Exhibit 10.A
PURCHASE AND SALE AGREEMENT
among
EL PASO CORPORATION
and
EL PASO CNG COMPANY, L.L.C.,
as Sellers,
and
TRANSCANADA AMERICAN INVESTMENTS LTD.,
as Buyer,
dated December 22, 2006

 

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TABLE OF CONTENTS

         
Article 1 DEFINITIONS
    1  
1.1 Certain Defined Terms
    1  
1.2 Construction
    11  
 
       
Article 2 TERMS OF THE TRANSACTION
    12  
2.1 Agreement to Sell and to Purchase the Purchased Interests
    12  
2.2 Purchase Price and Payment
    12  
2.3 [Intentionally omitted]
    12  
2.4 Calculation of Closing Consideration
    12  
2.5 Calculation and Payment of Adjustment Amount
    12  
2.6 Acknowledgement of Obligations
    15  
2.7 Purchase Price Allocation
    16  
 
       
Article 3 CLOSING
    16  
3.1 Closing
    16  
3.2 Deliveries by Sellers
    16  
3.3 Deliveries by Buyer
    17  
 
       
Article 4 REPRESENTATIONS AND WARRANTIES OF SELLERS
    17  
4.1 Corporate Organization
    18  
4.2 Acquired Companies
    18  
4.3 Charter and Bylaws
    19  
4.4 Authority Relative to this Agreement
    19  
4.5 No Conflict
    19  
4.6 Consents, Approvals, and Licenses
    20  
4.7 Financial Statements and Reports
    20  
4.8 Absence of Material Changes
    21  
4.9 Undisclosed Liabilities
    22  
4.10 Tax Matters
    22  
4.11 Compliance With Laws
    24  
4.12 Legal Proceedings
    24  
4.13 Acquired Company Agreements
    24  
4.14 Employee Plans and Labor Matters
    27  
4.15 Environmental and Pipeline Matters
    28  
4.16 Insurance
    29  
4.17 Title to Property and Assets
    29  
4.18 Intellectual Property Rights
    29  
4.19 Permits
    29  
4.20 Regulatory Matters
    30  
4.21 Bank Accounts
    30  
4.22 Brokerage Fees
    30  
4.23 Transactions with Directors, Officers, and Employees
    30  
4.24 Long-Term Debt
    30  
4.25 GL Sale Agreement
    30  

 

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4.26 Limitations
    30  
 
       
Article 5 REPRESENTATIONS AND WARRANTIES OF BUYER
    31  
5.1 Corporate Organization
    31  
5.2 Authority Relative to This Agreement
    31  
5.3 No Conflict
    31  
5.4 Consents, Approvals, and Licenses
    32  
5.5 Available Funds
    32  
5.6 Investment Intent; Investment Experience; Restricted Securities
    32  
5.7 Legal Proceedings
    32  
5.8 Brokerage Fees
    32  
5.9 Independent Investigation
    32  
 
       
Article 6 CONDUCT OF ACQUIRED COMPANIES PENDING CLOSING
    33  
6.1 Conduct and Preservation of the Acquired Companies
    33  
6.2 Restrictions on Certain Actions
    34  
6.3 87/8% Notes; Elimination of Intercompany Amounts; Termination of Cash Pool
Program Amount; Dividends
    36  
 
       
Article 7 ADDITIONAL AGREEMENTS
    38  
7.1 Access to Information and Confidentiality
    38  
7.2 Regulatory and Other Authorizations and Consents
    41  
7.3 Employees and Employee Plans
    44  
7.4 Public Announcements
    48  
7.5 Amendment of Schedules
    48  
7.6 Fees and Expenses
    49  
7.7 Transfer Taxes
    49  
7.8 [Intentionally Omitted]
    49  
7.9 Excluded Assets
    49  
7.10 Guarantee Matters
    50  
7.11 Use of El Paso Marks
    50  
7.12 Insurance
    51  
7.13 Buyer Guaranty
    51  
7.14 Additional Financial Statements
    51  
7.15 Capital Expenditures
    51  
7.16 Transition Services Agreement
    51  
7.17 HSR Amount
    52  
7.18 Limitations
    53  
 
       
Article 8 CONDITIONS TO OBLIGATIONS OF SELLERS
    54  
8.1 Representations and Warranties True
    54  
8.2 Covenants and Agreements Performed
    54  
8.3 HSR Act
    54  
8.4 Legal Proceedings
    54  

 

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Article 9 CONDITIONS TO OBLIGATIONS OF BUYER
    54  
9.1 Representations and Warranties True
    54  
9.2 Covenants and Agreements Performed
    55  
9.3 HSR Act and Other Approval
    55  
9.4 Legal Proceedings
    55  
 
       
Article 10 TERMINATION, AMENDMENT, AND WAIVER
    55  
10.1 Termination
    55  
10.2 Effect of Termination
    56  
10.3 Amendment
    56  
10.4 Waiver
    56  
 
       
Article 11 TAX MATTERS
    56  
11.1 Preparation of Tax Returns and Payment of Taxes
    56  
11.2 Tax Indemnity
    59  
11.3 Access to Information
    60  
11.4 Post-Closing Tax Actions
    60  
11.5 Tax Sharing Agreements
    61  
11.6 Earnings and Profits
    61  
11.7 Assistance and Cooperation
    61  
11.8 Closing Tax Certificate
    62  
 
       
Article 12 SURVIVAL AND INDEMNIFICATION
    62  
12.1 Indemnification
    62  
12.2 Defense of Claims
    64  
 
       
Article 13 OTHER PROVISIONS
    66  
13.1 Notices
    66  
13.2 Entire Agreement
    67  
13.3 Binding Effect; Assignment; No Third Party Benefit
    67  
13.4 Severability
    68  
13.5 Governing Law
    68  
13.6 Further Assurances
    68  
13.7 Counterparts
    68  
13.8 Disclosure
    68  
13.9 Consent to Jurisdiction
    68  
13.10 Specific Performance
    68  

 

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PURCHASE AND SALE AGREEMENT
     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of
December 22, 2006, is among (i) El Paso CNG Company, L.L.C., a Delaware limited
liability company (“EP CNG”), (ii) El Paso Corporation, a Delaware corporation
(“EPC;” EP CNG and EPC are each referred to herein individually as a “Seller”
and collectively as the “Sellers”), and (iii) TransCanada American Investments
Ltd., a Delaware corporation (“Buyer”). Sellers and Buyer are referred to herein
sometimes individually as a “Party” and collectively as the “Parties.”
Recitals:
     A. American Natural Resources Company, a Delaware corporation (the
“Pipeline Company”), is a wholly owned subsidiary of EP CNG and ANR Storage
Company, a Michigan corporation (the “Storage Company”), is a wholly owned
subsidiary of EPC. The Pipeline Company and the Storage Company are referred to
herein as the “Companies.”
     B. Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, all of the issued and outstanding capital stock of the Companies, upon
the terms and subject to the conditions in this Agreement.
     NOW, THEREFORE, Sellers and Buyer agree as follows:
Article 1
DEFINITIONS
     1.1 Certain Defined Terms. As used in this Agreement, each of the following
terms has the meaning given to it below:
     “Acquired Companies” means the Companies, the Company Subsidiaries (other
than the Excluded Subsidiaries), and the Related Companies.
     “Acquired Company” means any of the Acquired Companies.
     “Acquired Company Insurance Policies” means those material policies of
insurance which either Seller or any of their Affiliates (other than the
Acquired Companies) maintains with respect to the assets and operations of the
Acquired Companies, all of which are listed on Schedule 4.16(i).
     “Additional Governmental Approval” means the approval described in Item 2
of Schedule 4.6.
     “Adjusted Working Capital” is defined in Section 2.5(f).
     “Adjustment Amount” is defined in Section 2.5(a).
     “Adjustment Statement” is defined in Section 2.5(b).
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     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For the purposes of
this definition, “control” means, when used with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise, and the terms
“controlling” and “controlled” have correlative meanings.
     “Agreement” is defined in the Preamble.
     “ANR Pipeline” means ANR Pipeline Company, a Delaware corporation and a
wholly owned indirect subsidiary of the Pipeline Company.
     “Applicable Environmental Laws” means any and all Applicable Laws (in
effect as of the date of this Agreement) pertaining to protection of human
health and the environment in any and all jurisdictions in which any Acquired
Company conducts or has conducted operations.
     “Applicable Law” means any statute, law, rule, or regulation, or any
judgment, order, ordinance, or other documentary articulation of law, writ,
injunction, or decree of any Governmental Entity to which a specified Person or
its property is subject.
     “Assumed Obligations” is defined in Section 2.6.
     “Balance Sheet Date” means September 30, 2006.
     “Base Purchase Price” means a purchase price of $2,881,000,000.
     “Bonus Payment” is defined in Section 7.3(h).
     “Buyer” is defined in the Preamble.
     “Buyer’s FSA” is defined in Section 7.3(l).
     “Buyer Guarantors” means TransCanada Corporation and TransCanada PipeLine
USA Ltd.
     “Buyer Guaranty” means a guaranty agreement in the form of Exhibit 7.13.
     “Buyer Indemnitees” means, collectively, Buyer and its Affiliates
(including each of the Acquired Companies) and its and their officers,
directors, employees, agents, and representatives.
     “Buyer Protected Information” is defined in Section 7.1(e)(i).
     “Cash Balance Plan” is defined in Section 7.3(k).
     “Cash Pool Program Amount” means the aggregate amount owed to the Acquired
Companies by EPC and its Affiliates (other than the Acquired Companies) under
the El Paso Cash Pool Program as of the Effective Date, which shall be paid to
the Companies under Section 6.3(c) prior to Closing.
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     “Closing” means the closing of the transactions contemplated hereby.
     “Closing Date” means the date on which the Closing occurs.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Combined Financial Statements” is defined in Section 4.7(a).
     “commercially reasonable efforts” means efforts (i) in accordance with
reasonable commercial practice and the terms, limitations, and restrictions of
all applicable contracts and other agreements and (ii) without the incurrence of
unreasonable expense.
     “Companies” is defined in the recitals.
     “Company Employee Plans” means those Employee Plans that the Acquired
Companies contribute to or participate in as of the date of this Agreement.
     “Company Subsidiaries” means the direct or indirect wholly owned
subsidiaries of the Companies listed in Schedule 1.1(a).
     “Confidentiality Agreement” means that certain confidentiality letter
agreement, dated September 25, 2006, between TransCanada PipeLines Limited and
EPC.
     “Consent Amendment” is defined in Section 6.3(a).
     “Consent Documents” is defined in Section 6.3(a).
     “Consent Solicitation” is defined in Section 6.3(a).
     “Data Site” means the online presentation of materials, as the same exists
as of the close of business on the day preceding the date of this Agreement,
prepared by Sellers to assist Buyer in its investigation of the Acquired
Companies.
     “Debt Documents” means the following: (i) the 87/8% Indenture, (ii) the
Indenture, dated as of February 15, 1994, between ANR Pipeline and Comerica
Bank, as Trustee, as supplemented by the First Supplemental Indenture, dated as
of February 15, 1994, relating to $125 million principal amount of 73/8%
Debentures due February 15, 2024, and as further supplemented by the Second
Supplemental Indenture, dated June 1, 1995, relating to $75 million principal
amount of 7% Debentures due June 1, 2025; (iii) the Indenture, dated as of
May 13, 1991, between ANR Pipeline and Manufacturers Bank, N.A., as Trustee, as
supplemented by the First Supplemental Indenture, dated as of November 4, 1991,
relating to $300 million principal amount of 95/8% Debentures due November 1,
2021; and (iv) the Loan Agreement, dated as of March 6, 2000, between Coastal
Natural Gas Company, as Borrower, and CMS Field Services, Inc., as Lender,
relating to a $14 million loan, evidenced by a promissory note, dated March 6,
2000 that matures on March 5, 2010 and bears interest at 13.75% per annum,
payable in 39 quarterly installments of $82,638.88 plus accrued interest and a
final installment of $10,777,083.68 plus accrued interest on March 5, 2010, as
amended by that certain Consent, Assignment and Assumption Agreement, dated as
of December 12, 2002, among El Paso CNG
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Company (f/k/a Coastal and c/k/a EP CNG), ANR Pipeline and The Variable Annuity
Life Insurance Company (as successor in interest to CMS) whereby ANR Pipeline
assumed all rights and obligations of EP CNG under the loan agreement and note,
and by that certain Amendment to Loan Agreement, dated as of December 12, 2002
between ANR Pipeline and The Variable Annuity Life Insurance Company and the New
Note, dated December 12, 2002, issued in substitution and exchange for the prior
note.
     “Deductible Amount” means an amount equal to 1.0% of the Total Purchase
Price.
     “Direct Claim” means any claim by an Indemnitee on account of a Loss which
does not result from a Third Party Claim.
     “Disclosure Letter” means the letter, of even date herewith, of Sellers or
Buyer to which such party’s Schedules are attached, as the same may be amended
or supplemented in accordance with Section 7.5.
     “Dispute Deadline Date” is defined in Section 2.5(c).
     “El Paso Marks” means the name “El Paso” and other similar trademarks,
service marks, and trade names owned by Sellers or their Affiliates (other than
the Acquired Companies).
     “El Paso Cash Pool Program” means the cash management programs conducted
under (i) the Cash Management Agreement, dated as of November 24, 2003, between
EPC and ANR Pipeline or (ii) the Cash Management Agreement, dated as of
October 5, 2004, between EPC and the Storage Company.
     “87/8% Indenture” means the Indenture, dated as of March 5, 2003, between
ANR Pipeline and The Bank of New York, as trustee.
     “87/8% Notes” means the $300 million aggregate principal amount of senior
notes due 2010 issued by ANR Pipeline under the 87/8% Indenture.
     “Effective Date” means the close of business on the last day of the month
preceding the Closing Date.
     “Effective Date Pro Forma Financial Statements” is defined in
Section 2.5(b).
     “Employee Plan” means any stock purchase, stock option, pension, profit
sharing, bonus, deferred compensation, incentive compensation, severance or
termination pay, hospitalization or other medical or dental, life or other
insurance, supplemental unemployment benefits plan or agreement or policy or
other arrangement providing employment-related compensation or benefits,
including “employee benefit plans” as defined in Section 3(3) of ERISA.
     “Employees” is defined in Section 7.3(a).
     “Encumbrances” means liens, charges, pledges, options, rights of first
refusal, reversionary rights, mortgages, deeds of trust, security interests,
claims, restrictions (whether on voting, sale, transfer, disposition, or
otherwise), easements, encroachments, and other
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encumbrances of every type and description, whether imposed by law, agreement,
understanding, or otherwise.
     “EP CNG” is defined in the preamble.
     “EPC” is defined in the preamble.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “ERISA Plans” means, collectively, any of the Company Employee Plans which
is an “employee benefit pension plan” as defined in Section 3(2) of ERISA.
     “Estimated Adjustment Amount” means Sellers’ good faith and reasonable
estimate of the Adjustment Amount as of the date on which Sellers deliver to
Buyer the written statement contemplated by Section 2.4.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Excluded Assets” is defined in Section 7.9.
     “Excluded Cash” is defined in Section 6.3(c).
     “Excluded Information” is defined in Section 7.1(a).
     “Excluded Liabilities” means any and all obligations or liabilities arising
from or relating to the matters described on Schedule 12.1(a).
     “Excluded Subsidiaries” means each of ANR Venture Management Company, ANR
Capital Corporation, ANR Funding Company L.L.C., ANR Finance Company, L.L.C., El
Paso Coal Holding, L.L.C., and ANR Venture Eagle Point Company, each of which
was a direct, wholly owned subsidiary of the Pipeline Company at the Balance
Sheet Date but all of the equity interests of which were transferred by the
Pipeline Company to an Affiliate of EPC that is not an Acquired Company prior to
the date of this Agreement. For purposes of clarity, the term Excluded
Subsidiaries shall not include the GL Companies.
     “Exhibits” means the exhibits attached to this Agreement.
     “FERC” means the Federal Energy Regulatory Commission.
     “GL Companies” means Great Lakes Gas Transmission Company and its
subsidiary and Great Lakes Gas Transmission Limited Partnership and its
subsidiary.
     “GL Sale Agreement” means the Purchase and Sale Agreement, dated
December 21, 2006, between ANR Capital Corporation and Seafarer US Pipeline
System, Inc.
     “Governmental Approvals” means all consents and approvals of Governmental
Entities, including those required under the HSR Act, that reasonably may be
deemed necessary so that the consummation of the transactions contemplated
hereby will be in compliance with Applicable Law.
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     “Governmental Entity” means any court or tribunal in any jurisdiction
(domestic or foreign) or any federal, state, municipal, or local government or
other governmental body, agency, authority, department, commission, board,
bureau, instrumentality, arbitrator, or arbitral body (domestic or foreign).
     “Guarantees” means any and all obligations relating to the guarantees,
letters of credit, bonds, and other credit assurances of a comparable nature of
Sellers or any of their Affiliates (other than the Acquired Companies) for the
benefit of any Acquired Company as listed on Schedule 7.10.
     “Holders” is defined in Section 6.3(a).
     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
     “HSR Amount” is defined in Section 7.2(b).
     “HSR Measures” is defined in Section 7.2(b).
     “Income Tax” means federal, state, local, or foreign income or franchise
Taxes or other similar Taxes measured in whole or in part by income and any
interest and penalties or additions thereon.
     “Indemnifying Party” means a Party required to provide indemnification
under Section 12.1.
     “Indemnitee” means a Party entitled to receive indemnification under
Section 12.1.
     “Interest Adjustment” means interest (calculated based on the actual number
of days elapsed, assuming a 360-day year) on the Base Purchase Price, as
adjusted by the Estimated Adjustment Amount, at the Prime Rate plus 1.0% from
(and including) the Effective Date to (but excluding) the Closing Date.
     “IRS” means the Internal Revenue Service.
     “Jackson Pipeline” means Jackson Pipeline Company, a Michigan general
partnership.
     “Jointly Held Guarantees” means any guarantee, letter of credit, bond, cash
deposit, or other financial assurance that is held jointly by one or more
Acquired Companies, on the one hand, and a Seller or any Affiliate of a Seller
(other than any Acquired Company), on the other hand.
     “knowledge” means (i) when used with respect to (A) a Seller or the
Acquired Companies (other than Jackson Pipeline), that which is actually known
after reasonable inquiry by the individuals listed on Schedule 1.1(b) in their
respective areas of responsibility, and (B) Jackson Pipeline, that which is
actually known by the individuals listed on Schedule 1.1(b) in their respective
areas of responsibility and (ii) when used with respect to Buyer, that which is
actually
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known after reasonable inquiry by the individuals listed on Schedule 1.1(c) in
their respective areas of responsibility.
     “Lease Assignment Agreement” is defined in Section 6.3(d).
     “Listed Employees” is defined in Section 7.3(b).
     “Long-Term Debt” means both the current and the long-term portions of the
outstanding principal amount of indebtedness as of the date of determination
under the Debt Documents, and including the amount of unamortized debt discount
under U.S. GAAP.
     “Losses” means, collectively, any and all claims, liabilities, losses,
causes of action, fines, penalties, litigation, lawsuits, administrative
proceedings, administrative investigations, costs, and expenses, including
reasonable attorneys’ fees, court costs, and other costs of suit.
     “Material Adverse Effect” means any circumstance, change, or effect that is
materially adverse to the financial condition, properties, operations, results
of operations, assets or business of the Acquired Companies taken as a whole or
that impedes or delays the ability of Sellers to perform their obligations under
this Agreement or the Related Agreements or to consummate the transactions
contemplated hereby or thereby, other than (i) any adverse circumstance, change,
or effect arising from or relating to general business or economic conditions in
the industries or markets in which the Acquired Companies operate, including
(A) changes in national or regional gathering, pipeline, or storage facilities
or (B) rules, regulations, or decisions of FERC or the courts affecting the
natural gas transportation industry as a whole or the natural gas storage
industry as a whole, (ii) any adverse circumstance, change, or effect arising
from weather conditions, including unexpected or harsh weather conditions,
(iii) seasonal reductions in revenues or earnings of the Acquired Companies in
the ordinary course of business consistent with past periods, (iv) national or
international political, diplomatic, or military conditions (including any
engagement in hostilities, whether or not pursuant to a declaration of war, or
the occurrence of any military or terrorist attack) not disproportionately
affecting the Acquired Companies, (v) changes in U.S. GAAP, (vi) changes in
Applicable Laws not disproportionately affecting the Acquired Companies,
(vii) the taking of any action required or permitted by Section 6.3(a), 6.3(b),
and 6.3(c), 7.9, or 7.15 or the failure of Sellers or the Acquired Companies to
take any action for which Sellers in good faith request Buyer’s written consent
under Section 6.1 or 6.2 and Buyer refuses to provide such consent, (viii) any
changes in prices for commodities, goods, or services, or the availability or
costs of hedges or other derivatives, including fluctuations in interest rates,
(ix) any matter that is expressly disclosed in the Schedules as of the date of
execution of this Agreement, and (x) the execution and delivery or announcement
of this Agreement. The Parties agree that any determination as to whether a
change, effect, event, or occurrence is a Material Adverse Effect shall be made
after taking into account and considering all matters relevant to such analysis,
including (x) all amounts, if any, recognized by the Person and its Affiliates,
as applicable, under insurance or third-party indemnifications or similar
agreements, and (y) all Tax Benefits with respect to such change, effect, event,
or occurrence.
     “MPSC” is defined in Section 4.20.
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     “NGA” is defined in Section 4.20.
     “NLRB” is defined in Section 4.14(d).
     “Note Redemption” is defined in Section 6.3(a).
     “Note Redemption Documents” is defined in Section 6.3(a).
     “Notice” means any notice, request, demand, or other communications
required or permitted to be given or made under this Agreement by either Party.
     “Notice of Disagreement” is defined in Section 2.5(c).
     “Party” is defined in the Preamble.
     “Permits” means licenses, permits, franchises, consents, approvals,
variances, exemptions, and other authorizations of or from Governmental
Entities.
     “Permitted Encumbrances” means (i) zoning, planning, and building codes and
ordinances; (ii) defects, imperfections, or irregularities in title (including
easements, rights-of-way, covenants, conditions, restrictions, and other matters
affecting title to real property) that are not material in character, amount, or
extent with respect to the asset or assets to which they relate or, together
with any other such defects, imperfections or irregularities, in the aggregate;
(iii) Encumbrances created by or referenced in any of the Scheduled Contracts;
(iv) Encumbrances created by Buyer, or its successors and assigns; (v) liens for
Taxes not yet due and payable; (vi) statutory liens (including materialmen’s,
mechanic’s, repairmen’s, landlord’s and other similar liens) arising in
connection with the ordinary course of business securing payments not yet due
and payable; (vii) Encumbrances arising under the Debt Documents; and
(viii) Encumbrances that would not materially interfere with the operations of
the Acquired Companies, as currently conducted, whether of record or not.
     “Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
     “Pipeline Company” is defined in the recitals.
     “Post-Effective Date Taxes” is defined in Section 11.1(f).
     “Pre-Closing Periods” is defined in Section 11.1(c).
     “Prime Rate” means the prime interest rate reported in The Wall Street
Journal on the Effective Date.
     “Proceedings” means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any mediator, arbitrator, or
Governmental Entity.
     “Pro Forma Combined Financial Statements” is defined in Section 4.7(b).
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     “Purchase Price” means the sum of (i) the Base Purchase Price, as adjusted
by the Adjustment Amount, and (ii) the Interest Adjustment.
     “Purchase Price Allocation Schedule” is defined in Section 2.7.
     “Purchased Interests” means all the issued and outstanding capital stock of
the Companies.
     “Related Agreements” means the Transition Services Agreement and any other
document, agreement, certificate or instrument delivered in connection with the
transactions contemplated by this Agreement, and with respect to Buyer only, the
Buyer Guaranty.
     “Related Companies” means the partially owned subsidiaries of the Companies
listed in Schedule 1.1(a).
     “Related Company” means any of the Related Companies.
     “Ren-Cen Matters” is defined in Section 6.3(d).
     “Ren-Cen Note” means the Promissory Note, dated as of November 1, 2001,
issued by ANR Pipeline to Riverfront Holdings Phase II, Inc., in the original
principal amount of $1.8 million that matures on November 1, 2010 and bears
interest at 7% per annum, payable annually.
     “Replacement Debt” is defined in Section 6.3(a).
     “Replacement Debt Expenses” means the sum of all fees, expenses, penalties,
charges, and interest paid or incurred by the Acquired Companies in connection
with the Replacement Debt, including underwriting fees, placement fees,
attorneys’ fees, trustee fees, interest payments and similar fees and expenses,
but excluding any fees, expenses, penalties, charges, and interest included in
the Replacement Debt Repayment Amount.
     “Replacement Debt Repayment Amount” is defined in Section 6.3(a).
     “Replacement Guarantee” is defined in Section 7.10(b).
     “Savings Plan” is defined in Section 7.3(j).
     “Scheduled Contracts” means any of the agreements or contracts listed on
Schedule 4.13.
     “Schedules” means the schedules attached to the Disclosure Letter of
Sellers or Buyer, as the case may be.
     “SEC” means the Securities and Exchange Commission.
     “SEC Reports” is defined in Section 4.7(d).
     “Securities Act” means the Securities Act of 1933, as amended.
     “Selected Employees” is defined in Section 7.3(b).
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     “Seller” and “Sellers” are defined in the Preamble.
     “Seller Group” is defined in Section 11.1(a).
     “Seller Protected Information” is defined in Section 7.1(e)(ii).
     “Sellers’ FSA” is defined in Section 7.3(l).
     “Sellers Indemnitees” means, collectively, Sellers and their Affiliates
(other than the Acquired Companies) and each of their officers, directors,
employees, agents, and representatives.
     “Stay-On Bonus and Severance Reimbursement Amount” means the sum of (i) the
aggregate amount of stay-on bonuses paid by Buyer under Section 7.3(g) and
(ii) the total severance amounts shown in Part II of Schedule 7.3(g).
     “Storage Company” is defined in the recitals.
     “Straddle Period” means a Tax period or year commencing before and ending
after the Closing Date.
     “Straddle Return” means a Tax Return for a Straddle Period.
     “Tax Benefit” means an amount by which the current Tax liability of a Party
(or group of corporations including the Party) is reduced (including by
deduction, reduction of income by virtue of increased Tax basis or otherwise,
entitlement of refund, credit, or otherwise).
     “Tax Return” means any return or report, declaration, report, claim for
refund, information return, or statement relating to Taxes, including any
related schedules, attachments, or other supporting information, with respect to
Taxes, and including any amendment thereto.
     “Taxes” means any federal, state, local or foreign income, gross receipts,
license, payroll, parking, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax or other
tax of any kind whatsoever, including any interest, penalty or addition thereto,
including such item for which a liability arises as a transferee or
successor-in-interest.
     “Taxing Authority” means any Governmental Entity responsible for the
imposition or collection of any Tax.
     “Third Party” means any Person other than (i) Sellers or any of their
Affiliates (including the Acquired Companies and the Excluded Subsidiaries) and
(ii) Buyer and its Affiliates.
     “Third Party Claim” means any claim or the commencement of any claim,
action, or proceeding made or brought by a Third Party.
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     “Total Purchase Price” means the sum of (i) the Purchase Price plus
(ii) the principal amount of the Long-Term Debt outstanding as of the Closing.
     “Transition Period” is defined in Section 7.11.
     “Transition Services Agreement” means the Transition Services Agreement
attached as Exhibit 3.2(c) hereto, to be completed by the Parties under
Section 7.16.
     “U.S. GAAP” means generally accepted accounting principles in the United
States of America (including interpretations, guidance, or bulletins issued in
respect thereof) as in effect on the date to which the document or calculation
to which it refers relates, applied on a consistent basis throughout the periods
covered by such document or calculation.
     1.2 Construction. In construing this Agreement, the following principles
shall be followed:
     (a) the terms “herein,” “hereof,” “hereby,” “hereunder,” and other similar
terms, refer to this Agreement as a whole and not only to the particular
Article, Section, or other subdivision in which any such terms may be employed;
     (b) references to Articles, Sections, Schedules, Exhibits, and other
subdivisions and clauses refer to the Articles, Sections, Schedules, Exhibits
and other subdivisions and clauses of this Agreement;
     (c) a reference to any Person shall include such Person’s predecessors and
successors;
     (d) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with U.S. GAAP;
     (e) all references herein to amounts in dollars or preceded by “$” shall
constitute references to such amount in U.S. currency;
     (f) no consideration shall be given to the captions of the Articles,
Sections, subsections, or clauses, which are inserted for convenience in
locating the provisions of this Agreement and not as an aid in its construction;
     (g) examples shall not be construed to limit, expressly or by implication,
the matter they illustrate;
     (h) the word “includes” and its syntactical variants mean “includes, but is
not limited to” and corresponding syntactical variant expressions;
     (i) a defined term has its defined meaning throughout this Agreement,
regardless of whether it appears before or after the place in this Agreement
where it is defined;
     (j) the plural shall be deemed to include the singular, and vice versa; and
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     (k) each Exhibit and Schedule to this Agreement is a part of this
Agreement, but if there is any conflict or inconsistency between the main body
of this Agreement and any Exhibit or Schedule, the provisions of the main body
of this Agreement shall prevail.
Article 2
TERMS OF THE TRANSACTION
     2.1 Agreement to Sell and to Purchase the Purchased Interests. At the
Closing, and on the terms and subject to the conditions in this Agreement,
Sellers shall sell, transfer, deliver, and convey to Buyer, and Buyer shall
purchase and accept from Sellers, the Purchased Interests free and clear of all
Encumbrances, other than restrictions on the transfer of securities under
Applicable Laws.
     2.2 Purchase Price and Payment. In consideration of the sale of the
Purchased Interests to Buyer, Buyer shall pay to Sellers at the Closing, in
immediately available funds, an amount equal to the sum of (i) the Base Purchase
Price, as adjusted by the Estimated Adjustment Amount, and (ii) the Interest
Adjustment by confirmed wire transfer to a bank account or accounts to be
designated by Sellers not later than 3 business days prior to the Closing Date,
in the amount shown in Sellers’ statement delivered to Buyer in accordance with
Section 2.4 below.
     2.3 [Intentionally omitted].
     2.4 Calculation of Closing Consideration. Not later than 5 business days
prior to the Closing Date, Sellers shall deliver to Buyer a written statement
setting forth (i) the Base Purchase Price, (ii) the Interest Adjustment, and
(iii) the Estimated Adjustment Amount, together with Sellers’ calculation of the
Interest Adjustment and the Estimated Adjustment Amount in reasonable detail,
based on the best information available to Sellers on the date the same is
delivered, and supporting work papers with respect to the calculation of the
Estimated Adjustment Amount. If the Estimated Adjustment Amount is positive, the
Base Purchase Price shall be increased by the Estimated Adjustment Amount, and
if the Estimated Adjustment Amount is negative, the Base Purchase Price shall be
reduced by the Estimated Adjustment Amount.
     2.5 Calculation and Payment of Adjustment Amount.
     (a) Adjustment Amount. The “Adjustment Amount” equals the net increase to,
or net decrease from, the Adjusted Working Capital between the Balance Sheet
Date and the Effective Date. For purposes of clarity, an increase in Adjusted
Working Capital shall be represented by a positive number and a decrease in
Adjusted Working Capital shall be represented by a negative number.
     (b) Effective Date Financial Statements and Adjustment Amount. As promptly
as practicable after the Closing Date, and in any event not later than 90 days
after the Closing Date, Buyer shall prepare and deliver to Sellers (i) a
combined balance sheet of the Acquired Companies as of the Effective Date (the
“Effective Date Pro Forma Financial Statements”) prepared in accordance with
U.S. GAAP applied on the same basis as the Pro Forma Combined Financial
Statements have been prepared, including giving pro forma effect to the actions
specified in the first sentence of Section 4.7(b)
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(except that the Effective Date Pro Forma Financial Statements shall be prepared
using actual volumes and revenues and based on other best available information
through the period ending upon the date the same is delivered to Sellers), and
(ii) a statement of Buyer (the “Adjustment Statement”) showing in reasonable
detail its calculation of the Adjustment Amount, together with supporting work
papers. Sellers agree, at no cost to Buyer, to give Buyer and its authorized
representatives reasonable access to such employees, offices, and other
facilities and such books and records of Sellers and their Affiliates as are
reasonably necessary to allow Buyer and its authorized representatives to
prepare the Effective Date Pro Forma Financial Statements and the Adjustment
Amount in compliance with this Section 2.5. Buyer, at no cost to Sellers, shall
give representatives of Sellers reasonable access to its and the Acquired
Companies’ premises, Employees, and other facilities and to its and the Acquired
Companies’ books and records as are reasonably necessary for purposes of
reviewing, verifying, and auditing the calculations contained in the Effective
Date Pro Forma Financial Statements and the Adjustment Statement.
     (c) Dispute Resolution. The Adjustment Statement shall become final and
binding on Sellers and Buyer as to the Adjustment Amount on the 90th day
following the date the Adjustment Statement is received by Sellers (the “Dispute
Deadline Date”), unless prior to the Dispute Deadline Date, Sellers deliver
Notice to Buyer of their disagreement (“Notice of Disagreement”). Sellers’
Notice of Disagreement shall set forth all of Sellers’ disputed items together
with Sellers’ proposed changes thereto, including an explanation in reasonable
detail of the basis on which Sellers propose such changes. If Sellers have
delivered a timely Notice of Disagreement, then Sellers and Buyer shall use
their good faith efforts to reach written agreement on the disputed items to
determine the Adjustment Amount. If all of Sellers’ disputed items have not been
resolved by Sellers and Buyer by the 120th day following Sellers’ receipt of the
Adjustment Statement, then Sellers’ items that are still disputed shall be
submitted to binding arbitration by an independent nationally recognized
accounting firm without any material financial relationship to either Sellers or
Buyer, as mutually selected by Sellers and Buyer within 5 business days after
the end of the foregoing 120-day period (or in the absence of agreement between
Sellers and Buyer by the close of business on such 5th business day as selected
by the president of the American Arbitration Association or his designee). The
arbitrator’s determination shall in no event be more favorable to Buyer than
reflected on the Adjustment Statement prepared by Buyer or more favorable to
Sellers than shown in the proposed changes delivered by Sellers under their
Notice of Disagreement. The fees and expenses of such arbitration shall be borne
50% by Buyer and 50% by Sellers. The determination of the disputed items by such
arbitration shall be final and binding upon Sellers and Buyer as to such
disputed items.
     (d) Final Date. The Adjustment Amount shall be deemed to be finally
determined in the amount set forth in the Adjustment Statement on the Dispute
Deadline Date unless a Notice of Disagreement is timely given in accordance with
Section 2.5(c) with respect to the calculation thereof. If such a Notice of
Disagreement is timely given, the Adjustment Amount shall be deemed finally
determined on the date that the selected accounting firm gives Notice to Buyer
and Sellers of its determination with respect to all disputed items regarding
the calculation thereof, or, if earlier, the date on which Sellers
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and Buyer agree in writing on the amount thereof, in which case the Adjustment
Amount shall be calculated in accordance with such determination or agreement,
as the case may be.
     (e) Payments. If the Adjustment Amount, as finally determined, exceeds the
Estimated Adjustment Amount, then Buyer shall pay to Sellers the amount of such
excess, plus interest on the amount of such excess from (and including) the
Effective Date to (but excluding) the date of payment at the Prime Rate plus
1.0%. If the Adjustment Amount, as finally determined, is less than the
Estimated Adjustment Amount, then Sellers shall pay to Buyer the amount of such
deficiency, plus interest on the amount of such deficiency from (and including)
the Effective Date to (but excluding) the date of payment at the Prime Rate plus
1.0%. Any payment shall be made within three business days of the date the
Adjustment Amount is deemed to be finally determined under Section 2.5(d).
     (f) Definition. The “Adjusted Working Capital” as of the Balance Sheet Date
is calculated as set forth on Schedule 2.5(f). The “Adjusted Working Capital” as
of the Effective Date shall be calculated using the Effective Date Pro Forma
Financial Statements and shall be equal to (1) the sum of (i) the amount of
current assets of the Acquired Companies reflected on the Effective Date Pro
Forma Financial Statements, plus (ii) the sum of any amounts expended by any of
the Acquired Companies from and after January 1, 2007 and on or prior to the
Effective Date to pay for capital expenditures permitted by Section 6.2(h), plus
(iii) the amount of any decrease in the amount of the current and long-term
portions of all long-term debt outstanding as of the Closing Date (including the
amount of unamortized debt discount under U.S. GAAP, but excluding any
Replacement Debt Repayment Amount otherwise included therein to the extent
deducted in the computations of Excluded Cash under Section 6.3(c)) below
$444 million of Long-Term Debt, less (2) the amount of current liabilities
reflected on the Effective Date Pro Forma Financial Statements, less (3) the
amount of any increase in the amount of the current and long-term portions of
all long-term debt outstanding as of the Closing Date (including the amount of
unamortized debt discount under U.S. GAAP, but excluding any Replacement Debt
Repayment Amount otherwise included therein to the extent deducted in the
computations of Excluded Cash under Section 6.3(c)) above $444 million of
Long-Term Debt, less (4) any amounts refunded to Sellers or any of their
Affiliates (other than the Acquired Companies) in respect of prepaid insurance
of the Acquired Companies cancelled on or prior to the Closing to the extent
reflected as a current asset for purposes of calculating Adjusted Working
Capital as of the Balance Sheet Date, less (5) any amounts received or
receivable as proceeds from the sale since the Balance Sheet Date of assets,
other than Excluded Assets, that constitute non-current assets (including for
purposes of this Agreement, base gas), less (6) any amounts received or accounts
receivable constituting the proceeds of insurance in respect of a casualty loss
experienced by an Acquired Company after the Balance Sheet Date, which casualty
loss involves a non-current asset which has not been repaired or replaced with
an asset of at least comparable quality and the affected operations, if any,
restored to at least the operating capacity as it existed prior to the casualty
loss, less (7) the Stay-On Bonus and Severance Reimbursement Amount, less (8) if
Sellers elect under Section 6.3(a) to pursue the Consent Solicitation, an amount
equal to the applicable redemption premium specified in
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the 87/8% Indenture that would be payable if all 87/8% Notes remaining
outstanding as of the Closing Date (if any) were redeemed on the earliest date
permissible by the terms of the 87/8% Indenture assuming that a redemption
notice were issued on the Effective Date, and less (9) the Replacement Debt
Expenses, if any. Notwithstanding the foregoing sentence, for the purpose of
calculating Adjusted Working Capital, (i) the amount of current assets and
current liabilities included in Adjusted Working Capital for any Related Company
shall be calculated by multiplying the current assets and current liabilities of
such Related Company determined in accordance with the other provisions of this
Section 2.5(f) by a percentage equal to the Storage Company’s indirect ownership
interest in that Related Company, (ii) none of the following shall be included
in either current assets or current liabilities: (A) the balances in the
following line items set forth in Schedule 4.7(b) under assets: (I) Line 116000
— T&E Gas Receivable, (II) Line 110301 — Customer Accounts Receivable Cashout
Invoices, (III) Line 116500 — Account Receivables Gas Imbalances/Exchange, and
(IV) Line 120101 — Accounts Receivable Other—Insurance; (B) the balances in the
following line items set forth in Schedule 4.7(b) under liabilities: (I) Line
306000 — Transportation and Exchange Gas, (II) Line 306500 — Accounts Payable
Gas Imbalances/Exchange, and (III) Line 310402 Accounts Payable—Miscellaneous
Gas Payable; (C) assets or liabilities of the Acquired Companies relating to
Taxes (including any deferred Tax assets or liabilities); (D) assets or
liabilities of any of the Acquired Companies relating to pensions or other
Employee post-retirement benefits; (E) the current portion of any principal
payment obligation with respect to Long-Term Debt; (F) any Excluded Asset,
including the Excluded Cash to be distributed by dividend by the Storage Company
and the Pipeline Company prior to Closing under Section 6.3(c); and (G) any
intercompany accounts (other than imbalances that are to be settled with in-kind
gas volumes in accordance with the terms of existing operational balancing
agreements in effect as of the date hereof) or notes receivable due from EPC or
any of its direct or indirect wholly owned subsidiaries (other than the Acquired
Companies) to any of the Acquired Companies (other than the Related Companies)
or intercompany accounts (other than imbalances that are to be settled with
in-kind gas volumes in accordance with the terms of existing operational
balancing agreements in effect as of the date hereof) or notes payable of any of
the Acquired Companies (other than the Related Companies) to EPC or any of its
direct or indirect subsidiaries (other than the Acquired Companies), including
payables and/or receivables under the El Paso Cash Pool Program, and (iii) the
valuation of the inventories of the Acquired Companies as of the Effective Date
shall be determined in the same manner as the valuation of such inventories as
of the Balance Sheet Date. Except to the extent contemplated above, Sellers
represent and warrant to Buyer that the Adjusted Working Capital as of the
Balance Sheet Date has been calculated in a manner consistent with the method
for calculating Adjusted Working Capital as of the Effective Date as set forth
in this Section 2.5(f).
     2.6 Acknowledgement of Obligations. For the avoidance of doubt, subject to
the terms and conditions of this Agreement, including Sections 7.3 and 7.9 and
Articles 11 and 12, (i) Buyer acknowledges and agrees that, following the
Closing, the Acquired Companies shall remain obligated for their liabilities and
obligations, including the Long-Term Debt, and accrued and unpaid interest
thereon, outstanding as of the Closing (the “Assumed Obligations”), and
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(ii) the Acquired Companies shall pay, perform, and discharge the Assumed
Obligations from and after the Closing in accordance with their terms.
     2.7 Purchase Price Allocation. Sellers and Buyer agree that the Purchase
Price shall be allocated among the Purchased Interests for Tax purposes in
accordance with an allocation schedule to be agreed upon prior to the Closing by
the Parties (the “Purchase Price Allocation Schedule”). The Purchase Price
Allocation Schedule shall be revised to take into account subsequent adjustments
under this Agreement to the Purchase Price after the Closing. Sellers and Buyer
shall each report the Tax consequences of the purchase and sale contemplated
hereby in a manner consistent with the Purchase Price Allocation Schedule and
shall not take any inconsistent position on any Tax Returns unless required by
Applicable Law.
Article 3
CLOSING
     3.1 Closing. Subject to fulfillment or waiver of the conditions in this
Agreement, the Closing shall take place on the Closing Date. The Closing shall
take place at the offices of Andrews Kurth LLP, 600 Travis Street, Houston,
Texas 77002 or such other place as the Parties may agree, at 10:00 a.m.,
Houston, Texas time, on the fifth business day following the satisfaction or
waiver of all conditions to Closing in Articles 8 and 9 (other than conditions
that by their nature are to be satisfied at the Closing) or at such other time
as the Parties may agree. Unless otherwise agreed, all Closing transactions
shall be deemed to have occurred simultaneously.
     3.2 Deliveries by Sellers. At the Closing, Sellers will deliver the
following documents to Buyer:
     (a) A certificate executed on behalf of each Seller by the president,
senior vice president, or vice president of each Seller, dated the Closing Date,
representing and certifying, in such detail as Buyer may reasonably request,
that the conditions set forth in Sections 9.1 and 9.2 have been fulfilled.
     (b) The certificates, instruments, and documents listed below:
     (i) The stock certificates representing all of the Purchased Interests duly
endorsed in blank, or accompanied by stock powers duly executed in blank, and
otherwise in form acceptable to Buyer for transfer of the Purchased Interests to
Buyer free and clear of all Encumbrances.
     (ii) The minute books, stock records, and corporate seal (if any) of each
Acquired Company.
     (iii) The written resignations of the directors and officers of each
Acquired Company, such resignations to be effective concurrently with the
Closing on the Closing Date.
     (iv) Evidence of the receipt of each Governmental Approval required
hereunder with respect to Sellers.
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     (v) Such other certificates, instruments of conveyance, and documents as
may be reasonably requested by Buyer prior to the Closing Date to carry out the
intent and purposes of this Agreement.
     (c) The Transition Services Agreement duly executed by EPC.
     (d) Evidence reasonably satisfactory to Buyer that (i) either (A) the Note
Redemption has been consummated in accordance with the terms of Section 6.3(a)
or (B) the Consent Solicitation has been consummated in accordance with the
terms of Section 6.3(a) and the Consent Amendment has been duly executed and
delivered by ANR Pipeline and the Trustee under the 8 7/8% Indenture and is in
full force and effect and (ii) the Replacement Debt Repayment Amount has been
repaid in full, all agreements related to the Replacement Debt have been
terminated and no Acquired Company has any liability or obligation related to
the Replacement Debt after the Closing.
     3.3 Deliveries by Buyer. At the Closing, Buyer will deliver the following
documents to Sellers:
     (a) A certificate executed by the president, senior vice president, or vice
president of Buyer, dated the Closing Date, representing and certifying, in such
detail as Sellers may reasonably request, that the conditions set forth in
Sections 8.1 and 8.2 have been fulfilled.
     (b) The Transition Services Agreement duly executed by Buyer.
     (c) All releases, replacements, substitutions or “back-to-back” guarantees
required by Section 7.10 with respect to the Guarantees listed in Schedule 7.10,
in form and substance reasonably satisfactory to Sellers.
     (d) Evidence of the receipt of each Governmental Approval required
hereunder with respect to Buyer.
     (e) Such other certificates, instruments, and documents as may be
reasonably requested by Sellers prior to the Closing Date to carry out the
intent and purposes of this Agreement.
     (f) Payment of the sum of Base Purchase Price, as adjusted by the Estimated
Adjustment Amount, and the Interest Adjustment, in immediately available funds
to the bank account or accounts designated by Sellers under Section 2.2.
Article 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
     Except as set forth in the Schedules (it being understood that a
representation or warranty shall not be deemed to be qualified by any item
disclosed or described in any Schedule unless it is reasonably apparent that
such item is applicable to such representation or warranty), Sellers represent
and warrant to Buyer as follows:
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     4.1 Corporate Organization. EPC is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware. EP CNG is a limited
liability company duly organized, validly existing, and in good standing under
the laws of Delaware.
     4.2 Acquired Companies.
     (a) List of Acquired Companies. Except as set forth on Schedule 4.2, none
of the Acquired Companies owns, directly or indirectly, any capital stock or
other equity securities of any corporation or has any direct or indirect equity
or ownership interest in any other Person. Schedule 4.2 lists (i) each Acquired
Company, the jurisdiction of incorporation or formation of each Acquired
Company, and the authorized (in the case of capital stock) and outstanding
capital stock or other equity interests of each Acquired Company (including the
owners thereof) and (ii) each of the other entities in which the Acquired
Companies own any equity interests. Each corporate Acquired Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, and each other Acquired Company
is duly formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation. Each Acquired Company has all requisite corporate
or other power and authority, as applicable, to own, lease, and operate its
assets and properties and to carry on its business as now being conducted. No
actions or proceedings to dissolve any Acquired Company are pending.
     (b) No Encumbrances. Except as otherwise indicated on Schedule 4.2, the
outstanding capital stock or other equity interests of each Acquired Company is
owned directly or indirectly by Sellers and is free and clear of all
Encumbrances, other than (i) restrictions on transfer that may be imposed by
federal or state securities laws, (ii) those that arise by virtue of any actions
taken by or on behalf of Buyer or its Affiliates, (iii) the restrictions on
transfer that may be imposed under the certificate of incorporation, bylaws, or
other organizational documents of the Acquired Companies, or (iv) those that
arise in respect of the Long-Term Debt and the Debt Documents as of the date
hereof. All outstanding shares of capital stock of each corporate Acquired
Company owned directly or indirectly by a Seller have been validly issued and
are fully paid and nonassessable. All equity interests of each other Acquired
Company owned directly or indirectly by Sellers have been validly issued and are
fully paid. None of the shares of capital stock or other equity interests of any
Acquired Company owned directly or indirectly by Sellers are subject to, or were
issued in violation of, any preemptive or similar rights.
     (c) No Options. Except as set forth on Schedule 4.2, there are outstanding
(i) no shares of capital stock or other equity securities of any Acquired
Company, (ii) no securities of any Acquired Company convertible into or
exchangeable for shares of capital stock or other equity securities of any
Acquired Company, (iii) no options or other rights to acquire from Sellers or
any Acquired Company, and no obligation of Sellers or any Acquired Company to
issue or sell, any shares of capital stock or other equity securities, and
(iv) no equity equivalent, interests in the ownership or earnings, or other
similar rights of or with respect to any Acquired Company or any securities
convertible into or exchangeable for such capital stock or equity securities.
There are no outstanding
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obligations of Sellers or any Acquired Company to repurchase, redeem, or
otherwise acquire any of the foregoing shares, securities, options, equity
equivalents, interests, or rights.
     (d) Qualification. Each of the Acquired Companies is duly qualified or
licensed to do business as a corporation, foreign corporation, limited
partnership, or limited liability company, as applicable, and each of the
Acquired Companies is in good standing in each of the jurisdictions set forth
opposite its name on Schedule 4.2, which are all the jurisdictions in which the
assets or property owned, leased, or operated by it or the conduct of its
business requires such qualification or licensing, except jurisdictions in which
the failure to be so qualified or licensed would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
     4.3 Charter and Bylaws. Sellers have made available to Buyer in the Data
Site accurate and complete copies of each Acquired Company’s certificate of
incorporation and bylaws (or equivalent organizational documents) as currently
in effect and stock records of the Acquired Companies.
     4.4 Authority Relative to this Agreement. Each Seller has full corporate or
limited liability company power and authority to execute, deliver, and perform
this Agreement and the Related Agreements to which it is a party. The execution,
delivery, and performance by each Seller of this Agreement and the Related
Agreements, and the consummation by each Seller of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate or
limited liability company action on the part of each Seller, and no other action
on the part of any Seller or any Affiliate, shareholder, or member of any Seller
is necessary to authorize such execution, delivery, and performance. This
Agreement has been duly executed and delivered by each Seller and constitutes,
and each Related Agreement executed or to be executed by each Seller has been,
or when executed will be, duly executed and delivered by each Seller and
constitutes, or when executed and delivered will constitute, valid and legally
binding obligations of such Seller, enforceable against such Seller in
accordance with its terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors’ rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
     4.5 No Conflict. Assuming all consents, approvals, authorizations, and
other actions described in Section 4.6 have been obtained and all filings and
notifications listed on Schedule 4.6 have been made, except as set forth in
Schedule 4.5, the execution, delivery, and performance by each Seller of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby or thereby do not and will not (x) violate or breach the
certificate of incorporation or by-laws (or equivalent organizational documents)
of such Seller or any Acquired Company, (y) violate or breach any Applicable Law
binding upon such Seller or any Acquired Company or any of their respective
assets or properties, or (z) violate or result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of any Acquired Company under,
any note, bond,
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mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other instrument relating to such assets or properties to which any Acquired
Company is a party or by which any of such assets or properties is bound or
affected, except in the case of clauses (y) and (z), as would not, individually
or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect.
     4.6 Consents, Approvals, and Licenses. No consent, approval, authorization,
license, order or Permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person, is required to be
made or obtained by either Seller or any Acquired Company in connection with the
execution, delivery and performance of this Agreement or the Related Agreements
and the consummation of the transactions contemplated hereby or thereby, except:
(a) as set forth on Schedule 4.6; (b) as necessary to comply with applicable
requirements of the HSR Act; (c) where the failure to obtain such consents,
approvals, authorizations, licenses, orders, or Permits of, or to make such
declarations, filings, or registrations or notifications, would not,
individually or in the aggregate, have, or reasonably be expected to have, a
Material Adverse Effect; and (d) as may be necessary as a result of any facts or
circumstances relating solely to Buyer.
     4.7 Financial Statements and Reports.
     (a) Historical Financial Statements. Schedule 4.7(a) contains (i) unaudited
combined balance sheets as of December 31, 2005 and September 30, 2006 of
(a) the Pipeline Company and its consolidated subsidiaries and (b) the Storage
Company and its consolidated subsidiaries, (ii) unaudited combined statements of
income for the year ended December 31, 2005 and the nine-month period ended
September 30, 2006 of (a) the Pipeline Company and its consolidated subsidiaries
and (b) the Storage Company and its consolidated subsidiaries, and
(iii) unaudited combined statements of cash flow of the Acquired Companies for
the year ended as of December 31, 2005 and the nine-month period ended
September 30, 2006 (collectively, the “Combined Financial Statements”). The
Combined Financial Statements have been prepared in accordance with U.S. GAAP,
except as set forth in the notes thereto. The Combined Financial Statements are
consistent with the books and records of the Acquired Companies and fairly
present, in all material respects, the financial position, results of
operations, and cash flows of the Acquired Companies as of the dates and for the
periods indicated.
     (b) Pro Forma Financial Statements. Schedule 4.7(b) contains the Combined
Financial Statements (other than statements of cash flow) as adjusted to give
pro forma effect to exclusion of the Excluded Assets, the Excluded Liabilities,
the Excluded Subsidiaries (including any liabilities related thereto), and the
following: in the case of the Combined Financial Statements of the Pipeline
Company (i) the transfer and sale after the Balance Sheet Date but prior to the
date of this Agreement by the Pipeline Company of ANR Capital Corporation and El
Paso Great Lakes Company, L.L.C. and their respective subsidiaries in accordance
with the terms of the GL Sale Agreement, (ii) the disposition after the Balance
Sheet Date but prior to the date of this Agreement by the Pipeline Company of
its equity ownership interests in each of the Excluded Subsidiaries, and
(iii) the transactions specified in Section 6.3 and the other items disclosed in
Schedule 4.8. The Combined Financial Statements adjusted in accordance
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with the preceding sentence are referred to herein as the “Pro Forma Combined
Financial Statements.” The Pro Forma Combined Financial Statements have been
prepared in accordance with U.S. GAAP subject to the assumptions, limitations,
and notes set forth therein or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X of the SEC, and subject to the pro
forma adjustments specified in the notes thereto and excluding the statement of
cash flows. The Pro Forma Combined Financial Statements are consistent with the
books and records of the Acquired Companies and fairly present, in all material
respects, the financial position and results of operations of the Acquired
Companies as of the date and for the period indicated, subject to the pro forma
adjustments set forth in the notes thereto.
     (c) Controls. ANR Pipeline has established and maintains disclosure
controls and procedures (as such term is defined in rule 13a-15(e) or 15d-15(e)
under the Exchange Act), and such disclosure controls and procedures are
designed to ensure that material information relating to ANR Pipeline is made
known to ANR Pipeline’s principal executive office and its principal financial
officer by others within those entities. To Sellers’ knowledge, except as
disclosed on Schedule 4.7(c), there are no significant deficiencies, including
material weaknesses, in the design or operation of internal controls over the
Acquired Companies’ financial reporting.
     (d) Reports. ANR Pipeline has filed all required forms, reports, and
documents, and amendments thereto, with the SEC since January 1, 2005 (the “SEC
Reports”), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports, and documents, and amendments thereto were filed.
Except for ANR Pipeline, none of the Acquired Companies is required to file any
forms, reports, or other documents with the SEC. The consolidated financial
statements of ANR Pipeline included in the SEC Reports complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect on the dates such SEC
Reports were filed. As of their respective filings dates, the SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided, that
this sentence shall not be deemed to be a representation or warranty with
respect to any forward looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995) included or incorporated by reference
in any of the SEC Reports.
     4.8 Absence of Material Changes. Except as disclosed on Schedule 4.8, as
contemplated by the other provisions of this Agreement, or as would not,
individually or in the aggregate, have, or reasonably be expected to have, a
Material Adverse Effect, since the Balance Sheet Date, (i) there has not been
any adverse change in the assets, liabilities, business, operations, results of
operation, or financial condition of the Acquired Companies, (ii) the businesses
of the Acquired Companies have been conducted only in the ordinary course
consistent with past practice, (iii) no Acquired Company has incurred any
liability or entered into any agreement, in each case, outside the ordinary
course of business consistent with past
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practice, (iv) no Acquired Company has suffered any unrepaired loss, damage,
destruction, or other casualty to any of its property, plant, equipment, or
inventories (whether or not covered by insurance), and (v) the Acquired
Companies have not made any change in the compensation levels of their senior
executives, any changes in the manner in which other Employees of the Acquired
Companies are generally compensated, or any provision of additional or
supplemental benefits for employees of the Acquired Companies generally, except
normal periodic increases or promotions effected in the ordinary course of
business consistent with past practice.
     4.9 Undisclosed Liabilities. No Acquired Company (other than any Related
Company that is not required by U.S. GAAP to be consolidated on the financial
statements of the Pipeline Company or the Storage Company) has any liability or
obligation, except (i) liabilities or obligations reflected on the Pro Forma
Consolidated Financial Statements, (ii) liabilities or obligations which have
arisen since the Balance Sheet Date in the ordinary course of business
consistent with past practice, (iii) liabilities or obligations reflected on
Schedule 4.9, (iv) liabilities or obligations with respect to Tax and
environmental matters, which are addressed by the representations and warranties
set forth in Sections 4.10 and 4.15(a), and (v) other liabilities or obligations
which, individually or in the aggregate, have not had and would not be
reasonably expected to have a Material Adverse Effect. The Related Companies
that are not required by U.S. GAAP to be consolidated on the financial
statements of the Pipeline Company or the Storage Company do not have any
liability or obligation (other than liabilities or obligations with respect to
Tax and environmental matters, which are addressed by the representations and
warranties set forth in Sections 4.10 and 4.15(a)) that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
     4.10 Tax Matters. Except as disclosed on Schedule 4.10:
     (a) all material Tax Returns required to be filed by or with respect to the
Acquired Companies (including consolidated, combined, or unitary Tax Returns in
which the Acquired Companies are members) have been timely filed with the
appropriate Taxing Authorities in all jurisdictions in which such Tax Returns
are required to be filed;
     (b) such Tax Returns were correct and complete in all material respects,
and all Taxes due and payable on such Tax Returns have been paid in full or
adequate reserves (determined in accordance with U.S. GAAP) have been provided
for on the Pro Forma Combined Financial Statements;
     (c) there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any material Tax Returns filed by or with
respect to any of the Acquired Companies;
     (d) none of the Tax Returns of or with respect to any of the Acquired
Companies is currently being audited or examined by any Taxing Authority;
     (e) no material deficiency for any Income Taxes has been assessed with
respect to any of the Acquired Companies that has not been abated, paid in full
or adequately provided for on the Pro Forma Combined Financial Statements;
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     (f) there is no material dispute or material claim concerning any Tax
liability of any Acquired Company claimed or raised by any Taxing Authority in
writing;
     (g) all material Taxes that any Acquired Company is or was required to
withhold or collect have been duly withheld or collected, and to the extent
required, have been paid to the proper Taxing Authority;
     (h) no payments are due or will become due by any Acquired Company under
any Tax sharing agreement or similar arrangement;
     (i) Schedule 4.10 contains complete and accurate, in all material respects,
tax basis balance sheets of the Acquired Companies based on Tax reporting for
the 2005 tax year and estimates as of the Balance Sheet Date;
     (j) the tax basis of all depreciable or amortizable assets, and the methods
used in determining allowable depreciation or amortization (including cost
recovery) deductions of the Acquired Companies, are correct and in compliance
with the Code and regulations thereunder, in all material respects;
     (k) none of the Acquired Companies is required to indemnify any other party
for Taxes owed by any other party;
     (l) each of the Acquired Companies (i) is a member of the consolidated
group of which EPC is the common parent, (ii) has never been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was EPC) and (iii) has never had any Liability
for the Taxes of any Person (other than as a member in a group the common parent
of which was EPC) under Treas. Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise;
     (m) none of the Acquired Companies is a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of (i) any “excess parachute payment” within the
meaning of Section 280G of the Code (or any corresponding provision of state,
local or foreign Tax law) and (ii) any amount that will not be fully deductible
as a result of Section 162(m) of the Code (or any corresponding provision of
state, local or foreign Tax law);
     (n) since May 14, 2002, none of the Acquired Companies has distributed
stock of another person, or has had its stock distributed by another person, in
a transaction that was governed in whole or in part by Section 355 of the Code;
     (o) none of the Tax attributes of the Acquired Companies are subject to
limitation under Section 382 of the Code, Section 383 of the Code or any other
provision of the Code or any regulations promulgated under the Code;
     (p) none of the assets of the Acquired Companies constitute tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code, and none of the assets reflected on the Combined Financial
Statements of the
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Acquired Companies is subject to a lease, safe harbor lease or other arrangement
as a result of which the Acquired Companies is not treated as the owner for
federal Income Tax purposes;
     (q) none of the Acquired Companies has engaged in a “reportable
transaction” or “listed transaction” for U.S. federal Income Tax purposes or the
equivalent under state or local law; and
     (r) there will not be any income recognized for federal or state Tax
purposes after the Closing Date as a result of transactions occurring on or
before the Closing Date involving the Acquired Companies that resulted in the
realization of income for federal or state Tax purposes that was either deferred
or suspended under consolidated, combined, affiliated, or unitary Tax
principles.
     4.11 Compliance With Laws. The Acquired Companies are in compliance with
all Applicable Laws (other than Applicable Environmental Laws, as to which
Sellers’ sole representations and warranties are set forth in Section 4.15(a),
and Taxes, as to which Sellers’ sole representations and warranties are set
forth in Section 4.10), except (i) as disclosed on Schedule 4.11 or (ii) for
noncompliance with such Applicable Laws that would not individually or in the
aggregate, have, or reasonably be expected to have, a Material Adverse Effect.
Neither Sellers, nor to Sellers’ knowledge, any of the Acquired Companies,
(x) has, since January 1, 2004, received written notice of any material
violation of any Applicable Law (other than Applicable Environmental Laws, as to
which Sellers’ sole representations and warranties are set forth in
Section 4.15(a), and Taxes, as to which Sellers’ sole representations and
warranties are set forth in Section 4.10), other than such notices that have
been resolved with the applicable Governmental Entity without any liability or
cost related thereto after the Closing Date, or (y) is in default, in any
material respect, under any material judgment, order, writ, injunction, or
decree of any Governmental Entity applicable to the Acquired Companies or any of
their respective assets, properties, or operations.
     4.12 Legal Proceedings. Except as disclosed on Schedule 4.12, there are no
material Proceedings pending, or to the knowledge of Sellers, threatened against
or involving any Acquired Company or any properties of any Acquired Company.
Except (i) as disclosed on Schedule 4.12 and (ii) for judgments, orders, writs,
injunctions, and decrees issued by FERC or the MPSC, no Acquired Company is
subject to any material judgment, order, writ, injunction, or decree of any
Governmental Entity. Except as disclosed on Schedule 4.12, no Acquired Company
is subject to any judgment, order, writ, injunction, or decree issued by FERC or
the MPSC that would, individually or in the aggregate, have, or reasonably be
expected to have, a Material Adverse Effect. Except as disclosed on
Schedule 4.12, there are no Proceedings pending or, to the knowledge of Sellers,
threatened seeking to restrain, prohibit, or obtain damages or other relief from
Sellers or the Acquired Companies in connection with this Agreement, the Related
Agreements or the transactions contemplated hereby or thereby.
     4.13 Acquired Company Agreements.
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     (a) List of Agreements. Set forth on Schedule 4.13 is a list of the
following agreements and contracts to which any Acquired Company is a party or
by which any Acquired Company is otherwise bound:
     (i) any commitment, agreement or purchase order that could, in accordance
with its terms, involve aggregate payments by any Acquired Company of more than
$5,000,000 within the remaining term of such agreement;
     (ii) any note, loan, evidence of indebtedness, letter of credit or
guarantee of the indebtedness or performance of any obligations of another
Person that could involve aggregate payments by any Acquired Company of
$5,000,000 or more;
     (iii) any lease, including the term of such lease, under which an Acquired
Company is the lessor or lessee of real or personal property, which lease either
(A) (1) cannot be terminated by any Acquired Company without penalty upon not
more than 180 calendar days’ notice and (2) involves an annual base rental
during calendar year 2005 or 2006 in excess of $2,000,000 or base rental over
its term in excess of $5,000,000 or (B) is a surface or subsurface storage lease
with a Third Party that is used in or related to the Acquired Companies’ storage
businesses and the loss of which could materially interfere with the operations
of the Acquired Companies, as presently conducted;
     (iv) any contracts or agreements containing covenants limiting the freedom
of any Acquired Company or any Acquired Company and its Affiliates after the
Closing Date, in any material respect, to engage in any line of business or
compete with any Person;
     (v) any contracts or agreements that grant to any Person any right of first
refusal, right of first offer, or participation right in any material future
business or business opportunity or expansion of any Acquired Company;
     (vi) any employment agreement that provides for (A) continued employment
with, or retention by, any Acquired Company or (B) any payments due or payable
by the Acquired Companies as a result of this Agreement or the consummation of
the transactions contemplated by this Agreement;
     (vii) any pending sale or lease of real or personal property of any
Acquired Company (other than sales of natural gas, natural gas liquids, or other
items of inventory in the ordinary course of business) in excess of $5,000,000;
     (viii) any gas purchase contracts, gas sales contracts, gas processing
agreements, transportation agreements, natural gas liquids sales contracts,
storage agreements and gathering agreements involving payments to or from any
Acquired Company during calendar year 2006 in excess of $5,000,000;
     (ix) any contract requiring a capital expenditure or a commitment for a
capital expenditure in excess of $5,000,000;
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     (x) any material obligation to make future payments, contingent or
otherwise, arising out of or relating to the acquisition or disposition of any
business, assets, or stock of any Acquired Company or of any other Person by any
Acquired Company;
     (xi) any joint venture, joint development, or partnership agreement;
     (xii) any natural gas or other futures or options trading agreements or any
price swaps, hedges, or futures instruments involving payments to or from any
Acquired Company during 2006 in excess of $5,000,000;
     (xiii) documents granting any power of attorney with respect to the
material affairs of any of the Company Subsidiaries;
     (xiv) agreements that have obligations of the Acquired Companies after the
Closing Date relating to the issuance of any securities or ownership interests
of the Acquired Companies or the granting of any registration rights with
respect thereto;
     (xv) any operational balancing agreement relating to the gas volumes of any
Acquired Company and involving payments to or from any Acquired Company in
excess of $5,000,000 within the remaining term of such agreement; and
     (xvi) any material agreement between any Acquired Company, on the one hand,
and a Seller or any Affiliate of a Seller (other than an Acquired Company), on
the other hand, other than (A) agreements that will be terminated at or prior to
the Closing under Section 6.1(x) and with respect to which the Acquired
Companies shall have no obligations or liabilities after the Closing and
(B) bona fide arms’ length agreements with respect to the purchase, sale,
transportation, or storage of natural gas, including operational balancing and
measurement agreements; and
     (xvii) all material amendments, modifications, extensions or renewals of
any of the foregoing.
     (b) No Violations. Except as disclosed in Schedule 4.13, no Acquired
Company is in material breach or material violation of, or material default
under, any of the Scheduled Contracts. Each Scheduled Contract is, in all
material respects, a valid agreement, arrangement, or commitment of the Acquired
Company which is a party thereto, enforceable against the Acquired Company in
accordance with its terms and, to the knowledge of Sellers, is, in all material
respects, a valid agreement, arrangement, or commitment of each other party
thereto, enforceable against such party in accordance with its terms, except in
each case (i) where enforceability may be limited by bankruptcy, insolvency, or
other similar laws affecting creditors’ rights generally and except where
enforceability is subject to the application of equitable principles or remedies
or (ii) where such Scheduled Contract has expired or been terminated by its
terms. True and
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complete electronic copies of the Scheduled Contracts were made available to
Buyer on the Data Site.
     4.14 Employee Plans and Labor Matters.
     (a) Disclosure. Sellers have heretofore provided to Buyer or made available
on the Data Site (i) a true and complete copy of each material Company Employee
Plan (each of which is listed on Schedule 4.14(a)) and any accompanying summary
plan description, (ii) each trust agreement relating to such Company Employee
Plan, (iii) the most recent IRS Form 5500 for such Company Employee Plan, and
(iv) the most recent determination letter issued by the IRS with respect to any
ERISA Plan intended to be qualified under Section 401(a) of the Code.
     (b) ERISA. (i) Except as set forth in Schedule 4.14(b), none of the ERISA
Plans, is a “multiemployer pension plan,” as described in Section 3(37) of
ERISA, or a “multiple employer pension plan,” as defined in Section 4063 of
ERISA, and (ii) no material liability under Title IV of ERISA has been incurred
by the Acquired Companies or any ERISA Plan that has not been satisfied in full,
other than liability for premiums that are not yet due and payable to the
Pension Benefit Guaranty Corporation. No ERISA Plan has an “accumulated funding
deficiency” (within the meaning of Section 302 of ERISA and Section 412 of the
Code). Full payment has been made, or will be made in accordance with Section
404(a)(6) of the Code, of all contributions which any Acquired Company is
required to pay under the terms of each of the Company Employee Plans and
Section 412 of the Code, and all such amounts properly accrued through the date
of this Agreement with respect to the current plan year thereof have been paid
by the Acquired Companies on or prior to the date of this Agreement or have been
properly recorded on the Combined Financial Statements.
     (c) Qualification. Each ERISA Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS to
the effect that it is so qualified, and to Sellers’ knowledge, nothing has
occurred since the date of such letter to adversely affect the qualified status
of each such plan. Except as set forth on Schedule 4.14(c), in the context of
the transaction contemplated by this Agreement, none of the Company Employee
Plans or any other plan, program, or arrangement of the Acquired Companies would
result, separately or in the aggregate, in the payment of any “excess parachute
payment” within the meaning of Section 280G of the Code. Each ERISA Plan has
been operated in all material aspects in accordance with its terms and the
requirements of Applicable Law. To the knowledge of Sellers, there have been no
non-exempt “prohibited transactions” within the meaning of Section 4975 of the
Code or Section 406 of ERISA with respect to any ERISA Plan to which either of
those sections may apply that could reasonably be expected to result in a
material liability to any of the Acquired Companies.
     (d) Labor Matters. Except as set forth in Schedule 4.14(d), none of the
Acquired Companies is or has been during the past three years (i) a party to, or
bound by, any collective bargaining agreement with a labor union or labor
organization, or (ii) the subject of any formal proceeding asserting that any
Acquired Company has committed an
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unfair labor practice or is seeking to compel it to bargain with any labor
organization as to wages or conditions of employment. To the knowledge of
Sellers, there are no organizational efforts presently being made or threatened
by or on behalf of any labor union with respect to Employees of any Acquired
Company. There is no pending or, to the knowledge of Sellers, threatened
grievance, arbitration demand, charge, complaint, or other legal action against
any Acquired Company by the National Labor Relations Board (the “NLRB”) or any
comparable agency of any state of the United States. None of the Acquired
Companies has taken any action with respect to the transactions contemplated
hereby that could constitute a “mass layoff” or “plant closing” within the
meaning of the Worker Adjustment and Retraining Notification (WARN) Act of 1989
or that could otherwise trigger any notice requirement or liability under any
local or state plant closing notice law.
     (e) No Plan Liability. The Acquired Companies will not have any liability
after the Closing with respect to any litigation, if any, pending as of the
Closing with respect to (i) the El Paso Corporation Retirement Savings Plan,
(ii) the El Paso Corporation Cash Balance Plan, and (iii) any multiemployer
pension plan under Subtitle E of Title IV of ERISA listed on Schedule 4.14(e).
     4.15 Environmental and Pipeline Matters.
     (a) Environmental Matters. Except as set forth on Schedule 4.15(a), (i) the
Acquired Companies and their respective operations are in compliance with all
Applicable Environmental Laws in all material respects, (ii) none of the
Acquired Companies is the subject of any outstanding order or judgment from a
Governmental Entity under Applicable Environmental Laws requiring remediation or
payment of a fine in an amount in excess of $5,000,000, individually or in the
aggregate, (iii) since January 1, 2004, neither Sellers nor the Acquired
Companies have received any written notice of any material liability or material
violation by any Governmental Entity under any Applicable Environmental Law,
other than such notices that have been resolved with the applicable Governmental
Entity without any liability or cost related thereto after the Closing Date, and
(iv) except for actions or conditions which have not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, to the knowledge of Sellers, no condition exists on any property
currently owned or leased by the Acquired Companies which would subject any
Acquired Company or such property to any remedial obligations or liabilities
(including liabilities to Third Parties or to private tort plaintiffs) under any
Applicable Environmental Laws that does not have an adequate reserve (as
determined in accordance with U.S. GAAP) on the Pro Forma Combined Financial
Statements.
     (b) Pipeline Matters. As of the date of this Agreement, except as set forth
on Schedule 4.15(b), there have been no ruptures of any pipelines or related
facilities of the Acquired Companies resulting in significant injury, loss of
life, or material property damage, except to the extent that any liabilities or
costs arising as a result of such pipeline ruptures have been substantially
resolved so that Sellers do not reasonably expect that the Acquired Companies
will incur material liabilities or material costs related thereto after the
Closing Date.
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     4.16 Insurance. Set forth on Schedule 4.16(i) is a list of all Acquired
Company Insurance Policies. No Acquired Company maintains any insurance policy
with respect to its own assets or operations or with respect to the assets or
operations of any other Acquired Company. All premiums due and payable with
respect to the Acquired Company Insurance Policies have been timely paid. No
notice of cancellation of, or indication of an intention not to renew, any
Acquired Company Insurance Policy has been received by Sellers or any Acquired
Company. Set forth on Schedule 4.16(ii) is an accurate and complete list of all
pending claims in excess of $1,000,000 made by, or related to, the Acquired
Companies under any of the Acquired Company Insurance Policies, including the
following information with respect to each accident, loss, or other event:
(i) the identity of the claimant; (ii) the date of the occurrence; (iii) the
status as of the report date and (iv) the amounts paid or expected to be paid or
recovered.
     4.17 Title to Property and Assets. Except (i) for the Excluded Assets and
(ii) as shown in Schedule 4.17, each of the Acquired Companies has good and
valid title to its material property interests and the material assets used or
necessary to conduct the business of the Acquired Company as presently
conducted, free and clear of Encumbrances, other than Permitted Encumbrances.
     4.18 Intellectual Property Rights. Except for the assets described in
Section 7.9 or listed on Schedule 7.9, and excluding commercially available
computer software that is used in the business and operations of the Acquired
Companies without being materially customized or adapted by the Acquired
Companies, to the knowledge of Sellers, (i) the Acquired Companies own or have
the right to use under a license, sublicense, other agreement all material
intellectual property necessary for the businesses conducted by the Acquired
Companies, (ii) each item of material intellectual property owned or used by the
Acquired Companies as of the Balance Sheet Date will be in all material respects
owned or available for use by the Acquired Companies on substantially the same
terms and conditions immediately subsequent to the Closing, (iii) such material
intellectual property is not the subject of any Encumbrance or claim of license
or ownership of any Third Party that would materially adversely effect the
Acquired Companies’ rights in, or ability to use or exploit, such intellectual
property, (iv) since January 1, 2004, the Acquired Companies have not received
any written notice, claim, or demand alleging any misappropriation or
infringement of any material intellectual property rights of Third Parties, (v)
the Acquired Companies have not engaged in any conduct, or omitted to perform
any necessary act, the result of which is reasonably likely to invalidate or
adversely affect the enforceability of any material intellectual property
rights, and (vi) there is no infringement, misappropriation, or improper use of
the Acquired Companies’ rights in such material intellectual property by any
Third Party.
     4.19 Permits. Each Acquired Company possesses all Permits necessary for it
to own its assets and operate its business as currently conducted except where
the failure to hold any such Permit does not constitute a Material Adverse
Effect on the Acquired Companies taken as a whole. All such Permits are in full
force and effect, and except as reflected in Schedule 4.19, none of the Acquired
Companies has received any written notifications concerning violations of any
such Permits, and there are no Proceedings pending or, to the Company’s
knowledge, threatened before any Governmental Entity, arbitrator, or mediator
that seek the revocation, cancellation, suspension, or adverse modification
thereof, except for such matters as would not have, individually or in the
aggregate, a Material Adverse Effect.
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     4.20 Regulatory Matters. Except as shown on Schedule 4.20, each of the
Acquired Companies is in compliance, in all material respects, with (i) all
applicable provisions of the Natural Gas Act (the “NGA”) and (ii) all applicable
orders and regulations of FERC that pertain to the business or operations of
that Acquired Company. Except as shown on Schedule 4.20, the Acquired Companies,
as may be applicable, also are in compliance in all material respects with all
of the Michigan Public Services Commission’s (“MPSC”) orders, regulations, and
authorizing or enabling statutes that pertain to the business or operations of
the Acquired Companies. Except as shown on Schedule 4.20, no approval of FERC or
of the MPSC is required in connection with execution of this Agreement by
Sellers or the consummation of the transactions contemplated hereby with respect
to Sellers or the Acquired Companies.
     4.21 Bank Accounts. Set forth on Schedule 4.21 are (i) the names of each
bank or other financial institution with which any Acquired Company (other than
the Related Companies) maintains an account with an average balance in excess of
$100,000 since January 1, 2005 and (ii) a description of each such account,
including account number, branch (if applicable), and authorized signatories.
     4.22 Brokerage Fees. Except as set forth on Schedule 4.22, neither Seller
nor any of their Affiliates has retained any financial advisor, broker, agent,
or finder or paid or agreed to pay any financial advisor, broker, agent, or
finder on account of this Agreement or the transactions contemplated hereby for
which Buyer or any Acquired Company shall have any responsibility or liability.
     4.23 Transactions with Directors, Officers, and Employees. Except as set
forth on Schedule 4.23 and except for bona fide transactions in the ordinary
course of business consistent with past practice, since December 31, 2004, there
have been no transactions between any Acquired Company and any director,
officer, employee, stockholder, member, or other “affiliate” (as such term is
defined in Rule 405 under the Securities Act) of any such Acquired Company or
Sellers, including loans, guarantees or pledges to, by or for any Acquired
Company from, to, by or for any of such Persons (other than the Guarantees).
     4.24 Long-Term Debt. The Acquired Companies have no other indebtedness for
borrowed money that would be treated as long-term debt under U.S. GAAP other
than the Long-Term Debt and the Ren-Cen Note. Set forth on Schedule 4.24 is the
principal amount outstanding under each of the items listed in the definition of
Long-Term Debt (on a per item basis) as of the date hereof.
     4.25 GL Sale Agreement. Attached as Schedule 4.25 is a true and complete
copy of the GL Sale Agreement. The transactions contemplated by the GL Sale
Agreement have been consummated in accordance with the terms of the GL Sale
Agreement (without any amendments thereto or waivers thereunder) prior to the
date of this Agreement.
     4.26 Limitations. Except as and to the extent set forth in this Agreement,
Sellers make no representations or warranties whatsoever to Buyer and hereby
disclaim all liability and responsibility for any representation, warranty,
statement, or information made, communicated, or furnished (orally or in
writing) to Buyer or its representatives (including any opinion, information,
projection, or advice that may have been or may be
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provided to Buyer by any director, officer, employee, agent, consultant, or
representative of Sellers or any Affiliate thereof, including those on the Data
Site or in the Confidential Memorandum dated September 2006). Sellers make no
representations or warranties to Buyer regarding the probable success or
profitability of the businesses of the Acquired Companies. With respect to any
Related Company that is not operated by an Affiliate of Sellers, the
representations and warranties made in this Article 4 as to such Related Company
shall be limited to the knowledge of Sellers.
Article 5
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer represents and warrants to Sellers as follows:
     5.1 Corporate Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
     5.2 Authority Relative to This Agreement. Buyer has full corporate power
and corporate authority to execute, deliver, and perform this Agreement and any
Related Agreements to which it is a party. The execution, delivery, and
performance by Buyer of this Agreement and such Related Agreements and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action of Buyer, and no other action
on the part of Buyer or any Affiliate or shareholder of Buyer is necessary to
authorize such execution, delivery, and performance. This Agreement has been
duly executed and delivered by Buyer and constitutes, and each such Related
Agreement executed or to be executed by Buyer has been, or when executed will
be, duly executed and delivered by Buyer and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with their terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors’ rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
     5.3 No Conflict. Assuming all consents, approvals, authorizations, and
other actions described in Section 5.4 have been obtained and all filings and
notifications listed in Section 5.4 have been made, the execution, delivery and
performance of this Agreement and the Related Agreements by Buyer and the
consummation by Buyer of the transactions contemplated hereby or thereby do not
and will not (a) violate or breach the certificate of incorporation or by-laws
of Buyer (b) violate or breach any Applicable Law binding upon Buyer, or
(c) violate or result in any breach of, or constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Buyer under, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
relating to such assets or properties to which Buyer is a party or by which any
of such assets or properties is bound or affected, except in the case of clauses
(y) and (z) as would not, individually or in the aggregate, reasonably be
expected to materially impede or delay Buyer’s ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby.
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     5.4 Consents, Approvals, and Licenses. No consent, approval, authorization,
license, order, or Permit of, or declaration, filing, or registration with, or
notification to, any Governmental Entity, or any other Person, is required to be
made or obtained by Buyer or any of its Affiliates in connection with the
execution, delivery, and performance of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby or
thereby, except (a) as set forth in Schedule 5.4, (b) as may be necessary as a
result of any facts or circumstances relating solely to either of Sellers or the
Acquired Companies, (c) necessary to comply with applicable requirements of the
HSR Act, (d) where the failure to obtain such consent, approval, authorization,
license, order, or Permit, or to make such declaration, filing, registration or
notification would not, individually or in the aggregate, reasonably be expected
to materially impede or delay Buyer’s ability to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby.
     5.5 Available Funds. At the Closing, Buyer will have sufficient cash or
other sources of immediately available funds to enable it to pay the full
Purchase Price to Sellers when required hereunder.
     5.6 Investment Intent; Investment Experience; Restricted Securities. Buyer
is acquiring the Purchased Interests for its own account for investment and not
with a view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof. In acquiring the Purchased Interests,
Buyer is not offering or selling, and will not offer or sell, for Sellers in
connection with any distribution of the Purchased Interests, and Buyer does not
have a participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable federal
and state securities laws. Buyer acknowledges that it is able to understand and
appreciate the businesses conducted by the Acquired Companies, can bear the
economic risk of its investment in the Purchased Interests, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Purchased Interests.
Buyer is an “accredited investor” as such term is defined in Regulation D under
the Securities Act. Buyer understands that the Purchased Interests will not have
been registered under the Securities Act or any applicable state securities
laws, that the Purchased Interests will be characterized as “restricted
securities” under federal securities laws and that under such laws and
applicable regulations the Purchased Interests cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom.
     5.7 Legal Proceedings. There are no Proceedings pending against Buyer or
its Affiliates or, to the knowledge of Buyer, threatened against Buyer or its
Affiliates seeking to restrain, prohibit, or obtain damages or other relief in
connection with this Agreement or the transactions contemplated hereby.
     5.8 Brokerage Fees. Neither Buyer nor any of its Affiliates has retained
any financial advisor, broker, agent, or finder or paid or agreed to pay any
financial advisor, broker, agent, or finder on account of this Agreement or the
transactions contemplated hereby for which Sellers or their Affiliates will have
any responsibility or liability.
     5.9 Independent Investigation. Buyer hereby acknowledges and affirms that
it has completed its own independent investigation, analysis, and evaluation of
the Acquired
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Companies, that it has made all such reviews and inspections of the businesses,
assets, results of operations, condition (financial or otherwise), liabilities,
and prospects of the Acquired Companies as it has deemed necessary or
appropriate, and that in making its decision to enter into this Agreement and to
consummate the transactions contemplated hereby it has relied solely on its own
independent investigation, analysis, and evaluation of such matters and the
Acquired Companies and on the representations and warranties expressly set forth
in this Agreement and in the Related Agreements.
Article 6
CONDUCT OF ACQUIRED COMPANIES PENDING CLOSING
     Sellers hereby covenant and agree with Buyer as follows:
     6.1 Conduct and Preservation of the Acquired Companies. Except as provided
in this Agreement and Schedule 6.2 or as consented to in writing by Buyer (which
consent will not be unreasonably withheld, delayed, or conditioned), during the
period from the date hereof to the Closing, Sellers shall (to the extent it
affects the Acquired Companies) and shall cause each Acquired Company (other
than the Related Companies) and shall use commercially reasonable efforts to
cause each of the Related Companies to: (i) conduct its operations in all
material respects according to its ordinary course of business consistent with
past practice and in compliance with all Applicable Laws; (ii) use commercially
reasonable efforts to preserve, maintain, and protect in all material respects
its assets, rights and properties; (iii) keep the Acquired Company Insurance
Policies in effect through the Closing; and (iv) comply in all material respects
with the licenses and terms and conditions of service provided by FERC, the
MPSC, or any other permitting or regulatory agency.
     Notwithstanding the foregoing, (w) Sellers and the Acquired Companies shall
not be required to make any payments or enter into or amend any contractual
agreements, arrangements, or understandings to satisfy the foregoing obligation
unless such payment or other action is required or consistent with past
practice, (x) Sellers and the Acquired Companies shall terminate the contracts
described in Schedule 6.1(a) and any other intercompany financial arrangement
between one of the Acquired Companies, on the one hand, and Sellers or their
Affiliates (other than the Acquired Companies), on the other hand, on or prior
to the Closing Date, (y) the Acquired Companies shall assign to Sellers or their
Affiliates (other than the Acquired Companies) the contracts described in
Schedule 6.1(b), and subject to Section 6.3(b), the Acquired Companies shall be
irrevocably and unconditionally released from liabilities and obligations
thereunder, and (z) subject to Sellers’ obligations under Sections 6.2 and 6.3,
Sellers and the Acquired Companies shall be entitled to increase or decrease the
Cash Pool Program Amount under the El Paso Cash Pool Program, but any increase
thereto shall only be made on the last day of a month (it being understood and
agreed that, from and after the date hereof, Sellers shall not cause or
otherwise permit any “cash sweeps,” loans, dividends, payments or other
distributions from any Acquired Company to Sellers or any of their Affiliates
(other than the Acquired Companies) to occur under the El Paso Cash Pool Program
on any day other than the last business day of a month, unless such day is the
Closing Date, in which case no such “cash sweeps,” loans, dividends, payments,
or other distributions shall be made).
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     6.2 Restrictions on Certain Actions. Without limiting the generality of
Section 6.1, and except as set forth in Schedule 6.2, during the period between
the date hereof and the Closing, Sellers shall not (to the extent it affects the
Acquired Companies) and shall not permit any Acquired Company (other than the
Related Companies), and shall use commercially reasonable efforts to not permit
any Related Company, in each case without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, delayed, or conditioned, to:
     (a) amend its charter or bylaws or other governing instruments or
organizational documents;
     (b) (i) issue, sell, or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase, or
otherwise) any shares of its capital stock of any class or any other securities
or equity equivalents; or (ii) amend any of the terms of any such securities
outstanding as of the date hereof;
     (c) (i) split, combine, or reclassify any shares of its capital stock or
other equity interests; (ii) except for the dividends required or permitted by
Section 6.1(z) and Section 6.3(c), declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock; (iii) except for the Note Redemption
or the Consent Solicitation, repurchase, redeem or otherwise acquire any of its
securities; or (iv) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing a liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization of any
Acquired Company;
     (d) except for any indebtedness of Jackson Pipeline incurred in the
ordinary course of business consistent with past practice and except for
Replacement Debt, create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the obligations of
any other Person or make any loans, advances, or capital contributions to, or
investments in, any other Person;
     (e) (i) except as may be required by Applicable Law, enter into, adopt or
make any material amendments to or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase, pension,
retirement, deferred compensation, employment, severance, collective bargaining
agreement or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee;
(ii) except for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Acquired Companies, taken as a whole,
increase the benefits or compensation to any director or employee of the
Acquired Companies; (iii) increase the benefits or compensation with respect to
an officer of the Acquired Companies; (iv) pay to any director, officer or
employee any benefit not required by any employee benefit agreement, trust,
plan, fund, or other arrangement as in effect on the date hereof; (v) terminate
without cause or transfer any Employee or hire any person on behalf of the
Acquired Companies, except individuals that as of the date hereof are either
being interviewed or with respect to whom
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an offer of employment is pending; (vi) terminate without cause or transfer any
Selected Employee; or (vii) terminate without cause or transfer any Listed
Employee prior to January 31, 2007;
     (f) acquire, sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any assets outside the ordinary course of business consistent with
past practice, or any assets that, individually or in the aggregate, have a
value of more than $5,000,000;
     (g) acquire (by merger, consolidation, or acquisition of stock or assets,
or otherwise) any corporation, partnership, or other business organization or
division thereof;
     (h) make any capital expenditure or expenditures in excess of the amounts
set forth in the capital expenditures budget set forth as Schedule 6.2(h), other
than reasonable expenditures in excess thereof made by any Acquired Company in
connection with any emergency or other force majeure events affecting such
Acquired Company;
     (i) pay, discharge, or satisfy any material claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated or otherwise,
and whether asserted or unasserted), other than the payment, discharge, or
satisfaction of Excluded Liabilities on or prior to the Effective Date or
payment, discharge, or satisfaction in the ordinary course of business
consistent with past practice, or in accordance with their terms, of liabilities
reflected in the Pro Forma Combined Financial Statements or incurred since the
Balance Sheet Date in the ordinary course of business consistent with past
practice; and
     (j) amend, modify, or change in any material respect any Scheduled
Contract, or enter into any new agreement or contract that would constitute a
Scheduled Contract, except as required by Section 6.1(x) and (y) or to the
extent Sellers reasonably believe that the Acquired Companies are required to
amend, modify, or change any Scheduled Contract, or enter into any new agreement
or contract that would constitute a Scheduled Contract, in each case in order to
comply with obligations under such Scheduled Contracts existing as of the date
hereof or to comply with Applicable Laws, including a regulation of or tariff
filed with FERC or the MPSC;
     (k) change in any material respect any of the accounting principles or
practices used by it, except for any change required by reason of a concurrent
change in U.S. GAAP (it being understood that any such change in U.S. GAAP shall
be ignored for purposes of calculating the Adjusted Working Capital as of the
Effective Date);
     (l) other than filings related to the capital expenditures listed on
Schedule 6.2(h), make any material filings or submit any material document or
material information to FERC, the MPSC, or any other permitting or regulatory
agency;
     (m) deposit into the El Paso Cash Pool Program any amount of cash or cash
equivalents constituting the proceeds of insurance received or receivable by any
of the Acquired Companies, to the extent same would be deducted from the
calculation of Adjusted Working Capital under clause (6) of the second sentence
of Section 2.5(f) if Adjusted Working Capital was being calculated as of the
date of such determination; or
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     (n) commit or otherwise agree to do any of the foregoing;
provided, however, that nothing contained in this Agreement shall give to Buyer,
directly or indirectly, rights to control or direct the operations of the
Acquired Companies prior to Closing. Prior to Closing, the Acquired Companies
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision of their operations.
     6.3 87/8% Notes; Elimination of Intercompany Amounts; Termination of Cash
Pool Program Amount; Dividends.
     (a) 87/8% Notes. On or prior to the close of business on January 16, 2007,
Sellers shall furnish to Buyer a Notice of Sellers’ election to cause ANR
Pipeline either (i) to give notice of Sellers’ election to use cash on hand or
funds available under the El Paso Cash Pool Program to redeem the full principal
amount of the 87/8% Notes outstanding, together with all accrued and unpaid
interest due thereon to the redemption date and the applicable redemption
premium (the “Note Redemption”), or (ii) to commence a consent solicitation,
which may be done alone or in connection with a tender offer, with respect to
the outstanding 87/8% Notes soliciting the consent of the requisite holders of
87/8% Notes (the “Holders”) to eliminate Sections 3.07 through 3.10 from the
87/8% Indenture (the “Consent Solicitation”). If ANR Pipeline pursues the Note
Redemption, Sellers shall deliver to Buyer copies of any notices, information,
documents, or other materials relating to the Note Redemption (collectively, the
“Note Redemption Documents”) not less than 5 days prior to the date on which the
applicable Note Redemption Document is to be delivered to the Trustee, the
Holders, or any other Person. If ANR Pipeline pursues the Consent Solicitation,
Sellers shall cause ANR Pipeline to commence such Consent Solicitation as
promptly as practicable and shall deliver to Buyer copies of each notice,
information, solicitation, document, or other material relating to the Consent
Solicitation and the supplement to the 87/8% Indenture (the “Consent Amendment”)
that will be executed to effect the elimination of Sections 3.07 through 3.10
from the 87/8% Indenture (collectively, the “Consent Documents”) not less than 5
days prior to the date on which the applicable Consent Document is to be
delivered to the Holders, the Trustee, or any other Person. All Note Redemption
Documents or Consent Documents, as the case may be, shall be subject to Buyer’s
approval, which shall not be unreasonably withheld, delayed, or conditioned.
Notwithstanding anything in this Agreement to the contrary, in order to fund the
amounts payable by ANR Pipeline with respect to the Note Redemption or the
Consent Solicitation, ANR Pipeline may incur indebtedness in an original
principal amount equal to the full principal amount of the 87/8% Notes, in the
case of the Note Redemption, or the amount necessary to consummate the Consent
Solicitation, in the case of the Consent Solicitation (such indebtedness, the
“Replacement Debt”), provided that such Replacement Debt shall permit ANR
Pipeline to repay the same in whole prior to the Closing and shall not contain
any terms or conditions that are inconsistent with, or cause Sellers to breach,
the terms and conditions of this Agreement. Sellers unconditionally undertake
and agree that (i) the Note Redemption or the Consent Amendment shall be
completed prior to the close of business on February 27, 2007 and (ii) any
Replacement Debt, including all accrued but unpaid interest thereon through and
including the repayment date and all other fees, expenses, penalties and charges
related thereto that have not been paid prior to such date
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(collectively, the “Replacement Debt Repayment Amount”), shall be repaid in full
prior to the Closing, and the Acquired Companies shall have no obligations or
liabilities with respect thereto after the Closing.
     (b) Elimination of Intercompany Amounts. Effective on or prior to the
Effective Date, Sellers shall take all actions necessary or appropriate to cause
all intercompany accounts (other than imbalances that are to be settled with
in-kind gas volumes in accordance with the terms of existing operational
balancing agreements in effect as of the date hereof) or notes receivable due
from EPC or any of its direct or indirect wholly owned subsidiaries (other than
the Acquired Companies) to any of the Acquired Companies (other than the Related
Companies) and all intercompany accounts (other than imbalances that are to be
settled with in-kind gas volumes in accordance with the terms of existing
operational balancing agreements in effect as of the date hereof) or notes
payable of any of the Acquired Companies (other than the Related Companies) to
EPC or any of its direct or indirect subsidiaries (other than the Acquired
Companies) to be settled or eliminated (which may include netting receivables
against payables).
     (c) Termination of Cash Pool Program Amount. Effective on or prior to the
Closing Date, after giving effect to the actions specified in clauses (a) and
(b) above, EPC and its subsidiaries (other than the Acquired Companies) shall
take all actions necessary or appropriate (i) to pay in full the aggregate
unpaid Cash Pool Program Amount as of the Effective Date to the Acquired
Companies under the El Paso Cash Pool Program and, upon such payments, to cancel
the El Paso Cash Pool Program and irrevocably and unconditionally release and
discharge the Acquired Companies from any obligations or liabilities thereunder,
(ii) to cause the Storage Company to pay a dividend to EPC of an amount in cash
equal to the payment received by the Storage Company under clause (c)(i) of this
Section 6.3, and (iii) to cause ANR Pipeline to pay a dividend to the Pipeline
Company, and the Pipeline Company to pay a dividend to EP CNG, of an amount in
cash equal to the sum of the payment received by the ANR Pipeline under clause
(c)(i) of this Section 6.3 and the purchase price paid by Seafarer US Pipeline
System, Inc. at the closing of the purchase and sale under the GL Sale
Agreement, less the Replacement Debt Repayment Amount outstanding as of the date
calculations are being made pursuant to this sentence (all such cash, the
“Excluded Cash”). It is understood and agreed that the amount of the payments to
the Storage Company and the Pipeline Company under clause (c)(i) of this
Section 6.3 shall be equal to the aggregate unpaid Cash Pool Program Amount as
of the Effective Date and that, between the Effective Date and the Closing Date,
Sellers shall not cause or otherwise permit any “cash sweeps,” loans, dividends,
payments or other distributions from any Acquired Company to Sellers or any of
their Affiliates (other than the Acquired Companies) to occur under the El Paso
Cash Pool Program.
     (d) Ren-Cen Matters. Prior to the Closing Date, Sellers shall take all
actions necessary or appropriate to cause all of the liabilities and obligations
of ANR Pipeline or any other Acquired Company with respect to any of the
following to be transferred and assumed by an Affiliate of Sellers (other than
the Acquired Companies): (i) the Ren-Cen Note; (ii) the Base Rent B payable by
ANR Pipeline to ANR Real Estate under the Assignment and Partial Assumption of
Leases and Contracts, and Consent of Operating
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Lessor Agreement, dated as of November 1, 2001 (the “Lease Assignment
Agreement”), between ANR Pipeline and Riverfront Holdings Phase II, Inc. and
General Motors Corporation, as the obligations of ANR Pipeline under the Lease
Assignment Agreement are affected by that certain Letter Agreement, dated
November 1, 2001, from LMC Resources Capital Limited Partnership to ANR Pipeline
and ANR Real Estate; (iii) the “Retained Obligations” as such term is defined in
Section 2 of the Restated Lease Assignment Agreement referred to in clause
(ii) above; and (iv) any other liability or obligation arising from or related
to any of the foregoing matters or any of the assets described in the next
sentence. Prior to the Closing Date, Sellers shall take all actions necessary or
appropriate to cause ANR Pipeline to transfer to an Affiliate of Sellers (other
than the Acquired Companies) (i) the preferred stock in Riverfront Holdings
Phase II, Inc. that ANR Pipeline owns and (ii) the receivable of ANR Pipeline
under the Interest Savings Agreement, dated as of November 1, 2001, between ANR
Pipeline and LMC Resources Capital Limited Partnership relating to the prior
transactions with Riverfront Holdings Phase II, Inc. All agreements, contracts,
obligations, liabilities, assets and other arrangements related to or arising
from the matters described in this Section 6.3(d) are referred to herein as the
“Ren-Cen Matters”.
Article 7
ADDITIONAL AGREEMENTS
7.1 Access to Information and Confidentiality.
     (a) Access. Between the date hereof and the Closing, Sellers (i) shall
give, and cause the Acquired Companies (or, if Sellers do not have the right to
do so with respect to any Related Company, Sellers shall use commercially
reasonable efforts to cause such Related Company to give) to give, Buyer and its
authorized representatives reasonable access, during regular business hours and
upon reasonable advance Notice, to such employees, plants, pipelines, and other
facilities, and such books and records, of the Acquired Companies and Sellers,
as are reasonably necessary to allow Buyer and its authorized representatives to
make such inspections as they may reasonably require to verify the accuracy of
any representation or warranty contained in this Agreement or as they may
reasonably require for the transition of the ownership of the Acquired Companies
from Sellers to Buyer and (ii) shall cause officers of the Acquired Companies to
furnish Buyer and its authorized representatives with such financial and
operating data and other information with respect to the Acquired Companies as
Buyer may from time to time reasonably request. With respect to any Related
Company not operated by an Affiliate of Sellers, Sellers shall use commercially
reasonable efforts to cause the operator of such Related Company to comply with
the preceding sentence. Sellers shall have the right to have a representative
present at all times during any such inspections, interviews, and examinations
conducted at or on the offices or other facilities or properties of Sellers or
the Acquired Companies. Additionally, between the date hereof and the Closing,
Buyer shall hold in confidence all such information on the terms and subject to
the conditions contained in the Confidentiality Agreement. Buyer shall have no
right of access to, and Sellers shall have no obligation to provide to Buyer
(collectively, the “Excluded Information”), (1) bids received from others in
connection with the transactions contemplated by this Agreement and information
and analysis
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(including financial analysis) relating to such bids, (2) any information the
disclosure of which Sellers have concluded, based on the advice of legal
counsel, is reasonably likely to jeopardize any privilege available to any
Acquired Company or Sellers relating to such information or to cause either
Seller or any Acquired Company or any of their Affiliates to breach a
confidentiality obligation, provided that Sellers shall use commercially
reasonable efforts to obtain a waiver of any such confidentiality obligations,
and (3) information the disclosure of which Sellers have reasonably concluded
may jeopardize performance of Sellers’ obligations under antitrust laws and the
HSR Act to maintain the competitive operations of the Acquired Companies as
separate from Buyer, and free of consultation or coordination with Buyer until
Closing; provided that Sellers shall take all reasonable measures to disclose
such information on a limited basis in a manner permissible under antitrust laws
and the HSR Act and such information shall not be deemed to be Excluded
Information after Closing. Buyer further agrees that if either Seller or an
Acquired Company inadvertently furnishes to Buyer copies of or access to
Excluded Information, Buyer will, upon either Seller’s request promptly return
same to such Seller or such Acquired Company together with any and all extracts
therefrom or notes pertaining thereto (whether in electronic or other format).
Buyer shall indemnify, defend, and hold harmless Sellers and their Affiliates
from and against any Losses asserted against or suffered by the Sellers
Indemnitees relating to, resulting from, or arising out of examinations or
inspections made by Buyer or its authorized representatives under this
Section 7.1(a).
     (b) Retention by Sellers. Subject to the terms of Section 7.1(e), Buyer
agrees that Sellers may retain (i) a copy of all materials made available on the
Data Site, together with a copy of all documents referred to in such materials,
(ii) all books and records prepared in connection with the transactions
contemplated by this Agreement, including bids received from others and
information relating to such bids, (iii) copies of any books and records which
may be relevant in connection with the defense of disputes arising hereunder,
and (iv) all consolidating and consolidated financial information and all other
accounting books and records prepared or used in connection with the preparation
of financial statements of Sellers or their Affiliates.
     (c) Record Preservation by Buyer. Buyer agrees that it shall preserve and
keep all books and records relating to the business or operations of the
Acquired Companies on or before the Closing Date in Buyer’s possession for a
period of at least 7 years from the Closing Date. After such 7-year period,
Buyer may dispose of any of such books and records unless Sellers provide at
least 90 calendar days’ prior Notice to Buyer that Sellers elect, at Sellers’
cost and expense, to remove and retain all or any part of such books and
records. Notwithstanding the foregoing, Buyer agrees that it shall preserve and
keep all books and records of the Acquired Companies relating to any
investigation instituted by a Governmental Entity or any litigation (whether or
not existing on the Closing Date) if it is reasonably likely that such
investigation or litigation may relate to matters occurring prior to the
Closing, without regard to the 7-year period set forth in this Section 7.1(c).
     (d) Cooperation. Each Party agrees that it will cooperate with and make
available to the other Party (and its representatives) during normal business
hours, all
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books and records, information, and employees (without substantial disruption of
employment) retained and remaining in existence with respect to the Acquired
Companies after the Closing Date which are necessary or useful in connection
with (i) any Tax inquiry, audit, investigation, or dispute, (ii) any litigation
or investigation (including the Excluded Liabilities), or (iii) any other matter
requiring any such books and records, information, or employees for any
reasonable business purpose, but Sellers shall not be required by this
Section 7.1(d) to make available to Buyer any information referred to in clause
(1) of the fourth sentence of Section 7.1(a) or clause (ii) of Section 7.1(b),
or any of the items referred to in Section 7.9. The Party requesting any such
books and records, information, or access to such employees shall bear all of
the out-of-pocket costs and expenses (including reasonable attorneys’ fees and
reimbursement for the reasonable salaries and employee benefits for those
employees who are made available) reasonably incurred in connection with
providing such books and records, information, or employees. Sellers may require
certain financial information relating to the Acquired Companies’ businesses for
periods prior to the Closing Date for the purpose of filing Tax Returns and
other governmental reports, and Buyer agrees to furnish such information to
Sellers at Sellers’ request and expense.
     (e) Confidentiality.
     (i) For 24 months after Closing, except as required by any Applicable Law,
Governmental Entity, or applicable stock exchange rule, Sellers shall not, and
shall use commercially reasonable efforts to cause their Affiliates not to,
directly or indirectly, disclose to any Person or use any information not then
in the public domain or generally known in the industry, in any form, acquired
prior to the Closing Date or after the Closing in connection with the Transition
Services Agreement or the other post-Closing actions contemplated hereby or
thereby and relating to the businesses and operations of the Acquired Companies
(collectively, “Buyer Protected Information”). If, after Closing, it becomes
necessary for a Seller or any Affiliate of a Seller (other than the Acquired
Companies) to use Buyer Protected Information that is imbedded with other
information of Seller and its Affiliates in the ordinary course of its business
and operations and such Buyer Protected Information cannot be reasonably
separated or segregated from such other information, then such Buyer Protected
Information may be used by such Seller or its Affiliate in the ordinary course
of its business and operations.
     (ii) For 24 months after Closing, except as required by any Applicable Law,
Governmental Entity, or applicable stock exchange rule, Buyer shall not, and
shall use commercially reasonable efforts to cause its Affiliates (including the
Acquired Companies) not to, directly or indirectly, disclose to any Person or
use any information not then in the public domain or generally known in the
industry, in any form, acquired prior to the Closing Date or after the Closing
Date in connection with the Transition Services Agreement or the other
post-Closing actions contemplated hereby or thereby and relating to the
businesses and operations of Sellers and their Affiliates (other than the
Acquired Companies) (collectively, “Seller Protected Information”). If, after
Closing, it becomes necessary for a Buyer or any Affiliate of Buyer to use
Seller Protected
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Information that is imbedded with other information of Buyer and its Affiliates
in the ordinary course of its business and operations and such Seller Protected
Information cannot be reasonably separated or segregated from such other
information, then such Seller Protected Information may be used by Buyer or its
Affiliate in the ordinary course of its business and operations.
     (iii) Upon Buyer’s request, Sellers shall use commercially reasonable
efforts to enforce, on behalf of and for the benefit of the Acquired Companies,
the terms of any confidentiality or standstill agreements with any Third Party
relating to the Acquired Companies and the transactions contemplated hereby.
     (iv) The Parties acknowledge that TransCanada Pipelines Limited previously
executed the Confidentiality Agreement. The Confidentiality Agreement shall
continue in full force and effect until the Closing, at which time the
Confidentiality Agreement shall automatically terminate and be of no further
force or effect.
     (v) Notwithstanding anything to the contrary set forth herein or in any
other written or oral understanding or agreement to which the Parties are
parties or by which they are bound (including the Confidentiality Agreement),
each Party authorizes each other Party (and the representatives of each other
Party) to disclose to any and all Persons, without limitation of any kind, the
tax treatment and tax structure of the transactions contemplated by this
Agreement, and all materials (including tax opinions and other tax analyses)
provided to such other Party by such authorizing Party (and its
representatives); provided, however, that nothing herein shall be construed as a
waiver of any applicable attorney-client privilege or privilege in respect of a
confidential communication with a federally authorized tax practitioner under
Section 7525 of the Code, or as requiring any Person to waive such a privilege.
For this purpose, “tax treatment” means U.S. federal income tax treatment, and
“tax structure” is limited to any facts that may be relevant to that treatment.
7.2 Regulatory and Other Authorizations and Consents.
     (a) Filings. Each Party shall use all commercially reasonable efforts to
obtain all authorizations, consents, orders, and approvals of, and to give all
notices to and make all filings with, all Governmental Entities (including those
pertaining to the Governmental Approvals) that may be or become necessary for
its execution and delivery of, and the performance of its obligations under this
Agreement and will cooperate fully with the other Party in promptly seeking to
obtain all such authorizations, consents, orders, and approvals, giving such
notices, and making such filings. To the extent required by the HSR Act, each
Party shall (i) file or cause to be filed, as promptly as practicable but in no
event later than the close of business on January 12, 2007 with the Federal
Trade Commission and the United States Department of
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Justice, all reports and other documents required to be filed by such Party
under the HSR Act concerning the transactions contemplated hereby; and
(ii) promptly comply with or cause to be complied with any requests by the
Federal Trade Commission or the United States Department of Justice for
additional information, documents, or studies concerning such transactions, in
each case so that the waiting period under the HSR Act applicable to this
Agreement and the transactions contemplated hereby shall expire as soon as
practicable after the execution and delivery of this Agreement. Each Party
agrees to request, and to cooperate with the other Party in requesting, early
termination of any applicable waiting period under the HSR Act. Buyer shall pay
the filing fees payable in connection with the filings by the Parties required
by the HSR Act.
     (b) Additional Undertakings of Buyer. Prior to the Closing, Sellers and
Buyer shall consult and cooperate with each other, and consider in good faith
the views of each other, in connection with the obtaining of all consents,
licenses, Permits, waivers, approvals, authorizations, or orders, including
(i) keeping the other apprised of the status of matters relating to the
consummation of the transactions contemplated hereby, (ii) providing copies of
any written notices or other communications received by such Party or its
Affiliates with respect to the transactions contemplated hereby, (iii) subject
to Applicable Laws relating to the sharing of information, providing copies of
any proposed filings to be made with, or written materials submitted to, any
Third Party and/or any Governmental Entity in connection with the transactions
contemplated hereby (including any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any Party), and (iv) if requested, using commercially reasonable
efforts to furnish each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any Applicable
Law in connection with the transactions contemplated by this Agreement. In
connection with the foregoing, each Party (x) shall promptly notify the other
Party in writing of any communication received by such Party or its Affiliates
from any Governmental Entity and, subject to Applicable Laws, provide the other
Party with a copy of any such written communication (or written summary of any
oral communication) and (y) shall not participate in any substantive meeting or
discussion with any Governmental Entity in respect of any filing, investigation
or inquiry concerning the transactions contemplated by this Agreement unless it
consults with the other Party in advance and, to the extent permitted by such
Governmental Entity, gives the other Party the opportunity to attend and
participate in the meeting. Notwithstanding anything in this Agreement to the
contrary, Buyer shall not be required to enter into or commit to any
divestitures, licenses, hold separate arrangements, consent decrees,
undertakings, obligations, limitations, or any other measures or arrangements
(collectively, “HSR Measures”) related to or involving any assets, properties,
or businesses that any Acquired Company, Buyer, or any Affiliate of Buyer owns,
operates, or has the right to acquire; provided, that Buyer shall be required to
enter into or commit to any HSR Measures related to or involving any assets,
properties, or businesses of the Acquired Companies (but not those of Buyer or
any Affiliate of Buyer) or make other out-of-pocket costs or expenditures
(i) that are reasonably necessary to satisfy the conditions to Closing set forth
in Sections 8.3 and 9.3 in the timeframe contemplated by this Agreement and
(ii) that, individually or in the aggregate, would not reduce or reasonably be
expected to reduce the expected benefits to Buyer of the transactions
contemplated by this Agreement by more than $150 million (determined on a net
present value basis using 10% as the discount rate) through the incurrence of
out-of-pocket costs or expenditures paid to Third Parties and/or the reduction
of expected revenues caused by
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implementing such HSR Measures, as determined in good faith by Buyer using the
best available information (the net present value as of the Closing Date of such
expected benefits, out-of-pocket costs, expenditures, and reduction in expected
revenues, not to exceed $150 million in the aggregate, is collectively referred
to herein as the “HSR Amount”). Buyer shall give Notice to Sellers of Buyer’s
preliminary estimate (if available) of the HSR Amount, in reasonable detail, not
less than 5 days prior to Closing. Sellers shall not, and shall cause the
Acquired Companies not to, enter into or commit to any HSR Measures related to
or involving any assets, properties, or businesses that any Acquired Company
owns, operates, or has the right to acquire unless Sellers are instructed by
Buyer in writing to do so, in which case Sellers shall cause the Acquired
Companies to enter into and commit to such HSR Measures in accordance with
Buyer’s instructions.
     (c) Transfer. If the transfer of any instrument, contract, license, lease,
permit, or other document to Buyer hereunder shall require the consent of any
party thereto other than Sellers, then this Agreement shall not constitute an
agreement to assign the same, and such item shall not be assigned to or assumed
by Buyer, if an actual or attempted assignment thereof would constitute a breach
thereof or default thereunder. In such case, Sellers and Buyer shall cooperate
and each shall use commercially reasonable efforts to obtain such consents to
the extent required of such other parties and, if and when any such consents are
obtained, to transfer the applicable instrument, contract, license, lease,
Permit, or other document. If any such consent cannot be obtained, Sellers shall
cooperate in any reasonable arrangement designed to obtain for Buyer all
benefits, privileges, obligations and privileges of the applicable instrument,
contract, license, lease, Permit, or document, including possession, use, risk
of loss, potential for gain and dominion, control and demand. Buyer agrees that
(i) if any of the Excluded Assets require the consent of any party thereto other
than an Acquired Company, Sellers, or any of their respective Affiliates and
such consent is not received prior to Closing, Buyer shall cooperate with
Sellers to obtain such consents to the extent required of such other parties
and, if and when any such consents are obtained, to transfer the applicable
instrument, contract, license, lease, permit, or other document, and (ii) if any
such consent cannot be obtained, Buyer shall cooperate in any reasonable
arrangement (which shall include indemnification of the Buyer Indemnitees from
and against any and all liabilities or other obligations related thereto)
designed to obtain for Sellers all benefits, privileges, obligations and
privileges of the applicable instrument, contract, license, lease, permit, or
document, including possession, use, risk of loss, potential for gain and
dominion, control and demand; provided, however, that Sellers shall bear all
out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred
in connection with Buyer’s cooperation in such matters.
     (d) Third Party Consents. Sellers shall use their commercially reasonable
efforts to obtain all necessary consents, waivers, authorizations, and approvals
of all Third Parties (other than Governmental Entities, which are addressed in
Section 7.2(a) and (b)), required in connection with the Closing and the
performance of this Agreement as soon as practicable. Buyer shall use all
commercially reasonable efforts to assist Sellers in obtaining any such Third
Party consents and approvals, including providing to such Third Parties such
financial statements and other publicly available financial
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information with respect to Buyer as such Third Parties may reasonably request.
Nothing in this Section 7.2(d) shall require Buyer to make any expenditure or
provide any guarantee, indemnity, or financial assurance or other form of
security in connection with obtaining, or seeking to obtain, any consent of a
Third Party
7.3 Employees and Employee Plans.
     (a) Employment. Following the Closing Date, any Person who as of the
Closing Date is actively employed by an Acquired Company and (i) was actively
employed by an Acquired Company as of January 1, 2007 or (ii) whose employment
was or will be transferred to an Acquired Company on or after January 1, 2007
(after the date hereof, Sellers shall transfer to an Acquired Company only
employees whose employment is substantially related to providing services to,
for, or on behalf of the Acquired Companies) (all such Persons are referred to
herein individually as an “Employee” and collectively as the “Employees”) shall
continue in the employment of the Acquired Companies after the Closing on
substantially similar terms and conditions of employment as existed prior to the
Closing, including the same or higher base pay. Schedule 7.3(a) sets forth the
names of all Employees as of the date hereof and shall be updated as of Closing.
Within five business days after the date hereof, Sellers shall provide Buyer a
list of the Employees (current as of the date hereof) that includes the name,
job title, the market reference point of the position, compensation data
(including base salary, current short-term and long-term incentive targets and
actual base pay and bonus for the last two completed years), work location, date
of hire, recognized service date, and any other information reasonably requested
by Buyer that is necessary for payroll and benefits administration of each
Employee, and a follow-up list of any additional employees who are transferred
under clause (ii) above within five days of such transfer. Any Person who, as of
the Closing Date, is employed by the Acquired Companies and is on leave of
absence, layoff or on short-term or long-term disability (the name of each such
Person will be set forth on Schedule 7.3(a)) shall be transferred to the
employment of Sellers prior to the Closing Date; provided, however, that if such
Person returns to active employment status within six months of the Closing
Date, the Acquired Companies or Buyer or its Affiliates shall employ such Person
as an Employee.
     (b) Selected Employees. Set forth on Schedule 7.3(b) is a list of employees
who provide services to, for, or on behalf of the Acquired Companies, but who
are currently employed by an Affiliate of Sellers (other than the Acquired
Companies) (the “Listed Employees”). Within five business days after the date
hereof, Sellers shall provide Buyer a list of the Listed Employees (current as
of the date hereof) that includes the name, job title, the market reference
point of the position, compensation data (including base salary, current
short-term and long-term incentive targets and actual base pay and bonus for the
last two completed years), work location, date of hire, recognized service date,
and any other information reasonably requested by Buyer that is necessary for
payroll and benefits administration for each of the Listed Employees. Sellers
shall, as soon as practicable after the date hereof but no later than January 8,
2007, make each such employee available for employment interviews with Buyer.
Sellers shall take all reasonable measures to encourage the Listed Employees to
remain in their current positions. No later than January 31, 2007, Buyer shall
provide Sellers a written list of not
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less than 50% of the Listed Employees (the “Selected Employees”) and Sellers
shall transfer the employment of such Selected Employees to the Acquired
Companies immediately prior to Closing, at which time such Selected Employees
shall become Employees. Notwithstanding the foregoing, any Selected Employee who
is on leave of absence or on short-term disability (but excluding employees on
layoff or on long-term disability) shall continue in the employ of their current
employer. Following the Closing, if such Selected Employee returns to active
employment status within six months of the Closing Date, Sellers shall terminate
such employee and such Person shall be employed by the Acquired Companies,
Buyer, or its Affiliates. Any such Selected Employee who is on layoff or on
long-term disability shall continue in the employ of their current employer and
shall remain the responsibility of Sellers and their Affiliates. None of the
Acquired Companies, Buyer, or Buyer’s Affiliates shall assume any liability or
obligation with respect to any Listed Employee who does not become an Employee.
     (c) Withdrawal from Company Employee Plans. As of the Closing, the Acquired
Companies shall cease to participate in all Company Employee Plans, except as
may be otherwise provided in the Transition Services Agreement. Sellers and
their Affiliates shall retain all obligations and liabilities with respect to
any benefits earned by the Employees under all Company Employee Plans except as
set forth on Schedule 7.3(c).
     (d) Continuing Employees. Buyer shall, and shall cause each Acquired
Company to, for the 2007 calendar year, provide to each Employee, while employed
by an Acquired Company, (i) a base salary or wages and target bonus opportunity,
as applicable, that are not less than the base salary or wages or target bonus
opportunity, as applicable, provided to such Employee immediately prior to the
Closing Date and (ii) 401(k), health, medical, dental, life insurance, and long
term disability which will be no less favorable (taken as a whole) to those
provided to each such Employee immediately prior to the Closing.
     (e) Severance Benefits. For a period of not less than 12 months following
the Closing Date, Buyer agrees to provide, or cause an Affiliate of Buyer to
provide, to the Employees severance pay and continued medical and dental (if
any) and out-placement (if any) benefits that are not less than the severance
benefits the Employees would be entitled to receive under the severance policy
of EPC as in effect immediately prior to the Closing. Any such severance
payments will not be reduced by any stay-on bonus (if any) payable under
Section 7.3(g).
     (f) Service Credit. Buyer shall, and shall cause the Acquired Companies to
grant all Employees credit under the plans and benefit programs of Buyer and its
Affiliates for all service prior to the Closing for all purposes (other than
benefit accruals under any defined benefit plan or under any post-retirement
health and welfare plan which provides for employer contributions) for which
such service was recognized by the Acquired Companies, Sellers, or any Affiliate
of Sellers. In addition, Buyer shall, and shall cause the Acquired Companies to,
waive any pre-existing condition exclusions and actively-at-work requirements
and provide that any expenses incurred on or before the Closing Date by any such
individuals or their covered dependents shall be taken into
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account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions under health plans covering such individuals
after the Closing in the plan year in which the Closing occurs to the extent
such waivers and credits are supported by adequate documentation provided to
Buyer by Sellers or their Affiliates within 90 days after the Closing Date.
Sellers and their Affiliates shall retain responsibility for all medical,
vision, dental, life insurance, accident insurance and disability coverage
claims incurred by the Employees as of the Closing Date to the extent covered
under a plan sponsored or maintained by a Seller or an Affiliate of a Seller.
For purposes of the preceding sentence, a claim shall be deemed to have been
incurred (i) for medical, vision, and dental coverage, on the date the service
giving rise to the claim is performed, (ii) for life and accident insurance
coverage, on the date of death or accident, and (iii) for disability coverage,
on the date of disability. As of the Closing, each Employee will be immediately
credited with a pro-rata share of personal time off under Buyer’s personal time
off program and will receive a number of vacation days for the 2007 calendar
year equal to the number of vacation days that would have been credited on
January 1, 2007 under Buyer’s vacation policy less the number of days of paid
time off that each such Employee has taken with Sellers and their Affiliates
during 2007. Sellers shall, as soon as practicable after the Closing, provide
Buyer with a list which sets forth the number of days of paid time off taken by
each of the Employees with Sellers and their Affiliates during 2007.
     (g) Stay-on Bonus and Severance Reimbursement. Buyer shall, or shall cause
an Affiliate to, pay the stay-on bonuses to the eligible Employees as provided
in Part I of Schedule 7.3(g). If Buyer or any of the Acquired Companies
terminates the employment of any of the Employees listed in Part II of
Schedule 7.3(g) on or before the last day of the third full month following the
Closing Date, Buyer shall pay such Employee the severance amount shown for such
Employee in Part II of Schedule 7.3(g). If Buyer or any of the Acquired
Companies does not terminate the employment of any of the Employees listed in
Part II of Schedule 7.3(g) on or before the last day of the third full month
following the Closing Date, then Buyer shall promptly reimburse and pay to
Sellers the severance amount shown for such Employee in Part II of
Schedule 7.3(g).
     (h) 2006 Year Annual Bonus. Sellers shall be responsible for any bonus
payments due for calendar year 2006 under the terms of Sellers’ bonus plans and
arrangements covering any Employee (the “Bonus Payment”). Sellers shall
determine the amount of the Bonus Payment for each Employee. If the Closing
occurs before the date on which the Bonus Payments are paid to each Employee,
then Sellers shall transfer to Buyer on or before the date on which the Bonus
Payments are to be paid by Buyer the aggregate amount of the Bonus Payments to
be paid and Buyer shall make such payments or cause such payments to be made to
the Employees in the ordinary course.
     (i) Solicitation. For a period of 12 months after the Closing Date, Buyer
and its Affiliates shall not, without the prior written consent of Sellers,
directly solicit, encourage, or induce any employee of Sellers or their
Affiliates (other than the Acquired Companies) to become an employee,
contractor, or consultant of Buyer or its Affiliates. For a period of 12 months
after the Closing Date, Sellers and their Affiliates shall not, without the
prior written consent of Buyer, directly solicit, encourage, or induce any
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employee of any of the Acquired Companies to become an employee, contractor, or
consultant of Sellers or their Affiliates. The restrictions in this
Section 7.3(i) shall not prohibit general, non-targeted solicitations of
employees by Buyer or Sellers or their Affiliates.
     (j) El Paso Corporation Retirement Savings Plan. Prior to the Closing,
Sellers shall take all action necessary such that, immediately prior to the
Closing, all Employees who participate in the El Paso Corporation Retirement
Savings Plan (the “Savings Plan”) shall become fully vested in any unvested
portion of their accounts under the Savings Plan. Buyer shall cause a 401(k)
plan that is sponsored by Buyer or an Affiliate of Buyer to accept the rollover
of any Savings Plan distribution, in cash, or a cash equivalent (e.g., check or
wire transfer), and including any outstanding Savings Plan loans.
     (k) El Paso Corporation Cash Balance Plan. Prior to the Closing, Sellers
shall take all action necessary such that, immediately prior to the Closing, all
Employees who participate in the El Paso Corporation Cash Balance Plan (“Cash
Balance Plan”) shall (i) become fully vested in any unvested portion of their
Cash Balance Plan accrued benefit and (ii) be entitled to a distribution from
the Cash Balance Plan as provided under the terms of the Cash Balance Plan as
soon as practicable after the Closing.
     (l) Flexible Spending Accounts. Buyer shall cause the Acquired Companies to
participate in the dependent care spending account and the medical care flexible
spending account components of Buyer’s benefit plans (the “Buyer’s FSA”) as of
the Closing Date. Sellers shall take all steps necessary or appropriate so that
the account balances (reflecting salary deductions, deemed employer
contributions (if any), and claims paid (if any)) under Sellers’ dependent care
and medical care flexible spending accounts (the “Sellers’ FSA”) of each
Employee who has elected to participate therein in the year in which the Closing
occurs shall be transferred, as soon as practicable after the Closing, from
Sellers’ FSA to Buyer’s FSA. In addition, if, as of the Closing Date, the claims
paid by Sellers with respect to an Employee under Sellers’ FSA do not equal or
exceed the aggregate salary deductions and deemed employer contributions
allocable to such Employee, Sellers shall, immediately after the Closing Date,
transfer an amount of cash to Buyer equal to the difference between such claims
paid and such aggregate salary deductions and deemed employer contributions.
Buyer shall take all steps necessary or appropriate so that the contribution
elections of each such Employee as in effect immediately before the Closing
remain in effect under Buyer’s FSA immediately after the transfer of such
account balance. After the end of the period during which claims can be paid
from an Employee’s FSA with respect to the calendar year following Closing,
Buyer shall transfer to Sellers an amount of cash with respect to each such
Employee equal to the lesser of (i) the amount by which the salary deductions by
Buyer with respect to such Employee under Buyer’s FSA have exceeded the claims
paid by Buyer with respect to such Employee under Buyer’s FSA and (ii) the
amount, if any, of the negative balance of such Employee under Sellers’ FSA as
of the Closing. Buyer’s FSA shall assume responsibility for all applicable
dependent care and medical care claims of each Employee for the year in which
the Closing occurs. Prior to the Closing Date, Sellers shall furnish Buyer with
a schedule indicating, with respect to Sellers’ FSA, the salary
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deduction elections of the Employees along with their account balances (whether
positive or negative), amounts paid in claims, and salary deductions remaining.
     (m) Multiemployer Plans. To the extent the Acquired Companies become
entitled after Closing to any refund, reimbursement, or return of any
multiemployer plan contributions covering any periods prior to the Closing,
Buyer shall promptly reimburse such amounts to Sellers. To the extent the
Acquired Companies, Buyer or Buyer’s Affiliates become liable for any withdrawal
liability in connection with a multiemployer plan with respect to which the
Acquired Companies made contributions prior to the Closing, Sellers shall
indemnify Buyer for such liability.
     (n) Records and Documentation. As soon as practicable after the date
hereof, Sellers and their Affiliates shall provide Buyer general job
descriptions by job bands as may apply to any of the Employees. As soon as
practicable after the Closing, Sellers and their Affiliates shall provide to
Buyer all employee records of the Selected Employees including documentation
required under the U.S. Department of Transportation regulations regarding drug
and alcohol testing of Selected Employees.
     7.4 Public Announcements. The initial press release or releases to be
issued in connection with the execution of this Agreement shall be mutually
agreed upon by the Parties prior to the issuance thereof. Prior to the 5th
business day after the Closing, Buyer and Sellers shall consult with each other
before they or any of their Affiliates issue any other press release or
otherwise make any other public statement with respect to this Agreement or the
transactions contemplated hereby. For a 15 day period after any termination of
this Agreement, Buyer and Sellers shall consult with each other before they or
any of their Affiliates issue any other press release or otherwise make any
other public statement with respect to such termination. Buyer and Sellers and
their Affiliates shall not issue any such other press release or make any such
other public statement prior to any such consultation (but no approval thereof
shall be required), except as may be required by Applicable Law or stock
exchange rule.
     7.5 Amendment of Schedules. Each Party agrees that, with respect to the
representations and warranties of such Party contained in Articles 4 and 5 of
this Agreement, such Party shall have the continuing obligation until the
Closing to correct, supplement, or amend promptly the Schedules to such Party’s
Disclosure Letter with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules. Any such correction,
supplement, or amendment shall be delivered to the other Party no later than
three business days prior to the Closing Date. For all purposes of this
Agreement, including for purposes of determining whether the conditions set
forth in Articles 8 and 9 have been fulfilled, the Schedules to a Party’s
Disclosure Letter shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude all
information contained in any such correction, supplement, or amendment thereto,
but if the Closing shall occur, then all matters disclosed pursuant to any such
supplement or amendment at or prior to the Closing shall be waived and no Party
shall be entitled to make a claim thereon under the terms of this Agreement or
otherwise.
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     7.6 Fees and Expenses. Except as otherwise provided in this Agreement, all
fees and expenses, including fees and expenses of counsel, financial advisors,
and accountants incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee or expense,
whether or not the Closing occurs. Buyer shall be obligated to pay any and all
costs of any audit of the Acquired Companies as may be required to enable Buyer
to complete and file any filing by Buyer or an Affiliate of Buyer with the SEC.
     7.7 Transfer Taxes. All sales, transfer, filing, recordation, registration,
and similar Taxes and fees arising from or associated with the transactions
contemplated hereunder, whether levied on Buyer or Sellers, shall be borne
equally by Buyer and Sellers, and Buyer and Sellers shall cooperate in filing
all necessary documentation with respect to, and each make their respective
payments of, such Taxes and fees on a timely basis and if required by Applicable
Law, Buyer and Sellers shall and shall cause their respective Affiliates to join
the execution of any such documentation. For avoidance of doubt, the provisions
of this Section 7.7 do not apply to any Taxes and fees arising from or
associated with any transfer of the Excluded Assets described in Section 7.9.
     7.8 [Intentionally Omitted].
     7.9 Excluded Assets. Notwithstanding Article 6 hereof, the transactions
contemplated by this Agreement exclude, and prior to the Closing Date Sellers
shall cause an Acquired Company to transfer to Sellers or any of their
Affiliates (other than the Acquired Companies), the following (collectively, the
“Excluded Assets”):
     (a) the assets listed or described on Schedule 7.9;
     (b) except to the extent contemplated in Section 7.12, the Acquired Company
Insurance Policies and all rights under any the Acquired Company Insurance
Policies, including all rights to any proceeds payable under the Acquired
Company Insurance Policies, whether payable before or after the Closing Date;
     (c) the Excluded Information;
     (d) the Excluded Cash distributed by dividend by the Storage Company and
the Pipeline Company prior to the Closing under Section 6.3;
     (e) the El Paso Marks;
     (f) the GL Sale Agreement and ANR Capital Corporation, El Paso Great Lakes
Company, L.L.C. and their respective subsidiaries;
     (g) the preferred stock and receivable referred to in Section 6.3(d); and
     (h) the Excluded Subsidiaries.
     Notwithstanding anything to the contrary provided elsewhere in this
Agreement, Sellers’ representations and warranties in Article 4 shall not apply
to any of the Excluded Assets other than the representations in Section 4.7(a)
and Section 4.16.
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7.10 Guarantee Matters.
     (a) Guarantees. Buyer and Sellers shall cooperate and use commercially
reasonable efforts to cause as of the Closing Date (i) the Guarantees and any
liabilities related thereto to be released as to Sellers and their Affiliates
(other than the Acquired Companies) and (ii) substitute arrangements, if
required, of Buyer or its Affiliates to be in effect as of Closing. If Buyer and
Sellers are unable to cause any of the Guarantees to be released as to Sellers
and their Affiliates (other than the Acquired Companies) prior to the Closing
Date, then (i) Buyer shall provide (or cause to be provided) to Sellers a
“back-to-back” guaranty in a form and from a Person reasonably acceptable to
Sellers guaranteeing the performance by Buyer of all obligations under such
unreleased Guarantees from and after the Closing Date and (ii) Sellers shall,
and shall cause their Affiliates to, maintain such Guarantees after the Closing
Date so long as such “back-to-back” guaranty remains in full force and effect.
     (b) Replacement Guarantees. As promptly as practicable after the date
hereof, with respect to each Jointly Held Guarantee, Sellers shall use
commercially reasonable efforts to cause a new guarantee, letter of credit,
bond, cash deposit, or other financial assurance, as the case may be, to be
issued, at no cost or expense to Buyer or any Acquired Company, such that the
applicable Acquired Company will hold a stand-alone guarantee, letter of credit,
bond, cash deposit, or other financial assurance for the obligations that are
secured by such Jointly Held Guarantee on terms no less favorable than those
contained in such Jointly Held Guarantee as of the date hereof or as provided
for in the tariff of such Acquired Company (“Replacement Guarantee”). If a
Replacement Guarantee has not been issued for any Jointly Held Guarantee prior
to Closing, (i) Sellers shall, if requested by Buyer or the applicable Acquired
Company, enforce such Jointly Held Guarantee on behalf of and for the benefit of
such Acquired Company (proportionately and with equal priority with the rights,
if any, of Sellers and its Affiliates under such Jointly Held Guarantee) until
such Jointly Held Guarantee has been replaced by the Acquired Companies
(provided, that the applicable Acquired Company may assert, on its own behalf,
its rights under such Jointly Held Guarantee and Sellers, at their sole cost and
expense, shall cooperate with such Acquired Company in pursuing such claims) and
(ii) Sellers shall, at their sole cost and expense, continue to use commercially
reasonable efforts to obtain such Replacement Guarantee, and Buyer shall cause
the Acquired Companies to cooperate with Sellers in such endeavor.
     7.11 Use of El Paso Marks. El Paso Marks may appear on some of the assets
of the Acquired Companies, including on signs throughout the real property of
the Acquired Companies, and on supplies, materials, stationery, brochures,
manuals, and similar consumable items of the Acquired Companies. Buyer
acknowledges and agrees that other than as set forth in this Section 7.11, it
obtains no right, title, interest, license, or any other right whatsoever to use
the El Paso Marks. In furtherance thereof, Buyer shall (a) within six months
after the Closing Date (the “Transition Period”), discontinue use of El Paso
Marks and, remove El Paso Marks from the assets of the Acquired Companies,
including signs on the real and personal property of the Acquired Companies,
and, upon Sellers’ request, provide written confirmation thereof to Sellers.
Buyer agrees never to challenge the validity of Sellers’ (or its Affiliates’)
ownership of El Paso Marks or any application for registration thereof or any
registration thereof or any rights
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of Sellers or their Affiliates therein as a result, directly or indirectly, of
its ownership of the Acquired Companies. Buyer will not do any business or offer
any goods or services under El Paso Marks. After the expiration of the
Transition Period, Buyer will not send, or cause to be sent, any correspondence
or other materials to any Person on any stationery that contains any El Paso
Marks or otherwise operate the Acquired Companies in any manner which would be
reasonably likely to cause confusion, mistake or deception that Buyer is
associated or affiliated with Sellers’ or their respective Affiliates’ license
to use the El Paso Marks.
     7.12 Insurance. Buyer acknowledges and agrees that, following the Closing,
the Acquired Company Insurance Policies shall be terminated or modified to
exclude coverage of all or any portion of the Acquired Companies by Sellers,
and, as a result, Buyer will need to at or before Closing obtain at its sole
cost and expense replacement insurance, including insurance required by any
Third Party to be maintained by any of the Acquired Companies. Buyer further
acknowledges and agrees that Buyer will need to provide to certain Governmental
Entities and third parties evidence of such replacement or substitute insurance
coverage for the continued operations of the businesses of the Acquired
Companies following the Closing. Notwithstanding the foregoing, if any claims
are made or Losses occur prior to the Closing Date that relate solely to the
business activities of the Acquired Companies and such claims, or the claims
associated with such Losses, may be made after the Closing against any Acquired
Company Insurance Policies that have been underwritten by Third Parties, then
Sellers shall use commercially reasonable efforts so that the Acquired Companies
can file, notice, and otherwise continue to pursue these claims under the terms
of such Third Party insurance policies. If Sellers or any of their Affiliates
collect any insurance proceeds (excluding deductibles, self retentions,
retroactive premiums (but only to the extent related to the recovery for such
claims), and similar items, the cost of which shall be for Buyer’s account) with
respect to such claims after the Closing, Sellers shall promptly remit such
proceeds to Buyer.
     7.13 Buyer Guaranty. Concurrently with the execution and delivery of this
Agreement by Buyer, Buyer Guarantors have executed and delivered to Sellers the
Buyer Guaranty.
     7.14 Additional Financial Statements. Sellers shall provide Buyer as soon
as reasonably practicable after the end of each calendar month after the date of
this Agreement until the Closing Date any financial statements or summary
consolidated financial information regarding the Acquired Companies as are
customarily prepared by Sellers or the Acquired Companies.
     7.15 Capital Expenditures. Prior to the Closing, Sellers shall use
commercially reasonable efforts to cause the Acquired Companies to make the
capital expenditures set forth on Schedule 6.2(h) substantially in accordance
with the capital expenditure budget made available to Buyer. The Parties
acknowledge that, notwithstanding anything herein to the contrary, the contracts
or agreements entered into by any Acquired Company with a Third Party contractor
or sub-contractor pursuant to which such capital expenditure or expenditures
will be made as contemplated in Schedule 6.2(h) shall not constitute a Scheduled
Contract and shall not constitute a breach or violation of the obligations of
Sellers in Sections 6.1 or 6.2.
     7.16 Transition Services Agreement. Sellers and Buyer shall use all
commercially reasonable efforts to negotiate in good faith to complete the
exhibits and attachments to the
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Transition Services Agreement as promptly as practicable after the date of this
Agreement, and, in any event, prior to Closing, using as a basis for such
efforts the general descriptions of transition services in the Transition
Services Agreement. The intention of the Parties is that the Parties will
provide such services over the term of the Transition Services Agreement, as the
scope of such services is determined by the Parties, as are necessary to enable
the Acquired Companies, on one hand, and EPC and its Affiliates, on the other
hand, to operate their respective businesses post-Closing substantially in the
manner operated before Closing.
     7.17 HSR Amount.
     (a) Sellers Payment. Sellers shall be responsible to Buyer for 50% of the
amount, if any, by which the HSR Amount exceeds $50 million. The total amount
payable by Sellers to Buyer under this Section 7.17 shall not exceed
$50 million.
     (b) Statement. If Buyer reasonably determines that the HSR Amount exceeds
$50 million, no later than 30 days after the Closing Date, Buyer shall prepare
and deliver to Sellers a written statement showing (i) its good faith estimate
of the HSR Amount (which shall be based on the best available information
through the date the same is delivered to Sellers), (ii) its calculation, in
reasonable detail, of the HSR Amount, together with supporting documentation,
and (iii) its good faith estimate of Sellers’ share of the HSR Amount. Buyer
agrees, at no cost to Sellers, to give Sellers and their authorized
representatives reasonable access to such employees and offices and such books
and records of Buyer and its Affiliates as are reasonably necessary to allow
Sellers and their authorized representatives to confirm the HSR Amount.
     (c) Dispute Resolution. Buyer’s statement shall become final and binding on
Sellers and Buyer as to the HSR Amount on the 30th day following the date the
statement is received by Sellers, unless prior to the that date, Sellers deliver
Notice to Buyer of their disagreement. Sellers’ Notice shall set forth all of
Sellers’ disputed items together with Sellers’ proposed changes thereto,
including an explanation in reasonable detail of the basis on which Sellers
propose such changes. If Sellers have delivered a timely Notice, then Sellers
and Buyer shall use their good faith efforts to reach written agreement on the
HSR Amount. If Sellers and Buyer have not agreed on the HSR Amount by the 60th
day following Sellers’ receipt of the Buyer’s statement, then determination of
the HSR Amount shall be submitted to binding arbitration by an independent
nationally recognized accounting firm or other recognized expert without any
material financial relationship to either Sellers or Buyer, as mutually selected
by Sellers and Buyer within 5 business days after the end of the foregoing
90-day period (or in the absence of agreement between Sellers and Buyer by the
close of business on such 5th business day as selected by the president of the
American Arbitration Association or his designee). The arbitrator’s
determination shall in no event be more favorable to Buyer than the HSR Amount
reflected on the Buyer’s statement or more favorable to Sellers than the HSR
Amount shown in Sellers Notice of disagreement. The fees and expenses of such
arbitration shall be borne 50% by Buyer and 50% by Sellers. The determination of
the HSR Amount by such arbitration shall be final and binding upon Sellers and
Buyer. Sellers shall pay to Buyer their share of the HSR Amount within 5
business days of (i) the date on which Sellers accept (or fail to timely
disagree with as provided above)
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Buyer’s statement or (ii) if Sellers’ timely object to Buyer’s statement, the
date on which the arbitrator determines the HSR Amount, together with interest
on such amount from (and including) the Closing Date to (and excluding) the date
of payment at the Prime Rate plus 1%.
7.18 Limitations.
     (a) No Reliance. Buyer covenants that it has reviewed and had access to all
documents, records, and information which it has desired to review in connection
with its decision to enter into this Agreement, and to purchase the Acquired
Companies. In deciding to enter into this Agreement, and to consummate the
transactions contemplated hereby, Buyer covenants that it has relied solely upon
its own knowledge, investigation, and analysis (and that of its representatives)
and not on any disclosure or representation made by, or any duty to disclose on
the part of, Sellers, their Affiliates, or any of their representatives, other
than the representations and warranties of Sellers expressly set forth herein
and the Related Agreements.
     (b) Assets. Notwithstanding anything contained to the contrary in any other
provision of this Agreement, it is the explicit intent of each Party that
Sellers and their Affiliates are not making any representation or warranty
whatsoever, express, implied, at common law, statutory or otherwise, except for
the representations or warranties given in this Agreement and the Related
Agreements, and it is understood that Buyer, with such exceptions, takes the
businesses and assets of the Acquired Companies “as is” and “where is.” Without
limiting the generality of the immediately preceding sentence, except as
provided in this Agreement and the Related Agreements, Sellers hereby expressly
disclaim and negate any representation or warranty, express or implied, at
common law, statutory, or otherwise, relating to (i) the condition of the
businesses and assets of the Acquired Companies (including any implied or
express warranty of merchantability or fitness for a particular purpose, or of
conformity to models or samples of materials, or the presence or absence of any
hazardous materials in or on, or disposed or discharged from, the assets of the
Acquired Companies) or (ii) any infringement by the Acquired Companies of any
patent or proprietary right of any third party. Buyer has agreed not to rely on
any representation made by Sellers with respect to the condition, quality, or
state of the Acquired Companies or their assets except for those in this
Agreement and the Related Agreements, but rather, as a significant portion of
the consideration given to Sellers for this purchase and sale, has agreed to
rely solely and exclusively upon its own evaluation of the Acquired Companies
and the representations, warranties, covenants, and agreements of Sellers in
this Agreement and the Related Agreements.
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Article 8
CONDITIONS TO OBLIGATIONS OF SELLERS
     The obligations of Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver by Sellers on or
prior to the Closing Date of each of the following conditions:
     8.1 Representations and Warranties True. (i) All the representations and
warranties of Buyer contained in this Agreement and in any agreement,
instrument, or document delivered by Buyer pursuant hereto or in connection
herewith on or prior to the Closing Date that are qualified as to materiality
and the representations and warranties in Section 5.2 shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on
such date, and (ii) each of the representations and warranties of Buyer herein
or therein that is not so qualified as to materiality (other than the
representations and warranties in Section 5.2) shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of such date, in each such case except to the extent that
any such representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct as set
forth above as of such specified date.
     8.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and all deliveries contemplated by Section 3.3 shall have been made.
     8.3 HSR Act. All waiting periods (and any extensions thereof) applicable to
this Agreement and the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
     8.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree, or ruling issued by a Governmental Entity, and no Applicable Law
promulgated or enacted by a Governmental Entity, shall be pending, threatened,
or in effect which restrains, enjoins, prohibits, or otherwise makes illegal the
consummation of the transactions contemplated hereby.
Article 9
CONDITIONS TO OBLIGATIONS OF BUYER
     The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver by Buyer on or
prior to the Closing Date of each of the following conditions:
     9.1 Representations and Warranties True. (i) All the representations and
warranties of Sellers contained in this Agreement and in any agreement,
instrument, or document delivered by Sellers pursuant hereto or in connection
herewith on or prior to the Closing Date that are qualified as to materiality
and the representations and warranties in Sections 4.2(a) through 4.2(c) and
4.4, shall be true and correct on and as of the date hereof and on and as of the
Closing Date as if made on such date, and (ii) each of the representations and
warranties of Sellers herein or therein that is not so qualified as to
materiality (other than the representations and warranties
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in Sections 4.2(a) through 4.2(c) and 4.4) shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of such date, in each such case except to the extent that
any such representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct as set
forth above as of such specified date.
     9.2 Covenants and Agreements Performed. Sellers shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and all deliveries contemplated by Section 3.2 shall have been made.
     9.3 HSR Act and Other Approval. All waiting periods (and any extensions
thereof) applicable to this Agreement and the transactions contemplated hereby
under the HSR Act shall have expired or been terminated, and there shall have
been obtained the Additional Governmental Approval.
     9.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity, and no Applicable Law
promulgated or enacted by a Governmental Entity, shall be pending, threatened or
in effect which restrains, enjoins, prohibits, or otherwise makes illegal the
consummation of the transactions contemplated hereby.
Article 10
TERMINATION, AMENDMENT, AND WAIVER
     10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
     (a) by mutual written consent of Sellers and Buyer;
     (b) by either Sellers or Buyer, if any Governmental Entity with
jurisdiction over such matters shall have issued an order or injunction
restraining, enjoining, or otherwise prohibiting the sale of the Purchased
Interests hereunder and such order, decree, ruling, or other action shall have
become final and unappealable, but the right to terminate this Agreement under
this Section 10.1(b) shall not be available to a Party whose failure to fulfill
any obligation under Section 7.2 shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to such date;
     (c) by either Sellers or Buyer, if the Closing shall not have occurred on
or before June 22, 2007, but the right to terminate this Agreement under this
Section 10.1(c) shall not be available to a Party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to such date;
     (d) by Buyer, if (i) Sellers fail to comply with any of their covenants or
agreements contained herein, or breach their representations and warranties
contained herein, and, if curable, do not cure or commence and diligently pursue
remedial action to cure such failure to comply or breach within 30 days after
receipt by Sellers from Buyer
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of Notice of such failure to comply or breach, and (ii) such failure to comply
or breach would result in a failure to satisfy the conditions to Closing set
forth in Section 9.1 or 9.2; or
     (e) by Sellers, if (i) Buyer fails to comply with any of its covenants or
agreements contained herein, or breaches its representations and warranties
contained herein, and, if curable, does not cure or commence and diligently
pursue remedial action to cure such failure to comply or breach within 30 days
after receipt by Buyer from Sellers of Notice of such failure to comply or
breach, and (ii) such failure to comply or breach would result in a failure to
satisfy the conditions to Closing set forth in Section 8.1 or 8.2.
     10.2 Effect of Termination. If a Party terminates this Agreement under
Section 10.1, then such Party shall promptly give Notice to the other Party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no further force or effect, except
that the agreements contained in this Article 10, the confidentiality
obligations of Buyer in Section 7.1(a) and the provisions of Sections 7.4 and
7.6 shall survive the termination hereof. Nothing contained in this Section 10.2
shall relieve either Party from liability for damages actually incurred as a
result of any breach of this Agreement.
     10.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed by or on behalf of both Parties.
     10.4 Waiver. Either Party may (i) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document,
certificate, or writing delivered pursuant hereto or (ii) waive compliance by
the other Party with any of the other Party agreements or fulfillment of any
conditions to its own obligations contained herein. Any agreement on the part of
a Party to any such waiver shall be valid only if set forth in an instrument in
writing signed by or on behalf of such Party. No failure or delay by a Party in
exercising any right, power, or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege.
Article 11
TAX MATTERS
     11.1 Preparation of Tax Returns and Payment of Taxes.
     (a) Seller Group. For purposes of this Section 11, the “Seller Group”
means, with respect to Sellers, the affiliated group of entities filing a
consolidated federal income Tax Return of which Sellers and the Acquired
Companies are members (with EPC being the common parent of the Seller Group).
     (b) Liability for Taxes. Except as provided in Section 7.7, Sellers
covenant that they shall be responsible for: (i) all liability for Income Taxes
of the Acquired Companies for all Pre-Closing Periods (as defined below);
(ii) all liability for Taxes, excluding Income Taxes and Post-Effective Date
Taxes, of the Acquired Companies for Pre-Closing Periods (as defined below);
(iii) all liability of the Acquired Companies for
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Income Taxes for the portion of any Straddle Period (as defined below) through
the Closing Date; (iv) all liability for Taxes, excluding Income Taxes, of the
Acquired Companies for the portion of any Straddle Period (as defined below)
through the Effective Date; and (v) all liability imposed upon the Acquired
Companies for Taxes of any other person or entity pursuant to Treas. Reg.
Section 1.1502-6 or any similar provision of foreign, state or local law by
reason of an Acquired Company having been a member of any consolidated,
combined, or unitary group on or prior to the Closing Date.
     (c) Consolidated, Combined or Unitary Returns. Sellers shall cause to be
included in the consolidated federal income Tax Returns (and the state income
Tax Returns of any state that permits consolidated, combined, or unitary income
Tax Returns, if any) of the Seller Group for all taxable periods ending on or
before the Closing Date (“Pre-Closing Periods”) all tax items of the Acquired
Companies which are required to be included herein, shall cause such Income Tax
Returns to be timely filed with the appropriate Taxing Authorities, and shall
timely pay (and be entitled to any refund of other than the portion of any
refund attributable to Post-Effective Date Taxes) all Taxes due with respect to
the periods covered by such income Tax Returns. Unless otherwise required by
Treas. Reg. Section 1.1502-76(b)(1)(ii)(B) (or a similar provision of state,
local or foreign law), Tax items of each of the Acquired Companies shall be
apportioned for all income Tax purposes by closing the books of each of the
Acquired Companies at the end of the Closing Date and no ratable election shall
be made pursuant to Treas. Reg. Section 1.1502-76T(b)(2)(ii)(D) (or a similar
provision of state, local, or foreign law).
     (d) Non-Consolidated, Combined or Unitary Returns.
     (i) With respect to any federal, state or foreign income or franchise Tax
Return covering a Pre-Closing Period that is required to be filed after the
Closing Date with respect to the Acquired Companies that is not described in
Section 11.1(c), Sellers shall cause such Tax Return to be prepared, shall cause
to be included in such Tax Return all tax items required to be included therein,
shall cause such Tax Return to be timely filed and shall remit the amount shown
as due on such Tax Return with the appropriate Taxing Authority. Not later than
30 days prior to the due date of each such Tax Return, Sellers shall furnish to
Buyer a copy of such Tax Return. Sellers shall permit Buyer to review and
comment on each such Tax Return prior to filing and Buyer, if so required, shall
cause such Tax Return to be properly signed.
     (ii) With respect to any other Tax Returns covering a Pre-Closing Period
that is required to be filed after the Closing Date with respect to the Acquired
Companies and that is not described in Section 11.1(c) or the preceding
sentences of this Section 11.1(d), Sellers shall cause such Tax Return to be
prepared and shall cause to be included in such Tax Return all tax items
required to be included therein. Not later than 30 days prior to the due date of
each such Tax Return, Sellers shall furnish to Buyer a copy of such Tax Return.
Sellers shall permit Buyer to review and comment on each such Tax Return prior
to filing and Buyer, if so required shall cause such Tax Return to be properly
signed.
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Sellers shall cause such Tax Return to be filed and shall remit the amount shown
as due on the Tax Return with the appropriate Taxing Authority.
     (iii) Sellers shall be entitled to any refund of Taxes due with respect to
any Pre-Closing Period (other than the portion of any refund attributable to
Post-Effective Date Taxes), and Buyer shall pay over to Sellers any such refund,
net of any Taxes or other costs incurred with respect to such refund, within
15 days after receipt thereof. Unless otherwise required by Treas. Reg. Section
1.1502-76(b)(1)(ii)(B) (or a similar provision of state, local or foreign law),
Tax items of each of the Acquired Companies shall be apportioned for all income
Tax purposes by closing the books of each of the Acquired Companies at the end
of the Closing Date and no ratable election shall be made pursuant to Treas.
Reg. Section 1.1502-76T(b)(2)(ii)(D) (or a similar provision of state, local, or
foreign law).
     (e) Straddle Period Returns. With respect to any Tax Return covering a
taxable period beginning before the Closing Date and ending after the Closing
Date (a “Straddle Period”) that is required to be filed after the Closing Date
with respect to the Acquired Companies, Buyer shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all Tax items required
to be included therein, shall furnish a copy of such Tax Return to Sellers not
later than 30 days prior to the due date (taking into account extensions) of
each such Tax Return, shall file timely such Tax Return with the appropriate
Taxing Authority, and shall timely pay all Taxes due with respect to the period
covered by such Tax Return. Buyer shall permit Sellers to review and comment on
each such Tax Return prior to filing and shall make such revisions to such Tax
Returns as are reasonably requested by Sellers; provided that Buyer shall not be
required to make any revision that would be inconsistent with the Acquired
Companies’ past practices with respect to the item in question unless otherwise
required by Applicable Law. Buyer shall determine (by an interim closing of the
books as of the Closing Date except for ad valorem Tax which shall be pro rated
on a daily basis) the Tax that would have been due with respect to the period
covered by such Tax Return if such taxable period ended on and included the
Closing Date. If (i) the amount of Tax so determined exceeds (ii) the amount of
payments made in respect to such Tax as of the Closing Date, Sellers shall pay
to Buyer the amount of such excess not later than five days after receipt from
Buyer of evidence of the filing of such Tax Return; if the amount determined in
clause (ii) exceeds the amount determined in clause (i), Buyer shall pay to
Sellers the amount of such excess not later than five days after the filing of
such Tax Return. Any Tax refunds that are received by Buyer or the Acquired
Companies that relate to Tax periods or portions thereof ending on or before the
Closing Date (other than the portion of any refund attributable to
Post-Effective Date Taxes) shall be for the account of Sellers, and Buyer shall
pay over to Sellers any such refund, or appropriate portion thereof, net of any
Taxes or costs resulting from the receipt of such refund, within 15 days after
receipt thereof.
     (f) Post-Effective Date Taxes. Notwithstanding any other provision of this
Agreement, including any provision of this Article 11, Buyer shall be
responsible for and pay to Sellers any Taxes other than Income Taxes (including
Taxes, other than Income Taxes, with respect to Straddle Periods) with respect
to the Acquired Companies that are
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allocable to, attributable to, or accrue for the period beginning on the
Effective Date and ending on the Closing Date other than Taxes arising from the
triggering of deferred intercompany items or from any transfer of Excluded
Assets described in Section 7.9 (the “Post-Effective Date Taxes”) no later than
7 calendar days after the filing of the Tax Return with respect to which such
Post-Effective Date Taxes relate. The Post-Effective Date Taxes shall be
determined in a manner similar to and consistent with the determination of
Pre-Closing Taxes under Section 11.1(e). Buyer and Sellers agree to cooperate in
good faith (i) in the determination and payment of Post-Effective Date Taxes and
(ii) to offset any redundant Tax payments to one another under this Article 11.
For the avoidance of doubt, Sellers shall not be responsible or liable for any
Taxes under any provision of this Agreement including any provision of this
Article 11 with respect to the Acquired Companies attributable to any period
(including any partial period) on or after the Effective Date, including by
reason of a breach of any representation, warranty, covenant, or obligation of
Sellers related to or arising from Taxes to the extent attributable to
Post-Effective Date Taxes.
     (g) Manner of Preparation. Any Tax Return related to the Acquired Companies
to be prepared pursuant to the provisions of this Section 11.1 shall be prepared
in a manner consistent with practices followed in prior years with respect to
similar Tax Returns of the Acquired Companies, except as otherwise required by
Applicable Law. Without the prior written consent of Sellers, which shall not be
unreasonably withheld, conditioned or delayed, Buyer shall not (i) file an
amended Tax Return related to the Acquired Companies for any period ending on or
prior to the Closing Date or (ii) carry back any Tax item or attribute to a
taxable period (or portion thereof) of any of the Acquired Companies ending on
or before the Closing Date.
     11.2 Tax Indemnity. From and after the Closing Date, Sellers shall protect,
defend, indemnify and hold harmless Buyer and the Acquired Companies from any
and all Taxes (including any obligation to contribute to the payment of any
Taxes determined on a consolidated, combined, or unitary basis with respect to a
group of corporations that includes or included the Acquired Companies), other
than from any and all Taxes described in Section 7.7 (which shall be borne in
accordance with Section 7.7) and other than from any and all Post-Effective Date
Taxes, which are (i) imposed on Sellers or any member (other than the Acquired
Companies) of the consolidated, unitary or combined group which includes or
included the Acquired Companies for any period that ends on or before the
Closing Date, that Buyer or the Acquired Companies pays, otherwise satisfies in
whole or in part, or results in liens or other encumbrances on any of Buyer’s or
the Acquired Companies’ assets; or (ii) imposed on any of the Acquired Companies
in respect of their income, business, property or operations or for which they
may otherwise be liable (A) for any taxable period of the Acquired Companies or
portion thereof ending prior to the Closing Date as provided in this Section 11
(including without limitation Taxes for which Sellers are responsible pursuant
to Sections 11.1(b)-(e)), (B) resulting by reason of the several liability of
any of the Acquired Companies pursuant to Treas. Reg. Section 1.1502-6 or any
analogous state, local or foreign law or regulation or by reason of their having
been a member of any consolidated, combined or unitary group on or prior to the
Closing Date, (C) resulting from its ceasing to be a member of the Seller Group,
(D) resulting from the breach of Sellers’ covenants set forth in this Article 11
and/or breach of the representations and warranties set forth in Section 4.10 or
(E) relating to any reorganization of the Acquired
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Companies done on or prior to the Closing Date. Seller shall have no liability
under this Section 11.2 to the extent that such liability would not have been
incurred but for (y) conduct of Buyer or its Affiliates that conflict with this
Agreement or (z) failures by Buyer or its Affiliates to make filings or take
other actions required to be taken by Buyer or its Affiliates under this
Agreement (in each case, including the Acquired Companies as an Affiliate of
Buyer from and after the Closing Date and, in each case, other than matters
resulting from or arising out of actions taken or failed to be taken at the
direction of Seller). Indemnification for Taxes pursuant to this Section, shall
also include any reasonable professional fees, accounting fees and other out of
pocket costs incurred by Buyer and the Acquired Companies relating to the Tax
liability for which indemnification is provided or in enforcing this indemnity.
The indemnification for Taxes pursuant to this Section 11.2 shall take into
account any Tax Benefit existing from such indemnification. If the amount of any
Tax of an indemnitee is reduced as a result of indemnification for Taxes
pursuant to this Section 11.2, such amount shall promptly be paid by the
indemnitee to the indemnitor.
     11.3 Access to Information. Sellers and each member of the Seller Group
shall grant to Buyer (or its designees) access at all reasonable times to all of
the information, books, and records relating to the Acquired Companies within
the possession of Sellers or any member of the Seller Group (including work
papers and correspondence with Taxing Authorities), and shall afford Buyer (or
its designees) the right (at Buyer’s expense) to take extracts therefrom and to
make copies thereof, to the extent, reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns and to conduct negotiations with Taxing
Authorities. Buyer shall grant or cause the Acquired Companies to grant to
Sellers (or their designees) access at all reasonable times to all of the
information, books and records relating to the Acquired Companies within the
possession of Buyer or the Acquired Companies (including work papers and
correspondence with Taxing Authorities), and shall afford Sellers (or its
designees) the right (at Sellers’ expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Sellers (or
their designees) to prepare Tax Returns and to conduct negotiations with Taxing
Authorities.
     11.4 Post-Closing Tax Actions. Buyer shall indemnify and hold harmless
Sellers against Taxes, computed at the highest applicable Tax rates, on the
amount of income or gain of the Acquired Companies (without regard to tax
attributes available to Sellers or to any consolidated, combined, or unitary
group to which an Acquired Company is a part) resulting from any transaction
engaged in by an Acquired Company on the Closing Date after Buyer’s purchase of
the Purchased Interests that is not in the ordinary course of such Acquired
Company’s business. If after Closing, Buyer or any of the Acquired Companies
utilizes or takes into account any net operating losses, alternative minimum tax
net operating losses, net capital losses, alternative minimum tax net capital
losses, Tax credits, or alternative minimum tax credits that arose in a taxable
period (or portion thereof) ending on or prior to the Closing Date, the amount
of Tax reduced by the utilization or taking into account of such Tax attributes
shall promptly be paid by Buyer to the Sellers. Neither Buyer nor the Acquired
Companies shall (i) make or permit any election under Section 338 of the Code or
any comparable election under state, local or foreign law with respect to the
purchase and sale of the Purchased Interests; or (ii) without the prior written
consent of Sellers, which shall not be unreasonably withheld, conditioned or
delayed, (A) file any amended Tax Returns for any Tax Returns including an
Acquired Company with respect to taxable periods ending on or before the Closing
Date or
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(B) carry back any Tax item or attribute to a taxable period (or portion
thereof) of any of the Acquired Companies ending on or prior to the Closing
Date. Sellers will not, without the prior written consent of Buyer, file an
amended Tax Return with respect to any of the Acquired Companies.
     11.5 Tax Sharing Agreements. Sellers shall as of the Closing Date ensure
that no Tax allocation agreement or Tax sharing agreement with respect to the
Acquired Companies is in force or effect or results in any obligation of the
Acquired Companies on or after the Closing Date and that there shall be no
liability or obligation of the Acquired Companies on or after the Closing Date
under any such agreement.
     11.6 Earnings and Profits. At or within a reasonable time period following
Closing, Sellers shall deliver to Buyer a schedule providing the earnings and
profits, as determined for federal Income Tax purposes, for each of the Acquired
Companies that is a member of the consolidated group of which EPC is the common
parent.
     11.7 Assistance and Cooperation.
     (a) Assistance. After the Closing Date, in the case of any audit,
examination, claim or other Proceeding with respect to Taxes of the Acquired
Companies for which Sellers are or may be liable pursuant to this Agreement in
respect of taxable periods ending on or before the Closing Date, Buyer shall
promptly inform Sellers of such Proceeding, and shall afford Sellers, at
Sellers’ expense, the opportunity to control the conduct of such Proceedings
and, if there is substantial authority therefor, initiate any claim for refund,
file any amended return or take any other action which Sellers deems appropriate
with respect to such Taxes; provided that Sellers agree to fund all outlays
required, in Sellers’ determination, to pursue such Proceeding and agree to
reimburse Buyer for all reasonable out of pocket costs incurred by Buyer on
behalf of Sellers in connection with such Proceedings. Buyer shall execute or
cause to be executed powers of attorney or other documents necessary to enable
Sellers to control such Proceeding. Buyer, at Buyer’s expense, shall be entitled
to participate in any such Proceeding which Seller has elected to control and
shall be kept fully and timely informed by Sellers of all developments and
communications. Any Proceeding with respect to Taxes of the Acquired Companies
for a period which includes but does not end on the Closing Date shall be
controlled by Buyer. Sellers, at Sellers’ expense, shall be entitled to
participate in any such Proceeding. Notwithstanding any provision of this
Section 11.7 to the contrary if, as a result of such Proceeding, claim for
refund or amended Tax Return, the Taxes payable by Buyer or the Acquired
Companies for a taxable period (or portion of a period) for which Sellers are
not obligated to indemnify Buyer or the Acquired Companies pursuant to this
Section 11.7 would be (or there is a material risk that such Taxes would be)
increased, Sellers shall not settle any Proceeding, initiate any claim for
refund or file any amended Tax Return of the Acquired Companies without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed. Notwithstanding any provision of this
Section 11.7 to the contrary if, as a result of such Proceeding, claim for
refund or amended Tax Return, the Taxes for which Sellers are obligated to
indemnify Buyer or the Acquired Companies pursuant to this Section 11.7 would be
(or there is a material risk that such Taxes would be) increased,
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Buyer shall not settle any Proceeding, initiate any claim for refund or file any
amended return with respect to the Acquired Companies for a tax period ending
on, before or including the Closing Date, without the prior written consent of
Sellers, which consent shall not be unreasonably withheld, conditioned, or
delayed. Sellers will allow the Acquired Companies and their representatives,
including counsel, to participate at their own expense in any Proceedings
related to the consolidated federal income Tax Returns of the Seller Group to
the extent such returns relate to the Acquired Companies.
     (b) Cooperation. Cooperation between the Parties shall include the
nonexclusive designation of an employee of either Seller or an Affiliate as a
Tax officer of Buyer or the Acquired Companies (for the limited purpose of
signing Tax Returns and dealing with Taxing Authorities with respect to any Tax
Return filed pursuant to Sections 11.1(c)-(e)).
     11.8 Closing Tax Certificate. At the Closing, EPC shall deliver to Buyer,
on behalf of itself and EP CNG (which is disregarded as an entity separate from
its parent EPC for federal tax purposes), a certificate (in substantially the
form attached hereto as Exhibit 11.8) signed under penalties of perjury
(i) stating that it is not a foreign corporation, foreign partnership, foreign
trust or foreign estate, (ii) stating that it is not a disregarded entity as
defined in Treas. Reg. Section 1.1445-2(b)(2)(iii), (iii) providing its U.S.
Employer Identification Number, and (iv) providing its address, all pursuant to
Section 1445 of the Code.
Article 12
SURVIVAL AND INDEMNIFICATION
     12.1 Indemnification.
     (a) Sellers’ Indemnity. From and after the Closing, subject to the other
terms and limitations in this Article 12, Sellers shall jointly and severally
indemnify, defend, reimburse, and hold harmless the Buyer Indemnitees from and
against any and all Losses actually incurred by any of the Buyer Indemnitees or
asserted by a Third Party against any of the Buyer Indemnitees relating to or
arising from (i) any breach of Sellers’ representations or warranties made, as
of the Closing Date, in this Agreement or the Related Agreements (other than a
breach of any representation or warranty in Section 4.10 or Article 11, the
indemnification obligations for which are set forth in Article 11), (ii) (A) any
Excluded Asset, including the transfer thereof to Sellers or any of their
Affiliates, (B) any Excluded Liability, or (C) any Excluded Subsidiary,
(iii) any breach of the covenants of Sellers in clauses (i), (ii), or (iv) of
Section 6.1, or (iv) any breach of the other covenants or obligations of Sellers
and their Affiliates under this Agreement or the Related Agreements (other than
a breach of any covenant or obligation in Article 11, the indemnification
obligations for which are set forth in Article 11).
     (b) Buyer’s Indemnity. From and after the Closing, subject to the other
terms and limitations in this Article 12, Buyer shall indemnify, defend,
reimburse, and hold harmless the Sellers Indemnitees from and against any and
all Losses actually incurred by any of the Sellers Indemnitees or asserted by a
Third Party against any of the Sellers Indemnitees relating to or arising from
(i) any breach of Buyer’s representations or
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warranties made, as of the Closing Date, in this Agreement or the Related
Agreements (other than a breach of any representation or warranty in Article 11,
the indemnification obligations for which are set forth in Article 11), (ii) any
breach of the covenants or obligations of Buyer and its Affiliates under this
Agreement or the Related Agreements (other than a breach of any covenant or
obligation in Article 11, the indemnification obligations for which are set
forth in Article 11), (iii) any of the Guarantees to the extent such Guarantee
has not been released or replaced on or as of the Closing with a guarantee of
Buyer or its Affiliates, or (iv) if the Additional Governmental Approval is not
obtained before Closing and Buyer’s condition with respect thereto in
Section 9.3 is waived by Buyer, the failure to obtain the Additional
Governmental Approval prior to Closing.
     (c) Sellers’ Waiver. Notwithstanding anything to the contrary in this
Agreement or the Related Agreements, Buyer shall not be liable to the Sellers
Indemnitees under Section 12.1(b) for any exemplary, punitive, special,
indirect, consequential, remote, or speculative damages, except to the extent
any such damages are included in any action by a Third Party against a Sellers
Indemnitee for which such Sellers Indemnitee is entitled to indemnification
under Section 12.1(b).
     (d) Buyer’s Waiver. Notwithstanding anything to the contrary in this
Agreement or the Related Agreements, Sellers shall not be liable to the Buyer
Indemnitees under Section 12.1(a) for any exemplary, punitive, special,
indirect, consequential, remote or speculative damages, except to the extent any
such damages are included in any action by a Third Party against a Buyer
Indemnitee for which such Buyer Indemnitee is entitled to indemnification under
Section 12.1(a).
     (e) Limitations on Indemnity. None of the Buyer Indemnitees shall be
entitled to assert any right to indemnification under Section 12.1(a)(i) and
(iii) until the aggregate amount of all such Losses actually suffered by the
Buyer Indemnitees exceeds the Deductible Amount, and then only to the extent
such Losses exceed, in the aggregate, the Deductible Amount. In no event shall
Sellers ever be required to indemnify the Buyer Indemnitees for Losses under
Section 12.1(a)(i) in any amount exceeding, in the aggregate, 10% of the Total
Purchase Price. Notwithstanding the foregoing, the limitations on
indemnification set forth in this Section 12.1(e) shall not apply to any
indemnification claim made for a breach of Sellers’ representations and
warranties set forth in Section 2.5(f), 4.1, 4.2, 4.3, 4.4, 4.10, 4.13(a)(xvi),
4.22, 4.23, 4.24, or 4.25, or in Article 11.
     (f) Survival and Time Limitation. All of the representations, warranties,
covenants, obligations, and agreements of the Parties set forth in this
Agreement and the Related Agreements, including those obligations set forth in
this Article 12, shall survive the Closing. Notwithstanding the foregoing
sentence, after Closing, any assertion by Buyer or any Buyer Indemnitee that
Sellers are liable to Buyer or any Buyer Indemnitee for indemnification under
the terms of this Agreement, the Related Agreements, or for any other reason in
connection with the transactions contemplated in this Agreement must be made in
writing and must be given to Sellers on or prior to the date that is 18 months
after the Closing Date (or not at all), except for assertions by Buyer for
(i) breach of the representations and warranties in (A) Section 4.10 or the
covenants, obligations,
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and agreements in Article 11, which must be made in writing and must be given to
Sellers on or prior to the date that is 90 calendar days after the expiration of
any applicable statute of limitations (or not at all) and (B) Section 4.1, 4.2,
4.3, 4.4, or 4.22, which may be made in writing at any time from and after the
Closing or (ii) indemnification under Sections 12.1(a)(ii) or 12.1(a)(iv), which
must be made in writing and must be given to Sellers on or prior to the
expiration of any applicable statute of limitations (or not at all).
     (g) Further Indemnity Limitations. The amount of any Loss shall be reduced
(i) to the extent any Person entitled to receive indemnification under this
Agreement actually receives any insurance proceeds with respect to a Loss,
(ii) to take into account any Tax Benefit arising from the recognition of the
Loss, and (iii) to take into account any other payment or payments actually
received by a Person entitled to receive indemnification under this Article 12
with respect to a Loss.
     (h) Sole and Exclusive Remedy. From and after the Closing, except (i) as
provided in Article 11, (ii) for the assertion of any claim based on fraud, and
(iii) for matters covered by the Related Agreements, the indemnification
provisions of this Article 12 shall be the sole and exclusive remedy of each
Party (including the Sellers Indemnitees and the Buyer Indemnitees) (x) for any
breach of the other Party’s representations, warranties, covenants, or
agreements contained in this Agreement or (y) with respect to the transactions
contemplated hereby.
     (i) Indemnity and Rights of Contribution. From and after the time any
Notice under Section 12.2(a) or 12.2(c) is received by Buyer or Sellers, each
Party shall use commercially reasonable efforts (i) not to knowingly take any
action that would reasonably be expected to limit, reduce, or extinguish any
indemnity or right of contribution from a Third Party which may be available to
Sellers, Buyer, or the Acquired Companies with respect to the subject matter of
such Notice and (ii) to take any action, of which it has actual knowledge, that
would reasonably be expected to preserve claims with respect to any such
indemnity or right of contribution from a Third Party.
     (j) Tax Treatment of Payments. Buyer and Sellers, their Affiliates, and the
Acquired Companies shall, to the extent permitted by Applicable Law, treat any
indemnity payments made under Article 11 or this Article 12 as adjustments to
the Purchase Price.
     12.2 Defense of Claims.
     (a) Notice. Except as provided in Section 11.6, if an Indemnitee receives
notice of the assertion of any claim or of the commencement of any Third Party
Claim with respect to which indemnification is to be sought from the
Indemnifying Party, the Indemnitee will give such Indemnifying Party reasonable
prompt Notice thereof, but in any event not later than 7 calendar days after the
Indemnitee’s receipt of notice of such Third Party Claim, but the failure to
give timely Notice will not affect the rights or obligations of the Indemnifying
Party except and only to the extent that, as a result of such failure, the
Indemnifying Party was substantially disadvantaged. Such Notice shall
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describe the nature of the Third Party Claim in reasonable detail and will
indicate the estimated amount, if practicable, of the Loss that has been or may
be sustained by the Indemnitee; provided, however, that such estimated amount
shall in no way limit the Indemnitee’s right to recover any amount of Losses
over such estimate. The Indemnifying Party will have the right to participate in
or, by giving Notice to the Indemnitee, to elect to assume the defense of, any
Third Party Claim at such Indemnifying Party’s own expense and by such
Indemnifying Party’s own counsel, and the Indemnitee will cooperate in good
faith in such defense, unless the Third Party Claim seeks only non-monetary
relief, in which case the Indemnitee may assume and conduct the defense of such
Third Party Claim at the Indemnifying Party’s expense and the Indemnifying Party
may participate in such defense. If such Third Party Claim seeks both
non-monetary relief and monetary relief, the Indemnifying Party shall have the
right to jointly participate in the defense of such Third Party Claim with the
Indemnitee.
     (b) Defense. Except as provided in Section 11.6, if within 10 calendar days
after an Indemnitee provides Notice to the Indemnifying Party of any Third Party
Claim, the Indemnitee receives Notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party Claim,
the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof. The
Indemnitee shall be entitled to participate in the defense of such Third Party
Claim and to employ counsel for such purpose at the sole cost and expense of
Indemnitee. Each Party shall in good faith consult with the other Party
regarding the defense of any Third Party Claim upon the other Party’s reasonable
request from time to time. Without the prior written consent of the Indemnitee,
the Indemnifying Party will not enter into any settlement of any Third Party
Claim which would lead to liability or create any financial or other obligation
on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder or which would impose any injunctive or other
equitable remedy on the Indemnitee. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder (or which would not impose any injunctive
or other equitable remedy on the Indemnitee) and the Indemnifying Party desires
to accept and agree to such offer, the Indemnifying Party will give Notice to
the Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer within 10 calendar days after its receipt of such Notice, the Indemnitee
may continue to contest or defend such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party to such Third Party Claim will be
the amount of such settlement offer, plus reasonable costs and expenses paid or
incurred by the Indemnitee up to the date of such notice.
     (c) Direct Claim. Any Direct Claim will be asserted by giving the
Indemnifying Party reasonably prompt written notice thereof, stating the nature
of such claim in reasonable detail and indicating the estimated amount, if
practicable, but in any event not later than 20 calendar days after the
Indemnitee becomes aware of such Direct Claim (but the obligations of the
Indemnifying Party and the rights of the Indemnitee shall not be affected by the
failure to give such notice, except and only to the extent that, as a result of
such failure, the Indemnifying Party is substantially disadvantaged; provided,
however, that any such estimated amount shall in no way limit the
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Indemnitee’s rights to recover any amount of Losses over such estimate. The
Indemnifying Party will have a period of 30 calendar days within which to
respond to such Direct Claim. If the Indemnifying Party does not respond within
such 30-day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the
Indemnitee will be free to seek enforcement of its rights to indemnification
under this Agreement.
     (d) Subrogation. If the amount of any Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery,
settlement, or otherwise under any insurance coverage or Tax Benefit, or under
any claim, recovery, settlement or payment by or against any other entity, the
amount of such reduction, less any costs, expenses, or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any indemnity payment, the Indemnifying Party
will, to the extent of such indemnity payment, be subrogated to all rights of
the Indemnitee against any Third Party in respect of the Loss to which the
indemnity payment relates; provided, that (i) the Indemnifying Party is in
compliance with its obligations under this Agreement in respect of such Loss,
(ii) until the Indemnitee recovers full payment of its Loss, any and all claims
of the Indemnifying Party against any such Third Party on account of said
indemnity payment are hereby made expressly subordinated and subjected in right
of payment to the Indemnitee’s rights against such Third Party, and (iii) the
Indemnifying Party shall have no rights of subrogation against such Third Party
if the Indemnitee reasonably expects that pursuing such claim against such Third
Party would adversely affect the ongoing business prospects or relationship of
the Indemnitee or its Affiliates with such Third Party. Without limiting the
generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights.
Article 13
OTHER PROVISIONS
     13.1 Notices. All Notices shall be in writing and shall be deemed to have
been duly given or made if (i) delivered personally, (ii) transmitted by first
class registered or certified mail, postage prepaid, return receipt requested,
(iii) delivered by prepaid overnight courier service, or (iv) delivered by
confirmed telecopy or facsimile transmission to the Parties at the following
addresses (or at such other addresses as shall be specified by the Parties by
similar notice):

              If to Buyer:
 
            TransCanada American Investments Ltd.     TransCanada PipeLines
Tower     450 First Street, S.W.     Calgary, Alberta T2P5H1
 
  Attention:    Sean McMaster,
 
      Executive Vice President
 
      Law and General Counsel

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  Facsimile: (403) 920-2410
 
            with a copy to:
 
            Mayer, Brown, Rowe & Maw LLP     71 South Wacker Drive     Chicago,
IL 60606
 
  Attention:   Marc F. Sperber
 
      D. Michael Murray
 
       
 
  Fax: (312) 701-7711
 
            If to Sellers:     El Paso Corporation     1100 Louisiana Street
Houston, Texas 77002
 
  Attention:   General Counsel
 
  Fax: (713) 420-5043
 
            with a copy to:
 
            Andrews Kurth LLP     600 Travis Street, Suite 4200     Houston,
Texas 77002
 
  Attention: G. Michael O’Leary
 
  Fax: (713) 220-4285

     Notices shall be effective (i) if delivered personally or sent by courier
service, upon actual receipt by the intended recipient, (ii) if mailed, upon the
earlier of 5 days after deposit in the mail or the date of delivery as shown by
the return receipt therefor, or (iii) if sent by telecopy or facsimile
transmission, when the answer back is received.
     13.2 Entire Agreement. This Agreement, together with the Schedules, the
Exhibits, and the Related Agreements, including the Confidentiality Agreement,
constitute the entire agreement among the Parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the Parties with respect to the subject matter hereof.
There are no restrictions, promises, representations, warranties, covenants or
undertakings between the Parties, other than those expressly set forth or
referred to herein or therein.
     13.3 Binding Effect; Assignment; No Third Party Benefit. Subject to the
following sentence, this Agreement shall be binding upon and inure to the
benefit of the Parties and their successors and assigns. Neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned or
delegated by either Party, other than to an Affiliate (provided that if either
Party so assigns or delegates to an Affiliate, such Party shall not be released
from its obligations hereunder as a result of such assignment), without the
prior written consent of the other Party. Except as provided herein, nothing in
this Agreement is intended to or shall confer upon any Person other than the
Parties, and their successors and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this Agreement.
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     13.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect.
     13.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
its conflict of laws rules or principles.
     13.6 Further Assurances. From time to time following the Closing, at the
request of any Party and without further consideration, the other Party shall
execute and deliver to such requesting Party such instruments and documents and
take such other action as such requesting Party may reasonably request to
consummate more fully and effectively the transactions contemplated hereby.
     13.7 Counterparts. This Agreement may be executed by the Parties in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement. Such execution may be
evidenced by an exchange of facsimile communications or any other rapid
transmission device designed to produce a written record of communications
transmitted.
     13.8 Disclosure. Certain information set forth in the Schedules is included
solely for informational purposes, is not an admission of liability with respect
to the matters covered by the information, and may not be required to be
disclosed under this Agreement. The specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion of
any specific item in the Schedules is not intended to imply that such amounts
(or higher or lower amounts) are or are not material, and no Party shall use the
fact of the setting of such amounts or the fact of the inclusion of any such
item in the Schedules in any dispute or controversy between the Parties as to
whether any obligation, item, or matter not described herein or included in a
Schedule is or is not material for purposes of this Agreement.
     13.9 Consent to Jurisdiction. The Parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the federal courts of
the United States of America located in The Borough of Manhattan, New York, New
York over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby, and each Party irrevocably agrees that all
claims in respect of such dispute or proceeding shall be heard and determined in
such courts. The Parties hereby irrevocably waive, to the fullest extent
permitted by Applicable Law, any objection which they may now or hereafter have
to the venue of any dispute arising out of or relating to this Agreement or any
of the transactions contemplated hereby brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each Party agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by Applicable Law.
     13.10 Specific Performance. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that each Party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
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specifically the terms and provisions hereof in addition to any other remedy to
which such Party may be entitled at law or in equity.
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     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.

                  Sellers:    
 
                EL PASO CORPORATION    
 
           
 
  By:     /s/ D. Mark Leland    
 
   
 
D. Mark Leland, Executive Vice President
and Chief Financial Officer    
 
                EL PASO CNG COMPANY, L.L.C.    
 
           
 
  By:     /s/ D. Mark Leland    
 
         
 
    D. Mark Leland, Executive Vice President
and Chief Financial Officer    
 
                Buyer:    
 
                TRANSCANADA AMERICAN INVESTMENTS LTD.    
 
           
 
  By:     /s/ Russell K. Girling    
 
   
 
   
 
  Name:   Russell K. Girling    
 
     
 
   
 
  Title:   President    
 
     
 
     
 
  By:     /s/ Donald J. DeGrandis    
 
   
 
   
 
  Name:   Donald J. DeGrandis    
 
     
 
   
 
  Title:  Corporate Secretary    
 
     
 
   

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Signature Page

 

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Exhibit 7.13 to Purchase and Sale Agreement
BUYER GUARANTY
     This Guaranty (“Guaranty”), dated as of December 22, 2006, is made by
TransCanada Corporation, a corporation organized under the laws of Canada (“TC
Corp”), and TransCanada PipeLine USA Ltd., a Nevada Corporation (“TC Pipelines”
and, collectively with TC Corp, the “Guarantors”), in favor of El Paso
Corporation, a Delaware corporation (“El Paso”), and El Paso CNG Company,
L.L.C., a Delaware limited liability company (“CNG” and, collectively with El
Paso, the “Beneficiaries”) and their successors and assigns.
RECITALS
     A. TransCanada American Investments Ltd., a Delaware corporation (“Buyer”),
is a wholly-owned indirect subsidiary of TC Corp and a wholly-owned direct
subsidiary of TC Pipelines.
     B. Pursuant to a Purchase and Sale Agreement, dated as of December 22, 2006
(the “Purchase Agreement”), between Buyer and the Beneficiaries, the
Beneficiaries have agreed to sell to Buyer, and Buyer has agreed to purchase
from the Beneficiaries, all of the Purchased Interests (as defined in the
Purchase Agreement).
     C. Section 7.13 of the Purchase Agreement requires that Buyer cause the
Guarantors to deliver this Guaranty to the Beneficiaries.
     D. The Guarantors are familiar with the Purchase Agreement and have
determined that the guaranty provided in this Guaranty is necessary or
convenient to the conduct, promotion, or attainment of the business of the
Guarantors, may reasonably be expected to benefit, directly or indirectly, the
Guarantors, and is in the best interests of the Guarantors.
     NOW, THEREFORE, in consideration of the premises and as a material
inducement to the Beneficiaries to enter into the Purchase Agreement, the
Guarantors hereby agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
     1.1 Definitions. Capitalized terms used herein without definition that are
defined in the Purchase Agreement have the respective meanings assigned to such
terms in the Purchase Agreement. Additionally, the following terms have the
meanings set forth below:
     “Business Day” means a day on which commercial banks or financial
institutions are open for business in the States of New York and Texas and the
Province of Alberta, Canada.
     “Buyer” has the meaning set forth in the recitals.

 

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     “Guaranteed Obligations” means the obligations of Buyer of whatsoever
nature and howsoever evidenced, due or to become due, now existing or hereafter
arising, whether direct or indirect, absolute or contingent, which may arise
under, out of or in connection with the Transaction Documents and any amendment,
restatement or modification thereof.
     “Purchase Agreement” has the meaning set forth in the recitals.
     “Transaction Documents” means the Purchase Agreement and the other
documents executed and delivered by Buyer in connection with the Closing of the
transactions contemplated by the Purchase Agreement.
     1.2 Construction. The principles of construction set forth in Section 1.2
of the Purchase Agreement are incorporated herein mutatis mutandis.
ARTICLE II
GUARANTY
     2.1 Guaranty. Each of the Guarantors, jointly and severally, hereby
irrevocably and unconditionally guarantees the full, complete and timely payment
and performance by Buyer of the Guaranteed Obligations. If Buyer fails or
refuses to pay or perform any of the Guaranteed Obligations and either of the
Beneficiaries elects to exercise its rights under this Guaranty, such
Beneficiary shall make a demand upon either or both of the Guarantors
(hereinafter referred to as a “Payment Demand”). A Payment Demand shall be in
writing and shall specify in which manner and what amount Buyer has failed to
pay or perform and an explanation of why such payment or performance is due. The
Guarantors, jointly and severally, shall pay or perform, as applicable, such
Guaranteed Obligations set out in the Payment Demand, to the extent Buyer is
obligated to perform such Guaranteed Obligations under the Transaction
Documents, within five Business Days after the Guarantors’ receipt of the
Payment Demand. A single written Payment Demand shall be effective as to any
specific default during the continuance of such default until Buyer or a
Guarantor shall have cured such default, and additional written demands
concerning such default shall not be required until such default is cured.
     2.2 Guaranty Unconditional. This Guaranty is a guaranty of payment and
performance and not of collection. There are no conditions precedent to the
enforcement of this Guaranty. The obligations of the Guarantors hereunder shall
be continuing, absolute and unconditional and, without limiting the generality
of the foregoing, shall not be released, discharged or otherwise affected by:
     (a) any invalidity, illegality or unenforceability against Buyer of any
Transaction Document;
     (b) any modification, amendment, restatement, waiver or rescission of, or
any consent to the departure from, any of the terms of the Transaction
Documents;

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     (c) any exercise or non-exercise by a Beneficiary of any right or privilege
under any Transaction Document and any notice of such exercise or non-exercise;
     (d) any extension, renewal, settlement, compromise, waiver or release in
respect of any Guaranteed Obligation, by operation of law or otherwise, or any
assignment of any Guaranteed Obligation by a Beneficiary;
     (e) any change in the corporate existence, structure or ownership of Buyer;
     (f) any insolvency, bankruptcy, reorganization or other similar proceeding
affecting Buyer or its assets or any resulting release or discharge of any
Guaranteed Obligation;
     (g) any requirement that a Beneficiary exhaust any right or remedy or take
any action against Buyer or any other Person before seeking to enforce the
obligations of the Guarantors under this Guaranty;
     (h) the existence of any defense, set-off or other rights (other than a
defense of payment or performance) that a Guarantor may have at any time against
Buyer, a Beneficiary or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
     (i) any other act or failure to act or delay of any kind by Buyer, a
Beneficiary or any other Person; or
     (j) any other circumstance whatsoever that might, but for the provisions of
this Section 2.2, constitute a legal or equitable discharge of the Guaranteed
Obligations or the obligations of a Guarantor hereunder, including but not
limited to all defenses of a surety (except for indefeasible payment in full);
provided that the Guarantors may interpose and assert as defense to payment or
performance hereunder (A) any counterclaim or setoff that Buyer is or would have
been entitled to in respect of its obligations and liabilities under the
Transaction Documents and (B) any defense that Buyer is or would have been
entitled to arising out of the conduct of a Beneficiary in respect of its
obligations and liabilities under the Transaction Documents.
     2.3 Termination and Reinstatement. The Guarantors’ obligations hereunder
shall remain in full force and effect until all obligations of Buyer under the
Purchase Agreement have expired or terminated or been released. If at any time
any payment with respect to the Guaranteed Obligations is rescinded or must be
otherwise restored or returned as a result of any fraudulent conveyance or the
insolvency, bankruptcy or reorganization of Buyer or otherwise, the Guarantors’
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.

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     2.4 Waivers. Each Guarantor irrevocably waives
     (a) notice of acceptance of this Guaranty and notice of any obligation or
liability to which it may apply;
     (b) any diligence, promptness, presentment, demand, performance, protest,
demand for payment, notice of non-payment as the same pertains to Buyer, suit or
the taking of other action by a Beneficiary against, and any other notice to,
Buyer, the Guarantors or others;
     (c) any right to require a Beneficiary to proceed against Buyer or to
exhaust any security held by a Beneficiary or to pursue any other remedy;
     (d) any defense based upon an election of remedies by a Beneficiary, unless
the same would excuse performance by Buyer under the Transaction Documents;
     (e) any duty of a Beneficiary to advise the Guarantors of any information
known to such Beneficiary regarding Buyer or its ability to perform under the
Transaction Documents; and
     (f) any right to require a Proceeding against Buyer or any right to have
Buyer joined as a party to any Proceeding to enforce this Guaranty.
     2.5 Subrogation. Each Guarantor shall be subrogated to all rights of the
Beneficiaries against Buyer in respect of any amounts paid by such Guarantor
pursuant to the provisions of this Guaranty; provided, however, that such
Guarantor shall not be entitled to enforce or to receive any payments arising
out of or based upon such right of subrogation if any Guaranteed Obligations
then due have not been satisfied. If any amount is paid to a Guarantor on
account of subrogation rights under this Guaranty in violation of this
Section 2.5, such amount shall be held in trust for the benefit of the
Beneficiaries and shall be promptly paid to the Beneficiaries to be credited and
applied to the Guaranteed Obligations, whether matured or unmatured or absolute
or contingent, in accordance with the terms of the Transaction Documents.
ARTICLE III
GUARANTORS’ REPRESENTATIONS
     Each Guarantor, jointly and severally, represents and warrants to
Beneficiary, as of the date hereof and as of the Closing Date, as follows:
     3.1 Existence. Each of the Guarantors is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation and has all requisite power to execute and deliver this Guaranty and
to perform its obligations hereunder.
     3.2 Due Authorization. The execution and delivery of this Guaranty and the
consummation of the transactions contemplated hereby have been duly authorized
by all

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necessary corporate action on the part of each of the Guarantors. This Guaranty
has been duly executed and delivered by each of the Guarantors and constitutes
its legal, valid and binding obligation, enforceable against such Guarantor in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights and remedies
generally and to the effect of general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
     3.3 Consents. All consents, licenses, clearances, authorizations, and
approvals of, and registrations and declarations with, any Governmental Entity
necessary for the due execution, delivery and performance of this Guaranty have
been obtained and remain in full force and effect and all conditions thereof
have been duly complied with, and no other action by, and no notice to or filing
with, any Governmental Entity is required in connection with the execution,
delivery or performance of this Guaranty.
     3.4 No Conflict. The execution, delivery and performance of this Guaranty
by each Guarantor do not, and the consummation of the transactions contemplated
hereby will not,
     (i) result in a breach of the Certificate of Incorporation or bylaws of
such Guarantor or any resolution adopted by its Board of Directors;
     (ii) result in, or constitute an event that, with the passage of time or
giving of notice or both, would be, a breach, violation or default (or give rise
to any right of termination, cancellation, prepayment or acceleration) under any
agreement to which such Guarantor is a party or by which its properties or
assets may be bound that could reasonably be expected to materially adversely
affect the ability of such Guarantor to perform its obligations under this
Guaranty; or
     (iii) violate any Applicable Law binding upon such Guarantor or its assets
or properties.
     3.5 Litigation. There is no Proceeding pending against either of the
Guarantors or any of its subsidiaries, or to the knowledge of each Guarantor
threatened against such Guarantor or any of its subsidiaries, in which there is
a reasonable possibility of an adverse decision that could reasonably be
expected to materially adversely affect the ability of such Guarantor to perform
its obligations under this Guaranty or which in any manner draws into question
the validity of this Guaranty.
ARTICLE IV
OTHER PROVISIONS
     4.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by either Guarantor or
either Beneficiary (each a “Notice”) shall be in writing and shall be deemed to
have been duly given or made if (i) delivered personally, (ii) transmitted by
first class registered or certified mail, postage prepaid, return receipt
requested, (iii) delivered by prepaid overnight courier service, or (iv)
delivered by confirmed telecopy or facsimile

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transmission at the following addresses (or at such other addresses as shall be
specified by similar notice):
If to the Beneficiaries:
El Paso Corporation
El Paso CNG Company, L.L.C.
1100 Louisiana Street
Houston, Texas 77002
Attention: General Counsel
Fax: (713) 420-5043
with a copy to:
Andrews Kurth LLP
600 Travis Street, Suite 4200
Houston, Texas 77002
Attention: G. Michael O’Leary
Fax: (713) 220-4285
If to the Guarantors:
TransCanada Corporation
TransCanada PipeLines USA Ltd.
TransCanada PipeLines Tower
450 – 1st Street S.W.
Calgary, Alberta T2P 5H1
Attention: Sean McMaster
Executive Vice-President,
Law and General Counsel
Fax: (403) 920-2410
with a copy to:
Mayer, Brown, Rowe & Maw LLP
71 South Wacker Drive
Chicago, IL 60606

Attention: Marc F. Sperber  D. Michael Murray

Fax: (312) 701-7711
Notices shall be effective (i) if delivered personally or sent by courier
service, upon actual receipt by the intended recipient, (ii) if mailed, upon the
earlier of five days after deposit in the mail or the date of delivery as shown
by the return receipt therefor, or (iii) if sent by telecopy or facsimile
transmission, when the answer back is received.
     4.2 Entire Agreement. This Guaranty constitutes the entire agreement
between the Guarantors and the Beneficiaries with respect to the subject matter
hereof

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and supersedes all prior agreements and understandings, both written and oral,
between them with respect to the subject matter hereof. There are no
restrictions, promises, representations, warranties, covenants or undertakings
between the Guarantors and the Beneficiaries other than those expressly set
forth or referred to herein.
     4.3 Binding Effect; Assignment; No Third Party Benefit. Subject to the
following sentence, this Guaranty shall be binding upon each of the Guarantors
and its successors and assigns and shall inure to the benefit of each of the
Beneficiaries and its successors and assigns. Neither this Guaranty nor any of
the rights, interests, or obligations hereunder shall be assigned or delegated
by a party, other than to an Affiliate (provided that if a Guarantor so assigns
or delegates to an Affiliate, such Guarantor shall not be released from its
obligations hereunder as a result of such assignment), without the prior written
consent of the other parties. Except as provided herein, nothing in this
Guaranty is intended to or shall confer upon any Person other than the parties,
and their successors and assigns, any rights, benefits, or remedies of any
nature whatsoever under or by reason of this Guaranty.
     4.4 Severability. If any provision of this Guaranty is held to be
unenforceable, this Guaranty shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Guaranty shall remain in full force and effect.
     4.5 Governing Law. This Guaranty shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
its conflicts of laws rules or principles.
     4.6 Counterparts. This Guaranty may be executed by the parties in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement. Such execution may be
evidenced by an exchange of facsimile communications or any other rapid
transmission devise designed to produce a written record of communications
transmitted.
     4.7 Consent to Jurisdiction. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the federal courts of
the United States of America located in The Borough of Manhattan, New York, New
York, over any dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby, and each party irrevocably agrees that all
claims in respect of such dispute or proceeding shall be heard and determined in
such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by Applicable Law, any objection which they may now or hereafter have
to the venue of any dispute arising out of or relating to this Guaranty or any
of the transactions contemplated hereby brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each party agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by Applicable Law.
     4.8 Amendment and Waiver. No amendment or waiver of any provision of this
Guaranty, nor consent to any departure by a Guarantor therefrom, shall in any
event

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be effective unless the same shall be in writing and signed by both Guarantors
and both Beneficiaries. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
     4.9 No Implied Waiver. No failure or delay in exercising any right, power
or privilege or requiring the satisfaction of any condition hereunder, and no
course of dealing between the Guarantors and the Beneficiaries operates as a
waiver or estoppel of any right, remedy or condition. No single or partial
exercise of any right or remedy under this Guaranty precludes any simultaneous
or subsequent exercise of any other right, power or privilege. The rights and
remedies set forth in this Guaranty are not exclusive of, but are cumulative to,
any rights or remedies now or subsequently existing at law, in equity or by
statute.
     4.10 Expenses. The Guarantors shall indemnify the Beneficiaries for any and
all costs and expenses (including reasonable attorneys’ fees and expenses)
incurred by any of the Beneficiaries in the successful enforcement of any rights
under this Guaranty.
[Signatures on Following Page]

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     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

            TRANSCANADA CORPORATION
      By:   /s/ Gregory A. Lohnes         Name:   Gregory A. Lohnes       
Title:   Chief Financial Officer and Executive Vice-President              By:  
/s/ Ron Cook         Name:   Ron Cook        Title:   Vice President – Taxation 
      TRANSCANADA PIPELINE USA LTD.
      By:   /s/ Ron Anderson         Name:   Ron Anderson        Title:   Vice
President              By:   /s/ David Kohlenberg         Name:   David
Kohlenberg        Title:   Deputy General Counsel     

[Signature Page to Guaranty]