Exhibit 10.1

Execution Copy

PURCHASE AND SALE AGREEMENT

AMONG

HPL STORAGE LP, AND

AEP ENERGY SERVICES GAS HOLDING COMPANY II, L.L.C.

AS SELLERS

AND

LA GRANGE ACQUISITION, L.P.,

AS BUYER

DATED AS OF JANUARY 26, 2005

Purchase and Sale Agreement

 

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PURCHASE AND SALE AGREEMENT

TABLE OF CONTENTS

                      1.   RULES OF CONSTRUCTION; DEFINITIONS     1  
 
                   

    1.1.     Definitions     1  

    1.2.     Rules of Construction     2  
 
                    2.   PURCHASE AND SALE; CONSIDERATION; CLOSING     2  
 
                   

    2.1.     Purchase and Sale of the Purchased Interests     2  

    2.2.     Consideration     2  

    2.3.     The Closing     12  

    2.4.     Closing Obligations     12  
 
                    3.   SELLERS’ REPRESENTATIONS AND WARRANTIES     15  
 
                   

    3.1.     Organization and Good Standing of Sellers     15  

    3.2.     Enforceability; Authority; No Conflict; No Consent Requirements
with Respect to Sellers     15  

    3.3.     No Litigation Against Sellers     16  

    3.4.     Organization and Good Standing of the HPL Companies     16  

    3.5.     No Conflict; No Consent Requirements with Respect to the HPL
Companies     17  

    3.6.     Capitalization of the HPL Companies; Sellers’ Title     17  

    3.7.     Financial Statements of the HPL Entities     18  

    3.8.     No Material Adverse Change     18  

    3.9.     No Undisclosed Liabilities     18  

    3.10.     Property and Leases of the HPL Companies     19  

    3.11.     Contracts of the HPL Companies     19  

    3.12.     Insurance Maintained by the HPL Companies     20  

    3.13.     No Litigation Against the HPL Companies     20  

    3.14.     Compliance by the HPL Entities with Applicable Law; Permits     21
 

    3.15.     Intellectual Property of the HPL Companies     21  

    3.16.     Tax Matters     21  

    3.17.     Workforce Matters of the HPL Entities     23  

    3.18.     Environmental Matters     24  

    3.19.     Regulatory Matters     26  

    3.20.     Affiliate Transactions of the HPL Companies     26  

    3.21.     Finders and Brokers     26  

    3.22.     Bankruptcy     26  

    3.23.     Sufficiency of Assets     26  

    3.24.     Certain Warranty Disclaimers     26  
 
                    4.   BUYER’S REPRESENTATIONS AND WARRANTIES     27  
 
                   

    4.1.     Organization and Good Standing of Buyer     28  

    4.2.     Enforceability; Authority; No Conflict; No Consent Requirements
with Respect to Buyer     28  

    4.3.     No Litigation Against Buyer     29  

    4.4.     Finders and Brokers     29  

    4.5.     Bankruptcy     29  

    4.6.     Availability of Funds     29  
 
                    5.   COVENANTS OF THE PARTIES     30  
 
                   

    5.1.     Continuing Access     30  

    5.2.     Retained Matters     30  

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  5.3.   Workforce Matters     31  
 
  5.4.   Discontinuation of Intercompany Transactions     36  
 
  5.5.   Termination and Continuation of Certain Insurance Coverages     37  
 
  5.6.   Substitutions of Credit Support     37  
 
  5.7.   Claims for Certain Measurement Adjustments     38  
 
  5.8.   Discontinuance of Trademarks and Tradenames     38  
 
  5.9.   Change of Sellers’ Names     39  
 
  5.10.   Required Notices     39  
 
  5.11.   Public Statements     39  
 
  5.12.   Audit Matters     39  
 
  5.13.   Post-Closing Title Review     40  
 
  5.14.   Distributions to HPL Consolidation’s Partners     42  
 
  5.15.   Agreement to Cover Open Positions     42  
 
                6.   SURVIVAL; INDEMNIFICATION     42  
 
               
 
  6.1.   Survival     42  
 
  6.2.   Indemnification by Seller     43  
 
  6.3.   Indemnification by Buyer     47  
 
  6.4.   Indemnification Net of Benefits; Mitigation Obligations of Indemnitee  
  48  
 
                7.   TAX MATTERS     48  
 
               
 
  7.1.   Tax Indemnification     48  
 
  7.2.   Preparation and Filing of Tax Returns     49  
 
  7.3.   Procedures Relating to Indemnification of Tax Claims     50  
 
  7.4.   Tax Refunds and Credits     51  
 
  7.5.   Tax Treatment of Payments     51  
 
  7.6.   Transfer Taxes     51  
 
  7.7.   Termination of Participation in Tax Allocation Agreement     51  
 
  7.8.   Allocation of the Purchase Price     51  
 
                8.   GENERAL PROVISIONS     52  
 
               
 
  8.1.   Notice Provisions     52  
 
  8.2.   Confidentiality     53  
 
  8.3.   Schedules and Exhibits     54  
 
  8.4.   Interest on Overdue Amounts     55  
 
  8.5.   Amendment     55  
 
  8.6.   Merger and Integration; Binding on Successors; No Third        
 
      Party Beneficiaries; Assignment     55  
 
  8.7.   Forbearance and Waiver     55  
 
  8.8.   Partial Invalidity     55  
 
  8.9.   Attorney’s Fees     55  
 
  8.10.   Governing Law; Jurisdiction and Venue     56  
 
  8.11.   Waiver of Right to Jury Trial     56  
 
  8.12.   Construction     56  
 
  8.13.   Multiple Counterparts     56  
 
  8.14.   Further Assurances     56  
 
  8.15.   Headings     57  

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PURCHASE AND SALE AGREEMENT

          This Purchase and Sale Agreement (the “Agreement”) is made to be
effective as of January 26, 2005 among HPL Storage LP, a Delaware limited
partnership (“Storage LP”), AEP Energy Services Gas Holding Company II, L.L.C.,
a Delaware limited liability company (“AEP Gas Holding II”, and together with
Storage LP, individually, a “Seller” and collectively, “Sellers”), and La Grange
Acquisition, L.P., a Texas limited partnership (“Buyer”), as follows:

RECITALS

A.   Sellers own all of the outstanding partner interests in HPL Consolidation
LP, a Delaware limited partnership (“HPL Consolidation”)]. HPL Consolidation
owns all of the outstanding member interests in each of HPL Storage GP LLC, a
Delaware limited liability company (“Storage GP”) and HPL GP, LLC, a Delaware
limited liability company (“HPL GP”). HPL Consolidation, Storage GP, and HPL GP
own all of the outstanding partner interests in each of AEP Asset Holdings LP, a
Delaware limited partnership (“Storage Holdings”), AEP Leaseco LP, a Delaware
limited partnership (“Storage Leaseco”), Houston Pipe Line Company LP, a
Delaware limited partnership (“HPL Company LP”), HPL Resources Company LP, a
Delaware limited partnership (“HPL Resources”), and AEP Gas Marketing LP, a
Delaware limited partnership (“Gas Marketing”). HPL Consolidation, Storage GP,
HPL GP, Storage Holdings, Storage Leaseco, HPL Company LP, HPL Resources, and
Gas Marketing are herein referred to collectively as the “HPL Entities”, or
separately as “HPL Entity”.

B.   The HPL Entities are engaged, through themselves and the HPL Entity
Subsidiaries, in the gathering, transportation, purchase, sale, and storage of
natural gas within the State of Texas (the “Business”).

C.   Sellers desire to sell and Buyer desires to buy, on the terms and
conditions herein set forth, all of the general partner interests in HPL
Consolidation and all of the limited partner interests in HPL Consolidation,
with the exception of a 2% limited partner interest in HPL Consolidation to be
retained by Storage LP.

AGREEMENTS

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, and covenants contained herein and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:

1.   RULES OF CONSTRUCTION; DEFINITIONS

1.1.   Definitions.

As used in this Agreement, terms defined in Exhibit 1.1 hereto have the meanings
set forth therein or, to the extent they are accounting terms, they will have
the meanings set forth in GAAP.

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1.2.   Rules of Construction.

Unless the context of this Agreement requires otherwise, the plural includes the
singular, the singular includes the plural, and “including” has the inclusive
meaning of “including without limitation.” The words “hereof,” “herein,”
“hereby,” “hereunder” and other similar terms of this Agreement refer to this
Agreement as a whole and not exclusively to any particular provision of this
Agreement. All pronouns and any variations thereof will be deemed to refer to
masculine, feminine or neuter, singular or plural, as the identity of the Person
or Persons may require. Unless otherwise expressly provided, any agreement,
instrument or Applicable Law defined or referred to herein means such agreement
or instrument or Applicable Law as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of Applicable Law) by succession of comparable
successor law and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein.

2.   PURCHASE AND SALE; CONSIDERATION; CLOSING

2.1.   Purchase and Sale of the Purchased Interests.

Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing on the Closing Date, Buyer agrees to purchase from Sellers,
respectively, and Sellers hereby agree to sell, transfer and assign to Buyer,
free of any and all Encumbrances other than Permitted Encumbrances, a 1% general
partner interest and a 97% limited partner interest in HPL Consolidation (the
“Purchased Interests”).

Immediately after the consummation of the purchase and sale contemplated hereby,
Storage LP will continue to own a 2% limited partner interest in HPL
Consolidation, such retained interest being referred to herein as the “Retained
Interest”. Buyer has no rights in or with respect to the Retained Interest.

2.2.   Consideration.

  2.2.1.   Purchase Price. The consideration for the Purchased Interests (the
“Purchase Price”) will be:

  (a)   $825,000,000; plus     (b)   the Net Working Capital Payment determined
pursuant to Section 2.2.3 hereof; plus     (c)   the Inventory Payment
determined pursuant to Section 2.2.4 hereof.

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The Purchase Price will be allocated between the Sellers in the following
proportion:

                Seller     Allocation    
Storage LP
AEP Gas Holding II
    37%
63%    

2.2.2.   Closing Payment. In accordance with Section 2.4.2(a), at the Closing,
Buyer will tender to Sellers or their designee the portion of the Purchase Price
described in Section 2.2.1(a) hereof, plus the Initial Net Working Capital
Payment pursuant to Section 2.2.3 hereof, plus the Initial Inventory Payment
pursuant to Section 2.2.4 hereof (collectively, the “Closing Payment”). The
amount of the Closing Payment will be reduced by $760,552 to reflect interest
from the receipt of funds by the Sellers to the Valuation Time.

2.2.3.   Net Working Capital Payment. The “Net Working Capital Payment” will be
equal to the net aggregate of the Initial Net Working Capital Payment and the
Net Working Capital Adjustment, which in the aggregate are intended to reflect
the positive or negative Net Working Capital as of the Valuation Time. The Net
Working Capital Payment will be computed and paid as follows:

  (a)   At the Closing, Buyer will pay (or receive as a credit against the other
elements of the Closing Payment) as part of the Net Working Capital Payment, an
amount (the “Initial Net Working Capital Payment”) equal to Sellers’ good faith
estimate of the aggregate Net Working Capital of the HPL Entities expected as of
the Valuation Time determined in accordance with Exhibit 2.2.3. Such estimate
will be based on pro forma balance sheets of the HPL Entities as of the
Valuation Time, to be prepared by Sellers in accordance with GAAP and in
consultation with Buyer, in the same format and level of detail as the Final
Balance Sheet, and to be delivered to Buyer no later than 2 Business Days before
the scheduled Closing Date.     (b)   Within 90 days following the Closing Date,
Buyer will prepare and deliver to Sellers (i) unaudited balance sheets of each
of the HPL Entities as of the Valuation Time (each a “Final Balance Sheet”),
prepared in accordance with GAAP consistently applied, and (ii) a detailed
computation of the Net Working Capital of each of the HPL Entities as of the
Valuation Time, reconciled to those balance sheets and (iii) a computation of
the amount, if any, (the “Net Working Capital Adjustment”) by which the
aggregate

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Net Working Capital of the HPL Entities as of the Valuation Time, as so
computed, exceeds or is less than the Initial Net Working Capital Payment.
Sellers will provide Buyer and its representatives and advisors (and if
appropriate, the Independent Accounting Firm), at no expense to Buyer, with all
accounting services, assistance, and access to data during normal business hours
to the working papers, accounting, operating, and other books and records of
Sellers, and the appropriate personnel to the extent required to complete the
preparation of the Final Balance Sheets and the related computations, and any
deadline imposed by this Agreement on Buyer for the computation or payment of
the Net Working Capital Adjustment will be extended as appropriate in light of
any party’s failure to promptly make such information available. Pursuant to the
Transition Services Agreement, Sellers shall also ensure that the employees of
Sellers (to the extent they continue to be employed by Sellers or any Affiliate
of Sellers) previously involved with the foregoing accounting services and
operation activities will perform their customary and usual monthly tasks,
including the assistance in the month end closing of the books and records of
the HPL Entities, during the periods following the Closing Date for purposes of
the foregoing. Buyer shall also ensure that the employees of Sellers (to the
extent they continue to be employed by Sellers or any Affiliate of Sellers and
made available under the Transition Services Agreement) and the Transferred
Employees (to the extent they continue to be employed by Buyer or any Affiliate
of Buyer) previously involved with the foregoing accounting services and
operation activities will perform their customary and usual monthly tasks,
including the assistance in the month end closing of the books and records of
the HPL Entities, during the periods following the Closing Date for purposes of
the foregoing. However, if Sellers have failed to assist and provide reasonable
access to data as required for Buyer to complete the preparation of the Final
Balance Sheets and the related computations, Buyer must notify Sellers of such
failure on or before the 90th day following the Closing Date specifying in
detail the documents that Buyer requires, and Buyer will have an additional
90 days after receipt to complete the preparation of the Final Balance Sheets
and the related computations. If Sellers do not dispute the Final Balance Sheets
or the related computations in accordance with the next following sentence, the
Net Working Capital Adjustment as computed by Buyer will be final and binding as
between the parties hereto. If Sellers wish to dispute the Final Balance Sheets
or the related computations, it may do so, within 30 days (or such longer period
as the parties hereto may agree in writing) after the submission of the Final
Balance Sheets, by notifying Buyer in writing of any disputed items in the Net
Working Capital Adjustment. Sellers and Buyer shall, over

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the 20 days following the date of such notice (the “Resolution Period”), attempt
to resolve their differences and any written resolution by them as to any
disputed item shall be final and binding for all purposes of this Agreement. If
at the conclusion of the Resolution Period, Sellers and Buyer have not reached
an agreement on the disputed items, then all items remaining in dispute shall be
submitted by Sellers and Buyer to the Independent Accounting Firm. The
Independent Accounting Firm shall act as an arbitrator to determine only those
items still in dispute at the end of the Resolution Period. In making its
decision, the arbitrator must render a decision on each disputed item that
adopts the position of one of the parties on that item and may not decide on any
other amount for that item. The parties shall instruct the Independent
Accounting Firm to render its reasoned written decision as soon as practicable
but in no event later than 60 days after its engagement (which engagement shall
be made no later than 10 Business Days after the end of the Resolution Period).
Such decision shall be set forth in a written statement delivered to Sellers and
Buyer and shall be final and, binding for all purposes of this Agreement, and
judgment may be entered thereon. The fees and expenses of the Independent
Accounting Firm will be paid one-half by Sellers and one-half by Buyer.

  (c)   Within 30 days of receipt by Sellers of the Final Balance Sheets and
related computations described in Section 2.2.3(b) hereof from Buyer (or, if
Sellers dispute the same, then within 10 days of the parties’ resolution of any
disputed items or receipt of the Independent Accounting Firm’s decision on any
disputed items) Buyer will pay to Sellers or their designee an amount equal to
any positive Net Working Capital Adjustment, or Sellers will pay to pay to Buyer
an amount equal to any negative Net Working Capital Adjustment, in either such
case by wire transfer and with interest thereon at the Borrowing Rate from the
Closing Date to the date of payment.     (d)   Notwithstanding any other
provisions of this Agreement, no later than November 30 of the year in which the
Closing occurs, Buyer will provide to Sellers a detailed schedule of property
taxes for the HPL Companies for the calendar year in which the Closing occurs.
Included with the schedule will be copies of each Tax statement and/or bill. The
schedule will detail the allocation of property taxes to Sellers in accordance
with the computation of Net Working Capital. In the event the amount of the
allocation of property taxes to Sellers exceeds the amount of property taxes
allocated to Sellers as computed for the Net Working Capital Adjustment computed
pursuant to Section 2.2.3(b) of this Agreement, Sellers will pay the excess to
Buyer within 20

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Business Days. If the amount allocated to Sellers is less than the amount as
computed for the Net Working Capital Adjustment pursuant to Section 2.2.3(b) of
this Agreement, Buyer will pay to Sellers the deficit within 20 Business Days.
Payments made pursuant to this Section are subject to the provisions of
Section 7.5 of this Agreement. In the event of a dispute over the allocation of
property taxes under this Section 2.2.3(d), Buyer and Sellers shall use the
dispute resolution procedures set forth in Section 2.2.3(b) of this Agreement to
resolve such dispute.

2.2.4.   Inventory Payment. The “Inventory Payment” will be equal to the net
aggregate of the Initial Inventory Payment and the Final Inventory Payment
Adjustment, which in the aggregate are intended to reflect the value of the Gas
Inventory as of the Valuation Time. The Inventory Payment will be computed and
paid as follows:

  (a)   At the Closing, Buyer will pay, as part of the Inventory Payment, the
amount of $174,751,900 (the “Initial Inventory Payment”), based on Sellers’ good
faith estimate of a Gas Inventory of 31,200,000 MMBtus based on the regularly
maintained perpetual gas inventory records of the HPL Entities.     (b)   Within
15 days following the Valuation Time, Buyer shall provide to Sellers a revised
estimate of the Gas Inventory based on the perpetual gas inventory records in
MMBtus as of the Valuation Time (the “Valuation Time Estimate”). The “Valuation
Time Adjustment Amount” shall be the number of MMBtus determined by subtracting
31,200,000 MMBtus from the Valuation Time Estimate. In the event the Valuation
Time Adjustment Amount is a positive number, Buyer shall pay to Sellers, or
Sellers’ designee, within 15 days of receipt of an invoice, an amount equal to
the Valuation Time Adjustment Amount multiplied by $5.601. In the event the
Valuation Time Adjustment Amount is a negative number, Sellers shall pay to
Buyer, or Buyer’s Designee, within 15 days of receipt of an invoice, an amount
equal to the Valuation Time Adjustment Amount multiplied by $5.601 plus $0.40
per MMBtu. Any payment under this Section 2.2.4(b) shall be made by wire
transfer and is the “Valuation Time Adjustment”.     (c)   No later than 90 days
following the Closing Date, Buyer may deliver written notice (the “Inventory
Verification Notice”) to Sellers advising them whether or not it has elected to
undertake a verification of the actual storage inventory contained in the Bammel
Facilities. Any election by Buyer to undertake (or not undertake) such
verification shall be final and irrevocable in all respects. In the event Buyer
timely delivers an Inventory Verification Notice advising Sellers that it has
elected to

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undertake such a verification, Buyer and Sellers shall engage Wells Chappell &
Company, Inc. (“Wells”) to perform such verification in accordance with the
procedures and methods set forth on Exhibit 2.2.4 (with all fees and expenses of
Wells to be borne 1/2 by Buyer and 1/2 by Sellers). Buyer and Sellers shall
instruct Wells to complete its physical verification testing of the actual
storage volume of the Bammel Facilities no later than 120 days after the Closing
Date (and shall each use their reasonable best efforts to ensure that such
testing is completed by Wells no later than 120 days after the Closing Date),
and to deliver to each of them no later than 30 days after its completion a copy
of its verification of the actual storage volume of the Bammel Facilities and
any supporting documentation therefor, and any deadline imposed by this
Agreement on Buyer or Sellers which is contingent upon Wells’ verification of
the actual storage volume of the Bammel Facilities will be extended as
appropriate in light of any failure by Wells to promptly complete and deliver
its verification of the actual storage volume of the Bammel Facilities and any
supporting documentation therefor. Based upon the results of this verification,
Buyer shall (i) recompute in accordance with Exhibit 2.2.4 that portion of the
amount of the Gas Inventory as of the Valuation Time that was stored in the
Bammel Facilities (as so recomputed, the “Recomputed Bammel Inventory”) and
(ii) deliver to Sellers a statement thereof (“Buyer’s Statement of Recomputed
Bammel Inventory”) no later than 180 days following the Closing Date. However,
if Wells has failed to promptly complete and deliver its verification of the
actual storage volume of the Bammel Facilities and any supporting documentation
therefor, Buyer must notify Sellers of such failure on or before the 150th day
following the Closing Date, and Buyer will have an additional 30 days after
receipt of the verification of the actual storage volume of the Bammel
Facilities and any supporting documentation therefor from Wells to complete the
Recomputed Bammel Inventory and Buyer’s Statement of Recomputed Bammel
Inventory. In the event (A) Buyer does not timely deliver to Sellers the
Inventory Verification Notice, (B) Buyer does not deliver to Sellers Buyer’s
Statement of Recomputed Bammel Inventory on or prior to 180 days following the
Closing Date (or if Wells has failed to promptly complete and deliver its
verification of the actual storage volume of the Bammel Facilities and any
supporting documentation therefor, on or prior to 30 days after receipt of such
verification), (C) Buyer timely delivers an Inventory Verification Notice
stating that it shall not cause a verification of the actual storage volume of
the Bammel Facilities to be undertaken, or (D) the amount of Recomputed Bammel
Inventory set forth on Buyer’s Statement of Recomputed Bammel Inventory is not
more than 1.03, and not less than 0.97, times that portion of

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the Gas Inventory as of the Valuation Time that was stored in the Bammel
Facilities according to the most current perpetual gas inventory records (the
events referred to in the immediately preceding clauses (A) through
(D) inclusive each being referred to as a “Inventory Finalization Event”), Buyer
shall have no right to thereafter conduct a verification of the actual storage
inventory contained in the Bammel Facilities for purposes of any adjustment
pursuant to this Agreement. If Buyer provides to Sellers a timely Buyer’s
Statement of Recomputed Bammel Inventory which indicates that the Recomputed
Bammel Inventory is more than 1.03, or less than 0.97, times that portion of the
Gas Inventory as of the Valuation Time that was stored in the Bammel Facilities
according to the most current perpetual gas inventory records (such event being
referred to herein as a “Bammel Inventory Recomputation Event”), then subject to
the provisions of Section 2.2.4(d) hereof the Recomputed Bammel Inventory will
be used for all purposes of Section 2.2.4(e) hereof as the final actual storage
inventory of the Bammel Facilities as of the Valuation Time.

  (d)   The provisions of this Section 2.2.4(d) shall apply only if a Bammel
Inventory Recomputation Event occurs. After receipt of Buyer’s Statement of
Recomputed Bammel Inventory, Sellers shall have 30 days to review and dispute
Buyer’s Statement of Recomputed Bammel Inventory (which dispute may not include
any challenge to or disagreement with the results reported by Wells of its
verification of the actual storage volume of the Bammel Facilities), and for
this purpose will have the right to review, copy, abstract, and audit all
relevant meter data and other relevant information held by or available to the
HPL Entities for the period from the Valuation Time through the date as of which
the Recomputed Bammel Inventory was determined by Wells. Buyer will provide
Sellers and their representatives and advisors, at no expense to Sellers, with
all accounting services, assistance, and access to data during normal business
hours to the working papers, accounting, operating, and other books and records
of the HPL Entities, and the appropriate personnel to the extent required to
review and audit the Recomputed Bammel Inventory, and any deadline imposed by
this Agreement on Sellers for the completion of that review and audit will be
extended as appropriate in light of Buyer’s or its Affiliates’ failure to
promptly make such information available. Pursuant to the Transition Services
Agreement, Buyer shall also ensure that the employees of Sellers (to the extent
they continue to be employed by Sellers or any Affiliate of Sellers and made
available under the Transition Services Agreement) previously involved with the
foregoing accounting services and operation activities will perform their
customary and usual monthly tasks, including the

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assistance in the month end closing of the books and records of the HPL
Entities, during the periods following the Closing Date for purposes of the
foregoing. Buyer shall also ensure that the Transferred Employees (to the extent
they continue to be employed by Buyer or any Affiliate of Buyer) previously
involved with the foregoing accounting and operation activities will perform
their customary and usual monthly tasks, including the assistance in the month
end closing of the books and records of the HPL Entities, during the periods
following the Closing Date for purposes of the foregoing. However, if Buyer has
failed to assist and provide reasonable access to data as required for Sellers
to complete their review, Sellers must notify Buyer of such failure on or before
the 30th day after receipt of Buyer’s Statement of Recomputed Bammel Inventory
specifying in detail the documents that Sellers require, and Sellers will have
an additional 90 days after receipt to review Buyer’s Statement of Recomputed
Bammel Inventory and notify Buyer of a dispute. On or prior to the 30th day
after receipt of Buyer’s Statement of Recomputed Bammel Inventory and supporting
documentation (including access to and audit of such data and information),
Sellers shall deliver written notice to Buyer, specifying in detail any disputed
items and the basis therefor. If Sellers fail to so notify Buyer of any such
disputes or failures on or prior to the 30th day after receipt of Buyer’s
Statement of Recomputed Bammel Inventory, the calculations set forth on Buyer’s
Statement of Recomputed Bammel Inventory will be used for all purposes of
Section 2.2.4(e) hereof as the final actual storage inventory of the Bammel
Facilities as of the Valuation Time. If Sellers so notify Buyer of any disputed
items on Buyer’s Statement of Recomputed Bammel Inventory, Buyer and Sellers
shall, over the 20 days following the date of such notice (the “Resolution
Period”), attempt to resolve their differences and any written resolution by
them as to any disputed item shall be final and binding for all purposes of
Section 2.2.4(e) hereof as the final actual storage inventory of the Bammel
Facilities as of the Valuation Time. If at the conclusion of the Resolution
Period, Sellers, on the one hand, and Buyer, on the other, have not reached an
agreement on the disputed items, then all items remaining in dispute shall be
submitted by Sellers and Buyer to the Independent Accounting Firm. The
Independent Accounting Firm shall act as an arbitrator to determine only those
items still in dispute at the end of the Resolution Period. In making its
decision, the arbitrator must render a decision on each disputed item that
adopts the position of one of the parties on that item and may not decide on any
other amount for that item. The parties shall instruct the Independent
Accounting Firm to render its reasoned written decision as soon as practicable
but in no event later than 60 days after its engagement (which engagement shall

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be made no later than 10 Business Days after the end of the Resolution Period).
Such decision shall be set forth in a written statement delivered to Sellers and
Buyer and shall be final and binding on the parties hereto for all purposes of
Section 2.2.4(e) hereof as the final actual storage inventory of the Bammel
Facilities as of the Valuation Time. The fees and expenses of the Independent
Accounting Firm will be paid one-half by Sellers and one-half by Buyer.

  (e)   Within 90 days following the Closing Date (or, if there has been a
Bammel Inventory Recomputation Event, then within 30 days following the
determination under Sections 2.2.4(c) and/or 2.2.4(d) of the final actual
storage inventory of the Bammel Facilities as of the Valuation Time), Buyer will
prepare and deliver to Sellers (i) a computation of the Gas Inventory as of the
Valuation Time, taking into account any final actual storage inventory of the
Bammel Facilities as of the Valuation Time determined under Sections 2.2.4(c)
and/or 2.2.4(d) (it being understood that, except in the event of a failure by
Wells to promptly complete and deliver its verification of the actual storage
volume of the Bammel Facilities and any supporting documentation therefor,
unless the procedures and time limits for the determination of the actual
storage inventory under Sections 2.2.4(c) and/or 2.2.4(d) are fully complied
with, no results of any physical storage inventory will be used for purposes of
this Section 2.2.4(e), and (ii) a computation of the Final Inventory Payment
Adjustment. Sellers will provide Buyer and its representatives and advisors (and
if appropriate, the Independent Accounting Firm), at no expense to Buyer, with
all accounting services, assistance, and access to data during normal business
hours to the working papers, accounting, operating, and other books and records
of Sellers, and the appropriate personnel to the extent required to complete the
computation of the Gas Inventory and the Final Inventory Payment Adjustment, and
any deadline imposed by this Agreement on Buyer for the computation or payment
of the Final Inventory Payment Adjustment will be extended as appropriate in
light of Sellers’ or their Affiliates’ failure to promptly make such information
available. Pursuant to the Transition Services Agreement, Buyer shall also
ensure that the employees of Sellers (to the extent they continue to be employed
by Sellers or any Affiliate of Sellers and made available under the Transition
Services Agreement) previously involved with the foregoing accounting services
and operation activities will perform their customary and usual monthly tasks,
including the assistance in the month end closing of the books and records of
the HPL Entities, during the periods following the Closing Date for purposes of
the foregoing. Buyer shall also ensure that the Transferred Employees (to the
extent they

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continue to be employed by Buyer or any Affiliate of Buyer) previously involved
with the foregoing accounting services and operation activities will perform
their customary and usual monthly tasks, including the assistance in the month
end closing of the books and records of the HPL Entities, during the periods
following the Closing Date for purposes of the foregoing. However, if Sellers
have failed to assist and provide reasonable access to data as required for
Buyer to complete the computation or payment of the Final Inventory Payment
Adjustment, Buyer must notify Sellers of such failure on or before the 90th day
following the Closing Date or, if there has been a Bammel Inventory
Recomputation Event, then within 30 days following the determination under
Sections 2.2.4(c) and/or 2.2.4(d) of the final actual storage inventory of the
Bammel Facilities as of the Valuation Time) specifying in detail the documents
that Buyer requires, and Buyer will have an additional 90 days after receipt to
complete the preparation and delivery of such computations. If Sellers do not
dispute the computation of the Gas Inventory or the related computation of the
Final Inventory Payment Adjustment in accordance with the next following
sentence, the Final Inventory Payment Adjustment as computed by Buyer will be
final and binding as between the parties hereto. If Sellers wish to dispute the
computation of the Gas Inventory or the related computation of the Final
Inventory Payment Adjustment, they may do so, within 30 days (or such longer
period as the parties hereto may agree in writing) after the submission of the
Final Inventory Payment Adjustment, by notifying Buyer of any disputed items in
the Gas Inventory or the related computation of the Final Inventory Payment
Adjustment. No such dispute may include a reconsideration of any final actual
storage inventory of the Bammel Facilities as of the Valuation Time determined
under Sections 2.2.4(c) and/or 2.2.4(d). Sellers and Buyer shall, over the
20 days following the date of such notice (the “Resolution Period”), attempt to
resolve their differences and any written resolution by them as to any disputed
item shall be final and binding for all purposes of this Agreement. If at the
conclusion of the Resolution Period, Sellers and Buyer have not reached an
agreement on the disputed items, then all items remaining in dispute shall be
submitted by Sellers and Buyer to the Independent Accounting Firm. The
Independent Accounting Firm shall act as an arbitrator to determine only those
items still in dispute at the end of the Resolution Period. In making its
decision, the arbitrator must render a decision on each disputed item that
adopts the position of one of the parties on that item and may not decide on any
other amount for that item. The parties shall instruct the Independent
Accounting Firm to render its reasoned written decision as soon as practicable
but in no event later than 60 days after its engagement (which engagement shall

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be made no later than 10 Business Days after the end of the Resolution Period).
Such decision shall be set forth in a written statement delivered to the parties
hereto and shall be final and binding for all purposes of this Agreement, and
judgment may be entered thereon. The fees and expenses of the Independent
Accounting Firm will be paid one-half by Sellers and one-half by Buyer.

  (f)   Within 30 days of receipt by Sellers of the computations of the Gas
Inventory as of the Valuation Time and the Final Inventory Payment Adjustment
described in Section 2.2.4(e) hereof from Buyer (or, if Sellers dispute the
same, then within 10 days of the parties’ resolution of disputed items or
receipt of the decision of the Independent Accounting Firm on disputed items),
Buyer will pay to Sellers or Sellers’ designee (if the Final Inventory
Adjustment Amount is positive) or Sellers will pay to Buyer (if the Final
Inventory Adjustment Amount is negative) the Final Inventory Payment Adjustment
and in order to reverse the adjustment to the Inventory Payment made under
Section 2.2.4(b) the parties will offset the Final Inventory Payment Adjustment
by the Valuation Time Adjustment. Such payment, in either case, shall be made by
wire transfer and with interest thereon at the Borrowing Rate from the Closing
Date to the date of payment.

2.3.   The Closing.

The purchase and sale provided for in this Agreement (the “Closing”) will take
place at the offices of Sellers’ counsel in Austin, Texas, commencing at
10:00 a.m. (local time) on January 27, 2005 (the “Closing Date”).

2.4. Closing Obligations.

In addition to any other documents to be delivered under other provisions of
this Agreement, at the Closing:

  2.4.1.   Sellers will deliver to Buyer:

  (a)   assignments of all of the Purchased Interests in the forms of
Exhibit 2.4.1(a) hereto (each an “Assignment and Assumption Agreement”) executed
by Sellers, assigning respectively to Buyer or its designee the Purchased
Interests;     (b)   a closing statement and cross receipt executed by Sellers,
setting out the computation of the Closing Payment and acknowledging receipt of
the Closing Payment, in a form reasonably acceptable to Buyer;     (c)  
[intentionally blank];

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  (d)   such other instruments of transfer and conveyance as may reasonably be
requested by Buyer to effectuate the purchase of the Purchased Interests, each
in form and substance satisfactory to Buyer and its legal counsel and executed
by Sellers;

  (e)   an option agreement in the form of Exhibit 2.4.1(e) hereto (the “Option
Agreement”) executed by Storage LP, granting to Storage LP the option to sell
the Retained Interest on the terms and conditions therein set out;

  (f)   a transition services agreement in the form of Exhibit 2.4.1(f) hereto
(the “Transition Services Agreement”) executed by AEP Energy Services, Inc.;

  (g)   a limited guaranty in the form of Exhibit 2.4.1(g) hereto (the “Sellers’
Limited Guaranty”) executed by AEP (“Sellers’ Guarantor”), guaranteeing in
accordance with the terms thereof certain of Sellers’ obligations under this
Agreement;

  (h)   the Cushion Gas Litigation Agreement;

  (i)   the Partnership Agreement for HPL Consolidation;

  (j)   certificates in accordance with section 1445 of the Code stating that
Sellers are not “foreign persons”;

  (k)   a certificate of the Secretary or similar officer of each Seller and
Sellers’ Guarantor certifying and attaching all requisite resolutions or actions
of such Person’s governing body and, if appropriate, its equity holders,
approving the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions and any change of name contemplated for such
Person by Section 5.9 and certifying to the incumbency and signatures of the
officers of such Person executing this Agreement and any other document relating
to the Contemplated Transactions; and

  (l)   opinions of Sellers’ in-house and Sellers’ outside counsel, in form and
substance reasonably acceptable to Buyer, containing customary legal opinions
including an opinion regarding the enforceability of the Cushion Gas Litigation
Agreement.

  2.4.2.   Buyer will deliver to Sellers:

  (a)   the Closing Payment by wire transfer to the account of Sellers to an
account specified by Sellers in a writing, which writing will be delivered to
Buyer at least 3 days prior to the Closing Date;

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  (b)   the Assignment and Assumption Agreements executed by Buyer or its
designee;     (c)   the closing statement and cross receipt described in
Section 2.4.1(b) hereof, executed by Buyer, setting out the computation of the
Closing Payment and acknowledging receipt of the Purchased Interests, in a form
reasonably acceptable to Sellers;     (d)   [intentionally blank];     (e)  
such other instruments of transfer and conveyance as may reasonably be requested
by Sellers to effectuate the sale of the Purchased Interests, each in form and
substance satisfactory to Sellers and their legal counsel and executed by Buyer;
    (f)   the Option Agreement executed by Buyer;     (g)   the Transition
Services Agreement executed by each of the HPL Entities;     (h)   a corporate
guaranty in the form of Exhibit 2.4.2(h) hereto (the “Buyer’s Limited Guaranty”)
executed by Energy Transfer Partners, L.P. (“Buyer’s Guarantor”), guaranteeing
in accordance with the terms thereof certain of Buyer’s obligations under this
Agreement;     (i)   a 2002 ISDA Master Agreement with Schedule, Credit Support
Annex, and Letters of Confirmation in the form of Exhibit 2.4.2(i) hereto
between ETC Marketing, Ltd. and AEP Energy Services, Inc. (the “Swap
Agreement”);     (j)   the Cushion Gas Litigation Agreement;     (k)   the
Partnership Agreement for HPL Consolidation;     (l)   a certificate of the
Secretary or similar officer of Buyer and Buyer’s Guarantor certifying and
attaching all requisite resolutions or actions of such Person’s governing body,
approving the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions and certifying to the incumbency and signatures of
the officers of such Person executing this Agreement and any other document
relating to the Contemplated Transactions; and     (m)   opinions of Buyer’s
in-house and Buyer’s outside counsel, in form and substance reasonably
satisfactory to Sellers, containing customary legal opinions.

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  3.   SELLERS’ REPRESENTATIONS AND WARRANTIES

Sellers hereby represent and warrant as follows:

  3.1.   Organization and Good Standing of Sellers.

Except as disclosed in Sellers’ Disclosure Schedules, Sellers are duly organized
or formed, as applicable, validly existing and in good standing under the laws
of their respective states of formation or organization, as applicable, with
full limited liability company or limited partnership, as applicable, power and
authority to conduct their business as it is now being conducted, to own or use
the properties and assets that they purport to own or use, and to perform all
their obligations under this Agreement and to otherwise undertake the
Contemplated Transactions.

  3.2.   Enforceability; Authority; No Conflict; No Consent Requirements with
Respect to Sellers.

  3.2.1.   Except as disclosed in Sellers’ Disclosure Schedules, this Agreement
constitutes the legal, valid, and binding obligation of Sellers, enforceable
against them in accordance with its terms except as such enforceability may be
limited by General Exceptions to Enforceability. Except as disclosed in Sellers’
Disclosure Schedules, upon the execution and delivery by Sellers of the
instruments required to be executed by Sellers pursuant to Section 2.4.1
(collectively, the “Sellers’ Documents”), each of the Sellers’ Documents will
constitute the legal, valid and binding obligation of Sellers, enforceable
against them in accordance with its terms except, in each case, as such
enforceability may be limited by General Exceptions to Enforceability. Except as
disclosed in Sellers’ Disclosure Schedules, neither the execution and delivery
of this Agreement nor the consummation or performance of any of the Contemplated
Transactions by Sellers will breach (i) any provision of any of the Governing
Documents of Sellers or (ii) any resolution adopted by the equity holders or
governing bodies of Sellers.     3.2.2.   Except as disclosed in Sellers’
Disclosure Schedules, Sellers have the full right, power and authority to
execute and deliver this Agreement and the Sellers’ Documents, to perform their
obligations under this Agreement and the Sellers’ Documents, and to carry out
the Contemplated Transactions, and such actions have been duly authorized by all
necessary action by Sellers’ governing body and by Sellers’ equity holders.    
3.2.3.   Except as disclosed in Sellers’ Disclosure Schedules, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions by Sellers will:

  (a)   violate any Applicable Law to which Sellers are subject; or     (b)  
result in the imposition or creation of any Encumbrance other than Permitted
Encumbrances upon or with respect to any of the Purchased Interests to be sold
by Sellers.

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  3.2.4.   Except as disclosed in Sellers’ Disclosure Schedules, Sellers are not
required to give any notice to or obtain any consent, approval, permit, license,
franchise, or other authorization, or a variance or exemption therefrom or
waiver thereof from any Governmental Authority or other Person in connection
with the execution and delivery of this Agreement or the consummation of any of
the Contemplated Transactions (the “Sellers’ Consents”).

  3.3.   No Litigation Against Sellers.

Except as disclosed in Sellers’ Disclosure Schedules, there is no pending or, to
Sellers’ Knowledge, threatened Proceeding by or against Sellers or any of their
Affiliates that challenges, or seeks to restrain, delay, or prohibit the
Contemplated Transactions. Except as disclosed in Sellers’ Disclosure Schedules,
to the Knowledge of Sellers, no event has occurred or circumstance exists that
is reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Except as disclosed in Sellers’ Disclosure Schedules, there
is not in effect any order, judgment, or decree of any Governmental Authority
enjoining, barring, suspending, prohibiting, or otherwise limiting Sellers from
undertaking the Contemplated Transactions.

  3.4.   Organization and Good Standing of the HPL Companies.

Except as disclosed in Sellers’ Disclosure Schedules, each of the HPL Companies
is duly formed or organized, validly existing and in good standing, as
applicable, under the laws of its state of formation or organization, with full
general partnership, limited partnership, or limited liability company, as
applicable, power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under this Agreement and to otherwise
undertake the Contemplated Transactions. Except as disclosed in Sellers’
Disclosure Schedules, each HPL Company, as applicable, is duly qualified to do
business as a foreign entity and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification. Except as disclosed in Sellers’ Disclosure
Schedules, complete and accurate copies of the Governing Documents of each HPL
Company, as currently in effect, have been provided to Buyer. Except as
disclosed in Sellers’ Disclosure Schedules, no HPL Entity has any subsidiary or,
directly or indirectly, owns any shares of capital stock or other equity,
securities, or other ownership interest of any other Person. Except as disclosed
in Sellers’ Disclosure Schedules, neither the execution and delivery of this
Agreement by Sellers nor the consummation or performance of any of the
Contemplated Transactions by Sellers or by any of the HPL Entities will breach
(i) any provision of any of the Governing Documents of an HPL Company or
(ii) any resolution adopted by the general or limited partners or the managers,
members, or other owners of any HPL Company.

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  3.5.   No Conflict; No Consent Requirements with Respect to the HPL Companies.

  3.5.1.   Except as disclosed in Sellers’ Disclosure Schedules, neither the
execution and delivery of this Agreement by Sellers nor the consummation or
performance of any of the Contemplated Transactions by Sellers or by any of the
HPL Entities will:

  (a)   violate any Applicable Law to which an HPL Company is subject;     (b)  
contravene, conflict with or result in a violation or breach of any of the terms
or requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Permit that is held by an
HPL Company or that otherwise relates to the Business conducted by an HPL
Company;     (c)   breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any
indenture, mortgage, lease, note, or other Material HPL Contract or other
instrument to which any Seller or HPL Company is a party or by which its
properties may be bound; or     (d)   result in the imposition or creation of
any Encumbrance other than a Permitted Encumbrance upon or with respect to any
of the assets of any HPL Company.

  3.5.2.   Except as disclosed in Sellers’ Disclosure Schedules, no HPL Company
is required to give any notice to or obtain any consent, approval, permit,
license, franchise, or other authorization, or a variance or exemption therefrom
or waiver thereof from any Governmental Authority or other Person in connection
with the execution and delivery of this Agreement or the consummation of any of
the Contemplated Transactions by an HPL Entity (the “HPL Company Consents”).

  3.6.   Capitalization of the HPL Companies; Sellers’ Title.

  3.6.1.   Except as disclosed in Sellers’ Disclosure Schedules, there are no
member, partner or other ownership interests in any of the HPL Companies
authorized, issued, or outstanding or reserved for any purpose. The member,
partner, or other ownership interests, as applicable, of such HPL Companies
shown thereon to be outstanding are duly authorized, validly issued, and fully
paid and were not issued in violation of any preemptive rights, and are owned
beneficially and of record by the party indicated in Sellers’ Disclosure
Schedules. Except as disclosed in Sellers’ Disclosure Schedules, there are no
(A) existing options, warrants, calls, conversion rights or privileges,
pre-emptive rights, subscriptions, or other rights,

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    agreements, arrangements, or commitments of any character obligating any of
such HPL Companies to issue, transfer, or sell or cause to be issued,
transferred, or sold any partner interests or other interests in any of such HPL
Companies, or (B) contracts, agreements, or arrangements of any kind relating to
any of the same.     3.6.2.   Except as disclosed in Sellers’ Disclosure
Schedules, (a) Sellers have good and marketable title to their respective member
or partner interests, as applicable, in HPL Consolidation, free and clear of any
Encumbrances other than Permitted Encumbrances, (b) the HPL Entities have good
and marketable title to their respective HPL Subsidiary Interests free and clear
of any Encumbrances other than Permitted Encumbrances, and (c) the HPL Entities’
percentage interest as tenant-in-common in the South Texas Pipeline is 80%, and
in each of the Austin Pipeline, the Big Cowboy Pipeline, and in the A/S Pipeline
is 50%.

  3.7.   Financial Statements of the HPL Entities.

Sellers have delivered to Buyer an unaudited balance sheet of each of the HPL
Entities (other than HPL Consolidation) as of December 31, 2004, and the related
unaudited statements of income and expense for the fiscal year then ended (the
“HPL Financial Statements”). Except as disclosed in Sellers’ Disclosure
Schedules, the HPL Financial Statements fairly present as at the respective
dates of and for the period referred to therein and in accordance with GAAP the
financial condition and the results of operations of the HPL Entities.

  3.8.   No Material Adverse Change.

Except as disclosed in Sellers’ Disclosure Schedules, since the date of the HPL
Financial Statements, Sellers have operated, or caused the HPL Companies to
operate, the Business in the Ordinary Course of Business, and there has not been
any event or circumstance that has had or is likely to have a Material Adverse
Effect.

  3.9.   No Undisclosed Liabilities.

  3.9.1.   Except as disclosed in Sellers’ Disclosure Schedules, no HPL Entity
has any material liabilities that are required by GAAP to be reflected on the
balance sheet of such HPL Entity except for liabilities reflected or reserved
against in the HPL Financial Statements and current liabilities incurred in the
Ordinary Course of Business since the date of the HPL Financial Statements.

  3.9.2.   Except as disclosed in Sellers’ Disclosure Schedules, there are no
Encumbrances securing the payment or other satisfaction of any liabilities of
the kind described in Section 3.9.1 without regard to the materiality test
therein.

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  3.10.   Property and Leases of the HPL Companies.

  3.10.1.   Except as disclosed in Sellers’ Disclosure Schedules, each HPL
Company owns good and marketable title to, or a valid lessee’s or licensee’s
interest in, the major operating assets used by such HPL Company in the conduct
of the Business (other than pipeline easements and rights-of-way) as identified
in Sellers’ Disclosure Schedules (the “Material Assets”), free and clear of any
Encumbrances other than Permitted Encumbrances.     3.10.2.   Except as
disclosed in Sellers’ Disclosure Schedules (and except with respect to pipeline
easements and rights-of-way), to the Knowledge of Sellers, all leases and
licenses of material real property or other Material Assets of the HPL Companies
are in full force and effect and are valid, binding and enforceable (except as
such enforceability may be limited by General Exceptions to Enforceability),
except where failure thereof would not impair the conduct of normal operations
of the Business. Except as disclosed in Sellers’ Disclosure Schedules, no HPL
Company, and to the Knowledge of Sellers, no other party thereto, is in default
under any such lease.

  3.11.   Contracts of the HPL Companies.

  3.11.1.   Except for (A) contracts and other instruments identified or
described as “Disclosed HPL Contracts” in Sellers’ Disclosure Schedules,
(B) contracts with gas suppliers, gas customers, transportation customers, and
storage customers entered into in the Ordinary Course of Business consistent
with past practice, (C) pipeline easement and right-of-way agreements, and
(D) Benefit Plans, there are no outstanding commitments, contracts, or
agreements to which any HPL Company is a party or (except with respect to
commitments, contracts, and agreements, entered into by other owners of
undivided interests in certain of the property in which the HPL Entities have
undivided ownership interests, regarding such other owners’ use of their rights
in that property) by which any of its properties are bound that (i) call for
annual payments or receipts, or require capital expenditures or commitments by
the contracting HPL Company of more than $500,000 that may not be terminated
without substantial penalty by the contracting HPL Company on reasonable notice,
(ii) create an Encumbrance against any property of any HPL Company securing the
payment of funds borrowed by an HPL Company, or (iii) guaranty or otherwise
provide credit support for, or indemnification with respect to, the obligations
of any Person other than an HPL Company. Each Disclosed HPL Contract, and each
contract described in clause (B) of this Section 3.11.1 to the extent any such
contract described in clause (B) calls for average daily volumes of more than
2,000 MMBtu is herein called a “Material HPL Contract”.

  3.11.2.   Except as otherwise provided in the next paragraph of this
Section 3.11.2, and except as disclosed in Sellers’ Disclosure Schedules, each
Material HPL Contract is in full force and effect and is valid and enforceable
in

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accordance with its terms. Except as disclosed in Sellers’ Disclosure Schedules,
the contracting HPL Company on each such Material HPL Contract is not in
material breach of any applicable terms and requirements thereof. Except as
disclosed in Sellers’ Disclosure Schedules, each other Person that has any
obligation or liability under each such Material HPL Contract is, to the
Knowledge of Sellers, not in material breach of any applicable terms and
requirements thereof. Except as disclosed in Sellers’ Disclosure Schedules, the
contracting HPL Company has not given to or received from any other Person, at
any time since January 1, 2004 any written notice given in compliance with the
notice provisions of the applicable contract alleging that the HPL Company or
any other Person is in default under any such Material HPL Contract which has
not been resolved.

The representations and warranties of this Section 3.11.2 shall be applicable
with respect to the Bammel Documents, the Bammel Settlement Agreement, and the
Bammel Settlement Approval Order only to the extent that such documents, the
rights and interests of the parties thereto under such documents, the
performance under such documents of the parties thereto, and the transactions
thereunder are not in controversy in the Cushion Gas Litigation Agreement.

  3.12.   Insurance Maintained by the HPL Companies.

All of the material policies of insurance carried on the date of this Agreement
by the HPL Entities or any of their Affiliates directly insuring their
properties or the Business on or prior to the Closing Date (such HPL Entities’
“Business Insurance Policies”) are identified or described in Sellers’
Disclosure Schedule. Except as disclosed in Sellers’ Disclosure Schedules, all
premiums payable on such Business Insurance Policies have been timely paid.
Except as disclosed in Sellers’ Disclosure Schedules, with respect to such
Business Insurance Policies: (i) all are in full force and effect; (ii) all have
been complied with in all material respects by the HPL Companies; (iii) no HPL
Company has received any notice from the insurer under any such Business
Insurance Policy canceling or materially amending the same; and (iv) there is no
claim under any such Business Insurance Policy that (A) has been denied by the
insurer, and (B) is still being asserted by the insured.

  3.13.   No Litigation Against the HPL Companies.

Except as disclosed in Sellers’ Disclosure Schedules, there is no pending or, to
the Knowledge of Sellers, threatened Proceeding by or against any HPL Company
(i) that relates to or may reasonably be expected to affect, in any material
respect, the Business of, or any of the assets owned or used by any HPL Company,
or (ii) that seeks to restrain, delay or prohibit the Contemplated Transactions.
Except as disclosed in Sellers’ Disclosure Schedules, there is not in effect any
order, judgment, or decree of any Governmental Authority enjoining, barring,
suspending, prohibiting, or otherwise limiting any HPL Company from engaging in
the Business, or requiring any HPL Company to take or refrain from taking any
action with respect to any aspect of such Business. Notwithstanding the
foregoing, Sellers make no representation or

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warranty in this Section 3.13 as to Proceedings, judgments, orders, writs,
injunctions, or decrees which are, or contain issues, of broad applicability to,
or which generally affect, the natural gas, natural gas liquids, or pipeline
industry and do not specifically name Sellers, their Affiliates, or any of the
HPL Companies or their respective properties.

  3.14.   Compliance by the HPL Entities with Applicable Law; Permits.

Except as disclosed in Sellers’ Disclosure Schedules, since June 1, 2001, the
HPL Entities have complied in all material respects with all Applicable Laws to
which they are subject (not including Environmental Laws, with respect to which
Sellers’ representations and warranties are contained in Section 3.18 hereof).
Except as disclosed in Sellers’ Disclosure Schedules, no investigation or review
by any Governmental Authority, based on an alleged material violation of any
Applicable Law (not including Environmental Laws, with respect to which Sellers’
representations and warranties are contained in Section 3.18 hereof) is pending
or, to the Knowledge of Sellers, threatened, against an HPL Company, nor has any
Governmental Authority indicated in writing to Sellers, or any HPL Company an
intention to conduct the same at any time after the date hereof.

Except as disclosed in Sellers’ Disclosure Schedules, no Permit from or of any
Governmental Authority or license, franchise, permit, order, or approval from
any third party is required on the part of the HPL Entities to conduct the
Business as presently conducted or is required in connection with the execution
and delivery of this Agreement or the consummation of the Contemplated
Transactions except for such Permits as have been obtained if the failure to
have such Permits would not, alone or in the aggregate, result in a Material
Adverse Effect.

  3.15.   Intellectual Property of the HPL Companies.

All material patents, trademarks, service marks, trade names, registered
copyrights, domain names, and applications therefor used mainly in the conduct
of the Business by any HPL Company are herein referred to as “Intellectual
Property”. Except as disclosed in Sellers’ Disclosure Schedules, each HPL
Company owns or has the right to use all such Intellectual Property, free of all
Encumbrances other than Permitted Encumbrances. Except as disclosed in Sellers’
Disclosure Schedules, to the Knowledge of Sellers, (i) no Person is infringing
any of the HPL Companies’ rights in such Intellectual Property, (ii) no HPL
Company is infringing the intellectual property rights of any other Person,
(iii) no registration of any such Intellectual Property has expired or been
abandoned, and (iv) no HPL Company is in default under any license agreement
respecting any of its Intellectual Property, in each case where the result would
materially impair the conduct of the Business.

  3.16.   Tax Matters.

  3.16.1.   Except as disclosed in Sellers’ Disclosure Schedules and subject to
Section 3.16.3, there has been timely filed by or for each of the HPL Companies
all

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    Tax Returns, if any, which are required by law to be filed prior to the
Closing Date by it or with respect to its operations, and all Taxes due or
claimed to be due from it or with respect to its operations (whether or not
shown on any Tax Return) have duly and timely been paid, and there are no
assessments or claims for payment of any such Taxes now pending or, to the
Knowledge of Sellers, threatened, or any audit of the records of an HPL Company
being made or threatened by, any taxing authority. Except as disclosed in
Sellers’ Disclosure Schedules and subject to Section 3.16.3, each Tax Return
previously filed by each HPL Company is, or to be filed by each HPL Company in
the future relating to any period ending prior to the Closing Date shall be,
correct and complete in all material respects. Except as disclosed in Sellers’
Disclosure Schedules and subject to Section 3.16.3, none of such HPL Companies
is currently the beneficiary of any extension of time within which to file any
Tax Return, if any, and no extension or waiver of any statute of limitations is
in effect with respect to any Tax owed by any HPL Company. Except as disclosed
in Sellers’ Disclosure Schedules and subject to Section 3.16.3, each of such HPL
Companies has properly withheld and paid, or accrued for payment, when due, to
appropriate state and/or federal authorities, all sales and use taxes, if any,
and all amounts required to be withheld from payments made to its employees,
independent contractors, creditors, owners, or other third parties and have also
paid all employment taxes as required under Applicable Law.     3.16.2.   Each
of HPL Company LP, HPL Resources, and Gas Marketing have been domestic eligible
entities within the meaning of Treasury Regulation 301.7701-3 and each has been
treated as a disregarded entity by Sellers and their Affiliates for U.S. federal
income tax purposes since July 31, 2001, and each of Storage Holdings and
Storage Leaseco have been domestic eligible entities within the meaning of
Treasury Regulation 301.7701-3 and each has been treated as a disregarded entity
by Sellers and their Affiliates for U.S. federal income tax purposes since
October 12, 2004, and no election for any of the HPL Entities has been made to
change their respective default classifications, and neither Sellers, nor any of
their Affiliates, nor any taxing authority has taken a position inconsistent
with such treatment for federal income tax purposes. Each of HPL GP, LLC, HPL
Storage GP LLC and HPL Consolidation are domestic eligible entities within the
meaning of Treasury Regulation 301.7701-3 and each has been treated as a
disregarded entity by Sellers and their Affiliates (and with respect to HPL
Consolidation, such treatment was made up to the Closing) for U.S. federal
income tax purposes, and no election has been made to change the default
classification of any such entities. The only investments ever made by HPL GP,
LLC and HPL Storage GP LLC have been their respective interests in the HPL
Entities.

  3.16.3.   Sellers expressly make no representations or warranties regarding
compliance with Code section 409A.

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  3.17.   Workforce Matters of the HPL Entities.

  3.17.1.   Employees.       Sellers have provided to Buyer a complete and
accurate list of the name, current compensation, scheduled or agreed-upon pay
adjustments or bonuses, job title or description, and date of hire of each
employee of the HPL Entities or their Affiliates as of the day immediately
preceding Closing whose duties relate primarily to the Business (the “Closing
Workforce”).     3.17.2.   Labor Disputes.       Except as disclosed in Sellers’
Disclosure Schedules, each HPL Company is in compliance in all material respects
with all Applicable Law respecting employment and employment practices, terms
and conditions of employment, and wages and hours. Except as disclosed in
Sellers’ Disclosure Schedules, there is no unfair labor practice complaint
against any HPL Company before the National Labor Relations Board. Except as
disclosed in Sellers’ Disclosure Schedules, there is no labor strike, dispute,
slowdown, or stoppage actually pending or threatened against or affecting any
HPL Company. Except as disclosed in Sellers’ Disclosure Schedules, since June 1,
2001, no HPL Company has experienced a strike or work stoppage. Except as
disclosed in Sellers’ Disclosure Schedules, no HPL Company is a party to or
subject to a collective bargaining agreement and no collective bargaining
agreement relating to employees of any HPL Company is currently being
negotiated. Except as disclosed in Sellers’ Disclosure Schedules, no Proceedings
are pending or, to the Knowledge of Sellers, threatened against any HPL Company
with respect to employment and employment practices, terms and conditions of
employment, and wages and hours. Except as disclosed in Sellers’ Disclosure
Schedules, to the Knowledge of Sellers, there is no effort currently underway to
organize the work force of any HPL Company or any part thereof.     3.17.3.  
Employee Benefit Plans.       Sellers’ Disclosure Schedules set forth a complete
and accurate list of each plan, contract, agreement, or other arrangement
providing any type of compensation or benefit, including without limitation any
“employee benefit plan” as defined in Section 3(3) of ERISA in which any
individual included in the Closing Workforce is a participant or to which such
individual is a party (collectively, the “Benefit Plans”). Except as set forth
in Sellers’ Disclosure Schedules, (i) the Benefit Plans are in compliance with
all applicable requirements of ERISA, the Code, and other applicable laws and
have been administered in accordance with their terms and such laws, in each
case in all material respects; and (ii) each Benefit Plan that is intended to be
qualified within the meaning of Section 401 of the Code has received a favorable
determination letter as to its qualification that is current as of the Closing
Date except for changes required by the Economic Growth

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and Tax Relief Reconciliation Act (with respect to which good faith amendments
have been made), and nothing has occurred (or failed to occur) that could
reasonably be expected to result in the revocation of such letter. Except as set
forth in Sellers’ Disclosure Schedules, there are no pending or, to the
Knowledge of Sellers, threatened claims involving any individual included in the
Closing Workforce and no pending or, to the Knowledge of Sellers, threatened
litigation involving any individual included in the Closing Workforce with
respect to any of the Benefit Plans, other than ordinary and usual claims for
benefits by participants and beneficiaries, in either case which, if determined
or resolved adversely, would have a Material Adverse Effect. With respect to any
employee benefit plan (within the meaning of Section 3(3) of ERISA) that is
sponsored, maintained, or contributed to, or has been sponsored, maintained, or
contributed to since June 1, 2001, by any HPL Entity or any corporation, trade,
business, or entity that is now or has been at any time since that date under
common control with any HPL Entity, within the meaning of Section 4.14(b), (c),
(m) or (o) of the Code or Section 4001 of ERISA (“Commonly Controlled Entity”),
except as set forth in Sellers’ Disclosure Schedules (iii) no withdrawal
liability, within the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied in full or will be incurred as a
result of the Contemplated Transactions; (iv) no liability to the Pension
Benefit Guaranty Corporation has been incurred by any HPL Entity or any Commonly
Controlled Entity, which liability has not been satisfied in full; (v) no
accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred; (vi) all
contributions and premium payments (including, without limitation, employer
contributions and employee elective deferral contributions) that are due have
been paid to the applicable defined contribution Benefit Plan and all
contributions (including, without limitation, installments) to any Benefit Plan
(other than Seller’s defined contribution Benefit Plan) required by Section 302
of ERISA and Section 412 of the Code have been timely made and all contributions
for any period ending before the Closing Date that are not yet due have been
paid up to and including the Closing Date to any Benefit Plan which is subject
to Section 302 of ERISA or Section 412 of the Code, or accrued on the books of
the appropriate HPL Entities or any Commonly Controlled Entity; and (vii) no
liability under Section 302 of ERISA, Section 412 of the Code or Title IV of
ERISA has been incurred by any HPL Entity or any Commonly Controlled Entity that
would become a liability of Buyer or any of its Affiliates and no condition
exists that would result in any such liability.

3.18.   Environmental Matters.       Certain environmental matters have been
identified as “Disclosed Environmental Matters” in Sellers’ Disclosure
Schedules. Except as described as a Disclosed Environmental Matter, and except
as otherwise set forth in Sellers’ Disclosure Schedules and with respect to the
period beginning June 1, 2001, and to Sellers’ Knowledge, with respect to the
period preceding the period beginning June 1, 2001:

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  3.18.1.   No HPL Company is in violation, in any material respect, of any
Applicable Law pertaining to environmental protection, or protection of human
health or safety, including without limitation those arising under the Resource
Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended (“CERCLA”), the
Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Federal Water
Pollution Control Act, the Solid Waste Disposal Act, as amended, the Federal
Clean Air Act, or the Toxic Substances Control Act (collectively, “Environmental
Laws”); and     3.18.2.   Sellers have no Knowledge, and neither Sellers nor any
of the HPL Companies nor any of their Affiliates have received written notice
from any Person, including without limitation any Governmental Authority,
(i) that any HPL Company has been identified by the United States Environmental
Protection Agency (“EPA”) as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B; (ii) that any hazardous waste, as defined by 42 U.S.C. §6903(5), any
hazardous substance as defined by 42 U.S.C. §9601(14), any pollutant or
contaminant as defined by 42 U.S.C. §9601(33) or any other toxic substance, oil
or hazardous material (including friable asbestos, urea formaldehyde insulation
or polychlorinated biphenyls) in each case regulated by any Environmental Laws
(“Hazardous Substances”) which any HPL Company generated, transported or
disposed of has been found at any site at which a federal, state or local agency
or other third party has conducted an investigation, and in respect of which
Hazardous Substances any of the HPL Companies may have a remediation liability
or obligation pursuant to any Environmental Law; or (iii) that any HPL Company
is or shall be a named party to any claim, action, cause of action, complaint,
or legal or administrative proceeding under Environmental Laws arising out of
any Person’s incurrence of costs, expenses, losses or damages in connection with
the release (as that term is defined in 42 U.S.C. §9601(22) or the relevant
foreign Environmental Laws, hereinafter, “Release”) of Hazardous Substances.    
3.18.3.   To the Knowledge of Sellers, Sellers’ Disclosure Schedules list each
material Permit required under applicable Environmental Laws for the operation
of the Business. To the Knowledge of Sellers, each such Permit is valid and in
full force and effect, and no Proceeding is pending or threatened to suspend,
revoke, terminate, or declare invalid any such Permit. Except as set forth in
Sellers’ Disclosure Schedules, the applicable HPL Company (i) holds and is in
compliance, in all material respects, with each such Permit, (ii) has filed all
necessary reports and maintained all necessary records pertaining to such
Permits, in all material respects, and (iii) has otherwise complied, in all
material respects, with all such Permits.

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3.19.   Regulatory Matters.       Except as disclosed in Sellers’ Disclosure
Schedules, no HPL Company is subject to regulation as a “holding company” or a
“public utility company” under the Public Utility Holding Company Act of 1935,
as amended. HPL Company LP and MidTexas Pipeline Company are regulated as gas
utilities under the laws of the State of Texas. Except as disclosed in Sellers’
Disclosure Schedules, no HPL Company is subject to regulation as a “natural gas
company,” as defined in the Natural Gas Act of 1938, as amended (“NGA”).

3.20.   Affiliate Transactions of the HPL Companies.       Except as disclosed
in Sellers’ Disclosure Schedules, none of the HPL Companies is party to an
agreement or arrangement with Sellers or any of their other Affiliates that will
continue in effect after Closing. Except as disclosed in Sellers’ Disclosure
Schedules, there are no guarantees, letters of credit, indemnity agreements,
equity contribution agreements, or other credit support agreements under which
any HPL Company has any outstanding obligation relating to the obligations,
business, or assets of Sellers or any of their Affiliates (other than another
HPL Company).

3.21.   Finders and Brokers.       Neither Sellers nor any of the HPL Companies
is party to any agreement with any finder or broker under which Buyer or any HPL
Company after Closing would have any responsibility for any commissions, fees,
or expenses in connection with the origin, negotiation, execution, or
performance of this Agreement.

3.22.   Bankruptcy.       Except as disclosed in Sellers’ Disclosure Schedules,
neither Sellers nor any of the HPL Companies are subject to any bankruptcy
proceeding, and to Sellers’ Knowledge no proceeding is contemplated, in which
Sellers or the HPL Companies would be declared insolvent or subject to the
protection of any bankruptcy or reorganization laws or procedures.

3.23.   Sufficiency of Assets.       Except as set forth in Sellers’ Disclosure
Schedules, the equipment, facilities, real property, Intellectual Property,
Material HPL Contracts, and Permits owned, leased, or licensed by the HPL
Companies constitute substantially all of the equipment, facilities, real
property, Intellectual Property, Material HPL Contracts, and Permits used by the
HPL Companies for the conduct of the Business as conducted immediately prior to
Closing.

3.24.   Certain Warranty Disclaimers.

  3.24.1.   Except as and to the extent expressly set out in this Agreement or
the Exhibits hereto, in Sellers’ Disclosure Schedules, or in any certificate
furnished or to be furnished by Sellers pursuant hereto, Sellers make no

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      representations or warranties whatsoever to Buyer and Sellers hereby
disclaim all liability and responsibility for any other representation,
warranty, statement or information made, communicated, or furnished or
purportedly made, communicated, or furnished (orally or in writing) to Buyer or
its representatives (including without limitation any opinion, information,
projection, or advice that may have been or may be provided to Buyer by any
director, officer, employee, agent, consultant, or representative of any Seller
or any of their Affiliates). No information provided to Buyer or any of its
Affiliates or any of its or their representatives, advisors, or lenders, shall
enlarge or alter in any way the representations and warranties set out in this
Agreement or the Exhibits hereto, in Sellers’ Disclosure Schedules, or in any
certificate furnished or to be furnished by Sellers pursuant hereto or otherwise
constitute a representation or warranty hereunder. Buyer expressly acknowledges
that (i) it has undertaken all investigations, analyses, and evaluations
considered by it to be necessary or appropriate with respect to the Business,
its financial and operating history and condition, and the Purchased Interests,
Applicable Law, relevant industry and market conditions, and its decision to
enter into this Agreement and consummate the Contemplated Transactions, (ii) it
has had an opportunity to ask for all information desired from Sellers and their
Affiliates and the nature and extent of the responses to such requests are
satisfactory to Buyer, and (iii) it has made its own evaluation of the value of
the Business, its financial condition and prospects, and the Purchased Interests
and the risks and benefits of the Business and the Contemplated Transactions and
is not relying on any information or evaluation from Sellers or any of their
Affiliates or representatives other than those expressly set out in this
Agreement or the Exhibits hereto, in Sellers’ Disclosure Schedules, or in any
certificate furnished or to be furnished by Sellers pursuant hereto.    
3.24.2.   EXCEPT AS OTHERWISE CONTAINED IN THIS AGREEMENT OR THE EXHIBITS
HERETO, IN SELLERS’ DISCLOSURE SCHEDULES, OR IN ANY CERTIFICATE FURNISHED OR TO
BE FURNISHED BY SELLERS PURSUANT HERETO, SELLERS AND THEIR AFFILIATES MAKE NO
REPRESENTATION OR WARRANTY REGARDING THE CONDITION, REMAINING USEFUL LIFE, OR
STRUCTURAL INTEGRITY OF ANY OF THE PIPELINE OR GAS STORAGE ASSETS (OR RELATED
EQUIPMENT OR FACILITIES) OF ANY OF THE HPL COMPANIES. ALL SUCH ASSETS,
EQUIPMENT, AND FACILITIES ARE ACCEPTED ON AN “AS IS” BASIS, AND SELLERS AND
THEIR AFFILIATES HEREBY DISCLAIM ALL SUCH WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.

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4.   BUYER’S REPRESENTATIONS AND WARRANTIES       Buyer hereby represents and
warrants as follows:   4.1.   Organization and Good Standing of Buyer.      
Except as disclosed in Buyer’s Disclosure Schedules, Buyer is duly formed and
validly existing under the laws of its state of organization, with full limited
partnership power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under this Agreement and to otherwise
undertake the Contemplated Transactions. Except as disclosed in Buyer’s
Disclosure Schedules, Buyer is duly qualified to do business as a foreign entity
and is in good standing, if applicable, under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification.   4.2.   Enforceability; Authority; No Conflict; No Consent
Requirements with Respect to Buyer.

  4.2.1.   Except as disclosed in Buyer’s Disclosure Schedules, this Agreement
constitutes the legal, valid, and binding obligation of Buyer, enforceable
against it in accordance with its terms except as such enforceability may be
limited by General Exceptions to Enforceability. Except as disclosed in Buyer’s
Disclosure Schedules, upon the execution and delivery by Buyer of the
instruments required to be executed by Buyer or by any of the HPL Entities
pursuant to Section 2.4.2 (collectively, the “Buyer’s Documents”), each of the
Buyer’s Documents will constitute the legal, valid and binding obligation of
Buyer or HPL Entity party thereto, as the case may be, enforceable against it in
accordance with its terms except, in each case, as such enforceability may be
limited by General Exceptions to Enforceability. Except as disclosed in Buyer’s
Disclosure Schedules, neither the execution and delivery of this Agreement or
any of the Buyer’s Documents nor the consummation or performance of any of the
Contemplated Transactions by Buyer or any HPL Entity will breach (i) any
provision of any of the Governing Documents of Buyer or (ii) any resolution
adopted by the equity holders or governing bodies of Buyer.     4.2.2.   Except
as disclosed in Buyer’s Disclosure Schedules, Buyer has the full right, power
and authority to execute and deliver this Agreement and the Buyer’s Documents as
applicable, to perform its obligations under this Agreement and the Buyer’s
Documents as applicable, and to carry out the Con templated Transactions, and
such actions have been duly authorized by all necessary action by such the
governing bodies and equity holders of Buyer.     4.2.3.   Except as disclosed
in Buyer’s Disclosure Schedules, neither the execution and delivery of this
Agreement or any of the Buyer’s Documents nor the consummation or performance of
any of the Contemplated Transactions by Buyer will:

  (a)   violate any Applicable Law to which Buyer is subject;

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  (b)   contravene, conflict with or result in a violation or breach of any of
the terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held
by Buyer; or     (c)   breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any
indenture, mortgage, lease, note, or other material contract or other instrument
to which Buyer is a party or by which its properties may be bound.

  4.2.4.   Except as disclosed in Buyer’s Disclosure Schedules, Buyer is not
required to give any notice to or obtain any consent, approval, permit, license,
franchise, or other authorization, or a variance or exemption therefrom or
waiver thereof from any Governmental Authority or other Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.

4.3.   No Litigation Against Buyer.       Except as disclosed in Buyer’s
Disclosure Schedules, there is no pending or, to Buyer’s Knowledge, threatened
Proceeding by or against Buyer that challenges, or seeks to restrain, delay, or
prohibit the Contemplated Transactions. Except as disclosed in Buyer’s
Disclosure Schedules, to the Knowledge of Buyer, no event has occurred or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding. Except as disclosed in
Buyer’s Disclosure Schedules, there is not in effect any order, judgment, or
decree of any Governmental Authority enjoining, barring, suspending,
prohibiting, or otherwise limiting Buyer from undertaking the Contemplated
Transactions.

4.4.   Finders and Brokers.       Buyer is not a party to any agreement with any
finder or broker under which any Seller would have any responsibility for any
commissions, fees, or expenses in connection with the origin, negotiation,
execution, or performance of this Agreement.   4.5.   Bankruptcy.       Except
as disclosed in Buyer’s Disclosure Schedules, Buyer is not subject to any
bankruptcy proceeding, and to Buyer’s Knowledge no proceeding is contemplated,
in which Buyer would be declared insolvent or subject to the protection of any
bankruptcy or reorganization laws or procedures.   4.6.   Availability of Funds.
      Buyer has sufficient funds available or has received binding written
commitments from responsible financial institutions to provide sufficient funds
on the Closing Date to pay the Purchase Price and conduct the Business. The
ability of Buyer to consummate the transactions contemplated hereby are not
subject to any condition or contingency with respect to financing.

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5.   COVENANTS OF THE PARTIES   5.1.   Continuing Access.       After the
Closing Date and in addition to any rights under the Cushion Gas Litigation
Agreement, each of the parties hereto, its Affiliates, and its and their
representatives and advisors will have reasonable access to (and the right to
make and retain copies of) the records (including, but not limited to email
messages) of the HPL Companies and reasonable access to the officers, directors,
then-serving employees, members, agents, and any other personnel of the HPL
Companies, in each case for purposes of consultation or otherwise to the extent
reasonably required in connection with matters relating to the operations of the
HPL Companies before the Closing Date, in connection with the performance of its
obligations and exercise of its rights under this Agreement (including its
prosecution, defense, and settlement of Retained Matters or other litigation or
investigations), or otherwise in connection with the Contemplated Transactions.
Each of the parties hereto agrees to preserve and cause its Affiliates to
preserve all such records for the period of time set forth in any records
retention policy in effect at an HPL Entity as of the Closing Date or for any
longer period as may be required by law, but in any event for at least 6 years
from the Closing Date. Each of the parties hereto and their representatives and
advisors will have reasonable access to (and the right to make and retain copies
of) the documents, books and records, and other information of the HPL Companies
(to the extent currently possessed by the HPL Companies, and such parties shall
authorize Buyer or Sellers, as applicable, to seek or obtain, at the expense of
the party seeking such access, such documents, books, records, and other
information of the HPL Companies that are not currently possessed by such
parties). At no cost or expense to the cooperating party other than actual
out-of-pocket expenditures (which shall not include attorney’s fees), each party
will reasonably (or otherwise upon reimbursement of the cooperating party’s
out-of- pocket costs) cooperate and cause their Affiliates to reasonably (or
otherwise upon reimbursement of the cooperating party’s out-of-pocket costs)
cooperate in connection with any audit, investigation, hearing, or inquiry by
any Governmental Authority and any litigation, arbitration, or other Proceeding
which may continue or arise after the Closing Date relating to any of the
Retained Matters, such cooperation to include making individuals and records
reasonably (or otherwise upon reimbursement of Buyer’s out-of-pocket costs)
available for review, analysis, testing, consultation, interview, deposition, or
testimony, making a corporate representative available for deposition or at
trial, and executing declarations, affidavits, settlement agreements, and other
instruments as reasonably requested by the other party hereto. Any cost
associated with accessing former employees will be borne by the party seeking
such access.   5.2.   Retained Matters.

  5.2.1.   Except as otherwise set forth in Sellers’ Disclosure Schedules,
Sellers or their Affiliates will be entitled to exclusively control, conduct,
and

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     otherwise direct the prosecution, defense, and settlement of any of the
Proceedings described as or arising out of “Retained Matters” in Sellers’
Disclosure Schedules and Buyer covenants to cause the HPL Entities to grant such
control to Sellers. Following the Closing, the liability of the HPL Entities for
any demands, claims, causes of action, suits, judgments, damages, amounts paid
in settlement, penalties, liabilities, losses or deficiencies, court costs,
expenses of arbitration or mediation, and other out-of-pocket expenses relating
to any Retained Matter (“Retained Matter Liabilities”) will be limited as set
out in the description thereof in Sellers’ Disclosure Schedule, and Sellers
hereby agree to solely bear the cost of, or if unable to directly bear the cost
of, shall indemnify and hold harmless, the HPL Entities from all Retained Matter
Liabilities in excess of such limit on the liability of the HPL Entities
therefor (“Sellers’ Retained Matter Responsibility”), in accordance with the
provisions of Section 6.2. Sellers will retain rights in proportion to Sellers’
Retained Matter Responsibility with respect to any recovery from any of the
Retained Matters or any counterclaim thereto or cross-claim with respect thereto
(whether or not presently asserted), and Buyer agrees to immediately remit, and
cause the HPL Entities to immediately remit, any and all such recoveries to
Sellers or their designees.     5.2.2.   Cushion Gas Litigation is not a
Retained Matter under this Agreement. Allocation of responsibility and liability
among Sellers and their Affiliates on the one hand and Buyer, the HPL Entities,
and their Affiliates on the other hand with respect to Cushion Gas Litigation is
controlled exclusively by the Cushion Gas Litigation Agreement, and neither
Sellers nor any of their Affiliates will have any liability under this Agreement
to Buyer, the HPL Entities, or any of their Affiliates (including liability
based on a breach of the representation and warranty in Section 3.11) for any
Damages or other loss, liability, obligation, damage, cost, or expense of any
kind arising out of or relating to any Cushion Gas Litigation and none of the
limitations on liability contained in this Agreement will apply to any liability
arising under the Cushion Gas Litigation Agreement.

5.3.   Workforce Matters.

  5.3.1.   Post-Closing Employment and Compensation; Severance.

  (a)   Sellers have transferred, or have caused to be transferred, all members
of the Closing Workforce to a Seller or an Affiliate of a Seller (other than an
HPL Company). From the Closing Date until the expiration of the Employee Review
Period, Sellers shall be responsible for the Closing Workforce in accordance
with the terms of the Transition Services Agreement. Not later than 100 days
following the Closing Date (such period being the “Employee Review Period”),
except as provided in Section 5.3.1(b), Buyer shall extend offers of employment,
or cause the HPL Entities or another of its Affiliates to extend offers of

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      employment, to the members of the Closing Workforce that it so elects with
terms consistent with Section 5.3.2 (“Offer of Employment”). Buyer will make
Offers of Employment and initiate employment in consultation with Sellers in an
orderly fashion that does not impose an undue administrative burden on Sellers.
Buyer shall notify Sellers in writing at least 10 days prior to making an Offer
of Employment of: (i) the name of each such member of the Closing Workforce to
whom Buyer or an Affiliate of Buyer intends to make an Offer of Employment; and
(ii) the terms of each such Offer of Employment. Buyer shall not give notice to
any member of the Closing Workforce that such employee will not receive an Offer
of Employment in the period beginning on the Closing Date and ending 30 days
after the Closing Date. At any time and from time to time on or before the date
that is the last day of the Employee Review Period, Buyer or an Affiliate of
Buyer shall hire those members of the Closing Workforce who accept an Offer of
Employment. Each member of the Closing Workforce who accepts an Offer of
Employment shall be referred to as a “Transferred Employee”. The date on which a
Transferred Employee becomes an employee of Buyer or Buyer’s Affiliate shall be
referred to as the “Hire Date” for such Transferred Employee. Sellers or their
Affiliate, as the case may be, shall terminate each of the Transferred Employees
as of such employee’s Hire Date. Except to the extent that such liabilities are
to be borne by Buyer under Section 5.3.1(c), Sellers shall be liable for any
Required Severance Benefits and health care continuation benefits (COBRA rights)
of any member of the Closing Workforce that does not become a Transferred
Employee, and except as otherwise provided herein or in the Transition Services
Agreement, neither Buyer nor any Affiliate thereof shall have any other
liability or obligation whatsoever with respect to any member of the Closing
Workforce who does not become a Transferred Employee.

  (b)   The provisions of Section 5.3.1(a) notwithstanding, (i) Buyer will have
no obligation to employ, or cause to be employed, any member of the Closing
Workforce who does not accept an Offer of Employment that conforms to the
requirements of Section 5.3.1(a); (ii) Buyer will have no obligation to continue
the employment of any individual who voluntarily terminates his or her
employment other than in the circumstances described in clause (ii) or (iii) of
Section 5.3.1(c), and (iii) Buyer may terminate the employment of any member of
the Closing Workforce at anytime for Cause. For purposes of this Agreement,
termination for “Cause” means termination because of material dereliction of
duty, commission of a crime of moral turpitude, material violation of any
written policy of the employer, or termination because of any other “termination
for

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      cause” provision in the involved individual’s written employment
agreement, if any.     (c)   Buyer will provide, or will cause the HPL Entities
or another of its Affiliates to provide the Required Severance Benefits to each
Transferred Employee who:

  (i)   is terminated without Cause during the Continuation Period,     (ii)  
elects during the Continuation Period to terminate such employment within 7 days
following such Transferred Employee’s receipt of a notice from his or her
employer of its intent to reduce such employee’s base rate of pay, or    
(iii)   elects during the Continuation Period to terminate such employment
within 30 days after his or her employer notifies such employee of its intent to
assign such employee to a principal place of work that is more than 50 miles
from such employee’s principal place of work as of the Closing Date.

      Additionally, in the event Buyer fails to extend, or cause to be extended,
Offers of Employment to not less than 75% of the Closing Workforce as required
by Section 5.3.1(a), and the members of the Closing Workforce that are severed
by Sellers or their Affiliates who have not received Offers of Employment from
Buyer and have not resigned or have not received offers of employment from
Sellers or any of their Affiliates that in each such case would relieve Sellers
of any severance obligation to such employees, then Buyer will pay to Sellers or
their designated Affiliate, within 30 days of written request therefor (such
request to be made within 30 days of the end of the Employee Review Period) an
amount equal to (A) the weighted average severance benefits (based on credited
service and COBRA premium rates determined as of the last day of the Employee
Review Period) that could be available pursuant to the Required Severance
Benefits to the remaining members of the Closing Workforce described above
multiplied by (B) a number equal to (x) the number of individuals constituting
75% of the Closing Workforce minus (y) the number of individuals who receive an
Offer of Employment that conforms to the requirements of Section 5.3.1(a).

  (d)   Sellers and their Affiliates will not discourage any member of the
Closing Workforce from accepting an Offer of Employment that conforms to the
requirements of Section 5.3.1(a).

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  (e)   Prior to the Closing Date, Sellers shall have caused the HPL Entities to
(i) terminate any Benefit Plans that are sponsored, contributed to, maintained,
or entered into solely by one or more of the HPL Entities, unless sponsorship is
transferred to and assumed by a Seller or an Affiliate of Sellers (other than an
HPL Company) prior to the Closing Date (including any liability that might
otherwise apply to the HPL Entities), and (ii) terminate the participation of
all HPL Entities in all Benefit Plans. It is expressly understood and agreed
that neither Buyer nor any Affiliate thereof is, by virtue of this Agreement or
otherwise, assuming any Benefit Plan or any liability or obligation of any kind
under any such Benefit Plan.

  5.3.2.   Post-Closing Benefits; Service Credit for Transferred Employees.

  (a)   During the Continuation Period, Buyer will provide, or cause the HPL
Entities or another of its Affiliates to provide, Transferred Employees with
(i) a base compensation level at least as high as that referred to in
Section 3.17.1 hereof (including scheduled increases in compensation identified
therein), and (ii) a principal place of work that is no more than 50 miles from
such Transferred Employee’s principal place of work as of the day immediately
preceding Closing.     (b)   During the Continuation Period, Buyer will provide,
or cause the HPL Entities or another of its Affiliates to provide, to the extent
permitted by Applicable Law, bonus, fringe benefits, welfare benefits,
retirement and pension benefits, medical, dental, and other health plans,
vacation pay, sick leave, deferred compensation arrangements, and other benefits
(other than severance benefits, which are controlled by Section 5.3.1(c)) (the
“Buyer Plans”) for Transferred Employees that are no less favorable than those
provided by Buyer or its Affiliates to other similarly situated employees of
Buyer or its Affiliates.     (c)   To the extent permitted under Applicable Law
and the applicable Buyer Plans, Buyer agrees that for purposes of all Buyer
Plans (including all policies and employee fringe benefit programs, including
vacations, of Buyer) under which an employee’s benefit depends, in whole or in
part, on length of service, credit will be given to Transferred Employees as of
each employee’s Hire Date for service previously credited with or by Sellers or
any of their Affiliates prior to such Hire Date for such programs, provided that
such crediting of service shall not be given for benefit accrual purposes under
any defined benefit plan. If permitted under the applicable Buyer Plans with no
immediate increase in Buyer’s premiums with respect to any insured group health
plan, each Transferred Employee shall also be given credit

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      for any deductible or co-payment amounts paid in respect of the plan year
in which the Closing occurs to the extent that, following such employee’s Hire
Date, such Transferred Employee participates in any Buyer Plan for which
deductibles or co-payments are required. Buyer shall also cause each Buyer Plan
(except Buyer’s insured welfare benefit plans that are not group health plans,
with respect to which Buyer shall use its commercially reasonable efforts to
cause such plans) to waive (i) any preexisting conditions, exclusions, evidence
of insurability requirements, and actively-at-work exclusions for each
Transferred Employee and his or her dependents under any Buyer Plan in which a
Transferred Employee becomes eligible to participate to the extent that such
pre-existing conditions, exclusions, evidence of insurability requirements, and
actively-at-work exclusions were previously satisfied under the comparable
Benefit Plan, and (ii) any waiting period limitation which would otherwise be
applicable to a Transferred Employee on or after the Closing to the extent such
Transferred Employee had satisfied any similar waiting period limitation under
an analogous plan prior to the Closing. All claims and expenses incurred by any
such Transferred Employee and any dependents that were to be taken into account
for purposes of satisfying any deductible or out-of-pocket limit under any
Benefit Plan will be taken into account for purposes of satisfying any
deductible or out-of-pocket limit under the plans maintained after Closing for
the benefit of such Transferred Employee. Sellers shall use their reasonable
best efforts to provide to Buyer information concerning out-of-pocket expenses
incurred by Transferred Employees under any Benefit Plan for pre-Hire Date
treatments or services.     (d)   Buyer will recognize, or will cause the HPL
Entities or another of its Affiliates to recognize, all unused earned, banked,
and accrued vacation of each Transferred Employee as of such employee’s Hire
Date up to a maximum of 2 weeks of vacation for each Transferred Employee and
will provide to each such Transferred Employee a level of sick leave and other
leave benefits that is no less favorable than the sick leave and other leave
benefits provided by Buyer or its Affiliates to similarly situated employees of
Buyer or its Affiliates. If any Transferred Employee has more than 2 weeks
unused earned, banked, and accrued vacation available to be taken in the year of
Closing under Sellers’ or their Affiliates’ vacation policy as of such
Transferred Employee’s Hire Date, Sellers shall be responsible for the payment
to such Transferred Employee of such additional amount of unused earned, banked,
and accrued vacation based on such Transferred Employee’s salary immediately
prior to the Hire Date. At any time and from time to time during the Employee

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      Review Period, at Buyer’s request, Sellers will prepare a report of the
amounts accrued by Sellers and their Affiliates for vacation benefits of the
Closing Workforce. To the extent that Buyer provides such benefits to the
Transferred Employees as a result of such accruals (rather than as a result of
accruals from service after the Transferred Employee’s Hire Date), Sellers will
remit to Buyer the amount of such accruals as a reduction of the Purchase Price.

  (e)   Buyer will provide or cause to be provided to each Transferred Employee
and their qualified beneficiaries who incur a “qualifying event” (as defined in
COBRA) on or after such Transferred Employee’s Hire Date continuation health
coverage in accordance with the continuation health coverage requirements of
COBRA.

  5.3.3.   WARN Act Compliance.         Sellers do not anticipate terminating
the employment of any member of the Closing Workforce prior to Closing as a
result of the Contemplated Transactions. Buyer will, at its expense, effect or
cause the HPL Entities or its other Affiliates to effect full compliance with
the Worker Adjustment and Retraining Notification Act (“WARN Act”) and
regulations promulgated thereunder, and any comparable state or local Applicable
Law, required as a result of the Contemplated Transactions, regardless of
whether the obligation to do so is that of Buyer, Sellers, their Affiliates, or
the HPL Entities. Buyer agrees to indemnify Sellers for any damages, costs,
fees, including but not limited to attorneys’ fees, penalties, or other legal
obligations under the WARN Act or comparable state or local Applicable Law,
resulting from the Contemplated Transactions.

5.4.   Discontinuation of Intercompany Transactions.       Effective as of the
Closing, and consistent with the determination of Net Working Capital, all
intercompany receivables and payables and loans including amounts due to or from
the HPL Entities under the AEP System Amended and Restated Non-Utility Money
Pool Agreement then existing between any HPL Entity on the one hand and AEP or
any of its Affiliates on the other hand (other than those between the HPL
Entities) shall be fully settled so that there are, as of the Valuation Time, no
such outstanding payables, receivables, or loans except as set forth in Sellers’
Disclosure Schedules. Without limitation of the foregoing, all accruals of
federal income tax and state income tax, all deferred tax liabilities, and all
deferred tax assets will be eliminated from the accounts of the HPL Entities.
Except as set forth in Sellers’ Disclosure Schedules, all intercompany
agreements or arrangements between any HPL Entity on the one hand and AEP or any
of its Affiliates on the other hand including agreements for accounting services
and access to accounting processes (other than those between the HPL Entities)
shall be terminated as of the Valuation Time.

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5.5.   Termination and Continuation of Certain Insurance Coverages.

  5.5.1.   Buyer acknowledges that as of Closing the insurance coverages
relating to the Business and described as “Terminating Insurance Coverages” in
Sellers’ Disclosure Schedules will terminate or otherwise cease to be in effect,
except with respect to claims of any of the HPL Companies that are pending under
such insurance coverage as of the Closing Date, which shall survive the Closing
Date and continue in effect until resolution thereof. No HPL Company will be
entitled to any refund of any premium paid with respect to any such coverage.
Except as otherwise provided in this Agreement, Buyer agrees that it will be
solely responsible for, and neither Sellers nor any of their Affiliates will
have any responsibility for, all risks as to which a claim for coverage under
any of the Terminating Insurance Coverages may have otherwise been brought after
Closing.     5.5.2.   Until December 20, 2006, and thereafter at the option and
expense of Sellers, Buyer will maintain, or cause the HPL Entities to maintain,
continuously in force Chubb Custom Insurance Company Policy Number 3725-37-46
(or an equivalent policy from an insurer acceptable to Sellers in their sole
discretion) covering insured losses, providing for deductibles and limits, and
including endorsements, in each case, as presently set forth in such policy, and
naming AEP and its Affiliates as additional named insureds. Buyer shall notify
Sellers at least 60 days prior to the end of the coverage period of its
intention to not renew the above-described policy. If such coverage is extended
at the option and expense of Sellers, Sellers shall have the sole right to
modify and limit coverage at their discretion.

5.6.   Substitutions of Credit Support.       Buyer shall, within 30 days
following the Closing Date, cause itself or one or more of its Affiliates to be
substituted in all respects for Sellers or one or more of their Affiliates, as
the case may be, in respect of all obligations of Sellers or any of their
Affiliates under each and every guaranty, indemnity agreement, surety bond,
performance bond, letter of credit, support agreement, keep-well agreement,
third party collateral assignment or other pledge of collateral, or other credit
support arrangement of any kind supporting the credit or facilitating the
transactions of any of the HPL Companies in connection with the Business (each a
“Credit Support Arrangement”) and shall cause Sellers and each of their
Affiliates, as the case may be, to be discharged from all obligations under any
such Credit Support Arrangement. The Credit Support Arrangements include those
listed in Schedule 5.6 of Sellers’ Disclosure Schedules. If Buyer is unable to
timely effect such substitution with respect to any Credit Support Arrangement
on terms acceptable to Buyer, then Buyer will immediately obtain a letter of
credit, on terms and from a financial institution reasonably satisfactory to
Sellers, with respect to the obligations of Sellers and each of their Affiliates
under such Credit Support Arrangement.

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5.7.   Claims for Certain Measurement Adjustments.       Buyer agrees to remit
to Sellers, within 30 days of receipt, any amount receivable within the
18 months following the Closing Date to correct any misallocation, calculation
error, measurement problem or similar event relating to performance prior to the
Closing Date under any of the HPL Companies’ contracts with gas suppliers, gas
customers, transportation customers, and storage customers. If any such amount
is offset for any reason, the amount so offset will be remitted within 30 days
of the date on which the HPL Companies receive credit as a result of such
offset. Sellers will have the right to direct Buyer and the HPL Companies in the
administration of any contract provision calling for any such a correction to
the extent necessary to protect its interests under this Section 5.7. At the
expense of Sellers, Sellers shall have the right, in accordance with this
Section 5.7 and Section 5.1, to audit the records of the HPL Entities to
determine the existence of a right to any such correction and/or the details
concerning any such correction and for this purpose will have the right, in
accordance with this Section 5.7 and Section 5.1, to review, copy, abstract, and
audit all relevant meter data and other relevant information held by or
available to the HPL Entities for the relevant period. Buyer will provide
Sellers and their representatives and advisors, at no expense to Sellers, with
all accounting services, assistance, and access to data during normal business
hours to the working papers, accounting, operating, and other books and records
of the HPL Entities, and the appropriate personnel to the extent required to
exercise Sellers’ rights under this Section 5.7. Pursuant to the Transition
Services Agreement, Buyer shall also ensure that the employees of Sellers (to
the extent they continue to be employed by Sellers or any Affiliate of Sellers
and made available under the Transition Services Agreement) previously involved
with the foregoing accounting services and operation activities will perform
their customary and usual monthly tasks, including the assistance in the month
end closing of the books and records of the HPL Entities, during the periods
following the Closing Date for purposes of the foregoing. Buyer shall also
ensure that the Transferred Employees (to the extent they continue to be
employed by Buyer or any Affiliate of Buyer) previously involved with the
foregoing accounting services and operation activities will perform their
customary and usual monthly tasks, including the assistance in the month end
closing of the books and records of the HPL Entities, during the periods
following the Closing Date for purposes of the foregoing.

5.8.   Discontinuance of Trademarks and Tradenames.       Any and all
Intellectual Property owned by or licensed to the HPL Companies with respect to
the name “Houston Pipe Line Company” or the acronym “HPL” or any variation or
derivative thereof (the “Business Marks”) shall be retained by the HPL Companies
for their use after Closing. Effective upon Closing Sellers shall cause their
appropriate Affiliates to grant to the HPL Companies a non-exclusive,
non-transferable, non-sublicenseable, royalty-free right to display, solely in
connection with the Business, “AEP”, “American Electric Power” or any other
similar trademarks, service marks, and tradenames owned by or licensed to
Sellers or any of their Affiliates (the “Retained Marks”), for a period of time,
not to exceed 6 months from the Closing Date, as is reasonably necessary to
promptly discontinue such

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    display, on any stationery, billing stock, signs, vehicles, pipeline
markers, manuals, forms, or in connection with the normal operation of computer
software, but solely to the extent and in the form that the Retained Marks exist
or are contained thereon as of the Closing. At the conclusion of such period,
Buyer shall cause each of the HPL Companies to discontinue display or other use
of, and license to others of, the Retained Marks.   5.9.   Change of Sellers’
Names.       At Closing each Seller will take all steps necessary to change its
name effective as of the Closing Date so as to eliminate any reference to “HPL”.
  5.10.   Required Notices.       Buyer will timely prepare and file or cause to
be prepared and filed, at its own expense, with a complete and contemporaneous
copy to Sellers, all notices or other filings required to be filed by any HPL
Company or Buyer after Closing with any Governmental Authority as a result of or
with respect to the execution and delivery of this Agreement or the Buyer’s
Documents or the consummation of the Contemplated Transactions. Upon the request
of Buyer, Sellers will fully cooperate with Buyer in making any such filing.  
5.11.   Public Statements.       After the Closing Date, no party will issue any
press release or make any public disclosure concerning the Contemplated
Transactions or the contents of this Agreement, the Option Agreement, the
Cushion Gas Litigation Agreement, the Guaranties, or the Transition Services
Agreement without the prior written consent of the other parties, which shall
not be unreasonably withheld. Notwithstanding the above, nothing in this Section
will preclude any party from making any disclosures required by Applicable Law
or necessary and proper in conjunction with the filing of any tax return or
other document required to be filed with any Governmental Authority or to comply
with the regulations of any securities exchange; provided, that the party
required to make such disclosure shall allow the other parties reasonable time
to review and comment thereon in advance of such disclosure.   5.12.   Audit
Matters.       Promptly following Closing, Sellers will provide representatives
of Buyer, at no expense to Sellers, with all assistance and access to data
during normal business hours, including accounting and other books and records
of the HPL Entities and Sellers and the appropriate personnel of Sellers and the
HPL Entities, reasonably required by Buyer to enable Buyer to prepare for the
HPL Entities: (i) an audited balance sheet as may be required or, in the
judgment of Buyer, advisable to be filed by Buyer or any Affiliate of Buyer in
accordance with Regulation S-X under the Securities Act of 1933, as amended, and
related statements of income and cash flows for each of its then three most
recent fiscal years, or (ii) other financial statements (including without
limitation adjusted historical financial statements), in each case as may be
required or

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    advisable for filings with the Securities and Exchange Commission in
compliance with Regulation S-X in connection with or on account of the
Contemplated Transactions. Buyer, at its sole expense, shall engage independent
auditors to undertake the above-described audit, and if Buyer engages Deloitte &
Touche, LLP, Sellers (at no expense to Sellers) will authorize access to that
firm’s working papers relating to its audit of AEP insofar as they relate
exclusively to Sellers and their direct and indirect subsidiaries. It is
expressly agreed that no Buyer representative, including the independent
auditors engaged by Buyer as contemplated by this Section 5.12, shall have
access to any unpublished accounting information or working papers other than
those of Sellers and their direct or indirect subsidiaries.   5.13.  
Post-Closing Title Review.

  5.13.1.   Within 60 days following the Closing Date, Buyer may conduct a
review of the HPL Companies’ title to the real property interests described in
Exhibit 5.13 to this Agreement, and assert Title Defects against Sellers, in
accordance with the procedures set forth in this Section 5.13.     5.13.2.  
Prior to the expiration of the Defect Examination Period (as defined below),
Buyer shall furnish to Sellers written notice(s) (each, a “Defect Notice”)
specifying in reasonable detail each matter which, in Buyer’s opinion,
constitutes a Title Defect (including any and all reasonable supporting
documentation), and which Buyer wishes to assert as a Title Defect hereunder,
together with the costs that Buyer, in good faith, estimates to be the costs
necessary to cure or remediate the described Title Defects (each a “Defect
Amount”). The “Defect Examination Period” shall mean the period commencing on
the Closing Date and ending 30 days after such date. Any Title Defects not
asserted by Buyer on or before the expiration of the Defect Examination Period
in accordance with this Section 5.13 shall be deemed conclusively to be waived.
Sellers shall have no liability for any Defect Amount unless such Defect Amount
exceeds $50,000 (a “Qualifying Defect Amount”) and until and unless the sum of
all Qualifying Defect Amounts exceeds $1,000,000 (the “Title Threshold”) and
then only to the extent that such sum exceeds the Title Threshold, and Sellers’
liability therefor is subject to the Sellers’ Cap.     5.13.3.   Sellers shall
provide a written response to Buyer within 30 days following the expiration of
the Defect Examination Period stating, with respect to each Title Defect
asserted in the Defect Notice(s), whether or not Sellers agree: (a) that the
alleged Title Defect constitutes a Title Defect under the terms of this
Agreement; and (b) that Buyer’s estimate of the Defect Amount attributable to
each Title Defect asserted by Buyer is acceptable to Sellers (the “Response
Notice”). If Sellers disagree with Buyer’s assertion of the existence of a Title
Defect or the Defect Amount with respect thereto, Sellers’ Response Notice shall
also specify in reasonable detail Sellers’ grounds for such disagreement, the
Defect Amount estimated in good faith by Sellers therefor, or both, as the case
may be. If Sellers do not include in their Response Notice an objection to a
Title Defect or to the Defect

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      Amount, or if Sellers’ Response Notice agrees that the alleged Title
Defect constitutes a Title Defect under the terms of this Agreement and that
Buyer’s estimate of the Defect Amount is acceptable, then that Defect Amount
shall be the amount taken into consideration under Section 5.13.2, regardless of
the costs that Buyer in fact incurs in curing that Title Defect. Sellers and
Buyer will attempt in good faith to resolve any disagreements with respect to
the matters set forth in Buyer’s Defect Notice(s) and Sellers’ Response Notice
within 30 days following Buyer’s receipt of Sellers’ Response Notice. If Sellers
and Buyer are unable, within such 30 day period, to agree in writing as to the
existence or value, as applicable, of any Title Defect, the parties agree to
submit the dispute to the Independent Accounting Firm, which shall employ
persons who are independent of the parties hereto and are impartial and
experienced in the evaluation of matters of the type to be determined. The
decision of the Independent Accounting Firm with respect to the disputed matters
shall be final and binding on the parties. The parties will direct the
Independent Accounting Firm to render its decision with respect to such matters
within 15 days after the dispute is submitted, or such reasonably longer period
as the Independent Accounting Firm requires in its reasonable discretion.
Sellers and Buyer will each promptly provide all information and documents
within their respective possession that the Independent Accounting Firm requests
in order to make its decision with respect to the disputed matters. The fees of
the Independent Accounting Firm will be borne equally by Sellers, on the one
hand, and Buyer, on the other hand.     5.13.4.   With respect to each Title
Defect that has a Qualifying Defect Amount, Sellers may, at their election,
either remit to Buyer such Qualifying Defect Amount (after satisfaction of the
Title Threshold) or at Sellers’ sole cost and expense, and subject to the prior
consent of Buyer (such consent not to be unreasonably withheld), cure within the
Cure Period (as hereinafter defined) such Title Defect asserted by Buyer for
which Sellers are liable hereunder. The “Cure Period” shall mean the period of
time commencing on the expiration of the Defect Examination Period and ending
180 days after such date. Immediately following the expiration of the Cure
Period, Sellers shall provide Buyer with written evidence of any curative
actions which, in Sellers’ determination, cure the Title Defect. On or before
the expiration of 15 days following Buyer’s receipt of such notice, Buyer shall
provide to Sellers in writing a list of those Title Defects asserted by Buyer
which Sellers claim to have cured pursuant to this Section, and which Buyer
determines not to have been cured. For a period of 30 days after Sellers’
receipt of Buyer’s notice of uncured Title Defects, Sellers and Buyer shall
attempt in good faith to resolve disputes as to such items by agreement. In the
event that the dispute concerning any uncured Title Defect is not resolved
within this 30 day period, then parties are unable to resolve all disputes
concerning the existence of Title Defects or Defect Amounts within this 30 day
period, then Sellers shall remit to Buyer the Qualifying Defect Amount for such
uncured Title Defect (after satisfaction of the Title Threshold).

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5.14.   Distributions to HPL Consolidation’s Partners.       During the period
from the Closing Date through and including the Valuation Time, Buyers will not
cause or allow HPL Consolidation to make any distributions to its partners.  
5.15.   Agreement to Cover Open Positions.       In the event that either party
determines, within 30 days following the Closing Date, that any Fixed Price Risk
as of the end of the trading day immediately before the Closing Date is not
hedged as of the Valuation Time, Sellers shall cause AEP Energy Services, Inc.
to provide (and Buyer will cause ETC Marketing, Ltd. to accept) offsetting
hedges to said Fixed Price Risk from the Closing Date. The obligation of Sellers
to provide offsetting hedges shall not apply to volume variances during
February 2005 in the normal course of business.   6.   SURVIVAL; INDEMNIFICATION
  6.1.   Survival.

  6.1.1.   Subject to the following, the representations and warranties of
Sellers and Buyer in this Agreement shall, without regard to any investigation
made by any party, survive the Closing Date; provided, however, that (i) the
representations and warranties set forth in Sections 3.1, 3.2.1, 3.2.2, 3.4,
3.6, 3.20, 3.21, 4.1, 4.2.1, 4.2.2, and 4.4 hereof shall survive indefinitely,
(ii) the representations and warranties set forth in Section 3.16 and
Section 3.17.3 hereof shall survive for a period of 90 days after the expiration
of the applicable statute of limitations, and (iii) the remainder of the
representations and warranties of Sellers in Article 3 and Buyer in Article 4
shall survive the Closing until 12 months thereafter.     6.1.2.   No claim for
Damages or other relief of any kind, including a claim under Sections 6.2.1(i)
or 6.3.1(i), arising out of or relating to any breach of representation or
warranty under this Agreement or otherwise arising out of any information
alleged to have been provided or not provided by Sellers or any of their
Affiliates in connection with this Agreement or the Contemplated Transactions
(whether sounding in contract, tort, breach of warranty, securities law, other
statutory cause of action, deceptive trade practice, strict liability, product
liability, or other theory of liability) may be brought unless suit thereon is
filed, or a written notice describing the nature of the claim, the theory of
liability or the nature of the relief sought and the material factual assertions
upon which the claim is based is given to the other party, before the
termination of the applicable Survival Period.     6.1.3.   The applicable
survival period of each representation or warranty is provided in Section 6.1.1
and each such period is referred to herein as a “Survival Period”.
Notwithstanding the foregoing, any representation or warranty that would
otherwise terminate shall survive for any Damages with respect to which suit
thereon is filed and process is served, or of which

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      notice describing the nature of the claim, the theory of liability, or the
nature of the relief sought and the material factual assertions upon which the
claim is based is given pursuant to this Agreement, prior to the end of the
Survival Period until the matter is finally resolved and any related Damages are
paid.

6.2.   Indemnification by Seller.

  6.2.1.   Except as otherwise provided in Article 7 below, Sellers jointly
shall defend, indemnify and hold Buyer, its Affiliates and respective successors
and permitted assigns, and their respective shareholders, members, partners
(general and limited), officers, directors, managers, employees, agents, and
representatives, and each of their heirs, executors, successors and assigns
(“Buyer Indemnified Parties”) harmless from and against and in respect of any
and all actual damages relating to any demands, claims, lawsuits, causes of
action, losses, investigations and other proceedings (whether or not before a
Governmental Authority and whether or not brought by a third party), including
reasonable attorney’s fees (which shall not include fees on a contingency
basis), court costs and other documented out-of-pocket expenses reasonably
incurred investigating or preparing, but excluding in all cases any special,
indirect, incidental, consequential, or punitive damages (collectively,
“Damages”) which arise out of (i) any breach by any Seller of any of the
representations and warranties contained in this Agreement (except for the
representations and warranties set forth in Sections 3.16 (which shall be
governed by Article 7 hereof), (ii) any breach of any of the covenants of any
Seller in this Agreement, (iii) except to the extent that such liabilities are
to be borne by Buyer under Section 5.3.1(c) or pursuant to any Buyer Plans in
accordance with the requirements of Section 5.3 or otherwise, any liabilities or
obligations with respect to any employee of any Seller or with respect to any
employee of any HPL Entity if arising out of or related to employment by an HPL
Entity prior to the Closing Date, any contributions, payments or other
obligations arising out of the administration, sponsorship or participation of
the Closing Workforce in any Benefit Plan with respect to periods of service
prior to the Closing Date, and, except as provided in Section 5.3.1(c), any
severance or other liabilities owed to any such employee who does not become a
Transferred Employee in accordance with Section 5.3, (iv) any Proceeding pending
or which may be asserted with respect to any Retained Matter, but only to the
extent of Sellers’ Retained Matter Responsibility, (v) any personal injury or
property damage loss claims arising from the ownership or operations by the HPL
Companies of their assets or the Business prior to the Closing Date that is
first threatened, asserted, or brought after the Closing Date, (vi) any
obligations to make a correcting adjustment under any of the HPL Companies’
contracts with gas suppliers, gas customers, transportation customers, and
storage customers as a result of any misallocation, calculation error,
measurement problem or similar event relating to performance under such contract
prior to the Closing Date, (vii) other than claims arising under this Agreement
or any other agreement or arrangement

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      entered into at or in connection with the Closing and claims under
affiliate transactions that are identified in Schedule 5.4 of Sellers’
Disclosure Schedules, any claims by Sellers or any of their Affiliates or any of
their respective officers, directors, partners, shareholders or members,
including claims of any Person that served as an officer or manager of any HPL
Company, against any HPL Company to the extent such claims relate to the period
of time prior to the Closing Date or relate to the Contemplated Transactions,
specifically including claims under or with respect to any of the affiliate
transactions terminated in accordance with Sections 3.20 and 5.4, and (viii) the
failure, prior to the Closing Date, to obtain any of the Seller Consents or HPL
Company Consents required to be obtained prior to the Closing Date.     6.2.2.  
The foregoing obligation to indemnify Buyer Indemnified Parties set forth in
Section 6.2.1 shall be subject to each of the following limitations.

  (a)   Sellers’ indemnification obligations under Section 6.2.1(i) shall be
subject to the Survival Period limitations set forth in Section 6.1.     (b)  
Sellers’ indemnification obligations set forth in Section 6.2.1(v) shall be
limited such that Sellers shall only be liable thereunder to the extent that a
written claim describing the nature of the claim, the theory of liability, or
the nature of the relief sought and the material factual assertions upon which
the claim is based is given to Sellers prior to the first anniversary of the
Closing Date.     (c)   Sellers’ indemnification obligations set forth in
Section 6.2.1(vi) shall be limited such that Sellers shall only be liable
thereunder to the extent that a written claim describing the nature of the
claim, the theory of liability, or the nature of the relief sought and the
material factual assertions upon which the claim is based is given to Sellers
within 18 months following the Closing Date.     (d)   Sellers’ indemnification
obligations set forth in Section 6.2.1(iii) shall be limited such that Sellers
shall only be liable thereunder to the extent that a written claim describing
the nature of the claim, the theory of liability, or the nature of the relief
sought and the material factual assertions upon which the claim is based is
given to Sellers within 90 days after the expiration of the applicable statute
of limitations.     (e)   No reimbursement or payment for any Damages asserted
against Sellers under Section 6.2.1(i) (other than for breach of Sellers’
representations and warranties set forth in Sections 3.1, 3.2.1, 3.2.2, 3.4,
3.6, and 3.9.2, which are not subject to the Sellers’ Threshold) or 6.2.1(v)
shall be required unless and until the cumulative aggregate amount of such
Damages for all claims

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      arising thereunder equals or exceeds $10,000,000 (the “Sellers’
Threshold”) and then only to the extent that the cumulative aggregate amount of
Damages, as finally determined, exceeds the Sellers’ Threshold.     (f)  
Notwithstanding anything to the contrary contained in this Agreement, Sellers’
aggregate liability to Buyer and its Affiliates for all Damages under
Sections 6.2.1(i) (other than for breaches of Sellers’ representations and
warranties set forth in Section 3.6, which are not subject to Sellers’ Cap),
6.2.1(v), and 6.2.1(vi) and those items of Sellers’ Retained Matter
Responsibility that are shown in Sellers’ Disclosure Schedules to be subject to
Sellers’ Cap shall not exceed $220,000,000 (“Sellers’ Cap”).     (g)   In
addition to the limitation set forth in Section 6.2.2(e) above, Sellers’
indemnification obligations with respect to Section 3.18 are subject to the
additional limitations set forth below:

  (i)   Sellers shall only be liable to the extent that a claim is provided to
Sellers in a reasonably detailed written communication prior to the first
anniversary of the Closing Date and Buyer shall afford Sellers a reasonable
opportunity to evaluate the conditions giving rise to such claim.     (ii)  
Sellers shall not be responsible for any Damages that arise out of any action to
meet a cleanup or remedial standard under any Environmental Law that is more
stringent or costly than necessary for the continued ownership or use of any
property or facility as it was last owned or used by the HPL Entities prior to
the Closing Date in compliance with Environmental Laws applicable as of the
Closing Date.     (iii)   Sellers shall not be responsible for any costs of any
post-Closing construction, demolition, or renovation of any facilities owned,
leased, or operated by the HPL Entities including any asbestos abatement
obligations arising from such activities, except to the extent that such
activities are required to comply with Applicable Law, and such non-compliance
was a breach under Section 3.18.     (iv)   Sellers shall be entitled, but not
obligated, to undertake and control, with Buyer Indemnified Parties’ reasonable
participation, any investigation, remediation or other action required by
Environmental Laws (and any negotiation with Governmental Authorities regarding
same) with respect to any matter to the extent covered by

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      Sellers’ indemnification for a breach of Section 3.18, but in doing so
they must use their commercially reasonable efforts to avoid any unreasonable
interference with the operations of Buyer, the HPL Entities, or any of their
Affiliates. Buyer Indemnified Parties shall cause the HPL Entities to afford
Sellers reasonable access to any relevant property or facility to undertake any
such investigation, remediation or other action (it being understood that if
Sellers do not assume responsibility for undertaking actions pursuant to this
subsection, Buyer Indemnified Parties may undertake to complete such actions in
a reasonably cost effective manner, and Sellers shall have a right to reasonable
participation in such undertaking). Sellers will promptly repair and restore any
damage to the property of an HPL Entity caused by Sellers in connection with any
such investigation, remediation, or other action as close as reasonably
practicable to the former condition of such property, and Sellers will indemnify
Buyer and the HPL Entities from and against any Damages related to or arising
from Sellers’ or their agents’ or employees’ performance of the remediation work
or their presence on the premises of Buyer or the HPL Entities. Sellers will
perform any investigation, remediation, or other action undertaken by Sellers
hereunder in a reasonably diligent manner and in compliance with all Applicable
Laws, including Environmental Laws.

  6.2.3.   The indemnities provided in this Section 6.2 shall survive the
Closing. The indemnity provided in this Section 6.2 shall be the sole and
exclusive remedy of the indemnified party against the indemnifying parties at
law or equity for any matter covered by Section 6.2.1.     6.2.4.   Except as
otherwise set forth in Section 6.2, Buyer shall give Sellers prompt written
notice of any third party claim which may give rise to any indemnity obligation
under this Section, together with the estimated amount of such claim, and
Sellers shall have the right to assume the defense of any such claim through
counsel of their own choosing, by so notifying Buyer within 60 days of receipt
of Buyer’s written notice under this paragraph; provided, however, that Sellers’
counsel shall be reasonably satisfactory to Buyer. Failure to give prompt notice
shall not affect the indemnification obligations hereunder in the absence of
actual prejudice. If Buyer desires to participate in any such defense assumed by
Sellers, it may do so at its sole cost and expense but Sellers shall retain
control of any assumed defense. If Sellers decline to assume any such defense,
they shall be liable for all reasonable costs and expenses of defending such
claim incurred by Buyer, including reasonable fees and disbursements of counsel.

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  6.2.5.   Sellers shall have no indemnification obligation to Buyer with
respect to any Damages arising from or relating to the condition, remaining
useful life, or structural integrity of the pipeline or gas storage assets (or
related equipment or facilities) of the HPL Entities unless such Damages arise
out of Sellers’ breach of a representation or covenant in this Agreement.

6.3.   Indemnification by Buyer.

  6.3.1.   Except as otherwise provided in Article 7 below, Buyer shall defend,
indemnify and hold each Seller, their respective Affiliates and respective
successors and permitted assigns, and their respective shareholders, members,
partners (general and limited), officers, directors, managers, employees,
agents, and representatives, and each of their heirs, executors, successors and
assigns (“Seller Indemnified Parties”) harmless from and against and in respect
of any and all Damages which arise out of (i) any breach of any of the
representations and warranties contained in this Agreement, (ii) any breach of
any of the covenants of Buyer in this Agreement, (iii) activities of the HPL
Companies after the Closing Date except to the extent any liability with respect
thereto is included in Sellers’ Retained Matter Responsibility or is otherwise
the responsibility of Sellers under another express provision of this Agreement,
and (iv) any liability incurred or amount paid by AEP or any of its Affiliates
under any Credit Support Agreement with respect to events or circumstances
arising after the Closing Date.

  6.3.2.   The foregoing obligation to indemnify Seller Indemnified Parties set
forth in Section 6.3.1 shall be subject to each of the following limitations:

  (a)   Buyer’s indemnification obligations under Section 6.3.1(i) shall be
subject to the Survival Period limitations set forth in Section 6.1.     (b)  
No reimbursement or payment for any Damages asserted against Buyer under
Sections 6.3.1(i) or 6.3.1(iii) shall be required unless and until the
cumulative aggregate amount of such Damages for all claims arising thereunder
equals or exceeds $10,000,000 (the “Buyer’s Threshold”) and then only to the
extent that the cumulative aggregate amount of Damages, as finally determined,
exceeds the Buyer’s Threshold.     (c)   Notwithstanding anything to the
contrary contained in this Agreement, Buyer’s liability to Seller Indemnified
Parties for Damages in excess of Buyer’s Threshold under Section 6.3.1(i) shall
not exceed $220,000,000 (“Buyer’s Cap”).

  6.3.3.   Sellers shall give Buyer prompt written notice of any third party
claim which may give rise to any indemnity obligation under this Section,
together with the estimated amount of such claim, and Buyer shall have the

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      right to assume the defense of any such claim through counsel of its own
choosing, by so notifying Sellers within 60 days of receipt of Sellers’ written
notice under this paragraph; provided, however, that Buyer’s counsel shall be
reasonably satisfactory to Sellers. Failure to give prompt notice shall not
affect the indemnification obligations hereunder in the absence of actual
prejudice. If Sellers desire to participate in any such defense assumed by Buyer
they may do so at their sole cost and expense. If Buyer declines to assume any
such defense, it shall be liable for all costs and expenses of defending such
claim incurred by Sellers, including reasonable fees and disbursements of
counsel. No party shall, without the prior written consent of the other parties,
which shall not be unreasonably withheld, settle, compromise or offer to settle
or compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the parties or any Affiliate thereof or if such
settlement or compromise does not include an unconditional release of the other
parties for any liability arising out of such claim or demand.     6.3.4.   The
indemnities provided in this Section 6.3 shall survive the Closing. The
indemnity provided in this Section 6.3 shall be the sole and exclusive remedy of
the indemnified parties against the indemnifying party at law or equity for any
matter covered by Section 6.3.1.

     6.4. Indemnification Net of Benefits; Mitigation Obligations of Indemnitee.

     The Damages recoverable by any Indemnified Party under this Article 6 shall
be calculated after giving effect to the actual receipt of any available
insurance proceeds, third party indemnification or contribution payment, or
other similar right of recovery (collectively, “Recoveries”) paid or payable to
the Indemnified Party. In computing the amount of any Recovery, (i) such
Recovery shall be reduced by a reasonable estimate of the present value of
future insurance premium increases that the Indemnified Party may reasonably
expect to bear to the extent attributable to the payment of insurance proceeds
included in the Recovery and (ii) insurance proceeds which are ultimately borne
by the Indemnified Party under any self-insurance, retrospective premium,
deductible or comparable arrangement shall not be taken into account. In all
cases in which a Person is entitled to be indemnified under this Article 6, such
Indemnified Party shall be under a duty to take all commercially reasonable
measures to mitigate all such Damages.

7.   TAX MATTERS   7.1.   Tax Indemnification.

  7.1.1.   In accordance with Section 7.3 hereof and except to the extent that
such liabilities are included in the computation of Net Working Capital, Sellers
shall indemnify and hold Buyer and its Affiliates harmless from and against
(i) all liability for Taxes of, or pertaining or attributable to the HPL

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      Companies with regard (x) to all taxable periods ending as of or prior to
the Closing Date (the “Pre-Closing Period”) (y) with respect to any Tax period
beginning prior to the Closing and ending after the Closing (the “Straddle
Period”), the portion of Taxes attributable to the portion of such taxable
period beginning before (but not ending on) the Closing Date shall be calculated
as though the tax year terminates as of Closing; provided, however, that in the
case of a Tax not based on income, receipts, proceeds, profits, or similar
items, such Taxes shall be equal to the amount of Tax for the taxable period
multiplied by a fraction, the numerator of which shall be the number of days
from the beginning of the taxable period up to but not including the Closing
Date and the denominator of which shall be the total number of days in the
taxable period; and (ii) all Taxes arising out of or related to a breach of any
of the representations and warranties set forth in Section 3.16 of this
Agreement.     7.1.2.   Except for any Liabilities associated with Sellers’
Retained Interest in each HPL Entity after the Closing and any Liabilities for
which Sellers are required to indemnify Buyer under Section 7.1.1 hereof, Buyer
shall indemnify and hold Sellers and each of their Affiliates harmless from and
against any and all Taxes of, or pertaining or attributable to, the HPL Entities
with respect to any taxable period that begins on or after the Closing.

7.2.   Preparation and Filing of Tax Returns.

  7.2.1.   With respect to any Tax which is based on federal income, any Tax
election relating thereto, and with respect to any Tax accounting method, for
any Pre-Closing Period, Sellers, without the consent of Buyer, shall be entitled
to file any amended Tax Return with respect to any Tax which Sellers deem
appropriate, as determined in Sellers’ sole discretion, provided that no filing
may change the status of any HPL Companies as disregarded entities for federal
income tax purposes. For all other Taxes, either Buyer or Sellers, as
appropriate, shall be entitled to file an amended Tax Return provided that:
(i) Buyer may not amend a Tax Return in such a manner that would cause Sellers
to have any indemnification obligations under Section 7.1.1 hereof, and further
provided that no filing may change the status of any HPL Companies as
disregarded entities for federal income tax purposes for any Pre-Closing Period,
and (ii) Sellers may not amend any Tax Return for a Tax not based on income
without the consent of Buyer which consent shall not be unreasonably withheld.
To the extent not made for previous tax years, Sellers agree to make a timely
and valid 754 election for MidTexas Pipeline Company for the period ending
December 31, 2004. Sellers shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the HPL Companies for all Pre-Closing
Periods, and shall pay all Taxes due with respect to such Tax Returns except to
the extent that the liability for such Taxes is included as a liability in the
computation of Net Working Capital.

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  7.2.2.   Buyer and Sellers agree to provide such assistance as may reasonably
be requested by such other party in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority, or any judicial
or administrative proceedings relating to liability for Taxes, and any deadline
imposed by this Agreement on Buyer or Sellers in connection with the preparation
of any Tax Return, any audit or other examination by any taxing authority, or
any judicial or administrative proceedings relating to liability for Taxes will
be extended as appropriate in light of any party’s failure to promptly make such
assistance available, and each will retain and provide the requesting party with
any records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.2.2 or pursuant to any other Section hereof providing for the
sharing of information relating to or review of any Tax Return or other schedule
relating to Taxes shall be kept confidential hereto in accordance with
Section 8.2.

7.3.   Procedures Relating to Indemnification of Tax Claims.

  7.3.1.   If a claim regarding liability for a Tax or with respect to a Tax
Return shall be made by any Governmental Authority, for which Sellers are or may
be liable pursuant to this Agreement, Buyer shall notify Sellers in writing
within 10 Business Days of receipt by Buyer of notice of such claim (a “Tax
Claim”).     7.3.2.   With respect to any Tax Claim, Sellers, at Sellers’
expense, shall control all proceedings taken in connection with such Tax Claim
(including selection of counsel), and Buyer shall execute or cause to be
executed powers of attorney or other documents necessary to enable Sellers to
take all actions that do not materially adversely affect Buyer or the HPL
Companies with respect to such Tax Claim. Sellers shall permit Buyer to
participate in (but not control) such proceedings through counsel chosen by
Buyer (but the fees and expenses of such counsel shall be paid by Buyer).
Sellers may in their sole discretion pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with any taxing authority with
respect to such Tax Claim, and may initiate any claim for refund, file and
amended return, or take any other action which is deemed appropriate by Sellers
with respect to such Tax Claim, provided such actions do not materially
adversely affect Buyer or the HPL Companies.     7.3.3.   Buyer and its
Affiliates (including after the Closing, the HPL Companies), on the one hand,
and Sellers, on the other hand, shall cooperate with each other in contesting
any Tax Claim, which cooperation shall include, without limitation, the
retention and, at the contesting party’s request and expense, the provision of
records and information which are reasonably relevant to such Tax Claim, and
making employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.

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7.4.   Tax Refunds and Credits.       Any refund or credits of Taxes paid or
payable that are attributable to the HPL Companies for any Pre-Closing Period
will be for the account of Sellers. Any refunds or credits of Taxes paid or
payable that are attributable to the HPL Companies for any other taxable period
will be for the account of Buyer and Seller with respect to each Buyer’s
interest in and Sellers’ Retained Interest in each HPL Entity. Buyer shall, if
Sellers so request and at Sellers’ expense, cause the HPL Entities to file for
and obtain any refunds or credits to which Sellers are entitled. Buyer shall
cause the HPL Entities to forward to Sellers any such refund within 10 days
after the refund is received (or reimburse Sellers for any such credit within
10 days after the credit is applied against another Tax liability); provided,
however, that Sellers shall indemnify Buyer in accordance with Section 7.3
hereof for any amount paid pursuant to this Section 7.4 if any such refund or
credit is subsequently disallowed.   7.5.   Tax Treatment of Payments.       The
Parties shall treat any indemnification payment made pursuant to this Agreement
as a purchase price adjustment for Tax purposes.   7.6.   Transfer Taxes.      
All Transfer Taxes incurred in connection with this Agreement and the
transactions shall be borne by the person upon whom such tax is imposed by
Applicable Law. Sellers shall file, to the extent required by Applicable Law,
all necessary Tax Returns and other documentation with respect to such Transfer
Taxes. Buyer shall, to the extent required by Applicable Law, join in the
execution of any such Tax Return. For purposes of this Agreement, “Transfer
Taxes” shall mean transfer, documentary, sales, use, registration, and other
such taxes (including all applicable real estate transfer taxes). Prior to the
Closing Date, Buyer shall provide to Sellers appropriate exemption certificates
in connection with this Agreement and the Contemplated Transactions with respect
to each applicable Taxing Authority.   7.7.   Termination of Participation in
Tax Allocation Agreement.       As of the Closing Date, none of the HPL Entities
will be parties to that certain agreement known as the American Electric Power
Company, Inc. and Its Consolidated Affiliates Tax Agreement under Title 17,
Chapter II of the Code of Federal Regulations Paragraph (c) of Section 250.45
Regarding Method of Allocating Consolidated Income Taxes and said agreement
shall have no further effect for any taxable year of any HPL Company (whether
there is an adjustment for the current year, a future year, or a past year).  
7.8.   Allocation of the Purchase Price.       The Purchase Price will be
allocated in accordance with Exhibit 7.8 hereto. After the Closing, the parties
will make consistent use of the allocation, fair market value, and useful lives
specified in Exhibit 7.8 hereto for all Tax purposes and in all Tax Returns,

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    including those required by section 1060 of the Code. Buyer will prepare and
deliver IRS Form 8594 to Sellers within 45 days after the Closing Date. The
Form 8594 will be amended, subject to the mutual consent of both parties, from
time to time to reflect any adjustments subsequently made to the Purchase Price.
In any Proceeding relating to the determination of any Tax, neither Buyer nor
any Seller contend, agree, or represent that such allocation is not a correct
allocation or agree to any allocation other than that set out in the Form 8594
as amended from time to time.   8.   GENERAL PROVISIONS   8.1.   Notice
Provisions.       Any notice that is required or permitted under this Agreement
may be given by personal delivery to the party entitled thereto, by facsimile
transmission, by any courier service which guarantees overnight, receipted
delivery, or by U.S. Certified or Registered Mail, return receipt requested,
addressed to the party entitled thereto, at:

     
If to HPL Storage LP:
  HPL Storage LP

  c/o American Electric Power Company, Inc.

  Attention: Chief Financial Officer

  1 Riverside Plaza

  Columbus, OH 43215

  Facsimile No.: (614) 716-1603
 
   
with copy to:
  Clark, Thomas & Winters, P.C.

  Attention: C. Joseph Cain

  300 West 6th Street, 15th Floor

  Austin, Texas 78701

  Facsimile No.: (512) 474-1129
 
   
with copy to:
  American Electric Power Company, Inc.

  Attention: Randy G. Ryan

  1 Riverside Plaza

  Columbus, Ohio 43215

  Facsimile No.: (614) 583-1603
 
   
If to AEP Energy Services Gas Holding
  AEP Energy Services Gas Holding Company II, L.L.C.
Company II, L.L.C.:
  c/o American Electric Power Company, Inc.

  Attention: Chief Financial Officer

  1 Riverside Plaza

  Columbus, OH 43215

  Facsimile No.: (614) 716-1603

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with copy to:
  Clark, Thomas & Winters, P.C.

  Attention: C. Joseph Cain

  300 West 6th Street, 15th Floor

  Austin, Texas 78701

  Facsimile No.: (512) 474-1129
 
   
with copy to:
  American Electric Power Company, Inc.

  Attention: Randy G. Ryan

  1 Riverside Plaza

  Columbus, Ohio 43215

  Facsimile No.: (614) 583-1603
 
   
If to Buyer:
  La Grange Acquisition, L.P.

  Attention: Clay Kutch

  2838 Woodside Street

  Dallas, Texas 75204

   
Facsimile No.: (214)-981-0703
 
   
with copy to:
  Hunton & Williams LLP

  Attention: Joe A. Davis

  Energy Plaza, 30th Floor

  1601 Bryan Street

  Dallas, Texas 75201

  Facsimile No.: (214) 880-0011
 
   
with copy to:
  Energy Transfer Partners, L.P.

  Attention: Robert A. Burk

  8801 S. Yale, Suite 310

  Tulsa, Oklahoma 74137

  Facsimile No.: (918) 493-7290

      Any notices will be sent to the address or facsimile number when
permitted, as specified in this Agreement or at such other address or facsimile
number for a party as it may specify in writing to the other parties from time
to time. Any notice properly given to the proper address will be deemed to have
been given when dispatched.   8.2.   Confidentiality.       Each of the parties
hereby agrees, except in order to comply with Applicable Law and any applicable
stock exchange rules and regulations, not to disclose (or permit any of their
Affiliates to disclose), in whole or in part, this Agreement or any information

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    disclosed by one party to the other parties during the period beginning on
the effective date of the Confidentiality Agreement and ending on the Closing
Date and which constituted or would constitute “Confidential Information” under
the Confidentiality Agreement (collectively, the “Confidential Information”) to
any Person, other than an Affiliate of a party who requires such Confidential
Information in connection with the consummation of Contemplated Transactions,
for a period of 2 years from the Closing Date without having first obtained the
prior written consent of the disclosing party. Additionally, each of the parties
hereby agrees not to use (or permit any of its Affiliates to use) any of the
Confidential Information for any purpose other than the exercise of that party’s
rights and the performance of its obligations under this Agreement and the
consummation of the Contemplated Transactions, including the conduct by Buyer
and its Affiliates of the Business. Additionally, Sellers agree not to disclose,
except in order to comply with Applicable Law and any applicable stock exchange
rules and regulations, or use (or permit any of their Affiliates to so disclose
or use), for a period of 2 years from the Closing Date, any information and
documents relating to the Business that are of a proprietary nature to Sellers,
the HPL Companies, or their Affiliates, including market and competitive
information, customer lists, technology, know how, and trade secrets
(collectively, the “Business Information”), and to otherwise treat such
information and documents as Confidential Information for all purposes
hereunder. Each of the parties further agrees to protect the Confidential
Information by using the same degree of care, but not less than a reasonable
degree of care, to prevent the unauthorized use, dissemination, or publication
of the Confidential Information as such party uses to protect its own
confidential information of a like nature. The provisions of this Section 8.2
impose no obligation upon a party with respect to specific Confidential
Information which (a) except for Business Information in possession of Sellers,
was in such party’s possession before receipt from the disclosing party as
evidenced by written records; (b) is or becomes a matter of public knowledge
through no fault of such party; (c) except for Business Information in
possession of Sellers, is rightfully obtained by such party from a third party
who represents that it is free to pass on such information without a duty of
confidentiality and the receiving party has no knowledge of any such duty of
confidentiality; (d) is disclosed by the disclosing party to a third party
without a duty of confidentiality on the third party; or (e) except for Business
Information in possession of Sellers, is independently developed by such party
as evidenced by written records. It is understood and agreed that the terms of
this Section 8.2 shall apply to, and the terms of the Confidentiality Agreement
shall not be applicable to, any Confidential Information disclosed by one party
to the other parties after the date hereof.   8.3.   Schedules and Exhibits.  
    All Schedules and Exhibits hereto are incorporated herein by reference and
made a part of this Agreement. Any fact or item which is disclosed in any part
of any Schedule or Exhibit hereto or in the HPL Financial Statements or the
notes thereto will be deemed to have been disclosed in every part of such
Schedules and Exhibit where it is reasonably apparent that such fact or item is
relevant to the matters there under consideration, notwithstanding the omission
of a reference or cross-reference thereto.

     
Purchase and Sale Agreement
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8.4.   Interest on Overdue Amounts.       Any amount due to a party under this
Agreement will earn interest accruing daily from the due date thereof until paid
at the Borrowing Rate.   8.5.   Amendment.       No amendment to this Agreement
will be valid or binding unless and until reduced to writing and executed by
each party’s authorized representative.   8.6.   Merger and Integration; Binding
on Successors; No Third Party Beneficiaries; Assignment.       This Agreement
sets out the entire understanding of the parties with respect to the matters it
purports to cover and supersedes all prior communications, agreements and
understandings, whether written or oral, concerning such matters. No party will
be liable or bound to any party in any manner by any warranties,
representations, or covenants other than those set forth in this Agreement and
the instruments to be executed and delivered at Closing. The terms and
conditions of this Agreement will inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any third party any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. No party to this
Agreement shall have the right to assign this Agreement, or any of its rights or
obligations hereunder, without the written consent of the other parties (such
consent not to be unreasonably withheld); provided, however, that without the
consent of the other parties, a party hereto may assign this Agreement, and its
rights and obligations hereunder, to an Affiliate of such party but, in such
event, the assigning party will not be released from its obligations hereunder.
  8.7.   Forbearance and Waiver.       Except where a specific time period is
provided hereunder for the exercise of a right or remedy, any party’s
forbearance in the exercise or enforcement of any right or remedy under this
Agreement will not constitute a waiver thereof, and a waiver under one
circumstance will not constitute a waiver under any other circumstance.   8.8.  
Partial Invalidity.       Any invalidity, illegality or unenforceability of any
provision of this Agreement in any jurisdiction will not invalidate or render
illegal or unenforceable the remaining provisions hereof in such jurisdiction
and will not invalidate or render illegal or unenforceable such provision in any
other jurisdiction.   8.9.   Attorney’s Fees.       In the event of any suit,
action, or arbitration proceedings (whether based on contract, tort, or any
other theory of liability) to enforce any provision of this Agreement, to
recover damages for a breach hereof, or to secure or preserve the rights of any
party

     
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    against any other party to any property which is the subject of this
Agreement, the prevailing party will be entitled to recover reasonable attorney
fees (other than fees computed on a contingency fee basis), court costs and
expenses of arbitration and litigation expended in the prosecution or defense
thereof.   8.10.   Governing Law; Jurisdiction and Venue.       The
interpretation and construction of this Agreement and the rights of the parties
hereunder will be interpreted, construed, and governed by the laws of the state
of New York, without regard to its conflicts of law principles. Each party
hereto hereby irrevocably submits, for itself and its property, to the
jurisdiction of the courts of such jurisdiction in any action, suit, or
proceeding brought against it related to or in connection with this Agreement or
the transactions contemplated hereby, and to the extent permitted by Applicable
Law (and assuming effective service of process), each party hereto hereby waives
and agrees not to assert by way of motion, as a defense or otherwise in any such
suit, action, or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action, or proceeding is brought in
an inconvenient forum, that the venue of the suit, action, or proceeding is
improper, or that this Agreement or any document or instrument referred to
herein or the subject matter hereof may not be litigated in or by such court.
Each party hereto agrees that service of process may be made upon it by
certified or registered mail to the address for administrative notice set forth
herein or any other method authorized by the laws of New York.   8.11.   Waiver
of Right to Jury Trial.       To the fullest extent permitted by law, and as
separately bargained-for-consideration, each party hereby waives any right to
trial by jury in any action, suit, proceeding, or counterclaim of any kind
arising out of or relating to this Agreement or the Contemplated Transactions.  
8.12.   Construction.       This Agreement was prepared jointly by the parties,
and no rule that it be construed against the drafter will have any application
in its construction or interpretation.   8.13.   Multiple Counterparts.      
This Agreement may be executed by the parties in multiple original counterparts,
and each such counterpart will constitute an original hereof.   8.14.   Further
Assurances.       Upon request from time to time, Sellers and Buyer shall
execute or cause to be executed and delivered such other documents and
instruments and do such other acts

     
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    as may be reasonably necessary or appropriate to consummate the Contemplated
Transactions.   8.15.   Headings.       The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.

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The next page of this document is S-1]

     
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                  Executed to be effective as provided above:            
 
                HPL Storage LP   AEP Energy Services Gas Holding Company II,
L.L.C.
 
                By:   HPL Storage, Inc.   By:   HPL Storage LP, its Sole Member
    its General Partner       By: HPL Storage, Inc., its General Partner
By:
 

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            Name: Ronald A. Erd       By:  

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Title: President       Name: Ronald A. Erd             Title: President
 
                La Grange Acquisition, L.P.            
 
               
By:
  LA GP, LLC,
its General Partner            
 
               
By:
 

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Name:
 

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Title:
 

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Purchase and Sale Agreement
  Page  S-1

 

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EXHIBIT 1.1

DEFINITIONS

Terms defined in this Exhibit 1.1 will have the meanings set forth in this
Exhibit.

      TERM   DEFINITION
1. AEP
  American Electric Power Company, Inc.
 
   
2. AEP Gas Holding II
  As defined in the first paragraph of the Agreement.
 
   
3. AEPSC
  As defined in Section 2.4.1(f) of the Agreement.
 
   
4. Affiliate
  An “Affiliate” of a Person is any Person directly or indirectly controlling,
controlled by, or under common control with the first such Person. For the
purposes of this definition, “control,” when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract, or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.
 
   
5. Agreement
  This Purchase and Sale Agreement, together with all exhibits, schedules, and
appendices attached hereto, as any of the same may be amended from time to time
in accordance with the provisions hereof.
 
   
6. Applicable Law
  Any statute, law, ordinance, executive order, rule, or regulation (including a
regulation that has been formally promulgated in a rule making proceeding but,
pending final adoption, is in proposed or temporary form having force of law);
guideline or notice having force of law; or approval, permit, license,
franchise, judgment, order, decree, injunction, or writ of any Governmental
Authority applicable to a specified Person or specified property, as in effect
from time to time.
 
   
7. Assignment and Assumption Agreement
  As defined in Section 2.4.1(a) of the Agreement.
 
   
8. Bammel Documents
  As defined in the Cushion Gas Litigation Agreement.
 
   
9. Bammel Facilities
  An underground natural gas storage reservoir located near Houston, Texas,
known as the Bammel storage reservoir, and certain appurtenant pipelines,
compressors, wells, pipes, and other equipment and related facilities

     
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      TERM   DEFINITION
10. Bammel Gas Inventory Verification
  As defined in paragraph 1.1 of Exhibit 2.2.4 of the Agreement.
 
   
11. Bammel Inventory Recomputation Event
  As defined in Section 2.2.4(c) of the Agreement.
 
   
12. Bammel Settlement Agreement
  As defined in the Cushion Gas Litigation Agreement.
 
   
13. Bammel Settlement Approval Order
  As defined in the Cushion Gas Litigation Agreement.
 
   
14. Benefit Plans
  As defined in Section 3.17.3 of the Agreement.
 
   
15. Borrowing Rate
  The lesser of the prime rate as published in The Wall Street Journal, or the
maximum rate permitted by Applicable Law.
 
   
16. Business
  As defined in Recital B of the Agreement.
 
   
17. Business Day
  Any day other than a Saturday, Sunday, or Holiday.
 
   
18. Business Information
  As defined in Section 8.2 of the Agreement.
 
   
19. Business Insurance Policies
  As defined in Section 3.12 of the Agreement.
 
   
20. Buyer
  As defined in the first paragraph of the Agreement.
 
   
21. Buyer Indemnified Parties
  As defined in Section 6.2.1 of the Agreement.
 
   
22. Buyer Plans
  As defined in Section 5.3.2(b) of the Agreement.
 
   
23. Buyer’s Cap
  As defined in Section 6.3.2(c) of the Agreement. Those certain disclosure
schedules delivered by Buyer
 
   
24. Buyer’s Disclosure Schedules
  to Sellers concurrently with Buyer’s execution and delivery of the Agreement.
 
   
25. Buyer’s Documents
  As defined in Section 4.2.1 of the Agreement.
 
   
26. Buyer’s Guarantor
  As defined in Section 2.4.2(h) of the Agreement.
 
   
27. Buyer’s Limited Guaranty
  As defined in Section 2.4.2(h) of the Agreement.

     
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      TERM   DEFINITION
28. Buyer’s Statement of Recomputed Bammel Inventory
  As defined in Section 2.2.4(c) of the Agreement.
 
   
29. Buyer’s Threshold
  As defined in Section 6.3.2(b) of the Agreement.
 
   
30. Cause
  As defined in Section 5.3.1(b) of the Agreement
 
   
31. Closing
  As defined in Section 2.3 of the Agreement.
 
   
32. Closing Date
  As defined in Section 2.3 of the Agreement.
 
   
33. Closing Payment
  As defined in Section 2.2.2 of the Agreement.
 
   
34. Closing Workforce
  As defined in Section 3.17.1 of the Agreement.
 
   
35. COBRA
  Section 4980B of the Code and Title 1, Subtitle B, Part 6 of ERISA, each as
amended.
 
   
36. Code
  The Internal Revenue Code of 1986, as amended from time to time, and
regulations or other Applicable Law promulgated thereunder.
 
   
37. Commonly Controlled Entity
  As defined in Section 3.17.3 of the Agreement.
 
   
38. Confidential Information
  As defined in Section 8.2 of the Agreement.
 
   
39. Confidentiality Agreement
  That certain Confidentiality Agreement dated as of December 16, 2004 between
AEPSC, as agent for the Affiliates of AEP and Energy Transfer Partners, L.P.
 
   
40. Contemplated Transactions
  Each and all of the transactions contemplated by this Agreement to be
undertaken between or among the parties hereto.
 
   
41. Continuation Period
  With respect to each Transferred Employee, the period from each such
employee’s Hire Date through the last day of the month in which occurs the first
anniversary of such Hire Date.
 
   
42. Credit Support Arrangement
  As defined in Section 5.6 of the Agreement.
 
   
43. Cure Period
  As defined in Section 5.13 of the Agreement.
 
   
44. Current Assets
  As defined in Exhibit 2.2.3 to the Agreement.

     
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      TERM   DEFINITION
45. Current Liabilities
  As defined in Exhibit 2.2.3 to the Agreement.
 
   
46. Cushion Gas Litigation
  As defined in the Cushion Gas Litigation Agreement.
 
   
47. Cushion Gas Litigation Agreement
  That certain Cushion Gas Litigation Agreement dated as of the date of the
Agreement by and among Sellers, Buyer, Storage Holdings, Storage Leaseco, HPL
Company LP, and HPL Resources LP.
 
   
48. Damages
  As defined in Section 6.2.1 of the Agreement.
 
   
49. Defect Amount
  As defined in Section 5.13 of the Agreement.
 
   
50. Defect Examination Period
  As defined in Section 5.13 of the Agreement.
 
   
51. Defect Notice
  As defined in Section 5.13 of the Agreement.
 
   
52. Disclosed Environmental Matters
  As defined in Section 3.18 of the Agreement.
 
   
53. Disclosed HPL Contract
  As defined in Section 3.11.1 of the Agreement.
 
   
54. Disclosure Schedules
  Those certain disclosure schedules delivered by Sellers to Buyer concurrently
with Sellers’ execution and delivery of the Agreement.
 
   
55. Employee Review Period
  As defined in Section 5.3.1 of the Agreement.
 
   
56. Encumbrance
  Any lien, security interest, mortgage, pledge, hypothecation, assignment,
easement, right-of-way, servitude, other encumbrance, equitable interest,
charge, restrictive covenant, mineral interest, community or other marital
property interest, right of first refusal or similar restriction, option,
contractual provision, provision of Governing Documents, provision of Applicable
Law, or other restriction or matter affecting title to the involved property or
the freedom to dispose of any interest in or use the involved property or
exercise voting rights associated therewith.
 
   
57. Environmental Claims
  Any claim for remediation, containment, removal, or disposal costs or other
direct costs incurred as a result of a violation of Environmental Laws and any
third-party claims by any Person, including any Governmental Authority, for
damages (including, without limitation, punitive damages), losses, penalties,
fines, interest, fees,

     
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      TERM   DEFINITION

  liabilities (including strict liability), taxes, costs and expenses
(including, without limitation, costs and expenses of investigation and defense
of any claim) based on a violation of Environmental Laws.
 
   
58. Environmental Laws
  As defined in Section 3.18.1 of the Agreement.
 
   
59. EPA
  As defined in Section 3.18.2 of the Agreement.
 
   
60. ERISA
  The Employee Retirement Income Security Act of 1974, as amended.
 
   
61. Exchange Imbalances
  The aggregate of all imbalances as of the determination date under
transportation agreements or operational balancing agreements, expressed as a
positive number if such aggregate sum of such imbalances is a net receivable or
expressed as a negative number if such aggregate sum is a net payable but
excluding any such imbalances accounted for as Gas Inventory.
 
   
62. FERC
  The Federal Energy Regulatory Commission.
 
   
63. Final Balance Sheet
  As defined in Section 2.2.3(b) of the Agreement.
 
   
64. Final Inventory Adjustment Amount
  An amount equal to (i) the amount of the Gas Inventory as determined under
Section 2.2.4(e) of the Agreement and expressed in MMBtus minus (ii) 31,200,000
MMBtus.
 
   
65. Final Inventory Payment Adjustment
  A dollar amount equal to (i) Final Inventory Adjustment Amount, multiplied by
(ii) (a) in the case that the Final Inventory Adjustment Amount is a positive
number, $5.601 or (b) in the case that the Final Inventory Adjustment Amount is
a negative number, $5.601 plus $0.40 per MMBtu.
 
   
66. Fixed Price Risk
  Those financial and physical gas purchase and sale agreements of the HPL
Entities in place as of the Closing Date, which contain a currently determined
fixed price, a currently determined fixed basis, or price caps and/or floors
with currently determined strike prices.
 
   
67. GAAP
  Generally Accepted Accounting Principles for financial reporting as in effect
as of the Valuation Time in the United States, applied on a consistent basis.
Any change in GAAP that becomes effective after the date hereof will not be
taken into account in the use of GAAP under Section 2.2.3 of the Agreement for
the computation of the Net Working Capital Adjustment, and any such a
computation will be made by application of GAAP as in effect on the date of this
Agreement.

     
Purchase and Sale Agreement, Exhibit 1.1
  Page  5

 

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      TERM   DEFINITION
68. Gas Inventory
  The volume of natural gas owned by the HPL Entities as of the determination
date, wherever located, but excluding 10.5 bcf of cushion gas in the Bammel
Facilities and excluding line pack.
 
   
69. Gas Marketing
  As defined in Recital A of the Agreement.
 
   
70. General Exceptions to Enforceability
  Limitations on or exceptions to the enforceability of an agreement or
instrument by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors’ rights, or (ii) general
principles of equity relating to the availability of equitable remedies
(regardless of whether such agreement or instrument is sought to be enforced in
a proceeding at law or in equity).
 
   
71. Governing Documents
  With respect to a particular Person, (i) if a corporation, the articles or
certificate of incorporation and the bylaws; (ii) if a general partnership, the
partnership agreement and any statement of partnership; (iii) if a limited
partnership, the limited partnership agreement and the certificate of limited
partnership; (iv) if a limited liability company, the articles of organization
and operating agreement or regulations; (v) if another type of Person, any other
charter or similar document promulgated, adopted, or filed in connection with
the creation, formation, or organization of the Person; (vi) all equityholders’
agreements, voting agreements, voting trust instruments, joint venture
agreements, registration rights agreements, or other agreements or documents
relating to the organization, management, or operation of the Person or relating
to the rights, duties, or obligations of the equityholders of the Person, and
(vii) any amendment or supplement to any of the foregoing.
 
   
72. Governmental Authority
  Any federal, state, foreign, tribal, local, or municipal governmental body;
and any governmental, regulatory, or administrative agency, commission, body,
agency, instrumentality, or other authority exercising or entitled to exercise
any executive, judicial, legislative, administrative, regulatory, or taxing
authority or power, including any court or other tribunal.
 
   
73. Hazardous Substances
  As defined in Section 3.18.2 of the Agreement.

     
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      TERM   DEFINITION
74. Hire Date
  As defined in Section 5.3.1 of the Agreement.
 
   
75. Holiday 76. HPL Companies
  Any day on which banking institutions located in the City of Houston, Texas
are authorized or required to close for business.
 
   
76. HPL Companies
  The HPL Entities and the HPL Entity Subsidiaries, collectively.
 
   
77. HPL Company Consents
  As defined in Section 3.5.2 of the Agreement.
 
   
78. HPL Company LP
  As defined in Recital A of the Agreement.
 
   
79. HPL Consolidation
  As defined in Recital A of the Agreement.
 
   
80. HPL Entities
  As defined in Recital A of the Agreement.
 
   
81. HPL Entity Subsidiaries
  AEP Houston Pipe Line Company, LLC, a Delaware limited liability company, and
Mid Texas Pipeline Company, a Texas general partnership.
 
   
82. HPL Financial Statements
  As defined in Section 3.7 of the Agreement.
 
   
83. HPL GP
  As defined in the first paragraph of the Agreement.
 
   
84. HPL Resources
  As defined in Recital A of the Agreement.
 
   
85. HPL Subsidiary Interests
  The membership and partnership interests of the HPL Entities in and to the HPL
Entity Subsidiaries.
 
   
86. Independent Accounting Firm
  KPMG Peat Marwick or, if such firm is unable or unwilling to serve, another
nationally recognized firm of independent public accountants that is willing to
serve to be selected by mutual agreement of the parties hereto (which firm shall
not be the auditor for any party to the Agreement or any Affiliate of any such
party unless disclosed to each other party and agreed to by such other parties
and will otherwise be selected by mutual agreement of the parties hereto).
 
   
87. Initial Inventory Payment
  As defined in Section 2.2.4(a) of the Agreement.
 
   
88. Initial Net Working Capital Payment
  As defined in Section 2.2.3(a) of the Agreement.
 
   
89. Intellectual Property
  As defined in Section 3.15 of the Agreement.

     
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      TERM   DEFINITION
90. Inventory Finalization Event
  As defined in Section 2.2.4(c) of the Agreement.
 
   
91. Inventory Payment
  As defined in Section 2.2.4 of the Agreement.
 
   
92. Inventory Verification Notice
  As defined in Section 2.2.4(c) of the Agreement.
 
   
93. Knowledge
  As to any Seller, “Knowledge” means the actual knowledge of any of the
individuals listed in Sellers’ Disclosures Schedules as “Sellers’ Knowledge
Group” or any other presently serving officer, member of the board of directors,
or limited liability company manager of such Seller or the HPL Companies that
such Seller directly or indirectly owned before the Closing Date, and the
knowledge that such individual would have obtained as a result of the proper
operation of reporting procedure concerning the business of Sellers or the HPL
Entities that was not grossly negligent. As to Buyer, “Knowledge” means the
actual knowledge of any presently serving officer or manager of Buyer or its
general partner, and the knowledge that such individual would have obtained as a
result of the proper operation of reporting procedure concerning the business of
Buyer that was not grossly negligent.
 
   
94. Material Adverse Effect
  A material adverse effect on the business, operations, properties, financial
condition, or results of operations of the aggregate Business as conducted by
the HPL Companies, excluding any effect relating to or resulting from (i) any
event affecting the local, regional, or United States or global economy or
financial or capital markets generally, (ii) any change in the natural gas
transportation, storage, and marketing business generally, including the
availability of or any changes in prices for commodities, goods or services, or
the availability or cost of hedges, (iii) the condition or integrity of any of
the pipeline or storage assets of the HPL Entities, or (iv) changes in
Applicable Law.
 
   
95. Material Assets
  As defined in Section 3.10 of the Agreement.
 
   
96. Material HPL Contracts
  As defined in Section 3.11.1 of the Agreement.
 
   
97. Net Working Capital
  As defined in Exhibit 2.2.3 to the Agreement.
 
   
98. Net Working Capital Adjustment
  As defined in Section 2.2.3(b) of the Agreement.

     
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      TERM   DEFINITION
99. Net Working Capital Payment
  As defined in Section 2.2.3 of the Agreement.
 
   
100. NGA
  As defined in Section 3.19 of the Agreement.
 
   
101. Offer of Employment
  As defined in Section 5.3.1 of the Agreement.
 
   
102. Option Agreement
  As defined in Section 2.4.1(e) of the Agreement.
 
   
103. Ordinary Course of Business
  An action taken by a Person if that action (i) is consistent in nature, scope,
and magnitude with past practices of that Person and is taken in the ordinary
course of the normal, day-to-day operations of such Person’s existing lines of
business, and (ii) is similar in nature, scope, and magnitude to actions
customarily taken in the ordinary course of the normal, day-to-day operations of
other Persons that are in the same line of business as such Person.
 
   
104. Permit
  Any permit, license, franchise, certificate, or other authorization, consent,
order, or approval, or variance therefrom or waiver thereof, in each case from a
Governmental Authority.
 
   
105. Permitted Contest
  Any Proceeding if and only so long as while such Proceeding or any appeal
therefrom is pending (i) there shall be no material danger that the involved
property or any portion thereof is subject to sale, forfeiture or loss, and
(ii) no material restrictions are imposed on the use of such property.
 
   
106. Permitted Encumbrance
  Any of the following affecting title to the involved property or the freedom
to dispose of any interest in or use the involved property: (i) any of the items
described in Exhibit 3.10 to the Agreement; (ii) any Encumbrance securing any
obligation of Buyer or any of its Affiliates; (iii) with respect to any property
other than the Purchased Interests (A) any lien securing the payment of taxes,
assessments and other governmental charges or levies which are either not
delinquent or, if delinquent, are being contested in good faith as a Permitted
Contest; (B) any materialmen’s, mechanic’s, worker’s, repairmen’s, employee’s,
carrier’s, warehouseman’s or other like lien relating to the construction of the
property or in connection with any maintenance, repair, improvement, addition,
alteration to, or other services or materials relating to, the property, or
arising in the ordinary course of business for

     
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      TERM   DEFINITION

  amounts in respect of the foregoing that are not more than 30 days past due or
are being contested as a Permitted Contest; (C) any lien arising out of
judgments or awards with respect to which appeals or other proceedings for
review are being prosecuted in good faith, so long as such proceedings have the
effect of staying the execution of such judgments or awards; (D) any obligation
or liability of a shareholder, member, or partner imposed by an entity’s
Governing Documents, any security interest and other Encumbrance created by or
under an entity’s Governing Documents upon any equity interest in that entity,
or any limitation, condition, or restriction imposed by law or by or under an
entity’s Governing Documents upon the transfer, assignment, collateral transfer,
or other disposition of any equity interest in that entity; (E) any zoning or
other land use ordinance that does not materially impair the conduct of the
normal operations of the Business; or (F) any subdivision and platting
restrictions, easements, rights-of-way, licenses, restrictions on the use of any
of the involved property, or encroachments or irregularities of title, none of
which individually or in the aggregate could reasonably be expected to
materially impair the conduct of the normal operations of the Business; and
(iii) any other or additional matter as may be approved in writing by all
parties properly interested therein.
 
   
107. Person
  Any individual, corporation, partnership, limited liability company, other
business organization of any kind, association, trust, or governmental entity,
agency, or instrumentality.
 
   
108. Pre-Closing Period
  Any taxable period ending before or as of the Closing.
 
   
109. Proceeding
  Any action, arbitration proceeding, audit, hearing, investigation, inquiry,
litigation, or suit (in each such case whether civil, criminal, administrative,
judicial, or investigative and whether formal or informal, public or private)
commenced, brought, conducted, or heard by or before any Governmental Authority
or arbitrator.
 
   
110. Purchase Price
  As defined in Section 2.2.1 of the Agreement.
 
   
111. Purchased Interests
  As defined in Section 2.1 of the Agreement.
 
   
112. Qualifying Defect Amount
  As defined in Section 5.13 of the Agreement.

     
Purchase and Sale Agreement, Exhibit 1.1
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      TERM   DEFINITION
113. Recomputed Bammel Inventory
  As defined in Section 2.2.4(c) of the Agreement.
 
   
114. Recoveries
  As defined in Section 6.4 of the Agreement.
 
   
115. Release
  As defined in Section 3.18.2 of the Agreement.
 
   
116. Required Severance Benefits
  Benefits payable under the program of severance benefits described in a
separate writing delivered to Buyer at or before Closing.
 
   
117. Resolution Period
  As defined in Sections 2.2.3(b), 2.2.4(d), and 2.2.4(e) of the Agreement, as
applicable.
 
   
118. Response Notice
  As defined in Section 5.13 of the Agreement.
 
   
119. Retained Interest
  As defined in Section 2.1 of the Agreement.
 
   
120. Retained Marks
  As defined in Section 5.8 of the Agreement.
 
   
121. Retained Matter Liabilities
  As defined in Section 5.2 of the Agreement.
 
   
122. Retained Matters
  As defined in Section 5.2 of the Agreement.
 
   
123. Seller Indemnified Parties
  As defined in Section 6.3.1 of the Agreement.
 
   
124. Sellers
  As defined in the first paragraph of the Agreement.
 
   
125. Sellers’ Cap
  As defined in Section 6.2.2(f) of the Agreement.
 
   
126. Sellers’ Consents
  As defined in Section 3.2.4 of the Agreement.
 
   
127. Sellers’ Disclosure Schedules
  Those certain disclosure schedules delivered by Sellers to Buyer concurrently
with Sellers’ execution and delivery of the Agreement.
 
   
128. Sellers’ Documents
  As defined in Section 3.2.1 of the Agreement.
 
   
129. Sellers’ Guarantor
  As defined in Section 2.4.1(g) of the Agreement.
 
   
130. Sellers’ Limited Guaranty
  As defined in Section 2.4.1(g) of the Agreement.
 
   
131. Sellers’ Retained Matter Responsibility
  As defined in Section 5.2 of the Agreement.

     
Purchase and Sale Agreement, Exhibit 1.1
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      TERM   DEFINITION
132. Sellers’ Threshold
  As defined in Section 6.2.2(e) of the Agreement.
 
   
133. Storage GP
  As defined in Recital A of the Agreement.
 
   
134. Storage Holdings
  As defined in Recital A of the Agreement.
 
   
135. Storage Leaseco
  As defined in Recital A of the Agreement.
 
   
136. Storage LP
  As defined in the first paragraph of the Agreement.
 
   
137. Straddle Period
  As defined in Section 7.1.1 of the Agreement.
 
   
138. Survival Period
  As defined in Section 6.1.3 of the Agreement.
 
   
139. Swap Agreement
  As defined in Section 2.4.2(i) of the Agreement.
 
   
140. Tax
  (i) Any federal, state, local, or foreign income, gross receipts, value added,
windfall or other profits, alternative or add-on minimum, estimated, franchise,
profits, sales, use, real property, personal property, ad valorem, vehicle,
airplane, boat, license, payroll, employment, workers’ compensation,
unemployment compensation, withholding, social security, disability, excise,
severance, stamp, occupation, premium, environmental (including taxes under Code
section 59A), customs duties, import fees, capital stock transfer, title,
documentary, or registration, or other tax, duty, or impost of any kind
whatsoever, whether disputed or not. “Taxes” includes (ii) any liability for the
payment of any amounts described in clause (i) above as a result of being a
member of an affiliated, consolidated, combined, or unitary group for any
taxable period, (iii) any liability for the payment of any amount described in
clause (i) above as a result of being a Person required to withhold or collect
Taxes imposed on another Person, (iv) any liability for the payment of any
amount described in clause (i), (ii) or (iii) above as a result of being a
transferee of, or successor in interest to, any Person or as a result of an
express or implied obligation to indemnify any Person, and (v) any and all
interest, penalties, additions to tax, or additional amounts imposed in
connection with or with respect to any amount described in clauses (i) through
(iv) of this definition.
 
   
141. Tax Claim
  As defined in Section 7.3.1 of the Agreement
 
   
 
   
142. Tax Return
  Any return, declaration, report, claim for refund, or information return or
statement (including, but not limited

     
Purchase and Sale Agreement, Exhibit 1.1
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      TERM   DEFINITION

  to, information returns or reports related to back-up withholding and any
payments to third parties) relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
   
143. Terminating Insurance Coverages
  As defined in Section 5.5 of the Agreement.
 
   
144. Title Defect
  Any Encumbrance (other than a Permitted Encumbrance) upon or against the HPL
Companies’ title to the real property interests described in Exhibit 5.13 to
this Agreement that would cause Buyer not to have good and marketable title to
such real property interests. The foregoing notwithstanding, any defect in title
to an easement or right-of-way will not constitute a Title Defect if the HPL
Company’s rights to maintain its pipeline and facilities on, under, and over the
involved land are at least equal to industry standard for such rights in Texas
and if such defect does not and is not reasonably likely to prohibit or
interfere with the use thereof in accordance with past practice.
 
   
145. Title Threshold
  As defined in Section 5.13 of the Agreement.
 
   
146. Transfer Taxes
  As defined in Section 7.6 of the Agreement.
 
   
147. Transferred Employees
  As defined in Section 5.3.1 of the Agreement.
 
   
148. Transition Services Agreement
  As defined in Section 2.4.1(f) of the Agreement.
 
   
149. Valuation Time
  The end of the gas day for January 31, 2005, which ends at 9:00 a.m. Central
Standard Time on February 1, 2005.
 
   
150. Valuation Time Adjustment
  As defined in Section 2.2.4(b) of the Agreement.
 
   
151. Valuation Time Adjustment Amount
  As defined in Section 2.2.4(b) of the Agreement.
 
   
152. Valuation Time Estimate
  As defined in Section 2.2.4(b) of the Agreement.
 
   
153. Verified Bammel Gas Inventory
  As defined in paragraph 2.1 of Exhibit 2.2.4 of the Agreement.
 
   
154. WARN Act
  As defined in Section 5.3.3 of the Agreement.
 
   
155. Wells
  As defined in Section 2.2.4(c) of the Agreement.

     
Purchase and Sale Agreement, Exhibit 1.1
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EXHIBIT 2.2.3

NET WORKING CAPITAL

1.   Net Working Capital will be the net aggregate balance, as of the
determination date, of the Current Assets as defined in Section 2 of this
Exhibit 2.2.3 less the Current Liabilities as defined in Section 2 of this
Exhibit 2.2.3.   2.   “Current Assets” means the current assets of the HPL
Entities as of the determination date, including any positive Exchange
Imbalances (but excluding (i) intercompany accounts between the HPL Entities, on
the one hand, and AEP and its Affiliates, on the other including the AEP System
Amended and Restated Non-Utility Money Pool Agreement (ii) the Gas Inventory,
(iii) balance sheet accounts reflecting unrealized gains, if any, (iv) federal
income Tax receivables and state income or franchise Tax receivables, including
refunds or credits of Taxes that are attributable to the HPL Entities or for any
Pre-Closing Period and are payable to Sellers or their Affiliates pursuant to
the terms set forth in Section 7.4 of the Agreement, and (v) any other Current
Assets which Seller will retain under the terms of the Agreement including
prepaid insurance, AEP Procurement Card balances and any employee-related
balances), in each case as reflected on combined balance sheets of the HPL
Entities as of such date as determined pursuant to GAAP, applied in a manner
consistent with the preparation of the Financial Statements, except that the
exceptions to GAAP described in Section 1 of this Exhibit 2.2.3 will be made.
“Current Liabilities” means the current liabilities of the HPL Entities as of
the determination date, including any negative Exchange Imbalances and including
accruals for state and local property, sales, and excise taxes (but excluding
(vi) intercompany accounts between the HPL Entities, on the one hand, and AEP
and its Affiliates, on the other including the AEP System Amended and Restated
Non-Utility Money Pool Agreement (vii) balance sheet accounts reflecting
unrealized losses, if any, (viii) accruals for federal income Taxes,
(ix) federal income Taxes or state income or franchise Taxes that are
attributable to the HPL Entities for any Pre-Closing Period which are payable by
Sellers or their Affiliates pursuant to the terms set forth in Section 7.1.1 of
the Agreement, (x) accruals for vacation benefits, and (xi) other current
liabilities which Seller will pay under the terms of the Agreement including
employee related liabilities and incentive compensation plan accruals), in each
case as reflected on the combined balance sheets of the HPL Entities as of such
date as determined pursuant to GAAP, applied in a manner consistent with the
preparation of the Financial Statements, except that the exceptions to GAAP
described in Section 3 of this Exhibit 2.2.3 will be made.   3.   State sales,
property, and other excise Taxes will be accrued through the Valuation Time in
accordance with GAAP using a level accrual of the liability then expected for
the tax period during which the Valuation Time occurs.

     
Purchase and Sale Agreement, Exhibit 2.2.3
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EXHIBIT 2.2.4

GAS INVENTORY MATTERS

1.   The following procedures and methods will be used in the determination of
the Gas Inventory:

1.1.   If inventory verification pursuant to Section 2.2.4(c) of the Agreement
(the “Bammel Gas Inventory Verification”) is performed, but the Verified Bammel
Gas Inventory, determined pursuant to paragraph 2.1 of this Exhibit, is not more
than 1.03 and not less than 0.97 times that portion of the Gas Inventory as of
the Valuation Time that was stored in the Bammel Facilities according to the
most current perpetual gas inventory records, then Gas Inventory is as reflected
on the HPL Entities’ perpetual gas inventory records.

2.   The following procedures and methods will be used to conduct the Bammel Gas
Inventory Verification:

2.1.   The portion of the Gas Inventory as of the Valuation Time that was stored
in the Bammel Facilities (the “Verified Bammel Gas Inventory”) will be
determined by the following calculation:

  2.1.1.   Volume in MMBtus of the Gas Inventory stored in the Bammel
Facilities, as of the verification date, as verified by Wells pursuant to
Section 2.2.4(c) of the Agreement in accordance with paragraph 2.2 of this
Exhibit;     2.1.2.   minus 65.5 BCF cushion gas in MMBtus;     2.1.3.   minus
third party inventory in the Bammel Facilities at the Valuation Time in MMBtus
as reflected on the perpetual inventory records as adjusted for the Valuation
Time.     2.1.4.   minus injections into the Bammel Facilities between the
Valuation Time and the verification date in MMBtus as determined from the gas
measurement records;     2.1.5.   plus withdrawals from the Bammel Facilities
between the Valuation Time and the verification date in MMBtus as determined
from the gas measurement records; and     2.1.6.   plus or minus any applicable
inventory adjustments occurring between the Valuation Time and the verification
date as determined from the gas measurement records.

     
Purchase and Sale Agreement, Exhibit 2.2.4
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    Volumes will be determined in mmcf and will be converted to MMBtus as
follows:       The conversion will be based on the heat content as reflected on
Sellers’ perpetual gas inventory records.   2.2.   Procedures for the Bammel Gas
Inventory Verification.       The Verified Bammel Gas Inventory will be
calculated by Wells using the same methods (including a shut-in period of at
least 14 days) and assumptions as were used in the preparation by Wells of its
report on the Bammel storage facility dated August 3, 2004.

     
Purchase and Sale Agreement, Exhibit 2.2.4
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EXHIBIT 2.4.1(A)
FORMS OF ASSIGNMENT AND ASSUMPTION AGREEMENT

     
Purchase and Sale Agreement, Exhibit 2.4.1(a)
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EXHIBIT 2.4.1(E)
FORM OF OPTION AGREEMENT

     
Purchase and Sale Agreement, Exhibit 2.4.1(e)
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EXHIBIT 2.4.1(F)
FORM OF TRANSITION SERVICES AGREEMENT

     
Purchase and Sale Agreement, Exhibit 2.4.1(f)
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EXHIBIT 2.4.1(G)
FORM OF SELLERS’ LIMITED GUARANTY

     
Purchase and Sale Agreement, Exhibit 2.4.1(g)
  Page  1

 

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EXHIBIT 2.4.2(H)
FORM OF BUYER’S LIMITED GUARANTY

     
Purchase and Sale Agreement, Exhibit 2.4.2(h)
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EXHIBIT 2.4.2(I)
FORM OF SWAP AGREEMENT SCHEDULE AND ANNEX

     
Purchase and Sale Agreement, Exhibit 2.4.2(i)
  Page  1

 

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EXHIBIT 3.10

CERTAIN PERMITTED ENCUMBRANCES

    Seven Oaks Lateral Pipeline is subject to a Lease and Operating Agreement
dated July 1, 1995, as amended by amendment dated November 1, 1998, which
includes the right of the lessee to purchase a portion of the pipeline upon
90 days notice prior to July 1, 2010.

     
Purchase and Sale Agreement, Exhibit 3.10
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EXHIBIT 5.13

CERTAIN REAL PROPERTY INTERESTS

1.   The rights of way and easements of the HPL Companies in which is located
the pipeline described in Section 2.1.1(a) of Schedule 3.10 of Sellers’
Disclosure Schedules.

2.   The fee title interest of the HPL Companies in the land under which is
located the Bammel storage reservoir described in Section 2.1.2 of Schedule 3.10
of Sellers’ Disclosure Schedules.

3.   The rights of way and easements of the HPL Companies in which is located
the pipeline described in Section 2.2.2 of Schedule 3.10 of Sellers’ Disclosure
Schedules.

4.   The rights of way and easements of the HPL Companies in which are located
the pipelines described in Section 2.4 of Schedule 3.10 of Sellers’ Disclosure
Schedules other than the 300 miles of “A/S Line.”

     
Purchase and Sale Agreement, Exhibit 5.13
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EXHIBIT 7.8

ALLOCATION OF PURCHASE PRICE

                 
Assets comprising the Bammel Facilities
    No less than $320,000,000, of which $10,000,000 is allocated to cushion gas
of
approximately 10.5 BCF    
50% general partnership interest
in MidTexas Pipeline Company
    $30,000,000        
To all other tangible assets
    Residual purchase price    

     
Purchase and Sale Agreement, Exhibit 7.8
  Page  1