Document:

exv10w4

 

EXHIBIT 10.4

PRECEDENT AGREEMENT

     This PRECEDENT AGREEMENT (“Precedent Agreement”) is made and entered into as of the 29th day
of June, 2005, by and between Maritimes & Northeast Pipeline Limited Partnership, a New Brunswick
limited partnership (“Pipeline”), and Anadarko Canada LNG Marketing, Corp. (“Customer”). Pipeline
and Customer are sometimes referred to herein individually as a “Party”, or collectively as the
“Parties”.

W I T N E S S E T H:

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

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

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

 

 

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

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

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

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

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

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     1. Pipeline’s Regulatory Authorizations. Subject to the terms and conditions of this
Precedent Agreement, Pipeline shall proceed following the date hereof with due diligence to obtain
from all governmental and regulatory authorities having competent jurisdiction over the Project,
including, but not limited to, the NEB, the authorizations and/or exemptions Pipeline reasonably
determines are necessary: (i) for Pipeline to construct, own, operate, and maintain the Project
facilities necessary to provide the firm transportation service for Customer contemplated herein;
and (ii) for Pipeline to perform its obligations as contemplated in this Precedent Agreement.
Pipeline reserves the right to file and prosecute any and all applications for such authorizations
and/or exemptions, any supplements or amendments thereto, and, if necessary, any court review, in a
manner that Pipeline reasonably determines to be in its best interest and that is consistent with
Pipeline’s obligations under this Precedent Agreement. Customer expressly agrees reasonably to
support and cooperate with, and to not oppose, obstruct or otherwise interfere with in any manner
whatsoever, the efforts of Pipeline to obtain all authorizations and/or exemptions and supplements
and amendments thereto necessary for Pipeline to construct, own, operate, and maintain the Project
facilities and to provide the firm transportation service contemplated in this Precedent Agreement
and to perform its obligations as contemplated by this Precedent Agreement; provided, however, that
Customer reserves all rights to protect its interests in the exercise of its sole discretion with
respect to any proposal(s) (whether such proposals are made by Pipeline, or any other party or in
connection with an industry-wide forum, conference or proceeding) to change, clarify, or restate
any tariff provisions relating to natural gas quality, heating content, or ownership of
hydrocarbons other than

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methane produced from Pipeline’s processing of gas to meet pipeline specifications, as
contemplated in the Service Agreement (as defined in Paragraph 4 hereof). Such support and
cooperation may include providing reasonable assurances and undertakings to the NEB and other
regulatory authorities with jurisdiction relating to the Project or Customer’s Terminal, including
the adequacy of Customer’s LNG supply to the extent requested or required by the NEB process or
process of such other regulatory authority, subject to Customer’s obligations under non-disclosure
agreements with third parties; provided that Customer shall use reasonable efforts to obtain any
waivers necessary under such non-disclosure agreements to ensure that Customer is able to provide
any such reasonable assurances and undertakings. Customer shall have the right to seek
confidential treatment from such regulatory authorities for any such reasonable assurances or
undertakings and Pipeline shall support or not oppose such request for such confidential treatment.
Pipeline agrees to promptly notify Customer in writing when each of the required authorizations,
approvals and/or exemptions set forth in the NEB application and accompanying materials for the
Project are received, obtained, rejected or denied. Pipeline shall also promptly notify Customer
in writing as to whether any such authorizations, approvals, and/or exemptions received or obtained
are acceptable or unacceptable to Pipeline.

     2. Description of Customer’s Facilities and List of Customer’s Authorizations. Within
sixty (60) days after execution of this Precedent Agreement, Customer, or an affiliate thereof,
will advise Pipeline in writing of: (i) any material facilities which Customer, or an affiliate
thereof, must construct, or cause to be constructed, in the Province of Nova Scotia in order for
Customer, or an affiliate thereof,

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to complete Customer’s Terminal and to connect Customer’s Terminal to Pipeline’s facilities
(“Customer’s Facilities”); (ii) any necessary governmental and/or regulatory authorizations,
approvals, certificates, permits and/or exemptions associated with the facilities identified
pursuant to (i) above (“Customer’s Authorizations”); and (iii) any necessary authorizations to
import and export natural gas or LNG, as applicable, through the facilities of Customer’s Terminal
and across the Canadian-US border. Customer, or an affiliate thereof, shall, however, have the
right to update, modify or supplement the list of Customer’s Facilities or Customer’s
Authorizations periodically.

     3. Customer’s Regulatory Authorizations. Subject to the terms and conditions of this
Precedent Agreement, Customer shall proceed with due diligence to obtain Customer’s Authorizations.
Customer reserves the right to file and prosecute applications for Customer’s Authorizations in a

manner it deems to be in its best interest; provided, however, Customer shall pursue Customer’s
Authorizations in a manner designed to implement the firm transportation service contemplated
herein in a timely manner and Customer shall not take any action that would obstruct, interfere
with or delay Pipeline’s receipt of the authorizations and/or exemptions and any supplements and
amendments thereto contemplated hereunder or otherwise jeopardize timely implementation of the firm
transportation service contemplated in this Precedent Agreement. Pipeline expressly agrees
reasonably to support and cooperate with, and to not oppose, obstruct or otherwise interfere with
in any manner whatsoever, the efforts of Customer to obtain all authorizations and/or exemptions
and supplements and amendments thereto necessary for Customer to construct, own, operate and
maintain Customer’s Terminal and to perform its obligations as contemplated by this Precedent

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Agreement; provided, however, that the foregoing commitment shall not preclude Pipeline in the
exercise of its sole discretion from seeking to change, clarify, or restate any provision of
Pipeline’s NEB Gas Tariff (the “Tariff”) with respect to any proposal(s) to change, clarify, or
restate any tariff provision relating to natural gas quality or heating content or to participate
in any NEB proceeding or any industry wide forum to protect its interests in the exercise of its
sole discretion with respect to any proposal(s) to change, clarify, or restate any tariff provision
relating to natural gas quality or heating content. Customer agrees to promptly notify Pipeline in
writing when each of the required authorizations, approvals and/or exemptions is received,
obtained, rejected or denied. Customer shall also promptly notify Pipeline in writing as to
whether any such authorizations, approvals, and/or exemptions received or obtained are acceptable
or unacceptable to Customer.

     4. Firm Transportation Service Agreement

(A) To effectuate the firm transportation service contemplated herein, Customer and Pipeline are
executing contemporaneously herewith a firm transportation service agreement under Pipeline’s Rate
Schedule MN365 (“Service Agreement”) which shall become effective in accordance with its terms.
The Service Agreement: (i) specifies a Maximum Daily Transportation Quantity (“MDTQ”) of 857,444
GJ, exclusive of fuel requirements, subject to the further conditions noted below; (ii) specifies a
primary term of twenty (20) years, with renewal or right of first refusal extension rights, to the
extent such rights are approved by the NEB for this particular transaction and reflected in the
Service Agreement; (iii) specifies a primary point(s) of receipt at the interconnection of
Pipeline’s facilities and Customer’s Facilities and Primary Point(s) of Delivery as

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reflected in Schedule A hereto and in the Service Agreement; and (iv) shall be subject to
Pipeline’s MN365 toll which shall be filed initially by Pipeline as a 100% load factor rolled-in
toll plus fuel and any other charges and surcharges specified in the Tariff, as amended from time
to time.

(B) In the event that the Project Description indicates that the Project facilities are designed
for no more than 211,011 GJ/d of service to any shipper or shippers other than for service
contemplated under the Precedent Agreement at the time that Pipeline files with the NEB the
certificate application for approval of the Project, then Pipeline and Customer agree as follows:

	 	(i)	 	the total Project costs, as reflected in Exhibit K (as adjusted for
construction year dollars) to the certificate application to be filed by Maritimes-U.S.
with the Federal Energy Regulatory Commission (the “FERC”) for its related expansion
project (“Exhibit K”) and the capital amounts (converted to U.S. dollars using the then
current exchange rate and adjusted for construction year dollars) used by Pipeline in
the certificate application to be filed with the NEB for the Project shall be added
together and shall be deemed to be the combined target capital costs for Pipeline and
Maritimes-U.S. (the “Target Capital Costs”);
	 
	 	(ii)	 	the Target Capital Costs shall be restated to reflect the exchange rate on the
later of (aa) the filing by Maritimes-U.S. of its cost report with the FERC (the “Cost
Report”); or (bb) the filing of the post construction cost

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	 	 	 	report as required by the NEB for the Project (the “Canadian Cost Report”), and the
capital amounts (as adjusted for construction year dollars) used by Pipeline in the
certificate application filed with the NEB for the Project (as referred to in
Paragraph 4(B)(i) herein) shall be converted to U.S. dollars using the then current
exchange rate and this will be added to the amount set forth in the Exhibit K (as
adjusted for construction year dollars) and together shall be deemed to be the
revised target capital costs (the “Revised Target Capital Costs”);
	 
	 	(iii)	 	to the extent that any action or inaction of Customer or an affiliate of
Customer causes an actual delay in the construction of the Project facilities such
that, in Pipeline’s reasonable determination, the Service Commencement Date will be
delayed more than sixty (60) days beyond November 1, 2008, then, on or before November
1, 2008, Pipeline shall adjust the amounts reflected in the capital amounts used by
Pipeline in the certificate application filed with the NEB for the Project (as referred
to in Paragraph 4(B)(i) herein) and the amounts reflected Exhibit K associated with the
Allowance for Funds Used During Construction, materials and labor to reflect Pipeline’s
good faith estimate of such amounts (if and to the extent that Pipeline has not
previously incurred such costs prior to the date of such actual delay) in light of its
estimate of the expected Service Commencement Date and the information it has at the
time. Pipeline shall provide Customer with reasonable supporting documentation to
allow

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	 	 	 	Customer to verify the adjusted amounts. The adjusted amounts shall be utilized by
the Parties (along with all other applicable unadjusted amounts) in determining (i)
the Exhibit K amount utilized in the definition of “Rate Base (2)” and in Paragraph
1(h) of the Negotiated Rate Agreement (defined in Paragraph 4 of the Maritimes –
U.S. Precedent Agreement); and (ii) the amount in the NEB certificate application
for the Maritimes-Canada Project utilized in Paragraph 4(B)(i).
	 
	 	(iv)	 	the sum of the total amount for the Project set forth in the Canadian Cost
Report (once converted into U.S. dollars using the then current exchange rate) and the
total amount for the Maritimes-U.S. project set forth in the Cost Report shall be
deemed to be the final capital costs (the “Final Capital Costs”); and
	 
	 	(v)	 	in the event that the Final Capital Costs exceed the Revised Target Capital
Costs by more than 120%, then Pipeline, in making its initial or any further rate
filing with the NEB for tolls incorporating Project capital costs, will exclude costs
that, when converted to U.S. dollars using the then current exchange rate, exceed 120
percent of the Revised Capital Costs .

     (C) (i) Pipeline and Customer agree that the Primary Points of Delivery reflected on Schedule
A may be modified, prior to September 1, 2005, by mutual written agreement of the Parties from time
to time. The Parties agree further that such

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modifications may encompass changes to the projected Primary Points of Delivery and delivered
volumes or to the allocation of delivered volumes between U.S. and Canadian Primary Points of
Delivery.

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

     5. Service Commencement Date

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

     (i) No later than the tenth (10th) day following the date on which Pipeline
provides Customer with the Project Description (defined below), Customer may elect to
receive partial service as contemplated under Paragraphs 5(B) and 5(C) by notifying Pipeline
in writing of such election.

     (ii) In the event that Customer has not elected to receive partial service by the
deadline set forth under sub-paragraph 5(A)(i), then no later than one hundred and eighty
(180) days following the date on which Pipeline provides

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Customer with the Project Description, Customer may elect to receive partial service as
contemplated under this Paragraph 5(A)(ii) by notifying Pipeline in writing of such
election.

     (iii) The election rights set forth in sub-paragraphs 5(A)(i) and (ii) are the
exclusive means for Customer to elect to receive partial service. If Customer does not
elect to receive partial service in strict compliance with either such provision, Customer
shall have no right to partial service under the Service Agreement and the provisions of
Paragraphs 5(B) and 5(C) of this Precedent Agreement shall have no further force or effect.

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

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

	 	(i)	 	The Parties will use reasonable efforts to ensure that an
“Initial MDTQ,” equal to the maximum percentage of the full MDTQ under the
Service Agreement that Pipeline can make available, will be available to
Customer under the Service Agreement within a

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	 	 	 	window from November 1, 2007 to November 1, 2008 (the “First Window Period
for Partial Service”).
	 
	 	(ii)	 	By the later of (a) September 15, 2005, or (b) forty-five (45)
days after the conclusion of the open season and reverse open season procedures
and the Maritimes-U.S. Joint Facilities Expansion Notice Procedures (defined in
Paragraph 6 of the Maritimes-U.S. Precedent Agreement) all of which will be
conducted with respect to the Project and all of which are more fully described
below, (x) the Parties shall meet and negotiate in good faith to establish in
writing a 180-day window within the First Window Period for Partial Service
(the “Second Window Period for Partial Service”), whereby the Preliminary
Initial MDTQ under the Service Agreement will be available to Customer; and (y)
Pipeline shall establish the “Preliminary Initial MDTQ,” which will be
Pipeline’s good faith estimate of the percentage of the full MDTQ (less than
the full MDTQ) that Pipeline will be able to provide by the Initial
Commencement Date. 
	 
	 	(iii)	 	Twelve (12) months prior to the first day of the Second Window
Period for Partial Service, (a) the Parties shall meet and negotiate in good
faith to establish in writing a 90-day window within the Second Window Period
for Partial Service (the “Third Window Period for Partial Service”), whereby
the Preliminary Initial MDTQ will be available to Customer; and (b) Pipeline
shall provide a good

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	 	 	 	faith estimate of any modifications that are necessary to the Preliminary
Initial MDTQ. In the event that the Parties are unable to agree in writing
upon such 90-day window period, the Third Window Period for Partial Service
shall be the 90-day period ending on the last day of the Second Window
Period for Partial Service(iv) Twelve (12) months prior to the first day of
the Third Window Period for Partial Service, Pipeline shall establish the
“Initial MDTQ,” which will be any quantity less than the full MDTQ under the
Service Agreement, but will be based upon the Preliminary Initial MDTQ and
all information regarding the status of the development of the Project that
Pipeline has in its possession at the time.
	 
	 	(v)	 	Six (6) months prior to the first day of the Third Window
Period for Partial Service, the Parties shall meet and negotiate in good faith
to establish in writing the targeted in-service date within the Third Window
Period for Partial Service (the “Target Date for Partial Service”), whereby the
Initial MDTQ will be available to Customer. In the event that the Parties are
unable to agree in writing upon such Target Date for Partial Service, the last
day of the Third Window Period for Partial Service shall be the Target Date for
Partial Service.
	 
	 	(vi)	 	Commencing six (6) months prior to the Target Date for Partial
Service, the Parties agree that their respective project teams will

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	 	 	 	meet on a regular basis, to be no less frequent than monthly, to update each
other on the progress of their respective projects.
	 
	 	(vii)	 	Any agreement or notice of the Parties that establishes the
Preliminary Initial MDTQ, the Initial MDTQ and/or the timing of the
commencement of partial service described in this Paragraph 5(C) shall be made
in writing.

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

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

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	 	 	 	such 270-day window period, the Second Window Period for Full Service shall
be the 270-day period ending on the last day of the First Window Period for
Full Service).
	 
	 	(iii)	 	Twenty-four (24) months prior to the first day of the Second
Window Period for Full Service, the Parties shall meet and negotiate in good
faith to establish in writing a 180-day window within the Second Window Period
for Full Service (the “Third Window Period for Full Service”), whereby the full
MDTQ under the Service Agreement will be available to Customer (in the event
that the Parties are unable to agree in writing upon such 180-day window
period, the Third Window Period for Full Service shall be the 180-day period
ending on the last day of the Second Window Period for Full Service).
	 
	 	(iv)	 	Twelve (12) months prior to the first day of the Third Window
Period for Full Service, the Parties shall meet and negotiate in good faith to
establish in writing a 90-day window within the Third Window Period for Full
Service (the “Fourth Window Period for Full Service”), whereby the full MDTQ
under the Service Agreement will be available to Customer (in the event that
the Parties are unable to agree in writing upon such 90-day window period, the
Fourth Window Period for Full Service shall be the 90-day period ending on the
last day of the Third Window Period for Full Service).

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	 	(v)	 	Six (6) months prior to the first day of the Fourth Window
Period for Full Service, the Parties shall meet and negotiate in good faith to
establish in writing the targeted in-service date for full service, which shall
be a date within the Fourth Window Period for Full Service (the “Target Date
for Full Service”), whereby the full MDTQ under the Service Agreement will be
available to Customer (in the event that the Parties are unable to agree in
writing upon such targeted in-service date, the Target Date for Full Service
shall be the last day of the Fourth Window Period for Full Service).
	 
	 	(vi)	 	Commencing six (6) months prior to the Target Date for Full
Service, the Parties agree that their respective project teams will meet on a
regular basis, to be no less frequently than monthly, to update each other on
the progress of their respective projects.

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

     (F) To facilitate full and complete understanding, at the Parties’ senior management levels of
the status and progress of both Parties’ respective projects, the

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Parties agree that their respective project teams will make project update presentations (with
respect to Pipeline, Pipeline shall provide information regarding the development of the Project,
and with respect to Customer, Customer shall provide information regarding the development of
Customer’s Terminal and the status of Customer’s LNG supply commitments) to joint meetings of the
Parties’ designees no less than quarterly, commencing September 1, 2005.

     (G) At least thirty (30) days prior to the date on which Pipeline files its certificate
application with the Board regarding the Project, Pipeline shall provide Customer with a draft of
the estimated capital costs that will accompany such application (the “Estimated Capital Costs”).
Pipeline shall respond to reasonable requests from Customer for information related to the amounts
set forth in such draft Estimated Capital Costs. At Customer’s request, Pipeline shall meet with
Customer regarding such Estimated Capital Costs within fifteen (15) days following Customer’s
receipt of such Estimated Capital Costs, to discuss the Estimated Capital Costs and, subject to
Customer’s reasonable request, to provide additional information regarding the amounts set forth in
such Estimated Capital Costs.

     6. Design and Permitting of Facilities.

     (A) Promptly following the date hereof, Pipeline will undertake the design of the Project

facilities and any other preparatory actions necessary for Pipeline to complete and file its
certificate application(s) with the Board including, but not limited to, conducting a reverse open
season and an open season and the Joint Facilities Expansion Notice (as defined in Paragraph 6 of
the Maritimes – U.S. Precedent

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Agreement). Prior to satisfaction of the conditions precedent set forth in Paragraph 8 of
this Precedent Agreement, and consistent with the requirements of Paragraph 5 hereof, Pipeline
shall have the right, but not the obligation, to proceed with the necessary design of facilities,
acquisition of materials, supplies, properties, rights-of-way and any other necessary preparations
to implement the firm transportation service under the Service Agreement as contemplated in this
Precedent Agreement.

     (B) Within forty-five (45) days following the conclusion of the reverse open season and open
season procedures and the Joint Facilities Expansion Notice Procedures (as defined in Paragraph 6
of the Maritimes-US Precedent Agreement) relating to the Project, Pipeline shall provide Customer
with a written detailed description of the Project to be constructed, the estimated costs of the
Project and the volumes (for both partial service, rounded to the nearest increment of ten thousand
five hundred and fifty (10,550) GJ/d, and full service) that can be transported through Pipeline’s
facilities as expanded by the Project (the “Project Description”). In addition, Pipeline shall,
within the same forty-five (45) day period, provide Customer with a written good faith estimate of
the MN365 toll to be applicable for service to Customer on Pipeline’s system under the Service
Agreement.

     7. Construction of Project. Upon satisfaction of all of the conditions precedent set
forth in Paragraph 8 of this Precedent Agreement (except for the conditions in Paragraphs 8(A)(x)
and 8(B)(vi)), or waiver in writing of the same by Pipeline or Customer, as applicable, Pipeline
shall proceed with due diligence to construct the authorized Project facilities and to implement
the firm transportation service as contemplated in Paragraph 5 of this Precedent Agreement. If,

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

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

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

	 	(i)	 	Pipeline’s receipt and acceptance by May 1, 2007, of all
necessary certificates and authorizations from the Board to construct, own,

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	 	 	 	operate and maintain the Project facilities, as described in Pipeline’s
certificate application(s) as the same may be amended from time to time,
necessary to provide the firm transportation service contemplated herein and
in the Service Agreement;
	 
	 	(ii)	 	Pipeline’s receipt by June 1, 2007, of approval from its
management committee or similar governing body to proceed with construction of
the Project and expend the capital necessary to construct the Project
facilities to provide the firm transportation service contemplated herein and
in the Service Agreement;
	 
	 	(iii)	 	Pipeline’s receipt of all necessary governmental
authorizations, approvals, and permits required to construct the Project
facilities necessary to provide the firm transportation service contemplated
herein and in the Service Agreement other than those specified in Paragraph
8(A)(i);
	 
	 	(iv)	 	Pipeline’s procurement of all necessary rights-of-way, rights
of entry, or easements, in connection with the Project in form and
substance acceptable to Pipeline;
	 
	 	(v)	 	Pipeline’s receipt by June 1, 2007, of approval from the
lenders that provided long-term financing for the development and construction
of the existing Maritimes Project facilities (“Existing Lenders”) to proceed
with construction of the Project facilities;

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	 	(vi)	 	Pipeline’s receipt by June 1, 2007, of funding from banks or
other financial institutions (“Project Lenders”) in accordance with agreements
between such Project Lenders and the Pipeline governing the short-term and/or
long-term financing for the development and construction of the Project
facilities;
	 
	 	(vii)	 	Customer or its guarantor, having by February 1, 2006, an
investment grade rating, as set forth in the first sentence of Paragraph 11(A);
	 
	 	(viii)	 	[intentionally left blank]
	 
	 	(ix)	 	The receipt and acceptance by
Customer, or an affiliate thereof, of the following environmental or siting
governmental authorizations for the site of Customer’s Terminal by June 1,
2005:

(a) Federal Environmental Assessment Approval;

(b) Provincial Environmental Assessment Approval;

(c) Provincial Industrial (Division V) Approval;

(d) Provincial Water (Division I) Approval;

(e) Provincial Permit for Breaking Soil of Highway;

(f) Provincial Beaches Act Clearance; and

(g) Municipal Development Permit;

	 	(x)	 	Pipeline’s completion of construction of the necessary Project
facilities required to render firm transportation service for Customer

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	 	 	 	pursuant to the Service Agreement and Pipeline having been granted leave to
open the Project;
	 
	 	(xi)	 	Execution and delivery of this Precedent Agreement, the
Maritimes-U.S. Precedent Agreement, the Service Agreement, and the Maritimes
U.S. Service Agreement (defined in Paragraph 26 of this Precedent Agreement);
and
	 
	 	(xii)	 	Satisfaction or waiver in writing of all of the conditions
precedent set forth in the Maritimes- U.S. Precedent Agreement, other than the
conditions precedent set forth in Paragraphs 8(A)(x) and 8(B)(vi) thereof.

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

	 	(i)	 	The receipt and acceptance by Customer, or an affiliate
thereof, of all governmental authorizations as may be necessary to construct
and operate Customer’s Terminal and Customer’s Facilities and to export and
import natural gas or LNG, as applicable, through the facilities of Customer’s
Terminal and across the Canadian- U.S.

-22-

 

	 	 	 	border, other than those contemplated in Paragraph 8(A)(ix) above by May 1,
2006;
	 
	 	(ii)	 	Approvals from the board of directors or similar governing
body of Anadarko Petroleum Corporation (“Anadarko”) by May 1, 2007, to proceed
with the construction and development of Customer’s Terminal, and Customer’s
Facilities, and to proceed with related LNG supply, LNG transportation,
regasification, and regasified natural gas marketing activities and the receipt
of firm transportation under the Service Agreement;
	 
	 	(iii)	 	Customer’s receipt of short-term and/or long-term funding by
May 1, 2007, from lenders financing the construction and development of
Customer’s Terminal and Customer’s Facilities on a non-recourse or limited
recourse basis;
	 
	 	(iv)	 	Customer’s receipt, at least fifteen (15) days prior to the
Service Commencement Date, of a letter from an officer of Pipeline certifying
that Pipeline has requested that the NEB give leave to open the Project
facilities;
	 
	 	(v)	 	Customer arranging for all necessary marine transportation of
LNG by January 1, 2006;
	 
	 	(vi)	 	Pipeline’s completion of construction of the necessary Project
facilities required to render firm transportation service for Customer

-23-

 

	 	 	 	pursuant
to the Service Agreement and Pipeline having been granted leave to open the
Project facilities;
	 
	 	(vii)	 	[intentionally left blank]
	 
	 	(viii)	 	Execution and delivery of this Precedent Agreement, the Maritimes-U.S
Precedent Agreement, the Service Agreement, the Maritimes-U.S. Service
Agreement (defined in Paragraph 26 of this Precedent Agreement) and the
Negotiated Rate Agreement (as defined in Paragraph 4 of the Maritimes- U.S.
Precedent Agreement); and
	 
	 	(ix)	 	Satisfaction or waiver in writing of all of the conditions
precedent set forth in the Maritimes- U.S. Precedent Agreement, other than the
conditions precedent set forth in Paragraphs 8(A)(x) and 8(B)(vi) thereof.

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

-24-

 

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

     9. Reimbursement

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

-25-

 

such information requested by Pipeline), then Customer shall, at the option and election
of Pipeline (such option to be exercised, if at all, in writing within sixty (60) days of such
termination), reimburse Pipeline as hereinafter provided for all of Pipeline’s reasonable and
verifiable costs incurred, allocated and paid as of the date of such termination, or for which
Pipeline is contractually obligated to pay (and does pay), as of the date of such termination,
solely in conjunction with its efforts to satisfy its obligations under this Precedent Agreement
(“Pre-service Costs”), except to the extent such expenses previously have been reimbursed or are
reimbursable by Anadarko or by any third party or parties. Pre-service Costs will include those
third-party expenditures and/or costs incurred, allocated and paid by Pipeline or for which
Pipeline is contractually obligated to pay and does pay, and Pipeline’s internal direct and
corporate overhead costs allocated to technical services associated with the Project, which shall
include engineering, construction, materials and equipment, environmental, land acquisition and any
other technically-based costs related to the firm service contemplated in this Precedent Agreement
and incurred in furtherance of Pipeline’s efforts to satisfy its obligations under this Precedent
Agreement. For clarity, the Parties specifically agree that Pre-service Costs will not include
internal management and internal legal costs. In addition, identifiable physical assets for which
Pipeline is reimbursed pursuant to this Paragraph 9 and not already installed as part of Pipeline’s
NEB or Federal Energy Regulatory Commission jurisdictional facilities by Pipeline shall become the
sole property of Customer, if and to the extent Customer so elects and provides written notice of
such election to Pipeline.

-26-

 

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

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

-27-

 

of the Canadian Imperial Bank of Commerce in Calgary, Alberta as a reference rate then in effect for
determining interest rates on Canadian dollar commercial loans, plus 200 basis points (the “Prime
Rate”), from the date Customer should have paid Pipeline until the date Customer actually pays
Pipeline.

     (D) If, within five (5) years from the time Customer pays the Pre-service Costs with respect
to the Project facilities, any other expansion project on Pipeline’s system results in an executed
precedent agreement that contemplates utilization of any of the same facilities contemplated for
use by Customer in connection with this Precedent Agreement, Pipeline will pay back to Customer all
payments Pipeline has received from Customer or any affiliate thereof for the Project facilities
(including all costs reimbursed to Pipeline under the Reimbursement Agreement among Anadarko,
Pipeline and Maritimes-U.S. dated May 26, 2004, as amended from time to time); provided that, the
obligation of Pipeline to pay back such amount shall be limited to only the amount that Pipeline
has received from Customer, Anadarko, or any affiliate thereof in connection with such expansion
facilities (i) that Pipeline actually constructs as part of the other expansion or (ii) for which
Pipeline actually receives reimbursement from the new expansion shipper(s). The amount required to
be paid back pursuant to this Paragraph 9(D), including amounts repaid pursuant to any audit,
accounting or dispute resolution procedure hereunder shall also include interest at the Prime Rate,
from the date of receipt of such funds by or on behalf of Pipeline until the date of payment in
full to Customer. Pipeline shall use a reasonable allocation methodology in determining how to
allocate costs among various portions of the Project facilities that have been incurred in
connection with the Project facilities but that are not directly attributable to any

-28-

 

particular portion of such Project facilities. Customer shall have audit rights and the right
to an accounting of Pipeline and its affiliates whose costs are subject to a claim for
reimbursement hereunder to enforce the provisions of this Paragraph 9 regarding Pre-service Costs.
Disputes regarding this Paragraph 9 shall be resolved between the Parties pursuant to the
provisions of Paragraph 24 below.

     10. Termination

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

-29-

 

termination expenses) shown to Customer’s reasonable satisfaction, by Pipeline, in writing, to
have been required of Pipeline.

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

-30-

 

Paragraph 10(B), Customer shall not have a right to terminate this Precedent Agreement
pursuant to this Paragraph 10(B) unless and until Customer’s Facilities are completed and available
for service.

     (C) With respect to Paragraph 6(B) of this Precedent Agreement, to the extent the good faith
estimate of the MN365 toll or the scope of the Project contemplated in the Project Description
materially differs from that which forms the basis for this Precedent Agreement, Customer shall
have the option but not the obligation to terminate this Precedent Agreement, in Customer’s sole
discretion, after providing written notice to Pipeline of such election within forty-five (45) days
following receipt of such good faith estimate and the Project Description.

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

     (E) Customer shall have the option but not the obligation to terminate this Precedent
Agreement in good faith for inability or anticipated inability to meet any one or more of the
following conditions precedent, prior to the dates set forth above for

-31-

 

satisfaction of such conditions precedent in Paragraph 8(B) of this Precedent Agreement:
8(B)(iii), 8(B)(v) and 8(B)(vii); provided that, Customer shall have the option at any time to
terminate this Precedent Agreement prior to the date on which the condition precedent set forth in
Paragraph 8(B)(ii) is satisfied or waived by Customer in writing. Such option shall be exercised
by providing notice of termination to Pipeline in writing.

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

-32-

 

Pipeline shall provide written notice to Customer on or after the date on which Pipeline
provides Customer with the Project Description, stating that Pipeline has elected to terminate this
Precedent Agreement under this Paragraph 10, and this Precedent Agreement shall terminate upon
delivery of such written notice to Customer. Such termination option shall be exercised, if at
all, within one hundred twenty (120) days after the Pipeline provides Customer with the Project
Description.

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

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

     (A) Customer (or any entity that guarantees all of Customer’s obligations under the Service
Agreement for the initial twenty (20) year term of the Service Agreement) shall have an investment
grade rating for its long-term senior unsecured debt from Moody’s Investors Service, Inc. of Baa3
or higher or from Standard & Poor’s

-33-

 

of BBB- or higher. In the event that Customer or its guarantor meets the requirement
contained in the immediately preceding sentence initially, but is later downgraded below such
investment grade rating, Customer will be required to obtain a guarantee from any affiliate of
Customer that is an investment grade rated entity as defined in Paragraph 11(A); provided, that if
Customer does not have any affiliates with such investment grade rating, Customer shall be required
to satisfy the requirement set forth in Paragraph 11(B).

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

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

-34-

 

Paragraph 11(A), 11(B) and/or 11(E)) and Pipeline shall provide Customer, prior to suspension,
with at least 30 days in which to cure the claimed failure to provide such evidence.

     (D) If and to the extent that an entity guarantees Customer’s obligations for the initial
twenty (20) year term of the Service Agreement and/or for Customer’s obligations under this
Precedent Agreement, such guarantees shall be in the form, content, and substance as expressly set
forth as Schedule C hereto (for the Service Agreement) and Schedule D hereto (for the Precedent
Agreement), respectively. Each such guaranty shall be assignable in accordance with its stated
terms.

     (E) With respect to Customer’s obligations under this Precedent Agreement, Customer, or its
guarantor, shall meet the credit rating requirements of Paragraph 11(A). If Customer or its
guarantor loses such investment grade rating and if Customer’s guarantor is not an affiliate of
Customer, then Customer shall endeavour to first provide a guarantee from an affiliate of Customer
with an investment grade rating as defined in Paragraph 11(A), and if Customer’s guarantor is an
affiliate of Customer, then Customer shall endeavour to first provide a guarantee from another
affiliate of Customer with an investment grade rating as defined in Paragraph 11(A). If no
affiliate of Customer has such investment grade rating, Customer or its guarantor shall provide a
standby irrevocable letter of credit from a financial institution reasonably acceptable to Pipeline
and acceptable to Pipeline’s Existing Lenders and Project Lenders (“Letter of Credit”) in an amount
equal to the applicable estimated Pre-service Costs set forth in Schedule B as of the date on which
such assurances are requested, plus the estimated additional costs projected to be incurred for the
following twelve months as set forth in

-35-

 

Schedule B. The right of Pipeline to suspend its obligations under this Precedent Agreement
under Paragraph 11(C) shall not be affected by Customer providing a letter of credit under this
Paragraph 11(E); provided, however, if Pipeline provides notice of its intention to suspend
performance pursuant to Paragraph 11(C), the Parties agree that Customer may replace any
outstanding letters of credit previously posted by Customer pursuant to this Paragraph 11(E) with a
replacement Letter of Credit in the amount of the applicable estimated Pre-Service Costs for the
next Milestone Event set forth in Schedule B scheduled to occur following the date on which
Pipeline provides such notice of suspension; provided further that, in the event Pipeline
subsequently resumes performance under this Precedent Agreement after providing notice of
suspension (and provides written notice to Customer of Pipeline’s resumption of performance), but
prior to any termination of this Precedent Agreement, then Customer shall tender an additional
Letter of Credit in an amount equal to the difference between (i) the amount of the Letter of
Credit posted by Customer during suspension, and (ii) an amount equal to the applicable estimated
Pre-service Costs set forth in Schedule B as of the date on which Pipeline suspended performance
under this Agreement, plus the estimated additional costs projected to be incurred for the
following twelve months as set forth in Schedule B.

     12. Pipeline Representations and Warranties and Customer Acknowledgments. Pipeline
represents and warrants that (i) it is duly organized and validly existing under the laws of the
Province of New Brunswick and has all requisite legal power and authority to execute this Precedent
Agreement and carry out the terms, conditions and provisions hereof; (ii) this Precedent Agreement
constitutes the valid,

-36-

 

legal and binding obligation of Pipeline, enforceable in accordance with the terms hereof;
(iii) there are no actions, suits or proceedings pending or, to Pipeline’s knowledge, threatened
against or affecting Pipeline before any court or administrative body that might materially
adversely affect the ability of Pipeline to meet and carry out its obligations hereunder; and (iv)
the execution and delivery by Pipeline of this Precedent Agreement has been duly authorized by all
requisite limited partnership action.

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

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

     15. Succession, Merger, Consolidation of Properties. Any party which succeeds by
purchase, merger, or consolidation of title to the properties of Pipeline or Customer necessary to
provide or receive service pursuant to this Precedent

-37-

 

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

     16. Assignment

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

-38-

 

other Party’s financing by supplying such other Party’s lenders information concerning the
first Party (that is in the first Party’s possession and is not of a proprietary or confidential
nature) reasonably requested in writing by the other Party’s lenders.

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

-39-

 

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

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

-40-

 

PARAGRAPH 11(D), SUCH GUARANTEE, THE FORM OF WHICH IS SET FORTH IN SCHEDULE C HERETO, SHALL
AUTOMATICALLY AND WITHOUT ANY ACTION OF CUSTOMER OR THE GUARANTOR UNDER SUCH GUARANTEE TERMINATE OR
BE REDUCED IN ALL RESPECTS EFFECTIVE FOR ALL PURPOSES AS OF THE EFFECTIVE DATE OF THE FOREGOING
ASSIGNMENT.

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

-41-

 

Customer’s Points of Delivery or points of delivery within Customer’s transportation path.

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

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

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

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

     21. Limitation of Damages. NEITHER PARTY, NOR ANY AFFILIATE THEREOF, SHALL BE LIABLE
TO THE OTHER PARTY, OR ANY AFFILIATE THEREOF, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL

-42-

 

DAMAGES OF ANY NATURE RESULTING FROM ANY BREACH OF OR DEFAULT UNDER THIS PRECEDENT AGREEMENT,
INCLUDING ANY DAMAGES RESULTING FROM LOST PROFITS OR BUSINESS INTERRUPTION HOWSOEVER CAUSED OR
OCCASIONED, EVEN IF SUCH PARTY HAS BEEN MADE AWARE OF THE POSSIBILITY OF SUCH DAMAGES, LOST PROFITS
OR BUSINESS INTERRUPTION.

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

	 	 	 	 	 
	 

	 	Pipeline:
	 	Maritimes & Northeast Pipeline Limited Partnership
	 

	 	 	 	Suite 300
	 

	 	 	 	890 Winter Street
	 

	 	 	 	Waltham, MA 02415
	 

	 	 	 	Attn: Vice President, Marketing
	 

	 	 	 	Fax: (617) 560-1552

-43-

 

	 	 	 	 	 
	 

	 	Customer:
	 	Anadarko Canada LNG Marketing Corp.
	 

	 	 	 	c/o Anadarko Petroleum Corporation
	 

	 	 	 	1201 Lake Robbins Drive
	 

	 	 	 	The Woodlands, Texas 77380
	 

	 	 	 	Attn: Manager, Commercial Development
	 

	 	 	 	Facsimile: (832) 636-8263
	 
	 	 	 	 
	 

	 	 	 	Anadarko Canada LNG Marketing, Corp.
	 

	 	 	 	c/o Anadarko Petroleum Corporation
	 

	 	 	 	1201 Lake Robbins Drive
	 

	 	 	 	The Woodlands, Texas 77380
	 

	 	 	 	Attn: Gas Marketing Operations Manager
	 

	 	 	 	Facsimile: (832) 636-7215

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

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

     24. Dispute Resolution(A) Any controversy, cause of action, dispute or claim arising
out of, relating to, or in connection with, this Precedent Agreement, or the breach, termination or
validity hereof (collectively a “Dispute”), shall be settled solely, exclusively and finally
through mandatory and binding arbitration, to which the Parties hereby agree to submit, it being
the intention of the Parties that this is a broad form

-44-

 

arbitration agreement designed to encompass all possible Disputes between the Parties relating to
this Precedent Agreement.

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

     (C) All arbitration procedures under this Precedent Agreement shall be conducted in accordance
with the Commercial Arbitration Rules (the “Rules”) of the National Arbitration Rules of the ADR
Institute of Canada, Inc. (“ADRI”), as amended and in effect from time to time. All arbitration
procedures shall be administered by the ADRI. The tribunal for the arbitration shall consist of
three arbitrators, all of whom shall be independent of the parties and impartial, one to be
designated by each Party and the

-45-

 

third to be selected by the mutual written agreement of the two arbitrators. In the event
either Party fails to appoint an arbitrator, or if the two arbitrators appointed by the Parties
fail to reach agreement on a third arbitrator, the ADRI shall select such arbitrator(s). Each
Party shall designate its arbitrator within twenty (20) days of receiving a demand to arbitrate.
Prior to acceptance of appointment as an arbitrator, each arbitrator shall have read and
affirmatively agreed to observe all provisions of the ADRI’s Arbitration and Mediation Institute of
Canada Code of Ethics for Arbitrators and Mediators. THE SUBSTANTIVE AND PROCEDURAL LAWS OF THE
PROVINCE OF NOVA SCOTIA (EXCLUDING ANY CONFLICT OF LAWS OR CHOICE OF LAWS RULES OR PRINCIPLES AS
APPLIED IN NOVA SCOTIA) SHALL APPLY. The choice of Nova Scotia law shall not be interpreted as a
choice to exclude applicability of the federal law to the enforceability and scope of this
arbitration provision. It is therefore specifically understood that both Nova Scotia and federal
law, neither to the exclusion of the other, shall apply to the enforceability and scope of this
provision, and, in the event of a conflict between Nova Scotia and federal law, the law maximizing
the enforceability and scope of this provision, including laws relating to appellate remedies, may
be invoked, without excluding applicability of other law, by the Party seeking to compel
arbitration. If, for purposes of determining Nova Scotia or federal law, a conflict or difference
of opinion exists between provincial courts and federal courts, as the case may be, this
arbitration provision shall be interpreted to select the precedent of that provincial court or that
federal court that maximizes the enforceability and scope of this arbitration provision. All
arbitrations hereunder shall take place in Halifax, Nova Scotia. The Parties specifically agree
that the judgment or award of the tribunal shall be final

-46-

 

and binding on each Party and for all purposes. Judgment upon an arbitration award may be
entered in any court having jurisdiction. This arbitration provision shall survive the termination
of this Precedent Agreement. Should the Parties ever be prevented by applicable law from utilizing
arbitration to resolve Disputes hereunder, then the choice of law provisions of Paragraph 20 shall
nevertheless remain in full force and effect, and the Parties shall submit such Disputes to the
exclusive jurisdiction of the appropriate court located in Halifax, Nova Scotia (to whose exclusive
jurisdiction the Parties hereby agree to submit). Notwithstanding the foregoing, nothing in this
Paragraph 24 shall be construed in any manner to exclude, qualify, limit or condition the exclusive
or primary jurisdiction of the NEB (as well as the Federal Court of Canada that may review
decisions of the NEB) over matters, disputes or controversies within the scope of the NEB’s
exclusive or primary jurisdiction, or limit, qualify or condition the right of either Party to
present, prosecute or defend its interests before the NEB or reviewing courts.

     25. Survival. Notwithstanding any termination of this Precedent Agreement, the
provisions of Paragraphs 4(B), 7, 9, 11(D), 12, 13, 17, 20, 21, 22 and 24 of this Precedent
Agreement shall survive such termination pursuant to their respective terms.

     26. Related Agreements

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

-47-

 

Agreement (as defined in Paragraph 4 of the Maritimes U.S. Precedent Agreement) which will
govern the rate for service under the Maritimes-U.S. Service Agreement.

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

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

	 	 	 	 	 	 	 	 	 
	Maritimes & Northeast Pipeline	 	 	 	Anadarko Canada LNG Marketing,
	Limited Partnership	 	 	 	Corp.
	by:

	 	Maritimes & Northeast Pipeline	 	 	 	 	 	 
	 

	 	Management Ltd.	 	 	 	 	 	 
	 

	 	Its General Partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Douglas P. Bloom	 	 	 	By:
	 	/s/ JAMES R. LARSON
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:	 	Douglas P. Bloom	 	 	 	Name:	 	James R. Larson
	 
	 	 	 	 	 	 	 	 
	Title:	 	President	 	 	 	Title:	 	Senior Vice President, Finance

-48-exv10w5

 

EXHIBIT 10.5

GUARANTEE

     THIS GUARANTEE, dated as of the 29th day of June, 2005, is made by Anadarko Petroleum
Corporation, a Delaware corporation (the “Guarantor”), in favor of Maritimes & Northeast Pipeline
Limited Partnership, a New Brunswick limited partnership (the “Beneficiary”).

PRELIMINARY STATEMENTS

     WHEREAS, Anadarko Canada LNG Marketing, Corp., a Nova Scotia corporation (the “Customer”), is
a wholly-owned subsidiary of the Guarantor; and

     WHEREAS, pursuant to and in connection with that certain Service Agreement for Toll Schedule
MN365 between the Beneficiary and the Customer dated as of even date herewith (the “Agreement”)
(the term “Agreement” shall include the Agreement and any successor agreement entered into by the
Beneficiary and the Customer that supercedes and replaces the Agreement), the Beneficiary has
agreed to provide certain pipeline transportation services to the Customer; and

     WHEREAS, it is a condition to the Beneficiary entering into the Agreement that the Guarantor
provide this Guarantee; and

     WHEREAS, the Guarantor has agreed to execute and deliver this Guarantee with respect to the
Customer’s payment obligations under the Agreement;

     NOW THEREFORE, in consideration of the premises set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby
covenants and agrees, from and after the execution and delivery of the Agreement, as follows:

	 	1.	 	Guarantee of Obligations. The Guarantor hereby irrevocably and
unconditionally guarantees to the Beneficiary, as primary obligor and not as surety,
the full and prompt payment by the Customer of all the Customer’s payment obligations
under the Agreement, strictly in accordance with the terms thereof, however created,
arising or evidenced, whether direct or indirect, primary or secondary, absolute or
contingent, joint or several, and whether now or hereafter existing or due or to become
due (such payment obligations, the “Obligations”). The Guarantor further agrees to pay
all out-of-pocket expenses (including, without limitation, reasonable expenses for
legal services) actually paid or incurred by the Beneficiary in enforcing this
Guarantee following any default by the Guarantor hereunder, whether the same shall be
enforced by a suit or otherwise. Such guarantee is an absolute, unconditional,
irrevocable, present and continuing guarantee of payment and not of collectability.
	 
	 	2.	 	Notice and Payment. If for any reason any Obligation to be paid by the
Customer shall not be paid strictly in accordance with the terms of the Agreement, the

 

 

	 	 	 	Guarantor shall, no later than five (5) Business Days following the Guarantor’s
receipt of written notice by the Beneficiary of such non-payment, pay each such
Obligation then due and owing for which the Customer shall have received notice of
non-payment at the place provided for in the Agreement, regardless of whether the
Beneficiary or anyone on behalf of it shall have instituted any suit, action or
proceeding or exhausted its remedies or taken any steps to enforce any rights
against the Customer to compel any such payment or to collect all or any part of
such amount pursuant to the provisions of the Agreement, or at law or in equity, or
otherwise, and regardless of any other condition or contingency.
	 
	 	3.	 	Waivers. The Guarantor hereby waives notice of: (i) the acceptance of
this Guarantee; (ii) notice of any default of whatsoever kind or nature or demand in
the case of such default (other than the notice set forth in the immediately preceding
Section 2 hereof); and (iii) notice of transactions between the Beneficiary and the
Customer under the Agreement.
	 
	 	4.	 	Effect of Guarantee. The obligations, covenants, agreements and duties
of the Guarantor hereunder shall remain in full force and effect and enforceable until
the Obligations are finally, indefeasibly and unconditionally paid in full in
accordance with the terms of the Agreement, and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from time to
time of any other event, including, without limitation, the following, whether or not
any such event shall have occurred without notice to or the consent of the Guarantor:
(i) the waiver, compromise, settlement, termination or other release of the performance
or observance by the Customer of any or all of its agreements, covenants, terms or
conditions contained in the Agreement; (ii) the modification or amendment (whether
material or otherwise) of any obligation, covenant or agreement set forth in the
Agreement, including, without limitation, any increase in the payment obligations
thereunder, if such modification or amendment was made with the consent of the Customer
and with any required prior written notice to the Guarantor pursuant to Section 6
hereof; (iii) the voluntary or involuntary liquidation, dissolution, sale of all or
substantially all of the assets, marshaling of assets and liabilities, receivership,
conservatorship, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceedings affecting the Customer or any of its assets or any allegation or contest of
the validity of the Agreement in any such proceeding; (iv) any set-off, counterclaim,
reduction, or diminution of any Obligation, or any defense of any kind or nature
whatsoever (other than non-performance by the Beneficiary under the Agreement or
payment by or on behalf of the Customer or the Guarantor), which the Guarantor or the
Customer may have or assert against the Beneficiary; (v) the surrender or impairment of
any security for the performance or observance of any of the Obligations; (vi) the
failure or omission on the part of the Beneficiary to enforce, ascertain or exercise
(or any delay in enforcing, ascertaining or exercising) any right, power or remedy
under or pursuant to the terms of the Agreement; (vii) any other circumstance (other
than performance) that might

2

 

	 	 	 	otherwise constitute a legal or equitable defense or discharge of the Guarantor
under this Guarantee or of a guarantor or surety with respect to the Obligations.
	 
	 	5.	 	Subrogation. This Guarantee is given on the understanding and
condition that upon full and final, indefeasible payment of the Obligations and all
other amounts owed hereunder, the Guarantor shall be subrogated to the rights of the
Beneficiary against the Customer with respect to the Obligations under the Agreement or
otherwise to the extent of any or all payments made by the Guarantor hereunder. The
Beneficiary agrees to take such steps as the Guarantor may reasonably request to
implement such subrogation including, without limitation, the assignment to the
Guarantor, in one or more instruments satisfactory in form and substance to the
Guarantor and the Beneficiary, of all of the Beneficiary’s rights against the Customer
under the Agreement and under any other document or instrument delivered in connection
therewith with respect to the amounts so paid by the Guarantor.
	 
	 	6.	 	Knowledge of Agreement/Amendment of Agreement. The Guarantor confirms
that it has been provided with a copy of the Agreement, and that it is aware of the
obligations of the Customer pursuant to the Agreement. The Guarantor acknowledges that
the Beneficiary is relying on this Guarantee in entering into the Agreement. The
Agreement may not be amended in any material respect without the prior written notice
thereof to the Guarantor; provided however, that no notice is required with respect to
any amendments to the Beneficiary’s tariff, including toll schedules and general terms
and conditions.
	 
	 	7.	 	Assignment/Transfer of the Customer Interest. If the Customer shall
assign or otherwise transfer all or any part of its interest in the Agreement (the
“Assigned Interest”) as permitted under the Agreement, and if the Customer is thereby
released from its obligations under the Agreement, this Guarantee shall remain in
effect only for Obligations of the Customer accruing prior to such assignment or
transfer. If the Assigned Interest is part but not all of the Customer’s interest in
the Agreement, this Guarantee shall also remain in full force and effect with respect
to the interest which is not assigned by the Customer. Notwithstanding anything herein
to the contrary, upon an assignment, release, and consent described in the first
sentence of this Section 7, the Guarantor shall not be liable for any payments relating
or arising from the Assigned Interest from and after the date of the assignment or
transfer thereof by the Customer as permitted under the Agreement.
	 
	 	8.	 	Notices. All notices and other communications provided for hereunder,
shall be in writing (including, without limitation, telecopy) and telecopied or
delivered by hand, if to the Guarantor, addressed to it at Anadarko Petroleum
Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380, Attn: Treasurer; or
if to the Beneficiary, addressed to it at Maritimes & Northeast Pipeline Limited
Partnership, 890 Winter Street, Suite 300, Waltham, Massachusetts 02415, Attn:
President, Maritimes & Northeast Pipeline Management Ltd., Telecopy No. (617) 560-1392;
or as to any party at such other address as shall be designated by such

3

 

	 	 	 	party in a written notice to each other party. All such notices and other
communications shall, when telecopied, be effective when transmitted by telecopier.
	 
	 	9.	 	No Waiver/Remedies. No delay in exercising or omission to exercise any
right or power accruing upon any default, omission or failure of performance hereunder
shall impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be
deemed expedient. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. In the event that Guarantor fails to pay or perform any of
its obligations hereunder, including the failure to make payment when due, the
Beneficiary may avail itself of all available remedies, in law or in equity, to enforce
its rights hereunder.
	 
	 	10.	 	Governing Law; Consent to Jurisdiction.

	 	(a)	 	THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE PROVINCE OF NOVA SCOTIA WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW. Any legal action or
proceeding against the Guarantor with respect to this Guarantee or the
Agreement may be brought in any provincial or federal court in the Province of
Nova Scotia, and, by execution and delivery of this Guarantee, the Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The Guarantor
hereby irrevocably designates, appoints, and empowers Carl Holm, Wickwire Holm,
Suite 2100, 1801 Hollis Street, Halifax, Nova Scotia B3J 2X6, as its designee,
appointee and agent solely for the purpose of receiving, accepting and
acknowledging for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Guarantor agrees to
designate a new designee, appointee and agent in the Province of Nova Scotia on
the terms and for the purposes of this provision satisfactory to the
Beneficiary. The Guarantor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding delivered pursuant to the notice provision contained in Section 8 of
this Guarantee. Nothing herein shall affect the right of the Beneficiary to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Guarantor in any other
jurisdiction.
	 
	 	(b)	 	The Guarantor hereby irrevocably waives any objection that it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or

4

 

	 	 	 	proceedings arising out of or in connection with this Guarantee brought in
the courts referred to in Section 10(a) and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in any
inconvenient forum.

	 	11.	 	Obligation to Make Payments in Dollars. Any and all amounts due from
the Guarantor hereunder shall be made by the Guarantor in Canadian currency
(“Dollars”), and any such payment obligation shall not be discharged or satisfied by
any tender, or any recovery pursuant to any judgment, which is expressed or converted
into any currency other than Dollars, except to the extent such tender or recovery
shall result in the actual receipt for the account of the Beneficiary, of the full
amount of Dollars expressed to be payable in respect of the amounts due hereunder. The
obligation of the Guarantor to make payments in Dollars as aforesaid shall be
enforceable as an alternative or additional cause of action for the purpose of recovery
in Dollars expressed to be payable in respect of any amounts due hereunder, and shall
not be affected by judgment being obtained for any other sums due under this Guarantee.
All payments to be made by the Guarantor under this Guarantee or the Agreement shall
be made to the Beneficiary in Halifax, Nova Scotia.
	 
	 	12.	 	Reinstatement. The obligations of the Guarantor hereunder shall be
automatically reinstated if and to the extent that, for any reason, any payment or
performance by or on behalf of the Customer in respect of the Obligations is rescinded
or must be otherwise repaid or restored to the Customer by any holder of any of the
Obligations, whether as a result of any proceedings in bankruptcy, reorganization or
otherwise.
	 
	 	13.	 	Successors and Assigns; Benefitted Parties. This Guarantee is entered
into by the Guarantor for the benefit of the Beneficiary in accordance with the
provisions of this Guarantee and the Agreement. This Guarantee shall not be deemed to
create any right in, or to be in whole or part for the benefit of, any person other
than the Beneficiary and the Guarantor and their respective successors and permitted
assigns, including permitted assigns resulting from an assignment or pledge of the
Agreement under the provisions of any mortgage, deed of trust, indenture, bank credit
agreement, assignment, receivable sale, or similar instrument, as permitted by Article
VII of the Agreement. The Guarantee hereunder is a continuing guarantee and shall
apply to all Obligations whenever arising and shall inure to the benefit of the
successor and assigns of the Beneficiary permitted under the Agreement, and be binding
upon the Guarantor and its successors and assigns; provided, however, that the
Guarantor may not make an assignment of this Guarantee or any interest herein by
operation of law or otherwise unless it has obtained the prior written consent of the
Beneficiary, which consent may not be unreasonably withheld. Notwithstanding anything
herein to the contrary, so long as any of the Obligations remain outstanding or any
amounts due and owing by the Customer with respect thereto remain unpaid, the Guarantor
may merge or consolidate with any other corporation or dissolve or otherwise sell or
dispose of

5

 

	 	 	 	all or substantially all of its assets as an entirety, if the successor or
transferee corporation (if other than the Guarantor) shall assume the punctual
performance and observance of all covenants, conditions and obligations of this
Guarantee to be performed by the Guarantor.
	 
	 	14.	 	Representations and Warranties. The Guarantor hereby represents and
warrants as follows:

	 	(a)	 	The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of Delaware;
	 
	 	(b)	 	The execution, delivery and performance by the Guarantor of
this Guarantee, and the consummation by the Guarantor of the transactions
contemplated hereby are within the Guarantor’s corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Guarantor’s charter or bylaws, (ii) violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently applicable
to it, (iii) conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument presently binding on or affecting the Guarantor or by which
its properties are now bound; or (iv) result in or require the creation or
imposition of any lien upon or with respect to any of its properties.
	 
	 	(c)	 	No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any other
third party which has not been obtained or filed is required for the due
execution, delivery or performance by the Guarantor of this Guarantee.
	 
	 	(d)	 	This Guarantee has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with the terms
hereto except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors’ rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.

     IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and delivered
as of the date first above written.

	 	 	 	 	 
	 	 	ANADARKO PETROLEUM CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ James R. Larson
	 

	 	 	 	 
	 

	 	Name:	 	James R. Larson
	 

	 	Title:	 	Chief Financial Officer and

Senior Vice President, Finance

6

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