Document:

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                                                                   Exhibit 10.12

                                                               Execution Version

                               CRAWFORD & COMPANY
                     CRAWFORD & COMPANY INTERNATIONAL, INC.

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

                             NOTE PURCHASE AGREEMENT

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

                         DATED AS OF SEPTEMBER 30, 2003

         $50,000,000 6.08% SENIOR GUARANTIED NOTES DUE OCTOBER 10, 2010

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                    ----
<S>                                                                                 <C>
1.    AUTHORIZATION OF NOTES....................................................     1

2.    SALE AND PURCHASE OF NOTES................................................     1

3.    CLOSING...................................................................     2

4.    CONDITIONS TO CLOSING.....................................................     2

   4.1.  REPRESENTATIONS AND WARRANTIES.........................................     2
   4.2.  PERFORMANCE; NO DEFAULT................................................     2
   4.3.  COMPLIANCE CERTIFICATES................................................     3
   4.4.  OPINIONS OF COUNSEL....................................................     3
   4.5.  PURCHASE PERMITTED BY APPLICABLE LAW, ETC..............................     3
   4.6.  SALE OF OTHER NOTES....................................................     4
   4.7.  PAYMENT OF SPECIAL COUNSEL FEES........................................     4
   4.8.  PRIVATE PLACEMENT NUMBER...............................................     4
   4.9.  CHANGES IN CORPORATE STRUCTURE.........................................     4
   4.10.    SUBSIDIARY GUARANTY AGREEMENT.......................................     4
   4.11.    PLEDGE AGREEMENT....................................................     5
   4.12.    BANK CREDIT AGREEMENT...............................................     5
   4.13.    SHARING AGREEMENT...................................................     5
   4.14.    PROCEEDINGS AND DOCUMENTS...........................................     5
   4.15.    OFFEREE LETTER......................................................     5

5.    REPRESENTATIONS AND WARRANTIES OF THE ISSUERS.............................     5

   5.1.  ORGANIZATION; POWER AND AUTHORITY......................................     6
   5.2.  AUTHORIZATION, ETC.....................................................     6
   5.3.  DISCLOSURE.............................................................     6
   5.4.  ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.......     7
   5.5.  FINANCIAL STATEMENTS...................................................     8
   5.6.  COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC...........................     8
   5.7.  GOVERNMENTAL AUTHORIZATIONS, ETC.......................................     9
   5.8.  LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS..............     9
   5.9.  TAXES..................................................................     9
   5.10.    TITLE TO PROPERTY; LEASES...........................................    10
   5.11.    LICENSES, PERMITS, ETC..............................................    10
   5.12.    COMPLIANCE WITH ERISA...............................................    10
   5.13.    PRIVATE OFFERING BY THE ISSUERS.....................................    11
   5.14.    USE OF PROCEEDS; MARGIN REGULATIONS.................................    11
   5.15.    EXISTING INDEBTEDNESS; FUTURE LIENS.................................    12
   5.16.    FOREIGN ASSETS CONTROL REGULATIONS, ETC.............................    12
   5.17.    STATUS UNDER CERTAIN STATUTES.......................................    13
   5.18.    ENVIRONMENTAL MATTERS...............................................    13
   5.19.    PARI PASSU RANKING..................................................    13
</TABLE>

                                        i

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<TABLE>
<S>                                                                                 <C>
   5.20.    NOT SUBJECT TO IMMUNITY.............................................    13
   5.21.    DORMANT COMPANIES...................................................    14
   5.22.    BANK CREDIT AGREEMENT REPRESENTATIONS...............................    14

6.    REPRESENTATIONS OF THE PURCHASERS.........................................    14

   6.1.  PURCHASE FOR INVESTMENT................................................    14
   6.2.  SOURCE OF FUNDS........................................................    14
   6.3.  PURCHASER ACTION.......................................................    16

7.    INFORMATION AS TO ISSUERS.................................................    16

   7.1.  FINANCIAL AND BUSINESS INFORMATION.....................................    16
   7.2.  OFFICER'S CERTIFICATES.................................................    19
   7.3.  INSPECTION.............................................................    20

8.    PREPAYMENT OF THE NOTES...................................................    21

   8.1.  REQUIRED PREPAYMENTS...................................................    21
   8.2.  OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT............................    21
   8.3.  ALLOCATION OF PARTIAL PREPAYMENTS......................................    22
   8.4.  MATURITY; SURRENDER, ETC...............................................    22
   8.5.  PURCHASE OF NOTES......................................................    22
   8.6.  MAKE-WHOLE AMOUNT......................................................    22

9.    AFFIRMATIVE COVENANTS.....................................................    24

   9.1.  COMPLIANCE WITH LAW....................................................    24
   9.2.  INSURANCE..............................................................    24
   9.3.  MAINTENANCE OF PROPERTIES..............................................    25
   9.4.  PAYMENT OF TAXES AND CLAIMS............................................    25
   9.5.  CORPORATE EXISTENCE, ETC...............................................    25
   9.6.  NEW SUBSIDIARY GUARANTOR; ADDITIONAL PLEDGED STOCK.....................    26
   9.7.  PARI PASSU RANKING.....................................................    26
   9.8.  MOST FAVORED LENDER PROVISIONS.........................................    27
   9.9.  COVENANT TO SECURE NOTES EQUALLY.......................................    28
   9.10.    POST-CLOSING REQUIREMENTS...........................................    29
   9.11.    DORMANT COMPANIES...................................................    29

10.   NEGATIVE COVENANTS........................................................    30

   10.1.    TRANSACTIONS WITH AFFILIATES; DORMANT COMPANIES.....................    31
   10.2.    MERGER, CONSOLIDATION, ETC..........................................    31
   10.3.    LIMITATION ON LIENS.................................................    32
   10.4.    SALE OF ASSETS, ETC.................................................    35
   10.5.    LEVERAGE RATIO......................................................    35
   10.6.    FIXED CHARGES COVERAGE RATIO........................................    36
   10.7.    CONSOLIDATED NET WORTH..............................................    36
   10.8.    PRIORITY DEBT.......................................................    37
   10.9.    LINE OF BUSINESS....................................................    37
   10.10.   RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS; ACQUISITIONS........    37
   10.11.   LIMITATIONS ON CERTAIN SUBSIDIARY ACTIONS...........................    39
</TABLE>

                                       ii

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<TABLE>
<S>                                                                                             <C>
   10.12.   HEDGING ARRANGEMENTS.........................................................       40
   10.13.   ACCOUNTING CHANGES; CHANGE OF FISCAL YEAR....................................       40
   10.14.   MINIMUM CASH.................................................................       40
   10.15.   LITIGATION...................................................................       40
   10.16.   AMENDMENTS TO ORGANIZATIONAL DOCUMENTS.......................................       41
   10.17.   NO LIMITATION ON PREPAYMENTS OR AMENDMENTS TO CERTAIN FINANCING DOCUMENTS....       41

11.   EVENTS OF DEFAULT...................................................................      41

12.   REMEDIES ON DEFAULT, ETC............................................................      44

   12.1.    ACCELERATION..................................................................      44
   12.2.    OTHER REMEDIES................................................................      45
   12.3.    RESCISSION....................................................................      45
   12.4.    NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.............................      45

13.   REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................................      46

   13.1.    REGISTRATION OF NOTES.........................................................      46
   13.2.    TRANSFER AND EXCHANGE OF NOTES................................................      46
   13.3.    REPLACEMENT OF NOTES..........................................................      47

14.   PAYMENTS ON NOTES...................................................................      48

   14.1.    PLACE OF PAYMENT..............................................................      48
   14.2.    HOME OFFICE PAYMENT...........................................................      48

15.   EXPENSES, ETC.......................................................................      48

   15.1.    TRANSACTION EXPENSES..........................................................      48
   15.2.    SURVIVAL......................................................................      49

16.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........................      49

17.   AMENDMENT AND WAIVER................................................................      50

   17.1.    REQUIREMENTS..................................................................      50
   17.2.    SOLICITATION OF HOLDERS OF NOTES..............................................      50
   17.3.    BINDING EFFECT, ETC...........................................................      51
   17.4.    NOTES HELD BY THE ISSUERS, ETC................................................      51

18.   NOTICES.............................................................................      51

19.   REPRODUCTION OF DOCUMENTS...........................................................      52

20.   CONFIDENTIAL INFORMATION............................................................      52

21.   SUBSTITUTION OF PURCHASER...........................................................      53

22.   MISCELLANEOUS.......................................................................      54
</TABLE>

                                      iii

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<TABLE>
<S>                                                                                          <C>
22.1.    SUCCESSORS AND ASSIGNS........................................................      54
22.2.    PAYMENTS DUE ON NON-BUSINESS DAYS.............................................      54
22.3.    SEVERABILITY..................................................................      54
22.4.    CONSTRUCTION..................................................................      54
22.5.    COUNTERPARTS..................................................................      55
22.6.    JURISDICTION; SERVICE OF PROCESS..............................................      55
22.7.    GOVERNING LAW.................................................................      56
22.8.    WAIVER OF TRIAL BY JURY.......................................................      56
</TABLE>

SCHEDULE A     --  Information Relating to Purchasers

SCHEDULE B     --  Defined Terms

SCHEDULE C     --  Investment Guidelines

SCHEDULE 4.9   --  Changes in Corporate Structure

SCHEDULE 5.3   --  Disclosure Materials

SCHEDULE 5.4   --  Subsidiaries of the Company and Ownership of Subsidiary Stock

SCHEDULE 5.5   --  Financial Statements

SCHEDULE 5.8   --  Certain Litigation

SCHEDULE 5.14  --  Use of Proceeds

SCHEDULE 5.15  --  Existing Indebtedness

SCHEDULE 5.18  --  Environmental Matters

SCHEDULE 5.21  --  Assets of Dormant Companies

SCHEDULE 10.3  --  Existing Liens

SCHEDULE 10.10 --  Existing Investments

SCHEDULE 10.11 --  Existing Restrictive Agreements

EXHIBIT 1      --  Form of 6.08% Senior Guarantied Note due October 10,2010

                                       iv
<PAGE>

EXHIBIT 4.3(a) --  Form of Officer's Certificate for Company

EXHIBIT 4.3(b) --  Form of Officer's Certificate for Co-Issuer

EXHIBIT 4.3(c) --  Form of Secretary's Certificate for each Issuer and
                   each Initial Guarantor

EXHIBIT 4.4(a) --  Form of Opinion of Special Counsel for the Obligors

EXHIBIT 4.4(b) --  Form of Opinion of Special Counsel for the Purchasers

EXHIBIT 4.10   --  Form of Guaranty Agreement

EXHIBIT 4.11   --  Form of Pledge Agreement

EXHIBIT 4.13   --  Form of Sharing Agreement

                                       v

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                               CRAWFORD & COMPANY
                     CRAWFORD & COMPANY INTERNATIONAL, INC.
                           5620 GLENRIDGE DRIVE, N.E.
                                ATLANTA, GA 30342

         $50,000,000 6.08% SENIOR GUARANTIED NOTES DUE OCTOBER 10, 2010

                                                              September 30, 2003

To Each of the Persons Listed in
the Attached Schedule A (the "PURCHASERS"):

Ladies and Gentlemen:

      Crawford & Company, a Georgia corporation (together with its successors
and assigns, the "COMPANY"), and Crawford & Company International, Inc., a
Georgia corporation (together with its successors and assigns, the "CO-ISSUER"
and together with the Company, the "ISSUERS"), jointly and severally agree with
each Purchaser as follows:

1.    AUTHORIZATION OF NOTES.

      The Issuers will authorize the joint and several issue and sale of
$50,000,000 aggregate principal amount of their joint and several 6.08% Senior
Guarantied Notes due October 10, 2010 (the "NOTES", such term to include any
such notes issued in substitution therefor pursuant to Section 13 of this
Agreement). The Notes shall be substantially in the form set out in Exhibit 1,
with such changes therefrom, if any, as may be approved by the Purchasers and
the Issuers. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, references to a Schedule or an Exhibit attached to this Agreement;
references to Sections are, unless otherwise specified, references to Sections
of this Agreement.

2.    SALE AND PURCHASE OF NOTES.

      Subject to the terms and conditions of this Agreement, the Issuers will
issue and sell to each Purchaser and each Purchaser will purchase from the
Issuers, at the Closing provided for in Section 3, Notes in the principal amount
specified

<PAGE>

opposite each Purchaser's name in Schedule A at the purchase price of 100% of
the principal amount thereof. The obligations of the Purchasers hereunder are
several and not joint and no Purchaser shall have any liability to any Person
for the performance or non-performance by any other Purchaser hereunder.

3.    CLOSING.

      The sale and purchase of the Notes to be purchased by each of the
Purchasers shall occur at the offices of Bingham McCutchen LLP, One State
Street, Hartford, CT 06103, at 10:00 a.m., local time, at a closing (the
"CLOSING") on October 10, 2003 or on such other Business Day thereafter on or
prior to October 31, 2003 as may be agreed upon by the Issuers and the
Purchasers. At the Closing the Issuers will deliver to each Purchaser the Notes
to be purchased by it in the form of a single Note (or such greater number of
Notes in denominations of at least $100,000 as each such Purchaser may request)
dated the date of the Closing and registered in such Purchaser's name (or in the
name of its nominee), against delivery by such Purchaser to the Issuers or their
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Issuers to account number ___________ at SunTrust Bank, Atlanta, GA, ____
________________________________ for the benefit of Crawford & Company. If at
the Closing either Issuer shall fail to tender such Notes to any Purchaser as
provided above in this Section 3, or any of the conditions specified in Section
4 shall not have been fulfilled to each Purchaser's satisfaction, such Purchaser
shall, at its election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights each such Purchaser may have by
reason of such failure or such nonfulfillment.

4.    CONDITIONS TO CLOSING.

      Each Purchaser's obligation to purchase and pay for the Notes to be sold
to it at the Closing is subject to the fulfillment to each such Purchaser's
satisfaction, prior to or at the Closing, of the following conditions:

      4.1.  REPRESENTATIONS AND WARRANTIES.

      The representations and warranties of each Obligor contained in the
Financing Documents shall be correct when made and at the time of the Closing.

      4.2.  PERFORMANCE; NO DEFAULT.

      Each Obligor shall have performed and complied with all agreements and
conditions contained in the Financing Documents required to be performed or
complied with by it prior to or at the Closing and after giving effect to the
issuance and sale of the Notes (and the application of the proceeds thereof as
contemplated

                                      -2-

<PAGE>

by Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. Neither of the Issuers nor any Subsidiary shall have entered into
any transaction since the date of the Memorandum that would have been prohibited
by Sections 10.1, 10.2, 10.3, 10.4, 10.8, 10.10, 10.11, 10.12, 10.13 or 10.15
hereof had such Sections applied since such date.

      4.3.  COMPLIANCE CERTIFICATES.

            (a)   Officer's Certificate. The Company shall have delivered to
                  each Purchaser an Officer's Certificate, dated the date of the
                  Closing, certifying that the conditions specified in Sections
                  4.1, 4.2 and 4.9 have been fulfilled, substantially in the
                  form of Exhibit 4.3(a) hereto.

            (b)   Officer's Certificate. The Co-Issuer shall have delivered to
                  each Purchaser an Officer's Certificate, dated the date of the
                  Closing, certifying that the conditions specified in Sections
                  4.1, 4.2 and 4.9 have been fulfilled, substantially in the
                  form of Exhibit 4.3(b) hereto.

            (c)   Secretary's Certificates. Each Issuer and each Initial
                  Guarantor shall have delivered to each Purchaser a certificate
                  of its secretary or its assistant secretary (or, in the case
                  of certain Initial Guarantors, a certificate of the secretary
                  of its sole shareholder or general partner, as the case may
                  be) dated the date of the Closing certifying as to the
                  resolutions attached thereto and other corporate proceedings
                  relating to the authorization, execution and delivery of the
                  Financing Documents to which such Person is a party,
                  substantially in the form of Exhibit 4.3(c) hereto.

      4.4.  OPINIONS OF COUNSEL.

      Each Purchaser shall have received opinions in form and substance
satisfactory to it, dated the date of the Closing (a) from King & Spalding LLP
counsel for the Obligors, covering the matters set forth in Exhibit 4.4(a) and
covering such other matters incident to the transactions contemplated hereby as
such Purchaser or its counsel may reasonably request (and the Issuers hereby
instruct their counsel to deliver such opinion to each Purchaser) and (b) from
Bingham McCutchen LLP, the Purchasers' special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as any Purchaser may reasonably
request.

      4.5.  PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

      On the date of the Closing, each Purchaser's purchase of Notes shall (a)
be permitted by the laws and regulations of each jurisdiction to which it is
subject,

                                      -3-

<PAGE>

without recourse to provisions (such as section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the United States Federal Reserve System) and
(c) not subject any Purchaser to any tax, penalty or liability under or pursuant
to any applicable law or regulation, which law or regulation was not in effect
on the date hereof. If requested by any Purchaser, such Purchaser shall have
received an Officer's Certificate certifying as to such matters of fact as such
Purchaser may reasonably specify to enable such Purchaser to determine whether
such purchase is so permitted.

      4.6.  SALE OF OTHER NOTES.

      Contemporaneously with the Closing the Issuers shall sell to each
Purchaser and each such Purchaser shall purchase the Notes to be purchased by it
at the Closing as specified in Schedule A.

      4.7.  PAYMENT OF SPECIAL COUNSEL FEES.

      Without limiting the provisions of Section 15.1, the Issuers shall have
paid on or before the Closing the fees, charges and disbursements of the
Purchasers' special counsel referred to in Section 4.4(b) to the extent
reflected in a statement of such counsel rendered to the Issuers at least one
Business Day prior to the Closing.

      4.8.  PRIVATE PLACEMENT NUMBER.

      A Private Placement number issued by the CUSIP Service Bureau of Standard
& Poor's, a division of The McGraw-Hill Companies (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners (the "SVO")) shall have been obtained for the Notes.

      4.9.  CHANGES IN CORPORATE STRUCTURE.

      Except as specified in Schedule 4.9, neither Issuer shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.

      4.10. SUBSIDIARY GUARANTY AGREEMENT.

         Each Initial Guarantor shall have executed and delivered to the
Purchasers a guaranty agreement (as may be amended, restated or modified from
time to time, the "GUARANTY AGREEMENT"), substantially in the form of Exhibit
4.10.

                                      -4-

<PAGE>

      4.11. PLEDGE AGREEMENT.

      The Company shall have executed and delivered to the Purchasers a pledge
agreement (as may be amended, restated or modified from time to time, the
"PLEDGE AGREEMENT"), substantially in the form of Exhibit 4.11.

      4.12. BANK CREDIT AGREEMENT.

      The Issuers shall have delivered to each Purchaser true and correct copies
of each of the documents constituting the Bank Credit Agreement as in effect on
the date of the Closing, certified as true and correct by a Senior Financial
Officer.

      4.13. SHARING AGREEMENT.

      The Agent, on behalf of itself and the other lenders under the Bank Credit
Agreement and as collateral agent for the holders of Notes, shall have entered
into a collateral sharing agreement with the Purchasers, in form and substance
satisfactory to each of the Purchasers, substantially in the form of Exhibit
4.13 (as may be amended, restated or modified from time to time, the "SHARING
AGREEMENT").

      4.14. PROCEEDINGS AND DOCUMENTS.

      All corporate and other proceedings in connection with the transactions
contemplated by this Agreement, the other Financing Documents and all documents
and instruments incident to such transactions shall be satisfactory to each
Purchaser and its special counsel, and each Purchaser and its special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as such Purchaser or its counsel may reasonably request.

      4.15. OFFEREE LETTER.

         Sun Trust Capital Markets, Inc. shall have delivered to the Issuers,
their counsel, each of the Purchasers and the Purchasers' special counsel an
offeree letter, in form and substance satisfactory to each Purchaser, confirming
the manner of the offering of the Notes by Sun Trust Capital Markets, Inc.

5.    REPRESENTATIONS AND WARRANTIES OF THE ISSUERS.

      Each of the Issuers represents and warrants, as of the date hereof and as
of the date of the Closing, to each Purchaser that:

                                      -5-

<PAGE>

      5.1.  ORGANIZATION; POWER AND AUTHORITY.

      The Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver the
Financing Documents to which it is a party and to perform the provisions hereof
and thereof.

      5.2.  AUTHORIZATION, ETC.

            (a) This Agreement, the Notes and the other Financing Documents to
      which either Issuer is a party have been duly authorized by all necessary
      corporate action on the part of such Issuer, and the Financing Documents
      to which such Issuer is a party constitute, and upon execution and
      delivery thereof each Note will constitute, a legal, valid and binding
      obligation of such Issuer enforceable against such Issuer in accordance
      with its terms, except as such enforceability may be limited by (i)
      applicable bankruptcy, insolvency, reorganization, moratorium or other
      similar laws affecting the enforcement of creditors' rights generally and
      (ii) general principles of equity (regardless of whether such
      enforceability is considered in a proceeding in equity or at law).

            (b) The Guaranty Agreement has been duly authorized by all necessary
      corporate action on the part of each Initial Guarantor, and the Guaranty
      Agreement constitutes a legal, valid and binding obligation of each
      Initial Guarantor enforceable against each Initial Guarantor in accordance
      with its terms, except as such enforceability may be limited by (i)
      applicable bankruptcy, insolvency, reorganization, moratorium or other
      similar laws affecting the enforcement of creditors' rights generally and
      (ii) general principles of equity (regardless of whether such
      enforceability is considered in a proceeding in equity or at law).

      5.3.  DISCLOSURE.

      The Issuers, through their agent, SunTrust Capital Markets, Inc. have
delivered to each Purchaser a copy of a Confidential Private Placement
Memorandum, dated July 2003 (the "MEMORANDUM"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Issuers and
their Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the

                                      -6-

<PAGE>

Memorandum, the documents, certificates or other writings delivered to each
Purchaser by or on behalf of the Obligors in connection with the transactions
contemplated hereby and the financial statements listed in Schedule 5.5, taken
as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made. Except as disclosed in
the Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 2002, there has
been no change in the financial condition, operations, business, properties or
prospects of either of the Issuers or any Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Issuers that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to each Purchaser by or on behalf of the Issuers
specifically for use in connection with the transactions contemplated hereby.

      5.4.  ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.

            (a) Schedule 5.4 contains (except as noted therein) complete and
      correct lists (i) of the Company's Subsidiaries, showing, as to each
      Subsidiary, the correct name thereof, the jurisdiction of its
      organization, the percentage of shares of each class of its capital stock
      or similar equity interests outstanding owned by the Company and each
      other Subsidiary and whether or not such Subsidiary is a Dormant Company,
      (ii) of the Company's Affiliates, other than Subsidiaries, and (iii) of
      each of the Issuer's directors and senior officers.

            (b) All of the outstanding shares of capital stock or similar equity
      interests of each Subsidiary shown in Schedule 5.4 as being owned by the
      Company and the Subsidiaries have been validly issued, are fully paid and
      nonassessable and are owned by the Company or another Subsidiary free and
      clear of any Lien in the case of the capital stock of the Co-Issuer, and
      in the case of the capital stock or other equity interests of all other
      Subsidiaries, free and clear of any Lien except Liens that would be
      permitted by Section 10.3 or as otherwise disclosed in Schedule 5.4).

            (c) Each Subsidiary identified in Schedule 5.4 other than any
      Dormant Company is a corporation or other legal entity duly organized,
      validly existing and (to the extent such concept is recognized in such
      jurisdiction) in good standing under the laws of its jurisdiction of
      organization, and (to the extent such concepts are recognized in such
      jurisdictions) is duly qualified as a foreign corporation or other legal
      entity

                                      -7-

<PAGE>

      and (to the extent such concept is recognized in such jurisdictions) is in
      good standing in each jurisdiction in which such qualification is required
      by law, other than those jurisdictions as to which the failure to be so
      qualified or in good standing could not, individually or in the aggregate,
      reasonably be expected to have a Material Adverse Effect. Each such
      Subsidiary has the corporate or other power and authority to own or hold
      under lease the properties it purports to own or hold under lease and to
      transact the business it transacts and proposes to transact, to execute
      and deliver the Financing Documents to which such Subsidiary is a party
      and to perform the provisions thereof.

            (d) No Subsidiary is a party to, or otherwise subject to any legal
      restriction or any agreement (other than this Agreement, the agreements
      listed on Schedule 5.4 and customary limitations imposed by corporate law
      statutes) restricting the ability of such Subsidiary to pay dividends out
      of profits or make any other similar distributions of profits to the
      Company or any Subsidiary that owns outstanding shares of capital stock or
      similar equity interests of such Subsidiary.

      5.5.  FINANCIAL STATEMENTS.

      The Company has delivered to each Purchaser copies of the financial
statements of the Company and the Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and the Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments) and additional information set forth
in year-end financial statements.

      5.6.  COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

      The execution, delivery and performance by each Obligor of the Financing
Documents to which such Obligor is a party will not (a) contravene, result in
any breach of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
memorandum or articles of association, corporate charter or by-laws, or any
other agreement or instrument to which the Company or any Subsidiary is bound or
by which the Company or any Subsidiary or any of their respective properties may
be bound or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or

                                      -8-

<PAGE>

Governmental Authority applicable to the Company or any Subsidiary or (c)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.

      5.7.  GOVERNMENTAL AUTHORIZATIONS, ETC.

      No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by (a) each of the Issuers of the Financing
Documents to which such Issuer is a party and (b) each Initial Guarantor of the
Guaranty Agreement.

      5.8.  LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

            (a) Except as disclosed in Schedule 5.8, there are no actions, suits
      or proceedings pending or, to the knowledge of either Issuer, threatened
      against or affecting either of the Issuers or any Subsidiary or any
      property of either of the Issuers or any Subsidiary in any court or before
      any arbitrator of any kind or before or by any Governmental Authority
      that, individually or in the aggregate, could reasonably be expected to
      have a Material Adverse Effect.

            (b) Neither of the Issuers nor any Subsidiary is in default under
      any term of any agreement or instrument to which it is a party or by which
      it is bound, or any order, judgment, decree or ruling of any court,
      arbitrator or Governmental Authority or is in violation of any applicable
      law, ordinance, rule or regulation (including without limitation
      Environmental Laws) of any Governmental Authority, which default or
      violation, individually or in the aggregate, could reasonably be expected
      to have a Material Adverse Effect.

      5.9.  TAXES.

            (a) Each of the Issuers and the Subsidiaries have filed all tax
      returns that are required to have been filed in any jurisdiction except
      for any such returns that may be required to be filed in jurisdictions
      other than the United States and political subdivisions thereof, which
      returns, in the aggregate, would not reflect an amount of Taxes owing that
      would be Material. Each of the Issuers and the Subsidiaries has paid all
      Taxes required to have been paid on all returns that have been filed and
      all other Taxes levied upon them or their properties, assets, income or
      franchises, to the extent such Taxes have become due and payable and
      before they have become delinquent, except for any Taxes (i) the amount of
      which is not individually or in the aggregate Material or (ii) the amount,
      applicability or validity of which is currently being contested in good
      faith by appropriate proceedings and with respect to which such Issuer or
      a Subsidiary, as the

                                      -9-

<PAGE>

      case may be, has established adequate reserves in accordance with GAAP.
      Neither Issuer knows of any basis for any other Tax that could reasonably
      be expected to have a Material Adverse Effect.

            (b) The charges, accruals and reserves on the books of the Issuers
      and their Subsidiaries in respect of all Taxes for all fiscal periods are
      adequate. The Federal income tax liabilities of the Company and the
      Subsidiaries have been determined by the Internal Revenue Service and paid
      for all fiscal years up to and including the fiscal year ended December
      31, 1999.

      5.10. TITLE TO PROPERTY; LEASES.

      Each of the Issuers and the Subsidiaries (other than any Dormant Company)
has good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by either of the Issuers or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.

      5.11. LICENSES, PERMITS, ETC.

      Each of the Issuers and the Subsidiaries owns, or is licensed, or
otherwise has the right, to use, all patents, trademarks, service marks,
tradenames, copyrights and other intellectual property Material to its business,
and the use thereof by the Issuers and the Subsidiaries does not infringe on the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, would not have a Material Adverse Effect.

      5.12. COMPLIANCE WITH ERISA.

            (a) The Company and each ERISA Affiliate have operated and
      administered each US Plan in compliance with all applicable laws except
      for such instances of noncompliance as have not resulted in and could not
      reasonably be expected to result in a Material Adverse Effect. Neither the
      Company nor any ERISA Affiliate has incurred any liability pursuant to
      Title I or IV of ERISA or the penalty or excise tax provisions of the US
      Tax Code relating to employee pension benefit plans (as defined in section
      3 of ERISA), and no event, transaction or condition has occurred or exists
      that could reasonably be expected to result in the incurrence of any such
      liability by the Company or any ERISA Affiliate, or in the imposition of
      any Lien on any

                                      -10-

<PAGE>

      of the rights, properties or assets of the Company or any ERISA Affiliate,
      in either case pursuant to Title I or IV of ERISA or to such penalty or
      excise tax provisions or to section 401(a)(29) or 412 of the US Tax Code,
      other than such liabilities or Liens as would not be individually or in
      the aggregate Material.

            (b) As determined by the Company's actuary, the present value of the
      aggregate projected benefit obligation of all underfunded US Plans
      determined as of January 1, 2003 (based on the assumptions used for
      purposes of Statement of Financial Standards No. 87) did not exceed the
      aggregate fair value of the assets of all such underfunded US Plans by
      more than $67,000,000 as of such date.

            (c) The Company and its ERISA Affiliates have not incurred
      withdrawal liabilities (and are not subject to contingent withdrawal
      liabilities) under section 4201 or 4204 of ERISA in respect of
      Multiemployer Plans that individually or in the aggregate are Material.

            (d) The execution and delivery of this Agreement and the issuance
      and sale of the Notes to each Purchaser hereunder will not involve any
      transaction that is subject to the prohibitions of section
      406(a)(1)(A)-(E) of ERISA or in connection with which a tax could be
      imposed by sections 4975(a) and (b) of the US Tax Code by reason of
      section 4975(c)(1)(A)-(D) of the US Tax Code. The representation by the
      Company in the first sentence of this Section 5.12(d) is made in reliance
      upon and subject to the accuracy of the representation in Section 6.2 from
      each Purchaser and each transferee of a Note as to the sources of the
      funds used to pay the purchase price of the Notes to be purchased by such
      Purchaser or acquired by such transferee.

      5.13. PRIVATE OFFERING BY THE ISSUERS.

      Neither the Issuers nor anyone acting on their behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
in each case within one year of the date of the Closing, any Person other than
the Purchasers, each of whom has been offered the Notes at a private sale for
investment. Neither the Issuers nor anyone acting on their behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable jurisdiction.

      5.14. USE OF PROCEEDS; MARGIN REGULATIONS.

      The Issuers will apply the proceeds of the sale of the Notes as set forth
in Schedule 5.14 and none of the proceeds will be used to make any loan or other

                                      -11-

<PAGE>

Investment in any Dormant Company. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the United States Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Issuers in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 5% of the value of the consolidated assets of the Issuers and their
Subsidiaries and neither Issuer has any present intention that margin stock will
constitute more than 5% of the value of such assets. As used in this Section,
the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the
meanings assigned to them in said Regulation U.

      5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.

            (a) Except as described therein, Schedule 5.15 sets forth a complete
      and correct list of all outstanding Indebtedness of the Issuers and their
      Subsidiaries as of August 31, 2003, since which date there has been no
      Material change in the amounts, interest rates, sinking funds, installment
      payments or maturities of the Indebtedness of either of the Issuers or any
      Subsidiary. Neither of the Issuers nor any Subsidiary is in default and no
      waiver of default is currently in effect, in the payment of any principal
      or interest on any Indebtedness of either of the Issuers or any Subsidiary
      and no event or condition exists with respect to any Indebtedness of
      either of the Issuers or any Subsidiary that would permit (or that with
      notice or the lapse of time, or both, would permit) one or more Persons to
      cause such Indebtedness to become due and payable before its stated
      maturity or before its regularly scheduled dates of payment.

            (b) Except as disclosed in Schedule 5.15, neither of the Issuers nor
      any Subsidiary has agreed or consented to cause or permit in the future
      (upon the happening of a contingency or otherwise) any of its property,
      whether now owned or hereafter acquired, to be subject to a Lien that
      would not be permitted by Section 10.3.

      5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.

      Neither the sale of the Notes by the Issuers hereunder nor their use of
the proceeds thereof will violate the Trading with the Enemy Act of the United
States of America, as amended, or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto.

                                      -12-

<PAGE>

      5.17. STATUS UNDER CERTAIN STATUTES.

      Neither of the Issuers nor any Subsidiary:

            (a) is subject to regulation under the Investment Company Act of
      1940 of the United States of America, as amended, the Public Utility
      Holding Company Act of 1935 of the United States of America, as amended,
      or the Federal Power Act of 1920 of the United States of America, as
      amended;

            (b) is or will become a Person or entity described by section 1 of
      Executive Order 13224 of September 24, 2001 Blocking Property and
      Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or
      Support Terrorism, 31 CFR Part 595 et seq., and, to the best knowledge and
      belief of each Issuer, neither of the Issuers nor any Subsidiary does or
      will engage in any dealings or transactions, or be otherwise associated,
      with any such Persons or entities; or

            (c) is in violation of the USA Patriot Act.

      5.18. ENVIRONMENTAL MATTERS.

      Except as disclosed in Schedule 5.18 and except for matters which could
not reasonably be expected to have a Material Adverse Effect, neither of the
Issuers nor any Subsidiary (a) has failed to comply with any Environmental Law
or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (b) has become subject to any
Environmental Liability, (c) has received notice of any claim with respect to
any Environmental Liability or (d) knows of any basis for any Environmental
Liability in each case.

      5.19. PARI PASSU RANKING.

      Each of the Issuer's obligations under the Notes and this Agreement do and
will, upon issuance of the Notes, rank at least pari passu, without preference
or priority, with all of its other outstanding unsecured and unsubordinated
obligations, except for those obligations that are mandatorily preferred by law
and not by reason of contract (other than as provided in the Sharing Agreement).

      5.20. NOT SUBJECT TO IMMUNITY.

      Each of the Issuers represents and warrants that neither it nor any other
Obligor is entitled to immunity from judicial proceedings and agrees that, if
judicial proceedings are brought by any holder of Notes to enforce any right or
remedy under any Financing Documents, no immunity from such proceedings will be
claimed by or on behalf of any Obligor or with respect to it or its respective
properties.

                                      -13-

<PAGE>

      5.21. DORMANT COMPANIES.

      Except as set forth in Schedule 5.21, no Dormant Company owns any Material
assets or has any outstanding Indebtedness or other Material liabilities. The
aggregate revenues and assets of the Dormant Companies are less than 1% of the
aggregate revenue and assets of the Company and its Consolidated Subsidiaries.

      5.22. BANK CREDIT AGREEMENT REPRESENTATIONS.

      Each of the representations and warranties set forth in section 4 of the
Bank Credit Agreement is true and correct in all Material respects on and as of
the date of the Closing.

6.    REPRESENTATIONS OF THE PURCHASERS.

      6.1.  PURCHASE FOR INVESTMENT.

      Each Purchaser represents that (a) it is a Qualified Institutional Buyer
and (b) it is purchasing the Notes for its own account or for one or more
separate accounts or investment funds maintained or managed by such Purchaser or
for the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's property
shall at all times be within such Purchaser's control. Each Purchaser
understands that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Issuers are not required to register the Notes.

      6.2.  SOURCE OF FUNDS.

      Each Purchaser represents that at least one of the following statements is
an accurate representation as to each source of funds (a "SOURCE") to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by it
hereunder:

            (a) the Source is an "insurance company general account" (as the
      term is defined in the United States Department of Labor's Prohibited
      Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) in respect of
      which the reserves and liabilities (as defined by the annual statement for
      life insurance companies approved by the National Association of Insurance
      Commissioners (the "NAIC ANNUAL STATEMENT")) for the general account
      contract(s) held by or on behalf of any employee benefit plan together
      with the amount of the reserves and liabilities for the general account
      contract(s)

                                      -14-

<PAGE>

      held by or on behalf of any other employee benefit plans maintained by the
      same employer (or affiliate thereof as defined in PTE 95-60) or by the
      same employee organization in the general account do not exceed 10% of the
      total reserves and liabilities of the general account (exclusive of
      separate account liabilities) plus surplus as set forth in the NAIC Annual
      Statement filed with such Purchaser's state of domicile; or

            (b) the Source is a separate account that is maintained solely in
      connection with such Purchaser's fixed contractual obligations under which
      the amounts payable, or credited, to any employee benefit plan (or its
      related trust) that has any interest in such separate account (or to any
      participant or beneficiary of such plan (including any annuitant)) are not
      affected in any manner by the investment performance of the separate
      account; or

            (c) the Source is either (i) an insurance company pooled separate
      account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
      a bank collective investment fund, within the meaning of PTE 91-38 (issued
      July 1, 1991, as corrected November 25, 1991) and, except as disclosed by
      such Purchaser to the Issuers in writing prior to the Closing (or, in the
      case of a transferee of Notes, prior to its acquisition of such Notes)
      pursuant to this clause (c), no employee benefit plan or group of plans
      maintained by the same employer or employee organization beneficially owns
      more than 10% of all assets allocated to such pooled separate account or
      collective investment fund; or

            (d) the Source constitutes assets of an "investment fund" (within
      the meaning of Part V of PTE 84-14 (issued March 13, 1984, as corrected
      October 10, 1985) (the "QPAM EXEMPTION")) managed by a "qualified
      professional asset manager" or "QPAM" (within the meaning of Part V of the
      QPAM Exemption), no employee benefit plan's assets that are included in
      such investment fund, when combined with the assets of all other employee
      benefit plans established or maintained by the same employer or by an
      affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of
      such employer or by the same employee organization and managed by such
      QPAM, exceed 20% of the total client assets managed by such QPAM and the
      conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
      neither the QPAM nor a person controlling or controlled by the QPAM
      (applying the definition of "control" in section V(e) of the QPAM
      Exemption) owns a 5% or more interest in either Issuer and (i) the
      identity of such QPAM and (ii) the names of all employee benefit plans
      whose assets are included in such investment fund have been disclosed to
      the Issuers in writing pursuant to this clause (d); or

                                      -15-

<PAGE>

            (e) the Source constitutes assets of a "plan(s)" (within the meaning
      of Section IV of PTE 96-23 (issued April 10, 1996) (the "INHAM
      EXEMPTION")) managed by an "in-house asset manager" or "INHAM" (within the
      meaning of Part IV of the INHAM exemption), the conditions of Part I(a),
      (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a
      person controlling or controlled by the INHAM (applying the definition of
      "control" in Section IV(h) of the INHAM Exemption) owns a 5% or more
      interest in either Issuer and (i) the identity of such INHAM and (ii) the
      name(s) of the employee benefit plan(s) whose assets constitute the Source
      have been disclosed to the Issuers in writing pursuant to this clause (e);
      or

            (f) the Source is a governmental plan and the purchase of the Notes
      is not otherwise restricted by applicable law; or

            (g) the Source is one or more employee benefit plans, or a separate
      account or trust fund comprised of one or more employee benefit plans,
      each of which has been identified to the Issuers in writing prior to the
      Closing (or, in the case of a transferee of Notes, prior to its
      acquisition of such Notes) pursuant to this clause (g); or

            (h) the Source does not include assets of any employee benefit plan,
      other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN," "GOVERNMENTAL
PLAN," AND "SEPARATE ACCOUNT" shall have the respective meanings assigned to
such terms in section 3 of ERISA.

      6.3.  PURCHASER ACTION.

      No Purchaser has taken or will take any action that would subject the
issuance or sale of the Notes to the registration requirements of section 5 of
the Securities Act or to the provisions of any securities or Blue Sky law of any
applicable jurisdiction.

7.    INFORMATION AS TO ISSUERS.

      7.1.  FINANCIAL AND BUSINESS INFORMATION.

      The Company shall deliver to each holder of Notes that is an Institutional
Investor:

            (a) Quarterly Statements -- within 45 days after the end of each
      quarterly fiscal period in each Fiscal Year (other than the last quarterly
      fiscal period of each such Fiscal Year), duplicate copies of,

                                      -16-

<PAGE>

            (i) an unaudited consolidated balance sheet of the Company and the
      Subsidiaries as at the end of such quarter, and

            (ii) unaudited consolidated statements of income, changes in
      shareholders' equity and cash flows of the Company and its Consolidated
      Subsidiaries, for such quarter and (in the case of the second and third
      quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

      (b) Annual Statements -- within 90 days after the end of each Fiscal Year,
duplicate copies of,

            (i) a consolidated balance sheet of the Company and the
      Subsidiaries, as at the end of such year, and

            (ii) consolidated statements of income, changes in shareholders'
      equity and cash flows of the Company and the Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances (without a
"going concern" or like qualification, exception or explanation and without any
qualification or exception as to scope of such audit), and provided that the
delivery within the time period

                                      -17-

<PAGE>

      specified above of the Company's Annual Report on Form 10-K for such
      Fiscal Year (together with the Company's annual report to shareholders, if
      any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
      accordance with the requirements therefor and filed with the Securities
      and Exchange Commission shall be deemed to satisfy the requirements of
      this Section 7.1(b);

            (c) SEC and Other Reports -- promptly upon their becoming available,
      one copy of (i) each financial statement, report, notice, proxy statement
      or circular sent by the Company to public securities holders generally or
      its creditors generally (or any class thereof generally), and (ii) each
      regular or periodic report, each registration statement (without exhibits
      except as expressly requested by such holder), and each prospectus and all
      amendments thereto filed by the Company with the Securities and Exchange
      Commission;

            (d) Notice of Default or Event of Default -- promptly, and in any
      event within five Business Days after a Responsible Officer becoming aware
      of the existence of any Default or Event of Default or that any Person has
      given any notice or taken any action with respect to a claimed default
      hereunder or that any Person has given any notice or taken any action with
      respect to a claimed default of the type referred to in Section 11(f), a
      written notice specifying the nature and period of existence thereof and
      what action the Company is taking or proposes to take with respect
      thereto;

            (e) ERISA Matters - promptly, and in any event within fifteen days
      after a Responsible Officer becoming aware of any of the following, a
      written notice setting forth the nature thereof and the action, if any,
      that the Company or an ERISA Affiliate proposes to take with respect
      thereto:

                  (i) with respect to any US Plan, any reportable event, as
            defined in section 4043(b) of ERISA and the regulations thereunder,
            for which notice thereof has not been waived; or

                  (ii) the taking by the PBGC of steps to institute, or the
            threatening by the PBGC of the institution of, proceedings under
            section 4042 of ERISA for the termination of, or the appointment of
            a trustee to administer, any US Plan, or the receipt by the Company
            or any ERISA Affiliate of a notice from a Multiemployer Plan that
            such action has been taken by the PBGC with respect to such
            Multiemployer Plan; or

                  (iii) any event, transaction or condition that could result in
            the incurrence of any liability by the Company or any ERISA
            Affiliate

                                      -18-

<PAGE>

            pursuant to Title I or IV of ERISA or the penalty or excise tax
            provisions of the US Tax Code relating to employee pension benefit
            plans, or in the imposition of any Lien on any of the rights,
            properties or assets of the Company or any ERISA Affiliate pursuant
            to Title I or IV of ERISA or such penalty or excise tax provisions,
            if such liability or Lien, taken together with any other such
            liabilities or Liens then existing, could reasonably be expected to
            have a Material Adverse Effect;

            (f) Notices from Governmental Authority -- promptly, and in any
      event within 30 days of receipt thereof, copies of any notice to either of
      the Issuers or any Subsidiary from any Governmental Authority relating to
      any order, ruling, statute or other law or regulation that could
      reasonably be expected to have a Material Adverse Effect;

            (g) Rule 144A - promptly after any holder of Notes so requests, such
      information regarding the Issuers required to satisfy the requirements of
      17 C.F.R. Section 230.144A, as amended from time to time, in connection
      with any contemplated transfer of the Notes, provided that the delivery of
      the Company's Annual Report on Form 10-K pursuant to Section 7.1(b) for
      the most recent Fiscal Year shall be deemed to satisfy the requirements of
      this Section 7.1(g);

            (h) Bank Credit Agreement -- to the extent not provided above in
      this Section 7.1, all reports, statements, certificates, notices or other
      writings required to be delivered pursuant to section 5.2 of the Bank
      Credit Agreement only so long as the Bank Credit Agreement (or any
      equivalent provision following any amendment or refinancing of the
      original Bank Credit Agreement) remains operative within the times
      required therein; and

            (i) Requested Information -- with reasonable promptness, such other
      data and information relating to the business, operations, affairs,
      financial condition, assets or properties of either of the Issuers or any
      Subsidiary or relating to the ability of any Obligor to perform its
      obligations hereunder and under the Financing Documents to which such
      Obligor is a party, as from time to time may be reasonably requested by
      any such holder of Notes.

      7.2.  OFFICER'S CERTIFICATES.

      Each set of financial statements delivered to a holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate
of a Senior Financial Officer of the Company setting forth:

                                      -19-
<PAGE>

            (a) Covenant Compliance -- the information (including detailed
      calculations) required in order to establish whether the Issuers were in
      compliance with the requirements of Section 10.3 through Section 10.8,
      inclusive, Section 10.10 and Section 10.14 hereof, during the quarterly or
      annual period covered by the statements then being furnished (including
      with respect to each such Section, where applicable, the calculations of
      the maximum or minimum amount, ratio or percentage, as the case may be,
      permissible under the terms of such Sections, and the calculation of the
      amount, ratio or percentage then in existence); and

            (b) Event of Default -- a statement that such officer has reviewed
      the relevant terms hereof and has made, or caused to be made, under his or
      her supervision, a review of the transactions and conditions of the
      Issuers and their Subsidiaries from the beginning of the quarterly or
      annual period covered by the statements then being furnished to the date
      of the certificate and that such review shall not have disclosed the
      existence during such period of any condition or event that constitutes a
      Default or an Event of Default or, if any such condition or event existed
      or exists (including, without limitation, any such event or condition
      resulting from the failure of either of the Issuers or any Subsidiary to
      comply with any Environmental Law), specifying the nature and period of
      existence thereof and what action the Company shall have taken or proposes
      to take with respect thereto.

      7.3. INSPECTION.

      Each of the Issuers shall permit the representatives of each holder of
Notes that is an Institutional Investor:

            (a) No Default -- if no Default or Event of Default then exists, at
      the expense of such holder and upon reasonable prior notice to the
      applicable Issuer, to visit the principal executive office of such Issuer,
      to discuss the affairs, finances and accounts of such Issuer and its
      Subsidiaries with such Issuer's officers, and (with the consent of such
      Issuer, which consent will not be unreasonably withheld) its independent
      public accountants, and (with the consent of such Issuer, which consent
      will not be unreasonably withheld) to visit the other offices and
      properties of such Issuer and each Subsidiary, all at such reasonable
      times and as often as may be reasonably requested in writing; and

            (b) Default -- if a Default or Event of Default then exists, at the
      expense of the Issuers to visit and inspect any of the offices or
      properties of either of the Issuers or any Subsidiary, to examine all
      their respective books of account, records, reports and other papers, to
      make copies and extracts therefrom, and to discuss their respective
      affairs, finances and accounts with

                                      -20-
<PAGE>

      their respective officers and independent public accountants (and by this
      provision each of the Issuers authorizes said accountants to discuss the
      affairs, finances and accounts of such Issuer and its Subsidiaries), all
      at such times and as often as may be requested.

8. PREPAYMENT OF THE NOTES.

      8.1. REQUIRED PREPAYMENTS.

      On October 10, 2006 and on April 10, 2007 and each October 10 and April 10
thereafter to and including April 10, 2010, the Issuers will prepay
$5,555,555.56 principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole Amount or
any premium, provided that upon any partial prepayment of the Notes pursuant to
Section 8.2 the principal amount of each required prepayment of the Notes
becoming due under this Section 8.1 on and after the date of such prepayment or
any purchase thereof pursuant to Section 8.5 shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase. Subject to Section 12.1, any remaining
principal of, and the interest then accrued and unpaid on, the Notes shall be
due and payable on October 10, 2010.

      8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

      The Issuers may, at their option, upon notice as provided below, prepay at
any time all, or from time to time any part of, the Notes, in an aggregate
principal amount of not less than $1,000,000 in the case of a partial
prepayment, at 100% of the principal amount so prepaid, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Issuers will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
such date, the aggregate principal amount of the Notes to be prepaid on such
date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment, the
Issuers shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.

                                      -21-
<PAGE>

      8.3. ALLOCATION OF PARTIAL PREPAYMENTS.

      In the case of each partial prepayment of the Notes pursuant to Section
8.2 and each purchase of Notes pursuant to Section 8.5, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.

      8.4. MATURITY; SURRENDER, ETC.

      In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Issuers shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Issuers and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.

      8.5. PURCHASE OF NOTES.

      Neither Issuer will, and neither Issuer will permit any Affiliate to,
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
offer to purchase made by the Issuers or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 30 days. If the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, the Issuers shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days necessary
to give each such remaining holder at least five (5) Business Days from its
receipt of such notice to accept such offer. The Issuers will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.

      8.6. MAKE-WHOLE AMOUNT.

      The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining

                                      -22-
<PAGE>

Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:

            "CALLED PRINCIPAL" means, with respect to any Note, the principal of
      such Note that is to be prepaid pursuant to Section 8.2 or has become or
      is declared to be immediately due and payable pursuant to Section 12.1, as
      the context requires.

            "DISCOUNTED VALUE" means, with respect to the Called Principal of
      any Note, the amount obtained by discounting all Remaining Scheduled
      Payments with respect to such Called Principal from their respective
      scheduled due dates to the Settlement Date with respect to such Called
      Principal, in accordance with accepted financial practice and at a
      discount factor (applied on the same periodic basis as that on which
      interest on such Note is payable) equal to the Reinvestment Yield with
      respect to such Called Principal.

            "REINVESTMENT YIELD" means, with respect to the Called Principal of
      any Note, 0.50% over the yield to maturity implied by (a) the yields
      reported, as of 10:00 A.M. (New York City time) on the second Business Day
      preceding the Settlement Date with respect to such Called Principal on the
      display designated as "Page 678" on the Moneyline Telerate Service (or
      such other display as may replace Page 678 on the Moneyline Telerate
      Service) for actively traded on the run US Treasury securities having a
      maturity equal to the Remaining Average Life of such Called Principal as
      of such Settlement Date, or (b) if such yields are not reported as of such
      time or the yields reported as of such time are not ascertainable, the
      Treasury Constant Maturity Series Yields reported, for the latest day for
      which such yields have been so reported as of the second Business Day
      preceding the Settlement Date with respect to such Called Principal, in
      Federal Reserve Statistical Release H.15 (519) (or any comparable
      successor publication) for actively traded US Treasury securities having a
      constant maturity equal to the Remaining Average Life of such Called
      Principal as of such Settlement Date. Such implied yield will be
      determined, if necessary, by (i) converting US Treasury bill quotations to
      bond-equivalent yields in accordance with accepted financial practice and
      (ii) interpolating linearly between (x) the actively traded US Treasury
      Security with the maturity closest to and greater than the Remaining
      Average Life and (y) the actively traded US Treasury Security with the
      maturity closest to and less than the Remaining Average Life.

            "REMAINING AVERAGE LIFE" means, with respect to the Called Principal
      of any Note, the number of years (calculated to the nearest one-

                                      -23-
<PAGE>

      twelfth year) obtained by dividing (a) such Called Principal into (b) the
      sum of the products obtained by multiplying (i) the principal component of
      each Remaining Scheduled Payment with respect to such Called Principal by
      (ii) the number of years (calculated to the nearest one-twelfth year) that
      will elapse between the Settlement Date with respect to such Called
      Principal and the scheduled due date of such Remaining Scheduled Payment.

            "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
      Principal of any Note, all payments of such Called Principal and interest
      thereon that would be due after the Settlement Date with respect to such
      Called Principal if no payment of such Called Principal were made prior to
      its scheduled due date, provided that if such Settlement Date is not a
      date on which interest payments are due to be made under the terms of such
      Note, then the amount of the next succeeding scheduled interest payment
      will be reduced by the amount of interest accrued to such Settlement Date
      and required to be paid on such Settlement Date pursuant to Section 8.2 or
      Section 12.1.

            "SETTLEMENT DATE" means, with respect to the Called Principal of any
      Note, the date on which such Called Principal is to be prepaid pursuant to
      Section 8.2 or has become or is declared to be immediately due and payable
      pursuant to Section 12.1, as the context requires.

9. AFFIRMATIVE COVENANTS.

      Each of the Issuers covenants that so long as any of the Notes are
outstanding:

      9.1. COMPLIANCE WITH LAW.

      Each of the Issuers will and will cause each Subsidiary to comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, ERISA and Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

      9.2. INSURANCE.

                                      -24-
<PAGE>

      Each of the Issuers will and will cause each Subsidiary to maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.

      9.3. MAINTENANCE OF PROPERTIES.

      Each of the Issuers will and will cause each Subsidiary other than any
Dormant Company to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
prevent either of the Issuers or any Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is desirable
in the conduct of its business and such Issuer has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

      9.4. PAYMENT OF TAXES AND CLAIMS.

      Each of the Issuers will and will cause each Subsidiary to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes required to be paid on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and all claims for
which sums have become due and payable that have or might become a Lien on
properties or assets of either of the Issuers or any Subsidiary, provided that
neither of the Issuers nor any Subsidiary need pay any such tax or assessment or
claims if (a) the amount, applicability or validity thereof is contested by such
Issuer or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and such Issuer or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of such Issuer or such Subsidiary
or (b) the nonpayment of all such taxes and assessments in the aggregate could
not reasonably be expected to have a Material Adverse Effect.

      9.5. CORPORATE EXISTENCE, ETC.

      Each of the Issuers will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 9.3, 10.2 and 10.4, each of
the Issuers will at all times preserve and keep in full force and effect the
corporate existence of

                                      -25-
<PAGE>

each Subsidiary other than any Dormant Company (unless merged into an Issuer or
a Subsidiary (other than a Dormant Company)) and all rights and franchises of
such Issuer and its Subsidiaries (other than a Dormant Company) unless, in the
good faith judgment of such Issuer, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
could not, individually or in the aggregate, have a Material Adverse Effect.

      9.6. NEW SUBSIDIARY GUARANTOR; ADDITIONAL PLEDGED STOCK.

            (a) The Issuers will (i) cause each Person that, after the date of
      the Closing, becomes a Domestic Subsidiary that is a "significant
      subsidiary" within the meaning of Regulation S-X of the Exchange Act, and
      each Subsidiary that ceases to be a Dormant Company pursuant to Section
      9.11, to become, promptly and in any event within fifteen (15) Business
      Days of becoming a Domestic Subsidiary or ceasing to be a Dormant Company,
      as the case may be, an additional guarantor pursuant to the terms of the
      Guaranty Agreement and (ii) deliver to each of the holders of Notes, to
      the extent reasonably requested by the Required Holders, copies of
      authorizing resolutions, bylaws and other constitutive documents and
      financial information of such Person, as well as an opinion of independent
      counsel reasonably satisfactory to the Required Holders, as to the due
      execution, delivery and enforceability of such Person's obligations as a
      Guarantor, in form and substance reasonably satisfactory to the Required
      Holders.

            (b) The Company will promptly, and in any event within fifteen (15)
      Business Days of any Person becoming (i) a Foreign Subsidiary of the
      Company or (ii) a Foreign Subsidiary that is not a Wholly-Owned Subsidiary
      of either Issuer that, in each case, is a "significant subsidiary" within
      the meaning of Regulation S-X of the Exchange Act, after the date of the
      Closing, (A) pledge, or cause to be pledged, the Applicable Pledge Amount
      of any equity interests of such Foreign Subsidiary pursuant to the Pledge
      Agreement, and (B) deliver or cause to be delivered to the Agent, on
      behalf of the holders of Notes, the original stock or membership
      certificate(s) evidencing such equity interests and undated stock powers
      executed in blank.

      9.7. PARI PASSU RANKING.

      Each of the Issuers shall ensure that its payment obligations under this
Agreement and the Notes rank and will at all times rank at least pari passu in
all respects with the claims of all of its other unsecured and unsubordinated
creditors, respectively, except as may be otherwise provided for in the Sharing
Agreement with respect to the Debt under the Bank Credit Agreement, save those
whose claims are preferred by any bankruptcy, insolvency, liquidation,
administration or other similar laws of general application.

                                      -26-
<PAGE>

      9.8. MOST FAVORED LENDER PROVISIONS.

            (a) NEW AND AMENDED COVENANTS. If at any time and from time to time
      on or after the date of the Closing either of the Issuers or any
      Subsidiary enters into, assumes or otherwise becomes bound or obligated
      under, or agrees to any new agreement with the lenders under the Bank
      Credit Agreement or, without derogating from any of the restrictions
      contained herein, any amendment, modification of or supplement to the Bank
      Credit Agreement or any agreement which relates to the Bank Credit
      Agreement in any manner the effect of which would be (i) to create, amend
      or add covenants or obligations of the Issuers and the Subsidiaries which
      are in addition to those contained in the Bank Credit Agreement (as in
      effect on the date of the Closing) or (ii) more restrictive on the Issuers
      or any Subsidiary than are the equivalent covenants (other than the
      Specified Financial Covenants) contained herein (the "NEW/AMENDED COVENANT
      PROVISIONS"), then this Agreement shall, without any further action on the
      part of either Issuer, any Subsidiary or any holder of Notes, be deemed to
      be amended automatically to include each such New/Amended Covenant
      Provision, effective as of the effective date of such New/Amended Covenant
      Provision; provided, that the Required Holders and the Issuers may agree
      in writing not to so amend this Agreement. For the purposes of clause (ii)
      above, in the event that (A) any such amendment, modification or
      supplement reduces a sum certain dollar amount in the Bank Credit
      Agreement, which reduction has the effect of making a covenant in the Bank
      Credit Agreement more restrictive than a covenant contained herein and (B)
      the corresponding covenant contained herein is a percentage rather than a
      sum certain dollar amount, then such percentage contained herein shall be
      reduced and shall thereafter be equal to the product (expressed as a
      percentage) of (x) such percentage herein immediately before giving effect
      to such amendment, modification or supplement, multiplied by (y) a
      fraction, the numerator of which is the sum certain dollar amount in the
      Bank Credit Agreement immediately after giving effect to such amendment,
      modification or supplement and the denominator of which is the sum certain
      dollar amount stated in the Bank Credit Agreement immediately prior to
      giving effect to such amendment, modification or supplement. By way of
      example, if the definition of the "Permitted Acquisition Basket" in the
      Bank Credit Agreement were amended to reduce the sum certain dollar amount
      from $15,000,000 to $9,000,000 (a 40% reduction), then the percentage in
      the definition of Permitted Acquisition herein would be reduced to 6% from
      10% (a 40% reduction).

            (b) SPECIFIED FINANCIAL COVENANTS. If at any time and from time to
      time after the date of the Closing, either Issuer or any Subsidiary enters

                                      -27-
<PAGE>

      into, assumes or otherwise becomes bound or obligated under, or agrees to,
      any modification of or amendment or supplement to the Bank Credit
      Agreement in respect of or that contains provisions (the "SPECIFIED
      PROVISIONS") that are the same as or similar to the covenants set forth in
      Sections 10.5, 10.6 or 10.7 (as in effect from time to time after giving
      effect to this Section 9.8, the "SPECIFIED FINANCIAL COVENANTS"), and one
      or more of such Specified Provisions is more restrictive on the Issuers or
      any Subsidiary than the equivalent Specified Financial Covenants, then
      such equivalent Specified Financial Covenants shall, without any further
      action on the part of either Issuer, any Subsidiary or any holder of
      Notes, be deemed to be amended automatically to be as restrictive as the
      relevant Specified Provision as of the effective date of such Specified
      Provision; provided, however, that at all times subsequent to the date of
      the DOJ Settlement Payment, the required ratios of Consolidated Funded
      Debt to Consolidated EBITDA set forth in Section 10.5 shall each have a
      numerator that is the lesser of (i) the relevant numerator set forth in
      such section (as of the date of the Closing) or (ii) a numerator that is
      0.25 higher than that specified in the Bank Credit Agreement (after giving
      effect to any applicable Specified Provision) for the relevant time period
      (after converting, if necessary, the ratios in the Bank Credit Agreement
      to the method of presentation in Section 10.5).

            (c) WRITTEN AMENDMENT; SUCCESSIVE CHANGES. Each of the Issuers
      further covenants to promptly, and in any event within 30 days, execute
      and deliver at its expense (including, without limitation, the fees and
      expenses of counsel for the holders of the Notes) a document which amends
      this Agreement in form and substance satisfactory to the Required Holders
      to reflect any change to this Agreement made effective by this Section
      9.8, provided that the execution and delivery of such document shall not
      be a precondition to the effectiveness of such amendment, waiver or
      termination. The provisions of this Section 9.8 shall apply successively
      to each New/Amended Covenant Provision and each change in a Specified
      Provision.

      9.9. COVENANT TO SECURE NOTES EQUALLY.

      Each Issuer covenants that, if it or any Subsidiary shall create or assume
any Lien to secure the Debt under the Bank Credit Agreement upon any of its
property or assets, whether now owned or hereafter acquired, it will make or
cause to be made effective provision whereby the Notes will be secured by such
Lien equally and ratably with any and all Debt under the Bank Credit Agreement
thereby secured so long as any such other Debt shall be so secured.

                                      -28-
<PAGE>

      9.10. POST-CLOSING REQUIREMENTS.

      No later than 60 days following the date of the Closing, the Issuers will
deliver or cause to be delivered to the holders of Notes (a) certificates of
good standing from the office of the Secretary of State from each jurisdiction
where the ownership of property or the conduct of its business requires the
Company to be qualified to transact business as a foreign corporation and (b)
certificates of good standing from the office of the Secretary of State of the
jurisdiction of incorporation of Qirra Custom Software, Inc. and the
jurisdiction where such Subsidiary maintains its principal place of business. No
later than 75 days following the date of the Closing, the Issuers will cause the
following Subsidiaries to be dissolved and shall provide the Required Holders
with reasonably satisfactory evidence of such dissolution: (i) Brocklehursts,
Inc., (ii) Brocklehurst Holdings, Inc. and (iii) Graham Miller, Inc. No later
than 30 days following the date of the Closing, the Issuers will cause all Liens
in favor of the Royal Bank of Canada set forth on Schedule 10.3 to be terminated
and released of record, and will promptly provide each holder of Note written
evidence of such termination and release. The Issuers will, within 30 days
following a request therefore by the Required Holders, cause the documents and
instruments described on Schedule 10.11 as item 1, to be terminated, or
otherwise cause the restrictive agreements or arrangements therein requiring
such items to be disclosed pursuant to Section 10.11 to be terminated and
released, and will promptly provide the holders of Notes written evidence of
such termination and release.

      9.11. DORMANT COMPANIES.

            (a) If, at any time after the date of the Closing, the Company
      decides that any Subsidiary that is a Dormant Company at such time shall
      cease being a Dormant Company, such Subsidiary shall cease to be a Dormant
      Company for all purposes of this Agreement and the other Financing
      Documents upon the satisfaction of the following conditions:

                  (i) the Company shall notify the holders of Notes of the
            proposed change in the status of such Subsidiary, which notice shall
            contain a certification by a Responsible Officer to the effect that
            (A) such Subsidiary is in full compliance with all provisions of
            this Agreement applicable to it as a Subsidiary that is not a
            Dormant Company, (B) each of the representations and warranties set
            forth in Section 5 that are applicable to a Subsidiary that is not a
            Dormant Company is true and correct with respect to such Subsidiary
            as of the date of such notice, and (C) no Default or Event of
            Default would result from such change in status of such Subsidiary;

                                      -29-
<PAGE>

                  (ii) if such Subsidiary is a Domestic Subsidiary and is not
            already a Guarantor, the Issuers shall cause it to become a
            Guarantor pursuant to Section 9.6(a);

                  (iii) Schedule 5.4 hereto shall be revised to reflect that
            such Subsidiary is no longer a Dormant Company; and

                  (iv) the Issuers shall have delivered such information as is
            required by Section 9.6(a).

            (b) If, at any time after the date of the Closing, the Company
      decides that any Subsidiary that is not a Dormant Company at such time
      shall become a Dormant Company, such Subsidiary shall become a Dormant
      Company for all purposes of this Agreement and the other Financing
      Documents upon the satisfaction of the following conditions:

                  (i) the Company shall notify the holders of Notes of the
            proposed change in the status of such Subsidiary, which notice shall
            contain a certification by a Responsible Officer to the effect that
            (A) such Subsidiary is in full compliance with all provisions of
            this Agreement applicable to it as a Subsidiary that is a Dormant
            Company, (B) after giving effect to such Subsidiary becoming a
            Dormant Company, the aggregate revenues and assets of all Dormant
            Companies is less than 1% of the aggregate revenues and assets of
            the Company and its Consolidated Subsidiaries, and (C) no Default or
            Event of Default would result from such change in status of such
            Subsidiary;

                  (ii) if the Subsidiary is a party to the Guaranty Agreement
            and is not a "significant subsidiary" within the meaning of
            Regulations S-X of the Exchange Act, the Required Holders shall
            release it from the Guaranty Agreement;

                  (iii) Schedule 5.4 hereto shall be revised to reflect that
            such Subsidiary has after such time become a Dormant Company; and

                  (iv) the Issuers shall have delivered such information
            (financial and otherwise) as is reasonably requested by the Required
            Holders with respect to such Subsidiary.

10. NEGATIVE COVENANTS.

      Each of the Issuers covenants that so long as any of the Notes are
outstanding:

                                      -30-
<PAGE>

      10.1. TRANSACTIONS WITH AFFILIATES; DORMANT COMPANIES.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
enter into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than an Issuer or a Wholly-Owned Subsidiary subject to the limitations
set forth in Section 10.10(b)), except (a) in the ordinary course and pursuant
to the reasonable requirements of an Issuer's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to such Issuer or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate and (b) any Restricted Payment permitted by
Section 10.10(a). Notwithstanding the foregoing, the Issuers will not, and will
not permit any Subsidiaries to, sell, lease or otherwise transfer any property
or assets to, or purchase, lease or otherwise acquire any property or assets
from, make any Investment in, or otherwise engage in any other transactions
with, any Dormant Company unless (i) such transaction is at prices and on terms
and conditions no less favorable to the Issuers or such Subsidiary (other than
the Dormant Company) than could be obtained on an arm's-length basis from
unrelated third parties or involves maintaining the corporate existence, good
standing or properties of any Dormant Company and (ii) after giving effect to
such transaction, the representations and warranties contained in Section 5.21
shall be deemed remade and shall be true and correct.

      10.2. MERGER, CONSOLIDATION, ETC.

      Neither Issuer will, and neither Issuer will permit any Subsidiary (other
than any Dormant Company) to, consolidate with or merge with any other Person or
convey, Transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person or liquidate or dissolve
(except that if at the time thereof and immediately after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing (i) subject
to Section 10.4, any Subsidiary may liquidate or dissolve if the Issuers
determine in good faith that such liquidation or dissolution is in the best
interests of the Issuers and is not materially disadvantageous to the holders of
Notes, (ii) any Subsidiary (other than a Dormant Company) may merge with any
Person that is not a Subsidiary if such Subsidiary is the surviving Person,
(iii) any Subsidiary may merge into another Subsidiary (other than a Dormant
Company), provided, that if any party to such merger is a Guarantor (other than
a Dormant Company), such Guarantor shall be the surviving Person, (iv) any
Subsidiary may sell, transfer, lease or otherwise dispose of all or
substantially all of its assets to an Issuer or to a Subsidiary (other than a
Dormant Company); provided, that a Guarantor may only sell, lease or otherwise
dispose of all or substantially all of its assets to an Issuer or another
Guarantor (other than a Dormant Company), and (v) any Subsidiary may be sold so
long as such sale is

                                      -31-
<PAGE>

permitted under Section 10.4; provided, that any merger involving a Person that
is not a Wholly-Owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 10.10(b)), provided that the
foregoing restriction does not apply to the consolidation or merger of either
Issuer with, or the conveyance, transfer or lease of all or substantially all of
the assets of either Issuer in a single transaction or series of transactions
to, any Person so long as:

            (a) the successor formed by such consolidation or the survivor of
      such merger or the Person that acquires by conveyance, Transfer or lease
      all or substantially all of the assets of such Issuer as an entirety, as
      the case may be (the "SUCCESSOR CORPORATION"), shall be a solvent
      corporation organized and existing under the laws of the United States or
      any state thereof (including the District of Columbia);

            (b) if such Issuer is not the Successor Corporation, such
      corporation shall have executed and delivered to each holder of Notes its
      assumption of the due and punctual performance and observance of each
      covenant and condition of this Agreement, the Notes and each other
      Financing Document to which such Issuer is a party (pursuant to such
      agreements and instruments governed by New York law and otherwise in form
      and substance as shall be reasonably satisfactory to the Required
      Holders), and the Company shall have caused to be delivered to each holder
      of Notes an opinion of nationally recognized independent counsel, or other
      independent counsel reasonably satisfactory to the Required Holders, to
      the effect that all agreements or instruments effecting such assumption
      are enforceable in accordance with their terms and comply with the terms
      hereof; and

            (c) immediately prior to and after giving effect to such transaction
      no Default or Event of Default would exist.

No such conveyance, Transfer or lease of all or substantially all of the assets
of either Issuer shall have the effect of releasing such Issuer or any Successor
Corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under the Financing Documents to which such
Issuer is a party.

      10.3. LIMITATION ON LIENS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property (including, without limitation, any document or instrument in respect
of goods or accounts receivable or book debts) of either of the Issuers or any
such Subsidiary, whether now owned or held or hereafter acquired, or any income
or profits therefrom or

                                      -32-
<PAGE>

assign or otherwise convey any right to receive income or profits, except:

            (a) Liens for taxes or assessments or other governmental charges or
      levies not yet due and payable or which are being contested as permitted
      by Section 9.4;

            (b) statutory liens, common law liens, carriers', warehousemen's,
      mechanics', materialmen's, landlord's, repairmen's or other like Liens
      arising in the ordinary course of business and securing obligations (other
      than Debt) which are not overdue for a period of more than sixty (60) days
      or which are actively being contested in good faith by appropriate
      proceedings and for which reasonable book reserves in accordance with GAAP
      have been established;

            (c) pledges or deposits in connection with workers' compensation,
      unemployment insurance and other types of social security legislation and
      deposits securing liability to insurance carriers under insurance or
      self-insurance arrangements, provided, however, that such Liens were not
      incurred or made in connection with the borrowing of money or the
      obtaining of advances or credit;

            (d) Liens incurred or deposits to secure the performance of bids,
      tenders, contracts (other than for borrowed money), leases, statutory
      obligations, surety and appeal bonds, performance bonds and other
      obligations of a like nature incurred in the ordinary course of business,
      provided, however, that such Liens were not incurred or made in connection
      with the borrowing of money or the obtaining of advances or credit;

            (e) any attachment or judgment Lien, unless the judgment it secures
      shall not, within 60 days after the entry thereof, have been discharged or
      execution thereof stayed pending appeal, or shall not have been discharged
      within 60 days after the expiration of any such stay;

            (f) Liens on any property of the Company and the Subsidiaries in
      existence on the date of the Closing including Liens securing the Notes
      and the Debt evidenced by the Bank Credit Agreement and other Liens so
      long as such Liens are described on Schedule 10.3; provided, such Lien
      shall not apply to any other property of either of the Issuers or any
      Subsidiary;

            (g) leases or subleases granted to others, zoning restrictions,
      easements, rights-of-way, restrictions and other similar charges or
      encumbrances, in each case incidental to, and not interfering with, the
      ordinary conduct of the business of the Issuers or any of their
      Subsidiaries,

                                      -33-
<PAGE>

      provided that such Liens do not, in the aggregate, materially detract from
      the value of such property;

            (h) any Lien created to secure all or any part of the purchase price
      or cost of construction, of property (or any improvement thereon) acquired
      or constructed by either of the Issuers or a Subsidiary after the date of
      the Closing, provided that

                  (i) any such Lien shall extend solely to the item or items of
            such property (or improvement thereon) so acquired or constructed
            (and replacement assets of the same type) and, if required by the
            terms of the instrument originally creating such Lien, other
            property (or improvement thereon) which is an improvement to or is
            acquired for specific use in connection with such acquired or
            constructed property (or improvement thereon) or which is real
            property being improved by such acquired or constructed property (or
            improvement thereon),

                  (ii) the principal amount of the Debt secured by any such Lien
            shall at no time exceed an amount equal to 100% of the lesser of (A)
            the cost to such Issuer or such Subsidiary of the property (or
            improvement thereon) so acquired or constructed and (B) the Fair
            Market Value (as determined in good faith by the board of directors
            of such Issuer or such Subsidiary) of such property (or improvement
            thereon) at the time of such acquisition or construction, and

                  (iii) any such Lien shall be created contemporaneously with,
            or within 90 days after, the acquisition or construction of such
            property;

            (i) any Liens renewing extending or refunding any Lien permitted by
      the foregoing clauses (a) through (h), provided that

                  (i) the principal amount of Debt secured by such Lien
            immediately prior to such extension, renewal or refunding is not
            increased or the maturity thereof reduced,

                  (ii) such Lien is not extended to any other property, and

                  (iii) immediately after such extension, renewal or refunding
            no Default or Event of Default would exist;

            (j) Liens created under the Pledge Agreement in favor of the Agent
      as collateral agent for the Creditors (as defined in the Pledge
      Agreement); and

                                      -34-
<PAGE>

            (k) other Liens (not otherwise permitted by clauses (a) through (j))
      so long as the Debt secured by such Liens is permitted by Section 10.8.

      10.4. SALE OF ASSETS, ETC.

      Except as permitted under Section 10.2, neither Issuer will, and neither
Issuer will permit any Subsidiary (other than any Dormant Company) to, make any
Asset Disposition unless:

            (a) in the good faith opinion of the Company, the Asset Disposition
      is in exchange for consideration having a Fair Market Value at least equal
      to that of the property exchanged and is in the best interest of such
      Issuer or such Subsidiary; and

            (b) immediately after giving effect to the Asset Disposition, no
      Default or Event of Default would exist; and

            (c) immediately after giving effect to the Asset Disposition, the
      aggregate Disposition Value of all Asset Dispositions made (i) during the
      period commencing with the first day of the then current Fiscal Year to
      and including the date of such Transfer does not exceed an amount equal to
      5% of Consolidated Net Worth determined as of the last day of the then
      most recently ended fiscal quarter of the Company and (ii) during the
      period commencing on the date of the Closing to and including the date of
      such Transfer does not exceed an amount equal to 25% of Consolidated Net
      Worth determined as of the last day of the then most recently ended fiscal
      quarter of the Company; except that the Disposition Value of an Asset
      Disposition will be excluded from this clause (c) at such time as the Net
      Proceeds Amount with respect to such transaction is applied to a Property
      Reinvestment Application within 120 days after such Transfer.

      10.5. LEVERAGE RATIO.

      The Issuers will not, as of the last day of the fiscal quarter of the
Company ending on (or closest to) each date specified below, permit the ratio of
Consolidated Funded Debt outstanding on such day to Consolidated EBITDA for the
four consecutive fiscal quarter period ending on such day to be greater than the
ratio set forth below opposite such date:

<TABLE>
<CAPTION>
               Fiscal Quarter Ending Dates                                    Ratio
---------------------------------------------------------                 ------------
<S>                                                                       <C>
September 30, 2003, December 31, 2003, March 31, 2004 and                 2.75 to 1.00
June 30, 2004
</TABLE>

                                      -35-
<PAGE>

<TABLE>
<S>                                                    <C>
September 30, 2004, December 31, 2004,                 2.50 to 1.00
March 31, 2005, June 30, 2005, and the
last day of each fiscal quarter of the
Company thereafter if such last day is
subsequent to the DOJ Settlement Payment

September 30, 2005, if such date is                    2.25 to 1.00
prior to the DOJ Settlement Payment,
and the last day of each fiscal quarter
of the Company thereafter, if such last
day is prior to the DOJ Settlement
Payment
</TABLE>

      10.6. FIXED CHARGES COVERAGE RATIO.

      The Issuers will not, as of the last day of the fiscal quarter of the
Company ending on (or closest to) each date specified below, permit the Fixed
Charges Coverage Ratio to be less than the ratio set forth below opposite such
date:

<TABLE>
<CAPTION>
    Fiscal Quarter Ending Dates                             Ratio
--------------------------------------                 ------------
<S>                                                    <C>
September 30, 2003, December 31, 2003,                 1.25 to 1.00
March 31, 2004 and June 30, 2004

September 30, 2004 and the last day of                 1.50 to 1.00
each fiscal quarter of the Company
thereafter
</TABLE>

      10.7. CONSOLIDATED NET WORTH.

      The Issuers will not, as of the last day of each fiscal quarter of the
Company commencing with the fiscal quarter ending September 30, 2003, permit
Consolidated Net Worth to be less than the sum of (a) $135,516,350, plus (b) an
aggregate amount equal to 50% of its Consolidated Net Income (but, in each case,
only if a positive number) accrued after December 31, 2002 plus (c) to the
extent, but only to the extent that such aggregate amount was not included in
the computation of Consolidated Net Worth for such period, 100% of the net
proceeds received from the sale, pursuant to an effective registration
statement, of the Company's capital stock (an "EQUITY OFFERING"); provided, that
the net proceeds of an Equity Offering of a debt Security that is convertible
into or exchangeable for capital stock of the Company or a debt Security that is
issued with a warrant or

                                      -36-

<PAGE>

other instrument to purchase capital stock of the Company shall not be required
to be added under this clause (c) unless and until such debt Security is
converted into or exchanged for, or such warrant or other instrument is
exercised for, capital stock of the Company. For purposes of determining
Consolidated Net Worth on any date after December 31, 2002, (i) any non-cash
adjustment after December 31, 2002 (whether such adjustment is an increase or
decrease) to shareholders' investment related to pension fund liabilities, (B)
any non-cash adjustment after December 31, 2002 (whether such adjustment is an
increase or decrease) to shareholders' investment related to goodwill and (C)
any non-cash adjustment after December 31, 2002 (whether such adjustment is an
increase or decrease) to shareholders' investment related to foreign currency
translations shall, in each case, be excluded.

      10.8. PRIORITY DEBT.

      The Issuers will not, at any time, permit Priority Debt determined at such
time to exceed 15% of Consolidated Net Worth determined as of the last day of
the then most recently ended fiscal quarter of the Company.

      10.9. LINE OF BUSINESS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
engage to any substantial extent in any business other than businesses of the
type in which the Issuers and the Subsidiaries are engaged on the date of the
Closing, as described in the Memorandum, and businesses reasonably related
thereto or in furtherance thereof. Neither Issuer will permit (a) any Dormant
Company to own any Material assets or have any outstanding Indebtedness or other
Material liabilities and (b) the aggregate revenues and assets of the Dormant
Companies at any time to be more than 1% of the aggregate revenue and assets of
the Company and its Consolidated Subsidiaries.

      10.10. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS; ACQUISITIONS.

            (a) RESTRICTED PAYMENTS. Neither Issuer will, and neither Issuer
      will permit any Subsidiary to, at any time, declare or make, or incur any
      liability to declare or make, any Restricted Payment (other than (i)
      Distributions payable by the Company solely in shares of any class of its
      capital stock; provided, that prior to, and immediately after giving
      effect to any such Distribution, no Default or Event of Default exists,
      and (ii) Restricted Payments made by any Subsidiary to either of the
      Issuers or any other Subsidiary (other than a Dormant Company) so long as
      Restricted Payments may only be made to an Obligor during the existence of
      a Default or an Event of Default), unless immediately after giving effect
      to such actions the aggregate amount of all Restricted Payments of the
      Company and the

                                      -37-

<PAGE>

Subsidiaries declared or made during the current Fiscal Year would not exceed
100% of Consolidated Net Income (if greater than $0) for the immediately
preceding Fiscal Year and no Default or Event of Default would exist.

      (b) RESTRICTED INVESTMENTS; ACQUISITIONS. Neither Issuer will, and neither
Issuer will permit any Subsidiary to, make or authorize any Restricted
Investment or consummate any Acquisition; provided, that the following
Restricted Investments and Acquisitions are permitted:

            (i) Guaranties; provided, that the aggregate principal amount of
      Indebtedness of Subsidiaries that are not Guarantors that is Guarantied by
      either of the Issuers or any Guarantor shall be subject to the limitations
      set forth in clause (iii) hereof;

            (ii) Investments made by any Consolidated Subsidiary (other than a
      Dormant Company) in either of the Issuers or any Guarantor;

            (iii) Investments made by either Issuer in the form of Indebtedness
      owed by any Consolidated Subsidiary to either Issuer and Guaranties by
      either Issuer of Indebtedness of any Consolidated Subsidiary; provided,
      that (A) the aggregate amount of Investments (determined at book value
      (except for Guaranties) without giving effect to any consolidation of
      accounts) by the Issuers in Indebtedness of any Consolidated Subsidiary
      (including by means of Guaranties thereof which shall be valued at the
      amount of their maximum contingent obligation) that is not a Guarantor
      (excluding Investments existing on the date of the Closing and which are
      identified on Schedule 10.10 hereto) shall not exceed an amount equal to
      15% of Consolidated Net Worth (determined as of the end of the then most
      recently ended fiscal quarter of the Company at the time of any such
      Investment) in any period of 12 consecutive months and not more than 50%
      of Consolidated Net Worth (determined as of the end of the then most
      recently ended fiscal quarter of the Company at any time of determination)
      in the aggregate subsequent to the date of the Closing and (B) the
      aggregate amount of Investments (determined at book value (except for
      Guaranties) without giving effect to any consolidation of accounts) by the
      Issuers in Indebtedness of any single Consolidated Subsidiary (including
      by means of Guaranties thereof which shall be valued at the amount of
      their maximum contingent obligation) that is not a Guarantor (excluding
      Investments existing on the date of the Closing and which are identified
      on Schedule 10.10 hereto) shall not exceed at any time $10,000,000;

                                      -38-

<PAGE>

            (iv) loans or advances to employees, officers or directors of either
      Issuer or any Consolidated Subsidiary (other than a Dormant Company) in
      the ordinary course of business for travel, relocation and other business
      related expenses;

            (v) Investments permitted by Section 10.12;

            (vi) Permitted Investments;

            (vii) Permitted Acquisitions;

            (viii) other Investments existing on the date of the Closing and set
      forth on Schedule 10.10 (including Investments in Consolidated
      Subsidiaries); provided, that any Investment set forth on Schedule 10.10
      consisting of Indebtedness owing by a Subsidiary that is not an Obligor to
      any Obligor or any other Consolidated Subsidiary may not be reborrowed
      after repayment;

            (ix) Investments in joint ventures that are not Subsidiaries made
      after the date of the Closing; provided, that (A) no Default or Event of
      Default shall exist prior to or after giving effect to such Investment and
      (B) the total amount of all Investments (determined at book value) made
      under this clause (ix) during the preceding 12 month period, when
      aggregated with such Investment, does not exceed the lesser of (1)
      $5,000,000 and (2) the result (if positive) of 10% of Consolidated Net
      Worth (determined as of the end of the then most recently ended fiscal
      quarter of the Company) minus the aggregate amount of Total Acquisition
      Consideration of all Acquisitions consummated by the Issuers and the
      Consolidated Subsidiaries during such preceding 12 month period; and

            (x) other Investments in and to any Domestic Subsidiary that is an
      Obligor (other than a Dormant Company).

      10.11. LIMITATIONS ON CERTAIN SUBSIDIARY ACTIONS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to, be
a party to any contract, agreement or business arrangement that restricts or
limits in any manner, or incur or permit to exist any restriction (other than
customary restrictions imposed by corporate law) on, any Subsidiary's ability to
(i) create, incur or permit any Lien upon any of its assets or properties,
whether now owned or hereafter acquired, (ii) pay dividends or make other
Distributions on or with respect to its capital stock to either of the Issuers
or any Subsidiary, (iii) pay any Debt or other obligations owing to either of
the Issuers or any Subsidiary or (iv) transfer

                                      -39-

<PAGE>

property to either of the Issuers or any Subsidiary, except for such limitations
or restrictions existing under or by reason of:

            (a) applicable law;

            (b) the Financing Documents or the Bank Credit Agreement or those
      agreements in the form existing on the date of the Closing and listed on
      Schedule 10.11;

            (c) customary restrictions and conditions of any contract relating
      to the Transfer of any Subsidiary permitted by this Agreement or any lease
      governing a leasehold interest of any Subsidiary; or

            (d) Liens permitted by Section 10.3.

      10.12. HEDGING ARRANGEMENTS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
enter into any Swap, commodity, foreign exchange risk, currency risk, or other
hedging or risk protection arrangements which are for speculative purposes or
which are not effected in the ordinary course of business of such Issuer or such
Subsidiary.

      10.13. ACCOUNTING CHANGES; CHANGE OF FISCAL YEAR.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
change its fiscal year end or make any significant change in accounting
treatment or reporting practices, except as permitted or required by GAAP or as
required by applicable law.

      10.14. MINIMUM CASH.

      At all times prior to the DOJ Settlement Payment, the Issuers will not, at
any time, permit cash on hand to be less than $10,000,000 less any amount paid
in satisfaction of the DOJ Settlement Payment.

      10.15. LITIGATION.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
settle or compromise, or enter into any agreement to settle or compromise, any
pending or threatened suit, investigation, cause of action or other proceeding
described in Schedule 5.8 with any Person or Governmental Authority, as to any
single or related series of claims, involving payment by an Obligor or a
Consolidated Subsidiary (or a group of them) of $10,000,000 or more, without
obtaining the prior written consent of the Required Holders.

                                      -40-

<PAGE>

      10.16. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to,
amend, modify or waive any of its rights in a manner materially adverse to the
holders of Notes under its articles or certificate of incorporation, bylaws or
other organizational documents.

      10.17. NO LIMITATION ON PREPAYMENTS OR AMENDMENTS TO CERTAIN FINANCING
             DOCUMENTS.

      Neither Issuer will, and neither Issuer will permit any Subsidiary to, be
a party to any agreement or instrument limiting its rights (a) to make payments
or prepayments on the Notes, whether optional or mandatory, under this Agreement
or (b) to amend or waive any term or provision of this Agreement, the Notes or
the Guaranty Agreement.

      11. EVENTS OF DEFAULT.

      An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:

            (a) either Issuer defaults in the payment of any principal or
      Make-Whole Amount, if any, on any Note when the same becomes due and
      payable, whether at maturity or at a date fixed for prepayment or by
      declaration or otherwise; or

            (b) either Issuer defaults in the payment of any interest on any
      Note for more than three Business Days after the same becomes due and
      payable; or

            (c) either Issuer defaults in the performance of or compliance with
      any term contained in Sections 7.1, 7.2, 9.6, 9.10 and 10; or

            (d) either of the Issuers or any Subsidiary defaults in the
      performance of or compliance with any term contained herein (other than
      those referred to in paragraphs (a), (b) and (c) of this Section 11) or in
      any other Financing Document (other than the Sharing Agreement) and such
      default is not remedied within 30 days after the earlier of (i) a
      Responsible Officer obtaining actual knowledge of such default and (ii)
      the Company receiving written notice of such default from any holder of a
      Note (any such written notice to be identified as a "notice of default"
      and to refer specifically to this paragraph (d) of Section 11); or

                                      -41-

<PAGE>

            (e) any representation or warranty made in writing by or on behalf
      of any Obligor or any other Subsidiary or by any officer of any Obligor in
      this Agreement or any other Financing Documents or in any writing
      furnished in connection with the transactions contemplated hereby proves
      to have been false or incorrect in any material respect on the date as of
      which made; or

            (f) (i) any Obligor or any other Consolidated Subsidiary is in
      default (as principal or as guarantor or other surety) in the payment of
      any principal of or premium or make-whole amount or interest on any
      Indebtedness that is outstanding in an aggregate principal amount of at
      least $5,000,000 (or its equivalent) beyond any period of grace provided
      with respect thereto, or (ii) any Obligor or any other Consolidated
      Subsidiary is in default in the performance of or compliance with any term
      of any evidence of any Indebtedness in an aggregate outstanding principal
      amount of at least $5,000,000 (or its equivalent) or of any mortgage,
      indenture or other agreement relating thereto or any other condition
      exists, and as a consequence of such default or condition such
      Indebtedness has become, or has been declared (or one or more Persons are
      entitled to declare such Indebtedness to be), due and payable before its
      stated maturity or before its regularly scheduled dates of payment, or
      (iii) as a consequence of the occurrence or continuation of any event or
      condition (other than the passage of time or the right of the holder of
      Indebtedness to convert such Indebtedness into equity interests), (x) any
      Obligor or any other Consolidated Subsidiary has become obligated to
      purchase or repay Indebtedness before its regular maturity or before its
      regularly scheduled dates of payment in an aggregate outstanding principal
      amount of at least $5,000,000 (or its equivalent), or (y) one or more
      Persons have the right to require an Obligor or any other Consolidated
      Subsidiary so to purchase or repay such Indebtedness; or

            (g) any Obligor or any Subsidiary (i) is generally not paying, or
      admits in writing its inability to pay, its debts as they become due, (ii)
      files, or consents by answer or otherwise to the filing against it of, a
      petition for relief or reorganization or arrangement or any other petition
      in bankruptcy, for liquidation or to take advantage of any bankruptcy,
      insolvency, reorganization, moratorium or other similar law of any
      jurisdiction, (iii) makes an assignment for the benefit of its creditors,
      (iv) consents to the appointment of a custodian, receiver, trustee or
      other officer with similar powers with respect to it or with respect to
      any substantial part of its property, (v) is adjudicated as bankrupt or
      insolvent or to be liquidated, or (vi) takes corporate action for the
      purpose of any of the foregoing; or

                                      -42-

<PAGE>

            (h) a court or Governmental Authority of competent jurisdiction
      enters an order appointing, without consent by any Obligor or any
      Subsidiary, a custodian, receiver, trustee or other officer with similar
      powers with respect to it or with respect to any substantial part of its
      property (or any such Person is appointed by one or more creditors of any
      Obligor or any Subsidiary), or constituting an order for relief or
      approving a petition for relief or reorganization or any other petition in
      bankruptcy or for liquidation or to take advantage of any bankruptcy or
      insolvency, law of any jurisdiction, or ordering the dissolution,
      winding-up or liquidation of any Obligor or any Subsidiary, or any such
      petition shall be filed against any Obligor or any Subsidiary and such
      petition shall not be dismissed within 60 days; or

            (i) a final judgment or judgments for the payment of money
      aggregating in excess of $10,000,000 (or its equivalent) are rendered
      against one or more of the Obligors or any other Consolidated Subsidiary
      and which judgments are not, within 30 days after entry thereof, bonded,
      discharged or stayed pending appeal, or are not discharged within 30 days
      after the expiration of such stay; or

            (j) any non-monetary judgment shall have been rendered against any
      Obligor or other Consolidated Subsidiary that could reasonably be expected
      to have a Material Adverse Effect and there shall be a period of 30
      consecutive days during which a stay of enforcement of such judgment or
      order, by reason of a pending appeal or otherwise, shall not be in effect;
      or

            (k) any Financing Document shall for any reason cease to be valid
      and binding on, or enforceable against, any Obligor that is a party
      thereto or any Obligor shall so state in writing, or any Obligor or other
      Person shall challenge the validity of or seek to terminate any Financing
      Document or any provision of this Agreement or the Notes; or

            (l) any Obligor or any other Consolidated Subsidiary is enjoined,
      restrained or in any way prevented by the order of any Governmental
      Authority from conducting all or a material part of its business and such
      order continues for more than 30 days; or

            (m) a Change in Control shall occur or exist; or

            (n) an "Event of Default" under and as defined in the Bank Credit
      Agreement shall have occurred; or

            (o) if (i) any US Plan shall fail to satisfy the minimum funding
      standards of ERISA or the US Tax Code for any plan year or part thereof or
      a waiver of such standards or extension of any amortization period is
      sought or

                                      -43-

<PAGE>

      granted under section 412 of the US Tax Code, (ii) a notice of intent to
      terminate any US Plan shall have been or is reasonably expected to be
      filed with the PBGC or the PBGC shall have instituted proceedings under
      ERISA section 4042 to terminate or appoint a trustee to administer any US
      Plan or the PBGC shall have notified the Company or any ERISA Affiliate
      that a US Plan may become a subject of any such proceedings, (iii) there
      shall exist with respect to any US Plan an "accumulated funding
      deficiency" (as defined in section 412 of the US Tax Code or section 302
      of ERISA, (iv) the Company or any ERISA Affiliate shall have incurred or
      is reasonably expected to incur any liability pursuant to Title I or IV of
      ERISA or the penalty or excise tax provisions of the US Tax Code relating
      to employee benefit plans, or (v) the Company or any ERISA Affiliate
      withdraws from any Multiemployer Plan; and any such event or events
      described in clauses (i) through (v) above, either individually or
      together with any other such event or events, could reasonably be expected
      to have a Material Adverse Effect.

As used in Section 11(o), the term "EMPLOYEE BENEFIT PLAN" shall have the
meaning assigned to such term in section 3 of ERISA.

12. REMEDIES ON DEFAULT, ETC.

      12.1. ACCELERATION.

            (a) If an Event of Default described in paragraph (g) or (h) of
      Section 11 (other than an Event of Default described in clause (i) of
      paragraph (g) or described in clause (vi) of paragraph (g) by virtue of
      the fact that such clause encompasses clause (i) of paragraph (g)) has
      occurred, all the Notes then outstanding shall automatically become
      immediately due and payable.

            (b) If any other Event of Default has occurred and is continuing,
      the Required Holders may at any time at its or their option, by notice or
      notices to the Company, declare all the Notes then outstanding to be
      immediately due and payable.

            (c) If any Event of Default described in paragraph (a) or (b) of
      Section 11 has occurred and is continuing, any holder or holders of Notes
      at the time outstanding affected by such Event of Default may at any time,
      at its or their option, by notice or notices to the Company, declare all
      the Notes held by it or them to be immediately due and payable.

      Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest

                                      -44-

<PAGE>

thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each of the Issuers
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Issuers
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Issuers in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

      12.2. OTHER REMEDIES.

      If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

      12.3. RESCISSION.

      At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Issuers have paid all overdue interest on the Notes, all principal of
and Make-Whole Amount, if any, on any Notes that are due and payable and are
unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

      12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

      No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy

                                      -45-

<PAGE>

conferred by this Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Issuers under Section 15, the Issuers will pay
to the holder of each Note on demand such further amount as shall be sufficient
to cover all costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

      13.1. REGISTRATION OF NOTES.

      The Issuers shall keep at the Company's principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Issuers shall not be
affected by any notice or knowledge to the contrary. The Issuers shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

13.2. TRANSFER AND EXCHANGE OF NOTES.

      Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Issuers shall
execute and deliver, at the Issuers' expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Issuers may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000 and there shall be no more
than twenty-five holders of Notes at any time, provided that any group of two or
more holders whose investments in the Notes are managed by the same Person

                                      -46-

<PAGE>

shall be deemed to be one holder of Notes solely for purposes of determining
whether such limitation on the number of holders has been exceeded, provided
further that if necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination of less than
$100,000. Subject to the provisions of this Section 13.2, any Purchaser may
transfer or exchange any Note if, in the case of a transfer, the representations
set forth in Section 6.1 (except that a transferee shall not be deemed to have
made the representation that its purchase of such Notes is not with a view to
distribution thereof) and Section 6.2 are true and correct, with the word
"Purchaser" used in such section referring to the transferee. The Company shall
not be obligated to register a transfer of Notes pursuant to this Section 13.2
if the transferee has given notice to the Company of the names of employee
benefit plans pursuant to Section 6.2(c) or Section 6.2(g) and the Company has
determined that an acquisition of Notes by the insurance company pooled separate
account or bank collective investment fund in which such employee benefit plans
have an interest, or by the employee benefit plan disclosed pursuant to Section
6.2(g), is reasonably likely to result in a transaction prohibited by section
406 of ERISA, provided that the Company gives notice of such determination to
the registered holder of such Notes and the proposed transferee within 5
Business Days after delivery to the Company of such notice setting forth the
names of the relevant employee benefit plans and a brief written description of
the prohibited transaction that the Company has determined is reasonably likely
to result from such transfer.

      13.3. REPLACEMENT OF NOTES.

      Upon receipt by the Issuers of evidence reasonably satisfactory to them of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

            (a) in the case of loss, theft or destruction, of indemnity
      reasonably satisfactory to it (provided that if the holder of such Note
      is, or is a nominee for, an original Purchaser or another holder of a Note
      with a minimum net worth of at least $50,000,000, such Person's own
      unsecured agreement of indemnity shall be deemed to be satisfactory), or

            (b) in the case of mutilation, upon surrender and cancellation
      thereof,

the Issuers at their own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall have
been paid on such lost, stolen, destroyed or mutilated Note or dated the date of
such lost, stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.

                                      -47-

<PAGE>

14. PAYMENTS ON NOTES.

      14.1. PLACE OF PAYMENT.

      Subject to Section 14.2, payments of principal, Make-Whole Amount, if any,
and interest becoming due and payable on the Notes shall be made in Atlanta,
Georgia at the principal office of the Company in such jurisdiction. The Company
may at any time, by notice to each holder of a Note, change the place of payment
of the Notes so long as such place of payment shall be either the principal
office of the Company in such jurisdiction or the principal office of a bank or
trust company in such jurisdiction.

      14.2. HOME OFFICE PAYMENT.

      So long as any Purchaser or its nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Issuers will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below each Purchaser's name in Schedule A, or by such
other method or at such other address as such Purchaser shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Issuers made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by it pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by any Purchaser or its
nominee such Purchaser will, at its election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Issuers in exchange for a new Note or
Notes pursuant to Section 13.2. The Issuers will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by any Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser has made in
this Section 14.2.

15. EXPENSES, ETC.

      15.1. TRANSACTION EXPENSES.

      Whether or not the transactions contemplated hereby are consummated, the
Issuers will pay all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser or
holder of a Note in

                                      -48-

<PAGE>

connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or any other Financing
Document (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or any other Financing Document or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or any other Financing Document, or by reason of
being a holder of any Note, and (b) the costs and expenses, including, without
limitation, financial advisors' and accountants' fees, incurred in connection
with the insolvency or bankruptcy of either of the Issuers or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Issuers will pay, and will save each
Purchaser and each other holder of a Note harmless from, all claims in respect
of any fees, costs or expenses if any, of brokers and finders (other than those
retained by any Purchaser).

      The Issuers will promptly pay or reimburse each Purchaser or holder of a
Note (upon demand, in accordance with each such Purchaser's or holder's written
instructions) for all fees and costs paid or payable by such Purchaser or holder
to the SVO in connection with the initial filing of this Agreement and all
related documents and financial information, and all subsequent annual and
interim filings of documents and financial information related to this
Agreement, with the SVO or any successor organization acceding to the authority
thereof.

      15.2. SURVIVAL.

      The joint and several obligations of the Issuers under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or any other Financing Document, and
the termination of this Agreement.

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

      All representations and warranties contained herein shall survive the
execution and delivery of this Agreement, the Notes and the other Financing
Documents, the purchase or transfer by any Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of such Purchaser or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or on
behalf of any Obligor pursuant to any Financing Document shall be deemed
representations and warranties of the Issuers under this Agreement. Subject to
the preceding sentence, this Agreement and the other Financing Documents embody
the entire agreement

                                      -49-

<PAGE>

and understanding among each Purchaser and the Obligors and supersede all prior
agreements and understandings relating to the subject matter hereof.

17. AMENDMENT AND WAIVER.

      17.1. REQUIREMENTS.

      This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Issuers and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to each Purchaser unless consented to by
each Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or change the rate or the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

      17.2. SOLICITATION OF HOLDERS OF NOTES.

            (a) Solicitation. The Issuers will provide each holder of the Notes
      (irrespective of the amount of Notes then owned by it) with sufficient
      information, sufficiently far in advance of the date a decision is
      required, to enable such holder to make an informed and considered
      decision with respect to any proposed amendment, waiver or consent in
      respect of any of the provisions hereof or of the Notes. The Issuers will
      deliver executed or true and correct copies of each amendment, waiver or
      consent effected pursuant to the provisions of this Section 17 to each
      holder of outstanding Notes promptly following the date on which it is
      executed and delivered by, or receives the consent or approval of, the
      requisite holders of Notes.

            (b) Payment. Neither Issuer will directly or indirectly pay or cause
      to be paid any remuneration, whether by way of supplemental or additional
      interest, fee or otherwise, or grant any security, to any holder of Notes
      as consideration for or as an inducement to the entering into by any
      holder of Notes or any waiver or amendment of any of the terms and
      provisions hereof unless such remuneration is concurrently paid, or
      security is concurrently granted, on the same terms, ratably to each
      holder of Notes then outstanding even if such holder did not consent to
      such waiver or amendment.

                                      -50-

<PAGE>

      17.3. BINDING EFFECT, ETC.

      Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon each of the Issuers without regard to whether
such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between either Issuer and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

      17.4. NOTES HELD BY THE ISSUERS, ETC.

      Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by either of the Issuers or any
of its Affiliates shall be deemed not to be outstanding.

18. NOTICES.

      All notices and communications provided for hereunder shall be in writing
and sent (i) by telecopy if the sender on the same day sends a confirming copy
of such notice by a nationally recognized overnight delivery service (charges
prepaid), or (ii) by registered or certified mail with return receipt requested
(postage prepaid), or (iii) by a nationally recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:

            (a) if to a Purchaser or its nominee, to such Purchaser or its
      nominee at the address specified for such communications in Schedule A, or
      at such other address as such Purchaser or its nominee shall have
      specified to the Issuers in writing,

            (b) if to any other holder of any Note, to such holder at such
      address as such other holder shall have specified to the Company in
      writing, or

            (c) if to the Company, to the Company at its address set forth at
      the beginning hereof to the attention of Joe Caporaso at fax number
      404-845-

                                      -51-

<PAGE>

      3127, or at such other address as the Company shall have specified to the
      holder of each Note in writing; or

            (d) if to the Co-Issuer, to the Co-Issuer at the address specified
      in clause (c) above (or such other address as the Co-Issuer shall have
      specified to the holder of each Note in writing).

Notices under this Section 18 will be deemed given only when actually received.

19. REPRODUCTION OF DOCUMENTS.

      This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) Financing Documents and documents received by each Purchaser at
the Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to each
Purchaser, may be reproduced by each Purchaser by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and each
Purchaser may destroy any original document so reproduced. The Issuers agree and
stipulate that, to the extent permitted by applicable law, any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by each Purchaser in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Issuers or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

20. CONFIDENTIAL INFORMATION.

      For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to any Purchaser by or on behalf of either of the Issuers
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
such Purchaser as being confidential information of the Issuers or such
Subsidiary, provided that such term does not include information that (a) was
publicly known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any Person acting on its behalf, (c) otherwise becomes
known to such Purchaser other than through disclosure by the Issuers or any
Subsidiary or (d) constitutes financial statements delivered to such Purchaser
under Section 7.1 that are otherwise publicly available. Each Purchaser will
maintain the confidentiality

                                      -52-

<PAGE>

of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to it, provided that such Purchaser may deliver or disclose
Confidential Information to (i) its directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by its Notes), (ii) its
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which such Purchaser sells or offers to sell such Note
or any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which such Purchaser offers
to purchase any Security of either Issuer (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (vi) any federal or state regulatory authority
having jurisdiction over such Purchaser, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser's investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser's Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Issuers in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Issuers embodying the provisions of this Section 20.

21. SUBSTITUTION OF PURCHASER.

      Each Purchaser shall have the right to substitute, prior to the Closing,
any one of its Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Issuers, which notice
shall be signed by such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6 as to such Affiliates and an affirmation
of the acknowledgment contained in such Notes. Upon

                                      -53-

<PAGE>

receipt of such notice, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of such original Purchaser. In the event that such Affiliate
is so substituted as a purchaser hereunder and such Affiliate thereafter
transfers to such Purchaser all of the Notes then held by such Affiliate in
accordance with Section 13.2, upon the effectiveness of such transfer, wherever
the word "Purchaser" is used in this Agreement (other than in this Section 21),
such word shall no longer be deemed to refer to such Affiliate, but shall refer
to the original Purchaser, and such Purchaser shall have all the rights of an
original holder of the Notes under this Agreement.

22. MISCELLANEOUS.

      22.1. SUCCESSORS AND ASSIGNS.

      All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.

      22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.

      Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or Make-Whole Amount or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.

      22.3. SEVERABILITY.

      Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

      22.4. CONSTRUCTION.

      Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is

                                      -54-
<PAGE>

prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.

      22.5. COUNTERPARTS.

      This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

      22.6. JURISDICTION; SERVICE OF PROCESS.

      EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY
SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY NOTE OR OTHER
FINANCING DOCUMENT, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGMENT IN RESPECT OF ANY BREACH THEREOF, BROUGHT BY ANY HOLDER OF A NOTE
AGAINST ANY OBLIGOR OR ANY OF ITS PROPERTY, MAY BE BROUGHT BY SUCH HOLDER OF A
NOTE IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
OR ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN AS SUCH HOLDER
OF A NOTE MAY IN ITS SOLE DISCRETION ELECT, AND, BY THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE
JURISDICTION OF EACH SUCH COURT; AND AGREES THAT PROCESS SERVED EITHER
PERSONALLY OR BY REGISTERED MAIL SHALL, TO THE EXTENT PERMITTED BY LAW,
CONSTITUTE ADEQUATE SERVICE OF PROCESS IN ANY SUCH SUIT. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY NOTE OR OTHER
FINANCING DOCUMENT BROUGHT IN THE SAID COURTS, AND HEREBY IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
TO LIMIT THE ABILITY OF ANY HOLDER OF A NOTE TO SERVE ANY SUCH WRITS, PROCESS OR
SUMMONSES, IN ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION
OVER THE ISSUERS, IN SUCH OTHER JURISDICTION, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY APPLICABLE LAW.

                                      -55-
<PAGE>

      22.7. GOVERNING LAW.

      THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

      22.8. WAIVER OF TRIAL BY JURY.

      TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT,
THE NOTES, THE FINANCING DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH OR THEREWITH.

   [Remainder of page intentionally left blank; next page is signature page.]

                                      -56-
<PAGE>

      If each Purchaser is in agreement with the foregoing please sign the form
of agreement on the accompanying counterpart of this Agreement and return it to
the Issuers, whereupon the foregoing shall become a binding agreement between
the Purchasers and the Issuers.

                                         Very truly yours,

                                         CRAWFORD & COMPANY

                                         By: /s/ John F. Giblin
                                         ---------------------------------------
                                         Name:  John F. Giblin
                                         Title: Executive Vice President

                                         CRAWFORD & COMPANY INTERNATIONAL, INC.

                                         By: /s/ John  F. Giblin
                                         ---------------------------------------
                                         Name:  John F. Giblin
                                         Title: Executive Vice President

                                      -1-
<PAGE>

The foregoing is hereby
agreed to as of the
date thereof.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: /s/ Billy Greer
----------------------------
Name:  Billy Greer
Title: Vice President

PRUCO LIFE INSURANCE COMPANY

By: /s/ Billy Greer
----------------------------
Name:   Billy Greer
Title:  Vice President

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

By: /s/ Billy Greer
-----------------------------
Name:   Billy Greer
Title:  Vice President

RGA REINSURANCE COMPANY
RELIASTAR LIFE INSURANCE COMPANY
BY: PRUDENTIAL PRIVATE PLACEMENT INVESTORS, L.P.,
    AS INVESTMENT ADVISOR
    BY: PRUDENTIAL PRIVATE PLACEMENT INVESTORS, INC.,
        GENERAL PARTNER

                By: /s/ Billy Greer
                ---------------------------------------
                Name:  Billy Greer
                Title: Vice President

                                      -2-
<PAGE>

                                   SCHEDULE A

<TABLE>
<CAPTION>
PURCHASER NAME                                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
--------------                                   -------------------------------------------
<S>                                              <C>
Name in Which Notes are to be Registered         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Note Registration Number; Principal Amount       R-1; $20,782,000

Payment on Account of Note
            Method                               Federal Funds Wire Transfer
            Account Information                  Bank of New York
                                                 New York, New York
                                                 ABA No.: 021-000-018
                                                 Account No. ____________
                                                 Re:  (see "Accompanying Information" below)

Accompanying Information                         Names of Issuers:  CRAWFORD & COMPANY
                                                                    CRAWFORD & COMPANY
                                                                    INTERNATIONAL, INC.

                                                 Description of     6.08% Senior Guarantied Notes
                                                 Security:          Due October 10, 2010

                                                 PPN:               22464# AA 7

                                                 Accompanying       Due Date and Application (as among
                                                 Information:       principal, Make-Whole Amount and
                                                                    interest) of the payment being made

Address for Notices Related to Payments          The Prudential Insurance Company of America
                                                 c/o Prudential Investment Management, Operations & Systems
                                                 Gateway Center Two, 10th Floor
                                                 100 Mulberry Street
                                                 Newark, New Jersey  07102
                                                 Attention: Manager, Billings and Collections

                                                 For telephonic prepayment notices:
                                                 Manager, Trade Management Group
                                                 Tel: 973-802-4222
                                                 Fax: 800-224-2278

Address for All Other Notices (including         The Prudential Insurance Company of America
copies of all notices relating to payments)      c/o Prudential Capital Group
                                                 1170 Peachtree Street, Suite 500
                                                 Atlanta, GA  30309
                                                 Fax: 404-870-3741
                                                 Attn: Managing Director
</TABLE>

                                  Schedule A-1
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
--------------                                   -------------------------------------------
<S>                                              <C>
Signature Block                                  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                                 By: __________________________________

Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.

Tax Identification Number                        22-1211670
</TABLE>

                                  Schedule A-2
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
--------------                                   -------------------------------------------
<S>                                              <C>
Name in Which Notes are to be Registered         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Note Registration Number; Principal Amount       R-2; $9,650,000

Payment on Account of Note
                  Method                         Federal Funds Wire Transfer
                  Account Information            Bank of New York
                                                 New York, New York
                                                 ABA No.: 021-000-018
                                                 Account No. ____________
                                                 Re: (see "Accompanying Information" below)

Accompanying Information                         Names of Issuers: CRAWFORD & COMPANY
                                                                   CRAWFORD & COMPANY
                                                                   INTERNATIONAL, INC.

                                                 Description of    6.08% Senior Guarantied Notes
                                                 Security:         Due October 10, 2010

                                                 PPN:              22464# AA 7

                                                 Accompanying      Due Date and Application (as among
                                                 Information:      principal, Make-Whole Amount and interest)
                                                                   of the payment being made

Address for Notices Related to Payments          The Prudential Insurance Company of America
                                                 c/o Prudential Investment Management, Operations & Systems
                                                 Gateway Center Two, 10th Floor
                                                 100 Mulberry Street
                                                 Newark, New Jersey 07102
                                                 Attention: Manager, Billings and Collections

                                                 For telephonic prepayment notices:
                                                 Manager, Trade Management Group
                                                 Tel: 973-802-4222
                                                 Fax: 800-224-2278

Address for All Other Notices (including         The Prudential Insurance Company of America
copies of all notices relating to payments)      c/o Prudential Capital Group
                                                 1170 Peachtree Street, Suite 500
                                                 Atlanta, GA  30309
                                                 Fax: 404-870-3741
                                                 Attn: Managing Director

Signature Block                                  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                                 By: __________________________________
</TABLE>

                                  Schedule A-3
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
--------------                                   -------------------------------------------
<S>                                              <C>
Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.

Tax Identification Number                        22-1211670
</TABLE>

                                  Schedule A-4
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   PRUCO LIFE INSURANCE COMPANY
--------------                                   ----------------------------
<S>                                              <C>
Name in Which Notes are to be Registered         PRUCO LIFE INSURANCE COMPANY

Note Registration Number; Principal Amount       R-3; $3,218,000

Payment on Account of Note
                  Method                         Federal Funds Wire Transfer
                  Account Information            Bank of New York
                                                 New York, New York
                                                 ABA No.: 021-000-018
                                                 Account No. ____________
                                                 Re:   (see "Accompanying Information" below)

Accompanying Information                         Names of Issuers:  CRAWFORD & COMPANY
                                                                    CRAWFORD & COMPANY
                                                                    INTERNATIONAL, INC.

                                                 Description of     6.08% Senior Guarantied Notes
                                                 Security:          Due October 10, 2010

                                                 PPN:               22464# AA 7

                                                 Accompanying       Due Date and Application (as among
                                                 Information:       principal, Make-Whole Amount and
                                                                    interest) of the payment being made

Address for Notices Related to Payments          Pruco Life Insurance Company
                                                 c/o Prudential Investment Management, Operations & Systems
                                                 Gateway Center Two, 10th Floor
                                                 100 Mulberry Street
                                                 Newark, New Jersey  07102
                                                 Attention: Manager, Billings and Collections

                                                 For telephonic prepayment notices:
                                                 Manager, Trade Management Group
                                                 Tel: 973-802-4222
                                                 Fax: 800-224-2278

Address for All Other Notices (including         The Prudential Insurance Company of America
copies of all notices relating to payments)      c/o Prudential Capital Group
                                                 1170 Peachtree Street, Suite 500
                                                 Atlanta, GA  30309
                                                 Fax: 404-870-3741
                                                 Attn: Managing Director

Signature Block                                  PRUCO LIFE INSURANCE COMPANY

                                                 By: __________________________________
</TABLE>

                                  Schedule A-5
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   PRUCO LIFE INSURANCE COMPANY
--------------                                   ----------------------------
<S>                                              <C>
Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.

Tax Identification Number                        22-1944557
</TABLE>

                                  Schedule A-6
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
--------------                                   ------------------------------------------
<S>                                              <C>
Name in Which Notes are to be Registered         PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

Note Registration Number; Principal Amount       R-4; $1,000,000

Payment on Account of Note
                  Method                         Federal Funds Wire Transfer
                  Account Information            Bank of New York
                                                 New York, New York
                                                 ABA No.: 021-000-018
                                                 Account No. ____________
                                                 Re:   (see "Accompanying Information" below)

Accompanying Information                         Names of Issuers: CRAWFORD & COMPANY
                                                                   CRAWFORD & COMPANY
                                                                   INTERNATIONAL, INC.

                                                 Description of    6.08% Senior Guarantied Notes
                                                 Security:         Due October 10, 2010

                                                 PPN:              22464# AA 7

                                                 Accompanying      Due Date and Application (as among
                                                 Information:      principal, Make-Whole Amount and
                                                                   interest) of the payment being made

Address for Notices Related to Payments          Pruco Life Insurance Company of New Jersey
                                                 c/o Prudential Investment Management, Operations & Systems
                                                 Gateway Center Two, 10th Floor
                                                 100 Mulberry Street
                                                 Newark, New Jersey  07102
                                                 Attention:  Manager, Billings and Collections

                                                 For telephonic prepayment notices:
                                                 Manager, Trade Management Group
                                                 Tel: 973-802-4222
                                                 Fax: 800-224-2278

Address for All Other Notices (including         The Prudential Insurance Company of America
copies of all notices relating to payments)      c/o Prudential Capital Group
                                                 1170 Peachtree Street, Suite 500
                                                 Atlanta, GA  30309
                                                 Fax: 404-870-3741
                                                 Attn:  Managing Director

Signature Block                                  PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

                                                 By: __________________________________
</TABLE>

                                  Schedule A-7
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
--------------                                   ------------------------------------------
<S>                                              <C>
Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.

Tax Identification Number                        22-2426091
</TABLE>

                                  Schedule A-8
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   RGA REINSURANCE COMPANY
--------------                                   -----------------------
<S>                                              <C>
Name in Which Notes are to be Registered         HARE & CO.

Note Registration Number; Principal Amount       R-5; $8,100,000

Payment on Account of Note
                  Method                         Federal Funds Wire Transfer
                  Account Information            Bank of New York
                                                 New York, New York
                                                 ABA No.:  021-000-018
                                                 Account No. ______ RGA Private Placement Account
                                                 Re:  (see "Accompanying Information" below)

Accompanying Information                         Names of Issuers: CRAWFORD & COMPANY
                                                                   CRAWFORD & COMPANY
                                                                   INTERNATIONAL, INC.

                                                 Description of    6.08% Senior Guarantied Notes
                                                 Security:         Due October 10, 2010

                                                 PPN:              22464# AA 7

                                                 Accompanying      Due Date and Application (as among
                                                 Information:      principal, Make-Whole Amount and
                                                                   interest) of the payment being made

Address for Notices Related to Payments          RGA Reinsurance Company
                                                 1370 Timberlake Manor Parkway
                                                 Chesterfield, MO  63017-6039
                                                 Attn: Banking Department

Address for All Other Notices                    Prudential Private Placement Investors, L.P.
                                                 Gateway Center Four
                                                 100 Mulberry Street
                                                 Newark, New Jersey  07102
                                                 Attention:  Mr. Albert Trank, Senior Vice President
                                                 Tel: 973-802-8608
                                                 Fax: 973-624-6432

Signature Block                                  RGA REINSURANCE COMPANY
                                                 By:    Prudential Private Placement Investors, L.P.,
                                                        As Investment Advisor
                                                        By: Prudential Private Placement Investors,
                                                            Inc., General Partner

                                                        By: __________________________________

Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.
</TABLE>

                                  Schedule A-9
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   RGA REINSURANCE COMPANY
--------------                                   -----------------------
<S>                                              <C>
Tax Identification Number                        43-1235868
</TABLE>

                                 Schedule A-10
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   RELIASTAR LIFE INSURANCE COMPANY
--------------                                   --------------------------------
<S>                                              <C>
Name in Which Notes are to be Registered         RELIASTAR LIFE INSURANCE COMPANY

Note Registration Number; Principal Amount       R-6; $7,250,000

Payment on Account of Note
                  Method                         Federal Funds Wire Transfer
                  Account Information            Bank of New York
                                                 New York, New York
                                                 ABA No.:  021-000-018
                                                 IOC566 - Inst'l Custody
                                                 Ref: ReliaStar Life Insurance Company, Account No. ______
                                                      and "Accompanying Information" below.

Accompanying Information                         Names of Issuers: CRAWFORD & COMPANY
                                                                   CRAWFORD & COMPANY
                                                                   INTERNATIONAL, INC.

                                                 Description of    6.08% Senior Guarantied Notes
                                                 Security:         Due October 10, 2010

                                                 PPN:              22464# AA 7

                                                 Accompanying      Due Date and Application (as among
                                                 Information:      principal, Make-Whole Amount and
                                                                   interest) of the payment being made

Address for Notices Related to Payments          ING Investment Management LLC
                                                 5780 Powers Ferry Road, NW, Suite 300
                                                 Atlanta, GA  30327-4349
                                                 Attn: Securities Accounting
                                                 Fax: 770-690-4899

Address for All Other Notices (including         Prudential Private Placement Investors, L.P.
copies of all notices relating to payments)      Gateway Center Four
                                                 100 Mulberry Street
                                                 Newark, New Jersey  07102
                                                 Attention:  Mr. Albert Trank, Senior Vice President
                                                 Tel: 973-802-8608
                                                 Fax: 973-624-6432

Signature Block                                  RELIASTAR LIFE INSURANCE COMPANY
                                                 By:  Prudential Private Placement Investors, L.P.,
                                                      As Investment Advisor
                                                      By: Prudential Private Placement Investors,
                                                          Inc., General Partner

                                                      By: __________________________________
</TABLE>

                                 Schedule A-11
<PAGE>

<TABLE>
<CAPTION>
PURCHASER NAME                                   RELIASTAR LIFE INSURANCE COMPANY
--------------                                   --------------------------------
<S>                                              <C>
Instructions re Delivery of Notes                The Prudential Insurance Company of America
                                                 1114 Avenue of the Americas, 30th Floor
                                                 New York, New York 10036
                                                 Attn: Suzanne Lui, Esq.

Tax Identification Number                        41-0451140
</TABLE>

                                 Schedule A-12
<PAGE>

                                   SCHEDULE B

                                  DEFINED TERMS

      As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:

      "ACQUISITION" means any acquisition, whether by cash, stock (or other
equity purchase), asset purchase, merger, consolidation or otherwise of a
Person, all or substantially all of the property of a Person or a business line
or division of a Person.

      "AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of either
of the Issuers or any Subsidiary or any Person of which one or more of the
Issuers and the Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of an Issuer.

      "AGENT" means SunTrust Bank or its successors or assigns acting as
administrative agent for all lenders under the Bank Credit Agreement.

      "AGREEMENT, THIS" is defined in Section 17.3.

      "APPLICABLE PLEDGE AMOUNT" means, in respect of the amount of capital
stock or other equity interest of any Foreign Subsidiary to be pledged to the
Agent, for the benefit of the holders of Notes, pursuant to the Pledge
Agreement, the lesser of (a) 65% of all outstanding capital stock or other
equity interest of such Foreign Subsidiary and (b) the total amount of all
outstanding capital stock or other equity interest of such Foreign Subsidiary
owned by the Issuers and their other Subsidiaries.

      "ASSET DISPOSITION" means any Transfer (including, without limitation, a
Transfer in connection with a Sale and Leaseback Transaction) except:

      (a) any

                                  Schedule B-1
<PAGE>

            (i) Transfer from a Subsidiary to an Issuer or a Wholly-Owned
      Subsidiary (other than a Dormant Company);

            (ii) Transfer from an Issuer to a Wholly-Owned Subsidiary (other
      than a Dormant Company) ; and

            (iii) Transfer from an Issuer to a Subsidiary (other than a
      Wholly-Owned Subsidiary that is not a Dormant Company) or from a
      Subsidiary to another Subsidiary (other than a Dormant Company), which in
      either case is for Fair Market Value,

so long as immediately before and immediately after the consummation of any such
Transfer and after giving effect thereto, no Default or Event of Default exists;
and

      (b) any Transfer made in the ordinary course of business and involving
only property that is either (i) inventory held for sale or (ii) equipment,
fixtures, supplies or materials of a type no longer required in the operation of
the business of an Issuer or any Subsidiary or that are obsolete.

      "ATTRIBUTABLE DEBT" means as to any particular lease relating to a Sale
and Leaseback Transaction, the greater of (a) the present value of all Lease
Rentals required to be paid by the Company or any Subsidiary under such lease
during the remaining term thereof (determined in accordance with generally
accepted financial practice using a discount factor equal to the interest rate
implicit in such lease if known or, if not known, of 8% per annum) and (b) the
Fair Market Value of the property subject to such Sale and Leaseback Transaction
as determined at the time of consummation of such Sale and Leaseback
Transaction.

      "BANK CREDIT AGREEMENT" means the Revolving Credit Agreement by and among
the Company and the Co-Issuer as borrowers, the Agent and the various lenders
party thereto, dated the date of the Closing, as amended from time to time,
together with all agreements and documents related thereto as the same may be
refinanced or refunded from time to time in accordance with the provisions
thereof and hereof (except that "Bank Credit Agreement" shall mean the Revolving
Credit Agreement in effect on the date of the Closing where so specified).

      "BUSINESS DAY" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Atlanta, Georgia or New York, New York are
required or authorized to be closed.

                                  Schedule B-2
<PAGE>

      "CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

      "CAPITAL LEASE OBLIGATION" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

      "CHANGE IN CONTROL" means the occurrence of one or more of the following
events: (a) any sale, lease, exchange or other transfer (in a single transaction
or a series of related transactions) of all or substantially all of the assets
of the Company to any Person or "group" (within the meaning of the Exchange Act
and the rules of the Securities and Exchange Commission from time to time issued
thereunder); (b) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or "group" (as defined immediately
above) of 30% or more of the outstanding shares of the voting stock of the
Company; (c) the Company ceases to own 100% of the outstanding capital stock of
the Co-Issuer; or (d) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Company by persons who were neither (i)
nominated by the then current board of directors or (ii) appointed by directors
so nominated.

      "CLOSING" is defined in Section 3.

      "CO-ISSUER" is defined in the introductory paragraph of this Agreement.

      "COMPANY" is defined in the introductory paragraph of this Agreement.

      "CONFIDENTIAL INFORMATION" is defined in Section 20.

      "CONSOLIDATED EBITDA" means, for any period, the sum of:

      (a) Consolidated Net Income for such period; plus

      (b) to the extent, and only to the extent, that such amount was deducted
in the computation of Consolidated Net Income for such period, the amount of:

            (i) Consolidated Interest Expense for such period;

            (ii) with respect to the pending litigation involving the Department
      of Justice as described in Schedule 5.8, any non-recurring charges related
      to the costs and settlement of such litigation (including the DOJ
      Settlement Payment), provided that the amount added back to Consolidated
      Net Income

                                  Schedule B-3
<PAGE>

      subsequent to the date of the Closing pursuant to this clause (ii) does
      not exceed $10,000,000 (or its equivalent);

            (iii) income tax expense, depreciation expense and amortization
      expense of the Issuers and their Consolidated Subsidiaries, in each case,
      for such period; and

            (iv) other non-cash charges as approved by the Required Holders
      (including, if so approved, non-cash charges for such period taken for the
      impairment of goodwill in accordance with Statement of Financial
      Accounting Standards No. 142 "Goodwill and Other Intangible Assets" issued
      by the Financial Accounting Standards Board) minus

      (c) all software costs that are capitalized in respect of such period
(other than software purchased or acquired from software vendors),

in each case determined on a consolidated basis in accordance with GAAP for such
period.

      "CONSOLIDATED EBITR" means, for any period, the sum of:

      (a) Consolidated Net Income for such period; plus

      (b) to the extent, and only to the extent, that such amount was deducted
in the computation of Consolidated Net Income for such period, the amount of:

            (i) Consolidated Interest Expense for such period;

            (ii) with respect to the pending litigation involving the Department
      of Justice as described in Schedule 5.8, any non-recurring charges related
      to the costs and settlement of such litigation (including the DOJ
      Settlement Payment), provided that the amount added back to Consolidated
      Net Income subsequent to the date of the Closing pursuant to this clause
      (ii) does not exceed $10,000,000 (or its equivalent);

            (iii) income tax expense of the Issuers and their Consolidated
      Subsidiaries, in each case, for such period;

            (iv) Consolidated Lease Expense for such period; and

            (v) other non-cash charges as approved by the Required Holders
      (including, if so approved, non-cash charges for such period taken for the
      impairment of goodwill in accordance with Statement of Financial

                                  Schedule B-4
<PAGE>

      Accounting Standards No. 142 "Goodwill and Other Intangible Assets" issued
      by the Financial Accounting Standards Board) minus

      (c) all software costs that are capitalized in respect of such period
(other than software purchased or acquired from software vendors),

      in each case determined on a consolidated basis in accordance with GAAP
for such period.

      "CONSOLIDATED FUNDED DEBT" means, as of any date of determination, the
total of all Indebtedness of the Issuers and their Consolidated Subsidiaries
outstanding on such date, after eliminating all offsetting debits and credits
between the Issuers and their Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Issuers and their Subsidiaries in accordance with GAAP.

      "CONSOLIDATED INTEREST EXPENSE" means, for the Issuers and their
Consolidated Subsidiaries, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Issuers and their Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Issuers and their Consolidated Subsidiaries in
accordance with GAAP): (a) all interest paid in cash in respect of Debt of the
Issuers and their Subsidiaries (including, however, imputed interest on Capital
Lease Obligations whether paid in cash or capitalized or expensed during such
period) and (b) the net amount payable (or minus the net amount receivable)
under Swaps during such period (whether or not actually paid or received during
such period).

      "CONSOLIDATED LEASE EXPENSE" means, for the Issuers and their Consolidated
Subsidiaries, with respect to any period, the sum of the fixed and contingent
Lease Rentals determined on a consolidated basis in accordance with GAAP for
such period, provided that, if at the date of determination, any such rental or
other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount of such
obligations (or such portion thereof) (a) shall be assumed to be equal to the
amount of such obligations for the period of 12 consecutive calendar months
immediately preceding the date of determination or (b) if the related lease was
not in effect during such preceding 12-month period, shall be the amount
estimated by a Senior Financial Officer on a reasonable basis and in good faith.

      "CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or loss) of the Issuers and their Consolidated Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with GAAP,
after

                                  Schedule B-5
<PAGE>

eliminating all offsetting debits and credits between the Issuers and their
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Issuers and their
Subsidiaries in accordance with GAAP, provided that there shall be excluded (to
the extent otherwise included therein):

      (a) any extraordinary gains or losses,

      (b) any gains resulting from any write-up of any assets (but not any loss
resulting from any write-down of any assets),

      (c) the income (or loss) of any Person (other than a Subsidiary) in which
the Issuers or any Consolidated Subsidiary has an ownership interest, except to
the extent that any such income has been actually received by either of the
Issuers or such Consolidated Subsidiary in the form of cash dividends or similar
cash distributions,

      (d) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with an Issuer or a
Subsidiary, and the income (or loss) of any Person, substantially all of the
assets of which have been acquired in any manner, realized by such other Person
prior to the date of acquisition, and

      (e) the undistributed earnings of any Subsidiary (other than any
Guarantor) to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Subsidiary.

      "CONSOLIDATED NET WORTH" means, at any time,

      (a) the sum of (i) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and the Subsidiaries plus (ii) the
amount of the paid-in capital and retained earnings of the Company and the
Subsidiaries, in each case as such amounts would be shown on a consolidated
balance sheet of the Company and the Subsidiaries as of such time prepared in
accordance with GAAP, minus,

      (b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries,

                                  Schedule B-6
<PAGE>

      "CONSOLIDATED SUBSIDIARY" means, at any date, any Person that, in
accordance with GAAP, would or should be consolidated in the Company's
consolidated financial statements on such date.

      "DEBT" means, with respect to any Person, without duplication,

      (a) its liabilities for borrowed money;

      (b) its liabilities for the deferred purchase price of property acquired
by such Person (excluding accounts payable arising in the ordinary course of
business but including, without limitation, all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

      (c) its Capital Lease Obligations;

      (d) its liabilities (whether or not contingent) for borrowed money secured
by any Lien with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); and

      (e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) hereof.

      Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

      "DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

      "DEFAULT RATE" means that rate of interest that is the greater of (a)
8.08% per annum or (b) 2% over the rate of interest publicly announced by The
Bank of New York in New York, New York as its "base" or "prime" rate.

      "DISPOSITION VALUE" means, at any time, with respect to any property

      (a) in the case of property that does not constitute Subsidiary Stock, the
book value thereof, valued at the time of such disposition in good faith by the
Company, and

                                  Schedule B-7
<PAGE>

      (b) in the case of property that constitutes Subsidiary Stock, an amount
equal to that percentage of the book value of the assets of the Subsidiary that
issued such stock as is equal to the percentage that the book value of such
Subsidiary Stock represents of the book value of all of the outstanding capital
stock of such Subsidiary (assuming, in making such calculations, that all
Securities convertible into such capital stock are so converted and giving full
effect to all transactions that would occur or be required in connection with
such conversion) determined at the time of the disposition thereof, in good
faith by the Company.

      "DISTRIBUTION" means, in respect of any Person:

      (a) dividends or other distributions or payments on capital stock or other
equity interests of such Person (except distributions in such stock or other
equity interest); and

      (b) the redemption or acquisition of such stock or other equity interests
or of warrants, rights or other options to purchase such stock or other equity
interests (except when solely in exchange for such stock or other equity
interests) unless made, contemporaneously, from the net proceeds of a sale of
such stock or other equity interests.

      "DOJ SETTLEMENT PAYMENT" means the payment and satisfaction in full by the
Issuers of all claims made by the Department of Justice or any Governmental
Authority in respect of the Department of Justice litigation described in
Schedule 5.8.

      "DOLLARS" OR "$" means the lawful currency of the United States of
America.

      "DOMESTIC SUBSIDIARY" means a direct or indirect Subsidiary of an Issuer
organized under the laws of, or holding any assets located in any jurisdiction
of, the United States of America, any State thereof or the District of Columbia.

      "DORMANT COMPANY" means each of the Subsidiaries of the Company
specifically designated as "dormant" on Schedule 5.4 hereto, as amended from
time to time.

      "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

                                  Schedule B-8
<PAGE>

      "ENVIRONMENTAL LIABILITY" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
investigation and remediation, costs of administrative oversight, fines, natural
resource damages, penalties or indemnities), of either Issuer or any Subsidiary
directly or indirectly resulting from or based upon (a) any actual or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
any actual or alleged exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

            As used in this definition, "RELEASE" means any release, spill,
      emission, leaking, dumping, injection, pouring, deposit, disposal,
      discharge, dispersal, leaching or migration into the environment
      (including ambient air, surface water, groundwater, land surface or
      subsurface strata) or within any building, structure, facility or fixture.

      "EQUITY OFFERING" is defined in Section 10.7.

      "EQUIVALENT" means, on any given date when one currency (the "FIRST
CURRENCY") of a certain amount is denominated in another currency (the "SECOND
CURRENCY"), the amount of the First Currency which could be purchased with the
amount of the Second Currency at the spot rate of exchange quoted by The Bank of
New York at or about 9:15 a.m. (New York time) on such date for the purchase of
the First Currency with the Second Currency.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

      "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with an Issuer (a)
under Section 414(b) or (c) of the US Tax Code or (b) solely for the purpose of
section 302 of ERISA and section 412 of the US Tax Code, under section 414 of
the US Tax Code.

      "EVENT OF DEFAULT" is defined in Section 11.

      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      "FAIR MARKET VALUE" means, at any time with respect to any property, the
sale value of such property that would be realized in an arm's-length sale at
such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.

                                  Schedule B-9
<PAGE>

      "FINANCING DOCUMENTS" means the Notes, this Agreement, the Guaranty
Agreement, the Sharing Agreement and the Pledge Agreement, as each may be
amended, restated or otherwise modified from time to time.

      "FISCAL YEAR" means the 12 month period of the Company ending on the 31st
day of December in each year.

      "FIXED CHARGES" means, with respect to the Issuers and their Consolidated
Subsidiaries for any period, the sum of (a) Consolidated Interest Expense for
such period and (b) Consolidated Lease Expense for such period.

      "FIXED CHARGES COVERAGE RATIO" means, as of the last day of each fiscal
quarter, the ratio of (a) Consolidated EBITR for the period of four consecutive
fiscal quarters ending on such day to (b) Fixed Charges for such period.

      "FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws of, or
holding any assets located in (other than inventory it has acquired for shipment
to the United States), any jurisdiction other than the United States of America,
any state thereof or the District of Columbia.

      "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

      "GOVERNMENTAL AUTHORITY" means

      (a) the government of

            (i) the United States of America or any State or other political
      subdivision thereof, or

            (ii) any jurisdiction in which either of the Issuers or any
      Subsidiary other than any Dormant Company conducts all or any part of its
      business, or which asserts jurisdiction over any properties of either of
      the Issuers or any Subsidiary other than any Dormant Company, or

      (b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

      "GUARANTORS" means each Initial Guarantor and each other Person that
enters into the Guaranty Agreement pursuant to Section 9.6(a).

                                 Schedule B-10
<PAGE>

      "GUARANTY" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

      (a) to purchase such Indebtedness or obligation or any property
constituting security therefor;

      (b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation;

      (c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of any other Person to make payment of the Indebtedness or obligation;
or

      (d) otherwise to assure the owner of such Indebtedness or obligation
against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

      "GUARANTY AGREEMENT" is defined in Section 4.10.

      "HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

      "HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Issuers pursuant to Section
13.1.

      "INDEBTEDNESS" means, with respect to any Person at any time, without
duplication,

                                 Schedule B-11
<PAGE>

            (a) its obligations for borrowed money (whether evidenced by bonds,
      debentures, notes or similar instruments);

            (b) its liabilities for the deferred purchase price of property
      acquired by such Person (excluding accounts payable arising in the
      ordinary course of business but including all liabilities created or
      arising under any conditional sale or other title retention agreement with
      respect to any such property);

            (c) its Capital Lease Obligations;

            (d) its liabilities (whether or not contingent) in respect of
      letters of credit or instruments serving a similar function issued or
      accepted for its account by banks and other financial institutions
      (whether or not representing obligations for borrowed money);

            (e) its liabilities (whether or not contingent) for borrowed money
      secured by any Lien with respect to any property owned by such Person
      (whether or not it has assumed or otherwise become liable for such
      liabilities);

            (f) its redemption obligations (whether or not contingent) in
      respect of redeemable capital stock or other Security of such Person;

            (g) any off-balance sheet liability it has retained in connection
      with asset securitization programs, synthetic leases, sale and leaseback
      transactions or other similar obligations arising with respect to any
      other transaction which is the functional equivalent of or takes the place
      of borrowing but which does not constitute a liability on the consolidated
      balance sheet of such Person and its Subsidiaries;

            (h) Swaps of such Person; and

            (i) any Guaranty of such Person with respect to liabilities of a
      type described in any of clauses (a) through (h) hereof.

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (i) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

      "INHAM EXEMPTION" is defined in Section 6.2(e).

                                 Schedule B-12
<PAGE>

      "INITIAL GUARANTORS" means each The Garden City Group, Inc., Crawford-THG,
Inc., Crawford Leasing Services, Inc., Crawford & Company Healthcare Management,
Inc., The PRISM Network, Inc., Crawford Investigation Services, Inc., Calesco,
Inc., Crawford & Company of New York, Inc., Risk Sciences Group, Inc., Crawford
& Company of California, Crawford & Company, L.P., Crawford & Company of
Illinois, Crawford & Company of Florida, Crawford & Company Employment Services,
Inc., Crawford Healthcare Management of Norfolk and Baltimore, Inc., Qirra
Custom Software, Inc. and Brocklehurst Miller, Inc.

      "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

      "INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any Subsidiary (a) in any Person, whether by
acquisition of stock, Indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise, or (b) in any property.

      "ISSUERS" is defined in the introductory paragraph of this Agreement.

      "LEASE RENTALS" means, with respect to any period, the sum of the rental
and other obligations required to be paid during such period by the Issuers or
any Consolidated Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases).

      "LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

      "MAKE-WHOLE AMOUNT" is defined in Section 8.6.

      "MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and the Subsidiaries taken as a whole.

      "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company

                                 Schedule B-13
<PAGE>

and the Subsidiaries taken as a whole, or (b) the ability of either Issuer to
perform its obligations under any Financing Document to which it is a party, or
(c) the ability of any Guarantor to perform its obligations under the Guaranty
Agreement, or (d) the validity or enforceability of any Financing Document.

      "MEMORANDUM" is defined in Section 5.3.

      "MULTIEMPLOYER PLAN" means any US Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

      "NAIC ANNUAL STATEMENT" is defined in Section 6.2(a).

      "NET PROCEEDS AMOUNT" means, with respect to any Transfer of any property
by any Person, an amount equal to the difference of:

            (a) the aggregate amount of the consideration (valued at the Fair
      Market Value of such consideration at the time of the consummation of such
      Transfer) received by such Person in respect of such Transfer, minus

            (b) all ordinary and reasonable out-of-pocket costs and expenses,
      and taxes in respect of, such Transfer actually incurred by such Person,
      minus

            (c) all amounts applied to Debt secured by such property which is
      repaid contemporaneously and in connection with such Transfer.

      "NEW/AMENDED COVENANT PROVISIONS" is defined in Section 9.8(a).

      "NOTES" is defined in Section 1.

      "OBLIGORS" means, collectively, both Issuers, all Guarantors and each
Person that becomes a pledgor under Section 9.6(b).

      "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.

      "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

      "PERMITTED ACQUISITIONS" means any Acquisition so long as (a) at the time
of such Acquisition, no Default or Event of Default is in existence, (b) such
acquisition has been approved or recommended by the board of directors of the
Person being

                                 Schedule B-14
<PAGE>

acquired and (c) the Total Acquisition Consideration of such Acquisition, when
aggregated with the Total Acquisition Consideration of all Acquisitions
consummated by the Company and the Consolidated Subsidiaries during the
preceding 12 month period does not exceed 10% of Consolidated Net Worth
determined as of the last day of the then most recently ended fiscal quarter of
the Company.

      "PERMITTED INVESTMENTS" means the following Investments:

            (a) Investments in United States Governmental Securities, provided
      that such obligations mature within one year from the date of acquisition
      thereof;

            (b) Investments in certificates of deposit or banker's acceptances
      issued by an Acceptable Bank, provided that such obligations mature within
      180 days from the date of acquisition thereof;

            (c) Investments in commercial paper given the highest rating by a
      credit rating agency of recognized national standing and maturing not more
      than one year from the date of creation thereof;

            (d) Investments in fully collateralized Repurchase Agreements;

            (e) mutual funds investing solely in one or more of the Investments
      permitted in clauses (a) through (d) above; and

            (f) any Investment made pursuant to, and in accordance with, the
      "Investment Guidelines" of the Company set forth on Schedule C hereto.

            As used in this definition of "Permitted Investments":

                  "Acceptable Bank" means any bank or trust company (i) which is
            organized under the laws of the United States of America or any
            State thereof, (ii) which has capital, surplus and undivided profits
            aggregating at least $500,000,000, and (iii) whose long-term
            unsecured debt obligations (or the long-term unsecured debt
            obligations of the bank holding company owning all of the capital
            stock of such bank or trust company) shall have been given a rating
            of "A" or better by S&P, "A2" or better by Moody's or an equivalent
            rating by any other credit rating agency of recognized national
            standing.

                  "Acceptable Broker-Dealer" means any Person other than a
            natural person (i) which is registered as a broker or dealer
            pursuant to the Exchange Act and (ii) whose long-term unsecured debt
            obligations

                                 Schedule B-15
<PAGE>

            shall have been given a rating of "A" or better by S&P, "A2" or
            better by Moody's or an equivalent rating by any other credit rating
            agency of recognized national standing.

                  "Moody's" means Moody's Investors Service.

                  "Repurchase Agreement" means any written agreement that
            provides for (i) the transfer of one or more United States
            Governmental Securities in an aggregate principal amount at least
            equal to the amount of the Transfer Price (defined below) to the
            Company or any Subsidiary from an Acceptable Bank or an Acceptable
            Broker-Dealer against a transfer of funds (the "Transfer Price") by
            the Company or such Subsidiary to such Acceptable Bank or Acceptable
            Broker-Dealer, and (ii) a simultaneous agreement by the Company or
            such Subsidiary, in connection with such transfer of funds, to
            transfer to such Acceptable Bank or Acceptable Broker-Dealer the
            same or substantially similar United States Governmental Securities
            for a price not less than the Transfer Price plus a reasonable
            return thereon at a date certain not later than 30 days after such
            transfer of funds.

                  "S&P" means Standard & Poor's Ratings Group, a division of The
               McGraw Hill Companies.

                  "United States Governmental Security" means any direct
            obligation of, or obligation guaranteed by, the United States of
            America, or any agency controlled or supervised by or acting as an
            instrumentality of the United States of America pursuant to
            authority granted by the Congress of the United States of America,
            so long as such obligation or guarantee shall have the benefit of
            the full faith and credit of the United States of America which
            shall have been pledged pursuant to authority granted by the
            Congress of the United States of America.

      "PERSON" means an individual, partnership, corporation, limited liability
company, firm, association, joint venture, trust, unincorporated organization,
or a government or agency or political subdivision thereof.

      "PLEDGE AGREEMENT" is defined in Section 4.11 and shall include each
additional Pledge Agreement that is required by Section 9.6(b).

      "PREFERRED STOCK" means any class of capital stock or other equity
interests of a Person that is preferred over any other class of capital stock or
equity interests of

                                 Schedule B-16
<PAGE>

such Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.

      "PRIORITY DEBT" means as of any date, without duplication, the sum of (a)
all Debt of the Obligors secured by any Lien with respect to any property owned
by the Company or any Subsidiary (other than pursuant to the Pledge Agreement),
(b) all Debt of Subsidiaries (except Debt of the Co-Issuer or a Guarantor or
Debt of any Subsidiary owing solely to the Company or a Wholly-Owned
Subsidiary), and (c) Attributable Debt of the Company and the Subsidiaries.

      "PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.

      "PROPERTY REINVESTMENT APPLICATION" means, with respect to any Transfer of
property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by either of the Issuers or any
Guarantor of machinery, equipment or other similar operating assets of either of
the Issuers or any Guarantor to be used in the ordinary course of business of
such Person (excluding, for the avoidance of doubt, cash and cash equivalents).

      "PTE" is defined in Section 6.2(a).

      "PURCHASERS" is defined at the commencement of this Agreement.

      "QPAM EXEMPTION" is defined in Section 6.2(d).

      "QUALIFIED INSTITUTIONAL BUYER" means a "Qualified Institutional Buyer" as
defined in Rule 144A under the Securities Act and any investment company or fund
that invests on a discretionary basis at least $100,000,000 in Securities of
issuers that are not affiliated with such investment company or fund.

      "REQUIRED HOLDERS" means, at any time, the holders of at least a majority
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Issuers or any of its Affiliates).

      "RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

      "RESTRICTED INVESTMENTS" means all Investments, including without
limitation, Investments in joint ventures and in Subsidiaries that are not
Consolidated Subsidiaries.

                                 Schedule B-17
<PAGE>

      "RESTRICTED PAYMENTS" means:

      (a) any Distribution in respect of the Company or any Subsidiary of the
Company (other than on account of capital stock or other equity interests of a
Subsidiary of the Company owned legally and beneficially by the Company or
another Subsidiary of the Company), including, without limitation, any
Distribution resulting in the acquisition by the Company of Securities which
would constitute treasury stock, and

      (b) any payment, repayment, redemption, retirement, repurchase or other
acquisition, direct or indirect, by the Company or any Subsidiary of, on account
of, or in respect of, the principal of any Subordinated Debt (or any installment
thereof) prior to the regularly scheduled maturity date thereof (as in effect on
the date such Subordinated Debt was originally incurred).

      For purposes of this Agreement, the amount of any Restricted Payment made
in property shall be the greater of (x) the Fair Market Value of such property
(as determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.

      "SALE AND LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which an Issuer or any Subsidiary shall sell or
transfer to any Person (other than the Issuers or a Subsidiary) any property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of transactions, such Issuer or such Subsidiary shall rent or lease as
lessee (other than pursuant to a Capital Lease), or similarly acquire the right
to possession or use of, such property or one or more properties which it
intends to use for the same purpose or purposes as such property.

      "SECURITIES ACT" means the Securities Act of 1933 of the United States of
America, as amended from time to time.

      "SECURITY" is defined in section 2(a) of the Securities Act.

      "SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

      "SHARING AGREEMENT" is defined in Section 4.13.

      "SOURCE" is defined in Section 6.2.

                                 Schedule B-18
<PAGE>

      "SPECIFIED FINANCIAL COVENANTS" is defined in Section 9.8(b).

      "SPECIFIED PROVISIONS" is defined in Section 9.8(b).

      "SUBORDINATED DEBT" means any Debt that is in any manner subordinated in
right of payment or security in any respect to Debt evidenced by the Notes.

      "SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

      "SUBSIDIARY STOCK" means, with respect to any Person, the share capital or
other equity interest (or any options or warrants to purchase share capital or
other equity interests or other securities exchangeable for or convertible into
share capital or other equity interests) of any Subsidiary of such Person.

      "SUCCESSOR CORPORATION" is defined in Section 10.2(a).

      "SVO" is defined in Section 4.8.

      "SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

      "TAX" means any present or future tax, levy, impost, withholding, duty,
charge, assessment or fee of any nature that is imposed by any Governmental
Authority or any taxing authority thereof.

                                 Schedule B-19
<PAGE>

      "TOTAL ACQUISITION CONSIDERATION" means as at the date of any Acquisition,
the sum of the following without duplication: (a) the amount of any cash and
Fair Market Value of other property given as consideration, including at such
date the deferred payment of any such amounts, (b) the amount (determined by
using the outstanding amount or the amount payable at maturity, whichever is
greater) of any obligations for money borrowed incurred, assumed or acquired by
either of the Issuers or any Subsidiary in connection with such Acquisition, (c)
all amounts paid in respect of covenants not to compete and consulting
agreements that should be recorded on the financial statements of the Company
and the Subsidiaries in accordance with GAAP, and (d) the aggregate Fair Market
Value of all other consideration given by either of the Issuers or any
Subsidiary (including any shares of capital stock of either of the Issuers or
any Subsidiary) in connection with such Acquisition.

      "TRANSFER" means and includes, with respect to any property, any sales,
exchanges, conveyances, leases, transfers, assignments or other dispositions of
such property; the term "Transfer," when used as a verb with respect to any
property, means to sell, exchange, convey, lease as lessor, transfer, assign or
otherwise dispose of such property; and the term "Transferred" has a correlative
meaning.

      "USA PATRIOT ACT" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001 of the United States of America.

      "US PLAN" means an "employee pension benefit plan" (as defined in section
3(2) of ERISA) subject to the provisions of Title IV of ERISA, section 412 of
the US Tax Code or section 302 of ERISA that is or, within the preceding five
years, has been established or maintained, or to which contributions are or,
within the preceding five years, have been made or required to be made, by the
Company or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.

      "US TAX CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.

      "WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Issuers and each of such Issuer's other Wholly-Owned Subsidiaries at such time.

                                 Schedule B-20
<PAGE>

                                   SCHEDULE C

                              INVESTMENT GUIDELINES

1.    INTRODUCTION

      The main goal of Crawford & Company's (the "Company") investment strategy
      is to provide a competitive return on the operating funds of the Company,
      while providing safety of principal and providing for the Company's
      regular cash needs.

2.    INVESTMENT OBJECTIVES

      A.    The primary investment objective shall be safety of principal.

      B.    The secondary investment objective shall be to maximize income and
            investment returns.

      C.    The overall character of the portfolio shall be of above average
            quality, and holdings shall be well diversified as to issuer and
            maturity.

      D.    It is anticipated that liquidity needs generally will be met through
            maturities and portfolio structure rather than depend upon the
            marketability of individual holdings.

3.    GENERAL INVESTMENT GUIDELINES

      A.    The Treasurer is authorized and responsible for the investment
            decisions and changes as deemed necessary and in accordance with the
            objectives and guidelines set forth herein.

4.    SPECIFIC INVESTMENT GUIDELINES

      A.    The average maturity of the portfolio shall not exceed two (2.0)
            years.

      B.    The maturity of any individual holding shall not exceed three (3.0)
            years.

      C.    At least twenty-five percent (25%) of the portfolio shall have a
            maturity of 90 days or less.

      D.    For purpose of determining maturities, the next reset date will be
            used for floating rate securities.

                                  Schedule C-1
<PAGE>

E.    Investments shall be limited to the following classes of securities:

      1.    Obligations of the U.S. Government and Government Agencies including
            but not limited to U.S. Treasury Notes and bills, Federal Mortgage
            Association, Student Loan Marketing Association and the Federal Home
            Loan Bank Board.

      2.    Debt obligations of U.S. Corporations.

      3.    U.S. Dollar denominated Debt obligations of multi-national
            corporations.

      4.    Short term Investment Company (STIC) or other institutional money
            market fund shares (i.e. Lehman Brothers Money Market Funds, Dreyfus
            Institutional Funds).

      5.    Permissible investment instruments shall include:

            a.    Repurchase Agreements

            b.    Commercial paper (A3A paper) including private placement
                  commercial paper (4-2 paper)

            c.    Certificates of deposit and time deposits

            d.    Loan Sales Participation

            e.    Variable rate demand notes

            f.    Eurodollar commercial paper

            g.    Eurodollar and time deposits of domestic and foreign banks

            h.    U.S. dollar denominated foreign commercial paper

            i.    Bankers' Acceptances

            j.    Master Notes

F.    Corporate obligations with long-term debt rating of single A or better by
      at least one recognized rating agency and short-term ratings of A1 or P1.

                                  Schedule C-2
<PAGE>

5.    RESTRICTIONS

      A.    Except for U.S. Treasury securities (securities backed by the full
            faith and credit of the U.S. Government), and money-market mutual
            funds, no more than 15% of the total assets of the account may be
            invested in the securities of any single issuer.

      B.    Investment in Eurodollar securities shall be limited to 10% of the
            portfolio.

      C.    Investment in any form of hedging, interest swaps and/or derivatives
            which hedge interest rates (either floating to fixed rate or fixed
            to floating rate) must have the prior approval of the Chief
            Financial Officer (CFO) and the Chief Executive Officer (CEO) of the
            Company.

                                  Schedule C-3<PAGE>
                                                                    Exhibit 10.1

                   THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL
                               TREATMENT REQUEST
                        PURSUANT TO RULE 24b-2 UNDER THE
                   SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

                               PRECEDENT AGREEMENT
                                 BY AND BETWEEN

                          SOUTHERN NATURAL GAS COMPANY

                                       AND

                            FLORIDA POWER CORPORATION
                       D/B/A PROGRESS ENERGY FLORIDA, INC.
                         (HINES PLANT AND SYSTEM SUPPLY)

                             DATED: DECEMBER 2, 2004
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                     Page
-------                                                                     ----
<S>                                                                         <C>
1. Firm Service Obligation...............................................     3
2. Approvals; Cooperation................................................     6
3. Acceptance of FERC Authorization......................................     7
4. Service Agreement; In-Service Date....................................     9
5. Conditions Precedent..................................................    10
6. Notices...............................................................    15
7. Assignment and Delegation.............................................    16
8. Term..................................................................    17
9. Miscellaneous Provisions..............................................    17

Exhibit "A" Transportation Demand

Exhibit "B" Service Agreement
</TABLE>
<PAGE>
                               PRECEDENT AGREEMENT

     This Precedent Agreement is made and entered into as of the 2nd day of
December, 2004, by and between Southern Natural Gas Company ("SOUTHERN"), a
Delaware corporation, and Florida Power Corporation d/b/a Progress Energy
Florida, Inc. ("SHIPPER"), a Florida Corporation (hereinafter Shipper and
Southern are sometimes referred to individually as "PARTY" or collectively as
the "PARTIES") pursuant to the following terms, conditions, and representations:

                                   WITNESSETH:

     WHEREAS, Southern proposes to design, construct, own and operate an
expansion of its existing natural gas pipeline system (the "CYPRESS PROJECT")
that extends from a point of interconnection with Southern's existing pipeline
facilities downstream of Southern LNG Company, L.L.C.'s ("SOUTHERN LNG") Elba
Island LNG Terminal ("ELBA ISLAND") in Chatham County, Georgia, to an
interconnection with the existing natural gas transmission facilities of Florida
Gas Transmission Company ("FGT") in Clay County, Florida; and

     WHEREAS, the Cypress Project is proposed to consist of and shall herein be
defined as (i) approximately 166 miles of 24-inch pipeline; and (ii) a
bidirectional meter station at the interconnection of Southern and FGT in Clay
County, Florida ("FGT INTERCONNECTION"); and

     WHEREAS, Shipper desires to receive firm transportation service from
Southern pursuant to (i) the terms of a Service Agreement containing
substantially the same terms and conditions as set forth below in Section 1; and
(ii) Rate
<PAGE>
                                                                               2

Progress Energy Precedent Agreement (continued)

Schedule FT under Volume I of Southern's FERC Gas Tariff ("TARIFF"), hereinafter
the "FT SERVICE"; and

     WHEREAS, Shipper will also subscribe to an expansion on FGT's pipeline
system into or from Southern's system at the FGT Interconnection in order to
receive gas at Shipper's generating plant in Polk County, Florida, and other
delivery points on FGT's system for Shipper's system supply ("FGT EXPANSION");
and

     WHEREAS, to effectuate this proposal to construct the Cypress Project and
provide FT service to Shipper, Southern will file an application with the
Federal Energy Regulatory Commission ("FERC") for authorization to construct,
install, operate and maintain the Cypress Project for the purpose of providing
the FT Service to Shipper; and

     WHEREAS, Southern will hold an open season to solicit bids from other
prospective shippers interested in subscribing for firm transportation service;
and

     WHEREAS, Southern and Shipper now desire to enter into this binding
precedent agreement ("PRECEDENT AGREEMENT") setting forth the terms and
conditions under which the Parties may subsequently execute a definitive service
agreement for the FT Service on Southern's system ("SERVICE AGREEMENT").

     NOW THEREFORE, in consideration of the mutual covenants set forth in this
agreement, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, Southern and Shipper agree as follows:
<PAGE>
                                                                               3

Progress Energy Precedent Agreement (continued)

1. FIRM SERVICE OBLIGATION.

     Subject to the terms and conditions of this Precedent Agreement, any terms
and conditions which may be imposed by the FERC and the terms and conditions of
Southern's Tariff, Southern agrees to provide to Shipper FT Service as described
below. Such FT Service shall be provided in accordance with the terms of a
Service Agreement to be executed between Southern and Shipper. A proforma copy
of the Service Agreement is set forth in Exhibit "B" attached hereto and made a
part hereof. Such Service Agreement shall contain the terms and conditions that
are substantially in accordance with the following:

     (a)  The FT Service will be for the Transportation Demand ("TD") stated in
          MMBtu as set forth on Exhibit "A" attached hereto, commencing on the
          date that both of (1) the Southern facilities comprising the Cypress
          Project, and (2) the FGT Expansion are capable of providing such
          transportation service on a firm daily basis (the "COMMENCEMENT
          DATE").

     (b)  The firm Receipt Point designated on Exhibit "A" to the Service
          Agreement shall be the Elba Island Receipt Point and the firm Delivery
          Point designated on Exhibit "B" to the Service Agreement shall be the
          FGT Interconnection. Shipper shall have secondary rights to alternate
          receipt and delivery points on Southern's system as set forth in
          Southern's Tariff.

     (c)  The initial term of the FT Service described in Section (a) above
          shall be twenty (20) years from the Commencement Date of FT
<PAGE>
                                                                               4

Progress Energy Precedent Agreement (continued)

          Service set forth above (the "PRIMARY TERM"). Shipper shall have the
          right to extend the Primary Term of the Service Agreement for the FT
          Service described in Section (a) above for one or more periods of
          three (3) years at Southern's then applicable maximum lawful rate (any
          such period being hereinafter referred to as an "EVERGREEN EXTENSION")
          by providing Southern with written notice of the exercise of such
          right at least two (2) years prior to the end of the Primary Term or
          any Evergreen Extension thereto.

     (d)  The rate to be charged Shipper for the FT Service shall be a
          negotiated reservation rate of $[*] per MMBtu for the Primary Term of
          this Precedent Agreement and successor Service Agreement, plus the
          maximum commodity charge for the applicable zone(s) of service as set
          forth in Southern's Tariff. The rate to be charged Shipper for fuel
          under this Precedent Agreement and successor Service Agreement shall
          be Southern's generally applicable and approved fuel charge
          established pursuant to Southern's Tariff.

     (e)  In addition to the rates provided for under Section 1(d) above,
          Shipper will compensate Southern for any other FERC approved,
          generally applicable charges or surcharges applicable to the FT
          Service.

     (f)  Southern shall have the unilateral right to file for generally
          applicable changes in its maximum rates or any other provisions in its
          FERC Gas Tariff and the Service Agreement including, but not

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
                                                                               5

Progress Energy Precedent Agreement (continued)

          limited to, provisions relating to compensation for fuel and lost and
          unaccounted for gas or electric usage applicable to the service
          hereunder. Subject to the provisions in Section 1(d) above, such
          changes shall be effective and applicable, subject to refund as
          determined by the FERC, after the required notice or at the end of any
          suspension period ordered by the FERC, and any such rates, charges,
          surcharges or terms and conditions of service accepted by the FERC
          shall be effective under the Service Agreement. It is understood and
          agreed that the generally applicable fuel retention percentage and the
          surcharges set forth in Section 1(e) above are designed to change from
          time to time consistent with Southern's FERC Gas Tariff and FERC
          Regulations. With respect to the services provided under this
          Precedent Agreement (and any successor Service Agreement), and
          notwithstanding the foregoing, (i) Shipper shall not have the right to
          intervene and protest in any rate filing by Southern with respect to
          changes in Southern's recourse rates during the Primary Term of this
          Precedent Agreement or the Service Agreement, and (ii) Shipper shall
          have the right to intervene and protest (a) any filing involving
          generally applicable charges or surcharges in accordance with Sections
          1(e) above, or (b) any filing involving the terms and conditions of
          service in Southern's Tariff, or (c) any rate filing applicable to
          services
<PAGE>
                                                                               6

Progress Energy Precedent Agreement (continued)

          received by Shipper from Southern other than those provided hereunder.

     (g)  Notwithstanding the rate cap set forth in Section 1(d) above, if,
          while the negotiated reservation rate of $[*] per MMBtu is in effect,
          Southern's costs to provide transportation services are adversely
          affected as a result of State, local or federal legislation or
          regulation specifically including, but not limited to orders,
          regulations, rules or opinions by the FERC, Environmental Protection
          Agency, Department of Transportation, U.S. Army Corps of Engineers,
          Internal Revenue Service, U. S. Fish and Wildlife Service or any other
          State or federal agency or court of law and/or any changes in
          Generally Accepted Accounting Principles (GAAP), that has a general or
          industry wide effect which causes the total cost of service to
          Southern of providing Shipper the transportation service to be
          materially and adversely increased; then Southern may provide written
          notice to Shipper requesting to increase Shipper's rates to take into
          account the costs associated with the legislation or regulation. For
          purposes of the previous sentence, "materially and adversely" shall be
          defined as an overall increase in Southern's total cost of service to
          provide service to Shipper as contemplated by this Precedent Agreement
          of 25% or more (after taking into consideration any offsetting
          decreases in other costs or increases in other revenues from
          regulatory events such as those described

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
                                                                               7

Progress Energy Precedent Agreement (continued)

          above), calculated on a net present value basis, discounted at an 8%
          discount rate. Such written notice requesting an adjustment in the
          rates shall specifically state (i) the legislation or regulation
          impacting such costs or revenues; (ii) the obligation by Southern to
          comply with such regulation or legislation; and (iii) how, and the
          extent to which, such legislation or regulation materially and
          adversely increases Southern's total cost of service to provide
          service to Shipper as contemplated by this Precedent Agreement. Once
          Southern has provided such notice, the Parties shall meet within
          thirty (30) days to discuss possible means of correcting the material
          and adverse impact and shall attempt in good faith to negotiate a
          mutually acceptable solution, including, but not limited to, an
          amendment to the rate discount through an increase of the reservation
          or transportation charges. If the Parties are unable within 120 days
          after the receipt of such notice to agree upon a mutually acceptable
          solution, then either Party may, upon 30 days prior written notice to
          the other, invoke alternative dispute resolution procedures consistent
          with the commercial arbitration rules of the American Arbitration
          Association in order to determine how to mitigate the adverse impact
          in light of all of the facts and circumstances existing at that time.
          Any rate increase agreed upon by Southern and Shipper or that is
          approved through the alternate dispute resolution procedures shall
          only go into effect prospectively
<PAGE>
                                                                               8

Progress Energy Precedent Agreement (continued)

          commencing upon the date that either the Parties agree upon the rate
          change or such rate change is approved through the alternate dispute
          resolution procedures. Notwithstanding the foregoing, no rate increase
          or increases adopted pursuant to this Section 1(g), whether agreed to
          by Southern and Shipper or approved through the alternate dispute
          resolution procedures described herein, shall result in an aggregate
          increase in the negotiated reservation rate provided hereunder of more
          than twenty-five percent (25%).

2.   APPROVALS; COOPERATION.

     (a)  Upon execution of this Precedent Agreement, Southern and Shipper agree
          to promptly seek, and to exercise good faith efforts to cause any and
          all other parties whose participation is required to promptly seek the
          regulatory approvals, including from the FERC all necessary
          authorizations under the Natural Gas Act (the "FERC AUTHORIZATIONS"),
          as may be necessary to construct, install and operate the Cypress
          Project consistent with the terms of this Precedent Agreement.
          Southern and Shipper reserve the right to file and prosecute
          applications for any required authorizations, any supplement or
          amendment to an application, and any court review as each deems in its
          best interests.

     (b)  Southern shall provide Shipper from time to time, but in no event less
          frequently than once a month, with updates of its progress in
          obtaining the FERC Authorizations to construct the Cypress Project.
<PAGE>
                                                                               9

Progress Energy Precedent Agreement (continued)

     (c)  Southern and Shipper each agree to execute and deliver all other
          additional instruments and documents, and to do all other acts, as may
          be reasonably necessary to effectuate the terms and provisions of this
          Precedent Agreement.

     (d)  Southern shall not be obligated to prosecute its application with the
          FERC or seek any other regulatory approvals or permit applications or
          proceed with the construction of the Cypress Project unless and until
          it holds an open season soliciting bids from other shippers.

     (e)  Once the open season for subscription for the Cypress Project has
          closed and been finalized, Southern will actively pursue design,
          engineering and title work as necessary to facilitate the filing of
          the FERC Authorizations and the FERC review process, but it shall not
          be required to commit significant capital expenditures for
          right-of-way or materials for the project unless and until it receives
          a Preliminary Determination, as defined in Section 5(a)(i)(B) below,
          from the FERC approving the commercial aspects of the filing in a
          manner acceptable to Southern or until all conditions precedent set
          forth in Section 5(b) below are met by Shipper.

3.   ACCEPTANCE OF FERC AUTHORIZATION.

          Within 10 business days of Southern receiving the FERC Authorizations,
     Southern shall notify Shipper of its intent to accept or reject the FERC
     Authorizations. Shipper shall, within fifteen (15) days after the date
     Southern provides an electronic copy to Shipper by e-mail of FERC's
<PAGE>
                                                                              10

Progress Energy Precedent Agreement (continued)

          Preliminary Determination on the Cypress Project, notify Southern in
          writing of any terms or conditions in the Preliminary Determination
          that materially and adversely affect Shipper, as further defined
          below, and whether Shipper has any material objections to such
          Preliminary Determination. Neither Southern, in the case of the FERC
          Authorizations, nor Shipper, in the case of the Preliminary
          Determination, shall be under any obligation to accept the respective
          terms of the FERC Authorizations or Preliminary Determination if they
          contain terms or conditions which are reasonably likely to have a
          material and adverse effect. A material and adverse effect shall be
          defined as (i) having a material and adverse impact on the financial
          benefits to either Southern or Shipper arising out of the transactions
          contemplated hereby, or (ii) imposing upon Southern or Shipper
          material business or regulatory risks, as Southern or Shipper,
          respectively, in their sole discretion shall determine or (iii) being
          directly contrary to the terms and conditions contained in this
          Precedent Agreement. Such material business or regulatory risks could
          include, but not be limited to, the ability of Southern to obtain
          rolled-in rate treatment for the Cypress Project.

               Notwithstanding the above, in the event the FERC Authorizations
          or Preliminary Determination contain unsatisfactory, material terms
          and conditions consistent with the provision described above, Shipper
          and Southern agree that, prior to the date by which rehearing must be
          requested of the Preliminary Determination in the case where Shipper
          objects to the
<PAGE>
                                                                              11

Progress Energy Precedent Agreement (continued)

          Preliminary Determination or the date that Southern must accept the
          certificate under Section 157.20 of the FERC Regulations in the case
          where Southern objects to the FERC Authorizations, Southern and
          Shipper will discuss potential options to adjust the rate set forth
          above in Paragraph 1(d) in order to compensate, as appropriate, (i)
          Southern for accepting the certificate and proceeding with the Cypress
          Project and the transaction contemplated herein, and (ii) Shipper for
          accepting the Preliminary Determination and proceeding with the
          transaction contemplated herein. If the Parties can agree on the means
          to adjust the rate, then they will document such agreement by
          execution of an amendment to this agreement or execution of a Service
          Agreement with the applicable terms prior to the date by which
          rehearing requests are due for the Preliminary Determination or
          Southern is required to accept the FERC certificate. In the event that
          Shipper issues notice in writing to Southern of its objection to the
          terms of the Preliminary Determination or Southern issues notice in
          writing to Shipper of its objection to the terms of the FERC
          Authorizations, and the Parties cannot agree on the means to adjust
          the rate, then the Party issuing the notice of objections shall have
          the right to terminate this Precedent Agreement. Such right must be
          exercised by written notice to the other Party provided, respectively,
          by Shipper no later than the date upon which rehearing requests for
          the Preliminary Determination are due or by Southern no later than
          twenty-nine (29) days after issuance of the certificate and such right
          to terminate under this Section 3 shall be deemed to be
<PAGE>
                                                                              12

Progress Energy Precedent Agreement (continued)

          waived if such right is not exercised by providing such notice in the
          manner and within the times specified herein. In the event either
          Party provides the other Party with notice of its objection to the
          Preliminary Determination or the terms of the FERC Authorizations as
          set forth above but does not exercise its right to terminate this
          Precedent Agreement under this Section 3, the Parties shall remain
          bound to perform their obligations under this Precedent Agreement.

               Nothing contained herein shall prevent Southern or Shipper from
          seeking rehearing of any unfavorable term or condition contained in
          the Preliminary Determination or the FERC Authorizations in a manner
          that is consistent with the terms of this Precedent Agreement or the
          Service Agreement, even if Southern accepts the certificate as
          provided above.

4.   SERVICE AGREEMENT; IN-SERVICE DATE.

     (a)  Subject to the satisfaction or waiver of the conditions precedent set
          forth in Section 5 below, within ten (10) days of Southern filing with
          the FERC a letter of acceptance, Southern and Shipper shall execute
          and deliver a standard form of firm Service Agreement as set forth in
          Exhibit "B", attached hereto and made a part hereof, that incorporates
          terms and conditions that are substantially in accordance with Section
          1 above.

     (b)  Upon execution and delivery of the Service Agreement by each Party and
          once all of the Conditions Precedent set forth in Section 5 below are
          met or waived, Southern will use due diligence to
<PAGE>
                                                                              13

Progress Energy Precedent Agreement (continued)

          construct and install the Cypress Project to commence the FT Service
          by May 1, 2007, or such other mutually agreeable date (the "IN SERVICE
          DATE"). Shipper agrees and understands that any delays in receiving
          FERC approval may cause delays in reaching the In Service Date.
          Southern and Shipper will discuss any changes to the In Service Date
          based on the status of the regulatory process. At Shippers request,
          Southern agrees to timely review with Shipper its design drawings and
          specifications, bill of material, bid results, and construction
          contract and specifications (collectively, the "CONSTRUCTION
          DOCUMENTS") for the construction of the Cypress Project to Shipper so
          that Shipper is kept abreast of Southern's construction progress.

5.   CONDITIONS PRECEDENT.

     (a)  Notwithstanding any of the foregoing to the contrary, the obligation
          of Southern to construct, install and operate the Cypress Project and
          to execute the Service Agreement is subject to the fulfillment of
          condition (i)(A) and the waiver by Southern or fulfillment of
          conditions (i)(B), (ii), and (iii) as follows:

          (i)  receipt and acceptance by Southern, as provided in Section 3
               above, of (A) and (B) below which shall be collectively referred
               to as the "GOVERNMENT AUTHORIZATIONS."

               (A) authorizations from the FERC; the United States Army Corps of
               Engineers, the U.S. Fish and Wildlife Service, and any
<PAGE>
                                                                              14

Progress Energy Precedent Agreement (continued)

          other state and federal regulatory agencies, as necessary, to
          construct, install and operate the Cypress Project on or before
          January 31, 2007. This condition precedent may not be waived by
          Southern; and

          (B) FERC approval of the terms of service set forth above in Section
          1, including, without limitation, the rates hereunder in accordance
          with the terms of this Precedent Agreement in the form of a
          Preliminary Determination ("Preliminary Determination") on or before
          January 31, 2006; and

          (ii) receipt by Southern of approval from the El Paso Corporation
               Board of Directors to construct, install and operate the Cypress
               Project on or before January 31, 2005; and

          (iii) receipt by Southern from Shipper and an additional shipper or
               shippers for FT Service from the Cypress Project of executed
               precedent agreement(s) each with a twenty (20) year term and with
               an aggregate year-round TD equal to at least [*] MMBtu/day on or
               before March 31, 2005.

          Southern shall pursue satisfaction of each of the foregoing conditions
          precedent on a due diligent basis. If each of the conditions precedent
          shall not have been satisfied on terms and conditions acceptable to
          Southern or, with respect to conditions (i)(B), (ii), and (iii) only,
          waived by Southern on or before the date indicated, then Southern or
          Shipper may terminate this Agreement

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
                                                                              15

Progress Energy Precedent Agreement (continued)

                    by giving written notice to the non-terminating Party at any
                    time after the date the applicable condition precedent was
                    to be satisfied or waived as set forth above, but prior to
                    the satisfaction or waiver of the applicable condition
                    precedent. Upon such termination, neither Southern nor
                    Shipper shall have any further obligations under this
                    Precedent Agreement. Such notice shall be effective as of
                    the date it is delivered to the U. S. Mail for delivery by
                    certified mail, return receipt requested.

               (b) Notwithstanding any of the foregoing to the contrary, the
          obligation of Shipper to execute the Service Agreement and to perform
          the obligations hereunder is subject to the fulfillment or waiver by
          Shipper of the following conditions precedent (i), (ii), (iii), (iv),
          and (v), and the fulfillment of the following condition precedent
          (vi):

               (i)  receipt by Shipper of approval from the Progress Energy
                    Florida, Inc. Board of Directors to execute the Service
                    Agreement and subscribe to the FT Service as provided herein
                    on or before January 31, 2005; and

               (ii) execution by Shipper of an agreement with FGT to provide
                    Shipper with firm transportation on FGT's system from the
                    FGT interconnection with a TD equal to the FGT/TD's shown on
                    Exhibit "A" attached hereto, on or before December 6, 2004;
                    and
<PAGE>
                                                                              16

Progress Energy Precedent Agreement (continued)

               (iii) receipt and acceptance by Shipper of all authorizations,
                    approvals and/or exemptions from the Florida Public Service
                    Commission and from any other regulatory body having
                    jurisdiction necessary for Shipper to construct, own and
                    operate an expansion at the Hines Generating Plant in Polk
                    County, Florida, on or before May 1, 2005; and

               (iv) execution by Shipper of a satisfactory agreement, as
                    determined in Shipper's sole discretion, with BG LNG
                    Services, LLC to provide the natural gas supplies at Elba
                    Island to serve Shipper's Hines Generating Plant and
                    Shipper's other system supply requirements on or before
                    December 6, 2004; and

               (v)  receipt and acceptance by Shipper of all authorizations,
                    approvals and/or exemptions from the Florida Public Service
                    Commission and from any other regulatory body having
                    jurisdiction necessary for Shipper on or before June 15,
                    2005 to (a) to contract for fuel from BG LNG Services, LLC
                    at Elba Island to serve Shipper's Hines Generating Plant in
                    Polk County, Florida, and Shipper's other system supply
                    requirements, (b) to contract for firm transportation
                    pursuant to this Precedent Agreement (and any successor
                    service agreement), and (c) to contract for firm
                    transportation on
<PAGE>
                                                                              17

Progress Energy Precedent Agreement (continued)

                    FGT pursuant to the agreement referenced in subsection
                    5(b)(ii) above; and

               (vi) demonstration to Southern's satisfaction on or before
                    January 31, 2005, that Shipper is creditworthy to perform
                    its financial obligations required under the terms of this
                    Precedent Agreement that would support the construction of
                    the Cypress Pipeline by demonstrating Shipper's ability to
                    sustain the transaction under its own capital structure, or
                    produce Southern with credit assurances of either (i) an
                    acceptable intracorporate guarantee or (ii) letter of credit
                    or other comparable surety with the value of at least two
                    and one-half (2 1/2) years of transportation demand payments
                    at Shipper's MDQ set forth above in Section 1(a).
                    Notwithstanding the date set forth above in which the
                    condition precedent must be satisfied, Shipper shall be
                    obligated to sustain its showing of creditworthiness
                    throughout the term of the Service Agreement by providing
                    Southern with one of the acceptable credit assurances listed
                    above. This condition precedent may not be waived by
                    Shipper.

               Shipper shall pursue satisfaction of each of the foregoing
          conditions precedent on a due diligent basis. If each of the
          conditions precedent shall have not been satisfied or, with respect to
          conditions (i), (ii), (iii), (iv), and
<PAGE>
                                                                              18

Progress Energy Precedent Agreement (continued)

          (v) only, waived by Shipper on or before the date indicated, then
          Shipper or Southern may terminate this Agreement by giving written
          notice to the other Party thereof at any time after the date the
          applicable condition precedent was to be satisfied or waived, but
          prior to the satisfaction or waiver of the applicable condition
          precedent. Upon such termination, neither Southern nor Shipper shall
          have any further obligations under this Precedent Agreement. Such
          notice shall be effective as of the date it is delivered to the U. S.
          Mail for delivery by certified mail, return receipt requested.

     (c)  The Government Authorizations required by Sections 5(a)(i) and
          5(b)(iii) and (v) shall be final and duly granted without contingency
          by the authorities having jurisdiction; provided, however, that
          Southern or Shipper may, at their option, elect to waive the condition
          that such approvals be final.

6.   NOTICES.  Notices made pursuant to the terms of this Precedent Agreement
     shall be sent to:

               If Southern: Southern Natural Gas Company
                            Post Office Box 2563
                            Birmingham, Alabama 35202-2563
                            Attention: Director, Business Development
                            Phone: 205/325-7146
                            Fax: 205/325-3787

               If Shipper:  Progress Energy Florida, Inc.
                            410 S. Wilmington Street (PEB 10)
                            Raleigh, North Carolina 27601
                            Attention: Contract Administration
                            Phone: 919/546-4280
                            Fax: 919/546-2649
<PAGE>
                                                                              19

Progress Energy Precedent Agreement (continued)

                            James H. Jeffries IV.
                            Nelson Mullins Riley & Scarborough L.L.P.
                            Bank of America Corporate Center, Suite 2400
                            100 North Tryon Street
                            Charlotte, North Carolina 28202-4000
                            Office: (704) 417-3103
                            Facsimile: (704) 417-3014

          Either Party may change its address by written notice to the other
     Party. Notices given to change the above addresses shall be deemed to have
     been effectively given (i) upon the fifth business day after the notice,
     properly addressed and postpaid, has been placed in the United States mail;
     (ii) upon confirmation of receipt, if delivered by facsimile or other
     similar means; or (iii) in accordance with the dates and time provided for
     overnight delivery service.

7.   ASSIGNMENT AND DELEGATION.

     (a)  Any entity that succeeds by purchase, merger, or consolidation to the
          properties substantially as an entirety of either Southern or Shipper,
          as the case may be, shall be entitled to the rights and subject to the
          obligations set out in this Precedent Agreement and the executed
          Service Agreement.

     (b)  Either Party may, without the consent of the other Party, assign any
          of its rights hereunder to an Affiliate of assignor, but the assignor
          shall not be relieved of its obligations under this Precedent
          Agreement until the nonassigning Party receives an agreement from the
          assignee that it is assuming all the terms and conditions hereto and
          such assignee is financially and technically capable of meeting such
          terms and
<PAGE>
                                                                              20

Progress Energy Precedent Agreement (continued)

          conditions. The assignor shall provide written notice of the
          assignment to the other Party to this Precedent Agreement as soon as
          practicable after such assignment. For the purpose of this Section
          7(b), the term "Affiliate" shall mean an individual or entity that
          directly, or indirectly through one or more intermediaries, controls,
          is controlled by or is under common control with another individual or
          entity. The terms "controls," "controlled," and "control" in the
          preceding sentence shall mean the possession, direct or indirect, of
          the power to direct the management and policies of an entity, whether
          through the ownership of voting securities or otherwise.

     (c)  Except as provided above in Sections 7(a) or 7(b) of this Precedent
          Agreement, no assignment of rights or delegation of duties under this
          Precedent Agreement shall be made unless there first shall have been
          obtained the written consent of Shipper, in the event of an assignment
          or delegation by Southern, or the written consent of Southern, in the
          event of an assignment or delegation by Shipper, such consents not to
          be unreasonably withheld. Southern and Shipper agree, however, that
          the restrictions on assignment contained in this Paragraph shall not
          in any way prevent either Southern or Shipper from pledging or
          mortgaging its rights hereunder as security for its indebtedness.

8.   TERM.

     Subject to the provisions of Section 5 hereof, this Precedent Agreement
shall remain in full force and effect until it is superceded by the execution by
the
<PAGE>
                                                                              21

Progress Energy Precedent Agreement (continued)

Parties of an effective Service Agreement as provided in Section 4 above or
otherwise terminated in accordance with the provisions of this Precedent
Agreement, except for the provisions of Sections 1 and 9 hereof which shall
survive the execution of an effective Service Agreement and remain binding and
effective on the Parties in accordance with their respective terms.

9.   NEGOTIATED RATE FOR FUTURE CYPRESS PROJECT EXPANSIONS

     In the event that BG LNG Services LLC does not satisfy or waive the
conditions precedent in its Precedent Agreement with Southern for the Cypress
Project to subscribe to Phase II and/or Phase III of the Cypress Project by the
dates set forth in such Precedent Agreement, as such Phases are defined in the
FERC Authorizations for the Cypress Project referenced above in Section 2(a),
Shipper shall have the right to subscribe to up to [*] MMbtu of such expansion
capacity per phase provided that Southern can achieve adequate subscription from
other shippers to make the project economical to Southern. In conjunction with
such right, Southern and Shipper agree that the reservation rate to be charged
Shipper for each phase, respectively, shall be the lower of: (a) the recourse
rate filed by Southern for the applicable expansion facilities; or (b) the
lowest rate charged by Southern or paid by other shippers for the respective
Cypress expansion capacity; or (c) for Phase II only, $[*], if Shipper
subscribes for the expansion capacity within ninety (90) days after being
notified by Southern that the expansion capacity is available; provided,
however, that such notice shall not be sent to Shipper any earlier than January
2, 2008.

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
                                                                              22

Progress Energy Precedent Agreement (continued)

10.  MISCELLANEOUS PROVISIONS.

     (a)  Except as provided otherwise in this Precedent Agreement, no
          modification of the terms and provisions of this Precedent Agreement
          shall have effect unless contained in a writing executed by both
          Southern and Shipper.

     (b)  This Precedent Agreement may be executed in multiple counterparts,
          each of which shall be deemed an original, but all of which shall
          constitute one and the same agreement.

     (c)  This Precedent Agreement shall become effective on the date first
          written above and shall continue in effect until terminated pursuant
          to the terms and condition herein.

     (d)  Anything in this Agreement to the contrary notwithstanding, neither
          party hereto shall be liable to the other party for any consequential,
          incidental or punitive damages arising out of, or related to a breach
          of this Agreement.

     (e)  If a court of competent jurisdiction declares any provision of this
          Precedent Agreement unenforceable, then that provision shall be
          severed from this Precedent Agreement, which shall otherwise remain in
          full force and effect and be construed as if it did not contain the
          severed provision.

     (f)  Except as expressed otherwise in this Precedent Agreement, nothing
          expressed or implicit in this Precedent Agreement shall confer on
<PAGE>
                                                                              23

Progress Energy Precedent Agreement (continued)

          any person other than Southern and Shipper any rights or remedies
          under or by reason of this Precedent Agreement.

     (g)  The titles to the paragraphs in this Precedent Agreement are included
          only for the convenience of reference and shall have no effect on, or
          be deemed a part of, the text of this Precedent Agreement.

     (h)  The Parties expressly agree that the laws of the State of Alabama,
          without regard for any rules for conflicts of law, shall govern the
          validity, effect, construction, and interpretation of this Precedent
          Agreement.

     (i)  This Precedent Agreement constitutes the entire agreement between the
          Parties and no waiver by either Party or any default of either Party
          under this agreement shall operate as a waiver of any subsequent
          default whether it is of a like or different character.
<PAGE>
                                                                              24

Progress Energy Precedent Agreement (continued)

     IN WITNESS WHEREOF, the Parties hereto have caused this Precedent Agreement
to be duly executed by their proper officers, duly authorized as of the date
first hereinabove written.

SOUTHERN NATURAL GAS COMPANY

/s/ James C. Yardley
-------------------------------------
James C. Yardley
President

FLORIDA POWER CORPORATION
D/B/A PROGRESS ENERGY FLORIDA, INC.

/s/ Robert F. Caldwell
---------------------------------
By:  Robert F. Caldwell
Its: Vice President - Regulated Commercial Operations
<PAGE>
                                   EXHIBIT "A"
                          SHIPPER TRANSPORTATION DEMAND

<TABLE>
<CAPTION>
YEARS(1)   SEASON      SPAN     TD/MMBtu   FGTTD
--------   ------   ---------   --------   -----
<S>        <C>      <C>         <C>        <C>
2007       Summer   May-Sept.      [*]      [*]

2007-08    Winter   Oct.-Apr.      [*]      [*]

2008       Summer   May-Sept.      [*]      [*]

2008-09    Winter   Oct.-Apr.      [*]      [*]

2009-26    Summer   May-Sept.      [*]      [*]

2009-27    Winter   Oct.-Apr.      [*]      [*]
</TABLE>

----------
(1)  The actual start date and end date for the FT Service will be determined
     based on the "Commencement Date" as set forth in Section 1(a) above in the
     Precedent Agreement and the "Primary Term" as set forth in Section 1(c)
     above.

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
Exhibit "B"                                                Service Agreement No.

                                    PRO FORMA
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                UNDER RATE SCHEDULE FT AND/OR RATE SCHEDULE FT-NN

         THIS AGREEMENT, made and entered into as of this _________ day of
______, _______, by and between Southern Natural Gas Company, a Delaware
corporation, hereinafter referred to as "Company", and Florida Power Corporation
d/b/a Progress Energy Florida, Inc., a Florida corporation, hereinafter referred
to as "Shipper".

                                   WITNESSETH

         WHEREAS, Company is an interstate pipeline, as defined in Section 2(15)
of the Natural Gas Policy Act of 1978 (NGPA); and

         WHEREAS, Shipper has requested firm transportation pursuant to Rate
Schedule FT and/or FT-NN of various supplies of gas for redelivery for Shipper's
account and has submitted to Company a request for such transportation service
in compliance with Section 2 of the General Terms and Conditions applicable to
such Rate Schedules; and/or

         WHEREAS, Shipper may acquire, from time to time, released firm
transportation capacity under Section 22 of the General Terms and Conditions of
Company's FERC Gas Tariff; and

         WHEREAS, Company has agreed to provide Shipper with transportation
service of such gas supplies or through such acquired capacity release in
accordance with the terms and conditions of this Agreement.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I
                             TRANSPORATION QUANTITY

         1.1 Subject to the terms and provisions of this Agreement, Rate
Schedule FT and/or FT-NN, as applicable, and the General Terms and Conditions
thereto, Shipper agrees to deliver or cause to be delivered to Company at the
Receipt Point(s) described in Exhibit A and Exhibit A-1 to this Agreement, and
Company agrees to accept at such point(s) for transportation under this
Agreement, an aggregate quantity of natural gas per day up to the total
Transportation Demand set forth on Exhibit B hereto. Company's obligation to
accept gas on a firm basis at any Receipt Point is limited to the Receipt Points
set out on Exhibit A and to the Maximum Daily Receipt Quantity (MDRQ) stated for
each such Receipt Point. The sum of the MDRQ's for the Receipt Points on Exhibit
A shall not exceed the Transportation Demand.

         1.2 Subject to the terms and provisions of this Agreement, Rate
Schedule FT and/or FT-NN, as applicable, and the General Terms and Conditions
thereto, Company shall deliver a thermally equivalent quantity of gas, less the
applicable fuel charge as set forth in the applicable FT or FT-NN Rate Schedule,
to Shipper at the Delivery Point(s) described in Exhibit B and Exhibit B-l
hereto. Company's obligation to redeliver gas at any Delivery Point on a firm
basis is limited to the Delivery Points specified

<PAGE>

                                                           Service Agreement No.

on Exhibit B and to the Maximum Daily Delivery Quantity (MDDQ) stated for each
such Delivery Point and in no event shall Shipper be entitled to deliveries in
excess of the MDDQ such that if Shipper elects to take gas at an Exhibit B-1
Delivery Point then the MDDQ at its Exhibit B Delivery Points will be reduced
proportionately. The sum of the MDDQ's for the Delivery Points on Exhibit B
shall equal the Transportation Demand.

         1.3 In the event Shipper is the successful bidder on released firm
transportation capacity under Section 22 of the Company's General Terms and
Conditions, Company will promptly email to Shipper the terms of the Capacity
Release Transaction. Upon the issuance of the email, subject to the terms,
conditions and limitations hereof and of Company's Rate Schedules FT and FT-NN,
Company agrees to provide the released firm transportation service to Shipper
under Rate Schedule FT or FT-NN, the General Terms and Conditions thereto, and
this Agreement.

                                   ARTICLE II
                              CONDITIONS OF SERVICE

         2.1 It is recognized that the transportation service hereunder is
provided on a firm basis pursuant to, in accordance with and subject to the
provisions of Company's Rate Schedule FT and/or FT-NN, and the General Terms and
Conditions thereto, which are contained in Company's FERC Gas Tariff, as in
effect from time to time, and which are hereby incorporated by reference. In the
event of any conflict between this Agreement and the terms of the applicable
Rate Schedule, the terms of the Rate Schedule shall govern as to the point of
conflict. Any limitation of transportation service hereunder shall be in
accordance with the priorities set out in Rate Schedule FT and/or FT-NN, as
applicable, and the General Terms and Conditions thereto.

         2.2 This Agreement shall be subject to all provisions of the General
Terms and Conditions applicable to Company's Rate Schedule FT and/or FT-NN as
such conditions may be revised from time to time. Unless Shipper requests
otherwise, Company shall provide to Shipper the filings Company makes at the
Federal Energy Regulatory Commission ("Commission") of such provisions of the
General Terms and Conditions or other matters relating to Rate Schedule FT or
FT-NN.

         2.3 Company shall have the right to discontinue service under this
Agreement in accordance with Section 15.3 of the General Terms and Conditions
hereto.

         2.4 The parties hereto agree that neither party shall be liable to the
other party for any special, indirect, or consequential damages (including,
without limitation, loss of profits or business interruptions) arising out of or
in any manner related to this Agreement.

         2.5 This Agreement is subject to the provisions of Part 284 of the
Commission's Regulations under the NGPA and the Natural Gas Act. Upon
termination of this Agreement, Company and Shipper shall be relieved of further
obligation to the other party except to complete the transportation of gas
underway on the day of termination, to comply with the provisions of Section 14
of the General Terms and Conditions with respect to any imbalances accrued prior
to termination of this Agreement, to render reports, and to make payment for all
obligations accruing prior to the date of termination.

                                  ARTICLE III
                                     NOTICES

         3.1 Except as provided in Section 8.6 herein, notices hereunder shall
be given pursuant to the provisions of Section 18 of the General Terms and
Conditions to the respective party at the applicable address, telephone number,
facsimile machine number or e-mail addresses provided by the parties on

                                       2

<PAGE>

                                                           Service Agreement No.

Appendix E to the General Terms and Conditions or such other addresses,
telephone numbers, facsimile machine numbers or email addresses as the parties
shall respectively hereafter designate in writing from time to time.

                                   ARTICLE IV
                                      TERM

         4.1 Subject to the provisions hereof, this Agreement shall become
effective as of the date first hereinabove written and shall be in full force
and effect for the primary term(s) set forth on Exhibit B hereto, if applicable,
and shall continue and remain in force and effect for successive evergreen terms
specified on Exhibit B hereto unless canceled by either party giving the
required amount of written notice specified on Exhibit B to the other party
prior to the end of the primary term(s) or any extension thereof.

         4.2 In the Event Shipper has not contracted for firm Transportation
Demand under this Agreement directly with Company, as set forth on Exhibit B
hereto, then the term of this Agreement shall be effective as of the date first
hereinabove written and shall remain in full force and effect for a primary term
through the end of the month and month to month thereafter unless canceled by
either party giving: at least five (5) days written notice to the other party
prior to the end of the primary term or any extension thereof, provided however,
this agreement will automatically terminate if no nominations are requested
during a period of 12 consecutive months It is provided, however that this
Agreement shall not terminate prior to the expiration of the effective date of
any Capacity Release Transaction.

                                   ARTICLE V
                              CONDITIONS PRECEDENT

         5.1 Unless otherwise agreed to by the parties, the terms of Rate
Schedule FT and/or FT-NN, as applicable, and the General Terms and Conditions
thereto, shall apply to the acquisition of construction of any facilities
necessary to effectuate this Agreement. Other provisions of this Agreement
notwithstanding, company shall be under no obligation to commence service
hereunder unless and until (1) all facilities, of whatever nature, as are
required to permit the receipt, measurement, transportation, and delivery of
natural gas hereunder have been authorized, installed, and are in operating
condition, and (2) Company, in its reasonable discretion has determined that
such service would constitute transportation of natural gas authorized under all
applicable regulatory authorizations and the Commission's Regulations.

                                       3

<PAGE>

                                                           Service Agreement No.

                                   ARTICLE VI
                                  REMUNERATION

         6.1 Shipper shall pay Company monthly for the transportation services
rendered hereunder the charges specified in Rate Schedule FT, Rate Schedule
FT-NN, and under each effective Capacity Release Transaction, as applicable,
including any penalty and other authorized charges assessed under the applicable
FT or FT-NN Rate Schedule and the General Terms and Conditions. For service
requested from Company under Rate Schedule FT or FT-NN, Company shall notify
Shipper as soon as practicable of the date services will commence hereunder, and
if said date is not the first day of the month, the Reservation Charge for the
first month of service hereunder shall be adjusted to reflect only the actual
number of days during said month that transportation service is available.
Company may agree from time to time to discount the rates charged Shipper for
services provided hereunder in accordance with the provisions of Rate Schedule
FT and/or FT-NN, as applicable. Said discounted charges shall be set forth on
Exhibit E hereto or the parties may agree to a Negotiated Rate for such services
in accordance with the provisions of Rate Schedule FT or FT-NN. Said discounted
or Negotiated Rates shall be set forth on Exhibit E or Exhibit F, respectively,
hereto and shall take precedence over the charges set forth in Rate Schedules FT
or FT-NN during the period in which they are in effect.

                                       4

<PAGE>

                                                           Service Agreement No.

         6.2 The rates and charges provided for under Rate Schedule FT shall be
subject to increase or decrease pursuant to any order issued by the Commission
in any proceeding initiated by Company or applicable to the services performed
hereunder. Shipper agrees that Company shall, without any further agreement by
Shipper, have the right to change from time to time, all or any part of its
Proforma Service Agreement, as well as all or any part of Rate Schedule FT or
FT-NN, as applicable, or the General Terms and Conditions thereto, including
without limitation the right to change the rates and charges in effect
hereunder, pursuant to Section 4(d) of the Natural Gas Act as may be deemed
necessary by Company, in its reasonable judgment, to assure just and reasonable
service and rates under the Natural Gas Act. It is recognized, however, that
once a Capacity Release Transaction has been awarded, Company cannot increase
the Reservation Charge to be paid by Shipper under that Capacity Release
Transaction, unless in its bid the Acquiring Shipper has agreed to pay a
percentage of the maximum tariff rate in effect and the maximum tariff rate
increases during the term of the Capacity Release Transaction. Nothing contained
herein shall prejudice the rights of Shipper to contest at any time the changes
made pursuant to this Section 6.2, including the right to contest the
transportation rates or charges for the services provided under this Agreement,
from time to time, in any subsequent rate proceedings by Company under Section 4
of the Natural Gas Act or to file a complaint under Section 5 of the Natural Gas
Act with respect to such transportation rates or charges, the Rate Schedules, or
the General Terms and Conditions thereto.

                                  ARTICLE VII
                               SPECIAL PROVISIONS

         7.1 If Shipper is a seller of gas under more than one Service Agreement
and requests that company allow it to aggregate nominations for certain Receipt
Points for such Agreements, Company will allow such an arrangement under the
terms and conditions set forth in this Article VII. To be eligible to aggregate
gas, Shipper must comply with the provisions of Section 2.2 of the General Terms
and Conditions and the terms and conditions of the Supply Pool Balancing
Agreement executed by Shipper and Company pursuant thereto.

         7.2 If Shipper is a purchaser of gas from a seller that is selling from
an aggregate of Receipt Points, and Shipper wishes to nominate to receive gas
from such seller's aggregate supplies of gas, Company will allow such a
nomination, provided that the seller (i) has entered into a Supply Pool
Balancing Agreement with Company and (ii) submits a corresponding nomination to
deliver gas to Shipper from its aggregate supply pool.

                                  ARTICLE VIII
                                  MISCELLANEOUS

         8.1 This Agreement constitutes the entire Agreement between the parties
and no waiver by Company or Shipper of any default of either party under this
Agreement shall operate as a waiver of any subsequent default whether of a like
or different character.

         8.2 The laws of the State of Alabama shall govern the validity,
construction, interpretation, and effect of this Agreement.

         8.3 No modification of or supplement to the terms and provisions hereof
shall be or become effective except by execution of a supplementary written
agreement between the parties except that (i) a Capacity Release Transaction may
be issued, and (ii) in accordance with the provisions of Rate Schedule FT and/or
FT-NN, as applicable, and the General Terms and Conditions thereto, Receipt
Points may be added to or deleted from Exhibit A and the Maximum Daily Receipt
Quantity for any Receipt Point on Exhibit A may be changed upon execution by
Company and Shipper of a Revised Exhibit A to reflect said change(s), and (iii)
Delivery Points may be added to or deleted from Exhibit B and the Maximum

                                       5

<PAGE>

                                                           Service Agreement No.

Daily Delivery Quantity for any Delivery Point may be changed upon execution by
Company and Shipper of a Revised Exhibit B to reflect said change(s). It is
provided, however, that any such change to Exhibit A or Exhibit B must include
corresponding changes to the existing Maximum Daily Receipt Quantities or
Maximum Daily Delivery Quantities, respectively, such that the sum of the
changed Maximum Daily Receipt Quantities-shall not exceed the Transportation
Demand and the sum of the Maximum Daily Delivery Quantities equals the
Transportation Demand.

         8.4 This Agreement shall bind and benefit the successors and assigns of
the respective parties hereto. Subject to the provisions of Section 22 of the
General Terms and Conditions applicable hereto, either party may assign this
Agreement to an affiliated company without the prior written consent of the
other party, provided that the affiliated company is creditworthy pursuant to
Section 2.1(d) of the General Terms and Conditions, but neither party may assign
this Agreement to a nonaffiliated company without the prior written consent of
the other party, which consent shall not be unreasonably withheld; provided,
however, that either party may assign or pledge this Agreement under the
provisions of any mortgage, deed or trust, indenture or similar instrument.

         8.5 Exhibits A, A-l, B, B-1, and F attached to this Agreement
constitute a part of this Agreement are incorporated herein.

         8.6 This Agreement is subject to all present and future valid laws and
orders, rules, and regulations of any regulatory body of the federal or state
government having or asserting jurisdiction herein. After the execution of this
Agreement for firm transportation capacity from Company, each party shall make
and diligently prosecute all necessary filings with federal or other
governmental bodies, or both, as may be required for the initiation and
continuation of the transportation service which is the subject of this
Agreement and to construct and operate any facilities necessary therefore. Each
party shall have the right to seek such governmental authorizations as it deems
necessary, including the right to prosecute its requests or applications for
such authorization in the manner it deems appropriate. Upon either party's
request, the other party shall timely provide or cause to be provided to the
requesting party such information and material not within the requesting party's
control and/or possession that may be required for such filings. Each party
shall promptly inform the other party of any changes in the representations made
by such party herein and/or in the information provided pursuant to this
paragraph. Each party shall promptly provide the party with a copy of all
filings, notices, approvals, and authorizations in the course of the prosecution
of its filings. In the event all such necessary regulatory approvals have not
been issued or have not been issued on terms and conditions acceptable to
Company or Shipper within twelve (12) months from the date of the initial
application therefor, then Company or Shipper may terminate this Agreement
without further liability or obligation to the other party by giving written
notice thereof at any time subsequent to the end of such twelve-month period,
but prior to the receipt of all such acceptable approvals. Such notice will be
effective as of the date it is delivered to the U.S. Mail, for delivery by
certified mail, return receipt requested.

         8.7 If Shipper experiences the loss of any load by direct connection of
such load to the Company's system, Shipper may reduce its Transportation Demand
under this Service Agreement or any other Service Agreement for firm
transportation service between Shipper and Company by giving Company 30 days
prior written notice of such reduction within six (6) months of the date Company
initiates direct service to the industrial customer; provided, however, that any
such reduction shall be applied first to the Transportation Demand under the
Service Agreement with the shortest remaining contract term.

         In order to qualify for a reduction in its Transportation Demand,
Shipper must certify and provide supporting data that:

                                       6

<PAGE>

                                                           Service Agreement No.

         (i)      The load was actually being served by Shipper with gas
                  transported by Company prior to November 1, 1993.

         (ii)     If the load lost by Shipper was served under a firm contract,
                  the daily contract quantity shall be provided.

         (iii)    If the load lost by Shipper was served under an interruptible
                  contract, the average daily volumes during the latest twelve
                  months of service shall be provided.

         Shipper may reduce its aggregate Transportation Demand under all its
Service Agreements by an amount up to the daily contract quantity in the case of
the loss of a firm customer and/or up to the average daily deliveries during the
latest twelve month period in the case of the loss of an interruptible customer.
Such reduction shall become effective thirty days after the date of Shipper's
notice that it desires to reduce its Transportation Demand.

         8.8 (If applicable) This Agreement supersedes and cancels the Service
Agreement (# ___________) dated _______________ between the parties hereto.

         IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above by their respective duly authorized officers.

                                       7

<PAGE>

                                                           Service Agreement No.

Attest/Witness:                     SOUTHERN NATURAL GAS COMPANY

________________________________    By ___________________________________
                                         Its ___________________________________

                                         FLORIDA POWER CORPORATION d/b/a
                                         Progress Energy Florida, Inc.

________________________________    By ___________________________________
                                         Its ___________________________________

                                       8

<PAGE>

                                                           Service Agreement No.

                      FIRM TRANSPORTATION SERVICE AGREEMENT

                                   EXHIBIT "A"

--------------------------------------------------------------------------------
SERVICE TYPE   SERVICE CODE   RECEIPT POINTS/CODE   MDRQ  SEASON(1)   YEAR(2)
                                                            (Mcf)
--------------------------------------------------------------------------------
     FT             1           SLNG-SNG/060000     [*]     Summer      [*]
                                                    [*]     Winter      [*]
--------------------------------------------------------------------------------
     FT             2           SLNG-SNG/060000     [*]     Summer      [*]
                                                    [*]     Winter      [*]
                                                    [*]     Summer      [*]
                                                    [*]     Winter      [*]
--------------------------------------------------------------------------------

By:  ________________________________       By:  _______________________________
     Florida Power Corporation d/b/a             Southern Natural Gas Company
     Progress Energy Florida, Inc.

Effective Date:  _______________________

---------
         (1) The Summer Season is May 1 through September 30 of each year and
the Winter Season is October 1 through April 30 of each year.

         (2) The actual start date and end date for the FT Service will be
determined based on the "Commencement Date" as set forth in Section 1(a) of the
Precedent Agreement for the Cypress Project and the "Primary Term" as set forth
in Section 1(c) of said Precedent Agreement.

         [*] Confidential portion has been omitted and filed separately with the
Commission.

                                       9

<PAGE>

                                                           Service Agreement No.

                                   EXHIBIT A-1
                                 RECEIPT POINTS

All active Receipt Points on Company's contiguous pipeline system, a current
list of which shall be maintained by Company on its SoNet Premier bulletin
board.

                                       10

<PAGE>

                                                           Service Agreement No.

                                    EXHIBIT B
                                 DELIVERY POINTS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
SERVICE TYPE   SERVICE   START DATE(3)  PRIMARY TERM(4)  PT NOTICE    EVERGREEN TERM    EVRG NOTICE      DEL.        TD MDDQ
                CODE                                                                                 POINT/CODE       (Mcf)
                                                                                                        NAME
--------------------------------------------------------------------------------------------------------------------------------
<S>            <C>       <C>            <C>              <C>          <C>               <C>           <C>            <C>
    FT            1       05-01-2007     04-30-2027      24 mo.       36 mo.             24 mo.      SNG-FGTJack    [*]summer(5)
                                                                                                                    [*]winter(6)
--------------------------------------------------------------------------------------------------------------------------------
    FT            2       05-01-2008     09-30-2008      24 mo.       36 mo.              24 mo.     SNG-FGTJack    [*]
                          10-01-2008     04-30-2009                                                                 [*]
                          05-01-2009     09-30-2026                                                                 [*]
                          10-01-2009     04-30-2027                                                                 [*]
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

By:  ________________________________       By:  _______________________________
     Florida Power Corporation d/b/a             Southern Natural Gas Company
     Progress Energy Florida, Inc.

Effective Date:  _______________________

---------
         (3) The actual start date for the FT Service will be determined based
on the "Commencement Date" as set forth in Section 1(a) of the Precedent
Agreement for the Cypress Project.

         (4) The actual primary term end date for the FT Service will be
determined based on the "Primary Term" as set forth in Section 1(c) of the
Precedent Agreement for the Cypress Project.

         (5) The Summer Season is May 1 through September 30 of each year.

         (6) The Winter Season is October 1 through April 30 of each year.

         [*] Confidential portion has been omitted and filed separately with the
Commission.

                                       11

<PAGE>

                                                           Service Agreement No.

                                   EXHIBIT B-l
                                 DELIVERY POINTS

All active Delivery Points on Company's contiguous pipeline system, a current
list of which shall be maintained by Company on its SoNet Premier bulletin
board.

                                       12

<PAGE>

                                                           Service Agreement No.

                                   EXHIBIT "F"
                                 NEGOTIATED RATE

The rate to be charged Shipper for the firm Transportation Demand provided by
Company under this Service Agreement shall be a negotiated reservation rate of
$[*] per MMBtu for the Primary Term of this Service Agreement, plus [*]. The
rate to be charged Shipper for fuel under this Service Agreement shall be [*].

____________________________________________________________
Southern Natural Gas Company

____________________________________________________________

Florida Power Corporation d/b/a Progress Energy Florida, Inc.

Effective Date:  ______________________

End Date:  ____________________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       13

<PAGE>

              THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
                         REQUEST PURSUANT TO RULE 24b-2
              UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

                         GAS SALE AND PURCHASE CONTRACT

This Gas Sale and Purchase Contract (this "Contract") is entered into on
December 1, 2004 (the "Effective Date"), between BG LNG Services, LLC, a
Delaware limited liability company ("Seller") and Florida Power Corporation, a
Florida corporation, doing business as Progress Energy Florida, Inc. ("Buyer").

                                   WITNESSETH

WHEREAS, Seller desires to deliver and sell, and Buyer desires to receive and
purchase, certain quantities of Gas in accordance with the terms and conditions
specified in this Contract;

NOW THEREFORE, in consideration of the foregoing and of the agreements contained
herein, the Parties agree as follows:

SECTION 1. DEFINITIONS; INTERPRETATION

1.1 Definitions.  Unless otherwise defined herein or in any annex hereto, the
following terms, when used herein or in any annex hereto shall have the meanings
set forth below.

"AFFILIATE" shall mean, with respect to a Party, any entity controlled, directly
or indirectly, by such Party, any entity that controls, directly or indirectly,
such Party, or any entity directly or indirectly under common control with such
Party. For this purpose, "control" of any entity or Party means ownership of a
majority of the issued shares or voting power or control in fact of the entity
or Party.

"ALTERNATE DELIVERY POINT" shall mean any point of delivery other than the
Primary Delivery Point as mutually agreed between the Parties pursuant to the
procedures set forth in Section 3.5.

"BRITISH THERMAL UNIT" OR "BTU" shall mean the International BTU, which is also
called the Btu (IT).

"BUSINESS DAY" shall mean any day except Saturday, Sunday or Federal Reserve
Bank holidays and shall run from 8 a.m. to 5 p.m. Eastern Prevailing Time.

"CLAIMS" shall have the meaning set forth in Section 8.3.

"CONFIRMATION" shall mean a written document setting forth the terms of a Price
Change or a Delivery Point Change, as applicable.

"CONTRACT PRICE" shall mean, with respect to a particular delivery Day, the
amount expressed in U.S. Dollars per MMBtu determined pursuant to Section 3.3.

"CONTRACT QUANTITY" shall mean, with respect to a particular delivery Day, the
Contract Quantity for Hines plus the Contract Quantity for System, as
applicable.

"CONTRACT QUANTITY FOR HINES" shall mean the following quantities, each adjusted
to reflect any changes to the relevant Transporter(s) natural gas transportation
tariff(s) related to charges for fuel and/or losses and unaccounted for volumes,
with respect to the entire Delivery Period:

                                        1

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
     (i)  [*] MMBtu per Day for the Summer Months; and

     (ii) [*] MMBtu per Day for the Winter Months

"CONTRACT QUANTITY FOR SYSTEM" shall mean the following quantities, each
adjusted to reflect any changes to the relevant Transporter(s) natural gas
transportation tariff(s) related to charges for fuel and/or losses and
unaccounted for volumes:

(a)  with respect to the period from May, 2008 through April, 2009:

     (i)  [*] MMBtu per Day for the Summer Months; and

     (ii) [*] MMBtu per Day for the Winter Months; and

(b)  with respect to the period from May, 2009 through the last day of the
     Delivery Period:

     (i)  [*] MMBtu per Day for the Summer Months; and

     (ii) [*] MMBtu per Day for the Winter Months.

"CONTRACT VALUE" shall have the meaning set forth in Section 11.3.

"COSTS" shall mean, with respect to the Non-Defaulting Party, reasonable
brokerage fees, commissions and other similar third party transaction costs and
expenses reasonably incurred by such Party either in terminating any arrangement
pursuant to which it has hedged its obligations or entering into new
arrangements to replace the quantity of Gas not delivered or received hereunder
as a result of the early termination of this Contract, and all reasonable
attorneys' fees and expenses incurred by the Non-Defaulting Party in connection
with a the early termination of this Contract pursuant to Section 11.3 hereof.

"COVER STANDARD" shall mean that if there is an unexcused failure to take or
deliver any quantity of Gas pursuant to this Contract, then the performing Party
shall use commercially reasonable efforts to (i) if Buyer is the performing
Party, (1) obtain replacement Gas at a price reasonable for Gas in the Southern
Natural Gas Company or the Florida Gas Transmission Company production area (or,
if available at a lower price, at or near the Primary Delivery Point) (or an
alternate fuel if elected by Buyer and replacement Gas is not available), and
(2) utilize Buyer's then available secondary transportation that is not
curtailed by a Transporter to effect delivery of such replacement gas; or (ii)
if Seller is the performing Party, sell such Gas at a price reasonable for Gas
at or near the Primary Delivery Point; and consistent with (a) the amount of
notice provided by the non-performing Party; (b) the immediacy of the Buyer's
Gas consumption needs or Seller's Gas sales requirements, as applicable; (c) the
quantities involved; and (d) the anticipated length of failure by the
non-performing Party.

"CREDIT RATING" means, with respect to any entity, the rating then assigned by
S&P or Moody's to such entity's unsecured, senior long-term debt obligations
(not supported by third party credit enhancements), or if such entity does not
have a rating for its senior unsecured long-term debt, then the rating then
assigned by S&P or Moody's to such entity as a corporate or issuer rating.

"CREDIT SUPPORT ANNEX" shall mean Annex A to this Contract which shall
supplement, form part of, and be incorporated into this Contract.

"CYPRESS PIPELINE" shall mean the proposed expansion of Southern Natural Gas
Company's ("Southern's") natural gas pipeline system that extends from (i) a
point of interconnection with Southern's existing natural gas pipeline system
downstream of the Elba Island LNG Terminal; to (ii) an interconnection with the
existing (as of the Effective Date), natural gas transmission facilities owned
by Florida Gas Transmission Company in Clay County, Florida.

"DAY" shall mean a period of 24 consecutive hours, coextensive with a "day" as
defined by the Receiving Transporter.

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                        2

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
"DEFAULTING PARTY" shall have the meaning set forth in Section 11.1.

"DELIVERY PERIOD" shall be the period during which deliveries are to be made
under this Contract and shall commence on the date that both of the Cypress
Pipeline and the FGT Expansion have been placed into service and end on the date
twenty (20) years thereafter.

"DELIVERY POINT" shall mean either the Primary Delivery Point or and Alternate
Delivery Point, as applicable.

"DELIVERY POINT CHANGE" shall have the meaning set forth in Section 3.5.

"DEMAND CHARGE" shall have the meaning set forth in Section 3.2.

"EARLY TERMINATION DATE" shall have the meaning set forth in Section 11.2.

"ELBA ISLAND LNG TERMINAL" shall mean the LNG terminal facility located in
Chatham County, Georgia, which is, as of the Effective Date, owned and operated
by Southern LNG, Inc.

"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1.

"FERC" shall mean the Federal Energy Regulatory Commission or any successor
thereto.

"FGT EXPANSION" shall mean the proposed expansion (as of the Effective Date) of
Florida Gas Transmission Company's natural gas pipeline system from (i) a
bidirectional meter station at the interconnection of Southern Natural Gas
Company's natural gas pipeline system and Florida Gas Transmission Company's
natural gas pipeline system, to (ii) Buyer's Hines electrical generating
facility located in Polk County, Florida.

"FIRM" shall mean that either Party may interrupt its performance with respect
to the delivery or receipt of Gas without liability only to the extent that such
performance is prevented for reasons of Force Majeure; provided, however, that
during Force Majeure interruptions, the Party invoking Force Majeure may be
responsible for any Imbalance Charges as set forth in Section 4.3 related to
interruption by the Party invoking Force Majeure after the nomination is made to
the relevant Transporter(s) and until the change in deliveries and/or receipts
is confirmed by the Transporter(s).

"FIXED PRICE" shall have the meaning set forth in Section 3.6.

"FORCE MAJEURE" shall have the meaning set forth in Section 12.

"GAS" shall mean any mixture of hydrocarbons and noncombustible gases in a
gaseous state consisting primarily of methane. Gas shall specifically include
regasified LNG, which such LNG Seller has received from either domestic or
foreign sources and that Seller (or an agent of Seller) has regasified such that
it meets the requirements of the first sentence of this definition.

"GOVERNMENT AGENCY" means any federal, state, local, territorial or municipal
government, governmental department, commission, board, bureau, agency,
instrumentality, judicial or administrative body (or any agency, instrumentality
or political subdivision thereof).

"GOVERNMENTAL APPROVAL" means any authorization, consent, approval, license,
lease, ruling, permit, exemption, filing, variance, order, judgment, decree,
publication, notice to, declarations of or with or regulation by or with any
Government Agency relating to the execution, delivery or performance of this
Agreement.

"GUARANTEE" shall mean a guarantee from a party's corporate parent or other
Affiliate that is issued to the other Party to this Contract (as a beneficiary
thereof), to support the obligations of such first Party.

                                        3

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
"GUARANTOR" shall mean with respect to a Party, the entity that has provided a
Guarantee to support the obligations of such Party under this Contract.
Initially, the Guarantor for Seller shall be BG Energy Holdings Ltd. or its
successor, and the Guarantor for Buyer shall be not applicable.

"IMBALANCE CHARGES" shall mean any fees, penalties, costs or charges (in cash or
in kind) assessed by a Transporter for failure to satisfy the Transporter's
balancing and/or nomination requirements.

"LAW" means any statute, law, ordinance, code, rule or regulation, or other
applicable legislative or administrative action of any Government Agency, or any
judicial or administrative interpretation thereof.

"LIQUEFIED NATURAL GAS" ("LNG") shall mean natural gas (primarily methane) that
has been liquefied by reducing its temperature to -260 degrees Fahrenheit at
atmospheric pressure.

"MARKET VALUE" shall have the meaning set forth in Section 11.3.

"MERGER EVENT" shall mean, with respect to a Party or other entity, an event in
which such Party or other entity consolidates or amalgamates with, or merges
into or with, or transfers substantially all of its assets to another entity and
(i) the resulting entity fails to assume all of the obligations of such Party or
other entity hereunder or (ii) the benefits of any credit support provided
pursuant to or related to this Contract fail to extend to the performance by
such resulting, surviving or transferee entity of its obligations hereunder or
(iii) the resulting entity's creditworthiness is materially weaker than that of
such Party or other entity immediately prior to such action.

"MMBTU" shall mean one million British thermal units, which is equivalent to one
dekatherm.

"MONTH" shall mean the period beginning on the first Day of the calendar month
and ending immediately prior to the commencement of the first Day of the next
calendar month.

"MONTHLY DEFICIENCY" shall have the meaning set forth in Section 3.6.

"MOODY'S" means Moody's Investor Services, Inc. or its successor.

"NET SETTLEMENT AMOUNT" shall have the meaning set forth in Section 11.4.

"NON-DEFAULTING PARTY" shall have the meaning set forth in Section 11.2.

"NOTICE" shall have the meaning set forth in Section 9.1 hereof.

"PARTY" shall mean Seller or Buyer individually.

"PARTIES" shall mean Seller and Buyer collectively.

"PAYMENT DATE" shall mean, the later of (i) the 25th day of the Month
immediately following the Month during which such Gas is delivered, or (ii) 10
days after receipt of an invoice relating to such Gas; provided, however, that
if such day is not a Business Day then the Payment Date shall be the immediately
following Business Day.

"PERFORMANCE ASSURANCE" shall have the meaning set forth in the Credit Support
Annex.

"PERSON" means any individual, corporation, partnership, limited liability
company, association, joint venture, trust, unincorporated organization,
Government Agency or other entity.

"PRICE CHANGE" shall have the meaning set forth in Section 3.5.

                                        4

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
"PRIMARY DELIVERY POINT" shall mean the interconnection of (i) the Elba Island
LNG Terminal and (ii) the Southern Natural Gas Company gas transportation
pipeline system.

"RECEIVING TRANSPORTER" shall mean the Transporter receiving Gas at a Delivery
Point, or absent such receiving Transporter, the Transporter delivering Gas at a
Delivery Point.

"S&P" means the Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.)
or its successor.

"SCHEDULED GAS" shall mean the quantity of Gas confirmed by Transporter(s) for
movement, transportation or management.

"SPOT PRICE" shall mean, with respect to any particular delivery Day, the price
listed in the publication Gas Daily (as published by The McGraw-Hill Companies,
Inc. or its successor), in the table entitled "Daily Price Survey" and reported
as the "Louisiana-Onshore-South . . . SONAT . . . Midpoint" for Gas delivered
during such Day for which such a price is then so published; provided, if there
is no single price published for such location for such Day, but there is
published a range of prices, then the Spot Price shall be the average of such
high and low prices. If no price or range of prices is so published for such
Day, then the Spot Price shall be the average of the following: (i) the price
(determined as stated above) for the first Day for which a price or range of
prices is published that next precedes the relevant Day; and (ii) the price
(determined as stated above) for the first Day for which a price or range of
prices is published that next follows the relevant Day.

"SUMMER MONTHS" shall mean May, June, July, August, and September.

"TERM" shall have the meaning set forth in Section 2.1 hereof.

"TRANSPORTER(S)" shall mean all Gas gathering or pipeline companies, or local
distribution companies, acting in the capacity of a transporter, transporting
Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery
Point(s).

"WINTER MONTHS" shall mean October, November, December, January, February, March
and April.

1.2 Interpretation.  Unless the context otherwise requires:

     (a) Words singular and plural in number will be deemed to include the other
and pronouns having masculine or feminine gender will be deemed to include the
other.

     (b) Any reference in this Contract to any Person includes its successors
and permitted assigns and, in the case of any Government Agency, any Person
succeeding to its functions and capacities.

     (c) Any reference in this Contract to any Section or Annex means and refers
to the Section contained in this Contract or in an Annex attached to this
Contract.

     (d) Other grammatical forms of defined words or phrases have corresponding
meanings.

     (e) A reference to writing includes typewriting, printing, lithography,
photography and any other mode of representing or reproducing words, figures or
symbols in a lasting and visible form.

     (f) Unless otherwise specified, a reference to a specific time for the
performance of an obligation is a reference to that time in the place where that
obligation is to be performed.

     (g) A reference to a Party to this Contract includes that Party's
successors and permitted assigns.

                                        5

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
     (h) A reference to a document or agreement, including this Contract,
includes a reference to that document or agreement as novated, amended,
supplemented or restated from time to time.

1.3 Technical Meanings.  Words not otherwise defined herein that have well-known
and generally accepted technical or trade meanings are used herein in accordance
with such recognized meanings, as of the Effective Date.

SECTION 2. TERM; DELIVERY PERIOD

2.1 The term of this Contract (the "Term") shall commence on the Effective Date
and shall remain in effect until the expiration of the Delivery Period, unless
otherwise extended by written agreement of the Parties.

2.2 In the event that, prior to the first date of the Delivery Period as defined
above, Seller and Buyer mutually agree to move up the first day of the Delivery
Period, the Parties shall execute a written amendment to this Contract
re-defining "Delivery Period" to reflect the new start date thereof.

SECTION 3. PERFORMANCE OBLIGATIONS

3.1 Seller agrees to sell and deliver to Buyer, and Buyer agrees to receive and
purchase from Seller, the Contract Quantity on a Firm basis at the Delivery
Point(s) each Day during the Delivery Period in accordance with the terms and
conditions of this Contract.

3.2 With respect to each Month during the Delivery Period, Buyer shall pay to
Seller an amount equal to the product of: (i) the amount of Gas actually
delivered by Seller to Buyer in such Month, and (ii) the Contract Price
applicable to such Month (as determined pursuant to Section 3.3).

3.3 Unless otherwise agreed between the Parties pursuant to this Section 3.3,
the Contract Price with respect to each delivery Day during a particular Month,
shall be the price (expressed in U.S. Dollars per MMBtu) for such Month as
published in Inside FERC's Gas Market Report (as published by The McGraw-Hill
Companies, Inc. or its successor), under the heading "Market Center Spot-Gas
Prices" "South Louisiana" "Henry Hub" "Midpoint", [*] per MMBtu. For any
particular Month during the Term, the Parties may agree to change the Contract
Price for such Month from that which is described in the previous sentence to
either a fixed dollar amount per MMBtu, or a price based on another index (other
than the Inside FERC index referenced above), in either case as mutually agreed
by the Parties pursuant to the procedures set forth in Section 3.5.

3.4 Unless otherwise agreed between the Parties pursuant to this Section 3.4,
the Delivery Point with respect to each delivery Day during a particular Month,
shall be the Primary Delivery Point. For any particular Month during the Term,
the Parties may agree to change the Delivery Point for such Month to an
Alternate Delivery Point pursuant to the procedures set forth in Section 3.5.

3.5 To effect a change to the Contract Price for one or more Months (a "Price
Change"), or to effect a change from the Primary Delivery Point to an Alternate
Delivery Point for one or more Months (a "Delivery Point Change"), the Party
seeking such change must make such request of the other Party prior to 2:30 P.M.
Eastern Prevailing Time on the last trading day of the NYMEX gas futures
contract (Henry Hub) of the Month immediately preceding the relevant Month or
Months for which the change would be effective. Each Party shall exercise
reasonable efforts to accept such a proposed change; provided, however, that a
Party shall not be required to accept a change that would not be commercially
reasonable for such a Party. The Parties acknowledge that Seller's source of Gas
for use under this Contract is regasified LNG delivered to the Elba Island LNG
Terminal, and therefore any proposed change in Delivery Point that does not
allow delivery from the Elba Island LNG Terminal is not commercially reasonable
for Seller. If

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                        6

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
the Party to whom the request is made accepts the proposed change, such
agreement between the Parties may be effectuated through a recorded telephone
conversation, with the offer and acceptance constituting the agreement of the
Parties. The Parties shall be legally bound from the time they so agree to the
terms of such Price Change or Delivery Point Change and may each rely thereon.
Any such agreement shall be considered to be a "writing" and to have been
"signed" for all purposes hereunder. Notwithstanding the foregoing sentence, the
Parties agree that either Party may confirm a telephonic transaction by sending
the other Party a Confirmation via facsimile or other mutually agreeable means
within a reasonable time of such agreement; provided that the failure of either
or both Parties to send a Confirmation shall not invalidate the oral agreement
of the Parties. The confirming Party adopts its confirming letterhead, or the
like, as its signature on any Confirmation as the identification and
authentication of the confirming Party. If the Confirmation contains any
provision other than those relating to the terms of the Price Change or Delivery
Point Change (i.e. any terms other than the applicable Month and the
newly-agreed Contract Price or Delivery Point for such Month), which modify or
supplement this Contract, such provisions shall not be binding on the receiving
Party; provided that the foregoing shall not invalidate any Price Change or
Delivery Point Change agreed to by the Parties. Any failure by either or both
Parties to send a Confirmation for any Price Change or Delivery Point Change
shall not affect the enforceability of any such Price Change or Delivery Point
Change actually entered into nor shall such failure constitute or be deemed to
constitute a breach of this Contract. If a sending Party's Confirmation is
materially different from the receiving Party's understanding of the agreement
concerning the applicable Price Change or Delivery Point Change, such receiving
Party shall notify the sending Party in writing (facsimile acceptable) within
two Business Days of receipt of such Confirmation and the Parties shall work
together to resolve the discrepancies. The failure of the receiving Party to so
notify the sending Party in writing by such deadline constitutes the receiving
Party's agreement to the terms of the applicable Price Change or Delivery Point
Change described in the sending Party's Confirmation. If there are any material
differences between timely sent Confirmations governing the same Price Change or
Delivery Point Change, then neither Confirmation shall be binding with respect
to the differing terms until or unless such differences are resolved including
the use of any evidence that clearly resolves the differences in the
Confirmations. In the event of a conflict among the terms of (i) a binding
Confirmation (including by deemed acceptance as described above), (ii) the oral
agreement of the Parties which may be evidenced by a recorded conversation, and
(iii) this Contract, the terms of the documents shall govern in the priory
listed in this sentence.

3.6 The Parties may agree to a Price Change that results in a fixed price
("Fixed Price") as opposed to a Contract Price that floats based on NYMEX,
industry postings, reference publications, or other external market factors or
indices. If a Fixed Price is established and, for any reason whatsoever (other
than a breach or default by either Party under this Contract), including,
without limitation, an event of Force Majeure or any circumstance (other than a
breach or default by either Party under this Contract) that would excuse a
Party's obligation to deliver or receive Gas under this Contract, Seller
delivers or Buyer takes less than the full Contract Quantity for such Month (a
"Monthly Deficiency"), then (1) Buyer shall pay Seller an amount equal to such
Monthly Deficiency (expressed in MMBtus) multiplied by the amount, if any, by
which the Fixed Price exceeds the applicable NYMEX Natural Gas futures contract
price for such Month, or (2) Seller shall pay to the Buyer an amount equal to
such Monthly Deficiency (expressed in MMBtus) multiplied by the amount, if any,
by which the applicable NYMEX Natural Gas futures contract for such Month
exceeds the Fixed Price established for such Month.

SECTION 4. TRANSPORTATION, NOMINATIONS AND IMBALANCES

4.1 Seller shall have the sole responsibility for transporting the Gas to the
Delivery Point(s). Buyer shall have the sole responsibility for transporting the
Gas from the Delivery Point(s).

4.2 The Parties shall coordinate their nomination activities, giving sufficient
time to meet the deadlines of the affected Transporter(s). Each Party shall give
the other Party timely prior notice, sufficient to meet the requirements of all
Transporter(s) involved in the transaction, of the quantities of Gas to be
delivered and purchased each Day. Should either Party become aware that actual
deliveries at the Delivery Point(s) are greater or lesser than the Scheduled
Gas, such Party shall promptly notify the other Party.

                                        7

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
4.3 The Parties shall use commercially reasonable efforts to avoid imposition of
any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter
that includes Imbalance Charges, the Parties shall determine the validity as
well as the cause of such Imbalance Charges. If the Imbalance Charges were
incurred as a result of Buyer's receipt of quantities of Gas greater than or
less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or
reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance
Charges were incurred as a result of Seller's delivery of quantities of Gas
greater than or less than the Scheduled Gas, then Seller shall pay for such
Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer.
Notwithstanding anything to the contrary herein, in the event of Force Majeure,
the Parties shall follow the procedures set forth in Section 12.8 and each Party
shall be responsible for any Imbalance Charges arising out of its
non-conformance with such procedures.

SECTION 5. QUALITY AND MEASUREMENT

All Gas delivered by Seller shall meet the requirements of the Receiving
Transporter's pipeline specifications for pipeline quality Gas. The unit of
quantity measurement for purposes of this Contract shall be one MMBtu dry.
Measurement of Gas quantities hereunder shall be in accordance with the
established procedures of the Receiving Transporter.

SECTION 6. TAXES

Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any Government Agency ("Taxes") on or with
respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to
be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all
Taxes after the Delivery Point(s). If a Party is required to remit or pay Taxes
that are the other Party's responsibility hereunder, the Party responsible for
such Taxes shall promptly reimburse the other Party for such Taxes. Any Party
entitled to an exemption from any such Taxes or charges shall furnish the other
Party any necessary documentation thereof. Failure by either Party to furnish
such documentation shall not give rise to a breach of this Contract.

SECTION 7. BILLING, PAYMENT AND AUDIT

7.1 Seller shall invoice Buyer for Gas delivered and received in the preceding
Month and for any other applicable charges, providing supporting documentation
acceptable in industry practice to support the amount charged. If the actual
quantity delivered is not known by the billing date, billing will be prepared
based on the quantity of Scheduled Gas. The invoiced quantity will then be
adjusted to the actual quantity on the following Month's billing or as soon
thereafter as actual delivery information is available.

7.2 Buyer shall remit the amount due under Section 7.1 via wire transfer or ACH,
in immediately available funds, on or before the Payment Date. Except as
otherwise provided in Section 7.3, in the event any payments are due Buyer
hereunder, payment to Buyer shall be made in accordance with this Section 7.2.

7.3 In the event payments become due pursuant to Section 13, the performing
Party may submit an invoice to the non-performing Party for an accelerated
payment setting forth the basis upon which the invoiced amount was calculated.
Payment from the non-performing Party shall be due within five (5) Business Days
after receipt of invoice.

7.4 If the invoiced Party, in good faith, disputes the amount of any such
invoice or any part thereof, such invoiced Party will pay the portion of such
amount as it concedes to be correct; provided, however, if the invoiced Party
disputes the amount due, it must provide supporting documentation acceptable in
industry practice to support the amount paid or disputed. In the event the
Parties are unable to resolve such dispute, either Party may pursue any remedy
available at law or in equity to enforce its rights pursuant to this Section 7.

                                        8

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
7.5 If the invoiced Party fails to remit the full amount payable when due,
interest on the unpaid portion shall accrue from the date due until the date of
payment at a rate equal to the lower of (i) the then-effective prime rate of
interest published under "Money Rates" by The Wall Street Journal, plus two
percent per annum; or (ii) the maximum applicable lawful interest rate.

7.6 A Party shall have the right, at its own expense, upon reasonable Notice and
at reasonable times, to examine and audit and to obtain copies of the relevant
portion of the books, records and telephone recordings of the other Party only
to the extent reasonably necessary to verify the accuracy of any statement,
charge, payment or computation made under this Contract. This right to examine,
audit and obtain copies shall not be available with respect to proprietary
information not directly relevant to obligations under this Contract. Such right
shall include, but not be limited to, copies of any and all statements and/or
records pertaining to transportation of Gas with respect to which any such
transportation charges are included in billing and/or invoices hereunder, and/or
are the subject of any bona fide dispute between the Parties, and without regard
as to whether such records and/or statements were generated by the Party being
audited or the relevant Transporter. All invoices and billings shall be
conclusively presumed final and accurate and all associated claims for
underpayments or overpayments shall be deemed waived unless such invoices or
billings are objected to in writing, with adequate explanation and/or
documentation, within two years after the Month of Gas delivery. All retroactive
adjustments under Section 7 shall be paid in full by the Party owing payment
within 30 Days of Notice and substantiation of such inaccuracy.

7.7 The Parties shall net all undisputed amounts due and owing, and/or past due,
arising under this Contract such that the Party owing the greater amount shall
make a single payment of the net amount to the other Party in accordance with
Section 7.2; provided that no payment required to be made pursuant to the terms
of Section 10 shall be subject to netting under this Section 7.7.

SECTION 8. TITLE, WARRANTY AND INDEMNITY

8.1 Unless otherwise specifically agreed, title to the Gas shall pass from
Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for
and assume any liability with respect to the Gas prior to its delivery to Buyer
at the specified Delivery Point(s). Buyer shall have responsibility for and
assume any liability with respect to said Gas after its delivery to Buyer at the
Delivery Point(s).

8.2 Seller warrants that it will have the right to convey and will transfer good
and merchantable title to all Gas sold hereunder and delivered by it to Buyer,
free and clear of all liens, encumbrances and claims. EXCEPT AS OTHERWISE
PROVIDED HEREIN, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE
DISCLAIMED.

8.3 Seller agrees to indemnify and defend Buyer and its Affiliates, and their
respective agents, employees, officers and directors, and save them harmless
from all losses, liabilities or claims including reasonable attorneys' fees and
costs of court ("Claims"), from any and all Persons, arising from or out of
claims of title, personal injury or property damage from said Gas or other
charges thereon which attach before title passes to Buyer, except to the extent
attributable to Buyer's negligence or willful misconduct. Buyer agrees to
indemnify and defend Seller and its Affiliates, and their respective agents,
employees, officers and directors, and save them harmless from all Claims, from
any and all persons, arising from or out of claims regarding payment, personal
injury or property damage from said Gas or other charges thereon which attach
after title passes to Buyer, except to the extent attributable to Seller's
negligence or willful misconduct. Each Party shall indemnify, defend and hold
harmless the other Party against any taxes for which such Party is responsible
under Section 6.

8.4 Notwithstanding the other provisions of this Section 8, as between Seller
and Buyer, Seller will be liable for all Claims to the extent that such arise
from the failure of Gas delivered by Seller to meet the quality requirements of
Section 5.

                                        9

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
SECTION 9. NOTICES

9.1 All correspondence, invoices, payments and other communications made
pursuant to this Contract (each a "Notice") shall be made to the addresses set
forth below for such Party or as otherwise may be specified in writing by the
respective Parties from time to time by providing Notice in accordance with this
Section 9.1.

<TABLE>
<S>                                          <C>
If to Buyer:                                 If to Seller:

With respect to Notices that do not relate   With respect to Notices that do not
to invoices or payments:                     relate to invoices or payments:

Progress Energy Florida, Inc.                BG LNG Services, LLC
Attn: Contracts Department                   Attn: President
410 S. Wilmington Street (PEB 10)            5444 Westheimer, Suite 1775
Raleigh, NC 27601                            Houston, Texas 77056
Fax: 919-546-2649                            Fax: 713-599-3781

A copy of any Notice above relating to       A copy of any Notice above relating
Sections 8.3, 10, 11, and 19.10 shall        to Sections 8.3, 10, 11, and 19.10
also be sent to:                             shall also be sent to:

Attn: Assistant General Counsel - Energy
Trading & Marketing                          Attn: VP-Legal
410 S. Wilmington Street (PEB 17)            5444 Westheimer, Suite 1775
Raleigh, NC 2760                             Houston, Texas 77056
Fax: 919-546-2920                            Fax: 713-599-3781

With respect to Notices that relate to       With respect to Notices that relate
invoices or payments:                        to invoices or payments:

Attn: PEF Gas Accounting                     Attn: Financial Controller
410 S. Wilmington Street (PEB 10)            5444 Westheimer, Suite 1775
Raleigh, NC 27601                            Houston, Texas 77056
Fax: 919-546-3258                            Fax: 713-599-3781
</TABLE>

9.2 All Notices required hereunder may be sent by facsimile or mutually
acceptable electronic means, a nationally recognized overnight courier service,
first class mail or hand delivered. Any Notice sent pursuant to Sections 8.3,
10, 11, 12, 15.2, or 19.10 shall not be sent via electronic means.

9.3 Notice shall be given when received on a Business Day by the addressee. In
the absence of proof of the actual receipt date, the following presumptions
shall apply: Notices sent by facsimile shall be deemed to have been received
upon the sending Party's receipt of its facsimile machine's confirmation of
successful transmission. If the day on which such facsimile is received is not a
Business Day or is after 5:00 p.m. on a Business Day, then such facsimile shall
be deemed to have been received on the next following Business Day. Notice by
overnight mail or courier shall be deemed received on the next Business Day
after it was sent or such earlier time as confirmed by the receiving Party.
Notice via first class mail shall be considered delivered five Business Days
after mailing.

SECTION 10. CREDIT

10.1 Seller shall cause its Guarantor to provide to Buyer a Guarantee in the
form of Annex B by January 1, 2007.

                                       10

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
10.2 The Parties agree that the provisions of the Credit Support Annex set forth
the exclusive conditions under which a Party shall be required to transfer
Performance Assurance to the other Party as well as the exclusive conditions
under which a Party shall release such Performance Assurance, and the Parties
agree to abide by all of the terms and conditions of the Credit Support Annex.

SECTION 11. EVENTS OF DEFAULT; REMEDIES

11.1 An "Event of Default" shall mean, with respect to a Party (the "Defaulting
Party"), the occurrence of any of the following: Such Party shall (i) make an
assignment or any general arrangement for the benefit of creditors; (ii) file a
petition or otherwise commence, authorize, or acquiesce in the commencement of a
proceeding or case under any bankruptcy or similar law for the protection of
creditors or have such petition filed or proceeding commenced against it; (iii)
otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to
pay its debts as they fall due; (v) have a receiver, provisional liquidator,
conservator, custodian, trustee or other similar official appointed with respect
to it or substantially all of its assets; (vi) fail to provide Performance
Assurance to the other Party pursuant to the terms of the Credit Support Annex;
(vii) not have paid any amount due the other Party hereunder on or before the
second Business Day following written Notice that such payment is due and such
amount is not the subject of a bona fide dispute pursuant to Section 7.4; (viii)
make any representation or warranty herein that was false or misleading in any
material respect when made or when deemed made or repeated; (ix) fail to perform
any material covenant or obligation set forth in this Contract (except to the
extent constituting a separate Event of Default, and except for such Party's
obligations to deliver or receive Gas, the exclusive remedy for which is
provided in Section 13) if such failure is not remedied within three (3)
Business Days after written notice; (x) be the subject of a Merger Event; (xi)
disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the
validity of, this Contract; (xii) fail to deliver or take delivery of the
Contract Quantity for a cumulative sixty (60) Days in any twelve (12) month
period or any thirty (30) Days in succession, in either case if such failure is
not excused, (xiii) failure of Seller to cause its Guarantor to provide to Buyer
a Guarantee as provided in Section 10.1 if such failure is not remedied by
Seller within five (5) Business Days of Buyer sending a Notice of such failure
to Seller; or (xiv) with respect to Seller's Guarantor only, the failure of
Seller's Guarantor's Guarantee to be in full force and effect for purposes of
this Contract (other than in accordance with its terms) prior to the
satisfaction of all obligations of Seller hereunder without the written consent
of Buyer, or such Guarantor shall repudiate, disaffirm, disclaim, or reject, in
whole or in part, or challenge the validity of the Guarantee.

11.2 If an Event of Default has occurred and is continuing, the Party that is
not the Defaulting Party (the "Non-Defaulting Party"), shall have the right in
its sole discretion to (i) designate a day (the "Early Termination Date") by
providing the Defaulting Party with written notice thereof, which such day shall
be within 20 days after the delivery of such Notice, upon which the
Non-Defaulting Party will accelerate all amounts owing between the Parties
hereunder and liquidate and terminate this Contract pursuant to Section 11.3;
(ii) withhold payments due to the Defaulting Party under this Contract; and/or
(iii) suspend performance under this Contract.

11.3 If the Non-Defaulting Party elects to liquidate and terminate this
Contract, the Non-Defaulting Party shall determine, as of the Early Termination
Date, in good faith and in a commercially reasonable manner, (i) the amount owed
(whether or not then due) by each Party with respect to all Gas delivered and
received between the Parties under this Contract on and before the Early
Termination Date and all other applicable charges relating to such deliveries
and receipts (including without limitation any amounts owed under Section 13),
for which payment has not yet been made by the Party that owes such payment
under this Contract and (ii) the Market Value, as defined below, of this
Contract. The Non-Defaulting Party shall liquidate and accelerate this Contract
at its Market Value, so that the amount equal to the difference between such
Market Value and the Contract Value, as defined below, shall be due to Buyer if
such Market Value exceeds the Contract Value and to Seller if the opposite is
the case. "Contract Value" means the amount of Gas remaining to be delivered or
purchased under this Contract multiplied by the applicable Contract Price(s),
and "Market Value" means the amount of Gas remaining to be delivered or
purchased under this Contract multiplied by the market price for a similar
transaction at the Delivery Point (or in the event Buyer is the Non-Defaulting
Party and is unable to obtain a reasonable determination of

                                       11

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
the market price at the Primary Delivery Point, then at any other delivery point
that is reasonably geographically close to the Primary Delivery Point where
Buyer is able to obtain a reasonable determination of the market price),
determined by the Non-Defaulting Party in a commercially reasonable manner; in
each case, discounting each amount that would have otherwise been due under this
Contract to present value in a commercially reasonable manner as of the Early
Termination Date (to take account of the period between the date of liquidation
and the date on which such amount would have otherwise been due pursuant to this
Contract). To ascertain the Market Value, the Non-Defaulting Party may consider,
among other valuations, any or all of the settlement prices of NYMEX Gas futures
contracts, quotations from leading dealers in energy swap contracts or physical
gas trading markets, similar sales or purchases and any other bona fide
third-party offers, all adjusted for the length of the remaining portion of the
Term and differences in transportation costs (including but not limited to the
availability and cost of firm capacity on pipelines and the cost of pipeline
expansion capacity if firm capacity is not available). A Party shall not be
required to enter into a replacement transaction(s) in order to determine the
Market Value. Any extension(s) of the Term to which the Parties are not bound as
of the Early Termination Date shall not be considered in determining Contract
Value and Market Value. For the avoidance of doubt, any option pursuant to which
one Party has the right to extend the Term shall not be considered in
determining Contract Value and Market Value. The rate of interest used in
calculating net present value shall be determined by the Non-Defaulting Party in
a commercially reasonable manner.

11.4 The Non-Defaulting Party shall net or aggregate the following, as
appropriate: (1) any and all amounts owing between the Parties under Section
11.3, (2) any Costs incurred by the Non-Defaulting Party, and (3) any amounts
received by a Party as a result of exercising its rights to apply or realize
against Performance Assurance in accordance with the Credit Support Annex, so
that all such amounts are netted or aggregated to a single liquidated amount
payable by one Party to the other (the "Net Settlement Amount").

11.5 If any obligation that is to be included in any netting, aggregation or
setoff pursuant to Section 11.4 is unascertained, the Non-Defaulting Party may
in good faith estimate that obligation and net, aggregate or setoff, as
applicable, in respect of the estimate, subject to the Non-Defaulting Party
accounting to the Defaulting Party when the obligation is ascertained. Any
amount not then due which is included in any netting, aggregation or setoff
pursuant to Section 11.4 shall be discounted to net present value in a
commercially reasonable manner determined by the Non-Defaulting Party.

11.6 As soon as practicable after a liquidation, Notice shall be given by the
Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and
whether the Net Settlement Amount is due to or due from the Non-Defaulting
Party. The Notice shall include a written statement explaining in reasonable
detail the calculation of such amount, provided that failure to give such Notice
shall not affect the validity or enforceability of the liquidation or give rise
to any claim by the Defaulting Party against the Non-Defaulting Party. The Net
Settlement Amount shall be paid by the Party that owes it by the close of
business on the second Business Day following the receipt of such Notice, which
date shall not be earlier than the Early Termination Date. Interest on any
unpaid portion of the Net Settlement Amount shall accrue from the date due until
the date of payment at a rate equal to the lower of (i) the then-effective prime
rate of interest published under "Money Rates" by The Wall Street Journal, plus
two percent per annum; or (ii) the maximum applicable lawful interest rate.

11.7 After calculation of a Net Settlement Amount in accordance with Section
11.4, if the Defaulting Party would be owed the Net Settlement Amount, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(i) set off against such Net Settlement Amount any amounts due and owing by the
Defaulting Party to the Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting Party and the Non-Defaulting
Party and/or (ii) to the extent any such amounts are not yet liquidated in
accordance with Section 11.3, withhold payment of the Net Settlement Amount to
the Defaulting Party. The remedy provided for in this Section 11.7 shall be
without prejudice and in addition to any right of setoff, combination of
accounts, lien, deduction, retention or withholding or other right to which any
Party is at any time otherwise entitled (whether by operation of law, contract
or otherwise).

                                       12

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
11.8 If the Defaulting Party disputes the Non-Defaulting Party's calculation of
the Net Settlement Amount, the Defaulting Party shall, within two Business Days
of receipt of Non-Defaulting Party's calculation thereof, provide to the
Non-Defaulting Party a detailed written explanation of the basis for such
dispute; provided, however, that if the Net Settlement Amount is due from the
Defaulting Party, the Defaulting Party must nonetheless pay the Net Settlement
Amount by the deadline described in Section 11.6. Notwithstanding the foregoing,
nothing in this Section 11 shall be construed to restrict or preclude the Party
to whom the Net Settlement Amount is owed from realizing on Performance
Assurance held by such Party at any time upon and during the continuance of an
Event of Default with respect to the other Party, notwithstanding (and without
awaiting the outcome of) any dispute as to the Net Settlement Amount.

SECTION 12. FORCE MAJEURE

12.1 Except with regard to a Party's obligation to make any payment due under
this Contract, neither Party shall be liable to the other for failure to perform
its obligation to deliver or receive Gas under this Contract, to the extent such
failure was caused by Force Majeure. The term "Force Majeure" means any cause or
event not reasonably within the control of the Party claiming suspension and not
due to the fault or negligence of such Party, including without limitation, (i)
physical events such as acts of God, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, explosions, breakage or accident or
necessity of repairs to facilities, machinery, equipment or lines of pipe; (ii)
weather related events affecting an entire geographic region, such as low
temperatures which cause freezing or failure of wells or lines of pipe; (iii)
interruption and/or curtailment of Firm transportation and/or storage by
Transporters; (iv) acts of others such as strikes, lockouts or other industrial
disturbances, riots, sabotage, insurrections, wars or acts of terrorism; (v)
governmental actions such as necessity for compliance with any court order, Law
or policy having the effect of law promulgated by a Government Agency having
jurisdiction, (vi) any event, action or circumstance described in the preceding
clauses (i) through (v) which impacts the Elba Island LNG Terminal; and (vii)
any port closure, weather related events or acts of others that impede the
unloading, storage or revaporization of LNG at the Elba Island LNG Terminal.

12.2 Notwithstanding anything to the contrary in Section 12.1, neither Party
shall be entitled to claim Force Majeure with respect to a failure to fulfill
its obligation to deliver or receive Gas hereunder to the extent such failure
was caused by any or all of the following circumstances: (i) the curtailment of
interruptible or secondary Firm transportation (unless primary, in-path, Firm
transportation is also curtailed); (ii) economic hardship, to include, without
limitation, Seller's ability to sell Gas at a higher or more advantageous price
than the Contract Price, or Buyer's ability to purchase Gas at a lower or more
advantageous price than the Contract Price; (iii) any event or circumstance
affecting the supply, extraction, production, or transportation of LNG, which
such event or circumstance occurs upstream of the sea buoy identified as "RW "T"
Mo(A) WHIS (the "Sea Buoy") which is located just East of the mouth of the
Savannah River Channel (which shall specifically include any event or
circumstance that affects foreign liquefaction facilities, LNG shipping or other
facilities, pipes, other transportation facilities, and/or LNG supply, in each
case to the extent such event or circumstance occurs upstream of the Sea Buoy);
(iv) acts of others such as strikes, lockouts or other industrial disturbances,
riots, sabotage, insurrections, wars or acts of terrorism that occur other than
on United States soil; or (v) governmental actions by any agency or authority
outside of the United States.

12.3 A Party shall not be entitled to claim Force Majeure and shall not be
relieved of its obligations to deliver or receive Gas hereunder unless such
Party has made reasonable efforts to avoid the adverse impacts of the event(s)
or circumstance(s) constituting Force Majeure and resolve such event(s) or
circumstance(s) in an effort to resume performance. In an event of Force Majeure
(including an event of Force Majeure that affects the Elba Island LNG Terminal),
the Party claiming excuse shall have no obligation to seek alternate Gas or LNG
supplies in order to satisfy any obligation hereunder; provided, however, that
in the case of Force Majeure affecting Seller's performance, Seller shall be
required to deliver to Buyer Gas owned by Seller then available in storage at
the Elba Island LNG Terminal on a pro-rated basis with Seller's other customers,
irrespective of the economic impact to Seller. Buyer

                                       13

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
acknowledges that, with respect to sales of Gas by Seller, it is anticipated
that such Gas will primarily be derived from LNG that Seller or its affiliates
import through the Elba Island LNG Terminal.

12.4 Seller shall have the right to sell and deliver to third parties any
quantities of Gas which Buyer has notified Seller it is unable to receive due to
an event of Force Majeure, throughout the duration of the period stipulated in
such Notice as the period during which Buyer will be unable to receive such
quantities of Gas.

12.5 Notwithstanding anything to the contrary herein, the Parties agree that the
settlement of strikes, lockouts or other industrial disturbances that occur
within the United States shall be within the sole discretion of the Party
experiencing such disturbance.

12.6 The Party whose performance is prevented by Force Majeure must provide
Notice to the other Party as soon as practicable after discovery of the event or
circumstance constituting Force Majeure. Initial notice may be given orally;
however, written Notice with reasonably full particulars of the event or
occurrence is required as soon thereafter as reasonably possible. Except as
specifically provided in Section 12.7, upon providing written Notice of Force
Majeure to the other Party, the affected Party shall be relieved of its
obligation to make or accept delivery of Gas, as applicable, from the onset of
the Force Majeure event, but only to the extent that the event or circumstance
constituting Force Majeure is the direct cause of such Party's inability to
perform its obligations, and only with respect to the portion of the Contract
Quantity which cannot be delivered or received due to the Force Majeure. To the
extent a Force Majeure claim is valid pursuant to this Section 12, neither Party
shall be deemed to have failed in any payment obligation related to the portion
of the Contract Quantity which cannot be delivered or received due to the Force
Majeure.

12.7 Upon receiving written Notice of Force Majeure from the Party affected
thereby, the Party not affected by the Force Majeure shall notify any affected
Transporters and make any necessary adjustments to nominations to account for
any changes in quantities to be delivered or received. Such nomination changes
shall be made by the non-affected Party as soon as practicable after receipt of
written Notice of Force Majeure from the affected Party, but in no event later
than 5:00 p.m. of the next following Business Day after receipt of the Notice.

12.8 The performing Party shall have the right to terminate this Contract upon
60 days prior written Notice to the non-performing Party, without any liability
to such performing Party under this Contract (except any outstanding liability
for performance rendered), if due to the occurrence of Force Majeure, the
non-performing Party is unable to perform its obligations for a period of 730
consecutive Days.

12.9 In the event Seller institutes any curtailments due to events or
circumstances that would constitute Force Majeure hereunder, deliveries of Gas
to Buyer under this Contract shall be allocated ratably by Seller with
deliveries to Seller's other customers (i) whose deliveries are also excused by
such Force Majeure, and (ii) which are also supplied on a firm basis with gas
from the Elba Island LNG Terminal delivered to a primary point of receipt in
Southern's Zone 3. Seller shall allocate deliveries ratably based on the
applicable contract volumes of this Contract and such other customers.

SECTION 13. UNEXCUSED FAILURE TO DELIVER/RECEIVE GAS; REMEDY

13.1 Except as set forth in Section 11.1(xii) above, if Seller fails to deliver
or Buyer fails to receive Gas during a particular Day and such is not excused
pursuant to Section 12 of this Contract, the sole and exclusive remedy of the
performing Party shall be recovery of the following:

     (i) in the event of a breach by Seller to deliver Gas during such Day,
     payment by Seller to Buyer in an amount equal to (A) the positive
     difference, if any, between the purchase price paid by Buyer utilizing the
     Cover Standard minus the Contract Price applicable to such Day, adjusted
     for commercially reasonable differences in transportation costs to or from
     the Delivery Point(s), multiplied

                                       14

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
     by (B) the difference between the Contract Quantity applicable to such Day
     and the quantity actually delivered by Seller during such Day; or

     (ii) in the event of a breach by Buyer to receive Gas during such Day,
     payment by Buyer to Seller in the amount equal to (A) the positive
     difference, if any, between the Contract Price applicable to such Day minus
     the price received by Seller utilizing the Cover Standard for the resale of
     such Gas, adjusted for commercially reasonable differences in
     transportation costs to or from the Delivery Point(s), multiplied by (B)
     the difference between the Contract Quantity applicable to such Day and the
     quantity actually received by Buyer during such Day; or

     (iii) in the event that Buyer has used commercially reasonable efforts to
     replace the Gas or Seller has used commercially reasonable efforts to sell
     the Gas to a third party, and no such replacement or sale is available,
     payment to the performing Party in the amount equal to (A) any unfavorable
     difference between the Contract Price applicable to such Day and the Spot
     Price applicable to such Day, adjusted for such additional transportation
     costs required to deliver gas from a secondary receipt point utilizing
     Buyer's existing transportation to the applicable Delivery Point,
     multiplied by (B) the difference between the Contract Quantity applicable
     to such Day and the quantity actually delivered by Seller and received by
     Buyer during such Day.

13.2 The non-performing Party shall pay the performing Party the amount
calculated pursuant to Section 13.1 within five (5) Business Days after receipt
of the performing Party's invoice, which shall set forth the basis upon which
such amount was calculated. Imbalance Charges shall not be recovered under
Section 13.1, but rather Seller and/or Buyer shall be responsible for Imbalance
Charges, if any, as provided in Section 4.3.

13.3 In the event Seller fails to deliver Gas during a particular Day and such
is not excused pursuant to Section 12 of this Contract or by Buyer's failure to
perform, then in such case, Seller shall exercise commercially reasonable
efforts to obtain and deliver to Buyer replacement Gas.

SECTION 14. LIMITATIONS

THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED
IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE
OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL
OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR
MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE
THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN
EQUITY ARE WAIVED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY
PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE
CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

                                       15

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
SECTION 15. CONDITIONS PRECEDENT

15.1 The Parties' respective obligations under this Contract are subject to the
fulfillment by the respective dates specified below (but in no event later than
the first Day of the Delivery Period), of the following conditions, unless such
are waived by the applicable Party, as provided in Section 15.2:

     (i)  The approval of this Contract by Buyer's senior management and if
          necessary, Buyer's Board of Directors, by January 31, 2005; and

     (ii) The entry by the Florida Public Service Commission of an order
          approving this Contract without the need for significant alteration
          (which shall be determined by Buyer in its sole discretion), by June
          15, 2005; and

     (iii) The entry by Florida Public Service Commission of an order approving
          a determination of the need for the additional proposed combined-cycle
          Unit #4 that is planned to be installed at Buyer's Hines electric
          power generating facility located in Polk County, Florida, by May 1,
          2005; and

     (iv) The execution by Buyer of agreements with each of Southern Natural Gas
          Company and Florida Gas Transmission Company for each of them to
          provide Buyer with firm transportation on their respective systems in
          quantities related to the Contract Quantity of Gas specified in this
          Contract, each in a form and containing terms and conditions
          satisfactory to Buyer in its sole discretion (collectively, the
          "Transportation Agreements"), by December 6, 2004; and

     (v)  The entry by the Florida Public Service Commission of an order
          approving each of the Transportation Agreements without the need for
          significant alteration (which shall be determined by Buyer in its sole
          discretion), by June 15, 2005; and

     (vi) Completion and commencement of operation of (which shall be determined
          by Buyer in its sole discretion), the Cypress Pipeline and the FGT
          Expansion by March 1, 2009; and

     (vii) The elimination (to Buyer's sole satisfaction) by Buyer of any term
          or condition contained in the Preliminary Determination issued by FERC
          related to the Cypress Pipeline that in Buyer's sole discretion are
          reasonably likely to have a materially adverse effect on Buyer; within
          30 days following FERC's issuance of the Preliminary Determination
          relating to the Cypress Pipeline, but not later than January 31, 2006;
          and

     (viii) The approval of this Contract by Seller's senior management and if
          necessary, Seller's Board of Directors, by January 31, 2005.

15.2 If any condition precedent set forth in clauses (i) through (vii) of
Section 15.1 has not been satisfied by the specified date, then (i) Buyer shall
have the right to provide a written Notice to Seller waiving the satisfaction of
such condition precedent, (ii) the Parties may extend by mutual agreement the
deadline for satisfaction thereof, or (iii) either Party may terminate this
Contract without any liability to the other Party or any further obligation
hereunder by delivering a Notice of termination to the other Party; provided,
however, that Buyer may not so terminate this Contract unless Buyer has
exercised due diligence to satisfy each such condition precedent (to the extent
such condition precedent is within the control of Buyer). If the condition
precedent set forth in clause (viii) of Section 15.1 has not been satisfied by
the specified date, then (i) Seller shall have the right to provide a written
Notice to Buyer waiving the satisfaction of such condition precedent, (ii) the
Parties may extend by mutual agreement the deadline for satisfaction thereof, or
(iii) either Party may terminate this Contract without any liability to the
other Party or any further obligation hereunder by delivering a Notice of
termination to the other Party; provided, however, that Seller may not so
terminate this Contract unless Seller has exercised due diligence to satisfy
such condition precedent. Upon delivery of any Notice of termination pursuant

                                       16

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
to this Section 15.2, this Contract shall terminate with immediate effect and
neither Party shall have any liability to the other Party whatsoever as a result
of such termination.

SECTION 16. INTENTIONALLY OMITTED.

SECTION 17. ADDITIONAL FIRM TRANSPORTATION AND GAS SUPPLY

17.1 Definitions.  For purposes of this Section 17, the following terms shall
     have the following definitions:

"Call Option Delivery Point" means the interconnection of the Cypress Pipeline
and Southern's South Georgia lateral; provided, however, that if (i) Southern's
rates for South Georgia incremental service are rolled into Southern's FT Zone 3
rate, and (ii) Seller is able to transfer its primary delivery point for such
firm transportation to the Suwannee Project on the South Georgia lateral (the
"Suwannee Project Delivery Point"), then in such case the Call Option Delivery
Point shall be deemed to be the Suwannee Project Delivery Point.

"Firm Transportation" means firm capacity entitlements held by Seller on the
first and/or second phase(s) of the Cypress Pipeline ("Phase I") and ("Phase
II") respectively from the Elba Island LNG Terminal to an interconnection with
Florida Gas Transmission Company, with the Call Option Delivery Point in
Seller's primary transportation path.

"Suwannee Project" means a combined-cycle, gas-fired electric generating unit
that is constructed by Buyer during the Term of this Contract and that is
located at or within very close proximity to Buyer's existing Suwannee plant
site.

17.2 Buyer's First Call Option and Second Call Option Related To Gas Supply and
     Firm Transportation For Suwannee Projects.

     (a) Subject to the conditions set forth in this Section 17, Buyer shall
have the option to purchase from Seller on a Firm basis, and, if such option is
properly exercised, Seller agrees to sell to Buyer, up to [*] MMBtu/day (but no
less than [*] MMBtu/day) of Gas ("Buyer's First Call Option") to supply gas for
the Suwannee Project; provided, however, that Seller may elect to reduce the
quantity of Buyer's First Call Option by up to [*] MMBtu/day upon notice to
Buyer within thirty (30) days of Buyer's election to exercise Buyer's First Call
Option. In addition, Buyer shall have the right to purchase from Seller on a
Firm basis, and if such option is properly exercised, Seller agrees to sell to
Buyer, up to an additional [*] MMBtu/day (but no less than [*] MMBtu/day) of Gas
("Buyer's Second Call Option"); provided, however, that Seller may elect to
reduce the quantity of Buyer's Second Call Option by up to [*] MMBtu/day upon
notice to Buyer within thirty (30) days of Buyer's election to exercise Buyer's
Second Call Option. Buyer's First Call Option and Buyer's Second Call Option may
be referred to herein individually as a "Call Option" and collectively as the
"Call Options".

     (b) Buyer must notify Seller of its exercise of Buyer's First Call Option
by no later than [*]. If Buyer exercises Buyer's First Call Option, Buyer shall
diligently pursue an order from the Florida Public Service Commission ("FPSC")
for a determination of the need for the Suwannee Project or waive such
requirement within five (5) days of exercising such Call Option. If the FPSC
rejects Buyer's request for such determination, Buyer may withdraw its exercise
of Buyer's First Call Option on the earlier of [*] or thirty (30) days after the
rejection. Seller may terminate Buyer's First Call Option and the rights arising
thereunder after [*] if the FPSC fails to issue an order approving the Suwannee
Project, unless Buyer elects to waive all conditions precedent relating to such
approval. Buyer must notify Seller of its exercise of Buyer's Second Call Option
after the earlier of (i) exercise of Buyer's First Call Option or (ii) [*];
provided that if Seller has previously acquired capacity on

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       17

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
the second phase of the Cypress Pipeline ("Phase II"), then Buyer must notify
Seller of its exercise of Buyer's Second Call Option no later than [*].

     (c) To the extent Buyer exercises either of the Call Options, Seller agrees
to sell and deliver, and Buyer agrees to purchase from Seller, the Gas at the
Call Option Delivery Point. The price with respect to each delivery Day during a
particular Month shall be [*].

     (d) To the extent that Buyer exercises either of the Call Options, Buyer
may elect to relocate the Call Option Delivery Point to the Primary Delivery
Point, in which event Seller shall release to Buyer Firm Transportation, on a
prearranged basis at the maximum applicable rate for such Firm Transportation as
reflected in Southern's tariff for Phase I and/or Phase II, as applicable, for a
quantity and duration equal to the term and the quantity of Gas to be purchased
pursuant to the applicable Call Option(s). If Buyer elects to relocate the Call
Option Delivery Point, the Call Option Price shall be reduced by [*].

     (e) To the extent Buyer exercises either of the Call Options, the sale of
Gas shall be for a term expiring on the later of (i) 20 years after the
in-service date of Phase I, or (ii) in the event Seller acquires capacity on
Phase II in connection with the exercise of either the Buyer's First Call Option
and/or Buyer's Second Call Option, 20 years after the in-service date of Phase
II. The sale of Gas shall commence on the later of (a) the in-service date of
Phase I, or (b) the date specified in Buyer's notice exercising either the
Buyer's First Call Option and/or Buyer's Second Call Option; provided that,
unless otherwise agreed, Buyer must specify a date [*] following delivery of
such notice of exercise. Except as set forth in this Section 17, the terms and
conditions of the purchase and sale of any Gas pursuant to the exercise of a
Call Option shall be consistent with the agreed terms and conditions of the
purchase and sale of the Contract Quantity.

     (f) If, prior to the exercise of either the Buyer's First Call Option or
the Buyer's Second Call Option, Seller has committed to firm natural gas sales
and transportation arrangements or stand-alone transportation arrangements under
Phase I or Phase II ("Additional Sales") that result, at any time during which
such Call Options could be exercised by Buyer, in Seller having availability of
less than [*] MMBtu/day of Firm Transportation on Phase II, Buyer's right to
exercise either Call Option shall be limited to Seller's remaining available
Firm Transportation. If (i) Buyer fails to exercise Buyer's First Call Option or
withdraws its exercise of Buyer's First Call Option, (ii) Seller elects not to
acquire capacity on Phase II, and (iii) prior to the exercise of Buyer's Second
Call Option, Seller has committed to Additional Sales that result, at any time
during which such Buyer's Second Call Option could be exercised, in Seller
having availability of less than [*] MMBtu/day of Firm Transportation on Phase
I, then Buyer's right to exercise Buyer's Second Call Option shall be limited
Seller's remaining available Firm Transportation. Seller shall notify Buyer of
any bona fide contractual offers from a third party that is not affiliated with
Seller for Additional Sales with a term in excess of [*]. Buyer shall have the
right, exercisable within sixty (60) days of delivery of such notice, to elect
to purchase gas and transportation capacity or transportation capacity (in the
case of a transportation-only arrangement) from Seller on the same terms and
conditions as specified therein. [*]. Seller represents and warrants to Buyer
that as of the Effective Date, there are no Additional Sales other than those
existing sales to [*]. Buyer acknowledges that the existence of [*] right under
[*],

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       18

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
whether or not exercised, constitutes an "Additional Sale." Seller shall
promptly provide Notice to Buyer [*].

     (g) If Buyer is prevented from exercising either the Buyer's First Call
Option or Buyer's Second Call Option pursuant to Section 17.2(f), Buyer may
request that Seller release the Firm Transportation associated with such Call
Option. Upon Buyer's request, Seller shall permanently release to Buyer such
Firm Transportation if both of the following conditions have been satisfied: (i)
Seller does not require the Firm Transportation in order to perform its
obligations pursuant to its agreements for Additional Sales and (ii) Seller is
permitted pursuant to applicable FERC policy and Southern's FERC Gas Tariff to
release the capacity at a transportation rate equal to Seller's negotiated
transportation rate. If Seller is not permitted pursuant to applicable FERC
policy and Southern's FERC Gas Tariff to release the Firm Transportation to
Buyer at a rate equal to Seller's negotiated transportation rate, then Buyer and
Seller shall work together to agree upon an alternative arrangement that will
put the Parties in the same economic position.

     (h) For any release of Firm Transportation hereunder, Seller shall submit a
request to Southern to release the Firm Transportation to Buyer on a prearranged
basis at a rate equal to the negotiated rate set forth in Seller's
transportation agreement with Southern; provided, however, that, if the
negotiated rate is less than the applicable maximum rate set forth in Southern's
FERC Gas Tariff, Buyer shall be solely responsible for matching any bid by a
competing shipper for the Firm Transportation above the negotiated rate. If
Buyer is required to bid a rate that is higher than Seller's negotiated rate in
order to acquire the Firm Transportation, Seller shall reimburse Buyer for the
difference to the extent that such reimbursement is permitted under applicable
FERC policy and Southern's FERC Gas Tariff. The term of any release of Firm
Transportation hereunder shall be as set forth in Section 17.2(e). If Seller is
not permitted pursuant to applicable FERC policy and Southern's FERC Gas Tariff
to reimburse Buyer for the difference between the rate bid by Buyer in order to
acquire the Firm Transportation and Seller's negotiated rate, then Buyer and
Seller shall work together to agree upon an alternative arrangement that will
put the Parties in the same economic position.

     (i) At any time after the exercise of the option described in this Section
17.2, the Parties may agree, pursuant to the procedures set forth in Section
3.5, to change the Suwannee Gas Contract Price for such Month to either a fixed
dollar amount per MMBtu, or a price based on another index (other than the
Inside FERC index referenced above), in either case as mutually agreed by the
Parties.

     (j) If Seller notifies Southern at any time that it desires to acquire
capacity on Phase II, Seller shall notify Buyer thereof within thirty (30) Days
of Seller's notice to Southern.

17.3 [*]

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       19

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
17.4 Buyer's Representations Related To The Next Power Project.  Buyer shall not
accept, propose, or enter into any gas supply contract or similar arrangement in
connection with the Next Power Project that, if effective, would prevent Seller
from supplying the Requirements of the Next Power Project (up to [*] MMBtu/day
of Gas) pursuant to Section 17.3 above. Buyer represents and warrants as of the
Effective Date, there are no binding gas supply commitments or gas purchase
obligations related to the Next Power Project.

SECTION 18. REPRESENTATIONS AND WARRANTIES

18.1 At all times beginning with the Effective Date (unless otherwise provided
below) and ending at the end of the Term, each Party represents and warrants to
the other Party that:

(i)  the execution, delivery and performance of this Contract are within its
     powers, have been duly authorized by all necessary action and do not
     violate any of the terms and conditions in its governing documents, any
     contracts to which it is a party or any Law, rule, regulation order or the
     like applicable to it;

(ii) it is duly organized, validly existing and in good standing under the laws
     of the jurisdiction of its formation;

(iii) beginning at the time of commencement of any delivery obligations
     hereunder, it will have all Governmental Approvals required for it to
     legally perform its obligations under this Contract;

(iv) this Contract, and each other document executed and delivered in accordance
     with this Contract constitutes its legally valid and binding obligations
     enforceable against it in accordance with their respective terms (subject
     to applicable bankruptcy, reorganization, moratorium or similar Laws
     affecting creditors' rights generally and subject, as to enforceability, to
     equitable principles of general application regardless of whether
     enforcement is sought in a proceeding in equity or at law);

(v)  there are no proceedings similar to those described in Section 11.1 (i)
     through (v) pending or being contemplated by it or, to its knowledge,
     threatened against it; (vi) except with respect to FERC proceedings in
     connection with the Cypress Pipeline, there is not pending or, to its
     knowledge, threatened against it or any of its Affiliates any legal
     proceedings that could materially adversely affect its ability to perform
     its obligations under this Contract;

(vii) no Event of Default with respect to it has occurred and is continuing and
     no such event or circumstance would occur as a result of its entering into
     or performing its obligations under this Contract;

(viii) it is acting for its own account, has made its own independent decision
     to enter into this Contract and as to whether this Contract is appropriate
     or proper for it based upon its own judgment, is not relying upon the
     advice or recommendations of the other Party in so doing, and is capable of
     assessing the merits of and understanding, and understands and accepts, the
     terms, conditions and risks of this Contract;

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       20

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
(ix) it has entered into this Contract in connection with the conduct of its
     business and it has the capacity or ability to make or take delivery of the
     Gas referred to hereunder and the material economic terms hereof have been
     subject to individual negotiation by the Parties.

(x)  it is the understanding of both of the Parties that this Contract
     constitutes a "forward contract" within the meaning of the United States
     Bankruptcy Code and that each of Buyer and Seller is (i) a "forward
     contract merchant" within the meaning of the United States Bankruptcy Code,
     (ii) an "eligible contract participant" as such term is defined in the
     Commodity Exchange Act, as amended 7 U.S.C. Section 1 (a) (12), and (iii)
     an "eligible commercial entity" as such term is defined in the Commodity
     Exchange Act, as amended 7 U.S.C. Section 1 (a) (11).

18.2 Seller further represents and warrants to Buyer that Seller and/or its
Affiliates will either own or hold firm rights to (i) terminalling capacity at
the Elba Island LNG Terminal, (ii) LNG supplies; and (iii) transportation
capacity to effect delivery to any Alternate Delivery Point(s) (to the extent
that the Parties have agreed upon an Alternate Delivery Point that requires
Seller to obtain transportation), all to the extent necessary to meet Seller's
obligations to Buyer under this Contract.

SECTION 19. MISCELLANEOUS

19.1 Assignment.  No assignment of this Contract, in whole or in part, whether
by merger and operation of law or otherwise, will be made without the prior
written consent of the non-assigning Party, which consent shall not be
unreasonably withheld or delayed; provided, however, either Party may transfer
its interest to any Affiliate by assignment, merger or otherwise without the
prior approval of the other Party if (i) such transfer or assignment is to an
entity whose creditworthiness is equal to or better than that of the transferee
party immediately preceding the transfer, (ii) such transfer has no adverse tax
consequences to the non-transferring Party, (iii) the assignee agrees in writing
to be bound to all of the assignor's obligations under this Contract, and (iv)
such transfer does not affect any Guarantee (or the benefit to the named
beneficiary thereof) that has been previously provided to the non-transferring
Party and that was still in effect immediately prior to such transfer.

19.2 Severability.  If any term or provision of this Contract or the application
thereof to any Person or circumstance is held to be illegal, invalid or
unenforceable under any present or future Law or by any Governmental Agency, (a)
such term or provision shall be fully severable, (b) this Contract shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, (c) the remaining provisions of this Contract
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom and (d) the
Parties shall negotiate in good faith to agree upon legal, valid and enforceable
substitute provisions to carry out the purposes and intent of the illegal,
invalid or unenforceable terms and provisions.

19.3 Waiver.  Any term or condition of this Contract may be waived at any time
by the Party hereto that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition. The failure or delay of
either Party to require performance by the other Party of any provision of this
Contract shall not affect its right to require performance of such provision
unless and until such performance has been waived by such Party in writing in
accordance with the terms hereof. No waiver by either Party of any term or
condition of this Contract, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Contract on any future occasion.

19.4 Entire Agreement.  This Contract sets forth all understandings between the
Parties respecting the transaction contemplated herein, and any prior contracts,
understandings and representations, whether oral or written, relating to such
transaction are merged into and superseded by this Contract. Except as otherwise
provided in Section 3.4 hereof, this Contract may be amended only by a writing
executed by both Parties.

                                       21

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
19.5 Governing Law.  The validity, interpretation and performance of this
Contract and each of its provisions shall be governed by the applicable laws of
the state of New York, without regard to the application of such state's laws
relating to conflicts of laws (except for Section 5-1401 and 5-1402 of the
General Obligations Laws).

19.6 Venue.  EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE JURISDICTION OF
ANY COURT SITTING OUTSIDE OF THE STATE OF TEXAS, THE STATE OF LOUISIANA, THE
STATE OF ILLINOIS, OR THE STATE OF MISSISSIPPI FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS CONTRACT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND AGREES THAT SUCH COURTS SITTING OUTSIDE OF THE STATE
TEXAS, THE STATE OF LOUISIANA, THE STATE OF ILLINOIS, OR THE STATE OF
MISSISSIPPI SHALL BE THE EXCLUSIVE FORUMS FOR RESOLVING ANY DISPUTE OR
CONTROVERSY UNDER OR WITH RESPECT TO THIS CONTRACT. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDINGS BROUGHT IN SUCH COURTS AND ANY CLAIMS THAT ANY SUCH PROCEEDINGS
BROUGHT IN SUCH COURTS HAVE BEEN BROUGHT IN INCONVENIENT FORUMS.

19.7 Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH,
RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS CONTRACT.

19.8 Third Parties.  This Contract is intended solely for the benefit of the
Parties. Nothing in this Contract shall be construed to create any duty or
liability to, or standard of care with reference to, any other Person.

19.9 Headings.  The headings and subheadings contained in this Contract are used
solely for convenience and do not constitute a part of this Contract between the
Parties and shall not be used to construe or interpret the provisions of this
Contract.

19.10 Confidentiality.  Neither Party shall disclose directly or indirectly
without the prior written consent of the other Party the terms of this Contract
to a third party (other than the employees, lenders, royalty owners, counsel,
accountants and other agents of the Party and its Affiliates, prospective
purchasers of all or substantially all of a Party's assets or of any rights
under this Contract, provided such Persons shall have agreed to keep such terms
confidential) except (i) in order to comply with any applicable Law, order,
regulation, or exchange rule (including without exclusion disclosures required
by the Securities and Exchange Commission), (ii) to the extent necessary for the
enforcement of this Contract, (iii) to the extent necessary to implement any
delivery or receipt of Gas under this Contract, or (iv) to the extent such
information is delivered to such third Party for the sole purpose of calculating
a published index (provided, however, that such information shall be handled in
an aggregate form with other data such that it cannot be used to identify the
Parties to this Contract). Each Party shall notify the other Party of any
proceeding of which it is aware which may result in disclosure of the terms of
this Contract (other than as permitted hereunder), if and to the extent that
such notification does not violate any order or decree with regard to such
proceeding, and shall use reasonable efforts to prevent or limit the disclosure.
Subject to Section 14, the Parties shall be entitled to all remedies available
at law or in equity to enforce, or seek relief in connection with this
confidentiality obligation. Notwithstanding anything to the contrary in this
Section 19.10, Buyer shall have the right to provide a copy of this Contract to
the Florida Public Service Commission and any other entity that is a party to
the relevant docket that has executed a confidentiality agreement to retain such
information confidential, without prior notice to or the consent of Seller, in
connection with Buyer's attempts to obtain the Florida Public Service
Commission's approval of this Contract; provided, however, that at the time
Buyer provides this Contract to the Florida Public Service Commission, Buyer
shall petition the Florida Public Service Commission to keep confidential for a
period of eighteen months certain information contained herein, including
without

                                       22

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
limitation, all information related to the Contract Price and the Contract
Quantity. Buyer shall inform Seller within two Business Days if the Florida
Public Service Commission denies Buyer's request to keep such information
confidential for such period. In such event, Seller shall have the right to
immediately terminate this Contract by written notice to Buyer. During the Term
of this Contract, at Seller's request, Buyer shall cooperate with Seller to
petition the Florida Public Service Commission for extension of the confidential
treatment of the information related to the Contract Price and the Contract
Quantity for periods beyond the initial eighteen months.

19.11 Market Disruption Affecting Price Source.  The following provisions shall
be applicable where the Contract Price is determined by reference to a
third-party information source or with respect to instances in which the Spot
Price is applied:

     19.11.1 Market Disruption.  If a Market Disruption Event (as defined below)
occurs during the Determination Period (as defined below), the Floating Price
(as defined below) for the affected Trading Day(s) (as defined below) shall be
determined pursuant to the Floating Price for the first Trading Day thereafter
on which no Market Disruption Event exists; provided, however, that if the
Floating Price is not so determined within three Business Days after the first
Trading Day on which the Market Disruption Event occurred or existed, then the
Parties shall negotiate in good faith to agree on a Floating Price (or a method
for determining a Floating Price), and if the Parties have not so agreed on or
before the 12th Business Day following the first Trading Day on which the Market
Disruption Event occurred or existed, then the Floating Price shall be
determined in good faith by Buyer by taking the average of two or more dealer
quotes. "Market Disruption Event" means, with respect to any Price Source (as
defined below), any of the following events (the existence of which shall be
determined in good faith by Buyer): (i) the failure of the Price Source to
announce or publish information necessary for determining the Floating Price;
(ii) the failure of trading to commence or the permanent discontinuation or
material suspension of trading in the relevant options contract or commodity on
the Exchange (as defined below) or in the market specified for determining a
Floating Price; (iii) the temporary or permanent discontinuance or
unavailability of the Price Source (iv) the temporary or permanent closing of
any Exchange specified for determining a Floating Price; or (v) a material
change in the formula for the method of determining the Floating Price. "Price
Source" means the publication (or such other origin of reference, including an
Exchange) containing (or reporting) the specified price (or prices from which
the specified price is calculated). "Floating Price" means the Contract Price
that is based upon a Price Source. "Exchange" means, in respect of a price, the
exchange or principal trading market specified in the calculation of such price.
"Determination Period" means each calendar Month, a part or all of which is
within the delivery period during which the relevant price applies. "Trading
Day" means a day in respect of which the relevant Price Source published the
Floating Price.

     19.11.2 Corrections to Published Prices.  For purposes of determining the
relevant prices for any Day, if the price published or announced on a given Day
and used or to be used to determine a relevant price is subsequently corrected
and the correction is published or announced by the person responsible for that
publication or announcement, either Party may notify the other Party of (i) that
correction and (ii) the amount (if any) that is payable as a result of that
correction. If a Party gives notice that an amount is so payable, the Party that
originally either received or retained such amount will, not later than two
Business Days after the effectiveness of that notice, pay, subject to any
applicable conditions precedent, to the other Party that amount, together with
interest at a rate equal to the lower of (x) the then-effective prime rate of
interest published under "Money Rates" by The Wall Street Journal; or (y) the
maximum applicable lawful interest rate, for the period from and including the
day on which payment originally was (or was not) made to but excluding the day
of payment of the refund or payment resulting from that correction.

     19.11.3 Calculation of Floating Price.  For the purposes of the calculation
of a Floating Price, all numbers shall be rounded to three decimal places. If
the fourth decimal number is five or greater, then the third decimal number
shall be increased by one, and if the fourth decimal number is less than five,
then the third decimal number shall remain unchanged.

                                       23

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
19.12 Construction.  The language used in this Contract is the product of both
Parties' efforts and each Party hereby irrevocably waives the benefit of any
rule of contract construction which disfavors the drafter of a contract or the
drafter of specific language in a contract.

19.13 Recording.  The Parties agree that each Party may electronically record
all telephone conversations with respect to this Contract between their
respective employees, without any special or further notice to the other Party.
Each Party shall obtain any necessary consent of its agents and employees to
such recording. Each Party waives any objections to the introduction of the
recorded conversations into evidence in any proceeding based on the Statute of
Frauds, the parol evidence rule, or the best evidence rule. Each Party waives
any objection or defense to its authority or the authority of its employee
provided that such employee can be identified on the relevant employing Party's
recording. No Party may knowingly destroy or erase a recording once the
possessing Party becomes aware of an actual dispute in which the recording may
reasonably be anticipated to be discoverable.

19.14 Independent Contractors.  The Parties are independent contractors. Nothing
contained in this Contract shall be deemed to create an association, joint
venture, partnership or principal/agent relationship between the Parties hereto
or to impose any partnership obligation or liability on either Party. Neither
Party shall have any right, power or authority hereunder to enter into any
agreement or commitment, act on behalf of, or otherwise bind the other Party in
any way.

19.15 Survival.  The rights of either Party pursuant to Sections 7, 8.3, 11,
19.10 and any other provision(s) of this Contract that expressly or by
implication comes into or remains in force following the termination or
expiration of this Contract shall survive the termination or expiration of this
Contract.

19.16 Imaged Agreement.  Any original executed counterpart of this Contract, or
other related document may be photocopied and stored on computer tapes and disks
(the "Imaged Agreement"). The Imaged Agreement, if introduced as evidence on
paper, a tape or other electronic recording of an oral agreement to a Price
Change made pursuant to Section 3.4 (the "Transaction Tape"), if introduced as
evidence in its original form and as transcribed onto paper, and all computer
records of the foregoing, if introduced as evidence in printed format, in any
judicial, arbitration, mediation or administrative proceedings, will be
admissible as between the Parties to the same extent and under the same
conditions as other business records originated and maintained in documentary
form. Neither Party shall object to the admissibility of the Transaction Tape,
or the Imaged Agreement (or photocopies of the transcription of the Transaction
Tape, or the Imaged Agreement) on the basis that such were not originated or
maintained in documentary form under the hearsay rule, the best evidence rule,
or the parol evidence rule.

19.17 Counterparts.  This Contract may be executed in several counterparts, and
all such counterparts shall constitute one agreement binding on both Parties
hereto and shall have the same force and effect as an original instrument.

                  (Remainder of page intentionally left blank.
                           Signature page to follow.)

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Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Contract to be executed by
their respective duly authorized officers as of the Effective Date.

FLORIDA POWER CORPORATION
D/B/A PROGRESS ENERGY FLORIDA, INC.

BY: /S/ ROBERT F. CALDWELL
    ----------------------------------
NAME: ROBERT F. CLADWELL
TITLE: VICE PRESIDENT - REGULATED COMMERCIAL OPERATIONS

BG LNG SERVICES, LLC

BY: /S/ ELIZABETH SPOMER
    ----------------------------------
NAME: ELIZABETH SPOMER
TITLE: VICE PRESIDENT

                                       25

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
                                     ANNEX A

                              CREDIT SUPPORT ANNEX

     This Credit Support Annex ("CSA") supplements, forms a part of, and is
subject to the Gas Sale and Purchase Contract between BG LNG Services, LLC
("Seller") and Florida Power Corporation, doing business as Progress Energy
Florida, Inc. ("Buyer"), dated December 1, 2004 (the "Contract"). Capitalized
terms used in this CSA but not defined herein shall have the meanings ascribed
to them in the Contract. If a term is defined in both the Contract and this CSA,
then with respect to a particular Section of the Contract in which such term is
used, the definition in the Contract shall apply, and with respect to a
particular Section of the CSA in which such term is used, the definition in the
CSA shall apply. References in this CSA to Sections or Articles shall be to
sections and articles of this CSA unless otherwise specified.

     The obligations of each Party under the Contract shall be secured in
accordance with the provisions of this CSA, which, except as provided below,
sets forth the exclusive conditions under which a Party will be required to
Transfer Performance Assurance in the form of Cash, a Letter of Credit, as well
as the exclusive conditions under which a Party will release such Performance
Assurance.

                                   ARTICLE 1.
                          DEFINITIONS AND CONSTRUCTION.

1.1 DEFINITIONS.  For purposes of this CSA, the definitions set forth in this
Section 1.1 shall apply unless the context clearly indicates otherwise. All
capitalized terms used in this CSA that are not defined in this Section 1.1
shall have the definitions set forth elsewhere herein or in the Contract. Words,
phrases or expressions used in this CSA, which are not capitalized terms or
otherwise defined herein, and which have an accepted meaning in the custom and
usage of the business of buying, selling, generating, delivering, and
transporting Gas shall have that meaning.

"CALCULATION DATE" means any Local Business Day on which a Party chooses or is
requested by the other Party to make the determinations referred to in Sections
2.1, 2.3, 2.5, or 2.8 of this CSA.

"CASH" means U.S. dollars held by or on behalf of a Party as Performance
Assurance hereunder.

"COLLATERAL REQUIREMENT" shall have the meaning set forth in Section 2.1.

"COLLATERAL THRESHOLD" means,

     (a)  with respect to Seller:

          The lower of (a) the then current amount of the Guarantee provided to
          Buyer by Seller's Guarantor pursuant to Section 10.1 of the Contract,
          (b) the amount set forth below under the heading "Seller's Collateral
          Threshold" opposite the Credit Rating for Seller's Guarantor on the
          relevant date of determination, and if Seller's Guarantor's Credit
          Ratings shall not be equivalent, the lower Credit Rating shall govern,
          or (c) zero if on the relevant date of determination Seller's
          Guarantor does not have a Credit Rating from the rating agency(ies)
          specified below or an Event of Default with respect to Seller has
          occurred and is continuing:

<TABLE>
<CAPTION>
      SELLER'S
COLLATERAL THRESHOLD   S&P CREDIT RATING   MOODY'S CREDIT RATING
--------------------   -----------------   ---------------------
<S>                    <C>                 <C>
        $[*]             A - (or above)        A3 (or above)
        $[*]             BBB +                 Baa1
        $[*]             BBB                   Baa2
        $[*]             BBB -                 Baa3
        $[*]             Below BBB -           Below Baa3
</TABLE>

     (b)  with respect to Buyer:

          The amount set forth below under the heading "Buyer's Collateral
          Threshold" opposite the Credit Rating for Buyer on the relevant date
          of determination, and if Buyer's Credit Ratings shall not be
          equivalent, the lower Credit Rating shall govern, or (b) zero if on
          the relevant date of determination

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       26

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
          Buyer does not have a Credit Rating from the rating agency(ies)
          specified below or an Event of Default with respect to Buyer has
          occurred and is continuing:

<TABLE>
<CAPTION>
       BUYER'S
COLLATERAL THRESHOLD   S&P CREDIT RATING   MOODY'S CREDIT RATING
--------------------   -----------------   ---------------------
<S>                    <C>                 <C>
        $[*]             A - (or above)        A3 (or above)
        $[*]             BBB +                 Baa1
        $[*]             BBB                   Baa2
        $[*]             BBB -                 Baa3
        $[*]             Below BBB -           Below Baa3
</TABLE>

"COLLATERAL VALUE" means (i) with respect to Cash, the face amount thereof; (ii)
with respect to Letters of Credit, the Valuation Percentage multiplied by the
stated amount then available under the Letter of Credit to be unconditionally
drawn by the beneficiary thereof.

"EXPOSURE AMOUNT" means the net value of the amounts calculated pursuant to
Section 11.3 (i) and (ii) if such amounts were to be calculated at any time
during the Term of this Contract; irrespective of whether an Early Termination
Date had occurred.

"INTEREST AMOUNT" means with respect to a Party and an Interest Period, the sum
of the daily interest amounts for all days in such Interest Period; each daily
interest amount to be determined by such Party as follows: (a) the amount of
Cash held by such Party on that day; multiplied by (b) the Interest Rate for
that day, divided by (c) 360.

"INTEREST PERIOD" means the period from (and including) the last Local Business
Day on which an Interest Amount was Transferred by a Party (or if no Interest
Amount has yet been Transferred by such Party, the Local Business Day on which
Cash was Transferred to such Party) to (but excluding) the Local Business Day on
which the current Interest Amount is to be Transferred.

"INTEREST RATE" means the rate for the applicable day opposite the caption
"Federal Funds (Effective)" as set forth in the weekly statistical release
designated as H.15(519), or any successor publication, published by the Board of
Governors of the Federal Reserve System.

"LETTER OF CREDIT" means an irrevocable, non-transferable, standby letter of
credit, issued by a major U.S. commercial bank or a U.S. branch office of a
major commercial foreign bank, with a credit rating of at least "A-" by S&P or
"A3" by Moody's and having at least $10,000,000,000 in total assets and capital
surplus of at least $1,000,000,000. The form of the Letter of Credit and its
issuer shall be reasonably acceptable to the Party in whose favor the Letter of
Credit is issued. Costs of a Letter of Credit shall be borne by the applicant
for such Letter of Credit.

"LETTER OF CREDIT DEFAULT" means with respect to a Letter of Credit, the
occurrence of any of the following events: (a) the issuer of such Letter of
Credit shall fail to maintain a Credit Rating of at least (i) "A-" by S&P or
"A3" by Moody's, if such issuer is rated by both S&P and Moody's, (ii) "A-" by
S&P, if such issuer is rated only by S&P, or (iii) "A3" by Moody's, if such
issuer is rated only by Moody's; (b) the issuer of the Letter of Credit shall
fail to comply with or perform its obligations under such Letter of Credit; (c)
the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or
reject, in whole or in part, or challenge the validity of, such Letter of
Credit; (d) such Letter of Credit shall expire or terminate, or shall fail or
cease to be in full force and effect at any time during the Term of this CSA, in
any such case without replacement; or (e) the issuer of such Letter of Credit
shall become bankrupt (however evidenced); provided, however, that no Letter of
Credit Default shall occur or be continuing in any event with respect to a
Letter of Credit after the time such Letter of Credit is required to be canceled
or returned to a Party in accordance with the terms of this CSA.

"LOCAL BUSINESS DAY" means any day except a Saturday, Sunday, or a Federal
Reserve Bank holiday. A Local Business Day shall open at 8:00 a.m. and close at
5:00 p.m. local time for the relevant Party's principal place of business. The
relevant Party, in each instance unless otherwise specified, shall be the Party
from whom the notice, payment or delivery is being sent and by whom the notice
or payment or delivery is to be received.

"MINIMUM TRANSFER AMOUNT" means, with respect to Buyer and Seller, $100,000.

"NOTIFICATION TIME" means 11:00 a.m. Eastern Prevailing Time on a Local Business
Day.

"PERFORMANCE ASSURANCE" means either Cash or Letter(s) of Credit. Any Interest
Amount or portion thereof not Transferred pursuant to Section 2.6(a)(iv) and any
Cash received and held by a Party after drawing on any Letter of

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       27

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
Credit will constitute Performance Assurance in the form of Cash, until all or
any portion of such Cash is applied against Obligations owing to such Party
pursuant to the provisions of this CSA. Any Guarantee executed by a Guarantor of
a Party shall not constitute Performance Assurance hereunder.

"PLEDGING PARTY" shall have the meaning set forth in Section 2.1.

"QUALIFIED CONSULTANT" means an independent consultant who shall have expertise
in the relevant markets and in the valuation of Gas purchase and sale
agreements.

"QUALIFIED INSTITUTION" means a commercial bank or trust company organized under
the laws of the United States or a political subdivision thereof, with (i) a
Credit Rating of at least (a) "A-" by S&P and "A3" by Moody's, if such entity is
rated by both S&P and Moody's or (b) "A-" by S&P or "A3" by Moody's, if such
entity is rated by either S&P or Moody's but not both, and (ii) having a capital
and surplus of at least $10,000,000,000.

"ROUNDING AMOUNT" means $100,000.

"SECURED PARTY" shall have the meaning set forth in Section 2.1.

"SECURED PARTY'S EXPOSURE" shall have the meaning set forth in Section 2.1.

"TRANSFER" means, with respect to any Performance Assurance or Interest Amount,
and in accordance with the instructions of the Party entitled thereto: (i) in
the case of Cash, payment or transfer by wire transfer into one or more bank
accounts specified by the recipient or (ii) in the case of Letters of Credit,
delivery of the Letter of Credit or an amendment thereto to the recipient.

"VALUATION PERCENTAGE" means, (i) with respect to Cash, 100%; and (ii) with
respect to Letter(s) of Credit, 100% unless either (A) a Letter of Credit
Default shall have occurred and be continuing with respect to such Letter of
Credit, or (B) thirty (30) or fewer Local Business Days remain prior to the
expiration of such Letter of Credit, in which cases the Valuation Percentage
shall be zero (0).

                                   ARTICLE 2.
                             PERFORMANCE ASSURANCE.

2.1 CALCULATION OF COLLATERAL REQUIREMENT.

(a) On any Calculation Date, the Exposure Amount shall be calculated. The Party
to whom such Exposure Amount would be owed on such Calculation Date shall be the
"Secured Party". The Party that would owe such Exposure Amount on such
Calculation Date shall be the "Pledging Party". The amount of such Exposure
Amount that would be owed to the Secured Party shall be the "Secured Party's
Exposure".

(b) The "Collateral Requirement" for the Pledging Party means the Secured
Party's Exposure minus the sum of:

     (1) the Pledging Party's Collateral Threshold; plus

     (2) the amount of Cash previously Transferred to the Secured Party, the
     amount of Cash held by the Secured Party as Performance Assurance as a
     result of drawing under any Letter of Credit, and any Interest Amount that
     has not yet been Transferred to the Pledging Party; plus

     (3) the Collateral Value of each Letter of Credit maintained by the
     Pledging Party for the benefit of the Secured Party; provided, however,
     that, the Collateral Requirement of a Party will be deemed to be zero (0)
     whenever the calculation of such Party's Collateral Requirement yields a
     number less than zero (0).

2.2 Intentionally omitted.

2.3 DELIVERY OF PERFORMANCE ASSURANCE.  On any Calculation Date on which (a) no
Event of Default has occurred and is continuing with respect to the Secured
Party, (b) no Early Termination Date has occurred or been designated as a result
of an Event of Default with respect to the Secured Party for which there exist
any unsatisfied payment Obligations, and (c) the Pledging Party's Collateral
Requirement equals or exceeds its Minimum Transfer Amount, then the Secured
Party may demand that the Pledging Party Transfer to the Secured Party, and the
Pledging Party shall, after receiving such notice from the Secured Party,
Transfer, or cause to be Transferred to the Secured Party, Performance Assurance
for the benefit of the Secured Party, having a Collateral Value at least equal
to the Pledging Party's Collateral Requirement. The amount of Performance
Assurance required to be Transferred hereunder shall be rounded up to the
nearest integral multiple of the Rounding Amount. Unless otherwise agreed in
writing by the Parties, (i) Performance Assurance demanded of a Pledging Party
on or before the Notification Time

                                       28

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
shall be provided by the close of business on the next Local Business Day and
(ii) Performance Assurance demanded of a Pledging Party after the Notification
Time shall be provided by the close of business on the second Local Business Day
thereafter. Any Letter of Credit shall be Transferred to such address as the
Secured Party shall specify and any such demand made by the Secured Party
pursuant to this CSA shall specify account information for the account to which
Performance Assurance in the form of Cash shall be Transferred. Failure by the
Pledging Party to comply with the provisions of this Section 2.3 shall
constitute an Event of Default pursuant to Section 11 of the Contract.

2.4 ENCUMBRANCE; GRANT OF SECURITY INTEREST.  As security for the prompt and
complete payment of all amounts due or that may now or hereafter become due from
a Party to the other Party and the performance by a Party of all covenants and
obligations to be performed by it pursuant to this CSA, the Contract and any
other documents, instruments or agreements executed in connection therewith
(collectively, the "OBLIGATIONS"), each Party hereby pledges, assigns, conveys
and transfers to the other Party, and hereby grants to the other Party a present
and continuing security interest in and to, and a general first lien upon and
right of set off against, all Performance Assurance which has been or may in the
future be Transferred to, or received by, the other Party and/or its Custodian,
and all dividends, interest, and other proceeds from time to time received,
receivable or otherwise distributed in respect of, or in exchange for, any or
all of the foregoing and each Party agrees to take such action as the other
Party reasonably requests in order to perfect the other Party's continuing
security interest in, and lien on (and right of setoff against), such
Performance Assurance.

2.5 REDUCTION AND SUBSTITUTION OF PERFORMANCE ASSURANCE.

     (a) On any Local Business Day (but no more frequently than weekly with
respect to Letters of Credit and daily with respect to Cash), a Pledging Party
may request a reduction in the amount of Performance Assurance previously
provided by the Pledging Party for the benefit of the Secured Party, provided
that, after giving effect to the requested reduction in Performance Assurance,
(i) the Pledging Party shall in fact have a Collateral Requirement of zero, and
(ii) no Event of Default with respect to the Pledging Party shall have occurred
and be continuing. A permitted reduction in Performance Assurance may be
effected by the Transfer of Cash to the Pledging Party or the reduction of the
amount of an outstanding Letter of Credit previously issued for the benefit of
the Secured Party. The amount of Performance Assurance required to be reduced
hereunder shall be rounded down to the nearest integral multiple of the Rounding
Amount. The Pledging Party shall have the right to specify the means of
effecting the reduction in Performance Assurance. In all cases, the cost and
expense of reducing Performance Assurance (including, but not limited to, the
reasonable costs, expenses, and attorneys' fees of the Secured Party) shall be
borne by the Pledging Party. Unless otherwise agreed in writing by the Parties,
(i) if the Pledging Party's reduction demand is made on or before the
Notification Time, then the Secured Party shall have one (1) Local Business Day
to effect a permitted reduction in Performance Assurance and (ii) if the
Pledging Party's reduction demand is made after such time on a Local Business
Day, then the Secured Party shall have two (2) Local Business Days to effect a
permitted reduction in Performance Assurance, in each case, if such reduction is
to be effected by the return of Cash to the Pledging Party. If a permitted
reduction in Performance Assurance is to be effected by a reduction in the
amount of an outstanding Letter of Credit previously issued for the benefit of
the Secured Party, the Secured Party shall promptly take such action as is
reasonably necessary to effectuate such reduction.

     (b) Except when an Event of Default with respect to the Pledging Party
shall have occurred and be continuing, the Pledging Party may substitute
Performance Assurance for other existing Performance Assurance of equal
Collateral Value upon two (2) Local Business Day's written notice to the Secured
Party; provided, however, that if such substitute Performance Assurance is of a
type not otherwise approved by this CSA, then the Secured Party must consent to
such substitution. Upon the Transfer to the Secured Party and/or its Custodian
of the substitute Performance Assurance, the Secured Party and/or its Custodian
shall Transfer the relevant replaced Performance Assurance to the Pledging Party
within two (2) Local Business Days. Notwithstanding anything herein to the
contrary, no such substitution shall be permitted unless (i) the substitute
Performance Assurance is Transferred simultaneously or has been Transferred to
the Secured Party and/or its Custodian prior to the release of the Performance
Assurance to be returned to the Pledging Party and the security interest in, and
general first lien upon, such substituted Performance Assurance granted pursuant
hereto in favor of the Secured Party shall have been perfected as required by
applicable law and shall constitute a first priority perfected security interest
therein and general first lien thereon, and (ii) after giving effect to such
substitution, the Collateral Value of such substitute Performance Assurance
shall not be materially diminished. Each substitution of Performance Assurance
shall constitute a representation and warranty by the Pledging Party that the
substituted Performance Assurance shall be subject to and governed by the terms
and conditions of this CSA, including without limitation the security interest
in, general first lien on and right of offset against, such substituted
Performance Assurance granted pursuant hereto in favor of the Secured Party
pursuant to Section 2.4.

                                       29

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
     (c) The Transfer of any Performance Assurance by the Secured Party and/or
its Custodian in accordance with this Section 2.5 shall be deemed a release by
the Secured Party of its security interest, general first lien and right of
offset granted pursuant to Section 2.4 hereof only with respect to such returned
Performance Assurance. In connection with each Transfer of any Performance
Assurance pursuant to this Section 2.5, the Pledging Party will, upon request of
the Secured Party, execute a receipt showing the Performance Assurance
Transferred to it.

2.6 ADMINISTRATION OF PERFORMANCE ASSURANCE.

     (a) Cash.  Performance Assurance provided in the form of Cash to a Party
that is the Secured Party shall be subject to the following provisions:

     (i) A Party shall be entitled to hold Performance Assurance in the form of
Cash provided that the following conditions are satisfied: (i) no Event of
Default has occurred and is continuing with respect to it; and (ii) Cash shall
be held only in any jurisdiction within the United States.

     (ii) If such Party is entitled to hold Cash, then it will be entitled to
hold Cash or to appoint an agent which is a Qualified Institution (a
"CUSTODIAN") to hold Cash for it. If such Party is not entitled to hold Cash,
then the provisions of Section 2.6(a)(iii) shall not apply with respect to such
Party and Cash shall be held in a Qualified Institution in accordance with the
provisions of Section 2.6(a)(iii)(B). Upon notice by the Secured Party to the
Pledging Party of the appointment of a Custodian, the Pledging Party's
obligations to make any Transfer will be discharged by making the Transfer to
that Custodian. The holding of Cash by a Custodian will be deemed to be the
holding of Cash by the Secured Party for which the Custodian is acting. If the
Secured Party or its Custodian fails to satisfy any conditions for holding Cash
as set forth above or if the Secured Party is not entitled to hold Cash at any
time, then the Secured Party will Transfer, or cause its Custodian to Transfer,
the Cash to a Qualified Institution and the Cash shall be maintained in
accordance with Section 2.6(a)(iii)(B), with the Party not eligible to hold Cash
being considered the "DOWNGRADED PARTY" (as defined below). Except as set forth
in Section 2.6(c), the Secured Party will be liable for the acts or omissions of
its Custodian to the same extent that the Secured Party would be liable
hereunder for its own acts or omissions.

     (iii) Use of Cash.  Notwithstanding the provisions of applicable law, if no
Event of Default has occurred and is continuing with respect to the Secured
Party, then the Secured Party shall have the right to sell, pledge,
rehypothecate, assign, invest, use, commingle or otherwise use in its business
any Cash that it holds as Performance Assurance hereunder, free from any claim
or right of any nature whatsoever of the Pledging Party, including any equity or
right of redemption by the Pledging Party; provided, however, that if a Party or
its Custodian is not eligible to hold Cash pursuant to Section 2.6(a) (such
Party shall be the "DOWNGRADED PARTY" and the event that caused it or its
Custodian to be ineligible to hold Cash shall be a "CREDIT RATING EVENT") then:

          (A) the provisions of this Section 2.6(a)(iii) will not apply with
     respect to the Downgraded Party; and

          (B) the Downgraded Party shall be required to Transfer (or cause to be
     Transferred) not later than the close of business on the next Local
     Business Day following such Credit Rating Event all Cash in its possession
     or held on its behalf to a Qualified Institution approved by the
     non-Downgraded Party (which approval shall not be unreasonably withheld),
     to a segregated, safekeeping or custody account (the "COLLATERAL ACCOUNT")
     within such Qualified Institution with the title of the account indicating
     that the property contained therein is being held as Cash for the
     Downgraded Party. The Qualified Institution shall serve as Custodian with
     respect to the Cash in the Collateral Account, and shall hold such Cash in
     accordance with the terms of this CSA and for the security interest of the
     Downgraded Party and execute such account control agreements as are
     necessary or applicable to perfect the security interest of the
     non-Downgraded Party therein pursuant to Section 9-314 of the Uniform
     Commercial Code or otherwise, and subject to such security interest, for
     the ownership and benefit of the non-Downgraded Party. The Qualified
     Institution holding the Cash will invest and reinvest or procure the
     investment and reinvestment of the Cash in accordance with the written
     instructions of the Pledging Party, subject to the approval of such
     instructions by the Downgraded Party (which approval shall not be
     unreasonably withheld), provided that the Qualified Institution shall not
     be required to so invest or reinvest or procure such investment or
     reinvestment if an Event of Default with respect to the Pledging Party
     shall have occurred and be continuing. The Downgraded Party shall have no
     responsibility for any losses resulting from any investment or reinvestment
     effected in accordance with the Pledging Party's instructions.

                                       30

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
     (iv) Interest Payments on Cash.  So long as no Event of Default with
respect to the Pledging Party has occurred and is continuing, and to the extent
that an obligation to Transfer Performance Assurance would not be created or
increased by the Transfer, in the event that the Secured Party or its Custodian
is holding Cash, the Secured Party will Transfer (or caused to be Transferred)
to the Pledging Party, in lieu of any interest or other amounts paid or deemed
to have been paid with respect to such Cash (all of which may be retained by the
Secured Party or its Custodian), the Interest Amount. The Pledging Party shall
invoice the Secured Party monthly setting forth the calculation of the Interest
Amount due, and the Secured Party shall make payment thereof by the later of (A)
the third Local Business Day of the first month after the last month to which
such invoice relates or (B) the third Local Business Day after the day on which
such invoice is received. On or after the occurrence of an Event of Default with
respect to the Pledging Party, the Secured Party or its Custodian shall retain
any such Interest Amount as additional Performance Assurance hereunder for so
long as such Event of Default is continuing.

(b) Letters of Credit.  Performance Assurance provided in the form of a Letter
of Credit shall be subject to the following provisions.

     (i) Unless otherwise agreed to in writing by the Parties, each Letter of
Credit shall be provided in accordance with Section 2.3, and each Letter of
Credit shall be maintained for the benefit of the Secured Party. The Pledging
Party shall (A) renew or cause the renewal of each outstanding Letter of Credit
on a timely basis as provided in the relevant Letter of Credit, (B) if the bank
that issued an outstanding Letter of Credit has indicated its intent not to
renew such Letter of Credit, provide either a substitute Letter of Credit or
other form of Performance Assurance, in each case at least twenty (20) Local
Business Days prior to the expiration of the outstanding Letter of Credit, and
(C) if a bank issuing a Letter of Credit shall fail to honor the Secured Party's
properly documented request to draw on an outstanding Letter of Credit, provide
for the benefit of the Secured Party either a substitute Letter of Credit that
is issued by a bank acceptable to the Secured Party or other form of Performance
Assurance, in each case within one (1) Local Business Day after such refusal,
provided that, as a result of the Pledging Party's failure to perform in
accordance with (A), (B), or (C) above, the Pledging Party would still have an
obligation to provide Performance Assurance hereunder.

     (ii) As one method of providing Performance Assurance, the Pledging Party
may increase the amount of an outstanding Letter of Credit or establish one or
more additional Letters of Credit.

     (iii) Upon the occurrence of a Letter of Credit Default, the Pledging Party
agrees to Transfer to the Secured Party either a substitute Letter of Credit or
other form of Performance Assurance, in each case on or before the first Local
Business Day after the occurrence thereof (or the fifth (5th) Local Business Day
after the occurrence thereof if only clause (a) under the definition of Letter
of Credit Default applies).

     (iv) Upon or at any time after the occurrence and continuation of an Event
of Default with respect to the Pledging Party, then the Secured Party may draw
on the entire, undrawn portion of any outstanding Letter of Credit upon
submission to the bank issuing such Letter of Credit of one or more certificates
specifying that such Event of Default has occurred and is continuing. Cash
proceeds received from drawing upon the Letter of Credit shall be deemed
Performance Assurance as security for the Pledging Party's obligations to the
Secured Party and the Secured Party shall have the rights and remedies set forth
in Section 2.7 with respect to such cash proceeds. Notwithstanding the Secured
Party's receipt of Cash proceeds of a drawing under the Letter of Credit, the
Pledging Party shall remain liable (y) for any failure to Transfer sufficient
Performance Assurance or (z) for any amounts owing to the Secured Party and
remaining unpaid after the application of the amounts so drawn by the Secured
Party.

     (v) In all cases, the costs and expenses (including but not limited to the
reasonable costs, expenses, and attorneys' fees of the Secured Party) of
establishing, renewing, substituting, canceling, and increasing the amount of a
Letter of Credit shall be borne by the Pledging Party.

(c) Care of Performance Assurance.  Except as otherwise provided in Section
2.6(a)(iv) and beyond the exercise of reasonable care in the custody thereof,
the Secured Party shall have no duty as to any Performance Assurance in its
possession or control or in the possession or control of any Custodian or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Performance
Assurance in its possession, and/or in the possession of its agent for
safekeeping, if the Performance Assurance is accorded treatment substantially
equal to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Performance Assurance, or for
any diminution in the value thereof, by reason of the act or omission of any
Custodian selected by the Secured Party in good faith except to the extent such
loss or damage is the result of such agent's willful misconduct or negligence.
Unless held by a Custodian, the Secured Party shall at all times retain
possession or control of any Performance Assurance Transferred to it. The
holding of Performance

                                       31

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
Assurance by a Custodian for the benefit of the Secured Party shall be deemed to
be the holding and possession of such Performance Assurance by the Secured Party
for the purpose of perfecting the security interest in the Performance
Assurance. Except as otherwise provided in Section 2.6(a)(iii), nothing in this
CSA shall be construed as requiring the Secured Party to select a Custodian for
the keeping of Performance Assurance for its benefit.

2.7 EXERCISE OF RIGHTS AGAINST PERFORMANCE ASSURANCE.

     (a) In the event that an Event of Default with respect to the Pledging
Party has occurred and is continuing, the Secured Party may exercise any one or
more of the rights and remedies provided under the Contract, in this CSA, or as
otherwise available under applicable law. Without limiting the foregoing, if at
any time an Event of Default with respect to the Pledging Party has occurred and
is continuing, then the Secured Party may, in its sole discretion, exercise any
one or more of the following rights and remedies:

     (i)  all rights and remedies available to a secured party under the Uniform
          Commercial Code and any other applicable jurisdiction and other
          applicable laws with respect to the Performance Assurance held by or
          for the benefit of the Secured Party;

     (ii) the right to set off any Performance Assurance held by or for the
          benefit of the Secured Party against and in satisfaction of any amount
          payable by the Pledging Party in respect of any of its Obligations;

     (iii) the right to draw on any outstanding Letter of Credit issued for its
          benefit; and/or

     (iv) the right to liquidate any Performance Assurance held by or for the
          benefit of the Secured Party through one or more public or private
          sales or other dispositions with such notice, if any, as may be
          required by applicable law, free from any claim or right of any nature
          whatsoever of the Pledging Party, including any right of equity or
          redemption by the Pledging Party (with the Secured Party having the
          right to purchase any or all of the Performance Assurance to be sold)
          and to apply the proceeds from the liquidation of such Performance
          Assurance to and in satisfaction of any amount payable by the Pledging
          Party in respect of any of its Obligations in such order as the
          Secured Party may elect.

     (b) The Pledging Party hereby irrevocably constitutes and appoints the
Secured Party and any officer or agent thereof, with full power of substitution,
as the Pledging Party's true and lawful attorney-in-fact with full irrevocable
power and authority to act in the name, place and stead of the Pledging Party or
in the Secured Party's own name, from time to time in the Secured Party's
discretion, for the purpose of taking any and all action and executing and
delivering any and all documents or instruments which may be necessary or
desirable to accomplish the purposes of Section 2.7(a).

     (c) Secured Party shall be under no obligation to prioritize the order with
respect to which it exercises any one or more rights and remedies available
hereunder. The Pledging Party shall in all events remain liable to the Secured
Party for any amount payable by the Pledging Party in respect of any of its
Obligations remaining unpaid after any such liquidation, application and set
off.

     (d) In addition to the provisions of Section 2.7(a), if at any time an
Event of Default with respect to the Secured Party has occurred and is
continuing, then:

     (1) the Secured Party will be obligated immediately to Transfer all
     Performance Assurance (including any Letter of Credit) and the Interest
     Amount, if any, to the Pledging Party;

     (2) the Pledging Party may do any one or more of the following: (x)
     exercise any of the rights and remedies of a pledgor with respect to the
     Performance Assurance, including any such rights and remedies under law
     then in effect; (y) to the extent that the Performance Assurance or the
     Interest Amount is not Transferred to the Pledging Party as required in (1)
     above, setoff amounts payable to the Secured Party against the Performance
     Assurance (other than Letters of Credit) held by the Secured Party or to
     the extent its rights to setoff are not exercised, withhold payment of any
     remaining amounts payable by the Pledging Party, up to the value of any
     remaining Performance Assurance held by the Secured Party, until the
     Performance Assurance is Transferred to the Pledging Party; and (z)
     exercise rights and remedies available to the Pledging Party under the
     terms of any Letter of Credit; and

                                       32

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
(3)  the Secured Party shall be prohibited from drawing on any Letter of Credit
     that has been posted by the Pledging Party for its benefit.

2.8 DISPUTED CALCULATIONS.  If the Pledging Party in good faith disputes the
Secured Party's calculation of the Performance Assurance amount, it will notify
the Secured Party in writing not later than the close of business on the Local
Business Day following the date demand is made and the Pledging Party shall
deliver to the Secured Party the undisputed portion of the Performance Assurance
amount requested within the time period set forth in Section 2.3. Regarding the
disputed portion of the Performance Assurance amount originally requested, the
Parties agree to negotiate in good faith for a period not to exceed four (4)
Local Business Days after the Local Business Day in which such original request
is made to determine the amount of additional Performance Assurance the Pledging
Party shall be required to deliver. By the close of business on such fourth
Local Business Day, the Pledging Party will deliver to the Secured Party the
disputed portion of the Performance Assurance amount in the amount as agreed by
the Parties. If the Parties are unable to agree, then the Pledging Party will
deliver to the Secured Party the disputed portion of the Performance Assurance
amount in the amount originally requested or any lesser amount then requested by
the Secured Party.

If following the four Local Business Day negotiating period the Parties cannot
agree, each Party shall choose and contract for a Qualified Consultant to
calculate the Exposure Amount and notify both Parties of the resulting amount
within eighteen (18) Local Business Days from the last day of the four Local
Business Day negotiating period. The Exposure Amount shall be calculated
independently by each Qualified Consultant. The average of the two resulting
amounts provided by the Qualified Consultants shall be deemed to be the Exposure
Amount. If the Pledging Party provided Performance Assurance in excess of that
required as a result of the calculation of the Qualified Consultants, then the
Secured Party shall return the excess Performance Assurance to the Pledging
Party in accordance with Section 2.5. The Party whose calculation of the
Exposure Amount as of the end of the four Local Business Day negotiating period
differs the most from the average of the calculations performed by the Qualified
Consultants as described above shall be responsible for the reasonable cost of
both Qualified Consultants.

2.9 COVENANTS; REPRESENTATIONS AND WARRANTIES; MISCELLANEOUS.

     (a) The Pledging Party will execute and deliver to the Secured Party (and
to the extent permitted by applicable law, the Pledging Party hereby authorizes
the Secured Party to execute and deliver, in the name of the Pledging Party or
otherwise) such financing statements, assignments and other documents and do
such other things relating to the Performance Assurance and the security
interest granted under this CSA, including any action the Secured Party may deem
necessary or appropriate to perfect or maintain perfection of its security
interest in the Performance Assurance, and the Pledging Party shall pay all
costs relating to its Transfer of Performance Assurance and the maintenance and
perfection of the security interest therein.

     (b) On each day on which Performance Assurance is held by the Secured Party
and/or its Custodian under the Contract and this CSA, the Pledging Party hereby
represents and warrants that:

          (i) the Pledging Party has good title to and is the sole owner of such
     Performance Assurance, and the execution, delivery and performance of the
     covenants and agreements of this CSA, do not result in the creation or
     imposition of any lien or security interest upon any of its assets or
     properties, including, without limitation, the Performance Assurance, other
     than the security interests and liens created under the Contract and this
     CSA;

          (ii) upon the Transfer of Performance Assurance by the Pledging Party
     to the Secured Party and/or its Custodian, the Secured Party shall have a
     valid and perfected first priority continuing security interest therein,
     free of any liens, claims or encumbrances, except those liens, security
     interests, claims or encumbrances arising by operation of law that are
     given priority over a perfected security interest; and

          (iii) it is not and will not become a party to or otherwise be bound
     by any agreement, other than the Contract and this CSA, which restricts in
     any manner the rights of any present or future holder of any of the
     Performance Assurance with respect hereto.

     (c) This CSA has been and is made solely for the benefit of the Parties and
their permitted successors and assigns, and no other person, partnership,
association, corporation or other entity shall acquire or have any right under
or by virtue of this CSA.

     (d) The Pledging Party shall pay on request and indemnify the Secured Party
against any taxes (including without limitation, any applicable transfer taxes
and stamp, registration or other documentary taxes), assessments, or charges
that may become payable by reason of the security interests, general first lien
and right of

                                       33

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
offset granted under this CSA or the execution, delivery, performance or
enforcement of the Contract and this CSA, as well as any penalties with respect
thereto (including, without limitation costs and reasonable fees and
disbursements of counsel). The Parties each agree to pay the other Party for all
reasonable expenses (including without limitation, court costs and reasonable
fees and disbursements of counsel) incurred by the other in connection with the
enforcement of, or suing for or collecting any amounts payable by it under, this
CSA.

     (d) No failure or delay by either Party hereto in exercising any right,
power, privilege, or remedy hereunder shall operate as a waiver thereof.

2.10 UCC.  Each Party agrees that (for purposes of encumbrance and the granting
of security interests, this CSA is a control agreement as required by provisions
of Article 9 of the UCC.

                                       34

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
                                     ANNEX B

                                FORM OF GUARANTEE

                                    GUARANTEE

     Guarantee, dated as of ___________, 20__, by BG Energy Holdings Limited, a
company registered in England and Wales ("Guarantor"), in favor of Florida Power
Corporation, a Florida corporation doing business as Progress Energy Florida,
Inc. ("Beneficiary").

1 Guarantee.  In consideration of Beneficiary entering into that certain Gas
Sale and Purchase Contract dated as of December 1, 2004, as amended and
supplemented from time to time (the "Gas Contract"), between BG LNG Services,
LLC ("Company"), an affiliate of Guarantor, and Beneficiary, Guarantor
irrevocably and unconditionally guarantees to Beneficiary, its successors and
assigns, the prompt payment when due, subject to any applicable grace period
under the Gas Contract, of all present and future amounts payable by Company to
Beneficiary under the Gas Contract (even if such amounts payable are deemed to
be damages) (the "Obligations").Beneficiary may make written demand of Guarantor
for any Obligation not paid by Company when due, subject to applicable grace
periods, and Guarantor shall pay such Obligations within five Business Days (as
such term is defined in the Gas Contract), of receipt of such demand.
Notwithstanding any other provision hereof to the contrary, the maximum amount
payable by Guarantor under this Guarantee shall not exceed US$_____________ in
the aggregate.

2 Nature of Guarantee.  Guarantor's obligations hereunder shall not be affected
by the genuineness, validity, regularity or enforceability of the Obligations or
any instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
event, occurrence or circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor or surety other than the defense
of payment by Company or Guarantor. Beneficiary makes no representation or
warranty in respect of any such circumstance and has no duty or responsibility
whatsoever to Guarantor with respect to the management and maintenance of the
Obligations or any collateral therefor. This Guarantee constitutes a guarantee
of payment when due and not of collection. In the event that any payment of
Company in respect of any Obligations is annulled, set aside, invalidated,
declared to be fraudulent or preferential, rescinded or must otherwise be
returned for any reason whatsoever, Guarantor shall remain liable hereunder with
respect to such Obligations as if such payment had not been made.

3 Consents, Waivers and Renewals.  Without limiting the provisions of Section 1
hereof with respect to the termination of this Guarantee and Guarantor's maximum
liability hereunder, Guarantor agrees that Beneficiary may at any time and from
time to time, either before or after the maturity thereof, without notice to or
further consent of Guarantor, extend the time of payment of, exchange or
surrender any collateral for, or renew any of the Obligations, and may also make
any agreement with Company for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in part, or for any modification of
the terms thereof or of any agreement between Beneficiary and Company or any
such other party or person, without in any way impairing or affecting this
Guarantee. Guarantor agrees that Beneficiary may resort to Guarantor for payment
of any of the Obligations, whether or not Beneficiary shall have resorted to any
collateral security, or shall have proceeded against any other obligor
principally or secondarily obligated with respect to any of the Obligations.

                                       35

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
4 Expenses.  Guarantor agrees to pay on demand all reasonable out-of-pocket
expenses (including the reasonable fees and expenses of Beneficiary's counsel)
in any way relating to the enforcement or protection of the rights of
Beneficiary hereunder; provided, that Guarantor shall not be liable for any
expenses of Beneficiary unless payment is due under this Guarantee.

5 Subrogation.  Guarantor will not exercise any rights which it may acquire by
way of subrogation until all the Obligations to Beneficiary shall have been paid
in full. Subject to the foregoing, upon payment of all the Obligations,
Guarantor shall be subrogated to the rights of Beneficiary against Company, and
Beneficiary agrees to take at Guarantor's expense such steps as the Guarantor
may reasonably request to implement such subrogation.

6 No Waiver; Cumulative Rights.  Without limiting the provisions of Section 1
hereof with respect to the termination of this Guarantee and Guarantor's maximum
liability hereunder, no failure on the part of Beneficiary to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Beneficiary of any
right, remedy or power hereunder preclude any other or future exercise of any
right, remedy or power. Each and every right, remedy and power hereby granted to
Beneficiary or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by Beneficiary from time to time.

7 Waiver of Notice.  Guarantor waives notice of the acceptance of this
Guarantee, presentment, demand, notice of dishonor, protest, notice of any sale
of collateral security and all other notices whatsoever, except for those
expressly required by this Guarantee, and any right to require that any action
or proceeding be brought against Company or any other entity, or except as
expressly hereinabove set forth, to require that Beneficiary seek enforcement of
any performance against Company or any other entity, prior to any action against
Guarantor under the terms hereof.

8 Representations and Warranties.

     8.1 Guarantor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has full power to
execute, deliver and perform this Guarantee.

     8.2 The execution, delivery and performance of this Guarantee have been and
remain duly authorized by all necessary action and do not contravene any
provision of law or of Guarantor's constitutional documents or any contractual
restriction binding on Guarantor or its assets.

     8.3 All consents, authorizations and approvals of, and registrations and
declarations with, any governmental authority necessary for the due execution,
delivery and performance of this Guarantee have been obtained and remain in full
force and effect and all conditions thereof have been duly complied with, and no
other action by, and no notice to or filing with, any governmental authority is
required in connection with the execution, delivery or performance of this
Guarantee.

     8.4 This Guarantee constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.

9 Reservation of Certain Defenses.  Notwithstanding any other provision hereof
to the contrary, Guarantor reserves the right to assert all rights, setoffs,
counterclaims and other defenses to which Guarantor or Company is or may be
entitled to arising out of the Gas Contract, other than those defenses (a)
arising from the bankruptcy, insolvency, dissolution or liquidation of Company,
(b) expressly waived by Company in the Gas Contract or otherwise waived in this
Guarantee, (c) arising from the failure of

                                       36

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
Company to have authorized the Gas Contract or to have obtained any approval
necessary to enter into or perform the Gas Contract, and (d) arising from the
failure of Company to have the corporate power to enter into and perform the Gas
Contract.

10 Assignment.  Neither Guarantor nor Beneficiary may assign its rights,
interest or obligations hereunder to any other person without the prior written
consent of the other; provided that Beneficiary may assign its rights hereunder
to any transferee of the Gas Contract without the consent of Guarantor.

11 Notices.  All notices or other communications to Guarantor shall be in
writing and shall be given in the same manner and with the same effect as set
forth in the Gas Contract. Guarantor's address for notices is as follows:

          100 Thames Valley Park Drive
          Reading
          Berkshire, RG6 1PT
          England

or such other address as Guarantor shall from time to time specify to
Beneficiary.

12 Governing Law.  This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
application of such state's laws relating to conflicts of laws (except for
Sections 5-1401 and 5-1402 of the General Obligations Laws).

13 Exclusive Jurisdiction.  EACH OF GUARANTOR AND BENEFICIARY HEREBY SUBMITS TO
THE JURISDICTION OF ANY COURT SITTING OUTSIDE OF THE STATE OF TEXAS, THE STATE
OF LOUISIANA, THE STATE OF ILLINOIS, OR THE STATE OF MISSISSIPPI FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTEE, AND AGREES
THAT SUCH COURTS SITTING OUTSIDE OF THE STATE TEXAS, THE STATE OF LOUISIANA, THE
STATE OF ILLINOIS, OR THE STATE OF MISSISSIPPI SHALL BE THE EXCLUSIVE FORUMS FOR
RESOLVING ANY DISPUTE OR CONTROVERSY UNDER OR WITH RESPECT TO THIS GUARANTEE.
EACH OF GUARANTOR AND BENEFICIARY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDINGS BROUGHT IN SUCH COURTS
AND ANY CLAIMS THAT ANY SUCH PROCEEDINGS BROUGHT IN SUCH COURTS HAVE BEEN
BROUGHT IN INCONVENIENT FORUMS.

14 Waiver of Jury Trial.  EACH OF BENEFICIARY AND GUARANTOR HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH,
RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS GUARANTEE.

15 Amendment of Guarantee.  Guarantor may amend this Guarantee to increase the
guarantee limit set forth in Paragraph 1 (up to a maximum limit of U.S.
$50,000,000) without the consent of Beneficiary, provided that any such
amendment shall be in writing and signed by Guarantor. No other term or
provision of this Guarantee shall be amended, modified, altered, waived or
supplemented except in a writing signed by both Guarantor and Beneficiary. Any
such waiver regarding consent as provided in this Section 15 shall be effective
only in the specific instance and for the specific purpose for which it was
given.

                                       37

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
16 Miscellaneous.  This Guarantee shall be binding upon Guarantor, its
successors and permitted assigns and inure to the benefit of and be enforceable
by Beneficiary, its successors and permitted assigns. The Guarantee embodies the
entire agreement and understanding between Guarantor and Beneficiary and
supersedes all prior agreements and understandings relating to the subject
matter hereof. The headings in this Guarantee are for purposes of reference
only, and shall not affect the meaning hereof.

     IN WITNESS WHEREOF, Guarantor has caused its duly authorized officer to
execute and deliver this Guarantee as of the date first above written.

                                     BG ENERGY HOLDINGS LIMITED

                                     By:
                                         ---------------------------------------
                                     Name:
                                     Title:

                                       38

Gas Sale and Purchase Contract (December 1, 2004)
<PAGE>
              THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
                      REQUEST PURSUANT TO RULE 24b-2 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     THIS AGREEMENT entered into this the 2nd day of December, 2004 by and
between Florida Gas Transmission Company, a corporation of the State of Delaware
(herein called "Transporter"), and Florida Power Corporation d/b/a Progress
Energy Florida, Inc. (herein called "Shipper"),

                                   WITNESSETH:

     WHEREAS, Shipper is interested in obtaining firm seasonal transportation
service from Transporter, in conjunction with other upstream supply and capacity
arrangements, in order to make available to Shipper (1) supplies needed to
operate an additional combined-cycle generating unit #4 at Shipper's Hines
electric power generating facility in Polk County, Florida ("Hines Unit #4
Capacity"), and (2) additional system supplies to serve its existing electric
power generation facilities ("System Supply Capacity"); and

     WHEREAS, Transporter is willing to provide such firm seasonal
transportation services to Shipper;  and

     WHEREAS, such services will be provided by Transporter for Shipper in
accordance with the terms hereof.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the sufficiency of which is hereby
acknowledged, Transporter and Shipper do covenant and agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     In addition to the definitions incorporated herein through Transporter's
Rate Schedule FTS-2, the following terms when used herein shall have the
meanings set forth below:

1.1  The term "Rate Schedule FTS-2" shall mean Transporter's Rate Schedule FTS-2
     as filed with the FERC and as may be changed and adjusted from time to time
     by Transporter in accordance with Section 4.2 hereof or in compliance with
     any final FERC order affecting such rate schedule.

                                       1
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

1.2  The term "FERC" shall mean the Federal Energy Regulatory Commission or any
     successor regulatory agency or body, including the Congress, which has
     authority to regulate the rates and services of Transporter.

1.3  [deleted - not applicable]

1.4  [deleted - not applicable]

1.5  The term "Service Commencement Date" shall mean the date on which the
     conditions set forth in Article XI hereof have first been satisfied, which
     Service Commencement Date shall be no later than March 1, 2009.

                                   ARTICLE II
                                    QUANTITY

2.1  The Maximum Daily Transportation Quantity ("MDTQ") with respect to each
     component of the Hines Unit #4 Capacity and System Supply Capacity provided
     for herein is set forth on a seasonal basis, and by Division if applicable,
     on Exhibit B attached hereto as the same may be amended from time to time.
     The respective applicable MDTQs (as of May 1, 2009, the MDTQs of [*]
     MMBtu/d for the Hines Unit #4 Capacity, and 25,000 MMBtu/d for System
     Supply Capacity) shall be the largest daily quantity of gas expressed in
     MMBtu, that Transporter is obligated to transport and make available for
     delivery to Shipper under this Service Agreement on any one day.

2.2  Upon the Service Commencement Date, Shipper may tender natural gas for
     transportation to Transporter on any day, up to the MDTQ plus Transporter's
     Fuel, if applicable. Transporter agrees to receive the aggregate of the
     quantities of natural gas that Shipper tenders for transportation at the
     Receipt Points, up to the maximum daily quantity ("MDQ") specified for each
     receipt point as set out on Exhibit A, plus Transporter's Fuel, if
     applicable, and to transport and make available for delivery to Shipper at
     each Delivery Point specified on Exhibit B, up to the amount scheduled by
     Transporter less Transporter's Fuel, if applicable (as provided in Rate
     Schedule FTS-2), provided however, that

----------
[*]  Confidential portion has been omitted and filed separately with the
     Commission.

                                       2
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     Transporter shall not be required to accept for transportation and make
     available for delivery more than the MDTQ on any day.

                                   ARTICLE III
                 PAYMENT AND RIGHTS IN THE EVENT OF NON-PAYMENT

3.1  Upon the Service Commencement Date, Shipper shall pay Transporter, for all
     service rendered hereunder, the rates established in Article IV herein.

3.2  Termination for Non-Payment. In the event Shipper fails to pay for the
     service provided under this Agreement, pursuant to the conditions set forth
     in Section 15 of the General Terms and Conditions of Transporter's FERC Gas
     Tariff, Transporter shall have the right to suspend or terminate this
     Agreement pursuant to the conditions set forth in said Section 15.

                                   ARTICLE IV
                    RATES AND TERMS AND CONDITIONS OF SERVICE

4.1  This Agreement in all respects shall be and remain subject to the
     provisions of Rate Schedule FTS-2 and of the applicable provisions of the
     General Terms and Conditions of Transporter on file with the FERC (as the
     same may hereafter be legally amended or superseded), all of which are made
     a part hereof by this reference.

4.2  Subject to the Discount Agreement between Transporter and Shipper,
     Transporter shall have the unilateral right to file with the appropriate
     regulatory authority and seek to make changes in (a) the rates and charges
     applicable to its Rate Schedule FTS-2, (b) Rate Schedule FTS-2 including
     the Form of Service Agreement and the existing Service Agreement pursuant
     to which this service is rendered; provided however, that the firm
     character of service shall not be subject to change hereunder by means of a
     Section 4 Filing by Transporter, and/or (c) any provisions of the General
     Terms and Conditions of Transporter's Tariff applicable to Rate Schedule
     FTS-2. Transporter agrees that Shipper may protest or contest the
     aforementioned filings, or seek authorization from duly constituted
     regulatory authorities for such adjustment of Transporter's existing FERC
     Gas Tariff as may be found necessary in order to assure that the provisions
     in (a), (b) or (c) above are just and reasonable.

                                       3
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

4.3  Notwithstanding Section 4.1 above, as of the Service Commencement Date and
     during the primary term of this Agreement, Shipper shall pay Transporter,
     for all services rendered hereunder, unless otherwise agreed by Shipper and
     Transporter, the lower of: (I) the rates established under Transporter's
     Rate Schedule FTS-2 (inclusive of all applicable surcharges), as filed with
     and approved by the FERC and as said Rate Schedule may hereafter be legally
     amended or superseded, or (2) the Final Rate Cap as determined below:

     (a)  The Base Rate Cap shall be as follows: $[*]/MMBtu/d.

     (b)  The Base Rate Cap assumes the levelized rate methodology through March
          31, 2005, and thereafter, the traditional cost of service methodology.
          For purposes of this section with respect to this Agreement, a
          "levelized rate" shall mean a rate designed by adjusting the annual
          depreciation expense such that it results in a levelized cost of
          service.

     (c)  The Base Rate Cap is stated in nominal dollars, and shall exclude all
          applicable surcharges and fuel.

     (d)  Beginning on January 1, 2005, and annually thereafter ("Escalation
          Date"), the Base Rate Cap then in effect shall be escalated in
          accordance with the following formula; provided that in no event shall
          the Base Rate Cap, as it may be escalated pursuant to this subsection
          (d), exceed $[*] per MMBtu. On each Escalation Date, the Base Rate Cap
          to be effective for the subsequent twelve (12) month period shall be
          the sum of: (i) [*] multiplied by the Prior Base Rate Cap, which is
          defined herein as the Base Rate Cap that was effective for the twelve
          (12) month period immediately preceding the Escalation Date, and (ii)
          [*] multiplied by the Prior Base Rate Cap, [*].

     (e)  (i) For any billing month, the Final Rate Cap (stated on a per unit
          basis) shall be determined by adding the Base Rate Cap and an amount
          equal to the aggregate of the applicable surcharges (as defined in
          section (e)(ii) below).

          (ii) The type of surcharges contemplated under Rate Schedule FTS-2 to
               be included in the calculation of the Final Rate Cap are
               applicable surcharges, such as ACA, fuel, and Capital surcharges;
               provided, however, Transporter shall not collect

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       4
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

               under this Agreement any surcharge associated with GRI, Gas
               Supply Realignment ("GSR"), the recovery of take-or-pay costs or
               gas purchase reformation costs, FERC Account No.191 costs
               ("restructuring costs"), or any similar surcharge associated with
               the restructuring of Transporter's merchant service under orders
               in FERC Docket No. RS92-16-000 or similar proceedings, any
               separately stated surcharge related to the recovery of
               restructuring costs of any upstream provider of transportation or
               sales services to Transporter, or, to the extent such charges may
               be discountable, any industry-wide research and development
               surcharges such as those currently proposed in FERC Docket No.
               RP04-378.

     (f)  If, at any time after the Service Commencement Date and during the
          primary term of this Agreement, the effective rate that Transporter is
          authorized by the FERC to charge Shipper, including surcharges,
          exceeds the Final Rate Cap, then Transporter shall discount such
          authorized FERC rate down to the Final Rate Cap in accordance with the
          order of discounting provided for in Transporter's FERC Gas Tariff.

     (g)  Unless otherwise mutually agreed by the Parties, after the expiration
          of the primary term of this Agreement, Shipper shall pay Transporter
          the rates established under Transporter's Rate Schedule FTS-2, as
          filed with and approved by the FERC.

     (h)  If Shipper proposes or supports a change in the rate design
          methodology on which the currently effective FTS-2 rates are based, as
          set forth in Sections III.2.c and d, and III.3.b of the Phase III
          Settlement, and such proposals or changes are approved by a final
          non-appealable order, the Final Rate Cap shall be deemed waived.
          Notwithstanding the foregoing, if Transporter proposes, or any other
          party proposes and Transporter either supports or does not oppose, a
          change to any of such rate design methodologies in any Section 4 or
          Section 5 proceeding, then Shipper may take a position on that
          particular rate design methodology in that proceeding, whether or not
          consistent with the position taken by Transporter, without waiving the
          Final Rate Cap, and unless otherwise agreed by Transporter and
          Shipper, approval of such a proposed change in the rate design
          methodology by a final non-appealable order, in such Section 4 or
          Section 5 proceeding, shall not affect the

                                       5
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

          continuing applicability of the Final Rate Cap. Specifically, the rate
          design methodology issues referenced above in this Section (h) are as
          follows:

          (i)  the straight fixed variable method of rate design, and of
               classifying and allocating costs,

          (ii) unless otherwise agreed to by both parties hereto, the
               system-wide postage stamp rate for FTS-2 service to the Market
               Area,

          (iii) the levelized rate methodology through March 31, 2005, and
               thereafter, the traditional cost-of-service methodology, and

          (iv) the methodology of allocating the operation and maintenance
               ("O&M") costs between Rate Schedules FTS-1 and FTS-2; provided,
               however, that without waiving its final Rate Cap under this
               Section (h) (iv), and with respect to the allocation of
               administrative and general ("A&G") expenses only, a Shipper may
               challenge, on a prospective basis only, Transporter's use of the
               Kansas-Nebraska methodology in the Section 4 rate case to be
               filed by Transporter in accordance with Article XI of the
               Settlement approved by the FERC in Docket No. RP04-12; and
               provided further, that Shipper may, without waiving its Final
               Rate Cap (and regardless of any position taken by Transporter),
               argue for any allocation methodology that allocates no more O&M
               costs to Rate Schedule FTS-2 than would otherwise be allocated by
               use of:

               a.   the Phase III Settlement methodology for allocating all O&M
                    costs except for A&G expenses, and

               b.   the Kansas-Nebraska methodology for allocating A&G expenses.

4.4  [Deleted- Not Applicable]

                                    ARTICLE V
                                TERM OF AGREEMENT

                                       6
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

5.1  This Agreement shall become effective upon the date first written above and
     shall continue in effect for a primary term of Twenty (20) years commencing
     with the Service Commencement Date.

5.2  In the event the capacity being contracted for was acquired pursuant to
     Section 18.E. of Transporter's Tariff, then this Agreement shall terminate
     on the date set forth in Section 5.1 above. Otherwise, in accordance with
     the provisions of Section 20 of the General Terms and Conditions of
     Transporter's Tariff, Shipper has elected [Right of First Refusal or
     Roll-over Option] and upon the expiration of the primary term and any
     extension or roll-over, termination will be governed by the provisions of
     Section 20 of the General Terms and Conditions of Transporter's Tariff.

5.3  [deleted - not applicable]

5.4  Shipper may buy out of a Service Agreement for all or a portion of its
     transportation capacity ("MDTQ") thereunder, at any time, by paying
     Transporter the net present value of Shipper's remaining reservation charge
     obligations for such capacity, discounted at a reasonable rate to be
     mutually agreed upon by the parties at the time of such buy-out.

5.5  Notwithstanding any other provision in this Agreement, after the Service
     Commencement Date, in the event that: (1) Shipper is capable of using gas;
     and (2) Transporter is unable to deliver Shipper's designated volumes at
     the specified Delivery Point(s) and at the pressures provided for in this
     Agreement for a period of two consecutive days ("Service Cessation"),
     Shipper shall have the right to reduce the MDTQ by the volumes not
     delivered, without costs or penalty, by providing written notice to
     Transporter within forty-five (45) days of such occurrence; provided,
     however, that if a Service Cessation occurs more than five (5) times in any
     calendar year, Shipper shall have the right to terminate this Agreement by
     providing written notice to Transporter within forty-five (45) days of such
     occurrence; provided further, however, that if Transporter's failure to
     deliver is due to events of Transporter's force majeure as defined in Rate
     Schedule FTS-2, Shipper shall have the right to terminate or to reduce the
     MDTQ only in the event such force majeure continues for more than one
     hundred eighty-five (185) consecutive days of any three hundred sixty-five
     (365) day period.

                                       7
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                   ARTICLE VI
          POINT(S) OF RECEIPT AND DELIVERY AND MAXIMUM DAILY QUANTITIES

6.1  The Primary Point(s) of Receipt and maximum daily quantity for each Primary
     Point of Receipt, with respect to the Hines Unit #4 Capacity and System
     Supply Capacity, for all gas delivered by Shipper to Transporter under this
     Agreement shall be at the Point(s) of Receipt on the pipeline system of
     Transporter or any Transporting Pipeline as set forth in Exhibit A attached
     hereto, as the same may be amended from time to time. In accordance with
     the provisions of Section 8.A. of Rate Schedule FTS-2 and Section 21.C. of
     the General Terms and Conditions of Transporter's Tariff, Shipper may
     request changes in its Primary Point(s) of Receipt. Transporter may make
     such changes in accordance with the terms of Rate Schedule FTS-2 and the
     applicable General Terms and Conditions of its Tariff.

6.2  The Primary Point(s) of Delivery and maximum daily quantity for each point
     for all gas made available for delivery by Transporter to Shipper, or for
     the account of Shipper, under this Agreement with respect to the Hines Unit
     #4 Capacity and System Supply Capacity shall be at the Point(s) of Delivery
     as set forth in Exhibit B hereto, as same may be amended from time to time,
     and shall be in Transporter's Market Area. In accordance with the
     provisions of Section 9.A. of Rate Schedule FTS-2 and Section 21.C. of the
     General Terms and Conditions of Transporter's Tariff, Shipper may request
     changes in its Primary Point(s) of Delivery provided that such new
     requested Primary Delivery Points must be located in Transporter's Market
     Area. Transporter may make such changes in accordance with the terms of
     Rate Schedule FTS-2 and the applicable General Terms and Conditions of its
     Tariff. Transporter is not obligated to accept changes where the new
     Primary Delivery point is also a delivery point under a Rate Schedule SFTS
     Service Agreement and the load to be served is an existing behind-the-gate
     customer of a Rate Schedule SFTS Shipper as defined in Section 11 of Rate
     Schedule SFTS.

                                   ARTICLE VII
                                     NOTICES

                                       8
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     All notices, payments and communications with respect to this Agreement
shall be in writing and sent to the addresses stated below or at any other such
address as may hereafter be designated in writing:

ADMINISTRATIVE MATTERS

     Transporter: Florida Gas Transmission Company
                  1331 Lamar Street, Suite #650
                  Houston, Texas 77010
                  Attention: Market Services
                  Telephone No. (713) 853-5655

     Shipper: Florida Power Corporation d/b/a Progress Energy Florida, Inc.
              410 South Wilmington St., PEB19
              Raleigh, NC 27601
              Attention: Contracts Dept.
              Telephone No. 919-546-4280
              Fax No. 919-546-2649

PAYMENT BY WIRE TRANSFER

     Transporter: Florida Gas Transmission Company
                  [Transporter to provide at a later date]

     Shipper: Florida Power Corporation d/b/a Progress Energy Florida, Inc.
              [Shipper to provide at a later date]

                                  ARTICLE VIII
                                   FACILITIES

8.1  [Deleted - Not Applicable]

8.2  [Deleted - Not Applicable]

                                       9
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                   ARTICLE IX
                     REGULATORY AUTHORIZATIONS AND APPROVALS

     (a) Transporter's obligation to provide service is conditioned upon receipt
and acceptance of any necessary regulatory authorization, in a form acceptable
to Transporter in its sole discretion, to provide Firm Transportation Service to
Shipper in accordance with the terms of Rate Schedule FTS-2, this Service
Agreement and the General Terms and Conditions of Transporter's Tariff.

     (b) [deleted - not applicable]

                                    ARTICLE X
                                    PRESSURE

10.1 The quantities of gas delivered or caused to be delivered by Shipper to
     Transporter hereunder shall be delivered into Transporter's pipeline system
     at a pressure sufficient to enter Transporter's system, but in no event
     shall such gas be delivered at a pressure exceeding the maximum authorized
     operating pressure or such other pressure as Transporter permits at the
     Point(s) of Receipt.

10.2 Transporter shall have no obligation to provide compression and/or alter
     its system operation to effectuate deliveries at the Point(s) of Delivery
     hereunder.

10.3 The quantities of gas to be delivered by Transporter to Shipper hereunder
     shall be delivered to Shipper at a minimum pressure of 500 psig at the
     Progress-Hines delivery point.

                                   ARTICLE XI
                                OTHER PROVISIONS

11.1 Prior to Transporter's execution of this Agreement, Shipper must
     demonstrate creditworthiness satisfactory to Transporter, In the event
     Shipper fails to establish creditworthiness within fifteen (15) days of
     Transporter's notice, Transporter shall not execute this Agreement and this
     Agreement shall not become effective.

                                       10
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

11.2 Service pursuant to this Agreement is expressly subject to the following
     conditions:

     (a)  (i) [Deleted - Not Applicable]

          (ii) [Deleted - Not Applicable]

     (b)  This agreement is subject to approval of the board of directors of
          Transporter.

     (c)  [Deleted - Not Applicable]

     (d)  [Deleted - Not Applicable]

     (e)  [Deleted - Not Applicable]

     (f)  [Deleted - Not Applicable]

     (g)  Approval of this Agreement by Shipper's senior management and/or Board
          of Directors by January 31, 2005, the issuance and acceptance by
          Shipper by June 15, 2005, of all federal, state or local
          authorizations, if any, requested by Shipper to receive service
          hereunder, and the execution by Shipper of binding upstream gas
          transportation and supply arrangements by January 31, 2005, and the
          completion of construction, by March 1, 2009, of any facilities
          necessary to deliver Shipper's gas to Transporter, for delivery to
          Shipper hereunder. In the event that any of these conditions are not
          met by the dates specified ("deadline") in this section 11.2(g),
          Shipper may elect to terminate this Agreement by giving written
          notice, within ten (10) days of the deadline, of such termination to
          Transporter, and this Service Agreement shall terminate upon
          Transporter's receipt of Shipper's notice; provided, however, in no
          event shall such notice be given by Shipper to Transporter any later
          than March 10, 2009.

     (h)  The approval without modification or condition that is unacceptable to
          any Settling Party, of the rate case Stipulation and Agreement of
          Settlement filed on August 13, 2004 in Docket No. RP04-12.

11.3 [Deleted - Not Applicable]

11.4 [Deleted - Not Applicable]

11.5 [Deleted - Not Applicable]

                                       11
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

11.6 In the event that Shipper does not receive, on terms and conditions
     acceptable to Shipper in its sole determination, by May 1, 2005, all of the
     final and non-appealable authorizations, approvals and or exemptions from
     the Florida Public Service Commission and from any other regulatory body
     having jurisdiction necessary for Shipper to construct, own and operate
     Shipper's Hines Plant Expansion ("Shippers Regulatory Approvals"), Shipper
     may give written notice of termination to Transporter, and this Service
     Agreement shall terminate upon FGT's receipt of Shipper's notice; provided,
     however, in no event shall such notice be given by Shipper to Transporter
     any later than June 10, 2005.

                                   ARTICLE XII
                                  MISCELLANEOUS

12.1 (a)  This Agreement shall bind and benefit the successors and assigns of
          the respective parties hereto; provided however, that neither party
          shall assign this Agreement or any of its rights or obligations
          hereunder without first obtaining the written consent of the other
          party, which consent shall not be unreasonably withheld.

     (b)  Shipper may also assign its rights under the Final Rate Cap but only
          in the event that such assignment is to a third party that has a
          Moody's credit rating equal to or greater than that of Shipper.

12.2 No waiver by either party of anyone or more defaults by the other in the
     performance of any provisions of this Agreement shall operate or be
     construed as a waiver of any future defaults of a like or different
     character.

12.3 This Agreement contains Exhibits A and B (each for the periods October 2007
     through April 2008, October 2008 through April 2009, and commencing October
     2009), which are incorporated fully herein.

12.4 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ANY CONFLICT OF LAWS
     DOCTRINE WHICH WOULD APPLY THE LAWS OF ANOTHER JURISDICTION.

                                       12
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                  ARTICLE XIII
                      SUPERSEDING PRIOR SERVICE AGREEMENTS

     This Agreement supercedes and cancels the following Service Agreements
between Transporter and Shipper:

          None.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers effective as of the date first written above.

TRANSPORTER                                SHIPPER

                                           FLORIDA POWER CORPORATION d/b/a
FLORIDA GAS TRANSMISSION COMPANY           PROGRESS ENERGY FLORIDA, INC.

By /s/ R. E. Hayes                         By /s/ Robert F. Caldwell
   -------------------------------------      ----------------------------------
Title Sr. V.P. & CCO                       Title Vice President - Regulated
                                           Commercial Operations

Attest: (to be attested if not             Attest: (to be attested if not
signed by an officer of the company)       signed by an officer of the company)

By                                         By
   -------------------------------------      ----------------------------------
Title                                      Title
      ----------------------------------         -------------------------------
Date                                       Date
     -----------------------------------        --------------------------------

                                       13
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2007*

<TABLE>
<CAPTION>
Point(s) of Receipt              Maximum Daily Quantity (MMBtu)**
Description of                   --------------------------------
Point of Receipt           DRN    Oct   Nov-Mar   Apr   May-Sept
----------------           ---    ---   -------   ---   --------
<S>                        <C>    <C>   <C>       <C>   <C>
PRODUCTION ZONE 1          [*]    [*]     [*]     [*]     [*]
PRODUCTION ZONE 2          [*]    [*]     [*]     [*]     [*]
PRODUCTION ZONE 3          [*]    [*]     [*]     [*]     [*]
SNG-CYPRESS                New    [*]     [*]     [*]     [*]
INTERCONNECT
                                                          [*]
   Total MDQ:                     [*]     [*]     [*]     [*]
</TABLE>

*    Or the Service Commencement Date, if later than October 1, 2007.

**   Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       14
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2007*

<TABLE>
<CAPTION>
Point(s) of Delivery              Maximum Daily Quantity (MMBtu)
Description of          Maximum   ------------------------------
Point of Delivery      Hourly**   Oct   Nov-Mar   Apr   May-Sept
--------------------   --------   ---   -------   ---   --------
<S>                    <C>        <C>   <C>       <C>   <C>
Progress-Anclote          [*]     [*]     [*]     [*]      [*]
Progress-Hines            [*]     [*]     [*]     [*]      [*]
Mirant-Shady Hills        [*]     [*]     [*]     [*]      [*]
   Total MDTQ:                    [*]     [*]     [*]      [*]
</TABLE>

*    Or the Service Commencement Date, if later than October 1, 2007.

**   Not to exceed [*] of MDQ.

Date of this Exhibit B: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       15
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2008*

<TABLE>
<CAPTION>
Point(s) of Receipt              Maximum Daily Quantity (MMBtu)**
Description of                   --------------------------------
Point of Receipt           DRN    Oct   Nov-Mar   Apr   May-Sept
------------------------   ---    ---   -------   ---   --------
<S>                        <C>    <C>   <C>       <C>   <C>
PRODUCTION ZONE 1                 [*]     [*]     [*]      [*]
PRODUCTION ZONE 2                 [*]     [*]     [*]      [*]
PRODUCTION ZONE 3                 [*]     [*]     [*]      [*]
SNG-CYPRESS                New    [*]     [*]     [*]      [*]
INTERCONNECT
                                                           [*]
   Total MDQ:                     [*]     [*]     [*]      [*]
</TABLE>

*    Or the Service Commencement Date, if later than October 1, 2008.

**   Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       16
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2008*

<TABLE>
<CAPTION>
Point(s) of Delivery              Maximum Daily Quantity (MMBtu)
Description of          Maximum   ------------------------------
Point of Delivery      Hourly**   Oct   Nov-Mar   Apr   May-Sept
--------------------   --------   ---   -------   ---   --------
<S>                    <C>        <C>   <C>       <C>   <C>
Progress-Anclote          [*]     [*]     [*]     [*]      [*]
Progress-Hines            [*]     [*]     [*]     [*]      [*]
Mirant-Shady Hills        [*]     [*]     [*]     [*]      [*]
   Total MDTQ:                    [*]     [*]     [*]      [*]
</TABLE>

*    Or the Service Commencement Date, if later than October 1, 2008.

**   Not to exceed [*] of MDQ.

Date of this Exhibit B: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       17
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2009

<TABLE>
<CAPTION>
Point(s) of Receipt         Maximum Daily Quantity (MMBtu)*
Description of              -------------------------------
Point of Receipt      DRN    Oct   Nov-Mar   Apr   May-Sept
-------------------   ---    ---   -------   ---   --------
<S>                   <C>   <C>    <C>       <C>   <C>
PRODUCTION ZONE 1            [*]     [*]     [*]      [*]
PRODUCTION ZONE 2            [*]     [*]     [*]      [*]
PRODUCTION ZONE 3            [*]     [*]     [*]      [*]
SNG-CYPRESS           New    [*]     [*]     [*]      [*]
INTERCONNECT
                                                      [*]
   Total MDQ:                [*]     [*]     [*]      [*]
</TABLE>

*    Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       18
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                             DATED December 2, 2004

                           COMMENCING OCTOBER 1, 2009

<TABLE>
<CAPTION>
Point(s) of Delivery             Maximum Daily Quantity (MMBtu)
Description of         Maximum   ------------------------------
Point of Delivery      Hourly*   Oct   Nov-Mar   Apr   May-Sept
--------------------   -------   ---   -------   ---   --------
<S>                    <C>       <C>   <C>       <C>   <C>
Progress-Anclote         [*]     [*]     [*]     [*]      [*]
Progress-Hines           [*]     [*]     [*]     [*]      [*]
Mirant-Shady Hills       [*]     [*]     [*]     [*]      [*]
   Total MDTQ:                   [*]     [*]     [*]      [*]
</TABLE>

*    Not to exceed [*] of MDQ.

Date of this Exhibit B: December 2, 2004

Contract No. [to be assigned after execution]

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       19
<PAGE>
                [Letterhead of Florida Gas Transmission Company]

December 2, 2004

Progress Energy Florida, Inc.
Attention: Ms. Pamela Murphy
P. O. Box 1551
410 South Wilmington St., PEB10A
Raleigh, North Carolina 27602-1551

     Re: Proposal for Transportation Services by and between Florida Power
         Corporation, d/b/a Progress Energy Florida, Inc., and Florida Gas
         Transmission Company (regarding expansion of Florida Gas Transmission
         Company's system to provide incremental capacity for receipts of LNG
         from Southern Natural Gas Company)

Dear Ms. Murphy:

     Florida Power Corporation d/b/a Progress Energy Florida, Inc. ("Progress"
or "Shipper") and Florida Gas Transmission Company ("FGT") hereby enter into
this letter agreement ("Letter Agreement") regarding the expansion of the FGT
system to provide incremental capacity to Progress as part of a project to bring
liquefied natural gas ("LNG") to the State of Florida via Southern Natural Gas
Company's ("SNG") proposed Cypress Pipeline project. In consideration of the
premises and mutual covenants set forth herein, FGT and Shipper agree as
follows:

     1. Upon satisfaction of the conditions precedent set forth below, the
parties will enter an FTS-2 service agreement (with terms and conditions
substantially similar to those contained in the draft attached hereto as
Attachment A), providing for firm natural gas transportation service to be
provided by FGT for Shipper:

          a.   Completion of an open season for an FGT 2007-2008 expansion of
               its system, and

          b.   A determination by FGT, after the close of such open season, but
               in any case, by February 1, 2005, that the capacity desired by
               Shipper can be economically provided, in FGT's sole opinion,
               under the terms set forth in the attached draft agreements.

     2. In the event that the conditions precedent set forth in "1" above are
met, the parties shall execute the Service Agreement attached hereto as
Attachment A, and shall also
<PAGE>
Progress Energy Florida, Inc.
Proposal for Transportation Services
December 2, 2004
Page 2

execute an amendment to certain existing service agreements between the parties,
in order to increase the minimum delivery pressure at the Progress-Hines
Delivery Point from 500 psig to 575 psig, effective upon the in-service date of
the Incremental Facilities (as defined in Section 1.3 of the FTS-2 Agreement
attached as Attachment A hereto), such agreements being: (a) the FTS-1
Transportation Service Agreement dated April 1, 1998, (b) the FTS-2
Transportation Service Agreement dated April 1, 1998, (c) the FTS-2
Transportation Service Agreement dated October 7, 1998, and (d) the FTS-2
Transportation Service Agreement dated December 2, 2004.

     3. This Letter Agreement shall become effective on the date of its
execution by both parties and shall remain in effect until the earlier of: (a)
the date of execution of FTS-2 Agreement (in form substantially similar to the
attached draft agreement), (b) the date that either party notifies the other
party that such condition(s) precedent will not be met, or (c) February 1, 2005.
In the event that the parties do not execute the agreements attached as
Attachment A by February 1, 2005, all obligations of the parties shall terminate
and this Letter Agreement, as well as any agreements of the parties (oral or
otherwise) with respect to such Letter Agreement, shall become null and void and
of no further force and effect.

     If this Letter Agreement meets with your approval, please sign below and
return one of the two originals to us.

                                        Yours truly,

                                        /s/ R. E. Hayes
                                        ----------------------------------------
                                        R. E. Hayes
                                        Senior Vice President &
                                        Chief Commercial Officer

FLORIDA POWER CORPORATION
d/b/a PROGRESS ENERGY FLORIDA, INC.

By: /s/ Robert F. Caldwell
    ---------------------------------
Name: Robert F. Caldwell
Title: Vice President - Regulated Commercial Operations

Attachment
<PAGE>
                                  ATTACHMENT A
<PAGE>
              THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
                      REQUEST PURSUANT TO RULE 24b-2 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     THIS AGREEMENT entered into this day _____ of __________, 2005 by and
between Florida Gas Transmission Company, a corporation of the State of Delaware
(herein called "Transporter"), and Florida Power Corporation d/b/a Progress
Energy Florida, Inc. (herein called "Shipper"),

                                   WITNESSETH:

     WHEREAS, Shipper is interested in obtaining firm incremental seasonal
transportation service from Transporter, in conjunction with other upstream
supply and capacity arrangements, in order to make available to Shipper (1)
supplies needed to operate an additional combined-cycle generating unit #4 at
Shipper's Hines electric power generating facility in Polk County, Florida
("Hines Unit #4 Capacity"), and (2) additional system supplies to serve its
existing electric power generation facilities ("System Supply Capacity"); and

     WHEREAS, Transporter is willing to provide such firm incremental seasonal
transportation services to Shipper; and

     WHEREAS, such services will be provided by Transporter for Shipper in
accordance with the terms hereof.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the sufficiency of which is hereby
acknowledged, Transporter and Shipper do covenant and agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     In addition to the definitions incorporated herein through Transporter's
Rate Schedule FTS-2, the following terms when used herein shall have the
meanings set forth below:

                                       4
<PAGE>

                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

1.1  The term "Rate Schedule FTS-2" shall mean Transporter's Rate Schedule FTS-2
     as filed with the FERC and as may be changed and adjusted from time to time
     by Transporter in accordance with Section 4.2 hereof or in compliance with
     any final FERC order affecting such rate schedule.

                                       5
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

1.2  The term "FERC" shall mean the Federal Energy Regulatory Commission or any
     successor regulatory agency or body, including the Congress, which has
     authority to regulate the rates and services of Transporter.

1.3  The term "Incremental Facilities" shall mean any additional facilities
     necessary to be constructed by Transporter and by Southern Natural Gas
     Company ("SNG") in connection with the seasonal incremental service to be
     provided under this Agreement.

1.4  The term "In-Service Date" shall mean the date the Incremental Facilities,
     as defined in 1.3, shall go into service provided that all conditions set
     forth in Article XI hereof have first been satisfied, which In-Service Date
     shall be no later than May 1, 2009.

                                   ARTICLE II
                                    QUANTITY

2.1  The Maximum Daily Transportation Quantity ("MDTQ") with respect to each
     component of the Hines Unit #4 Capacity and System Supply Capacity provided
     for herein is set forth on a seasonal basis, and by Division if applicable,
     on Exhibit B attached hereto as the same may be amended from time to time.
     The respective applicable MDTQs (as of May 1, 2009, the MDTQs of [*]
     MMBtu/d for the Hines Unit #4 Capacity, and [*] MMBtu/d for System Supply
     Capacity) shall be the largest daily quantity of gas expressed in MMBtu,
     that Transporter is obligated to transport and make available for delivery
     to Shipper under this Service Agreement on any one day.

2.2  Upon the In-Service Date, Shipper may tender natural gas for transportation
     to Transporter on any day, up to the MDTQ plus Transporter's Fuel, if
     applicable. Transporter agrees to receive the aggregate of the quantities
     of natural gas that Shipper tenders for transportation at the Receipt
     Points, up to the maximum daily quantity ("MDQ") specified for each receipt
     point as set out on Exhibit A, plus Transporter's Fuel, if applicable, and
     to transport and make available for delivery to Shipper at each Delivery
     Point specified on Exhibit B, up to the amount scheduled by Transporter
     less Transporter's Fuel, if applicable (as provided in Rate Schedule
     FTS-2), provided however, that Transporter shall not be required to accept
     for transportation and make available for delivery more than the MDTQ on
     any day.

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       6
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                   ARTICLE III
                 PAYMENT AND RIGHTS IN THE EVENT OF NON-PAYMENT

3.1  Upon the commencement of service hereunder (following the In-Service Date),
     Shipper shall pay Transporter, for all service rendered hereunder, the
     rates established in Article IV herein.

3.2  Termination for Non-Payment. In the event Shipper fails to pay for the
     service provided under this Agreement, pursuant to the conditions set forth
     in Section 15 of the General Terms and Conditions of Transporter's FERC Gas
     Tariff, Transporter shall have the right to suspend or terminate this
     Agreement pursuant to the conditions set forth in said Section 15.

                                   ARTICLE IV
                    RATES AND TERMS AND CONDITIONS OF SERVICE

4.1  This Agreement in all respects shall be and remain subject to the
     provisions of Rate Schedule FTS-2 and of the applicable provisions of the
     General Terms and Conditions of Transporter on file with the FERC (as the
     same may hereafter be legally amended or superseded), all of which are made
     a part hereof by this reference.

4.2  Transporter shall have the unilateral right to file with the appropriate
     regulatory authority and seek to make changes in (a) the rates and charges
     applicable to its Rate Schedule FTS-2, (b) Rate Schedule FTS-2 including
     the Form of Service Agreement and the existing Service Agreement pursuant
     to which this service is rendered; provided however, that the firm
     character of service shall not be subject to change hereunder by means of a
     Section 4 Filing by Transporter, and/or (c) any provisions of the General
     Terms and Conditions of Transporter's Tariff applicable to Rate Schedule
     FTS-2. Transporter agrees that Shipper may protest or contest the
     aforementioned filings, or seek authorization from duly constituted
     regulatory authorities for such adjustment of Transporter's existing FERC
     Gas Tariff as may be found necessary in order to assure that the provisions
     in (a), (b) or (c) above are just and reasonable.

4.3  Notwithstanding Section 4.1 above, as of the In-Service Date and during the
     primary term of this Agreement, Shipper shall pay Transporter, for all
     services rendered hereunder, the

                                       7
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     lower of: (I) the rates established under Transporter's Rate Schedule FTS-2
     (inclusive of all applicable surcharges), as filed with and approved by the
     FERC and as said Rate Schedule may hereafter be legally amended or
     superseded, or (2) the Final Rate Cap as determined below:

     (a)  The Base Rate Cap shall be as follows: $[*]/MMBtu/d.

     (b)  The Base Rate Cap assumes the levelized rate methodology through March
          31, 2005, and thereafter, the traditional cost of service methodology.
          For purposes of this section with respect to this Agreement, a
          "levelized rate" shall mean a rate designed by adjusting the annual
          depreciation expense such that it results in a levelized cost of
          service.

     (c)  The Base Rate Cap is stated in nominal dollars, and shall exclude all
          applicable surcharges and fuel.

     (d)  Beginning on January 1, 2005, and annually thereafter ("Escalation
          Date"), the Base Rate Cap then in effect shall be escalated in
          accordance with the following formula; provided that in no event shall
          the Base Rate Cap, as it may be escalated pursuant to this subsection
          (d), exceed $[*] per MMBtu. On each Escalation Date, the Base Rate Cap
          to be effective for the subsequent twelve (12) month period shall be
          the sum of: (i) [*] multiplied by the Prior Base Rate Cap, which is
          defined herein as the Base Rate Cap that was effective for the twelve
          (12) month period immediately preceding the Escalation Date, and (ii)
          [*] multiplied by the Prior Base Rate Cap, [*].

     (e)  (i) For any billing month, the Final Rate Cap (stated on a per unit
          basis) shall be determined by adding the Base Rate Cap and an amount
          equal to the aggregate of the applicable surcharges (as defined in
          section (e)(ii) below).

          (ii) The type of surcharges contemplated under Rate Schedule FTS-2 to
               be included in the calculation of the Final Rate Cap are
               applicable surcharges, such as ACA, fuel, and Capital surcharges;
               provided, however, Transporter shall not collect under this
               Agreement any surcharge associated with GRI, Gas Supply
               Realignment ("GSR"), the recovery of take-or-pay costs or gas

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       8
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

               purchase reformation costs, FERC Account No.191 costs
               ("restructuring costs"), or any similar surcharge associated with
               the restructuring of Transporter's merchant service under orders
               in FERC Docket No. RS92-16-000 or similar proceedings, any
               separately stated surcharge related to the recovery of
               restructuring costs of any upstream provider of transportation or
               sales services to Transporter, or, to the extent such charges may
               be discountable, any industry-wide research and development
               surcharges such as those currently proposed in FERC Docket No.
               RP04-378.

     (f)  If, at any time after the In-Service Date and during the primary term
          of this Agreement, the effective rate that Transporter is authorized
          by the FERC to charge Shipper, including surcharges, exceeds the Final
          Rate Cap, then Transporter shall discount such authorized FERC rate
          down to the Final Rate Cap in accordance with the order of discounting
          provided for in Transporter's FERC Gas Tariff.

     (g)  Unless otherwise mutually agreed by the Parties, after the expiration
          of the primary term of this Agreement, Shipper shall pay Transporter
          the rates established under Transporter's Rate Schedule FTS-2, as
          filed with and approved by the FERC.

     (h)  If Shipper proposes or supports a change in the rate design
          methodology on which the currently effective FTS-2 rates are based, as
          set forth in Sections III.2.c and d, and III.3.b of the Phase III
          Settlement, and such proposals or changes are approved by a final
          non-appealable order, the Final Rate Cap shall be deemed waived.
          Notwithstanding the foregoing, if Transporter proposes, or any other
          party proposes and Transporter either supports or does not oppose, a
          change to any of such rate design methodologies in any Section 4 or
          Section 5 proceeding, then Shipper may take a position on that
          particular rate design methodology in that proceeding, whether or not
          consistent with the position taken by Transporter, without waiving the
          Final Rate Cap, and unless otherwise agreed by Transporter and
          Shipper, approval of such a proposed change in the rate design
          methodology by a final non-appealable order, in such Section 4 or
          Section 5 proceeding, shall not affect the continuing applicability of
          the Final Rate Cap. Specifically, the rate design methodology issues
          referenced above in this Section (h) are as follows:

                                       9
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

          (i)  the straight fixed variable method of rate design, and of
               classifying and allocating costs,

          (ii) unless otherwise agreed to by both parties hereto, the
               system-wide postage stamp rate for FTS-2 service to the Market
               Area,

          (iii) the levelized rate methodology through March 31, 2005, and
               thereafter, the traditional cost-of-service methodology, and

          (iv) the methodology of allocating the operation and maintenance
               ("O&M") costs between Rate Schedules FTS-1 and FTS-2; provided,
               however, that without waiving its final Rate Cap under this
               Section (h) (iv), and with respect to the allocation of
               administrative and general ("A&G") expenses only, a Shipper may
               challenge, on a prospective basis only, Transporter's use of the
               Kansas-Nebraska methodology in the Section 4 rate case to be
               filed by Transporter in accordance with Article XI of the
               Settlement approved by the FERC in Docket No. RP04-12; and
               provided further, that Shipper may, without waiving its Final
               Rate Cap (and regardless of any position taken by Transporter),
               argue for any allocation methodology that allocates no more O&M
               costs to Rate Schedule FTS-2 than would otherwise be allocated by
               use of:

               a.   the Phase III Settlement methodology for allocating all O&M
                    costs except for A&G expenses, and

               b.   the Kansas-Nebraska methodology for allocating A&G expenses.

4.4  [Deleted- Not Applicable]

                                    ARTICLE V
                                TERM OF AGREEMENT

5.1  This Agreement shall become effective upon the date first written above and
     shall continue in effect for a primary term of Twenty (20) years commencing
     with the In-Service Date.

                                       10
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

5.2  In the event the capacity being contracted for was acquired pursuant to
     Section 18.E. of Transporter's Tariff, then this Agreement shall terminate
     on the date set forth in Section 5.1 above. Otherwise, in accordance with
     the provisions of Section 20 of the General Terms and Conditions of
     Transporter's Tariff, Shipper has elected [Right of First Refusal or
     Roll-over Option] and upon the expiration of the primary term and any
     extension or roll-over, termination will be governed by the provisions of
     Section 20 of the General Terms and Conditions of Transporter's Tariff.

5.3  [deleted - not applicable]

5.4  Shipper may buy out of a Service Agreement for all or a portion of its
     transportation capacity ("MDTQ") thereunder, at any time, by paying
     Transporter the net present value of Shipper's remaining reservation charge
     obligations for such capacity, discounted at a reasonable rate to be
     mutually agreed upon by the parties at the time of such buy-out.

5.5  Notwithstanding any other provision in this Agreement, after the In-Service
     Date , in the event that: (1) Shipper is capable of using gas and (2)
     Transporter is unable to deliver Shipper's designated volumes at the
     specified Delivery Point(s) and at the pressures provided for in this
     Agreement for a period of two consecutive days ("Service Cessation"),
     Shipper shall have the right to reduce the MDTQ by the volumes not
     delivered, without costs or penalty, by providing written notice to
     Transporter within forty-five (45) days of such occurrence; provided,
     however, that if a Service Cessation occurs more than five (5) times in any
     calendar year, Shipper shall have the right to terminate this Agreement by
     providing written notice to Transporter within forty-five (45) days of such
     occurrence; provided further, however, that if Transporter's failure to
     deliver is due to events of Transporter's force majeure as defined in Rate
     Schedule FTS-2, Shipper shall have the right to terminate or to reduce the
     MDTQ only in the event such force majeure continues for more than one
     hundred eighty-five (185) consecutive days of any three hundred sixty-five
     (365) day period.

                                   ARTICLE VI
          POINT(S) OF RECEIPT AND DELIVERY AND MAXIMUM DAILY QUANTITIES

                                       11
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

6.1  The Primary Point(s) of Receipt and maximum daily quantity for each Primary
     Point of Receipt with respect to the Hines Unit #4 Capacity and System
     Supply Capacity, for all gas delivered by Shipper to Transporter under this
     Agreement shall be at the Point(s) of Receipt on the pipeline system of
     Transporter or any Transporting Pipeline as set forth in Exhibit A attached
     hereto, as the same may be amended from time to time. In accordance with
     the provisions of Section 8.A. of Rate Schedule FTS-2 and Section 21.C. of
     the General Terms and Conditions of Transporter's Tariff, Shipper may
     request changes in its Primary Point(s) of Receipt. Transporter may make
     such changes in accordance with the terms of Rate Schedule FTS-2 and the
     applicable General Terms and Conditions of its Tariff.

6.2  The Primary Point(s) of Delivery and maximum daily quantity for each point
     for all gas made available for delivery by Transporter to Shipper, or for
     the account of Shipper, under this Agreement and with respect to the Hines
     Unit #4 Capacity and System Supply Capacity shall be at the Point(s) of
     Delivery as set forth in Exhibit B hereto, as same may be amended from time
     to time, and shall be in Transporter's Market Area. In accordance

                                       12
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     with the provisions of Section 9.A. of Rate Schedule FTS-2 and Section
     21.C. of the General Terms and Conditions of Transporter's Tariff, Shipper
     may request changes in its Primary Point(s) of Delivery provided that such
     new requested Primary Delivery Points must be located in Transporter's
     Market Area. Transporter may make such changes in accordance with the terms
     of Rate Schedule FTS-2 and the applicable General Terms and Conditions of
     its Tariff. Transporter is not obligated to accept changes where the new
     Primary Delivery point is also a delivery point under a Rate Schedule SFTS
     Service Agreement and the load to be served is an existing behind-the-gate
     customer of a Rate Schedule SFTS Shipper as defined in Section 11 of Rate
     Schedule SFTS.

                                   ARTICLE VII
                                     NOTICES

     All notices, payments and communications with respect to this Agreement
shall be in writing and sent to the addresses stated below or at any other such
address as may hereafter be designated in writing:

ADMINISTRATIVE MATTERS

     Transporter: Florida Gas Transmission Company
                  1331 Lamar Street, Suite #650
                  Houston, Texas 77010
                  Attention: Market Services
                  Telephone No. (713) 853-5655

     Shipper: Florida Power Corporation d/b/a Progress Energy Florida, Inc.
              410 South Wilmington St., PEB19
              Raleigh, NC 27601
              Attention: Contracts Dept.
              Telephone No. 919-546-4280
              Fax No. 919-546-2649

PAYMENT BY WIRE TRANSFER

     Transporter: Florida Gas Transmission Company
                  Transporter to provide at a later date]

                                       13
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     Shipper: Florida Power Corporation d/b/a Progress Energy Florida, Inc.
              [Shipper to provide at a later date]

                                  ARTICLE VIII
                                   FACILITIES

8.1  To the extent that construction of facilities is necessary to provide
     service under this Service Agreement, such construction, including payment
     for the facilities, shall occur in accordance with Section 21 of the
     General Terms and Conditions of Transporter's Tariff.

8.2  Transporter shall seek authorization to roll in the cost of the Incremental
     Facilities necessary to render service hereunder, including the mainline
     facilities and any modifications and upgrades required to the existing
     Progress-Hines delivery station facilities to provide a delivery capacity
     of up to [*] MMBtu/day.

                                   ARTICLE IX
                     REGULATORY AUTHORIZATIONS AND APPROVALS

     (a) Transporter's obligation to provide service is conditioned upon receipt
and acceptance of any necessary regulatory authorization, in a form acceptable
to Transporter in its sole discretion, to provide Firm Transportation Service to
Shipper in accordance with the terms of Rate Schedule FTS-2, this Service
Agreement, and the General Terms and Conditions of Transporter's Tariff.

     (b) [deleted - not applicable]

                                    ARTICLE X
                                    PRESSURE

10.1 The quantities of gas delivered or caused to be delivered by Shipper to
     Transporter hereunder shall be delivered into Transporter's pipeline system
     at a pressure sufficient to enter Transporter's system, but in no event
     shall such gas be delivered at a pressure

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       14
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     exceeding the maximum authorized operating pressure or such other pressure
     as Transporter permits at the Point(s) of Receipt.

10.2 Transporter shall have no obligation to provide compression and/or alter
     its system operation to effectuate deliveries at the Point(s) of Delivery
     hereunder.

10.4 The quantities of gas to be delivered by Transporter to Shipper hereunder
     shall be delivered to Shipper at a minimum pressure of 575 psig at the
     Progress-Hines delivery point.

                                   ARTICLE XI
                                OTHER PROVISIONS

11.1 Prior to Transporter's execution of this Agreement, Shipper must
     demonstrate creditworthiness satisfactory to Transporter, In the event
     Shipper fails to establish creditworthiness within fifteen (15) days of
     Transporter's notice, Transporter shall not execute this Agreement and this
     Agreement shall not become effective.

11.2 Service pursuant to this Agreement is expressly subject to the following
     conditions:

     (a)  (i)  The issuance, and acceptance by Transporter, of all necessary
               authorizations from the FERC pursuant to the Natural Gas Act or
               Natural Gas Policy Act, permitting Transporter to construct, own,
               and operate the Facilities and to effectuate the proposed service
               hereunder. All such authorizations shall be in form and substance
               satisfactory to Transporter, and shall be final before the
               respective governmental authority and no longer subject to appeal
               or rehearing; provided, however, that Transporter may waive the
               condition that such authority be final and/or no longer subject
               to appeal or rehearing.

          (ii) Shipper shall have the right to terminate this Agreement in the
               event that it determines, in good faith, that a condition in the
               FERC authorization materially adversely affects its business and
               operations. If Shipper elects to terminate under this provision,
               it will notify Transporter in writing within fifteen (15) days of
               the issuance of such authorization.

                                       15
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

     (b)  This agreement is subject to approval of the board of directors of
          Transporter and receipt and acceptance by Transporter of all other
          approvals required to construct the Facilities, including all
          necessary authorizations from federal, state, local, and/or municipal
          agencies or other governmental authorities. All such approvals shall
          be in form and substance satisfactory to Transporter, and shall be
          final before the respective governmental authority and no longer
          subject to appeal or rehearing; provided, however, that Transporter
          may waive the condition that such authority be final and/or no longer
          subject to appeal or rehearing.

     (c)  The receipt of executed firm transportation service agreements
          sufficient to economically justify construction of the Facilities, if
          required, in Transporter's sole opinion, and the execution of all
          necessary interconnect and balancing agreements with Southern Natural
          Gas Company ("SNG"), relating to the Cypress Pipeline project.

     (d)  So long as the FTS-2 rates are designed on an incremental basis,
          Shipper agrees to support the rate methodology underlying the existing
          FTS-2 rates for the Facilities and service rendered under its FTS-2
          agreements, in any proceeding before the FERC during the term of this
          Agreement.

     (e)  Receipt by Transporter of all necessary right-of-way easements or
          permits in form and substance acceptable to Transporter.

     (f)  Transporter obtaining financing to construct the Facilities, in a
          form, and under terms, satisfactory to Transporter, in Transporter's
          sole opinion. Shipper agrees to provide reasonable cooperation in
          Transporter's effort to obtain financing.

     (g)  Completion of all of the following:

          (i)  The approval of this Agreement by Shipper's senior management and
               if necessary, Shipper's Board of Directors, BY January 31, 2005;

          (ii) The entry by the Florida Public Service Commission of an order
               approving this Agreement without the need for significant
               alteration (which shall be determined by Shipper in its sole
               discretion), by June 15, 2005;

                                       16
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

          (iii) The entry by Florida Public Service Commission of an order
               approving a determination of the need for the additional proposed
               combined-cycle Unit #4 that is planned to be installed at
               Shipper's Hines electric power generating facility located in
               Polk County, Florida, by May 1, 2005;

          (iv) The execution by Shipper of agreements with each of (1) Southern
               Natural Gas Company (for firm transportation on its system for
               quantities related to the MDTQ's reflected in Attachment A and
               Attachment B hereto); and (2) BG LNG Services, LLC (for the
               supply of natural gas to Shipper for quantities related to the
               MDTQ's reflected in Attachment A and Attachment B hereto), each
               in a form and containing terms and conditions satisfactory to
               Shipper in its sole discretion (collectively, the "Related
               Agreements"), by December 6, 2004;

          (v)  The entry by the Florida Public Service Commission of an order
               approving each of the Related Agreements without the need for
               significant alteration (which shall be determined by Shipper in
               its sole discretion), by June 15, 2005;

          (vi) Completion and commencement of operation of (which shall be
               determined by Shipper in its sole discretion), the proposed
               expansion of SNG's natural gas pipeline system that extends from
               (i) a point of interconnection with the Elba Island LNG Terminal;
               to (ii) an interconnection with the existing (as of the effective
               date hereof), natural gas transmission facilities owned by
               Transporter in Clay County, Florida no later than March 1, 2009;
               and

          (vii) The granting of all governmental approvals by October 1, 2006,
               in form and substance satisfactory to Shipper, as may be deemed
               necessary by Shipper in its sole discretion related to Shipper's
               purchase, transportation, and utilization of the supplies of
               natural gas referenced hereunder and in the Related Agreements.

          In the event that any of these conditions are not met by the date
          specified ("deadline") in this section 11.2(g), Shipper may elect to
          terminate this Agreement by giving written notice, within ten (10)
          days of the deadline, of such termination to Transporter, and this
          Service Agreement shall terminate upon FGT's receipt of Shipper's
          notice; provided, however, in no event shall such notice be given by
          Shipper to Transporter any later than March 10, 2009.

     (h)  The final approval by the FERC, without modification or condition that
          is unacceptable to any Settling Party, of the rate case Stipulation
          and Agreement of Settlement filed on August 13, 2004 in Docket No.
          RP04-12.

                                       17
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

11.3 Subject to the other provisions of this Article XI, Transporter agrees to
     make all reasonable efforts to obtain the necessary authorizations,
     financing commitments, and all other approvals necessary to effectuate
     service under this Agreement. Shipper agrees to exercise good faith in the
     performance of this Agreement by supporting Transporter's efforts to obtain
     all necessary authorizations, financing, and other approvals necessary to
     effectuate service under this Agreement.

11.4 Notwithstanding any other provision herein, at any time prior to
     Transporter's acceptance of all authorizations necessary to construct the
     Facilities, Transporter retains the right to terminate this Agreement, and
     to withdraw any requests or applications for regulatory approvals.

11.5 [Deleted - Not Applicable]

                                   ARTICLE XII
                                  MISCELLANEOUS

12.1 (a)  This Agreement shall bind and benefit the successors and assigns of
          the respective parties hereto; provided however, that neither party
          shall assign this Agreement or any of its rights or obligations
          hereunder without first obtaining the written consent of the other
          party, which consent shall not be unreasonably withheld.

     (b)  Shipper may also assign its rights under the Final Rate Cap but only
          in the event that such assignment is to a third party that has a
          Moody's credit rating equal to or greater than that of Shipper.

12.2 No waiver by either party of any one or more defaults by the other in the
     performance of any provisions of this Agreement shall operate or be
     construed as a waiver of any future defaults of a like or different
     character.

12.3 This Agreement contains Exhibits A and B (each for the periods May through
     September 2007, May through September 2008, and commencing May 2009), which
     are incorporated fully herein.

                                       18
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

12.4 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ANY CONFLICT OF LAWS
     DOCTRINE WHICH WOULD APPLY THE LAWS OF ANOTHER JURISDICTION.

                                  ARTICLE XIII
                      SUPERSEDING PRIOR SERVICE AGREEMENTS

     This Agreement supercedes and cancels the following Service Agreements
between Transporter and Shipper:

          None.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers effective as of the date first written above.

TRANSPORTER:                            SHIPPER:

                                        FLORIDA POWER CORPORATION d/b/a
FLORIDA GAS TRANSMISSION COMPANY        PROGRESS ENERGY FLORIDA, INC.

By                                      By
   ----------------------------------      -------------------------------------
Title                                   Title
      -------------------------------         ----------------------------------

Attest: (to be attested if not          Attest: (to be attested if not
signed by an officer of the company)    signed by an officer of the company)

By                                      By
   ----------------------------------      -------------------------------------
Title                                   Title
      -------------------------------         ----------------------------------
Date                                    Date
     --------------------------------        -----------------------------------

                                       19
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                            COMMENCING MAY 1, 2007*

<TABLE>
<CAPTION>
Point(s) of Receipt          Maximum Daily Quantity (MMBtu)**
Description of Point       ------------------------------------
of Receipt                 DRN   Oct   Nov-Mar   Apr   May-Sept
--------------------       ---   ---   -------   ---   --------
<S>                        <C>   <C>   <C>       <C>   <C>
PRODUCTION ZONE 1                [*]     [*]     [*]      [*]
PRODUCTION ZONE 2                [*]     [*]     [*]      [*]
PRODUCTION ZONE 3                [*]     [*]     [*]      [*]
SNG-CYPRESS INTERCONNECT   New   [*]     [*]     [*]      [*]
   Total MDQ:                    [*]     [*]     [*]      [*]
</TABLE>

*    Or the In-Service Date, if later than October 1, 2007.

**   Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: _____________________

Contract No. ____________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       20
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                            COMMENCING MAY 1, 2007*

<TABLE>
<CAPTION>
                             Maximum Daily Quantity (MMBtu)
Point(s) of Delivery   -----------------------------------------
Description of         Maximum
Point of Delivery      Hourly**   Oct   Nov-Mar   Apr   May-Sept
--------------------   --------   ---   -------   ---   --------
<S>                    <C>        <C>   <C>       <C>   <C>
Progress-Anclote          [*]     [*]     [*]     [*]      [*]
Progress-Hines            [*]     [*]     [*]     [*]      [*]
Mirant-Shady Hills        [*]     [*]     [*]     [*]      [*]
   Total MDTQ:                    [*]     [*]     [*]      [*]
</TABLE>

*    Or the In-Service Date, if later than October 1, 2007.

**   Not to exceed [*] of MDQ.

Date of this Exhibit B: ________________________

Contract No. ____________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       21
<PAGE>
                     FIRM TRANSPORTATION SERVICE AGREEMENT
                              RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                             COMMENCING MAY 1, 2008*

<TABLE>
<CAPTION>
Point(s) of Receipt         Maximum Daily Quantity (MMBtu)**
                            --------------------------------
Description of                         Nov-         May-
Point of Receipt      DRN        Oct    Mar   Apr   Sept
----------------      ---        ---   ----   ---   ----
<S>                   <C>   <C>        <C>    <C>   <C>
PRODUCTION ZONE 1     [*]        [*]    [*]   [*]    [*]
PRODUCTION ZONE 2     [*]        [*]    [*]   [*]    [*]
PRODUCTION ZONE 3     [*]        [*]    [*]   [*]    [*]
SNG-CYPRESS           New        [*]    [*]   [*]    [*]
INTERCONNECT
   Total MDQ:                    [*]    [*]   [*]    [*]
</TABLE>

*    Or the In-Service Date, if later than October 1, 2008.

**   Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: _____________________

Contract No. ____________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       22
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                             COMMENCING MAY 1, 2008*

<TABLE>
<CAPTION>
Point(s) of Delivery              Maximum Daily Quantity (MMBtu)
                                  ------------------------------
Description of          Maximum             Nov-         May-
Point of Delivery      Hourly**       Oct    Mar   Apr   Sept
-----------------      --------       ---   ----   ---   ----
<S>                    <C>        <C>       <C>    <C>   <C>
Progress-Anclote          [*]         [*]    [*]   [*]    [*]
Progress-Hines            [*]         [*]    [*]   [*]    [*]
Mirant-Shady Hills        [*]         [*]    [*]   [*]    [*]
   Total MDTQ:                        [*]    [*]   [*]    [*]
</TABLE>

*    Or the In-Service Date, if later than October 1, 2008.

**   Not to exceed [*] of MDQ.

Date of this Exhibit B: ________________________

Contract No. ____________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       23
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT A

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                             COMMENCING MAY 1, 2009

<TABLE>
<CAPTION>
Point(s) of Receipt         Maximum Daily Quantity (MMBtu)*
                            -------------------------------
Description of                        Nov-         May-
Point of Receipt      DRN       Oct    Mar   Apr   Sept
----------------      ---       ---   ----   ---   ----
<S>                   <C>   <C>       <C>    <C>   <C>
PRODUCTION ZONE 1     [*]       [*]    [*]   [*]    [*]
PRODUCTION ZONE 2     [*]       [*]    [*]   [*]    [*]
PRODUCTION ZONE 3     [*]       [*]    [*]   [*]    [*]
SNG-CYPRESS           New       [*]    [*]   [*]    [*]
INTERCONNECT
   Total MDQ:                   [*]    [*]   [*]    [*]
</TABLE>

*    Exclusive of Transporter's fuel. Shipper to provide fuel pursuant to Fuel
     Reimbursement Charge Adjustment provisions of Transporter's F.E.R.C. Gas
     Tariff, General Terms and Conditions.

Date of this Exhibit A: _____________________

Contract No. ____________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       24
<PAGE>
                      FIRM TRANSPORTATION SERVICE AGREEMENT
                               RATE SCHEDULE FTS-2

                                    EXHIBIT B

                                       TO

                    FIRM GAS TRANSPORTATION AGREEMENT BETWEEN

                      FLORIDA GAS TRANSMISSION COMPANY AND

                          PROGRESS ENERGY FLORIDA, INC.

                      DATED: _______________ _____, ______

                             COMMENCING MAY 1, 2009

<TABLE>
<CAPTION>
Point(s) of Delivery             Maximum Daily Quantity (MMBtu)
Description of         Maximum   ------------------------------
Point of Delivery      Hourly*   Oct   Nov-Mar   Apr   May-Sept
--------------------   -------   ---   -------   ---   --------
<S>                    <C>       <C>   <C>       <C>   <C>
Progress-Anclote         [*]     [*]     [*]     [*]      [*]
Progress-Hines           [*]     [*]     [*]     [*]      [*]
Mirant-Shady Hills       [*]     [*]     [*]     [*]      [*]
   Total MDTQ:                   [*]     [*]     [*]      [*]
</TABLE>

*    Not to exceed [*] of MDQ.

Date of this Exhibit B:_________________

Contract No. __________________

[*] Confidential portion has been omitted and filed separately with the
    Commission.

                                       25
<PAGE>
              THIS DOCUMENT IS SUBJECT TO A CONFIDENTIAL TREATMENT
                      REQUEST PURSUANT TO RULE 24b-2 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

                [Letterhead of Florida Gas Transmission Company]

December 2, 2004

Progress Energy Florida, Inc.
Attn: Ms. Pamela Murphy
P. O. Box 1551
410 South Wilmington St., PEB10A
Raleigh, NC 27601

Re: Discount of Rate Under the Firm Transportation (FTS-2) Service Agreement
    dated December 2, 2004 ("Agreement") Between Florida Gas Transmission
    Company ("FGT" or "Transporter") and Florida Power Corporation d/b/a
    Progress Energy Florida, Inc. ("Progress" or "Shipper") (collectively the
    "Parties" or singularly "Party").

Dear Ms. Murphy:

     Shipper has requested a competitive discount. Based upon current market
conditions, Transporter has agreed to charge and Shipper has agreed to pay a
discounted rate for transportation of quantities of gas under the Agreement. The
terms and conditions of the discount agreed upon are expressed in this Discount
Agreement ("Discount Agreement").

     This Discount Agreement shall be effective from October 1, 2007 through
April 30, 2027 (and supercedes and cancels the Discount Agreement dated October
7, 2004); provided, however, in the event that the referenced Agreement is
terminated, this Discount Agreement shall immediately terminate.

     The Maximum Daily Transportation Quantity (MDTQ) shall be as follows, and,
unless expressly agreed otherwise, FGT's maximum rates shall apply to volumes
exceeding such amounts:

<TABLE>
<CAPTION>
Effective Time Period                      Volume (MMBtu/day)
----------------------------------------   ------------------
<S>                                        <C>
October 2007 - April 2008                          [*]

October 2008 - April 2009                          [*]

For the months of October through April
for the years 2009 through 2027                    [*]
</TABLE>

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
Progress Energy Florida, Inc.
December 2, 2004
Contract No._______
Page 2

The primary receipt and delivery points for the term(s) of this discount shall
be as follows:

<TABLE>
<CAPTION>
          Effective Time Period            Receipt (RP)/Delivery (DP) Points
----------------------------------------   ---------------------------------
<S>                                        <C>
For the months of October through April,
for the years 2007 through 2027                           [*]

For the months of October through April,
for the years 2007 through 2027                           [*]
</TABLE>

Effective for the periods stated below, Shipper shall pay the following
Discounted Reservation Charges per MMBtu ("Discounted Demand Charge"), plus all
applicable surcharges; provided, however, FGT shall discount the any research
and development ("R&D") surcharges (whether demand or volumetric) to $0.00 per
MMBtu for transportation of quantities under the Agreement:

<TABLE>
<CAPTION>
                                              Discounted
 Effective Time                Volume        Demand Charge
     Period                  (MMBtu/day)   Dollars ($)/MMBtu
--------------------------   -----------   -----------------
<S>                          <C>           <C>
Oct. 2007 - April 2008           [*]              [*]

Oct. 2008 - April 2009           [*]              [*]

For the months of October
through April, for the
years 2009 through 2027          [*]              [*]
</TABLE>

In addition to the above rate(s), Shipper shall also pay any applicable fuel use
and unaccounted for charges, as well as any fuel surcharge.

Except for the posting of information by FGT pursuant to 18 C.F.R. Parts 161,
284, and 358 and any other applicable regulations of the Federal Energy
Regulatory Commission ("FERC"), each Party agrees that it will maintain this
discount, all of its contents and subsequent discount documentation and
communications in strict confidence and that it will not cause or permit
disclosure thereof to any third party without the express written consent of the
other Party except to the extent necessary to comply with valid laws,
regulations, or orders of any court or agency having jurisdiction. However, in
the event either Party becomes aware of a judicial or administrative proceeding
or request that has resulted or that may result in such disclosure, it shall
notify the other Party immediately and will also take all actions necessary to
maintain the confidentiality of all discount communications and documents.
Notwithstanding anything to the contrary in this paragraph, Shipper shall have
the right to provide a copy of this Discount Agreement to the Florida Public
Service Commission and any other entity that is a party to the relevant docket
that has executed a confidentiality agreement to retain such information
confidential, without prior notice to or consent of Transporter, in connection
with

[*] Confidential portion has been omitted and filed separately with the
    Commission.
<PAGE>
Progress Energy Florida, Inc.
December 2, 2004
Contract No._______
Page 3

Shipper's attempts to obtain the Florida Public Service Commission's
approval of this Discount Agreement and the Agreements.

As stated above, any R&D surcharge shall be discounted to $0.00; provided,
however that such discount shall immediately terminate in the event FGT is
required to absorb any costs associated with discounting any R&D surcharge or
FGT is prohibited by law from granting such discount.

Shipper shall affirmatively support the continuation of FERC's discount rate
adjustment policy (providing for recognition of volumes flowing at less than
maximum rates in rate proceedings). In the event that Shipper takes a contrary
position in any future rate, rulemaking, or other proceeding before the FERC (or
other governmental body having jurisdiction in the premises), this Discount
Agreement shall immediately terminate.

In the event the maximum and minimum rates applicable to Rate Schedule FTS-2 are
changed pursuant to an Order issued by the FERC, such that the transportation
rates provided for herein are above FGT's maximum rates or below FGT's minimum
rates, this Agreement shall terminate immediately prior to the effectiveness of
such revised rates, and FGT and Shipper shall negotiate to arrive at new rates
applicable to the transportation service. It is the intent of FGT and Shipper
that such renegotiated discounted rates will leave both FGT and Shipper in
substantially the same economic position as the transportation rates provided
for herein.

THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ANY CONFLICT OF LAWS DOCTRINE WHICH
WOULD APPLY THE LAWS OF ANOTHER JURISDICTION. ANY SUIT BROUGHT WITH RESPECT TO
OR RELATING TO THIS LETTER AGREEMENT SHALL BE BROUGHT IN THE COURTS OF HARRIS
COUNTY, TEXAS OR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION.

     The Parties have caused this Discount Agreement to be executed by their
respective duly authorized officers as of the date first mentioned above.

FLORIDA GAS TRANSMISSION COMPANY

By: /s/ R.E. Hayes
    -----------------------------------
Name: R. E. Hayes
Title: Sr. V.P. & C.C.O.

FLORIDA POWER CORPORATION,
d/b/a PROGRESS ENERGY FLORIDA, INC.

By: /s/ Robert F. Caldwell
    -----------------------------------
Name: Robert F. Caldwell
Title: Vice President - Regulated Commercial Counsel
<PAGE>

                        [BG LNG Service, LLC Letterhead]

January 28, 2005

Rob Caldwell
Progress Energy Florida, Inc.
410 S. Wilmington Street
Raleigh, NC  27601

Re:      Gas Sale and Purchase Contract ("GSPC") dated December 1, 2004, between
         Florida Power Corporation, doing business as Progress Energy Florida,
         Inc. ("Progress") and BG LNG Services, LLC ("BGLS")

Dear Rob:

BGLS proposes to amend Section 15.1(viii) of the GSPC by changing "January 31,
2005" to "April 1, 2005." Please indicate Progress' acceptance of this amendment
of the GSPC by executing a copy of this letter in the space provided below and
returning it to me.

Sincerely yours,

/s/ Elizabeth Spomer

Elizabeth Spomer
Vice President, BG LNG Services, LLC

Agreed and accepted this 31st day of January, 2005 by:

Progress Energy Florida, Inc.

By: /s/ Robert F. Caldwell
    ----------------------
        Robert F. Caldwell

<PAGE>

                  [Florida Gas Transmission Company Letterhead]

                                January 31, 2005

Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
Attention: Ms. Pamela Murphy
P. O. Box 1551
410 South Wilmington St., PEB10A
Raleigh, North Carolina  27602-1551

Re:      Letter Agreement Amending the Firm Transportation Service Agreements by
         and between Florida Power Corporation, d/b/a Progress Energy Florida,
         Inc., and Florida Gas Transmission Company: (1) FTS-1 dated April 1,
         1998, (2) FTS-2 dated April 1, 1998, (3) FTS-2 dated October 7, 1998,
         and (4) FTS-2 dated December 2, 2004

Dear Ms. Murphy:

         Florida Power Corporation d/b/a Progress Energy Florida, Inc.
("Progress" or "Shipper") and Florida Gas Transmission Company ("FGT") hereby
enter into this letter agreement ("Letter Agreement"), regarding the amendment
to the referenced existing firm service agreements. In consideration of the
premises and mutual covenants set forth herein, FGT and Shipper agree as
follows:

         1. Immediately upon the in-service date of FGT's proposed Phase VII
Expansion, FGT and Shipper agree to execute a revised Exhibit B to each of the
referenced firm service agreements, to reflect that the minimum delivery
pressure at Shipper's Progress-Hines Delivery Point shall be 575 psig, effective
upon the in-service date of any additional facilities necessary to be
constructed by FGT and by Southern Natural Gas Company in connection with the
seasonal incremental service to be provided under the FTS-2 Firm Service
Agreement dated January 31, 2005.

         2. The parties hereby reaffirm the FTS-2 Firm Transportation Service
Agreement dated October 7, 1998. Although, by letter agreement dated June 14,
1999, the parties agreed to execute a new replacement service agreement
(covering service by means of FGT's Phase IV Expansion), the parties acknowledge
that, on October 11, 2000, they amended Exhibits A and B to such agreement
(effective on October 7, 1998), in place of entering into a replacement service
agreement.

<PAGE>

Progress Energy Florida, Inc.
Proposal for Transportation Services
January 31, 2005
Page 2

         3. This Letter Agreement shall become effective on the date of its
execution by both parties. In the event that the parties' FTS-2 Firm Service
Transportation Agreement dated January 31, 2005 (for service by means of FGT's
proposed Phase VII Expansion) is terminated or cancelled without service
commencing, Section 1 of this Letter Agreement will no longer be of any force
and effect, and the obligation of the parties to amend the referenced agreements
shall terminate and become null and void and of no further force and effect.

         If this Letter Agreement meets with your approval, please sign below
and return one of the two originals to us.

                                             Yours truly,

                                             /s/ R. E. Hayes

                                             Robert E. Hayes

FLORIDA POWER CORPORATION
d/b/a PROGRESS ENERGY FLORIDA, INC.

By:      /s/ Paula J. Sims
    ----------------------------------------
Name:        Paula J. Sims
      --------------------------------------
Title:   Vice President - Regulated Fuels
       -------------------------------------

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