Exhibit 10.1
 
CONTRIBUTION AGREEMENT
by and among
SPECTRA ENERGY TRANSMISSION, LLC,
SPECTRA ENERGY PARTNERS (DE) GP, LP,
and
SPECTRA ENERGY PARTNERS, LP,
dated as of
December 13, 2007
 

 

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TABLE OF CONTENTS

                      Page ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION

 
           
Section 1.1
  Definitions     2  
 
           
Section 1.2
  Rules of Construction     11  
 
            ARTICLE II
CONTRIBUTION; CLOSING

 
           
Section 2.1
  Contribution of Contributed Interests     11  
 
           
Section 2.2
  Consideration     12  
 
           
Section 2.3
  The Closing     12  
 
           
Section 2.4
  Post-Closing Working Capital Adjustment     13  
 
            ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO
SE TRANSMISSION AND MLP GP

 
           
Section 3.1
  Organization     14  
 
           
Section 3.2
  Authorization; Enforceability     14  
 
           
Section 3.3
  No Conflict     15  
 
           
Section 3.4
  Litigation     15  
 
           
Section 3.5
  Brokers’ Fees     15  
 
           
Section 3.6
  Ownership of Contributed Interests     15  
 
           
Section 3.7
  Investment Representation     16  
 
            ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO
THE SALTVILLE COMPANIES

 
           
Section 4.1
  Organization of the Saltville Companies     16  
 
           
Section 4.2
  Enforceability of Merger Agreement     16  
 
           
Section 4.3
  No Conflict     17  

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                      Page
Section 4.4
  Subsidiaries     17  
 
           
Section 4.5
  Financial Statements; Records; Undisclosed Liabilities     17  
 
           
Section 4.6
  Absence of Certain Changes     17  
 
           
Section 4.7
  Contracts     18  
 
           
Section 4.8
  Intellectual Property     19  
 
           
Section 4.9
  Litigation     19  
 
           
Section 4.10
  Taxes     19  
 
           
Section 4.11
  Environmental Matters     20  
 
           
Section 4.12
  Legal Compliance     21  
 
           
Section 4.13
  Permits     21  
 
           
Section 4.14
  Insurance     21  
 
           
Section 4.15
  Labor Relations; Employees     21  
 
           
Section 4.16
  Title to Properties and Related Matters     21  
 
           
Section 4.17
  Brokers’ Fees     22  
 
           
Section 4.18
  Regulatory Matters     22  
 
            ARTICLE V
REPRESENTATIONS AND WARRANTIES RELATING TO SPECTRA MLP

 
           
Section 5.1
  Organization of Spectra MLP     22  
 
           
Section 5.2
  Authorization; Enforceability     22  
 
           
Section 5.3
  No Conflict     23  
 
           
Section 5.4
  Litigation     23  
 
           
Section 5.5
  Brokers’ Fees     23  
 
           
Section 5.6
  Investment Representation     23  
 
           
Section 5.7
  Spectra MLP SEC Documents     24  

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                      Page ARTICLE VI
COVENANTS

 
           
Section 6.1
  Conduct of Business     24  
 
           
Section 6.2
  Access     25  
 
           
Section 6.3
  Third Party Approvals     26  
 
           
Section 6.4
  Saltville Restructuring     26  
 
           
Section 6.5
  Company Guarantees     26  
 
           
Section 6.6
  Indebtedness for Borrowed Money     26  
 
           
Section 6.7
  Update Information     27  
 
           
Section 6.8
  Books and Records     27  
 
           
Section 6.9
  Permits     27  
 
           
Section 6.10
  Excluded Assets     27  
 
           
Section 6.11
  Noncompetition Agreement     28  
 
            ARTICLE VII
TAX MATTERS

 
           
Section 7.1
  Tax Returns     28  
 
           
Section 7.2
  Transfer Taxes     30  
 
           
Section 7.3
  Tax Indemnity     30  
 
           
Section 7.4
  Scope     31  
 
           
Section 7.5
  Tax Refunds     31  
 
            ARTICLE VIII
CONDITIONS TO OBLIGATIONS

 
           
Section 8.1
  Conditions to Obligations of Spectra MLP     32  
 
           
Section 8.2
  Conditions to the Obligations of SE Transmission and MLP GP     32  

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                      Page ARTICLE IX
INDEMNIFICATION

 
           
Section 9.1
  Survival     33  
 
           
Section 9.2
  Indemnification     34  
 
           
Section 9.3
  Indemnification Procedures     35  
 
           
Section 9.4
  Additional Agreements Regarding Indemnification     36  
 
           
Section 9.5
  Waiver of Other Representations     37  
 
           
Section 9.6
  Total Consideration Adjustment     38  
 
           
Section 9.7
  Exclusive Remedy     38  
 
            ARTICLE X
TERMINATION

 
           
Section 10.1
  Termination     38  
 
           
Section 10.2
  Effect of Termination     39  
 
            ARTICLE XI
MISCELLANEOUS

 
           
Section 11.1
  Notices     39  
 
           
Section 11.2
  Assignment     40  
 
           
Section 11.3
  Rights of Third Parties     41  
 
           
Section 11.4
  Expense     41  
 
           
Section 11.5
  Counterparts     41  
 
           
Section 11.6
  Entire Agreement     41  
 
           
Section 11.7
  Disclosure Schedule     41  
 
           
Section 11.8
  Amendments     41  
 
           
Section 11.9
  Publicity     41  
 
           
Section 11.10
  Severability     42  
 
           
Section 11.11
  Governing Law; Jurisdiction     42  
 
           
Section 11.12
  Action by Spectra MLP     42  

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Disclosure Schedule

         
Schedule A
  –   P-25 Assets
Schedule 1.1(i)
  –   Spectra MLP Knowledge
Schedule 1.1(ii)
  –   SE Transmission and MLP GP Knowledge
Schedule 1.1(iii)
  –   Permitted Liens
Schedule 3.3
  –   Transmission Approvals
Schedule 3.5
  –   SE Transmission and MLP GP Brokers’ Fees
Schedule 3.6(b)
  –   Voting Agreements
Schedule 4.5
  –   Financial Statements
Schedule 4.6
  –   Absence of Certain Changes
Schedule 4.7(a)
  –   Material Contracts
Schedule 4.7(c)
  –   Enforceability of Material Contracts; No Defaults
Schedule 4.7(d)
  –   Purchase and Sale Agreements
Schedule 4.8(b)
  –   Intellectual Property
Schedule 4.9
  –   Litigation
Schedule 4.10
  –   Taxes
Schedule 4.11
  –   Environmental Matters
Schedule 4.13
  –   Permits
Schedule 4.14
  –   Insurance
Schedule 4.16(a)
  –   Material Real Estate Leases
Schedule 5.3
  –   Spectra MLP Approvals
Schedule 5.5
  –   Spectra MLP Brokers’ Fees
Schedule 6.1
  –   Conduct of Business
Schedule 6.1(v)
  –   Capital Expenditures
Schedule 6.5
  –   Guarantees
Schedule 6.10
  –   Excluded Assets

Exhibits
Exhibit A      –      Omnibus Amendment

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CONTRIBUTION AGREEMENT
     THIS CONTRIBUTION AGREEMENT, dated as of December 13, 2007 (this
“Agreement”), is entered into by and among Spectra Energy Transmission, LLC, a
limited liability company organized under the Laws of the State of Delaware (“SE
Transmission”), Spectra Energy Partners (DE) GP, LP, a limited partnership
organized under the Laws of the State of Delaware (“MLP GP”), and Spectra Energy
Partners, LP, a limited partnership organized under the Laws of the State of
Delaware (“Spectra MLP”).
RECITALS
     WHEREAS, as of the date of this Agreement, SE Transmission owns (i) 100% of
the limited liability company interests in Saltville Gas Storage Company L.L.C.,
a limited liability company organized under the Laws of the Commonwealth of
Virginia (“Saltville LLC”), (ii) 100% of the capital stock of Spectra Energy
Early Grove Company, a corporation organized under the Laws of the Commonwealth
of Virginia (“SE Early Grove”), and (iii) 100% of the capital stock of Spectra
Energy Virginia Pipeline Company, a corporation organized under the Laws of the
Commonwealth of Virginia (“SE Virginia Pipeline”);
     WHEREAS, prior to the Closing (as defined below):
     (i) Certification of the storage facilities of SE Early Grove and SE
Virginia Pipeline by the Federal Energy Regulatory Commission, and
relinquishment of jurisdiction over such storage facilities by the Virginia
State Corporation Commission shall have been granted or shall have been deemed
granted;
     (ii) Saltville LLC intends to negotiate replacement Contracts with
customers of SE Early Grove and SE Virginia Pipeline related to their storage
assets;
     (iii) SE Early Grove and SE Virginia Pipeline intend to convert from
corporations into limited liability companies;
     (iv) SE Virginia Pipeline, after such conversion, intends to transfer to
East Tennessee Natural Gas, LLC, a limited liability company organized under the
Laws of the State of Tennessee, pursuant to that certain asset purchase
agreement between such parties and dated the date hereof (the “Asset Purchase
Agreement”), all of its right, title and interest in approximately 72 miles of
8” natural gas transmission pipeline commencing at SE Virginia Pipeline’s meter
station located at Chilhowie, VA, and continuing eastward to SE Virginia
Pipeline’s meter station located at Radford, VA, together with 0.5 miles of the
4” Marion lateral, and certain other assets, liabilities and obligations
associated with such pipeline facilities and described on Schedule A attached
hereto (collectively, the “P-25 Assets”), in exchange for Common Units (as
defined below) and a cash reimbursement of prior capital expenditures, which
Common Units and cash reimbursement would then be transferred to SE Transmission
or one of its Affiliates (as defined below), other than the Saltville Companies,
prior to the Closing;

 

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     (v) SE Early Grove and SE Virginia Pipeline, after conversion into limited
liability companies, would then merge with and into Saltville LLC, pursuant to a
merger agreement (the “Merger Agreement”), with Saltville LLC being the
surviving entity;
     (vi) SE Transmission would then contribute to Spectra MLP, and Spectra MLP
would then accept from SE Transmission, 97.6% of the limited liability company
interests in Saltville LLC (the “SET Contributed Interests”), and, in exchange,
Spectra MLP would distribute, as contemplated in this Agreement, to SE
Transmission (a) a certain number of Common Units and (b) a certain amount in
cash as a reimbursement for capital expenditures incurred by SE Transmission
with respect to certain assets of Saltville LLC;
     (vii) SE Transmission would then contribute 2.376% of the limited liability
company interests in Saltville LLC to Spectra Energy Southeast Pipeline
Corporation, a corporation organized under the Laws of the State of Delaware
(“SE Southeast Pipeline”) and 0.024% of its limited liability company interests
in Saltville LLC to Spectra Energy Partners GP, LLC, a limited liability company
organized under the Laws of the State of Delaware (“MLP GP LLC”), and SE
Southeast Pipeline and MLP GP LLC would contribute all their respective limited
liability company interests in Saltville LLC received from SE Transmission to
MLP GP (the actions to be taken in sections (i) through (v) and section
(vii) hereof, collectively, the “Saltville Restructuring”);
     WHEREAS, MLP GP would then contribute to Spectra MLP, and Spectra MLP would
then accept from MLP GP, all of MLP GP’s limited liability company interests in
Saltville LLC (the “MLP GP Contributed Interests”), and, in exchange, Spectra
MLP would distribute to MLP GP a certain number of General Partner Units;
     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties (as defined below)
agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
     Section 1.1 Definitions. As used herein, the following capitalized terms
shall have the following meanings:
     “Accounting Referee” has the meaning provided such term in Section 2.4(c).
     “Adjustment Amount” has the meaning provided such term in Section 2.4(e).
     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such specified Person through one or more intermediaries or otherwise. For
the purposes of this definition, “control” means, where used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by Contract or otherwise.

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     “AGL Agreement” means that Purchase and Sale Agreement, dated as of
April 27, 2005, among NUI Saltville Storage, Inc., a Delaware corporation,
Virginia Gas Company, a Delaware corporation, Duke Energy Gas Transmission, LLC,
a Delaware limited liability company, Duke Energy Saltville Gas Storage, L.L.C.,
a Delaware limited liability company, and NUI Corporation, a New Jersey
corporation.
     “Agreement” has the meaning provided such term in the preamble to this
Agreement.
     “Asset Purchase Agreement” has the meaning provided such term in the
recitals of this Agreement.
     “Balance Sheet Date” means October 31, 2007.
     “Billed Party” has the meaning provided such term in Section 7.1(d).
     “Business” means the operations and business conducted by the Saltville
Companies.
     “Business Day” means any day that is not a Saturday, Sunday or legal
holiday in the State of Texas or a federal holiday in the United States.
     “Claim Notice” has the meaning provided such term in Section 9.3(a).
     “Closing” has the meaning provided such term in Section 2.3(a).
     “Closing Date” has the meaning provided such term in Section 2.3(a).
     “Code” means the Internal Revenue Code of 1986.
     “Commission” means the United States Securities and Exchange Commission.
     “Common Units” has the meaning provided such term in the Spectra MLP
Partnership Agreement.
     “Company Guarantees” means all guaranties, letters of credit, bonds,
sureties, cash collateral accounts, and other credit support or assurances
provided by SE Transmission or any of its Affiliates (other than the Saltville
Companies) in support of any obligations of any of the Saltville Companies or
the Business, including those obligations listed on Schedule 6.5.
     “Conflicts Committee” has the meaning provided such term in the Spectra MLP
Partnership Agreement.
     “Contract” means any legally binding agreement, commitment, lease, license
or contract.
     “Contributed Interests” means the SET Contributed Interests and/or the MLP
GP Contributed Interests, as applicable.
     “Cross Receipt” means a cross receipt acknowledging the receipt of the
items in Section 2.3(b)(i) and (v) by Spectra MLP and the items in
Section 2.3(c)(i), (ii) and (v) by SE Transmission and MLP GP.

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     “Disclosure Schedule” means the schedules attached hereto.
     “Dollars” and “$” mean the lawful currency of the United States.
     “Effective Time” has the meaning provided such term in Section 2.3(a).
     “Environment” means (a) the navigable waters, the waters of the contiguous
zone, and the ocean waters of which the natural resources are under the
exclusive management authority of the United States under the Magnuson-Stevens
Fishery Conservation and Management Act, 16 U.S.C. 1801 et seq., and (b) any
other surface water, ground water, drinking water supply, land surface or
subsurface strata, or ambient air within the United States or under the
jurisdiction of the United States.
     “Environmental Law” means any Law relating to the environment, natural
resources, or the protection thereof, including any applicable provisions of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the
Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401
et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et seq., the Safe Drinking Water Act, 42
U.S.C. § 300f et seq., and any Law relating to health, safety, the Environment,
natural resources or the protection thereof, and all analogous state or local
statutes, and the regulations promulgated pursuant thereto.
     “ERISA” means the Employee Retirement Income Security Act of 1974.
     “Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations of the Commission promulgated thereunder.
     “Excluded Assets” has the meaning provided such term in Section 6.10.
     “Final Net Working Capital” means the difference of (x) total current
assets less (y) total current liabilities, each as shown on the balance sheet of
Saltville LLC as of the Closing Date (which sheet shall be prepared in the same
manner, under the same basis, with the same methodology and principles, and
utilizing the same line items as the Financial Statements) except that the
amount of total current liabilities shall be reduced to exclude any ad valorem
Taxes and federal and state income Taxes.
     “Financial Statements” has the meaning provided such term in
Section 4.5(a).
     “Fundamental Representations and Warranties” means the representations and
warranties contained in Sections 3.1, 3.2, 3.6, 4.1 and 4.4.
     “GAAP” means generally accepted accounting principles of the United States,
consistently applied.
     “General Partner Units” has the meaning provided such term in the Spectra
MLP Partnership Agreement.

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     “Governmental Authority” means any federal, state, municipal, local or
similar governmental authority, regulatory or administrative agency, court or
arbitral body.
     “Hazardous Substance(s)” means each substance defined, designated or
classified as a hazardous waste, hazardous substance, hazardous material,
pollutant, containment or toxic substance under any Environmental Law and any
petroleum or petroleum products that have been Released into the environment.
     “Indebtedness for Borrowed Money” means with respect to any Person, at any
date, without duplication, (a) all obligations of such Person for borrowed money
(including intercompany obligations), including all principal, interest,
premiums, fees, expenses, overdrafts and penalties with respect thereto, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property, except trade payables incurred in the ordinary
course of business, (d) all obligations of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (e) all capitalized lease obligations of such Person, and (f)  all
indebtedness of any other Person of the type referred to in clauses (a) to
(e) above directly or indirectly guaranteed by such Person or secured by any
assets of such Person, whether or not such indebtedness has been assumed by such
Person.
     “Indemnified Party” has the meaning provided such term in Section 9.3(a).
     “Indemnifying Party” has the meaning provided such term in Section 9.3(a).
     “Indemnified Tax Claim” has the meaning provided such term in
Section 7.3(b).
     “Intellectual Property” means intellectual property rights, statutory or
common law, worldwide, including (a) trademarks, service marks, trade dress,
slogans, logos and all goodwill associated therewith, and any applications or
registrations for any of the foregoing, (b) copyrights and any applications or
registrations for any of the foregoing, and (c) patents, all confidential
know-how, trade secrets and similar proprietary rights in confidential
inventions, discoveries, improvements, processes, techniques, devices, methods,
patterns, formulae and specifications.
     “Knowledge” as to Spectra MLP means the actual knowledge of those Persons
listed on Schedule 1.1(i), and; as to SE Transmission and MLP GP means the
actual knowledge of those Persons listed on Schedule 1.1(ii); provided, however,
that those Persons noted in such Schedule 1.1(ii) as not having knowledge as to
the Saltville Companies shall be disregarded with respect to any representation
relating to the Saltville Companies qualified by “Knowledge”.
     “Law” means any applicable law, rule, regulation, ordinance, order,
judgment or decree of a Governmental Authority.
     “Lien(s)” means, with respect to any property or asset, any mortgage,
pledge, charge, security interest or other encumbrance of any kind in respect of
such property or asset.
     “Losses” means all actual liabilities, losses, damages, fines, penalties,
judgments, settlements, awards, costs and expenses (including reasonable fees
and expenses of counsel);

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provided, however, that Losses shall not include any special, punitive,
exemplary, incidental, consequential or indirect damages nor shall Losses
include lost profits, lost opportunities or other speculative damages; provided,
further, however, that the preceding proviso shall not apply to the extent a
Party is required to pay such damages to a third party in connection with a
matter for which such Party is entitled to indemnification under Article IX.
     “Material Adverse Effect” means, with respect to any Person, any
circumstance, change or effect that (a) is or would reasonably be expected to be
materially adverse to the business, operations or financial condition of such
Person (and in the case of any Saltville Company, of the Saltville Companies and
the Business taken as a whole), or (b) materially impedes or would reasonably be
expected to impede the ability of such Person to complete the transactions
contemplated herein, but shall exclude any circumstance, change or effect
resulting or arising from:
               (i) any change in general economic conditions in the industries
or markets in which any of the Saltville Companies operates;
               (ii) seasonal reductions in revenues or earnings of the Saltville
Companies substantially consistent with the historical results of such
businesses;
               (iii) national or international political conditions, including
any engagement in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist
attack;
               (iv) changes in Law or GAAP; or
               (v) the entry into or announcement of this Agreement, actions
contemplated by this Agreement or the consummation of the transactions
contemplated hereby.
     Notwithstanding the foregoing, clauses (i), (iii) and (iv) shall not apply
in the event of a disproportionate effect on the Saltville Companies as compared
to other entities in the industry or markets in which the Saltville Companies
operate.
     “Material Contracts” has the meaning provided such term in Section 4.7(a).
     “Material Real Estate Leases” has the meaning provided such term in
Section 4.16(a).
     “Merger Agreement” has the meaning provided such term in the recitals of
this Agreement.
     “MLP GP” has the meaning provided such term in the preamble to this
Agreement.
     “MLP GP Consideration” means an amount equal to the product of the Per Unit
Value times the MLP GP General Partner Units.
     “MLP GP Contributed Interests” has the meaning provided such term in the
recitals of this Agreement.

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     “MLP GP General Partner Units” means the number of General Partner Units
that is computed by (i) adding the Saltville Total Value and the P-25 Total
Value (as defined in the Asset Purchase Agreement), (ii) subtracting both the
Saltville CapEx Reimbursement and the P-25 CapEx Reimbursement (as defined in
the Asset Purchase Agreement) from that sum, (iii) dividing that difference by
the Per Unit Value, and (iv) multiplying that quotient by 2%.
     “MLP GP Indemnified Parties” has the meaning provided such term in
Section 9.2(b).
     “MLP GP LLC” has the meaning provided such term in the recitals of this
Agreement.
     “Omnibus Agreement” means the Omnibus Agreement effective as of July 2,
2007, among Spectra MLP, MLP GP, Spectra Energy Partners, GP, LLC, a limited
liability company organized under the Laws of the State of Delaware, and Spectra
Energy Corp, a corporation organized under the Laws of the State of Delaware.
     “Omnibus Amendment” means the Amendment to Omnibus Agreement attached as
Exhibit A.
     “Organizational Documents” means any charter, certificate of incorporation,
certificate of formation, articles of association, bylaws, partnership
agreement, operating agreement or similar formation or governing documents and
instruments.
     “P-25 Assets” has the meaning provided such term in the recitals of this
Agreement.
     “P-25 Indemnity Obligations” has the meaning provided such term in
Section 9.2(a).
     “P-25 Pipeline” means approximately 72 miles of 8” transmission pipeline
operated by Seller.
     “Parties” means SE Transmission, MLP GP and Spectra MLP.
     “Per Unit Valuation Date” means the date that is three days prior to the
Closing Date.
     “Per Unit Value” means the volume-weighted average price of the Common
Units on the New York Stock Exchange during the 20 trading days immediately
preceding the Per Unit Valuation Date, calculated using the Bloomberg SEP Equity
AQR function.
     “Permits” means authorizations, licenses, permits or certificates issued by
Governmental Authorities; provided, however, right-of-way agreements and similar
rights and approvals are not included in the definition of Permits.
     “Permitted Liens” means (a) Liens for Taxes not yet delinquent or being
contested in good faith by appropriate proceedings, (b) statutory Liens
(including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s,
and other similar Liens) arising in the ordinary course of business securing
payments not yet delinquent or being contested in good faith by appropriate
proceedings, (c) the rights of lessors and lessees under leases, and the rights
of third parties under any agreement, in each case executed in the ordinary
course of business and that do not materially and adversely affect the ability
of the Saltville Companies to conduct

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their Business as currently conducted, (d) the rights of licensors and licensees
under licenses executed in the ordinary course of business and that do not
materially and adversely affect the ability of the Saltville Companies to
conduct their Business as currently conducted, (e) restrictive covenants,
easements and defects, imperfections or irregularities of title or Liens, if
any, of a nature that do not materially and adversely affect the assets or
properties subject thereto, (f) preferential purchase rights and other similar
arrangements with respect to which consents or waivers are obtained for this
transaction or as to which the time for asserting such rights has expired at the
Closing Date without an exercise of such rights, (g) restrictions on transfer
with respect to which consents or waivers are obtained for this transaction,
(h) Liens granted in the ordinary course of business which do not secure the
payment of Indebtedness for Borrowed Money and which do not materially and
adversely affect the ability of the Saltville Companies to conduct their
Business as currently conducted, (i) Liens listed in Schedule 1.1(iii), and
(j) Liens created by Spectra MLP or its successors and assigns.
     “Person” means any individual, firm, corporation, partnership, limited
liability company, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of any kind.
     “Pre-Closing Tax” has the meaning provided such term in Section 7.1(c).
     “Pre-Closing Taxable Period” means any taxable period ending on or before
the Effective Time and that portion of any taxable period beginning before and
ending after the Effective Time that ends on the Effective Time.
     “Reasonable Efforts” means efforts in accordance with reasonable commercial
practice and without the incurrence of unreasonable expense.
     “Reference Net Working Capital” means $1,122,527.
     “Refund Amount” has the meaning provided such term in Section 2.4(e).
     “Release” means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing of, without limitation,
Hazardous Substances, into the Environment.
     “Representatives” means, as to any Person, its officers, directors,
employees, counsel, accountants, financial advisers and consultants.
     “Saltville CapEx Reimbursement” means 97.6% of the sum of the capital
expenditures incurred by the Saltville Companies with respect to their assets
other than the P-25 Assets during the 24 month period prior to the Closing Date;
provided, however, that such amount shall not exceed $10,000,000.
     “Saltville Companies” means, prior to Saltville Restructuring, Saltville
LLC, SE Early Grove and SE Virginia Pipeline, and “Saltville Company” means any
one of the foregoing. After the Saltville Restructuring, “Saltville Company”
shall mean Saltville LLC.
     “Saltville LLC” has the meaning provided such term in the recitals of this
Agreement.

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     “Saltville Restructuring” has the meaning provided such term in the
recitals of this Agreement.
     “Saltville Total Value” means $81,700,000.
     “SE Early Grove” has the meaning provided such term in the recitals of this
Agreement.
     “SE Southeast Pipeline” has the meaning provided such term in the recitals
of this Agreement.
     “SE Transmission” has the meaning provided such term in the preamble to
this Agreement.
     “SE Transmission Indemnified Parties” has the meaning provided such term in
Section 9.2(b).
     “SE Virginia Pipeline” has the meaning provided such term in the recitals
of this Agreement.
     “Securities Act” means the Securities Act of 1933 and the rules and
regulations of the Commission promulgated thereunder.
     “SET Common Units” means the number of Common Units that is computed by
(i) subtracting the Saltville CapEx Reimbursement from the Saltville Total
Value, (ii) dividing that difference by the Per Unit Value, and
(iii) subtracting the number of MLP GP General Partner Units from that quotient.
     “SET Consideration” means an amount equal to the product of the Per Unit
Value times the SET Common Units.
     “SET Contributed Interests” has the meaning provided such term in the
recitals of this Agreement.
     “Spectra Energy Corp” means Spectra Energy Corp, a Delaware corporation.
     “Spectra MLP” has the meaning provided such term in the preamble to this
Agreement.
     “Spectra MLP Approvals” has the meaning provided such term in Section 5.3.
     “Spectra MLP Financial Statements” has the meaning provided such term in
Section 5.8.
     “Spectra MLP Indemnified Parties” has the meaning provided such term in
Section 9.2(a).
     “Spectra MLP Partnership Agreement” means the First Amended and Restated
Agreement of Limited Partnership of Spectra Energy Partners, LP dated as of
July 2, 2007.
     “Spectra MLP SEC Documents” has the meaning provided such term in
Section 5.8.

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     “Tax” means (a) all taxes, assessments, duties, levies, imposts or other
similar charges imposed by a Governmental Authority, including all income,
franchise, profits, capital gains, capital stock, transfer, gross receipts,
sales, use, transfer, service, occupation, ad valorem, property, excise,
severance, windfall profits, premium, stamp, license, payroll, employment,
social security, unemployment, disability, environmental (including taxes under
Code Section 59A), alternative minimum, add-on, value-added, withholding
(including backup withholding) and other taxes, assessments, duties, levies,
imposts or other similar charges of any kind whatsoever (whether payable
directly or by withholding and whether or not requiring the filing of a Tax
Return), and all estimated taxes, deficiency assessments, additions to tax,
additional amounts imposed by any Governmental Authority, penalties and
interest, (b) any liability of any Saltville Company for the payment of any
amounts of any of the foregoing types as a result of being a member of an
affiliated, consolidated, combined or unitary group, or being a party to any
agreement or arrangement whereby liability of such Saltville Company for payment
of such amounts was determined or taken into account with reference to the
liability of any other Person and (c) any liability of any Saltville Company for
the payment of any amounts as a result of being a party to any Tax-Sharing
Agreement or with respect to the payment of any amounts of any of the foregoing
types as a result of any express or implied obligation to indemnify any other
Person.
     “Tax Authority” means any Governmental Authority having jurisdiction over
the assessment, determination, collection or imposition of any Tax.
     “Tax Benefit” means, with respect to a Loss, an amount by which the Tax
liability of a Person (or group of corporations filing a Tax Return that
includes the Person), with respect to a taxable period, is reduced as a result
of such Loss or the amount of any Tax refund or Tax credit that is generated
(including, by deduction, loss, credit or otherwise) as a result of such Loss,
and any related interest received from any relevant Tax Authority; provided,
however, in each case, only the reasonable present value of any Tax Benefit
shall be considered with respect to a Loss.
     “Tax Indemnified Party” has the meaning provided such term in
Section 7.3(b).
     “Tax Indemnifying Party” has the meaning provided such term in
Section 7.3(b).
     “Tax Proceeding” has the meaning provided such term in Section 7.1(f).
     “Tax Returns” means any report, return, election, document, estimated Tax
filing, declaration or other filing provided to any Tax Authority, including any
amendments thereto.
     “Tax-Sharing Agreement” means any existing agreement or arrangement
(whether or not written) that is binding on any Saltville Company and regarding
the sharing, allocation or payment of Taxes or amounts in lieu of Taxes.
     “Third Party Claim” has the meaning provided such term in Section 9.3(a).
     “Transmission Approvals” has the meaning provided such term in Section 3.3.
     “United States” or “U.S.” means United States of America.

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     Section 1.2 Rules of Construction.
          (a) All article, section, schedule and exhibit references used in this
Agreement are to articles, sections, schedules and exhibits to this Agreement
unless otherwise specified. The schedules and exhibits attached to this
Agreement constitute a part of this Agreement and are incorporated herein for
all purposes.
          (b) If a term is defined as one part of speech (such as a noun), it
shall have a corresponding meaning when used as another part of speech (such as
a verb). Terms defined in the singular have the corresponding meanings in the
plural, and vice versa. Unless the context of this Agreement clearly requires
otherwise, words importing the masculine gender shall include the feminine and
neutral genders and vice versa. The term “includes” or “including” shall mean
“including without limitation.” The words “hereof,” “hereto,” “hereby,”
“herein,” “hereunder” and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any particular section or
article in which such words appear.
          (c) The Parties acknowledge that each Party and its attorney have
reviewed this Agreement and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party, or any similar rule
operating against the drafter of an agreement, shall not be applicable to the
construction or interpretation of this Agreement.
          (d) The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
          (e) All references to currency herein shall be to, and all payments
required hereunder shall be paid in, Dollars.
          (f) All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
          (g) Any event hereunder requiring the payment of cash or cash
equivalents on a day that is not a Business Day shall be deferred until the next
Business Day.
          (h) References to any Law are references to such Law as it may be
amended from time to time, and references to particular provisions of a Law
include a reference to the corresponding provisions of any succeeding Law.
ARTICLE II
CONTRIBUTION; CLOSING
     Section 2.1 Contribution of Contributed Interests.
          (a) At the Closing, upon the terms and subject to the conditions set
forth in this Agreement, SE Transmission shall contribute to Spectra MLP, and
Spectra MLP shall accept from SE Transmission, the SET Contributed Interests,
free and clear of any Liens other than transfer restrictions imposed thereon by
securities Laws.

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          (b) At the Closing, upon the terms and subject to the conditions set
forth in this Agreement, MLP GP shall contribute to Spectra MLP, and Spectra MLP
shall accept from MLP GP, the MLP GP Contributed Interests, free and clear of
any Liens other than transfer restrictions imposed thereon by securities Laws.
     Section 2.2 Consideration.
          (a) At the Closing, upon the terms and subject to the conditions set
forth in this Agreement, in exchange for the SET Contributed Interests, Spectra
MLP shall (i) distribute to SE Transmission the SET Common Units and (ii) pay to
SE Transmission the Saltville CapEx Reimbursement, which amount shall be payable
in cash. For purposes of determining the Saltville CapEx Reimbursement, SE
Transmission shall provide a binding good faith estimate of such amount at least
ten days prior to the Closing Date.
          (b) At the Closing, upon the terms and subject to the conditions set
forth in this Agreement, in exchange for the MLP GP Contributed Interests,
Spectra MLP shall distribute to MLP GP the MLP GP General Partner Units.
          (c) The Parties acknowledge that the transactions described in this
Article II are properly characterized as transactions described in Section
721(a) of the Code.
     Section 2.3 The Closing.
          (a) The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Vinson & Elkins L.L.P., 1001
Fannin, Houston, Texas 77002, commencing at 10:00 a.m. local time on the later
of April 1, 2008 and the first day of the month following the date on which all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby have been satisfied or waived (other than conditions with
respect to actions the Parties shall take at the Closing itself) or such other
date as the Parties may mutually determine (the “Closing Date”); provided,
however, the Closing shall be deemed to have been consummated at 12:30 a.m.
Houston, Texas time on the Closing Date (the “Effective Time”).
          (b) At the Closing, each of SE Transmission and MLP GP will deliver
the following documents and deliverables to Spectra MLP:
               (i) an assignment or assignments effecting the transfer to
Spectra MLP of ownership of all of the Contributed Interests together with
certificates, if any, representing the Contributed Interests and such other
documentation as is required to admit Spectra MLP as a member of Saltville LLC;
               (ii) a certification in the form prescribed by Treasury
Regulation Section 1.1445-2(b)(2) to the effect that neither MLP GP’s owner nor
SE Transmission is a foreign person;
               (iii) the Omnibus Amendment executed by MLP GP LLC and MLP GP;

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               (iv) the Cross Receipt executed by each of SE Transmission and
MLP GP; and
               (v) such other certificates, instruments of conveyance and
documents as may be reasonably requested by Spectra MLP and agreed to by SE
Transmission or MLP GP prior to the Closing Date to carry out the intent and
purposes of this Agreement.
          (c) At the Closing, Spectra MLP will deliver the following documents
and deliverables to SE Transmission or MLP GP, as applicable, or take the
following actions:
               (i) the Saltville CapEx Reimbursement to SE Transmission by wire
transfer of immediately available U.S. federal funds to an account or accounts
specified by SE Transmission;
               (ii) issue, in certificated or book entry form, to SE
Transmission the SET Common Units, and to MLP the MLP GP General Partner Units;
               (iii) the Omnibus Amendment executed by Spectra MLP;
               (iv) the Cross Receipt executed by Spectra MLP; and
               (v) such other certificates, instruments of conveyance and
documents as may be reasonably requested by SE Transmission or MLP GP and agreed
to by Spectra MLP prior to the Closing Date to carry out the intent and purposes
of this Agreement.
     Section 2.4 Post-Closing Working Capital Adjustment.
          (a) Within 45 days following the Closing Date, SE Transmission shall
deliver to Spectra MLP its estimate of Final Net Working Capital.
          (b) If Spectra MLP objects to SE Transmission’s estimate, then it must
provide a written objection notice, together with its estimate of Final Net
Working Capital, to SE Transmission within 30 days after receipt of SE
Transmission’s estimate. If no objection is delivered within such 30 days, then
SE Transmission’s estimate shall be final and binding.
          (c) If Spectra MLP objects in a timely manner and Spectra MLP and SE
Transmission are unable to agree upon Final Net Working Capital within 30 days
after SE Transmission’s receipt of Spectra MLP’s objection, then such dispute
shall be resolved by referring the disputed items relating to such calculation
to an independent accounting firm of recognized national standing (the
“Accounting Referee”) to be selected in the following manner: (i) the Parties
shall have seven additional days following the aforementioned 30 day dispute
resolution period to mutually agree on the identity of the Accounting Referee
or, (ii) if the Parties are unable to agree on an Accounting Referee pursuant to
the preceding clause (i), SE Transmission will select three candidates and
deliver a written notice containing the names of such candidates to Spectra MLP
(in care of the Conflicts Committee) within five days of the expiration of the
seven day period referred to in the preceding clause (i) and within five days of
receiving such notice, Spectra MLP will select one of such three candidates to
serve as the Accounting Referee. The Accounting Referee may not be otherwise
engaged by any of SE

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Transmission or Spectra MLP, or their respective Affiliates, in connection with
the transactions contemplated under this Agreement and may not have performed
any material services on behalf of any of MLP GP, SE Transmission or Spectra
MLP, or their respective Affiliates, during the two years immediately preceding
the date of this Agreement.
          (d) The Accounting Referee shall be instructed upon appointment to
determine the disputed amounts in the manner provided in this Section 2.4 within
30 days; provided, however, the amount of the Adjustment Amount or Refund
Amount, as applicable, determined by the Accounting Referee shall be no greater
than the higher amount submitted and no lower than the lower amount submitted.
The authority of the Accounting Referee shall be limited to determining the
items disputed by Spectra MLP in its original objection that have not since been
resolved by the Parties. The Accounting Referee shall have no right or authority
to award interest or penalties or to grant or award damages of any kind
(including indirect, consequential, punitive or exemplary damages). The
determination of the Adjustment Amount or the Refund Amount, as applicable, by
the Accounting Referee shall be final and binding on the Parties. The fees and
expenses of the Accounting Referee shall be borne equally by Spectra MLP, on one
hand, and SE Transmission, on the other hand.
          (e) Spectra MLP shall pay to SE Transmission and MLP GP, in proportion
to such Party’s ownership of the Saltville Companies prior to this Agreement, an
amount in cash equal to the excess, if any, of Final Net Working Capital minus
Reference Net Working Capital (the “Refund Amount”), or SE Transmission and MLP
GP shall pay, in proportion to such Party’s ownership of the Saltville Companies
prior to this Agreement, to Spectra MLP an amount in cash equal to the excess,
if any, of Reference Net Working Capital minus Final Net Working Capital (the
“Adjustment Amount”). The Refund Amount or Adjustment Amount, as the case may
be, shall be paid by wire or interbank transfer of immediately available funds
within 10 days following the agreement by the Parties or the determination by
the Accounting Referee of the Final Net Working Capital. To the extent that
Spectra MLP makes payment to SE Transmission and MLP GP under this Section 2.4,
the Parties agree to characterize such payments for all purposes as a reduction
or refund of the net working capital contributed and not as consideration for
the transfer of the Contributed Interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
RELATING TO SE TRANSMISSION AND MLP GP
     Except as disclosed in the Disclosure Schedule, each of SE Transmission and
MLP GP, as applicable, hereby jointly and severally represents and warrants to
Spectra MLP as follows:
     Section 3.1 Organization. It is a limited liability company or limited
partnership, as applicable, duly organized, validly existing and in good
standing under the Laws of the State of Delaware.
     Section 3.2 Authorization; Enforceability. It has all requisite limited
liability company or limited partnership power and authority, as applicable, to
execute and deliver this Agreement and to perform all obligations to be
performed by it hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have

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been duly and validly authorized and approved by all requisite limited liability
company or limited partnership action, as applicable, on its part, and no other
limited liability company or limited partnership proceeding, as applicable, on
its part is necessary to authorize this Agreement. This Agreement has been duly
and validly executed and delivered by it, and this Agreement constitutes a valid
and binding obligation of it, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity.
     Section 3.3 No Conflict. The execution and delivery of this Agreement by it
and the consummation of the transactions contemplated hereby by it (assuming all
required filings, consents, approvals, authorizations and notices set forth in
Schedule 3.3 (collectively, the “Transmission Approvals”) have been made, given
or obtained) do not and shall not:
          (a) violate in any material respect any Law applicable to it or
Spectra Energy Corp or require of it or Spectra Energy Corp any filing with,
consent, approval or authorization of, or notice to, any Governmental Authority;
          (b) violate any of its or Spectra Energy Corp’s Organizational
Documents; or
          (c) (i) breach any material Contract to which it or Spectra Energy
Corp is a party or by which it or Spectra Energy Corp may be bound, (ii) result
in the termination of any such material Contract, (iii) result in the creation
of any Lien upon any of its Contributed Interests or (iv) constitute an event
which, after notice or lapse of time or both, would result in any such breach,
termination or creation of a Lien upon any of its Contributed Interests.
     Section 3.4 Litigation. There are no legal actions before any Governmental
Authority or lawsuits pending or, to the Knowledge of Spectra Transmission and
MLP GP, as applicable, threatened against it that would adversely affect its
ability to perform its obligations under this Agreement, and there are no orders
or unsatisfied judgments from any Governmental Authority binding upon it that
would adversely affect its ability to perform its obligations under this
Agreement.
     Section 3.5 Brokers’ Fees. Except as set forth on Schedule 3.5, no broker,
finder, investment banker or other Person is entitled to any brokerage fee,
finders’ fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by it or any of its
Affiliates.
     Section 3.6 Ownership of Contributed Interests.
          (a) It has good and valid title to, holds of record and owns its
Contributed Interests free and clear of any Liens other than transfer
restrictions imposed thereon by securities Laws.
          (b) SE Transmission, as of the date of this Agreement, owns 100% of
the equity interests of the Saltville Companies. The Contributed Interests
represent 100% of the limited liability company interests in Saltville LLC. With
respect to each Saltville Company, there are no outstanding options, warrants,
rights or other securities convertible into or

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exchangeable or exercisable for equity securities, any other commitments or
agreements providing for the issuance of additional equity interests or the
repurchase or redemption of equity interests, and there are no agreements of any
kind which may obligate any of the Saltville Companies to issue, purchase,
redeem or otherwise acquire any of their respective equity interests. Except as
set forth in Schedule 3.6(b), there are no voting agreements, proxies or other
similar agreements or understandings with respect to the equity interests of any
Saltville Company. All of its Contributed Interests are duly authorized, validly
issued and outstanding and fully paid, and were issued free of preemptive rights
in compliance with Laws. Upon consummation of the transactions contemplated by
this Agreement, Spectra MLP will acquire good and valid title to all of its
Contributed Interests, free and clear of any Liens other than transfer
restrictions imposed thereon by securities Laws or Liens created by Spectra MLP.
     Section 3.7 Investment Representation. It is purchasing the Common Units or
General Partner Units, as applicable, for its own account with the present
intention of holding such units for investment purposes and not with a view to
or for sale in connection with any public distribution of such units in
violation of any federal or state securities Laws. It acknowledges that such
Common Units or General Partner Units, as applicable, have not been registered
under federal and state securities Laws and that such Common Units or General
Partner Units, as applicable, may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of unless such transfer, sale,
assignment, pledge, hypothecation or other disposition is registered under
federal and state securities Laws or pursuant to an exemption from registration
under any federal or state securities Laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
RELATING TO THE SALTVILLE COMPANIES
     Except as disclosed in the Disclosure Schedule, each of SE Transmission and
MLP GP hereby jointly and severally represents and warrants to Spectra MLP as
follows:
     Section 4.1 Organization of the Saltville Companies. Each of the Saltville
Companies is a limited liability company or corporation, as applicable, duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Virginia, and has all requisite limited liability company or
corporate power and authority, as applicable, to own, operate or lease its
properties assets and to conduct the Business as it is now being conducted. Each
of the Saltville Companies is duly licensed or qualified in each jurisdiction in
which the ownership or operation of its assets or the character of its
activities is such as to require it to be so licensed or qualified, except where
the failure to be so licensed or qualified would not reasonably be expected to
have a Material Adverse Effect on the Saltville Companies. SE Transmission and
MLP GP has made available to Spectra MLP true copies of all existing
Organizational Documents of the Saltville Companies.
     Section 4.2 Enforceability of Merger Agreement. When executed, the Merger
Agreement will be duly and validly executed and delivered by the Saltville
Companies, and the Merger Agreement will, upon execution, constitute a valid and
binding obligation of the Saltville Companies, enforceable against them in
accordance with its terms, subject to bankruptcy,

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insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws
affecting creditors’ rights generally and subject, as to enforceability, to
general principles of equity.
     Section 4.3 No Conflict. The execution and delivery of this Agreement by
each of SE Transmission and MLP GP and the consummation of the transactions
contemplated hereby by SE Transmission and MLP GP (assuming all of the
Transmission Approvals have been made, given or obtained) do not and shall not:
          (a) violate, in any material respect, any Law applicable to the
Saltville Companies or require of the Saltville Companies any filing with,
consent, approval or authorization of, or notice to, any Governmental Authority;
          (b) violate any Organizational Document of the Saltville Companies; or
          (c) (i) breach any Material Contract, (ii) result in the termination
of any such Material Contract, (iii) result in the creation of any Lien under
any Material Contract or (iv) constitute an event which, after notice or lapse
of time or both, would result in any such breach, termination or creation of a
Lien.
     Section 4.4 Subsidiaries. The Saltville Companies do not own any equity
interests in any Person.
     Section 4.5 Financial Statements; Records; Undisclosed Liabilities.
          (a) Schedule 4.5 sets forth true and complete copies of the standalone
unaudited pro forma balance sheets of each Saltville Company and the
consolidated unaudited pro forma balance sheet of the Saltville Companies with
the adjustments set forth on Schedule 4.5, in each case as of the Balance Sheet
Date (such sheets being the “Financial Statements”). The Financial Statements
have been prepared in accordance with GAAP, in each case except as otherwise
stated in the footnotes and except for normal year-end adjustments and the
absence of footnote disclosure, and present fairly in accordance with GAAP, in
all material respects, the financial position of the Saltville Companies as of
such date.
          (b) All liabilities of the Saltville Companies that are required by
GAAP to be reflected or reserved against in the Financial Statements have been
so reflected or reserved against in the Financial Statements.
     Section 4.6 Absence of Certain Changes. Except as disclosed on
Schedule 4.6, from the Balance Sheet Date, (a) there has not been any Material
Adverse Effect on the Saltville Companies, (b) the Business of the Saltville
Companies has been conducted, in all material respects, only in the ordinary
course consistent with past practices, and (c) there has been no damage,
destruction or loss to the assets or properties of the Saltville Companies which
could reasonably be expected to have a Material Adverse Effect on the Saltville
Companies.

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     Section 4.7 Contracts.
          (a) Schedule 4.7(a) contains a true and complete listing of the
following Contracts to which any of the Saltville Companies is a party (such
Contracts that are required to be listed on Schedule 4.7(a) being “Material
Contracts”):
               (i) each Contract for the transportation or storage of gas;
               (ii) each Contract for Indebtedness for Borrowed Money except for
any that will be cancelled prior to Closing;
               (iii) each Contract involving a remaining commitment by a
Saltville Company to pay capital expenditures in excess of $50,000;
               (iv) each Contract for lease of personal property involving
payments in excess of $50,000 in any calendar year;
               (v) each Contract between SE Transmission, MLP GP or an Affiliate
of either (other than any of the Saltville Companies) on the one hand, and any
of the Saltville Companies, on the other hand, which will survive the Closing;
               (vi) each Contract that provides for a limit on the ability of a
Saltville Company to compete in any line of business or with any Person or in
any geographic area during any period of time after the Closing;
               (vii) except for Contracts of the nature described in clauses
(ii) through (vi) above, any Contract for the purchase of materials, supplies,
goods, services, equipment or other assets that provides for aggregate payments
by a Saltville Company of $50,000 or more in any 12 month period;
               (viii) any partnership or joint venture agreement (other than the
Organizational Documents of the Saltville Companies);
               (ix) any Contract pursuant to which any third party has rights to
own or use any material asset of a Saltville Company, including any Intellectual
Property right of a Saltville Company, other than pursuant to Contracts entered
into by the Saltville Companies with such third parties in the ordinary course
of business; and
               (x) any Contract relating to the acquisition or disposition
following the Closing of any business (whether by merger, sale of stock, sale of
assets or otherwise) or granting to any Person a right of first refusal, first
offer or right to purchase any of the assets of a Saltville Company which right
survives the Closing other than Permitted Liens.
          (b) True and complete copies of all Material Contracts have been made
available to Spectra MLP.
          (c) Except as set forth in Schedule 4.7(c), each Material Contract
(other than such Material Contracts with respect to which all performance and
payment obligations have

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been fully performed or otherwise discharged by all parties thereto prior to the
Closing) (i) is in full force and effect and (ii) represents the legal, valid
and binding obligation of the Saltville Company that is a party thereto and, to
the Knowledge of SE Transmission and MLP GP, represents the legal, valid and
binding obligation of the other parties thereto, in each case enforceable in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors’
rights generally and subject, as to enforceability, to general principles of
equity. Except as set forth in Schedule 4.7(c), none of the Saltville Companies,
or, to the Knowledge of SE Transmission and MLP GP, any other party is in breach
of any Material Contract, and none of SE Transmission, MLP GP or any Saltville
Company has received any written notice of termination or breach of any Material
Contract.
          (d) Schedule 4.7(d) lists all of the purchase and sale agreements
pursuant to which the Saltville Companies have acquired or disposed of any
assets or entities during the prior 24 months other than purchases and disposals
of assets in the ordinary course of business. True and correct copies of the
documents listed on Schedule 4.7(d) have been made available to Spectra MLP.
     Section 4.8 Intellectual Property.
          (a) The Saltville Companies own or have the right to use pursuant to
license, sublicense, agreement or otherwise all items of Intellectual Property
required in the operation of the Business as presently conducted. No third party
has asserted against any of the Saltville Companies any written claim that such
Saltville Company is infringing the Intellectual Property of such third party,
and, to the Knowledge of SE Transmission and MLP GP, no third party is
infringing the Intellectual Property owned by any of the Saltville Companies.
          (b) All of the Saltville Companies’ Intellectual Property which is
required to conduct the Business (as currently being conducted) is listed on
Schedule 4.8(b).
     Section 4.9 Litigation. Except as set forth in Schedule 4.9, (a) there are
no legal actions before any Governmental Authority or lawsuits pending or, to
the Knowledge of SE Transmission and MLP GP, threatened against any of the
Saltville Companies other than lawsuits or actions which could not reasonably be
expected to have a Material Adverse Effect and (b) no Saltville Companies is
subject to any injunction, order or unsatisfied judgment from any Governmental
Authority.
     Section 4.10 Taxes. Except as set forth on Schedule 4.10, with respect to
each Saltville Company (a) all Tax Returns required to be filed have been duly
and timely filed with the appropriate Tax Authority, and were, when filed, true,
correct and complete in all material respects, (b) all Taxes due and owing
(whether or not shown as due on any Tax Returns) have been timely paid in full,
(c) there are no Liens (other than Permitted Liens) on any of the assets of the
Saltville Companies that arose in connection with any failure (or alleged
failure) to pay any Tax, (d) there is no claim, action or proceeding pending by
any applicable Tax Authority in connection with any Tax (provided, however, that
the foregoing representation is limited to the Knowledge of SE Transmission and
MLP GP for periods prior to August 10, 2005), (e) no Tax Returns are now under
audit or examination by any Tax Authority (provided, however, that the

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foregoing representation is limited to the Knowledge of SE Transmission and MLP
GP for periods prior to August 10, 2005), (f) there are no agreements or waivers
providing for an extension of time with respect to the filing of any Tax Returns
or the assessment or collection of any such Tax, (g) no written claim has been
made by any Tax Authority in a jurisdiction where a Saltville Company does not
file a Tax Return that it is or may be subject to taxation in that jurisdiction,
(h) no Saltville Company is a party to any Tax-Sharing Agreement, and is not
otherwise liable for the Taxes of any other Person (including as a transferee or
successor), (i) since its inception, Saltville LLC has been treated either as a
partnership or has been disregarded as an entity separate from its owner for
federal income tax purposes pursuant to Treasury Regulation Section
301.7701-3(b)(1), (j) no power of attorney that is currently in force has been
granted with respect to any matter relating to Taxes that could affect any
Saltville Company, (k) no Saltville Company has, during any period for which the
statute of limitations for any relevant Tax has not expired, participated in any
listed transaction required to be disclosed under Treasury Regulation Section
1.6011-4, and (l) the Saltville Companies have no liability for Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Law), as a transferee or successor, by Contract, or
otherwise.
     Section 4.11 Environmental Matters. Except as set forth on Schedule 4.11 or
as would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect:
          (a) the operations of the Saltville Companies are in compliance in all
material respects with all Environmental Laws, which compliance includes the
possession and maintenance of, and compliance with, all material Permits
required under all Environmental Laws;
          (b) no Saltville Company is the subject of any outstanding
administrative or judicial order or judgment, agreement or arbitration award
from any Governmental Authority under any Environmental Laws requiring
remediation or the payment of a fine or penalty;
          (c) no Saltville Company is subject to any action pending or
threatened in writing, whether judicial or administrative, alleging
noncompliance with or potential liability under any Environmental Law;
          (d) there has been no Release of any Hazardous Substance into the
Environment by the Saltville Companies or their assets, operations and the
Business except in compliance with applicable Environmental Law (provided,
however, that the foregoing representation is limited to the Knowledge of SE
Transmission and MLP GP for periods prior to August 10, 2005); and
          (e) there has been no exposure of any Person or property to any
Hazardous Substances in connection with the operation of the assets of the
Saltville Companies (provided, however, that the foregoing representation is
limited to the Knowledge of SE Transmission and MLP GP for periods prior to
August 10, 2005).
     Spectra MLP acknowledges that this Section 4.11 shall be deemed to be the
only representation and warranty in this Agreement with respect to environmental
matters.

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     Section 4.12 Legal Compliance. Except with respect to (a) matters set forth
in Schedule 4.9 (b) compliance with Laws concerning Taxes (as to which
representations and warranties are made only pursuant to Section 4.10),
(c) compliance with Environmental Laws (as to which representations and
warranties are made only pursuant to Section 4.11) and (d) compliance with
Permits (as to which representations and warranties are made only pursuant to
Section 4.13), the Saltville Companies are in compliance in all material
respects with all Laws and, no Saltville Company has received written notice of
any violation of any Law relating to the operation of the Business or to any of
its assets or operations which could reasonably be expected to have a Material
Adverse Effect.
     Section 4.13 Permits. Except as set forth in Schedule 4.13, the Saltville
Companies possess all material Permits necessary for them to own their assets
and operate the Business as currently conducted. All such Permits are in full
force and effect. There are no lawsuits or other proceedings pending or, to the
Knowledge of SE Transmission and MLP GP, threatened in writing before any
Governmental Authority that seek the revocation, cancellation, suspension or
adverse modification thereof. Except as would not reasonably be expected,
individually or in the aggregate to have a Material Adverse Effect, such Permits
will not be subject to suspension, modification, revocation or non-renewal as a
result of the execution, delivery and consummation of the transactions
contemplated hereby.
     Section 4.14 Insurance. Schedule 4.14 contains a summary description of all
material policies of property, fire and casualty, product liability, workers’
compensation and other insurance held by or for the benefit of any of the
Saltville Companies as of the date of this Agreement. Except as reflected on
Schedule 4.14, there is no material claim by any Saltville Company pending under
any of such policies as to which coverage has been denied or disputed by the
underwriters of such policies. All premiums due and payable under such policies
have been paid, and the Saltville Companies have complied with the terms and
conditions of such written policies. All such insurance policies are in full
force and effect. No notice of cancellation of, or indication of an intention
not to renew, any such insurance policy has been received by SE Transmission or
MLP GP other than in the ordinary course of business.
     Section 4.15 Labor Relations; Employees. No Saltville Company (a) is a
party to any collective bargaining agreement or other labor union Contract
applicable to persons employed by SE Transmission’s or MLP GP’s Affiliates who
provide services to a Saltville Company, and, to the Knowledge of SE
Transmission and MLP GP, there are no organizational campaigns, petitions or
other unionization activities focusing on persons employed by SE Transmission’s
or MLP GP’s Affiliates who provide services to a Saltville Company which seeks
recognition of a collective bargaining unit, or (b) is subject to any strikes,
material slowdowns or material work stoppages pending or, to the Knowledge of SE
Transmission and MLP GP, threatened in writing between a Saltville Company and
any group of the foregoing employees. No Saltville Company (i) has any employees
and (ii) maintains, contributes or is subject to any liability in respect of
employee benefit or welfare plan of any nature, including plans subject to
ERISA.
     Section 4.16 Title to Properties and Related Matters.
          (a) The Saltville Companies have (i) good and defensible fee simple
title to or valid leasehold interests in all of their real property and
(ii) good and valid title to all of their

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personal property used in the ordinary conduct of the Business, except (x) for
such defects in title as could not, individually or in the aggregate, reasonably
be expected to materially and adversely impact the ability of the Companies to
conduct the Business and (y) for easements, rights of way and similar property
use rights which are addressed in Section 4.16(b), in each case free and clear
of Liens other than Permitted Liens. Schedule 4.16(a) includes a list of all
real estate leases which involve the payment by any Saltville Company of in
excess of $50,000 in any calendar year or which if lost would have a Material
Adverse Effect on the Saltville Companies (“Material Real Estate Leases”). The
Material Real Estate Leases are (i) in full force and effect, (ii) represent the
legal, valid and binding obligations of the Saltville Company that is a party
thereto and, to the Knowledge of SE Transmission and MLP GP, represent the
legal, valid and binding obligation of the other parties thereto, in each case
enforceable in accordance with its terms. No Saltville Company nor, to the
Knowledge of SE Transmission and MLP GP, any other party is in breach in any
material respect of any Material Real Estate Lease.
          (b) The Saltville Companies have such easements, rights of way and
other similar property use rights which are sufficient, in the aggregate, for
the Saltville Companies to conduct the Business as currently conducted except
for such defects that could not reasonably be expected to have a Material
Adverse Effect on the Saltville Companies. Spectra MLP acknowledges that this
Section 4.16(b) shall be deemed to be the only representation and warranty in
the Agreement with respect to easements, rights of way and other similar
property use rights held or used by the Saltville Companies.
     Section 4.17 Brokers’ Fees. No broker, finder, investment banker or other
Person is entitled to any brokerage fee, finders’ fee or other commission in
connection with the transactions contemplated in this Agreement based upon
arrangements made by any Saltville Company or any of its Affiliates.
     Section 4.18 Regulatory Matters. Saltville LLC has made a filing with the
Federal Energy Regulatory Commission to request the issuance of an order to
establish a certificated working gas capacity of the storage facility owned by
Saltville LLC at 3.0 Bcf.
ARTICLE V
REPRESENTATIONS AND WARRANTIES RELATING TO SPECTRA MLP
     Spectra MLP hereby represents and warrants as follows:
     Section 5.1 Organization of Spectra MLP. Spectra MLP is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware.
     Section 5.2 Authorization; Enforceability. Spectra MLP has all requisite
partnership power and authority to execute and deliver this Agreement and to
perform all obligations to be performed by it hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by all requisite
limited partnership action on the part of Spectra MLP, and no other partnership
proceeding on the part of Spectra MLP is necessary to authorize this Agreement.
This Agreement has been duly and validly executed and delivered by Spectra MLP,
and this Agreement constitutes a valid and binding obligation of Spectra MLP,
enforceable against

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Spectra MLP in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar Laws affecting
creditors’ rights generally and subject, as to enforceability, to general
principles of equity.
     Section 5.3 No Conflict. The execution and delivery of this Agreement by
Spectra MLP and the consummation of the transactions contemplated hereby by
Spectra MLP (assuming all required filings, consents, approvals authorizations
and notices set forth in Schedule 5.3 (collectively, the “Spectra MLP
Approvals”) have been made, given or obtained) do not and shall not:
          (a) violate in any material respect, any Law applicable to Spectra MLP
or require of Spectra MLP any filing with, consent, approval or authorization
of, or, notice to, any Governmental Authority;
          (b) violate any Organizational Document of Spectra MLP; or
          (c) (i) breach any material Contract, to which Spectra MLP is a party
or by which Spectra MLP may be bound, (ii) result in the termination of any such
material Contract, (iii) result in the creation of any Lien upon any of the
properties or assets of Spectra MLP or (iv) constitute an event which, after
notice or lapse of time or both, would result in any such breach, termination or
creation of a Lien.
     Section 5.4 Litigation. There are no legal actions before any Governmental
Authority or lawsuits pending or, to the Knowledge of Spectra MLP, threatened
against Spectra MLP that would adversely affect the ability of Spectra MLP to
perform its obligations under this Agreement, and there are no orders or
unsatisfied judgments from any Governmental Authority binding upon Spectra MLP
that would adversely affect the ability of Spectra MLP to perform its
obligations under this Agreement.
     Section 5.5 Brokers’ Fees. Except as set forth on Schedule 5.5, no broker,
finder, investment banker or other Person is entitled to any brokerage fee,
finders’ fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by Spectra MLP or
any of its Affiliates.
     Section 5.6 Issuance of SET Common Units and MLP GP General Partner Units.
Upon issuance, all of the SET Common Units and MLP GP General Partner Units will
be duly authorized; validly issued and outstanding; with respect to the SET
Common Units, fully paid (to the extent required by the Spectra MLP Partnership
Agreement); and, with respect to the SET Common Units, nonassessable (subject to
Del. Code Ann. Tit. 6, §§ 17-303, 17-607 and 17-804 (2007)), and will have been
issued free of preemptive rights in compliance with Laws. Upon consummation of
the transactions contemplated by this Agreement, SE Transmission and MLP GP will
acquire good and valid title to all of the SET Common Units and MLP GP General
Partner Units, free and clear of any Liens other than transfer restrictions
imposed thereon by securities Laws or arising under the Spectra MLP Partnership
Agreement.
     Section 5.7 Investment Representation. Spectra MLP is purchasing the
Contributed Interests for its own account with the present intention of holding
the Contributed Interests for investment purposes and not with a view to or for
sale in connection with any public distribution

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of the Contributed Interests in violation of any federal or state securities
Laws. Spectra MLP acknowledges that the Contributed Interests have not been
registered under federal and state securities Laws and that the Contributed
Interests may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of unless such transfer, sale, assignment, pledge,
hypothecation or other disposition is registered under federal and state
securities Laws or pursuant to an exemption from registration under any federal
or state securities Laws.
     Section 5.8 Spectra MLP SEC Documents. Spectra MLP has timely filed with
the Commission all forms, registration statements, reports, schedules and
statements required to be filed by it under the Exchange Act or the Securities
Act (all such documents filed on or prior to the date of this Agreement,
collectively, the “Spectra MLP SEC Documents”). The Spectra MLP SEC Documents,
including any audited or unaudited financial statements and any notes thereto or
schedules included therein (the “Spectra MLP Financial Statements”), at the time
filed (in the case of registration statements, solely on the dates of
effectiveness) (except to the extent corrected by a subsequently filed Spectra
MLP SEC Document filed prior to the date of this Agreement) (i) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be. The
Spectra MLP Financial Statements were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the Commission) and fairly present (subject in the case of unaudited
statements to normal, recurring and year-end audit adjustments) in all material
respects the consolidated financial position and status of the business of
Spectra MLP as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended. Deloitte & Touche LLP is
an independent registered public accounting firm with respect to Spectra MLP and
has not resigned or been dismissed as independent registered public accountants
of Spectra MLP as a result of or in connection with any disagreement with
Spectra MLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures.
ARTICLE VI
COVENANTS
     Section 6.1 Conduct of Business. From the date of this Agreement through
the Closing, except: (1) as set forth on Schedule 6.1, (2) for the Saltville
Restructuring, (3) for the filing of a rate case by the Saltville Companies with
the Federal Energy Regulatory Commission with respect to rates regarding gas
storage assets and the pursuit, renegotiation and settlement of customer
Contracts related to such assets, (4) as contemplated by this Agreement, or
(5) as consented to by Spectra MLP in writing (which consent shall not be
unreasonably withheld, conditioned or delayed):
          (a) each of SE Transmission and MLP GP shall cause each of the
Saltville Companies to (i) operate the Business in the ordinary course and
(ii) use Reasonable Efforts to preserve intact the Business and its relationship
with customers, suppliers and others having business relationships with any of
the Saltville Companies, and

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          (b) each of SE Transmission and MLP GP shall not permit the Saltville
Companies to:
               (i) amend its Organizational Documents;
               (ii) liquidate, dissolve, recapitalize or otherwise wind up the
Business;
               (iii) change its accounting methods, policies or practices,
except as required by GAAP or Law;
               (iv) sell, assign, transfer, lease or otherwise dispose of any
assets except in the ordinary course of business or pursuant to the terms of a
Material Contract;
               (v) make any capital expenditure in excess of $1,000,000 other
than capital expenditures reflected on Schedule 6.1 and other than reasonable
capital expenditures in connection with any emergency or force majeure events
affecting any Saltville Company;
               (vi) merge or consolidate with, or purchase substantially all of
the assets or business of, or equity interests in, or make an investment in any
Person (other than extensions of credit to customers in the ordinary course of
business);
               (vii) incur any Indebtedness for Borrowed Money or issue or sell
any equity interests, notes, bonds or other securities of any Saltville Company
(except for intercompany loans from or to SE Transmission or its Affiliates or
MLP GP or its Affiliates), or any option, warrant or right to acquire same;
               (viii) adopt any profit sharing, compensation, savings,
insurance, pension, retirement or other benefit plan or hire any employees;
               (ix) enter into any Contract, except for Contracts entered into
by any Saltville Company in the ordinary course of business;
               (x) create or assume any Lien, other than a Permitted Lien;
               (xi) terminate or close any facility, business or operation of
any Saltville Company except in the ordinary course of business; or
               (xii) agree, whether in writing or otherwise, to do any of the
foregoing.
     Section 6.2 Access. From the date hereof through the Closing, each of SE
Transmission and MLP GP shall afford to Spectra MLP and its authorized
Representatives reasonable access, during normal business hours and in such
manner as not unreasonably to interfere with normal operation of the Business,
to the properties, books, Contracts, records and appropriate officers and
employees of each of SE Transmission’s and MLP GP’s Affiliates who provide
services to any Saltville Company, and shall furnish such authorized
Representatives with all financial and operating data and other information
concerning the affairs of any Saltville Company as Spectra MLP and such
Representatives may reasonably request. Each of SE Transmission and MLP GP shall
have the right to have a Representative present at all times during any such
inspections, interviews, and examinations. Notwithstanding the foregoing,

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Spectra MLP shall have no right of access to, and none of SE Transmission and
MLP GP shall have any obligation to provide to Spectra MLP, information relating
to (a) any information the disclosure of which would jeopardize any privilege
available to any Saltville Company, SE Transmission, any SE Transmission
Affiliate, MLP GP or any MLP GP Affiliate relating to such information or
(b) any information the disclosure of which would result in a violation of Law.
     Section 6.3 Third Party Approvals. Spectra MLP, MLP GP and SE Transmission
shall (and shall each cause their respective Affiliates to) use Reasonable
Efforts to obtain all material consents and approvals of third parties that any
of Spectra MLP, MLP GP, SE Transmission or their respective Affiliates are
required to obtain in order to consummate the transactions contemplated hereby.
     Section 6.4 Saltville Restructuring. From the date of this Agreement until
the Closing, SE Transmission and MLP GP shall, and shall cause their respective
Affiliates to, use Reasonable Efforts to cause the Saltville Restructuring to be
consummated as soon as possible on or after April 1, 2008, including making all
filings with respect thereto and seeking all approvals required in connection
therewith; provided, however, that SE Transmission and MLP GP shall not be
obligated to effect or consent to any action that would have a Material Adverse
Effect on Spectra Energy Corp or any of its Affiliates; provided further,
however, that in no event shall the Saltville Companies enter into a Contract in
replacement of any Contract listed on Schedule 4.7(a)(i) with a particular
customer at a rate lower than the rate charged to such customer or with a
shorter term than the term then remaining under its existing Contract without
the prior written consent of Spectra MLP, which consent shall not unreasonably
be withheld.
     Section 6.5 Company Guarantees.
          (a) A list of Company Guarantees as of the date of this Agreement is
set forth on Schedule 6.5.
          (b) Notwithstanding anything to the contrary herein, the Parties
acknowledge and agree that at any time following the Closing Date, each of SE
Transmission and MLP GP and their respective Affiliates may, in their sole
discretion, take any action to terminate, obtain release of or otherwise limit
its liability under any and all outstanding Company Guarantees; provided,
however, that any such party shall give Spectra MLP 90 days advance written
notice prior to taking any such action.
     Section 6.6 Indebtedness for Borrowed Money. Immediately prior to the
Closing, (i) each of SE Transmission and MLP GP shall cause the Saltville
Companies to distribute to SE Transmission or MLP GP, as applicable, any
Indebtedness for Borrowed Money due to the Saltville Companies from SE
Transmission or its Affiliates and MLP GP or its Affiliates, as applicable, and
(ii) SE Transmission and MLP GP shall cancel and contribute to the capital of
the Saltville Companies (or, as applicable, cause its Affiliates to cancel) any
Indebtedness for Borrowed Money due from the Saltville Companies to SE
Transmission or its Affiliates and MLP GP or its Affiliates, as applicable, in
each case including interest and other amounts accrued thereon or due in respect
thereof.

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     Section 6.7 Update Information. At any time up to 10 days before the
Closing, SE Transmission and MLP GP shall supplement in writing any information
furnished on the Disclosure Schedule to reflect post-signing developments and
matters that have come to the Knowledge of SE Transmission and MLP GP (which if
not included on a Schedule would constitute a breach of this Agreement by SE
Transmission or MLP GP, as applicable) by furnishing such supplemented
information to Spectra MLP pursuant to the notice provisions hereof. If (a) SE
Transmission or MLP GP so furnishes supplemental information, (b) the absence of
such information would have resulted in a breach of any representation or
warranty under this Agreement and (c) the Closing occurs, then such information
shall be deemed to amend this Agreement and the Disclosure Schedule for all
purposes hereunder; provided, however, that if such supplemental disclosure
would or would reasonably be expected to result in Losses to the Saltville
Companies in excess of $2,500,000 in the aggregate, then Spectra MLP may elect,
by written notice delivered to SE Transmission and MLP GP to terminate this
Agreement no later than two Business Days before Closing.
     Section 6.8 Books and Records. From and after the Closing, Spectra MLP
shall preserve and keep a copy of all books and records (other than Tax records
which are addressed in Article VII) relating to the Business or operations of
the Saltville Companies on or before the Closing Date in Spectra MLP’s
possession for a period of at least seven years after the Closing Date. After
such seven year period, before Spectra MLP shall dispose of any such books and
records, Spectra MLP shall give each of SE Transmission and MLP GP at least
90 days prior notice to such effect, and each of SE Transmission and MLP GP
shall be given an opportunity, at their cost and expense, to remove and retain
all or any part of such books and records as each of SE Transmission and MLP GP
may select. Spectra MLP shall provide to each of SE Transmission and MLP GP, at
no cost or expense to such Party, reasonable access during business hours to
such books and records as remain in Spectra MLP’s possession and reasonable
access during business hours to the properties and employees of Spectra MLP and
any of the Saltville Companies in connection with matters relating to the
Business or operations of the Saltville Companies on or before the Closing Date
and any disputes relating to this Agreement.
     Section 6.9 Permits. SE Transmission, MLP GP and Spectra MLP shall
cooperate to provide all notices and otherwise take all reasonable actions
required to transfer or reissue any Permits, including those required under
Environmental Laws, as a result of or in furtherance of the transactions
contemplated by this Agreement.
     Section 6.10 Excluded Assets.
          (a) Spectra MLP acknowledges that the Saltville Companies will, prior
to the Closing, convey, assign and transfer to SE Transmission or one of its
Affiliates (other than the Saltville Companies), all right, title and interest
in and to the consideration received pursuant to the Asset Purchase Agreement
and the other assets, properties and rights (and associated liabilities and
obligations) and the liabilities and obligations (and associated assets,
properties and rights) described or referenced in Schedule 6.10 and neither
Spectra MLP nor the Saltville Companies shall have any claims or rights with
respect to such consideration, assets, properties, rights, liabilities and
obligations (such assets, properties, rights, liabilities and obligations, the
“Excluded Assets”) under this Agreement.

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          (b) Notwithstanding anything herein to the contrary, (i) all
references herein to any revenues, expenses, assets, or liabilities of the
Saltville Companies shall expressly exclude the Excluded Assets, (ii) all
references herein to the Business, whether with respect to financial,
accounting, legal, Tax or other position or operation, shall expressly exclude
the businesses or the position or operation of the businesses included in the
Excluded Assets and (iii) none of SE Transmission and MLP GP and their
respective Affiliates makes any representations, warranties or covenants with
respect to the Excluded Assets.
     Section 6.11 Noncompetition Agreement. From and after the Closing Date,
Spectra MLP shall cause Saltville LLC to comply with the terms of the
Noncompetition Agreement, dated as of October 11, 2001, by and between Virginia
Gas Company and Heritage Holdings, Inc.
     Section 6.12 Asset Purchase Agreement. Spectra MLP shall (i) cause East
Tennessee Natural Gas, LLC and, from and after the Closing, Saltville LLC (as
successor-in-interest by merger to SE Virginia Pipeline under the Asset Purchase
Agreement) to refrain from amending, supplementing, or otherwise modifying the
Asset Purchase Agreement without the prior written consent of SE Transmission
(which consent SE Transmission may withhold in its sole discretion) and
(ii) promptly forward to SE Transmission any notices given by East Tennessee
Natural Gas, LLC to Saltville LLC in connection with the Asset Purchase
Agreement.
ARTICLE VII
TAX MATTERS
     Section 7.1 Tax Returns.
          (a) Through the Closing, each of SE Transmission and MLP GP shall
cause Saltville LLC to continue either to be treated as a partnership or
disregarded as an entity separate from its owner for federal income tax purposes
pursuant to Treasury Regulation Section 301.7701-3(b)(1), and the operations of
each of the Saltville Companies through the Effective Time shall be reflected on
the consolidated federal income Tax Return of Spectra Energy Corp. The income of
the Saltville Companies will be apportioned to the period up to and including
the Effective Time, and the period after the Effective Time, by closing the
books of the Saltville Companies as of the Effective Time.
          (b) Except as provided in Section 7.1(d) for ad valorem Taxes, with
respect to any Tax Return of any Saltville Company covering a taxable period
ending on or before the Effective Time that is required to be filed after the
Effective Time, SE Transmission shall cause such Tax Return to be prepared and
shall cause to be included in such Tax Return all Tax items required to be
included therein. Not later than 15 days prior to the due date of each such Tax
Return, SE Transmission shall deliver a copy of such Tax Return to Spectra MLP
together with a statement of the difference, if any, of the amount of Tax shown
due on such Tax Return over the amount set up as a liability for such Tax (for
the period through the Effective Time) in the Final Net Working Capital. If the
Tax shown on the Tax Return exceeds the amount set up as a liability for the Tax
(for the period through the Effective Time) in the Final Net Working Capital,
not later than the due date of such Tax Return, each of SE Transmission and MLP
GP shall pay to Spectra MLP its share of such amount of such excess. If the
amount set up as a liability for

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the Tax (for the period through the Effective Time) in the Final Net Working
Capital exceeds the Tax shown on the Tax Return, not later than the due date of
such Tax Return, Spectra MLP shall pay to SE Transmission and MLP GP in
proportion to such Party’s ownership of the Saltville Companies prior to this
Agreement the amount of such excess. Spectra MLP shall cause such Saltville
Company to file the Tax Return and timely pay the Taxes shown due on such Tax
Return.
          (c) With respect to any Tax Return of a Saltville Company covering a
taxable period beginning on or before the Effective Time and ending after the
Effective Time that is required to be filed after the Effective Time, Spectra
MLP shall cause such Tax Return to be prepared and shall cause to be included in
such Tax Return all Tax items required to be included therein. Spectra MLP shall
determine (by an interim closing of the books as of the Effective Time except
for franchise Taxes based solely on capital and ad valorem Taxes which shall be
prorated on a daily basis) the Tax which would have been due with respect to the
period covered by such Tax Return if such taxable period ended on the Effective
Time (the “Pre-Closing Tax”). For this purpose, any franchise Tax paid or
payable with respect to any Saltville Company shall be allocated to the taxable
period for which payment of the Tax provides the right to engage in business,
regardless of the taxable period during which the income, operations, assets or
capital comprising the base of such Tax is measured. Not later than 15 days
prior to the due date of each such Tax Return, Spectra MLP shall deliver a copy
of such Tax Return to each SE Transmission and MLP GP for their review. Spectra
MLP shall make all reasonable changes to such Tax Return as requested by each of
SE Transmission and MLP GP not later than ten days prior to the due date of such
Tax Return. Not later than the due date of the Tax Return, either (i) each of SE
Transmission and MLP GP shall pay to Spectra MLP their share of the excess, if
any, of the Pre-Closing Tax over the amount set up as a liability for the
Pre-Closing Tax in the Final Net Working Capital, or (ii) Spectra MLP shall pay
to SE Transmission or MLP GP in proportion to such Party’s ownership of
Saltville LLC prior to this Agreement the excess, if any, of the amount set up
as a liability for the Pre-Closing Tax in the Final Net Working Capital over the
Pre-Closing Tax. Spectra MLP shall cause such Saltville Company to file the Tax
Return and timely pay the Taxes shown due on such Tax Return.
          (d) Ad valorem Taxes relating to the Saltville Companies for any tax
year that includes periods prior to the Closing Date shall be prorated on a
daily basis between Spectra MLP on the one hand and SE Transmission on the other
hand, with SE Transmission responsible for the prorated portion of such Taxes
for the period up to and including the Closing Date and Spectra MLP responsible
for the prorated portion of such Taxes after the Closing Date. The Party that
receives the ad valorem Tax billing (the “Billed Party”) shall provide a copy of
such billing to the other Party together with a calculation of the prorated ad
valorem Taxes owed by each Party. The Party that did not receive the ad valorem
Tax billing shall pay its prorated portion of the ad valorem Taxes to the Billed
Party prior to the due date of such Taxes and the Billed Party shall be
responsible for the timely payment of the ad valorem Taxes to the taxing
authorities.
          (e) Any Tax Return prepared pursuant to the provisions of this
Section 7.1 shall be prepared in a manner consistent with practices followed in
prior years with respect to similar Tax Returns, except as otherwise required by
Law or fact. Any dispute arising pursuant

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to the provisions of Section 7.1(b) or Section 7.1(c) shall be resolved pursuant
to procedures comparable to the procedures applicable under Sections 2.4.
          (f) Spectra MLP, MLP GP and SE Transmission shall cooperate fully, and
Spectra MLP shall cause each of the Saltville Companies to cooperate fully, as
and to the extent reasonably requested by the other Party, in connection with
the preparation and filing of Tax Returns pursuant to this Section 7.1 (and
Section 7.5), requests for the provision of any information or documentation
within the knowledge or possession of the other Party as reasonably necessary to
facilitate compliance with financial reporting obligations arising under FASB
Statement No. 109 (including without limitation, compliance with Financial
Accounting Standards Board Interpretation No. 48), and any audit, litigation or
other proceeding (each a “Tax Proceeding”) with respect to Taxes. Such
cooperation shall include access to, the retention and (upon the other Party’s
request) the provision of records and information which are reasonably relevant
to any such Tax Return or Tax Proceeding, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. SE Transmission will, MLP GP will and Spectra
MLP will and will cause the Saltville Companies to, (i) retain all books and
records with respect to Tax matters pertinent to the Saltville Companies
relating to any taxable period beginning before the Effective Time until the
later of six years after the Effective Time or the expiration of the applicable
statute of limitations of the respective taxable periods (including any
extensions thereof), and to abide by all record retention agreements entered
into with any Tax Authority, and (ii) give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, Spectra MLP, MLP GP or SE
Transmission, as the case may be, shall allow the other parties to take
possession of such books and records. Spectra MLP, MLP GP and SE Transmission
each agree, upon request, to use Reasonable Efforts to obtain any certificate or
other document from any Tax Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed with respect to the
transactions contemplated by this Agreement.
     Section 7.2 Transfer Taxes. Responsibility for the payment of all state and
local transfer, sales, use, stamp, registration or other similar Taxes resulting
from the transactions contemplated by this Agreement shall be borne 50% by
Spectra MLP and 50% by SE Transmission and MLP GP in proportion to their
ownership of the Saltville Companies prior to this Agreement.
     Section 7.3 Tax Indemnity.
          (a) SE Transmission and MLP GP shall be jointly and severally liable
for, shall pay and shall protect, defend, indemnify and hold harmless Spectra
MLP and the Saltville Companies from (i) any breach of the representations and
warranties contained in Section 4.10, (ii) any and all Taxes in excess of any
liability for Taxes (for the period through the Effective Time) reflected in the
Final Net Working Capital which relate to or result from the income, Business,
property or operations of the Saltville Companies prior to the Effective Time,
(iii) any Taxes arising as a result of the Saltville Restructuring and (iv) with
respect to any tax liabilities of the Saltville Companies as a result of the
provisions of Treasury Regulation Section 1.1502-6 or any similar provision of
foreign, state or local law. Spectra MLP shall be solely liable for, shall pay
and shall protect, defend, indemnify and hold harmless each of SE Transmission
and

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MLP GP from any and all Taxes which relate to or result from the income,
Business, property or operations of the Saltville Companies after the Effective
Time.
          (b) If any claim (an “Indemnified Tax Claim”) is made by any Tax
Authority that, if successful, would result in indemnification of any Party (the
“Tax Indemnified Party”) by another Party (the “Tax Indemnifying Party”) under
this Section 7.3, the Tax Indemnified Party shall promptly, but in no event
later than the earlier of (i) 45 days after receipt of notice from the Tax
Authority of such claim or (ii) 15 days prior to the date required for the
filing of any protest of such claim, notify the Tax Indemnifying Party in
writing of such fact.
          (c) The Tax Indemnifying Party shall control all decisions with
respect to any Tax Proceeding involving an Indemnified Tax Claim and the Tax
Indemnified Party shall take such action (including settlement with respect to
such Tax Proceeding or the prosecution of such Tax Proceeding to a determination
in a court or other tribunal of initial or appellate jurisdiction) in connection
with a Tax Proceeding involving an Indemnified Tax Claim as the Tax Indemnifying
Party shall reasonably request in writing from time to time, including the
selection of counsel and experts and the execution of powers of attorney;
provided, however, that (i) within 30 days after the notice required by
Section 7.3(b) has been delivered (or such earlier date that any payment of
Taxes with respect to such claim is due but in no event sooner than five days
after the Tax Indemnifying Party’s receipt of such notice), the Tax Indemnifying
Party requests that such claim be contested, and (ii) if the Tax Indemnified
Party is requested by the Tax Indemnifying Party to pay the Tax claimed and sue
for a refund, the Tax Indemnifying Party shall have advanced to the Tax
Indemnified Party, on an interest-free basis, the amount of such claim. The Tax
Indemnified Party shall not make any payment of an Indemnified Tax Claim for at
least 30 days (or such shorter period as may be required by Law) after the
giving of the notice required by Section 7.3(b) with respect to such claim,
shall give to the Tax Indemnifying Party any information requested related to
such claim, and otherwise shall cooperate with the Tax Indemnifying Party in
order to contest effectively any such claim.
     Section 7.4 Scope. Notwithstanding anything to the contrary herein, this
Article VII shall be the exclusive remedy for any claims relating to Taxes
(including any claims relating to representations respecting Tax matters
including Section 4.10). The rights under this Article VII shall survive the
Closing until 30 days after the expiration of the statute of limitations
(including extensions) applicable to such Tax matter. No claim may be made or
brought by any Party hereto after the expiration of the applicable survival
period unless such claim has been asserted by written notice specifying the
details supporting the claim on or prior to the expiration of the applicable
survival period.
     Section 7.5 Tax Refunds. In the event that Spectra MLP receives any refund
of Taxes from a taxing jurisdiction or a reimbursement of Taxes from a third
party with respect to any Pre-Closing Taxable Period (which refund is not
reflected in “Accrued Taxes” on the balance sheet of Saltville LLC dated as of
the Closing Date prepared in connection with the determination of Final Net
Working Capital), such amounts shall belong to SE Transmission and MLP GP and
shall be forwarded by Spectra MLP to SE Transmission and MLP GP in proportion to
such Party’s ownership of Saltville LLC prior to this Agreement within 10 days
of receipt.

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ARTICLE VIII
CONDITIONS TO OBLIGATIONS
     Section 8.1 Conditions to Obligations of Spectra MLP. The obligation of
Spectra MLP to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions, any one or more of
which may be waived in writing by Spectra MLP:
          (a) All necessary filings with and consents, approvals, licenses,
Permits, and orders of any Governmental Authority required by Law for the
consummation of the transactions contemplated in this Agreement shall have been
made and obtained, other than those that do not or would not reasonably be
expected to result in Losses to the Saltville Companies in excess of $2,500,000
in the aggregate. All necessary consents of any third party, other than any
Governmental Authority, required for the consummation of the transactions
contemplated in this Agreement shall have been made and obtained, including the
Transmission Approvals and Spectra MLP Approvals, other than those that do not
or would not reasonably be expected to result in Losses to the Saltville
Companies in excess of $2,500,000 in the aggregate;
          (b) each of the representations and warranties of SE Transmission and
MLP GP contained in this Agreement shall be true as of the date of this
Agreement and as of the Closing, as if made at and as of that time (other than
such representations and warranties that expressly address matters only as of a
certain date, which need only be true as of such certain date);
          (c) each of SE Transmission and MLP GP shall have performed or
complied in all material respects with all of the covenants and agreements
required by this Agreement to be performed or complied with by it at or before
the Closing;
          (d) each of SE Transmission and MLP GP shall have delivered to Spectra
MLP a certificate dated the Closing Date, certifying that the conditions
specified in Sections 8.1(b) and 8.1(c) have been fulfilled;
          (e) no statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction, judgment or other order
shall have been enacted, entered, promulgated, enforced or issued by any
Governmental Authority, or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a Governmental Authority shall have
been instituted or threatened challenging or seeking to restrain or prohibit the
transactions contemplated hereby or to recover damages in connection therewith;
          (f) the closing under the Asset Purchase Agreement has occurred; and
          (g) the Saltville Restructuring has been consummated without the
occurrence of a Material Adverse Effect on Spectra MLP or the Saltville
Companies.
     Section 8.2 Conditions to the Obligations of SE Transmission and MLP GP.
The obligation of each of SE Transmission and MLP GP to consummate the
transactions

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contemplated by this Agreement is subject to the satisfaction of the following
conditions, any one or more of which may be waived in writing by SE
Transmission:
          (a) All necessary filings with and consents, approvals, Permits, and
orders of any Governmental Authority required by Law for the consummation of the
transactions contemplated in this Agreement shall have been made and obtained,
other than those that would not reasonably be expected, in the aggregate, to
have a Material Adverse Effect on SE Transmission or MLP GP. All necessary
consents of any third party, other than any Governmental Authority, required for
the consummation of the transactions contemplated in this Agreement shall have
been made and obtained, including the Transmission Approvals and Spectra MLP
Approvals, other than those that would not reasonably be expected, in the
aggregate, to have a Material Adverse Effect on SE Transmission or MLP GP;
          (b) each of the representations and warranties of Spectra MLP
contained in this Agreement shall be true as of the date of this Agreement and
as of the Closing, as if made anew at and as of that time (other than such
representations and warranties that expressly address matters only as of a
certain date, which need only be true as of such certain date);
          (c) Spectra MLP shall have performed or complied in all material
respects with all of the covenants and agreements required by this Agreement to
be performed or complied with by Spectra MLP on or before the Closing;
          (d) Spectra MLP shall have delivered to each of SE Transmission and
MLP GP a certificate, dated the Closing Date, certifying that the conditions
specified in Section 8.2(b) and (c) have been fulfilled;
          (e) no statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction, judgment or other order
shall have been enacted, entered, promulgated, enforced or issued by any
Governmental Authority, or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a court or any other governmental
agency or body shall have been instituted or threatened challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this Agreement or to recover damages in connection therewith;
          (f) the closing under the Asset Purchase Agreement has occurred; and
          (g) the Saltville Restructuring has been consummated without the
occurrence of a Material Adverse Effect on Spectra Energy Corp or any of its
Affiliates.
ARTICLE IX
INDEMNIFICATION
     Section 9.1 Survival.
          (a) The representations and warranties of the Parties contained in
this Agreement and all covenants contained in this Agreement that are to be
performed prior to the Closing will survive the closing for 18 months following
the Closing; provided, however, that

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(i) the Fundamental Representations and Warranties shall survive for the
applicable statute of limitations, (ii) the representations and warranties set
forth in Section 4.10 shall survive as set forth in Article VII and (iii) the
representations and warranties in Section 4.11 shall survive for three years
following the Closing. The P-25 Indemnity Obligations (as defined below) shall
survive as set forth in the Asset Purchase Agreement. No Party shall have any
liability for indemnification claims made under this Article IX with respect to
any such representation, warranty or pre-closing covenant unless a Claim Notice
is provided by the non-breaching Party to the other Party prior to the
expiration of the applicable survival period for such representation, warranty
or pre-closing covenant. If a Claim Notice has been timely given in accordance
with this Agreement prior to the expiration of the applicable survival period
for such representation, warranty or pre-closing covenant or claim, then the
applicable representation, warranty or pre-closing covenant shall survive as to
such claim, until such claim has been finally resolved.
          (b) All covenants and agreements of the Parties contained in this
Agreement to be performed after the Closing will survive the Closing in
accordance with their terms.
     Section 9.2 Indemnification.
          (a) Subject to Article VII relating to Taxes, the provisions of this
Article IX and, as to the P-25 Indemnity Obligations, all rights, counterclaims,
defenses and limitations available under the Asset Purchase Agreement to SE
Virginia Pipeline (except for defenses arising from the involuntary bankruptcy,
insolvency, dissolution or liquidation of SE Virginia Pipeline), from and after
the Closing, each of SE Transmission and MLP GP shall indemnify and hold
harmless Spectra MLP, Spectra MLP’s Affiliates (other than SE Transmission and
MLP GP) and their respective Representatives (the “Spectra MLP Indemnified
Parties”) from and against all Losses that Spectra MLP Indemnified Parties incur
arising from (i) any breach of any representation, warranty or covenant of SE
Transmission or MLP GP, as applicable, in this Agreement or in the certificates
to be delivered at Closing or (ii) any breach of any representation, warranty or
covenant of SE Virginia Pipeline at or prior to closing under the Asset Purchase
Agreement or in the certificates delivered at the closing thereunder or any
indemnity obligation thereunder relating to periods on or prior to the closing
thereunder (collectively, the “P-25 Indemnity Obligations”).
          (b) Subject to Article VII relating to Taxes and the provisions of
this Article IX, from and after the Closing, Spectra MLP shall indemnify and
hold harmless SE Transmission and its Affiliates and their respective
Representatives (the “SE Transmission Indemnified Parties”) and MLP GP and its
Affiliates and their respective Representatives (the “MLP GP Indemnified
Parties”) from and against all Losses that each of the SE Transmission
Indemnified Parties and MLP GP Indemnified Parties incur arising from or out of
(i) any breach of any representation, warranty or covenant of Spectra MLP in
this Agreement or in the certificate to be delivered at Closing or (ii) relating
to any Company Guarantees.
          (c) Notwithstanding anything to the contrary herein, the Parties shall
have a duty to use Reasonable Efforts to mitigate any Loss arising out of or
relating to this Agreement or the transactions contemplated hereby.

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          (d) Notwithstanding anything to the contrary herein, to the extent
that any Spectra MLP Indemnified Party incurs Losses arising from any breach of
any representation, warranty or covenant of SE Transmission or MLP GP, as
applicable, in this Agreement, and recourse is available to it for all or a
portion of such Losses under the AGL Agreement, then such Spectra MLP
Indemnified Party shall give SE Transmission and MLP GP a Claim Notice therefor
and first use its Reasonable Efforts for a period of one year to seek
indemnification under the AGL Agreement and shall have recourse hereunder for
such Losses only to the extent not recovered pursuant to the AGL Agreement. The
delivery of a Claim Notice in respect of such Losses shall toll the applicable
survival period under Section 9.1 for the duration of such year. Notwithstanding
the foregoing, Spectra MLP agrees not to initiate litigation pursuant to the AGL
Agreement and, at such time as it determines efforts at recovery pursuant to the
AGL Agreement short of litigation are unlikely to be successful, Spectra MLP
shall notify SE Transmission thereof and SE Transmission may then freely pursue
such litigation. If SE Transmission decides to initiate such litigation prior to
the end of the above-referenced one year period, or otherwise as of the
expiration of such one year period, Spectra MLP shall no longer be obligated to
seek recourse under the AGL Agreement with respect to the applicable matters.
          (e) Notwithstanding anything in this Article IX to the contrary, all
Losses relating to Taxes which are the subject of Article VII shall only be
subject to indemnification under Section 7.3.
     Section 9.3 Indemnification Procedures. Claims for indemnification under
this Agreement (other than claims involving a Tax Proceeding, the procedures for
which are set forth in Article VII) shall be asserted and resolved as follows:
          (a) Any Spectra MLP Indemnified Party, MLP GP Indemnified Party or SE
Transmission Indemnified Party claiming indemnification under this Agreement (an
“Indemnified Party”) with respect to any claim asserted against the Indemnified
Party by a third party (“Third Party Claim”) in respect of any matter that is
subject to indemnification under Section 9.2 shall promptly (i) notify the
appropriate Party (the “Indemnifying Party”) of the Third Party Claim and
(ii) transmit to the Indemnifying Party a written notice (“Claim Notice”)
describing in reasonable detail the nature of the Third Party Claim, a copy of
all papers served with respect to such claim (if any), the Indemnified Party’s
best estimate of the amount of Losses attributable to the Third Party Claim and
the basis of the Indemnified Party’s request for indemnification under this
Agreement. Failure to timely provide such Claim Notice shall not affect the
right of the Indemnified Party’s indemnification hereunder, except to the extent
the Indemnifying Party is prejudiced by such delay or omission.
          (b) The Indemnifying Party shall have the right to defend the
Indemnified Party against such Third Party Claim. If the Indemnifying Party
notifies the Indemnified Party that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend such Third Party Claim with counsel selected by the Indemnifying
Party (who shall be reasonably satisfactory to the Indemnified Party), by all
appropriate proceedings, to a final conclusion or settlement at the discretion
of the Indemnifying Party in accordance with this Section 9.3(b). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnifying Party shall not enter into any settlement agreement without the

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written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, conditioned or delayed); provided, further, that such
consent shall not be required if (i) the settlement agreement contains a
complete and unconditional general release by the third party asserting the
claim to all Indemnified Parties affected by the claim and (ii) the settlement
agreement does not contain any sanction or restriction upon the conduct of any
business by the Indemnified Party or its Affiliates. If requested by the
Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Party, to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim which the Indemnifying Party elects
to contest, including the making of any related counterclaim against the Person
asserting the Third Party Claim or any cross complaint against any Person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 9.3(b), and the Indemnified Party shall bear its own costs and expenses
with respect to such participation.
          (c) If the Indemnifying Party does not notify the Indemnified Party
that the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 9.3(b), then the Indemnified Party shall have the right to defend, and
be reimbursed for its reasonable cost and expense (but only if the Indemnified
Party is actually entitled to indemnification hereunder) in regard to the Third
Party Claim with counsel selected by the Indemnified Party (who shall be
reasonably satisfactory to the Indemnifying Party), by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the Indemnified
Party. In such circumstances, the Indemnified Party shall defend any such Third
Party Claim in good faith and have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into any compromise
or settlement of such Third Party Claim if indemnification is to be sought
hereunder, without the Indemnifying Party’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed). The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 9.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.
          (d) Subject to the other provisions of this Article IX, a claim for
indemnification for any matter not involving a Third Party Claim may be asserted
by notice to the Party from whom indemnification is sought.
          (e) Notwithstanding anything to the contrary in this Section 9.3, the
indemnification procedures set forth in Article VII shall control any
indemnities relating to Taxes.
     Section 9.4 Additional Agreements Regarding Indemnification.
Notwithstanding anything to the contrary herein:
          (a) a breach of any representation or warranty (other than with
respect to a breach of the Fundamental Representations and Warranties) of SE
Transmission or MLP GP in this Agreement in connection with any single item or
group of related items that results in Losses of less than $10,000 shall be
deemed, for all purposes of this Article IX not to be a breach of such
representation, warranty or pre-closing covenant;

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          (b) neither SE Transmission nor MLP GP shall have any liability
arising out of or relating to Section 9.2(a) for breaches of representations or
warranties (other than with respect to a breach of the Fundamental
Representations and Warranties) or the P-25 Indemnity Obligations except if the
aggregate Losses actually incurred by Spectra MLP Indemnified Parties thereunder
exceed $1,070,000 (and then, subject to Section 9.4(c), only to the extent such
aggregate Losses exceed such amount);
          (c) in no event shall the aggregate liability of SE Transmission or
MLP GP arising out of or relating to Section 9.2(a) for breaches of
representations or warranties (other than with respect to a breach of the
Fundamental Representations and Warranties) or the P-25 Indemnity Obligations
exceed $21,400,000;
          (d) the amount of any Loss for which a Spectra MLP Indemnified Party
claims indemnification under this Agreement shall be reduced by: (i) any
insurance proceeds actually recovered with respect to such Loss; (ii) any Tax
Benefits with respect to such Loss and (iii) indemnification or reimbursement
payments actually recovered from third parties with respect to such Loss;
          (e) for purposes of determining whether there has been a breach or
inaccuracy of a representation or warranty by a party in connection with the
assertion of a claim for indemnification under Article IX, or determining the
amount of a Loss, with respect to any asserted breach or inaccuracy, such
determination shall be made without regard to any qualifier as to “material,”
“materiality” or Material Adverse Effect expressly contained in Article III or
IV;
          (f) as contemplated by Section 6.10(b), none of SE Transmission and
MLP GP and their respective Affiliates shall have any liability hereunder that
arises out of or relating to the Excluded Assets;
          (g) the provisions of Section 8.4(b) and Section 8.4(c) of the Asset
Purchase Agreement do not apply as to any claim for a P-25 Indemnity Obligation
brought hereunder; and
          (h) for the avoidance of doubt, nothing in this Section 9.4 shall
affect the provisions of Article VII.
     Section 9.5 Waiver of Other Representations.
          (a) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO, AND THE PARTIES HEREBY AGREE, THAT NONE OF
SE TRANSMISSION, MLP GP OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES
HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO
THE CONDITION, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE WITH RESPECT TO THE CONTRIBUTED INTERESTS, THE SALTVILLE COMPANIES,
THEIR ASSETS OR ANY PART THEREOF, EXCEPT THOSE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, AND WITHOUT IN ANY WAY LIMITING THE FOREGOING,
NEITHER

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SE TRANSMISSION NOR MLP GP MAKES ANY REPRESENTATION OR WARRANTY TO SPECTRA MLP
WITH RESPECT TO ANY FINANCIAL PROJECTIONS OR FORECASTS RELATING TO THE SALTVILLE
COMPANIES.
          (b) The representations and warranties contained in Section 4.11 shall
be the exclusive representations and warranties with regard to Environmental
Laws and related matters.
     Section 9.6 Total Consideration Adjustment. The Parties agree to treat all
payments made pursuant to this Article IX as adjustments to the SET
Consideration and MLP GP Consideration, as applicable, for Tax purposes.
     Section 9.7 Exclusive Remedy.
          (a) Notwithstanding anything to the contrary herein except as provided
in Sections 7.2, 7.3, 9.2 or 10.2, no Party shall have any liability, and no
Party shall make any claim, for any Loss or other matter (and Spectra MLP, MLP
GP and SE Transmission hereby waive any right of contribution against the other
and their respective Affiliates), under, arising out of or relating to this
Agreement, any other document, agreement, certificate or other matter delivered
pursuant hereto or the transactions contemplated hereby, whether based on
contract, tort, strict liability, other Laws or otherwise.
          (b) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NO PARTY SHALL BE
LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT
DAMAGES, LOST PROFITS, LOST OPPORTUNITIES OR OTHER SPECULATIVE DAMAGES, WHETHER
BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR
NOT ARISING FROM ANY OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT; PROVIDED, HOWEVER, THAT THIS SECTION 9.7(b) SHALL NOT
LIMIT A PARTY’S RIGHT TO RECOVERY UNDER ARTICLE IX FOR ANY SUCH DAMAGES TO THE
EXTENT SUCH PARTY IS REQUIRED TO PAY SUCH DAMAGES TO A THIRD PARTY IN CONNECTION
WITH A MATTER FOR WHICH SUCH PARTY IS OTHERWISE ENTITLED TO INDEMNIFICATION
UNDER ARTICLE IX.
ARTICLE X
TERMINATION
     Section 10.1 Termination. At any time prior to the Closing, this Agreement
may be terminated and the transactions contemplated hereby abandoned:
          (a) pursuant to Section 6.7;
          (b) by the mutual consent of Spectra MLP, MLP GP and SE Transmission
as evidenced in writing signed by each of Spectra MLP, MLP GP and SE
Transmission;
          (c) by any of Spectra MLP, MLP GP or SE Transmission if any
Governmental Authority having competent jurisdiction has issued a final,
non-appealable order, decree, ruling or injunction (other than a temporary
restraining order) or taken any other action

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permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
          (d) by any of Spectra MLP, MLP GP or SE Transmission, if the Closing
has not occurred on or before September 30, 2008 or such later date as the
Parties may agree upon.
     Section 10.2 Effect of Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any Party hereto other than for any prior breaches, as to which the Parties will
remain liable and/or to which the other Party shall be entitled to all rights
and remedies available under Law or equity. The provisions of Sections 10.2 and
11.4 shall survive any termination of this Agreement.
ARTICLE XI
MISCELLANEOUS
     Section 11.1 Notices. Any notice, request, demand and other communication
required or permitted to be given hereunder shall be in writing, and may be
served by personal delivery, facsimile or by depositing same in the mail,
addressed to the Party to be notified, first class, postage prepaid, and
registered or certified with a return receipt requested. Notice deposited in the
mail in the manner hereinabove described shall be deemed to have been given and
received on the date of the delivery as shown on the return receipt. Notice
served in any other manner shall be deemed to have been given and received only
if and when actually received by the addressee (except that notice given by
facsimile shall be deemed given and received upon receipt only if received
during normal business hours and, if received other than during normal business
hours, shall be deemed received as of the opening of business on the next
Business Day). For purposes of notice, the addresses of the Parties shall be as
follows:

  (a)   If to Spectra MLP, to:         Spectra Energy Partners, LP
5400 Westheimer Court
Houston, TX 77056
Attention: Greg Harper, President and Chief Executive Officer
Facsimile: (713) 989-1818         With copies to:         Spectra Energy
Partners, LP
5400 Westheimer Court
Houston, TX 77056
Attention: Chairman of the Conflicts Committee of the Board of Directors of
Spectra Energy Partners GP, LLC
Facsimile: (713) 650-8105

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  (b)   If to SE Transmission, to:         Spectra Energy Transmission, LLC
c/o Spectra Energy Corp
5400 Westheimer Court
Houston, TX 77056
Attention: Alan N. Harris, Chief Development Officer
                   Room Code: WO 8M56
Facsimile: (713) 627-4635         with copies to:         Spectra Energy
Transmission, LLC
c/o Spectra Energy Corp
5400 Westheimer Court
Houston, TX 77056
Attention: Anders K. Torning, Associate General Counsel – M & A
                   Room Code: WMO 9D65
Facsimile: (713) 989-3190     (c)   If to MLP GP, to:         Spectra Energy
Partners (DE) GP, LP
c/o Spectra Energy Corp
5400 Westheimer Court
Houston, TX 77056
Attention: Alan N. Harris, Chief Development Officer
                   Room Code: WO 8M56
Facsimile: (713) 627-4635         with copies to:         Spectra Energy
Partners (DE) GP, LP
c/o Spectra Energy Corp
5400 Westheimer Court
Houston, TX 77056
Attention: Anders K. Torning, Associate General Counsel – M & A
                   Room Code: WMO 9D65
Facsimile: (713) 989-3190

or to such other address or addresses as the Parties may from time to time
designate in writing.
     Section 11.2 Assignment. No Party shall assign this Agreement or any part
hereof without the prior written consent of all of the other Parties. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the Parties and their respective permitted successors and assigns.

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     Section 11.3 Rights of Third Parties. Except for the provisions of
Section 9.2 which are intended to be enforceable by the Persons respectively
referred to therein, nothing expressed or implied in this Agreement is intended
or shall be construed to confer upon or give any Person, other than the Parties,
any right or remedies under or by reason of this Agreement.
     Section 11.4 Expense. Except as otherwise provided herein, each Party shall
bear its own expenses incurred in connection with this Agreement and the
transactions herein contemplated hereby whether or not such transactions shall
be consummated, including all fees of its legal counsel, financial advisers and
accountants.
     Section 11.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any facsimile copies
hereof or signature hereon shall, for all purposes, be deemed originals.
     Section 11.6 Entire Agreement. This Agreement (together with the Disclosure
Schedule and exhibits to this Agreement) constitutes the entire agreement among
the Parties and supersedes any other agreements, whether written or oral, that
may have been made or entered into by or among any of the Parties or any of
their respective Affiliates relating to the transactions contemplated hereby.
     Section 11.7 Disclosure Schedule. Unless the context otherwise requires,
all capitalized terms used in the Disclosure Schedule shall have the respective
meanings assigned in this Agreement. No reference to or disclosure of any item
or other matter in the Disclosure Schedule shall be construed as an admission or
indication that such item or other matter is material or that such item or other
matter is required to be referred to or disclosed in the Disclosure Schedule. No
disclosure in the Disclosure Schedule relating to any possible breach or
violation of any agreement or Law shall be construed as an admission or
indication that any such breach or violation exists or has actually occurred.
The inclusion of any information in the Disclosure Schedule shall not be deemed
to be an admission or acknowledgment by SE Transmission or MLP GP, as
applicable, in and of itself, that such information is material to or outside
the ordinary course of the Business of the Saltville Companies or required to be
disclosed on the Disclosure Schedule.
     Section 11.8 Amendments. This Agreement may be amended or modified in whole
or in part, and terms and conditions may be waived, only by a duly authorized
agreement in writing which makes reference to this Agreement executed by each
Party.
     Section 11.9 Publicity. All press releases or other public communications
of any nature whatsoever relating to the transactions contemplated by this
Agreement, and the method of the release for publication thereof, shall be
subject to the prior consent of Spectra MLP, MLP GP and SE Transmission, which
consent shall not be unreasonably withheld, conditioned or delayed by any Party;
provided, however, that nothing herein shall prevent a Party from publishing
such press releases or other public communications as such Party may consider
necessary in order to satisfy such Party’s obligations at Law or under the rules
of any stock or commodities exchange after consultation with the other Party as
is reasonable under the circumstances.

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     Section 11.10 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, then the other
provisions of this Agreement shall remain in full force and effect. The Parties
further agree that if any provision contained herein is, to any extent, held
invalid or unenforceable in any respect under the Laws governing this Agreement,
then they shall take any actions necessary to render the remaining provisions of
this Agreement valid and enforceable to the fullest extent permitted by Law and,
to the extent necessary, shall amend or otherwise modify this Agreement to
replace any provision contained herein that is held invalid or unenforceable
with a valid and enforceable provision giving effect to the intent of the
Parties to the greatest extent legally permissible.
     Section 11.11 Governing Law; Jurisdiction.
          (a) This Agreement shall be governed and construed in accordance with
the Laws of the State of Texas without regard to the Laws that might be
applicable under conflicts of laws principles.
          (b) The Parties agree that the appropriate, exclusive and convenient
forum for any disputes between any of the Parties hereto arising out of this
Agreement or the transactions contemplated hereby shall be in any state or
federal court in Houston, Texas, and each of the Parties hereto irrevocably
submits to the jurisdiction of such courts solely in respect of any legal
proceeding arising out of or related to this Agreement. The Parties further
agree that the Parties shall not bring suit with respect to any disputes arising
out of this Agreement or the transactions contemplated hereby in any court or
jurisdiction other than the above specified courts; provided, however, that the
foregoing shall not limit the rights of the Parties to obtain execution of
judgment in any other jurisdiction. The Parties further agree, to the extent
permitted by Law, that a final and unappealable judgment against a Party in any
action or proceeding contemplated above shall be conclusive and may be enforced
in any other jurisdiction within or outside the United States by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of the fact and amount of such judgment. Except to the extent that a different
determination or finding is mandated due to the Law being that of a different
jurisdiction, the Parties agree that all judicial determinations or findings by
a state or federal court in Houston, Texas with respect to any matter under this
Agreement shall be binding.
          (c) To the extent that any Party hereto has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
such party hereby irrevocably (i) waives such immunity in respect of its
obligations with respect to this Agreement and (ii) submits to the personal
jurisdiction of any court described in Section 11.11(b).
          (d) THE PARTIES HERETO AGREE THAT THEY HEREBY IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR INTERPRET THE PROVISIONS OF
THIS AGREEMENT.
     Section 11.12 Action by Spectra MLP. With respect to any action (including
any case where the agreement of, or selection by, Spectra MLP is required),
notice, consent, approval or waiver that is required to be taken or given or
that may be taken or given by Spectra MLP prior

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to or after the Closing Date with respect to, or in connection with, the subject
matter hereof, such action, notice, consent, approval or waiver shall be taken
or given by the Conflicts Committee on behalf of Spectra MLP.

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
each Party as of the date first above written.

                      SE TRANSMISSION:
 
                    SPECTRA ENERGY TRANSMISSION, LLC
 
                    By:   /s/ Mark R. Fiedorek                   Name: Mark R.
Fiedorek         Title: Group Vice President, Southeast Transmission and Storage
 
                    MLP GP:
 
                    SPECTRA ENERGY PARTNERS (DE) GP, LP
 
                    By:      Spectra Energy Partners GP, LLC,
its general partner
 
               
 
      By:      /s/ Paul K. Haralson
 
               
 
          Name:   Paul K. Haralson
 
          Title:   Assistant Treasurer
 
                    SPECTRA MLP:
 
                    SPECTRA ENERGY PARTNERS, LP
 
                    By:   Spectra Energy Partners (DE) GP, LP, its general
partner
 
                        By:   Spectra Energy Partners GP, LLC,
its general partner
 
               
 
          By:   /s/ C. Gregory Harper
 
               
 
              Name: C. Gregory Harper
 
              Title: President and Chief Executive Officer

[Signature Page to the Contribution Agreement]

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FIRST AMENDMENT TO
OMNIBUS AGREEMENT
     THIS FIRST AMENDMENT TO OMNIBUS AGREEMENT (“First Amendment”) is entered
into on, and effective as of,                    , 2008, and is by and among
Spectra Energy Corp, a Delaware corporation (“Spectra”), Spectra Energy Partners
GP, LLC, a Delaware limited liability company (“GP LLC”), Spectra Energy
Partners (DE) GP, LP, a Delaware limited partnership (the “General Partner”) and
Spectra Energy Partners, LP, a Delaware limited partnership (the “Partnership”).
The above-named entities are sometimes referred to in this First Amendment each
as a “Party” and collectively as the “Parties.”
R E C I T A L S:
     1. The Parties entered into that certain Omnibus Agreement, dated and
effective as of the Closing Date (as defined therein) (the “Current Agreement"),
to (i) evidence their agreement with respect to the amount to be paid by the
Partnership for certain general and administrative services to be performed by
Spectra and its Affiliates (as defined in the Current Agreement) as well as
direct expenses, including operating expenses, incurred by Spectra and its
Affiliates for and on behalf of the Partnership Group (as defined in the Current
Agreement) and (ii) evidence their agreement with respect to certain
indemnification obligations of the Parties.
     2. The Parties desire to amend the Current Agreement to, among other
things, reflect the contribution of Saltville LLC (as defined herein) to the
Partnership Group from certain Affiliates of Spectra and the extension of the
reimbursement obligations of Article III of the Current Agreement for expenses
made by Spectra and its Affiliates on behalf of Saltville LLC.
     In consideration of the agreements contained herein, and for other good and
valuable consideration, the Parties hereby agree as follows:
ARTICLE I
Definitions
     Defined Terms. Each capitalized term used herein but not otherwise defined
herein has the meaning given such term in the Current Agreement. Unless
otherwise indicated, all section references in this First Amendment refer to
sections of the Current Agreement.
ARTICLE II
Amendment to Current Agreement
     Amendments to Section 1.1
          (a) The following definition is hereby amended in its entirety to read
as follows:
     “Agreement” means this Omnibus Agreement as amended by the First Amendment,
as it may be further amended, modified or supplemented from time to time in
accordance with the terms hereof.

 

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          (b) The definition of “Partnership Assets” is hereby amended by adding
the following proviso to the end of such definition prior to the period:
     “; provided, however, that with respect to Article III only, Partnership
Assets shall also include Saltville LLC”
          (c) The following definitions are hereby added where alphabetically
appropriate to read as follows:
     “First Amendment” means the First Amendment to Omnibus Agreement dated as
of                      , 2008 among Spectra, GP LLC, the General Partner and
Partnership.
     “Saltville LLC” means Saltville Gas Storage Company L.L.C., a limited
liability company organized under the Laws of the [Commonwealth of Virginia].
ARTICLE III
Miscellaneous
     Confirmation. The provisions of the Current Agreement, as amended by this
First Amendment, shall remain in full force and effect following the execution
of this First Amendment.
     Choice of Law; Submission to Jurisdiction. This First Amendment shall be
subject to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this First Amendment to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State
of Texas and to venue in Houston, Texas.
     Entire Agreement. This First Amendment constitutes the entire agreement of
the Parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.

 

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     Counterparts. This First Amendment may be executed in any number of
counterparts, including facsimile counterparts, with the same effect as if all
signatory Parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument.
     Severability. If any provision of this First Amendment or the application
thereof to any Person or circumstance shall be held invalid or unenforceable by
a court or regulatory body of competent jurisdiction, the remainder of this
First Amendment and the application of such provision to other Persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
[The remainder of this page is left blank intentionally.]

 

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     IN WITNESS WHEREOF, the Parties have executed this First Amendment on, and
effective as of, the date first written above.

                  SPECTRA ENERGY CORP    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   
 
                SPECTRA ENERGY PARTNERS GP, LLC    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   
 
                SPECTRA ENERGY PARTNERS (DE) GP, LP    
 
           
 
  By:   Spectra Energy Partners GP, LLC,
its general partner    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   
 
                SPECTRA ENERGY PARTNERS, LP    
 
           
 
  By:   Spectra Energy Partners (DE) GP, LP, its general partner    
 
           
 
  By:   Spectra Energy Partners GP, LLC,
its general partner    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title: