Document:

exv4w5

Exhibit 4.5

CENTERPOINT ENERGY, INC.

THIRD AMENDED AND RESTATED

INVESTOR’S CHOICE PLAN

(effective as of December 31, 2010)

     CenterPoint Energy, Inc., a Texas corporation (the “Company”), hereby amends and restates its
Second Amended and Restated Investor’s Choice Plan (the “ICP”) in its entirety to establish the
following CenterPoint Energy, Inc. Third Amended and Restated Investor’s Choice Plan (the “Plan”):

RECITALS:

     WHEREAS, the purpose of the Plan is to provide interested investors and holders of shares of
the Company’s common stock, par value $0.01 per share, including associated preferred stock
purchase rights (the “Common Stock”), a convenient, economical means of increasing their investment
in the Company through (i) regular investment of cash dividends paid on shares of Common Stock,
(ii) optional cash investments and/or (iii) initial cash investments in shares Common Stock; and

     WHEREAS, the Internal Revenue Service recently adopted regulations on broker reporting of
sales of securities and on the basis of securities (RIN 1545-BI66) (the “IRS Regulations”) that
require the ICP to be amended prior to January 1, 2011 in order to meet the definition of a
dividend reinvestment plan in the IRS Regulations; and

     WHEREAS, the Board of Directors deems it advisable and in the best interests of the Company
that the Plan be amended to (i) meet the definition of a dividend reinvestment plan in the IRS
Regulations and make other related changes in the Plan, and (ii) provide certain other
clarifications in the Plan; and

     WHEREAS, the Company desires to amend and restate the ICP, effective as of the close of
business on December 31, 2010 (the “Effective Date”), to (i) meet the definition of a dividend
reinvestment plan in the IRS Regulations and make other related changes, (ii) change the name of
the ICP, (iii) revise the list of Eligible Securities (as defined herein), and (iv) provide certain
other clarifications.

     NOW, THEREFORE:

ARTICLE I

Definitions

     The terms defined in this Article I shall, for all purposes of this Plan, have the following
respective meanings:

     Account

     The term “Account” shall mean, as to any Participant, the account maintained by the
Administrator evidencing (i) the shares (and/or fraction of a share) of Common Stock

 

 

(a) purchased through the Plan and/or (b) deposited by such Participant into the Plan pursuant to
Section 4.1 hereof, and credited to such Participant and (ii) cash held in the Plan pending
investment in Common Stock for such Participant.

     Account Shares

     The term “Account Shares” shall mean all shares (and/or a fraction of a share) of Common Stock
credited to the Account of a Participant by the Administrator, which shall include shares deposited
into the Plan pursuant to Section 4.1 hereof.

     Administrator

     The term “Administrator” shall mean the individual (who may be an employee of the Company),
bank, trust company or other entity (including the Company) appointed from time to time by the
Company to act as Administrator hereunder.

     Automatic Investing Authorization Form

     The term “Automatic Investing Authorization Form” shall mean the documentation, including a
voided check or deposit slip on the bank, savings or credit union account from which funds are to
be drawn, that the Administrator shall require to be completed and received for a Participant to
authorize the Administrator to make automatic deductions from an account designated by the
Participant for investment in Common Stock through the Plan.

     Common Stock

     As defined in the Recitals.

     Company

     As defined in the introduction to the Recitals.

     Company Share Purchase Price

     The term “Company Share Purchase Price,” when used with respect to Fractional Account Shares,
newly issued shares of Common Stock or shares of Common Stock held in the Company’s treasury, shall
mean the average of the high and low sales prices of Common Stock on a given trading day as
reported on the New York Stock Exchange Composite Tape as published in The Wall Street Journal. In
the absence of knowledge of inaccuracy, the Administrator may rely upon such prices as published in
The Wall Street Journal. In the event no trading is so reported for a trading day, the Company
Share Purchase Price for such shares may be determined by the Company on the basis of such market
quotations as it deems appropriate.

     Direct Deposit Authorization Form

     The term “Direct Deposit Authorization Form” shall mean the documentation, including a voided
check or deposit slip for the designated bank, savings or credit union account, that the
Administrator shall require to be completed and received prior to a Participant having any
Dividends on Account Shares not being reinvested in Common Stock paid by electronic direct deposit
to the Participant’s predesignated bank, savings or credit union account pursuant to Section 7.7
hereof.

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     Dividend

     The term “Dividend” shall mean cash dividends paid on Reinvestment Eligible Securities.

     Dividend Payment Date

     The term “Dividend Payment Date” shall mean a date on which a cash dividend on shares of
Common Stock is paid.

     Effective Date

     As defined in the Recitals.

     Eligible Securities

     The term “Eligible Securities” shall mean those equity and debt securities of the Company and
its subsidiaries, whether issued prior to, on or after the Effective Date, set forth in Section 6.1
hereof, and such other equity and debt securities of the Company and its subsidiaries as the
Company may designate, in its sole discretion, pursuant to Section 6.2 hereof.

     Enrollment Form

     The term “Enrollment Form” shall mean the documentation that (i) the Administrator shall
require to be completed and received prior to an investor’s enrollment in the Plan pursuant to
Section 2.2, 2.3, 2.4 or 4.1 hereof and (ii) a Participant may submit to the Administrator to
change his options under the Plan pursuant to Section 7.1 hereof.

     Exchange Act

     The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

     Foreign Person

     The term “Foreign Person” shall mean a Person that is a citizen or resident of, or is
organized or incorporated under, or has its principal place of business in, a country other than
the United States, its territories and possessions.

     Fractional Account Shares

     The term “Fractional Account Shares” shall mean the shares (and fractions of shares) of Common
Stock held in the Fractional Share Account.

     Fractional Share Account

     The term “Fractional Share Account” shall mean an account under the Plan, owned by the
Company, consisting of Fractional Account Shares, which is held by the Administrator and
administered pursuant to Section 8.3 hereof.

     ICP

     As defined in the introduction to the Recitals.

     Independent Agent

     The term “Independent Agent” shall mean an agent independent of the Company who satisfies
applicable legal requirements (including without limitation the requirements of Regulation M and
Rule 10b-18 promulgated under the Exchange Act) and who has been selected

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by the Company, pursuant to Section 10.6 hereof, to serve as an Independent Agent for purposes
of making open market purchases and sales of Common Stock under the Plan.

     Interest

     The term “Interest” shall mean interest payments made on Reinvestment Eligible Securities.

     Investment Date

     The term “Investment Date” shall mean each date on which the Administrator or Independent
Agent shall begin to purchase or sell shares of Common Stock pursuant to the Plan. An Investment
Date shall occur at least every fifth business day, and may occur as often as every business day,
if practicable, as determined in the sole discretion of the Administrator.

     IRS Regulations

     As defined in the Recitals.

     Market Share Purchase Price

     The term “Market Share Purchase Price,” when used with respect to shares of Common Stock
purchased in the open market, shall mean the weighted average purchase price per share (including
brokerage commissions, any related service charges and applicable taxes) of the aggregate number of
shares purchased in the open market for an Investment Date.

     Market Share Sales Price

     The term “Market Share Sales Price,” when used with respect to shares of Common Stock sold
under the Plan, shall mean the weighted average sales price per share (less brokerage commissions,
any related service charges and applicable taxes) of the aggregate number of shares sold in the
open market for the relevant period.

     Maximum Amount

     As defined in Section 2.5 hereof.

     Participant

     As defined in Section 2.1 hereof.

     Person

     The term “Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, estate or unincorporated
organization.

     Plan

     As defined in the introduction to the Recitals.

     Reinvestment Eligible Securities

     The term “Reinvestment Eligible Securities” shall mean (i) those Eligible Securities of which
a Participant is the record or registered holder and on which the Participant has elected to have
all or a portion of the Dividends or Interest paid reinvested in Common Stock and (ii) those
Account Shares on which the Participant has elected to have all or a portion of the Dividends paid
reinvested in Common Stock, which election under (i) or (ii) has been made by

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delivering a completed optional cash investment stub or a completed Enrollment Form, as the
case may be, to the Administrator.

     Statement of Account

     The term “Statement of Account” shall mean a written statement prepared by the Administrator
and sent to each Participant which reflects (i) all transactions to date completed under the Plan
during the current calendar year, (ii) the number of Account Shares credited to such Participant’s
Account at the date of such statement, (iii) the amount of cash, if any, credited to such
Participant’s Account pending investment at the date of such statement and (iv) such additional
information regarding such Participant’s Account as the Administrator may determine to be pertinent
to the Participant.

     Trust Account

     As defined in Section 11.1 hereof.

     Trustee

     As defined in Section 11.7 hereof.

A pronoun or adjective in the masculine gender includes the feminine gender, and the singular
includes the plural, unless the context clearly indicates otherwise.

ARTICLE II

Participation

     Section 2.1. Participation. Any Person, whether or not a record holder of Common Stock, may elect to participate in the
Plan; provided, however, that if such Person is a Foreign Person, he must provide
evidence satisfactory to the Administrator that his participation in the Plan would not violate
local laws applicable to the Company, the Plan or such Foreign Person.

     An election by a Person to participate in the Plan shall be made by properly completing and
returning to the Administrator an Enrollment Form and (i) electing to have Dividends on Eligible
Securities of which such Person is the record holder invested in Common Stock pursuant to Section
2.2 hereof, (ii) electing to have Interest on Eligible Securities of which such Person is the
registered owner invested in Common Stock pursuant to Section 2.3 hereof, (iii) depositing
certificates representing Common Stock of which such person is the record holder into the Plan
pursuant to Section 4.1 hereof or (iv) making an initial cash investment pursuant to Section 2.4
hereof.

     Any Person who has met such requirements, has had his completed Enrollment Form accepted by
the Administrator and has made and not revoked such election is herein referred to as a
“Participant.” Notwithstanding the foregoing, each participant in the ICP (other than any
participant in the ICP that has not elected prior to the Effective Date to reinvest in Common Stock
at least 10% of the Dividends on each of such participant’s Account Shares) or the Plan on the
Effective Date is automatically a Participant without submitting a new Enrollment Form;
provided, however, that any such Participant who wishes to change his current
participation in any way must submit written or facsimile instructions or a new Enrollment
Form

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to the Administrator. For the avoidance of doubt, any participant in the ICP that has not
elected prior to the Effective Date to reinvest in Common Stock at least 10% of the Dividends on
each of such participant’s Account Shares shall not become a Participant until such participant
submits a new Enrollment Form to the Administrator. A Participant (or a Person completing an
Enrollment Form in order to become a Participant) may elect to participate in any or all forms of
investment provided in Sections 2.2 through 2.5 hereof and to utilize the Plan’s safekeeping
services provided in Section 4.1 hereof by submitting an Enrollment Form designating such election
to the Administrator; provided, however, that any such Participant elects to
reinvest in Common Stock at least 10% of the Dividends on each of such Participant’s Account
Shares; and provided, further, that so long as a Participant meets the minimum
dividend reinvestment requirement, such Participant may, in lieu of an Enrollment Form, submit to
the Administrator (i) written or facsimile instructions in order to elect Dividend and/or Interest
reinvestment pursuant to Sections 2.2 and/or 2.3 hereof, (ii) a completed optional cash investment
stub attached to a quarterly Statement of Account in order to elect to make optional cash
investments pursuant to Section 2.5 hereof and (iii) the stock certificates representing the Common
Stock to be deposited into the Plan in order to elect to utilize the safekeeping services provided
by the Plan.

     Section 2.2. Dividend Reinvestment. A Participant may elect to have all or a portion of any Dividend on each of his Reinvestment
Eligible Securities invested in shares (and/or a fraction of a share) of Common Stock to be
credited to his Account in lieu of receiving such Dividend directly; provided,
however, that each Participant must reinvest in Common Stock at least 10% of the Dividends
on each of such Participant’s Account Shares. Subject to Section 3.1, if a Participant elects to
reinvest only a portion of the Dividends received on his Reinvestment Eligible Securities, the
portion of Dividends not reinvested will be sent to the Participant by check in the manner
otherwise associated with payment of such Dividends or, if such Reinvestment Eligible Securities
are also Account Shares, by electronic direct deposit if the Participant has elected the direct
deposit option provided in Section 7.7 hereof.

     Section 2.3. Interest Reinvestment. A Participant may elect to have all or a portion of any Interest on his Reinvestment Eligible
Securities invested in shares (and/or a fraction of a share) of Common Stock to be credited to his
Account in lieu of receiving such Interest directly. If a Participant elects to reinvest only a
portion of the Interest on his Reinvestment Eligible Securities, that portion of Interest not
reinvested in Common Stock will be sent to the Participant by check in the manner otherwise
associated with payment of Interest.

     Section 2.4. Initial Cash Investment. A Person not already a Participant may become a Participant by (i) making an initial cash
payment of at least $250, or (ii) in the case of a Person who is already a record or registered
holder of Eligible Securities, of at least $50, by personal check, money order or wire transfer
payable to CenterPoint Energy, Inc. Investor’s Choice Plan, to be invested in Common Stock pursuant
to Section 3.4 hereof; provided, however, that such initial cash payment may not
exceed
$120,000 and payment for such initial cash investment must be accompanied by a completed Enrollment
Form. Any Participant that makes an initial cash investment pursuant to this Section 2.4 and does
not designate his reinvestment election with respect to shares of Common Stock purchased with such
investment shall be deemed to have elected that all Dividends paid on each such share of Common
Stock shall be reinvested in Common Stock pursuant to Article III hereof.

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     Section 2.5. Optional Cash Investments. A Participant may elect to make cash payments at any time or from time to time to the Plan, by
personal check, money order or wire transfer payable to CenterPoint Energy, Inc. Investor’s Choice
Plan, or by automatic deductions from a predesignated bank, savings or credit union account
pursuant to Section 7.8 hereof, for investment in Common Stock pursuant to Section 3.4 hereof;
provided, however, that any Participant who elects to make optional cash
investments pursuant to this Section 2.5 must invest at least $50 for any single investment and may
not invest more than $120,000 in aggregate amount in any calendar year (the “Maximum Amount”). For
purposes of determining whether the Maximum Amount has been reached, initial cash investments shall
be counted as optional cash investments. Any Participant that makes an optional cash investment
pursuant to this Section 2.5 and does not designate his reinvestment election with respect to
shares of Common Stock purchased with such investment shall be deemed to have elected that all
Dividends paid on each such share of Common Stock shall be reinvested in Common Stock pursuant to
Article III hereof.

     Section 2.6. Receipt of Cash Investments. All cash investments are subject to collection by the Administrator for full face value in U.S.
funds. The method of delivery of any cash investment is at the election and risk of the
Participant and will be deemed received when actually received by the Administrator.

ARTICLE III

Dividend and Interest Reinvestment and Stock Purchase

     Section 3.1. Dividend and Interest Reinvestment. Each Participant must elect to reinvest in Common Stock at least 10% of the Dividends on each of
such Participant’s Account Shares. Any Participant that makes an initial cash investment pursuant
to Section 2.4 or an optional cash investment pursuant to Section 2.5 and does not designate his
reinvestment election with respect to such shares of Common Stock shall be deemed to have elected
that all Dividends paid on each such share of Common Stock shall be reinvested in Common Stock
pursuant to this Article III. Any Participant that deposits shares of Common Stock into the Plan
pursuant to Section 4.1 and does not designate his reinvestment election with respect to such
shares of Common Stock on the Enrollment Form accompanying such stock certificate(s) shall be
deemed to have elected that all Dividends paid on each such share of Common Stock shall be
reinvested in Common Stock pursuant to this Article III. If a Participant that has elected partial
reinvestment on an Enrollment Form or a returned stub from a Statement of Account does not specify
the partial reinvestment percentage, then such Participant
shall be treated as having elected to have 100% of the cash dividends paid on each Account Share
reinvested in Common Stock until the Administrator receives written instructions from such
Participant designating the partial reinvestment percentage. Dividends and Interest as to which
reinvestment has been elected (or deemed elected) by a Participant shall be paid to the
Administrator or its nominee on behalf of such Participant. Dividends and Interest shall be
reinvested, at the Company’s election, in either (i) newly issued shares of Common Stock or shares
of Common Stock held in the Company’s treasury purchased from the Company or (ii) shares of Common
Stock purchased in the open market. Any reinvestment of Dividends or Interest in, or other
purchases of, Common Stock pursuant to this Article III shall be subject to Section 3.5 hereof.

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     Section 3.2. Dividend and Interest Reinvestment in Newly Issued or Treasury Shares. Dividend and Interest reinvestment in newly issued shares of Common Stock or shares of Common
Stock held in the Company’s treasury shall be governed by this Section 3.2. On an Investment Date
with respect to which the Company elects to issue new shares or sell shares of Common Stock held in
the Company’s treasury to the Plan in order to effect the reinvestment of Dividends and/or
Interest, the Company shall issue to the Administrator upon the Company’s receipt of the funds
described in (a) below, for crediting by the Administrator to the Account of a Participant, a
number of shares (and/or fraction of a share rounded to three decimal places) of Common Stock equal
to (a) the amount of any Dividends and/or Interest paid to the Administrator on behalf of such
Participant since the preceding Investment Date plus the amount of any Dividends paid to the
Administrator on behalf of such Participant on such Investment Date divided by (b) the Company
Share Purchase Price on the trading day immediately preceding such Investment Date. Such shares
shall be issued or sold to, and registered in the name of, the Administrator or its nominee as
custodian for such Participants. No interest shall be paid on Dividends or Interest held pending
reinvestment pursuant to this Section 3.2.

     Section 3.3. Dividend and Interest Reinvestment in Shares Purchased in the Open Market. Dividend and Interest reinvestment in shares of Common Stock purchased in the open market shall
be governed by this Section 3.3. On an Investment Date with respect to which the Company elects to
effect reinvestment of Dividends and/or Interest in shares of Common Stock purchased in the open
market, the Administrator shall (if it is an Independent Agent), or shall cause an Independent
Agent to, apply the amount of any Dividends and/or Interest paid to the Administrator on behalf of
the Participants since the preceding Investment Date plus the amount of any Dividends paid to the
Administrator on behalf of the Participants on such Investment Date to the purchase of shares of
Common Stock in the open market. Purchases in the open market pursuant to this Section 3.3 and
Subsection 3.4.2 hereof may begin on the applicable Investment Date and shall be completed no later
than five days from such date unless completion at a later date is necessary or advisable under
applicable law, including without limitation any federal securities laws. Any Dividends, Interest,
optional cash investments and initial cash investments to be reinvested in shares of Common Stock
purchased in the open market pursuant to this Section 3.3 and Subsection 3.4.2 hereof not
reinvested in shares of Common Stock within 30 days of receipt by the Administrator, or if the
Company is not the Administrator by the
Company, shall be promptly returned to the Participant at his address of record by First Class
Mail. Open market purchases pursuant to this Section 3.3 and Subsection 3.4.2 hereof may be made
on any securities exchange on which the Common Stock is traded, in the over-the-counter market or
by negotiated transactions, and may be upon such terms and subject to such conditions with respect
to price and delivery to which the Independent Agent (including the Administrator if it is also an
Independent Agent) may agree. With regard to open market purchases of shares of Common Stock
pursuant to this Section 3.3 and Subsection 3.4.2 hereof, none of the Company, the Administrator
(if it is not also serving as the Independent Agent) or any Participant shall have any authority or
power to direct the time or price at which shares of Common Stock may be purchased, the markets on
which such shares are to be purchased (including on any securities exchange, in the
over-the-counter market or in negotiated transactions) or the selection of the broker or dealer
(other than the Independent Agent) through or from whom purchases may be made. For the purpose of
making, or causing to be made, purchases of shares of Common Stock pursuant to this Section 3.3 and
Subsection 3.4.2 hereof, and sales of Account Shares pursuant to Section 5.1 hereof, the
Independent Agent shall be

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entitled to commingle each Participant’s funds with those of all other
Participants and to offset purchases of shares of Common Stock against sales of shares of Common
Stock to be made for Participants, resulting in a net purchase or a net sale of shares. The number
of shares (and/or fraction of a share rounded to three decimal places) of Common Stock that shall
be credited to a Participant’s Account with respect to an Investment Date to which this Section 3.3
applies shall be equal to (a)(i) the amount of any Dividends and/or Interest paid to the
Administrator on behalf of such Participant since the preceding Investment Date plus (ii) the
amount of any Dividends paid to the Administrator on behalf of such Participant on such Investment
Date less (iii) any Dividends and/or Interest to be returned to such Participant pursuant to this
Section 3.3 divided by (b) the Market Share Purchase Price with respect to such Investment Date.
Such shares shall be registered in the name of the Administrator or its nominee as custodian for
the Participants. No interest shall be paid on Dividends or Interest held pending reinvestment
pursuant to this Section 3.3.

     Section 3.4. Investment of Optional Cash Payments and Initial Cash Payments. Any optional cash investments and initial cash investments received by the Administrator from a
Participant at least one business day prior to an Investment Date shall be invested, beginning on
such Investment Date, in either (i) newly issued shares or shares of Common Stock held in the
Company’s treasury in the manner provided in Subsection 3.4.1 hereof, or (ii) Common Stock
purchased in the open market in the manner provided in Subsection 3.4.2 hereof. Optional cash
investments and initial cash investments not received by the Administrator at least one business
day prior to an Investment Date need not be invested on such Investment Date; provided,
however, that any such optional cash investments and initial cash investments not invested
on such Investment Date shall be invested beginning on the next succeeding Investment Date. No
interest shall be paid on optional cash investments and initial cash investments held pending
investment pursuant to this Section 3.4.

     Subsection 3.4.1 Newly Issued or Treasury Shares. On an Investment Date with respect to which the Company elects to issue new shares or sell
shares of Common Stock held in the Company’s treasury to the Plan in order to effect the investment
of optional cash investments and initial cash investments, the Company shall issue to
the Administrator upon the Company’s receipt of the funds described in (a) below, for crediting by
the Administrator to the Account of a Participant, a number of shares (and/or fraction of a share
rounded to three decimal places) of Common Stock equal to (a) the amount of any optional cash
investments and/or initial cash investment received by the Administrator from such Participant
since the preceding Investment Date (excluding any amounts received from such Participant within
one business day of such Investment Date but including any amounts received from such Participant
within one business day prior to the preceding Investment Date that were not invested on the
preceding Investment Date as set forth in Section 3.4 hereof) divided by (b) the Company Share
Purchase Price on the trading day immediately preceding such Investment Date. Such shares shall be
issued or sold to, and registered in the name of, the Administrator or its nominee as custodian for
the Participants.

     Subsection 3.4.2 Shares Purchased in the Open Market. On an Investment Date with respect to which the Company elects to effect the investment of
optional cash investments and initial cash investments in shares of Common Stock purchased in the
open market, the Administrator shall (if it is an Independent
Agent), or shall cause an Independent

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Agent to, purchase for crediting by the Administrator to the Account of a Participant a number of
shares (and/or fraction of a share rounded to three decimal places) of Common Stock in the open
market equal to (a)(i) the amount of any optional cash investments and/or initial cash investment
received by the Administrator from such Participant since the preceding Investment Date (excluding
any amounts received from such Participant within one business day of such Investment Date but
including any amounts received from such Participant within one business day prior to the preceding
Investment Date as set forth in Section 3.4 hereof) less (ii) any optional cash investments and/or
initial cash investments to be returned to such Participant pursuant to Section 3.3 hereof divided
by (b) the Market Share Purchase Price with respect to such Investment Date. Such purchases shall
be made in the manner set forth in Section 3.3 hereof. Such shares shall be registered in the name
of the Administrator or its nominee as custodian for the Participants.

     Subsection 3.4.3 Request to Stop Investment. If a written request to stop investment of optional cash investments or an initial cash
investment is received by the Administrator from a Participant at least two business days before
the next Investment Date, any optional cash investments or initial cash investment from such
Participant then held by the Administrator shall not be invested in Common Stock and shall be
returned to such Participant. If such a request is not received by the Administrator at least two
business days prior to an Investment Date, any such optional cash investments or initial cash
investment shall be invested in shares of Common Stock for such Participant’s Account.

     Section 3.5. Exhaustion of Fractional Share Account. Prior to any purchase of Common Stock by the Administrator or an Independent Agent pursuant to
this Article III, the Administrator shall first purchase, at the Company Share Purchase Price on
the trading day immediately preceding the Investment Date, the Fractional Account Shares from the
Fractional Share Account. To the extent made, such purchases from the Fractional Share Account
shall substitute for purchases required by this Article III.

     Section 3.6. Minimum Dividend Reinvestment. At a minimum, each Participant shall reinvest in Common Stock at least 10% of the Dividends on
each of such Participant’s Account Shares. In no event shall any Participant elect (or be deemed
to have elected) to reinvest in Common Stock less than 10% of the Dividends on each of such
Participant’s Account Shares.

ARTICLE IV

Safekeeping Services for Deposited Common Stock

     Section 4.1. Deposited Common Stock. A Participant who has already delivered an Enrollment Form to the Administrator may elect to
have certificate(s) representing shares of Common Stock of which the Participant is the record
holder deposited into the Plan by delivering such certificate(s) to the Administrator, while a
Person meeting the requirements set forth in Section 2.1 hereof who is not yet a Participant may
elect to have his certificate(s) representing shares of Common Stock of which he is the record
holder deposited into the Plan by completing an Enrollment Form and delivering such certificate(s)
and Enrollment Form to the Administrator; provided, however, that any such
Participant or Person, as the case may be, elects

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(or has previously elected) to reinvest in Common
Stock at least 10% of the Dividends on each of such Participant’s Account Shares (including the
shares of Common Stock represented by such certificate(s)). Shares of Common Stock so deposited
shall be transferred into the name of the Administrator or its nominee and credited to the
depositing Participant’s Account. Dividends paid on shares of Common Stock deposited into the Plan
pursuant to this Section 4.1 shall be reinvested in Common Stock pursuant to Article III hereof in
accordance with the depositing Participant’s reinvestment election designated on a completed
Enrollment Form. Any Participant that deposits shares of Common Stock into the Plan pursuant to
this Section 4.1 and does not designate his reinvestment election with respect to such shares of
Common Stock on the Enrollment Form accompanying such stock certificate(s) shall be deemed to have
elected that all Dividends paid on each such share of Common Stock shall be reinvested in Common
Stock pursuant to Article III.

     Section 4.2. Withdrawal of Common Stock Deposited Pursuant to Section 4.1. Shares of Common Stock deposited pursuant to Section 4.1 hereof may be withdrawn from the Plan
pursuant to Section 7.2 hereof.

ARTICLE V

Sale of Account Shares; Gift or Transfer of Account Shares

     Section 5.1. Sale of Account Shares. At any time, a Participant may request, by written, telephone or facsimile instructions, that
the Administrator sell all or a portion of his whole Account Shares. The Administrator (if it is
not also an Independent Agent) shall forward such sale instructions to the Independent Agent as
soon as practicable, but within five business days, after receipt thereof (except in the case of
instructions to sell all whole Account Shares of a Participant described below in the immediately
following paragraph). The Independent Agent shall make such sales as soon as practicable (in
accordance with stock transfer requirements and federal and state securities laws) after processing
such sale instructions. Within five business days after the sale has been completed by the
Independent Agent, the Administrator shall mail by First Class Mail to such Participant at his
address of record a check in an amount equal to (a) the Market Share Sales Price multiplied by (b)
the number of his Account Shares sold.

     If instructions for the sale of Account Shares are received by the Administrator on or after
the record date relating to a Dividend Payment Date but before the Dividend Payment Date, the
shares of Common Stock purchased from the reinvestment of such Dividends shall be credited to the
Participant’s Account, and (i) if the Participant’s sale instructions cover less than all of his
whole Account Shares, the sale shall be processed as described above in the immediately preceding
paragraph or (ii) if the Participant’s sale instructions cover all of his whole Account Shares, the
sale instructions shall not be processed until after such Dividends have been reinvested pursuant
to the Plan and the shares of Common Stock purchased therewith have been credited to his Account.
In the case of clause (ii) of the immediately preceding sentence, the Administrator shall forward
such sale instructions to the Independent Agent promptly (within at least five business days) after
such Dividend Payment Date.

     With regard to open market sales of Account Shares pursuant to this Section 5.1, none of the
Company, the Administrator (if it is not also serving as the Independent Agent) or

11

 

any Participant
shall have any authority or power to direct the time or price at which shares of Common Stock may
be sold, the markets on which such shares are to be sold (including on any securities exchange, in
the over-the-counter market or in negotiated transactions) or the selection of the broker or dealer
(other than the Independent Agent) through or from whom sales may be made, except that the timing
of such sales must be made in accordance with the terms and conditions of the Plan.

     Section 5.2. Gift or Transfer of Account Shares. A Participant may elect to transfer (whether by gift, private sale or otherwise) ownership of
all or a portion of his Account Shares to the Account of another Participant or establish an
Account for a Person not already a Participant by delivering to the Administrator written or
facsimile instructions to that effect and a stock assignment (stock power) with the Participant’s
signature guaranteed by a member of the Medallion Signature Guarantee program (or a successor
signature guarantee program acceptable to the Administrator), acceptable to the Administrator. No
fraction of a share of Common Stock credited to the transferor’s Account shall be transferred
unless the transferor’s entire Account is transferred.

     Account Shares transferred in accordance with the preceding paragraph shall continue to be
registered in the name of the Administrator as custodian and shall be credited to the transferee’s
Account. If the transferee is not already a Participant, an Account shall be opened in the name of
the transferee and the Administrator shall send the transferee an Enrollment Form as soon as
practicable after such transfer. Until the transferee elects otherwise or the transferor
specifically requests that the new Account be enrolled in one or more of the Plan’s options, the
new Account will be treated as having elected (i) to have shares held in
safekeeping under the Plan and (ii) to have all Dividends paid on such Account Shares
reinvested in Common Stock pursuant to Article III hereof. If the transferee is already a
Participant, the Account Shares so transferred shall be treated as other Account Shares of the
transferee already in such Participant’s Account. The transferor may request that the
Administrator deliver a Statement of Account to the transferor for personal delivery to the
transferee and/or the transferor may request that the Administrator deliver to such transferee a
gift certificate. The transferor may request that the Administrator send the gift certificate
directly to such transferee with the first Statement of Account following such transfer or request
that the Administrator deliver such gift certificate to the transferor for personal delivery to the
transferee. The Administrator shall comply with any such request of a transferor relating to
Statements of Account and/or gift certificates as soon as practicable following receipt of such
request.

     If transfer instructions with regard to Account Shares are received by the Administrator on or
after the record date relating to a Dividend Payment Date but before the Dividend Payment Date, the
shares of Common Stock purchased from the reinvestment of such Dividends shall be credited to the
Participant’s Account, and (i) if the Participant’s transfer instructions cover less than all of
his whole Account Shares, the transfer shall be processed as described above in the immediately
preceding paragraph or (ii) if the Participant’s transfer instructions cover all of his whole
Account Shares, the transfer shall not be processed until after such Dividends have been reinvested
pursuant to the Plan and the shares of Common Stock purchased therewith have been credited to his
Account. In the case of clause (ii) of the immediately preceding sentence, the Administrator shall
effect such transfer as soon as practicable after such Dividend Payment Date.

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     Subsection 5.2.1 Transfer of Account Shares to a Broker. Upon receipt of customary documentation from a Participant’s broker to electronically
transfer a specified number of whole Account Shares from such Participant’s Account to such
Participant’s brokerage account at such broker, the Administrator shall transfer the requested
number of whole Account Shares from such Participant’s Account to such Participant’s broker.

     Section 5.3. Reinvestment of Dividends on Remaining Account Shares. If a Participant has elected to reinvest Dividends on less than all of such Participant’s
Account Shares and the Participant elects to (i) sell a portion of his Account Shares pursuant to
Section 5.1 hereof, (ii) transfer a portion of his Account Shares pursuant to Section 5.2 hereof or
(iii) withdraw a portion of his Account Shares pursuant to Section 7.2 hereof, the Account Shares
which are subject to partial reinvestment shall be sold, transferred or withdrawn, as the case may
be, before any Account Shares which are subject to full reinvestment are sold, transferred or
withdrawn unless the Participant gives specific instructions to the contrary in connection with
such sale, transfer or withdrawal of Account Shares.

ARTICLE VI

Eligible Securities

     Section 6.1. Eligible Securities. As of the Effective Date, shares of Common Stock are the only debt and equity securities of the
Company and its subsidiaries that shall be Eligible Securities.

     Section 6.2. Additional Eligible Securities. The Company may from time to time or at any time designate other debt or equity securities of
the Company and its subsidiaries as Eligible Securities by notifying the Administrator in writing
of the designation of such securities as Eligible Securities.

ARTICLE VII

Treatment of Accounts

     Section 7.1. Changing Plan Options. A Participant may elect to change his Plan options, including (i) changing the reinvestment
levels of Dividends and Interest on Reinvestment Eligible Securities subject to the minimum
reinvestment requirement set forth in Sections 3.1 and 3.6 hereof, and (ii) changing the
designation of Reinvestment Eligible Securities, by delivering to the Administrator written or
facsimile instructions or a new Enrollment Form to that effect. To be effective with respect to
any Dividend or Interest payment, the instructions or Enrollment Form with respect to such
Reinvestment Eligible Securities must be received by the Administrator on or before the record date
relating to such Dividend and/or Interest. If the instructions or Enrollment Form are not received
by the Administrator on or before the record date relating to such Dividend and/or Interest, such
instructions shall not become effective until after the payment of such Dividend and/or Interest.
The shares of Common Stock purchased from the reinvestment of such Dividend and/or Interest shall
be credited to the Participant’s Account. After the Administrator’s receipt of effective option
changing instructions, Dividends and Interest on Reinvestment Eligible Securities as to

13

 

which the
reinvestment election has been revoked will be paid in cash or with regard to Dividends on Common
Stock, by direct deposit to the Participant’s designated direct deposit account, if such
Participant has elected the direct deposit option pursuant to Section 7.7 hereof.

     Section 7.2. Right of Withdrawal. A Participant may, at any time or from time to time, withdraw from the Plan all or any part
(other than fractions) of his Account Shares by delivering to the Administrator (i) appropriate
withdrawal instructions to that effect, if such Participant will be the record holder of such
Account Shares after withdrawal or (ii) written instructions specifying the recipient’s name,
address, Social Security number and telephone number (or such items as required by the
Administrator) and a stock assignment (stock power) to that effect with the Participant’s signature
guaranteed by a member of the Medallion Signature Guarantee program (or a successor
signature guarantee program acceptable to the Administrator), if the Participant will not be the
record holder of such Account Shares after withdrawal. If Account Shares are to be withdrawn and
sent to a broker, the Participant must provide in writing the number of whole Account Shares to be
withdrawn, the broker’s name, business name, address, telephone number and the brokerage account
number, if applicable. Subject to the limitations described in the immediately following
paragraph, within two business days of the Administrator’s receipt of (i) appropriate withdrawal
instructions or (ii) appropriate written transfer instructions and a stock assignment (stock power)
with the Participant’s signature guaranteed by a member of the Medallion Signature Guarantee
program (or a successor signature guarantee program acceptable to the Administrator), as the case
may be, which indicates the Participant’s desire to withdraw certain of his whole Account Shares,
the Administrator shall mail by First Class Mail to the Participant at his address of record, or to
the address of any Person that the Participant designated, certificates representing such
designated Account Shares.

     If withdrawal instructions with regard to Account Shares are received by the Administrator on
or after the record date relating to a Dividend Payment Date but before the Dividend Payment Date,
the shares of Common Stock purchased from the reinvestment of such Dividends shall be credited to
the Participant’s Account, and (i) if the Participant’s withdrawal instructions cover less than all
of his Account Shares, the withdrawal shall be processed as described above in the immediately
preceding paragraph or (ii) if the Participant’s withdrawal instructions cover all of his whole
Account Shares, the withdrawal instructions shall not be processed until after such Dividends have
been reinvested pursuant to the Plan and the shares of Common Stock purchased therewith have been
credited to his Account. In the case of clause (ii) of the immediately preceding sentence, the
Administrator shall mail by First Class Mail to the Participant at his address of record, or to the
address of any Person that the Participant designated, certificates representing the withdrawn
Account Shares as soon as practicable following such Dividend Payment Date.

     Withdrawal of Account Shares shall not affect reinvestment of Dividends on the Account Shares
withdrawn unless (i) the Participant is no longer the record holder of such Account Shares, (ii)
such reinvestment is changed by the Participant by delivering to the Administrator written or
facsimile instructions or an Enrollment Form to that effect pursuant to Section 7.1 hereof or (iii)
the Participant has terminated his participation in the Plan.

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     Section 7.3. Right of Termination of Participation. If a Participant’s written, telephone or facsimile instructions to the Administrator indicate
the Participant’s desire to terminate his participation in the Plan, the Administrator shall treat
such request as a withdrawal of all of such Participant’s whole Account Shares pursuant to Section
7.2 hereof. As soon as practicable after receipt of termination instructions, the Administrator
shall (i) at its discretion, either mail certificates representing all whole Account Shares, if
any, pursuant to Section 7.2 hereof or record (or cause the transfer agent of the Common Stock to
record) a book-entry position on the Company’s stock transfer records representing all whole
Account Shares, if any, pursuant to Section 7.2 hereof, and (ii) mail by First Class Mail to the
Participant at his address of record a check for an amount equal to the sum of (x) the amount of
cash credited to such Participant’s Account pending investment in Common Stock and (y) the cash
value of any fraction of a share of Common Stock credited to his Account. Such fraction of
a share shall be valued at the Company Share Purchase Price for the trading day immediately
preceding the date of termination.

     Section 7.4. Stock Splits, Stock Dividends and Rights Offerings. Any shares or other securities representing stock splits or other noncash distributions on
Account Shares shall be credited to such Participant’s Account. Stock splits, combinations,
recapitalizations and similar events affecting the Common Stock shall, as to shares credited to
Accounts of Participants, be credited to such Accounts on a pro rata basis. In the event of a
rights offering, a Participant shall receive rights based upon the total number of whole shares of
Common Stock credited to his Account.

     Section 7.5. Shareholder Materials; Voting Rights. The Administrator shall send or forward to each Participant all applicable proxy solicitation
materials, other shareholder materials or consent solicitation materials. Participants shall have
the exclusive right to exercise all voting rights respecting Account Shares credited to their
respective Accounts. A Participant may vote any of his whole Account Shares in person or by proxy.
A Participant’s proxy card shall include his whole Account Shares and shares of Common Stock of
which he is the record holder. Account Shares shall not be voted unless a Participant or his proxy
votes them. Fractions of shares of Common Stock shall not be voted.

     Solicitation of the exercise of Participants’ voting rights by the management of the Company
and others under a proxy or consent provision applicable to all holders of Common Stock shall be
permitted. Solicitation of the exercise of Participants’ tender or exchange offer rights by
management of the Company and others shall also be permitted. The Administrator shall notify the
Participants of each occasion for the exercise of their voting rights or rights with respect to a
tender offer or exchange offer within a reasonable time before such rights are to be exercised.
Such notification shall include all information distributed to the shareholders of the Company by
the Company regarding the exercise of such rights.

     Section 7.6. Statements of Account. As soon as practicable after each calendar quarter, the Administrator shall send to each
Participant a quarterly Statement of Account. Additionally, the Administrator shall send a
confirmation to each Participant promptly after each cash investment, deposit of Common Stock into
the Plan pursuant to Section 4.1 hereof or sale, transfer or withdrawal of Account Shares by such
Participant. The Administrator need not

15

 

confirm Dividend and Interest reinvestments individually
but shall confirm any such reinvestments on quarterly Statements of Account.

     Section 7.7. Direct Deposit Option. A Participant may elect to have any Dividends on Account Shares not being reinvested in Common
Stock pursuant to the Plan paid by electronic direct deposit to the Participant’s predesignated
bank, savings or credit union account. To receive such direct deposit of funds, a Participant must
complete and return a Direct Deposit Authorization Form to the Administrator, along with a voided
check or deposit slip for the designated account. Direct deposit authorizations must be received
by the Administrator at least 30 days before an applicable
Dividend Payment Date to be effective for that Dividend Payment Date. Participants can cancel
direct deposit of Dividends by notifying the Administrator in writing or by facsimile. In order to
be effective for an applicable Dividend Payment Date, the Administrator must receive the
cancellation notice at least 30 days before that Dividend Payment Date. To change a designated
bank, savings or credit union account for direct deposit of Dividends, the Administrator must
receive written notice, accompanied by a voided check or deposit slip for the new bank account, at
least 30 days before an applicable Dividend Payment Date.

     Section 7.8. Automatic Investing Option. A Participant may elect to make automatic monthly or quarterly investments of a specified amount
(not less than $50 per purchase nor more than $120,000 per calendar year) by electronic automatic
transfer of funds from a predesignated bank, savings or credit union account. A Participant must
complete an Automatic Investing Authorization Form and return it to the Administrator, along with a
voided check or deposit slip for the designated account, at least 30 days before initiating
automatic investing. If the monthly investment option is chosen, automatic investing shall be made
on the first Investment Date that is on or after the 10th day of such month. If the quarterly
investment option is chosen, investments shall be made on the first Investment Date that is on or
after the 10th day of each March, June, September and December. Automatic investing deductions
shall be made two business days before the Investment Date. A Participant shall be charged a
returned check fee by his bank if the designated bank, savings or credit union account does not
have sufficient funds to cover the authorized deduction.

     A Participant may change the amount of his automatic investment by notifying the Administrator
in writing or by facsimile of the new amount, and the change shall be effective approximately two
weeks after the notice is received. A Participant may cancel automatic investing by instructing
the Administrator in writing or by facsimile to cancel the automatic investing, and the
cancellation shall be effective approximately two weeks after the notice is received. To change a
designated bank, savings or credit union account, a Participant must notify the Administrator in
writing, by telephone or by facsimile at least 30 days before the change is to take effect and
supply a voided check or deposit slip for the new account.

     Section 7.9. No Pledging or Assigning Account Shares. Account Shares held in a Participant’s Account cannot be pledged or assigned. A
Participant who wishes to pledge or assign any of such Participant’s Account Shares must request
that they be withdrawn from the Plan and issued to the Participant in certificate form.

16

 

ARTICLE VIII

Certificates and Fractions of Shares

     Section 8.1. Certificates. Shares of Common Stock purchased for a Participant will be held in an automated, electronic
record keeping system by the Administrator in its name or the name of its nominee. The number of
shares, including fractional shares, held for each Participant will be shown on each Statement of
Account. A Participant, at any time or from time to time, may request in writing, by telephone
or by facsimile to receive a certificate for all or a portion of his whole Account Shares. The
Administrator shall mail such certificate(s) within two business days after the receipt of such
request to such Participant at his address of record; provided, however, that upon
the mailing of such certificate(s) the shares of Common Stock represented by such certificate(s)
shall no longer be Account Shares but shall remain Reinvestment Eligible Securities (to the extent
such Participant has elected to have Dividends on such Account Shares reinvested in Common Stock).
A Participant may request that whole Account Shares be electronically transferred to such
Participant’s brokerage account by authorizing his broker to do so, which request must be made
through such Participant’s broker and contain customary documentation acceptable to the
Administrator.

     Section 8.2. Fractional Shares. Fractions of shares of Common Stock shall be credited to Accounts as provided in Article III
hereof; provided, however, that no certificate for a fraction of a share shall be
distributed to any Participant at any time; and provided, further, that the Company
shall issue and sell only whole shares of Common Stock to the Administrator in respect of Dividends
and Interest reinvested in, and purchases made by the Administrator hereunder of, newly issued
shares or shares of Common Stock held in the Company’s treasury.

     Section 8.3. Fractional Share Account. In the event that, upon a Participant’s termination of participation in the Plan, the Account of
such Participant is credited with a fraction of a share of Common Stock, such fraction of a share
shall be purchased by the Administrator for the Fractional Share Account at the Company Share
Purchase Price determined as of the trading date specified in Section 7.3, 9.1 or 9.4 hereof, as
the case may be, and the proceeds thereof shall be remitted to such Participant as set forth in
Section 7.3, 9.1 or 9.4 hereof, respectively. The Company shall from time to time credit the
Fractional Share Account with such amounts of money as may be necessary to fund such purchases for
the Fractional Share Account; provided, however, that the Company may, at any time
or from time to time, direct the Administrator to repay, and thereupon the Administrator shall
repay to the Company such portion of the cash as the Company may, in its discretion, deem to be in
excess of the amount needed to fund the operations of the Fractional Share Account.

     As set forth in Section 3.5 hereof, on each Investment Date, the Administrator shall first
apply the aggregate amount of optional cash investments, initial cash investments, Dividends and
Interest to the purchase of all currently existing Fractional Account Shares. If the remaining
aggregate amount of optional cash investments, initial cash investments, Dividends and Interest is
not sufficient to purchase a whole number of shares of Common Stock, the Company shall provide to
the Administrator, as agent for the Company, such additional amount of money as may be necessary to
enable the Administrator (or the Independent Agent, as the case may be) to purchase an additional
share of Common Stock. The fraction of a share that has been

17

 

purchased with funds provided by the
Company shall be credited to the Fractional Share Account, and the remaining fraction of a share
shall be allocated among the Participants’ Accounts as necessary.

ARTICLE IX

Concerning the Plan

     Section 9.1. Suspension, Modification and Termination. The Company may at any time and from time to time, at its sole option, suspend, modify, amend or
terminate the Plan, in whole, in part or in respect of Participants in one or more jurisdictions;
provided, however, no such amendment shall decrease the Account of any Participant
or result in a distribution to the Company of any amount credited to the Account of any
Participant. Upon complete termination of the Plan, the Accounts of all Participants (or in the
case of partial termination of the Plan, the Accounts of all affected Participants) shall be
treated as if each such Participant had elected to terminate his participation in the Plan pursuant
to Section 7.3 hereof, except that any fraction of a share of Common Stock shall be valued as of
the trading date immediately preceding the date on which the Plan is terminated. The Administrator
shall promptly send each affected Participant notice of such suspension, modification or
termination.

     Section 9.2. Rules and Regulations. The Company may from time to time adopt such administrative rules and regulations concerning the
Plan as it deems necessary or desirable for the administration of the Plan. The Company shall have
the power and authority to interpret the terms and the provisions of the Plan and shall interpret
and construe the Plan and reconcile any inconsistency or supply any omitted detail in a manner
consistent with the general terms of the Plan and applicable law.

     Section 9.3. Costs. All costs of administration of the Plan shall be paid by the Company; provided,
however, that any brokerage commissions, service charges or applicable taxes incurred in
connection with open market purchases and sales of shares of Common Stock made under the Plan shall
be borne by the Participants.

     Section 9.4. Termination of a Participant. If a Participant does not have at least one whole Account Share or own or hold any other
Reinvestment Eligible Securities, the Participant’s participation in the Plan shall be terminated
by the Company. Additionally, the Company, in its sole discretion, may terminate any Participant’s
participation in the Plan after written notice mailed in advance to such Participant at his address
of record. Upon any such termination, the Account of such Participant shall be treated as if he
had elected to terminate his participation in the Plan pursuant to Section 7.3 hereof, except that
any fraction of a share of Common Stock shall be valued as of the trading date immediately
preceding the date on which such Participant’s participation is terminated.

     Section 9.5. Interpretation of Plan. With respect to any matter relating to the Plan, including, without limitation, the timing and
pricing of purchases and sales of Common Stock for Participants, the written provisions of the
Plan as set forth herein shall be controlling. None of the Company, the Administrator or any
Independent Agent shall be liable for a

18

 

Participant’s reliance on any oral statement that is
inconsistent with the written provisions of the Plan as set forth herein.

ARTICLE X

Administration of the Plan

     Section 10.1. Selection of an Administrator. The Administrator shall be appointed by the Company. The Administrator’s appointment to serve
as such may be revoked by the Company at any time. The Administrator may resign at any time upon
reasonable notice to the Company. In the event that no Administrator is appointed, the Company
shall be deemed to be the Administrator for purposes of the Plan. The Company shall be the initial
Administrator.

     Section 10.2. Compensation. The officers of the Company shall make such arrangements regarding compensation, reimbursement
of expenses and indemnification of the Administrator and any Independent Agent as they from time to
time deem reasonable and appropriate.

     Section 10.3. Authority and Duties of Administrator. The Administrator shall have the authority to undertake any act necessary to fulfill its duties
as set forth in the various provisions of the Plan. Upon receipt, the Administrator shall deposit
all Dividends, Interest, optional cash investments and initial cash investments in the Trust
Account. The Administrator shall maintain appropriate records of the Accounts of Participants and
the Fractional Share Account.

     Section 10.4. Liability of the Company, the Administrator and Any Independent Agent. The Company, the Administrator and any Independent Agent shall not be liable for any act done in
good faith, or for the good faith omission to act in administering or performing their duties with
respect to the Plan, including, without limitation, any claim of liability arising out of failure
to terminate a Participant’s Account upon such Participant’s death prior to receipt of notice in
writing of such death, or with respect to the prices at which shares are purchased or sold for a
Participant’s Account and the times when such purchases and sales are made, or with respect to any
loss or fluctuation in the market value after the purchase or sale of such shares.

     Section 10.5. Records and Reports. The Administrator shall keep appropriate records concerning the Plan, Accounts of Participants,
purchases and sales of Common Stock made under the Plan and Participants’ addresses of record and
shall send Statements of Account and confirmations to each Participant in accordance with the
provisions of Section 7.6 hereof.

     Section 10.6. Selection of Independent Agent. Any Independent Agent serving in such capacity pursuant to the Plan shall be selected by the
Company, and the Administrator and the Company, or either of them, shall, subject to the provisions
of Section 3.3 hereof, make such arrangements and enter into such agreements with the Independent
Agent in connection with the activities contemplated by the Plan as the Administrator and the
Company, or either of them, deem reasonable and appropriate.

19

 

     Section 10.7. Source of Shares of Common Stock. The Company shall not change the source of shares of Common Stock purchased by Participants in
the Plan (i.e., either (i) newly issued shares of Common Stock or shares of Common Stock held in
the Company’s treasury purchased from the Company or (ii) shares of Common Stock purchased in the
open market) more than once in any three-month period.

ARTICLE XI

Trust Agreement

     Section 11.1. Continuation of Trust Account. The Company has previously created with the Trustee a trust consisting of all Dividends,
Interest, optional cash investments and initial cash investments deposited by the Administrator in
that certain non-interest bearing trust account (together with all Dividends, Interest, optional
cash investments and initial cash investments deposited therein from time to time, the “Trust
Account”) established by the Company at JPMorgan Chase Bank Texas, account no. 0010-091-2428, or
such other non-interest bearing accounts as the Company may establish from time to time hereunder
with any commercial bank organized under the laws of the United States or any state, which
commercial bank must have assets in excess of $500,000,000. The Trust Account is hereby continued.

     Section 11.2. Acceptance of Trust. This provision is no longer applicable.

     Section 11.3. Successor Trustees. The person serving at any particular time as the Chief Financial Officer of the Company shall be
the trustee of the trust hereunder. Therefore, if any person who is serving as trustee for any
reason ceases to serve as Chief Financial Officer of the Company, that person shall also be deemed
to have ceased to serve as trustee hereunder, and the successor Chief Financial Officer of the
Company shall be the trustee hereunder. If the situation arises, under the preceding part of this
Section 11.3 or otherwise, in which no trustee is either serving or designated to serve hereunder,
a trustee of the trust shall be appointed by the Company in accordance with Section 11.4 or, if the
Company fails to appoint a successor within sixty (60) days of receiving notification that a
vacancy has occurred, a trustee for the trust shall be appointed in accordance with applicable law.

     Section 11.4. Method of Appointment by Company. The appointment of a successor trustee hereunder by the Company shall be accomplished by (i) an
instrument in writing appointing such successor trustee, executed by the Company, together with a
certified copy of resolutions of the Board of Directors of the Company to such effect and (ii) an
acceptance in writing of the office of successor trustee hereunder executed by the successor so
appointed. The Company shall send notice of such appointment to the Administrator. Any successor
trustee hereunder may be either a corporation authorized and empowered to exercise trust powers or
one or more individuals.

     Section 11.5. Removal of Trustee. Any person or entity serving as trustee may be removed as such by the Company at any time, with
or without cause, effective sixty (60) days after delivery of written notice to the trustee, but
such notice may be waived by the trustee. Such removal shall be effected by delivering to the
trustee a written notice of removal executed by the

20

 

Company and by giving notice to the trustee of
the appointment of a successor trustee in the manner set forth in Section 11.4.

     Section 11.6. Resignation of Trustee. Any person or entity serving as trustee may resign as such, effective sixty (60) days after
delivery of notice thereof in writing to the Company.

     Section 11.7. Trustee Defined. As used or applied below in this Article XI, the term “Trustee” refers collectively to the one
or ones at any particular time serving as the trustee or trustees of the trust. The neuter gender
is used in referring to that term.

     Section 11.8. General Duties of the Company. The Company shall provide the Trustee with a true and correct copy of the Plan and true and
correct copies of any amendments to the Plan promptly upon their adoption and shall certify to the
Trustee the names and specimen signatures of any person who shall have authority to control and
manage the operation and administration of the Plan on behalf of the Administrator.

     Section 11.9. General Duties and Powers of the Trustee. No bond or other security shall ever be required of the Trustee.

     The Trustee shall keep accurate and detailed records of receipts and disbursements and other
transactions affecting the Trust Account, and shall make disbursements from the Trust Account at
such times, to such persons (including the Administrator) and in such amounts as the Administrator
shall direct in writing. All such disbursements shall comply with the provisions of the Plan, and
no disbursement shall be made which would cause any property in the Trust Account to be used or
diverted for purposes not consistent with the provisions of the Plan.

     The Trustee shall, in the Trustee’s sole and absolute discretion, perform such other acts as
the Trustee may deem necessary or proper for the protection of the Trust Account and, except to the
extent inconsistent with the provisions of the Plan, may exercise all such further rights and
powers as may be granted to trustees generally under the Texas Trust Code.

     Section 11.10. Liability of Trustee. The Trustee shall use ordinary care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims. The Trustee shall not be
liable or responsible for any loss sustained by the Trust Account by reason of the insolvency of
the financial institution holding such account or for acting without question on the direction of,
or failing to act in the absence of any direction from, the Administrator or any person with
authority to act on behalf of the Administrator, unless the Trustee knows that by such action or
failure to act he or she will be in breach of his or her fiduciary duty. The Trustee shall not be
responsible in any respect for the administration of the Plan.

     The duties and obligations of the Trustee hereunder shall be governed solely by the terms of
this Article XI, and no implied covenants or obligations shall be read into this Article XI against
the Trustee.

21

 

     Section 11.11. Transfer of Trust Account to Successor. Upon resignation or removal, the Trustee shall transfer and deliver control over the Trust
Account and all records relating to the Trust Account to the successor trustee of the trust. All
of the provisions set forth herein with respect to the Trustee shall relate to each successor
trustee hereunder with the same force and effect as if such successor trustee had been originally
named herein as the Trustee hereunder.

     Section 11.12. Trustee’s Compensation. The officers of the Company shall make such arrangements regarding compensation, reimbursement
of expenses and indemnification of the Trustee as they from time to time deem reasonable and
appropriate.

ARTICLE XII

Miscellaneous Provisions

     Section 12.1. Controlling Law. This Plan shall be construed, regulated and administered under the laws of the State of Texas.

     Section 12.2. Acceptance of Terms and Conditions of Plan by Participants. Each Participant, by completing an Enrollment Form and as a condition of participation herein,
for himself, his heirs, executors, administrators, legal representatives and assigns, approves and
agrees to be bound by the provisions of this Plan and any subsequent amendments hereto, and all
actions of the Company and the Administrator hereunder.

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     IN WITNESS WHEREOF, CENTERPOINT ENERGY, INC. has amended and restated the ICP in the form of
this CenterPoint Energy, Inc. Third Amended and Restated Investor’s Choice Plan and has executed
this Plan and continued the trust contemplated herein as evidenced by the signature affixed hereto
of its Executive Vice President and Chief Financial Officer, Gary L. Whitlock, and Gary L.
Whitlock, individually as Trustee, has evidenced his acceptance of the trust contemplated herein
and has agreed to the terms of the trust as evidenced by his signature affixed hereto, effective as
of the close of business on December 31, 2010.

	 	 	 	 	 
	 	CENTERPOINT ENERGY, INC.

 	 
	 	By:  	 /s/ Gary L. Whitlock	 
	 	 	Name:  	Gary L. Whitlock 	 
	 	 	Title:  	Executive Vice President

and Chief Financial Officer 	 
	 
	 	TRUSTEE:

 	 
	 	
 /s/ Gary L. Whitlock	 
	 	Gary L. Whitlock, Trustee 	 
	 	 	 
	 

23exv10w1

Exhibit 10.1

Execution Version

COMMON UNIT

PURCHASE AGREEMENT

by and among

PAA NATURAL GAS STORAGE, L.P.

and

THE PURCHASERS PARTY HERETO

December 23, 2010

 

 

COMMON UNIT

PURCHASE AGREEMENT

     This COMMON UNIT PURCHASE AGREEMENT is made and entered into as of December 23, 2010 (this
“Agreement”), by and among PAA NATURAL GAS STORAGE, L.P., a Delaware limited partnership
(“Seller”), and the Purchasers listed on Schedule 2.1 hereto (each a “Purchaser”
and collectively, the “Purchasers”).

     WHEREAS, Seller desires to sell to the Purchasers, and the Purchasers desire to purchase from
Seller, certain common units representing limited partner interests in Seller, subject to the terms
and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and each of the Purchasers, severally and not jointly, hereby agree as follows:

ARTICLE I.

DEFINITIONS

     Section 1.1 Definitions. As used in this Agreement, and unless the context requires a
different meaning, the following terms have the meanings indicated:

     “Action” against a Person means any lawsuit, action, proceeding, investigation or
complaint before any court, governmental authority, mediator or arbitrator.

     “Affiliate” means, with respect to a specified Person, any other Person, whether now
in existence or hereafter created, directly or indirectly controlling, controlled by or under
direct or indirect common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling,” “controlled by,” and “under common
control with”) means the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

     “Agreement” shall have the meaning specified in the Preamble.

     “Baker Botts Legal Fees” shall have the meaning set forth in Section 7.10.

     “Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement and any and all other agreements or instruments executed and delivered to the Purchasers
by Seller hereunder or thereunder.

     “Business Day” means any day other than a Saturday, Sunday or a legal holiday or other
date on which the NYSE does not open for trading.

     “Common Unit Price” shall have the meaning specified in Section 2.2.

     “Closing” shall have the meaning specified in Section 2.3.

     “Closing Date” shall have the meaning specified in Section 2.3.

     “Commission” means the United States Securities and Exchange Commission.

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     “Commitment” or “Commitments” means the commitment of each Purchaser or the
commitments of all of the Purchasers, as applicable, to purchase and the obligation of Seller to
sell, as applicable, the Purchased Units set forth opposite such Purchaser’s name on Schedule 2.1
to this Agreement.

     “Commitment Date” means the date hereof.

     “Commitment Fee” means a fee to be paid in cash on the Closing Date or the termination
of this Agreement by the Seller to each Purchaser equal to 1.0% of each Purchaser’s respective
Commitment, which fee, if paid on the Closing Date, will be netted against and reduce such
Purchaser’s Purchase Price. In the event the Commitment Period does not terminate on the Reference
Date, the Commitment Fee will be increased by 1.0% per each sixty day period, prorated on a
day-for-day basis, for the period from the Reference Date until the Closing Date or date of
termination of this Agreement.

     “Commitment Period” means the date commencing on the Commitment Date and extending
through the Reference Date; provided, however, that if the Closing Date has been set for a date
after the Reference Date, the Commitment Period will be automatically extended through such Closing
Date, but in no event shall the Commitment Period be extended beyond March 15, 2011.

     “Common Unit Price” shall have the meaning set forth in Section 2.2.

     “Common Units” means the common units representing limited partner interests in
Seller.

     “Confidential Information” means, with respect to each Purchaser, all oral or written
information, documents, records and data that Seller or its Representatives furnishes or otherwise
discloses to such Purchaser or any of its Representatives, together with all copies, extracts,
analyses, compilations, studies, memoranda, notes or other documents, records or data (in whatever
form maintained, whether documentary, computer or other electronic storage or otherwise) prepared
by any Person that contain or otherwise reflect or are generated from such information, documents,
records, or data. The term “Confidential Information” does not include any information that (a) at
the time of disclosure or thereafter is generally available to the public (other than as a result
of a disclosure by such Purchaser or its Representatives), (b) is developed by such Purchaser or
any of its Representatives, independent of, and without reliance in whole or in part on, any
Confidential Information or any knowledge of Confidential Information, (c) becomes available to
such Purchaser or its Representatives on a non-confidential basis from a source other than Seller
or its Representatives who, insofar as is known to the recipient, is not prohibited from
transmitting the information to the recipient by a contractual, legal, fiduciary or other
obligation to Purchaser or (d) was available to such Purchaser or its Representatives on a
non-confidential basis prior to its disclosure to such Purchaser or its Representatives by Seller
or its Representatives.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations of the Commission promulgated thereunder.

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

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     “Indemnified Party” shall have the meaning specified in Section 6.3.

     “Indemnifying Party” shall have the meaning specified in Section 6.3.

     “Lead Purchaser” means Kayne Anderson MLP Investment Company; Kayne Anderson Energy
Total Return Fund, Inc.; Kayne Anderson Midstream/Energy Fund, Inc.; and KA First Reserve, LLC.

     “Major Acquisition” means the proposed acquisition by Seller of SG Resources
Mississippi, LLC.

     “NYSE” means the New York Stock Exchange.

     “PAA” means Plains All American Pipeline, L.P., a Delaware limited partnership.

     “Parties” means the Seller and the Purchasers.

     “Partnership Agreement” means the Second Amended and Restated Agreement of Limited
Partnership of Seller, dated as of August 16, 2010.

     “Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or any other form of
entity.

     “Private Placement Value” has the meaning specified in Section 7.15.

     “Purchase Price” means, with respect to a particular Purchaser, the amount set forth
opposite such Purchaser’s name under the column entitled “Purchase Price” on Schedule 2.1 to this
Agreement.

     “Purchased Units” means, with respect to a particular Purchaser, the number of Common
Units equal to the quotient determined by dividing (a) the Purchase Price of such Purchaser by (b)
the Common Unit Price; rounded to the nearest whole number.

     “Purchaser” or “Purchasers” shall have the meaning specified in the Preamble.

     “Purchaser Material Adverse Effect” means, with respect to each Purchaser, any
material and adverse effect on (i) the ability of such Purchaser to meet its obligations under the
Basic Documents on a timely basis or (ii) the ability of such Purchaser to consummate the
transactions under any Basic Document.

     “Purchaser Related Parties” shall have the meaning specified in Section 6.1.

     “Reference Date” means the date that is 60 days after the Commitment Date.

     “Registration Rights Agreement” means the Registration Rights Agreement, to be entered
into at the Closing, between Seller and the Purchasers in the form attached hereto as Exhibit A.

     “Representatives” of any Person means the officers, directors, employees, agents,
counsel, investment bankers and other representatives of such Person.

     “Securities Act” means the Securities Act of 1933, as amended from time to time, and
the rules and regulations of the Commission promulgated thereunder.

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     “Seller” shall have the meaning specified in the Preamble.

     “Seller Material Adverse Effect” means any material adverse effect on (i) the
condition (financial or otherwise), business, prospects, properties, net worth or results of
operations of Seller and its subsidiaries, taken as a whole, (ii) the ability of Seller to meet its
obligations under the Basic Documents on a timely basis, or (iii) the ability of Seller to
consummate the transactions under the Basic Documents.

     “Seller Related Parties” shall have the meaning specified in Section 6.2.

     “Seller Commission Documents” shall have the meaning specified in Section 3.3.

     “Seller Financial Statements” shall have the meaning specified in Section 3.3.

     “Short Sales” means, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and
forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined
in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions
through non-U.S. broker dealers or foreign regulated brokers.

ARTICLE II.

AGREEMENT TO SELL AND PURCHASE

     Section 2.1 Sale and Purchase. On the basis of the representations and warranties
contained herein and subject to the terms and conditions hereof, at the Closing (as defined in
Section 2.3 below), Seller hereby agrees to issue and sell to each Purchaser, and each Purchaser
hereby agrees to purchase from such Seller, the number of Purchased Units set forth opposite such
Purchaser’s name on Schedule 2.1 to this Agreement, and each Purchaser agrees to pay Seller the
amount of the Purchase Price in respect of such Purchased Units set forth opposite such Purchaser’s
name on Schedule 2.1 to this Agreement as consideration for the Purchased Units.

     Section 2.2 Consideration. The amount per Common Unit each Purchaser will pay to
Seller to purchase the Purchased Units (the “Common Unit Price”) shall be $21.75 per Common
Unit; subject to adjustment in accordance with Section 5.4(a) and Section 7.13. Upon payment of
each Purchaser’s Purchase Price at Closing, such Purchaser’s Purchased Units shall be fully paid
for.

     Section 2.3 Closing. Subject to the terms and conditions hereof, the consummation of
the purchase and sale of the Purchased Units hereunder (the “Closing”) shall occur no
earlier than five Business Days following the date on which Seller provides notice to the
Purchasers of its election to exercise the Commitment (such date, the “Closing Date”), at
the offices of Vinson & Elkins L.L.P., 1001 Fannin, Suite 2500, Houston, Texas 77002.

     Section 2.4 Independent Obligations. The obligation of each Purchaser hereunder is
several and not joint and is independent of the obligation of each other Purchaser, and the failure
of, or Seller’s waiver of, performance by any Purchaser does

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not excuse performance by any other Purchaser or Seller. No Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under this Agreement.
Nothing contained herein, and no action taken by any Purchaser pursuant hereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its review and negotiation of this
Agreement. Seller has elected to provide all Purchasers with the same material terms and this
Agreement for the convenience of Seller and not because it was required or requested to do so by
the Purchasers.

     Section 2.5 Major Acquisition. If the Major Acquisition has not been consummated at a
price of not more than 1% greater than the Base Purchase Price (excluding working capital and
capital expenditure adjustments), as defined in the draft purchase agreement relating to the Major
Acquisition provided to the Lead Purchaser on December 22, 2010, within two (2) Business Days of
the Closing Date, then Seller shall promptly, but in no event more than one (1) Business Day later,
refund the amount of the Purchase Price paid in accordance with Section 2.1 plus the Commitment Fee
to each Purchaser in exchange for the return of the certificates evidencing the Purchased Units.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

RELATED TO SELLER

     Seller hereby represents and warrants to Purchasers as follows:

     Section 3.1 Existence. Seller (a) is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware and (b) has all requisite
limited partnership power necessary to own its assets and carry on its business as its business is
now being conducted.

     Section 3.2 Valid Issuance of Purchased Units. The offer and sale of the Purchased
Units and the limited partner interests represented thereby have been duly authorized by Seller
and, when issued and delivered to the Purchasers against payment therefor in accordance with the
terms of this Agreement, will be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by such
matters described under the caption “The Partnership Agreement — Limited Liability” in Seller’s
Registration Statement on Form S-1 (File No. 333-164492), which is incorporated by reference into
Seller’s Registration Statement on Form 8-A (File No. 001-34722)).

     Section 3.3 Seller Commission Documents. Seller has filed with the Commission all
forms, registration statements, reports, schedules and statements required to be filed by it under
the Exchange Act or the Securities Act (all such documents,

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collectively “Seller Commission Documents”). The Seller Commission Documents,
including, without limitation, any audited or unaudited financial statements and any notes thereto
or schedules included therein (the “Seller Financial Statements”), at the time filed (in
the case of registration statements, solely on the dates of effectiveness) (except to the extent
corrected by a subsequently filed Seller Commission Document filed prior to the date hereof) (a)
did not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, (b) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as the case may be,
(c) complied as to form in all material respects with applicable accounting requirements and with
the published rules and regulations of the Commission with respect thereto, (d) were prepared in
accordance with GAAP applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and (e) fairly present (subject in the case of unaudited statements to normal,
recurring and year-end audit adjustments) in all material respects the consolidated financial
position and status of the business of Seller as of the dates thereof and the consolidated results
of its operations and cash flows for the periods then ended. PricewaterhouseCoopers LLP is an
independent registered public accounting firm with respect to Seller and has not resigned or been
dismissed as independent registered public accountants of Seller as a result of or in connection
with any disagreement with Seller on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures.

     Section 3.4 No Conflicts. The execution, delivery and performance by Seller of this
Agreement, the Registration Rights Agreement and all other agreements and instruments to be
executed and delivered by Seller pursuant hereto or in connection with the transactions
contemplated by this Agreement and the Registration Rights Agreement, and compliance by Seller with
the terms and provisions hereof and thereof, do not and will not (a) violate any provision of any
statute, rule, regulation or order of any court or governmental authority having jurisdiction over
Seller or any of its properties or assets, (b) conflict with or result in a violation of Seller’s
certificate of limited partnership or the Partnership Agreement, or (c) result in a violation or
breach of or constitute a default under any material agreement to which Seller is a party or by
which Seller or any of its properties is bound, except, in the case of clauses (a) and (c), where
such violation, breach or default would not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect.

     Section 3.5 Authority. Seller has all necessary limited partnership power and
authority to execute, deliver and perform its obligations under this Agreement and the Registration
Rights Agreement and to consummate the transactions contemplated hereby and thereby; the execution,
delivery and performance by Seller of this Agreement and the Registration Rights Agreement and the
consummation of the transactions contemplated hereby and thereby, have been duly authorized by all
necessary limited partnership action on its part; and this Agreement and the Registration Rights
Agreement constitute the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent

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transfer and similar laws affecting creditors’ rights generally or by general principles of
equity.

     Section 3.6 Approvals. No authorization, consent, approval, waiver, license,
qualification or written exemption from, nor any filing, declaration, qualification or registration
with, any governmental authority or any other Person is required in connection with the execution,
delivery or performance by Seller of this Agreement and the Registration Rights Agreement, except
where the failure to receive such authorization, consent, approval, waiver, license, qualification
or written exemption, or to make such filing, declaration, qualification or registration, would
not, individually or in the aggregate, reasonably be expected to have a Seller Material Adverse
Effect.

     Section 3.7 Investment Company Status. Seller is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

     Section 3.8 Certain Fees. No fees or commissions will be payable by Seller to
brokers, finders, or investment bankers with respect to the sale of any of the Purchased Units or
the consummation of the transactions contemplated by this Agreement.

     Section 3.9 No Side Agreements. Other than any existing confidentiality agreements in
favor of Seller that have been executed by any Purchaser or to which any Purchaser is otherwise
bound, there are no other agreements by, among or between Seller or its Affiliates, on the one
hand, and any Purchaser or its Affiliates, on the other hand, with respect to the transactions
contemplated hereby.

     Section 3.10 MLP Status. Seller has, since its formation, met the gross income
requirements of Section 7704(c)(2) of the Internal Revenue Code of 1986, as amended.

     Section 3.11 Offering. Assuming the accuracy of the representations and warranties of
the Purchasers contained in this Agreement, the sale and issuance of the Purchased Units to each of
the Purchasers pursuant to this Agreement is exempt from the registration requirements of the
Securities Act, and neither Seller nor any authorized agent acting on its behalf has taken or will
take any action hereafter that would cause the loss of such exemptions.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF PURCHASERS

     Each Purchaser, severally and not jointly, hereby represents and warrants to Seller as
follows:

     Section 4.1 Existence. Such Purchaser (a) is an entity duly organized, validly
existing and in good standing, as applicable, under the laws of its jurisdiction of organization
and (b) has all requisite power necessary to own its assets and carry on its business as its
business is now being conducted.

     Section 4.2 No Conflicts. The execution, delivery and performance by such Purchaser
of this Agreement and the Registration Rights Agreement and all other

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agreements and instruments to be executed and delivered by such Purchaser pursuant hereto or
thereto or in connection herewith, compliance by such Purchaser with the terms and provisions
hereof or thereof and the purchase of the Purchased Units by such Purchaser do not and will not (a)
violate any provision of any statute, rule, regulation or order of any court or governmental
authority having jurisdiction over such Purchaser or any of its properties or assets, (b) conflict
with or result in a violation of any provision of the organizational documents of such Purchaser,
or (c) result in a violation or breach of or constitute a default under any material agreement to
which such Purchaser is a party or by which such Purchaser or any of its properties is bound,
except, in the case of clauses (a) and (c), where such violation, breach or default would not,
individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse
Effect.

     Section 4.3 Authority. Such Purchaser has all necessary power and authority to
execute, deliver and perform its obligations under this Agreement and the Registration Rights
Agreement and to consummate the transactions contemplated hereby and thereby; the execution,
delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement
and the consummation of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary action on its part; and this Agreement and the Registration Rights Agreement
constitute the legal, valid and binding obligation of such Purchaser, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer and similar laws affecting creditors rights generally or by general principles of equity.

     Section 4.4 Ownership of Securities. Such Purchaser and its Affiliates do not, as of
the date hereof, and, as of the Closing Date, will not, own ten percent or more of Seller’s issued
and outstanding Common Units.

     Section 4.5 Trading Activities. Such Purchaser’s trading activities, if any, with
respect to Seller’s Common Units will be in compliance with all applicable state and federal
securities laws, rules and regulations and the rules and regulations of the NYSE.

     Section 4.6 Investment. The Purchased Units are being acquired for its own account,
not as a nominee or agent, and with no intention of distributing the Purchased Units or any part
thereof, and that such Purchaser has no present intention of selling or granting any participation
in or otherwise distributing the same in any transaction in violation of the securities laws of the
United States of America or any State, without prejudice, however, to such Purchaser’s right at all
times to sell or otherwise dispose of all or any part of the Purchased Units under a registration
statement under the Securities Act and applicable state securities laws or under an exemption from
such registration available thereunder (including, without limitation, if available, Rule 144
promulgated thereunder). If such Purchaser should in the future decide to dispose of any of the
Purchased Units, such Purchaser understands and agrees (a) that it may do so only (i) in compliance
with the Securities Act and applicable state securities law, as then in effect, or (ii) in the
manner contemplated by any registration statement pursuant to which such securities are being
offered, and (b) that stop-transfer instructions to that effect will be in effect with respect to
such securities.

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     Section 4.7 Nature of Purchaser. Such Purchaser represents and warrants to, and
covenants and agrees with, Seller that, (a) it is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated by the Securities and Exchange Commission pursuant to the
Securities Act and (b) by reason of its business and financial experience it has such knowledge,
sophistication and experience in making similar investments and in business and financial matters
generally so as to be capable of evaluating the merits and risks of the prospective investment in
the Purchased Units, is able to bear the economic risk of such investment and, at the present time,
would be able to afford a complete loss of such investment.

     Section 4.8 Receipt of Information. Such Purchaser acknowledges that it has (a) had
access to Seller’s periodic filings with the Commission and (b) been provided a reasonable
opportunity to ask questions of and receive answers from Representatives of Seller regarding such
matters. Such Purchaser acknowledges that certain information that Seller would be required to
provide to such Purchaser in a registered offering, including historical and pro forma financial
information relating to the Major Acquisition, has not been made available to such Purchaser.

     Section 4.9 Legend. It is understood that the certificates evidencing the Common
Units may bear the following legend: “These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to the Partnership that such registration is
not required.”

     Section 4.10 Certain Fees. No fees or commissions will be payable by such Purchaser
to brokers, finders, or investment bankers with respect to the sale of any of the Purchased Units
or the consummation of the transactions contemplated by this Agreement.

     Section 4.11 No Side Agreements. Other than any existing confidentiality agreements
in favor of Seller that have been executed by such Purchaser or to which such Purchaser is
otherwise bound, there are no other agreements by, among or between such Purchaser or any of its
Affiliates, on the one hand, and Seller or any of its Affiliates, on the other hand, with respect
to the transactions contemplated hereby.

ARTICLE V.

CLOSING CONDITIONS

     Section 5.1 Conditions to the Closing.

     (a) Mutual Conditions. The respective obligation of each Party to consummate
the purchase and issuance and sale of the Purchased Units shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions (any or
all of which may be waived by a particular Party on behalf of itself in writing, in whole
or in part, to the extent permitted by applicable law):

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     (i) no statute, rule, regulation or order shall have been enacted or
promulgated, and no action shall have been taken, by any governmental authority of
competent jurisdiction that temporarily, preliminarily or permanently restrains,
precludes, enjoins or otherwise prohibits the consummation of the transactions
contemplated by this Agreement or makes the transactions contemplated by this
Agreement illegal;

     (ii) there shall not be pending any suit, action or proceeding by any
governmental authority seeking to restrain, preclude, enjoin or prohibit the
transactions contemplated by this Agreement;

     (iii) the Purchased Units shall have been approved for listing on the NYSE,
subject to notice of issuance;

     (iv) the material conditions associated with the closing of the Major
Acquisition shall have been satisfied and Seller shall have notified the Purchasers
of its intent to effect the closing of the Major Acquisition at a price of not more
than 1% greater than the Base Purchase Price (excluding working capital and capital
expenditure adjustments), as defined in the draft purchase agreement relating to
the Major Acquisition provided to the Lead Purchaser on December 22, 2010, and on
terms substantially similar to those in such draft purchase agreement no later than
one Business Day following the Closing hereunder; and

     (v) the Seller shall have obtained (A) gross equity proceeds of at least $600
million (including the equity proceeds pursuant to this Agreement) on terms at
least as favorable to the Seller as the terms of this Agreement and (B) debt
financing of at least $200 million at a fixed interest rate of no higher than 5.5%
per annum and an initial minimum term of three years.

     (b) Each Purchaser’s Conditions. The respective obligation of each Purchaser
to consummate the purchase of its Purchased Units shall be subject to the satisfaction on
or prior to the Closing Date of each of the following conditions (any or all of which may
be waived by a particular Purchaser on behalf of itself in writing, in whole or in part, to
the extent permitted by applicable law):

     (i) Seller shall have performed and complied with the covenants and agreements
contained in this Agreement that are required to be performed and complied with by
Seller on or prior to the Closing Date;

     (ii) the representations and warranties of Seller contained in this Agreement
that are qualified by materiality or Seller Material Adverse Effect shall be true
and correct when made and as of the Closing Date and all other representations and
warranties shall be true and correct in all material respects when made and as of
the Closing Date, in each case as though made at and as of the Closing Date (except
that representations

10

 

made as of a specific date shall be required to be true and correct as of such
date only);

     (iii) Seller shall have delivered, or caused to be delivered, to the
Purchasers at the Closing, Seller’s closing deliveries described in Section 5.3 of
this Agreement; and

     (iv) since September 30, 2010, no Seller Material Adverse Effect shall have
occurred and be continuing.

     (c) Seller’s Conditions. The obligation of Seller to consummate the sale of
the Purchased Units to each of the Purchasers shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions with respect to each
Purchaser individually and not the Purchasers jointly (any or all of which may be waived by
Seller in writing, in whole or in part, to the extent permitted by applicable law):

     (i) such Purchaser shall have performed and complied with the covenants and
agreements contained in this Agreement that are required to be performed and
complied with by that Purchaser on or prior to the Closing Date;

     (ii) the representations and warranties of such Purchaser contained in this
Agreement that are qualified by materiality or Purchaser Material Adverse Effect
shall be true and correct when made and as of the Closing Date and all other
representations and warranties shall be true and correct in all material respects
when made and as of the Closing Date, in each case as though made at and as of the
Closing Date (except that representations made as of a specific date shall be
required to be true and correct as of such date only);

     (iii) such Purchaser shall have delivered, or caused to be delivered, to
Seller at the Closing, such Purchaser’s closing deliveries described in Section 5.4
of this Agreement; and

     (iv) since the date hereof, no Purchaser Material Adverse Effect shall have
occurred and be continuing.

     Section 5.2 Termination.

     (a) Any Purchaser (with respect to itself) may terminate its respective Commitment and
Seller (with respect to all of the Purchasers) may terminate all of the Commitments at any
time after the expiration of the Commitment Period.

     (b) In the event that any condition to a Party’s obligation to close specified in
Section 5.1 is not satisfied or waived on the Closing Date, such Party may terminate this
Agreement upon written notice to the other Party; provided,

11

 

however, that no Party may exercise such termination right to the extent that it has
not satisfied or complied with its obligations under this Agreement.

     (c) In the event of any termination of this Agreement pursuant to Sections 5.2(a) or
(b) hereof, this Agreement shall forthwith become null and void solely with respect to the
Parties to such termination. In the event that this Agreement is terminated in accordance
with Section 5.2(a) hereof or by a Purchaser in accordance with Section 5.2(b) hereof,
within two (2) Business Days following such termination, Seller shall pay to each Purchaser
in immediately available funds by wire transfer an amount equal to the Commitment Fee.
Except as provided in the immediately preceding sentence, in the event of any termination
in accordance with Section 5.2(a) or (b), there shall be no liability on the part of any
Party to such termination; provided, however, that nothing herein shall relieve any Party
from any liability or obligation with respect to any willful breach of this Agreement.
Notwithstanding the foregoing, any termination of this Agreement by any Purchaser shall not
serve to terminate this Agreement as between any Purchaser not so terminating and Seller.

     Section 5.3 Seller Deliveries. At the Closing, subject to the terms and conditions of
this Agreement, Seller will deliver, or cause to be delivered, to the Purchasers:

     (a) the applicable Purchased Units by delivery of certificates evidencing such
Purchased Units at the Closing meeting the requirements of the Partnership Agreement,
registered in such name(s) as such Purchaser shall, with reasonable notice, have
designated, all free and clear of any liens, encumbrances or interests of any other Person;

     (b) an officer’s certificate in form reasonably satisfactory to the Purchasers
attesting to the matters set forth in Sections 5.1(b)(i), (ii) and (iii); and

     (c) the Registration Rights Agreement, which shall have been duly executed by the
Seller.

     Section 5.4 Purchaser Deliveries. At the Closing, subject to the terms and conditions
of this Agreement, each Purchaser will deliver, or cause to be delivered, to Seller:

     (a) payment to Seller of the amount of the applicable Purchase Price set forth
opposite such Purchaser’s name on Schedule 2.1 to this Agreement for the applicable
Purchased Units, net of the applicable Commitment Fee, by wire transfer of immediately
available funds to an account designated by Seller in writing at least two (2) Business
Days (or such shorter period as shall be agreeable to the applicable Parties) prior to the
Closing;

     (b) an officer’s certificate in form reasonably acceptable to Seller attesting to the
matters set forth in Sections 5.1(c)(i), (ii) and (iii); and

12

 

     (c) the Registration Rights Agreement, which shall have been duly executed by the
Purchaser.

ARTICLE VI.

INDEMNIFICATION

     Section 6.1 Indemnification by Seller. Seller agrees to indemnify each Purchaser and
its Affiliates and each of their respective Representatives (collectively, “Purchaser Related
Parties”), from, and hold each of them harmless against any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), demands, and causes of action, and, in
connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable
costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever, including,
without limitation, the reasonable fees and disbursements of counsel and all other reasonable
expenses incurred in connection with investigating, defending or preparing to defend any such
matter that may be incurred by them or asserted against or involve any of them as a result of,
arising out of, or in any way related to the breach of any of the representations, warranties or
covenants of Seller contained herein, provided such claim for indemnification relating to a breach
of a representation or warranty is made prior to the expiration of such representation or warranty.
Furthermore, Seller agrees that it will indemnify and hold harmless each Purchaser and Purchaser
Related Parties from and against any and all claims, demands or liabilities for broker’s, finder’s,
placement or other similar fees or commissions incurred by Seller or alleged to have been incurred
by Seller in connection with the sale of any of the Purchased Units or the consummation of the
transactions contemplated by this Agreement.

     Section 6.2 Indemnification by Purchasers. Each Purchaser agrees, severally and not
jointly, to indemnify Seller and its Affiliates and each of their respective Representatives
(collectively, “Seller Related Parties”) from, and hold each of them harmless against any
and all actions, suits, proceedings (including any investigations, litigation, or inquiries),
demands, and causes of action, and, in connection therewith, and promptly upon demand, pay or
reimburse each of them for all reasonable costs, losses, liabilities, damages, or expenses of any
kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of
counsel and all other reasonable expenses incurred in connection with investigating, defending or
preparing to defend any such matter to the extent that it may be incurred by them or asserted
against or involve any of them as a result of, arising out of, or in any way related to the breach
of any of the representations, warranties or covenants of such Purchaser contained herein, provided
such claim for indemnification relating to a breach of the representations and warranties by such
Purchaser is made prior to the expiration of such representations and warranties. Furthermore,
each Purchaser agrees, severally and not jointly, that it will indemnify and hold harmless Seller
and Seller Related Parties from and against any and all claims, demands or liabilities for
broker’s, finder’s, placement or other similar fees or commissions incurred by such Purchaser or
alleged to have been incurred by such Purchaser in connection with the purchase of any of the
Purchased Units or the consummation of the transactions contemplated by this Agreement.

13

 

     Section 6.3 Indemnification Procedures. Promptly after any Seller Related Party or
Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any
indemnifiable claim hereunder, or the commencement of any Action or proceeding by a third person,
which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement,
the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such claim or the commencement of such Action or proceeding, but failure to so
notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may
have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and the basis of such
claim to the extent then known. The Indemnifying Party shall have the right to defend and settle,
at its own expense and by its own counsel, any such matter as long as the Indemnifying Party
pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or
settle, it shall promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and the settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and
other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s
possession or control. Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for so long as the
Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified Party shall be
entitled (a) at its expense, to participate in the defense of such asserted liability and the
negotiations of the settlement thereof and (b) if (i) the Indemnifying Party has failed to assume
the defense and employ counsel or (ii) if the defendants in any such Action include both the
Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have
concluded that there may be reasonable defenses available to the Indemnified Party that are
different from or in addition to those available to the Indemnifying Party or if the interests of
the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying
Party, then the Indemnified Party shall have the right to select a separate counsel and to assume
such legal defense and otherwise to participate in the defense of such Action, with the expenses
and fees of such separate counsel and other expenses related to such participation to be reimbursed
by the Indemnifying Party as incurred. Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified
Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete
release from liability of, the Indemnified Party.

     Section 6.4 Survival. The Parties’ obligations under this Article VI shall only
become operative following the Closing Date and shall not survive any termination of this Agreement
pursuant to Section 5.2.

14

 

ARTICLE VII.

MISCELLANEOUS

     Section 7.1 Interpretation of Provisions. Article, Section and Schedule references
are to this Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents, contracts, and agreements
as the same may be amended, supplemented, and otherwise modified from time to time, unless
otherwise specified. The word “including” shall mean “including but not limited to.” Whenever a
Party has an obligation under this Agreement, the expense of complying with that obligation shall
be an expense of such Party unless otherwise specified. Whenever any determination, consent, or
approval is to be made or given by a Party, such action shall be in such Party’s sole discretion
unless otherwise specified in this Agreement. If any provision in this Agreement is held to be
illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid, not binding, or
unenforceable provision had never comprised a part of this Agreement, and the remaining provisions
shall remain in full force and effect. This Agreement has been reviewed and negotiated by
sophisticated parties with access to legal counsel and shall not be construed against the drafter.

     Section 7.2 Survival. The representations and warranties set forth in Section 3.2,
Section 3.8, Section 3.9, Section 3.10, Section 4.10 and Section 4.11 hereunder shall survive
indefinitely, and the other representations and warranties set forth herein shall survive for a
period of twelve (12) months, in each case, following the Closing Date regardless of any
investigation made by or on behalf of Seller or the Purchasers. The covenants made in this
Agreement shall survive the Closing of the transactions described herein and remain operative and
in full force and effect regardless of acceptance of any of the Purchased Units and payment
therefor.

     Section 7.3 No Waiver; Modifications in Writing.

     (a) Delay. No failure or delay on the part of any Party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be available to a
Party at law or in equity or otherwise.

     (b) Specific Waiver. Except as otherwise provided herein, no amendment,
waiver, consent, modification or termination of any provision of this Agreement shall be
effective unless signed by each of the Parties hereto or thereto affected by such
amendment, waiver, consent, modification or termination. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically required by this Agreement, no
notice to or demand

15

 

on a Party in any case shall entitle such Party to any other or further notice or
demand in similar or other circumstances.

     Section 7.4 Binding Effect; Assignment.

     (a) Binding Effect. This Agreement shall be binding upon Seller, the
Purchasers and their respective successors and permitted assigns. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to confer any right
or benefit upon any Person other than the Parties to this Agreement, and their respective
successors and permitted assigns.

     (b) Assignment of Rights. All or any portion of the rights and obligations of
each Purchaser under this Agreement may be transferred to any Affiliate of such Purchaser
but may not otherwise be transferred by such Purchaser without the prior written consent of
Seller.

     Section 7.5 Confidentiality. Notwithstanding anything herein to the contrary, to the
extent that any Purchaser has executed or is otherwise bound by a confidentiality agreement in
favor of Seller, such Purchaser shall continue to be bound by such confidentiality agreement
(notwithstanding any termination provision contained therein). To the extent that any Purchaser
has not executed or is not otherwise bound by a confidentiality agreement in favor of Seller, and
has actually received Confidential Information from Seller, such Purchaser will refrain, and will
cause its Representatives to refrain, from disclosing to any other Person any Confidential
Information; provided, however, that with respect to any Purchaser who has not executed and is not
otherwise bound by a confidentiality agreement in favor of Seller, Seller acknowledges that Seller
has not provided such Purchaser any Confidential Information unless requested by such Purchaser.
Disclosure of Confidential Information will not be deemed to be a breach of this Section 7.5 if
such disclosure is made with the consent of Seller or pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial, administrative or legislative body or committee;
provided, however, that upon receipt by any Purchaser of any subpoena or order covering
Confidential Information of Seller, such Purchaser will to the extent reasonably practicable
promptly notify Seller of such subpoena or order.

     Section 7.6 Communications. All notices and communications provided for hereunder
shall be in writing and shall be given by registered or certified mail, return receipt requested,
regular mail, telecopy, air courier guaranteeing overnight delivery or personal delivery to the
following addresses:

16

 

     (a) If to Purchasers, to the addresses listed on Schedule 7.6, with a copy to:

Baker Botts L.L.P.

98 San Jacinto Blvd., Suite 1500

Austin, Texas 78701

Attention: Laura Lanza Tyson

Facsimile: (512) 322-8377

     (b) If to Seller:

PAA Natural Gas Storage, L.P.

333 Clay Street

Houston, Texas 77002

Attention: Richard McGee

Facsimile: (713) 652-3700

     with a copy to:

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: Alan Beck

Facsimile: (713) 615-5620

or to such other address as Seller or any Purchaser may designate in writing. All notices and
communications shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; upon actual receipt if sent by registered or certified mail, return receipt
requested, or regular mail, if mailed; when receipt acknowledged, if sent via telecopy; and upon
actual receipt when delivered to an air courier guaranteeing overnight delivery.

     Section 7.7 Entire Agreement. This Agreement is intended by the Parties as a final
expression of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the Parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by Seller or any of its Affiliates
or Purchasers or any of their Affiliates set forth herein. This Agreement supersedes all prior
agreements and understandings between the Parties with respect to such subject matter, including
any term sheets and commitment letters.

     Section 7.8 Governing Law. This Agreement will be construed in accordance with and
governed by the laws of the State of Texas without regard to principles of conflicts of laws.

     Section 7.9 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different Parties hereto in separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original

17

 

and all of which counterparts, taken together, shall constitute but one and the same
Agreement.

     Section 7.10 Costs and Expenses. Each Party shall be responsible for such Party’s own
expenses in connection with this Agreement and the transactions contemplated hereby, except that
Seller will reimburse the Lead Purchaser for up to $25,000 of legal fees incurred by Baker Botts
L.L.P. (“Baker Botts Legal Fees”). Any Baker Botts Legal Fees in excess of $25,000 shall
be paid pro rata by all Purchasers (other than PAA) in proportion to the aggregate number of
Purchased Units set forth opposite the names of such Purchasers on Schedule 2.1.

     Section 7.11 Short Selling Acknowledgement and Agreement. Each Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently
takes the position that coverage of Short Sales of securities “against the box” prior to the
effective date of a registration statement is a violation of Section 5 of the Securities Act. Each
Purchaser agrees, severally and not jointly , that it will not (and shall cause its Affiliates not
to) engage in any Short Sales that result in the disposition of the Common Units acquired hereunder
by the Purchaser until such time as the Shelf Registration Statement (as defined in the
Registration Rights Agreement) is declared or deemed effective by the Commission. Each Purchaser
further agrees, severally and not jointly, that it will not (and shall cause its Affiliates not to)
enter into any Short Sales that result in the disposition of the Common Units owned by it from the
date hereof through the Closing Date; provided that this provision shall not limit any Purchaser’s
ability to fulfill contractual obligations existing on the date hereof.

     Section 7.12 Unit Split Affecting the Purchased Units. In the event that Seller
declares a unit split with respect to its Common Units and the record date for such unit split is
after the date of this Agreement and prior to the Closing Date, the number of Purchased Units to be
delivered to Purchasers hereunder and the Common Unit Price and the Purchase Price therefor shall
be appropriately adjusted so that the Purchasers would be in the same relative economic position as
they would be if such Purchased Units would have been issued and delivered to the Purchasers prior
to the record date for any such unit split.

     Section 7.13 Distributions. If the Closing Date is after the record date relating to
a distribution to be made to holders of Common Units with respect to the fiscal quarter ended
December 31, 2010 (the Seller anticipates paying such distribution on or about February 15, 2011)
or any other distribution to be made to holders of Common Units, then the Purchasers shall not be
entitled to receive such distribution but the Common Unit Price shall be reduced by the per Common
Unit amount of such distribution and the number of Purchased Units set forth on Schedule 2.1 shall
be increased accordingly.

     Section 7.14 Removal of Legend. In connection with a sale of the Purchased Units by a
Purchaser in reliance on Rule 144, the applicable Purchaser or its broker shall deliver to the
Seller a broker representation letter providing any information the Seller deems necessary to
determine that the sale of the Purchased Units is made in compliance with Rule 144, including, as
may be appropriate, a certification that the Purchaser is not

18

 

an affiliate of the Seller and regarding the length of time the Purchased Units have been
held. Upon receipt of such representation letter, the Seller shall as soon as reasonably
practicable exchange unit certificates bearing the legend described in Section 4.9 for unit
certificates without such legend. After any Purchaser or its permitted assigns have held the
Purchased Units for one year, if such Purchased Units still bear the legend described in Section
4.9, the Purchaser may request the Seller to remove the legend and the Seller agrees to take all
steps necessary to effect the removal of the legend as soon as reasonably practicable. The Seller
shall bear all direct costs and expenses associated with the removal of a legend pursuant to this
Section 7.14, regardless of whether the request is made in connection with a sale or otherwise, so
long as such Purchaser or its permitted assigns provide to the Seller any information the Seller
deems necessary to determine that the legend is no longer required under the Securities Act or
applicable state laws, including a certification that the holder is not an affiliate of the Seller
and regarding the length of time the Purchased Units have been held; provided, however, that the
Seller shall not be responsible for any legal fees and expenses of counsel incurred by the
Purchaser in connection therewith.

     Section 7.15 Certain Special Allocations of Book and Taxable Income. To the extent
that the Common Unit Price differs from the trading price of the Common Units on the NYSE as of the
Closing Date (the “Private Placement Value”), the general partner of the Seller intends to
specially allocate Seller items of book and taxable income, gain, loss or deduction to the
Purchasers so that their capital accounts in their Purchased Units are equal, on a per-Unit basis,
with the capital accounts of the other holders of Common Units (and thus to assure fungibility of
all Common Units). Such special allocation will occur upon the earlier to occur of any taxable
period of Seller ending upon, or after, (a) a book-up event or book-down event in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(f) or a sale of all or substantially all of the
assets of Seller occurring after the date of the issuance of the Purchased Units, or (b) the
transfer of the Purchased Units to a Person that is not an Affiliate of the Purchaser, in which
case, such allocation shall be made only with respect to the Purchased Units so transferred. A
Purchaser holding a Purchased Unit shall be required to provide notice to the general partner of
the Seller of a transfer of a Purchased Unit to a Person who is not an Affiliate of the Purchaser
no later than the last Business Day of the calendar year during which such transfer occurred,
unless by virtue of the application of clause (a) above, the general partner of the Seller has
determined that the capital accounts of Common Units transferred are equal, on a per-Unit basis,
with the capital accounts of the other holders of Common Units. The initial capital account
balance in respect of each Purchased Unit shall be the Private Placement Value for such Purchased
Unit. To provide Purchasers of the Purchased Units with a net capital account in the Purchased
Units on the date of purchase equal to the Common Unit Price paid by those Purchasers for the
Purchased Units, immediately following the creation of a capital account balance in respect of each
Purchased Unit, each holder acquiring a Purchased Unit at original issuance shall be deemed to
have (x) received a cash distribution in respect of each Purchased Unit in an amount equal to any
excess of the Private Placement Value over the Common Unit Price of the Purchased Unit or (y) made
a cash contribution in respect of each Purchased Unit in an amount equal to any excess of the
Common Unit Price over the Private Placement Value of the Purchased Unit.

19

 

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

	 	 	 	 	 
	 	PAA NATURAL GAS STORAGE, L.P.

 	 
	 	By:  	PNGS GP LLC, its general partner
 	 
	 	 	 
	 	By:  	
 /s/ Richard K. McGee	 
	 	 	Name:  	Richard K. McGee 	 
	 	 	Title:  	Vice President – Legal and Business
Development 	 
	 

[Signature Page to Purchase Agreement]

 

Schedule 2.1

	 	 	 	 	 	 	 	 	 
	Purchaser	 	Purchase Price*	 	 	Purchased Units	 
	Kayne Anderson MLP Investment Company
	 	$	29,700,000	 	 	 	1,379,310	 
	Kayne Anderson Energy Total Return
Fund, Inc.
	 	 	4,950,000	 	 	 	229,885	 
	Kayne Anderson Midstream/Energy Fund,
Inc.
	 	 	24,750,000	 	 	 	1,149,425	 
	KA First Reserve, LLC
	 	 	9,900,000	 	 	 	459,770	 
	Tortoise Energy Infrastructure
Corporation
	 	 	14,850,000	 	 	 	689,655	 
	Tortoise Energy Capital Corporation
	 	 	5,940,000	 	 	 	275,862	 
	Tortoise North American Energy
Corporation
	 	 	990,000	 	 	 	45,977	 
	Tortoise MLP Fund, Inc.
	 	 	19,800,000	 	 	 	919,540	 
	AT MLP Fund, LLC
	 	 	14,850,000	 	 	 	689,655	 
	Tetrad Corporation
	 	 	2,970,000	 	 	 	137,931	 
	Fiduciary/Claymore MLP Opportunity Fund
	 	 	4,950,000	 	 	 	229,885	 
	FAMCO MLP & Energy Infrastructure Fund
	 	 	346,500	 	 	 	16,092	 
	Eagle Income Appreciation Partners L.P.
	 	 	10,500,000	 	 	 	459,770	 
	Eagle Income Appreciation II L.P.
	 	 	7,000,000	 	 	 	344,828	 
	Tallgrass MLP Fund I, L.P.
	 	 	9,900,000	 	 	 	459,770	 
	Anna Maria and Stephen Kellen
Foundation, Inc
	 	 	9,900,000	 	 	 	459,770	 
	Hartz Capital Investments, LLC
	 	 	7,920,000	 	 	 	367,816	 
	Baron Small Cap Fund
	 	 	21,532,500	 	 	 	1,000,000	 
	Baron Real Estate Fund
	 	 	43,065	 	 	 	2,000	 
	ClearBridge Energy MLP Fund Inc.
	 	 	29,700,000	 	 	 	1,379,310	 
	Granite Growth 124, LLC
	 	 	9,900,000	 	 	 	459,770	 
	RCH Energy MLP Fund, L.P.
	 	 	9,900,000	 	 	 	459,770	 
	MTP Energy Infrastructure Finance
Master Fund, Ltd
	 	 	9,900,000	 	 	 	459,770	 
	Hoak Public Equities, LP
	 	 	990,000	 	 	 	45,977	 
	Hoak Private Equities I, L.P.
	 	 	1,485,000	 	 	 	68,966	 

 

			
	*	 	Purchase Price shown is net of Commitment Fee and assumes Closing Date is on or before Reference
Date.

Schedule 2.1

 

Schedule 7.6

Kayne Anderson MLP Investment Company

Kayne Anderson Energy Total Return Fund, Inc.

Kayne Anderson Midstream/Energy Fund, Inc.

KA First Reserve, LLC

Address:

Kayne Anderson Capital Advisors, L.P.

717 Texas, Suite 3100

Houston, Texas 77002

Attention: James Baker

Tortoise Energy Infrastructure Corporation

Tortoise Energy Capital Corporation

Tortoise North American Energy Corporation

Tortoise MLP Fund, Inc.

Addresses:

Tortoise Capital Advisors, LLC

11550 Ash Street, Suite 300

Leawood, Kansas 66211

Attention: Terry Matlack

Tortoise Capital Advisors, LLC

11550 Ash Street, Suite 300

Leawood, Kansas 66211

Attention: Zach Hamel

AT MLP Fund, LLC

Address:

Invesco/Atlantic Trust

1700 Lincoln Street — 2550

Denver, Colorado 80203

Attention: Chris Linder

Tetrad Corporation

Address:

Tetrad Corp

11422 Miracle Hills Drive, Suite 400

Omaha, Nebraska 68154

Attention: David Scott

Schedule 7.6

 

Fiduciary/Claymore MLP Opportunity Fund

FAMCO MLP & Energy Infrastructure Fund

Addresses:

Fiduciary Asset Management LLC

8235 Forsyth Blvd, Suite 700

St. Louis, Missouri 63105

Attention: Quinn Kiley

Fiduciary Asset Management LLC

8235 Forsyth Blvd, Suite 700

St. Louis, Missouri 63105

Attention: Jim Cunnane

Eagle Income Appreciation Partners L.P.

Eagle Income Appreciation II L.P.

Address:

Eagle Global Advisors

5847 San Felipe, Suite 930

Houston, Texas 77057

Attention: Malcom Day

Tallgrass MLP Fund I, L.P.

Address:

Tallgrass Capital, LLC

6640 W. 143rd Street, Suite 200

Overland Park, Kansas 66223

Attention: David G. Dehaemers, Jr.

Anna Maria and Stephen Kellen Foundation, Inc

Address:

Arnhold & S. Bleischroeder Advisors

(First Eagle Investment Management)

1345 Avenue of the Americas

New York, New York 10105

Attention: Andrew Gundlach

Schedule 7.6

 

Hartz Capital Investments, LLC

Address:

Hartz Capital

400 Plaza Drive

Secaucus, New Jersey 07094

Attention: Noah Lerner

Baron Small Cap Fund

Baron Real Estate Fund

Addresses:

BAMCO, Inc.

767 Fifth Avenue, 49th Floor

New York, New York 10153

Attention: James Stone

BAMCO, Inc.

767 Fifth Avenue, 49th Floor

New York, New York 10153

Attention: Kristine Treglia

BAMCO, Inc.

767 Fifth Avenue, 49th Floor

New York, New York 10153

Attention: Patrick Patalino

ClearBridge Energy MLP Fund Inc.

Addresses:

ClearBridge Advisors, LLC

620 8th Avenue, 47th FL

New York, New York 10018

Attention: Patrick Collier

ClearBridge Advisors, LLC

620 8th Avenue, 47th FL

New York, New York 10018

Attention: Barbara Brooke Manning, Esq.

Schedule 7.6

 

Granite Growth 124, LLC

Addresses:

Granite Associates, L.P.

570 Lexington Avenue, 30th Floor

New York, New York 10022

Attention: Boris Raykin

Granite Associates, L.P.

570 Lexington Avenue, 30th Floor

New York, New York 10022

Attention: Rian Dartnell

Granite Associates, L.P.

One Cablevision Center

Liberty, New York 12754

Attention: Christopher Grillo

RCH Energy MLP Fund, L.P.

Address:

RR Advisors, LLC

3953 Maple Avenue, Suite 180

Dallas, TX 75219

Attention: Rob Raymond

MTP Energy Infrastructure Finance Master Fund, Ltd

Address:

MTP Energy Infrastructure Finance Master Fund, Ltd

c/o MTP Energy Management LLC

c/o Magnetar Financial LLC

1603 Orrington Avenue, 13th Floor

Evanston, Illinois 60201

Attention: Adam Daley

Hoak Public Equities, LP

Hoak Private Equities I, L.P.

Address:

Hoak & Co.

500 Crescent Court, Suite 230

Dallas, Texas 75201

Attention: Isaac Isom

Schedule 7.6

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