exv10wa



 





Exhibit 10.A




PURCHASE AND SALE AGREEMENT




among




EL PASO CORPORATION




and




EL PASO CNG COMPANY, L.L.C.,




as Sellers,




and




TRANSCANADA AMERICAN INVESTMENTS LTD.,




as Buyer,




dated December 22, 2006




 









 





TABLE OF CONTENTS




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






 









 






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






 









 






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







 









 








PURCHASE AND SALE AGREEMENT




     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of December 22, 2006, is
among (i) El Paso CNG Company, L.L.C., a Delaware limited liability company (“EP CNG”),
(ii) El Paso Corporation, a Delaware corporation (“EPC;” EP CNG and EPC are each referred
to herein individually as a “Seller” and collectively as the “Sellers”), and (iii)
TransCanada American Investments Ltd., a Delaware corporation (“Buyer”). Sellers and Buyer
are referred to herein sometimes individually as a “Party” and collectively as the
“Parties.”



Recitals:




     A. American Natural Resources Company, a Delaware corporation (the “Pipeline
Company”), is a wholly owned subsidiary of EP CNG and ANR Storage Company, a Michigan
corporation (the “Storage Company”), is a wholly owned subsidiary of EPC. The Pipeline
Company and the Storage Company are referred to herein as the “Companies.”



     B. Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers, all of the
issued and outstanding capital stock of the Companies, upon the terms and subject to the conditions
in this Agreement.



     NOW, THEREFORE, Sellers and Buyer agree as follows:



Article 1

DEFINITIONS




     1.1 Certain Defined Terms. As used in this Agreement, each of the following terms has the
meaning given to it below:



     “Acquired Companies” means the Companies, the Company Subsidiaries (other than the Excluded
Subsidiaries), and the Related Companies.



     “Acquired Company” means any of the Acquired Companies.



     “Acquired Company Insurance Policies” means those material policies of insurance which either
Seller or any of their Affiliates (other than the Acquired Companies) maintains with respect to the
assets and operations of the Acquired Companies, all of which are listed on Schedule
4.16(i).



     “Additional Governmental Approval” means the approval described in Item 2 of Schedule
4.6.



     “Adjusted Working Capital” is defined in Section 2.5(f).



     “Adjustment Amount” is defined in Section 2.5(a).



     “Adjustment Statement” is defined in Section 2.5(b).





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     “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with,
such Person. For the purposes of this definition, “control” means, when used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise, and the terms “controlling” and “controlled” have correlative meanings.



     “Agreement” is defined in the Preamble.



     “ANR Pipeline” means ANR Pipeline Company, a Delaware corporation and a wholly owned indirect
subsidiary of the Pipeline Company.



     “Applicable Environmental Laws” means any and all Applicable Laws (in effect as of the date of
this Agreement) pertaining to protection of human health and the environment in any and all
jurisdictions in which any Acquired Company conducts or has conducted operations.



     “Applicable Law” means any statute, law, rule, or regulation, or any judgment, order,
ordinance, or other documentary articulation of law, writ, injunction, or decree of any
Governmental Entity to which a specified Person or its property is subject.



     “Assumed Obligations” is defined in Section 2.6.



     “Balance Sheet Date” means September 30, 2006.



     “Base Purchase Price” means a purchase price of $2,881,000,000.



     “Bonus Payment” is defined in Section 7.3(h).



     “Buyer” is defined in the Preamble.



     “Buyer’s FSA” is defined in Section 7.3(l).



     “Buyer Guarantors” means TransCanada Corporation and TransCanada PipeLine USA Ltd.



     “Buyer Guaranty” means a guaranty agreement in the form of Exhibit 7.13.



     “Buyer Indemnitees” means, collectively, Buyer and its Affiliates (including each of the
Acquired Companies) and its and their officers, directors, employees, agents, and representatives.



     “Buyer Protected Information” is defined in Section 7.1(e)(i).



     “Cash Balance Plan” is defined in Section 7.3(k).



     “Cash Pool Program Amount” means the aggregate amount owed to the Acquired Companies by EPC
and its Affiliates (other than the Acquired Companies) under the El Paso Cash Pool Program as of
the Effective Date, which shall be paid to the Companies under Section 6.3(c) prior to
Closing.





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     “Closing” means the closing of the transactions contemplated hereby.



     “Closing Date” means the date on which the Closing occurs.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Combined Financial Statements” is defined in Section 4.7(a).



     “commercially reasonable efforts” means efforts (i) in accordance with reasonable commercial
practice and the terms, limitations, and restrictions of all applicable contracts and other
agreements and (ii) without the incurrence of unreasonable expense.



     “Companies” is defined in the recitals.



     “Company Employee Plans” means those Employee Plans that the Acquired Companies contribute to
or participate in as of the date of this Agreement.



     “Company Subsidiaries” means the direct or indirect wholly owned subsidiaries of the Companies
listed in Schedule 1.1(a).



     “Confidentiality Agreement” means that certain confidentiality letter agreement, dated
September 25, 2006, between TransCanada PipeLines Limited and EPC.



     “Consent Amendment” is defined in Section 6.3(a).



     “Consent Documents” is defined in Section 6.3(a).



     “Consent Solicitation” is defined in Section 6.3(a).



     “Data Site” means the online presentation of materials, as the same exists as of the close of
business on the day preceding the date of this Agreement, prepared by Sellers to assist Buyer in
its investigation of the Acquired Companies.



     “Debt
Documents” means the following: (i) the
87/8% Indenture, (ii) the Indenture, dated as of
February 15, 1994, between ANR Pipeline and Comerica Bank, as Trustee, as supplemented by the First
Supplemental Indenture, dated as of February 15, 1994, relating to $125 million principal amount of
73/8% Debentures due February 15, 2024, and as further supplemented by the Second Supplemental
Indenture, dated June 1, 1995, relating to $75 million principal amount of 7% Debentures due June
1, 2025; (iii) the Indenture, dated as of May 13, 1991, between ANR Pipeline and Manufacturers
Bank, N.A., as Trustee, as supplemented by the First Supplemental Indenture, dated as of November
4, 1991, relating to $300 million principal amount of 95/8% Debentures due November 1, 2021; and (iv)
the Loan Agreement, dated as of March 6, 2000, between Coastal Natural Gas Company, as Borrower,
and CMS Field Services, Inc., as Lender, relating to a $14 million loan, evidenced by a promissory
note, dated March 6, 2000 that matures on March 5, 2010 and bears interest at 13.75% per annum,
payable in 39 quarterly installments of $82,638.88 plus accrued interest and a final installment of
$10,777,083.68 plus accrued interest on March 5, 2010, as amended by that certain Consent,
Assignment and Assumption Agreement, dated as of December 12, 2002, among El Paso CNG







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Company (f/k/a Coastal and c/k/a EP CNG), ANR Pipeline and The Variable Annuity Life Insurance
Company (as successor in interest to CMS) whereby ANR Pipeline assumed all rights and obligations
of EP CNG under the loan agreement and note, and by that certain Amendment to Loan Agreement, dated
as of December 12, 2002 between ANR Pipeline and The Variable Annuity Life Insurance Company and
the New Note, dated December 12, 2002, issued in substitution and exchange for the prior note.




     “Deductible Amount” means an amount equal to 1.0% of the Total Purchase Price.



     “Direct Claim” means any claim by an Indemnitee on account of a Loss which does not result
from a Third Party Claim.



     “Disclosure Letter” means the letter, of even date herewith, of Sellers or Buyer to which such
party’s Schedules are attached, as the same may be amended or supplemented in accordance with
Section 7.5.



     “Dispute Deadline Date” is defined in Section 2.5(c).



     “El Paso Marks” means the name “El Paso” and other similar trademarks, service marks, and
trade names owned by Sellers or their Affiliates (other than the Acquired Companies).



     “El Paso Cash Pool Program” means the cash management programs conducted under (i) the Cash
Management Agreement, dated as of November 24, 2003, between EPC and ANR Pipeline or (ii) the Cash
Management Agreement, dated as of October 5, 2004, between EPC and the Storage Company.



     “87/8% Indenture” means the Indenture, dated as of March 5, 2003, between ANR Pipeline and The
Bank of New York, as trustee.



     “87/8% Notes” means the $300 million aggregate principal amount of senior notes due 2010 issued
by ANR Pipeline under the 87/8% Indenture.



     “Effective Date” means the close of business on the last day of the month preceding the
Closing Date.



     “Effective Date Pro Forma Financial Statements” is defined in Section 2.5(b).



     “Employee Plan” means any stock purchase, stock option, pension, profit sharing, bonus,
deferred compensation, incentive compensation, severance or termination pay, hospitalization or
other medical or dental, life or other insurance, supplemental unemployment benefits plan or
agreement or policy or other arrangement providing employment-related compensation or benefits,
including “employee benefit plans” as defined in Section 3(3) of ERISA.



     “Employees” is defined in Section 7.3(a).



     “Encumbrances” means liens, charges, pledges, options, rights of first refusal, reversionary
rights, mortgages, deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition, or otherwise), easements, encroachments, and other






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encumbrances of every type and description, whether imposed by law, agreement, understanding,
or otherwise.




     “EP CNG” is defined in the preamble.



     “EPC” is defined in the preamble.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



     “ERISA Plans” means, collectively, any of the Company Employee Plans which is an “employee
benefit pension plan” as defined in Section 3(2) of ERISA.



     “Estimated Adjustment Amount” means Sellers’ good faith and reasonable estimate of the
Adjustment Amount as of the date on which Sellers deliver to Buyer the written statement
contemplated by Section 2.4.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Excluded Assets” is defined in Section 7.9.



     “Excluded Cash” is defined in Section 6.3(c).



     “Excluded Information” is defined in Section 7.1(a).



     “Excluded Liabilities” means any and all obligations or liabilities arising from or relating
to the matters described on Schedule 12.1(a).



     “Excluded Subsidiaries” means each of ANR Venture Management Company, ANR Capital Corporation,
ANR Funding Company L.L.C., ANR Finance Company, L.L.C., El Paso Coal Holding, L.L.C., and ANR
Venture Eagle Point Company, each of which was a direct, wholly owned subsidiary of the Pipeline
Company at the Balance Sheet Date but all of the equity interests of which were transferred by the
Pipeline Company to an Affiliate of EPC that is not an Acquired Company prior to the date of this
Agreement. For purposes of clarity, the term Excluded Subsidiaries shall not include the GL
Companies.



     “Exhibits” means the exhibits attached to this Agreement.



     “FERC” means the Federal Energy Regulatory Commission.



     “GL Companies” means Great Lakes Gas Transmission Company and its subsidiary and Great Lakes
Gas Transmission Limited Partnership and its subsidiary.



     “GL Sale Agreement” means the Purchase and Sale Agreement, dated December 21, 2006, between
ANR Capital Corporation and Seafarer US Pipeline System, Inc.



     “Governmental Approvals” means all consents and approvals of Governmental Entities, including
those required under the HSR Act, that reasonably may be deemed necessary so that the consummation
of the transactions contemplated hereby will be in compliance with Applicable Law.






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     “Governmental Entity” means any court or tribunal in any jurisdiction (domestic or foreign) or
any federal, state, municipal, or local government or other governmental body, agency, authority,
department, commission, board, bureau, instrumentality, arbitrator, or arbitral body (domestic or
foreign).



     “Guarantees” means any and all obligations relating to the guarantees, letters of credit,
bonds, and other credit assurances of a comparable nature of Sellers or any of their Affiliates
(other than the Acquired Companies) for the benefit of any Acquired Company as listed on
Schedule 7.10.



     “Holders” is defined in Section 6.3(a).



     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.



     “HSR Amount” is defined in Section 7.2(b).



     “HSR Measures” is defined in Section 7.2(b).



     “Income Tax” means federal, state, local, or foreign income or franchise Taxes or other
similar Taxes measured in whole or in part by income and any interest and penalties or additions
thereon.



     “Indemnifying Party” means a Party required to provide indemnification under Section
12.1.



     “Indemnitee” means a Party entitled to receive indemnification under Section 12.1.



     “Interest Adjustment” means interest (calculated based on the actual number of days elapsed,
assuming a 360-day year) on the Base Purchase Price, as adjusted by the Estimated Adjustment
Amount, at the Prime Rate plus 1.0% from (and including) the Effective Date to (but excluding) the
Closing Date.



     “IRS” means the Internal Revenue Service.



     “Jackson Pipeline” means Jackson Pipeline Company, a Michigan general partnership.



     “Jointly Held Guarantees” means any guarantee, letter of credit, bond, cash deposit, or other
financial assurance that is held jointly by one or more Acquired Companies, on the one hand, and a
Seller or any Affiliate of a Seller (other than any Acquired Company), on the other hand.



     “knowledge” means (i) when used with respect to (A) a Seller or the Acquired Companies (other
than Jackson Pipeline), that which is actually known after reasonable inquiry by the individuals
listed on Schedule 1.1(b) in their respective areas of responsibility, and (B) Jackson
Pipeline, that which is actually known by the individuals listed on Schedule 1.1(b) in
their respective areas of responsibility and (ii) when used with respect to Buyer, that which is
actually





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known after reasonable inquiry by the individuals listed on Schedule 1.1(c) in their
respective areas of responsibility.




     “Lease Assignment Agreement” is defined in Section 6.3(d).



     “Listed Employees” is defined in Section 7.3(b).



     “Long-Term Debt” means both the current and the long-term portions of the outstanding
principal amount of indebtedness as of the date of determination under the Debt Documents, and
including the amount of unamortized debt discount under U.S. GAAP.



     “Losses” means, collectively, any and all claims, liabilities, losses, causes of action,
fines, penalties, litigation, lawsuits, administrative proceedings, administrative investigations,
costs, and expenses, including reasonable attorneys’ fees, court costs, and other costs of suit.



     “Material Adverse Effect” means any circumstance, change, or effect that is materially adverse
to the financial condition, properties, operations, results of operations, assets or business of
the Acquired Companies taken as a whole or that impedes or delays the ability of Sellers to perform
their obligations under this Agreement or the Related Agreements or to consummate the transactions
contemplated hereby or thereby, other than (i) any adverse circumstance, change, or effect arising
from or relating to general business or economic conditions in the industries or markets in which
the Acquired Companies operate, including (A) changes in national or regional gathering, pipeline,
or storage facilities or (B) rules, regulations, or decisions of FERC or the courts affecting the
natural gas transportation industry as a whole or the natural gas storage industry as a whole, (ii)
any adverse circumstance, change, or effect arising from weather conditions, including unexpected
or harsh weather conditions, (iii) seasonal reductions in revenues or earnings of the Acquired
Companies in the ordinary course of business consistent with past periods, (iv) national or
international political, diplomatic, or military conditions (including any engagement in
hostilities, whether or not pursuant to a declaration of war, or the occurrence of any military or
terrorist attack) not disproportionately affecting the Acquired Companies, (v) changes in U.S.
GAAP, (vi) changes in Applicable Laws not disproportionately affecting the Acquired Companies,
(vii) the taking of any action required or permitted by Section 6.3(a), 6.3(b), and
6.3(c), 7.9, or 7.15 or the failure of Sellers or the Acquired Companies
to take any action for which Sellers in good faith request Buyer’s written consent under
Section 6.1 or 6.2 and Buyer refuses to provide such consent, (viii) any changes in
prices for commodities, goods, or services, or the availability or costs of hedges or other
derivatives, including fluctuations in interest rates, (ix) any matter that is expressly disclosed
in the Schedules as of the date of execution of this Agreement, and (x) the execution and delivery
or announcement of this Agreement. The Parties agree that any determination as to whether a
change, effect, event, or occurrence is a Material Adverse Effect shall be made after taking into
account and considering all matters relevant to such analysis, including (x) all amounts, if any,
recognized by the Person and its Affiliates, as applicable, under insurance or third-party
indemnifications or similar agreements, and (y) all Tax Benefits with respect to such change,
effect, event, or occurrence.



     “MPSC” is defined in Section 4.20.







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     “NGA” is defined in Section 4.20.



     “NLRB” is defined in Section 4.14(d).



     “Note Redemption” is defined in Section 6.3(a).



     “Note Redemption Documents” is defined in Section 6.3(a).



     “Notice” means any notice, request, demand, or other communications required or permitted to
be given or made under this Agreement by either Party.



     “Notice of Disagreement” is defined in Section 2.5(c).



     “Party” is defined in the Preamble.



     “Permits” means licenses, permits, franchises, consents, approvals, variances, exemptions, and
other authorizations of or from Governmental Entities.



     “Permitted Encumbrances” means (i) zoning, planning, and building codes and ordinances; (ii)
defects, imperfections, or irregularities in title (including easements, rights-of-way, covenants,
conditions, restrictions, and other matters affecting title to real property) that are not material
in character, amount, or extent with respect to the asset or assets to which they relate or,
together with any other such defects, imperfections or irregularities, in the aggregate; (iii)
Encumbrances created by or referenced in any of the Scheduled Contracts; (iv) Encumbrances created
by Buyer, or its successors and assigns; (v) liens for Taxes not yet due and payable; (vi)
statutory liens (including materialmen’s, mechanic’s, repairmen’s, landlord’s and other similar
liens) arising in connection with the ordinary course of business securing payments not yet due and
payable; (vii) Encumbrances arising under the Debt Documents; and (viii) Encumbrances that would
not materially interfere with the operations of the Acquired Companies, as currently conducted,
whether of record or not.



     “Person” means any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, enterprise, unincorporated organization, or
Governmental Entity.



     “Pipeline Company” is defined in the recitals.



     “Post-Effective Date Taxes” is defined in Section 11.1(f).



     “Pre-Closing Periods” is defined in Section 11.1(c).



     “Prime Rate” means the prime interest rate reported in The Wall Street Journal on the
Effective Date.



     “Proceedings” means all proceedings, actions, claims, suits, investigations, and inquiries by
or before any mediator, arbitrator, or Governmental Entity.



     “Pro Forma Combined Financial Statements” is defined in Section 4.7(b).








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     “Purchase Price” means the sum of (i) the Base Purchase Price, as adjusted by the Adjustment
Amount, and (ii) the Interest Adjustment.



     “Purchase Price Allocation Schedule” is defined in Section 2.7.



     “Purchased Interests” means all the issued and outstanding capital stock of the Companies.



     “Related Agreements” means the Transition Services Agreement and any other document,
agreement, certificate or instrument delivered in connection with the transactions contemplated by
this Agreement, and with respect to Buyer only, the Buyer Guaranty.



     “Related Companies” means the partially owned subsidiaries of the Companies listed in
Schedule 1.1(a).



     “Related Company” means any of the Related Companies.



     “Ren-Cen Matters” is defined in Section 6.3(d).



     “Ren-Cen Note” means the Promissory Note, dated as of November 1, 2001, issued by ANR Pipeline
to Riverfront Holdings Phase II, Inc., in the original principal amount of $1.8 million that
matures on November 1, 2010 and bears interest at 7% per annum, payable annually.



     “Replacement Debt” is defined in Section 6.3(a).



     “Replacement Debt Expenses” means the sum of all fees, expenses, penalties, charges, and
interest paid or incurred by the Acquired Companies in connection with the Replacement Debt,
including underwriting fees, placement fees, attorneys’ fees, trustee fees, interest payments and
similar fees and expenses, but excluding any fees, expenses, penalties, charges, and interest
included in the Replacement Debt Repayment Amount.



     “Replacement Debt Repayment Amount” is defined in Section 6.3(a).



     “Replacement Guarantee” is defined in Section 7.10(b).



     “Savings Plan” is defined in Section 7.3(j).



     “Scheduled Contracts” means any of the agreements or contracts listed on Schedule
4.13.



     “Schedules” means the schedules attached to the Disclosure Letter of Sellers or Buyer, as the
case may be.



     “SEC” means the Securities and Exchange Commission.



     “SEC Reports” is defined in Section 4.7(d).



     “Securities Act” means the Securities Act of 1933, as amended.



     “Selected Employees” is defined in Section 7.3(b).






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     “Seller” and “Sellers” are defined in the Preamble.



     “Seller Group” is defined in Section 11.1(a).



     “Seller Protected Information” is defined in Section 7.1(e)(ii).



     “Sellers’ FSA” is defined in Section 7.3(l).



     “Sellers Indemnitees” means, collectively, Sellers and their Affiliates (other than the
Acquired Companies) and each of their officers, directors, employees, agents, and representatives.



     “Stay-On Bonus and Severance Reimbursement Amount” means the sum of (i) the aggregate amount
of stay-on bonuses paid by Buyer under Section 7.3(g) and (ii) the total severance amounts
shown in Part II of Schedule 7.3(g).



     “Storage Company” is defined in the recitals.



     “Straddle Period” means a Tax period or year commencing before and ending after the Closing
Date.



     “Straddle Return” means a Tax Return for a Straddle Period.



     “Tax Benefit” means an amount by which the current Tax liability of a Party (or group of
corporations including the Party) is reduced (including by deduction, reduction of income by virtue
of increased Tax basis or otherwise, entitlement of refund, credit, or otherwise).



     “Tax Return” means any return or report, declaration, report, claim for refund, information
return, or statement relating to Taxes, including any related schedules, attachments, or other
supporting information, with respect to Taxes, and including any amendment thereto.



     “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll,
parking, employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, including such item for which a
liability arises as a transferee or successor-in-interest.



     “Taxing Authority” means any Governmental Entity responsible for the imposition or collection
of any Tax.



     “Third Party” means any Person other than (i) Sellers or any of their Affiliates (including
the Acquired Companies and the Excluded Subsidiaries) and (ii) Buyer and its Affiliates.



     “Third Party Claim” means any claim or the commencement of any claim, action, or proceeding
made or brought by a Third Party.






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     “Total Purchase Price” means the sum of (i) the Purchase Price plus (ii) the principal amount
of the Long-Term Debt outstanding as of the Closing.



     “Transition Period” is defined in Section 7.11.



     “Transition Services Agreement” means the Transition Services Agreement attached as
Exhibit 3.2(c) hereto, to be completed by the Parties under Section 7.16.



     “U.S. GAAP” means generally accepted accounting principles in the United States of America
(including interpretations, guidance, or bulletins issued in respect thereof) as in effect on the
date to which the document or calculation to which it refers relates, applied on a consistent basis
throughout the periods covered by such document or calculation.



     1.2
Construction. In construing this Agreement, the following principles shall be
followed:




     (a) the terms “herein,” “hereof,” “hereby,” “hereunder,” and other similar terms, refer
to this Agreement as a whole and not only to the particular Article, Section, or other
subdivision in which any such terms may be employed;




     (b) references to Articles, Sections, Schedules, Exhibits, and other subdivisions and
clauses refer to the Articles, Sections, Schedules, Exhibits and other subdivisions and
clauses of this Agreement;




     (c) a reference to any Person shall include such Person’s predecessors and successors;




     (d) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with U.S. GAAP;




     (e) all references herein to amounts in dollars or preceded by “$” shall constitute
references to such amount in U.S. currency;




     (f) no consideration shall be given to the captions of the Articles, Sections,
subsections, or clauses, which are inserted for convenience in locating the provisions of
this Agreement and not as an aid in its construction;




     (g) examples shall not be construed to limit, expressly or by implication, the matter
they illustrate;




     (h) the word “includes” and its syntactical variants mean “includes, but is not limited
to” and corresponding syntactical variant expressions;




     (i) a defined term has its defined meaning throughout this Agreement, regardless of
whether it appears before or after the place in this Agreement where it is defined;




     (j) the plural shall be deemed to include the singular, and vice versa; and







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     (k) each Exhibit and Schedule to this Agreement is a part of this Agreement, but if
there is any conflict or inconsistency between the main body of this Agreement and any
Exhibit or Schedule, the provisions of the main body of this Agreement shall prevail.



Article 2

TERMS OF THE TRANSACTION




     2.1 Agreement to Sell and to Purchase the Purchased Interests. At the Closing, and on the
terms and subject to the conditions in this Agreement, Sellers shall sell, transfer, deliver, and
convey to Buyer, and Buyer shall purchase and accept from Sellers, the Purchased Interests free and
clear of all Encumbrances, other than restrictions on the transfer of securities under Applicable
Laws.



     2.2 Purchase Price and Payment. In consideration of the sale of the Purchased Interests
to Buyer, Buyer shall pay to Sellers at the Closing, in immediately available funds, an amount
equal to the sum of (i) the Base Purchase Price, as adjusted by the Estimated Adjustment Amount,
and (ii) the Interest Adjustment by confirmed wire transfer to a bank account or accounts to be
designated by Sellers not later than 3 business days prior to the Closing Date, in the amount shown
in Sellers’ statement delivered to Buyer in accordance with Section 2.4 below.



     2.3 [Intentionally omitted].



     2.4 Calculation of Closing Consideration. Not later than 5 business days prior to the
Closing Date, Sellers shall deliver to Buyer a written statement setting forth (i) the Base
Purchase Price, (ii) the Interest Adjustment, and (iii) the Estimated Adjustment Amount, together
with Sellers’ calculation of the Interest Adjustment and the Estimated Adjustment Amount in
reasonable detail, based on the best information available to Sellers on the date the same is
delivered, and supporting work papers with respect to the calculation of the Estimated Adjustment
Amount. If the Estimated Adjustment Amount is positive, the Base Purchase Price shall be increased
by the Estimated Adjustment Amount, and if the Estimated Adjustment Amount is negative, the Base
Purchase Price shall be reduced by the Estimated Adjustment Amount.



     2.5 Calculation and Payment of Adjustment Amount.




     (a) Adjustment Amount. The “Adjustment Amount” equals the net increase
to, or net decrease from, the Adjusted Working Capital between the Balance Sheet Date and
the Effective Date. For purposes of clarity, an increase in Adjusted Working Capital shall
be represented by a positive number and a decrease in Adjusted Working Capital shall be
represented by a negative number.




     (b) Effective Date Financial Statements and Adjustment Amount. As promptly as
practicable after the Closing Date, and in any event not later than 90 days after the
Closing Date, Buyer shall prepare and deliver to Sellers (i) a combined balance sheet of the
Acquired Companies as of the Effective Date (the “Effective Date Pro Forma Financial
Statements”) prepared in accordance with U.S. GAAP applied on the same basis as the Pro
Forma Combined Financial Statements have been prepared, including giving pro forma effect to
the actions specified in the first sentence of Section 4.7(b)









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(except that the
Effective Date Pro Forma Financial Statements shall be prepared using
actual volumes and revenues and based on other best available information through the
period ending upon the date the same is delivered to Sellers), and (ii) a statement of Buyer
(the “Adjustment Statement”) showing in reasonable detail its calculation of the
Adjustment Amount, together with supporting work papers. Sellers agree, at no cost to
Buyer, to give Buyer and its authorized representatives reasonable access to such employees,
offices, and other facilities and such books and records of Sellers and their Affiliates as
are reasonably necessary to allow Buyer and its authorized representatives to prepare the
Effective Date Pro Forma Financial Statements and the Adjustment Amount in compliance with
this Section 2.5. Buyer, at no cost to Sellers, shall give representatives of
Sellers reasonable access to its and the Acquired Companies’ premises, Employees, and other
facilities and to its and the Acquired Companies’ books and records as are reasonably
necessary for purposes of reviewing, verifying, and auditing the calculations contained in
the Effective Date Pro Forma Financial Statements and the Adjustment Statement.




     (c) Dispute Resolution. The Adjustment Statement shall become final and
binding on Sellers and Buyer as to the Adjustment Amount on the 90th day following the date
the Adjustment Statement is received by Sellers (the “Dispute Deadline Date”),
unless prior to the Dispute Deadline Date, Sellers deliver Notice to Buyer of their
disagreement (“Notice of Disagreement”). Sellers’ Notice of Disagreement shall set
forth all of Sellers’ disputed items together with Sellers’ proposed changes thereto,
including an explanation in reasonable detail of the basis on which Sellers propose such
changes. If Sellers have delivered a timely Notice of Disagreement, then Sellers and Buyer
shall use their good faith efforts to reach written agreement on the disputed items to
determine the Adjustment Amount. If all of Sellers’ disputed items have not been resolved
by Sellers and Buyer by the 120th day following Sellers’ receipt of the Adjustment
Statement, then Sellers’ items that are still disputed shall be submitted to binding
arbitration by an independent nationally recognized accounting firm without any material
financial relationship to either Sellers or Buyer, as mutually selected by Sellers and Buyer
within 5 business days after the end of the foregoing 120-day period (or in the absence of
agreement between Sellers and Buyer by the close of business on such 5th business day as
selected by the president of the American Arbitration Association or his designee). The
arbitrator’s determination shall in no event be more favorable to Buyer than reflected on
the Adjustment Statement prepared by Buyer or more favorable to Sellers than shown in the
proposed changes delivered by Sellers under their Notice of Disagreement. The fees and
expenses of such arbitration shall be borne 50% by Buyer and 50% by Sellers. The
determination of the disputed items by such arbitration shall be final and binding upon
Sellers and Buyer as to such disputed items.




     (d) Final Date. The Adjustment Amount shall be deemed to be finally determined
in the amount set forth in the Adjustment Statement on the Dispute Deadline Date unless a
Notice of Disagreement is timely given in accordance with Section 2.5(c) with
respect to the calculation thereof. If such a Notice of Disagreement is timely given, the
Adjustment Amount shall be deemed finally determined on the date that the selected
accounting firm gives Notice to Buyer and Sellers of its determination with respect to all
disputed items regarding the calculation thereof, or, if earlier, the date on which Sellers






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and Buyer agree in writing on the amount thereof, in which case the Adjustment Amount
shall be calculated in accordance with such determination or agreement, as the case may
be.




     (e) Payments. If the Adjustment Amount, as finally determined, exceeds the
Estimated Adjustment Amount, then Buyer shall pay to Sellers the amount of such excess, plus
interest on the amount of such excess from (and including) the Effective Date to (but
excluding) the date of payment at the Prime Rate plus 1.0%. If the Adjustment Amount, as
finally determined, is less than the Estimated Adjustment Amount, then Sellers shall pay to
Buyer the amount of such deficiency, plus interest on the amount of such deficiency from
(and including) the Effective Date to (but excluding) the date of payment at the Prime Rate
plus 1.0%. Any payment shall be made within three business days of the date the Adjustment
Amount is deemed to be finally determined under Section 2.5(d).




     (f) Definition. The “Adjusted Working Capital” as of the Balance Sheet
Date is calculated as set forth on Schedule 2.5(f). The “Adjusted Working
Capital” as of the Effective Date shall be calculated using the Effective Date Pro Forma
Financial Statements and shall be equal to (1) the sum of (i) the amount of current assets
of the Acquired Companies reflected on the Effective Date Pro Forma Financial Statements,
plus (ii) the sum of any amounts expended by any of the Acquired Companies from and after
January 1, 2007 and on or prior to the Effective Date to pay for capital expenditures
permitted by Section 6.2(h), plus (iii) the amount of any decrease in the amount of
the current and long-term portions of all long-term debt outstanding as of the Closing Date
(including the amount of unamortized debt discount under U.S. GAAP, but excluding any
Replacement Debt Repayment Amount otherwise included therein to the extent deducted in the
computations of Excluded Cash under Section 6.3(c)) below $444 million of Long-Term
Debt, less (2) the amount of current liabilities reflected on the Effective Date Pro Forma
Financial Statements, less (3) the amount of any increase in the amount of the current and
long-term portions of all long-term debt outstanding as of the Closing Date (including the
amount of unamortized debt discount under U.S. GAAP, but excluding any Replacement Debt
Repayment Amount otherwise included therein to the extent deducted in the computations of
Excluded Cash under Section 6.3(c)) above $444 million of Long-Term Debt, less (4)
any amounts refunded to Sellers or any of their Affiliates (other than the Acquired
Companies) in respect of prepaid insurance of the Acquired Companies cancelled on or prior
to the Closing to the extent reflected as a current asset for purposes of calculating
Adjusted Working Capital as of the Balance Sheet Date, less (5) any amounts received or
receivable as proceeds from the sale since the Balance Sheet Date of assets, other than
Excluded Assets, that constitute non-current assets (including for purposes of this
Agreement, base gas), less (6) any amounts received or accounts receivable constituting the
proceeds of insurance in respect of a casualty loss experienced by an Acquired Company after
the Balance Sheet Date, which casualty loss involves a non-current asset which has not been
repaired or replaced with an asset of at least comparable quality and the affected
operations, if any, restored to at least the operating capacity as it existed prior to the
casualty loss, less (7) the Stay-On Bonus and Severance Reimbursement Amount, less (8) if
Sellers elect under Section 6.3(a) to pursue the Consent Solicitation, an amount
equal to the applicable redemption premium specified in







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the 87/8% Indenture that would be
payable if all 87/8% Notes remaining outstanding as of
the Closing Date (if any) were redeemed on the earliest date permissible by the terms
of the 87/8% Indenture assuming that a redemption notice were issued on the Effective Date,
and less (9) the Replacement Debt Expenses, if any. Notwithstanding the foregoing sentence,
for the purpose of calculating Adjusted Working Capital, (i) the amount of current assets
and current liabilities included in Adjusted Working Capital for any Related Company shall
be calculated by multiplying the current assets and current liabilities of such Related
Company determined in accordance with the other provisions of this Section 2.5(f) by
a percentage equal to the Storage Company’s indirect ownership interest in that Related
Company, (ii) none of the following shall be included in either current assets or current
liabilities: (A) the balances in the following line items set forth in Schedule
4.7(b) under assets: (I) Line 116000 — T&E Gas Receivable, (II) Line 110301 — Customer
Accounts Receivable Cashout Invoices, (III) Line 116500 — Account Receivables Gas
Imbalances/Exchange, and (IV) Line 120101 — Accounts Receivable Other—Insurance; (B) the
balances in the following line items set forth in Schedule 4.7(b) under liabilities:
(I) Line 306000 — Transportation and Exchange Gas, (II) Line 306500 — Accounts Payable Gas
Imbalances/Exchange, and (III) Line 310402 Accounts Payable—Miscellaneous Gas Payable; (C)
assets or liabilities of the Acquired Companies relating to Taxes (including any deferred
Tax assets or liabilities); (D) assets or liabilities of any of the Acquired Companies
relating to pensions or other Employee post-retirement benefits; (E) the current portion of
any principal payment obligation with respect to Long-Term Debt; (F) any Excluded Asset,
including the Excluded Cash to be distributed by dividend by the Storage Company and the
Pipeline Company prior to Closing under Section 6.3(c); and (G) any intercompany
accounts (other than imbalances that are to be settled with in-kind gas volumes in
accordance with the terms of existing operational balancing agreements in effect as of the
date hereof) or notes receivable due from EPC or any of its direct or indirect wholly owned
subsidiaries (other than the Acquired Companies) to any of the Acquired Companies (other
than the Related Companies) or intercompany accounts (other than imbalances that are to be
settled with in-kind gas volumes in accordance with the terms of existing operational
balancing agreements in effect as of the date hereof) or notes payable of any of the
Acquired Companies (other than the Related Companies) to EPC or any of its direct or
indirect subsidiaries (other than the Acquired Companies), including payables and/or
receivables under the El Paso Cash Pool Program, and (iii) the valuation of the inventories
of the Acquired Companies as of the Effective Date shall be determined in the same manner as
the valuation of such inventories as of the Balance Sheet Date. Except to the extent
contemplated above, Sellers represent and warrant to Buyer that the Adjusted Working Capital
as of the Balance Sheet Date has been calculated in a manner consistent with the method for
calculating Adjusted Working Capital as of the Effective Date as set forth in this
Section 2.5(f).



     2.6 Acknowledgement of Obligations. For the avoidance of doubt, subject to the terms and
conditions of this Agreement, including Sections 7.3 and 7.9 and Articles
11 and 12, (i) Buyer acknowledges and agrees that, following the Closing, the Acquired
Companies shall remain obligated for their liabilities and obligations, including the Long-Term
Debt, and accrued and unpaid interest thereon, outstanding as of the Closing (the “Assumed
Obligations”), and






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(ii) the Acquired Companies shall pay, perform, and discharge the Assumed
Obligations from and after the Closing in accordance with their terms.




     2.7 Purchase Price Allocation. Sellers and Buyer agree that the Purchase Price shall be
allocated among the Purchased Interests for Tax purposes in accordance with an allocation schedule
to be agreed upon prior to the Closing by the Parties (the “Purchase Price Allocation
Schedule”). The Purchase Price Allocation Schedule shall be revised to take into account
subsequent adjustments under this Agreement to the Purchase Price after the Closing. Sellers and
Buyer shall each report the Tax consequences of the purchase and sale contemplated hereby in a
manner consistent with the Purchase Price Allocation Schedule and shall not take any inconsistent
position on any Tax Returns unless required by Applicable Law.



Article 3

CLOSING




     3.1 Closing. Subject to fulfillment or waiver of the conditions in this Agreement, the
Closing shall take place on the Closing Date. The Closing shall take place at the offices of
Andrews Kurth LLP, 600 Travis Street, Houston, Texas 77002 or such other place as the Parties may
agree, at 10:00 a.m., Houston, Texas time, on the fifth business day following the satisfaction or
waiver of all conditions to Closing in Articles 8 and 9 (other than conditions that
by their nature are to be satisfied at the Closing) or at such other time as the Parties may agree.
Unless otherwise agreed, all Closing transactions shall be deemed to have occurred simultaneously.



     3.2 Deliveries by Sellers. At the Closing, Sellers will deliver the following documents
to Buyer:




     (a) A certificate executed on behalf of each Seller by the president, senior vice
president, or vice president of each Seller, dated the Closing Date, representing and
certifying, in such detail as Buyer may reasonably request, that the conditions set forth in
Sections 9.1 and 9.2 have been fulfilled.




     (b) The certificates, instruments, and documents listed below:




     (i) The stock certificates representing all of the Purchased Interests duly
endorsed in blank, or accompanied by stock powers duly executed in blank, and
otherwise in form acceptable to Buyer for transfer of the Purchased Interests to
Buyer free and clear of all Encumbrances.




     (ii) The minute books, stock records, and corporate seal (if any) of each
Acquired Company.




     (iii) The written resignations of the directors and officers of each Acquired
Company, such resignations to be effective concurrently with the Closing on the
Closing Date.




     (iv) Evidence of the receipt of each Governmental Approval required hereunder
with respect to Sellers.







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




     (c) The Transition Services Agreement duly executed by EPC.




     (d) Evidence reasonably satisfactory to Buyer that (i) either (A) the Note Redemption
has been consummated in accordance with the terms of Section 6.3(a) or (B) the
Consent Solicitation has been consummated in accordance with the terms of Section
6.3(a) and the Consent Amendment has been duly executed and delivered by ANR Pipeline
and the Trustee under the 8 7/8% Indenture and is in full force and effect and (ii) the
Replacement Debt Repayment Amount has been repaid in full, all agreements related to the
Replacement Debt have been terminated and no Acquired Company has any liability or
obligation related to the Replacement Debt after the Closing.



     3.3 Deliveries by Buyer. At the Closing, Buyer will deliver the following documents
to Sellers:




     (a) A certificate executed by the president, senior vice president, or vice president
of Buyer, dated the Closing Date, representing and certifying, in such detail as Sellers may
reasonably request, that the conditions set forth in Sections 8.1 and 8.2
have been fulfilled.




     (b) The Transition Services Agreement duly executed by Buyer.




     (c) All releases, replacements, substitutions or “back-to-back” guarantees required by
Section 7.10 with respect to the Guarantees listed in Schedule 7.10, in form
and substance reasonably satisfactory to Sellers.




     (d) Evidence of the receipt of each Governmental Approval required hereunder with
respect to Buyer.




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




     (f) Payment of the sum of Base Purchase Price, as adjusted by the Estimated Adjustment
Amount, and the Interest Adjustment, in immediately available funds to the bank account or
accounts designated by Sellers under Section 2.2.



Article 4

REPRESENTATIONS AND WARRANTIES OF SELLERS




     Except as set forth in the Schedules (it being understood that a representation or warranty
shall not be deemed to be qualified by any item disclosed or described in any Schedule unless it is
reasonably apparent that such item is applicable to such representation or warranty), Sellers
represent and warrant to Buyer as follows:






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     4.1 Corporate Organization. EPC is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware. EP CNG is a limited liability company duly
organized, validly existing, and in good standing under the laws of Delaware.



     4.2 Acquired Companies.




     (a) List of Acquired Companies. Except as set forth on Schedule 4.2,
none of the Acquired Companies owns, directly or indirectly, any capital stock or other
equity securities of any corporation or has any direct or indirect equity or ownership
interest in any other Person. Schedule 4.2 lists (i) each Acquired Company, the
jurisdiction of incorporation or formation of each Acquired Company, and the authorized (in
the case of capital stock) and outstanding capital stock or other equity interests of each
Acquired Company (including the owners thereof) and (ii) each of the other entities in which
the Acquired Companies own any equity interests. Each corporate Acquired Company is a
corporation duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation, and each other Acquired Company is duly formed, validly
existing, and in good standing under the laws of the jurisdiction of its formation. Each
Acquired Company has all requisite corporate or other power and authority, as applicable, to
own, lease, and operate its assets and properties and to carry on its business as now being
conducted. No actions or proceedings to dissolve any Acquired Company are pending.




     (b) No Encumbrances. Except as otherwise indicated on Schedule 4.2,
the outstanding capital stock or other equity interests of each Acquired Company is owned
directly or indirectly by Sellers and is free and clear of all Encumbrances, other than (i)
restrictions on transfer that may be imposed by federal or state securities laws, (ii) those
that arise by virtue of any actions taken by or on behalf of Buyer or its Affiliates, (iii)
the restrictions on transfer that may be imposed under the certificate of incorporation,
bylaws, or other organizational documents of the Acquired Companies, or (iv) those that
arise in respect of the Long-Term Debt and the Debt Documents as of the date hereof. All
outstanding shares of capital stock of each corporate Acquired Company owned directly or
indirectly by a Seller have been validly issued and are fully paid and nonassessable. All
equity interests of each other Acquired Company owned directly or indirectly by Sellers have
been validly issued and are fully paid. None of the shares of capital stock or other equity
interests of any Acquired Company owned directly or indirectly by Sellers are subject to, or
were issued in violation of, any preemptive or similar rights.




     (c) No Options. Except as set forth on Schedule 4.2, there are
outstanding (i) no shares of capital stock or other equity securities of any Acquired
Company, (ii) no securities of any Acquired Company convertible into or exchangeable for
shares of capital stock or other equity securities of any Acquired Company, (iii) no options
or other rights to acquire from Sellers or any Acquired Company, and no obligation of
Sellers or any Acquired Company to issue or sell, any shares of capital stock or other
equity securities, and (iv) no equity equivalent, interests in the ownership or earnings, or
other similar rights of or with respect to any Acquired Company or any securities
convertible into or exchangeable for such capital stock or equity securities. There are no
outstanding



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obligations of Sellers or any Acquired Company to repurchase, redeem, or
otherwise acquire any of the foregoing shares, securities, options, equity equivalents,
interests, or rights.




     (d) Qualification. Each of the Acquired Companies is duly qualified or
licensed to do business as a corporation, foreign corporation, limited partnership, or
limited liability company, as applicable, and each of the Acquired Companies is in good
standing in each of the jurisdictions set forth opposite its name on Schedule 4.2,
which are all the jurisdictions in which the assets or property owned, leased, or operated
by it or the conduct of its business requires such qualification or licensing, except
jurisdictions in which the failure to be so qualified or licensed would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.



     4.3 Charter and Bylaws. Sellers have made available to Buyer in the Data Site
accurate and complete copies of each Acquired Company’s certificate of incorporation and bylaws (or
equivalent organizational documents) as currently in effect and stock records of the Acquired
Companies.



     4.4 Authority Relative to this Agreement. Each Seller has full corporate or limited liability company power and authority to execute,
deliver, and perform this Agreement and the Related Agreements to which it is a party. The
execution, delivery, and performance by each Seller of this Agreement and the Related Agreements,
and the consummation by each Seller of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate or limited liability company action on the part of each
Seller, and no other action on the part of any Seller or any Affiliate, shareholder, or member of
any Seller is necessary to authorize such execution, delivery, and performance. This Agreement has
been duly executed and delivered by each Seller and constitutes, and each Related Agreement
executed or to be executed by each Seller has been, or when executed will be, duly executed and
delivered by each Seller and constitutes, or when executed and delivered will constitute, valid and
legally binding obligations of such Seller, enforceable against such Seller in accordance with its
terms, except that such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors’ rights generally and (ii)
equitable principles which may limit the availability of certain equitable remedies (such as
specific performance) in certain instances.



     4.5 No Conflict. Assuming all consents, approvals, authorizations, and other actions
described in Section 4.6 have been obtained and all filings and notifications listed on
Schedule 4.6 have been made, except as set forth in Schedule 4.5, the execution,
delivery, and performance by each Seller of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby or thereby do not and will not (x) violate or
breach the certificate of incorporation or by-laws (or equivalent organizational documents) of such
Seller or any Acquired Company, (y) violate or breach any Applicable Law binding upon such Seller
or any Acquired Company or any of their respective assets or properties, or (z) violate or result
in any breach of, or constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of
the assets or properties of any Acquired Company under, any note, bond,



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mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument relating to such assets
or properties to which any Acquired Company is a party or by which any of such assets or properties
is bound or affected, except in the case of clauses (y) and (z), as would not, individually or in
the aggregate, have, or reasonably be expected to have, a Material Adverse Effect.




     4.6 Consents, Approvals, and Licenses. No consent, approval, authorization, license,
order or Permit of, or declaration, filing or registration with, or notification to, any
Governmental Entity, or any other Person, is required to be made or obtained by either Seller or
any Acquired Company in connection with the execution, delivery and performance of this Agreement
or the Related Agreements and the consummation of the transactions contemplated hereby or thereby,
except: (a) as set forth on Schedule 4.6; (b) as necessary to comply with applicable
requirements of the HSR Act; (c) where the failure to obtain such consents, approvals,
authorizations, licenses, orders, or Permits of, or to make such declarations, filings, or
registrations or notifications, would not, individually or in the aggregate,
have, or reasonably be expected to have, a Material Adverse Effect; and (d) as may be
necessary as a result of any facts or circumstances relating solely to Buyer.



     4.7 Financial Statements and Reports.




     (a) Historical Financial Statements. Schedule 4.7(a) contains (i)
unaudited combined balance sheets as of December 31, 2005 and September 30, 2006 of (a) the
Pipeline Company and its consolidated subsidiaries and (b) the Storage Company and its
consolidated subsidiaries, (ii) unaudited combined statements of income for the year ended
December 31, 2005 and the nine-month period ended September 30, 2006 of (a) the Pipeline
Company and its consolidated subsidiaries and (b) the Storage Company and its consolidated
subsidiaries, and (iii) unaudited combined statements of cash flow of the Acquired Companies
for the year ended as of December 31, 2005 and the nine-month period ended September 30,
2006 (collectively, the “Combined Financial Statements”). The Combined Financial
Statements have been prepared in accordance with U.S. GAAP, except as set forth in the notes
thereto. The Combined Financial Statements are consistent with the books and records of the
Acquired Companies and fairly present, in all material respects, the financial position,
results of operations, and cash flows of the Acquired Companies as of the dates and for the
periods indicated.




     (b) Pro Forma Financial Statements. Schedule 4.7(b) contains the
Combined Financial Statements (other than statements of cash flow) as adjusted to give pro
forma effect to exclusion of the Excluded Assets, the Excluded Liabilities, the Excluded
Subsidiaries (including any liabilities related thereto), and the following: in the case of
the Combined Financial Statements of the Pipeline Company (i) the transfer and sale after
the Balance Sheet Date but prior to the date of this Agreement by the Pipeline Company of
ANR Capital Corporation and El Paso Great Lakes Company, L.L.C. and their respective
subsidiaries in accordance with the terms of the GL Sale Agreement, (ii) the disposition
after the Balance Sheet Date but prior to the date of this Agreement by the Pipeline Company
of its equity ownership interests in each of the Excluded Subsidiaries, and (iii) the
transactions specified in Section 6.3 and the other items disclosed in Schedule
4.8. The Combined Financial Statements adjusted in accordance



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with the preceding
sentence are referred to herein as the “Pro Forma Combined Financial Statements.”
The Pro Forma Combined Financial Statements have been prepared in accordance with U.S. GAAP
subject to the assumptions, limitations, and notes set forth therein or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC, and subject
to the pro forma adjustments specified in the notes thereto and excluding the statement of
cash flows. The Pro Forma Combined Financial Statements are consistent with the books and
records of the Acquired Companies and fairly present, in all material respects, the
financial position and results of operations of the Acquired Companies as of the date and
for the period indicated, subject to the pro forma adjustments set forth in the notes
thereto.




     (c) Controls. ANR Pipeline has established and maintains disclosure controls
and procedures (as such term is defined in rule 13a-15(e) or 15d-15(e) under the Exchange
Act), and such disclosure controls and procedures are designed to ensure that material
information relating to ANR Pipeline is made known to ANR Pipeline’s
principal executive office and its principal financial officer by others within those
entities. To Sellers’ knowledge, except as disclosed on Schedule 4.7(c), there are
no significant deficiencies, including material weaknesses, in the design or operation of
internal controls over the Acquired Companies’ financial reporting.




     (d) Reports. ANR Pipeline has filed all required forms, reports, and
documents, and amendments thereto, with the SEC since January 1, 2005 (the “SEC
Reports”), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on the dates such
forms, reports, and documents, and amendments thereto were filed. Except for ANR Pipeline,
none of the Acquired Companies is required to file any forms, reports, or other documents
with the SEC. The consolidated financial statements of ANR Pipeline included in the SEC
Reports complied in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect on the dates
such SEC Reports were filed. As of their respective filings dates, the SEC Reports,
including any financial statements or schedules included or incorporated by reference
therein, did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, that this sentence shall not be deemed to be a
representation or warranty with respect to any forward looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995) included or incorporated by
reference in any of the SEC Reports.



     4.8 Absence of Material Changes. Except as disclosed on Schedule 4.8, as
contemplated by the other provisions of this Agreement, or as would not, individually or in the
aggregate, have, or reasonably be expected to have, a Material Adverse Effect, since the Balance
Sheet Date, (i) there has not been any adverse change in the assets, liabilities, business,
operations, results of operation, or financial condition of the Acquired Companies, (ii) the
businesses of the Acquired Companies have been conducted only in the ordinary course consistent
with past practice, (iii) no Acquired Company has incurred any liability or entered into any
agreement, in each case, outside the ordinary course of business consistent with past



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practice,
(iv) no Acquired Company has suffered any unrepaired loss, damage, destruction, or other casualty
to any of its property, plant, equipment, or inventories (whether or not covered by insurance), and
(v) the Acquired Companies have not made any change in the compensation levels of their senior
executives, any changes in the manner in which other Employees of the Acquired Companies are
generally compensated, or any provision of additional or supplemental benefits for employees of the
Acquired Companies generally, except normal periodic increases or promotions effected in the
ordinary course of business consistent with past practice.




     4.9 Undisclosed Liabilities. No Acquired Company (other than any Related Company that
is not required by U.S. GAAP to be consolidated on the financial statements of the Pipeline Company
or the Storage Company) has any liability or obligation, except (i) liabilities or obligations
reflected on the Pro
Forma Consolidated Financial Statements, (ii) liabilities or obligations which have arisen
since the Balance Sheet Date in the ordinary course of business consistent with past practice,
(iii) liabilities or obligations reflected on Schedule 4.9, (iv) liabilities or obligations
with respect to Tax and environmental matters, which are addressed by the representations and
warranties set forth in Sections 4.10 and 4.15(a), and (v) other liabilities or
obligations which, individually or in the aggregate, have not had and would not be reasonably
expected to have a Material Adverse Effect. The Related Companies that are not required by U.S.
GAAP to be consolidated on the financial statements of the Pipeline Company or the Storage Company
do not have any liability or obligation (other than liabilities or obligations with respect to Tax
and environmental matters, which are addressed by the representations and warranties set forth in
Sections 4.10 and 4.15(a)) that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.



     4.10 Tax Matters. Except as disclosed on Schedule 4.10:




     (a) all material Tax Returns required to be filed by or with respect to the Acquired
Companies (including consolidated, combined, or unitary Tax Returns in which the Acquired
Companies are members) have been timely filed with the appropriate Taxing Authorities in all
jurisdictions in which such Tax Returns are required to be filed;




     (b) such Tax Returns were correct and complete in all material respects, and all Taxes
due and payable on such Tax Returns have been paid in full or adequate reserves (determined
in accordance with U.S. GAAP) have been provided for on the Pro Forma Combined Financial
Statements;




     (c) there are no outstanding agreements or waivers extending the statutory period of
limitations applicable to any material Tax Returns filed by or with respect to any of the
Acquired Companies;




     (d) none of the Tax Returns of or with respect to any of the Acquired Companies is
currently being audited or examined by any Taxing Authority;




     (e) no material deficiency for any Income Taxes has been assessed with respect to any
of the Acquired Companies that has not been abated, paid in full or adequately provided for
on the Pro Forma Combined Financial Statements;



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     (f) there is no material dispute or material claim concerning any Tax liability of any
Acquired Company claimed or raised by any Taxing Authority in writing;




     (g) all material Taxes that any Acquired Company is or was required to withhold or
collect have been duly withheld or collected, and to the extent required, have been paid to
the proper Taxing Authority;




     (h) no payments are due or will become due by any Acquired Company under any Tax
sharing agreement or similar arrangement;




     (i) Schedule 4.10 contains complete and accurate, in all material respects, tax
basis balance sheets of the Acquired Companies based on Tax reporting for the 2005 tax year
and estimates as of the Balance Sheet Date;




     (j) the tax basis of all depreciable or amortizable assets, and the methods used in
determining allowable depreciation or amortization (including cost recovery) deductions of
the Acquired Companies, are correct and in compliance with the Code and regulations
thereunder, in all material respects;




     (k) none of the Acquired Companies is required to indemnify any other party for Taxes
owed by any other party;




     (l) each of the Acquired Companies (i) is a member of the consolidated group of which
EPC is the common parent, (ii) has never been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of which was
EPC) and (iii) has never had any Liability for the Taxes of any Person (other than as a
member in a group the common parent of which was EPC) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise;




     (m) none of the Acquired Companies is a party to any agreement, contract, arrangement
or plan that has resulted or could result, separately or in the aggregate, in the payment of
(i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any
corresponding provision of state, local or foreign Tax law) and (ii) any amount that will
not be fully deductible as a result of Section 162(m) of the Code (or any corresponding
provision of state, local or foreign Tax law);




     (n) since May 14, 2002, none of the Acquired Companies has distributed stock of another
person, or has had its stock distributed by another person, in a transaction that was
governed in whole or in part by Section 355 of the Code;




     (o) none of the Tax attributes of the Acquired Companies are subject to limitation
under Section 382 of the Code, Section 383 of the Code or any other provision of the Code or
any regulations promulgated under the Code;




     (p) none of the assets of the Acquired Companies constitute tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the Code, and none
of the assets reflected on the Combined Financial Statements of the



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Acquired Companies is
subject to a lease, safe harbor lease or other arrangement as a result of which the Acquired
Companies is not treated as the owner for federal Income Tax purposes;




     (q) none of the Acquired Companies has engaged in a “reportable transaction” or “listed
transaction” for U.S. federal Income Tax purposes or the equivalent under state or local
law; and




     (r) there will not be any income recognized for federal or state Tax purposes after the
Closing Date as a result of transactions occurring on or before the Closing Date
involving the Acquired Companies that resulted in the realization of income for federal
or state Tax purposes that was either deferred or suspended under consolidated, combined,
affiliated, or unitary Tax principles.



     4.11 Compliance With Laws. The Acquired Companies are in compliance with all
Applicable Laws (other than Applicable Environmental Laws, as to which Sellers’ sole
representations and warranties are set forth in Section 4.15(a), and Taxes, as to which
Sellers’ sole representations and warranties are set forth in Section 4.10), except (i) as
disclosed on Schedule 4.11 or (ii) for noncompliance with such Applicable Laws that would
not individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect. Neither Sellers, nor to Sellers’ knowledge, any of the Acquired Companies, (x) has, since
January 1, 2004, received written notice of any material violation of any Applicable Law (other
than Applicable Environmental Laws, as to which Sellers’ sole representations and warranties are
set forth in Section 4.15(a), and Taxes, as to which Sellers’ sole representations and
warranties are set forth in Section 4.10), other than such notices that have been resolved
with the applicable Governmental Entity without any liability or cost related thereto after the
Closing Date, or (y) is in default, in any material respect, under any material judgment, order,
writ, injunction, or decree of any Governmental Entity applicable to the Acquired Companies or any
of their respective assets, properties, or operations.



     4.12 Legal Proceedings. Except as disclosed on Schedule 4.12, there are no
material Proceedings pending, or to the knowledge of Sellers, threatened against or involving any
Acquired Company or any properties of any Acquired Company. Except (i) as disclosed on
Schedule 4.12 and (ii) for judgments, orders, writs, injunctions, and decrees issued by
FERC or the MPSC, no Acquired Company is subject to any material judgment, order, writ, injunction,
or decree of any Governmental Entity. Except as disclosed on Schedule 4.12, no Acquired
Company is subject to any judgment, order, writ, injunction, or decree issued by FERC or the MPSC
that would, individually or in the aggregate, have, or reasonably be expected to have, a Material
Adverse Effect. Except as disclosed on Schedule 4.12, there are no Proceedings pending or,
to the knowledge of Sellers, threatened seeking to restrain, prohibit, or obtain damages or other
relief from Sellers or the Acquired Companies in connection with this Agreement, the Related
Agreements or the transactions contemplated hereby or thereby.



     4.13 Acquired Company Agreements.



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     (a) List of Agreements. Set forth on Schedule 4.13 is a list of the
following agreements and contracts to which any Acquired Company is a party or by which any
Acquired Company is otherwise bound:




     (i) any commitment, agreement or purchase order that could, in accordance with
its terms, involve aggregate payments by any Acquired Company of more than
$5,000,000 within the remaining term of such agreement;




     (ii) any note, loan, evidence of indebtedness, letter of credit or guarantee of
the indebtedness or performance of any obligations of another
Person that could involve aggregate payments by any Acquired Company of
$5,000,000 or more;




     (iii) any lease, including the term of such lease, under which an Acquired
Company is the lessor or lessee of real or personal property, which lease either (A)
(1) cannot be terminated by any Acquired Company without penalty upon not more than
180 calendar days’ notice and (2) involves an annual base rental during calendar
year 2005 or 2006 in excess of $2,000,000 or base rental over its term in excess of
$5,000,000 or (B) is a surface or subsurface storage lease with a Third Party that
is used in or related to the Acquired Companies’ storage businesses and the loss of
which could materially interfere with the operations of the Acquired Companies, as
presently conducted;




     (iv) any contracts or agreements containing covenants limiting the freedom of
any Acquired Company or any Acquired Company and its Affiliates after the Closing
Date, in any material respect, to engage in any line of business or compete with any
Person;




     (v) any contracts or agreements that grant to any Person any right of first
refusal, right of first offer, or participation right in any material future
business or business opportunity or expansion of any Acquired Company;




     (vi) any employment agreement that provides for (A) continued employment with,
or retention by, any Acquired Company or (B) any payments due or payable by the
Acquired Companies as a result of this Agreement or the consummation of the
transactions contemplated by this Agreement;




     (vii) any pending sale or lease of real or personal property of any Acquired
Company (other than sales of natural gas, natural gas liquids, or other items of
inventory in the ordinary course of business) in excess of $5,000,000;




     (viii) any gas purchase contracts, gas sales contracts, gas processing
agreements, transportation agreements, natural gas liquids sales contracts, storage
agreements and gathering agreements involving payments to or from any Acquired
Company during calendar year 2006 in excess of $5,000,000;




     (ix) any contract requiring a capital expenditure or a commitment for a capital
expenditure in excess of $5,000,000;



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     (x) any material obligation to make future payments, contingent or otherwise,
arising out of or relating to the acquisition or disposition of any business,
assets, or stock of any Acquired Company or of any other Person by any Acquired
Company;




     (xi) any joint venture, joint development, or partnership agreement;




     (xii) any natural gas or other futures or options trading agreements or any
price swaps, hedges, or futures instruments involving payments to or from any
Acquired Company during 2006 in excess of $5,000,000;




     (xiii) documents granting any power of attorney with respect to the material
affairs of any of the Company Subsidiaries;




     (xiv) agreements that have obligations of the Acquired Companies after the
Closing Date relating to the issuance of any securities or ownership interests of
the Acquired Companies or the granting of any registration rights with respect
thereto;




     (xv) any operational balancing agreement relating to the gas volumes of any
Acquired Company and involving payments to or from any Acquired Company in excess of
$5,000,000 within the remaining term of such agreement; and




     (xvi) any material agreement between any Acquired Company, on the one hand, and
a Seller or any Affiliate of a Seller (other than an Acquired Company), on the other
hand, other than (A) agreements that will be terminated at or prior to the Closing
under Section 6.1(x) and with respect to which the Acquired Companies shall
have no obligations or liabilities after the Closing and (B) bona fide arms’ length
agreements with respect to the purchase, sale, transportation, or storage of natural
gas, including operational balancing and measurement agreements; and




     (xvii) all material amendments, modifications, extensions or renewals of any of
the foregoing.




     (b) No Violations. Except as disclosed in Schedule 4.13, no Acquired
Company is in material breach or material violation of, or material default under, any of
the Scheduled Contracts. Each Scheduled Contract is, in all material respects, a valid
agreement, arrangement, or commitment of the Acquired Company which is a party thereto,
enforceable against the Acquired Company in accordance with its terms and, to the knowledge
of Sellers, is, in all material respects, a valid agreement, arrangement, or commitment of
each other party thereto, enforceable against such party in accordance with its terms,
except in each case (i) where enforceability may be limited by bankruptcy, insolvency, or
other similar laws affecting creditors’ rights generally and except where enforceability is
subject to the application of equitable principles or remedies or (ii) where such Scheduled
Contract has expired or been terminated by its terms. True and



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complete electronic copies
of the Scheduled Contracts were made available to Buyer on the Data Site.



     4.14 Employee Plans and Labor Matters.




     (a) Disclosure. Sellers have heretofore provided to Buyer or made available on
the Data Site (i) a true and complete copy of each material Company Employee Plan (each of
which is listed on Schedule 4.14(a)) and any accompanying summary plan
description, (ii) each trust agreement relating to such Company Employee Plan, (iii)
the most recent IRS Form 5500 for such Company Employee Plan, and (iv) the most recent
determination letter issued by the IRS with respect to any ERISA Plan intended to be
qualified under Section 401(a) of the Code.




     (b) ERISA. (i) Except as set forth in Schedule 4.14(b), none of the
ERISA Plans, is a “multiemployer pension plan,” as described in Section 3(37) of ERISA, or a
“multiple employer pension plan,” as defined in Section 4063 of ERISA, and (ii) no material
liability under Title IV of ERISA has been incurred by the Acquired Companies or any ERISA
Plan that has not been satisfied in full, other than liability for premiums that are not yet
due and payable to the Pension Benefit Guaranty Corporation. No ERISA Plan has an
“accumulated funding deficiency” (within the meaning of Section 302 of ERISA and Section 412
of the Code). Full payment has been made, or will be made in accordance with Section
404(a)(6) of the Code, of all contributions which any Acquired Company is required to pay
under the terms of each of the Company Employee Plans and Section 412 of the Code, and all
such amounts properly accrued through the date of this Agreement with respect to the current
plan year thereof have been paid by the Acquired Companies on or prior to the date of this
Agreement or have been properly recorded on the Combined Financial Statements.




     (c) Qualification. Each ERISA Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS to the effect
that it is so qualified, and to Sellers’ knowledge, nothing has occurred since the date of
such letter to adversely affect the qualified status of each such plan. Except as set forth
on Schedule 4.14(c), in the context of the transaction contemplated by this
Agreement, none of the Company Employee Plans or any other plan, program, or arrangement of
the Acquired Companies would result, separately or in the aggregate, in the payment of any
“excess parachute payment” within the meaning of Section 280G of the Code. Each ERISA Plan
has been operated in all material aspects in accordance with its terms and the requirements
of Applicable Law. To the knowledge of Sellers, there have been no non-exempt “prohibited
transactions” within the meaning of Section 4975 of the Code or Section 406 of ERISA with
respect to any ERISA Plan to which either of those sections may apply that could reasonably
be expected to result in a material liability to any of the Acquired Companies.




     (d) Labor Matters. Except as set forth in Schedule 4.14(d), none of
the Acquired Companies is or has been during the past three years (i) a party to, or bound
by, any collective bargaining agreement with a labor union or labor organization, or (ii)
the subject of any formal proceeding asserting that any Acquired Company has committed an



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unfair labor practice or is seeking to compel it to bargain with any labor organization as
to wages or conditions of employment. To the knowledge of Sellers, there are no
organizational efforts presently being made or threatened by or on behalf of any labor union
with respect to Employees of any Acquired Company. There is no pending or, to the knowledge
of Sellers, threatened grievance, arbitration demand, charge, complaint, or other legal
action against any Acquired Company by the National Labor Relations Board (the
“NLRB”) or any comparable agency of any state of the United States. None of the
Acquired Companies has taken any action with respect to the transactions contemplated
hereby that could constitute a “mass layoff” or “plant closing” within the meaning of
the Worker Adjustment and Retraining Notification (WARN) Act of 1989 or that could otherwise
trigger any notice requirement or liability under any local or state plant closing notice
law.




     (e) No Plan Liability. The Acquired Companies will not have any liability
after the Closing with respect to any litigation, if any, pending as of the Closing with
respect to (i) the El Paso Corporation Retirement Savings Plan, (ii) the El Paso Corporation
Cash Balance Plan, and (iii) any multiemployer pension plan under Subtitle E of Title IV of
ERISA listed on Schedule 4.14(e).



     4.15 Environmental and Pipeline Matters.




     (a) Environmental Matters. Except as set forth on Schedule 4.15(a),
(i) the Acquired Companies and their respective operations are in compliance with all
Applicable Environmental Laws in all material respects, (ii) none of the Acquired Companies
is the subject of any outstanding order or judgment from a Governmental Entity under
Applicable Environmental Laws requiring remediation or payment of a fine in an amount in
excess of $5,000,000, individually or in the aggregate, (iii) since January 1, 2004, neither
Sellers nor the Acquired Companies have received any written notice of any material
liability or material violation by any Governmental Entity under any Applicable
Environmental Law, other than such notices that have been resolved with the applicable
Governmental Entity without any liability or cost related thereto after the Closing Date,
and (iv) except for actions or conditions which have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect, to the
knowledge of Sellers, no condition exists on any property currently owned or leased by the
Acquired Companies which would subject any Acquired Company or such property to any remedial
obligations or liabilities (including liabilities to Third Parties or to private tort
plaintiffs) under any Applicable Environmental Laws that does not have an adequate reserve
(as determined in accordance with U.S. GAAP) on the Pro Forma Combined Financial Statements.




     (b) Pipeline Matters. As of the date of this Agreement, except as set forth on
Schedule 4.15(b), there have been no ruptures of any pipelines or related facilities
of the Acquired Companies resulting in significant injury, loss of life, or material
property damage, except to the extent that any liabilities or costs arising as a result of
such pipeline ruptures have been substantially resolved so that Sellers do not reasonably
expect that the Acquired Companies will incur material liabilities or material costs related
thereto after the Closing Date.



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     4.16 Insurance. Set forth on Schedule 4.16(i) is a list of all Acquired
Company Insurance Policies. No Acquired Company maintains any insurance policy with respect to its
own assets or operations or with respect to the assets or operations of any other Acquired Company.
All premiums due and payable with respect to the Acquired Company Insurance Policies have been
timely paid. No notice of cancellation of, or indication of an intention not to renew, any
Acquired Company
Insurance Policy has been received by Sellers or any Acquired Company. Set forth on
Schedule 4.16(ii) is an accurate and complete list of all pending claims in excess of
$1,000,000 made by, or related to, the Acquired Companies under any of the Acquired Company
Insurance Policies, including the following information with respect to each accident, loss, or
other event: (i) the identity of the claimant; (ii) the date of the occurrence; (iii) the status
as of the report date and (iv) the amounts paid or expected to be paid or recovered.



     4.17 Title to Property and Assets. Except (i) for the Excluded Assets and (ii) as
shown in Schedule 4.17, each of the Acquired Companies has good and valid title to its
material property interests and the material assets used or necessary to conduct the business of
the Acquired Company as presently conducted, free and clear of Encumbrances, other than Permitted
Encumbrances.



     4.18 Intellectual Property Rights. Except for the assets described in Section
7.9 or listed on Schedule 7.9, and excluding commercially available computer software
that is used in the business and operations of the Acquired Companies without being materially
customized or adapted by the Acquired Companies, to the knowledge of Sellers, (i) the Acquired
Companies own or have the right to use under a license, sublicense, other agreement all material
intellectual property necessary for the businesses conducted by the Acquired Companies, (ii) each
item of material intellectual property owned or used by the Acquired Companies as of the Balance
Sheet Date will be in all material respects owned or available for use by the Acquired Companies on
substantially the same terms and conditions immediately subsequent to the Closing, (iii) such
material intellectual property is not the subject of any Encumbrance or claim of license or
ownership of any Third Party that would materially adversely effect the Acquired Companies’ rights
in, or ability to use or exploit, such intellectual property, (iv) since January 1, 2004, the
Acquired Companies have not received any written notice, claim, or demand alleging any
misappropriation or infringement of any material intellectual property rights of Third Parties, (v)
the Acquired Companies have not engaged in any conduct, or omitted to perform any necessary act,
the result of which is reasonably likely to invalidate or adversely affect the enforceability of
any material intellectual property rights, and (vi) there is no infringement, misappropriation, or
improper use of the Acquired Companies’ rights in such material intellectual property by any Third
Party.



     4.19 Permits. Each Acquired Company possesses all Permits necessary for it to own its
assets and operate its business as currently conducted except where the failure to hold any such
Permit does not constitute a Material Adverse Effect on the Acquired Companies taken as a whole.
All such Permits are in full force and effect, and except as reflected in Schedule 4.19,
none of the Acquired Companies has received any written notifications concerning violations of any
such Permits, and there are no Proceedings pending or, to the Company’s knowledge, threatened
before any Governmental Entity, arbitrator, or mediator that seek the revocation, cancellation,
suspension, or adverse modification thereof, except for such matters as would not have,
individually or in the aggregate, a Material Adverse Effect.



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     4.20 Regulatory Matters. Except as shown on Schedule 4.20, each of the
Acquired Companies is in compliance, in all material respects, with (i) all applicable provisions
of the Natural Gas Act (the “NGA”) and (ii) all applicable orders and regulations of FERC
that pertain to the business or operations of that Acquired Company. Except as shown on
Schedule 4.20, the Acquired Companies, as may be applicable, also are in compliance in all
material respects with all of the Michigan Public Services Commission’s (“MPSC”) orders,
regulations, and authorizing or enabling statutes that pertain to the business or operations of the
Acquired Companies. Except as shown on Schedule 4.20, no approval of FERC or of the MPSC
is required in connection with execution of this Agreement by Sellers or the consummation of the
transactions contemplated hereby with respect to Sellers or the Acquired Companies.



     4.21 Bank Accounts. Set forth on Schedule 4.21 are (i) the names of each bank
or other financial institution with which any Acquired Company (other than the Related Companies)
maintains an account with an average balance in excess of $100,000 since January 1, 2005 and (ii) a
description of each such account, including account number, branch (if applicable), and authorized
signatories.



     4.22 Brokerage Fees. Except as set forth on Schedule 4.22, neither Seller nor
any of their Affiliates has retained any financial advisor, broker, agent, or finder or paid or
agreed to pay any financial advisor, broker, agent, or finder on account of this Agreement or the
transactions contemplated hereby for which Buyer or any Acquired Company shall have any
responsibility or liability.



     4.23 Transactions with Directors, Officers, and Employees. Except as set forth on
Schedule 4.23 and except for bona fide transactions in the ordinary course of business
consistent with past practice, since December 31, 2004, there have been no transactions between any
Acquired Company and any director, officer, employee, stockholder, member, or other “affiliate” (as
such term is defined in Rule 405 under the Securities Act) of any such Acquired Company or Sellers,
including loans, guarantees or pledges to, by or for any Acquired Company from, to, by or for any
of such Persons (other than the Guarantees).



     4.24 Long-Term Debt. The Acquired Companies have no other indebtedness for borrowed
money that would be treated as long-term debt under U.S. GAAP other than the Long-Term Debt and the
Ren-Cen Note. Set forth on Schedule 4.24 is the principal amount outstanding under each of
the items listed in the definition of Long-Term Debt (on a per item basis) as of the date hereof.



     4.25 GL Sale Agreement. Attached as Schedule 4.25 is a true and complete copy
of the GL Sale Agreement. The transactions contemplated by the GL Sale Agreement have been
consummated in accordance
with the terms of the GL Sale Agreement (without any amendments thereto or waivers thereunder)
prior to the date of this Agreement.



     4.26 Limitations. Except as and to the extent set forth in this Agreement, Sellers
make no representations or warranties whatsoever to Buyer and hereby disclaim all liability and
responsibility for any representation, warranty, statement, or information made, communicated, or
furnished (orally or in writing) to Buyer or its representatives (including any opinion,
information, projection, or advice that may have been or may be



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provided to Buyer by any director,
officer, employee, agent, consultant, or representative of Sellers or any Affiliate thereof,
including those on the Data Site or in the Confidential Memorandum dated September 2006). Sellers
make no representations or warranties to Buyer regarding the probable success or profitability of
the businesses of the Acquired Companies. With respect to any Related Company that is not operated
by an Affiliate of Sellers, the representations and warranties made in this Article 4 as to
such Related Company shall be limited to the knowledge of Sellers.




Article 5

REPRESENTATIONS AND WARRANTIES OF BUYER




     Buyer represents and warrants to Sellers as follows:



     5.1 Corporate Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.



     5.2 Authority Relative to This Agreement. Buyer has full corporate power and
corporate authority to execute, deliver, and perform this Agreement and any Related Agreements to
which it is a party. The execution, delivery, and performance by Buyer of this Agreement and such
Related Agreements and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action of Buyer, and no other action on the
part of Buyer or any Affiliate or shareholder of Buyer is necessary to authorize such execution,
delivery, and performance. This Agreement has been duly executed and delivered by Buyer and
constitutes, and each such Related Agreement executed or to be executed by Buyer has been, or when
executed will be, duly executed and delivered by Buyer and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Buyer, enforceable against
Buyer in accordance with their terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors’ rights generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.



     5.3 No Conflict. Assuming all consents, approvals, authorizations, and other actions described in
Section 5.4 have been obtained and all filings and notifications listed in Section
5.4 have been made, the execution, delivery and performance of this Agreement and the Related
Agreements by Buyer and the consummation by Buyer of the transactions contemplated hereby or
thereby do not and will not (a) violate or breach the certificate of incorporation or by-laws of
Buyer (b) violate or breach any Applicable Law binding upon Buyer, or (c) violate or result in any
breach of, or constitute a default (or event which with the giving of notice or lapse of time, or
both, would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance on any of the assets
or properties of Buyer under, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or properties to which Buyer
is a party or by which any of such assets or properties is bound or affected, except in the case of
clauses (y) and (z) as would not, individually or in the aggregate, reasonably be expected to
materially impede or delay Buyer’s ability to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.



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     5.4 Consents, Approvals, and Licenses. No consent, approval, authorization, license,
order, or Permit of, or declaration, filing, or registration with, or notification to, any
Governmental Entity, or any other Person, is required to be made or obtained by Buyer or any of its
Affiliates in connection with the execution, delivery, and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby or thereby, except
(a) as set forth in Schedule 5.4, (b) as may be necessary as a result of any facts or
circumstances relating solely to either of Sellers or the Acquired Companies, (c) necessary to
comply with applicable requirements of the HSR Act, (d) where the failure to obtain such consent,
approval, authorization, license, order, or Permit, or to make such declaration, filing,
registration or notification would not, individually or in the aggregate, reasonably be expected to
materially impede or delay Buyer’s ability to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.



     5.5 Available Funds. At the Closing, Buyer will have sufficient cash or other sources
of immediately available funds to enable it to pay the full Purchase Price to Sellers when required
hereunder.



     5.6 Investment Intent; Investment Experience; Restricted Securities. Buyer is
acquiring the Purchased Interests for its own account for investment and not with a view to, or for
sale or other disposition in connection with, any distribution of all or any part thereof. In
acquiring the Purchased Interests, Buyer is not offering or selling, and will not offer or sell,
for Sellers in connection with any distribution of the Purchased Interests, and Buyer does not have
a participation and will not participate in any such undertaking or in any underwriting of such an
undertaking except in compliance with applicable federal and state securities laws. Buyer
acknowledges that it is able to understand and appreciate the businesses conducted by the Acquired
Companies, can bear the economic risk of its investment in the Purchased Interests, and has such
knowledge and experience in financial and business matters that it is capable of evaluating the
merits and risks of an investment in the Purchased Interests. Buyer is an “accredited investor” as such term is defined in Regulation D under the Securities
Act. Buyer understands that the Purchased Interests will not have been registered under the
Securities Act or any applicable state securities laws, that the Purchased Interests will be
characterized as “restricted securities” under federal securities laws and that under such laws and
applicable regulations the Purchased Interests cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom.



     5.7 Legal Proceedings. There are no Proceedings pending against Buyer or its
Affiliates or, to the knowledge of Buyer, threatened against Buyer or its Affiliates seeking to
restrain, prohibit, or obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.



     5.8 Brokerage Fees. Neither Buyer nor any of its Affiliates has retained any
financial advisor, broker, agent, or finder or paid or agreed to pay any financial advisor, broker,
agent, or finder on account of this Agreement or the transactions contemplated hereby for which
Sellers or their Affiliates will have any responsibility or liability.



     5.9 Independent Investigation. Buyer hereby acknowledges and affirms that it has
completed its own independent investigation, analysis, and evaluation of the Acquired



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Companies,
that it has made all such reviews and inspections of the businesses, assets, results of operations,
condition (financial or otherwise), liabilities, and prospects of the Acquired Companies as it has
deemed necessary or appropriate, and that in making its decision to enter into this Agreement and
to consummate the transactions contemplated hereby it has relied solely on its own independent
investigation, analysis, and evaluation of such matters and the Acquired Companies and on the
representations and warranties expressly set forth in this Agreement and in the Related Agreements.




Article 6

CONDUCT OF ACQUIRED COMPANIES PENDING CLOSING




     Sellers hereby covenant and agree with Buyer as follows:



     6.1 Conduct and Preservation of the Acquired Companies. Except as provided in this
Agreement and Schedule 6.2 or as consented to in writing by Buyer (which consent will not
be unreasonably withheld, delayed, or conditioned), during the period from the date hereof to the
Closing, Sellers shall (to the extent it affects the Acquired Companies) and shall cause each
Acquired Company (other than the Related Companies) and shall use commercially reasonable efforts
to cause each of the Related Companies to: (i) conduct its operations in all material respects
according to its ordinary course of business consistent with past practice and in compliance with
all Applicable Laws; (ii) use commercially reasonable efforts to preserve, maintain, and protect in
all material respects its assets, rights and properties; (iii) keep the Acquired Company Insurance
Policies in effect through the Closing; and (iv) comply in all material respects with the licenses and terms and conditions of service
provided by FERC, the MPSC, or any other permitting or regulatory agency.



     Notwithstanding the foregoing, (w) Sellers and the Acquired Companies shall not be required to
make any payments or enter into or amend any contractual agreements, arrangements, or
understandings to satisfy the foregoing obligation unless such payment or other action is required
or consistent with past practice, (x) Sellers and the Acquired Companies shall terminate the
contracts described in Schedule 6.1(a) and any other intercompany financial arrangement
between one of the Acquired Companies, on the one hand, and Sellers or their Affiliates (other than
the Acquired Companies), on the other hand, on or prior to the Closing Date, (y) the Acquired
Companies shall assign to Sellers or their Affiliates (other than the Acquired Companies) the
contracts described in Schedule 6.1(b), and subject to Section 6.3(b), the Acquired
Companies shall be irrevocably and unconditionally released from liabilities and obligations
thereunder, and (z) subject to Sellers’ obligations under Sections 6.2 and 6.3,
Sellers and the Acquired Companies shall be entitled to increase or decrease the Cash Pool Program
Amount under the El Paso Cash Pool Program, but any increase thereto shall only be made on the last
day of a month (it being understood and agreed that, from and after the date hereof, Sellers shall
not cause or otherwise permit any “cash sweeps,” loans, dividends, payments or other distributions
from any Acquired Company to Sellers or any of their Affiliates (other than the Acquired Companies)
to occur under the El Paso Cash Pool Program on any day other than the last business day of a
month, unless such day is the Closing Date, in which case no such “cash sweeps,” loans, dividends,
payments, or other distributions shall be made).



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     6.2 Restrictions on Certain Actions. Without limiting the generality of Section
6.1, and except as set forth in Schedule 6.2, during the period between the date hereof
and the Closing, Sellers shall not (to the extent it affects the Acquired Companies) and shall not
permit any Acquired Company (other than the Related Companies), and shall use commercially
reasonable efforts to not permit any Related Company, in each case without the prior written
consent of Buyer, which consent shall not be unreasonably withheld, delayed, or conditioned, to:




     (a) amend its charter or bylaws or other governing instruments or organizational
documents;




     (b) (i) issue, sell, or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase, or otherwise) any shares of its
capital stock of any class or any other securities or equity equivalents; or (ii) amend any
of the terms of any such securities outstanding as of the date hereof;




     (c) (i) split, combine, or reclassify any shares of its capital stock or other equity
interests; (ii) except for the dividends required or permitted by Section 6.1(z) and
Section 6.3(c), declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of its capital
stock; (iii) except for the Note Redemption or the Consent Solicitation, repurchase, redeem
or otherwise acquire any of its securities; or (iv) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing a liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization of any Acquired
Company;




     (d) except for any indebtedness of Jackson Pipeline incurred in the ordinary course of
business consistent with past practice and except for Replacement Debt, create, incur,
guarantee, or assume any indebtedness for borrowed money or otherwise become liable or
responsible for the obligations of any other Person or make any loans, advances, or capital
contributions to, or investments in, any other Person;




     (e) (i) except as may be required by Applicable Law, enter into, adopt or make any
material amendments to or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase, pension, retirement, deferred compensation, employment,
severance, collective bargaining agreement or other employee benefit agreement, trust, plan,
fund or other arrangement for the benefit or welfare of any director, officer or employee;
(ii) except for normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Acquired Companies, taken as a whole, increase the benefits or
compensation to any director or employee of the Acquired Companies; (iii) increase the
benefits or compensation with respect to an officer of the Acquired Companies; (iv) pay to
any director, officer or employee any benefit not required by any employee benefit
agreement, trust, plan, fund, or other arrangement as in effect on the date hereof; (v)
terminate without cause or transfer any Employee or hire any person on behalf of the
Acquired Companies, except individuals that as of the date hereof are either being
interviewed or with respect to whom



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an offer of employment is pending; (vi) terminate
without cause or transfer any Selected Employee; or (vii) terminate without cause or
transfer any Listed Employee prior to January 31, 2007;




     (f) acquire, sell, lease, transfer, or otherwise dispose of, directly or indirectly,
any assets outside the ordinary course of business consistent with past practice, or any
assets that, individually or in the aggregate, have a value of more than $5,000,000;




     (g) acquire (by merger, consolidation, or acquisition of stock or assets, or otherwise)
any corporation, partnership, or other business organization or division thereof;




     (h) make any capital expenditure or expenditures in excess of the amounts set forth in
the capital expenditures budget set forth as Schedule 6.2(h), other than reasonable
expenditures in excess thereof made by any Acquired Company in connection with any emergency
or other force majeure events affecting such Acquired Company;




     (i) pay, discharge, or satisfy any material claims, liabilities, or obligations
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether asserted or
unasserted), other than the payment, discharge, or satisfaction of Excluded Liabilities on
or prior to the Effective Date or payment, discharge, or satisfaction in the ordinary course
of business consistent with past practice, or in accordance with their terms, of
liabilities reflected in the Pro Forma Combined Financial Statements or incurred since
the Balance Sheet Date in the ordinary course of business consistent with past practice; and




     (j) amend, modify, or change in any material respect any Scheduled Contract, or enter
into any new agreement or contract that would constitute a Scheduled Contract, except as
required by Section 6.1(x) and (y) or to the extent Sellers reasonably
believe that the Acquired Companies are required to amend, modify, or change any Scheduled
Contract, or enter into any new agreement or contract that would constitute a Scheduled
Contract, in each case in order to comply with obligations under such Scheduled Contracts
existing as of the date hereof or to comply with Applicable Laws, including a regulation of
or tariff filed with FERC or the MPSC;




     (k) change in any material respect any of the accounting principles or practices used
by it, except for any change required by reason of a concurrent change in U.S. GAAP (it
being understood that any such change in U.S. GAAP shall be ignored for purposes of
calculating the Adjusted Working Capital as of the Effective Date);




     (l) other than filings related to the capital expenditures listed on Schedule
6.2(h), make any material filings or submit any material document or material
information to FERC, the MPSC, or any other permitting or regulatory agency;




     (m) deposit into the El Paso Cash Pool Program any amount of cash or cash equivalents
constituting the proceeds of insurance received or receivable by any of the Acquired
Companies, to the extent same would be deducted from the calculation of Adjusted Working
Capital under clause (6) of the second sentence of Section 2.5(f) if
Adjusted Working Capital was being calculated as of the date of such determination; or



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     (n) commit or otherwise agree to do any of the foregoing;


provided, however, that nothing contained in this Agreement shall give to Buyer, directly or
indirectly, rights to control or direct the operations of the Acquired Companies prior to Closing.
Prior to Closing, the Acquired Companies shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision of their operations.




     6.3
87/8% Notes; Elimination of Intercompany Amounts; Termination of Cash Pool Program
Amount; Dividends.




     (a) 87/8% Notes. On or prior to the close of business on January 16, 2007,
Sellers shall furnish to Buyer a Notice of Sellers’ election to cause ANR Pipeline either
(i) to give notice of Sellers’ election to use cash on hand or funds available under the El
Paso Cash Pool Program to redeem the full principal amount of the
87/8% Notes outstanding,
together with all accrued and unpaid interest due thereon to the redemption date and the
applicable redemption premium (the “Note Redemption”), or (ii) to commence a consent
solicitation, which may be done alone or in connection with a tender offer, with respect to
the outstanding 87/8% Notes soliciting the consent of the requisite holders of 87/8% Notes (the
“Holders”) to eliminate Sections 3.07 through 3.10 from the 87/8%
Indenture (the “Consent Solicitation”). If ANR Pipeline pursues the Note
Redemption, Sellers shall deliver to Buyer copies of any notices, information, documents,
or other materials relating to the Note Redemption (collectively, the “Note
Redemption Documents”) not less than 5 days prior to the date on which the applicable
Note Redemption Document is to be delivered to the Trustee, the Holders, or any other
Person. If ANR Pipeline pursues the Consent Solicitation, Sellers shall cause ANR Pipeline
to commence such Consent Solicitation as promptly as practicable and shall deliver to Buyer
copies of each notice, information, solicitation, document, or other material relating to
the Consent Solicitation and the supplement to the 87/8% Indenture (the “Consent
Amendment”) that will be executed to effect the elimination of Sections 3.07 through
3.10 from the 87/8% Indenture (collectively, the “Consent Documents”) not less than 5
days prior to the date on which the applicable Consent Document is to be delivered to the
Holders, the Trustee, or any other Person. All Note Redemption Documents or Consent
Documents, as the case may be, shall be subject to Buyer’s approval, which shall not be
unreasonably withheld, delayed, or conditioned. Notwithstanding anything in this Agreement
to the contrary, in order to fund the amounts payable by ANR Pipeline with respect to the
Note Redemption or the Consent Solicitation, ANR Pipeline may incur indebtedness in an
original principal amount equal to the full principal amount of the 87/8% Notes, in the case
of the Note Redemption, or the amount necessary to consummate the Consent Solicitation, in
the case of the Consent Solicitation (such indebtedness, the “Replacement Debt”),
provided that such Replacement Debt shall permit ANR Pipeline to repay the same in whole
prior to the Closing and shall not contain any terms or conditions that are inconsistent
with, or cause Sellers to breach, the terms and conditions of this Agreement. Sellers
unconditionally undertake and agree that (i) the Note Redemption or the Consent Amendment
shall be completed prior to the close of business on February 27, 2007 and (ii) any
Replacement Debt, including all accrued but unpaid interest thereon through and including
the repayment date and all other fees, expenses, penalties and charges related thereto that
have not been paid prior to such date



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(collectively, the “Replacement Debt Repayment
Amount”), shall be repaid in full prior to the Closing, and the Acquired Companies shall
have no obligations or liabilities with respect thereto after the Closing.




     (b) Elimination of Intercompany Amounts. Effective on or prior to the
Effective Date, Sellers shall take all actions necessary or appropriate to cause all
intercompany accounts (other than imbalances that are to be settled with in-kind gas volumes
in accordance with the terms of existing operational balancing agreements in effect as of
the date hereof) or notes receivable due from EPC or any of its direct or indirect wholly
owned subsidiaries (other than the Acquired Companies) to any of the Acquired Companies
(other than the Related Companies) and all intercompany accounts (other than imbalances that
are to be settled with in-kind gas volumes in accordance with the terms of existing
operational balancing agreements in effect as of the date hereof) or notes payable of any of
the Acquired Companies (other than the Related Companies) to EPC or any of its direct or
indirect subsidiaries (other than the Acquired Companies) to be settled or eliminated (which
may include netting receivables against payables).




     (c) Termination of Cash Pool Program Amount. Effective on or prior to the
Closing Date, after giving effect to the actions specified in clauses (a) and (b) above, EPC
and its subsidiaries (other than the Acquired Companies) shall take all actions necessary or
appropriate (i) to pay in full the aggregate unpaid Cash Pool Program Amount as of the
Effective Date to the Acquired Companies under the El Paso Cash Pool Program and, upon
such payments, to cancel the El Paso Cash Pool Program and irrevocably and unconditionally
release and discharge the Acquired Companies from any obligations or liabilities thereunder,
(ii) to cause the Storage Company to pay a dividend to EPC of an amount in cash equal to the
payment received by the Storage Company under clause (c)(i) of this Section
6.3, and (iii) to cause ANR Pipeline to pay a dividend to the Pipeline Company, and the
Pipeline Company to pay a dividend to EP CNG, of an amount in cash equal to the sum of the
payment received by the ANR Pipeline under clause (c)(i) of this Section 6.3
and the purchase price paid by Seafarer US Pipeline System, Inc. at the closing of the
purchase and sale under the GL Sale Agreement, less the Replacement Debt Repayment Amount
outstanding as of the date calculations are being made pursuant to this sentence (all such
cash, the “Excluded Cash”). It is understood and agreed that the amount of the
payments to the Storage Company and the Pipeline Company under clause (c)(i) of this
Section 6.3 shall be equal to the aggregate unpaid Cash Pool Program Amount as of
the Effective Date and that, between the Effective Date and the Closing Date, Sellers shall
not cause or otherwise permit any “cash sweeps,” loans, dividends, payments or other
distributions from any Acquired Company to Sellers or any of their Affiliates (other than
the Acquired Companies) to occur under the El Paso Cash Pool Program.




     (d) Ren-Cen Matters. Prior to the Closing Date, Sellers shall take all actions
necessary or appropriate to cause all of the liabilities and obligations of ANR Pipeline or
any other Acquired Company with respect to any of the following to be transferred and
assumed by an Affiliate of Sellers (other than the Acquired Companies): (i) the Ren-Cen
Note; (ii) the Base Rent B payable by ANR Pipeline to ANR Real Estate under the Assignment
and Partial Assumption of Leases and Contracts, and Consent of Operating



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Lessor Agreement,
dated as of November 1, 2001 (the “Lease Assignment Agreement”), between ANR
Pipeline and Riverfront Holdings Phase II, Inc. and General Motors Corporation, as the
obligations of ANR Pipeline under the Lease Assignment Agreement are affected by that
certain Letter Agreement, dated November 1, 2001, from LMC Resources Capital Limited
Partnership to ANR Pipeline and ANR Real Estate; (iii) the “Retained Obligations” as such
term is defined in Section 2 of the Restated Lease Assignment Agreement referred to
in clause (ii) above; and (iv) any other liability or obligation arising from or related to
any of the foregoing matters or any of the assets described in the next sentence. Prior to
the Closing Date, Sellers shall take all actions necessary or appropriate to cause ANR
Pipeline to transfer to an Affiliate of Sellers (other than the Acquired Companies) (i) the
preferred stock in Riverfront Holdings Phase II, Inc. that ANR Pipeline owns and (ii) the
receivable of ANR Pipeline under the Interest Savings Agreement, dated as of November 1,
2001, between ANR Pipeline and LMC Resources Capital Limited Partnership relating to the
prior transactions with Riverfront Holdings Phase II, Inc. All agreements, contracts,
obligations, liabilities, assets and other arrangements related to or arising from the
matters described in this Section 6.3(d) are referred to herein as the “Ren-Cen
Matters”.




Article 7



ADDITIONAL AGREEMENTS




7.1 Access to Information and Confidentiality.




     (a) Access. Between the date hereof and the Closing, Sellers (i) shall give,
and cause the Acquired Companies (or, if Sellers do not have the right to do so with respect
to any Related Company, Sellers shall use commercially reasonable efforts to cause such
Related Company to give) to give, Buyer and its authorized representatives reasonable
access, during regular business hours and upon reasonable advance Notice, to such employees,
plants, pipelines, and other facilities, and such books and records, of the Acquired
Companies and Sellers, as are reasonably necessary to allow Buyer and its authorized
representatives to make such inspections as they may reasonably require to verify the
accuracy of any representation or warranty contained in this Agreement or as they may
reasonably require for the transition of the ownership of the Acquired Companies from
Sellers to Buyer and (ii) shall cause officers of the Acquired Companies to furnish Buyer
and its authorized representatives with such financial and operating data and other
information with respect to the Acquired Companies as Buyer may from time to time reasonably
request. With respect to any Related Company not operated by an Affiliate of Sellers,
Sellers shall use commercially reasonable efforts to cause the operator of such Related
Company to comply with the preceding sentence. Sellers shall have the right to have a
representative present at all times during any such inspections, interviews, and
examinations conducted at or on the offices or other facilities or properties of Sellers or
the Acquired Companies. Additionally, between the date hereof and the Closing, Buyer shall
hold in confidence all such information on the terms and subject to the conditions contained
in the Confidentiality Agreement. Buyer shall have no right of access to, and Sellers shall
have no obligation to provide to Buyer (collectively, the “Excluded Information”),
(1) bids received from others in connection with the transactions contemplated by this
Agreement and information and analysis



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(including financial analysis) relating to such bids,
(2) any information the disclosure of which Sellers have concluded, based on the advice of
legal counsel, is reasonably likely to jeopardize any privilege available to any Acquired
Company or Sellers relating to such information or to cause either Seller or any Acquired
Company or any of their Affiliates to breach a confidentiality obligation, provided that
Sellers shall use commercially reasonable efforts to obtain a waiver of any such
confidentiality obligations, and (3) information the disclosure of which Sellers have
reasonably concluded may jeopardize performance of Sellers’ obligations under antitrust laws
and the HSR Act to maintain the competitive operations of the Acquired Companies as separate
from Buyer, and free of consultation or coordination with Buyer until Closing; provided that
Sellers shall take all reasonable measures to disclose such information on a limited basis
in a manner permissible under antitrust laws and the HSR Act and such information shall not
be deemed to be Excluded Information after Closing. Buyer further agrees that if either
Seller or an Acquired Company inadvertently furnishes to Buyer copies of or access to
Excluded Information, Buyer will, upon either Seller’s request promptly return same to such
Seller or such Acquired Company together with any and all extracts therefrom or notes
pertaining thereto (whether in electronic or other format). Buyer shall indemnify, defend,
and hold harmless Sellers and their Affiliates from and against any Losses
asserted against or suffered by the Sellers Indemnitees relating to, resulting from, or
arising out of examinations or inspections made by Buyer or its authorized representatives
under this Section 7.1(a).




     (b) Retention by Sellers. Subject to the terms of Section 7.1(e),
Buyer agrees that Sellers may retain (i) a copy of all materials made available on the Data
Site, together with a copy of all documents referred to in such materials, (ii) all books
and records prepared in connection with the transactions contemplated by this Agreement,
including bids received from others and information relating to such bids, (iii) copies of
any books and records which may be relevant in connection with the defense of disputes
arising hereunder, and (iv) all consolidating and consolidated financial information and all
other accounting books and records prepared or used in connection with the preparation of
financial statements of Sellers or their Affiliates.



     (c) Record Preservation by Buyer. Buyer agrees that it shall preserve and keep
all books and records relating to the business or operations of the Acquired Companies on or
before the Closing Date in Buyer’s possession for a period of at least 7 years from the
Closing Date. After such 7-year period, Buyer may dispose of any of such books and records
unless Sellers provide at least 90 calendar days’ prior Notice to Buyer that Sellers elect,
at Sellers’ cost and expense, to remove and retain all or any part of such books and
records. Notwithstanding the foregoing, Buyer agrees that it shall preserve and keep all
books and records of the Acquired Companies relating to any investigation instituted by a
Governmental Entity or any litigation (whether or not existing on the Closing Date) if it is
reasonably likely that such investigation or litigation may relate to matters occurring
prior to the Closing, without regard to the 7-year period set forth in this Section
7.1(c).



     (d) Cooperation. Each Party agrees that it will cooperate with and make
available to the other Party (and its representatives) during normal business hours, all



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books and records, information, and employees (without substantial disruption of employment)
retained and remaining in existence with respect to the Acquired Companies after the Closing
Date which are necessary or useful in connection with (i) any Tax inquiry, audit,
investigation, or dispute, (ii) any litigation or investigation (including the Excluded
Liabilities), or (iii) any other matter requiring any such books and records, information,
or employees for any reasonable business purpose, but Sellers shall not be required by this
Section 7.1(d) to make available to Buyer any information referred to in clause (1)
of the fourth sentence of Section 7.1(a) or clause (ii) of Section 7.1(b),
or any of the items referred to in Section 7.9. The Party requesting any such books
and records, information, or access to such employees shall bear all of the out-of-pocket
costs and expenses (including reasonable attorneys’ fees and reimbursement for the
reasonable salaries and employee benefits for those employees who are made available)
reasonably incurred in connection with providing such books and records, information, or
employees. Sellers may require certain financial information relating to the Acquired
Companies’ businesses for periods prior to the Closing Date for the purpose of filing Tax
Returns and other governmental reports, and Buyer agrees to furnish such information to
Sellers at Sellers’ request and expense.




     (e) Confidentiality.




     (i) For 24 months after Closing, except as required by any Applicable Law,
Governmental Entity, or applicable stock exchange rule, Sellers shall not, and shall
use commercially reasonable efforts to cause their Affiliates not to, directly or
indirectly, disclose to any Person or use any information not then in the public
domain or generally known in the industry, in any form, acquired prior to the
Closing Date or after the Closing in connection with the Transition Services
Agreement or the other post-Closing actions contemplated hereby or thereby and
relating to the businesses and operations of the Acquired Companies (collectively,
“Buyer Protected Information”). If, after Closing, it becomes necessary for
a Seller or any Affiliate of a Seller (other than the Acquired Companies) to use
Buyer Protected Information that is imbedded with other information of Seller and
its Affiliates in the ordinary course of its business and operations and such Buyer
Protected Information cannot be reasonably separated or segregated from such other
information, then such Buyer Protected Information may be used by such Seller or its
Affiliate in the ordinary course of its business and operations.




     (ii) For 24 months after Closing, except as required by any Applicable Law,
Governmental Entity, or applicable stock exchange rule, Buyer shall not, and shall
use commercially reasonable efforts to cause its Affiliates (including the Acquired
Companies) not to, directly or indirectly, disclose to any Person or use any
information not then in the public domain or generally known in the industry, in any
form, acquired prior to the Closing Date or after the Closing Date in connection
with the Transition Services Agreement or the other post-Closing actions
contemplated hereby or thereby and relating to the businesses and operations of
Sellers and their Affiliates (other than the Acquired Companies) (collectively,
“Seller Protected Information”). If, after Closing, it becomes necessary
for a Buyer or any Affiliate of Buyer to use Seller Protected



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Information that is
imbedded with other information of Buyer and its Affiliates in the ordinary course
of its business and operations and such Seller Protected Information cannot be
reasonably separated or segregated from such other information, then such Seller
Protected Information may be used by Buyer or its Affiliate in the ordinary course
of its business and operations.




     (iii) Upon Buyer’s request, Sellers shall use commercially reasonable efforts
to enforce, on behalf of and for the benefit of the Acquired Companies, the terms of
any confidentiality or standstill agreements with any Third Party relating to the
Acquired Companies and the transactions contemplated hereby.




     (iv) The Parties acknowledge that TransCanada Pipelines Limited previously
executed the Confidentiality Agreement. The Confidentiality Agreement shall continue
in full force and effect until the Closing, at which time the Confidentiality
Agreement shall automatically terminate and be of no further force or effect.




     (v) Notwithstanding anything to the contrary set forth herein or in any other
written or oral understanding or agreement to which the Parties are parties or by
which they are bound (including the Confidentiality Agreement), each Party
authorizes each other Party (and the representatives of each other Party) to
disclose to any and all Persons, without limitation of any kind, the tax treatment
and tax structure of the transactions contemplated by this Agreement, and all
materials (including tax opinions and other tax analyses) provided to such other
Party by such authorizing Party (and its representatives); provided, however, that
nothing herein shall be construed as a waiver of any applicable attorney-client
privilege or privilege in respect of a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Code, or as requiring any
Person to waive such a privilege. For this purpose, “tax treatment” means U.S.
federal income tax treatment, and “tax structure” is limited to any facts that may
be relevant to that treatment.



7.2 Regulatory and Other Authorizations and Consents.




     (a) Filings. Each Party shall use all commercially reasonable efforts to
obtain all authorizations, consents, orders, and approvals of, and to give all notices to
and make all filings with, all Governmental Entities (including those pertaining to the
Governmental Approvals) that may be or become necessary for its execution and delivery of,
and the performance of its obligations under this Agreement and will cooperate fully with
the other Party in promptly seeking to obtain all such authorizations, consents, orders, and
approvals, giving such notices, and making such filings. To the extent required by the HSR
Act, each Party shall (i) file or cause to be filed, as promptly as practicable but in no
event later than the close of business on January 12, 2007 with the Federal Trade Commission
and the United States Department of



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Justice, all reports and other documents required to be
filed by such Party under the HSR Act concerning the transactions contemplated hereby; and
(ii) promptly comply with or cause to be complied with any requests by the Federal Trade
Commission or the United States Department of Justice for additional information, documents,
or studies concerning such transactions, in each case so that the waiting period under the
HSR Act applicable to this Agreement and the transactions contemplated hereby shall expire
as soon as practicable after the execution and delivery of this Agreement. Each Party
agrees to request, and to cooperate with the other Party in requesting, early termination of
any applicable waiting period under the HSR Act. Buyer shall pay the filing fees payable in
connection with the filings by the Parties required by the HSR Act.




     (b) Additional Undertakings of Buyer. Prior to the Closing, Sellers and Buyer
shall consult and cooperate with each other, and consider in good faith the views of each
other, in connection with the obtaining of all consents, licenses, Permits, waivers,
approvals, authorizations, or orders, including (i) keeping the other apprised of the status
of matters relating to the consummation of the transactions contemplated hereby, (ii)
providing copies of any written notices or other communications received by such Party or
its Affiliates with respect to the transactions contemplated hereby, (iii) subject to
Applicable Laws relating to the sharing of information, providing copies of any proposed
filings to be made with, or written materials submitted to, any Third Party and/or any
Governmental Entity in connection with the transactions contemplated hereby (including
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any Party), and (iv) if requested, using
commercially reasonable efforts to furnish each other all information required for any
application or other filing to be made pursuant to the rules and regulations of any
Applicable Law in connection with the transactions contemplated by this Agreement. In
connection with the foregoing, each Party (x) shall promptly notify the other Party in
writing of any communication received by such Party or its Affiliates from any Governmental
Entity and, subject to Applicable Laws, provide the other Party with a copy of any such
written communication (or written summary of any oral communication) and (y) shall not
participate in any substantive meeting or discussion with any Governmental Entity in respect
of any filing, investigation or inquiry concerning the transactions contemplated by this
Agreement unless it consults with the other Party in advance and, to the extent permitted by
such Governmental Entity, gives the other Party the opportunity to attend and participate in
the meeting. Notwithstanding anything in this Agreement to the contrary, Buyer shall not be
required to enter into or commit to any divestitures, licenses, hold separate arrangements,
consent decrees, undertakings, obligations, limitations, or any other measures or
arrangements (collectively, “HSR Measures”) related to or involving any assets,
properties, or businesses that any Acquired Company, Buyer, or any Affiliate of Buyer owns,
operates, or has the right to acquire; provided, that Buyer shall be required to
enter into or commit to any HSR Measures related to or involving any assets, properties, or
businesses of the Acquired Companies (but not those of Buyer or any Affiliate of Buyer) or
make other out-of-pocket costs or expenditures (i) that are reasonably necessary to satisfy
the conditions to Closing set forth in Sections 8.3 and 9.3 in the timeframe
contemplated by this Agreement and (ii) that, individually or in the aggregate, would not
reduce or reasonably be expected to reduce the expected benefits to Buyer of the
transactions contemplated by this Agreement by more than $150 million (determined on a net
present value basis using 10% as the discount rate) through the incurrence of out-of-pocket
costs or expenditures paid to Third Parties and/or the reduction of expected revenues caused
by



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implementing such HSR Measures, as determined in good faith by Buyer using the best
available information (the net present value as of the Closing Date of such expected
benefits, out-of-pocket costs, expenditures, and reduction in expected revenues, not to
exceed $150 million in the aggregate, is collectively referred to herein as the “HSR
Amount”). Buyer shall give Notice to Sellers of Buyer’s preliminary estimate (if
available) of the HSR Amount, in reasonable detail, not less than 5 days prior to Closing.
Sellers shall not, and shall cause the Acquired Companies not to, enter into or commit to
any HSR Measures related to or involving any assets, properties, or businesses that any
Acquired Company owns, operates, or has the right to acquire unless Sellers are instructed
by Buyer in writing to do so, in which case Sellers shall cause the Acquired Companies to
enter into and commit to such HSR Measures in accordance with Buyer’s instructions.




     (c) Transfer. If the transfer of any instrument, contract, license, lease,
permit, or other document to Buyer hereunder shall require the consent of any party thereto
other than Sellers, then this Agreement shall not constitute an agreement to assign the
same, and such item shall not be assigned to or assumed by Buyer, if an actual or attempted
assignment thereof would constitute a breach thereof or default thereunder. In such
case, Sellers and Buyer shall cooperate and each shall use commercially reasonable efforts
to obtain such consents to the extent required of such other parties and, if and when any
such consents are obtained, to transfer the applicable instrument, contract, license, lease,
Permit, or other document. If any such consent cannot be obtained, Sellers shall cooperate
in any reasonable arrangement designed to obtain for Buyer all benefits, privileges,
obligations and privileges of the applicable instrument, contract, license, lease, Permit,
or document, including possession, use, risk of loss, potential for gain and dominion,
control and demand. Buyer agrees that (i) if any of the Excluded Assets require the consent
of any party thereto other than an Acquired Company, Sellers, or any of their respective
Affiliates and such consent is not received prior to Closing, Buyer shall cooperate with
Sellers to obtain such consents to the extent required of such other parties and, if and
when any such consents are obtained, to transfer the applicable instrument, contract,
license, lease, permit, or other document, and (ii) if any such consent cannot be obtained,
Buyer shall cooperate in any reasonable arrangement (which shall include indemnification of
the Buyer Indemnitees from and against any and all liabilities or other obligations related
thereto) designed to obtain for Sellers all benefits, privileges, obligations and privileges
of the applicable instrument, contract, license, lease, permit, or document, including
possession, use, risk of loss, potential for gain and dominion, control and demand;
provided, however, that Sellers shall bear all out-of-pocket costs and expenses (including
reasonable attorneys’ fees) incurred in connection with Buyer’s cooperation in such matters.



     (d) Third Party Consents. Sellers shall use their commercially reasonable
efforts to obtain all necessary consents, waivers, authorizations, and approvals of all
Third Parties (other than Governmental Entities, which are addressed in Section
7.2(a) and (b)), required in connection with the Closing and the performance of
this Agreement as soon as practicable. Buyer shall use all commercially reasonable efforts
to assist Sellers in obtaining any such Third Party consents and approvals, including
providing to such Third Parties such financial statements and other publicly available
financial



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information with respect to Buyer as such Third Parties may reasonably request.
Nothing in this Section 7.2(d) shall require Buyer to make any expenditure or
provide any guarantee, indemnity, or financial assurance or other form of security in
connection with obtaining, or seeking to obtain, any consent of a Third Party




7.3 Employees and Employee Plans.




     (a) Employment. Following the Closing Date, any Person who as of the Closing
Date is actively employed by an Acquired Company and (i) was actively employed by an
Acquired Company as of January 1, 2007 or (ii) whose employment was or will be transferred
to an Acquired Company on or after January 1, 2007 (after the date hereof, Sellers shall
transfer to an Acquired Company only employees whose employment is substantially related to
providing services to, for, or on behalf of the Acquired Companies) (all such Persons are
referred to herein individually as an “Employee” and collectively as the
“Employees”) shall continue in the employment of the Acquired Companies after the
Closing on substantially similar terms and conditions of employment as existed prior to the
Closing, including the same or higher base pay.
Schedule 7.3(a) sets forth the names of all Employees as of the date hereof and
shall be updated as of Closing. Within five business days after the date hereof, Sellers
shall provide Buyer a list of the Employees (current as of the date hereof) that includes
the name, job title, the market reference point of the position, compensation data
(including base salary, current short-term and long-term incentive targets and actual base
pay and bonus for the last two completed years), work location, date of hire, recognized
service date, and any other information reasonably requested by Buyer that is necessary for
payroll and benefits administration of each Employee, and a follow-up list of any additional
employees who are transferred under clause (ii) above within five days of such transfer.
Any Person who, as of the Closing Date, is employed by the Acquired Companies and is on
leave of absence, layoff or on short-term or long-term disability (the name of each such
Person will be set forth on Schedule 7.3(a)) shall be transferred to the employment
of Sellers prior to the Closing Date; provided, however, that if such Person
returns to active employment status within six months of the Closing Date, the Acquired
Companies or Buyer or its Affiliates shall employ such Person as an Employee.



     (b) Selected Employees. Set forth on Schedule 7.3(b) is a list of
employees who provide services to, for, or on behalf of the Acquired Companies, but who are
currently employed by an Affiliate of Sellers (other than the Acquired Companies) (the
“Listed Employees”). Within five business days after the date hereof, Sellers shall
provide Buyer a list of the Listed Employees (current as of the date hereof) that includes
the name, job title, the market reference point of the position, compensation data
(including base salary, current short-term and long-term incentive targets and actual base
pay and bonus for the last two completed years), work location, date of hire, recognized
service date, and any other information reasonably requested by Buyer that is necessary for
payroll and benefits administration for each of the Listed Employees. Sellers shall, as
soon as practicable after the date hereof but no later than January 8, 2007, make each such
employee available for employment interviews with Buyer. Sellers shall take all reasonable
measures to encourage the Listed Employees to remain in their current positions. No later
than January 31, 2007, Buyer shall provide Sellers a written list of not



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less than 50% of
the Listed Employees (the “Selected Employees”) and Sellers shall transfer the
employment of such Selected Employees to the Acquired Companies immediately prior to
Closing, at which time such Selected Employees shall become Employees. Notwithstanding the
foregoing, any Selected Employee who is on leave of absence or on short-term disability (but
excluding employees on layoff or on long-term disability) shall continue in the employ of
their current employer. Following the Closing, if such Selected Employee returns to active
employment status within six months of the Closing Date, Sellers shall terminate such
employee and such Person shall be employed by the Acquired Companies, Buyer, or its
Affiliates. Any such Selected Employee who is on layoff or on long-term disability shall
continue in the employ of their current employer and shall remain the responsibility of
Sellers and their Affiliates. None of the Acquired Companies, Buyer, or Buyer’s Affiliates
shall assume any liability or obligation with respect to any Listed Employee who does not
become an Employee.




     (c) Withdrawal from Company Employee Plans. As of the Closing, the Acquired
Companies shall cease to participate in all Company Employee Plans, except as may be
otherwise provided in the Transition Services Agreement. Sellers and their
Affiliates shall retain all obligations and liabilities with respect to any benefits
earned by the Employees under all Company Employee Plans except as set forth on Schedule
7.3(c).



     (d) Continuing Employees. Buyer shall, and shall cause each Acquired Company
to, for the 2007 calendar year, provide to each Employee, while employed by an Acquired
Company, (i) a base salary or wages and target bonus opportunity, as applicable, that are
not less than the base salary or wages or target bonus opportunity, as applicable, provided
to such Employee immediately prior to the Closing Date and (ii) 401(k), health, medical,
dental, life insurance, and long term disability which will be no less favorable (taken as a
whole) to those provided to each such Employee immediately prior to the Closing.



     (e) Severance Benefits. For a period of not less than 12 months following the
Closing Date, Buyer agrees to provide, or cause an Affiliate of Buyer to provide, to the
Employees severance pay and continued medical and dental (if any) and out-placement (if any)
benefits that are not less than the severance benefits the Employees would be entitled to
receive under the severance policy of EPC as in effect immediately prior to the Closing.
Any such severance payments will not be reduced by any stay-on bonus (if any) payable under
Section 7.3(g).



     (f) Service Credit. Buyer shall, and shall cause the Acquired Companies to
grant all Employees credit under the plans and benefit programs of Buyer and its Affiliates
for all service prior to the Closing for all purposes (other than benefit accruals under any
defined benefit plan or under any post-retirement health and welfare plan which provides for
employer contributions) for which such service was recognized by the Acquired Companies,
Sellers, or any Affiliate of Sellers. In addition, Buyer shall, and shall cause the
Acquired Companies to, waive any pre-existing condition exclusions and actively-at-work
requirements and provide that any expenses incurred on or before the Closing Date by any
such individuals or their covered dependents shall be taken into



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account for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket provisions under
health plans covering such individuals after the Closing in the plan year in which the
Closing occurs to the extent such waivers and credits are supported by adequate
documentation provided to Buyer by Sellers or their Affiliates within 90 days after the
Closing Date. Sellers and their Affiliates shall retain responsibility for all medical,
vision, dental, life insurance, accident insurance and disability coverage claims incurred
by the Employees as of the Closing Date to the extent covered under a plan sponsored or
maintained by a Seller or an Affiliate of a Seller. For purposes of the preceding sentence,
a claim shall be deemed to have been incurred (i) for medical, vision, and dental coverage,
on the date the service giving rise to the claim is performed, (ii) for life and accident
insurance coverage, on the date of death or accident, and (iii) for disability coverage, on
the date of disability. As of the Closing, each Employee will be immediately credited with
a pro-rata share of personal time off under Buyer’s personal time off program and will
receive a number of vacation days for the 2007 calendar year equal to the number of vacation
days that would have been credited on January 1, 2007 under Buyer’s vacation policy less the
number of days of paid time off that each such Employee has taken with Sellers and their
Affiliates during 2007.
Sellers shall, as soon as practicable after the Closing, provide Buyer with a list
which sets forth the number of days of paid time off taken by each of the Employees with
Sellers and their Affiliates during 2007.




     (g) Stay-on Bonus and Severance Reimbursement. Buyer shall, or shall cause an
Affiliate to, pay the stay-on bonuses to the eligible Employees as provided in Part
I of Schedule 7.3(g). If Buyer or any of the Acquired Companies terminates the
employment of any of the Employees listed in Part II of Schedule 7.3(g) on
or before the last day of the third full month following the Closing Date, Buyer shall pay
such Employee the severance amount shown for such Employee in Part II of
Schedule 7.3(g). If Buyer or any of the Acquired Companies does not terminate the
employment of any of the Employees listed in Part II of Schedule 7.3(g) on
or before the last day of the third full month following the Closing Date, then Buyer shall
promptly reimburse and pay to Sellers the severance amount shown for such Employee in
Part II of Schedule 7.3(g).



     (h) 2006 Year Annual Bonus. Sellers shall be responsible for any bonus
payments due for calendar year 2006 under the terms of Sellers’ bonus plans and arrangements
covering any Employee (the “Bonus Payment”). Sellers shall determine the amount of
the Bonus Payment for each Employee. If the Closing occurs before the date on which the
Bonus Payments are paid to each Employee, then Sellers shall transfer to Buyer on or before
the date on which the Bonus Payments are to be paid by Buyer the aggregate amount of the
Bonus Payments to be paid and Buyer shall make such payments or cause such payments to be
made to the Employees in the ordinary course.



     (i) Solicitation. For a period of 12 months after the Closing Date, Buyer and
its Affiliates shall not, without the prior written consent of Sellers, directly solicit,
encourage, or induce any employee of Sellers or their Affiliates (other than the Acquired
Companies) to become an employee, contractor, or consultant of Buyer or its Affiliates. For
a period of 12 months after the Closing Date, Sellers and their Affiliates shall not,
without the prior written consent of Buyer, directly solicit, encourage, or induce any



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employee of any of the Acquired Companies to become an employee, contractor, or consultant
of Sellers or their Affiliates. The restrictions in this Section 7.3(i) shall not
prohibit general, non-targeted solicitations of employees by Buyer or Sellers or their
Affiliates.




     (j) El Paso Corporation Retirement Savings Plan. Prior to the Closing, Sellers
shall take all action necessary such that, immediately prior to the Closing, all Employees
who participate in the El Paso Corporation Retirement Savings Plan (the “Savings
Plan”) shall become fully vested in any unvested portion of their accounts under the
Savings Plan. Buyer shall cause a 401(k) plan that is sponsored by Buyer or an Affiliate of
Buyer to accept the rollover of any Savings Plan distribution, in cash, or a cash equivalent
(e.g., check or wire transfer), and including any outstanding Savings Plan loans.



     (k) El Paso Corporation Cash Balance Plan. Prior to the Closing, Sellers shall
take all action necessary such that, immediately prior to the Closing, all Employees who
participate in the El Paso Corporation Cash Balance Plan (“Cash Balance Plan”) shall
(i) become fully vested in any unvested portion of their Cash Balance Plan accrued
benefit and (ii) be entitled to a distribution from the Cash Balance Plan as provided under
the terms of the Cash Balance Plan as soon as practicable after the Closing.



     (l) Flexible Spending Accounts. Buyer shall cause the Acquired Companies to
participate in the dependent care spending account and the medical care flexible spending
account components of Buyer’s benefit plans (the “Buyer’s FSA”) as of the Closing
Date. Sellers shall take all steps necessary or appropriate so that the account balances
(reflecting salary deductions, deemed employer contributions (if any), and claims paid (if
any)) under Sellers’ dependent care and medical care flexible spending accounts (the
“Sellers’ FSA”) of each Employee who has elected to participate therein in the year
in which the Closing occurs shall be transferred, as soon as practicable after the Closing,
from Sellers’ FSA to Buyer’s FSA. In addition, if, as of the Closing Date, the claims paid
by Sellers with respect to an Employee under Sellers’ FSA do not equal or exceed the
aggregate salary deductions and deemed employer contributions allocable to such Employee,
Sellers shall, immediately after the Closing Date, transfer an amount of cash to Buyer equal
to the difference between such claims paid and such aggregate salary deductions and deemed
employer contributions. Buyer shall take all steps necessary or appropriate so that the
contribution elections of each such Employee as in effect immediately before the Closing
remain in effect under Buyer’s FSA immediately after the transfer of such account balance.
After the end of the period during which claims can be paid from an Employee’s FSA with
respect to the calendar year following Closing, Buyer shall transfer to Sellers an amount of
cash with respect to each such Employee equal to the lesser of (i) the amount by which the
salary deductions by Buyer with respect to such Employee under Buyer’s FSA have exceeded the
claims paid by Buyer with respect to such Employee under Buyer’s FSA and (ii) the amount, if
any, of the negative balance of such Employee under Sellers’ FSA as of the Closing. Buyer’s
FSA shall assume responsibility for all applicable dependent care and medical care claims of
each Employee for the year in which the Closing occurs. Prior to the Closing Date, Sellers
shall furnish Buyer with a schedule indicating, with respect to Sellers’ FSA, the salary



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deduction elections of the Employees along with their account balances (whether positive or
negative), amounts paid in claims, and salary deductions remaining.




     (m) Multiemployer Plans. To the extent the Acquired Companies become entitled
after Closing to any refund, reimbursement, or return of any multiemployer plan
contributions covering any periods prior to the Closing, Buyer shall promptly reimburse such
amounts to Sellers. To the extent the Acquired Companies, Buyer or Buyer’s Affiliates
become liable for any withdrawal liability in connection with a multiemployer plan with
respect to which the Acquired Companies made contributions prior to the Closing, Sellers
shall indemnify Buyer for such liability.




     (n) Records and Documentation. As soon as practicable after the date hereof,
Sellers and their Affiliates shall provide Buyer general job descriptions by job bands as
may apply to any of the Employees. As soon as practicable after the Closing, Sellers and
their Affiliates shall provide to Buyer all employee records of the Selected Employees
including documentation required under the U.S. Department of Transportation regulations
regarding drug and alcohol testing of Selected Employees.



     7.4 Public Announcements. The initial press release or releases to be issued in
connection with the execution of this Agreement shall be mutually agreed upon by the Parties prior
to the issuance thereof. Prior to the 5th business day after the Closing, Buyer and Sellers shall
consult with each other before they or any of their Affiliates issue any other press release or
otherwise make any other public statement with respect to this Agreement or the transactions
contemplated hereby. For a 15 day period after any termination of this Agreement, Buyer and
Sellers shall consult with each other before they or any of their Affiliates issue any other press
release or otherwise make any other public statement with respect to such termination. Buyer and
Sellers and their Affiliates shall not issue any such other press release or make any such other
public statement prior to any such consultation (but no approval thereof shall be required), except
as may be required by Applicable Law or stock exchange rule.



     7.5 Amendment of Schedules. Each Party agrees that, with respect to the
representations and warranties of such Party contained in Articles 4 and 5 of this
Agreement, such Party shall have the continuing obligation until the Closing to correct,
supplement, or amend promptly the Schedules to such Party’s Disclosure Letter with respect to any
matter hereafter arising or discovered which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in the Schedules. Any such correction,
supplement, or amendment shall be delivered to the other Party no later than three business days
prior to the Closing Date. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Articles 8 and 9 have been
fulfilled, the Schedules to a Party’s Disclosure Letter shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed to exclude all
information contained in any such correction, supplement, or amendment thereto, but if the Closing
shall occur, then all matters disclosed pursuant to any such supplement or amendment at or prior to
the Closing shall be waived and no Party shall be entitled to make a claim thereon under the terms
of this Agreement or otherwise.



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     7.6 Fees and Expenses. Except as otherwise provided in this Agreement, all fees and
expenses, including fees and expenses of counsel, financial advisors, and accountants incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the Party
incurring such fee or expense, whether or not the Closing occurs. Buyer shall be obligated to pay
any and all costs of any audit of the Acquired Companies as may be required to enable Buyer to
complete and file any filing by Buyer or an Affiliate of Buyer with the SEC.



     7.7 Transfer Taxes. All sales, transfer, filing, recordation, registration, and
similar Taxes and fees arising from or associated with the transactions contemplated hereunder,
whether levied on Buyer or Sellers, shall be borne equally by Buyer and Sellers, and Buyer and
Sellers shall cooperate in filing all necessary documentation with respect to, and each make their
respective payments of, such Taxes and fees on a timely basis and if required by Applicable Law,
Buyer and Sellers shall
and shall cause their respective Affiliates to join the execution of any such documentation.
For avoidance of doubt, the provisions of this Section 7.7 do not apply to any Taxes and
fees arising from or associated with any transfer of the Excluded Assets described in Section
7.9.



     7.8 [Intentionally Omitted].



     7.9 Excluded Assets. Notwithstanding Article 6 hereof, the transactions
contemplated by this Agreement exclude, and prior to the Closing Date Sellers shall cause an
Acquired Company to transfer to Sellers or any of their Affiliates (other than the Acquired
Companies), the following (collectively, the “Excluded Assets”):




     (a) the assets listed or described on Schedule 7.9;




     (b) except to the extent contemplated in Section 7.12, the Acquired Company
Insurance Policies and all rights under any the Acquired Company Insurance Policies,
including all rights to any proceeds payable under the Acquired Company Insurance Policies,
whether payable before or after the Closing Date;




     (c) the Excluded Information;




     (d) the Excluded Cash distributed by dividend by the Storage Company and the Pipeline
Company prior to the Closing under Section 6.3;




     (e) the El Paso Marks;




     (f) the GL Sale Agreement and ANR Capital Corporation, El Paso Great Lakes Company,
L.L.C. and their respective subsidiaries;




     (g) the preferred stock and receivable referred to in Section 6.3(d); and




     (h) the Excluded Subsidiaries.



     Notwithstanding anything to the contrary provided elsewhere in this Agreement, Sellers’
representations and warranties in Article 4 shall not apply to any of the Excluded Assets
other than the representations in Section 4.7(a) and Section 4.16.



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7.10 Guarantee Matters.





     (a) Guarantees. Buyer and Sellers shall cooperate and use commercially
reasonable efforts to cause as of the Closing Date (i) the Guarantees and any liabilities
related thereto to be released as to Sellers and their Affiliates (other than the Acquired
Companies) and (ii) substitute arrangements, if required, of Buyer or its Affiliates to be
in effect as of Closing. If Buyer and Sellers are unable to cause any of the Guarantees to
be released as to Sellers and their Affiliates (other than the Acquired Companies) prior to
the Closing Date, then (i) Buyer shall provide (or cause to be provided) to Sellers a
“back-to-back” guaranty in a form and from a Person reasonably acceptable to Sellers
guaranteeing the performance by Buyer of all obligations under such unreleased
Guarantees from and after the Closing Date and (ii) Sellers shall, and shall cause their
Affiliates to, maintain such Guarantees after the Closing Date so long as such
“back-to-back” guaranty remains in full force and effect.




     (b) Replacement Guarantees. As promptly as practicable after the date hereof,
with respect to each Jointly Held Guarantee, Sellers shall use commercially reasonable
efforts to cause a new guarantee, letter of credit, bond, cash deposit, or other financial
assurance, as the case may be, to be issued, at no cost or expense to Buyer or any Acquired
Company, such that the applicable Acquired Company will hold a stand-alone guarantee, letter
of credit, bond, cash deposit, or other financial assurance for the obligations that are
secured by such Jointly Held Guarantee on terms no less favorable than those contained in
such Jointly Held Guarantee as of the date hereof or as provided for in the tariff of such
Acquired Company (“Replacement Guarantee”). If a Replacement Guarantee has not been
issued for any Jointly Held Guarantee prior to Closing, (i) Sellers shall, if requested by
Buyer or the applicable Acquired Company, enforce such Jointly Held Guarantee on behalf of
and for the benefit of such Acquired Company (proportionately and with equal priority with
the rights, if any, of Sellers and its Affiliates under such Jointly Held Guarantee) until
such Jointly Held Guarantee has been replaced by the Acquired Companies (provided, that the
applicable Acquired Company may assert, on its own behalf, its rights under such Jointly
Held Guarantee and Sellers, at their sole cost and expense, shall cooperate with such
Acquired Company in pursuing such claims) and (ii) Sellers shall, at their sole cost and
expense, continue to use commercially reasonable efforts to obtain such Replacement
Guarantee, and Buyer shall cause the Acquired Companies to cooperate with Sellers in such
endeavor.



     7.11 Use of El Paso Marks. El Paso Marks may appear on some of the assets of the
Acquired Companies, including on signs throughout the real property of the Acquired Companies, and
on supplies, materials, stationery, brochures, manuals, and similar consumable items of the
Acquired Companies. Buyer acknowledges and agrees that other than as set forth in this Section
7.11, it obtains no right, title, interest, license, or any other right whatsoever to use the
El Paso Marks. In furtherance thereof, Buyer shall (a) within six months after the Closing Date
(the “Transition Period”), discontinue use of El Paso Marks and, remove El Paso Marks from
the assets of the Acquired Companies, including signs on the real and personal property of the
Acquired Companies, and, upon Sellers’ request, provide written confirmation thereof to Sellers.
Buyer agrees never to challenge the validity of Sellers’ (or its Affiliates’) ownership of El Paso
Marks or any application for registration thereof or any registration thereof or any rights



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of
Sellers or their Affiliates therein as a result, directly or indirectly, of its ownership of the
Acquired Companies. Buyer will not do any business or offer any goods or services under El Paso
Marks. After the expiration of the Transition Period, Buyer will not send, or cause to be sent,
any correspondence or other materials to any Person on any stationery that contains any El Paso
Marks or otherwise operate the Acquired Companies in any manner which would be reasonably likely to
cause confusion, mistake or deception that Buyer is associated or affiliated with Sellers’ or their
respective Affiliates’ license to use the El Paso Marks.




     7.12 Insurance. Buyer acknowledges and agrees that, following the Closing, the
Acquired Company Insurance Policies shall be terminated or modified to exclude coverage of all or
any portion of the Acquired Companies by Sellers, and, as a result, Buyer will need to at or before
Closing obtain at its sole cost and expense replacement insurance, including insurance required by
any Third Party to be maintained by any of the Acquired Companies. Buyer further acknowledges and
agrees that Buyer will need to provide to certain Governmental Entities and third parties evidence
of such replacement or substitute insurance coverage for the continued operations of the businesses
of the Acquired Companies following the Closing. Notwithstanding the foregoing, if any claims are
made or Losses occur prior to the Closing Date that relate solely to the business activities of the
Acquired Companies and such claims, or the claims associated with such Losses, may be made after
the Closing against any Acquired Company Insurance Policies that have been underwritten by Third
Parties, then Sellers shall use commercially reasonable efforts so that the Acquired Companies can
file, notice, and otherwise continue to pursue these claims under the terms of such Third Party
insurance policies. If Sellers or any of their Affiliates collect any insurance proceeds
(excluding deductibles, self retentions, retroactive premiums (but only to the extent related to
the recovery for such claims), and similar items, the cost of which shall be for Buyer’s account)
with respect to such claims after the Closing, Sellers shall promptly remit such proceeds to Buyer.



     7.13 Buyer Guaranty. Concurrently with the execution and delivery of this Agreement
by Buyer, Buyer Guarantors have executed and delivered to Sellers the Buyer Guaranty.



     7.14 Additional Financial Statements. Sellers shall provide Buyer as soon as
reasonably practicable after the end of each calendar month after the date of this Agreement until
the Closing Date any financial statements or summary consolidated financial information regarding
the Acquired Companies as are customarily prepared by Sellers or the Acquired Companies.



     7.15 Capital Expenditures. Prior to the Closing, Sellers shall use commercially
reasonable efforts to cause the Acquired Companies to make the capital expenditures set forth on
Schedule 6.2(h) substantially in accordance with the capital expenditure budget made
available to Buyer. The Parties acknowledge that, notwithstanding anything herein to the contrary,
the contracts or agreements entered into by any Acquired Company with a Third Party contractor or
sub-contractor pursuant to which such capital expenditure or expenditures will be made as
contemplated in Schedule 6.2(h) shall not constitute a Scheduled Contract and shall not
constitute a breach or violation of the obligations of Sellers in Sections 6.1 or
6.2.



     7.16 Transition Services Agreement. Sellers and Buyer shall use all commercially
reasonable efforts to negotiate in good faith to complete the exhibits and attachments to the



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Transition Services Agreement as promptly
as practicable after the date of this Agreement, and, in any event, prior to Closing, using as
a basis for such efforts the general descriptions of transition services in the Transition Services
Agreement. The intention of the Parties is that the Parties will provide such services over the
term of the Transition Services Agreement, as the scope of such services is determined by the
Parties, as are necessary to enable the Acquired Companies, on one hand, and EPC and its
Affiliates, on the other hand, to operate their respective businesses post-Closing substantially in
the manner operated before Closing.




     7.17 HSR Amount.




     (a) Sellers Payment. Sellers shall be responsible to Buyer for 50% of the
amount, if any, by which the HSR Amount exceeds $50 million. The total amount payable by
Sellers to Buyer under this Section 7.17 shall not exceed $50 million.




     (b) Statement. If Buyer reasonably determines that the HSR Amount exceeds $50
million, no later than 30 days after the Closing Date, Buyer shall prepare and deliver to
Sellers a written statement showing (i) its good faith estimate of the HSR Amount (which
shall be based on the best available information through the date the same is delivered to
Sellers), (ii) its calculation, in reasonable detail, of the HSR Amount, together with
supporting documentation, and (iii) its good faith estimate of Sellers’ share of the HSR
Amount. Buyer agrees, at no cost to Sellers, to give Sellers and their authorized
representatives reasonable access to such employees and offices and such books and records
of Buyer and its Affiliates as are reasonably necessary to allow Sellers and their
authorized representatives to confirm the HSR Amount.




     (c) Dispute Resolution. Buyer’s statement shall become final and binding on
Sellers and Buyer as to the HSR Amount on the 30th day following the date the statement is
received by Sellers, unless prior to the that date, Sellers deliver Notice to Buyer of their
disagreement. Sellers’ Notice shall set forth all of Sellers’ disputed items together with
Sellers’ proposed changes thereto, including an explanation in reasonable detail of the
basis on which Sellers propose such changes. If Sellers have delivered a timely Notice,
then Sellers and Buyer shall use their good faith efforts to reach written agreement on the
HSR Amount. If Sellers and Buyer have not agreed on the HSR Amount by the 60th day
following Sellers’ receipt of the Buyer’s statement, then determination of the HSR Amount
shall be submitted to binding arbitration by an independent nationally recognized accounting
firm or other recognized expert without any material financial relationship to either
Sellers or Buyer, as mutually selected by Sellers and Buyer within 5 business days after the
end of the foregoing 90-day period (or in the absence of agreement between Sellers and Buyer
by the close of business on such 5th business day as selected by the president of the
American Arbitration Association or his designee). The arbitrator’s determination shall in
no event be more favorable to Buyer than the HSR Amount reflected on the Buyer’s statement
or more favorable to Sellers than the HSR Amount shown in Sellers Notice of disagreement.
The fees and expenses of such arbitration shall be borne 50% by Buyer and 50% by Sellers.
The determination of the HSR Amount by such arbitration shall be final and binding upon
Sellers and Buyer. Sellers shall pay to Buyer their share of the HSR Amount within 5
business days of (i) the date on which Sellers accept (or fail to timely disagree with as
provided above)



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Buyer’s statement or (ii) if Sellers’ timely object to Buyer’s statement, the date on
which the arbitrator determines the HSR Amount, together with interest on such amount from
(and including) the Closing Date to (and excluding) the date of payment at the Prime Rate
plus 1%.



7.18 Limitations.




     (a) No Reliance. Buyer covenants that it has reviewed and had access to all
documents, records, and information which it has desired to review in connection with its
decision to enter into this Agreement, and to purchase the Acquired Companies. In deciding
to enter into this Agreement, and to consummate the transactions contemplated hereby, Buyer
covenants that it has relied solely upon its own knowledge, investigation, and analysis (and
that of its representatives) and not on any disclosure or representation made by, or any
duty to disclose on the part of, Sellers, their Affiliates, or any of their representatives,
other than the representations and warranties of Sellers expressly set forth herein and the
Related Agreements.



     (b) Assets. Notwithstanding anything contained to the contrary in any other
provision of this Agreement, it is the explicit intent of each Party that Sellers and their
Affiliates are not making any representation or warranty whatsoever, express, implied, at
common law, statutory or otherwise, except for the representations or warranties given in
this Agreement and the Related Agreements, and it is understood that Buyer, with such
exceptions, takes the businesses and assets of the Acquired Companies “as is” and “where
is.” Without limiting the generality of the immediately preceding sentence, except as
provided in this Agreement and the Related Agreements, Sellers hereby expressly disclaim and
negate any representation or warranty, express or implied, at common law, statutory, or
otherwise, relating to (i) the condition of the businesses and assets of the Acquired
Companies (including any implied or express warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of materials, or the presence or
absence of any hazardous materials in or on, or disposed or discharged from, the assets of
the Acquired Companies) or (ii) any infringement by the Acquired Companies of any patent or
proprietary right of any third party. Buyer has agreed not to rely on any representation
made by Sellers with respect to the condition, quality, or state of the Acquired Companies
or their assets except for those in this Agreement and the Related Agreements, but rather,
as a significant portion of the consideration given to Sellers for this purchase and sale,
has agreed to rely solely and exclusively upon its own evaluation of the Acquired Companies
and the representations, warranties, covenants, and agreements of Sellers in this Agreement
and the Related Agreements.



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Article 8



CONDITIONS TO OBLIGATIONS OF SELLERS




     The obligations of Sellers to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or waiver by Sellers on or prior to the Closing Date of each of the
following conditions:



     8.1 Representations and Warranties True. (i) All the representations and warranties
of Buyer contained in this Agreement and in any agreement, instrument, or document delivered by
Buyer pursuant hereto or in connection herewith on or prior to the Closing Date that are qualified
as to materiality and the representations and warranties in Section 5.2 shall be true and
correct on and as of the date hereof and on and as of the Closing Date as if made on such date, and
(ii) each of the representations and warranties of Buyer herein or therein that is not so qualified
as to materiality (other than the representations and warranties in Section 5.2) shall be
true and correct in all material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of such date, in each such case except to the extent that any such
representation or warranty is made as of a specified date, in which case such representation or
warranty shall have been true and correct as set forth above as of such specified date.



     8.2 Covenants and Agreements Performed. Buyer shall have performed and complied with
in all material respects all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, and all deliveries contemplated by Section
3.3 shall have been made.



     8.3 HSR Act. All waiting periods (and any extensions thereof) applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have expired or been
terminated.



     8.4 Legal Proceedings. No preliminary or permanent injunction or other order, decree,
or ruling issued by a Governmental Entity, and no Applicable Law promulgated or enacted by a
Governmental Entity, shall be pending, threatened, or in effect which restrains, enjoins,
prohibits, or otherwise makes illegal the consummation of the transactions contemplated hereby.



Article 9



CONDITIONS TO OBLIGATIONS OF BUYER




     The obligations of Buyer to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or waiver by Buyer on or prior to the Closing Date of each of the
following conditions:



     9.1 Representations and Warranties True. (i) All the representations and warranties of Sellers contained in this Agreement and in
any agreement, instrument, or document delivered by Sellers pursuant hereto or in connection
herewith on or prior to the Closing Date that are qualified as to materiality and the
representations and warranties in Sections 4.2(a) through 4.2(c) and 4.4,
shall be true and correct on and as of the date hereof and on and as of the Closing Date as if made
on such date, and (ii) each of the representations and warranties of Sellers herein or therein that
is not so qualified as to materiality (other than the representations and warranties



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in
Sections 4.2(a) through 4.2(c) and 4.4) shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing Date as if made on and
as of such date, in each such case except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall have been true and
correct as set forth above as of such specified date.




     9.2 Covenants and Agreements Performed. Sellers shall have performed and complied
with in all material respects all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date, and all deliveries contemplated
by Section 3.2 shall have been made.



     9.3 HSR Act and Other Approval. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or been terminated, and there shall have been obtained the Additional Governmental
Approval.



     9.4 Legal Proceedings. No preliminary or permanent injunction or other order, decree
or ruling issued by a Governmental Entity, and no Applicable Law promulgated or enacted by a
Governmental Entity, shall be pending, threatened or in effect which restrains, enjoins, prohibits,
or otherwise makes illegal the consummation of the transactions contemplated hereby.



Article 10



TERMINATION, AMENDMENT, AND WAIVER




     10.1 Termination. This Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing in the following manner:




     (a) by mutual written consent of Sellers and Buyer;




     (b) by either Sellers or Buyer, if any Governmental Entity with jurisdiction over such
matters shall have issued an order or injunction restraining, enjoining, or otherwise
prohibiting the sale of the Purchased Interests hereunder and such order, decree, ruling, or
other action shall have become final and unappealable, but the right to terminate this
Agreement under this Section 10.1(b) shall not be available to a Party
whose failure to fulfill any obligation under Section 7.2 shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur prior to such date;




     (c) by either Sellers or Buyer, if the Closing shall not have occurred on or before
June 22, 2007, but the right to terminate this Agreement under this Section 10.1(c)
shall not be available to a Party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure of the
Closing to occur prior to such date;




     (d) by Buyer, if (i) Sellers fail to comply with any of their covenants or agreements
contained herein, or breach their representations and warranties contained herein, and, if
curable, do not cure or commence and diligently pursue remedial action to cure such failure
to comply or breach within 30 days after receipt by Sellers from Buyer



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of Notice of such
failure to comply or breach, and (ii) such failure to comply or breach would result in a
failure to satisfy the conditions to Closing set forth in Section 9.1 or
9.2; or




     (e) by Sellers, if (i) Buyer fails to comply with any of its covenants or agreements
contained herein, or breaches its representations and warranties contained herein, and, if
curable, does not cure or commence and diligently pursue remedial action to cure such
failure to comply or breach within 30 days after receipt by Buyer from Sellers of Notice of
such failure to comply or breach, and (ii) such failure to comply or breach would result in
a failure to satisfy the conditions to Closing set forth in Section 8.1 or
8.2.



     10.2 Effect of Termination. If a Party terminates this Agreement under Section
10.1, then such Party shall promptly give Notice to the other Party specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall become void and have no
further force or effect, except that the agreements contained in this Article 10, the
confidentiality obligations of Buyer in Section 7.1(a) and the provisions of Sections
7.4 and 7.6 shall survive the termination hereof. Nothing contained in this
Section 10.2 shall relieve either Party from liability for damages actually incurred as a
result of any breach of this Agreement.



     10.3 Amendment. This Agreement may not be amended except by an instrument in writing
signed by or on behalf of both Parties.



     10.4 Waiver. Either Party may (i) waive any inaccuracies in the representations and
warranties of the other contained herein or in any document, certificate, or writing delivered
pursuant hereto or (ii) waive compliance by the other Party with any of the other Party agreements
or fulfillment of any conditions to its own obligations contained herein. Any agreement on the
part of a Party to any such waiver shall be valid only if set forth in an instrument in writing
signed by or on behalf of such Party. No failure or delay by a Party in exercising any right,
power, or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right, power, or
privilege.



Article 11



TAX MATTERS




     11.1 Preparation of Tax Returns and Payment of Taxes.




     (a) Seller Group. For purposes of this Section 11, the “Seller
Group” means, with respect to Sellers, the affiliated group of entities filing a
consolidated federal income Tax Return of which Sellers and the Acquired Companies are
members (with EPC being the common parent of the Seller Group).




     (b) Liability for Taxes. Except as provided in Section 7.7, Sellers
covenant that they shall be responsible for: (i) all liability for Income Taxes of the
Acquired Companies for all Pre-Closing Periods (as defined below); (ii) all liability for
Taxes, excluding Income Taxes and Post-Effective Date Taxes, of the Acquired Companies for
Pre-Closing Periods (as defined below); (iii) all liability of the Acquired Companies for



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Income Taxes for the portion of any Straddle Period (as defined below) through the Closing
Date; (iv) all liability for Taxes, excluding Income Taxes, of the Acquired Companies for
the portion of any Straddle Period (as defined below) through the Effective Date; and (v)
all liability imposed upon the Acquired Companies for Taxes of any other person or entity
pursuant to Treas. Reg. Section 1.1502-6 or any similar provision of foreign, state or local
law by reason of an Acquired Company having been a member of any consolidated, combined, or
unitary group on or prior to the Closing Date.




     (c) Consolidated, Combined or Unitary Returns. Sellers shall cause to be
included in the consolidated federal income Tax Returns (and the state income Tax Returns of
any state that permits consolidated, combined, or unitary income Tax Returns, if any) of the
Seller Group for all taxable periods ending on or before the Closing Date (“Pre-Closing
Periods”) all tax items of the Acquired Companies which are required to be included
herein, shall cause such Income Tax Returns to be timely filed with the appropriate Taxing
Authorities, and shall timely pay (and be entitled to any refund of other than the portion
of any refund attributable to Post-Effective Date Taxes) all Taxes due with respect to the
periods covered by such income Tax Returns. Unless otherwise required by Treas. Reg.
Section 1.1502-76(b)(1)(ii)(B) (or a similar provision of state, local or foreign law), Tax
items of each of the Acquired Companies shall be apportioned for all income Tax purposes by
closing the books of each of the Acquired Companies at the end of the Closing Date and no
ratable election shall be made pursuant to Treas. Reg. Section 1.1502-76T(b)(2)(ii)(D) (or a
similar provision of state, local, or foreign law).




     (d) Non-Consolidated, Combined or Unitary Returns.




     (i) With respect to any federal, state or foreign income or franchise Tax
Return covering a Pre-Closing Period that is required to be filed after the Closing
Date with respect to the Acquired Companies that is not described in
Section 11.1(c), Sellers shall cause such Tax Return to be prepared,
shall cause to be included in such Tax Return all tax items required to be included
therein, shall cause such Tax Return to be timely filed and shall remit the amount
shown as due on such Tax Return with the appropriate Taxing Authority. Not later
than 30 days prior to the due date of each such Tax Return, Sellers shall furnish to
Buyer a copy of such Tax Return. Sellers shall permit Buyer to review and comment
on each such Tax Return prior to filing and Buyer, if so required, shall cause such
Tax Return to be properly signed.




     (ii) With respect to any other Tax Returns covering a Pre-Closing Period that
is required to be filed after the Closing Date with respect to the Acquired
Companies and that is not described in Section 11.1(c) or the preceding
sentences of this Section 11.1(d), Sellers shall cause such Tax Return to be
prepared and shall cause to be included in such Tax Return all tax items required to
be included therein. Not later than 30 days prior to the due date of each such Tax
Return, Sellers shall furnish to Buyer a copy of such Tax Return. Sellers shall
permit Buyer to review and comment on each such Tax Return prior to filing and
Buyer, if so required shall cause such Tax Return to be properly signed.



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Sellers
shall cause such Tax Return to be filed and shall remit the amount shown as due on
the Tax Return with the appropriate Taxing Authority.




     (iii) Sellers shall be entitled to any refund of Taxes due with respect to any
Pre-Closing Period (other than the portion of any refund attributable to
Post-Effective Date Taxes), and Buyer shall pay over to Sellers any such refund, net
of any Taxes or other costs incurred with respect to such refund, within 15 days
after receipt thereof. Unless otherwise required by Treas. Reg. Section
1.1502-76(b)(1)(ii)(B) (or a similar provision of state, local or foreign law), Tax
items of each of the Acquired Companies shall be apportioned for all income Tax
purposes by closing the books of each of the Acquired Companies at the end of the
Closing Date and no ratable election shall be made pursuant to Treas. Reg. Section
1.1502-76T(b)(2)(ii)(D) (or a similar provision of state, local, or foreign law).




     (e) Straddle Period Returns. With respect to any Tax Return covering a taxable
period beginning before the Closing Date and ending after the Closing Date (a “Straddle
Period”) that is required to be filed after the Closing Date with respect to the
Acquired Companies, Buyer shall cause such Tax Return to be prepared, shall cause to be
included in such Tax Return all Tax items required to be included therein, shall furnish a
copy of such Tax Return to Sellers not later than 30 days prior to the due date (taking into
account extensions) of each such Tax Return, shall file timely such Tax Return with the
appropriate Taxing Authority, and shall timely pay all Taxes due with respect to the period
covered by such Tax Return. Buyer shall permit Sellers to review and comment on each such
Tax Return prior to filing and shall make such revisions to such Tax Returns as are
reasonably requested by Sellers; provided that Buyer shall not be required to make any
revision that would be inconsistent with the Acquired Companies’ past practices with respect
to the item in question unless otherwise required by Applicable Law. Buyer shall determine
(by an interim closing of the books as of the Closing Date except for ad valorem Tax which
shall be pro rated on a daily basis) the Tax that would
have been due with respect to the period covered by such Tax Return if such taxable
period ended on and included the Closing Date. If (i) the amount of Tax so determined
exceeds (ii) the amount of payments made in respect to such Tax as of the Closing Date,
Sellers shall pay to Buyer the amount of such excess not later than five days after receipt
from Buyer of evidence of the filing of such Tax Return; if the amount determined in clause
(ii) exceeds the amount determined in clause (i), Buyer shall pay to Sellers the amount of
such excess not later than five days after the filing of such Tax Return. Any Tax refunds
that are received by Buyer or the Acquired Companies that relate to Tax periods or portions
thereof ending on or before the Closing Date (other than the portion of any refund
attributable to Post-Effective Date Taxes) shall be for the account of Sellers, and Buyer
shall pay over to Sellers any such refund, or appropriate portion thereof, net of any Taxes
or costs resulting from the receipt of such refund, within 15 days after receipt thereof.




     (f) Post-Effective Date Taxes. Notwithstanding any other provision of this
Agreement, including any provision of this Article 11, Buyer shall be responsible
for and pay to Sellers any Taxes other than Income Taxes (including Taxes, other than Income
Taxes, with respect to Straddle Periods) with respect to the Acquired Companies that are



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allocable to, attributable to, or accrue for the period beginning on the Effective Date and
ending on the Closing Date other than Taxes arising from the triggering of deferred
intercompany items or from any transfer of Excluded Assets described in Section 7.9
(the “Post-Effective Date Taxes”) no later than 7 calendar days after the filing of
the Tax Return with respect to which such Post-Effective Date Taxes relate. The
Post-Effective Date Taxes shall be determined in a manner similar to and consistent with the
determination of Pre-Closing Taxes under Section 11.1(e). Buyer and Sellers agree
to cooperate in good faith (i) in the determination and payment of Post-Effective Date Taxes
and (ii) to offset any redundant Tax payments to one another under this Article 11.
For the avoidance of doubt, Sellers shall not be responsible or liable for any Taxes under
any provision of this Agreement including any provision of this Article 11 with
respect to the Acquired Companies attributable to any period (including any partial period)
on or after the Effective Date, including by reason of a breach of any representation,
warranty, covenant, or obligation of Sellers related to or arising from Taxes to the extent
attributable to Post-Effective Date Taxes.




     (g) Manner of Preparation. Any Tax Return related to the Acquired Companies to
be prepared pursuant to the provisions of this Section 11.1 shall be prepared in a
manner consistent with practices followed in prior years with respect to similar Tax Returns
of the Acquired Companies, except as otherwise required by Applicable Law. Without the
prior written consent of Sellers, which shall not be unreasonably withheld, conditioned or
delayed, Buyer shall not (i) file an amended Tax Return related to the Acquired Companies
for any period ending on or prior to the Closing Date or (ii) carry back any Tax item or
attribute to a taxable period (or portion thereof) of any of the Acquired Companies ending
on or before the Closing Date.



     11.2 Tax Indemnity. From and after the Closing Date, Sellers shall protect, defend, indemnify and hold harmless
Buyer and the Acquired Companies from any and all Taxes (including any obligation to contribute to
the payment of any Taxes determined on a consolidated, combined, or unitary basis with respect to a
group of corporations that includes or included the Acquired Companies), other than from any and
all Taxes described in Section 7.7 (which shall be borne in accordance with Section
7.7) and other than from any and all Post-Effective Date Taxes, which are (i) imposed on
Sellers or any member (other than the Acquired Companies) of the consolidated, unitary or combined
group which includes or included the Acquired Companies for any period that ends on or before the
Closing Date, that Buyer or the Acquired Companies pays, otherwise satisfies in whole or in part,
or results in liens or other encumbrances on any of Buyer’s or the Acquired Companies’ assets; or
(ii) imposed on any of the Acquired Companies in respect of their income, business, property or
operations or for which they may otherwise be liable (A) for any taxable period of the Acquired
Companies or portion thereof ending prior to the Closing Date as provided in this Section 11
(including without limitation Taxes for which Sellers are responsible pursuant to Sections
11.1(b)-(e)), (B) resulting by reason of the several liability of any of the Acquired Companies
pursuant to Treas. Reg. Section 1.1502-6 or any analogous state, local or foreign law or regulation
or by reason of their having been a member of any consolidated, combined or unitary group on or
prior to the Closing Date, (C) resulting from its ceasing to be a member of the Seller Group, (D)
resulting from the breach of Sellers’ covenants set forth in this Article 11 and/or breach
of the representations and warranties set forth in Section 4.10 or (E) relating to any
reorganization of the Acquired



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59 









 







Companies done on or prior to the Closing Date. Seller shall have
no liability under this Section 11.2 to the extent that such liability would not have been
incurred but for (y) conduct of Buyer or its Affiliates that conflict with this Agreement or (z)
failures by Buyer or its Affiliates to make filings or take other actions required to be taken by
Buyer or its Affiliates under this Agreement (in each case, including the Acquired Companies as an
Affiliate of Buyer from and after the Closing Date and, in each case, other than matters resulting
from or arising out of actions taken or failed to be taken at the direction of Seller).
Indemnification for Taxes pursuant to this Section, shall also include any reasonable professional
fees, accounting fees and other out of pocket costs incurred by Buyer and the Acquired Companies
relating to the Tax liability for which indemnification is provided or in enforcing this indemnity.
The indemnification for Taxes pursuant to this Section 11.2 shall take into account any
Tax Benefit existing from such indemnification. If the amount of any Tax of an indemnitee is
reduced as a result of indemnification for Taxes pursuant to this Section 11.2, such amount
shall promptly be paid by the indemnitee to the indemnitor.




     11.3 Access to Information. Sellers and each member of the Seller Group shall grant
to Buyer (or its designees) access at all reasonable times to all of the information, books, and
records relating to the Acquired Companies within the possession of Sellers or any member of the
Seller Group (including work papers and correspondence with Taxing Authorities), and shall afford
Buyer (or its designees) the right (at Buyer’s expense) to take extracts therefrom and to make
copies thereof, to the extent, reasonably necessary to permit Buyer (or its designees) to prepare
Tax Returns and to conduct negotiations with Taxing Authorities. Buyer shall grant or cause the
Acquired Companies to grant to Sellers (or their designees) access at all reasonable times to all
of the information, books and records relating to the Acquired Companies within the possession of
Buyer or the Acquired Companies (including work papers and correspondence with Taxing
Authorities), and shall afford Sellers (or its designees) the right (at Sellers’ expense) to
take extracts therefrom and to make copies thereof, to the extent reasonably necessary to permit
Sellers (or their designees) to prepare Tax Returns and to conduct negotiations with Taxing
Authorities.



     11.4 Post-Closing Tax Actions. Buyer shall indemnify and hold harmless Sellers
against Taxes, computed at the highest applicable Tax rates, on the amount of income or gain of the
Acquired Companies (without regard to tax attributes available to Sellers or to any consolidated,
combined, or unitary group to which an Acquired Company is a part) resulting from any transaction
engaged in by an Acquired Company on the Closing Date after Buyer’s purchase of the Purchased
Interests that is not in the ordinary course of such Acquired Company’s business. If after
Closing, Buyer or any of the Acquired Companies utilizes or takes into account any net operating
losses, alternative minimum tax net operating losses, net capital losses, alternative minimum tax
net capital losses, Tax credits, or alternative minimum tax credits that arose in a taxable period
(or portion thereof) ending on or prior to the Closing Date, the amount of Tax reduced by the
utilization or taking into account of such Tax attributes shall promptly be paid by Buyer to the
Sellers. Neither Buyer nor the Acquired Companies shall (i) make or permit any election under
Section 338 of the Code or any comparable election under state, local or foreign law with respect
to the purchase and sale of the Purchased Interests; or (ii) without the prior written consent of
Sellers, which shall not be unreasonably withheld, conditioned or delayed, (A) file any amended Tax
Returns for any Tax Returns including an Acquired Company with respect to taxable periods ending on
or before the Closing Date or



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(B) carry back any Tax item or attribute to a taxable period (or
portion thereof) of any of the Acquired Companies ending on or prior to the Closing Date. Sellers
will not, without the prior written consent of Buyer, file an amended Tax Return with respect to
any of the Acquired Companies.




     11.5 Tax Sharing Agreements. Sellers shall as of the Closing Date ensure that no Tax
allocation agreement or Tax sharing agreement with respect to the Acquired Companies is in force or
effect or results in any obligation of the Acquired Companies on or after the Closing Date and that
there shall be no liability or obligation of the Acquired Companies on or after the Closing Date
under any such agreement.



     11.6 Earnings and Profits. At or within a reasonable time period following Closing,
Sellers shall deliver to Buyer a schedule providing the earnings and profits, as determined for
federal Income Tax purposes, for each of the Acquired Companies that is a member of the
consolidated group of which EPC is the common parent.



     11.7 Assistance and Cooperation.




     (a) Assistance. After the Closing Date, in the case of any audit, examination,
claim or other Proceeding with respect to Taxes of the Acquired Companies for which Sellers
are or may be liable pursuant to this Agreement in respect of taxable periods
ending on or before the Closing Date, Buyer shall promptly inform Sellers of such
Proceeding, and shall afford Sellers, at Sellers’ expense, the opportunity to control the
conduct of such Proceedings and, if there is substantial authority therefor, initiate any
claim for refund, file any amended return or take any other action which Sellers deems
appropriate with respect to such Taxes; provided that Sellers agree to fund all outlays
required, in Sellers’ determination, to pursue such Proceeding and agree to reimburse Buyer
for all reasonable out of pocket costs incurred by Buyer on behalf of Sellers in connection
with such Proceedings. Buyer shall execute or cause to be executed powers of attorney or
other documents necessary to enable Sellers to control such Proceeding. Buyer, at Buyer’s
expense, shall be entitled to participate in any such Proceeding which Seller has elected to
control and shall be kept fully and timely informed by Sellers of all developments and
communications. Any Proceeding with respect to Taxes of the Acquired Companies for a period
which includes but does not end on the Closing Date shall be controlled by Buyer. Sellers,
at Sellers’ expense, shall be entitled to participate in any such Proceeding.
Notwithstanding any provision of this Section 11.7 to the contrary if, as a result
of such Proceeding, claim for refund or amended Tax Return, the Taxes payable by Buyer or
the Acquired Companies for a taxable period (or portion of a period) for which Sellers are
not obligated to indemnify Buyer or the Acquired Companies pursuant to this Section
11.7 would be (or there is a material risk that such Taxes would be) increased,
Sellers
shall not settle any Proceeding, initiate any claim for refund or file any amended Tax
Return of the Acquired Companies without the prior written consent of Buyer, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding any provision
of this Section 11.7 to the contrary if, as a result of such Proceeding, claim for
refund or amended Tax Return, the Taxes for which Sellers are obligated to indemnify Buyer
or the Acquired Companies pursuant to this Section 11.7 would be (or there is a
material risk that such Taxes would be) increased,



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Buyer shall not settle any Proceeding,
initiate any claim for refund or file any amended return with respect to the Acquired
Companies for a tax period ending on, before or including the Closing Date, without the
prior written consent of Sellers, which consent shall not be unreasonably withheld,
conditioned, or delayed. Sellers will allow the Acquired Companies and their
representatives, including counsel, to participate at their own expense in any Proceedings
related to the consolidated federal income Tax Returns of the Seller Group to the extent
such returns relate to the Acquired Companies.




     (b) Cooperation. Cooperation between the Parties shall include the
nonexclusive designation of an employee of either Seller or an Affiliate as a Tax officer of
Buyer or the Acquired Companies (for the limited purpose of signing Tax Returns and dealing
with Taxing Authorities with respect to any Tax Return filed pursuant to Sections
11.1(c)-(e)).



     11.8 Closing Tax Certificate. At the Closing, EPC shall deliver to Buyer, on behalf
of itself and EP CNG (which is disregarded as an entity separate from its parent EPC for federal
tax purposes), a certificate (in substantially the form attached hereto as Exhibit 11.8)
signed under penalties of perjury (i) stating that it is not a foreign corporation, foreign
partnership, foreign trust or foreign estate, (ii) stating that it is not a disregarded entity as
defined in Treas. Reg. Section 1.1445-2(b)(2)(iii),
(iii) providing its U.S. Employer Identification Number, and (iv) providing its address, all
pursuant to Section 1445 of the Code.



Article 12

SURVIVAL AND INDEMNIFICATION




     12.1 Indemnification.




     (a) Sellers’ Indemnity. From and after the Closing, subject to the other terms
and limitations in this Article 12, Sellers shall jointly and severally indemnify,
defend, reimburse, and hold harmless the Buyer Indemnitees from and against any and all
Losses actually incurred by any of the Buyer Indemnitees or asserted by a Third Party
against any of the Buyer Indemnitees relating to or arising from (i) any breach of Sellers’
representations or warranties made, as of the Closing Date, in this Agreement or the Related
Agreements (other than a breach of any representation or warranty in Section 4.10 or
Article 11, the indemnification obligations for which are set forth in Article
11), (ii) (A) any Excluded Asset, including the transfer thereof to Sellers or any of
their Affiliates, (B) any Excluded Liability, or (C) any Excluded Subsidiary, (iii) any
breach of the covenants of Sellers in clauses (i), (ii), or (iv) of
Section 6.1, or (iv) any breach of the other covenants or obligations of Sellers and
their Affiliates under this Agreement or the Related Agreements (other than a breach of any
covenant or obligation in Article 11, the indemnification obligations for which are
set forth in Article 11).




     (b) Buyer’s Indemnity. From and after the Closing, subject to the other terms
and limitations in this Article 12, Buyer shall indemnify, defend, reimburse, and
hold harmless the Sellers Indemnitees from and against any and all Losses actually incurred
by any of the Sellers Indemnitees or asserted by a Third Party against any of the Sellers
Indemnitees relating to or arising from (i) any breach of Buyer’s representations or



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warranties made, as of the Closing Date, in this Agreement or the Related Agreements (other
than a breach of any representation or warranty in Article 11, the indemnification
obligations for which are set forth in Article 11), (ii) any breach of the covenants
or obligations of Buyer and its Affiliates under this Agreement or the Related Agreements
(other than a breach of any covenant or obligation in Article 11, the
indemnification obligations for which are set forth in Article 11), (iii) any of the
Guarantees to the extent such Guarantee has not been released or replaced on or as of the
Closing with a guarantee of Buyer or its Affiliates, or (iv) if the Additional Governmental
Approval is not obtained before Closing and Buyer’s condition with respect thereto in
Section 9.3 is waived by Buyer, the failure to obtain the Additional Governmental
Approval prior to Closing.




     (c) Sellers’ Waiver. Notwithstanding anything to the contrary in this
Agreement or the Related Agreements, Buyer shall not be liable to the Sellers Indemnitees
under Section 12.1(b) for any exemplary, punitive, special, indirect, consequential,
remote, or speculative damages, except to the extent any such damages are included in any
action by a Third Party against a Sellers Indemnitee for which such Sellers Indemnitee is
entitled to indemnification under Section 12.1(b).




     (d) Buyer’s Waiver. Notwithstanding anything to the contrary in this Agreement
or the Related Agreements, Sellers shall not be liable to the Buyer Indemnitees under
Section 12.1(a) for any exemplary, punitive, special, indirect, consequential,
remote or speculative damages, except to the extent any such damages are included in any
action by a Third Party against a Buyer Indemnitee for which such Buyer Indemnitee is
entitled to indemnification under Section 12.1(a).




     (e) Limitations on Indemnity. None of the Buyer Indemnitees shall be entitled
to assert any right to indemnification under Section 12.1(a)(i) and (iii)
until the aggregate amount of all such Losses actually suffered by the Buyer Indemnitees
exceeds the Deductible Amount, and then only to the extent such Losses exceed, in the
aggregate, the Deductible Amount. In no event shall Sellers ever be required to indemnify
the Buyer Indemnitees for Losses under Section 12.1(a)(i) in any amount exceeding,
in the aggregate, 10% of the Total Purchase Price. Notwithstanding the foregoing, the
limitations on indemnification set forth in this Section 12.1(e) shall not apply to
any indemnification claim made for a breach of Sellers’ representations and warranties set
forth in Section 2.5(f), 4.1, 4.2, 4.3, 4.4,
4.10, 4.13(a)(xvi), 4.22, 4.23, 4.24, or
4.25, or in Article 11.




     (f) Survival and Time Limitation. All of the representations, warranties,
covenants, obligations, and agreements of the Parties set forth in this Agreement and the
Related Agreements, including those obligations set forth in this Article 12, shall
survive the Closing. Notwithstanding the foregoing sentence, after Closing, any assertion
by Buyer or any Buyer Indemnitee that Sellers are liable to Buyer or any Buyer Indemnitee
for indemnification under the terms of this Agreement, the Related Agreements, or for any
other reason in connection with the transactions contemplated in this Agreement must be made
in writing and must be given to Sellers on or prior to the date that is 18 months after the
Closing Date (or not at all), except for assertions by Buyer for (i) breach of the
representations and warranties in (A) Section 4.10 or the covenants, obligations,



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and agreements in Article 11, which must be made in writing and must be given to
Sellers on or prior to the date that is 90 calendar days after the expiration of any
applicable statute of limitations (or not at all) and (B) Section 4.1, 4.2,
4.3, 4.4, or 4.22, which may be made in writing at any time from and
after the Closing or (ii) indemnification under Sections 12.1(a)(ii) or
12.1(a)(iv), which must be made in writing and must be given to Sellers on or prior
to the expiration of any applicable statute of limitations (or not at all).




     (g) Further Indemnity Limitations. The amount of any Loss shall be reduced (i)
to the extent any Person entitled to receive indemnification under this Agreement actually
receives any insurance proceeds with respect to a Loss, (ii) to take into account any Tax
Benefit arising from the recognition of the Loss, and (iii) to take into account any other
payment or payments actually received by a Person entitled to receive indemnification under
this Article 12 with respect to a Loss.




     (h) Sole and Exclusive Remedy. From and after the Closing, except (i) as
provided in Article 11, (ii) for the assertion of any claim based on fraud, and
(iii) for matters covered by the Related Agreements, the indemnification provisions of this
Article 12 shall be the sole and exclusive remedy of each Party (including the
Sellers Indemnitees and the Buyer Indemnitees) (x) for any breach of the other Party’s
representations, warranties, covenants, or agreements contained in this Agreement or (y)
with respect to the transactions contemplated hereby.




     (i) Indemnity and Rights of Contribution. From and after the time any Notice
under Section 12.2(a) or 12.2(c) is received by Buyer or Sellers, each Party
shall use commercially reasonable efforts (i) not to knowingly take any action that would
reasonably be expected to limit, reduce, or extinguish any indemnity or right of
contribution from a Third Party which may be available to Sellers, Buyer, or the Acquired
Companies with respect to the subject matter of such Notice and (ii) to take any action, of
which it has actual knowledge, that would reasonably be expected to preserve claims with
respect to any such indemnity or right of contribution from a Third Party.




     (j) Tax Treatment of Payments. Buyer and Sellers, their Affiliates, and the
Acquired Companies shall, to the extent permitted by Applicable Law, treat any indemnity
payments made under Article 11 or this Article 12 as adjustments to the
Purchase Price.



     12.2 Defense of Claims.




     (a) Notice. Except as provided in Section 11.6, if an Indemnitee
receives notice of the assertion of any claim or of the commencement of any Third Party
Claim with respect to which indemnification is to be sought from the Indemnifying Party, the
Indemnitee will give such Indemnifying Party reasonable prompt Notice thereof, but in any
event not later than 7 calendar days after the Indemnitee’s receipt of notice of such Third
Party Claim, but the failure to give timely Notice will not affect the rights or obligations
of the Indemnifying Party except and only to the extent that, as a result of such failure,
the Indemnifying Party was substantially disadvantaged. Such Notice shall



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describe the
nature of the Third Party Claim in reasonable detail and will indicate the estimated amount,
if practicable, of the Loss that has been or may be sustained by the Indemnitee; provided,
however, that such estimated amount shall in no way limit the Indemnitee’s right to recover
any amount of Losses over such estimate. The Indemnifying Party will have the right to
participate in or, by giving Notice to the Indemnitee, to elect to assume the defense of,
any Third Party Claim at such Indemnifying Party’s own expense and by such Indemnifying
Party’s own counsel, and the Indemnitee will cooperate in good faith in such defense, unless
the Third Party Claim seeks only non-monetary relief, in which case the Indemnitee may
assume and conduct the defense of such Third Party Claim at the Indemnifying Party’s expense
and the Indemnifying Party may participate in such defense. If such Third Party Claim seeks
both non-monetary relief and monetary relief, the Indemnifying Party shall have the right to
jointly participate in the defense of such Third Party Claim with the Indemnitee.




     (b) Defense. Except as provided in Section 11.6, if within 10 calendar
days after an Indemnitee provides Notice to the Indemnifying Party of any Third Party Claim,
the Indemnitee receives Notice from the Indemnifying Party that such Indemnifying Party has
elected to assume the defense of such Third Party Claim, the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. The Indemnitee shall be entitled to participate in
the defense of such Third Party Claim and to employ counsel for such purpose at the sole
cost and expense of Indemnitee. Each Party shall in good faith consult with the other Party
regarding the defense of any Third Party Claim upon the other Party’s reasonable request
from time to time. Without the prior written consent of the Indemnitee, the Indemnifying
Party will not enter into any settlement of any Third Party Claim which would lead to
liability or create any financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder or which would impose any
injunctive or other equitable remedy on the Indemnitee. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder (or which would not impose any injunctive or other equitable
remedy on the Indemnitee) and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give Notice to the Indemnitee to that effect. If the
Indemnitee fails to consent to such firm offer within 10 calendar days after its receipt of
such Notice, the Indemnitee may continue to contest or defend such Third Party Claim and, in
such event, the maximum liability of the Indemnifying Party to such Third Party Claim will
be the amount of such settlement offer, plus reasonable costs and expenses paid or incurred
by the Indemnitee up to the date of such notice.




     (c) Direct Claim. Any Direct Claim will be asserted by giving the Indemnifying
Party reasonably prompt written notice thereof, stating the nature of such claim in
reasonable detail and indicating the estimated amount, if practicable, but in any event not
later than 20 calendar days after the Indemnitee becomes aware of such Direct Claim (but the
obligations of the Indemnifying Party and the rights of the Indemnitee shall not be affected
by the failure to give such notice, except and only to the extent that, as a result of such
failure, the Indemnifying Party is substantially disadvantaged; provided, however, that any
such estimated amount shall in no way limit the



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Indemnitee’s rights to recover any amount of
Losses over such estimate. The Indemnifying Party will have a period of 30 calendar days
within which to respond to such Direct Claim. If the Indemnifying Party does not respond
within such 30-day period, the Indemnifying Party will be deemed to have accepted such
Direct Claim. If the Indemnifying Party rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this Agreement.




     (d) Subrogation. If the amount of any Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery, settlement, or
otherwise under any insurance coverage or Tax Benefit, or under any claim, recovery,
settlement or payment by or against any other entity, the amount of such reduction, less any
costs, expenses, or premiums incurred in connection therewith, will promptly be repaid by
the Indemnitee to the Indemnifying Party. Upon making any indemnity payment, the
Indemnifying Party will, to the extent of such indemnity payment, be subrogated to all
rights of the Indemnitee against any Third Party in respect of the Loss to which the
indemnity payment relates; provided, that (i) the Indemnifying Party is in compliance with
its obligations under this Agreement in respect of such Loss, (ii) until the Indemnitee
recovers full payment of its Loss, any and all claims of the Indemnifying
Party against any such Third Party on account of said indemnity payment are hereby made
expressly subordinated and subjected in right of payment to the Indemnitee’s rights against
such Third Party, and (iii) the Indemnifying Party shall have no rights of subrogation
against such Third Party if the Indemnitee reasonably expects that pursuing such claim
against such Third Party would adversely affect the ongoing business prospects or
relationship of the Indemnitee or its Affiliates with such Third Party. Without limiting
the generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will execute upon request all instruments reasonably necessary to
evidence and perfect the above-described subrogation and subordination rights.



Article 13

OTHER PROVISIONS




     13.1 Notices. All Notices shall be in writing and shall be deemed to have been duly
given or made if (i) delivered personally, (ii) transmitted by first class registered or certified
mail, postage prepaid, return receipt requested, (iii) delivered by prepaid overnight courier
service, or (iv) delivered by confirmed telecopy or facsimile transmission to the Parties at the
following addresses (or at such other addresses as shall be specified by the Parties by similar
notice):



	 	 	 	 	 
	 	 	If to Buyer:
	 
	 	 	 	 
	 	 	TransCanada American Investments Ltd.
	 	 	TransCanada PipeLines Tower
	 	 	450 First Street, S.W.
	 	 	Calgary, Alberta T2P5H1
	 

	 	Attention: 	 	Sean McMaster,
	 

	 	 	 	Executive Vice President
	 

	 	 	 	Law and General Counsel






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	 	Facsimile: (403) 920-2410
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	Mayer, Brown, Rowe & Maw LLP
	 	 	71 South Wacker Drive
	 	 	Chicago, IL 60606
	 

	 	Attention:
	 	Marc F. Sperber
	 

	 	 	 	D. Michael Murray
	 
	 	 	 	 
	 

	 	Fax: (312) 701-7711
	 
	 	 	 	 
	 	 	If to Sellers:
	 	 	El Paso Corporation
	 	 	1100 Louisiana Street

Houston, Texas 77002
	 

	 	Attention:
	 	General Counsel
	 

	 	Fax: (713) 420-5043
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	Andrews Kurth LLP
	 	 	600 Travis Street, Suite 4200
	 	 	Houston, Texas 77002
	 

	 	Attention: G. Michael O’Leary
	 

	 	Fax: (713) 220-4285






     Notices shall be effective (i) if delivered personally or sent by courier service, upon actual
receipt by the intended recipient, (ii) if mailed, upon the earlier of 5 days after deposit in the
mail or the date of delivery as shown by the return receipt therefor, or (iii) if sent by telecopy
or facsimile transmission, when the answer back is received.



     13.2 Entire Agreement. This Agreement, together with the Schedules, the Exhibits, and
the Related Agreements, including the Confidentiality Agreement, constitute the entire agreement
among the Parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the Parties with respect to the subject matter hereof.
There are no restrictions, promises, representations, warranties, covenants or undertakings
between the Parties, other than those expressly set forth or referred to herein or therein.



     13.3 Binding Effect; Assignment; No Third Party Benefit. Subject to the following
sentence, this Agreement shall be binding upon and inure to the benefit of the Parties and their
successors and assigns. Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned or delegated by either Party, other than to an Affiliate (provided that
if either Party so assigns or delegates to an Affiliate, such Party shall not be released from its
obligations hereunder as a result of such assignment), without the prior written consent of the
other Party. Except as provided herein, nothing in this Agreement is intended to or shall confer
upon any Person other than the Parties, and their successors and permitted assigns, any rights,
benefits, or remedies of any nature whatsoever under or by reason of this Agreement.



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     13.4 Severability. If any provision of this Agreement is held to be unenforceable,
this Agreement shall be considered divisible and such provision shall be deemed inoperative to the
extent it is deemed unenforceable, and in all other respects this Agreement shall remain in full
force and effect.



     13.5 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without regard to its conflict of laws rules or
principles.



     13.6 Further Assurances. From time to time following the Closing, at the request of
any Party and without further consideration, the other Party shall execute and deliver to such
requesting Party such instruments
and documents and take such other action as such requesting Party may reasonably request to
consummate more fully and effectively the transactions contemplated hereby.



     13.7 Counterparts. This Agreement may be executed by the Parties in any number of
counterparts, each of which shall be deemed an original, but all of which shall constitute one and
the same agreement. Such execution may be evidenced by an exchange of facsimile communications or
any other rapid transmission device designed to produce a written record of communications
transmitted.



     13.8 Disclosure. Certain information set forth in the Schedules is included solely
for informational purposes, is not an admission of liability with respect to the matters covered by
the information, and may not be required to be disclosed under this Agreement. The specification
of any dollar amount in the representations and warranties contained in this Agreement or the
inclusion of any specific item in the Schedules is not intended to imply that such amounts (or
higher or lower amounts) are or are not material, and no Party shall use the fact of the setting of
such amounts or the fact of the inclusion of any such item in the Schedules in any dispute or
controversy between the Parties as to whether any obligation, item, or matter not described herein
or included in a Schedule is or is not material for purposes of this Agreement.



     13.9 Consent to Jurisdiction. The Parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the federal courts of the United States of
America located in The Borough of Manhattan, New York, New York over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby, and each Party
irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and
determined in such courts. The Parties hereby irrevocably waive, to the fullest extent permitted
by Applicable Law, any objection which they may now or hereafter have to the venue of any dispute
arising out of or relating to this Agreement or any of the transactions contemplated hereby brought
in such court or any defense of inconvenient forum for the maintenance of such dispute. Each Party
agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Applicable Law.



     13.10 Specific Performance. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that each Party shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce



Purchase and Sale Agreement — Pipeline and Storage Businesses





Page 68









 







specifically the terms and provisions hereof in addition to any other remedy to which such Party
may be entitled at law or in equity.




Purchase and Sale Agreement — Pipeline and Storage Businesses





Page 69









 








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



	 	 	 	 	 	 	 
	 	 	Sellers:	 	 
	 
	 	 	 	 	 	 
	 	 	EL PASO CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 /s/ D. Mark Leland	 	 
	 

	 	 	 

D. Mark Leland, Executive Vice President

and Chief Financial Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	EL PASO CNG COMPANY, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 /s/ D. Mark Leland	 	 
	 

	 	 	 	 	 
	 

	 	 	D. Mark Leland, Executive Vice President

and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Buyer:	 	 
	 
	 	 	 	 	 	 
	 	 	TRANSCANADA AMERICAN INVESTMENTS LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 /s/ Russell K. Girling	 	 
	 

	 	 	 

	 	 
	 

	 	Name: 	 Russell K. Girling	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title: 	 President	 	 
	 

	 	 	 	 

	 	 
	 
	 

	 	By: 	 	 /s/ Donald J. DeGrandis	 	 
	 

	 	 	 

	 	 
	 

	 	Name: 	 Donald J. DeGrandis	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 Corporate Secretary	 	 
	 

	 	 	 	 

	 	 






Purchase and Sale Agreement — Pipeline and Storage Businesses

Signature Page




 









 





Exhibit 7.13 to Purchase and Sale Agreement




BUYER GUARANTY




     This Guaranty (“Guaranty”), dated as of December 22, 2006, is made by TransCanada
Corporation, a corporation organized under the laws of Canada (“TC Corp”), and TransCanada
PipeLine USA Ltd., a Nevada Corporation (“TC Pipelines” and, collectively with TC Corp, the
“Guarantors”), in favor of El Paso Corporation, a Delaware corporation (“El Paso”),
and El Paso CNG Company, L.L.C., a Delaware limited liability company (“CNG” and,
collectively with El Paso, the “Beneficiaries”) and their successors and assigns.



RECITALS




     A. TransCanada American Investments Ltd., a Delaware corporation (“Buyer”), is a
wholly-owned indirect subsidiary of TC Corp and a wholly-owned direct subsidiary of TC Pipelines.



     B. Pursuant to a Purchase and Sale Agreement, dated as of December 22, 2006 (the “Purchase
Agreement”), between Buyer and the Beneficiaries, the Beneficiaries have agreed to sell to
Buyer, and Buyer has agreed to purchase from the Beneficiaries, all of the Purchased Interests (as
defined in the Purchase Agreement).



     C. Section 7.13 of the Purchase Agreement requires that Buyer cause the Guarantors to deliver
this Guaranty to the Beneficiaries.



     D. The Guarantors are familiar with the Purchase Agreement and have determined that the
guaranty provided in this Guaranty is necessary or convenient to the conduct, promotion, or
attainment of the business of the Guarantors, may reasonably be expected to benefit, directly or
indirectly, the Guarantors, and is in the best interests of the Guarantors.



     NOW, THEREFORE, in consideration of the premises and as a material inducement to the
Beneficiaries to enter into the Purchase Agreement, the Guarantors hereby agree as follows:



ARTICLE I

DEFINITIONS AND CONSTRUCTION




     1.1 Definitions. Capitalized terms used herein without definition that are defined in
the Purchase Agreement have the respective meanings assigned to such terms in the Purchase
Agreement. Additionally, the following terms have the meanings set forth below:



     “Business Day” means a day on which commercial banks or financial institutions are
open for business in the States of New York and Texas and the Province of Alberta, Canada.



     “Buyer” has the meaning set forth in the recitals.



 









 








     “Guaranteed Obligations” means the obligations of Buyer of whatsoever nature and
howsoever evidenced, due or to become due, now existing or hereafter arising, whether direct or
indirect, absolute or contingent, which may arise under, out of or in connection with the
Transaction Documents and any amendment, restatement or modification thereof.



     “Purchase Agreement” has the meaning set forth in the recitals.



     “Transaction Documents” means the Purchase Agreement and the other documents executed
and delivered by Buyer in connection with the Closing of the transactions contemplated by the
Purchase Agreement.



     1.2 Construction. The principles of construction set forth in Section 1.2 of the
Purchase Agreement are incorporated herein mutatis mutandis.



ARTICLE II

GUARANTY




     2.1 Guaranty. Each of the Guarantors, jointly and severally, hereby irrevocably and
unconditionally guarantees the full, complete and timely payment and performance by Buyer of the
Guaranteed Obligations. If Buyer fails or refuses to pay or perform any of the Guaranteed
Obligations and either of the Beneficiaries elects to exercise its rights under this Guaranty, such
Beneficiary shall make a demand upon either or both of the Guarantors (hereinafter referred to as a
“Payment Demand”). A Payment Demand shall be in writing and shall specify in which manner
and what amount Buyer has failed to pay or perform and an explanation of why such payment or
performance is due. The Guarantors, jointly and severally, shall pay or perform, as applicable,
such Guaranteed Obligations set out in the Payment Demand, to the extent Buyer is obligated to
perform such Guaranteed Obligations under the Transaction Documents, within five Business Days
after the Guarantors’ receipt of the Payment Demand. A single written Payment Demand shall be
effective as to any specific default during the continuance of such default until Buyer or a
Guarantor shall have cured such default, and additional written demands concerning such default
shall not be required until such default is cured.



     2.2 Guaranty Unconditional. This Guaranty is a guaranty of payment and performance
and not of collection. There are no conditions precedent to the enforcement of this Guaranty.
The obligations of the Guarantors hereunder shall be continuing, absolute and unconditional and,
without limiting the generality of the foregoing, shall not be released, discharged or otherwise
affected by:




     (a) any invalidity, illegality or unenforceability against Buyer of any Transaction
Document;




     (b) any modification, amendment, restatement, waiver or rescission of, or any consent
to the departure from, any of the terms of the Transaction Documents;

2









 









     (c) any exercise or non-exercise by a Beneficiary of any right or privilege under any
Transaction Document and any notice of such exercise or non-exercise;




     (d) any extension, renewal, settlement, compromise, waiver or release in respect of
any Guaranteed Obligation, by operation of law or otherwise, or any assignment of any
Guaranteed Obligation by a Beneficiary;




     (e) any change in the corporate existence, structure or ownership of Buyer;




     (f) any insolvency, bankruptcy, reorganization or other similar proceeding affecting
Buyer or its assets or any resulting release or discharge of any Guaranteed Obligation;




     (g) any requirement that a Beneficiary exhaust any right or remedy or take any action
against Buyer or any other Person before seeking to enforce the obligations of the
Guarantors under this Guaranty;




     (h) the existence of any defense, set-off or other rights (other than a defense of
payment or performance) that a Guarantor may have at any time against Buyer, a Beneficiary
or any other Person, whether in connection herewith or any unrelated transactions, provided
that nothing herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;




     (i) any other act or failure to act or delay of any kind by Buyer, a Beneficiary or
any other Person; or




     (j) any other circumstance whatsoever that might, but for the provisions of this
Section 2.2, constitute a legal or equitable discharge of the Guaranteed Obligations or the
obligations of a Guarantor hereunder, including but not limited to all defenses of a surety
(except for indefeasible payment in full);


provided that the Guarantors may interpose and assert as defense to payment or performance
hereunder (A) any counterclaim or setoff that Buyer is or would have been entitled to in respect
of its obligations and liabilities under the Transaction Documents and (B) any defense that Buyer
is or would have been entitled to arising out of the conduct of a Beneficiary in respect of its
obligations and liabilities under the Transaction Documents.




     2.3 Termination and Reinstatement. The Guarantors’ obligations hereunder shall remain
in full force and effect until all obligations of Buyer under the Purchase Agreement have expired
or terminated or been released. If at any time any payment with respect to the Guaranteed
Obligations is rescinded or must be otherwise restored or returned as a result of any fraudulent
conveyance or the insolvency, bankruptcy or reorganization of Buyer or otherwise, the Guarantors’
obligations hereunder with respect to such payment shall be reinstated at such time as though such
payment had been due but not made at such time.

3









 








     2.4 Waivers. Each Guarantor irrevocably waives




     (a) notice of acceptance of this Guaranty and notice of any obligation or liability to
which it may apply;




     (b) any diligence, promptness, presentment, demand, performance, protest, demand for
payment, notice of non-payment as the same pertains to Buyer, suit or the taking of other
action by a Beneficiary against, and any other notice to, Buyer, the Guarantors or others;




     (c) any right to require a Beneficiary to proceed against Buyer or to exhaust any
security held by a Beneficiary or to pursue any other remedy;




     (d) any defense based upon an election of remedies by a Beneficiary, unless the same
would excuse performance by Buyer under the Transaction Documents;




     (e) any duty of a Beneficiary to advise the Guarantors of any information known to
such Beneficiary regarding Buyer or its ability to perform under the Transaction Documents;
and




     (f) any right to require a Proceeding against Buyer or any right to have Buyer joined
as a party to any Proceeding to enforce this Guaranty.



     2.5 Subrogation. Each Guarantor shall be subrogated to all rights of the
Beneficiaries against Buyer in respect of any amounts paid by such Guarantor pursuant to the
provisions of this Guaranty; provided, however, that such Guarantor shall not be entitled to
enforce or to receive any payments arising out of or based upon such right of subrogation if any
Guaranteed Obligations then due have not been satisfied. If any amount is paid to a Guarantor on
account of subrogation rights under this Guaranty in violation of this Section 2.5, such amount
shall be held in trust for the benefit of the Beneficiaries and shall be promptly paid to the
Beneficiaries to be credited and applied to the Guaranteed Obligations, whether matured or
unmatured or absolute or contingent, in accordance with the terms of the Transaction Documents.



ARTICLE III

GUARANTORS’ REPRESENTATIONS




     Each Guarantor, jointly and severally, represents and warrants to Beneficiary, as of the date
hereof and as of the Closing Date, as follows:



     3.1 Existence. Each of the Guarantors is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation and has all requisite
power to execute and deliver this Guaranty and to perform its obligations hereunder.



     3.2 Due Authorization. The execution and delivery of this Guaranty and the
consummation of the transactions contemplated hereby have been duly authorized by all



4








 







necessary
corporate action on the part of each of the Guarantors. This Guaranty has been duly executed and
delivered by each of the Guarantors and constitutes its legal, valid and binding obligation,
enforceable against such Guarantor in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights and
remedies generally and to the effect of general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).



     3.3 Consents. All consents, licenses, clearances, authorizations, and approvals of,
and registrations and declarations with, any Governmental Entity necessary for the due execution,
delivery and performance of this Guaranty have been obtained and remain in full force and effect
and all conditions thereof have been duly complied with, and no other action by, and no notice to
or filing with, any Governmental Entity is required in connection with the execution, delivery or
performance of this Guaranty.



     3.4 No Conflict. The execution, delivery and performance of this Guaranty by each
Guarantor do not, and the consummation of the transactions contemplated hereby will not,




     (i) result in a breach of the Certificate of Incorporation or bylaws of such Guarantor
or any resolution adopted by its Board of Directors;




     (ii) result in, or constitute an event that, with the passage of time or giving of
notice or both, would be, a breach, violation or default (or give rise to any right of
termination, cancellation, prepayment or acceleration) under any agreement to which such
Guarantor is a party or by which its properties or assets may be bound that could
reasonably be expected to materially adversely affect the ability of such Guarantor to
perform its obligations under this Guaranty; or




     (iii) violate any Applicable Law binding upon such Guarantor or its assets or
properties.



     3.5 Litigation. There is no Proceeding pending against either of the Guarantors or
any of its subsidiaries, or to the knowledge of each Guarantor threatened against such Guarantor or
any of its subsidiaries, in which there is a reasonable possibility of an adverse decision that
could reasonably be expected to materially adversely affect the ability of such Guarantor to
perform its obligations under this Guaranty or which in any manner draws into question the validity
of this Guaranty.



ARTICLE IV

OTHER PROVISIONS




     4.1 Notices. All notices, requests, demands, and other communications required or
permitted to be given or made hereunder by either Guarantor or either Beneficiary (each a
“Notice”) shall be in writing and shall be deemed to have been duly given or made if (i)
delivered personally, (ii) transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, (iii) delivered by prepaid overnight courier service, or (iv)
delivered by confirmed telecopy or facsimile



5









 







transmission at the following addresses (or at such
other addresses as shall be specified by similar notice):


If to the Beneficiaries:



El Paso Corporation

El Paso CNG Company, L.L.C.

1100 Louisiana Street

Houston, Texas 77002

Attention: General Counsel

Fax: (713) 420-5043



with a copy to:



Andrews Kurth LLP

600 Travis Street, Suite 4200

Houston, Texas 77002

Attention: G. Michael O’Leary

Fax: (713) 220-4285



If to the Guarantors:



TransCanada Corporation

TransCanada PipeLines USA Ltd.

TransCanada PipeLines Tower

450 – 1st Street S.W.

Calgary, Alberta T2P 5H1

Attention: Sean McMaster

Executive Vice-President,

Law and General Counsel

Fax: (403) 920-2410



with a copy to:



Mayer, Brown, Rowe & Maw LLP

71 South Wacker Drive

Chicago, IL 60606


	Attention: 	Marc F. Sperber
	 	D. Michael Murray



Fax: (312) 701-7711



Notices shall be effective (i) if delivered personally or sent by courier service, upon actual
receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in
the mail or the date of delivery as shown by the return receipt therefor, or (iii) if sent by
telecopy or facsimile transmission, when the answer back is received.




     4.2 Entire Agreement. This Guaranty constitutes the entire agreement between the
Guarantors and the Beneficiaries with respect to the subject matter hereof



6









 







and supersedes all prior
agreements and understandings, both written and oral, between them with respect to the subject
matter hereof. There are no restrictions, promises, representations, warranties, covenants or
undertakings between the Guarantors and the Beneficiaries other than those expressly set forth or
referred to herein.



     4.3 Binding Effect; Assignment; No Third Party Benefit. Subject to the following
sentence, this Guaranty shall be binding upon each of the Guarantors and its successors and assigns
and shall inure to the benefit of each of the Beneficiaries and its successors and assigns.
Neither this Guaranty nor any of the rights, interests, or obligations hereunder shall be assigned
or delegated by a party, other than to an Affiliate (provided that if a Guarantor so assigns or
delegates to an Affiliate, such Guarantor shall not be released from its obligations hereunder as a
result of such assignment), without the prior written consent of the other parties. Except as
provided herein, nothing in this Guaranty is intended to or shall confer upon any Person other than
the parties, and their successors and assigns, any rights, benefits, or remedies of any nature
whatsoever under or by reason of this Guaranty.



     4.4 Severability. If any provision of this Guaranty is held to be unenforceable, this
Guaranty shall be considered divisible and such provision shall be deemed inoperative to the extent
it is deemed unenforceable, and in all other respects this Guaranty shall remain in full force and
effect.



     4.5 Governing Law. This Guaranty shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without regard to its conflicts of laws rules or
principles.



     4.6 Counterparts. This Guaranty may be executed by the parties in any number of
counterparts, each of which shall be deemed an original, but all of which shall constitute one and
the same agreement. Such execution may be evidenced by an exchange of facsimile communications or
any other rapid transmission devise designed to produce a written record of communications
transmitted.



     4.7 Consent to Jurisdiction. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the federal courts of the United States of
America located in The Borough of Manhattan, New York, New York, over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby, and each party
irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted
by Applicable Law, any objection which they may now or hereafter have to the venue of any dispute
arising out of or relating to this Guaranty or any of the transactions contemplated hereby brought
in such court or any defense of inconvenient forum for the maintenance of such dispute. Each party
agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Applicable Law.



     4.8 Amendment and Waiver. No amendment or waiver of any provision of this Guaranty,
nor consent to any departure by a Guarantor therefrom, shall in any event



7









 







be effective unless the
same shall be in writing and signed by both Guarantors and both Beneficiaries. Any such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given.



     4.9 No Implied Waiver. No failure or delay in exercising any right, power or
privilege or requiring the satisfaction of any condition hereunder, and no course of dealing
between the Guarantors and the Beneficiaries operates as a waiver or estoppel of any right, remedy
or condition. No single or partial exercise of any right or remedy under this Guaranty precludes
any simultaneous or subsequent exercise of any other right, power or privilege. The rights and
remedies set forth in this Guaranty are not exclusive of, but are cumulative to, any rights or
remedies now or subsequently existing at law, in equity or by statute.



     4.10 Expenses. The Guarantors shall indemnify the Beneficiaries for any and all costs
and expenses (including reasonable attorneys’ fees and expenses) incurred by any of the
Beneficiaries in the successful enforcement of any rights under this Guaranty.



[Signatures on Following Page]




8









 








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



	 	 	 	 	 
	 	TRANSCANADA CORPORATION

 	 
	 	By:  	/s/ Gregory A. Lohnes
 	 
	 	 	Name:  	Gregory A. Lohnes 	 
	 	 	Title:  	Chief Financial Officer
and Executive Vice-President 	 
	 
	 	 	 
	 	By:  	              /s/ Ron Cook
 	 
	 	 	Name:  	Ron Cook 	 
	 	 	Title:  	Vice President – Taxation 	 
	 
	 	TRANSCANADA PIPELINE USA LTD.

 	 
	 	By:  	/s/ Ron Anderson
 	 
	 	 	Name:  	Ron Anderson 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                  /s/ David Kohlenberg
 	 
	 	 	Name:  	David Kohlenberg 	 
	 	 	Title:  	Deputy General Counsel 	 
	 



[Signature Page to Guaranty]