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Execution Version
EXHIBIT 10.4

 
LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
BOARDWALK HP STORAGE COMPANY, LLC
 

 
DATED EFFECTIVE AS OF OCTOBER 16, 2011

 
 

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EXHIBIT 10.4

TABLE OF CONTENTS
 
 
ARTICLE I.
DEFINITIONS AND RULES OF CONSTRUCTION 
1

 
ARTICLE II.
ORGANIZATIONAL MATTERS 
11

 
ARTICLE III.
PURPOSE OF THE COMPANY 
12

 
ARTICLE IV.
NAMES AND ADDRESSES OF MEMBERS 
13

 
ARTICLE V.
CONTRIBUTIONS; FINANCING; CAPITAL ACCOUNTS 
13

 
ARTICLE VI.
ALLOCATIONS AND DISTRIBUTIONS 
15

 
ARTICLE VII.
MANAGEMENT OF THE COMPANY 
20

 
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF MEMBERS 
30

 
ARTICLE IX.
TRANSFERS 
31

 
ARTICLE X.
DISSOLUTION AND TERMINATION 
33

 
ARTICLE XI.
MISCELLANEOUS PROVISIONS 
35

EXHIBIT A                           Members

 
 

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EXHIBIT 10.4

THE MEMBERSHIP INTERESTS REPRESENTED HEREBY (OR BY CERTIFICATES IF ANY ARE
ISSUED) HAVE BEEN ACQUIRED FOR INVESTMENT AND WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE.  THESE INTERESTS MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME EXCEPT IN ACCORDANCE WITH THE
RESTRICTIONS CONTAINED IN THIS AGREEMENT AND PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR IN THE EVENT THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE
REGISTRATION UNDER ANY APPLICABLE LAWS.
 
LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
BOARDWALK HP STORAGE COMPANY, LLC
 

 
This Limited Liability Company Agreement of Boardwalk HP Storage Company, LLC, a
Delaware limited liability company (the “Company”), is entered into and
effective as of October 16, 2011 (the “Effective Date”), by and between
Boardwalk Pipelines, LP, a Delaware limited partnership (“Boardwalk”), and
Boardwalk Pipelines Holding Corp., a Delaware corporation (“BPHC”); and
Boardwalk and BPHC referred to individually as a “Member” and collectively as
the “Members”.
 
W I T N E S S E T H:
 
WHEREAS, in accordance with and pursuant to the Act (as defined below), the
Company was formed as a Delaware limited liability company upon the filing of
the Certificate of Formation of Boardwalk HP Storage Company, LLC (the
“Certificate of Formation”) with the office of the Secretary of State of the
State of Delaware (the “Delaware SOS”) on October 5, 2011 (the “Formation
Date”);
 
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
 
ARTICLE I.
 
DEFINITIONS AND RULES OF CONSTRUCTION
 
1.1 Defined Terms.  The following terms, when used in this Agreement, shall have
the meanings set forth below unless the context requires otherwise.
 
 
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EXHIBIT 10.4
 
“Act” means the Delaware Limited Liability Company Act, Chapter 18, Title 6 of
the Delaware Code, as it may be amended from time to time, and the corresponding
provisions of any successor statute.
 
“Additional Capital Contribution” means, with respect to any Member, any Capital
Contribution made by such Member from time to time in accordance with the terms
of Article V (other than such Member’s Initial Capital Contribution).
 
“Adjusted Capital Account” means, with respect to any Member, the balance in the
Capital Account maintained for such Member as of the end of each taxable year of
the Company (i) increased by any amounts which such Member is obligated to
restore under the standards set by Regulations § 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Regulations §§ 1.704-2(g)(1) and
1.704-2(i)(5)) and (ii) decreased by (a) the amount of all losses and deductions
that, as of the end of such taxable year, are reasonably expected to be
allocated to such Member in subsequent years under Code Sections 704(e)(2) and
706(d) and Regulations § 1.751-1(b)(2)(ii), and (b) the amount of all
distributions that, as of the end of such taxable year, are reasonably expected
to be made to such Member in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed offsetting increases to
such Member’s Capital Account that are reasonably expected to occur during (or
prior to) the year in which such distributions are reasonably expected to be
made.  The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Regulations § 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
 
“Adjusted Property” means any property or asset, the Agreed Value of which has
been adjusted pursuant to the definition of “Agreed Value.”
 
“Affiliate” means, when used with respect to any specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such specified
Person.
 
“Agreed Value” means, with respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:
 
(i)           The initial Agreed Value of any asset contributed by a Member to
the Company shall be the gross Fair Market Value of such asset on the date of
the contribution, as determined by the contributing Member and the Company.
 
(ii)           The Agreed Values of all Company assets immediately prior to the
occurrence of any event described in subparagraphs (a) through (e) below shall
be adjusted to equal their respective gross Fair Market Values, as determined by
the Company, as of the following times:
 
(a)           the acquisition of an additional interest in the Company by any
new or existing Member in exchange for more than a de minimis Capital
Contribution, if the Company reasonably determines that such adjustment is
necessary or appropriate to reflect the relative Interests of the Members in the
Company;
 
(b)           the distribution by the Company to a Member of more than a de
minimis amount of Company assets as consideration for an Interest in the
Company, if the Company reasonably determines that such adjustment is necessary
or appropriate to reflect the relative Interests of the Members in the Company;
 
 
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EXHIBIT 10.4
 
(c)           the liquidation or dissolution of the Company within the meaning
of Regulations § 1.704-1(b)(2)(ii)(g);
 
(d)           the grant of an Interest in the Company (other than a de minimis
interest) as consideration for the provision of services to or for the benefit
of the Company by an existing Member acting in a Member capacity, or by a new
Member acting in a Member capacity or in anticipation of becoming a Member of
the Company, if the Company reasonably determines that such adjustment is
necessary or appropriate to reflect the relative Interests of the Members in the
Company; and
 
(e)           at such other times as the Company shall reasonably determine
necessary or advisable in order to comply with Regulations §§ 1.704-1(b) and
1.704-2.
 
(iii)           The Agreed Value of any Company asset distributed to any Member
shall be the gross Fair Market Value of such Company asset on the date of
distribution as determined by the distributee Member and the Company.
 
(iv)           The Agreed Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such Company
assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the
extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations § 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
the definition of “Profit” and “Loss;” provided, however, that Agreed Values
shall not be adjusted pursuant to this subparagraph (iv) to the extent the
Company determines that an adjustment pursuant to subparagraph (ii) hereof is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subparagraph (iv).
 
(v)           If the Agreed Value of a Company asset has been determined or
adjusted pursuant to subparagraph (i), (ii) or (iv) hereof, such Agreed Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such Company asset for purposes of computing Profit and Loss.
 
“Agreement” means this Limited Liability Company Agreement, as originally
executed and as amended from time to time.
 
“Available Cash” means, with respect to any month ending prior to the
dissolution or liquidation of the Company, that portion, if any, of the
Company’s unrestricted cash and cash equivalents that the Board determines
exceeds the Company’s current and anticipated needs, including reserves for
working capital, capital expenditures, repair and maintenance expenditures,
operating expenditures, debt service, expenditures for compliance with Law, any
Permit or any agreement or obligation to which the Company is a party or its
assets are subject, and for other obligations and contingencies; provided that,
“Available Cash” shall be zero with respect to any month in which dissolution or
liquidation occurs and any subsequent month.
 
“Board” has the meaning ascribed to it in Section 7.1(b).
 
 
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EXHIBIT 10.4
 
“Boardwalk” has the meaning specified in the preamble.
 
“Book-Tax Disparity” means with respect to any item of Contributed Property or
Adjusted Property, as of the date of any determination, the difference between
the Agreed Value of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of such date.  A
Member’s share of the Company’s Book-Tax Disparities in all of its Contributed
Property and Adjusted Property will be reflected by the difference between such
Member’s Capital Account balance as maintained pursuant to the definition of
“Capital Account” herein and the hypothetical balance of such Member’s Capital
Account computed as if it had been maintained strictly in accordance with
federal income tax accounting principles.  The determination of Book-Tax
Disparity and a Member’s share thereof will be determined consistently with
Regulations § 1.704-3(d).
 
“BPHC” has the meaning specified in the preamble.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
federally chartered banks in New York, New York, generally are open for business
and on any such day the period of time between 8:00 a.m. and 4:00 p.m. in
Houston, Texas.
 
“Capital Account” means the capital account maintained for each Member on the
Company’s books and records in accordance with the following provisions:
 
(a)           to each Member’s Capital Account there shall be added (i) such
Member’s Capital Contributions, (ii) such Member’s allocable share of Profit and
any items in the nature of income or gain that are specially allocated to such
Member pursuant to Article VI hereof or other provisions of this Agreement, and
(iii) the amount of any Company liabilities assumed by such Member or which are
secured by any property distributed to such Member.
 
(b)           From each Member’s Capital Account there shall be subtracted (i)
the amount of (A) cash and (B) the Agreed Value of any Company assets (other
than cash) distributed to such Member pursuant to any provision of this
Agreement, (ii) such Member’s allocable share of Loss and any other items in the
nature of expenses or losses that are specially allocated to such Member
pursuant to Article VI hereof or other provisions of this Agreement, and (iii)
liabilities of such Member assumed by the Company or which are secured by any
property contributed by such Member to the Company.
 
(c)           In the event any Interest is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred Interest.
 
(d)           In determining the amount of any liability for purposes of
subparagraphs (a) and (b) above, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
 
(e)           The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations §§ 1.704-1(b) and 1.704-2 and shall be interpreted and applied
in a manner consistent with such Regulations.  In the event that the Company
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any additions thereto or subtractions therefrom, are computed in
order to comply with such Regulations, the Company may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Member pursuant to Article VI hereof upon the dissolution
of the Company.
 
 
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EXHIBIT 10.4
 
“Capital Call” has the meaning set forth in Section 5.3.
 
“Capital Contribution” means, with respect to any Member, the total amount of
cash and the initial Agreed Value of property (other than cash) contributed to
the capital of the Company by such Member, whether as an Initial Capital
Contribution or as an Additional Capital Contribution.
 
“Certificate of Formation” means the certificate of formation of the Company
filed with the Delaware SOS as required by the Act, as such certificate may be
amended or amended and restated from time to time.
 
“Charter Documents” means the Certificate of Formation and this Agreement.
 
“Claim” means any demand, demand letter, claim, action, notice of noncompliance
or violation, or other proceeding.
 
“Code” means the United States Internal Revenue Code of 1986, as amended (or any
corresponding provisions of a successor statute).
 
“Company” has the meaning specified in the preamble.
 
“Company Minimum Gain” has the meaning set forth in Regulations §§ 1.704-2(b)(2)
and 1.704-2(d)(1) for the phrase “partnership minimum gain.”
 
“Consequential Damages” means all exemplary, punitive, special, indirect,
consequential, remote or speculative damages, including loss of profit, loss of
revenue or any other special or incidental damages, whether in contract, tort
(including negligence), strict liability or otherwise, whether or not the Person
at fault knew or should have known that such damage would likely be suffered.
 
“Contributed Property” means each property or asset, but excluding cash or cash
equivalents, contributed to the Company by a Member.  Once the Agreed Value of a
Contributed Property is adjusted pursuant to the definition of “Agreed Value”,
such property or asset will no longer constitute a Contributed Property for
purposes of Section 6.3(b), but will be deemed an Adjusted Property for such
purposes.
 
“Control” (and “Controls,” “Controlled by” and other derivatives thereof),
means, with respect to a specified Person, the possession, directly or
indirectly, of the power, directly or indirectly, to direct or cause the
direction of the management or policies of such specified Person, whether
through ownership of voting securities, by contract or otherwise.
 
“Delaware SOS” has the meaning specified in the recitals of this Agreement.
 
 
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EXHIBIT 10.4
 
“Depreciation” means, for each fiscal year or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such fiscal year or
other period, except that (i) if the Agreed Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such fiscal
year or other period and such difference is being eliminated by use of the
“remedial allocation method” as defined in Regulations § 1.704-3(d),
Depreciation for such period shall be the amount of the book basis recovered for
such period under the rules prescribed in Regulations § 1.704-3(d) and (ii) with
respect to any other asset whose Agreed Value differs from its adjusted basis
for federal income tax purposes at the beginning of such fiscal year or other
period, Depreciation shall be an amount which bears the same ratio to such
beginning Agreed Value as the federal income tax depreciation, amortization or
other cost recovery deduction for such fiscal year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Agreed
Value using any reasonable method selected by the Board.
 
“Effective Date” has the meaning specified in the preamble.
 
“Emergency Loan” has the meaning set forth in Section 5.8.
 
“Equity Percentage Interest” means the interest of a Member in the equity of the
Company, stated as a percentage and, for all Members, aggregating 100%.  The
initial Equity Percentage Interest of each Member is set forth on Exhibit A and
is subject to adjustment or revision from time to time in accordance with the
terms of this Agreement.
 
“Fair Market Value” means the value of any specified interest or property, which
shall not in any event be less than zero, that would be obtained in an arm’s
length transaction for cash between an informed and willing buyer and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, and without regard to the particular circumstances of the
buyer or seller.
 
“Formation Date” has the meaning given that term in the recitals of this
Agreement.
 
“GAAP” means United States generally accepted accounting principles.
 
“Governmental Authority” means any domestic or foreign, national, state, parish,
county, local or tribal government, or any subdivision, agency, branch, bureau,
board, commission, legislature, court, tribunal, arbitrator, official or other
instrumentality or authority thereof, or any governmental, quasi-governmental or
non-governmental body exercising or entitled to exercise any similar powers of
authority thereunder including regulatory, administrative, executive, judicial,
legislative, police or taxing authority.
 
“Indemnitee” has the meaning specified in Section 7.13.
 
“Initial Capital Contribution” means a Member’s aggregate Capital Contributions
as described in Section 5.1 and set forth on Exhibit A attached hereto as of the
Effective Date.
 
“Interest” has the same meaning as Membership Interest.
 
 
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EXHIBIT 10.4
 
“IRS” means the United States Internal Revenue Service or any successor agency
succeeding to substantially all of the authority of the United States Internal
Revenue Service.
 
“Law” means any statute, law (including common law), rule, ordinance,
regulation, ruling, requirement, writ, injunction, decree, order or other
official act of or by any Governmental Authority or any arbitral tribunal to
which a Person or property is subject, whether such Laws now exist or hereafter
come into effect.
 
“Liquidating Events” has the meaning set forth in Section 10.1.
 
“Liquidating Trustee” means the liquidating trustee specified in accordance with
Section 10.2(a).
 
“Loss” has the meaning set forth in the definition of Profit and Loss.
 
“Majority” means one or more Members holding, in the aggregate, more than 50% of
the Equity Percentage Interests of all Members.
 
“Majority Approval”, when used with respect to the Board, means approval by one
or more Managers entitled to vote, consent to and approve matters and appointed
to the Board by Members holding, in the aggregate, more than fifty percent (50%)
of the Equity Percentage Interests; and, when used with respect to the Members,
means approval by Members entitled to vote, consent to and approve matters
holding, in the aggregate, more than fifty percent (50%) of the Equity
Percentage Interests.
 
“Manager” means any individual appointed to the Board as provided in Section
7.1(b), but only for so long as such Person remains a member of the Board in
accordance with this Agreement.
 
“Member” means any Person that is a party to this Agreement by virtue of
ownership of Membership Interests, and any other Person that hereafter becomes a
Member in accordance with Article IX, but only for so long as each such Person
remains a member of the Company in accordance with this Agreement and the Act,
and does not include an assignee which is not admitted as a Substitute Member in
accordance with Article IX.
 
“Member Minimum Gain” means an amount, with respect to each Member Nonrecourse
Debt, equal to the Company Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations § 1.704-2(i).
 
“Member Nonrecourse Debt” has the meaning set forth in Regulations §
1.704-2(b)(4) for the phrase “partner nonrecourse debt.”
 
“Member Nonrecourse Deductions” has the meaning set forth in Regulations §
1.704-2(i) for the phrase “partner nonrecourse deductions.”
 
“Membership Interest” or “Interest” means all of the ownership interests and
rights of a Member in the Company, including such Member’s (i) right to a
distributive share of the Profits and Losses (and items thereof) of the Company,
(ii) right to a distributive share of the assets of the Company, (iii) rights to
allocations, information and to consent or approve, and (iv) right to
participate in the management of the affairs of the Company as provided herein.
 
 
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EXHIBIT 10.4
 
“Nonrecourse Deductions” has the meaning set forth in Regulations §§
1.704-2(b)(1) and 1.704-2(c).
 
“Nonrecourse Liability” has the meaning set forth in Regulations §§
1.704-2(b)(3) and 1.752-1(a)(2).
 
“Operations Agreement” means the Operations and Maintenance Agreement to be
entered into concurrently with the closing of the Purchase and Sale Agreement,
between the Company, as owner, and Gulf South Pipeline Company, LP, as operator,
as it may be amended from time to time.
 
“Permits” means any licenses, permits, certificates of authority, approvals,
authorizations, registrations, tariffs, statements of operating conditions,
franchises and similar consents granted by a Governmental Authority.
 
“Person” means any natural person, corporation, partnership (general, limited,
limited liability or otherwise), limited liability company, firm, association,
trust or any other entity, whether acting in an individual, fiduciary or other
capacity or any Governmental Authority.
 
“Pro Rata” means proportionately among all Members, or with respect to a
particular subset of Members, among the Members of such subset, in accordance
with the Members’ respective Equity Percentage Interests.
 
“Profit” and “Loss” mean, for each fiscal year or other period, an amount equal
to the Company’s taxable income or loss for such fiscal year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
 
(i)           Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profit and Loss pursuant to
this definition of Profit and Loss shall increase the amount of such income
and/or decrease the amount of such loss;
 
(ii)           Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations § 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profit or Loss pursuant to this definition of Profit and Loss, shall
decrease the amount of such income and/or increase the amount of such loss;
 
(iii)           In the event the Agreed Value of any Company asset is adjusted
pursuant to subparagraphs (ii) or (iii) of the definition of “Agreed Value,” the
amount of such adjustment shall be taken into account in the taxable year of
such adjustment as gain or loss from the disposition of such asset for purposes
of computing Profit or Loss;
 
 
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EXHIBIT 10.4
 
(iv)           Gain or loss resulting from any disposition of Company assets,
where such gain or loss is recognized for federal income tax purposes, shall be
computed by reference to the Agreed Value of the Company assets disposed of,
notwithstanding that the adjusted tax basis of such Company assets differs from
its Agreed Value;
 
(v)           In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such income or loss, there shall be
taken into account Depreciation for such fiscal year or other period;
 
(vi)           To the extent an adjustment to the adjusted tax basis or any
asset included in Company assets pursuant to Code Section 734(b) or 743(b) is
required pursuant to Regulations § 1.704-1(b)(2)(iv)(m) to be taken into account
in determining Capital Accounts as a result of a distribution other than in
liquidation of a Member’s Membership Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
for the disposition of the asset and shall be taken into account for purposes of
computing Profit and Loss; and
 
(vii)           Notwithstanding any other provision of this definition of
"Profit" and "Loss," any items which are specially allocated pursuant to Section
6.2 or Section 6.4(b) hereof shall not be taken into account in computing Profit
or Loss.  The amounts of the items of Company income, gain, loss, or deduction
available to be specially allocated pursuant to Sections 6.2 and 6.4(b) hereof
shall be determined by applying rules analogous to those set forth in
subparagraphs (i) through (vi) above.
 
“Purchase and Sale Agreement” has the meaning set forth in Section 3.1.
 
“Recapture Income” means any gain recognized by the Company (computed without
regard to any adjustment required by Code Sections 734 or 743) upon the
disposition of any property or asset of the Company, which gain is characterized
as ordinary income or gain because it represents the recapture of deductions
previously taken with respect to such property or asset.
 
“Regulations” means the Income Tax Regulations promulgated under the Code, as
may be amended from time to time (including corresponding provisions of
successor regulations).
 
“Regulatory Allocations” has the meaning set forth in Section 6.2(h).
 
“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Company recognized for federal income tax purposes resulting from
a sale, exchange or other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Section 6.3(b), to eliminate Book-Tax Disparities.
 
“Securities Act” has the meaning specified in the legend appearing at the top of
this Agreement.
 
“Substitute Member” means any Person who acquires Membership Interests from a
Member and is admitted to the Company as a Member pursuant to the provisions of
Section 9.2.
 
 
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EXHIBIT 10.4
 
“Supermajority Approval” means, when used with respect to the Board, two-thirds
approval by the Managers (calculated by reference to the Equity Percentage
Interest of the Members that appointed the Managers); and, when used with
respect to the Members, two-thirds approval by the Members (calculated by
reference to the Equity Percentage Interest of such Members).
 
“Tax” or “Taxes” means any United States federal, state or local income tax, ad
valorem tax, excise tax, sales tax, use tax, franchise tax, margin tax, real or
personal property tax, transfer tax, gross receipts tax or other tax assessment,
fee, levy or other governmental charge, together with and including any and all
interest, fines, penalties, assessments and additions to the Tax resulting from,
relating to, or incurred in connection with any of the foregoing or any contest
or dispute thereof.
 
“Tax Matters Partner” has the meaning specified in Section 6.11.
 
“Third Parties” means any Person other than the Company and its Members, or
their respective Affiliates.
 
“Transfer” has the meaning specified in Section 9.1.
 
“Transferee” means a Person who receives all or part of a Member’s Membership
Interest through a Transfer.
 
“Wholly-Owned Affiliate” means, when used with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries, is
controlled by such other Person, where “control” for purposes of this definition
means the possession, directly or indirectly, of the power, directly or
indirectly, to direct or cause the direction of the management or policies of
such specified Person, through ownership of 100% of the equity securities of
such specified Person.
 
1.2 Rules of Construction.  In construing this Agreement:
 
(a) 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;
 
(b) no consideration shall be given to the fact or presumption that one party
had a greater or lesser hand in drafting this Agreement;
 
(c) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;
 
(d) the word “includes” and its derivatives means “includes, but is not limited
to,” and corresponding derivative expressions;
 
(e) a defined term has its defined meaning throughout this Agreement, and each
exhibit, attachment, and schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined;
 
 
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EXHIBIT 10.4
 
(f) all references to prices, values or monetary amounts refer to United States
dollars, unless expressly provided otherwise;
 
(g) all references to articles, sections, paragraphs, clauses, exhibits,
attachments or schedules refer to articles, sections, paragraphs and clauses of
this Agreement, and to exhibits, attachments or schedules attached to this
Agreement, unless expressly provided otherwise;
 
(h) each exhibit, attachment, 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, attachment or schedule, the provisions of the
main body of this Agreement shall prevail;
 
(i) the words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision, unless expressly so limited, but do not refer to
documents attached hereto as exhibits and schedules or referred to therein
unless expressly so stated;
 
(j) reference to a given agreement, instrument, exhibit or schedule constitutes
a reference to that agreement, instrument, exhibit or schedule as, and as may
be, from time to time, modified, amended, supplemented and restated; and
 
(k) references to any Person include transferees of such Person which acquire
such Person’s Membership Interests as permitted in and in accordance with this
Agreement.
 
ARTICLE II.
 
ORGANIZATIONAL MATTERS
 
2.1 Formation.  The Company was formed as a limited liability company under and
pursuant to the provisions of the Act for the limited purpose and scope
described in Section 3.1 and no other.  The rights and liabilities of all
Members shall be as provided under the Act, the Certificate of Formation and
this Agreement.
 
2.2 Name.  The name of the Company is Boardwalk HP Acquisition Company, LLC and
all Company business must be conducted in that name or such other names that
comply with applicable law as the Board may select from time to time with notice
to the other Members.  The Members hereby agree to execute an appropriate
assumed name certificate or certificates if required by the applicable law of
any state, and to file such certificate, and all amendments that may be
necessitated from time to time, in the appropriate filing locations.
 
2.3 Principal Place of Business.  The principal place of business of the Company
is located at 9 Greenway Plaza, Suite 2800, Houston, Texas 77046.  The Company
may locate its place of business, other or additional offices and the Company’s
registered office at any other place or places, and may seek qualification of
the Company to conduct business in such other jurisdictions, as the Board may
from time to time deem advisable with notice to the other Members.
 
 
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EXHIBIT 10.4
 
2.4 Registered Office and Registered Agent.  The registered office and
registered agent of the Company in the State of Delaware shall be as set forth
in the Certificate of Formation.  From time to time, the Board may change the
Company’s registered office and/or registered agent in the State of Delaware as
provided in the Act with notice to the other Members.
 
2.5 Foreign Qualification.  Prior to the Company’s conducting business in any
jurisdiction other than Delaware, the Company shall comply, to the extent
procedures are available and those matters are reasonably within the control of
the Company, with all requirements necessary to qualify the Company as a foreign
limited liability company in that jurisdiction.  At the request of the Company,
each Member shall execute, acknowledge, swear to, and deliver all certificates
and other instruments conforming with this Agreement that are necessary or
appropriate to qualify, continue, or terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct
business.
 
2.6 Term.  The term of the Company commenced on the date of the filing of the
Certificate of Formation with the Delaware SOS, and shall continue until the
Company is dissolved and wound up in accordance with this Agreement and the Act.
 
2.7 General.  A Member’s Membership Interest in the Company shall be personal
property for all purposes.  All real and other property owned or leased by the
Company shall be deemed owned or leased by the Company as an entity.  Title to
all real or other property owned or leased by the Company shall be held in the
name of the Company and no Member, individually, shall have any ownership of or
leasehold interest in any such property.
 
2.8 Tax Status.  The Members intend that the Company shall be treated as a
partnership for federal and state income Tax purposes, rather than an
association Taxable as a corporation, and neither the Members nor the Company
shall make any election pursuant to Regulations § 301.7701-3(c) or any similar
state Law or policy to cause the Company to be treated as an entity other than a
partnership for federal or state income Tax purposes.
 
2.9 No Partnership Intended for Nontax Purposes.  The Members have formed the
Company under the Act, and expressly do not intend hereby to form a partnership
under the laws of the State of Delaware or any other jurisdiction.  By executing
this Agreement, the Members do not intend to be partners as to one another, or
partners as to any third party, for any purpose other than federal, state, local
or foreign tax purposes.  To the extent any Member, by word or action,
represents to another person that any other Member is a partner or that the
Company is a partnership, the Member making such wrongful representation shall
be liable to any other Member who incurs personal liability by reason of such
wrongful representation.
 
ARTICLE III.
 
PURPOSE OF THE COMPANY
 
3.1 Purposes of the Company.  The purpose for which the Company is organized is
to acquire the equity interests in Crystal Holding, L.L.C. (“Crystal”) pursuant
to that certain Purchase and Sale Agreement dated October ___, 2011, by and
between Enterprise GTM Holdings L.P. and the Company (the “Purchase and Sale
Agreement”), and engage in any business activities that relate to the business
of natural gas storage or natural gas transportation conducted now or in the
future by Crystal and its current and future subsidiaries and in any other
business or activity that now or hereafter may be permitted by the Act.
 
 
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EXHIBIT 10.4
 
3.2 General Powers.  The Company shall have the power to enter into all
transactions necessary or incidental to accomplish or implement the business or
purposes of the Company, in its own name or in the name of, or by or through,
one or more agents, nominees or trustees, including, without limitation, the
incurring of indebtedness and the granting of liens and security interests in
assets of the Company to secure the payment of such indebtedness, together with
such other powers as may be authorized by this Agreement or permitted under the
Act and which are necessary, incidental or customary in connection with the
business of the Company.
 
ARTICLE IV.
 
NAMES AND ADDRESSES OF MEMBERS
 
4.1 Names and Addresses of Members.  The names and addresses of the Members are
set forth on Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
 
4.2 Substitute or Additional Members.  No substitute or additional Members shall
be admitted to the Company except in accordance with Article IX.
 
4.3 Issuance of Membership Interests.  On the Effective Date, the Members shall
contribute to the Company an aggregate amount equal to their respective Initial
Capital Contributions and, in exchange for such contributions, the Company is
issuing to such Members their respective Membership Interests.
 
4.4 Preemptive Rights.  The Members shall not have a preemptive right to acquire
additional, unissued or treasury Membership Interests of the Company or
securities of the Company, convertible into or carrying a right to subscribe to
acquire Membership Interests.
 
ARTICLE V.
 
CONTRIBUTIONS; FINANCING; CAPITAL ACCOUNTS
 
5.1 Capital Contributions.  Capital Contributions shall be comprised of Initial
Capital Contributions and Additional Capital Contributions.  Additional Capital
Contributions shall be comprised of contributions pursuant to Capital
Calls.  All Capital Contributions shall be made in cash except as otherwise
approved by the Board.  The Capital Contributions of the Members may be used for
any valid Company purpose.  The Members shall use their commercially reasonable
efforts to arrange debt financing for a portion of the costs of acquisition of
Crystal and related transaction expenses and additional capital needs of the
Company, Crystal and its subsidiaries, all of which debt financing shall be
subject to Board approval in accordance with this Agreement.
 
5.2 Initial Capital Contributions.  Each Member’s Initial Capital Contribution
consists of cash in the amount set forth on Exhibit A.  In exchange for these
Initial Capital Contributions, the Members shall own, hold and be entitled to
Membership Interests with the initial Equity Percentage Interests shown on
Exhibit A, such Membership Interests to be subject to all of the terms,
provisions and conditions of this Agreement.  The Capital Account balances of
each Member as of the Effective Date are agreed to be amounts equal to each
Member’s respective Initial Capital Contributions.
 
 
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EXHIBIT 10.4
 
5.3 Capital Calls.
 
(a) Without creating any rights in favor of third parties, at any time and from
time to time that the Board determines, by Supermajority Approval, that the
Company requires additional capital for any reason related to the business of
the Company, the Board may call for additional capital by written notice
(“Capital Call”) to the Members, and each Member shall have the right, but not
the obligation, to make an Additional Capital Contribution in an amount equal to
its Pro Rata portion of the Capital Call (or, so long as the aggregate amount of
the Members’ Additional Capital Contributions equal the total amount of the
Capital Call, in such other proportions as the Members unanimously agree).
 
(b) In the event a Member does not make an Additional Capital Contribution in an
amount equal to its Pro Rata portion of a Capital Call (or, so long as the
aggregate amount of the Members’ Additional Capital Contributions equal the
total amount of the Capital Call, in such other proportions as the Members
unanimously agreed), the fully contributing Member shall have the right, but not
the obligation, to contribute all or any portion of the Additional Capital
Contribution that was not contributed by the non-contributing Member.
 
5.4 Required Capital Contributions.  No Member shall have any obligation to make
any Capital Contributions to the Company other than as expressly set forth
herein.  In particular, no Member shall have any obligation to restore (to the
Company or to or for the benefit of any creditor of the Company) any deficit
balance in its Capital Account at any time, whether on liquidation or otherwise,
and such deficit balance shall not be considered a debt owed by such Member to
the Company or to any other Person for any purpose whatsoever.
 
5.5 Interest.  No Member shall be entitled to be paid interest in respect of
either its Capital Account or its Capital Contributions.
 
5.6 Return of Capital.  No Member shall be entitled to have any Capital
Contribution returned to it or to receive any distributions from the Company
upon withdrawal or otherwise, except in accordance with the express provisions
of this Agreement.  No unrepaid Capital Contribution shall be deemed or
considered to be a liability of the Company or any Member.  No Member shall be
required to contribute any cash or property to the Company to enable the Company
to return any Member’s Capital Contribution.
 
5.7 Creditors of the Company.  No creditor of the Company will have or shall
acquire at any time any direct or indirect interest in the profits, capital or
property of the Company other than as a secured creditor as a result of making a
loan to the Company.
 
5.8 Loans.  No Member may make any loans to the Company (a) without
Supermajority Approval by the Board and (b) without offering to the other
Members the opportunity to make such loans Pro Rata; provided, however, that a
Member may make a loan (an “Emergency Loan”) to the Company in order to allow
the Company to meet costs and expenses arising from measures taken to deal with
an emergency or imminent threat to life or property of the Company.
 
 
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EXHIBIT 10.4
 
5.9 Capital Accounts.  A Capital Account shall be established and maintained for
each Member in accordance with the definition of “Capital Account” herein.
 
ARTICLE VI.
 
ALLOCATIONS AND DISTRIBUTIONS
 
6.1 Allocations.  After giving effect to the special allocations set forth in
Sections 6.2 and 6.3, Company Profit or Loss for any taxable period shall be
allocated to the Members Pro Rata.
 
6.2 Regulatory Allocations.  Notwithstanding the foregoing provisions of this
Article VI, the following special allocations shall be made in the following
order of priority:
 
(a) Minimum Gain Chargeback.  If there is a net decrease in Company Minimum Gain
during any Company taxable year, then each Member shall be allocated items of
Company income and gain for such taxable year (and, if necessary, for subsequent
years) in an amount equal to such Member’s share of the net decrease in Company
Minimum Gain, determined in accordance with Regulations § 1.704-2(g)(2).  This
Section 6.2(a) is intended to comply with the minimum gain chargeback
requirement of Regulations § 1.704-2(f) and shall be interpreted consistently
therewith.
 
(b) Member Minimum Gain Chargeback.  If there is a net decrease in Member
Minimum Gain attributable to a Member Nonrecourse Debt during any Company
taxable year, then each Member who has a share of the Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations § 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for such taxable year (and, if necessary, for subsequent years)
in an amount equal to such Member’s share of the net decrease in Member Minimum
Gain attributable to such Member Nonrecourse Debt, determined in a manner
consistent with the provisions of Regulations § 1.704-2(i)(4).  This Section
6.2(b) is intended to comply with the partner nonrecourse debt minimum gain
chargeback requirement of Regulations § 1.704-2(i)(4) and shall be interpreted
consistently therewith.
 
(c) Qualified Income Offset.  If any Member unexpectedly receives an adjustment,
allocation, or distribution of the type contemplated by Regulations §
1.704-1(b)(2)(ii)(d)(4), (5) or (6), then items of income and gain shall be
allocated to all such Members (in proportion to the amounts of their respective
deficit Adjusted Capital Accounts) in an amount and manner sufficient to
eliminate the deficit balance in the Adjusted Capital Account of such Member as
quickly as possible.  It is intended that this Section 6.2(c) qualify and be
construed as a “qualified income offset” within the meaning of Regulations §
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
 
(d) Limitation on Allocation of Loss.  If the allocation of Loss (or items of
loss or deduction) to a Member as provided in Section 6.1 hereof would create or
increase an Adjusted Capital Account deficit, then there shall be allocated to
such Member only that amount of Loss (or items of loss or deduction) as will not
create or increase an Adjusted Capital Account deficit.  The Loss (or items of
loss or deduction) that would, absent the application of the preceding sentence,
otherwise be allocated to such Member shall be allocated to the other Members in
proportion to their relative Equity Percentage Interests, subject to the
limitations of this Section 6.2(d).
 
 
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EXHIBIT 10.4
 
(e) Certain Additional Adjustments.  To the extent that an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations § 1.704-1(b)(2)(iv)(m)(2) or
Regulations § 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Member in complete
liquidation of its Interest, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Members in accordance with
their Interests in the Company in the event that Regulations §
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was
made in the event that Regulations § 1.704-1(b)(2)(iv)(m)(4) applies.
 
(f) Nonrecourse Deductions.  The Nonrecourse Deductions for each Company taxable
year shall be allocated to the Members in proportion to their relative Equity
Percentage Interests.
 
(g) Member Nonrecourse Deductions.  The Member Nonrecourse Deductions shall be
allocated each year to the Member that bears the economic risk of loss (within
the meaning of Regulations § 1.752-2) for the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable.
 
(h) Curative Allocations.  The allocations set forth in Sections 6.2(a), 6.2(b),
6.2(c), 6.2(d), 6.2(e), 6.2(f) and 6.2(g) hereof (the “Regulatory Allocations”)
are intended to comply with certain requirements of Regulations §§ 1.704-1(b)
and 1.704-2(i).  Notwithstanding the provisions of Section 6.1, the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Members so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Member shall be equal to the net amount that would have been allocated to
each such Member if the Regulatory Allocations had not occurred.
 
6.3 Allocations for Tax Purposes.
 
(a) Except as otherwise provided herein, for federal income tax purposes, each
item of income, gain, loss and deduction which is recognized by the Company for
federal income tax purposes will be allocated among the Members in the same
manner as its correlative item of “book” income, gain, loss or deduction is
allocated pursuant to Sections 6.1 and 6.2.
 
(b) With respect to any Contributed Property or Adjusted Property with a
Book-Tax Disparity, the Company shall adopt the “remedial allocation method”
described in Regulations § 1.704-3(d) to eliminate the distortions caused by the
“ceiling rule” (under Code Section 704(c) and the Regulations promulgated
thereunder), and consistent therewith and in an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items
of income, gain, loss, depreciation, amortization and cost recovery deductions
will be allocated for federal income tax purposes among the Members as follows:
 
 
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EXHIBIT 10.4
 
(i) (A) In the case of a Contributed Property, such items attributable thereto
will be allocated among the Members in the manner provided under Code Section
704(c) and Regulations § 1.704-3(d) (i.e. the “remedial allocation method”) to
eliminate the Book-Tax Disparity of such Contributed Property; and (B) any item
of Residual Gain or Residual Loss attributable to a Contributed Property will be
allocated among the Members in the same manner as its correlative item of “book”
gain or loss is allocated pursuant to Sections 6.1 and 6.2.
 
(ii) (A)           In the case of an Adjusted Property, such items will (1)
first, be allocated among the Members in a manner consistent with the principles
of Code Section 704(c) and Regulations §1.704-3(d) (i.e. the “remedial
allocation method”) to eliminate the remaining portion of the Book-Tax Disparity
of such Adjusted Property that is attributable to the adjustment of its Agreed
Value pursuant to the definition of “Agreed Value” and (2) second, in the event
such Adjusted Property was originally a Contributed Property, be allocated among
the Parties in a manner consistent with Section 6.3(b)(i)(A) to eliminate the
portion of the remaining Book-Tax Disparity of such Adjusted Property that
existed at the time of its contribution to the Company; and (B) any item of
Residual Gain or Residual Loss attributable to an Adjusted Property will be
allocated among the Members in the same manner as its correlative item of “book”
gain or loss is allocated pursuant to Sections 6.1 and 6.2.
 
(c) For the proper administration of the Company, the Company will adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; provided, that such depreciation,
amortization and cost recovery methods will be the most accelerated methods
allowed under federal income tax laws.
 
(d) Any gain allocated to the Members upon the sale or other taxable disposition
of any Company property or asset will, to the extent possible, after taking into
account other required allocations of gain pursuant to this Section 6.3 be
characterized as Recapture Income in the same proportions and the same extent as
such Members (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
 
(e) All items of income, gain, loss, deduction and credit recognized by the
Company for federal income tax purposes and allocated to the Members in
accordance with the provisions hereof shall be determined without regard to any
election under Code Section 754 (other than any change in Capital Account
balance pursuant to Regulations § 1.704-1(b)(2)(iv)(m)) which may be made by the
Company; provided, however, that such allocations, once made, shall be adjusted
(in any manner determined by the Board) to take into account those adjustments
permitted or required by Code Sections 734 and 743.
 
6.4 Other Rules.
 
(a) For purposes of determining the Profit, Loss or any other item allocable to
any period, Profit, Loss and other items will be determined on a daily, monthly
or other basis, as reasonably determined by the Board using any permissible
method under Code Section 706 and the related Regulations.
 
 
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EXHIBIT 10.4
 
(b) In the event that the Code or any Regulations require allocations of items
of income, gain, loss, deduction or credit different from those set forth in
this Article VI, the Company is hereby authorized to make new allocations in
reliance on the Code and such Regulations, and no such new allocation shall give
rise to any claim or cause of action by any Member.
 
(c) For purposes of determining a Member’s proportional share of the Company’s
“excess nonrecourse liabilities” within the meaning of Regulations §
1.752-3(a)(3), each Member’s interest in Profit shall be such Member’s Equity
Percentage Interest.
 
6.5 Distributions.
 
(a) From time to time, the Board shall distribute Available Cash to the Members
Pro Rata, provided that the Company shall not make any distribution to its
Members that would be prohibited by the Act or by any contract to which the
Company is a party or to which it is subject.
 
(b) The Company and the Board shall be entitled to treat the record owner of a
Membership Interest as the absolute owner thereof in all respects and shall
incur no liability for distributions of cash or other property made in good
faith to such record owner until such time as a Transfer of such Membership
Interest has become effective on the books of the Company.  From the date of the
receipt of any instrument relating to Transfer of a Membership Interest or at
any time if the Company is reasonably in doubt as to the Person entitled to
receive distributions in respect of such Membership Interest, the Company may
withhold any such distributions until the Transfer is completed or abandoned or
the dispute is resolved.  Any amounts that a Member owes the Company may be
deducted from the amount of a distribution to such Member before payment.
 
6.6 Accounting Matters.
 
(a) The fiscal year of the Company shall end on December 31, with the first
fiscal year of the Company ending on December 31, 2011.  The books and records
of account of the Company shall, at the expense of the Company, (i) be kept, or
caused to be kept, by the Company at the principal place of business of the
Company, (ii) be on a basis consistent with GAAP consistently applied,
(iii) reflect all Company transactions, and (iv) be appropriate and adequate for
conducting the Company business.  The Company may cause accountants who are
employees of one or more Members or their Affiliates to keep the Company’s books
and records, or the Company may hire third party accountants to keep the
Company’s books and records.
 
(b) Company books and records of account will be available for inspection and
audit as provided in Section 8.4.
 
(c) Within a reasonable time after the end of each Company fiscal year during
the existence of the Company and in any event no later than the fifteenth day of
the fourth month after the commencement of the next succeeding fiscal year
(unless an extension request has been filed with the IRS), the Board will
prepare (or cause to be prepared), at Company expense, and file for the Company
appropriate tax returns and send all Members a copy thereof.
 
 
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EXHIBIT 10.4
 
(d) Subject to the provisions of Section 8.4, within 120 days after the end of
each Company fiscal year, 45 days after the end of each of the first three
fiscal quarters of each Company fiscal year, and 30 days after the end of each
month (other than months that are also the end of fiscal quarters or the Company
fiscal year), the Company shall furnish each Member with a copy of the balance
sheet of the Company as of the last day of the applicable period, and a
statement of income or loss for the Company for such period, which shall be
prepared from the books and records of the Company in accordance with GAAP
consistently applied.  The Company’s year-end annual statements shall be audited
by a nationally recognized independent registered public accounting firm and,
unless reasonably objected to by the Other Members, the accounting firm that
audits the year-end financial statements of Boardwalk.
 
(e) The funds of the Company shall not be commingled with the funds of any
Member or any other Person, and neither the Company nor any Member shall employ
or permit any other Person to employ such funds in any manner except for the
benefit of the Company.  The bank accounts of the Company shall be maintained in
the name of the Company in such banking institutions as are approved by the
Board, and withdrawals shall be made only in the regular course of Company
business and as otherwise authorized in this Agreement on such signature or
signatures as the Board may determine.
 
(f) Each Member shall furnish to the Company all pertinent information in its
possession relating to Company operations that is necessary to enable the
Company’s income tax returns and financial statements to be prepared.
 
6.7 Dissolution.  Notwithstanding the provisions of Article VI, upon dissolution
of the Company as provided in Article X, all distributions occurring after such
dissolution shall be made in accordance with Article X.
 
6.8 Amounts Withheld.  All amounts withheld pursuant to the Code or any
provision of any state, local or other tax law with respect to any payment or
distribution to the Members shall be treated as amounts distributed to the
Members pursuant to this Article VI for all purposes of this Agreement.
 
6.9 Conformity of Reporting.  The Members are aware of the income tax
consequences of the allocations made by this Article VI and hereby agree to be
bound by the provisions of this Article VI in reporting their shares of Company
profits, gains, income, losses, deductions, credits and other items for income
tax purposes.
 
6.10 Elections.  The Company shall make the following elections on the
appropriate tax returns:
 
(a) to adopt the calendar year as the Company’s taxable year;
 
(b) to adopt the accrual method of accounting;
 
 
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EXHIBIT 10.4
 
(c) to elect in a timely manner pursuant to Code Section 754 and pursuant to
corresponding provisions of applicable state and local tax laws, an election
under Code Section 754 and the Regulations promulgated thereunder to adjust the
bases of the Company’s properties under Code Sections 734 and 743;
 
(d) to elect to deduct the organizational expenses of the Company as permitted
by Code Section 709(b);
 
(e) to elect to deduct the start-up expenditures of the Company as permitted by
Code Section 195(b); and
 
(f) any other election approved by a Majority of the Board.
 
Neither the Company nor any Member may make an election for the Company to be
excluded from the application of the provisions of subchapter K of chapter 1 of
subtitle A of the Code or any similar provisions of applicable state law or take
any other action which would result in the Company not being treated as a
“partnership” for federal tax purposes.
 
6.11 Tax Matters Partner.  Boardwalk shall be the “tax matters partner” of the
Company pursuant to Code Section 6231(a)(7) (“Tax Matters Partner”).  The Tax
Matters Partner shall take such action as may be necessary to cause each other
Member to become a “notice partner” within the meaning of Code Section
6223.  The Tax Matters Partner shall inform each other Member of all significant
matters that may come to its attention in its capacity as the Tax Matters
Partner by giving notice thereof on or before the fifth Business Day after
becoming aware thereof and, within that time, shall forward to each other Member
copies of all material written communications it may receive in that
capacity.  The Tax Matters Partner may not take any action contemplated by Code
Sections 6222 through 6231 without the consent of a Majority except as necessary
to meet applicable time deadlines or comply with other requirements of law, but
this sentence does not authorize the Tax Matters Partner to take any action left
to the determination of an individual Member under Code Sections 6222 through
6231.
 
ARTICLE VII.
 
MANAGEMENT OF THE COMPANY
 
7.1 Management by Board of Managers.
 
(a) The Members hereby approve the Operations Agreement and the budget described
therein.
 
(b) The overall management and control of the Company shall be exercised by or
under the authority of the board of managers (“Board,” and each member of the
Board, a “Manager”) as provided in this Article VII.  A Manager shall be deemed
to be a “manager” within the meaning of the Act.  The Board shall be exclusively
vested with all management powers over the business and affairs of the Company
except as otherwise expressly provided in this Agreement or by non-waivable
provisions of applicable Law.  Except as expressly provided herein or as is
otherwise required by Law, no Member, in its capacity as a Member, shall have
any management power over the business and affairs of the Company or actual or
apparent authority to enter into contracts on behalf of the Company.
 
 
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EXHIBIT 10.4
 
(c) The Board shall be comprised of four (4) Managers, two (2) of whom are
designated by each of Boardwalk and BPHC, in each case so long as such entity
remains a Member.  The Persons initially serving as Managers are as follows:
 
BPHC:                                                    Andrew Tisch
Ken Siegel

Boardwalk:                                           Stan Horton
Jamie Buskill

(d) Each Manager shall continue to serve in such capacity until his resignation,
death or removal.  A Manager shall serve at the pleasure of the Member that
appointed such Manager and may be removed at any time with or without cause by,
and only by, the Member that is entitled to appoint such Person.
 
(e) In the event of a vacancy on the Board, the Member entitled pursuant to
Section 7.1(c) to appoint the Manager in respect of which such vacancy occurred
may appoint a Person to fill such vacancy.
 
(f) After the date hereof, Members entitled to appoint Managers may appoint such
Persons by providing written notice thereof to the other Members and the
Company, which notice shall state the effective date of any such appointment.
 
(g) A Manager may resign at any time by giving written notice to the Company and
the Member that appointed such Manager.  Such resignation shall be in writing
and shall take effect at the time specified therein, or, if no time is
specified, at the time of its receipt by the Company.  The acceptance of a
resignation shall not be necessary to make it effective unless expressly so
provided in the resignation.
 
(h) Disclaimer of Duties:  EACH MANAGER SHALL REPRESENT, AND OWE DUTIES TO, ONLY
THE MEMBER THAT DESIGNATED SUCH MANAGER (THE NATURE AND EXTENT OF SUCH DUTIES
BEING AN INTERNAL CORPORATE AFFAIR OF SUCH MEMBER), AND NOT TO THE COMPANY, ANY
OTHER MEMBER OR MANAGER, OR ANY OFFICER OR EMPLOYEE OF THE COMPANY.  THE
PROVISIONS OF SECTIONS 7.10 AND 7.12 SHALL ALSO BE APPLICABLE TO MANAGERS ACTING
IN SUCH CAPACITY AND INURE TO THE BENEFIT OF EACH MEMBER’S MANAGERS.  THE
COMPANY SHALL INDEMNIFY, PROTECT, DEFEND, RELEASE AND HOLD HARMLESS EACH MANAGER
FROM AND AGAINST ANY CLAIMS ASSERTED BY OR ON BEHALF OF ANY PERSON (INCLUDING
ANOTHER MEMBER OR THE COMPANY), OTHER THAN THE MEMBER THAT DESIGNATED SUCH
MANAGER, THAT ARISE OUT OF, RELATE TO OR ARE OTHERWISE ATTRIBUTABLE TO, DIRECTLY
OR INDIRECTLY, SUCH MANAGER’S SERVICE ON THE BOARD, OTHER THAN SUCH CLAIMS
ARISING OUT OF THE FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH MANAGER
(SUCH FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT HAVING BEEN DETERMINED BY A
FINAL AND NON-APPEALABLE JUDGMENT ENTERED BY A COURT OF COMPETENT JURISDICTION)
WHICH HAS A MATERIAL ADVERSE FINANCIAL IMPACT ON THE COMPANY.
 
 
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EXHIBIT 10.4
 
7.2 Authority of the Board.  Except for matters that (a) require approval of the
Members by the express terms of this Agreement or (b) relate to the
responsibilities and authority delegated by the Board to the officers, the Board
shall have the exclusive authority to make all decisions and take all actions
and act on behalf of the Company generally to conduct, direct and manage the
business, activities, operations and affairs of the Company.
 
7.3 Board Decisions and Quorum.  Unless otherwise required by the Act, other
applicable Law or the provisions hereof:
 
(a) Each Manager shall be entitled to cast on all matters to come before the
Board a number of votes equal to the Equity Percentage Interests held by the
Member that appointed such Manager divided by the number of Managers appointed
by such Member and, if any other Manager appointed by such Member is not in
attendance at the Board meeting, the Manager in attendance shall be entitled to
cast an aggregate number of votes equal to the Equity Percentage Interests held
by such Member (i.e., if one Member is the owner of 80% of the Equity Percentage
Interests, and only one Manager appointed by that Member is in attendance, the
attending Manager shall be entitled to cast in the aggregate votes equal to 80%
of the total votes cast by the Board).
 
(b) The Board shall hold such regular meetings, if any, as it may determine from
time to time which shall not require prior written notice, and such special
meetings as may be called by any Manager upon not less than one (1) Business
Day’s prior written notice to all Managers.
 
(c) Notices of Board meetings shall state the place, day and hour thereof, shall
include appropriate dial-in information to each Manager to participate in such
meeting by means of telephone conference, and shall otherwise be in accordance
with Section 11.1.  Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board need be specified in the notice
or waiver of notice of such meeting.
 
(d) Attendance of a Manager at any meeting shall constitute a waiver of notice
of such meeting, except where the Manager attends a meeting for the express
purpose of objecting to the transaction of business at such meeting on the
ground that such meeting is not lawfully called or convened.  Any Manager may
waive notice of any meeting by signing a written waiver to such effect before or
after such meeting and such waiver shall be effective for all purposes as
satisfying all notice requirements under this Agreement or applicable Law.
 
(e) The presence in person or by proxy of Managers having, in the aggregate, a
majority of the votes held by all Managers shall constitute a quorum for the
transaction of business at any meeting of the Board.  If, however, a quorum
shall not be present at any meeting of the Board, the Managers present may
adjourn the meeting from time to time without notice other than announcement at
the meeting until a quorum shall be present.  Notwithstanding anything contained
herein to the contrary, where a Manager attends a meeting for the express
purpose of objecting to the transaction of business at such meeting on the
ground that such meeting is not lawfully called or convened, such attendance
shall not constitute participation in, or presence at, such meeting.
 
 
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EXHIBIT 10.4
 
(f) With respect to any matter for which the approval, consent or vote of
Managers is required by the Act or this Agreement, except to the extent
Supermajority Approval is required by this Agreement or as otherwise provided in
this Agreement, the Majority Approval at which a quorum is present shall be the
act of the Board, and the phrases “approval”, “consent” or “vote” of or by the
Board and phrases of like import shall mean approval by the Board, similarly
construed.  At any meeting of the Board, each Manager shall be entitled to vote
in person or by proxy executed in writing by such Manager or by his duly
authorized attorney-in-fact.  No proxy shall be valid after eleven (11) months
from the date of its execution unless such proxy otherwise provides.  Each proxy
shall be revocable before it has been voted unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest.
 
(g) Any action required or permitted to be taken at a meeting of the Board may
be taken without a meeting if a consent or consents in writing, setting forth
the action so taken, shall be signed by Managers holding the requisite number of
votes and such consent shall have the same force and effect as a vote of such
Managers at a meeting of the Board.  Such consent shall be filed with the
consents of the Board and a copy of such consent shall be provided to all
Managers.
 
(h) Any meeting of the Board may be held by conference telephone, televideo or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.  Participation in a meeting pursuant to such
equipment shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
 
(i) The Managers shall designate a person to keep and maintain minutes of each
meeting of the Board with the other books and records of the Company, and shall
provide copies thereof to the other Managers for approval by the Managers.
 
7.4 Officers and Employees; Outsourced Services.
 
(a) Generally.  The Board shall appoint officers of the Company who shall be
responsible for the day-to-day business affairs of the Company, subject to the
overall direction and control of the Board.  The officers shall have such titles
and hold their offices for such terms as shall be determined from time to time
by the Board and shall have such authority as set forth in Section 7.5 except to
the extent modified from time to time by the Board.
 
(b) Officers and Agents.  The Board may appoint such officers and agents as may
from time to time appear to be necessary or advisable in the conduct of the
affairs of the Company, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.  The Board may grant powers of attorney or other authority as
appropriate to establish and evidence the authority of the officers and other
Persons.
 
 
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EXHIBIT 10.4
 
(c) Term of Office.  Any officer may be removed, with or without cause, only by
the Board.  Vacancies in any office may be filled only by the Board.
 
(d) Resignation.  An officer may resign at any time by giving written notice of
resignation to the Board.  Any such resignation shall be effective immediately
unless a certain date is specified for it to take effect, in which event it
shall be effective upon such date.  Acceptance of any such resignation shall not
be necessary to make it effective.
 
(e) Compensation.  The compensation, if any, of all officers, employees and
agents of the Company shall be fixed by the Board.
 
(f) Reimbursements.  The officers and agents of the Company may be reimbursed
for out-of-pocket costs and expenses of the Company paid or incurred by them on
behalf of the Company.
 
7.5 Authority of the Officers.  Except for matters that require approval of the
Members or the Managers by the express terms of this Agreement, or as the
Managers may otherwise determine, the officers shall have the authority to make
all decisions and take all actions and act on behalf of the Company generally to
conduct, direct and manage the day-to-day business, activities, operations and
affairs of the Company and all matters related to the business of the Company
 
7.6 Member Decisions and Quorum.
 
(a) The Members in their capacity as Members shall not have any power or
authority to manage the business or affairs of the Company or to bind the
Company or enter into agreements on behalf of the Company.  Except as otherwise
expressly provided in this Agreement, Members shall have no voting rights or
rights of approval, veto or consent or similar rights over any actions of the
Company.
 
(b) There shall be no regular meetings of the Members.  Special meetings of the
Members for any purpose or purposes, unless otherwise prescribed by Law, may be
called by any Member holding, together with its Affiliates, at least an
aggregate ten percent (10%) or more Equity Percentage Interest.  Meetings of the
Members shall take place at the principal office of the Company unless the
Members agree otherwise.
 
(c) Written notice of all special meetings of Members stating the place, day and
hour thereof, and the purpose for which the meeting is called, shall be given
not less than one (1) Business Day prior to the date of the meeting, to the
Members of record entitled to vote at such meeting and shall otherwise be in
accordance with Section 11.1.
 
(d) Attendance of a Member at any meeting shall constitute a waiver of notice of
such meeting, except where the Member attends a meeting for the express purpose
of objecting to the transaction of business at such meeting on the ground that
such meeting is not lawfully called or convened.  Any Member may waive notice of
any meeting by signing a written waiver to such effect before or after such
meeting and such waiver shall be effective for all purposes as satisfying all
notice requirements under this Agreement or applicable Law.
 
 
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EXHIBIT 10.4
 
(e) The presence in person or by proxy of Members holding in the aggregate a
majority of the Equity Percentage Interests shall constitute a quorum for the
transaction of business at any meeting of the Members.  If, however, such quorum
shall not be present or represented at any meeting of the Members, the Members
entitled to vote at such meeting, present in person or represented by proxy,
shall have the power to adjourn the meeting from time to time without notice
other than announcement at the meeting until a quorum shall be present or
represented.  At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally convened.
 
(f) With respect to any matter for which the approval, consent or vote of
Members is required by the Act or this Agreement, the affirmative vote of a
Majority Approval at a meeting of the Members at which a quorum is present shall
be the act of the Members, unless the matter is one for which the Act (in a
non-waivable provision thereof) or this Agreement requires the consent, approval
or vote of all of the Members or a Supermajority Approval.  The terms
“approval”, “consent” or “vote” of or by the Members and phrases of like import
shall mean approval by the Members, similarly construed.  At any meeting of the
Members, each Member entitled to vote at such meeting shall be entitled to vote
in person or by proxy executed in writing by such Member or by his or its duly
authorized attorney-in-fact.  No proxy shall be valid after eleven (11) months
from the date of its execution unless such proxy otherwise provides.  Each proxy
shall be revocable before it has been voted unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest.
 
(g) Any action required or permitted to be taken by the Members at a meeting of
the Members may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by Members holding an
aggregate Equity Percentage Interest sufficient to take such action at a meeting
of the Members at which a quorum is present.  Such consents shall be filed with
the minutes of the Members, and a copy of such consents shall be provided to all
Members.
 
(h) Members may participate in and hold a meeting of the Members by means of
conference telephone, televideo or similar communications equipment by means of
which all persons participating in the meeting can hear each
other.  Participation in a meeting pursuant to such telephone or communication
equipment shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
 
7.7 Acts Requiring Supermajority Approval.  Neither any Member, Manager or
officer shall have any authority to take any of the following actions or enter
into any agreement or arrangement to consummate any of the following actions on
behalf of the Company, or otherwise cause or permit the Company to do any of the
following without Supermajority Approval of the Board:
 
(a) any Capital Call (or acceptance of any Capital Contribution);
 
(b) any issuance or sale of any Membership Interests, except pursuant to any
convertible security, call, option, warrant, subscription, purchase right or
other contract or commitment previously approved by Supermajority Approval, or
any change in the number of outstanding Membership Interests whether by
recapitalization, reclassification, split-up, combination, exchange, repurchase,
acquisition or otherwise or take any action affecting the amount of outstanding
Membership Interests or altering the rights of outstanding Membership Interests
set forth in this Agreement;
 
 
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EXHIBIT 10.4
 
(c) any distributions of Membership Interests;
 
(d) approve the admission of an additional Member into the Company; and
 
(e) approve the admission of a Substitute Member into the Company.
 
Notwithstanding anything to the contrary in this Agreement, nothing herein
authorizes the Members, Managers or the officers of the Company to take any
action for which the unanimous consent of the Members is required by the express
terms of this Agreement or the non-waivable provisions of the Act without the
consent of all of the Members.
 
7.8 Acts Requiring Unanimous Approval.  Neither any Member, Manager or officer
shall have any authority to take any of the following actions or enter into any
agreement or arrangement to consummate any of the following actions on behalf of
the Company, or otherwise cause or permit the Company to do any of the following
without the unanimous approval of the Board:
 
(a) any amendment of the Charter Documents of the Company;
 
(b) the adoption of any voluntary change in the tax classification for federal
income tax purposes of the Company;
 
(c) approve any merger, consolidation or other combination of the Company, or
participation of the Company in a share exchange, or sale of all or
substantially all of the assets of the Company;
 
(d) assignment of all or substantially all of the Company’s assets in trust for
creditors or on the assignee’s promise to pay its debts or file a voluntary
petition commencing a bankruptcy, insolvency or similar proceeding; and
 
(e) dissolution or liquidation of the Company.
 
7.9 Budget.  The Board may approve budgets for the Company from time to time.
 
7.10 Determination of Fair Market Value.  Whenever a determination of Fair
Market Value is required under this Agreement (including as part of a
determination of Agreed Value), the Board shall determine the Fair Market Value
and shall notify the Member who (or whose Affiliate) owns or to whom is being
distributed the interest or property being valued of the Board’s determination.
 
 
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EXHIBIT 10.4
 
7.11 Limitation of Liability.  No Member, Manager or officer has guaranteed nor
shall it have any obligation with respect to the return of a Member’s Capital
Contributions, and no Member, Manager or officer has guaranteed profits from the
operation of the Company.  No Member or any of its Affiliates, nor any Manager
or officer shall be liable to the Company or to any other Member for any loss or
damage sustained by the Company or any other Member arising from any actions
taken or omitted to be taken in its capacity as a Member, Manager or officer,
except for any loss or damage directly resulting from fraud, gross negligence or
willful misconduct by such Member or its officers, directors, employees, agents
or Affiliates, or such Manager or officer (such fraud, gross negligence or
willful misconduct having been determined by a final and non-appealable judgment
entered by a court of competent jurisdiction) which has a material adverse
financial impact on the Company, it being specifically agreed that no Member,
Manager or officer shall be liable for its own ordinary, joint or concurrent
negligence of such Member or its officers, directors, employees, agents or
Affiliates, or such Manager or officer.  In no event shall any Member or its
officers, directors, employees, agents or Affiliates, or such Manager or officer
be liable to the Company or to any other Member for any Consequential Damages
sustained by the Company or any other Member.  Each Member, Manager and officer
shall be entitled to rely in good faith upon the records of the Company and upon
such information, opinions, reports or statements presented to the Company by
any Person as to matters the Member, Manager or officer reasonably believes are
within such Person’s professional competence or expertise, including financial
statements or other financial data prepared or presented in accordance with the
provisions of the Act, and any act taken or omitted in reliance thereon shall be
conclusively presumed to have been done or omitted in good faith and in
accordance therewith.  Notwithstanding any other provision of this Agreement or
any duty otherwise existing at Law or in equity, the parties hereby agree that
each Member, the Managers, the officers and their Affiliates shall owe, to the
maximum extent permitted by Law, including Section 18-1101 of the Act, no
fiduciary duties to the Company, the other Members or any other Person bound by
this Agreement and any standard of care and duty otherwise imposed on any
Member, Manager, officer or their Affiliates by this Agreement or under the Act
or any applicable Law shall be eliminated to the fullest extent permitted by
Law.  The provisions of this Agreement, including Sections 7.11 and 7.12, to the
extent that they restrict or eliminate fiduciary and other duties of Members,
Managers, officers or Affiliates to the Company or its Members otherwise
existing at law or in equity, are agreed by the parties hereto to replace such
other duties and liabilities of such Members, Managers, officers or Affiliates.
 
7.12 No Restrictions.
 
(a) No Member, Manager or officer shall be required to tend to the business and
affairs of the Company as such Member’s, Manager’s or officer’s sole and
exclusive function, and any Member, Manager or officer may have other business
interests and may engage in other investments and activities in addition to
those relating to the business of the Company or the Company, independently or
with others, including businesses, investments and activities that may be
similar to, or in competition with, the business of the Company, the Company,
any of its Members or any of their respective Affiliates, and none of the same
shall constitute a breach of this Agreement or any duty expressed or implied by
law to any Member, Manager or officer or the Company.  No Member, Manager or
officer shall incur liability to the Company or to any Member as a result of
engaging in any other such business, investment or activity.
 
 
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EXHIBIT 10.4
 
(b) Notwithstanding anything to the contrary in this Agreement, the doctrine of
corporate opportunity, or any analogous doctrine, shall not apply to a Member,
Manager or officer.  No Member, Manager or officer who acquires knowledge of a
potential transaction, agreement, arrangement or other matter that may be an
opportunity for the Company shall have any duty to communicate or offer such
opportunity to the Company or any Member, and such Member, Manager or officer
shall not be liable to the Company, to any Member or any other Person for breach
of any fiduciary or other duty by reason of the fact that such Member, Manager
or officer pursues or acquires such opportunity for itself, directs such
opportunity to another Person or does not communicate such opportunity or
information to the Company or any other Member.
 
(c) Neither the Company nor any Member shall have any right, by virtue of this
Agreement, to share or participate in such other businesses, investments or
activities of a Member or to the income or proceeds derived therefrom.
 
(d) The Board may deal and contract with the Company and shall be entitled to
enter into contracts with Affiliates, including contracts pursuant to which such
Affiliates will perform any function which the Board is authorized or obligated
to perform hereunder; provided, however, that all such contracts shall be on
terms at least as favorable to the Company as then would reasonably be expected
to be obtainable from a comparable unaffiliated third party performing the same
or similar services.
 
7.13 Indemnity of Members, Managers and Other Agents.
 
(a) To the fullest extent permitted under the Act, the Members, Managers and the
officers of the Company, to the extent acting on behalf of the Company in
accordance with the terms of this Agreement and any delegation of authority from
the Board and each of such Person’s equity owners, managers, directors,
officers, agents, representatives and employees (“Indemnitees”), shall be
indemnified and held harmless by the Company against all losses, Claims,
liabilities, damages, fines, penalties, costs and expenses (including attorneys’
fees, judgments and amounts paid in settlement actually and reasonably paid or
incurred by the Indemnitee), whether or not such Indemnitee is acting in such
capacity at the time such liability or expense is paid or incurred, as a result
of a Claim arising out of or related to the business of the Company, assets or
affairs of the Company, to the extent in the action, omission or transaction
giving rise to such Claim, the Indemnitee’s actions or omissions were in good
faith and in a manner the Indemnitee reasonably believed to be in, or not
opposed to, the best interest of the Company and the Indemnitee’s conduct did
not constitute fraud, gross negligence or willful misconduct (such fraud, gross
negligence or willful misconduct having been determined by a final and
non-appealable judgment entered by a court of competent jurisdiction) which has
a material adverse financial impact on the Company.  THE FOREGOING INDEMNITY
EXPRESSLY INCLUDES AN INDEMNITY TO PROTECT A MEMBER, MANAGER AND OFFICER FROM
THE CONSEQUENCES OF ITS OWN CONDUCT WITH RESPECT TO THE SOLE, CONCURRENT,
PASSIVE OR ACTIVE NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE) OR STRICT LIABILITY OF
A MEMBER OR ITS OFFICERS, MANAGERS, EMPLOYEES, AGENT OR AFFILIATES.  The
termination of any action, suit or proceeding by judgment, order or settlement
shall not, of itself, create a presumption that the Indemnitee’s actions or
omissions were not in good faith and in a manner that the Indemnitee reasonably
believed to be in, or not opposed to, the best interest of the Company, or
constituted fraud, gross negligence or willful misconduct.  The right of
indemnification provided herein shall be cumulative of, and in addition to, any
and all rights to which any Indemnitee may otherwise be entitled by contract or
as a matter of Law or equity and shall extend to his heirs, successors, assigns
and personal representatives.
 
 
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EXHIBIT 10.4
 
(b) To the extent an Indemnitee is successful on the merits or otherwise in any
proceeding that arises out of or otherwise relates to the Company or this
Agreement, such Indemnitee shall be indemnified by the Company against all
expenses actually and reasonably incurred by such Indemnitee or on such
Indemnitee’s behalf in connection therewith.  If an Indemnitee is not wholly
successful in such proceeding but is successful, on the merits or otherwise, as
to one or more but less than all Claims, issues or matters in such proceeding,
the Company shall indemnify such Indemnitee against all expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved Claim, issue or matter.  For purposes of this Section 7.13(b) and
without limitation, the termination of any Claim, issue or matter in such a
proceeding by dismissal or withdrawal with or without prejudice, shall be deemed
to be a successful result as to such Claim, issue or matter.
 
(c) The Company shall advance all reasonable expenses incurred by or on behalf
of an Indemnitee in connection with any proceeding within twenty (20) days after
the receipt by the Company of a statement or statements from the Indemnitee
requesting such advance or advances from time to time, whether prior to or after
final disposition of such proceeding.  Such statement or statements shall
reasonably evidence the expenses incurred by the Indemnitee and shall include or
be preceded or accompanied by an undertaking by or on behalf of any Indemnitee
to repay any expenses advanced if it shall ultimately be determined that such
Indemnitee is not entitled to be indemnified against such expenses.
 
(d) The Company may purchase and maintain insurance, at its expense, to protect
itself and any Indemnitee, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under Section
7.13(a).
 
(e) If the indemnification provided for in this Section 7.13 is unavailable to
an Indemnitee in respect of any amount referred to therein as a result of a
final judicial determination that such indemnification cannot be enforced, then,
to the extent permitted by Law, the Company shall, in lieu of indemnifying each
Indemnitee, contribute to the amount paid or payable by such Indemnitee as a
result of such amount in such proportion as is appropriate to reflect the
relative benefits received by the Company and each Indemnitee and the relative
fault of the Company and each Indemnitee in connection with the matter which
resulted in such Claims, damages, liabilities, judgments, penalties (including
excise and similar Taxes and punitive damages), fines, cost, expense or
settlement amount, as well as any other relevant equitable considerations.
 
(f) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 7.13 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.
 
 
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EXHIBIT 10.4
 
(g) The provisions of this Section 7.13 are for the benefit of the Indemnitees,
their heirs, successors and assigns, and shall not be deemed to create any
rights for the benefit of other Persons.
 
(h) No amendment or repeal of this Section 7.13 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future
Indemnitee to be indemnified by the Company, nor the obligations of the Company
to indemnify any such Indemnitee under and in accordance with the provisions of
this Section 7.13 as in effect immediately prior to such amendment or repeal
with respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment or repeal, regardless of when such claims
may arise or be asserted.
 
7.14 Compensation and Reimbursement of Expenses.  No Member, Manager or officer
shall be entitled to compensation for actions taken on behalf of the Company;
however, the Company shall reimburse the Managers and Members for any out of
pocket expenses reasonably incurred in attending meetings of the Board or of the
Members.
 
ARTICLE VIII.
 
RIGHTS AND OBLIGATIONS OF MEMBERS
 
8.1 Limitation on Liability and Authority.  Each Member’s liability shall be
limited as set forth in this Agreement, the Act and other applicable
law.  Without limiting the right of any  Member to exercise the rights expressly
granted to such Member under this Agreement, each Member agrees that it has no
authority under this Agreement, and will not exercise any authority it may have
under the Act, to act for, bind or commit the Company to agreements,
transactions or other arrangements, or hold itself out as an agent of the
Company, without the express prior written consent of the Board.
 
8.2 No Liability for Company Obligations.  No Member or its officers, directors,
employees, agents or Affiliates shall be liable for the debts, obligations or
liabilities of the Company (whether arising in contract, tort, statute or
otherwise), including under a judgment, decree or order of a court, except as
may be expressly provided in a separate, written guaranty or other agreement
executed by a Member or its officers, directors, employees, agents or Affiliates
or as may be provided under the Act relating to liability for wrongful
distributions.
 
8.3 Priority and Return of Capital.  Except as is expressly provided herein, no
Member shall have priority over any other Member, either as to the return of
Capital Contributions or as to Profits, Losses, or distributions.  This Section
8.3 shall not apply to loans made to the Company by any Member.
 
8.4 Access to Information.  Each Member shall be entitled to receive the
following (provided, however, an assignee of a Membership Interest who is not
admitted as a substitute Member shall not be entitled to any of the following):
 
(a) to receive a copy of this Agreement and any amendments hereto;
 
(b) to receive a current list of the name and last known address of each Member;
 
 
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EXHIBIT 10.4
 
(c) to receive information regarding the amount of cash and a description and
statement of the Agreed Value of any other property or services contributed by
each Member and that each Member has agreed to contribute in the future, and the
date on which each became a Member;
 
(d) to receive the financial information described in Section 6.6;
 
(e) to receive copies of the Company's federal, state and local tax returns for
each year;
 
(f) to inspect the assets of the Company during business hours at the principal
office of the Company upon reasonable prior written notice; and
 
(g) to audit, examine and make copies of the books of account and other records
of the Company during business hours at the principal office of the Company upon
reasonable prior written notice;
 
provided, however, that this Section 8.4 shall not obligate the Company to
create any information that is not required by this Agreement or the Act to be
prepared or made available if such information does not already exist at the
time of such request (other than to convert existing information from one medium
to another, such as providing a printout of information that is stored in a
computer database).  The inspection and audit rights in Sections 8.4(f) and (g)
may be exercised through any agent or employee of such Member designated in
writing by it or by an independent public accountant, attorney or other
consultant so designated and the Member making the request shall bear all costs
and expenses incurred in any inspection, examination or audit made on such
Member’s behalf.  Notwithstanding anything in this Section 8.4, each Member’s
access to information is subject to and limited by all applicable laws, rules
and regulations.
 
8.5 Insurance.  Boardwalk shall, or shall cause the Operator (as such term is
defined in the Operations Agreement), to provide and maintain insurance for the
Company with coverages and in amounts consistent with the existing policies of
Boardwalk.
 
ARTICLE IX.
 
TRANSFERS
 
9.1 Restrictions on Transfers.
 
(a) No Member may transfer, sell, assign, pledge, encumber, or otherwise dispose
of (each, a “Transfer”) all or any portion of its Membership Interest except to
another Member upon the consent of the Board and in accordance with the terms
and conditions of this Article IX.
 
(b) All Transfers hereunder shall be by instrument in form and substance
reasonably satisfactory to the Company, which instrument shall contain an
express statement by the transferee of its agreement to accept the Transfer and
to accept, adopt and be bound by all of the terms and provisions of this
Agreement, as the same may have been amended from time to time, and shall
provide for the payment by the transferring Member of all reasonable expenses
incurred by the Company in connection with such Transfer, including, without
limitation, the necessary amendments to this Agreement to reflect such
Transfer.  The transferring Member and the transferee shall execute and
acknowledge any and all such instruments as the Company may reasonably request
to effectuate such Transfer, in each case in form and substance reasonably
satisfactory to the Company.  In no event shall the Company dissolve or
terminate (other than for tax purposes, to the extent provided by the Code and
Regulations) upon the admission of any Member to the Company or upon any
permitted Transfer of a Membership Interest in the Company by any Member.
 
 
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EXHIBIT 10.4
 
9.2 Substitute Members.  Transferees of Membership Interests will not become
substitute Members without Supermajority Approval.  Substitute Members shall
have all of the rights and obligations of Members.  Transferees of Membership
Interests who do not become substitute Members shall have only the rights of
assignees of Membership Interests and, therefore, no rights of a Member
hereunder.  An assignee shall have only the right to receive allocations and
distributions attributable to the Membership Interest acquired by such assignee,
which Membership Interest shall be subject to the same restrictions on transfer
as contained in this Agreement.  An assignee shall have the same obligations to
the Company and the Members as a Member holding the same Membership Interest
would have, including any obligation to make Capital Contributions.
 
9.3 Admission of Additional Members.  An additional Member (which shall not
include a substitute Member resulting from a Transfer in accordance with Article
IX) may be admitted into the Company only upon Supermajority Approval, including
in such approval the additional Member’s required Capital Contribution and
Equity Percentage Interest, and execution of a counterpart of this Agreement by
the additional Member.  Additional Members shall have all of the rights and
obligations of Members.
 
9.4 Withdrawal.  No Member has the right or power to withdraw from the Company
and no Member shall withdraw from the Company, without the consent of the Board.
 
9.5 Effective Date of Transfers.  In the event a Transfer of a Membership
Interest is consummated in accordance with this Article, such Transfer will be
recognized for the purpose of distributions and allocations as of the date on
which such Transfer became effective, provided that the Company shall have been
given a copy of all documents or instruments executed in connection with such
Transfer.  Notwithstanding any assumption of liabilities by a Transferee, the
transferring Member shall not be released from its obligations under this
Agreement or otherwise with respect to the Company unless such a release is
approved by the Board.  The Company shall be entitled to treat the record owner
of a Membership Interest as the absolute owner thereof in all respects and shall
incur no liability for distributions of cash or other property made in good
faith to such record owner until such time as the Transfer of such Membership
Interest has become effective on the books of the Company.
 
9.6 Withholding of Distributions.  From the date of the receipt of any
instrument relating to Transfer of a Membership Interest or at any time if the
Board is reasonably in doubt as to the Person entitled to receive distributions
in respect of such Membership Interest, the Board may withhold any such
distributions until the Transfer is completed or abandoned or the dispute is
resolved.
 
 
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EXHIBIT 10.4
 
9.7 Compliance with Securities Laws.  In addition to the restrictions on
Transfer of the Membership Interests contained in this Agreement, no Transfer of
any Membership Interest shall be made by or on behalf of any Member unless the
Membership Interests are registered under the Securities Act, pursuant to an
effective registration statement which contemplates the proposed Transfers and
complies with the then applicable regulations, rules and administrative
procedures and practices of the Securities and Exchange Commission, and are
registered or qualified in accordance with any applicable state securities laws,
regulations, rules and administrative procedures and practices, or unless the
Company has received a written opinion of, or satisfactory to, its legal counsel
that the proposed Transfer is exempt from registration under applicable
securities laws.  The Board may waive the requirement of this Section to obtain
a legal opinion.
 
ARTICLE X.
 
DISSOLUTION AND TERMINATION
 
10.1 Dissolution.  The Company shall be dissolved and its affairs shall be wound
up in accordance with Section 10.2 upon the occurrence of any of the following
(“Liquidating Events”):
 
(a) the end of the term of the Company, if any, stated in the Certificate of
Formation;
 
(b) the unanimous consent of the Members to dissolve the Company;
 
(c) the sale or other disposition of all or substantially all of the Company
assets and the receipt of all proceeds therefor;
 
(d) the bankruptcy of or the appointment of a receiver for the Company; or
 
(e) the occurrence of any other event which causes a dissolution of the Company
under the Act, unless the remaining Member or Members vote to continue the
Company within the time period provided in the Act or, if no such period is
provided, within 90 days after the occurrence of the event.
 
Notwithstanding the foregoing, it is expressly agreed and provided that the
death, retirement, resignation, expulsion, bankruptcy or dissolution of any
Member or the occurrence of any other event that terminates the continued
membership of any Member shall not cause the Company to be wound up or
dissolved, and upon the occurrence of any such event, the Company shall be
continued without winding up or dissolution.
 
10.2 Winding Up, Liquidation and Distribution of Assets.
 
(a) Upon the dissolution of the Company because of an occurrence of any of the
events described in Section 10.1, no further business shall be conducted except
for the taking of such action as shall be necessary for the winding up of the
affairs of the Company and the distribution of its assets to the Members
pursuant to the provisions of this Article X.  Upon the occurrence of an event
requiring winding up of the Company, the Board shall act as  the Liquidating
Trustee.  The Liquidating Trustee shall have full authority to wind up the
affairs of the Company and to make distributions as provided herein, subject to
the same restrictions under Section 7.3 as if the Liquidating Trustee were the
Board.
 
 
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EXHIBIT 10.4
 
(b) Upon dissolution of the Company, the Liquidating Trustee shall either sell
the assets of the Company at the best price available, or the Liquidating
Trustee may distribute to the Members all or any portion of the Company’s assets
in kind.  The property of the Company shall be liquidated as promptly as is
consistent with obtaining the fair value thereof.  If any assets are sold or
otherwise liquidated for value, the Liquidating Trustee shall proceed as
promptly as practicable in a commercially reasonable manner to implement the
procedures of this Section 10.2.  If any assets are to be distributed in kind,
the Fair Market Value of such assets shall be determined in accordance with
Section 7.9, and each Member’s Capital Account shall be charged or credited, as
the case may be, as if such asset had been sold for cash at such Fair Market
Value and the net gain or net loss recognized thereby had been allocated to and
among the Members in accordance with Article VI.
 
(c) All assets of the Company shall be applied and distributed by the
Liquidating Trustee in the following order:
 
(i) first, to the creditors of the Company (including any Member who has made a
loan to the Company that remains outstanding) other than liabilities to Members
on account of their Capital Contributions or on account of a Member’s withdrawal
from the Company or pursuant to a withdrawal of capital;
 
(ii) second, to setting up the reserves that the Liquidating Trustee may deem
reasonably necessary for contingent or unforeseen liabilities or obligations of
the Company; and
 
(iii) thereafter, to the Members in accordance with, and to the extent of, the
positive balances of their Capital Accounts (after all adjustments to such
Capital Accounts have been made for such taxable year, including to reflect any
Profits or Losses to be allocated to the Members in connection with the
dissolution and liquidation of the Company).
 
10.3 Certificate of Cancellation.  When all debts, liabilities and obligations
of the Company have been paid and discharged or adequate provisions have been
made therefor and all of the remaining property and assets of the Company have
been distributed to the Members, a Certificate of Cancellation shall be executed
and filed with the Delaware SOS in accordance with the Act.
 
10.4 Return of Contribution; Nonrecourse Against Other Members.  Except as
provided by law or as expressly provided in this Agreement, upon dissolution,
each Member shall look solely to the assets of the Company for the return of its
Capital Contributions.  If the assets of the Company remaining after the payment
or discharge of the debts and liabilities of the Company are insufficient to
return the Capital Contributions of one or more Members, such Member or Members
shall have no recourse against any other Member.  No Member shall be required to
contribute any cash or property to the Company to enable the Company to return
any Member’s Capital Contributions.
 
 
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EXHIBIT 10.4
 
10.5 Compliance with Timing Requirements of Regulations.  Except as otherwise
provided in Section 10.6, in the event the Company is “liquidated” within the
meaning of Regulations § 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to Section 10.2.  In the discretion of the Liquidating Trustee, a Pro
Rata portion (according to the amount of the distributions) of the distributions
that would otherwise be made to the Members may be:
 
(a) Distributed to a trust established for the benefit of the Members for the
purposes of paying any contingent or unforeseen liabilities or obligations of
the Company arising out of or in connection with the Company.  The assets of any
such trust shall be distributed to the Members from time to time, in the
reasonable discretion of the Liquidating Trustee, in the same proportions as the
amount distributed to such trust by the Company would otherwise have been
distributed to the Members pursuant to this Agreement; or
 
(b) Withheld to provide a reasonable reserve for Company liabilities (contingent
or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Company, provided that such withheld amounts shall be
distributed to the Members as soon as practicable.
 
10.6 Deemed Contribution and Distribution.  In the event the Company is
“liquidated” within the meaning of Regulations § 1.704-1(b)(2)(ii)(g) but no
Liquidating Event has occurred, the Company’s property shall not be liquidated,
the Company’s liabilities shall not be paid or discharged, and the Company’s
affairs shall not be wound up.  Instead, solely for federal income tax purposes,
the Company shall be deemed to have contributed all Company property and
liabilities to a new limited liability company in exchange for an interest in
such new limited liability company and, immediately thereafter, the Company will
be deemed to liquidate by distributing interests in the new limited liability
company to the Members.
 
ARTICLE XI.
 
MISCELLANEOUS PROVISIONS
 
11.1 Notices.  All notices or other communications required or permitted by this
Agreement shall be in writing, shall be addressed to the Members at their
respective addresses or facsimile number set forth on Exhibit A attached hereto
or to such other address or facsimile number as may be specified by a party
hereto pursuant to notice given by such party in accordance with the provisions
of this Section 11.1, and shall be deemed to have been duly given and received
(a) when delivered in person, (b) five (5) Business Days after being sent by
registered or certified mail, return receipt requested, postage prepaid, (c)
when dispatched by electronic facsimile transfer (if confirmed in writing by
mail simultaneously dispatched) or by electronic mail in portable document
format (.pdf), if delivery thereof is confirmed to have occurred) on a Business
Day prior to 5:00 p.m. in the time zone of the receiving Party, otherwise it
shall be deemed delivered and received on the next Business Day, or (d) one (1)
Business Day after having been dispatched by a nationally recognized overnight
courier service, to the appropriate Party at the address or facsimile number
specified on Exhibit A (or to such other addresses and facsimile numbers as a
Party may designate by written notice to each of the other Parties in any manner
permitted in this Section 11.1).  Notices to the Company shall be made to the
Company at its principal place of business, with a copy of the notice to each
Member.
 
 
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EXHIBIT 10.4
 
11.2 Entire Agreement.  This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings of the
parties relating to the subject matter hereof.
 
11.3 Modifications and Waivers.  No amendment or other modification of any
provision of this Agreement shall be valid or binding unless it is in writing
and signed by all of the Members.  No waiver of any provision of this Agreement
shall be valid or binding unless it is in writing and signed by the party
waiving compliance with such provision.  No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver of any partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any other
such right, power or privilege.  No waiver of any breach, term or condition of
this Agreement by any Member shall constitute a subsequent waiver of the same or
any other breach, term or condition.
 
11.4 Severability.  This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable Laws of the State of
Delaware.  If any provision of this Agreement or the application thereof to any
person or circumstances is for any reason and to any extent invalid or
unenforceable, (a) the remainder of this Agreement and the application of such
provision to the other persons or circumstances will not be affected thereby,
but rather are to be enforced to the greatest extent permitted by Law and
(b) the Parties shall negotiate in good faith to replace that provision with a
new provision that is valid and enforceable and that puts the Parties in
substantially the same economic, business and legal position as they would have
been in if the original provision had been valid and enforceable.
 
11.5 Counterparts.  This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
11.6 LIMITATION OF LIABILITY.  THE EXPRESS REMEDIES AND MEASURES OF DAMAGES
PROVIDED FOR IN THIS AGREEMENT SHALL BE THE SOLE AND EXCLUSIVE REMEDIES FOR A
PARTY HEREUNDER AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED.  IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, A
PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR
DAMAGES AT LAW OR IN EQUITY ARE WAIVED.  NEITHER PARTY SHALL UNDER ANY
CIRCUMSTANCES BE LIABLE FOR CONSEQUENTIAL DAMAGES, WHETHER BY STATUTE, IN TORT
OR CONTRACT OR OTHERWISE.  THE LIMITATIONS IN THIS SECTION IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES SHALL BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY AND STRICT LIABILITY.  TO
THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE
OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED DAMAGES
CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
 
 
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EXHIBIT 10.4
 
11.7 Governing Law.  This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware without regard to its
principles of conflicts of laws.
 
11.8 Further Assurances.  Subject to the terms and conditions set forth in this
Agreement, each of the Members shall use all commercially reasonable efforts to
execute such agreements, instruments and other documents and to take or cause to
be taken such further actions as may be reasonably required or desirable to
consummate and give full force and effect to the transactions contemplated
hereby.
 
11.9 Successors and Assigns.  The rights and obligations of any party hereto
under this Agreement may not be assigned except in compliance with Article IX
hereof.  Each and all of the covenants, terms, provisions and agreements herein
contained shall be binding upon and inure to the benefit of the parties hereto
and, to the extent permitted by this Agreement, their respective successors and
permitted assigns.
 
11.10 Third Party Beneficiaries.  The provisions of this Agreement shall only be
for the benefit of, and enforceable by, the Company and its Members and shall
not inure to the benefit of or be enforceable by any third party, except that
the Members agree that any Indemnitee shall be entitled to assert rights and
remedies under Section 7.13 as a third-party beneficiary thereof.
 

 
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EXHIBIT 10.4

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representative as of the date first above
written.
 
BOARDWALK PIPELINES, LP

 
By:
Boardwalk Operating GP, LLC, its general partner

 
 

 
By:
Boardwalk Pipeline Partners, LP, its Sole Member

 
By:
Boardwalk GP, LP, its General Partner

 
By:
Boardwalk GP, LLC, its General Partner

By                                                                
Name:                                                                
Title:                                                                

BOARDWALK PIPELINES HOLDING CORP.

By:                                                                
Name:                                                                
Title:                                                                

 
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EXHIBIT 10.4

EXHIBIT A
 
MEMBERS
 
Membership Interests
 

 
 
Name and Address of Member
 
 
Initial Capital Contribution
 
 
Initial Equity Percentage Interest
Boardwalk Pipelines, LP
9 Greenway Plaza, Suite 2800
Houston, TX  77046
Attn:  Michael E. McMahon
Telephone:  713-479-8059
Facsimile:  866-459-7336
 
$5,500,000 cash
20%
Boardwalk Pipelines Holding Corp.
667 Madison Avenue
New York, NY 10021
Attention:  Gary W. Garson
Telephone:  (212) 521-2932
Facsimile:  (212) 521-2997
 
$22,000,000 cash
80%

 
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