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LIMITED LIABILITY COMPANY AGREEMENT

OF

STECKMAN RIDGE GP, LLC

A Delaware Limited Liability Company

March 2, 2007
 

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TABLE OF CONTENTS

 
Page
ARTICLE 1
DEFINITIONS
1
 
1.01
Definitions
1
 
1.02
Interpretation
7
ARTICLE 2
ORGANIZATION
7
 
2.01
Formation
7
 
2.02
Name
7
 
2.03
Registered Office; Registered Agent; Principal Office in the United States;
Other Offices
8
 
2.04
Purposes
8
 
2.05
Foreign Qualification
8
 
2.06
Formation of Partnership
8
 
2.07
Term
8
ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS
8
 
3.01
Current Members
8
 
3.02
Representations, Warranties and Covenants
8
 
3.03
Dispositions and Encumbrances of Membership Interests and LP Interests
9
 
3.04
Creation of Additional Membership Interests
12
 
3.05
Access to Information
12
 
3.06
Confidential Information
13
 
3.07
Liability to Third Parties
14
 
3.08
Use of Members’ Names and Trademarks
14
ARTICLE 4
CAPITAL CONTRIBUTIONS
14
 
4.01
Capital Contributions
14
 
4.02
Loans
14
 
4.03
No Other Contribution Obligations
14
 
4.04
Return of Contributions
14
 
4.05
Capital Accounts
14
 
4.06
Failure to Make a Capital Contribution
16
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
18
 
5.01
Distributions
18
 
5.02
Distributions on Dissolution and Winding Up
18
 
5.03
Withholding
18
 
5.04
Allocations
18
 
5.05
Special Allocations
18
 
5.06
Curative Allocations
20
 
5.07
Varying Interests
20
ARTICLE 6
MANAGEMENT
20
 
6.01
Generally
20
 
6.02
Management Committee
20
 
6.03
Operations and Management Agreement
23
 
6.04
Conflicts of Interest
24
 
6.05
Indemnification for Breach of Agreement
24
 
6.06
General Regulatory Matters
24
 
6.07
Initial Facilities
25

 
 
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ARTICLE 7
TAXES
25
 
7.01
Tax Returns
25
 
7.02
Tax Elections
25
 
7.03
Tax Matters Member
25
ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
26
 
8.01
Maintenance of Books; Reports
26
 
8.02
Bank Accounts
26
ARTICLE 9
WITHDRAWAL
26
 
9.01
No Right of Withdrawal
26
 
9.02
Deemed Withdrawal
27
 
9.03
Effect of Withdrawal
27
ARTICLE 10
DISPUTE RESOLUTION
28
 
10.01
Disputes
28
 
10.02
Negotiation to Resolve Disputes
28
 
10.03
Selection of Arbitrator
28
 
10.04
Conduct of Arbitration
29
 
10.05
Consolidation
29
ARTICLE 11
DISSOLUTION, WINDING UP AND TERMINATION
29
 
11.01
Dissolution
29
 
11.02
Winding Up and Termination
30
 
11.03
Deficit Capital Accounts
31
 
11.04
Certificate of Cancellation
31
ARTICLE 12
GENERAL PROVISIONS
31
 
12.01
Offset
31
 
12.02
Notices
31
 
12.03
Entire Agreement; Superseding Effect
31
 
12.04
Effect of Waiver or Consent
31
 
12.05
Amendment or Restatement
31
 
12.06
Binding Effect
31
 
12.07
Governing Law; Severability
32
 
12.08
Further Assurances
32
 
12.09
Waiver of Certain Rights
32
 
12.10
Counterparts
32

EXHIBITS:

A - Members
B - Form of Partnership Agreement
C - Non-Competition Area
D - Initial Facilities Plan

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LIMITED LIABILITY COMPANY AGREEMENT
OF
STECKMAN RIDGE GP, LLC
A Delaware Limited Liability Company
 
This LIMITED LIABILITY COMPANY AGREEMENT OF STECKMAN RIDGE GP, LLC (this
“Agreement”), dated as of March 2, 2007 (the “Effective Date”), is adopted,
executed and agreed to, for good and valuable consideration, by SPECTRA ENERGY
TRANSMISSION SERVICES, LLC, a Delaware limited liability company (“Spectra”),
and NJR STECKMAN RIDGE STORAGE COMPANY, a Delaware corporation (“NJR”).
Capitalized terms used in this Agreement and not defined elsewhere have the
meanings given to them in Article 1 below.

RECITALS

The Persons executing this Agreement as of the date of this Agreement are
becoming members of the Company and desire to enter into a written agreement
pursuant to the Act governing the affairs of the Company and the conduct of its
business. This Agreement is intended to bind all Members from time to time and
the Company.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Members agree as follows:

ARTICLE 1
DEFINITIONS
1.01 Definitions.

(a) Certain Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Sections referred to
below:

AAA - Section 10.02(c).

Act - the Delaware Limited Liability Company Act.

Additional Contribution - Section 4.06(a)(ii).

Additional Contribution Member - Section 4.06(a)(ii).

Adjusted Capital Account Deficit - with respect to any Member, the deficit
balance, if any, in such Member’s Capital Account as of the end of the relevant
Fiscal Year after giving effect to the following adjustments: (a) credit to such
Capital Account any amounts that such Member is obligated to restore pursuant to
the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and
1.704-2(i)(5) and (b) debit to such Capital Account such Member’s share of the
items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6). This definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

Affiliate - with respect to any Person, (a) each entity that such Person
Controls; (b) each Person that Controls such Person, including, in the case of a
Member, the Member’s Parent; and (c) each entity that is under common Control
with the Person, including, in the case of a Member, each entity that is
Controlled by the Member’s Parent; provided, with respect to any Member, an
Affiliate shall include (y) a limited partnership or a Person Controlled by a
limited partnership if a general partner of the limited partnership is
Controlled by the Member’s Parent, or (z) a limited liability company or a
Person controlled by a limited liability company if the managing member of the
limited liability company is Controlled by the Member’s Parent; provided
further, for purposes of this Agreement the Company, the Partnership and their
subsidiaries (if any) shall not be an Affiliate of any Member.
 
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Affiliate’s Outside Activities - Section 6.04(b).

Agreement - introductory paragraph.

Alternate Representative - Section 6.02(a)(i).

Arbitration Notice - Section 10.02(c).

Arbitrator - Section 10.03(b).

Assignee - any Person that acquires a Membership Interest or any portion of a
Membership Interest through a Disposition; provided, however, that an Assignee
shall have no right to be admitted to the Company as a Member except in
accordance with Section 3.03(b)(ii). The Assignee of a liquidated or wound up
Member is the shareholder, partner, member or other equity owner or owners of
the liquidated or wound up Member to which that Member’s Membership Interest is
assigned by the Person conducting the liquidation or winding up of such Member.
The Assignee of a Bankrupt Member is (a) the Person or Persons (if any) to whom
such Bankrupt Member’s Membership Interest is assigned by order of the
bankruptcy court or other Governmental Authority having jurisdiction over such
Bankruptcy, or (b) in the event of a general assignment for the benefit of
creditors, the creditor to which such Membership Interest is assigned.

Authorizations - licenses, certificates, permits, orders, approvals,
determinations and authorizations from Governmental Authorities having valid
jurisdiction.

Available Cash - with respect to any Quarter ending prior to the liquidation and
winding up of the Company, the excess, if any and without duplication, of:

(a)  the sum of all cash and cash equivalents of the Company on hand at the end
of that Quarter, over

(b)  the amount of any cash reserves that are necessary or appropriate in the
Sole Discretion of the Management Committee to (i) provide for the proper
conduct of the business of the Company (including reserves for future
maintenance capital expenditures and for anticipated future credit needs of the
Company) subsequent to that Quarter or (ii) comply with applicable Law or any
loan agreement, security agreement, mortgage, debt instrument or other agreement
or obligation to which the Company is a party or by which it is bound or its
assets are subject; provided, however, that distributions made by the Company or
cash reserves established, increased or reduced after the end of that Quarter
but on or before the date of determination of Available Cash with respect to
that Quarter shall be deemed to have been made, established, increased or
reduced, for purposes of determining Available Cash, within that Quarter if the
Management Committee so determines.

Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in
which a liquidation or winding up of the Company occurs and any subsequent
Quarter shall be deemed to equal zero.

Bankruptcy or Bankrupt - as defined in the Partnership Agreement.

Breaching Member - a Member (a) that (i) has committed a failure or breach of
the type described in the definition of “Default,” (ii) has received a notice of
the type described in the definition of “Default,” and (iii) has not cured the
failure or breach, but as to which the applicable cure period set forth in the
definition of “Default” has not yet expired or (b) that is, or any Affiliate of
which is, a “Breaching Partner” as defined in the Partnership Agreement.

Business Day - as defined in the Partnership Agreement.

Buy-out Right - Section 3.03(b)(iv)(A).

Capital Account - the account maintained by the Company for each Member in
accordance with this Agreement and to be maintained by the Company for each
Member from and after the Effective Date in accordance with Section 4.05.

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Capital Budget - the annual capital budget for the Partnership that is approved
(or deemed approved) pursuant to Section 6.02(h)(ii)(C).

Capital Call - Section 4.01(a).

Capital Contribution - with respect to any Member, the amount of money and the
net agreed value of any property (other than money) contributed to the Company
by the Member. Any reference in this Agreement to the Capital Contribution of a
Member shall include a Capital Contribution of its predecessors in interest.

Certificate - Section 2.01.

Change Exercise Notice - Section 3.03(b)(iv)(A).

Change of Member Control - with respect to any Member, an event (such as a
Disposition of voting securities or other equity interests) that causes such
Member to cease to be Controlled by such Member’s then Parent or an event that
causes an Affiliate of a Member that holds an LP Interest to be Controlled by
another Person that is not an Affiliate of that Member; provided, however, that
the term “Change of Member Control” shall not include any of the following
events:

(a) an event that causes that Member’s that Parent to be Controlled by another
Person;

(b) an event that involves the Disposition of voting securities or other equity
interests of that Member but also involves the Disposition of other assets
having a greater value than the larger of (i) the fair market value of such
Member’s Membership Interest and (ii) the product of the Sharing Ratio of that
Member times $1 billion;

(c) an event that involves the Disposition of voting securities or other equity
interests of a Person that Controls that Member if that Person also owns assets
(other than the voting securities or other equity interests of such Member) that
have a greater value than the larger of (i) the fair market value of that
Member’s Membership Interest and (ii) the product of the Sharing Ratio of that
Member times $1 billion; or

(d) in the case of a Member that is a publicly traded partnership or is
Controlled by a publicly traded partnership, any Disposition of or issuance of
new units representing limited partner interests by such publicly traded
partnership, whether to an Affiliate or an unrelated party and whether or not
such units or interests are listed on a national securities exchange or
quotation service.

Change Purchasing Member - Section 3.03(b)(iv)(A).

Change Unexercised Portion - Section 3.03(b)(iv)(A).

Changing Member - Section 3.03(b)(iv)(A).

Claim - any and all judgments, claims, causes of action, demands, lawsuits,
suits, proceedings, Governmental investigations or audits, losses, assessments,
fines, penalties, administrative orders, obligations, costs, expenses,
liabilities and damages (whether actual, consequential or punitive), including
interest, penalties, reasonable attorney’s fees, disbursements and costs of
investigations, deficiencies, levies, duties, imposts, remediation and cleanup
costs, and natural resources damages.

Code - as defined in the Partnership Agreement.

Company - Steckman Ridge GP, LLC, a Delaware limited liability company.

Company Minimum Gain - “partnership minimum gain” set forth in Treasury
Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

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Confidential Information - information and data (including all copies) that is
furnished or submitted by any of the Members, their Affiliates, or the Operator,
whether oral, written, or electronic, to the other Members, their Affiliates, or
the Operator in connection with the Facilities and the resulting information and
data obtained from those studies, including market evaluations, market
proposals, service designs and pricing, pipeline system design and routing, cost
estimating, rate studies, identification of permits, strategic plans, legal
documents, environmental studies and requirements, public and governmental
relations planning, identification of regulatory issues and development of
related strategies, legal analysis and documentation, financial planning, gas
reserves and deliverability data, studies of the natural gas supplies for the
Facilities, and other studies and activities to determine the potential
viability of the Facilities and their design characteristics, and identification
of key issues. Notwithstanding the foregoing, the term “Confidential
Information” shall not include any information that:

(a) is in the public domain at the time of its disclosure or thereafter, other
than as a result of a disclosure directly or indirectly by a Member or its
Affiliates or the Operator in contravention of this Agreement;

(b) as to any Member or its Affiliates or the Operator, was in the possession of
such Member or its Affiliates or the Operator prior to the execution of any
confidentiality agreements related to the Facilities or this Agreement; or

(c) has been independently acquired or developed by a Member or its Affiliates
or the Operator without violating any of the obligations of that Member or its
Affiliates or the Operator under any applicable agreement.

Contributing Member - Section 4.06(a).

Control - as defined in the Partnership Agreement.

Control Notice - Section 3.03(b)(iv)(A).

Customer - the Person (other than the Company) that has entered into a Storage
Agreement.

Day - a calendar day; provided, however, that, if any period of Days referred to
in this Agreement shall end on a Day that is not a Business Day, then the
expiration of that period shall be automatically extended until the end of the
first succeeding Business Day.

Default - with respect to any Member,

(a) the failure of that Member to contribute, on or before the 10th Day after
the date required, all or any portion of a Capital Contribution that Member is
required to make as provided in this Agreement, or

(b) the failure of a Member to comply in any material respect with any of its
other agreements, covenants or obligations under this Agreement, or the failure
of any representation or warranty made by a Member in this Agreement to have
been true and correct in all material respects at the time it was made, in each
case if the breach is not cured by the applicable Member on or before the 30th
Day after its receiving notice of such breach from any other Member (or, if such
breach is not capable of being cured within such 30-Day period, if such Member
fails to promptly commence substantial efforts to cure such breach or to
prosecute such curative efforts to completion with continuity and diligence).
The Management Committee may, but shall have no obligation to, extend the
foregoing 10-Day and 30-Day periods.

Default Rate - a rate per annum equal to the lesser of (a) a varying rate per
annum equal to the sum of (i) the prime rate as published in The Wall Street
Journal, with adjustments in that varying rate to be made on the same date as
any change in that rate is so published, plus (ii) 2% per annum, and (b) the
maximum rate permitted by Law.

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Dispose, Disposing or Disposition - with respect to any asset (including a
Membership Interest, an LP Interest or any portion of a Membership Interest or
LP Interest), a sale, assignment, transfer, conveyance, gift, exchange or other
disposition of such asset, whether such disposition be voluntary, involuntary or
by operation of Law, including the following: (a) in the case of an asset owned
by a natural person, a transfer of such asset upon the death of its owner,
whether by will, intestate succession or otherwise; (b) in the case of an asset
owned by an entity, (i) a merger or consolidation of such entity (other than
where such entity is the survivor thereof), (ii) a conversion of such entity
into another type of entity, or (iii) a distribution of such asset, including in
connection with the dissolution, liquidation, winding up or termination of such
entity (unless, in the case of dissolution, such entity’s business is continued
without the commencement of liquidation or winding up); and (c) a disposition in
connection with, or in lieu of, a foreclosure of an Encumbrance; but such terms
shall not include the creation of an Encumbrance.

Disposing Member - Section 3.03(a).

Dispute - Section 10.01.

Dispute Notice - Section 10.02.

Disputing Member - Section 10.01.

Dissolution Event - Section 11.01.

Effective Date - introductory paragraph.

Encumber, Encumbering, or Encumbrance - the creation of a security interest,
lien, pledge, mortgage or other encumbrance, whether such encumbrance be
voluntary, involuntary or by operation of Law.

Facilities - as defined in the Partnership Agreement.

FERC - as defined in the Partnership Agreement.

Governmental Authority (or Governmental) - as defined in the Partnership
Agreement.

including - including, without limitation.

Initial Facilities - as defined in the Partnership Agreement.

Initial Facilities Plan - Section 6.07(a).

Law - as defined in the Partnership Agreement.

Limited Partner - as defined in the Partnership Agreement.

LP Interest - as defined in the Partnership Agreement.

Majority Interest - Section 6.02(e)(i).

Management Committee - Section 6.01.

Member - any Person executing this Agreement as of the date of this Agreement as
a member or subsequently admitted to the Company as a member as provided in this
Agreement, but such term does not include any Person that has ceased to be a
member in the Company.

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Membership Interest - with respect to any Member, (a) that Member’s status as a
Member; (b) that Member’s share of the income, gain, loss, deduction and credits
of, and the right to receive distributions from, the Company; (c) any Priority
Interest to which that Member is entitled pursuant to Section 4.06(b); (d) all
other rights, benefits and privileges enjoyed by that Member (under the Act,
this Agreement or otherwise) in its capacity as a Member, including that
Member’s rights to vote, consent and approve and otherwise to participate in the
management of the Company, including through the Management Committee; and (e)
all obligations, duties and liabilities imposed on that Member (under the Act,
this Agreement or otherwise) in its capacity as a Member, including any
obligations to make Capital Contributions.

Member Minimum Gain - “partner nonrecourse debt minimum gain” as determined
under Treasury Regulation Section 1.704-2(i)(2).

Member Nonrecourse Debt - “partner nonrecourse debt” as set forth in Treasury
Regulation Section 1.704-2(b)(4).

Member Nonrecourse Deductions - “partner nonrecourse deductions,” and the amount
thereof shall be, as set forth in Treasury Regulation Section 1.704-2(i).

NJR - introductory paragraph.

Non-Contributing Member - Section 4.06(a).

Nonrecourse Debt - the meaning set forth in Treasury Regulation Section
1.704-2(b)(3).
Nonrecourse Deductions - the meaning, and the amount thereof shall be, as set
forth in Treasury Regulation Sections 1.704-2(b) and 1.704-2(c).

O&M Agreement - as defined in the Partnership Agreement.

Officer - any Person designated as an officer of the Company as provided in
Section 6.02(j), but that term does not include any Person who has ceased to be
an officer of the Company.

Operating Budget - the annual operating budget for the Partnership that is
approved (or deemed approved) pursuant to Section 6.02(h)(ii)(C).

Operator - as defined in the Partnership Agreement.

Parent - any Person that Controls a Member and that is not itself Controlled by
any other Person.

Partnership - as defined in the Partnership Agreement.

Partnership Agreement - Section 2.06.

Person - the meaning assigned that term in Section 18-101(11) of the Act and
also includes a Governmental Authority and any other entity.

Priority Interest - the special distribution rights under Section 4.06(b)
received by each Additional Contribution Member, which rights include the right
to receive the return described in Section 4.06(b)(i) and which form part of the
Additional Contribution Member’s Membership Interest.

Priority Interest Sharing Ratio - Section 4.06(b)(i).

PSA - as defined in the Partnership Agreement.

6

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Quarter - unless the context requires otherwise, a fiscal quarter of the
Company.

Regulatory Allocations - Section 5.06.

Representative - Section 6.02(a)(i).

Securities Act - the Securities Act of 1933.

Sharing Ratio - subject in each case to adjustments in accordance with this
Agreement or in connection with Dispositions of Membership Interests, (a) in the
case of a Member executing this Agreement as of the date of this Agreement or a
Person acquiring that Member’s Membership Interest, the percentage specified for
that Member as its Sharing Ratio on Exhibit A, and (b) in the case of Membership
Interests issued under Section 3.04, the Sharing Ratio established in Section
3.04; provided, however, that the total of all Sharing Ratios shall always equal
100%.

Sole Discretion - (a) in the applicable Person’s sole and absolute discretion,
(b) with or without cause, (c) subject to such conditions as it may deem
appropriate, and (d) without taking into account the interests of, and without
incurring liability to, the Company, the Partnership, any Limited Partner, any
other Member or Representative, or any Officer or employee of the Company, the
Partnership or any Limited Partner.

Spectra - introductory paragraph.

Storage Agreement - as defined in the Partnership Agreement.

Tax Matters Member - Section 7.03(a).

Term - Section 2.07.

Treasury Regulations - as defined in the Partnership Agreement.

Withdraw, Withdrawing or Withdrawal - the withdrawal, resignation or retirement
of a Member from the Company as a member. Such terms shall not include any
Dispositions of Membership Interests (which are governed by Sections 3.03(a) and
(b)), even though the Member making a Disposition may cease to be a Member as a
result of the Disposition.

Withdrawn Member - Section 9.03.

(b) Other Terms. Terms defined elsewhere in this Agreement have the meanings so
given them.
 
1.02 Interpretation. Unless the context requires otherwise: (a) the gender (or
lack of gender) of all words used in this Agreement includes the masculine,
feminine and neuter; (b) references to Articles and Sections refer to Articles
and Sections of this Agreement; (c) references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is made a part hereof for all
purposes; (d) references to Laws refer to such Laws as they may be amended from
time to time, and references to particular provisions of a Law include any
corresponding provisions of any succeeding Law; and (e) references to money
refer to legal currency of the United States of America.
 
ARTICLE 2
ORGANIZATION

2.01 Formation. The Company has been formed as a Delaware limited liability
company by the filing of a Certificate of Formation (the “Certificate”) on
February 7, 2007.

2.02 Name. The name of the Company is “Steckman Ridge GP, LLC” and all Company
business must be conducted in that name or such other names that comply with Law
as the Management Committee may select.

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2.03 Registered Office; Registered Agent; Principal Office in the United States;
Other Offices. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent named in the Certificate or such other office (which need not
be a place of business of the Company) as the Management Committee may designate
in the manner provided by Law. The registered agent of the Company in the State
of Delaware shall be the initial registered agent named in the Certificate or
such other Person or Persons as the Management Committee may designate in the
manner provided by Law. The principal office of the Company in the United States
shall be at such place as the Management Committee may designate, which need not
be in the State of Delaware, and the Company shall maintain records there or
such other place as the Management Committee shall designate and shall keep the
street address of such principal office at the registered office of the Company
in the State of Delaware. The Company may have such other offices as the
Management Committee may designate.

2.04 Purposes. The purpose of the Company is to act as the general partner of
the Partnership, to hold the general partner interests in the Partnership and to
engage in any activities directly or indirectly relating to the foregoing.

2.05 Foreign Qualification. Prior to the Company’s conducting business in any
jurisdiction other than Delaware, the Management Committee shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Management Committee, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Management Committee, 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 and terminate the Company as a foreign limited liability
company in all such jurisdictions in which the Company may conduct business.

2.06 Formation of Partnership. Promptly after the execution and delivery of this
Agreement, the Company as general partner and each Member signing this Agreement
(or its Affiliate) shall enter into the Limited Partnership Agreement of
Steckman Ridge, LP, in the form of Exhibit B to this Agreement (the “Partnership
Agreement,” as amended from time to time).

2.07 Term. The period of existence of the Company (the “Term”) commenced with
the acceptance for filing of the Certificate by the Secretary of State of the
State of Delaware and shall end at such time as a certificate of cancellation is
filed with the Secretary of State of the State of Delaware in accordance with
Section 11.04.
ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS

3.01 Current Members. As of the Effective Date, Spectra and NJR are the only
Members of the Company, each of which is admitted to the Company as a member.
 
3.02 Representations, Warranties and Covenants. Each Member hereby represents,
warrants and covenants to the Company and each other Member that the following
statements are true and correct as of the Effective Date and shall be true and
correct at all times that such Member is a Member:

(a) that Member is duly incorporated, organized or formed (as applicable),
validly existing, and (if applicable) in good standing under the Law of the
jurisdiction of its incorporation, organization or formation; if required by
applicable Law, that Member is duly qualified and in good standing in the
jurisdiction of its principal place of business, if different from its
jurisdiction of incorporation, organization or formation; and that Member has
full power and authority to execute and deliver this Agreement and to perform
its obligations hereunder, and all necessary actions by the board of directors,
shareholders, managers, members, partners, trustees, beneficiaries, or other
applicable Persons necessary for the due authorization, execution, delivery and
performance of this Agreement by that Member have been duly taken;

(b) that Member has duly executed and delivered this Agreement and the other
documents contemplated herein, and they constitute the legal, valid and binding
obligation of that Member enforceable against it in accordance with their terms
(except as may be limited by bankruptcy, insolvency or similar Laws of general
application and by the effect of general principles of equity, regardless of
whether considered at law or in equity);

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(c) that Member’s authorization, execution, delivery, and performance of this
Agreement does not and will not (i) conflict with, or result in a breach,
default or violation of, (A) the organizational documents of that Member, (B)
any contract or agreement to which that Member is a party or is otherwise
subject, or (C) any Law, order, judgment, decree, writ, injunction or arbitral
award to which that Member is subject; or (ii) require any consent, approval or
authorization from, filing or registration with, or notice to, any Governmental
Authority or other Person, unless such requirement has already been satisfied;

(d) that Member’s Parent is the Person identified as such on Exhibit A;

(e) that Member is acquiring its Membership Interest solely for investment for
its own account and not for distribution or sale to others in connection with
any distribution or public offering;

(f) that Member understands that there will not be any public market for the
Membership Interests and that it must bear the economic risk of an investment in
the Company for an indefinite period of time because (i) its Membership Interest
has not been registered under the Securities Act or any applicable state
securities laws and (ii) it may Dispose or Encumber, in whole or in part, its
Membership Interest only in accordance with this Agreement and then only if its
Membership Interest is subsequently registered in accordance with the provisions
of the Securities Act and applicable state securities laws, unless registration
is not required;

(g) that Member understands that the Company is not obligated to register the
Membership Interests for resale under the Securities Act or any applicable state
securities laws;

(h) that Member is a “qualified institutional buyer” within the meaning of rule
144A of the Securities and Exchange Commission or an “accredited investor”
within the meaning of Regulation D of the Securities and Exchange Commission and
is able to bear the economic risk of such an investment in the Company for an
indefinite period of time, and it has no need for liquidity of this investment
and it could bear a complete loss of this investment; if it is either a
“qualified purchaser” within the meaning of the Investment Company Act of 1940
or is an entity formed and is being utilized primarily for the purpose of making
an investment in the Company, each of the shareholders, partners, members or
other holders of equity or beneficial interests in that Member is such a
qualified purchaser; and

(i) that Member has the knowledge and sophistication to evaluate the risks of
investing in the Company; it has conducted its own investigation and due
diligence into the Company and is satisfied that its investment in the Company
is appropriate; it understands and agrees that none of the other Members or
their Affiliates, or the Company, has made nor will make any representation or
warranty with respect to the worthiness, terms, value, or any other aspect of
the Company or the Membership Interests, and it explicitly disclaims any
warranty, express or implied, with respect to such matters; and it specifically
acknowledges, represents, and warrants that it is not relying on any other
Member or its Affiliates (i) for its investigation or due diligence concerning,
or evaluation of, the Company or any related transaction or (ii) with respect to
tax and other economic considerations involved in an investment in the Company.
 
3.03 Dispositions and Encumbrances of Membership Interests and LP Interests.

(a) General Restriction. A Member (the “Disposing Member”) may not Dispose of or
Encumber all or any portion of its Membership Interest or LP Interest (or permit
any of its Affiliates to Dispose of or Encumber all or any portion of its LP
Interest) except in strict accordance with this Section 3.03. References in this
Section 3.03 to Dispositions or Encumbrances of a “Membership Interest” or of an
“LP Interest” shall also refer to Dispositions or Encumbrances of a portion of a
Membership Interest or of an LP Interest, respectively. Any attempted
Disposition or Encumbrance of a Membership Interest or an LP Interest, other
than in strict accordance with this Section 3.03, shall be, and is hereby
declared, null and void ab initio. The rights and obligations constituting a
Membership Interest or an LP Interest may not be separated, divided or split
from the other attributes of a Membership Interest or an LP Interest except as
contemplated by the express provisions of this Agreement. The Members agree that
a breach of the provisions of this Section 3.03 may cause irreparable injury to
the Company and to the other Members for which monetary damages (or other remedy
at law) are inadequate in view of (i) the complexities and

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uncertainties in measuring the actual damages that would be sustained by reason
of the failure of a Member to comply with such provision and (ii) the uniqueness
of the Company and Partnership business and the relationship among the Members.
Accordingly, the Members agree that the provisions of this Section 3.03 may be
enforced by specific performance in accordance with Section 10.04(b).

(b) Dispositions of Membership Interests and LP Interests.

(i) General Restriction. A Member may Dispose of its Membership Interest or LP
Interest (and will permit any of its Affiliates to Dispose of its LP Interest)
only (A) to an Affiliate of the Member making, or whose Affiliate is making, the
Disposition or (B) with the written consent of all other Members, which consent
may be granted or withheld in the Sole Discretion of each Member. Any such
Disposition must comply with the requirements of Section 3.03(b)(iii) and, if
the Assignee is to be admitted as a Member, Section 3.03(b)(ii) and with the
applicable provisions of the Partnership Agreement. If the Member is Disposing
of all or any portion of its Membership Interest, it must also transfer a pro
rata portion of its and its Affiliates’ LP Interest and vice versa.

(ii) Admission of Assignee as a Member. If, but only if, a Disposition is
effected in strict compliance with Sections 3.03(a) and (b), the Assignee of a
Membership Interest shall be admitted to the Company as a Member, with the
Membership Interest (and attendant Sharing Ratio) so transferred to such
Assignee and the Company shall consent to the Disposition of an LP Interest and
the admission of the Assignee as a Limited Partner of the Partnership.

(iii) Requirements Applicable to All Dispositions and Admissions. In addition to
the requirements set forth in Sections 3.03(b)(i), any Disposition of a
Membership Interest and LP Interest and any admission of an Assignee as a Member
shall also be subject to the following requirements, and such Disposition (and
admission, if applicable) shall not be effective unless such requirements are
complied with; provided, however, that the Management Committee, in its Sole
Discretion, may waive any of the following requirements:

(A) Disposition Documents. The following documents must be delivered to the
Management Committee and must be satisfactory, in form and substance, to the
Management Committee:

(I)   Disposition Instrument. A copy of the instrument pursuant to which the
Disposition is effected.

(II)  Ratification of this Agreement. An instrument, executed by the Disposing
Member and its Assignee, containing the following information and agreements, to
the extent they are not contained in the instrument described in Section
3.03(b)(iii)(A)(I): (aa) the notice address of the Assignee; (bb) the Parent of
the Assignee or a statement that it has no Parent; (cc) the Sharing Ratios after
the Disposition of the Disposing Member and its Assignee (which together must
total the Sharing Ratio of the Disposing Member before the Disposition); (dd)
the Assignee’s ratification of this Agreement and agreement to be bound by it,
and its confirmation that the representations and warranties in Section 3.02 are
true and correct with respect to it; and (ee) representations and warranties by
the Disposing Member and its Assignee (AA) that the Disposition and admission is
being made in accordance with all applicable Laws, (BB) that the matters set
forth in Section 3.03(b)(iii)(A)(III) are true and correct, and (CC) that the
Disposition and admission do not violate any agreement to which the Company or
the Partnership is a party; together with a similar instrument executed by the
Disposing Member and/or its Affiliate owning the LP Interest and the Assignee
(as defined in the Partnership Agreement) of the LP Interest.

(III)  Securities Law Opinion. Unless the Membership Interest subject to the
Disposition is registered under the Securities Act and any applicable state
securities Law, a favorable opinion of the Company’s legal counsel, or of other
legal counsel acceptable to the Management Committee, to the effect that the
Disposition and admission is being made pursuant to a valid exemption from
registration under those Laws and in accordance with those Laws; provided,
however, that no such opinion shall be required in the case of a Disposition by
a Member to an Affiliate.

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(B) Payment of Expenses. The Disposing Member and its Assignee shall pay, or
reimburse the Company for, all reasonable costs and expenses incurred by the
Company in connection with the Disposition and admission, including the legal
fees incurred in connection with the legal opinion referred to in Section
3.03(b)(iii)(A)(III), on or before the 10th Day after the receipt by that Person
of the Company’s invoice for the amount due. The Company will provide an invoice
as soon as practicable after the amount due is determined but in no event later
than the 90th Day thereafter. If payment is not made by the date due, the Person
owing that amount shall pay interest on the unpaid amount from the date due
until paid at a rate per annum equal to the Default Rate.

(C) No Release. No Disposition of a Membership Interest shall effect a release
of the Disposing Member from any liabilities to the Company or the other Members
arising from events occurring prior to the Disposition.

(D) Indebtedness of Company. Any Disposition of a Membership Interest or LP
Interest shall also include all of the indebtedness owed by the Company or the
Partnership to the Disposing Member or its Affiliates (or, if only a portion of
a Membership Interest or LP Interest is being Disposed, a proportionate share of
that indebtedness). As long as this Agreement shall remain in effect, all
evidence of indebtedness of the Company or the Partnership owed to any of the
Members or its Affiliates shall bear an appropriate legend to indicate that it
is held subject to, and may be Disposed of only in accordance with, the terms
and conditions of this Agreement, and that such Disposition may be made only in
conjunction with the Disposition of a proportionate part of such Member’s
Membership Interest.

(iv) Change of Member Control.

(A) Procedure. In the event of a Change of Member Control, then the Member with
respect to which the Change of Member Control has occurred (the “Changing
Member”) shall promptly (and in all events within five Business Days after the
Change in Member Control) notify (the “Control Notice”) the Company and the
other Members. If the Control Notice is not given by the Changing Member as
provided above and any other Member becomes aware of that Change of Member
Control, the other Member shall have the right to give the Control Notice to the
Changing Member, the Company and the other Members. The other Members shall have
the right (the “Buy-out Right”) to acquire the Membership Interest of the
Changing Member and its and its Affiliates’ LP Interest for the sum of (x) the
positive balance of the Changing Member’s Capital Account and (y) the positive
balance(s) of the Changing Member and/or its Affiliates’ capital accounts under
the Partnership Agreement. Each Member (excluding the Changing Member) shall
have the right (but not the obligation) to acquire a portion of the applicable
Membership Interest and its and its Affiliates’ LP Interest that is equal to (I)
the Sharing Ratio represented by the Membership Interest times (II) a fraction,
the numerator of which is the Member’s Sharing Ratio and the denominator of
which is the total Sharing Ratios of all Members other than the Changing Member.
Each Member (other than the Changing Member) shall have through the 30th Day
following the determination of the value of such Membership Interest and its and
its Affiliates’ LP Interest in which to notify the other Members (including the
Changing Member) whether the Member desires to exercise its Buy-out Right. A
notice in which a Member exercises the Buy-out Right is referred to as a “Change
Exercise Notice,” and a Member that delivers a Change Exercise Notice is
referred to as a “Change Purchasing Member.” If the Change Purchasing Members
constitute fewer than all of the Members (other than the Changing Member) and,
consequently, there is a portion of the Membership Interest and LP Interest for
which the Buy-out Right has not been exercised (a “Change Unexercised Portion”),
then each Change Purchasing Member shall have through the 20th Day following the
end of that period in which to notify the other Change Purchasing Members and
the Changing Member whether it desires to acquire the portion of the Change
Unexercised Portion that is equal to (aa) the Sharing Ratio represented by the
Change Unexercised Portion times (bb) a fraction, the numerator of which is the
Change Purchasing Member’s Sharing Ratio and the denominator of which is the
total Sharing Ratios of all Change Purchasing Members. If, at the end of this
20-Day period, there remains a Change Unexercised Portion, then the Change
Purchasing Members shall have an additional 10-Day period in which to negotiate
among themselves for a mutually agreeable method of sharing the acquisition of
the remaining Change Unexercised Portion. If the Change Purchasing Members reach
such agreement during this 10-Day period, then the Buy-out Right shall be deemed
exercised, and the Changing Member and, if applicable, its Affiliates and the
Change Purchasing Members shall close the acquisition of the Membership Interest
and LP Interest in accordance with Section 3.03(b)(iv)(B). If, however, the
Change Purchasing Members do not reach such agreement during this 10-Day period,
then the Buy-out Right shall be deemed to have been waived. A Member that fails
to exercise a right during any applicable period set forth in this Section
3.03(b)(iv)(A) shall be deemed to have waived such right for the subject Change
of Member Control, but not any right for future Changes of Member Control.

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(B) Closing. If the Buy-out Right is deemed exercised in accordance with Section
3.03(b)(iv)(A), the closing of the purchase of the Membership Interest and LP
Interest shall occur at the principal place of business of the Company no later
than the 60th Day after the expiration of the last applicable period referred to
in such Section 3.03(b)(iv)(A) (or, if later, the fifth Business Day after the
receipt of all applicable Authorizations to the purchase), unless the Changing
Member and, if applicable, its Affiliate and the Change Purchasing Members agree
upon a different place or date. A Change Purchasing Member may assign its right
to receive any Membership Interest or LP Interest to one or more Affiliates. At
the closing, (I) the Changing Member shall execute and deliver to the Change
Purchasing Members and/or their Affiliates, as applicable, (aa) an assignment of
the Membership Interest and LP Interest, in form and substance reasonably
acceptable to the Change Purchasing Members, containing a general warranty of
title as to the Membership Interest and the LP Interest (including that the
Membership Interest and the LP Interest are free and clear of all Encumbrances,
other than those permitted under Section 3.03(c)(ii)) and (bb) any other
instruments reasonably requested by the Change Purchasing Members to give effect
to the purchase; and (II) the Change Purchasing Members shall deliver to the
Changing Member and, if applicable, its Affiliate(s) in immediately available
funds the purchase price provided for in Section 3.03(b)(iv)(A). The Sharing
Ratios and Capital Accounts of the Members shall be deemed adjusted to reflect
the effect of the purchase and Exhibit A shall be amended accordingly and to
reflect any new Parent.

(v) Tax Termination. Notwithstanding anything to the contrary in this Agreement,
a direct or indirect Disposition of a Membership Interest shall be made only
with the consent of all Members if the Disposition would (a) cause a termination
of the Company under Section 708 of the Code or (b) adversely affect the tax
consequences of the Company or any Member.

(c) Encumbrances of Membership Interest or LP Interest. A Member may Encumber
its Membership Interest or any LP Interest, or permit any of its Affiliates to
Encumber any LP Interest, only if (i) the Member receives the consent of a
Majority Interest of the non-Encumbering Members (calculated without reference
to the Sharing Ratio of the Encumbering Member), which consent (as contemplated
by Section 6.02(e)(ii)) may be granted or withheld in the Sole Discretion of
each such other Member; and (ii) the instrument creating the Encumbrance must
provide that any foreclosure of such Encumbrance (or Disposition in lieu of such
foreclosure) must comply with the requirements of Section 3.03(a) and (b).
 
3.04 Creation of Additional Membership Interests. Additional Membership
Interests may be created and issued to existing Members or to other Persons, and
such other Persons may be admitted to the Company as Members, with the consent
of a Majority Interest, on such terms and conditions as a Majority Interest may
determine at the time of admission. The terms of admission or issuance must
specify the applicable Sharing Ratios and may provide for the creation of
different classes or groups of Members having different rights, powers and
duties. Any such admission is effective only after the new Member has executed
and delivered to the Members an instrument containing the notice address of the
new Member, the Assignee’s ratification of this Agreement and agreement to be
bound by it, and its confirmation that the representations and warranties in
Section 3.02 are true and correct with respect to it. The provisions of this
Section 3.04 shall not apply to Dispositions of Membership Interests and LP
Interests or admissions of Assignees in connection therewith, such matters being
governed by Section 3.03(a) and (b).
 
3.05 Access to Information. Each Member shall be entitled to receive any
information that it may request concerning the Company and the Partnership;
provided, however, that this Section 3.05 shall not obligate the Company, the
Management Committee, or the Operator to create any information that 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). Each Member shall also have
the right, upon reasonable notice, and at all reasonable times during usual
business hours to inspect the properties of the Company and the Partnership and
to audit, examine and make copies of the books of account and other records of
the Company and the Partnership. This right may be exercised through any agent
or employee of a Member designated in writing by it or by an independent public
accountant, engineer, attorney or other consultant so designated. The Member
making the request shall bear all costs and expenses incurred in any inspection,
examination or audit made
on that Member’s behalf. The Members agree to cooperate reasonably, and to cause
their respective independent public accountants, engineers, attorneys or other
consultants to cooperate reasonably, in connection with any such request.
Confidential Information obtained under this Section 3.05 shall be subject to
the provisions of Section 3.06.

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3.06 Confidential Information.

(a) Except as permitted by Section 3.06(b), (i) each Member shall, and shall
cause its Affiliates to, keep confidential all Confidential Information and
shall not disclose any Confidential Information to any Person, including any of
its Affiliates, and (ii) each Member shall use the Confidential Information only
in connection with the Facilities, the Company and the Partnership.

(b) Notwithstanding Section 3.06(a), but subject to the other provisions of this
Section 3.06, a Member or, where applicable, its Affiliates, may make the
following disclosures and uses of Confidential Information:

(i) disclosures to another Member, the Operator or any other Person retained by
the Company or the Partnership in connection with the Company or the
Partnership;

(ii) disclosures and uses that are approved by the Management Committee;

(iii) disclosures that may be required from time to time to obtain requisite
Authorizations or financing for the Facilities, if the disclosures are approved
by the Management Committee;

(iv) disclosures to an Affiliate of that Member, including the directors,
officers, employees, agents and advisors of that Affiliate, provided the Member
shall cause that Affiliate to abide by the terms of this Section 3.06, and
special care shall be taken to restrict such disclosures in any case where that
Affiliate is or may become a customer under a Storage Agreement or an “Marketing
Affiliate” (as defined in the FERC’s Standards of Conduct for Transmission
Providers, 18 C.F.R. Part 358, Section 358.3(k));

(v) disclosures to the Parent of that Member, including the directors, officers,
employees, agents and advisors of that Parent, but that Parent shall be subject
to the terms of this Section 3.06;

(vi) disclosures to a Person that is not a Member or an Affiliate of a Member,
if that Person has been retained by a Member or an Affiliate of a Member to
provide services in connection with the Company or the Partnership and has
agreed to abide by the terms of this Section 3.06;

(vii) disclosures to a bona-fide potential direct or indirect purchaser of that
Member’s Membership Interest, if that potential purchaser has agreed to abide by
the terms of this Section 3.06;

(viii) disclosures required, with respect to a Member or an Affiliate of a
Member, pursuant to (A) the Securities Act and the rules and regulations
promulgated thereunder, (B) the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, (C) any state securities Laws
or (D) any national securities exchange or automated quotation system; and

(ix) disclosures that a Member is legally compelled to make by deposition,
interrogatory, request for documents, subpoena, civil investigative demand,
order of a court of competent jurisdiction or similar process or otherwise by
Law; provided, however, that, prior to any such disclosure, such Member shall,
to the extent legally permissible:

(A) provide the Management Committee with prompt notice of such requirements so
that one or more of the Members may seek a protective order or other appropriate
remedy or waive compliance with the terms of this Section 3.06(b)(ix);

(B) consult with the Management Committee on the advisability of taking steps to
resist or narrow such disclosure; and

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(C) cooperate with the Management Committee and with the other Members in any
attempt one or more of them may make to obtain a protective order or other
appropriate remedy or assurance that confidential treatment will be afforded the
Confidential Information; and in the event such protective order or other remedy
is not obtained, or the other Members waive compliance with the provisions of
this Agreement, that Member agrees (I) to furnish only that portion of the
Confidential Information that, in the opinion of the Member’s counsel, the
Member is legally required to disclose, and (II) to exercise all reasonable
efforts to obtain assurance that confidential treatment will be accorded the
Confidential Information.

(c) Each Member shall take, and shall cause its Affiliates to take, such
precautionary measures as may be required to ensure (and such Member shall be
responsible for) compliance with this Section 3.06 by any of its Affiliates, and
its and their directors, officers, employees and agents, and other Persons to
which it may disclose Confidential Information in accordance with this Section
3.06.

(d) Promptly after its Withdrawal, a Withdrawn Member shall destroy (and provide
a certificate of destruction to the Company with respect to), or return to the
Company, all Confidential Information in its possession. Notwithstanding the
immediately preceding sentence, but subject to the other provisions of this
Section 3.06, a Withdrawn Member may retain for a stated period, but not
disclose to any other Person, Confidential Information for the limited purposes
of (i) explaining that Member’s corporate decisions with respect to the
Facilities or (ii) preparing such Member’s tax returns and defending audits,
investigations and proceedings relating thereto; provided, however, that the
Withdrawn Member must notify the Management Committee in advance of such
retention and specify in such notice the stated period of such retention.

(e) The Members agree that no adequate remedy at law exists for a breach or
threatened breach of any of the provisions of this Section 3.06, the
continuation of which unremedied will cause the Company, the Partnership and the
other Members to suffer irreparable harm. Accordingly, the Members agree that
the Company and the other Members shall be entitled, in addition to other
remedies that may be available to them, to immediate injunctive relief from any
breach of any of the provisions of this Section 3.06 and to specific performance
of their rights hereunder, as well as to any other remedies available at law or
in equity, pursuant to Section 10.04.

(f) The obligations of the Members under this Section 3.06 (including the
obligations of any Withdrawn Member) shall continue to bind any Person that has
ceased to be a Member and shall terminate on the second anniversary of the end
of the Term.
 
3.07 Liability to Third Parties. No Member or its Affiliates shall be liable for
the debts, obligations or liabilities of the Company.
 
3.08 Use of Members’ Names and Trademarks. The Company, the Members, their
Affiliates and the Partnership shall not use the name or trademark of any Member
or its Affiliates in connection with public announcements regarding the Company
and the Partnership, or marketing or financing activities of the Company and the
Partnership, without the prior consent of such Member or Affiliate, which shall
not be unreasonably withheld.

ARTICLE 4
CAPITAL CONTRIBUTIONS
4.01 Capital Contributions.

(a) On the Effective Date, each of Spectra and NJR will make a Capital
Contribution (i) in cash equal to its Sharing Ratio times $1,040,000 and (ii) of
its Sharing Ratio of a 1% interest in all of the rights and obligations set
forth for Spectra Energy Transmission, LLC under the PSA, which shall be used to
meet the Company’s obligations to contribute to the Partnership’s capital under
the first sentence of Section 4.01(a) of the Partnership Agreement. After that
time, the Management Committee whenever it determines appropriate, or the
Operator whenever it determines funds are required in accordance with the
Initial Facilities Plan or the Capital Budget or the Operating Budget (if any)
then in effect, shall cause the Company, as general partner of the Partnership,
to issue a “Capital Call” under Section 4.01(a) of the Partnership Agreement or
require loans under Section 4.02(a) of the

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Partnership Agreement; provided, however, that after the time the Company, as
general partner of the Partnership, becomes obligated to seek third-party debt
under Section 6.07(b), the Company may not issue a “Capital Call” under Section
4.01(a) of the Partnership Agreement or require loans under Section 4.02(a) of
the Partnership Agreement to the extent that would cause the aggregate of the
“Capital Contributions” under Section 4.01(a)(i) of the Partnership Agreement
plus all such “Capital Calls” and loans under the Partnership Agreement to
exceed $140,000,000. Whenever a “Capital Call” is issued under Section 4.01(a)
of the Partnership Agreement, the Management Committee or the Operator shall
issue a notice to each Member for the making of Capital Contributions (a
“Capital Call”) in an aggregate amount equal to the Company’s obligation for the
“Capital Call” under Section 4.01(a) of the Partnership Agreement. The
Management Committee also may issue a Capital Call whenever it determines the
Company needs additional funds. The aggregate of the Capital Contributions under
Section 4.01(a)(i) plus all Capital Calls may not exceed $2,500,000. All amounts
timely received by the Company under this Section 4.01 shall be credited to the
respective Member’s Capital Account as of the specified date. Each of Spectra
and NJR is entitled to a credit to its Capital Account equal to its Sharing
Ratio times $50,000 on account of its contribution under Section 4.01(a)(ii).

(b) Each Capital Call shall contain the following information:

(i) The total amount of Capital Contributions required from all Members;

(ii) The amount of Capital Contribution required from the Member to which the
notice is addressed, which amount must equal that Member’s Sharing Ratio of the
total Capital Call;

(iii) The purpose for which the funds are to be applied in such reasonable
detail as the Management Committee (or if applicable, the Operator) shall
direct; and

(iv) The date on which payments of the Capital Contribution shall be made (which
date shall not be sooner than the 30th Day following the date the Capital Call
is given, unless a sooner date is approved by the Management Committee) (or if
applicable, the Operator) and the method of payment, provided that the date and
the method shall be the same for each of the Members.

(c) Each Member agrees that it shall make payments of its respective Capital
Contributions in accordance with Capital Calls issued as provided in Section
4.01(a).
 
4.02 Loans. Rather than causing the Company, as general partner of the
Partnership, to make “Capital Calls” under Section 4.01(a) of the Partnership
Agreement, the Management Committee may cause the Company, as the general
partner of the Partnership, to require loans from the Limited Partners as
provided in Section 4.02(a) of the Partnership Agreement.
 
4.03 No Other Contribution Obligations. No Member shall be required or permitted
to make any Capital Contributions to the Company except as provided in this
Article 4.
 
4.04 Return of Contributions. Except as expressly provided in this Agreement, a
Member is not entitled to the return of any part of its Capital Contributions or
to be paid interest in respect of either its Capital Account or its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any
cash or property to the Company to enable the Company to return any Member’s
Capital Contributions.
 
4.05 Capital Accounts. 

(a) Each Member’s Capital Account shall be increased by (i) the amount of money
contributed by that Member to the Company, (ii) the fair market value of
property contributed by that Member to the Company (net of liabilities secured
by such contributed property that the Company is considered to assume or take
subject to under Section 752 of the Code), and (iii) allocations to that Member
of Company income and gain (or items thereof), including income and gain exempt
from tax and income and gain described in Treasury Regulation §
1.704-1(b)(2)(iv)(g), but excluding income and gain described in Treasury
Regulation § 1.704-1(b)(4)(i), and shall be decreased by (iv) the amount of
money distributed to that Member by the Company, (v) the fair market value of

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property distributed to that Member by the Company (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to under Section 752 of the Code), (vi) allocations to that Member of
expenditures of the Company described (or treated as described) in Section
705(a)(2)(B) of the Code, and (vii) allocations of Company loss and deduction
(or items thereof), including loss and deduction described in Treasury
Regulation § 1.704-1(b)(2)(iv)(g), but excluding items described in (vi) above
and loss or deduction described in Treasury Regulation § 1.704-1(b)(4)(i) or
1.704-1(b)(4)(iii). The Members’ Capital Accounts shall also be maintained and
adjusted as permitted by the provisions of Treasury Regulation §
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treasury
Regulation §§ 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to
reflect the allocations to the Members of depreciation, depletion, amortization,
and gain or loss as computed for book purposes rather than the allocation of the
corresponding items as computed for tax purposes, as required by Treasury
Regulation § 1.704-1(b)(2)(iv)(g). Thus, the Members’ Capital Accounts shall be
increased or decreased to reflect a revaluation of the Company’s property on its
books based on the fair market value of the Company’s property on the date of
adjustment (as determined pursuant to Section 4.05(b)), immediately prior to (A)
the contribution of money or other property to the Company by a new or existing
Member as consideration for a Membership Interest or an increased Sharing Ratio
(including any contribution under Section 4.06(c)), (B) the distribution of
money or other property by the Company to a Member as consideration for a
Membership Interest, or (C) the liquidation of the Company. A Member who has
more than one Membership Interest shall have a single Capital Account that
reflects all such Membership Interests, regardless of the class of Membership
Interests owned by such Member and regardless of the time or manner in which
such Membership Interests were acquired. Upon the Disposition of all or a
portion of a Membership Interest, the Capital Account of the Disposing Member
that is attributable to that Membership Interest shall carry over to the
Assignee in accordance with the provisions of Treasury Regulation §
1.704-1(b)(2)(iv)(l). The Capital Accounts shall not be deemed to be, nor have
the same meaning as, the capital account of the Company under the Natural Gas
Act.

(b) Whenever the fair market value of the Company’s property is required to be
determined pursuant to the third and fourth sentences of Section 4.05(a), the
Operator shall propose such a fair market value in a notice to the Members. If
any Member wishes to disagree with the determination, that Member shall notify
the Members of such disagreement on or before the 10th Business Day after
receiving such notice. If that Dispute is not resolved on or before the fifth
Business Day after that notice, any Member may submit that Dispute to binding
arbitration by delivering an Arbitration Notice. All of the provisions of
Article 11 shall apply to such arbitration, with the following exceptions: (i)
the Arbitrator shall be an appraiser or investment banking firm having expertise
in the valuation of natural gas storage facilities; (ii) the 20-Day period in
Section 11.03(b) shall be a five-Business Day period; and (iii) the 90-Day
period in Section 11.04 shall be a 20-Day period.
 
4.06 Failure to Make a Capital Contribution.

(a) General. If any Member fails to make a Capital Contribution when required in
a Capital Call under Section 4.01 of this Agreement (each such Member being a
“Non-Contributing Member”), then, provided the failure has not been cured, the
Members that have contributed their Capital Contributions and that are not, and
none of whose Affiliates are, Non-Contributing Partners under the Partnership
Agreement (each, a “Contributing Member”) may (without limitation as to other
remedies that may be available) at any time after the 10th Day after the date
the Capital Contribution was due elect to:

(i) treat the Non-Contributing Member’s failure to contribute as a Default by
giving notice to the Non-Contributing Member, in which event the provisions of
this Agreement regarding the commission of a Default by a Member shall apply; or

(ii) pay the portion of the Capital Contribution owed and unpaid by the
Non-Contributing Member (the “Additional Contribution”), in which event the
Contributing Members that elect to fund the Non-Contributing Members’ share (the
“Additional Contribution Members”) may treat the contribution as one of: (A) a
Capital Contribution resulting in the Additional Contribution Members receiving
a Priority Interest under Section 4.06(b), or (B) a permanent capital
contribution that results in an adjustment of Membership Interests under Section
4.06(c), as determined by the Additional Contribution Members as set forth
below.

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No Contributing Member shall be obligated to elect either (i) or (ii) above. The
decision of the Contributing Members to elect (i) or (ii) above shall be made by
the determination of the Contributing Members holding the majority of the
Sharing Ratios of all Contributing Members. The decision of the Additional
Contribution Members to elect (ii)(A) or (ii)(B) above shall be made by the
determination of the Additional Contribution Members holding the majority of the
Sharing Ratios of all Additional Contribution Members. If the election has not
been made on or before the 30th Day after the date the funds were paid by the
Non-Contributing Member(s), payment of the Additional Contribution shall be
treated as a Priority Interest under Section 4.06(a)(ii)(A).

(b) Priority Interest. If the Additional Contribution Members elect to treat the
payment of Additional Contribution as a contribution for which the Additional
Contribution Members receive a Priority Interest, then the following shall
apply:

(i) Each Additional Contribution Member shall receive a Priority Interest in the
distributions from the Company that would otherwise be due and payable to the
Non-Contributing Member(s). The Priority Interest received by each Additional
Contribution Member shall be in the proportion that the amount of the Additional
Contribution paid by that Additional Contribution Member bears to the amount of
the Additional Contributions made by all Additional Contribution Members (each
Additional Contribution Member’s percentage share of the Priority Interests
shall be its “Priority Interest Sharing Ratio”). All distributions from the
Company that would otherwise be due and payable to the Non-Contributing
Member(s) instead shall be paid to the Additional Contribution Members in
accordance with their respective Priority Interest Sharing Ratio and no
distribution shall be made from the Company to any Non-Contributing Member until
all Priority Interests have terminated. The Priority Interest shall terminate
with respect to an Additional Contribution Member when that Additional
Contribution Member has received either through the distributions it receives
under its Priority Interest or through payment(s) to it by the Non-Contributing
Member(s) (which payment(s) may be made by the Non-Contributing Member(s) at any
time) of an amount equal to the Additional Contribution made by such Member,
plus a return thereon of fourteen percent (14%) per annum (compounded monthly on
the outstanding balance). For the purpose of making this calculation, all
amounts received by an Additional Contribution Member shall be deemed to be
applied first against a return on, and then to the amount of, the Additional
Contribution. For purposes of maintaining Capital Accounts, any amount paid by a
Non-Contributing Member to a Contributing Member to reduce and/or terminate a
Priority Interest shall be treated as though such amount were contributed by the
Non-Contributing Member to the Company and thereafter distributed by the Company
to the Contributing Member with respect to its Priority Interest.

(ii) The Priority Interests shall not alter the Sharing Ratios, nor shall the
Priority Interests alter any distributions to the Contributing Members (in their
capacity as Contributing Members, as opposed to their capacity as Additional
Contribution Members) in accordance with their respective Sharing Ratios.
Notwithstanding any provision in this Agreement to the contrary, a Member may
not dispose of all or a portion of its Priority Interest except to a Person to
which it Disposes all or the applicable pro rata portion of its Membership
Interest and its or its Affiliates’ LP Interest after compliance with the
requirements of this Agreement for the Disposition.

(iii) For so long as any Additional Contribution Member holds a Priority
Interest (or it or any of its Affiliates that is an “Additional Contribution
Partner” holds a “Priority Interest,” as those terms are defined in the
Partnership Agreement), neither any Non-Contributing Member nor its
Representative (except for a Non-Contributing Member that has paid to the
Additional Contribution Member(s) all of the amount of the Additional
Contribution attributable to such Non-Contributing Member in accordance with
Section 4.06(b)(i)) shall have the right to vote its Membership Interest (or
Sharing Ratio) under the Agreement with respect to any decision regarding
distributions from the Company, and any distribution to which such
Non-Contributing Member is entitled shall be paid to the Additional Contribution
Members in respect of the Priority Interest.

(iv) No Member that is a Non-Contributing Member may Dispose of its Membership
Interest unless, at the closing of the Disposition, either the Non-Contributing
Member or the proposed Assignee pays the amount necessary to terminate the
Priority Interest arising from such Non-Contributing Member’s failure to
contribute. No Assignee shall be admitted to the Company as a Member until
compliance with this Section 4.06(b)(iv) has occurred.

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(c) Permanent Contribution. Subject to Section 4.06(a), if the Additional
Contribution Members elect under Section 4.06(a) to have the Additional
Contribution treated as a permanent capital contribution, then each Additional
Contribution Member that funds a portion of the Additional Contribution shall
have its capital account increased accordingly and the Members’ Membership
Interests and Sharing Ratios will be automatically adjusted to equal each
Member’s total Capital Contributions when expressed as a percentage of all
Members’ Capital Contributions.

(d) Further Assurance. In connection with this Section 4.06, each Member shall
execute and deliver any additional documents and instruments and perform any
additional acts that may be necessary or appropriate to effectuate and perform
the provisions of this Section 4.06.

ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
 
5.01 Distributions. On or before the 30th Day following the end of each Quarter,
the Management Committee shall review and determine the amount of Available Cash
with respect to that Quarter and shall direct that the Company distribute an
amount equal to 100% of Available Cash with respect to that Quarter. That amount
shall, subject to Section 18-607 of the Act, be distributed in accordance with
this Article 5 to the Members (other than a Breaching Member) in proportion to
their respective Sharing Ratios (at the time the distributions are made).
 
5.02 Distributions on Dissolution and Winding Up. Upon the winding up of the
Company, after adjusting the Capital Accounts for all distributions made under
Section 5.01 and all allocations under Article 5, all available proceeds
distributable to the Members as determined under Section 11.02 shall be
distributed to all of the Members (other than a Breaching Member) pro rata in
accordance with the Members’ positive Capital Account balances.
 
5.03 Withholding. The Company is authorized to withhold from distributions to a
Member and to pay over to a federal, state, local or non-United States
government, any amounts required to be withheld pursuant to the Code, or any
provisions of any other federal, state, local or non-United States law. Any
amounts so withheld shall be treated as having been distributed to the
applicable Member for all purposes of this Agreement and shall be offset against
the current or next amounts otherwise distributable to the applicable Member.

5.04 Allocations.

(a) After giving effect to the special allocations set forth in Sections 5.05
and 5.06, for purposes of maintaining the Capital Accounts pursuant to Section
4.05 and for income tax purposes, except as provided in Section 5.03(b) and (c),
each item of income, gain, loss, deduction and credit of the Company shall be
allocated to the Members in accordance with their respective Sharing Ratios.

(b) With respect to each period during which a Priority Interest is outstanding,
each Additional Contribution Member shall be allocated items of income and gain
in an amount equal to the return that accrues with respect to that Additional
Contribution Member’s Additional Contribution pursuant to Section 4.06(b)(i),
and items of income and gain that would otherwise be allocable to the
Non-Contributing Member(s) shall be correspondingly reduced.

(c) For income tax purposes, income, gain, loss, and deduction with respect to
property contributed to the Company by a Member or revalued pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) shall be allocated among the Members in
a manner that takes into account the variation between the adjusted tax basis of
such property and its book value, as required by Section 704(c) of the Code and
Treasury Regulation Section 1.704-1(b)(4)(i). These allocations shall be made in
such manner and utilizing such permissible tax election as are determined by the
Tax Matters Member.
 
5.05 Special Allocations. The following special allocations shall be made in the
following order:

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(a) Company Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulation Section 1.704-2(f), notwithstanding any other provision of this
Article 5, if there is a net decrease in Company Minimum Gain during any fiscal
year, each Member shall be specially allocated items of Company income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Treasury Regulation Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto. The
items to be so allocated shall be determined in accordance with Treasury
Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.05(a) is
intended to comply with the partnership minimum gain chargeback requirement in
Treasury Regulation Section 1.704-2(f) and shall be interpreted and applied
consistently therewith.

(b) Member Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this
Article 5, if there is a net decrease in Member Minimum Gain attributable to a
Member Nonrecourse Debt during any fiscal year, any Member with a share of that
Member Minimum Gain attributable to such a Member Nonrecourse Debt (as
determined under Treasury Regulation Section 1.704-2(i)(5)) as of the beginning
of the year shall be allocated items of Company income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount equal to such
Member’s share of the net decrease in Member Minimum Gain, determined in
accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Treasury Regulation Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.05(b) is intended to comply with
the partner minimum gain chargeback requirements in the Treasury Regulations and
shall be interpreted and applied consistently therewith.

(c) Qualified Income Offset. In the event any Member unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain
shall be specially allocated to such Member in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit as quickly as possible; provided, however, that an
allocation pursuant to this Section 5.05(c) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided in this Article 5 have been tentatively made as if
this Section 5.05(c) were not in this Agreement. This Section 5.05(c) is
intended to comply with the qualified income offset provision in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied
consistently therewith.

(d) Gross Income Allocation. In the event any Member has a deficit Capital
Account at the end of any fiscal year that is in excess of the amount that such
Member is deemed to be obligated to restore pursuant to the penultimate
sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each
such Member shall be specially allocated items of Company income and gain in an
amount and manner sufficient to eliminate such deficit as quickly as possible;
provided, however, that an allocation pursuant to this Section 5.05(d) shall be
made only if and to the extent that such Member would have a deficit Capital
Account in excess of such sum after all other allocations provided in this
Article 5 have been tentatively made as if Section 5.05(c) and this Section
5.05(d) were not in this Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Members in the manner determined by the Tax Matters
Partner and each Member’s share of excess Nonrecourse Debt shall be in the same
manner.

(f) Member Nonrecourse Deductions. Member Nonrecourse Deductions for any fiscal
year shall be specially allocated to the Member who bears the economic risk of
loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.752-2. If more than one Member bears the economic risk of loss for a
Member Nonrecourse Debt, any Member Nonrecourse Deductions attributable to that
Member Nonrecourse Debt shall be allocated among the Members according to the
ratio in which they bear the economic risk of loss.

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5.06 Curative Allocations. The allocations set forth in Section 5.05 (the
“Regulatory Allocations”) are intended to comply with certain requirements of
the Treasury Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss or deduction pursuant to this Section 5.06. Therefore,
notwithstanding any other provision of this Agreement, the Regulatory
Allocations shall be taken into account in allocating items of Company 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 pursuant to Section 5.01 if the Regulatory Allocations had not
occurred.
 
5.07 Varying Interests. All items of income, gain, loss, deduction or credit
shall be allocated, and all distributions shall be made, to the Persons shown on
the records of the Company to have been Members as of the last calendar day of
the period for which the allocation or distribution is to be made.
Notwithstanding the foregoing, if during any taxable year there is a change in
any Member’s Sharing Ratio, the Members agree that their allocable shares of
items for the taxable year shall be determined on any method determined by the
Management Committee to be permissible under Code Section 706 and the related
Treasury Regulations to take account of the Members’ varying Sharing Ratios.

ARTICLE 6
MANAGEMENT

6.01 Generally. The management of the Company is fully vested in the Members. To
facilitate the orderly and efficient management of the Company, the Members
shall act (a) collectively as a the “Management Committee” as provided in
Section 6.02, and (b) through the delegation of certain duties and authority to
the Operator and the Officers. Subject to the express provisions of this
Agreement, each Member agrees that it will not exercise its authority under the
Act to bind or commit the Company or the Partnership to agreements, transactions
or other arrangements, or to hold itself out as an agent of the Company or the
Partnership.
 
6.02 Management Committee. Decisions or actions taken by the Management
Committee in accordance with the provisions of this Agreement shall constitute
decisions or actions by the Company and shall be binding on each Member,
Representative, Officer and employee of the Company. The Management Committee
shall conduct its affairs in accordance with the following provisions and the
other provisions of this Agreement:

(a) Representatives.

(i) Designation. To facilitate the orderly and efficient conduct of Management
Committee meetings, each Member shall notify the other Members, from time to
time, of the identity of (A) one of its officers, employees or agents who will
represent it at meetings (a “Representative”), and (B) one of its officers,
employees or agents who will represent it at any meeting that the Member’s
Representative is unable to attend (“Alternate Representative”). (The term
“Representative” shall also refer to any Alternate Representative that is
actually performing the duties of the applicable Representative.). The initial
Representative and Alternate Representative of each Member are set forth in
Exhibit A. A Member may designate a different Representative or Alternate
Representative for any meeting of the Management Committee by notifying each of
the other Members on or before the third Business Day prior to the scheduled
date for that meeting; provided, however, that if giving that advance notice is
not feasible, then the new Representative or Alternate Representative shall
present written evidence of his or her authority at the commencement of such
meeting.

(ii) Authority. Each Representative shall have the full authority to act on
behalf of the Member that designated that Representative; the action of a
Representative at a meeting (or through a written consent) of the Management
Committee shall bind the Member that designated that Representative; and the
other Members shall be entitled to rely upon such action without further inquiry
or investigation as to the actual authority (or lack thereof) of that
Representative. In addition, the act of an Alternate Representative shall be
deemed the act of the Representative for which that Alternate Representative is
acting, without the need to produce evidence of the absence or unavailability of
such Representative.

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(iii) DISCLAIMER OF DUTIES; INDEMNIFICATION. EACH REPRESENTATIVE SHALL
REPRESENT, AND OWE DUTIES TO, ONLY THE MEMBER THAT DESIGNATED THE REPRESENTATIVE
(THE NATURE AND EXTENT OF SUCH DUTIES BEING AN INTERNAL AFFAIR OF THE MEMBER),
AND NOT TO THE COMPANY, THE PARTNERSHIP, ANY OTHER MEMBER OR REPRESENTATIVE OR
ANY OFFICER OR EMPLOYEE OF THE COMPANY OR THE PARTNERSHIP. THE PROVISIONS OF
SECTION 6.02(e)(iii) SHALL ALSO INURE TO THE BENEFIT OF EACH MEMBER’S
REPRESENTATIVE. THE COMPANY SHALL INDEMNIFY, PROTECT, DEFEND, RELEASE AND HOLD
HARMLESS EACH REPRESENTATIVE FROM AND AGAINST ANY CLAIMS ASSERTED BY OR ON
BEHALF OF ANY PERSON (INCLUDING ANOTHER MEMBER), OTHER THAN THE MEMBER THAT
DESIGNATED THE REPRESENTATIVE, THAT ARISE OUT OF, RELATE TO OR ARE OTHERWISE
ATTRIBUTABLE TO, DIRECTLY OR INDIRECTLY, THE REPRESENTATIVE’S SERVICE ON THE
MANAGEMENT COMMITTEE.

(iv) Attendance. Each Member shall use all reasonable efforts to cause its
Representative or Alternate Representative to attend each meeting of the
Management Committee, unless its Representative is unable to do so because of a
“force majeure” event or other event beyond his reasonable control, in which
event that Member shall use all reasonable efforts to cause its Representative
or Alternate Representative to participate in the meeting by telephone pursuant
to Section 6.02(g).

(b) Procedures. The Management Committee shall maintain written minutes of each
of its meetings, which shall be submitted for approval within 10 Days after each
meeting. The Management Committee may adopt whatever rules and procedures
relating to its activities as it may deem appropriate, provided that such rules
and procedures shall not be inconsistent with or violate the provisions of this
Agreement.

(c) Time and Place of Meetings. The Management Committee shall meet quarterly,
subject to more or less frequent meetings upon approval of the Management
Committee, at such times and places as the Representatives may agree. Special
meetings of the Management Committee may be called at such times, and in such
manner, as any Member deems necessary. Any Member calling for any such special
meeting shall notify all other Members of the date and agenda for such meeting
on or before the fifth Day prior to the date of such meeting. This five-Day
period may be shortened by unanimous vote of the Management Committee. All
meetings of the Management Committee shall be held at Spectra’s address as
provided on Exhibit A or such other location as the Members may agree.
Attendance of a Member’s Representative at a meeting of the Management Committee
shall constitute a waiver of notice of that meeting, except where the
Representative attends 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.

(d) Quorum. The presence of a Majority Interest shall constitute a quorum for
the transaction of business at any meeting of the Management Committee.

(e) Voting.

(i) Voting by Sharing Ratios; Voting Thresholds. Except as provided otherwise in
this Agreement, voting shall be according to the Members’ respective Sharing
Ratios. Except as otherwise provided in this Agreement, the vote of one or more
Members holding among them at least a majority of the Sharing Ratios (a
“Majority Interest”) shall constitute the action of the Management Committee.

(ii) DISCLAIMER OF DUTIES. WITH RESPECT TO ANY VOTE, CONSENT OR APPROVAL AT ANY
MEETING OF THE MANAGEMENT COMMITTEE OR OTHERWISE UNDER THIS AGREEMENT, EACH
MEMBER OR ITS REPRESENTATIVE MAY GRANT OR WITHHOLD ITS VOTE, CONSENT OR APPROVAL
IN ITS SOLE DISCRETION. THE PROVISIONS OF THIS SECTION 6.02(e)(ii) SHALL APPLY
NOTWITHSTANDING THE NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT
LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF A MEMBER OR ITS REPRESENTATIVE.

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(iii) Exclusion of Certain Members and Their Sharing Ratios. With respect to any
vote, consent or approval, any Breaching Member or Withdrawn Member shall be
excluded from such decision (as contemplated by Section 9.03(c)), and the
Sharing Ratio of such Breaching Member or Withdrawn Member shall be disregarded
in calculating the voting thresholds in Section 6.02(e)(i). In addition, if any
other provision of this Agreement provides that a Majority Interest is to be
calculated without reference to the Sharing Ratio of a particular Member, then
the applicable voting threshold, including the number of Members required, in
Section 6.02(e)(i) shall be deemed adjusted accordingly.

(f) Action by Written Consent. Any action required or permitted to be taken at a
meeting of the Management Committee may be taken without a meeting, without
prior notice, and without a vote if a consent or consents in writing, setting
forth the action so taken, is signed by all Members.

(g) Meetings by Telephone. Members may participate in and hold any meeting by
means of conference telephone, videoconference or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting shall constitute presence in person at
the meeting, except where a Member 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.

(h) Matters Requiring Management Committee Approval. Except as expressly
provided elsewhere in this Agreement, none of the following actions may be taken
by, or on behalf of, the Company, for itself or on behalf of the Partnership,
without first obtaining the vote of the Management Committee described below:

(i) 90% Interest. The following actions shall require the approval of Members
whose sharing Ratios total at least 90%:

(A) causing or permitting the Company or the Partnership to become Bankrupt (but
this provision shall not be construed to require any Member to ensure the
profitability or solvency of the Company or the Partnership);

(B) conducting, or authorizing the Partnership to conduct, any activity or
business that may generate income for federal income tax purposes that may not
be “qualifying income” (as such term is defined pursuant to Section 7704 of the
Code);

(C) any other action that, pursuant to an express provision of this Agreement,
requires the approval of a 90% Interest;

(D) authorizing the Partnership to enter into any contracts with an Affiliate of
any Member if the contract (other than a Storage Agreement conforming with any
applicable tariff) is for a nominal value in excess of $250,000, or otherwise on
terms that are not arm’s length;

(E) the Disposition or abandonment of all or substantially all of the assets of
the Company or the Partnership; or

(F) causing or permitting the Company or the Partnership to merge with, or
consolidate or convert into, any other entity.

(ii) Majority Interest. A Majority Interest shall be required to approve:

(A) causing the Company to take any action as general partner of the
Partnership, including any right or power of the Company under the Partnership
Agreement;

(B) the amount of Available Cash with respect to each Quarter;

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(C) approving or amending the annual Capital Budget and Operating Budget for the
Partnership (with it being understood that the latest approved Capital Budget or
Operating Budget shall be used, and deemed approved, for any subsequent period
until the new Capital Budget or Operating Budget (as applicable) for that period
is so approved), including the parameters under which the Operator and the
Officers are authorized to expend Partnership funds without further Management
Committee approval; provided, however, that the Initial Facilities Plan shall
serve as the Capital Budget until a Capital Budget is adopted;

(D) any Capital Call under Section 4.01 or loan under Section 4.02;

(E) any additions to or expansion of the Facilities;

(F) engaging any engineer, auditor, attorney or other consultant or adviser; or

(G) modifying the Initial Facilities Plan.

(i) Subcommittees. The Management Committee may create such subcommittees, and
delegate to such subcommittees such authority and responsibility, and rescind
any such delegations, as it may deem appropriate.

(j) Officers. The Management Committee may designate one or more Persons to be
officers of the Company or cause the Company, as general partner of the
Partnership, to designate one or more Persons as officers of the Partnership
(each an “Officer”). Any Officers so designated shall have such titles and,
subject to the other provisions of this Agreement, have such authority and
perform such duties as the Management Committee may delegate to them and shall
serve at the pleasure of the Management Committee and report to the Management
Committee.

(k) Initial Actions.  Notwithstanding the foregoing, the Members authorize
Spectra, on behalf of the Company (for itself or as general partner of the
Partnership), to take the following actions, including the execution and
delivery of all appropriate documents and instruments to effect the following
actions:

(i) file or cause to be filed the certificate of limited partnership of the
Partnership;

(ii) qualify the Company as a foreign limited liability company and the
Partnership as a foreign limited partnership in the Commonwealth of Pennsylvania
and any other jurisdiction where that qualification is necessary or appropriate;

(iii) obtain a taxpayer identification number of each of the Company and the
Partnership;

(iv) open the initial bank accounts of the Company and the Partnership;

(v) take all actions and execute and deliver all documents necessary or
appropriate to effect the contributions described in Section 4.01(a)(ii) of this
Agreement and Section 4.01(a)(ii) of the Partnership Agreement; and

(vi) take all actions and execute and deliver all documents, certificates and
other instruments necessary or appropriate in connection with the Closing under
the PSA.
 
6.03 Operations and Management Agreement. The Management Committee shall cause
the Company to enter into the O&M Agreement with the Operator and the
Partnership at the same time as the Partnership enters into it. From the
Effective Date until the O&M Agreement is executed and delivered as provided in
this Section 6.03, the Members authorize the Operator to take all actions this
Agreement contemplates the Operator will perform.

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6.04 Conflicts of Interest.

(a) Until the end of the Term, the Members shall not, and shall cause their
Affiliates not to, develop, construct, own, acquire or operate natural gas
storage facilities or oil or gas exploration or production within the area
identified on Exhibit C to this Agreement. The provisions of this Section
6.04(a) shall continue to bind a Withdrawn Member and its Affiliates until the
third anniversary of such Withdrawal, but not thereafter. The Members agree that
the provisions of this Section 6.04(a) are necessary (A) to further the
purposes, business and activities of the Partnership, and (B) to protect
confidential and proprietary information regarding the Partnership, to which the
Members will have access pursuant to this Agreement. The Members agree that no
adequate remedy at law exists for a breach or threatened breach of any of the
provisions of this Section 6.04(a), the continuation of which unremedied will
cause the Partnership and the other Members to suffer irreparable harm.
Accordingly, the Members agree that the Partnership and the other Members shall
be entitled, in addition to other remedies that may be available to them, to
immediate injunctive relief from any breach of any of the provisions of this
Section 6.04(a) and to specific performance of their rights hereunder, as well
as to any other remedies available at law or in equity, pursuant to Section
10.04.

(b) Subject to Section 6.04(a), a Member or an Affiliate of a Member may engage
in and possess interests in other business ventures of any and every type and
description, independently or with others, including ones in competition with
the Partnership or the Company and specifically including natural gas storage
and oil and gas exploration and production, with no obligation to offer to the
Partnership, the Company, any other Member or any Affiliate of another Member
the right to participate therein. Subject to Sections 6.04(a), the Partnership
or the Company may transact business with any Member or Affiliate of a Member,
provided the terms of those transactions are approved by the Management
Committee or expressly contemplated by this Agreement or the O&M Agreement.
Without limiting the generality of the foregoing, the Members recognize and
agree that their respective Affiliates currently, or in the future may, engage
in various activities involving natural gas and electricity marketing and
trading (including futures, options, swaps, exchanges of future positions for
physical deliveries and commodity trading), gathering, processing, storage,
transportation and distribution, electric generation, development and ownership,
as well as other commercial activities related to natural gas and that these and
other activities by Members’ Affiliates may be based on natural gas that is
stored in the Facilities or otherwise made possible or more profitable by reason
of the Partnership’s activities (herein referred to as “Affiliate’s Outside
Activities”). Subject to Sections 6.04(a), (i) no Affiliate of a Member shall be
restricted in its right to conduct, individually or jointly with others, for its
own account any Affiliate’s Outside Activities, and (ii) no Member or its
Affiliates shall have any duty or obligation, express or implied, fiduciary or
otherwise, to account to, or to share the results or profits of such Affiliate’s
Outside Activities with, the Partnership, the Company, any other Member or any
Affiliate of any other Member, by reason of such Affiliate’s Outside Activities.
The provisions of this Section 6.04(b) constitute an agreement to modify or
eliminate fiduciary duties pursuant to the provisions of Section 18-1101 of the
Act.
 
6.05 Indemnification for Breach of Agreement. Each Member shall indemnify,
protect, defend, release and hold harmless each other Member, its
Representative, its Affiliates, and its and their respective directors,
officers, trustees, employees and agents from and against any Claims asserted by
or on behalf of any Person (including another Member) that result from a breach
by the indemnifying Member of this Agreement or the Partnership Agreement;
provided, however, that this Section 6.05 shall not (a) apply to any Claim or
other matter for which a Member (or its Representative) has no liability or
duty, or is indemnified or released, pursuant to Section 6.02(a)(iii),
6.02(e)(ii) or 6.04 or pursuant to the terms of any Storage Agreements or (b)
hold the indemnified Person harmless from special, consequential or exemplary
damages, except in the case where the indemnified Person is legally obligated to
pay such damages to another Person.
 
6.06 General Regulatory Matters. Each Member shall:

(a) cooperate fully with the Company, the Partnership, the Management Committee
and the Operator in securing appropriate Authorizations for the development,
construction and operation of the Facilities, including supporting all
applications to the Governmental Authorities, and in connection with any reports
prescribed by any other Governmental Authority having jurisdiction over the
Company or the Partnership;

(b) join in any eminent domain takings by the Partnership, to the extent, if
any, required by Law;

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(c) devote such efforts as shall be reasonable and necessary to develop and
promote the Facilities for the benefit of the Partnership, taking into account
the Member’s Sharing Ratio, resources and expertise; and

(d) cooperate fully with the Company, the Partnership, the Management Committee
and the Operator to ensure compliance with FERC Standards of Conduct, if
applicable.
 
6.07 Initial Facilities.

(a) The Company, as general partner of the Partnership, shall cause the
Partnership to develop and construct the Initial Facilities in accordance with
the plan on Exhibit D, subject to such changes as the Management Committee may
adopt from time to time (the “Initial Facilities Plan”).

(b) The Company, as general partner of the Partnership, shall seek third-party
debt for the Partnership to complete the Initial Facilities after receipt of
appropriate FERC or state Authorizations and the execution and delivery of
Storage Agreements for firm storage of at least 70% of the storage capacity of
the Initial Facilities for an average period of at least 10 years or other
appropriate financing. The Company, as general partner of the Partnership, shall
cause the Partnership to enter into any such financing on such terms as the
Management Committee may approve.

ARTICLE 7
TAXES

7.01 Tax Returns. In accordance with the O&M Agreement, the Operator is to
prepare and timely file (on behalf of the Company) all federal, state and local
tax returns required to be filed by the Company. Each Member shall furnish to
the Operator all pertinent information in its possession relating to the Company
and the Partnership’s operations that is necessary to enable the Company’s tax
returns to be timely prepared and filed. The Company shall bear the costs of the
preparation and filing of its returns.
 
7.02 Tax Elections. The Company shall make the following elections on the
appropriate tax returns:

(a) to adopt as the Company’s fiscal year the calendar year;

(b) to adopt the accrual method of accounting;

(c) if a distribution of the Company’s property as described in Code Section 734
occurs or upon a transfer of a Membership Interest as described in Code Section
743 occurs, on request by notice from any Member, to elect, pursuant to Code
Section 754, to adjust the basis of the Company’s properties;

(d) to elect to amortize the organizational expenses of the Company ratably over
a period of 60 months as permitted by Section 709(b) of the Code;

(e) to elect to depreciate or amortize the assets of the Company using the most
rapid means available; and

(f) any other election the Management Committee may deem appropriate.
Neither the Company nor any Member shall 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 and no
provision of this Agreement shall be construed to sanction or approve such an
election.
 
7.03 Tax Matters Member.

 
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(a) Spectra or such other Member as the Management Committee may designate shall
serve as the “tax matters partner” of the Company pursuant to Section 6231(a)(7)
of the Code (the “Tax Matters Member”). The Tax Matters Member shall take such
action as may be necessary to cause to the extent possible each other Member to
become a “notice partner” within the meaning of Section 6223 of the Code. The
Tax Matters Member shall inform each other Member of all significant matters
that may come to its attention in its capacity as Tax Matters Member 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
significant written communications it may receive in that capacity.

(b) The Tax Matters Member shall provide any Member, upon request, access to
accounting and tax information and schedules as shall be necessary for the
preparation by such Member of its income tax returns and such Member’s tax
information reporting requirements.

(c) The Tax Matters Member shall take no action without the authorization of the
Management Committee, other than such action as may be required by Law. Any cost
or expense incurred by the Tax Matters Member in connection with its duties,
including the preparation for or pursuance of administrative or judicial
proceedings, shall be paid by the Company.

(d) The Tax Matters Member shall not enter into any extension of the period of
limitations for making assessments on behalf of the Members without first
obtaining the consent of the Management Committee. The Tax Matters Member shall
not bind any Member to a settlement agreement without obtaining the consent of
such Member. Any Member that enters into a settlement agreement with respect to
any Company item (as described in Code Section 6231(a)(3)) shall notify the
other Members of the settlement agreement and its terms on or before the 90th
Day after the date of the settlement.

(e) No Member shall file a request pursuant to Code Section 6227 for an
administrative adjustment of Company items for any taxable year without first
notifying the other Members. If the Management Committee consents to the
requested adjustment, the Tax Matters Member shall file the request for the
administrative adjustment on behalf of the Members. If this consent is not
obtained on or before the 30th Day after the notice, or within the period
required to timely file the request for administrative adjustment, if shorter,
any Member, including the Tax Matters Member, may file a request for
administrative adjustment on its own behalf. Any Member intending to file a
petition under Code Sections 6226, 6228 or other Code Section with respect to
any item involving the Company shall notify the other Members of that intention
and the nature of the contemplated proceeding. In the case where the Tax Matters
Member is the Member intending to file such petition on behalf of the Company,
such notice shall be given within a reasonable period of time to allow the other
Members to participate in the choosing of the forum in which such petition will
be filed.

(f) If any Member intends to file a notice of inconsistent treatment under Code
Section 6222(b), that Member shall give reasonable notice under the
circumstances to the other Members of that intent and the manner in which the
Member’s intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Members.

ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
 
8.01 Maintenance of Books; Reports. The Members acknowledge that the O&M
Agreement will include provisions for the maintenance of the Company’s books and
records and the preparation of various reports.
 
8.02 Bank Accounts. Funds of the Company shall be deposited in such banks or
other depositories as shall be designated from time to time by the Management
Committee. All withdrawals from any such depository shall be made only as
authorized by the Management Committee and shall be made only by check, wire
transfer, debit memorandum or other written instruction.

ARTICLE 9
WITHDRAWAL
 
9.01 No Right of Withdrawal. A Member has no power or right voluntarily to
Withdraw from the Company.

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9.02 Deemed Withdrawal. A Member is deemed to have Withdrawn from the Company
upon the occurrence of any of the following events:

(a) there occurs an event that makes it unlawful for the Member to continue to
be a Member;

(b) the Member becomes Bankrupt;

(c) the Member commences liquidation or winding up;

(d) notice from a Majority Interest (determined excluding the Member) if the
Member commits a Default and the Default has not been cured; or

(e) the Member and/or any of its Affiliates has withdrawn as a Limited Partner
under the Partnership Agreement.

9.03 Effect of Withdrawal. A Member that is deemed to have Withdrawn under
Section 9.02 (a “Withdrawn Member”), must comply with the following requirements
in connection with its Withdrawal:

(a) The Withdrawn Member ceases to be a Member immediately upon the occurrence
of the applicable Withdrawal event.

(b) The Withdrawn Member shall not be entitled to receive any distributions from
the Company except as set forth in Section 9.03(e), and neither it nor its
Representative shall be entitled to exercise any voting or consent rights, or to
appoint any Representative or Alternative Representative to the Management
Committee (and the Representative (and the Alternative Representative) appointed
by such Member shall be deemed to have resigned) or to receive any further
information (or access to information) from the Company. The Sharing Ratio of
that Member shall not be taken into account in calculating the Sharing Ratios of
the Members for any purposes. This Section 9.03(b) shall also apply to a
Breaching Member; but if a Breaching Member cures its breach during the
applicable cure period, then any distributions that were withheld from that
Member shall be paid to it, without interest.

(c) The Withdrawn Member must pay to the Company all amounts it owes to the
Company.

(d) The Withdrawn Member shall remain obligated for all liabilities it may have
under this Agreement or otherwise with respect to the Company that accrue prior
to the Withdrawal.

(e) From the date of the Withdrawal to the date of the payment, the former
Capital Account balance of the Withdrawn Member shall be recorded as a
contingent obligation of the Company, and not as a Capital Account, until
payment is made. The rights of a Withdrawn Member under this Section 9.03(e)
shall (i) be subordinate to the rights of any other creditor of the Company,
(ii) not include any right on the part of the Withdrawn Member to receive any
interest (except as may otherwise be provided in the evidence of any
indebtedness of the Company owed to such Withdrawn Member) or other amounts with
respect thereto; (iii) not require the Company to make any distribution (the
Withdrawing Member’s rights under this Section 9.03(e) being limited to
receiving such portion of distributions as the Management Committee may, in its
Sole Discretion, decide to cause the Company to make); (iv) not require any
Member to make a Capital Contribution or a loan to permit the Company to make a
distribution or otherwise to pay the Withdrawing Member; and (v) be treated as a
liability of the Company for purposes of Section 11.02. Subject to the
foregoing, payment to the Withdrawn Member of its Capital Account balance shall
be made upon the earliest of: (A) such time as the Management Committee
determines in its Sole Discretion to make such payment, (B) the later of (I) two
years from the date of Withdrawal, and (II) ten years from the date that the
Initial Facilities are placed into commercial operation, and (C) the dissolution
of the Company. Except as set forth in this Section 9.03(e), a Withdrawn Member
shall not be entitled to receive any return of its Capital Contributions or
other payment from the Company in respect of its Membership Interest.

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(f) The Sharing Ratio of the Withdrawn Member shall be allocated among the
remaining Members in the proportion that each Member’s Sharing Ratio bears to
the total Sharing Ratio of all remaining Members, or in such other proportion as
the Members may unanimously agree.

ARTICLE 10
DISPUTE RESOLUTION
 
10.01 Disputes. This Article 10 shall apply to any dispute arising under or
related to this Agreement (whether arising in contract, tort or otherwise, and
whether arising at law or in equity), including (a) any dispute regarding the
construction, interpretation, performance, validity or enforceability of any
provision of this Agreement or whether any Person is in compliance with, or
breach of, any provisions of this Agreement, and (b) the applicability of this
Article 10 to a particular dispute. Notwithstanding the foregoing, this Article
10 shall not apply to any matters that, pursuant to the provisions of this
Agreement, are to be resolved by a vote of the Members (including through the
Management Committee); provided, however, that (i) any matter that is expressly
stated herein to be determinable by arbitration may be so determined pursuant to
this Article 10 and (ii) if a vote, approval, consent, determination or other
decision must, under the terms of this Agreement, be made (or withheld) in
accordance with a standard other than Sole Discretion (such as a reasonableness
standard), then the issue of whether such standard has been satisfied may be a
dispute to which this Article 10 applies. Any dispute to which this Article 10
applies is referred to herein as a “Dispute.” With respect to a particular
Dispute, each Member that is a party to such Dispute is referred to herein as a
“Disputing Member.” The provisions of this Article 10 shall be the exclusive
method of resolving Disputes.
 
10.02 Negotiation to Resolve Disputes. If a Dispute arises, any Disputing Member
may initiate the dispute resolution procedure under this Article 10 by notifying
the other Disputing Members (a “Dispute Notice”), after which the Disputing
Members shall attempt to resolve such Dispute through the following procedure:

(a) first, within 7 Days after receipt of the Dispute Notice, the
Representatives of the Disputing Members shall meet (whether by phone or in
person) in a good faith attempt to resolve the Dispute;

(b) second, if the Dispute is still unresolved, then after the 20th Day
following the commencement of the negotiations described in Section 10.02(a) but
in no event later than the 30th Day after receipt of the Dispute Notice, the
chief executive officer (or his designee) of the Parent of each Disputing Member
shall meet (whether by phone or in person) in a good faith attempt to resolve
the Dispute; and

(c) third, if the Dispute is still unresolved, then after the 10th Day following
the commencement of the negotiations described in Section 10.02(b), any
Disputing Party may submit the Dispute for resolution under the Federal
Arbitration Act by binding arbitration following the Commercial Arbitration
Rules of the American Arbitration Association (or, if that Association has
ceased to exist, its principal successor) (the “AAA”) then in effect, including
its evidentiary and procedural rules (excluding rules governing the payment of
arbitration, administrative or other fees or expenses to the Arbitrator(s) or
the AAA), to the extent that such rules do not conflict with the terms of this
Agreement, by notifying the other Disputing Members (an “Arbitration Notice”)
within the applicable limitation period provided by law.
 
10.03 Selection of Arbitrator.

(a) For any case in which any claim, or combination of claims, is less than or
equal to $2,000,000, the arbitration shall be heard by a sole Arbitrator. Any
case in which any claim, or combination of claims, exceeds $2,000,000 will be
subject to the AAA’s Large, Complex Case Procedures and decided by the majority
of a panel of three neutral Arbitrators. The Arbitrator(s) shall be selected in
accordance with this Section 10.03.

(b) For arbitrations conducted by a single Arbitrator, the Disputing Member that
submits a Dispute to arbitration shall designate a proposed neutral sole
Arbitrator in its Arbitration Notice. If any other Disputing Member objects to a
proposed sole Arbitrator, it may, on or before the tenth Day following delivery
of the Arbitration Notice, notify all of the other Disputing Members of its
objection. All of the Disputing Members shall

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attempt to agree upon a mutually acceptable sole Arbitrator. If they have not
done so, then after the 20th Day following delivery of the notice described in
the immediately preceding sentence, any Disputing Member may request the AAA to
designate the sole Arbitrator. For arbitrations conducted by a panel of three
Arbitrators, the Disputing Member initiating arbitration shall nominate one
Arbitrator at the time it initiates arbitration. The other Disputing Member(s)
shall collectively nominate one Arbitrator on or before the 10th Day after
receiving the Arbitration Notice. The two Arbitrators shall appoint a third,
neutral Arbitrator. All arbitrators shall be competent and experienced in
matters involving the gas storage business in the United States, with at least
ten years of legal, engineering, or business experience in the gas industry, and
shall be impartial and independent of the Members (and the other arbitrators, in
the case of arbitrations conducted by a panel of three arbitrators, except for
prior arbitrations) (each an “Arbitrator”). Each Disputing Member shall pay for
the expenses incurred by the Arbitrator it appoints, if applicable, and the
costs of the sole Arbitrator or the third Arbitrator shall be divided equally
among the Disputing Members. If any Arbitrator so chosen shall die, resign or
otherwise fail or becomes unable to serve as Arbitrator, a replacement
Arbitrator shall be chosen in accordance with this Section 10.03.
 
10.04 Conduct of Arbitration. The Arbitrator(s) shall expeditiously (and, if
possible, on or before the 90th Day after the Arbitrator(s)’s selection) hear
and decide all matters concerning the Dispute. Any arbitration hearing shall be
held in Wilmington, Delaware. Except as expressly provided to the contrary in
this Agreement, the Arbitrator(s) shall have the power (a) to gather such
materials, information, testimony and evidence as it deems relevant to the
dispute before it (and each Member will provide such materials, information,
testimony and evidence requested by the Arbitrator(s), except to the extent any
information so requested is proprietary, subject to a third-party
confidentiality restriction or to an attorney-client or other privilege) and (b)
to grant injunctive relief and enforce specific performance. If they deem
necessary, the Arbitrator(s) may propose to the Disputing Members that one or
more other experts be retained to assist it in resolving the Dispute. The
retention of such other experts shall require the unanimous consent of the
Disputing Members, which shall not be unreasonably withheld. Each Disputing
Member, the Arbitrator(s) and any proposed expert shall disclose to the other
Disputing Members any business, personal or other relationship or affiliation
that may exist or may have existed between the Disputing Member (or the
Arbitrator(s)) and the proposed expert; and any Disputing Member may disapprove
of the proposed expert on the basis of that relationship or affiliation. The
decision of the Arbitrator(s) (which shall be rendered in writing) shall be
final, nonappealable and binding upon the Disputing Members and may be enforced
in any court of competent jurisdiction; provided, however, that the Members
agree that the Arbitrator(s) and any court enforcing the award of the
Arbitrator(s) shall not have the right or authority to award punitive, special,
consequential, indirect, exemplary or similar damages to any Disputing Member.
The responsibility for paying the costs and expenses of the arbitration,
including compensation to any experts retained by the Arbitrator(s), shall be
divided equally among the Disputing Members. Each Disputing Member shall be
responsible for the fees and expenses of its respective counsel, consultants and
witnesses, unless the Arbitrator(s) determines that compelling reasons exist for
allocating all or a portion of those costs and expenses to one or more other
Disputing Members.
 
10.05 Consolidation. While any matter is before the Arbitrator under this
Article 10, if any of the Disputing Members party to the arbitration, or, if
applicable, their Affiliates desire to bring a matter before an arbitrator under
the Partnership Agreement, the matter shall be consolidated with the matter
under this Agreement if, but only if, the Disputing Members under this Agreement
and the Persons bringing the matter before an arbitrator under the Partnership
Agreement are the same Persons or Affiliates of those Persons.

ARTICLE 11
DISSOLUTION, WINDING UP AND TERMINATION
 
11.01 Dissolution. The Company shall dissolve and its affairs shall be wound up
on the first to occur of the following events (each a “Dissolution Event”):

(a) the unanimous consent of the Management Committee to dissolve the Company
and/or the Partnership;

(b) entry of a decree of judicial dissolution of the Company under Section
18-802 of the Act;

(c) the Disposition or abandonment of all or substantially all of the Company’s
and/or the Partnership’s business and assets; or

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(d) an event that makes it unlawful for the business of the Company or the
Partnership to be carried on.
 
11.02 Winding Up and Termination.

(a) On the occurrence of a Dissolution Event, the Operator shall serve as
liquidator under the supervision of the Management Committee. The liquidator
shall proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of winding up shall
be borne as a Company expense. Until final distribution, the liquidator shall
continue to operate the Company properties with all of the power and authority
of the Members. The steps to be accomplished by the liquidator are as follows:

(i) as promptly as possible after dissolution and again after final winding up,
the liquidator shall cause a proper accounting to be made by a recognized firm
of certified public accountants of the Company’s assets, liabilities and
operations through the last calendar day of the month in which the dissolution
occurs or the final winding up is completed, as applicable;

(ii) the liquidator shall discharge from Company funds all of the indebtedness
of the Company and other debts, liabilities and obligations of the Company
(including all expenses incurred in winding up and any loans described in
Section 4.02) or otherwise make adequate provision for payment and discharge
thereof (including the establishment of a cash escrow fund for contingent
liabilities in such amount and for such term as the liquidator may reasonably
determine); and

(iii) all remaining assets of the Company shall be distributed to the Members as
follows:

(A) the liquidator may sell any or all Company property, including to Members,
and any resulting gain or loss from each sale shall be computed and allocated to
the Capital Accounts of the Members in accordance with the provisions of Article
5;

(B) with respect to all Company property that has not been sold, the fair market
value of that property shall be determined and the Capital Accounts of the
Members shall be adjusted to reflect the manner in which the unrealized income,
gain, loss, and deduction inherent in property that has not been reflected in
the Capital Accounts previously would be allocated among the Members if there
were a taxable disposition of that property for the fair market value of that
property on the date of distribution; and

(C) Company property (including cash) shall be distributed among the Members in
accordance with Section 5.02; and those distributions shall be made by the end
of the taxable year of the Company during which the liquidation of the Company
occurs (or, if later, the 90th Day after the date of the liquidation).

(b) The distribution of cash or property to a Member in accordance with the
provisions of this Section 11.02 constitutes a complete return to the Member of
its Capital Contributions and a complete distribution to the Member of its
Membership Interest and all the Company’s property and constitutes a compromise
to which all Members have consented pursuant to Section 18-502(b) of the Act. To
the extent that a Member returns funds to the Company, it has no claim against
any other Member for those funds.

(c) No dissolution or termination of the Company shall relieve a Member from any
obligation to the extent such obligation has accrued as of the date of such
dissolution or termination. Upon such termination, any books and records of the
Company that there is a reasonable basis for believing will ever be needed again
shall be furnished to the liquidator, which shall keep such books and records
(subject to review by any Person that was a Member at the time of dissolution)
for a period at least three years. At such time as the liquidator no longer
agrees to keep such books and records, it shall offer the Persons who were
Members at the time of dissolution the opportunity to take over such custody,
shall deliver such books and records to such Persons if they elect to take over
such custody and may destroy such books and records if they do not so elect. Any
such custody by such Persons shall be on such terms as they may agree upon among
themselves.

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11.03 Deficit Capital Accounts. No Member will be required to pay to the
Company, to any other Member or to any third party any deficit balance that may
exist from time to time in another Member’s Capital Account.
 
11.04 Certificate of Cancellation. On completion of the distribution of Company
assets as provided herein, the Members (or such other Person or Persons as the
Act may require or permit) shall file a certificate of cancellation with the
Secretary of State of the State of Delaware, cancel any other filings made
pursuant to Section 2.05, and take such other actions as may be necessary to
terminate the existence of the Company. Upon the filing of such certificate of
cancellation, the existence of the Company shall terminate (and the Term shall
end), except as may be otherwise provided by the Act or other applicable Law.

ARTICLE 12
GENERAL PROVISIONS
 
12.01 Offset. Whenever the Company is to pay any sum to any Member, any amounts
that Member owes the Company may be deducted from that sum before payment.
 
12.02 Notices. Except as expressly set forth to the contrary in this Agreement,
all notices, requests or consents provided for or permitted to be given under
this Agreement must be in writing and must be delivered to the recipient in
person, by courier or mail or by facsimile or other electronic transmission. A
notice, request or consent given under this Agreement is effective on receipt by
the Member to receive it; provided, however, that a facsimile or other
electronic transmission that is transmitted after the normal business hours of
the recipient shall be deemed effective on the next Business Day. All notices,
requests and consents to be sent to a Member must be sent to or made at the
addresses given for that Member on Exhibit A or in the instrument described in
Section 3.03(b)(iii)(A)(II) or 3.04, or such other address as that Member may
specify by notice to the other Members. Any notice, request or consent to the
Company must be given to all of the Members. Whenever any notice is required to
be given by Law, the Certificate or this Agreement, a written waiver thereof,
signed by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
 
12.03 Entire Agreement; Superseding Effect. This Agreement, the Partnership
Agreement, and the O&M Agreement constitute the entire agreement of the Members
and their Affiliates relating to the Company and the transactions contemplated
hereby and supersede all provisions and concepts contained in all prior
agreements.

12.04 Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member
or to declare any Member in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Member of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
 
12.05 Amendment or Restatement. This Agreement or the Certificate may be amended
or restated only by a written instrument executed (or, in the case of the
Certificate, approved) by all Members.
 
12.06 Binding Effect. Subject to the restrictions on Dispositions set forth in
this Agreement, this Agreement is binding on and shall inure to the benefit of
the Members and their respective successors and permitted assigns.

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12.07 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. WITHOUT
LIMITING THE PROVISIONS OF ARTICLE 10, A MEMBER MAY BRING AN ACTION ARISING
UNDER OR RELATING TO THIS AGREEMENT, IF AT ALL, ONLY IN COURTS OF THE STATE OF
DELAWARE OR (IF IT HAS JURISDICTION) THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE. In the event of a direct conflict between the provisions
of this Agreement and any mandatory, non-waivable provision of the Act, such
provision of the Act shall control. If any provision of the Act provides that it
may be varied or superseded in a limited liability company agreement (or
otherwise by agreement of the members or managers of a limited liability
company), that provision shall be deemed superseded and waived in its entirety
if this Agreement contains a provision addressing the same issue or subject
matter. If any provision of this Agreement or the application thereof to any
Member or circumstance is held invalid or unenforceable to any extent, (a) the
remainder of this Agreement and the application of that provision to other
Members or circumstances is not affected thereby, and (b) the Members shall
negotiate in good faith to replace that provision with a new provision that is
valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original
provision had been valid and enforceable.
 
12.08 Further Assurances. In connection with this Agreement and the transactions
it contemplates, each Member shall execute and deliver any additional documents
and instruments and perform any additional acts that may be necessary or
appropriate to effectuate and perform the provisions of this Agreement and those
transactions; provided, however, that this Section 12.08 shall not obligate a
Member to furnish guarantees or other credit supports by such Member’s Parent or
other Affiliates.
 
12.09 Waiver of Certain Rights. Each Member irrevocably waives any right it may
have to maintain any action for dissolution of the Company or for partition of
the property of the Company.
 
12.10 Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.

[Remainder of page intentionally left blank. Signature page follows.]

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IN WITNESS WHEREOF, the Members have executed this Agreement as of the date
first set forth above.

MEMBERS:

SPECTRA ENERGY TRANSMISSION SERVICES, LLC

By:   /s/ Mark Fiedorek
Name:    Mark Fiedorek
Title:      Vice President

NJR STECKMAN RIDGE STORAGE COMPANY

By: /s/ Glenn C. Lockwood

Name:  Glenn C. lockwood 
Title:     Senior Vice President and
              Chief Financial Officer

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EXHIBIT A
MEMBERS

Name and Address
Sharing Ratio
Parent
Representative and Alternate Representatives
Spectra Energy Transmission Services, LLC
5400 Westheimer Court
Houston, Texas 77056-5310
Attn: Christine M. Pallenik
Fax: (713) 386-4694
50%
Spectra Energy Corp
R. Mark Fiedorek
Alternate:
 
Gregory P. Bilinski
NJR Steckman Ridge Storage Company
1415 Wyckoff Road
Wall, New Jersey 07719
Attn: William P. Scharfenberg
Fax: (732) 938-1226
50%
New Jersey Resources Corporation
Richard R. Gardner
Alternate:
 
Jeffrey S. Davidson

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EXHIBIT B
PARTNERSHIP AGREEMENT

[Attached]

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EXHIBIT C
NON-COMPETITION AREA

The following areas, from the surface to all depths:

·  
The area inside the brown line on Exhibit F to the PSA

·  
Any shaded tracts on Exhibit F to the PSA

·  
Any other leases conveyed to the Partnership at the Closing under the PSA

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EXHIBIT D
INITIAL FACILITIES PLAN

Acquisition
 
$105,000,000

Development:
   
Wells
- 15 new wells
- 5 existing well conversions
$54,382,198
Gathering System
- 6.625 in. pipe
- 8.625 in. pipe
- 16 in. pipe
$31,679,713
Station
- Compressor
- Cooler
- Heater
- Dehydration
- Slug Catcher
- Measurement & Regulation
$36,239,008
Pad Gas
- Gas required to maintain minimum reservoir pressure
$19,390,352
 
Development Total
 
$141,691,271

Total
 
$246,691,271