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 EXHIBIT 10.1

 

 
 
 

 
CONTRIBUTION AGREEMENT
 
 
 
BY AND AMONG
 
 
 
EL PASO CORPORATION
 
EL PASO SNG HOLDING COMPANY, L.L.C.
 
EPPP SNG GP HOLDINGS, L.L.C.
 
SOUTHERN NATURAL GAS COMPANY
 
EL PASO NORIC INVESTMENTS III, L.L.C.
 
COLORADO INTERSTATE GAS COMPANY
 
EPPP CIG GP HOLDINGS, L.L.C.
 
EL PASO PIPELINE PARTNERS, L.P.
 
AND
 
EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.

 
 
 

 
 
June 29, 2011
 
 
 
 
 

 
 

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TABLE OF CONTENTS
 
 

   Page    ARTICLE 1 DEFINITIONS 1   1.1 Definitions  1   1.2  Construction  8  
       ARTICLE 2 CONTRIBUTION AND CLOSING 9   2.1
Contribution
9   2.2
Consideration
9   2.3
Closing and Closing Deliveries
9   2.4 Consideration Adjustment  11        
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTING PARTIES
12   3.1
Organization 
12   3.2
Authority and Approval
12   3.3
No Conflict; Consents
13   3.4
Capitalization; Title to Subject Interest
14   3.5
Financial Statements; Internal Controls; Undisclosed Liabilities
15   3.6
Working Capital
15   3.7 Title to Assets 15   3.8
Litigation; Laws and Regulations 
16   3.9
No Adverse Changes
16   3.10
Taxes
17   3.11 Environmental Matters 17   3.12
Licenses; Permits
18   3.13
Contracts 
18   3.14 Transactions with Affiliates
19
  3.15
Regulation 
19   3.16
Brokerage Arrangements 
19   3.17 Waivers and Disclaimers   20   3.18 Employees and Employee Benefits 
20   3.19 SEC Reports  22   3.20
Capital Contributions
22        
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP PARTIES
22   4.1
Organization and Existence
22   4.2
Authority and Approval
23   4.3
No Conflict; Consents
23   4.4
Brokerage Arrangements
24   4.5
Litigation
24   4.6 Waivers and Disclaimers 25

 
 
 
 
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ARTICLE 5 ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS  25   5.1
Operation of SNG Entities
25   5.2
Supplemental Disclosure 
26   5.3
Access to Books and Records
26   5.4 Cooperation; Further Assurances 26   5.5
Admission of Partnership as Partner
27   5.6
Debt Balance
27         ARTICLE 6 CONDITIONS TO CLOSING 27   6.1
Conditions to the Obligation of the Partnership Parties
27   6.2
Conditions to the Obligation of the Contributing Parties
28         ARTICLE 7 TAX MATTERS 30   7.1 
Liability for Taxes
30   7.2
Tax Returns
31   7.3
Tax Treatment of Indemnity Payments
32   7.4
Transfer Taxes
32   7.5
Survival
32   7.6
Conflict 
32   7.7 Tax Characterization of Transaction  32         ARTICLE 8 TERMINATION
32   8.1
Events of Termination
32   8.2
Effect of Termination
33         ARTICLE 9 INDEMNIFICATION UPON CLOSING 34   9.1 Indemnification of
the Partnership Parties 34   9.2
Indemnification of the Contributing Parties and SNG
34   9.3
Tax Indemnification
34   9.4
Survival
35   9.5
Demands
35   9.6
Right to Contest and Defend
36   9.7
Cooperation
37   9.8
Right to Participate
37   9.9
Payment of Damages
37   9.10
Limitations on Indemnification
37   9.11 Sole Remedy 38        
ARTICLE 10 MISCELLANEOUS
38   10.1
Expenses 
38   10.2
Notices 
39   10.3
Governing Law 
39   10.4 Public Statements 40   10.5 Entire Agreement; Amendments and Waivers
40   10.6 Conflicting Provisions 40   10.7
Binding Effect and Assignment
40

 
 
 
 
 
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  10.8 Severability 41   10.9 Interpretation 41

  10.10
Headings and Disclosure Schedules
41   10.11
Multiple Counterparts
41   10.12
Action by Partnership Parties
41   10.13
Limitation on Recourse
42

 

Disclosure Schedules
 
Exhibit A                      Form of Contribution, Conveyance and Assumption
Agreement
 
Exhibit B                      Form of Certificate of Non-Foreign Status

 
 

 
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CONTRIBUTION AGREEMENT
 
This Contribution Agreement (the “Agreement”) is made and entered into as
of  June 29, 2011, by and among El Paso Corporation, a Delaware corporation
(“El Paso”), El Paso SNG Holding Company, L.L.C., a Delaware limited liability
company and direct wholly-owned subsidiary of El Paso (“EP SNG”), Southern
Natural Gas Company, a Delaware general partnership (“SNG”), El Paso Noric
Investments III, L.L.C., a Delaware limited liability company and indirect
wholly-owned subsidiary of El Paso (“EP Noric”), Colorado Interstate Gas
Company, a Delaware general partnership, (“CIG”), El Paso Pipeline Partners,
L.P., a Delaware limited partnership (the “Partnership”), El Paso Pipeline
Partners Operating Company, L.L.C., a Delaware limited liability company and
direct wholly-owned subsidiary of the Partnership (the “Operating Company”),
EPPP CIG GP Holdings, L.L.C., a Delaware limited liability company and an
indirect wholly-owned subsidiary of the Partnership (“EPPP CIG”) and EPPP SNG GP
Holdings, L.L.C., a Delaware limited liability company and an indirect
wholly-owned subsidiary of the Partnership (“EPPP SNG”).  El Paso, EP SNG and EP
Noric are referred to herein as the “Contributing Parties,” the Partnership, the
Operating Company, EPPP CIG and EPPP SNG are referred to herein collectively as
the “Partnership Parties” and the Contributing Parties, Partnership Parties, CIG
and SNG are referred to herein collectively as the “Parties.”
 
R E C I T A L S:
 
WHEREAS,  EP SNG owns a 15% general partner interest in SNG and EPPP SNG owns an
85% general partner interest in SNG; and
 
WHEREAS,  EP Noric owns a 42% general partner interest in CIG and EPPP CIG owns
a 58% general partner interest in CIG; and
 
WHEREAS, pursuant to the Contribution Agreement (defined below), the
Contributing Parties desire to contribute, transfer and convey to the
Partnership Parties (i) a 15% general partner interest in SNG (the “SNG Subject
Interest”), and (ii) a 28% general partner interest in CIG (the “CIG Subject
Interest” and, together with the SNG Subject Interest, the “Subject Interest”)
in exchange for total consideration of $745 million (as may be adjusted pursuant
to this Agreement, the “Consideration”), which shall be paid in the form of the
cash amount specified in Section 2.2; and
 
WHEREAS, after giving effect to the completion of the contribution of the
Subject Interest referred to above pursuant to the terms of this Agreement and
the Contribution Agreement, EPPP SNG will own an 85% partnership interest in
SNG, EP Noric will own a 14% partnership interest in CIG, and EPPP CIG will own
an 86% partnership interest in CIG and a 15% partnership interest in SNG;
 
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the Parties agree as follows:

 
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ARTICLE 1
DEFINITIONS
 
1.1  Definitions.
 
The terms defined in this Section 1.1 shall, when used in this Agreement, have
the respective meanings specified herein, with each such definition equally
applicable to both singular and plural forms of the terms so defined:
 
“Additional Distribution Amount” means 15% of any cash distributions made by SNG
and 28% of any cash distributions made by CIG, in each case, attributable to
their operations on or after the Effective Time and distributed on or after the
Effective Time and prior to Closing.  For the avoidance of doubt, (i)
distributions attributable to the first quarter of 2011 and made on April 29,
2011 will not be given effect in the calculation of any Additional Distribution
Amount and (ii) in the event that Closing occurs on a distribution date (but
after the Closing) and El Paso receives either (i) 15%  of any distribution made
by SNG or (ii) 42% of any distribution made by CIG, such distributions will be
given effect in the calculation of any Additional Distribution Amount.
 
“Affiliate,” when used with respect to a Person, means any other Person that
directly or indirectly Controls, is Controlled by or is under common Control
with such first Person.
 
“Agreement” has the meaning assigned to such term in the preamble.
 
“Ancillary Documents” means the Contributing Parties Ancillary Documents and the
Partnership Ancillary Documents.
 
“Applicable Law” has the meaning assigned to such term in Section 3.3(a).
 
“Associated Employees” has the meaning assigned to such term in Section 3.18(a).
 
“Business Day” means any day other than a Saturday, Sunday or legal holiday on
which banks in Houston, Texas are authorized or obligated by law to close.
 
“Capital Contribution Adjustment Amount” means, for each of CIG and SNG, an
amount equal to 28% and 15%, respectively, of the sum of all Capital
Contributions (as such term is defined in the Existing CIG Partnership Agreement
and Existing SNG Partnership Agreement, as applicable) made pursuant to Capital
Calls (as such term is defined in the Existing CIG Partnership Agreement and
Existing SNG Partnership Agreement, respectively) on or after the Effective Time
and prior to the Closing Date; provided however that the Capital Contributions
made on April 29, 2011 with respect to operations for the first quarter of 2011
are not to be given effect in the calculation of any Capital Contribution
Adjustment Amount.
 
“Ceiling Amount” has the meaning assigned to such term in Section 9.10(a).
 
 
 
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“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act.
 
“CIG” has the meaning assigned to such term in the preamble.
 
“CIG 10-K” has the meaning assigned to such term in Section 3.5.
 
“CIG Entities” means (i) CIG, (ii) any subsidiary (direct or indirect) of CIG
and (iii) any Person in which CIG or any subsidiary of CIG owns an equity
interest constituting 50% or more of the outstanding voting interests of such
Person.
 
   “CIG Subject Interest” has the meaning assigned to such term in the Recitals.
 
“Closing” has the meaning assigned to such term in Section 2.1.
 
“Closing Date” has the meaning assigned to such term in Section 2.3(a).
 
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
 
“Conflicts Committee” has the meaning assigned to such term in the Partnership
Agreement.
 
“Consideration” has the meaning assigned to such term in the Recitals.
 
“Contributing Indemnified Parties” has the meaning assigned to such term in
Section 9.2.
 
“Contributing Parties” has the meaning assigned to such term in the preamble.
 
“Contributing Parties Aggregated Group” has the meaning assigned to such term in
Section 3.18(e).
 
“Contributing Parties Ancillary Documents” means each agreement, document or
certificate to be delivered by the Contributing Parties at Closing pursuant to
Section 2.3(b), including the Contribution Agreement.
 
“Contributing Parties Closing Certificate” has the meaning assigned to such term
in Section 6.1(a).
 
“Contribution Agreement” has the meaning assigned to such term in Section 2.1.
 
“Control” and its derivatives, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person.
 
“Damages” means liabilities and obligations, including all losses, deficiencies,
costs, expenses, fines, interest, expenditures, claims, suits, proceedings,
judgments, damages, and reasonable attorneys’ fees and reasonable expenses of
investigating, defending and prosecuting litigation.
 
 
 
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“Debt Amount” means, with respect to the relevant Person, determined in
accordance with GAAP, the sum of such Person’s liabilities for indebtedness for
borrowed money, capital leases and other transactions reflected on a balance
sheet prepared in accordance with GAAP as financing transactions, in each case
whether classified as a current or a non-current liability.
 
“Deductible Amount” has the meaning assigned to such term in Section 9.10(a).
 
“Disclosure Schedules” means the disclosure schedules to this Agreement.
 
“Effective Time” means 12:01 a.m., Houston, Texas time, on April 1, 2011.
 
“El Paso” has the meaning assigned to such term in the preamble.
 
“Environmental Laws” means any federal, state or local statutes, laws,
ordinances, rules, regulations, orders, codes, decisions, injunctions or decrees
that regulate or otherwise pertain to the protection of the environment,
including the management, control, discharge, emission, treatment, containment,
handling, removal, use, generation, permitting, migration, storage, release,
transportation, disposal, remediation, manufacture, processing or distribution
of Hazardous Materials that are or may present a threat to the environment,
including the following laws, as amended as of the Effective Time and
interpreted by the highest court of competent jurisdiction through the Effective
Time:  (i) the Resource Conservation and Recovery Act; (ii) the Clean Air Act;
(iii) CERCLA; (iv) the Federal Water Pollution Control Act; (v) the Safe
Drinking Water Act; (vi) the Toxic Substances Control Act; (vii) the Emergency
Planning and Community Right-to Know Act; (viii) the National Environmental
Policy Act; (ix) the Pollution Prevention Act of 1990; (x) the Oil Pollution Act
of 1990; (xi) the Hazardous Materials Transportation Act and (xii) all rules,
regulations, orders, judgments, decrees promulgated or issued with respect to
the foregoing Environmental Laws by Governmental Authorities with jurisdiction
in the premises.  The term “Environmental Laws” does not include operating
practices or standards that may be employed or adopted by other industry
participants or recommended by a Governmental Authority that are not required by
such federal, state or local statutes, laws, ordinances, rules, regulations,
orders, codes, decisions, injunctions or decrees.
 
“Environmental Permits” has the meaning assigned to such term in Section 3.11.
 
“EP Noric” has the meaning assigned to such term in the preamble.
 
“EP SNG” has the meaning assigned to such term in the preamble.
 
“EPPP CIG” has the meaning assigned to such term in the preamble.
 
“EPPP SNG” has the meaning assigned to such term in the preamble.
 
“ERISA” has the meaning ascribed to such term in Section 3.18(b).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
 
 
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“Existing CIG Partnership Agreement” means the General Partnership Agreement,
dated November 1, 2007, as amended by that First Amendment to General
Partnership Agreement, dated September 30, 2008, of CIG and by that Second
Amendment to the General Partnership Agreement, dated July 24, 2009, of CIG.
 
“Existing SNG Partnership Agreement” means the General Partnership Agreement,
dated November 1, 2007, of SNG, as amended by that certain First Amendment to
General Partnership Agreement, dated September 30, 2008, of SNG, by that certain
Second Amendment to the General Partnership Agreement, dated June 23, 2010, of
SNG, by that Third Amendment to the General Partnership Agreement, dated June
30, 2010, of SNG, by that Fourth Amendment to the General Partnership Agreement,
dated November 19, 2010, of SNG, and by that Fifth Amendment to the General
Partnership Agreement, dated March 14, 2011, of SNG.
 
“FERC” means the Federal Energy Regulatory Commission.
 
“Financial Statements” has the meaning assigned to such term in Section 3.5(a).
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 
“General Partner” means the general partner of the Partnership, which as of the
Effective Time and the date of this Agreement is El Paso Pipeline GP Company,
L.L.C., a Delaware limited liability company and an indirect wholly-owned
subsidiary of El Paso.
 
“Governmental Authority” means any federal, state, municipal or other
governmental court, department, commission, board, bureau, agency or
instrumentality.
 
“Hazardous Materials” means any substance, whether solid, liquid, or
gaseous:  (i) which is listed, defined, or regulated as a “hazardous material,”
“hazardous waste,” “solid waste,” “hazardous substance,” “toxic substance,”
“pollutant,” or “contaminant,” or otherwise classified or regulated or subject
to liability in or pursuant to any Environmental Law; or (ii) which is or
contains asbestos, polychlorinated biphenyls, radon, urea formaldehyde foam
insulation, explosives, or radioactive materials; or (iii) which causes or
threatens to cause contamination, nuisance with respect to any properties, or a
hazard to the environment or to the health or safety of persons on or about any
properties.
 
“Indemnity Claim” has the meaning assigned to such term in Section 9.5.
 
“Knowledge,” as used in this Agreement with respect to a Party, means the actual
knowledge of that Party’s designated personnel.  The designated personnel for
the Contributing Parties are James Yardley, James Cleary, Norman Holmes, J.R.
Sult, Katherine Murray, Thomas Hutchins and Michael J. Varagona.  The designated
personnel for the Partnership Parties are James Yardley, James Cleary, Norman
Holmes, J.R. Sult, Katherine Murray, Thomas Hutchins and Michael J. Varagona.
 
 
 
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“Lien” means any mortgage, deed of trust, lien, security interest, pledge,
conditional sales contract, charge, right of first refusal, drag-along or
tag-along right or other encumbrance.
 
“Material Adverse Effect” means any change, effect, event, occurrence, condition
or other circumstance that (a) materially and adversely affects the business,
assets, liabilities, properties, financial condition or results of operations of
any SNG Entity, CIG Entity or the Subject Interest, other than any such change,
effect, event, occurrence, condition or other circumstance affecting (i) the
interstate natural gas transportation industry generally (including any change
in the prices of natural gas, natural gas liquids or other hydrocarbon products,
industry margins or any regulatory changes or changes in Applicable Law), (ii)
the United States or global general market, economic, financial or political
conditions or (iii) the transactions contemplated in this Agreement, provided
that in the case of clauses (i) and (ii) the impact on any SNG Entity or any CIG
Entity is not materially disproportionate to the impact on other large
interstate natural gas pipeline companies, or (b) hinders, delays or impedes the
ability of the Contributing Parties or any SNG Entity or CIG Entity to perform
its obligations under the Agreement or the Contributing Party Ancillary
Documents or to consummate the transactions contemplated by this Agreement or
the Contributing Party Ancillary Documents.
 
“Material Contract” has the meaning assigned to such term in Section 3.13(b).
 
“NGA” has the meaning assigned to such term in Section 3.15(b).
 
“Notice” has the meaning assigned to such term in Section 10.2.
 
“Operating Company” has the meaning assigned to such term in the preamble.
 
“Ownership Percentage” means with respect to (i) the Partnership Parties, 85%
with respect to SNG, and 58% with respect to CIG and (ii) the Contributing
Parties, 15% with respect to SNG, and 42% with respect to CIG.
 
“Parties” has the meaning assigned to such term in the preamble.
 
“Partnership” has the meaning assigned to such term in the preamble.
 
“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of the Partnership, dated November 21, 2007, as amended by
Amendment No. 1 dated July 28, 2008.
 
“Partnership Ancillary Documents” means each agreement, document or certificate,
including the Contribution Agreement, to be delivered by the Partnership Parties
at Closing pursuant to Section 2.3(c).
 
“Partnership Indemnified Parties” has the meaning assigned to such term in
Section 9.1.
 
 
 
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“Partnership Material Adverse Effect” means any change, effect, event,
occurrence, condition or other circumstance that (a) materially and adversely
affects the business, assets, liabilities, properties, financial condition or
results of operations of any Partnership Party, other than any such change,
effect, event, occurrence, condition or other circumstance affecting (i) the
interstate natural gas transportation industry generally (including any change
in the prices of natural gas, natural gas liquids or other hydrocarbon products,
industry margins or any regulatory changes or changes in Applicable Law), (ii)
the United States or global general market, economic, financial or political
conditions or (iii) the transactions contemplated in this Agreement, provided
that in the case of clauses (i) and (ii) the impact on the Partnership Parties
is not materially disproportionate to the impact on other large interstate
natural gas pipeline companies, or (b) hinders, delays or impedes the ability of
any Partnership Party to perform its obligations under this Agreement or the
Partnership Ancillary Documents or to consummate the transactions contemplated
by this Agreement or any Partnership Ancillary Document.
 
“Partnership Parties” has the meaning assigned to such term in the preamble.
 
“Partnership Parties Closing Certificate” has the meaning assigned to such term
in Section 6.2.
 
“Permits” has the meaning assigned to such term in Section 3.12.
 
“Permitted Liens” means all: (i) to the extent no amounts secured thereby are
past due or are being contested in good faith by appropriate proceedings and as
to which adequate reserves, if any, have been established, mechanics’,
materialmen’s, carriers’, workmen’s, repairmen’s, vendors’, operators’ or other
like Liens entered into in the ordinary course of business consistent with past
practices, if any, that do not materially detract from the value of or
materially interfere with the use of any of any CIG Entity’s or SNG Entity’s
assets subject thereto; (ii) to the extent no amounts secured thereby are past
due or are being contested in good faith by appropriate proceedings, Liens
arising under original purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of business
consistent with past practices; (iii) title defects, rights of use,
rights-of-way, permits, licenses, servitudes, sub-surface leases, grazing
rights, logging rights, and easements (including the right to operate and
maintain ponds, lakes, waterways, canals, ditches, reservoirs, equipment,
pipelines, utility lines, railways, streets, roads and structures on, over or
through any of any CIG Entity’s or SNG Entity’s assets), if any, that,
individually or in the aggregate, do not or would not impair in any material
respect the use or occupancy of any CIG Entity’s or SNG Entity’s assets, taken
as a whole, (iv) Liens for Taxes that are not due and payable, that may
thereafter be paid without penalty or are being contested in good faith by
appropriate proceedings and as to which adequate reserves, if any, have been
established; and (v) liens supporting surety bonds, performance bonds and
similar obligations issued in connection with any CIG Entity’s or SNG Entity’s
businesses.
 
 
 
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“Person” means an individual or entity, including any partnership, corporation,
association, trust, limited liability company, joint venture, unincorporated
organization or Governmental Authority.
 
“Plans” has the meaning assigned to such term in Section 3.18(b).
 
“SEC” means the Securities and Exchange Commission.
 
“SEC Contract” has the meaning assigned to such term in Section 3.13(a).
 
“SEC Reports” has the meaning assigned to such term in Section 3.19.
 
“SNG” has the meaning assigned to such term in the preamble.
 
“SNG 10-K” has the meaning assigned to such term in Section 3.5(a).
 
“SNG Entities” means (i) SNG, (ii) any subsidiary (direct or indirect) of SNG
and (iii) any Person in which SNG or any subsidiary of SNG owns an equity
interest constituting 50% or more of the outstanding voting equity interests of
such Person.
 
   “SNG Subject Interest” has the meaning assigned to such term in the Recitals.
 
   “Subject Interest” has the meaning assigned to such term in the Recitals.
 
“Tax” means all taxes, however denominated, including any interest, penalties or
other additions to tax that may become payable in respect thereof, imposed by
any federal, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and state income taxes), gross receipts taxes,
net proceeds taxes, alternative or add-on minimum taxes, sales taxes, use taxes,
real property gains or transfer taxes, ad valorem taxes, property taxes,
value-added taxes, franchise taxes, production taxes, severance taxes, windfall
profit taxes, withholding taxes, payroll taxes, employment taxes, excise taxes
and other obligations of the same or similar nature to any of the foregoing.
 
“Tax Items” has the meaning assigned to such term in Section 7.2(a).
 
“Tax Losses” has the meaning assigned to such term in Section 7.1(a).
 
“Tax Return” means all reports, estimates, declarations of estimated Tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
 
“Taxing Authority” means, with respect to any Tax, the governmental body, entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental entity or agency that imposes,
or is charged with collecting, social security or similar charges or premiums.
 
 
 
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“Transfer Taxes” has the meaning assigned to such term in Section 7.4.
 
1.2  Construction.
 
In construing and interpreting this Agreement: (a) the word “includes” and its
derivatives means “includes, without limitation” and corresponding derivative
expressions; (b) the currency amounts referred to herein, unless otherwise
specified, are in United States dollars; (c) whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified; (d) unless otherwise specified, all references in this Agreement
to “Article,” “Section,” “Disclosure Schedule,” “Exhibit,” “preamble” or
“recitals” shall be references to an Article, Section, Disclosure Schedule,
Exhibit, preamble or recitals hereto; (e) all references to “shall” shall mean
“will,” and vice versa; (f) whenever the context requires, the words used in
this Agreement shall include the masculine, feminine and neuter, as well as the
singular and the plural; (g) references to a Party include its permitted
successors and assigns; and (h) except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time.
 
ARTICLE 2
CONTRIBUTION AND CLOSING
 
2.1  Contribution.
 
At the closing of the transactions contemplated hereby (the “Closing”), the
Contributing Parties shall contribute the Subject Interest to the Partnership
Parties, as more specifically set forth in that certain Contribution, Conveyance
and Assumption Agreement to be entered into by and among the Parties and El Paso
CNG Company, L.L.C., a Delaware limited liability company and direct
wholly-owned subsidiary of El Paso, at the Closing (the “Contribution
Agreement”) in substantially the form attached as Exhibit A hereto.
 
2.2  Consideration.
 
(a)  
The Consideration shall consist of $745 million in immediately available funds,
provided that the $745 million shall be subject to adjustment pursuant to
Sections 2.4.

 
(b)  
The Consideration shall be paid at the Closing by wire or interbank transfer of
immediately available funds to the account(s) specified by the Contributing
Parties.

 
2.3  Closing and Closing Deliveries.
 
(a)  
The Closing of the contribution of the Subject Interest pursuant to this
Agreement and the Contribution Agreement will be held at the offices of El Paso
Corporation, 1001 Louisiana Street, 15th Floor, Houston, Texas 77002 on or
before the second Business Day following satisfaction or waiver of the
conditions to Closing set forth in Article 6, commencing at 9:00 a.m., Houston,
Texas time, or such other place, date and time as may be mutually agreed upon by
the Parties. The “Closing Date,” as referred to herein, shall mean the date of
the Closing.

 
 
 
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(b)  
At the Closing, the Contributing Parties shall deliver, or cause to be
delivered, to the Partnership Parties the following:

 
(i)  
A counterpart of the Contribution Agreement, duly executed by the Contributing
Parties;

 
(ii)  
The Contributing Parties Closing Certificate, duly executed by, or on behalf of,
the Contributing Parties;

 
(iii)  
A certificate of good standing of recent date of each of CIG and SNG;

 
(iv)  
 A counterpart of the amendment to the Existing SNG Partnership Agreement, duly
executed by each Partnership Party that is a party thereto;

 
(v)  
A counterpart of the amendment to the Existing CIG Partnership Agreement, duly
executed by each Contributing Party that is a party thereto;

 
(vi)  
A Certificate of Non-Foreign Status substantially in the form of Exhibit B
certifying that El Paso is not a foreign person within the meaning of Section
1445 of the Code and the Treasury Regulations thereunder; and

 
(vii)  
Such other certificates, instruments of conveyance and documents as may be
reasonably requested by the Partnership Parties prior to the Closing Date to
carry out the intent and purposes of this Agreement.

 
(c)  
At the Closing, the Partnership Parties shall deliver, or cause to be delivered,
to the Contributing Parties the following:

 
(i)  
A counterpart of the Contribution Agreement, duly executed by each Partnership
Party;

 
(ii)  
The Consideration as provided in Section 2.2(a) as may be adjusted by Section
2.4;

 
(iii)  
The Partnership Parties Closing Certificate, duly executed by, or on behalf of,
each of the Partnership Parties;

 
(iv)  
A counterpart of the amendment to the Existing SNG Partnership Agreement, duly
executed by each Partnership Party that is a party thereto;

 
 
 
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(v)  
A counterpart of the amendment to the Existing CIG Partnership Agreement, duly
executed by each Partnership Party that is a party thereto; and

 
(vi)  
Such other certificates, instruments of conveyance and documents as may be
reasonably requested by the Contributing Parties prior to the Closing Date to
carry out the intent and purposes of this Agreement.

 
2.4  Consideration Adjustment.
 
The Consideration shall be adjusted (a) upward by an amount equal to the
applicable Capital Contribution Adjustment Amount and (b) downward by the
applicable Additional Distribution Amount.
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTING PARTIES
 
The Contributing Parties hereby represent and warrant to the Partnership Parties
as follows:
 
3.1  Organization.
 
(a)  
El Paso is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as now conducted. EP SNG and EP Noric are limited liability
companies duly organized, validly existing and in good standing under the laws
of the State of Delaware and have all requisite limited liability company power
and authority to own, operate and lease their properties and assets and to carry
on their business as now conducted.

 
(b)  
To the Contributing Parties’ Knowledge, (i) each CIG Entity and each SNG Entity
is duly organized or formed, as applicable, and validly existing under the laws
of the state of its organization or formation, as applicable, and has all
requisite corporate, partnership or limited liability power and authority, as
applicable, to own, operate and lease its properties and assets and to carry on
its business as now conducted and (ii) each CIG Entity and each SNG Entity is
duly licensed or qualified to do business in the states in which the character
of the properties and assets owned or held by it or the nature of the business
conducted by it requires it to be so licensed or qualified, except where the
failure to be so licensed or qualified would not, individually or in the
aggregate, have a Material Adverse Effect.

 
3.2  Authority and Approval.
 
(a)  
Each of the Contributing Parties has full corporate or limited liability company
power and authority to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform all of the terms and conditions
hereof to be performed by it.  The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of all
of the terms and conditions hereof to be performed by the Contributing Parties
have been duly authorized and approved by all requisite corporate or limited
liability company action of the Contributing Parties.  This Agreement has been
duly executed and delivered by the Contributing Parties and constitutes the
valid and legally binding obligation, enforceable against the Contributing
Parties in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’ rights
and remedies generally and by general principles of equity (whether applied in a
proceeding at law or in equity).

 
 
 
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(b)  
Each of the Contributing Parties has full corporate or limited liability company
power and authority to execute and deliver each of the Contributing Parties
Ancillary Documents to which it is a party, to consummate the transactions
contemplated thereby and to perform all of the terms and conditions thereof to
be performed by it.  The execution and delivery of each of the Contributing
Parties Ancillary Documents, the consummation of the transactions contemplated
thereby and the performance of all of the terms and conditions thereof to be
performed by the Contributing Parties which is a party thereto have been duly
authorized and approved by all requisite corporate or limited liability company
action.  When executed and delivered by each of the parties party thereto, each
of the Contributing Parties Ancillary Documents will constitute a valid and
legally binding obligation of the Contributing Parties enforceable against each
such party in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights and remedies generally and by general principles of equity
(whether applied in a proceeding at law or in equity).

 
3.3  No Conflict; Consents.
 
Except as set forth on Disclosure Schedule 3.3:
 
(a)  
the execution, delivery and performance of this Agreement by the Contributing
Parties or the execution, delivery and performance by the Contributing Parties
of any of the Contributing Parties’ Ancillary Documents will not, and the
fulfillment and compliance with the terms and conditions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby will not,
(i) violate, conflict with any of, result in any breach of, or require the
consent of any Person under, the terms, conditions or provisions of the
certificate of incorporation, certificate of formation, limited liability
company agreement, bylaws or equivalent governing instruments of any of the
Contributing Parties, or to the Contributing Parties’ Knowledge, any CIG Entity
or SNG Entity, (ii) conflict with or violate any provision of any law or
administrative rule or regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to any of the
Subject Interest, the Contributing Parties or, to the Contributing Parties’
Knowledge, any CIG Entity,  SNG Entity or any CIG Entity’s or SNG Entity’s
assets or business (“Applicable Law”); (iii) conflict with, result in a breach
of, constitute a default under (whether with notice or the lapse of time or
both), or accelerate or permit the acceleration of the performance required by,
or require any consent, authorization or approval under, or result in the
suspension, termination or cancellation of, or in a right of suspension,
termination or cancellation of, any indenture, mortgage, agreement, contract,
commitment, license, concession, permit, lease, joint venture or other agreement
or instrument to which any of the Contributing Parties or, to the Contributing
Parties’ Knowledge, any CIG Entity or SNG Entity is a party or by which it or
any of its assets are bound; or (iv) result in the creation of any Lien (other
than Permitted Liens) on the Subject Interest or, to the Contributing Parties’
Knowledge, any CIG Entity’s or SNG Entity’s assets, except in the case of
clauses (ii) or (iii) for those items which, individually or in the aggregate,
would not have a Material Adverse Effect; and

 
 
 
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(b)  
no consent, approval, license, permit, order or authorization of any
Governmental Authority or other Person is required to be obtained or made by the
Contributing Parties or, to the Contributing Parties’ Knowledge, CIG or SNG in
connection with the execution, delivery, and performance of this Agreement and
the Contributing Parties Ancillary Documents or the consummation of the
transactions contemplated hereby or thereby, except (i) as have been waived or
obtained or with respect to which the time for asserting such right has expired
or (ii) for those that individually or in the aggregate, would not have a
Material Adverse Effect (including such consents, approvals, orders or Permits
that are not customarily obtained prior to the Closing) and are reasonably
expected to be obtained in the ordinary course of business consistent with past
practice following the Closing.

 
3.4  Capitalization; Title to Subject Interest.
 
Except as set forth in Disclosure Schedule 3.4:
 
(a)  
EP SNG owns beneficially and of record the SNG Subject Interest free and clear
of all Liens (other than those arising pursuant to the terms of the Existing SNG
Partnership Agreement and restrictions on transfer under applicable federal and
state securities laws). The SNG Subject Interest is not subject to any
agreements or understandings with respect to the voting or transfer of the SNG
Subject Interest (except the contribution of the SNG Subject Interest
contemplated by this Agreement and the Contribution Agreement, as may be
contained in the Existing SNG Partnership Agreement and restrictions on transfer
under applicable federal and state securities laws).  The SNG Subject Interest
has been duly authorized and is validly issued and fully paid (to the extent
required under the Existing SNG Partnership Agreement).

 
 
 
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(b)  
EP Noric owns beneficially and of record the CIG Subject Interest free and clear
of all Liens (other than those arising pursuant to the terms of the Existing CIG
Partnership Agreement and restrictions on transfer under applicable federal and
state securities laws). The CIG Subject Interest is not subject to any
agreements or understandings with respect to the voting or transfer of the CIG
Subject Interest (except the contribution of the CIG Subject Interest
contemplated by this Agreement and the Contribution Agreement, as may be
contained in the Existing CIG Partnership Agreement and restrictions on transfer
under applicable federal and state securities laws).  The CIG Subject Interest
has been duly authorized and is validly issued and fully paid (to the extent
required under the Existing CIG Partnership Agreement).

 
(c)  
There are no outstanding subscriptions, options, warrants, preemptive rights,
preferential purchase rights, rights of first refusal or any similar rights
issued or granted by, or binding upon any of the Contributing Parties or, to the
Contributing Parties’ Knowledge, SNG or CIG to purchase or otherwise acquire or
to sell or otherwise dispose of any security of or equity interest in SNG or
CIG, except the contribution of the Subject Interest as contemplated by this
Agreement and the Contribution Agreement and as may be contained in the Existing
CIG Partnership Agreement and Existing SNG Partnership Agreement.

 
3.5  Financial Statements; Internal Controls; Undisclosed Liabilities.
 
(a)  
To the Contributing Parties’ Knowledge, the Annual Report on Form 10-K for the
year ended December 31, 2010 filed by SNG (the “SNG 10-K”) and CIG (the “CIG
10-K”) with the SEC sets forth true and complete copies of the audited balance
sheets as of December 31, 2009 and 2010 and audited statements of income,
comprehensive income and partners’ equity, and statements of cash flow for the
years ended December 31, 2008, 2009 and 2010 for SNG and CIG, as applicable, and
the Quarterly Reports on Form 10-Q for the quarter ended March 31, 2011 filed by
SNG and CIG with the SEC sets forth the true and complete copies of the
unaudited balance sheets as of March 31, 2011 and the unaudited statements of
income, comprehensive income, and statements of cash flow for the quarterly
periods ended March 31, 2010 and 2011  (the “Financial Statements”).  Except as
set forth on Disclosure Schedule 3.5(a)(i), the Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except for changes in
accounting principles disclosed therein) and present fairly the financial
condition of SNG and CIG, as of such dates and the results of operations, as
applicable, of SNG and CIG, or their accounting predecessors, for such periods.

 
(b)  
There are no material liabilities or obligations related to the Subject Interest
or, to the Contributing Parties’ Knowledge, any CIG Entity or SNG Entity
(whether known or unknown and whether accrued, absolute, contingent or
otherwise) and there are no facts or circumstances that would result in any such
material liabilities or obligations, other than (i) liabilities or obligations
reflected or reserved against in the Financial Statements or described in the
footnotes thereto, (ii) liabilities or obligations incurred in the ordinary
course of business consistent with past practice since December 31, 2010, (iii)
liabilities or obligations arising under executory contracts entered into in the
ordinary course of business consistent with past practice, (iv) liabilities not
required to be presented by GAAP in unaudited financial statements, (v)
liabilities or obligations under this Agreement, (vi) liabilities or obligations
disclosed in Disclosure Schedule 3.5(b) and (vii) other liabilities which, in
the aggregate, would not have a Material Adverse Effect.  This Section 3.5(b)
does not include any matters with respect to Taxes, Environmental Laws or
Permits; such matters are being addressed exclusively by Section 3.10, Section
3.11 and Section 3.12, respectively.

 
 
 
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3.6  Working Capital.
 
As of the date of this Agreement and the Closing Date, to the Contributing
Parties’ Knowledge, each of the CIG Entities and each of the SNG Entities have
(and will have) a level of working capital that is adequate for its level of
operations, consistent with past practices.
 
3.7  Title to Assets.
 
Except as set forth on Disclosure Schedule 3.7 and as would not, individually or
in the aggregate, have a Material Adverse Effect, to the Contributing Parties’
Knowledge, each SNG Entity and each CIG Entity has good and valid title to its
property interests and the assets used or necessary to conduct their respective
businesses as presently conducted, free and clear of any Liens, except for
Permitted Liens.
 
3.8  Litigation; Laws and Regulations.
 
Except as set forth on Disclosure Schedule 3.8 or in the footnotes to the
Financial Statements:
 
(a)  
There are no (i) civil, criminal or administrative actions, suits, claims,
hearings, arbitrations, investigations or proceedings pending or, to the
Contributing Parties’ Knowledge, threatened (a) against or affecting any SNG
Entity or CIG Entity or their assets or businesses or the Subject Interest or
(b) that (I) alleges the invalidity or unenforceability of any of the
Contributing Parties’ obligations under this Agreement or any of the
Contributing Parties’ Ancillary Documents or (II) seeks to prevent or delay the
consummation by the Contributing Parties of the transactions contemplated by
this Agreement or any of the Contributing Parties Ancillary Documents; or
(ii) judgments, orders, decrees or injunctions of any Governmental Authority,
whether at law or in equity, (a) against or affecting, to the Contributing
Parties’ Knowledge, any SNG Entity or CIG Entity or their assets or businesses
or the Subject Interest, or (b) that (I) alleges the invalidity or
unenforceability of any of the Contributing Parties’ obligations under this
Agreement or any of the Contributing Parties Ancillary Documents or (II) seeks
to prevent or delay the consummation by the Contributing Parties of the
transactions contemplated by this Agreement or any of the Contributing Parties
Ancillary Documents, except in each case of (i) and (ii) of this Section 3.8(a),
for those items that would not, individually or in the aggregate, have a
Material Adverse Effect.

 
 
 
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(b)  
To the Contributing Parties’ Knowledge, no SNG Entity or CIG Entity is in
violation of or in default under any Applicable Law, except as would not,
individually or in the aggregate, have a Material Adverse Effect.

 
This Section 3.8 does not include any matters with respect to Taxes,
Environmental Laws or Permits; such matters are being addressed exclusively by
Section 3.10, Section 3.11 and Section 3.12, respectively.
 
3.9  No Adverse Changes.
 
To the Contributing Parties’ Knowledge, except as set forth on Disclosure
Schedule 3.9 or as described in the Financial Statements, since December 31,
2010:
 
(a)  
there has not been a Material Adverse Effect applicable to any SNG Entity or CIG
Entity;

 
(b)  
the assets of each SNG Entity and each CIG Entity have been operated and
maintained in the ordinary course of business consistent with past practices;

 
(c)  
there has not been any material damage or destruction to any material portion of
the assets of any SNG Entity or CIG Entity, other than such damage or
destruction that has been repaired and such assets are available for service or
operation in all material respects;

 
(d)  
there has been no delay in, or postponement of, the payment of any liabilities
by any SNG Entity or CIG Entity in excess of $5,000,000; and

 
(e)  
there is no contract, commitment or agreement for SNG or CIG to do any of the
foregoing.

 
3.10  Taxes.
 
Except as set forth in Disclosure Schedule 3.10 or as reflected on the Financial
Statements or as would not have a Material Adverse Effect, to the Contributing
Parties’ Knowledge, (a) the SNG Entities and the CIG Entities have filed, or the
Contributing Parties and their Affiliates (other than the Partnership Parties)
have caused to be filed, all Tax Returns required to be filed by each SNG Entity
or each CIG Entity or with respect to their assets on a timely basis (taking
into account all extensions of due dates); (b) all such Tax Returns filed by
each SNG Entity and each CIG Entity were complete and correct; (c) all Taxes
owed by each SNG Entity or each CIG Entity or with respect to their assets which
are or have become due have been timely paid in full; (d) there are no Liens on
the Subject Interest or any of the SNG Entity’s assets or any of the CIG
Entity’s assets that arose in connection with any failure (or alleged failure)
to pay any Tax on any such assets or with respect to the Subject Interest, other
than Liens for Taxes not yet due and payable; and (e) there is no pending
action, proceeding or, to the Knowledge of the Contributing Parties,
investigation for the assessment or collection of Taxes and no Tax assessment,
deficiency or adjustment has been asserted or proposed with respect to any SNG
Entity, CIG Entity or their assets.
 
 
 
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3.11  Environmental Matters.
 
To the Contributing Parties’ Knowledge, except as set forth in Disclosure
Schedule 3.11, as reflected on the Financial Statements, or as would not,
individually or in the aggregate, have a Material Adverse Effect:  (i) each SNG
Entity and each CIG Entity and their  assets, operations and businesses  are and
have been in compliance with applicable Environmental Laws; (ii) each SNG Entity
and each CIG Entity has no obligation to investigate, remediate, monitor or
otherwise address (including paying for such action) the presence, on-site or
offsite, of Hazardous Materials under any applicable Environmental Laws;
(iii) no SNG Entity, CIG Entity or their assets, operations and businesses are
subject to any pending or threatened, claim, action, suit, investigation,
inquiry or proceeding under any Environmental Law (including designation as a
potentially responsible party under CERCLA or any similar local or state law);
(iv) all notices, permits, permit exemptions, licenses or similar
authorizations, if any, required to be obtained or filed by any SNG Entity and
CIG Entity with respect to its assets, operations and businesses, by any
Contributing Party under any Environmental Law (“Environmental Permits”) in
connection with any SNG Entity’s or CIG Entity’s businesses or assets have been
duly obtained or filed and are valid and currently in full force and effect; (v)
each SNG Entity, each CIG Entity and each Contributing Party has complied in all
material respects with the terms and conditions of such Environmental Permits;
(vi) such Environmental Permits will not be subject to suspension, modification,
revocation or non-renewal as a result of the execution and delivery of this
Agreement and the Contributing Parties’ Ancillary Documents or the consummation
of the transactions contemplated hereby or thereby (including such Environmental
Permits that are not customarily obtained prior to the Closing and are
reasonably expected to be obtained in the ordinary course of business consistent
with past practice following the Closing); (vii) no proceeding is pending or
threatened with respect to any alleged failure by the SNG Entities or CIG
Entities to have any material Environmental Permit necessary for the operation
of any SNG Entity’s or CIG Entity’s assets or the conduct of their business or
to be in compliance therewith; and (viii) there has been no release of any
Hazardous Material into the environment by any SNG Entity or CIG Entity at or
from their assets, operations and businesses except in compliance with
applicable Environmental Law.
 
3.12  Licenses; Permits.
 
To the Contributing Parties’ Knowledge, except as set forth in Disclosure
Schedule 3.12, (a) the SNG Entities and the CIG Entities have all licenses,
permits and authorizations (collectively, “Permits”) issued or granted by
Governmental Authorities that are necessary for the conduct of the SNG Entities’
and CIG Entities’ businesses as they are now being conducted, (b) all such
Permits are validly held by the SNG Entities and the CIG Entities and are in all
material respects in full force and effect, (c) the SNG Entities and the CIG
Entities have complied in all material respects with the terms and conditions of
such Permits and (d) such SNG Entities’ and CIG Entities’ Permits, and to the
Contributing Parties’ Knowledge, such other Permits, will not be subject to
suspension, modification, revocation or non-renewal as a result of the execution
and delivery of this Agreement and the Contributing Parties Ancillary Documents
or the consummation of the transactions contemplated hereby or thereby, except
as would not, individually or in the aggregate, have a Material Adverse Effect
(including such Permits that are not customarily obtained prior to the Closing
and are reasonably expected to be obtained in the ordinary course of business
consistent with past practice following the Closing).  With respect to the SNG
Entities and CIG Entities, no proceeding is pending or threatened with respect
to any alleged failure by such Person to have any material Permit necessary for
the operation of any of the SNG Entities’ or CIG Entities’ assets or the conduct
of their business or to be in compliance therewith.  This Section 3.12 does not
include any matters with respect to Environmental Laws; such matters are being
addressed exclusively by Section 3.11.
 
 
 
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3.13  Contracts.
 
(a)  
To the Contributing Parties’ Knowledge, the SNG 10-K and the CIG 10-K contain a
true and complete listing of each contract and other agreement to which each SNG
Entity or each CIG Entity, respectively, is a party that is required to be so
listed by SNG or CIG pursuant to Item 601(b)(10) of Regulation S-K (each such
contract or agreement being referred to herein as a “SEC Contract”).

 
(b)  
The Contributing Parties have made available to the Partnership Parties a
correct and complete copy of each SEC Contract and each contract or agreement to
which any SNG Entity or any CIG Entity is a party that provides for revenues to
or commitments of any SNG Entity or CIG Entity in an amount greater than $5
million during a calendar year (together with the SEC Contracts, each such
contract or agreement being referred to herein as a “Material Contract”).

 
(c)  
To the Contributing Parties’ Knowledge, with respect to each SNG Entity and each
CIG Entity (i) each Material Contract to which any such entity is a party is
legal, valid, binding, enforceable (assuming the enforceability against the
other party or parties thereto), and in full force and effect; (ii) each
Material Contract will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated by this Agreement; (iii) no SNG Entity or CIG Entity
is in breach or default of a Material Contract, and no event has occurred which
with notice or lapse of time would constitute a breach or default by such SNG
Entity or CIG Entity, or permit termination, modification, or acceleration,
under a Material Contract; and (iv)  no other party is in breach or default, and
no event has occurred that with notice, lapse of time or both would constitute a
breach or default by such other party, or permit termination, modification or
acceleration under a Material Contract, nor has any other party repudiated any
provision of a Material Contract; except in the case of clauses (i) - (iv)
above, such breaches, defaults or unenforceability as would not, individually or
in the aggregate, have a Material Adverse Effect.

 
 
 
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3.14  Transactions with Affiliates.
 
Except as disclosed in the SEC Contracts, Disclosure Schedule 3.14 or in the
footnotes to the Financial Statements, no SNG Entity or CIG Entity is party to
any agreement, contract or arrangement between such SNG Entity or CIG Entity, on
the one hand, and any of the Contributing Parties or any of its Affiliates
(other than SNG, CIG, the Partnership or the Operating Company), on the other
hand, other than those entered into in the ordinary course of business
consistent with past practice on commercially reasonable terms.
 
3.15  Regulation.
 
(a)  
To the Contributing Parties’ Knowledge, none of the SNG Entities or CIG Entities
are subject to regulation under the Investment Company Act of 1940; and

 
(b)  
To the Contributing Parties’ Knowledge,  each SNG Entity  and CIG Entity is in
compliance, in all material respects, with (i) all applicable provisions of the
Natural Gas Act (the “NGA”) and (ii) all applicable orders and regulations of
FERC that pertain to the business or operations of that SNG Entity or CIG
Entity.  No approval of FERC is required in connection with execution of this
Agreement by the Contributing Parties or the consummation by the Contributing
Parties of the transactions contemplated hereby.

 
3.16  Brokerage Arrangements.
 
Neither the Contributing Parties nor any of their Affiliates (other than the
Partnership Parties) has entered (directly or indirectly) into any agreement
with any person, firm or corporation that would obligate the Partnership
Parties, the CIG Entities or the SNG Entities to pay any commission, brokerage
or “finder’s fee” or other fee in connection with this Agreement, the
Contribution Agreement or the transactions contemplated hereby or thereby.
 
3.17  Waivers and Disclaimers. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT AND THE CONTRIBUTING PARTIES ANCILLARY DOCUMENTS,
EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND
AGREEMENTS MADE BY THE CONTRIBUTING PARTIES IN THIS AGREEMENT, THE CONTRIBUTING
PARTIES HAVE NOT MADE, DO NOT MAKE, AND SPECIFICALLY NEGATE AND DISCLAIM ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR
WRITTEN, PAST OR PRESENT REGARDING THE TRANSACTIONS CONTEMPLATED HEREBY RELATING
TO (A)  THE SNG ENTITIES, THE CIG ENTITIES AND THE VALUE, NATURE, QUALITY OR
CONDITION OF THEIR ASSETS, INCLUDING THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL
CONDITION OF SUCH ASSETS GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS
SUBSTANCES OR OTHER MATTERS IN OR ON SUCH ASSETS, (B) THE INCOME OR CASH FLOW TO
BE DERIVED BY THE SNG ENTITIES, THE CIG ENTITIES OR THEIR ASSETS, OPERATIONS OR
BUSINESSES, (C) THE SUITABILITY OF THE SNG ENTITIES’ ASSETS FOR ANY AND ALL
ACTIVITIES AND USES THAT MAY BE CONDUCTED USING SUCH ASSETS, (D) THE COMPLIANCE
OF OR BY THE SNG ENTITIES, THE CIG ENTITIES OR THEIR OPERATIONS WITH ANY LAWS,
INCLUDING ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS,
RULES, REGULATIONS, ORDERS OR REQUIREMENTS, OR (E) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE ASSETS OR BUSINESSES OF THE SNG ENTITIES OR CIG ENTITIES.  EXCEPT
TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN THE CONTRIBUTING PARTIES
ANCILLARY DOCUMENTS, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY,
NEITHER THE CONTRIBUTING PARTIES NOR ANY OF THEIR AFFILIATES SHALL BE LIABLE OR
BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE CONTRIBUTING PARTIES, THE SNG ENTITIES, THE CIG
ENTITIES OR THEIR ASSETS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD
PARTY.  THE PROVISIONS OF THIS SECTION 3.17 HAVE BEEN NEGOTIATED BY THE PARTIES
AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION
OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
WITH RESPECT TO THE CONTRIBUTING PARTIES, THE SNG ENTITIES, THE CIG ENTITIES OR
THEIR ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR
OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT.
 
 
 
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3.18  Employees and Employee Benefits.
 
     To the Contributing Parties Knowledge:
 
(a)  
No SNG Entity or CIG Entity has any employees.  None of the employees of the
Contributing Parties or its Affiliates who provide exclusive or shared services
to any SNG Entity or CIG Entity or with respect to their assets (collectively,
the “Associated Employees”) are covered by a collective bargaining
agreement.  Except as would not result in any liability to any SNG Entity or any
CIG Entity, there are no facts or circumstances that have resulted or would
result in a claim against any SNG Entity or CIG Entity on behalf of an
individual or a class in excess of $250,000 for unlawful discrimination, unpaid
overtime or any other violation of state or federal laws relating to employment
of the Associated Employees or any claims relating to any liability under ERISA.

 
(b)  
None of the SNG Entities or CIG Entities sponsor, maintain or contribute to, nor
do they have any legal or equitable obligation to establish, maintain or
contribute to any compensation or benefit plan, agreement, program or policy
(whether written or oral, formal or informal) for the benefit of any present or
former directors, officers, employees, agents, consultants or other similar
representatives, including, but not limited to, any “employee benefit plan” as
defined in section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) (the foregoing are hereinafter collectively referred to as
“Plans”).  All Plans in which Associated Employees participate are sponsored or
maintained by any Contributing Party or an Affiliate.

 
 
 
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(c)  
Each Plan in which Associated Employees participate and which is intended to be
qualified under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified.

 
(d)  
Except as could not result in a Material Adverse Effect, each Plan in which
Associated Employees participate is and has been maintained in substantial
compliance with its terms and the provisions of all applicable laws, including,
without limitation, ERISA and the Code.

 
(e)  
Except as could not result in a Material Adverse Effect, neither a Contributing
Party nor any entity treated as a single employer with a Contributing Party for
purposes of Section 414(b), (c), (m) or (o) of the Code (the “Contributing
Parties Aggregated Group”) has incurred any material liability under Title IV of
ERISA (other than for the payment of benefits or Pension Benefit Guaranty
Corporation insurance premiums, in either case in the ordinary course).

 
(f)  
Other than any liabilities for which each SNG Entity or each CIG Entity have no
responsibility or obligation, neither a Contributing Party nor any member of the
Contributing Party Aggregated Group is obligated to contribute to any
“multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) in respect of
which a Contributing Party or any member of the Contributing Party Aggregated
Group has or may reasonably be expected to incur any withdrawal liability (as
defined in Section 4201 of ERISA) that would result in a Material Adverse
Effect.

 
(g)  
Except as would not result in any liability to any SNG Entity or CIG Entity, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any subsequent employment-related event) result in any payment
becoming due, result in the acceleration of the time of payment or vesting of
any such benefits, result in the incurrence or acceleration of any other
obligation related to the Plans or to any employee or former employee of the
Contributing Parties or any of its Affiliates or a nonexempt “prohibited
transaction” within the meaning of Section 406 of ERISA or Section 4975 of the
Code.

 
(h)  
No member of the Contributing Parties Aggregated Group or any organization to
which such member is a successor or parent corporation, within the meaning of
Section 4069(b) of ERISA, has engaged in any transaction described in Sections
4069 or 4212(c) of ERISA.

 
 
 
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3.19  SEC Reports.
 
To the Contributing Parties’ Knowledge, since December 31, 2010, (i) SNG and CIG
have timely made all filings that such Persons would be required to make by the
Exchange Act (“SEC Reports”) if such Persons were subject to such laws, (ii) all
filings by SNG and CIG with the SEC, at the time filed complied as to form in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations of the SEC thereunder, and (iii) to the Knowledge of
the Contributing Parties, no such filing, at the time described above, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
 
3.20  Capital Contributions.
 
On or after the Effective Time through the date of this Agreement, none of the
Contributing Parties nor any of its subsidiaries have made any Capital
Contributions (as such term is defined in the Existing SNG Partnership Agreement
or Existing CIG Partnership Agreement) that would be included in the calculation
of any Capital Contribution Adjustment Amount, to SNG or CIG, respectively.
 
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PARTNERSHIP PARTIES
 
Each of the Partnership Parties hereby represents and warrants to the
Contributing Parties as follows:
 
4.1  Organization and Existence.
 
The Partnership is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
partnership power and authority to own, operate and lease its properties and
assets and to carry on its business as now conducted.  The Operating Company is
a limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware and has all requisite limited liability
company power and authority to own, operate and lease its properties and assets
and to carry on its business as now conducted.
 
4.2  Authority and Approval.
 
(a)  
Each of the Partnership Parties has full limited partnership or limited
liability company power and authority, as applicable, to execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to
perform all of the terms and conditions hereof to be performed by it.  The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the performance of all of the terms and conditions
hereof to be performed by the Partnership Parties have been duly authorized and
approved, by all requisite limited partnership action or limited liability
company action, as applicable, of each of the Partnership Parties.  This
Agreement has been duly executed and delivered by or on behalf of each of the
Partnership Parties and constitutes the valid and legally binding obligation of
each of them, enforceable against each of the Partnership Parties in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights and remedies
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).

 
 
 
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(b)  
Each of the Partnership Parties has full limited partnership or limited
liability company power and authority, as applicable, to execute and deliver
each Partnership Ancillary Document to which it is a party, to consummate the
transactions contemplated thereby and to perform all of the terms and conditions
thereof to be performed by it.  The execution and delivery of each of the
Partnership Ancillary Documents, the consummation of the transactions
contemplated thereby and the performance of all of the terms and conditions
thereof to be performed by each of the Partnership Parties which is a party
thereto have been duly authorized and approved, by all requisite limited
partnership action or limited liability company action, as applicable, of each
such party.  When executed and delivered by each of the Partnership Parties
party thereto, each Partnership Ancillary Document will constitute a valid and
legally binding obligation of each of the Partnership Parties that is a party
thereto, enforceable against each such Partnership Party in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors’ rights and remedies generally and
by general principles of equity (whether applied in a proceeding at law or in
equity).

 
4.3  No Conflict; Consents.
 
Except as set forth on Disclosure Schedule 4.3:
 
(a)  
the execution, delivery and performance of this Agreement by the Partnership
Parties or the execution, delivery and performance by the Partnership Parties of
any of the Partnership Ancillary Documents will not, and the fulfillment and
compliance with the terms and conditions hereof and thereof and the consummation
of the transactions contemplated hereby and thereby will not, (i) violate,
conflict with any of, result in any breach of, or require the consent of any
Person under, the terms, conditions or provisions of the certificate of limited
partnership, certificate of formation, limited liability company agreement,
agreement of limited partnership or other equivalent governing instruments of
any Partnership Party; (ii)  conflict with or violate any provision of any
Applicable Law applicable to any Partnership Party; (iii) conflict with, result
in a breach of, constitute a default under (whether with notice or the lapse of
time or both), or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under, or result
in the suspension, termination or cancellation of, or in a right of suspension,
termination or cancellation of, any indenture, mortgage, agreement, contract,
commitment, license, concession, permit, lease, joint venture or other agreement
or instrument to which any of the Partnership Parties is a party or by which
either of them is bound or to which any of their property is subject; or (iv)
result in the creation of any Lien (other than Permitted Liens) on any of the
Partnership Parties’ assets, except in the case of clauses (ii) or (iii), for
those items which, individually or in the aggregate, would not have a
Partnership Material Adverse Effect; and

 
 
 
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(b)  
no consent, approval, license, permit, order or authorization of any
Governmental Authority or other Person is required to be obtained or made by the
Partnership Parties in connection with the execution, delivery, and performance
of this Agreement and the Partnership Ancillary Documents or the consummation of
the transactions contemplated hereby or thereby, except (i) as have been waived
or obtained or with respect to which the time for asserting such right has
expired or (ii) for those that individually or in the aggregate, would not have
a Partnership Material Adverse Effect (including such consents, approvals,
orders or Permits that are not customarily obtained prior to the Closing) and
are reasonably expected to be obtained in the ordinary course of business
consistent with past practice following the Closing.

 
4.4  Brokerage Arrangements.
 
None of the Partnership Parties have entered (directly or indirectly) into any
agreement with any person, firm or corporation that would obligate the
Contributing Parties, any of its Affiliates (other than the Partnership Parties)
or any SNG Entity or CIG Entity to pay any commission, brokerage or “finder’s
fee” or other fee in connection with this Agreement, the Contribution Agreement
or the transactions contemplated hereby or thereby.
 
4.5  Litigation.
 
There are no (i) civil, criminal or administrative actions, suits, claims,
hearings, arbitrations, investigations or proceedings pending or, to the
Partnership Parties’ Knowledge, threatened that (a) alleges the invalidity or
unenforceability of any of the Partnership Parties’ obligations under this
Agreement or any of the Partnership Ancillary Documents or (b) seeks to prevent
or delay the consummation by the Partnership Parties of the transactions
contemplated by this Agreement or any of the Partnership Ancillary Documents; or
(ii) judgments, orders, decrees or injunctions of any Governmental Authority,
whether at law or in equity, that (a) alleges the invalidity or unenforceability
of any of the Partnership Parties’ obligations under this Agreement or any of
the Partnership Ancillary Documents or (b) seeks to prevent or delay the
consummation by the Partnership Parties of the transactions contemplated by this
Agreement or any of the Partnership Ancillary Documents, except in each case of
(i) and (ii) of this Section 4.5, for those items that would not, individually
or in the aggregate, have a Partnership Material Adverse Effect.
 
 
 
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4.6  Waivers and Disclaimers.
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT AND THE
PARTNERSHIP ANCILLARY DOCUMENTS, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES AND OTHER COVENANTS AND AGREEMENTS MADE BY THE PARTNERSHIP PARTIES IN
THIS AGREEMENT, THE PARTNERSHIP PARTIES HAVE NOT MADE, DO NOT MAKE, AND
SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES,
COVENANTS, AGREEMENTS, OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER,
WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT
REGARDING THE TRANSACTIONS CONTEMPLATED HEREBY. EXCEPT TO THE EXTENT PROVIDED IN
THIS AGREEMENT OR IN THE PARTNERSHIP ANCILLARY DOCUMENTS, WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY, NEITHER THE PARTNERSHIP PARTIES NOR ANY OF ITS
AFFILIATES SHALL BE LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PARTNERSHIP PARTIES
FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY.  THE PROVISIONS OF
THIS SECTION 4.6 HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND
ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE
PARTNERSHIP PARTIES THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN
EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT.
 
ARTICLE 5
ADDITIONAL AGREEMENTS,
COVENANTS, RIGHTS AND OBLIGATIONS
 
5.1  Operation of SNG Entities and CIG Entities.
 
Except as provided in this Agreement or the Contributing Parties Ancillary
Documents or the Partnership Ancillary Documents or as consented to by
the  Parties, during the period from the date of this Agreement through the
Closing Date, each  Party shall cause each of the SNG Entities and CIG Entities
to (a) conduct its businesses and operations in the usual and ordinary course
thereof, consistent with past practices thereof; and (b) use commercially
reasonable efforts to preserve, maintain and protect its assets, businesses and
operations; provided, however, the  Parties shall not be required to make any
payments or enter into any contractual arrangements or understandings to satisfy
the foregoing obligations in this Section 5.1 if such payments or contractual
arrangements or understandings would be commercially unreasonable.
 
5.2  Supplemental Disclosure.
 
As soon as reasonably practical following the Contributing Parties obtaining
Knowledge of a relevant disclosure, but in all cases no later than three
Business Days prior to Closing, by written notice to the Partnership, the
Contributing Parties shall supplement or amend the Disclosure Schedules to this
Agreement for matters which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in the Disclosure
Schedules.  For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Article 6 have been fulfilled,
the Disclosure Schedules shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
all information contained in any supplement or amendment to the Disclosure
Schedules, and if the Closing shall occur, then all matters disclosed pursuant
to any such supplement or amendment at or prior to the Closing shall not be
waived and the Partnership Parties shall be entitled to make a claim thereon
pursuant to the terms of this Agreement.
 
 
 
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5.3  Access to Books and Records.
 
The Contributing Parties shall afford the Partnership Parties and their
authorized representatives reasonable access during normal business hours to the
financial, title, Tax, corporate, partnership and legal materials and operating
data and information relating to each of the SNG Entities and the CIG Entities
and their assets, operations and business and the Subject Interest and shall
furnish to the Partnership Parties such other information as they may reasonably
request, unless any such access and disclosure would violate the terms of any
agreement to which the Contributing Parties or any of their Affiliates are bound
or any Applicable Law.
 
5.4  Cooperation; Further Assurances.
 
(a)  
The Contributing Parties shall cooperate with the Partnership Parties to assist
in identifying all Permits as may be necessary to own the Subject Interest.

 
(b)  
The Contributing Parties and the Partnership Parties shall use their respective
commercially reasonable efforts (i) to obtain all approvals and consents
required by or necessary for the transactions contemplated by this Agreement and
the Ancillary Documents, and (ii) to ensure that all of the conditions to its
respective obligations contained in Sections 6.1 and 6.2, respectively, are
satisfied as soon as reasonably practical.  Each of the Parties acknowledges
that certain actions may be necessary with respect to the matters and actions
contemplated by this Agreement and the Ancillary Documents such as making
notifications and obtaining consents or approvals or other clearances that are
material to the consummation of the transactions contemplated hereby, and each
agrees to take all appropriate action and to do all things necessary, proper or
advisable under Applicable Law to make effective the transactions contemplated
by this Agreement and the Ancillary Documents; provided, however, that nothing
in this Agreement will require any Party to hold separate or make any
divestiture not expressly contemplated herein of any asset or otherwise agree to
any restriction on its operations or other burdensome condition which would in
any such case be material to its assets, liabilities or business in order to
obtain any consent or approval or other clearance required by this Agreement or
any Ancillary Document.

 
 
 
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5.5  Admission of Partnership as Partner.
 
In accordance with the Existing SNG Partnership Agreement and with respect to
the Subject Interest, the Management Committee of SNG has consented to the
admission of the Partnership or its designee as the partner of SNG, with such
admissions to be effective contemporaneously with the applicable closing. In
accordance with the Existing CIG Partnership Agreement and with respect to the
Subject Interest, the Management Committee of CIG has consented to the admission
of the Partnership or its designee as the partner of CIG, with such admissions
to be effective contemporaneously with the applicable closing.
 
5.6  Debt Balance.
 
The Contributing Parties agree to cause:
 
(a)  
the Debt Amount of the SNG Entities to not exceed $1,211 million, as of the
Closing Date; and

 
(b)  
the Debt Amount of the CIG Entities to not exceed $653 million, as of the
Closing Date.

 
ARTICLE 6
CONDITIONS TO CLOSING
 
6.1  Conditions to the Obligation of the Partnership Parties.
 
The obligations of the Partnership Parties to proceed with the Closing
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of all of the following conditions, any one or more of which may be waived,
in whole or in part, by the Partnership Parties:
 
(a)  
The representations and warranties of the Contributing Parties set forth in this
Agreement shall be true and correct in all respects (without giving effect to
any supplement or amendment to the Disclosure Schedules or any qualification as
to materiality, Material Adverse Effect, value or other monetary amounts, or
concepts of similar import) as of the date of this Agreement and on the Closing
Date as if made on such date except for any inaccuracies, violations or breaches
that would not, individually or in the aggregate, constitute a Material Adverse
Effect.  The Contributing Parties, the CIG Entities and the SNG Entities shall
have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by them by
the time of the Closing.  The Contributing Parties, CIG and SNG shall have
delivered to the Partnership Parties a certificate, dated as of the Closing Date
and signed by an authorized officer on behalf of each of the Contributing
Parties, CIG and SNG confirming the foregoing matters set forth in this
Section 6.1(a) (the “Contributing Parties Closing Certificate”).

 
 
 
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(b)  
All material filings, including any registration statements, with, and material
consents, approvals, orders and Permits of, any Governmental Authority to be
obtained by the Contributing Parties, the CIG Entities or the SNG Entities for
the consummation of the transactions contemplated in this Agreement shall have
been made and obtained, and all waiting periods with respect to material filings
made with Governmental Authorities in contemplation of the consummation of the
transactions described herein shall have expired or been terminated.

 
(c)  
All material consents of any third party, other than any Governmental Authority
and other than as provided in Section 5.5, to be obtained by the Contributing
Parties, the CIG Entities or the SNG Entities for the consummation of the
transactions contemplated in this Agreement shall have been made and obtained.

 
(d)  
No statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction, judgment or other order shall have
been enacted, entered, promulgated, enforced or issued by any Governmental
Authority, or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a Governmental Authority shall have
been instituted or threatened challenging or seeking to restrain or prohibit the
transactions contemplated hereby.

 
(e)  
The Conflicts Committee shall have received the opinion, in form and substance
satisfactory to the Conflicts Committee, of Tudor, Pickering, Holt & Co.
Securities, Inc., the financial advisor to the Conflicts Committee, that the
transactions contemplated by this Agreement are fair to the Partnership’s public
unitholders from a financial point of view.

 
(f)  
Since the date of this Agreement, there shall not have occurred a Material
Adverse Effect.

 
(g)  
The Contributing Parties shall have delivered to the Partnership Parties all of
the documents, certificates and other instruments required to be delivered
under, and otherwise complied with the provisions of Section 2.3(b).

 
6.2  Conditions to the Obligation of the Contributing Parties.
 
The obligations of the Contributing Parties to proceed with the Closing
contemplated hereby is subject to the satisfaction on or prior to the Closing
Date of all of the following conditions, any one or more of which may be waived
in writing, in whole or in part, by the Contributing Parties:
 
(a)  
The representations and warranties of the Partnership Parties set forth in this
Agreement shall be true and correct in all material respects (without giving
effect to any supplement or amendment to the Disclosure Schedules or any
qualification as to materiality, Partnership Material Adverse Effect, value or
other monetary amounts, or concepts of similar import) as of the date of this
Agreement and on the Closing Date as if made on such date, except for
representations and warranties that are made as of a specific date or time,
which shall be true and correct only as of such specific date or time, except
for any inaccuracies, violations or breaches that would not, individually or in
the aggregate, constitute a Partnership Material Adverse Effect.  The
Partnership Parties shall have performed or complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by them by the time of the Closing.  The Partnership Parties shall
have delivered to the Contributing Parties a certificate, dated as of the
Closing Date and signed by an authorized officer on behalf of the Partnership
Parties confirming the foregoing matters set forth in this Section 6.2(a) (the
“Partnership Parties Closing Certificate”).

 
 
 
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(b)  
All material filings with, and material consents, approvals, orders and Permits
of, any Governmental Authority to be obtained by the Partnership Parties for the
consummation of the transactions contemplated in this Agreement shall have been
made and obtained, and all waiting periods with respect to material filings made
with Governmental Authorities in contemplation of the consummation of the
transactions described herein shall have expired or been terminated.

 
(c)  
All material consents of any Person not a party hereto, other than any
Governmental Authority and other than as provided in Section 5.5, to be obtained
by the Partnership Parties for the consummation of the transactions contemplated
in this Agreement shall have been made and obtained.

 
(d)  
No statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction, judgment or other order shall have
been enacted, entered, promulgated, enforced or issued by any Governmental
Authority, or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a court or any other governmental
agency or body shall have been instituted or threatened challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this Agreement.

 
(e)  
Since the date of this Agreement, there shall not have occurred a Partnership
Material Adverse Effect.

 
(f)  
The Partnership Parties shall have delivered to the Contributing Parties all of
the documents, certificates and other instruments required to be delivered
under, and otherwise complied with the provisions of, Section 2.3(c).

 
ARTICLE 7
TAX MATTERS
 
7.1  Liability for Taxes.
 
(a)  
Without duplication from and after the Closing Date,  the Contributing Parties
shall be liable for, and shall indemnify and hold the Partnership Parties, the
SNG Entities, the CIG Entities and their respective subsidiaries harmless from
the Contributing Parties’ Ownership Percentage of any Taxes, together with any
costs, expenses, losses or damages, including reasonable expenses of
investigation and attorneys’ and accountants’ fees and expenses, arising out of
or incident to the determination, assessment or collection of such Taxes (“Tax
Losses”), (i) imposed on or incurred by the SNG Entities or the CIG Entities or
their respective assets by reason of Treasury Regulations Section 1.1502-6 or
any analogous state, local or foreign law or regulation which is attributable to
the SNG Entities or the CIG Entities or the Contributing Parties having been a
member of any consolidated, combined or unitary group for the period prior to
and including the Closing Date, (ii) any Tax Losses (other than Tax Losses
described in clause (i) above) imposed on or incurred by or with respect to the
SNG Entities, the CIG Entities or their assets with respect to the period prior
to and including the Closing Date or (iii) attributable to a breach by the
Contributing Parties of any representation, warranty or covenant with respect to
Taxes in this Agreement.  In addition, the Contributing Parties shall be liable
for, and shall indemnify and hold the Partnership Parties, the CIG Entities and
their subsidiaries harmless from 14% of any Tax Losses which are imposed on or
incurred by the CIG Entities after the Closing Date.

 
 
 
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(b)  
The Partnership Parties shall be liable for, and shall indemnify and hold the
Contributing Parties and their Affiliates harmless from any Tax Losses
attributable to a breach by the Partnership Parties of any covenant with respect
to Taxes in this Agreement.

 
(c)  
Whenever it is necessary for purposes of this Article 7 to determine the amount
of any Taxes imposed on or incurred by the SNG Entities or CIG Entities for a
taxable period beginning before and ending after the Closing Date which is
allocable to the period prior to and including the Closing Date, the
determination shall be made, in the case of property or ad valorem taxes or
franchise taxes (which are measured by, or based solely upon capital, debt or a
combination of capital and debt), on a per diem basis and, in the case of other
Taxes, by assuming that such pre-Closing Date period constitutes a separate
taxable period applicable to the SNG Entities or to the CIG Entities and by
taking into account the actual taxable events occurring during such period
(except that exemptions, allowances and deductions for a taxable period
beginning before and ending after the Closing Date that are calculated on an
annual or periodic basis, such as the deduction for depreciation, shall be
apportioned to the period prior to and including the Closing Date ratably on a
per diem basis).  Notwithstanding anything to the contrary herein, any franchise
Tax paid or payable with respect to the SNG Entities or the CIG Entities shall
be allocated to the taxable period during which the income, operations, assets
or capital comprising the base of such Tax is measured, regardless of whether
the right to do business for another taxable period is obtained by the payment
of such franchise Tax.

 
(d)  
If any of the Partnership Parties or its Affiliates receives a refund of any
Taxes that the Contributing Parties are responsible for hereunder, or if the
Contributing Parties or their Affiliates receive a refund of any Taxes that any
of the Partnership Parties is responsible for hereunder, the party receiving
such refund shall, within ninety (90) days after receipt of such refund, remit
it to the party who has responsibility for such Taxes hereunder. The Parties
shall cooperate in order to take all necessary steps to claim any such refund.

 
 
 
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7.2  Tax Returns.
 
(a)  
With respect to any Tax Return covering a taxable period ending on or before the
Closing Date that is required to be filed after the Closing Date with respect to
the SNG Entities, the CIG Entities or their assets, the Contributing Parties
shall cause such Tax Return to be prepared, shall cause to be included in such
Tax Return all items of income, gain, loss, deduction and credit (“Tax Items”)
required to be included therein, shall cause such Tax Return to be filed timely
with the appropriate Taxing Authority, and shall be responsible for the timely
payment (and entitled to any refund) of Taxes due with respect to the period
covered by such Tax Return.

 
(b)  
With respect to any Tax Return covering a taxable period beginning on or before
the Closing Date and ending after the Closing Date that is required to be filed
after the Closing Date with respect to the SNG Entities or the CIG Entities or
their assets, the Contributing Parties shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all Tax Items required
to be included therein, shall furnish a copy of such Tax Return to the
Partnership Parties, shall cause such Tax Return to be filed timely with the
appropriate Taxing Authority, and shall be responsible for the timely payment of
Taxes due with respect to the period covered by such Tax Return allocable to the
period prior to and including the Closing Date.

 
(c)  
Any Tax Return not yet filed for any taxable period that begins before the
Closing Date with respect to the assets or operations of the SNG Entities or the
CIG Entities shall be prepared in accordance with past Tax accounting practices
used with respect to the Tax Returns in question (unless such past practices are
no longer permissible under the Applicable Law), and to the extent any items are
not covered by past practices (or in the event such past practices are no longer
permissible under the applicable tax law), in accordance with reasonable tax
accounting practices selected by the filing party with respect to such Tax
Return under this Agreement with the consent (not to be unreasonably withheld or
delayed) of the non-filing party.

 
7.3  Tax Treatment of Indemnity Payments.
 
All indemnification payments made under this Agreement, including any payment
made under this Article 7, shall be treated as increases or decreases to the
Consideration for Tax purposes.
 
7.4  Transfer Taxes.
 
The Contributing Parties shall file all necessary Tax Returns and other
documentation with respect to all transfer, documentary, sales, use, stamp,
registration and other similar Taxes and fees arising out of or in connection
with the transactions effected pursuant to this Agreement (the “Transfer Taxes”)
and shall be liable for and shall timely pay such Transfer Taxes.  If required
by Applicable Law, the Partnership Parties shall, and shall cause their
Affiliates to, join in the execution of any such Tax Returns and other
documentation.
 
 
 
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7.5  Survival.
 
Anything to the contrary in this Agreement notwithstanding, the representations,
warranties, covenants, agreements, rights and obligations of the Parties with
respect to any Tax matter covered by this Agreement shall survive the Closing
and shall not terminate until ninety (90) days after the expiration of the
applicable statutes of limitations (including all periods of extension and
tolling) applicable to such Tax matter.
 
7.6  Conflict.
 
In the event of a conflict between the provisions of this Article 7 and any
other provisions of this Agreement, the provisions of this Article 7 shall
control.
 
7.7  Tax Characterization of Transaction.
 
The Parties acknowledge and agree that the transactions contemplated by this
Agreement: i) are properly characterized for federal income tax purposes as a
sale of the SNG Subject Interest and the CIG Subject Interest by El Paso to the
Partnership (the parent of the Operating Company which is an entity that is
disregarded from the Partnership for federal tax purposes) in exchange for the
Consideration, (ii) will result in the termination of SNG for federal tax
purposes pursuant to Section 708(b)(1)(A) of the Code, and (iii) is, with
respect to the transfer of SNG, described in and governed by the holding in
Situation 1 of Rev. Rul. 99-6.
 
ARTICLE 8
TERMINATION
 
8.1  Events of Termination.
 
This Agreement may be terminated at any time prior to the Closing Date:
 
(a)  
by mutual written consent of the Parties;

 
(b)  
by either the Partnership Parties, on the one hand, or the Contributing Parties,
on the other hand, in writing after September 30, 2011, if the Closing has not
occurred by such date, provided that as of such date the terminating party is
not in default under this Agreement;

 
(c)  
by either the Partnership Parties, on the one hand, or the Contributing Parties,
on the other hand, in writing without prejudice to other rights and remedies
which the terminating party or its Affiliates may have (provided the terminating
party and its Affiliates are not otherwise in material default or breach of this
Agreement, or have not failed or refused to close without justification
hereunder), if (i) the other party has materially failed to perform its
covenants or agreements contained herein required to be performed on or prior to
the Closing Date, or (ii) there is one or more inaccuracies, violations or
breaches of the representations or warranties of the other party contained
herein and such inaccuracies, violations and breaches would constitute, as
applicable, a Material Adverse Effect or a Partnership Material Adverse Effect,
as applicable; provided, however, that in the case of clause (i) or (ii), the
defaulting party shall have a period of ten (10) days following written notice
from the non-defaulting party to cure any breach of this Agreement, if such
breach is curable;

 
 
 
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(d)  
by either the Partnership Parties, on the one hand, or the Contributing Parties,
on the other hand, in writing, without liability, if there shall be any
non-appealable order, writ, injunction or decree of any Governmental Authority
binding on any of the Parties, which prohibits or restrains them from
consummating the transactions contemplated hereby, provided that the Parties
shall have used their commercially reasonable efforts to have any such order,
writ, injunction or decree lifted and the same shall not have been lifted within
thirty (30) days after entry by any such Governmental Authority;

 
(e)  
by the Contributing Parties if any of the conditions set forth in Section 6.2
have become incapable of fulfillment, and have not been waived in writing by the
Contributing Parties; or

 
(f)  
by the Partnership Parties if any of the conditions set forth in Section 6.1
have become incapable of fulfillment, and have not been waived in writing by the
Partnership Parties;

 
8.2  Effect of Termination.
 
If a party terminates this Agreement as provided in Section 8.1 above, such
termination shall be without liability and none of the provisions of this
Agreement shall remain effective or enforceable, except for those contained in
this Section 8.2 and Article 10.  Notwithstanding and in addition to the
foregoing, in the event that this Agreement is terminated pursuant to
Section 8.1(c) or if any party is otherwise in breach of this Agreement, such
termination shall not relieve any party of any liability for a willful
inaccuracy, violation or breach of any representation or warranty of such party
or a breach of any covenant or agreement of such party under this Agreement or
be deemed a waiver of any available remedy (including specific performance, if
available) for any such breach.
 
ARTICLE 9
INDEMNIFICATION UPON CLOSING
 
9.1  Indemnification of the Partnership Parties.
 
Subject to the limitations set forth in this Agreement, the Contributing
Parties, from and after the Closing Date, shall indemnify, defend and hold the
Partnership Parties, their subsidiaries and their respective securityholders,
directors, officers, and employees (and the officers, directors and employees of
the General Partner but otherwise excluding the Contributing Parties and each of
its Affiliates) (the “Partnership Indemnified Parties”) harmless from and
against any and all Damages suffered or incurred by any Partnership Indemnified
Party as a result of or arising out of (i) any inaccuracy, violation or breach
of a representation or warranty of the Contributing Parties in this Agreement or
any Contributing Parties Ancillary Document (without giving effect to any
supplement or amendment to the Disclosure Schedules or any qualification as to
materiality, Material Adverse Effect, value or other monetary amounts, or
concepts of similar import), (ii) any breach of any agreement or covenant on the
part of the Contributing Parties made under Section 5.1 of this Agreement or
(iii) any breach of any agreement or covenant, other than an agreement or
covenant made under Section 5.1 of this Agreement, on the part of the
Contributing Parties made under this Agreement or any Contributing Parties
Ancillary Document or in connection with the transaction contemplated hereby or
thereby.
 
 
 
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9.2  Indemnification of the Contributing Parties.
 
Subject to the limitations set forth in this Agreement, the Partnership Parties
shall indemnify, defend and hold the Contributing Parties, its Affiliates (other
than any of the Partnership Indemnified Parties) and their respective
securityholders, directors, officers, and employees (the “Contributing
Indemnified Parties”) harmless from and against any and all Damages suffered or
incurred by the Contributing Indemnified Parties as a result of or arising out
of (i) any inaccuracy, violation or breach of a representation or warranty of
the Partnership Parties in this Agreement or any Partnership Ancillary Document
(without giving effect to any supplement or amendment to the Disclosure
Schedules or any qualification as to materiality, Material Adverse Effect, value
or other monetary amounts, or concepts of similar import), or (ii) any breach of
any agreement or covenant on the part of the Partnership Parties made under this
Agreement or any Partnership Ancillary Document or in connection with the
transaction contemplated hereby or thereby.
 
9.3  Tax Indemnification.
 
With the exception of any inaccuracy, violation or breach of the representations
and warranties of the Contributing Parties contained in Section 3.10, nothing in
this Article 9 shall apply to liability with respect to Taxes, the liability
with respect to which shall be as set forth in Article 7.
 
9.4  Survival.
 
All the provisions of this Agreement shall survive the Closing, notwithstanding
any investigation at any time made by or on behalf of any party hereto, provided
that the representations and warranties set forth in Article 3 and Article 4 and
in any certificate delivered in connection herewith with respect to any of those
representations and warranties, and the covenants and agreements made under
Section 5.1, shall terminate and expire at 12:01 a.m., Houston, Texas time, on
February 1, 2013, except (a) the representations and warranties of the
Contributing Parties set forth in Section 3.10 shall survive until 30 days after
the expiration of the applicable statutes of limitations (including all periods
of extension and tolling), (b) the representations and warranties of the
Contributing Parties set forth in Section 3.11 shall terminate and expire on the
third anniversary of the Closing Date, (c) the representations and warranties of
the Contributing Parties set forth in Sections 3.1, 3.2, 3.4 and 3.16 shall
survive forever and (d) the representations and warranties of the Partnership
Parties set forth in Sections 4.1, 4.2, and 4.4 shall survive forever.  After a
representation and warranty has terminated and expired, no indemnification shall
or may be sought pursuant to Section 9.1(i)-(ii) or Section 9.2(i) by any Person
who would have been entitled pursuant to this Article 9 to indemnification on
the basis of that representation and warranty prior to its termination and
expiration, provided that in the case of each representation and warranty that
shall terminate and expire as provided in this Section 9.4, no claim presented
in writing for indemnification pursuant to this Article 9 on the basis of that
representation and warranty prior to its termination and expiration shall be
affected in any way by that termination and expiration.  The indemnification
obligations under this Article 9 or elsewhere in this Agreement shall apply
regardless of whether any suit or action results solely or in part from the
active, passive or concurrent negligence or strict liability of the indemnified
party.  Except as otherwise provided in this Section 9.4, the covenants and
agreements entered into pursuant to this Agreement shall survive the Closing.
 
 
 
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9.5  Demands.
 
Each indemnified party hereunder agrees that promptly upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including receipt by it of notice of any demand, assertion, claim,
action or proceeding, judicial or otherwise, by any third party (such claims for
indemnity involving third party claims being collectively referred to herein as
the “Indemnity Claim”), with respect to any matter as to which it claims to be
entitled to indemnity under the provisions of this Agreement, it will give
prompt notice thereof in writing to the indemnifying party, together with a
detailed statement of such information respecting any of the foregoing as it
shall have and all supporting evidence, including any Damages already incurred
and its detailed estimate of any Damages to be incurred in the future.  Such
notice shall include a formal demand for indemnification under this Agreement.
 
If the indemnified party knowingly failed to notify the indemnifying party
thereof in accordance with the provisions of this Agreement in sufficient time
to permit the indemnifying party or its counsel to defend against an Indemnity
Claim and to make a timely response thereto, the indemnifying party’s indemnity
obligation relating to such Indemnity Claim shall be limited to the extent that
such failure has actually prejudiced or damaged the indemnifying party with
respect to that Indemnity Claim.
 
9.6  Right to Contest and Defend.
 
The indemnifying party shall be entitled, at its cost and expense, to contest
and defend by all appropriate legal proceedings any Indemnity Claim for which it
is called upon to indemnify the indemnified party under the provisions of this
Agreement; provided, that notice of the intention to so contest shall be
delivered by the indemnifying party to the indemnified party within twenty (20)
days from the date of receipt by the indemnifying party of notice by the
indemnified party of the assertion of the Indemnity Claim.  Any such contest may
be conducted in the name and on behalf of the indemnifying party or the
indemnified party as may be appropriate.  Such contest shall be conducted by
reputable counsel employed by the indemnifying party and not reasonably objected
to by the indemnified party, but the indemnified party shall have the right but
not the obligation to participate in such proceedings and to be represented by
counsel of its own choosing at its sole cost and expense.
 
 
 
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The indemnifying party shall have full authority to determine all action to be
taken with respect thereto; provided, however, that the indemnifying party will
not have the authority to subject the indemnified party to any obligation
whatsoever, other than the performance of purely ministerial tasks or
obligations not involving material expense or injunctive relief.  If the
indemnifying party does not elect to contest any such Indemnity Claim, the
indemnifying party shall be bound by the result obtained with respect thereto by
the indemnified party.  If the indemnifying party assumes the defense of an
Indemnity Claim, the indemnified party shall agree to any settlement, compromise
or discharge of an Indemnity Claim that the indemnifying party may recommend and
that by its terms obligates the indemnifying party to pay the full amount of the
liability in connection with such Indemnity Claim, which releases the
indemnified party completely in connection with such Indemnity Claim and which
would not otherwise adversely affect the indemnified party as reasonably
determined by the indemnified party.
 
Notwithstanding the foregoing, the indemnifying party shall not be entitled to
assume the defense of any Indemnity Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Indemnity Claim) if the Indemnity Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party which the indemnified party reasonably determines,
after conferring with its outside counsel, cannot be separated from any related
claim for money damages.  If such equitable relief or other relief portion of
the Indemnity Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to money damages.
 
9.7  Cooperation.
 
If requested by the indemnifying party, the indemnified party agrees to
cooperate with the indemnifying party and its counsel in contesting any
Indemnity Claim that the indemnifying party elects to contest or, if
appropriate, in making any counterclaim against the person asserting the
Indemnity Claim, or any cross-complaint against any person, and the indemnifying
party will reimburse the indemnified party for any expenses incurred by it in so
cooperating.  At no cost or expense to the indemnified party, the indemnifying
party shall cooperate with the indemnified party and its counsel in contesting
any Indemnity Claim.
 
 
 
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9.8  Right to Participate.
 
The indemnified party agrees to afford the indemnifying party and its counsel
the opportunity to be present at, and to participate in, conferences with all
Persons, including Governmental Authorities, asserting any Indemnity Claim
against the indemnified party or conferences with representatives of or counsel
for such Persons.
 
9.9  Payment of Damages.
 
The indemnification required hereunder shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, within ten
(10) days as and when reasonably specific bills are received or loss, liability,
claim, damage or expense is incurred and reasonable evidence thereof is
delivered.  In calculating any amount to be paid by an indemnifying party by
reason of the provisions of this Agreement, the amount shall be reduced by (a)
all insurance proceeds and any indemnification reimbursement proceeds received
from third parties credited to or received by the other party related to the
Damages and (b) any Tax benefit to be realized by the indemnified party related
to the Damages.
 
9.10  Limitations on Indemnification.
 
(a)  
To the extent that the Partnership Indemnified Parties are entitled to
indemnification for Damages pursuant to Section 9.1(i) and Section 9.1(ii), the
Contributing Parties shall be liable only for those Damages that in the
aggregate are in excess of 1.0% of the Consideration (the “Deductible Amount”),
and then only to the extent of any such excess.  In no event shall the
Contributing Parties’ aggregate liability to the Partnership Indemnified Parties
under Section 9.1(i) exceed 15% of the Consideration (the “Ceiling
Amount”).  Notwithstanding the foregoing, (i) the Deductible Amount shall not
apply to inaccuracies, violations or breaches of representations and warranties
contained in Section 3.1, Section 3.2, Section 3.4, Section 3.14 and  Section
3.16 and (ii) the Ceiling Amount shall not apply to inaccuracies, violations or
breaches of representations and warranties contained in Section 3.2,
Section 3.3, Section 3.4, and Section 3.16, provided, the Contributing Parties’
aggregate liability for a breach of Section 3.2, Section 3.3, Section 3.4 and
Section 3.16 shall not exceed the amount of the Consideration.

 
(b)  
To the extent the Contributing Indemnified Parties are entitled to
indemnification for Damages pursuant to Section 9.2(i), the Partnership Parties
shall be liable only for those Damages which exceed, in the aggregate, the
Deductible Amount, and then only to the extent of any such excess.  In no event
shall the Partnership Parties’ aggregate liability to the Contributing
Indemnified Parties under Section 9.2(i) exceed the Ceiling
Amount.  Notwithstanding the foregoing, (i) the Deductible Amount shall not
apply to inaccuracies, violations or breaches of representations and warranties
contained in Section 4.1,  Section 4.2 and Section 4.4 and (ii) the Ceiling
Amount shall not apply to inaccuracies, violations or breaches of
representations and warranties contained in Section 4.2, Section 4.3 and
Section 4.4 provided, the Partnership Parties’ aggregate liability for a breach
of Section 4.2, Section 4.3 and Section 4.4 shall not exceed the amount of the
Consideration.

 
 
 
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(c)  
Additionally, neither the Partnership Parties, on the one hand, nor the
Contributing Parties, on the other hand, will be liable as an indemnitor under
this Agreement for any consequential, incidental, special, indirect or exemplary
damages suffered or incurred by the indemnified party or parties.

 
(d)  
The Parties agree that any indemnification or payment obligation of the
Contributing Parties under Section 9.1(i) (to the extent relating to an
inaccuracy, violation or breach of a representation or warranty in Section
3.1(b), Section 3.4(c) (as applicable), or Sections 3.5 through 3.15, or
Sections 3.18 through 3.20) relating to Damages suffered or incurred by the
Partnership Indemnified Parties, attributable to any SNG Entity, any CIG Entity
or their assets, businesses or operations shall be limited to the Partnership
Parties’ proportionate share of the total (100%) Damages attributable to any
such inaccuracy, violation or breach, which proportionate share shall be equal
to 15% and 28%, respectively.  The Parties agree that the Contributing Parties
are jointly and severally liable for any indemnification or payment obligation
pursuant to this Article 9 of the Contributing Parties relating to Damages
suffered or incurred by the Partnership Indemnified Parties.

 
9.11  Sole Remedy.
 
Should the Closing occur, no party shall have liability under this Agreement,
any of the Ancillary Documents or the transactions contemplated hereby or
thereby except as is provided in Article 7 or this Article 9 (other than claims
or causes of action arising from fraud, and exclusive of claims under applicable
securities laws).
 
ARTICLE 10
MISCELLANEOUS
 
10.1  Expenses.
 
Except as otherwise provided herein and regardless of whether the transactions
contemplated hereby are consummated, each party hereto shall pay its own
expenses incident to this Agreement and all action taken in preparation for
carrying this Agreement into effect.
 
10.2  Notices.
 
Any notice, request, instruction, correspondence or other document to be given
hereunder by either party to the other (herein collectively called “Notice”)
shall be in writing and delivered in person or by courier service requiring
acknowledgment of receipt of delivery or by telecopier, as follows:
 
 
 
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If to the Contributing Parties, addressed to:
 
El Paso Corporation
El Paso Building
1001 Louisiana Street
Houston, Texas  77002
Attention:  General Counsel
Telecopy:  (713) 420-5043
 
 
If to the Partnership Parties, addressed to:
 
El Paso Pipeline Partners, LLC
c/o El Paso Pipeline GP Company, L.L.C.
El Paso Building
1001 Louisiana Street
Houston, Texas  77002
Attention:  General Counsel
Telecopy:  (713) 420-5043
 
with a copy (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street, 44th Floor
Houston, Texas  77002
Attention:  J. Vincent Kendrick
Telecopy:  (713) 236-0822
 
Notice given by personal delivery or courier service shall be effective upon
actual receipt.  Notice given by telecopier shall be confirmed by appropriate
answer back and shall be effective upon actual receipt if received during the
recipient’s normal business hours, or at the beginning of the recipient’s next
Business Day after receipt if not received during the recipient’s normal
business hours.  Any party may change any address to which Notice is to be given
to it by giving Notice as provided above of such change of address.
 
10.3  Governing Law.
 
This Agreement shall be governed and construed in accordance with the
substantive laws of the State of Texas without reference to the Texas conflicts
of law principles.
 
10.4  Public Statements.
 
The Parties shall consult with each other and no party shall issue any public
announcement or statement with respect to this Agreement or the transactions
contemplated hereby without the consent of the other party, unless the party
desiring to make such announcement or statement, after seeking such consent from
the other parties, obtains advice from legal counsel that a public announcement
or statement is required by Applicable Law or stock exchange regulations.
 
 
 
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10.5  Entire Agreement; Amendments and Waivers.
 
(a)  
This Agreement and the Ancillary Documents constitute the entire agreement among
the Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the Parties with
respect to the subject matter hereof.  Each party to this Agreement agrees that
no other party to this Agreement (including its agents and representatives) has
made any representation, warranty, covenant or agreement to or with such party
relating to this Agreement or the transactions contemplated hereby, other than
those expressly set forth herein and in the Ancillary Documents.

 
(b)  
No supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by each party to be bound thereby.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.

 
10.6  Conflicting Provisions.
 
This Agreement and the other Ancillary Documents, read as a whole, set forth the
Parties’ rights, responsibilities and liabilities with respect to the
transactions contemplated by this Agreement.  In the Agreement and the Ancillary
Documents, and as between them, specific provisions prevail over general
provisions.  In the event of a conflict between this Agreement and the Ancillary
Documents, this Agreement shall control.
 
10.7  Binding Effect and Assignment.
 
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective permitted successors and assigns, but neither this Agreement
nor any of the rights, benefits or obligations hereunder shall be assigned or
transferred, by operation of law or otherwise, by any party hereto without the
prior written consent of each other party.  Notwithstanding anything in this
Section 10.7, any Party may (without seeking the consent of the other Parties)
transfer or otherwise alienate any of its rights, title, interest or obligations
under this Agreement in connection with (i) a transfer to an Affiliate which
remains an Affiliate, (ii) the granting of a pledge, mortgage, hypothecation,
lien or other security interest, (iii) the foreclosure (judicial or
non-judicial) or other settlement or rearrangement pursuant to or in connection
with any transfer made pursuant to (ii) above, (iv) a transfer in connection
with the sale of all or substantially all of the assets of such Party, if
applicable, or (v) a merger, consolidation, share exchange or other form of
statutory reorganization with another Person if such Party is the sole surviving
Person.  Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity other than the Parties and their respective permitted
successors and assigns, any rights, benefits or obligations hereunder.
 
 
 
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10.8  Severability.
 
If any provision of the Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted legislation or
by decree of a court of last resort, the Partnership Parties and the
Contributing Parties shall promptly meet and negotiate substitute provisions for
those rendered or declared illegal or unenforceable, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
 
10.9  Interpretation.
 
It is expressly agreed by the Parties that neither this Agreement nor any of the
Ancillary Documents shall be construed against any party, and no consideration
shall be given or presumption made, on the basis of who drafted this Agreement,
any Ancillary Document or any provision hereof or thereof or who supplied the
form of this Agreement or any of the Ancillary Documents.  Each party agrees
that this Agreement has been purposefully drawn and correctly reflects its
understanding of the transactions contemplated by this Agreement and, therefore,
waives the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
 
10.10  Headings and Disclosure Schedules.
 
The headings of the several Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.  The Disclosure Schedules and
the Exhibits referred to herein are attached hereto and incorporated herein by
this reference, and unless the context expressly requires otherwise, the
Disclosure Schedules and such Exhibits are incorporated in the definition of
“Agreement.”
 
10.11  Multiple Counterparts.
 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
 
10.12  Action by Partnership Parties.
 
With respect to any action, notice, consent, approval or waiver that is required
to be taken or given or that may be taken or given by the Partnership Parties
prior to the Closing Date, such action, notice, consent, approval or waiver
shall be taken or given by the Conflicts Committee on behalf of the Partnership
Parties.
 
10.13  Limitation on Recourse.
 
 
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Except as otherwise expressly provided to contrary in the last clause of this
sentence, each of the Parties agree that the payment and performance of any
obligations of a party hereto shall be the obligations of party only and none of
the other Parties shall have any claim against or recourse to (whether by
operation of law or otherwise) any shareholder, member or partner of such Party
in respect of the obligations of such Party; provided that nothing in this
Section shall limit or impair the rights of the Parties to enforce their any
rights against such shareholder, member or partner set forth in this Agreement.
 
*  *  *  *  *
 
[Remainder of Page Intentionally Left Blank]
 

 
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
 
 

             
EL PASO CORPORATION
                     
 
By:
/s/ D. Mark Leland     Name:  D. Mark Leland      Title:   Executive Vice
President                          

         
EL PASO SNG HOLDING COMPANY, L.L.C.
                            By:  /s/ Rosa P. Jackson     Name:  Rosa P. Jackson
    Title: Vice President and Controller          

         
EPPP SNG GP HOLDINGS, L.L.C.
                            By:  /s/ John J. Hopper     Name:  John J. Hopper  
  Title:   Vice President and Treasurer          

         
SOUTHERN NATURAL GAS COMPANY
                            By:  /s/ Rosa P. Jackson     Name:  Rosa P. Jackson
    Title:  Vice President and Controller          

         
EL PASO NORIC INVESTMENTS III, L.L.C.
                            By:  /s/ Rosa P. Jackson     Name:  Rosa P. Jackson
    Title:  Vice President and Controller          

 
 
 

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COLORADO INTERSTATE GAS COMPANY
                            By:  /s/ Rosa P. Jackson     Name:  Rosa P. Jackson
    Title:  Vice President and Controller          

         
EPPP CIG GP HOLDINGS, L.L.C.
                            By:  /s/ John J. Hopper     Name:  John J. Hopper  
  Title:  Vice President and Treasurer          

         
EL PASO PIPELINE PARTNERS, L.P.
           
By: El Paso Pipeline GP Company, L.L.C.,
      its general partner
 
              By:  /s/ John J. Hopper     Name:  John J. Hopper     Title:  
Vice President and Treasurer          

         
EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.
                            By:  /s/ John J. Hopper     Name:  John J. Hopper  
  Title:  Vice President and Treasurer          

 
 

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DISCLOSURE SCHEDULES
 
to
 
CONTRIBUTION AGREEMENT

 
BY AND AMONG

 
EL PASO CORPORATION
 
EL PASO SNG HOLDING COMPANY, L.L.C.
 
EPPP SNG GP HOLDINGS, L.L.C.
 
SOUTHERN NATURAL GAS COMPANY
EL PASO NORIC INVESTMENTS III, L.L.C.
 
COLORADO INTERSTATE GAS COMPANY
 
EPPP CIG GP HOLDINGS, L.L.C.

EL PASO PIPELINE PARTNERS, L.P.
 
AND

EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.

 
dated June 29, 2011

 
These Disclosure Schedules are being provided in connection with the
Contribution Agreement (the “Agreement”) among El Paso Corporation, El Paso SNG
Holding Company, L.L.C., Southern Natural Gas Company, EPPP SNG GP Holdings,
L.L.C., El Paso Noric Investments III, L.L.C., Colorado Interstate Gas Company,
EPPP CIG GP Holdings, L.L.C., El Paso Pipeline Partners, L.P. and El Paso
Pipeline Partners Operating Company, L.L.C., dated as of June 29, 2011 (the
“Execution Date”).  Capitalized terms used in these Disclosure Schedules but not
defined herein have the meanings given to such terms in the Agreement.  Matters
reflected in these Disclosure Schedules are not necessarily limited to matters
required by the Agreement to be reflected herein.  Such additional matters not
required by the Agreement are set forth for informational purposes only and do
not necessarily include other matters of a similar nature. The inclusion of
information in these Disclosure Schedules (1) shall not be construed as an
admission of liability with respect to the matters covered by the information
and (2) shall not affect (directly or indirectly) the interpretation of the
Agreement or the scope of the disclosure obligations thereunder, including being
used as a basis for interpreting the terms “material” or “Material Adverse
Effect” or any similar qualifications in this Agreement.  Any matter or item
disclosed on these Disclosure Schedules shall not be deemed to be material
(whether singularly or in the aggregate) or deemed to give rise to circumstances
which may result in a Material Adverse Effect solely by reason of it being so
disclosed herein.  Nothing in these Disclosure Schedules is intended nor shall
be construed to expand the scope of any representations or warranties contained
in Article 3 or Article 4 of the Agreement.  The disclosures set forth in these
Disclosure Schedules shall be deemed to include and incorporate by reference the
matters that are disclosed in any of the Partnership’s or SNG’s filings with the
SEC since May 9, 2011, including the Financial Statements and SEC Contracts
(collectively, “SEC Documents”).  As a result, it shall mean that any matter
disclosed in an SEC Document need not be disclosed herein in order to constitute
an exception to the representations and warranties set forth in the Agreement.
The disclosure of any fact or item in the Agreement, any Ancillary Documents or
any schedule herein shall, should the existence of such fact or item be relevant
to any other provision of this Agreement, any Ancillary Documents or these
Disclosure Schedules, be deemed to be disclosed with respect to that other
provision or schedule to which it reasonably relates on its face notwithstanding
the omission of any reference or cross-reference thereto.  Where a particular
document is identified or referred to in these Disclosure Schedules, the full
contents of the document are deemed to be disclosed.  The information about
contracts, agreements or documents listed herein is for identification purposes
and is not intended to summarize the terms of such contracts or
agreements.  Reference should be made to the contracts or agreements themselves
for a complete description of their terms.  The Parties will be deemed to be
aware of, and the contents of and all matters referred to in the documents
listed, disclosed or included in these Disclosure Schedules will be deemed to
have been disclosed to the Parties.  Headings and captions in these Disclosure
Schedules are for convenience of reference only and in no way modify, affect, or
are to be considered in construing or interpreting any information provided
herein.
 
 
 

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Table of Contents
 
The representations and warranties set forth in Article 3 or Article 4 of the
Agreement have been made by the applicable Parties solely for the benefit of the
other Parties to the Agreement and:
 
·  
may be intended not as statements of fact, but rather as a way of allocating the
risk to one of the parties if those statements prove to be inaccurate,

 
·  
are qualified by the disclosures set forth in these Disclosure Schedules as
provided for in the Agreement, which disclosures are not reflected in the
Agreement, and

 
·  
may apply standards of materiality in a way that is different from what may be
viewed as material to investors.

 

 
 

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Table of Contents
Schedule 3.4(a)
 
Capitalization; Title to Subject Interest
 

1.  
Pledge Agreement between Southern Natural Gas Company and Union Bank, N.A.,
dated as of May 11, 2009

2.  
EEC Letter Agreement dated December 19, 2005; Southern Natural Gas Company -10%
Class A Units in Elba Express Company L.L.C. – Fourth Amended and Restated
Limited Liability Company Agreement of Elba Express Company, L.L.C., dated May
11, 2009

 
 

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Table of Contents
Schedule 3.8
 
Litigation; Laws and Regulations
 
A.   Litigation/Claims

BOEM Royalty Claim.  Potential reimbursement obligation associated with
take-or-pay contract settlements reached in the late 1980s with Total.
 
Louisiana Crawfish Producers Association West v. Amerada Hess, et al.  Louisiana
State District Court.

Lloyds Litigation.  Alabama state court action. SNG is the plaintiff in this
case.

Other Litigation.  Southern Natural Gas Company (“SNG”) and Colorado Interstate
Gas Company (“CIG”) are involved in other litigation that arise in the ordinary
course of business, none of which would have a Material Adverse Effect as
defined in this Agreement, including without limitation commercial disputes,
various condemnation lawsuits associated with expansion projects, property tax
cases, escheat matters, landowner disputes and collection matters.

B.   FERC Regulatory Proceedings – The following proceedings are pending before
the Federal Energy Regulatory Commission (“FERC”) or on appeal from the FERC:

MOPS Abandonment (CP10-82).  Proposal to abandon non-contiguous facilities that
are jointly owned by Northern Natural, SNG and FGT. Application has been
protested by producers in the area that oppose the abandonment. FERC issued an
order on April 21, 2011, which denied the proposed abandonment.  Rehearing
pending.
 
EC23 Abandonment (CP11-14).  Proposal to abandon facilities that are jointly
owned by SNG and Columbia Transmission Company, and transportation service
through such facilities.

CIG 2011 Rate Case (RP11-2107, RP06-397).  2006 CIG rate case settlement
required new general rate case filing to be effective no later than December 1,
2011.  A pre-filing settlement was filed on May 12, 2011. No adverse comments
were filed by the May 24 Comment Date set by FERC and thus the settlement is
uncontested. The settlement is currently pending before the Commission for
approval.
 
CIG Abandonment of Natural Buttes Compressor Station (AC10-22).  Rehearing of
FERC’s denial of CIG’s proposed Technical Obsolescence accounting method related
to the abandonment and sale of Natural Buttes.  During the pendency of the
request, CIG will apply the Vintage Rate methodology.

SNG and CIG are regulated by the FERC and are involved in other regulatory
proceedings that arise in the ordinary course of business, including without
limitation less material tariff filings, smaller expansion projects, reporting
and accounting requirements, and audits.  The recourse rates and negotiated
rates that SNG and CIG may charge are subject to the jurisdiction of the
FERC.  Under its current settlement agreement in Docket No. RP09-427, SNG is
permitted to file a rate case to be effective no earlier than September 1, 2012
and is required to file a rate case to be effective no later than September 1,
2013.

C.   PHMSA Proceedings

PHMSA Audit and NOPV.  Pipeline and Hazardous Materials Safety Administration
(“PHMSA”) issued a Notice of Probable Violation, Proposed Civil Penalty and
Proposed Compliance Order (“Notice”) to El Paso Pipeline Group. 

PHMSA CAOs – PHMSA has issued Corrective Action Orders (CAOs) directing SNG to
take certain corrective actions with respect to failures on:  1) 24-inch North
Main Loop line near Heflin, AL, 2) 24-inch North Main Line near the Louisville,
MS Compressor Station, and 3) 20-inch line  near Toca, LA.
 
D.   Other Matters

CIG Latigo Storage Fire. December 2010 fire at one of 31 wells at CIG’s Latigo
Storage Field, near Byers, Colorado.

 
 

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Table of Contents
Schedule 3.10
 
Taxes
 

Colorado Interstate Gas Company
 
Federal Income Tax

·  
2007-08, is under audit.

 
Southern Natural Gas Company

Alabama Income Tax

·  
2002-2007, the Department of Revenue sent a notice of proposed assessment for
2002 – 2006, which the Company protested.  The issue relates to the correct
amount of net operating loss carryover flowing out of a consolidated return year
(2001) into nexus consolidated years. In addition, the Company has filed refund
claims for these same years.

Alabama Sales Tax

·  
2006-2009, is under audit.

Georgia Income Tax

·  
2002-2005, the Department of Revenue sent a notice of proposed assessment and
interest.  The Company filed a protest.

Louisiana Income Tax.

·  
1997-2001, the Department of Revenue sent a notice of proposed tax due, interest
and penalties.  The Company filed a protest.

·  
2002-2006, the Department of Revenue sent draft work papers reflecting an
assessment of additional taxes and interest. The Company filed a protest.

Louisiana Franchise Tax

·  
1998-2002, the Department of Revenue sent a notice of proposed tax due, interest
and penalties.  The Company filed a protest.

·  
2003-2007, the Department of Revenue sent draft work papers reflecting an
assessment of tax and interest. The Company filed a protest.

Louisiana Natural Gas Franchise Tax

·  
2005-2007, is under audit.

 
 
 

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Table of Contents

Louisiana Sales Tax

·  
Taxable period undetermined (Jackson Parish), is under audit.

·  
2001-2005 (Jefferson Parish), received preliminary no change work papers.

·  
2001-2005 (LaFourche Parish), received preliminary no change work papers.

·  
Taxable period undetermined (St. Charles Parish), is under audit.

·  
2001-2005 (St. Charles Parish), received preliminary no change work papers.

·  
2001-2005 (Terrebonne Parish), received preliminary no change work papers.

·  
2001-2005 (Vernon Parish), received preliminary no change work papers.

·  
2005 – 2009 (Plaquemine Parish), is under audit.

·  
2005 – 2009 (St. Bernard Parish), is under audit.

 
Mississippi Income Tax

·  
2001-2003, the Department of Revenue sent draft work papers reflecting an
assessment.  The Company filed a protest.

Mississippi Sales Tax

·  
2002-2004, is under audit.

Federal Income Tax

·  
2007-08, is under audit.

 
 

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Table of Contents

Schedule 3.11
 
Environmental Matters
 
A.           Remediation Projects - SNG

General Background.  SNG and CIG are subject to federal, state and local laws
and regulations governing environmental quality and pollution control. These
laws and regulations require us to remove or remedy the effect on the
environment of the disposal or release of specified substances at current and
former operating sites. At March 31, 2011, SNG had no accrual for our
environmental matters, and CIG had approximately $10 million for expected
remediation costs and associated onsite, offsite and groundwater technical
studies and for related environmental legal costs; however, we estimate that our
exposure could be as high as $33 million. The accrual includes $6 million for
environmental contingencies related to properties we previously owned.

CERCLA Restitution Notice (EPA).  SNG was named as potentially responsible party
(PRP) under a previous settlement entered into with the EPA in 1999 relating to
the Port Refinery Superfund Site in Rye Brook, New York.

Sandy Hook Site.  Remediation activities are ongoing along pipeline site
formerly owned by SNG.

Iron Bowl Site.  We received a No Further Action letter from the State of
Alabama.  The monitor wells have been plugged and abandoned.  We are working
with the landowner on deed restrictions requested by the State.
 
CIG PCB Soils. Based on further investigation, it was determined additional soil
remediation will be required at ten stations.  The estimated cost for the work
increased the environmental reserve by $1.2 million bringing the total to $2.2
million.

Table Rock.  Remediation activities are ongoing at the Table Rock Processing
Plant formerly owned by CIG, along with an adjacent site that is owned by CIG.

Bivins Compressor Station.  Remediation activities are ongoing at the Bivins
Compressor Station formerly owned by CIG.

Sanford Site.  Further investigation is being performed to determine the extent
of the free phase hydrocarbons and impacted groundwater in the central portion
of the site owned by CIG.

Mocane Facilities. Remediation by monitoring natural attenuation is ongoing at
the compressor station site owned by CIG, along with a neighboring site sold by
CIG to a third party.
 
 
 
 

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Table of Contents
 
Panhandle Gathering System.  Remediation activities are ongoing with regard to
various sites along the Panhandle Gathering System that was formerly owned by
CIG.

Morton County Station.  A 2010 investigation indicated chromium impacted
groundwater has gone off site to the east.  An investigation is planned to
determine the extent of the off-site impacts at the Morton County Station owned
and operated by CIG.

Rawlins Station.  A soil investigation is underway to identify a continuing
source of groundwater contamination at the Rawlins Station and Processing Plant
owned and operated by CIG.

Fort Morgan Storage Field.  Monitoring and mitigation activities are ongoing at
the Fort Morgan Storage Field owned and operated by CIG.
 
B.           Compliance Matters – SNG and CIG

Notice of Violation, Albany, Georgia Compressor Station.  SNG received a notice
of violation (NoV) from the Georgia Environmental Protection Division (GEPD) in
April 2011 for excessive excursions identified in the second semiannual report
for 2010 resulting from operating T5 temperature and horsepower parameters
outside the permitted range for the Solar Turbine (Unit 3).  A performance test
was conducted in January 2011 to expand the permitted horsepower range for this
emission unit and the test report has been reviewed and approved by the agency. 
Following the test, no additional excursions are anticipated and therefore no
additional enforcement action will be initiated. 

Notice of Violation, Wrens, Georgia Compressor Station.  On April 4, 2011, GEPD
issued a NoV to SNG concerning a failed RICE MACT compliance test conducted on
compressor engine No. 3  in December 2010 at SNG’s Wrens, Georgia compressor
station.  A signed consent order and $1000 payment of the proposed fine was
submitted to GEPD.  No further enforcement action is anticipated.  We have to
update EPD on the steps we are undertaking to prevent a failed MACT test in the
future as noted in our NoV response.  The update is due in six months from the
April 21, 2011 NoV response. 
 
 
Notice of Violation, SNG Bear Creek Storage Facility, Louisiana. On June 1,
2011, SNG received a NoV from the Louisiana Department of Environmental Quality
(LDEQ) concerning SNG’s Bear Creek Storage Facility.  In the NOV, LDEQ alleges
that the permitted annual throughput and the volatile organic compound emission
limit were exceeded for one of six condensate tanks at the facility. 

Fort Morgan Storage Field Administrative Order on Consent. The Colorado Oil and
Gas Conservation Commission (COGCC) issued two Notices of Alleged Violations
(NOAV) associated with a contractor’s improper disposal of wastes generated at
Storage wells #3 and #6.  As of May 2011, the COGCC has not pursued enforcement
subsequent to CIG’s response.  This matter is not considered a significant
enforcement risk.
 
Air Compliance Capital Expenditures. We expect to make capital expenditures for
environmental matters of approximately $9 million in the aggregate for 2011
through 2015, primarily, to be expended from 2010 to 2013 associated with the
impact of the EPA rule related to emissions of hazardous air pollutants from
reciprocating internal combustion engines. Our engines that are subject to the
regulations have to be in compliance by October 2013.
 
 
 

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Table of Contents
 
Schedule 3.12
 
Licenses; Permits
 
The following projects are in various stages of permitting:

SNG

Southeast Supply Header (SESH) (CP09-40, et al.) – Joint certificate application
of SESH and SNG pipeline expansion – Phase II – project.  The Phase II Expansion
Project involves the addition of new compressor engines at two existing
compressor stations which will increase the total capacity of the jointly-owned
SESH pipeline from 1,140,000 MMBtu/d to 1,500,000 MMBtu/d.  The expansion was
placed in service June 1, 2011 and will increase SNG’s share of the capacity to
500,000 MMcf/d.

South System III Expansion (CP09-36) – Expansion of SNG pipeline system to serve
Southern Company’s plant McDonough that is being constructed in Atlanta,
Georgia. The project is to be built in three phases for a total Southern Company
contract quantity equal to 375 MMcf/d. The first phase of the project has been
placed into service. Phase II was placed in service on June 1, 2011.

Pipeline Integrity (Coupled Pipe) (CP10-36) – Replacement and/or abandonment of
certain segments of SNG’s North Main and North Main Loop lines west of its
Louisville, Mississippi Compressor Station. FERC approval was received on April
7, 2010.

 
CIG
 
Spruce Hill Air Blending Project.  CIG filed its Section 7(c) application for
its Spruce Hill Air Blending Project.  Located in Douglas County, Colorado, the
Project consists of a new electric air compressor station to compress up to 50
MDth/day and the related new Spruce Hill Gas Quality Control Surcharge.  FERC
issued the certificate order on March 17, 2011.  CIG filed its requisite
implementation plans, with the FERC issuing its Notice to Proceed with
construction on April 26, 2011.  Project construction commenced on May 12, 2011,
and CIG anticipates in In-Service Date of November 1, 2011.

Desert Springs Compressor Station Project.  CIG filed its Prior Notice Request
to abandon, by removal, the Desert Springs Compressor Station located in
Sweetwater County, Wyoming.  Receiving no protests to this Project, CIG’s
authorization to abandon the facility will be effective on June 21, 2011.

Lakin Compressor Station Project.  On April 11, 2011, CIG filed a Section 7(b)
application with the FERC to abandon six compressor units at its Lakin
Compressor Station in Kearny County, Kansas.  FERC issued its order authorizing
the abandonment on May 26, 2011.
 

 
 

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Table of Contents
 
Schedule 3.13
 
Contracts
 
1.  
SNG and Shoreline Southeast LLC, Purchase and Sale Agreement for the sale of
certain pipeline ownership interests (South Diamond – Lake Washington Line dated
March 29, 2011.

 
2.  
SNG and Southern Company Services, First Amendment to the Amended and Restated
Precedent Agreement, dated April 1, 2011.

 
3.  
SNG and Leaf River Energy Center, LLC, Firm Storage Service Agreement dated
March 18, 2011.

 

 

 
 

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Table of Contents
 
Schedule 3.14
 
Transaction with Affiliates
 
SNG
 
1.  
Management Services Agreement by and between Southern Natural Gas Company and
Elba Express Company, LLC dated November 1, 2007

 
2.  
Joint Ownership Agreement between SNG and EEC dated May 11, 2009 with Joinder
Instruments from Carolina Gas Transmissions Corporation and Magnolia Enterprise
Holdings, Inc

 
3.  
Pipeline Balancing Agreement dated March 27, 2009, between Southern Natural Gas
Company and Elba Express Company, LLC

 
4.  
Pipeline Balancing Agreement dated September 1, 2001 between Southern Natural
Gas Company and SLNG.

 
5.  
Management Services Agreement by and between Southern Natural Gas Company and
Southern LNG, Inc. dated November 1, 2007

 
6.  
Master Services Agreement dated November 1, 2007

 
7.  
Construction, Installation, Operation, and Maintenance Agreement for the
Interconnections and Tie-In of Elba Express Company, LLC and Southern Natural
Gas Company dated April 24, 2009

 
8.  
Management Services Agreement dated November 1, 2007, by and between Southern
Natural Gas Company and Bear Creek Storage Company

9.  
Management Services Agreement dated November 1, 2007, by and between Southern
Natural Gas Company and Southern Gulf LNG Company, LLC

10.  
Service Agreement, dated as of July 25, 2009, by and between Southern Natural
Gas Company and Bear Creek Storage Company.

11.  
Bear Creek Storage Company, Operating Agreement dated February 10, 2010, by and
between Tennessee Gas Pipeline Company and Southern Natural Gas Company showing
Southern Natural Gas Company as Operator.

 
12.  
Interconnection Agreement dated September 8, 2010 relating to a new
interconnection between SNG and TGP at Bienville, LA (executed November 2010).

 
CIG
 
1.  
Interconnect Agreement (Ruby 26, for the Emerald Springs Meter Station),
Operational Balancing Agreement (No. 54002000), and Data Sharing Agreement (Ruby
28), all effective June 30, 2010, by and between Colorado Interstate Gas Company
and Ruby Pipeline, L.L.C.  (No.46007)

2.  
Consent and Agreement, dated July 7, 2010, between and among Colorado Interstate
Gas Company, Ruby Pipeline, L.L.C., and Deutsche Bank Trust Company
Americas.  (No.46007-1)

 
 
 

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Table of Contents

EXHIBIT A
 
Form of Contribution, Conveyance and Assumption Agreement
 
 (See attached.)
 
 

 
 

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Table of Contents
 
EXHIBIT A
 
 
 
 
 
 
 
 
CONTRIBUTION, CONVEYANCE
 
 
AND ASSUMPTION AGREEMENT
 
 
BY AND AMONG
 
 
EL PASO PIPELINE PARTNERS, L.P.
 
 
EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.
 
 
EL PASO SNG HOLDING COMPANY, L.L.C.
 
 
EPPP SNG GP HOLDINGS, L.L.C.
 
SOUTHERN NATURAL GAS COMPANY
 
EL PASO NORIC INVESTMENTS III, L.L.C.
 
 
COLORADO INTERSTATE GAS COMPANY
 
 
EPPP CIG GP HOLDINGS, L.L.C.
 
 
EL PASO CNG COMPANY, L.L.C.
 
 
AND
 
 
EL PASO CORPORATION
 
 
 
June 29, 2011

 
 

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Table of Contents
 
 
TABLE OF CONTENTS
 

 RECITALS        
ARTICLE 1
DEFINITIONS
       
ARTICLE 2
TRANSFER, CONTRIBUTIONS AND ACKNOWLEDGMENTS
        Section  2.1
Transfer by EP SNG of the SNG Subject Interest to El Paso
3 Section   2.2
Transfer by EP Noric of the CIG Subject Interest to EP CNG
4 Section    2.3
Transfer by EP CNG of the CIG Subject Interest to El Paso
 4 Section  2.4
Contribution by the Operating Company of the Subject Interest to EPPP CIG
4 Section  2.5
Payment of the Consideration
4        
ARTICLE 3
FURTHER ASSURANCES
        Section   3.1
Further Assurances 
4 Section   3.2 Other Assurances  4    
 
 
ARTICLE 4
CLOSING TIME
       
ARTICLE 5
MISCELLANEOUS
        Section   5.1
Order of Completion of Transactions
5 Section   5.2
Headings; References; Interpretation
5 Section   5.3
Successors and Assigns
5 Section   5.4
No Third Party Rights
5 Section   5.5
Counterparts
6 Section   5.6
Governing Law
6 Section   5.7 Severability  6 Section   5.8
Amendment or Modification
6 Section   5.9
Integration
6 Section   5.10 Deed; Bill of Sale; Assignment 6

 
 
 
 
 

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Table of Contents
 
 
CONTRIBUTION, CONVEYANCE
 
AND ASSUMPTION AGREEMENT
 
    This CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT (this “Agreement”),
dated as of June 29, 2011, is entered into by and among El Paso Pipeline
Partners, L.P., a Delaware limited partnership (the “Partnership”), El Paso
Pipeline Partners Operating Company, L.L.C., a Delaware limited liability
company and direct wholly-owned subsidiary of the Partnership (the “Operating
Company”),  El Paso SNG Holding Company, L.L.C., a Delaware limited liability
company and direct wholly-owned subsidiary of El Paso Corporation (“EP SNG”),
EPPP SNG GP Holdings, L.L.C., a Delaware limited liability company and an
indirect wholly-owned subsidiary of the Partnership (“EPPP SNG”), Southern
Natural Gas Company, a Delaware general partnership (“SNG”), El Paso Noric
Investments III, L.L.C., a Delaware limited liability company and indirect
wholly-owned subsidiary of El Paso Corporation (“EP Noric”), Colorado Interstate
Gas Company, a Delaware general partnership, (“CIG”), EPPP CIG GP Holdings,
L.L.C., a Delaware limited liability company and an indirect wholly-owned
subsidiary of the Partnership (“EPPP CIG”), El Paso CNG Company, L.L.C.,
a Delaware limited liability company and direct wholly-owned subsidiary of
El Paso Corporation (“EP CNG”) and El Paso Corporation, a Delaware corporation
(“El Paso”).  The parties to this Agreement are collectively referred to herein
as the “Parties.”  El Paso, EP Noric, EP CNG and EP SNG are referred to herein
collectively as the “Contributing Parties.” Capitalized terms used herein shall
have the meanings assigned to such terms in Section 1.1.
 
 
RECITALS
 
    WHEREAS, the Contributing Parties desire to transfer to the Partnership a
15% general partner interest in SNG (the “SNG Subject Interest”) and a 28%
general partner interest in CIG (the “CIG Subject Interest” and, together with
the SNG Subject Interest, the “Subject Interest”) pursuant to the terms of the
Contribution Agreement (as defined below) and this Agreement; and
 
    WHEREAS, EP SNG owns a 15% general partner interest in SNG and EPPP SNG owns
an 85% general partner interest in SNG; and
 
    WHEREAS,  EP Noric owns a 42% general partner interest in CIG and EPPP CIG
owns a 58% general partner interest in CIG; and
 
    WHEREAS, after giving effect to the completion of the contribution of the
Subject Interest referred to above pursuant to the terms of this Agreement and
the Contribution Agreement (as defined below), EPPP SNG will own an 85% general
partner interest in SNG, EP Noric will own a 14% general partner interest in CIG
and EPPP CIG will own a 15% general partner interest in SNG and an 86% general
partner interest in CIG; and
 
    WHEREAS, in order to accomplish the objectives and purposes in the preceding
recitals, and to effect the intent of the Parties in connection with the
consummation of the transactions contemplated hereby, the Partnership, the
Operating Company, EP SNG, EPPP SNG, SNG, EP Noric, EPPP CIG, CIG and El Paso
entered into that certain Contribution Agreement (the “Contribution Agreement”),
dated June 29, 2011, pursuant to which the Partnership agreed to acquire the
Subject Interest from the Contributing Parties for aggregate consideration of
$745 million (as may be adjusted pursuant to the Contribution Agreement) (the
“Consideration”).
 
 
 
 

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Table of Contents
 
    WHEREAS, concurrently with the consummation of the transactions contemplated
hereby (the “Closing”), each of the following shall occur:
 
1. EP SNG will transfer the SNG Subject Interest to El Paso.
 
2. EP Noric will transfer the CIG Subject Interest to EP CNG.
 
3. EP CNG will transfer the CIG Subject Interest to El Paso.
 
4. El Paso will transfer the Subject Interest to the Operating Company.
 
5. The Operating Company will contribute the Subject Interest to EPPP CIG.
 
6. The general partnership agreements of CIG and SNG will be amended to the
extent necessary to reflect the matters and transactions mentioned in this
Agreement.
 
    NOW, THEREFORE, in consideration of their mutual undertakings and agreements
hereunder, the Parties undertake and agree as follows:
 
ARTICLE 1
DEFINITIONS
 
    Section 1.1  The following capitalized terms shall have the meanings given
below.
 
(a) “Agreement” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(b) “CIG” has the meaning assigned to such term in the first paragraph of this
Agreement.
 
(c) “CIG Subject Interest” has the meaning assigned to such term in the
recitals.
 
(d) “Consideration” has the meaning assigned to such term in the recitals.
 
(e) “Closing” has the meaning assigned to such term in the recitals.
 
(f) “Closing Date” has the meaning assigned to such term in the Contribution
Agreement.
 
(g) “Closing Time” shall mean 9:00 a.m. Houston, Texas time on the Closing Date.
 
(h)  “Contributing Parties” has the meaning assigned to such term in the first
paragraph of this Agreement.
 
 
 
2
EXHIBIT A

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Table of Contents
 
(i) “Contribution Agreement” has the meaning assigned to such term in the
recitals.
 
(j)  “El Paso” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(k)  “EP CNG” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(l) “EP Noric” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(m) “EP SNG” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(n) “EPPP CIG” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(o)  “EPPP SNG” has the meaning assigned to such term in the first paragraph of
this Agreement.  
 
(p) “Operating Company” has the meaning assigned to such term in the first
paragraph of this Agreement.
 
(q) “Parties” has the meaning assigned to such term in the first paragraph of
this Agreement.
 
(r) “Partnership” has the meaning assigned to such term in the first paragraph
of this Agreement.
 
(s) “SNG” has the meaning assigned to such term in the first paragraph of this
Agreement.
 
(t) “SNG Subject Interest” has the meaning assigned to such term in the
recitals.
 
(u) “Subject Interest” has the meaning assigned to such term in the recitals.
 
ARTICLE 2
TRANSFER, CONTRIBUTIONS AND ACKNOWLEDGMENTS
 
   Section 2.1 Transfer by EP SNG of the SNG Subject Interest to El Paso. EP SNG
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and
delivers to El Paso, its successors and assigns, for its and their own use
forever, all right, title and interest in and to the SNG Subject Interest, and
El Paso hereby accepts such SNG Subject Interest from EP SNG.
 
 
 
3
EXHIBIT A

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Table of Contents
 
   Section 2.2 Transfer by EP Noric of the CIG Subject Interest to EP CNG.  EP
Noric hereby grants, contributes, bargains, conveys, assigns, transfers, sets
over and delivers to EP CNG, its successors and assigns, for its and their own
use forever, all right, title and interest in and to the CIG Subject Interest,
and EP CNG hereby accepts such CIG Subject Interest from EP Noric.
 
   Section 2.3 Transfer by EP CNG of the CIG Subject Interest to El Paso.  EP
CNG hereby grants, contributes, bargains, conveys, assigns, transfers, sets over
and delivers to El Paso, its successors and assigns, for its and their own use
forever, all right, title and interest in and to the CIG Subject Interest, and
El Paso hereby accepts such CIG Subject Interest from EP CNG.
 
   Section 2.4 Transfer by El Paso of the Subject Interest to the Operating
Company.  El Paso hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to the Operating Company, its successors and
assigns, for its and their own use forever, all right, title and interest in and
to the Subject Interest, and the Operating Company hereby accepts such Subject
Interest from El Paso.
 
   Section 2.5 Contribution by the Operating Company of the Subject Interest to
EPPP CIG. The Operating Company hereby grants, contributes, bargains, conveys,
assigns, transfers, sets over and delivers to EPPP CIG, its successors and
assigns, for its and their own use forever, all right, title and interest in and
to the Subject Interest, and EPPP CIG hereby accepts such Subject Interest from
the Operating Company.
 
   Section 2.6 Payment of the Consideration. The Parties acknowledge that the
Operating Company has paid the Consideration to El Paso. El Paso hereby
acknowledges receipt of the Consideration.
 
ARTICLE 3
FURTHER ASSURANCES
 
    Section 3.1 Further Assurances.  From time to time after the Closing Time,
and without any further consideration, the Parties agree to execute, acknowledge
and deliver all such additional deeds, assignments, bills of sale, conveyances,
instruments, notices, releases, acquittances and other documents, and will do
all such other acts and things, all in accordance with applicable law, as may be
necessary or appropriate (a) to more fully assure that the applicable Parties
own all of the properties, rights, titles, interests, estates, remedies, powers
and privileges granted by this Agreement, or which are intended to be so
granted, or (b) to more fully and effectively vest in the applicable Parties and
their respective successors and assigns beneficial and record title to the
interests contributed and assigned by this Agreement or intended so to be and to
more fully and effectively carry out the purposes and intent of this Agreement.
 
    Section 3.2 Other Assurances.  From time to time after the Closing Time, and
without any further consideration, each of the Parties shall execute,
acknowledge and deliver all such additional instruments, notices and other
documents, and will do all such other acts and things, all in accordance with
applicable law, as may be necessary or appropriate to more fully and effectively
carry out the purposes and intent of this Agreement.  It is the express intent
of the Parties that the Partnership or its subsidiaries own the Subject Interest
that is identified in this Agreement.
 
 
 
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ARTICLE 4
CLOSING TIME
 
Notwithstanding anything contained in this Agreement to the contrary, none of
the provisions of Article 2 or Article 3 of this Agreement shall be operative or
have any effect until the Closing Time, at which time all the provisions of
Article 2 and Article 3 of this Agreement shall be effective and operative in
accordance with Article 5, without further action by any Party hereto.
 
ARTICLE 5
MISCELLANEOUS
 
    Section 5.1 Order of Completion of Transactions.  The transactions provided
for in Article 2 and Article 3 of this Agreement shall be completed immediately
following the Closing Time in the following order: first, the transactions
provided for in Article 2 shall be completed in the order set forth therein; and
second, following the completion of the transactions as provided in Article 2,
the transactions, if they occur, provided for in Article 3 shall be completed.
 
    Section 5.2 Headings; References; Interpretation.  All Article and Section
headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any of the provisions
hereof.  The words “hereof,” “herein” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.  All references herein to
Articles and Sections shall, unless the context requires a different
construction, be deemed to be references to the Articles and Sections of this
Agreement.  All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders, and the
singular shall include the plural and vice versa.  The use herein of the word
“including” following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation”,
“but not limited to”, or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter.
 
    Section 5.3 Successors and Assigns.  This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
assigns.
 
    Section 5.4 No Third Party Rights.  The provisions of this Agreement are
intended to bind the Parties as to each other and are not intended to and do not
create rights in any other person or confer upon any other person any benefits,
rights or remedies and no person is or is intended to be a third party
beneficiary of any of the provisions of this Agreement.
 
 
 
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    Section 5.5 Counterparts.  This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the Parties hereto.
 
    Section 5.6 Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
 
    Section 5.7 Severability.  If any of the provisions of this Agreement are
held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provision or provisions held to be invalid and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the Parties as expressed in this Agreement at the time of
execution of this Agreement.
 
    Section 5.8 Amendment or Modification.  This Agreement may be amended or
modified from time to time only by the written agreement of all the Parties.
Each such instrument shall be reduced to writing and shall be designated on its
face as an Amendment to this Agreement.
 
    Section 5.9 Integration.  This Agreement and the instruments referenced
herein supersede all previous understandings or agreements among the Parties,
whether oral or written, with respect to their subject matter. This document and
such instruments contain the entire understanding of the Parties with respect to
the subject matter hereof and thereof. No understanding, representation, promise
or agreement, whether oral or written, is intended to be or shall be included in
or form part of this Agreement unless it is contained in a written amendment
hereto executed by the Parties hereto after the date of this Agreement.
 
    Section 5.10 Deed; Bill of Sale; Assignment.  To the extent required and
permitted by applicable law, this Agreement shall also constitute a “deed,”
“bill of sale” or “assignment” of the assets and interests referenced herein.
 
[Signature pages follow]
 
 
 
 
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties hereto
as of the date first above written.
 
 
 

  EL PASO PIPELINE PARTNERS, L.P.           By:
EL PASO PIPELINE GP COMPANY, L.L.C.,
its general partner
                     
 
By:
           Name:          Title:     

 
 

 
EL PASO PIPELINE PARTNERS OPERATING COMPANY, L.L.C.
                     
 
By:
           Name:          Title:     

 
 

 
EL PASO SNG HOLDING COMPANY, L.L.C.
                     
 
By:
           Name:          Title:     

 
 

 
EPPP SNG GP HOLDINGS, L.L.C.
                     
 
By:
           Name:          Title:     

 
 
 
 
[Signature page to Contribution, Conveyance and Assumption Agreement]
 
 
 

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SOUTHERN NATURAL GAS COMPANY
                     
 
By:
           Name:          Title:     

 
 

 
EL PASO NORIC INVESTMENTS III, L.L.C.
                     
 
By:
           Name:          Title:     

 
 

 
COLORADO INTERSTATE GAS COMPANY
                     
 
By:
           Name:          Title:     

 
 

 
EPPP CIG GP HOLDINGS, L.L.C.
                     
 
By:
         Name:          Title:     

 
 

 
EL PASO CORPORATION
                     
 
By:
           Name:          Title:     

 
 

 
EL PASO CNG COMPANY, L.L.C.
                     
 
By:
           Name:          Title:     

 
[Signature page to Contribution, Conveyance and Assumption Agreement]
 
 
 

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EXHIBIT B
 
Form of Certificate of Non-Foreign Status
 

Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of
a U.S. real property interest must withhold tax if the transferor (seller) is a
foreign person.  To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by El Paso
Corporation (“El Paso”), the undersigned hereby certifies as follows:
 
1.  
El Paso is not a nonresident alien, foreign corporation, foreign partnership,
foreign trust, or foreign estate for purposes of U.S. income taxation (as those
terms are defined in the Internal Revenue Code of 1986, as amended and the
Treasury regulations thereunder);

 
2.  
El Paso is not a disregarded entity as defined in § 1.1445-2(b)(2)(iii);

 
3.  
El Paso’s taxpayer identifying number is 76-0568816; and

 
4.  
El Paso’s office address is 1001 Louisiana Street, Houston, Texas 77002.

 
El Paso understands that this certification may be disclosed to the Internal
Revenue Service by the buyer and that any false statement contained herein could
be punished by fine, imprisonment, or both.
 
Under penalty of perjury, I declare that I have examined this certification and,
to the best of my knowledge and belief, it is true, correct, and complete, and I
further declare I have authority to sign this document on behalf of El Paso.
 

             
EL PASO CORPORATION
                     
 
By:
      Name:        Title:                        

 

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