exv10w2






Exhibit 10.2




Execution Version




AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT




OF




RIGS HAYNESVILLE PARTNERSHIP CO.




(a Delaware general partnership)




Dated as of March 17, 2009




by and among




Regency Haynesville Intrastate Gas LLC




EFS Haynesville, LLC




Alinda Gas Pipeline I, L.P.




and




Alinda Gas Pipeline II, L.P.





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I DEFINITIONS; CONSTRUCTION	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 

	 	1.1 
	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 

	 	1.2 
	 	Construction
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II ORGANIZATION	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.1 
	 	Formation
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.2 
	 	Name
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.3 
	 	Registered Office; Registered Agent; Principal Office; Other Offices
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.4 
	 	Purpose
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.5 
	 	Foreign Qualification
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	2.6 
	 	Term
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III PARTNERS; GP UNITS	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	3.1 
	 	Partners
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	3.2 
	 	GP Units.
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	3.3 
	 	Transfers of GP Units
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV WITHDRAWAL	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 

	 	4.1 
	 	No Voluntary Withdrawal
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 

	 	4.2 
	 	Deemed Withdrawal
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 

	 	4.3 
	 	Effect of Withdrawal
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.1 
	 	Initial Capital Contributions
	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.2 
	 	Additional Capital Contributions.
	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.3 
	 	No Other Required Capital Contributions
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.4 
	 	Return of Contributions
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.5 
	 	Use of Proceeds
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	5.6 
	 	Capital Accounts.
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI DISTRIBUTIONS AND ALLOCATIONS	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 

	 	6.1 
	 	Distributions.
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 

	 	6.2 
	 	Allocations.
	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 

	 	6.3 
	 	Varying Interests
	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII MANAGEMENT OF THE PARTNERSHIP	 	 	25	 






 









 






	 	 	 	 	 	 	 	 	 
	 

	 	7.1 
	 	Management by Management Committee.
	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.2 
	 	MC Members of the Management Committee.
	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.3 
	 	Votes; Meetings.
	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.4 
	 	No Exclusive Duty to Partnership
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.5 
	 	Resignation and Withdrawal of MC Members
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.6 
	 	Removal of MC Members
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.7 
	 	MC Member Vacancies
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.8 
	 	Fees and Expenses of the MC Members
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.9 
	 	Delegation of Authority; Officers
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.10 
	 	Approved Agreements; Senior Management Team.
	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 

	 	7.11 
	 	Budgets.
	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII TAX MATTERS	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.1 
	 	Tax Returns
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.2 
	 	Partner Tax Return Information
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.3 
	 	Tax Matters Partner.
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.4 
	 	Tax Elections
	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.5 
	 	Tax Reimbursement
	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 

	 	8.6 
	 	Tax Partnership
	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX BOOKS AND RECORDS; ADDITIONAL COVENANTS	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.1 
	 	Maintenance of Books
	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.2 
	 	Financial Statements and Reports
	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.3 
	 	Bank Accounts
	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.4 
	 	Confidentiality.
	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.5 
	 	Conflicts of Interest.
	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.6 
	 	Haynesville Expense Reimbursement
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.7 
	 	Haynesville Expansion Cost Overruns
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.8 
	 	Financing
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	9.9 
	 	Permitted Investments
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X DISSOLUTION, LIQUIDATION, AND TERMINATION	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	10.1 
	 	Dissolution
	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 

	 	10.2 
	 	Winding Up and Termination.
	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 

	 	10.3 
	 	Deficit Capital Accounts
	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	 

	 	10.4 
	 	Statement of Dissolution
	 	 	42	 






 









 






	 	 	 	 	 	 	 	 	 
	ARTICLE XI EXCULPATION AND INDEMNIFICATION	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.1 
	 	Exculpation.
	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.2 
	 	Indemnification.
	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.3 
	 	Indemnification Procedures.
	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.4 
	 	Expenses
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.5 
	 	Insurance
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.6 
	 	Acts Performed Outside the Scope of the Partnership
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.7 
	 	Attorneys’ Fees
	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.8 
	 	Subordination of Other Rights to Indemnity
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.9 
	 	Survival of Indemnity Provisions
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	11.10 
	 	Reimbursement Obligation
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XII REPRESENTATIONS, WARRANTIES AND COVENANTS	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 

	 	12.1 
	 	Representations, Warranties and Covenants
	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIII GENERAL PROVISIONS	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.1 
	 	Offset
	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.2 
	 	Notices
	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.3 
	 	Entire Agreement
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.4 
	 	Waivers
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.5 
	 	Amendment or Restatement
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.6 
	 	Binding Effect
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.7 
	 	Governing Law; Jurisdiction
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.8 
	 	Severability
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.9 
	 	Tax Disclosure Authorization
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.10 
	 	Further Assurances
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.11 
	 	Waiver of Certain Rights
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.12 
	 	No Third Party Beneficiary
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.13 
	 	Counterparts
	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 

	 	13.14 
	 	Reliance on Counsel
	 	 	50	 






 









 





Attachments




	 	 	 
	Schedule 1

	 	Partners; GP Units; Sharing Ratios
	Schedule 2

	 	Initial MC Members
	Schedule 3(a)

	 	Initial Officers
	Schedule 3(b)

	 	Delegation of Authority to Officers
	Schedule 4

	 	Initial Senior Management Team
	Exhibit A

	 	Form of Master Services Agreement
	Exhibit B

	 	Area of Mutual Interest
	Exhibit C

	 	Haynesville Expansion Project
	Exhibit D

	 	Transfer Rights
	Exhibit E

	 	Initial Operating Budget
	Exhibit F

	 	Haynesville Expansion Budget
	Exhibit G

	 	Insurance
	Annex 1

	 	Form of GP Unit Certificate







 









 








GLOSSARY OF DEFINED TERMS




The location of the definition of each capitalized term used in this Agreement is set forth in this
Glossary:



	 	 	 	 	 
	Act
	 	 	2	 
	Adjusted Capital Account
	 	 	2	 
	Adoption Agreement
	 	 	D-6	 
	Affiliate
	 	 	2	 
	Agreement
	 	 	1	 
	Alinda Investor 1
	 	 	1	 
	Alinda Investor 2
	 	 	1	 
	Alinda Investors
	 	 	1	 
	AMI Agreement
	 	 	40	 
	Area of Mutual Interest
	 	 	2	 
	Authorized Representatives
	 	 	2	 
	Available Cash
	 	 	3	 
	Book Value
	 	 	3	 
	Budget
	 	 	4	 
	Business Day
	 	 	4	 
	Call Amount
	 	 	19	 
	Call Notice
	 	 	19	 
	Capital Account
	 	 	4	 
	Capital Contribution
	 	 	4	 
	Certificate
	 	 	1	 
	Claim Notice
	 	 	45	 
	Claims
	 	 	43	 
	Code
	 	 	5	 
	Confidential Information
	 	 	5	 
	Consolidated EBITDA
	 	 	5	 
	Consolidated Interest Expense
	 	 	6	 
	Consolidated Net Income
	 	 	6	 
	Contract
	 	 	6	 
	Contribution Agreement
	 	 	1	 
	Control
	 	 	6	 
	Controlled by
	 	 	6	 
	Controlling
	 	 	6	 
	Co-Sale Buyer
	 	 	D-4	 
	Co-Sale Electing Partner
	 	 	D-4	 
	Co-Sale Notice
	 	 	D-4	 
	Co-Sale Offer
	 	 	D-4	 
	Co-Sale Seller
	 	 	D-4	 
	Covered Person
	 	 	6	 
	CPI Price Factor
	 	 	7	 
	Depreciation
	 	 	7	 
	Disposing Partner
	 	 	D-2	 
	Disposition Notice
	 	 	D-2	 
	Dissolution Event
	 	 	41	 
	Economic Risk of Loss
	 	 	7	 
	Effective Date
	 	 	1	 
	Electing Partner
	 	 	19	 
	Election Period
	 	 	19	 
	Exchange Act
	 	 	7	 
	Exercising ROFO Partners
	 	 	D-2	 
	Expansion Capital Expenditures
	 	 	7	 
	FMV
	 	 	D-7	 
	Forfeited GP Units
	 	 	17	 
	Formation Date
	 	 	1	 
	GAAP
	 	 	38	 
	GE Investor
	 	 	1	 
	Governmental Authority
	 	 	8	 
	GP Unit
	 	 	16	 
	Haynesville Expansion Budget
	 	 	8	 
	Haynesville Expansion Project
	 	 	8	 
	HSR Act
	 	 	8	 
	Indemnified Party
	 	 	45	 
	Indemnitee
	 	 	47	 
	Indemnitor
	 	 	47	 
	Indemnity Loss
	 	 	8	 
	Indirect Transfer
	 	 	8	 
	Indirect Transfer Election Period
	 	 	D-5	 
	Indirect Transfer GP Units
	 	 	D-5	 
	Indirect Transfer Notice
	 	 	D-5	 
	Indirect Transfer Over-Allotment AmountD-5
	 	 	 	 
	Indirect Transfer Participating Partner
	 	 	D-5	 
	Indirect Transfer Sale Price
	 	 	D-5	 
	Initial Capital Contributions
	 	 	18	 
	Investment Company Act
	 	 	9	 
	Investment Grade Entity
	 	 	9	 
	Investor Partners
	 	 	9	 
	Laws
	 	 	9	 
	Losses
	 	 	12	 
	Maintenance Capital Expenditures
	 	 	9	 
	Management Committee
	 	 	26	 
	Management Company
	 	 	9	 
	Management Person
	 	 	9	 






 









 






	 	 	 	 	 
	Material Contract
	 	 	9	 
	MC Member
	 	 	26	 
	Minimum Gain
	 	 	10	 
	MSA
	 	 	10	 
	National Securities Exchange
	 	 	D-3	 
	Nonrecourse Deductions
	 	 	10	 
	Operating Budget
	 	 	10	 
	Original Agreement
	 	 	1	 
	Outside Activities
	 	 	40	 
	Over-Allotment Amount
	 	 	19	 
	Partner
	 	 	11	 
	Partner Nonrecourse Debt
	 	 	11	 
	Partner Nonrecourse Debt Minimum Gain11
	 	 	 	 
	Partner Nonrecourse Deductions
	 	 	11	 
	Partnership
	 	 	1	 
	Partnership Business
	 	 	15	 
	Partnership Interests
	 	 	11	 
	Partnership Specific Opportunity
	 	 	11	 
	Permitted Investments
	 	 	11	 
	Permitted Merger Transaction
	 	 	8	 
	Permitted Transfer
	 	 	11	 
	Person
	 	 	12	 
	Pipeline Construction Contract
	 	 	33	 
	Profits
	 	 	12	 
	Proposed Co-Sale Transfer
	 	 	D-4	 
	Regency HIG
	 	 	1	 
	Regulatory Allocations
	 	 	24	 
	Regulatory Requirement
	 	 	D-7	 
	Reimbursable Costs
	 	 	48	 
	Reimbursed Partner
	 	 	48	 
	Reimbursing Partner
	 	 	48	 
	RIGS SPE
	 	 	1	 
	ROFO Over-Allotment Amount
	 	 	D-2	 
	ROFO Partners
	 	 	D-2	 
	ROFO Partners Election Period
	 	 	D-2	 
	Sale GP Units
	 	 	D-2	 
	Sale Price
	 	 	D-2	 
	Securities Act
	 	 	13	 
	Senior Management Team
	 	 	34	 
	Sharing Ratio
	 	 	13	 
	Sole Discretion
	 	 	13	 
	Tax Matters Partner
	 	 	36	 
	Term
	 	 	15	 
	Third Party Claim
	 	 	45	 
	Transfer
	 	 	13	 
	Transferred
	 	 	13	 
	Transferred Partner
	 	 	D-5	 
	Transferring
	 	 	13	 
	Treasury Regulations
	 	 	13	 
	Ultimate Parent
	 	 	13	 
	Under Common Control with
	 	 	6	 
	Withdraw
	 	 	14	 
	Withdrawal
	 	 	14	 
	Withdrawing
	 	 	14	 
	Withdrawn
	 	 	14	 
	Withdrawn Partner
	 	 	17	 







-v-










 





AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT




OF




RIGS HAYNESVILLE PARTNERSHIP CO.




(a Delaware general partnership)




     This Amended and Restated General Partnership Agreement (this “Agreement”) of RIGS Haynesville
Partnership Co., a Delaware general partnership (the “Partnership”), dated as of March 17, 2009
(the “Effective Date”), is adopted, executed and agreed to, for good and valuable consideration, by
and among Regency Haynesville Intrastate Gas LLC, a Delaware limited liability company (“Regency
HIG”), EFS Haynesville, LLC, a Delaware limited liability company (“GE Investor”), Alinda Gas
Pipeline I, L.P., a Delaware limited partnership (“Alinda Investor 1”) and Alinda Gas Pipeline II,
L.P., a Delaware limited partnership (“Alinda Investor 2” and collectively with Alinda Investor 1,
the “Alinda Investors”).



RECITALS




     WHEREAS, Regency HIG and RIGS SPE LLC, a Delaware limited liability company (“RIGS SPE”)
formed the Partnership as a Delaware general partnership under and pursuant to the Act on March 9,
2009 (the “Formation Date”), and caused a statement of partnership existence to be filed with the
Secretary of State of the State of Delaware on March 9, 2009 (such statement of existence, as
amended or restated from time to time in accordance with this Agreement, is referred to herein as
the “Certificate”);



     WHEREAS, Regency HIG and RIGS SPE entered into the Partnership’s initial General Partnership
Agreement on March 9, 2009 (the “Original Agreement”);



     WHEREAS, Regency HIG, Alinda Investor 1, Alinda Investor 2 and General Electric Capital
Corporation, a Delaware corporation, entered into that certain Contribution Agreement, dated as of
February 26, 2009, (the “Contribution Agreement”) pursuant to which, among other things, (a)
Regency HIG agreed to cause the Partnership to be formed prior to the Closing (as defined in the
Contribution Agreement), (b) the Partnership has become a party to the Contribution Agreement by
executing a joinder to the Contribution Agreement dated as of the Effective Date, (c) Regency HIG
has agreed to contribute to the Partnership the RIGS Interests (as defined in the Contribution
Agreement) in exchange for certain GP Units of the Partnership and (d) each of GE Investor, Alinda
Investor 1 and Alinda Investor 2 has agreed to contribute to the Partnership cash in exchange for
certain GP Units of the Partnership, in each case, subject to and in accordance with the terms of
the Contribution Agreement;



     WHEREAS, prior to the Effective Date, General Electric Capital Corporation has assigned its
rights under the Contribution Agreement to GE Investor;



     WHEREAS, on the Effective Date, the Partnership has entered into the MSA, pursuant to which
the Management Company will manage the day-to-day operations of the Partnership



 









 







Business (including
the completion of the Haynesville Expansion Project) in accordance with the terms of the MSA; and



     WHEREAS, the Partnership and the Partners now desire to amend and restate the Original
Agreement in its entirety to reflect the withdrawal of RIGS SPE as a Partner, admit each of GE
Investor, Alinda Investor 1 and Alinda Investor 2 as a Partner and to reflect the agreement of the
Partners as set forth herein.



     NOW, THEREFORE, for and in consideration of the promises and the mutual covenants and
agreements contained herein and other good and valuable consideration (the receipt and sufficiency
of which are hereby confirmed and acknowledged), the Partners stipulate and agree, as follows:



ARTICLE I

DEFINITIONS; CONSTRUCTION




     1.1 Definitions. In addition to capitalized terms defined in the body of this
Agreement, capitalized terms used in this Agreement shall have the meanings given to them in this
Section 1.1. The Glossary, which follows the Table of Contents of this Agreement, sets
forth the location in this Agreement of the definition for each capitalized term used herein.




     “Act” means the Delaware Revised Uniform Partnership Act (6 Del. C. §15-101, et seq.),
as amended from time to time.




     “Adjusted Capital Account” means the Capital Account maintained for each Partner, (a)
increased by any amounts that such Partner is obligated to restore or is treated as
obligated to restore under Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1)
and 1.704-2(i)(5) and (b) decreased by any amounts described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) with respect to such Partner.




     “Affiliate” means, with respect to any Person, any Person Controlling, Controlled by,
or Under Common Control with such Person.




     “Area of Mutual Interest” means that portion of the area within the State of Louisiana
that is designated as the “Area of Mutual Interest” on Exhibit B.




     “Authorized Representatives” means (a) with respect to the Partnership, any of: (i) the
Partnership’s Affiliates; and (ii) the MC Members, officers, managers, employees, members,
partners, agents and authorized representatives (including attorneys, accountants,
consultants, bankers, lenders and financial advisors) of the Partnership and the
Partnership’s Affiliates and (b) with respect
to a Partner, any of: (i) such Partner’s Affiliates; (ii) the directors, officers,
managers, employees, members, stockholders, partners, owners, agents and authorized
representatives (including attorneys, accountants, consultants, bankers, lenders and
financial advisors) of such Partner and such Partner’s Affiliates; and (iii) the Persons who
are (or who are prospective) beneficial owners of direct or indirect interests in such
Partner or lenders to such Partner or its Affiliates.



-2-









 






     “Available Cash” means, the amount of cash, as determined by the Management Committee,
for each calendar quarter, without duplication:




     (a) the sum of all cash and cash equivalents of the Partnership and its subsidiaries on
hand at the end of such calendar quarter, less




     (b) prior to the completion of the Haynesville Expansion Project, any cash on hand at
the end of such calendar quarter contributed by the Partners in connection with the Initial
Capital Contributions and any other Capital Contribution related to the Haynesville
Expansion Project, less




     (c) the amount of any cash reserves determined by the Management Committee, in its
reasonable discretion, to be necessary or appropriate to (i) provide for the proper conduct
of the business of the Partnership (including any expected Maintenance Capital Expenditures
and any Expansion Capital Expenditures) subsequent to such calendar quarter or (ii) comply
with Law or any loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership is a party or by which it is bound or its
assets are subject; provided, however, that cash reserves established, increased or reduced
by the Management Committee after the end of such calendar quarter but on or before the date
of determination of Available Cash with respect to such calendar quarter shall be deemed to
have been made, established, increased or reduced, for purposes of determining Available
Cash, within such calendar quarter if the Management Committee so determines.




     Notwithstanding the foregoing, “Available Cash” with respect to the calendar quarter in
which a liquidation or dissolution of the Partnership occurs and any subsequent calendar
quarter shall be deemed to equal zero.




     “Book Value” means, with respect to any property, such property’s adjusted basis for
federal income tax purposes, except as follows:




     (a) the initial Book Value of any property contributed by a Partner to the Partnership
shall be the fair market value of such property as reasonably determined by the Management
Committee;




     (b) the Book Values of all properties shall be adjusted to equal their respective fair
market values as determined by the Management Committee in connection with (i) the
acquisition of an interest in the Partnership by any new or existing Partner in exchange for
more than a de minimis capital contribution to the Partnership, (ii) the distribution by the
Partnership to a Partner of more than a de minimis amount of property
as consideration for an interest in the Partnership, (iii) the grant of an interest in
the Partnership (other than a de minimis interest) as consideration for the provision of
services to or for the benefit of the Partnership by an existing Partner acting in a Partner
capacity, or by a new Partner acting in a Partner capacity or in anticipation of becoming a
Partner, (iv) the liquidation of the Partnership within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)(1) (other than pursuant to Section 708(b)(1)(B) of the Code),
or (v) any other event to the extent determined by the Management Committee to be



-3-









 







necessary
to properly reflect Book Values in accordance with the standards set forth in Treasury
Regulation Section 1.704-1(b)(2)(iv)(q);




     (c) the Book Value of any property distributed to a Partner shall be the fair market
value of such property as reasonably determined by the Management Committee; and




     (d) the Book Values of all properties shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such property pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulation Section 1.704 1(b)(2)(iv)(m)
and clause (f) of the definition of Profits and Losses or Section 6.2(b)(vii);
provided, however, Book Value shall not be adjusted pursuant to this clause (d) to the
extent the Management Committee reasonably determines that an adjustment pursuant to clause
(b) hereof is necessary or appropriate in connection with the transaction that would
otherwise result in an adjustment pursuant to this clause (d).




     If the Book Value of property has been determined or adjusted pursuant to clauses (b)
or (d) hereof, such Book Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such property for purposes of computing Profits and Losses and other
items allocated pursuant to Article VI.




     “Budget” means any budget approved by the Management Committee (as such budget may be
amended from time to time by the Management Committee), including the Haynesville Expansion
Budget and any Operating Budget.




     “Business Day” means any day other than a Saturday, Sunday or other day on which banks
are authorized or required by Law to be closed in Dallas, Texas.




     “Capital Account” means the account maintained by the Partnership for each Partner in
accordance with Section 5.6.




     “Capital Contribution” means, with respect to any Partner, the amount of money and the
fair market value, as determined by the Management Committee, of any property (other than
money) contributed to the Partnership by such Partner. Any reference in this Agreement to
the Capital Contribution of a Partner shall include its pro rata share of any Capital
Contribution of its predecessors in interest.




     “Code” means the United States Internal Revenue Code of 1986, as amended from time to
time. All references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding Law.




     “Confidential Information” shall mean all information provided or made available by or
on behalf of the Partnership or its Authorized Representatives to a Partner or its
Authorized Representatives, including all information, data, reserve reports or other
reports, interpretations, contract terms and conditions, forecasts and records containing or
otherwise reflecting information concerning the Partnership or its Affiliates, potential
counterparties or customers or their Affiliates, potential projects, business plans or



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proposals, market or economic data, identities of actual or potential counterparties or
customers, designs, concepts, trade secrets and other business, operational or technical
information (irrespective of the form of communication of such information) and together
with analyses, compilations, studies or other documents, whether prepared by or on behalf of
a Partner or its Authorized Representatives, which contain or otherwise reflect such
information (irrespective of the form of communication of such information). “Confidential
Information” also includes information of third parties that is subject to any third-party
confidentiality agreements. Notwithstanding the foregoing, Confidential Information shall
not include the following: (a) information which at the time of disclosure by or on behalf
of the Partnership is publicly available or which later becomes publicly available through
no act or omission of the disclosing Partner or its Authorized Representatives; (b)
information which a Partner can demonstrate was in its possession on a non-confidential
basis prior to disclosure by or on behalf of the Partnership hereunder; (c) information
received by a Partner from a third party who is not prohibited from transmitting the
information by a contractual, legal or fiduciary obligation; or (d) information which a
Partner can demonstrate was independently developed by it or for it and which was not
derived or obtained, in whole or in part, from Confidential Information or from the
Partnership or its Authorized Representatives hereunder.




     “Consolidated EBITDA” means, for any period, the Consolidated Net Income for such
period plus, without duplication and in accordance with GAAP and to the extent reflected as
a charge in the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) Consolidated Interest Expense and amortization or write-off of debt
issuance costs and commissions, discounts and other fees and charges associated with
indebtedness, (c) depreciation, depletion and amortization expense, (d) amortization of
intangibles and organization costs, (e) any extraordinary or non-recurring expenses or
losses (including, whether or not otherwise includable as a separate item in the statement
of such Consolidated Net Income for such period, losses on sales of assets outside of the
ordinary course of business) and (f) any other non-cash charges, and minus, to the extent
included in the statement of such Consolidated Net Income for such period, the sum of (i)
interest income (except to the extent deducted in determining Consolidated Interest
Expense), (ii) any extraordinary or non-recurring income or gains (including, whether or not
otherwise includable as a separate item in the statement of such Consolidated Net Income for
such period, gains on the sales of assets outside of the ordinary course of business, in
each case in accordance
with GAAP) and (iii) any other non-cash income, all as determined on a consolidated
basis.




     “Consolidated Interest Expense” means, with respect to the Partnership and its
subsidiaries on a consolidated basis for any fiscal period, total interest expenses of the
Partnership and its subsidiaries in such fiscal period which are classified as interest
expense on the consolidated financial statements of the Partnership and its subsidiaries,
all as determined in conformity with GAAP.




     “Consolidated Net Income” means, with respect to the Partnership and its subsidiaries
on a consolidated basis, for any fiscal period, without duplication, the net income (or
loss) of Partnership and its subsidiaries after allowances for taxes for such period
determined on a consolidated basis in accordance with GAAP; provided, that there



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shall be
excluded from such net income (or loss) (to the extent otherwise included therein) the
following: (a) the net income (or loss) for such period of any Person that is not a
subsidiary, or that is accounted for by the equity method of accounting; (b) the net income
(or loss) during such period of any subsidiary to the extent that the declaration or payment
of dividends or similar distributions or transfers or loans by that subsidiary is not at the
time permitted by operation of the terms of its charter or any agreement, instrument or
governmental requirement applicable to such subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction; and (d) any gains or losses attributable to writeups or writedowns of
assets.




     “Contract” means any contract, commitment, lease, license, mortgage, bond, note or
other instrument evidencing indebtedness, or other legally binding agreement, in each case
containing terms that remain executory, and all amendments thereof, but excluding any
permits or employee benefit plans.




     “Control”, including the correlative terms “Controlling”, “Controlled by” and “Under
Common Control with”, means possession, directly or indirectly, of the power to direct or
cause the direction of management or policies (whether through ownership of securities or
any partnership or other ownership interest, by contract or otherwise) of a Person. For the
purposes of the preceding sentence, Control shall be deemed to exist when a Person
possesses, directly or indirectly, through one or more intermediaries (a) more than 50% of
the outstanding voting interests thereof and (b) more than 25% of the economic or beneficial
interest therein.




     “Covered Person” means, in each case, whether or not a Person continues to have the
applicable status referred to in the following list: a Partner, a MC Member, any Affiliate
of a Partner (other than the Management Company), any officers of the Partnership (whether
or not such officers are employees of the Partnership), any member of the Senior Management
Team, any officers, directors, members, managers, stockholders, partners, owners, employees,
representatives or agents of any Partner, or of any of their respective Affiliates (other
than the Management
Company); any employee or agent of the Partnership or its Affiliates (other than the
Management Company); and any Tax Matters Partner.




     “CPI Price Factor” means a fraction, the numerator of which shall be the most recent
publication of the Consumer Price Index for All Urban Consumers, published by the U.S.
Department of Labor, Bureau of Labor Statistics as of the date of escalation, and the
denominator of which shall be the most recent publication of Consumer Price Index for All
Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics as of
the date one year prior to such date of escalation; provided, that if such index is
discontinued, any successor or substitute index, which, in the Management Committee’s
reasonable opinion, is most nearly equivalent to such index.




     “Depreciation” means, for each taxable year, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable for federal income tax purposes



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with
respect to property for such taxable year, except that with respect to any property the Book
Value of which differs from its adjusted tax basis for federal income tax purposes and which
difference is being eliminated by use of the remedial allocation method pursuant to Treasury
Regulation Section 1.704-3(d), Depreciation for such taxable year shall be the amount of
book basis recovered for such taxable year under the rules prescribed by Treasury Regulation
Section 1.704-3(d)(2).




     “Economic Risk of Loss” has the meaning assigned to that term in Treasury Regulation
Section 1.752-2(a).




     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
and the rules and regulations promulgated by the Securities and Exchange Commission
thereunder.




     “Expansion Capital Expenditures” means cash expenditures for:




     (a) any transaction in which the Partnership or any of its subsidiaries acquires
(through an asset acquisition, merger, stock acquisition or other form of investment)
control over all or a portion of the assets, properties or business of another Person for
the purpose of increasing for a period longer than the short-term the operating capacity or
operating income of the Partnership or any of its subsidiaries from the operating capacity
or operating income of the Partnership and its subsidiaries existing immediately prior to
such transaction, or




     (b) any (i) additions or improvements to the capital assets owned by the Partnership or
any of its subsidiaries or (ii) acquisitions of existing, or the construction of new or the
improvement or replacement of existing, capital assets, in each case if such additions,
improvements, acquisitions, replacements or construction is made to increase for a period
longer than the short-term the operating capacity or operating income of the Partnership of
its subsidiaries from the operating capacity or operating income of the
Partnership and its subsidiaries existing immediately prior to such addition,
improvement, replacement, acquisition or construction.




     For purposes of this definition, the short-term generally refers to a period not
exceeding 12 months.




     “Governmental Authority” means any federal, state or local governmental authority; a
state, commonwealth, territory or district thereof; a county or parish; a city, town,
township, village or other municipality; a district, ward or other subdivision of any of the
foregoing; any executive, legislative or other governing body of any of the foregoing; any
agency, authority, board, department, system, service, office, commission, committee,
council or other administrative body of any of the foregoing; any court or other judicial
body; and any officer, official or other representative of any of the foregoing.




     “Haynesville Expansion Budget” means the budget attached as Exhibit F, as it
may be amended or modified from time to time in accordance with the terms of this Agreement.




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     “Haynesville Expansion Project” means the expansion project in the Haynesville Shale
region of Louisiana as more particularly described in Exhibit C, which is expected
to be completed in accordance with the schedule set forth in Exhibit C.




     “HSR Act” means the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended
from time to time.




     “Indemnity Loss” means any item of Partnership loss or deduction that gives rise to an
indemnity payment to the Partnership by Regency HIG pursuant to Article 5 of the
Contribution Agreement.




     “Indirect Transfer” means, with respect to any Partner, any transfer, assignment, sale,
conveyance, license, lease or partition of any interests in any Person that results in the
Ultimate Parent of such Partner ceasing to Control such Partner; provided, however, that no
Indirect Transfer shall occur or be deemed to occur with respect to any Partner upon the
occurrence of a merger, combination or consolidation of the Ultimate Parent of such Partner
so long as, after giving effect to such merger, combination or consolidation, the surviving
entity of such merger, combination or consolidation continues to Control such Partner (a
“Permitted Merger Transaction”). Notwithstanding the foregoing, an Indirect Transfer shall
not include any pledge, hypothecation or encumbrance of any interests in any Person that
Controls any Partner for security purposes pursuant to a bona fide arms’ length transaction,
but shall include any direct transfer, assignment, sale, conveyance, license, lease, or
partition of such interests upon the foreclosure (or in lieu of foreclosure) of any such
pledge, hypothecation or encumbrance to the extent such direct transfer, assignment, sale,
conveyance, license, lease, or partition results in the Ultimate Partner of such Partner
ceasing to Control such Partner. For the avoidance of doubt, any transfer,
assignment, sale, conveyance, license, lease or partition that results from any
issuance of interests by the Ultimate Parent of any Partner shall not be an Indirect
Transfer with respect to such Partner.




     “Investor Partners” means, as of the relevant date, all of the Partners other than
Regency HIG or any Partner that is an Affiliate of Regency HIG as of such date.




     “Investment Company Act” means the United States Investment Company Act of 1940, as
amended from time to time, and the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.




     “Investment Grade Entity” means a Person with a rating equal to or higher than Baa3 (or
the equivalent) by Moody’s Investors Service, Inc. (or any successor to the rating agency
business thereof) or BBB- (or the equivalent) by Standards & Poor’s Ratings Group, a
division of The McGraw-Hill Companies, Inc. (or any successor to the rating agency business
thereof).




     “Laws” means any applicable constitutional provision, statute, act (including the Act),
code (including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration or interpretative or advisory
opinion or letter of a Governmental Authority having valid jurisdiction.



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     “Maintenance Capital Expenditures” means cash expenditures (including expenditures for
the addition or improvement to or replacement of the capital assets owned by the Partnership
or any of its subsidiaries or for the acquisition of existing, or the construction or
development of, new capital assets) if such expenditures are made to maintain, including for
a period longer than the short-term, the operating capacity or operating income of the
Partnership. “Maintenance Capital Expenditures” shall not include Expansion Capital
Expenditures. For purposes of this definition, the short-term generally refers to a period
not exceeding 12 months.




     “Management Company” means Regency Employees Management LLC.




     “Management Person” means, in each case, whether or not a Person continues to have the
applicable status referred to in the following list: a MC Member or an officer of the
Partnership.




     “Material Contract” means:




     (a) any Contract guarantying the obligations of any other Person or granting a lien on
any of the Partnership’s assets to secure the obligations of any other Person;




     (b) any swap, exchange, commodity option or hedging agreement, including all master
agreements and any confirmations issued pursuant thereto;




     (c) any Contract involving a remaining commitment by the Partnership to pay capital
expenditures in excess of $1,000,000;




     (d) any Contract for the lease or sublease of real property involving aggregate
payments in excess of $500,000 in any calendar year;




     (e) any Contract for the lease of personal property involving aggregate payments in
excess of $500,000 in any calendar year;




     (f) any natural gas transportation Contract that individually contains a minimum fixed
daily quantity of gas that exceeds 30,000 MMBtu;




     (g) any consulting Contract providing annual compensation in excess of $100,000 that
cannot be terminated by the Partnership on 60 days or less notice without premium or
penalty;




     (h) any Contract that purports to limit the freedom of the Partnership to compete in
any line of business or in any geographic area;




     (i) any partnership, joint venture or other similar Contracts providing for the sharing
of profits of the Partnership with any third party; and




     (j) except for Contracts of the nature described in clauses (a) through (i) above
(without regard to any dollar threshold described in such clauses), each Contract involving
aggregate payments by or to the Partnership in excess of $500,000 in any



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future calendar
year that cannot be terminated by the Partnership on 60 days or less notice without premium
or penalty.




     “Minimum Gain” has the meaning assigned to the term “partnership minimum gain” in
Treasury Regulation Section 1.704-2(d).




     “MSA” means the Master Services Agreement dated as of the Effective Date between the
Partnership and the Management Company substantially in the form attached hereto as
Exhibit A, as amended or modified from time to time in accordance with this
Agreement, pursuant to which the Management Company manages the day-to-day operations of the
Partnership Business.




     “Nonrecourse Deductions” has the meaning assigned that term in Treasury Regulation
Section 1.704-2(b).




     “Operating Budget” means, with respect to any calendar year, the annual operating
budget (including Maintenance Capital Expenditures and any other capital expenditures
necessary to operate the Partnership Business but excluding Expansion Capital Expenditures)
of the Partnership for such calendar year approved by the Management Committee in accordance
with the terms of this Agreement, as it may be amended or modified from time to time in
accordance with the terms of this Agreement. The Operating Budget as of the Effective Date
is attached as Exhibit E.




     “Partner” means any Person (but not any Affiliate or entity in which such Person has an
interest) executing this Agreement and any Person admitted as a Partner pursuant to the
provisions of this Agreement, in such Person’s capacity as a Partner of the Partnership.
Such terms do not include any Person or Persons who have ceased to be Partners of the
Partnership.




     “Partner Nonrecourse Debt” has the meaning assigned to the term “partner nonrecourse
debt” in Treasury Regulation Section 1.704-2(b)(4).




     “Partner Nonrecourse Debt Minimum Gain” has the meaning assigned to the term “partner
nonrecourse debt minimum gain” in Treasury Regulation Section 1.704-2(i)(2).




     “Partner Nonrecourse Deductions” has the meaning assigned to the term “partner
nonrecourse deductions” in Treasury Regulation Section 1.704-2(i)(1).




     “Partnership Interests” means the interest of a Partner, in its capacity as such, in
the Partnership, including rights to distributions (liquidating or otherwise), allocations,
information, all other rights, benefits and privileges enjoyed by that Partner (under the
Act, the Certificate, this Agreement or otherwise) in its capacity as a Partner and
otherwise to participate in the management of the Partnership; and all obligations, duties
and liabilities imposed on that Partner (under the Act, the Certificate, this Agreement, or
otherwise) in its capacity as a Partner.



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     “Partnership Specific Opportunity” means any intrastate and/or interstate natural gas
transmission infrastructure assets the sole purpose of which are to increase the available
capacity of the Partnership’s existing natural gas transmission infrastructure assets.




     “Permitted Investments” means an investment in (a) securities issued, or directly,
unconditionally and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than one year from the date of
acquisition and (b) money market funds substantially all of whose assets are comprised of
securities of the types described in clause (a) above.




     “Permitted Transfer” means (a) any Transfer by a Partner to its Ultimate Parent or to
any Person that is Controlled by such Ultimate Parent, (b) for so long as Regency HIG and GE
Investor are Affiliates, any Transfer by GE Investor (or its Affiliates) to Regency HIG (or
its Affiliates) or by Regency HIG (or its Affiliates) to GE Investor (or its Affiliates) and
(c) for so long as the Alinda Investors are Affiliates, any Transfer by Alinda Investor 1
(or its Affiliates) to Alinda Investor 2 (or its Affiliates) or by Alinda Investor 2 (or its
Affiliates) to Alinda Investor 1 (or its Affiliates).




     “Person” means any natural person, limited liability company, corporation, limited
partnership, general partnership, joint stock company, joint venture, association, company,
trust, bank trust company, land trust, business trust, or other organization, whether or not
a legal entity, and any government or agency or political subdivision thereof.




     “Profits” or “Losses” means, for each taxable year, an amount equal to the
Partnership’s taxable income or loss for such taxable year, determined in accordance with
Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments (without duplication):




     (a) any income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Profits and Losses pursuant to this definition of
“Profits” and “Losses” shall be added to such taxable income or loss;




     (b) any expenditures of the Partnership described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profits or Losses
pursuant to this definition of “Profits” and “Losses” shall be subtracted from such taxable
income or loss;




     (c) in the event the Book Value of any asset is adjusted pursuant to clause (b) or
clause (c) of the definition of Book Value, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the Book Value of the asset) or an item of
loss (if the adjustment decreases the Book Value of the asset) from the disposition of such
asset and shall be taken into account for purposes of computing Profits or Losses;



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     (d) gain or loss resulting from any disposition of property with respect to which gain
or loss is recognized for federal income tax purposes shall be computed by reference to the
Book Value of the property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Book Value;




     (e) in lieu of the depreciation, amortization, and other cost recovery deductions taken
into account in computing such taxable income or loss, there shall be taken into account
Depreciation for such taxable year;




     (f) to the extent an adjustment to the adjusted tax basis of any asset pursuant to Code
Section 734(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Account balances as a result of a
distribution other than in liquidation of a Partner’s interest in the Partnership, the
amount of such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or an item of loss (if the adjustment decreases such basis) from the
disposition of such asset and shall be taken into account for purposes of computing Profits
or Losses;




     (g) any items that are allocated pursuant to Sections 6.2(b) and (c)
shall be determined by applying rules analogous to those set forth in clauses (a) through
(g) hereof but shall not be taken into account in computing Profits and Losses; and




     (h) any Indemnity Loss and any items of Depreciation or other items of deduction or
loss specially allocated to Regency HIG pursuant to Section 6.2(a) shall not be
taken into account in computing Profits or Losses.




     “Securities Act” means the Securities Act of 1933, as amended from time to time, and
the rules and regulations promulgated by the Securities and Exchange Commission thereunder.




     “Sharing Ratio” means, with respect to any Partner, the percentage derived by dividing
(a) the number of GP Units held by such Partner as of the time of determination, by (b) the
number of GP Units held by all of the Partners as of the time of determination. The initial
Sharing Ratio of each Partner is set forth opposite such Partner’s name on Schedule
1 in the column titled “Sharing Ratio”.




     “Sole Discretion” means, with respect to any Person, such Person’s sole and absolute
discretion (a) with or without cause, (b) subject to such conditions (if any) as such Person
may deem appropriate and (c) without taking into account the interests of, and without
incurring liability to, the Partnership, any Partner, any MC Member or any officer or
employee of the Partnership (or any Affiliate of the foregoing).




     “Transfer”, including the correlative terms “Transferring” and “Transferred”, means any
direct transfer, assignment, sale, conveyance, license, lease, or partition of any GP Units,
and includes any “involuntary transfer” such as a sale of any part of the GP Units therein
in connection with any bankruptcy or similar insolvency proceedings, or any other
disposition of any GP Units. A Transfer shall not include any pledge,
hypothecation or encumbrance of any GP Units for security purposes pursuant to a bona



-12-









 







fide arms’ length
transaction, but shall include any direct transfer, assignment, sale, conveyance, license,
lease, or partition of GP Units upon the foreclosure (or in lieu of foreclosure) of any such
pledge, hypothecation or encumbrance. For the avoidance of doubt, Transfer does not include
any direct or indirect transfer, assignment, sale, conveyance, license, lease, or partition
of any interests in any Person that directly or indirectly owns any interest in any Partner.




     “Treasury Regulations” means the regulations promulgated by the United States
Department of the Treasury pursuant to and in respect of provisions of the Code.




     “Ultimate Parent” means (a) with respect to Regency HIG, Regency Energy Partners LP,
(b) with respect to GE Investor, General Electric Capital Corporation, (c) with respect to
Alinda Investor 1 and Alinda Investor 2, Alinda Capital Partners LLC or any other Person
that is directly (but not indirectly) Controlled by the Person (or Persons) that Controls
Alinda Capital Partners LLC as of the Effective
Date, and (d) with respect to any other Partner, the Person designated by the
Management Committee reasonably and in good faith as the ultimate Person that Controls such
Partner upon its admission as a Partner; provided, that any MC Member designated by such
Partner shall not be entitled to participate in such designation by the Management
Committee. In addition, the Management Committee shall designate reasonably and in good
faith the new “Ultimate Parent” of a Partner following any Permitted Merger Transaction with
respect to the previous Ultimate Parent of such Partner; provided, that any MC Member
designated by such Partner shall not be entitled to participate in such designation by the
Management Committee.




     “Withdraw” including the correlative terms “Withdrawn”, “Withdrawing” and “Withdrawal”,
means the withdrawal, resignation or retirement of a Partner from the Partnership as a
partner. Such terms shall not include any Transfer of GP Units in accordance with the terms
of this Agreement, even though the Partner making such a Transfer may cease to be a Partner
as a result of such Transfer.



     1.2 Construction. In this Agreement, unless a clear contrary intention appears (a)
the singular includes the plural and vice versa; (b) reference to a Person includes such Person’s
successors and assigns but, in the case of a Partner, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference
to any agreement (including this Agreement), document or instrument means such agreement, document,
or instrument as amended or modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms of this Agreement; (e) reference to any Section, Article,
Schedule, Exhibit or Annex means such Section, Article, Schedule, Exhibit or Annex of this
Agreement, and references in any Section, Article, Schedule, Exhibit or Annex or definition to any
clause means such clause of such Section, Article, Schedule, Exhibit or Annex or definition; (f)
“hereunder,” “hereof,” “hereto” and words of similar import are references to this Agreement as a
whole and not to any particular provision hereof; and (g) the word “or” is not exclusive, and the
word “including” (in its various forms) means including without limitation. Section titles and
headings in this Agreement are inserted for convenience of reference only and are not intended to
be a part of, or to affect the meaning or interpretation of,



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this Agreement. Each accounting term
not otherwise defined in this Agreement has the meaning commonly applied to it in accordance with
GAAP. All references to money refer to the lawful currency of the United States.



ARTICLE II

ORGANIZATION




     2.1 Formation. Regency HIG and RIGS SPE formed the Partnership on the Formation Date
under and pursuant to the Act, and caused the Certificate to be filed with the Secretary of State
of the State of Delaware on March 9, 2009, in accordance with and pursuant to the Act. All actions
by Regency HIG and RIGS SPE in making such filing are hereby ratified, adopted and approved. The
rights and liabilities of the Partners will be determined pursuant to the Act and this Agreement.
To the extent that there is any conflict or inconsistency between any
provision of this Agreement and any non-mandatory provision of the Act, the provisions of this
Agreement shall control and take precedence.



     2.2 Name. The name of the Partnership is “RIGS Haynesville Partnership Co.”, and all
Partnership business must be conducted in that name.



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



     2.4 Purpose. The purposes of the Partnership are to (a) engage in the natural gas
transportation business in the Area of Mutual Interest, (b) construct, acquire, own and/or operate
the Haynesville Expansion Project or other expansions of natural gas transportation assets in the
Area of Mutual Interest approved by the Management Committee or any natural gas assets and other
assets acquired by the Partnership in accordance with the AMI Agreement, (c) engage in any other
business approved by the Management Committee in accordance with Section 7.1(b)(xviii), (d)
fulfill the obligations of the Partnership pursuant to any contract entered into by the Partnership
or under which the Partnership has assumed obligations of any Person, and (e) engage in any other
business or activity that now or in the future may be necessary, incidental, proper, advisable or
convenient to accomplish the foregoing purposes and that is not forbidden by applicable Law
(collectively, the “Partnership Business”).



     2.5 Foreign Qualification. Prior to the Partnership’s conducting business in any
jurisdiction other than Delaware, to the extent required by Law, the Management Committee



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shall
cause the Partnership to comply, to the extent procedures are available and those matters are
reasonably within the control of the Management Committee, with all requirements necessary to
qualify the Partnership as a foreign partnership in such jurisdiction. At the request of the
Management Committee, each Partner shall execute, acknowledge, swear to and deliver all
certificates and other instruments conforming with this Agreement that are necessary or appropriate
to qualify, continue and terminate the Partnership as a foreign partnership in all such
jurisdictions in which the Partnership may conduct business.



     2.6 Term. The period of existence of the Partnership (the “Term”) commenced on the
Formation Date and shall end at such time as a statement of dissolution is filed with the Secretary
of State of the State of Delaware in accordance with Section 10.4.



ARTICLE III

PARTNERS; GP UNITS




     3.1 Partners. As of the Effective Date, Regency HIG, GE Investor, Alinda Investor 1
and Alinda Investor 2 are the Partners. The name and mailing address of each Partner is listed on
Schedule 1 in the column titled “Partners”.



     3.2 GP Units.




     (a) The Partnership Interests of the Partnership shall be issued in unit increments
(each, a “GP Unit”). The number of GP Units held by each Partner is set forth opposite such
Partner’s name on Schedule 1 in the column titled “GP Units”.




     (b) The GP Units shall be evidenced by GP Unit certificates. The form of certificate
evidencing ownership of GP Units is attached as Annex 1. The Partnership may issue
no more than one certificate representing any of the same GP Units to each Partner. The GP
Unit certificates shall be consecutively numbered (or otherwise identified), exhibit the
holder’s name and number of GP Units, and signed by at least two MC Members. The name of
each Person to whom the GP Unit certificates are issued, its Capital Contributions and the
respective dates of issue shall be entered in the certificate register of the Partnership.
The Management Committee may determine the conditions upon which a new certificate may be
issued in place of a certificate which is alleged to have been lost, stolen or destroyed and
may require the owner of such certificate or its legal representative to give a bond, with
sufficient surety, to indemnify the Partnership and the other Partners against any and all
Claims that may arise by reason of the issuance of a new certificate in the place of the one
so lost, stolen or destroyed.




     (c) The Partnership shall be entitled to recognize the exclusive right of a Person
registered on its books as the owner of its GP Units and shall not be bound to recognize any
equitable or other claim to or interest in such GP Units on the part of any Person other
than such registered owner, whether or not it shall have express or other notice thereof,
except as otherwise provided by Law.



     3.3 Transfers of GP Units. The GP Units shall be subject to, and the Partners shall
comply with, the terms set forth on Exhibit D governing, among other matters, the Transfer
of the GP Units.



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ARTICLE IV

WITHDRAWAL




     4.1 No Voluntary Withdrawal. A notice by a Partner that it has Withdrawn from the
Partnership shall be in breach of this agreement and shall be deemed to effect a wrongful
Withdrawal.



     4.2 Deemed Withdrawal. A Partner shall be deemed to have Withdrawn from the
Partnership immediately, without any further action on the part of such Partner or the Partnership,
only on the occurrence of any event (i) that makes it unlawful for the Partner to
continue to be a Partner, (ii) that makes it unlawful for the Partnership to carry on the
Partnership Business with that Partner or (iii) specified in Section 15-601(6) of the Act. A
Partner shall not be deemed to have Withdrawn from the Partnership for any events not specified in
Section 4.1 or this Section 4.2.



     4.3 Effect of Withdrawal. If a Partner Withdraws as contemplated in Section
4.1 or is deemed to have Withdrawn under Section 4.2 (a “Withdrawn Partner”), then the
following provisions shall apply in connection with such Withdrawal, notwithstanding the provisions
of the Act:




     (a) The Withdrawn Partner shall cease to be a Partner for all purposes immediately upon
the occurrence of the applicable Withdrawal event.




     (b) The Withdrawn Partner shall not be entitled to receive any distributions from the
Partnership except as set forth in Section 4.3(f), and the Withdrawn Partner shall
not be entitled to exercise any voting or consent rights with respect to Partnership matters
or to receive any further information from the Partnership. The Sharing Ratio of such
Withdrawn Partner shall not be taken into account in calculating the Sharing Ratios of the
Partners for any purposes.




     (c) The Withdrawn Partner must pay to the Partnership all amounts it owes to the
Partnership.




     (d) The Withdrawn Partner shall remain obligated for all liabilities it may have under
this Agreement with respect to the Partnership that accrue with respect to the period prior
to the Withdrawal.




     (e) Upon the occurrence of the applicable Withdrawal event or deemed Withdrawal, (i)
all of the GP Units held by such Withdrawn Partner (the “Forfeited GP Units”) shall
automatically, without any further action on the part of the Withdrawn Partner or the
Partnership, be redeemed, forfeited, surrendered and transferred to the Partnership for no
consideration (except as otherwise provided in Section 4.3(f)), (ii) such Withdrawn
Partner shall not be entitled to any rights with respect to the Forfeited GP Units, (iii)
any certificates representing the Forfeited GP Units shall be null and void, and (iv) any MC
Member previously designated by such Withdrawn Partner shall be deemed to be removed. If a
Partner Withdraws as contemplated in Section 4.1, then such Withdrawn Partner’s
Capital Account shall be allocated among the remaining Partners in the proportion that each
Partner’s Sharing Ratio (at the time of such allocation) bears to



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the total Sharing Ratio of
all remaining Partners, or in such other proportion as the remaining Partners may
unanimously agree.




     (f) If a Partner is deemed to be a Withdrawn Partner pursuant to Section 4.2,
then the former Capital Account balance of the Withdrawn Partner shall be recorded as a
contingent obligation of the Partnership, and not as a Capital Account, and such former
Capital Account balance shall be paid by the Partnership to such Withdrawn Partner solely
out of 25% of the future distributions (if any) that would have been made by the Partnership
to the Withdrawn Partner if the Forfeited GP Units remained outstanding
after the date of such Withdrawal; provided, that any amounts owed to the Partnership
by such Withdrawn Partner may be deducted from any such distributions. The rights of a
Withdrawn Partner under this Section 4.3(f) shall (i) be subordinate to the rights
of any other creditor of the Partnership, (ii) not include any right on the part of the
Withdrawn Partner to receive any interest or other amounts with respect thereto; (iii) not
require the Partnership to make any distribution (the Withdrawing Partner’s rights under
this Section 4.3(f) being limited to receiving such portion of distributions as the
Management Committee may, in its Sole Discretion, decide to cause the Partnership to make);
(iv) not require any Partner to make a Capital Contribution or a loan to permit the
Partnership to make a distribution or otherwise to pay the Withdrawing Partner; and (v) not
be treated as a liability of the Partnership for purposes of Section 10.2. Any
portion of such Withdrawn Partner’s former Capital Account in excess of amounts paid to it
under this Section 4.3(f) shall be allocated among the remaining Partners in
proportion to each Partner’s Sharing Ratio or as the remaining Partners otherwise
unanimously agree.




     (g) Each Partner hereby constitutes and appoints the Partnership as its agent and
attorney-in-fact, in the event such Partner becomes a Withdrawn Partner hereunder, for the
purposes of executing and delivering any and all documents necessary to effectuate the
forfeiture of its GP Units in accordance with this Section 4.3. This
power-of-attorney, being coupled with an interest, is irrevocable and shall survive the
dissolution, disability or incapacitation of any Partner.



ARTICLE V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS




     5.1 Initial Capital Contributions. On or prior to the Effective Date, each of Regency
HIG, GE Investor, Alinda Investor 1 and Alinda Investor 2 made, pursuant to the terms of the
Contribution Agreement, the Capital Contributions to the Partnership as set forth below (the
“Initial Capital Contributions”):




     (a) GE Investor contributed to the Partnership an amount in cash equal to $126,500,000,
and in exchange for such Capital Contribution, the Partnership issued to GE Investor 126,500
GP Units;




     (b) Alinda Investor 1 contributed to the Partnership an amount in cash equal to
$308,531,000, and in exchange for such Capital Contribution, the Partnership issued to
Alinda Investor 1 308,531 GP Units;



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     (c) Alinda Investor 2 contributed to the Partnership an amount in cash equal to
$217,969,000, and in exchange for such Capital Contribution, the Partnership issued to
Alinda Investor 2 217,969 GP Units; and




     (d) Regency HIG contributed to the Partnership the RIGS Interests (as defined in the
Contribution Agreement), and in exchange for such Capital Contribution, the Partnership
issued to Regency HIG 400,000 GP Units. The Partners hereby acknowledge and agree that, for
all purposes, the agreed net fair market value of such Capital
Contribution (after giving effect to the payment pursuant to Section 9.6) is
equal to $400,000,000.



     5.2 Additional Capital Contributions.




     (a) If at any time the Management Committee determines to raise additional capital for
the Partnership for any Partnership Business purpose, then the Management Committee shall
first issue a written notice to the Partners (a “Call Notice”) setting forth the amount of
Capital Contributions the Management Committee desires to raise (the “Call Amount”) and the
intended purpose of such Capital Contributions, the number of GP Units to be issued with
respect to such Capital Contributions and the date on which such Capital Contributions are
due, and each Partner shall have the right, but not the obligation, to contribute its pro
rata share based on its Sharing Ratio (as of the date of such Call Notice) of such Call
Amount in accordance with this Section 5.2(a). If any Partner desires to exercise
its rights under this Section 5.2(a), it must deliver a written notice to the
Partnership and each other Partner within ten Business Days after the Partner’s receipt of
the Call Notice (the “Election Period”) setting forth the portion of the Call Amount such
Partner (the “Electing Partner”) is electing to contribute, up to its Sharing Ratio plus any
additional portion of the Call Amount it desires to contribute in excess of its Sharing
Ratio (the “Over-Allotment Amount”) if other Partners do not exercise all or any portion of
their rights hereunder. The right of each Electing Partner to fund the Call Amount in
excess of its Sharing Ratio shall be based on the relative Sharing Ratios of the Electing
Partners desiring to fund Over-Allotment Amounts (or in such other manner as all of the
Electing Partners agree to allocate the right to fund among themselves). If any Electing
Partner elects to contribute any portion of the Call Amount, such Electing Partner shall be
obligated to make such Capital Contribution on the date set forth in the Call Notice (or
such other date as the Management Committee may determine), and upon receipt of such Capital
Contribution, the Partnership shall issue to such Electing Partner the number of GP Units
applicable to the portion of the Call Amount contributed by such Electing Partner.
Notwithstanding the foregoing, with respect to any two Partners that are Affiliates, at the
election of such Partners, one such Partner shall be entitled to contribute all or a portion
of the other such Partner’s pro rata share of any Call Amount or Over-Allotment Amount. Any
such issuance and payment in respect thereof shall be delayed, to the extent required, to
obtain any necessary governmental approvals, waivers and consents required for such issuance
(including any approvals under the HSR Act); provided, that if such approval, waiver or
consent is required by any Electing Partner to consummate such closing and such approval,
waiver or consent is not obtained within 40 Business Days after the scheduled closing date,
then such Electing Partner shall be deemed to have waived its right to contribute any
portion



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of the Call Amount and such Electing Partner shall not be deemed to have breached
its obligation to contribute such portion of the Call Amount.




     (b) If one or more Partners do not elect, in the aggregate, to contribute all of the
Call Amount (or are deemed to have waived such right), the Partnership shall have the right,
but not the obligation, to issue and sell to one or more Persons up to the number of GP
Units (as determined by the Management Committee) applicable to the portion of
the Call Amount not contributed by the Partners at any time during the 90 Business Days
following the end of the Election Period, for an aggregate amount equal to the applicable
portion of the Call Amount not contributed by the Partners; provided, that if the
Partnership fails to issue and sell such GP Units for such aggregate amount within such
90-Business Day period, the Partnership may not raise any additional capital without first
issuing another Call Notice pursuant to Section 5.2(a). The issuance of any GP
Units to any Person shall be subject to such terms and procedures as the Management
Committee determines are necessary or desirable, including obtaining any necessary
governmental approvals, waivers and consents required for such issuance (including any
approvals under the HSR Act).




     (c) Notwithstanding anything to the contrary in this Agreement, if any Electing Partner
breaches its obligation to contribute any portion of the Call Amount it elected to
contribute pursuant to Section 5.2(a), then in addition to any other rights the
Partnership and the non-breaching Partners may have at law or in equity, such breaching
Partner and any transferee thereof shall not have any future rights granted under
Section 5.2(a) unless the Management Committee expressly designates otherwise (which
the Management Committee may do on an offer-by-offer basis or not at all); provided, that
the MC Member designated by the breaching Partner shall not be entitled to participate in
(i) any decisions regarding the number of GP Units to be issued with respect to such Call
Notice or (ii) any decisions regarding whether such breaching Partner has any future rights
under Section 5.2(a).



     5.3 No Other Required Capital Contributions. Except as otherwise expressly provided
in this Agreement or required by Law and except for the Initial Capital Contributions, no Partner
has any obligation to make any Capital Contributions to the Partnership.



     5.4 Return of Contributions. Except as expressly provided in this Agreement to the
contrary, a Partner is not entitled to the return of any part of its Capital Contributions or to be
paid interest in respect of either its Capital Account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Partnership or of any Partner. A Partner is not
required to contribute or to lend any cash or property to the Partnership to enable the Partnership
to return any Partner’s Capital Contributions.



     5.5 Use of Proceeds. Notwithstanding anything to the contrary in this Agreement,
neither the Partnership, the Management Committee, the Management Company nor any Partner may use
any of the proceeds of any Initial Capital Contribution for any purpose except to (a) make
expenditures with respect to the Haynesville Expansion Project in accordance with the Budgets or
(b) pay to Regency HIG, in accordance with the terms of Article 2 of the



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Contribution Agreement,
the Pre-Closing Expenditures (as defined in the Contribution Agreement).



     5.6 Capital Accounts.




     (a) A Capital Account shall be established and maintained for each Partner in
accordance with the requirements of Treasury Regulation Section 1.704-1(b)(2)(iv).




     (b) Each Partner’s Capital Account shall be increased by (i) the amount of money
contributed by that Partner to the Partnership, (ii) the Book Value of property contributed
by that Partner to the Partnership (net of liabilities secured by such contributed property
that the Partnership is considered to assume or take subject to under Section 752 of the
Code), and (iii) allocations to that Partner of Profits and any other items of Partnership
income and gain, and shall be decreased by (x) the amount of money distributed to that
Partner by the Partnership, (y) the Book Value of property distributed to that Partner by
the Partnership (net of liabilities secured by such distributed property that such Partner
is considered to assume or take subject to under Section 752 of the Code), and (z)
allocations to that Partner of Losses and any other items of Partnership loss and deduction.




     (c) The Partners’ Capital Accounts shall also be maintained and adjusted as permitted
by the provisions of Treasury Regulation § 1.704-1(b)(2)(iv)(f) and as required by the other
provisions of Treasury Regulation §§ 1.704-1(b)(2)(iv) and 1.704-1(b)(4). A Partner who has
more than one GP Unit shall have a single Capital Account that reflects all such GP Units,
regardless of the time or manner in which such GP Units were acquired. Upon the Transfer of
a GP Unit, the Capital Account of the Transferring Partner that is attributable to such GP
Unit shall carry over to the assignee in accordance with the provisions of Treasury
Regulation § 1.704-1(b)(2)(iv)(l).




     (d) Whenever the fair market value of the Partnership’s property is required to be
determined pursuant to this Section 5.6, the Management Committee shall establish
the fair market value in a notice to the Partners (except in the case of the Initial Capital
Contribution of Regency HIG, which the Partner’s agree is the amount set forth on
Schedule 1 opposite Regency HIG’s name in the column title “Initial Capital
Contribution”).



ARTICLE VI

DISTRIBUTIONS AND ALLOCATIONS




     6.1 Distributions.




     (a) General. No later than 30 days after the end of each calendar quarter, (i)
the Management Committee shall review and determine the amount of Available Cash with
respect to such calendar quarter, and (ii) an amount equal to 100% of such Available Cash
shall be distributed by the Partnership in accordance with this Article VI to the
Partners in accordance with their respective Sharing Ratios (at the time such distributions
are made).



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     (b) Distributions on Dissolution and Winding Up. Upon the winding up of the
Partnership, all cash and other property distributable to the Partners as determined under
Section 10.2 shall be distributed to the Partners in accordance with their relative
Capital Account balances (at the time such distributions are made).




     (c) Withholding. The Management Committee is authorized to withhold from
distributions or with respect to allocations to the Partners and to pay over to any federal,
foreign, state or local government any amounts required to be so withheld pursuant to
the Code or any provision of any other federal, foreign, state or local tax law or treaty.
All amounts withheld pursuant to the Code or any provision of any other federal, foreign,
state or local tax law or treaty with respect to any payment, distribution or allocation to
the Partnership or the Partners shall be treated as amounts distributed to the Partner or
Partners with respect to which such amounts were withheld pursuant to this Article
VI for all purposes of this Agreement.




     (d) Limitations on Distribution. Except as provided in this Agreement, no
Partner shall be entitled to any distribution of cash or other property from the
Partnership. Notwithstanding any provision to the contrary contained in this Agreement, the
Partnership shall not make a distribution to any Partner on account of its GP Units if such
distribution would violate the Act or other applicable Law.




     (e) Haynesville Expansion Project Distributions. If any proceeds of the
Initial Capital Contributions remain after the completion of the Haynesville Expansion
Project in accordance with the Haynesville Expansion Budget, then, as soon as practicable
following the completion of the Haynesville Expansion Project, such remaining proceeds shall
be distributed to the Partners in accordance with their respective Sharing Ratios (at the
time such distribution is made).



     6.2 Allocations.




     (a) General. For purposes of maintaining the Capital Accounts pursuant to
Section 5.6, after making all allocations under Sections 6.2(b) and
6.2(c) for the taxable year, Profits and Losses and items thereof, for each taxable
year, shall be allocated among the Partners in such manner that, as of the end of such
period and to the extent possible, the Capital Account of each Partner shall be equal,
proportionately, to the excess of (1) the amount that would be distributed to such Partner
if the Company were to (A) liquidate its assets for an amount equal to their Book Value and
(B) distribute the proceeds in accordance with Section 6.1(a), over (2) the sum of (A) the
amount, if any, which such Partner is obligated to contribute to the capital of the
Partnership, (B) such Partner’s share of the Minimum Gain determined pursuant to Treasury
Regulation Section 1.704-2(g), and (C) such Partner’s share of Partner Nonrecourse Debt
Minimum Gain determined pursuant to Treasury Regulation Section 1.704-2(i)(5), all computed
immediately prior to the transactions described in (1)(A) above. Depreciation or other
items of deduction or loss arising from the expenditure of funds contributed to the
Partnership by Regency HIG pursuant to Section 9.7 and any Indemnity Loss shall be
allocated solely to Regency HIG.



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Losses and certain other items of deduction and loss specially allocated to a Partner
pursuant to Section 6.2(b) shall not exceed the maximum amount of Losses and items
of deduction and loss that can be allocated without causing such Partner to have a deficit
in its Adjusted Capital Account at the end of any taxable year or other period. In the
event that some but not all of the Partners would have a deficit in their Adjusted Capital
Account as a consequence of an allocation pursuant to Section 6.2(b), the limitation
set forth in the preceding sentence shall be applied on a Partner by Partner basis and
Losses
or items of deduction and loss not allocable to any Partner as a result of such limitation
shall be allocated to the other Partners in accordance with the relative positive balances
in such Partners’ Capital Accounts so as to allocate the maximum permissible Losses or items
of deduction and loss to each Partner under Treasury Regulation Section
1.704-1(b)(2)(ii)(d).




     (b) Special Allocations. Notwithstanding any other provisions of this Section
6.2, the following special allocations shall be made in the following order for each taxable
period:




     (i) Notwithstanding any other provision of this Section 6.2, if there
is a net decrease in Minimum Gain during any taxable year, each Partner shall be
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent taxable years) in the manner and amounts provided in Treasury Regulation
Sections 1.704-2(f)(6), (g)(2) and (j)(2)(i). For purposes of this Section 6.2(b),
each Partner’s Capital Account balance shall be determined, and the allocation of
income or gain required hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 6.2 with respect to such taxable
year. This Section 6.2(b)(i) is intended to comply with the minimum gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.




     (ii) Notwithstanding the other provisions of this Section 6.2 (other
than Section 6.2(b)(i) above), if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain during any taxable year, any Partner with a share of
Partner Nonrecourse Debt Minimum Gain at the beginning of such taxable year shall be
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent taxable years) in the manner and amounts provided in Treasury Regulation
Section 1.704-2(i)(4) and (j)(2)(ii). For purposes of this Section 6.2(b),
each Partner’s Adjusted Capital Account balance shall be determined, and the
allocation of income and gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 6.2, other
than Section 6.2(b)(i) above, with respect to such taxable year. This
Section 6.2(b)(ii) is intended to comply with the partner nonrecourse debt
minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.




     (iii) Except as provided in Sections 6.2(b)(i) and 6.2(b)(ii)
above, in the event any Partner unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), items



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of Partnership income and gain shall be allocated to such Partner in
an amount and manner sufficient to eliminate, to the extent required by such
Treasury Regulation, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustment, allocation or distribution as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Sections 6.2(b)(i),
6.2(b)(ii) or 6.2(b)(iv). This Section 6.2(b)(iii) is
intended to constitute a qualified income
offset described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.




     (iv) In the event any Partner has a deficit balance in its Adjusted Capital
Account at the end of any taxable year, such Partner shall be allocated items of
Partnership gross income and gain in the amount of such excess as quickly as
possible; provided, however, that an allocation pursuant to this Section
6.2(b)(iv) shall be made only if and to the extent that such Partner would have
a deficit balance in its Adjusted Capital Account after all other allocations
provided in this Section 6.2(b) (other than Section 6.2(b)(iii))
have been tentatively made as if Section 6.2(b)(iii) and this Section
6.2(b)(iv) were not in this Agreement.




     (v) Nonrecourse Deductions for any taxable year shall be allocated to the
Partners in accordance with their Sharing Ratios.




     (vi) Partner Nonrecourse Deductions for any taxable year shall be allocated
100% to the Partner that bears the Economic Risk of Loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than one Partner
bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, Partner
Nonrecourse Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of
Loss. This Section 6.2(b)(vi) is intended to comply with the provisions of
Treasury Regulation Section 1.704-2(i) and shall be interpreted consistently
therewith.




     (vii) To the extent an adjustment to the adjusted tax basis of any Partnership
asset pursuant to Code Sections 734(b) or 743(b) is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts as a result of a distribution in liquidation of a Partner’s
Interest in the Partnership, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of gain or
loss shall be allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
provisions.




     (c) Curative Allocation. The allocations set forth in Section 6.2(b)
(the “Regulatory Allocations”) are intended to comply with certain requirements of the
Treasury Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations or with



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special allocations of other items of Partnership income, gain, loss, or deduction pursuant
to this Section 6.2(c). Therefore, notwithstanding any other provision of this
Article VI (other than the Regulatory Allocations), but subject to the Code and the
Treasury Regulations, the Management Committee shall make such offsetting special
allocations of Partnership income, gain, loss, or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each
Partner’s Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part of this
Agreement. In exercising its discretion under this Section 6.2(c), the Management
Committee shall take into account future Regulatory Allocations that, although not yet made,
are likely to offset other Regulatory Allocations previously made.




     (d) Income Tax Allocations.




     (i) Except as otherwise provided in this Section 6.2, each item of
income, gain, loss and deduction of the Partnership shall be allocated among the
Partners for federal income tax purposes in the same manner as such items are
allocated under Sections 6.2(a), 6.2(b) and 6.2(c).




     (ii) For income tax purposes, income, gain, loss, and deduction with respect to
property contributed to the Partnership by a Partner or the Book Value of which is
adjusted pursuant to clause (b) or (d) of the definition of Book Value shall be
allocated among the Partners in a manner that takes into account the variation
between the adjusted tax basis of such property and its Book Value, as required by
Section 704(c) of the Code and Treasury Regulation Section 1.704-1(b)(4)(i), using
the remedial allocation method permitted by Treasury Regulation Section 1.704-3(d).




     (iii) All items of income, gain, loss, deduction and credit allocated to the
Partners in accordance with the provisions hereof and basis allocations recognized
by the Partnership for federal income tax purposes shall be determined without
regard to any election under Code Section 754 which may be made by the Partnership.




     (iv) If any deductions for depreciation or cost recovery are recaptured as
ordinary income upon the sale or other disposition of Partnership properties, the
ordinary income character of the gain from such sale or disposition shall be
allocated among the Partners in the same ratio as the deductions giving rise to such
ordinary income character were allocated.


The tax depreciation for the portion of the book basis (within the meaning of Treasury Regulation
Section 1.704-3(d)(2)) of the assets owned by RIGS (as defined in the Contribution Agreement) that
exceeds the tax basis of such assets will be MACRS depreciation plus all applicable bonus
depreciation.




     6.3 Varying Interests. All items of income, gain, loss, deduction and credit
allocable to GP Units that may have been transferred shall be allocated between the transferor and
the



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transferee as determined by the Management Committee in accordance with a method permissible
under Code Section 706 and the Treasury Regulations thereunder. All distributions shall be made,
to the Persons shown on the records of the Partnership to have been Partners as of the last
calendar day of the period for which the allocation or distribution is to be made. Notwithstanding
the foregoing, if during any taxable year there is a change in any Partner’s Sharing Ratio, the
Partners agree that their allocable shares of items for the taxable year shall be
determined on any method determined by the Management Committee to be permissible under Code
Section 706 and the related Treasury Regulations to take account of the Partners’ varying Sharing
Ratios.



ARTICLE VII

MANAGEMENT OF THE PARTNERSHIP




     7.1 Management by Management Committee.




     (a) Except as otherwise expressly provided in this Agreement or required under the Act,
the business and affairs of the Partnership shall be managed by a management committee (the
“Management Committee” and each member of the Management Committee a “MC Member”), and the
Management Committee shall have full and complete authority, power and discretion to manage
and control the business, affairs, and properties of the Partnership, to make all decisions
regarding those matters and to perform any and all other acts or activities customary or
incidental to the management of the Partnership’s business. Decisions or actions taken by
the Management Committee in accordance with the provisions of this Agreement shall
constitute decisions or actions by the Partnership. Without limiting the generality of the
foregoing, the approval of the Management Committee shall be required for all matters (other
than those matters delegated to (A) the Management Company pursuant to the MSA or (B) any
officer of the Partnership or any member of the Senior Management Team or other authorized
Persons in accordance with Section 7.10), including approval of the matters
described in Section 7.1(b), which the Management Committee shall not have the power
to delegate to any Person.




     (b) Notwithstanding anything to the contrary in this Agreement, the following actions
are specifically reserved to the Management Committee, may not be delegated by the
Management Committee to any Person and shall require the affirmative vote of MC Members
holding votes equal to 75% or more of the votes of the MC Members (unless any MC Member is
not entitled to vote with respect to the applicable matter, in which case the affirmative
vote of MC Members holding votes equal to 75% or more of the votes of the MC Members
entitled to vote shall be required):




     (i) any merger into or with or consolidation of the Partnership with any other
Person;




     (ii) the sale, exchange or other disposition of all, or substantially all, of
the Partnership’s assets in one transaction or a series of related transactions;



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     (iii) the determination to raise additional capital for the Partnership for any
Partnership Business purpose and the issuance of a Call Notice pursuant to
Section 5.2(a), except as otherwise provided in Section 7.3(j)(ii);




     (iv) any issuances of GP Units or other interests in the Partnership or any of
its subsidiaries, or any instruments convertible or exchangeable into GP Units or
other interests in the Partnership or any of its subsidiaries, except for issuances
pursuant to Section 5.2;




     (v) determining the amount of Available Cash pursuant to Section
6.1(a);




     (vi) any declaration of bankruptcy, or the filing of a petition, or seeking
protection, under any federal or state bankruptcy, insolvency or reorganization law
in respect of the Partnership or any of its subsidiaries;




     (vii) causing the Partnership to terminate the MSA for any reason, except as
otherwise set forth in Section 7.3(g);




     (viii) the dissolution of the Partnership or the voluntary liquidation of the
Partnership’s assets;




     (ix) the approval of any Budget (including any amendment or revision of any
Budget);




     (x) the incurrence or guarantee of debt by the Partnership or any of its
subsidiaries in excess of an amount equal to three times the Consolidated EBITDA
during the 12 months ended immediately prior to the date of determination, unless
all material terms are expressly described in any Budget;




     (xi) guarantying the obligations of any other Person (other than a subsidiary
of the Partnership) or granting a lien on any of the Partnership’s assets to secure
the obligations of any other Person (other than a subsidiary of the Partnership);




     (xii) any acquisitions or dispositions of any asset or related assets by the
Partnership or any of its subsidiaries for consideration in excess of $10,000,000,
unless all material terms are expressly described in any Budget;




     (xiii) the commencement or resolution of any litigation (other than litigation
arising in the ordinary course of business where the estimated amount in controversy
is less than $10,000,000 or the settlement amount to be paid or received by the
Partnership is less than $10,000,000);




     (xiv) entering into any Material Contract by the Partnership or any of its
subsidiaries, or any amendment or modification thereto, unless all material terms
are expressly described in any Budget;



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     (xv) the registration of any GP Units or other interests in the Partnership or
its subsidiaries under applicable federal or foreign securities laws or any public
offering of any interests (including debt interests) of the Partnership or its
subsidiaries;




     (xvi) any repurchase by the Partnership of GP Units or other interests in the
Partnership or any of its subsidiaries;




     (xvii) the (x) authorization of or issuance to any Person (including any
Partner) of any interests in the Partnership (or any instrument convertible or
exchangeable into or exercisable for any such interests) other than GP Units or (y)
reclassification of any of the GP Units;




     (xviii) causing the Partnership to engage in any business other than any of the
business purposes set forth in Sections 2.4(a), (b), (d) or
(e); or




     (xix) entering into any agreement to effect any of the foregoing.




     (c) Subject to the express provisions of this Agreement, each Partner agrees that it
will not exercise its authority under the Act to bind or commit the Partnership to
agreements, transactions or other arrangements, or to hold itself out as an agent of the
Partnership without the express authorization of the Management Committee. Except as
specifically set forth in this Agreement, no Partner shall have any voting rights with
respect to its GP Units (or any other interest in the Partnership) or any power to direct or
cause the direction of management or policies of the Partnership. No Partner shall have any
fiduciary or quasi-fiduciary duty to the Partnership or any other Partner pursuant to this
Agreement and any standard of care or duty otherwise imposed on any Partner by this
Agreement or under the Act or any Law shall be eliminated to the fullest extent permitted by
Law and each Partner may vote or not vote, or grant or withhold approval, in such Partner’s
Sole Discretion, with respect to any action on which it is entitled to vote or grant
approval.




     (d) Notwithstanding anything to the contrary in this Agreement, (i) no MC Member shall
have any fiduciary or quasi-fiduciary duty to the Partnership or any Partner pursuant to
this Agreement and any standard of care or duty otherwise imposed on any MC Member by this
Agreement or under the Act or any Law shall be eliminated to the fullest extent permitted by
Law (provided, that nothing in this Section 7.1(d)(i) shall be deemed to eliminate
any fiduciary or quasi-fiduciary duty any MC Member may have to the Partner that designated
such MC Member), and (ii) each MC Member may vote or not vote, or grant or withhold
approval, in such MC Member’s Sole Discretion, with respect to any action before the
Management Committee on which it is entitled to vote or grant approval.



     7.2 MC Members of the Management Committee.




     (a) The Management Committee shall consist of natural persons who need not be Partners
or residents of the State of Delaware. The Management Committee shall consist of a number
of MC Members equal to the number of Partners.




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     (b) Each Partner shall have the right to designate one MC Member, and to remove or
replace such MC Member from time to time in its Sole Discretion. The individuals listed on
Schedule 2 shall serve as the initial MC Members as of the Effective Date.




     (c) If at any time any Partner ceases to be a Partner, then the MC Member previously
designated by such Partner shall be deemed to be removed
automatically, without any further action on the part of such Partner or the Partnership, on the date
such Partner ceases to be a Partner.



     7.3 Votes; Meetings.




     (a) Each MC Member shall have one vote equal to the Sharing Ratio of the Partner that
designated such MC Member. Except as explicitly set forth in this Agreement to the
contrary, all of the MC Members shall be entitled to participate in each meeting of the
Management Committee and each MC Member shall be entitled to bring observers to each
meeting.




     (b) Except as otherwise required by applicable Law, the Management Committee may hold
meetings in such place or places, within or outside of the State of Delaware, as the
Management Committee may determine from time to time. Business shall be conducted at such
meetings in such order as the Management Committee shall determine from time to time.




     (c) Regular meetings of the Management Committee shall be held at least quarterly and
at such times and places as shall be designated from time to time by the Management
Committee. Notice of such regular meetings shall not be required if held at the times and
places as previously determined by the Management Committee and provided to each MC Member.
Special meetings of the Management Committee may be called by any MC Member upon at least 24
hours prior notice to each MC Member, which notice may be given via electronic mail, and
which notice must include dial-in or other information so as to permit each MC Member to
participate in such meeting by telephone conference or other electronic means. Such notice
must state the purpose of such special meeting.




     (d) Except as otherwise expressly provided in Sections 7.1(b), 7.3(g),
7.3(h) and 7.3(i) or otherwise in this Agreement, any action or event shall
be deemed approved by the Management Committee if MC Members having votes equal to more than
50% of the votes of all MC Members vote in favor of or approve such action or event (unless
any MC Member is not entitled to vote with respect thereto, in which case such action or
event shall be deemed approved by the Management Committee if MC Members having votes equal
to more than 50% of the votes of the MC Members entitled to vote, vote in favor of or
approve such action or event). Any action required or permitted to be taken at any meeting
of the Management Committee may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by MC Members having votes equal to more than 50%
of the votes of the MC Members or MC Members having votes equal to at least 75% of the votes
of the MC Members with respect to any actions set



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forth in Section 7.1(b) (unless
any MC Member is not entitled to vote with respect to such action, in which case such action
may be taken if a consent in writing, setting forth the action so taken, shall be signed by
the MC Members having votes equal to (x) more than 50% of the votes of the MC Members
entitled to vote or (y) at least 75% of the votes of the MC Members entitled to vote, as
applicable); provided, that such MC Members shall notify each of the other MC Members of any
action being taken without a meeting prior to causing the Management Committee to take such
action.




     (e) MC Members may participate in any meeting of the Management Committee by means of
conference telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall constitute
presence in person at such meeting, except as provided in Section 7.3(f).




     (f) Attendance of a MC Member at any meeting of the Management Committee (including by
telephone) shall constitute a waiver of notice of such meeting, except where such MC Member
attends the meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened and notifies the other MC
Members at such meeting of such purpose.




     (g) For so long as the Investor Partners collectively have a Sharing Ratio of 20% or
more:




     (i) the approval of the MC Members designated by the Investor Partners having
votes equal to not less than a majority of the votes of the MC Members designated by
the Investor Partners (in addition to any other vote or approval of the Management
Committee required by this Agreement) shall be required with respect to any
transactions or agreements (including amendments, terminations and renewals thereof
(including any renewal of the MSA)) between the Partnership or any of its
subsidiaries on the one hand, and any Affiliate of Regency HIG on the other hand
that are (1) Material Contracts, (2) natural gas transportation agreements, (3)
contracts not entered into in the ordinary course of business of the Partnership or
(4) contracts not entered into pursuant to a bona fide arms’ length transaction;




     (ii) if any Event of Default (as defined in the MSA) occurs with respect to the
Management Company, the MC Members designated by the Investor Partners having votes
equal to not less than a majority of the votes of the MC Members designated by the
Investor Partners may cause the Partnership to terminate the MSA in accordance with
the terms of the MSA if, prior to exercising such right, the MC Members designated
by the Investor Partners having votes equal to not less than a majority of the votes
of the MC Members designated by the Investor Partners propose to the Management
Committee a replacement management company reasonably acceptable to each of the
other MC Members (other than the MC Members appointed by Regency HIG), and any
termination of the MSA by the MC Members designated by the Investor Partners



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under
this Section 7.3(g)(ii) shall be without any liability to the Partners or
the Partnership for such termination; and




     (iii) if at any time General Electric Capital Corporation:




     (1) ceases to Control Regency Energy Partners LP, then the MC Members
designated by the Investor Partners having votes equal to not less than a
majority of the votes of the MC Members designated by the Investor Partners
may, within 30 days of the Partnership’s receipt of
written notice of the occurrence of General Electric Capital
Corporation ceasing to Control Regency Energy Partners LP, cause the
Partnership to terminate the MSA in accordance with the terms of the MSA; or




     (2) notifies the Partnership that it intends to cease Controlling
Regency Energy Partners LP pursuant to a transaction or series of related
transactions and identifies the counterparty thereto, then the MC Members
designated by the Investor Partners having votes equal to not less than a
majority of the votes of the MC Members designated by the Investor Partners
may elect to cause the Partnership to terminate the MSA in accordance with
terms of the MSA within 30 days from the date General Electric Capital
Corporation notifies the Partnership of its intention to cease Controlling
Regency Energy Partners LP pursuant to the applicable transaction or series
of related transactions; provided, however, that (A) such an election to
terminate the MSA shall not be effective until General Electric Capital
Corporation actually ceases to Control Regency Energy Partners LP in
connection with such transaction or series of related transactions, (B) if
such MC Members do not elect to cause the Partnership to terminate the MSA
within such 30-day period pursuant to this Section 7.3(g)(iii)(2),
then such MC Members shall not be entitled to terminate the MSA pursuant to
Section 7.3(g)(iii)(1) with respect to such transaction or series of
related transactions (except as provided in clause (C)), and (C) if the
Investor Partners do not elect to cause the Partnership to terminate the MSA
within such 30-day period and General Electric Capital Corporation does not
consummate such transaction or series of related transactions within 180
days after the end of such 30-day period, then the Investor Partners shall
have the right to terminate the MSA pursuant to Section
7.3(g)(iii)(1) if General Electric Capital Corporation ceases to Control
Regency Energy Partners LP as a result of such transaction or series of
related transactions.




Notwithstanding the foregoing, the MC Members designated by the Investor
Partners shall not have any right to terminate the MSA pursuant to clauses
(1) or (2) of this Section 7.3(g)(iii) if
immediately after giving effect to any such change of Control, (x) a Person
that would, upon the consummation of the applicable transaction, Control
Regency Energy Partners LP is an Investment Grade Entity and (y) such Person
(or one of its Affiliates) has substantial experience in operating natural
gas



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transportation assets and is generally recognized in the industry as a
reasonably prudent operator. In addition, any termination of the MSA
pursuant to this Section 7.3(g)(iii) shall be without any liability
to the Partners or the Partnership for such termination.




     (h) Notwithstanding anything to the contrary in this Agreement, so long as the AMI
Agreement has not been terminated and the Alinda Investors collectively have a Sharing Ratio
of 25% or more, the MC Members designated by the Alinda Investors shall have the right to
cause the Partnership to exercise the Partnership’s right to pursue an
AMI Greenfield Opportunity (as defined in the AMI Agreement) pursuant to the AMI
Agreement.




     (i) Notwithstanding anything to the contrary in this Agreement, if the Partnership
elects (in accordance with Section 7.3(h)) to not participate in an AMI Opportunity
(as defined in the AMI Agreement) presented to the Partnership in accordance with the terms
of the AMI Agreement and Regency HIG (or one of its Affiliates) pursues such AMI Opportunity
outside of the Partnership, then the Partnership shall enter into any interconnection
agreement and/or gas balancing agreement related to such AMI Opportunity reasonably
necessary in connection with such AMI Opportunity; provided, that the terms and conditions
of any such agreement are no less favorable to the Partnership than the terms and conditions
of an interconnection agreement or gas balancing agreement, as applicable, entered into
pursuant to a bona fide arms’ length transaction.




     (j) Notwithstanding anything to the contrary in this Agreement, so long as the AMI
Agreement has not been terminated and the Alinda Investors collectively have a Sharing Ratio
of 25% or more, the MC Members designated by the Alinda Investors shall have the right to:




     (i) cause the Partnership to elect to acquire an AMI Acquisition Opportunity
(as defined in the AMI Agreement) pursuant to the AMI Agreement; and




     (ii) cause the Management Committee to issue a Call Notice for the sole purpose
of raising additional capital to acquire an AMI Acquisition Opportunity and upon
such Call Notice, Regency HIG will fund its pro rata share of such Call Notice,
consistent with the equity funding contemplated in the acquisition agreements and
other related agreements relating to such AMI Acquisition Opportunity, on the same
terms and conditions as the Alinda Investors.




     (k) Notwithstanding anything to the contrary in this Agreement, no MC Member shall be
entitled to vote or grant its approval with respect to any transactions or agreements
(including amendments, terminations and renewals thereof) between the Partnership or any of
its subsidiaries on the one hand, and the Partner that appointed such MC Member or an
Affiliate of such Partner on the other hand that are (1) Material Contracts, (2) natural gas
transportation agreements, (3) contracts not entered into in the



-31-









 







ordinary course of business
of the Partnership or (4) contracts not entered into pursuant to a bona fide arms’ length
transaction.



     7.4 No Exclusive Duty to Partnership. No Management Person shall be required to
manage the Partnership as its sole and exclusive occupation, and a Management Person may have other
business interests and may engage in other investments, occupations and activities in addition to
those relating to the Partnership. Neither the Partnership nor any Partner shall have any right,
by virtue of this Agreement, to share or participate in such other investments or activities of a
Management Person or to the income or proceeds derived therefrom.



     7.5 Resignation and Withdrawal of MC Members. A MC Member may resign from the
position of MC Member at any time by giving written notice to the Partners. The resignation of a
MC Member shall take effect upon receipt of notice thereof or at such later time as shall be
specified in such notice; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Upon the withdrawal of a MC Member, such
MC Member shall be treated as having resigned as of the date of withdrawal and shall automatically
cease to be a MC Member as of the date of such withdrawal.



     7.6 Removal of MC Members. Except as provided in Section 4.3(e) and
Section 7.2(c), a MC Member may only be removed by the Partner that designated such MC
Member in accordance with Section 7.2.



     7.7 MC Member Vacancies. Any vacancy in the position of a MC Member that is created
by the withdrawal, death, resignation or removal of a MC Member shall be filled only by consent of
the Partner entitled to designate such MC Member in accordance with Section 7.2. A MC
Member elected to fill a vacancy shall hold office until a successor shall be elected and shall
qualify, or until the MC Member’s earlier death, resignation, withdrawal or removal.



     7.8 Fees and Expenses of the MC Members. A MC Member shall not be entitled to any
fees from the Partnership for serving as a MC Member. A MC Member shall be entitled to
reimbursement for all reasonable out-of-pocket costs and expenses incurred by such MC Member in the
capacity as a MC Member in accordance with the policies (if any) adopted from time to time by the
Management Committee.



     7.9 Delegation of Authority; Officers. The Management Committee shall have the power
to elect, delegate authority to (subject to Section 7.1(a)) and remove such officers,
employees, agents and representatives of the Partnership as the Management Committee may from time
to time deem appropriate. Any delegation of authority to take any action must be approved in the
same manner as would be required for the Management Committee to approve such action directly. The
salaries (if any) of all officers, employees and agents of the Partnership shall be fixed by the
Management Committee. By execution of this Agreement, the Partners hereby (and the Management
Committee is deemed to) elect the individuals listed on Schedule 3(a) as the initial
officers of the Partnership, with the titles set forth opposite each such officer’s name on
Schedule 3(a) and the authority set forth on Schedule 3(b).



     7.10 Approved Agreements; Senior Management Team.



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     (a) On the Effective Date, the Partnership shall enter into the MSA with the Management
Company. By execution of this Agreement, the Partners hereby (and the Management Committee
is deemed to) approve and consent to the Partnership entering into the MSA.




     (b) Regency Intrastate Gas Services LP (formerly known as Regency Intrastate Gas
Services LLC) has entered into the Pipeline Construction Contract with Price Gregory
International, Inc. dated as of February 26, 2009 (the “Pipeline Construction Contract”),
the Compression Contracts (as defined in the Contribution Agreement) and the Firm
Transportation
Contracts (as defined in the Contribution Agreement). By execution of this Agreement,
the Partners hereby (and the Management Committee is deemed to) ratify, approve and consent
to Regency Intrastate Gas Services LP entering into the Pipeline Construction Contract, the
Compression Contracts and the Firm Transportation Contracts. The Partnership shall, or
shall cause the Contractor (as defined in Exhibit A (General Conditions) to the Pipeline
Construction Contract) to, obtain Builder’s Risk Insurance as described in Section 6.1.5 of
the Pipeline Construction Contract in an amount not less than $5,000,000. In addition, the
Partnership shall maintain, or shall cause to be maintained, prior to the commencement of
construction under the Pipeline Construction Contract, Builders All Risk insurance with a
replacement cost lost limit and Delay In Start Up insurance for any above ground assets
including the compression station.




     (c) On the Effective Date, the Partnership shall execute a management rights letter
among the Partnership and the Alinda Investors in substantially the form of Exhibit G-2 to
the Contribution Agreement. By execution of this Agreement, the Partners hereby (and the
Management Committee is deemed to) approve and consent to the Partnership executing such
management rights letter.




     (d) Pursuant to the MSA, the Management Company shall nominate individuals to serve as
the senior management team of the Partnership. Upon the approval of the Management
Committee, such senior management team shall be the “Senior Management Team” of the
Partnership. The Management Committee may, but shall not be obligated to, elect any member
of the Senior Management Team as an officer of the Partnership, with such title and
authority as the Management Committee deems appropriate and shall be entitled to remove or
replace any such officer so elected. Unless otherwise agreed by the Management Committee,
members of the Senior Management Team shall not be entitled to any fees or reimbursement of
expenses directly from the Partnership for serving as a member of the Senior Management
Team; provided, that nothing herein shall be deemed to be a limitation on the Partnership’s
obligation to pay or reimburse the Management Company for services performed by the Senior
Management Team pursuant to the MSA or to indemnify any Person pursuant to this Agreement or
the MSA. By execution of this Agreement, the Partners hereby (and the Management Committee
is deemed to) approve the individuals listed on Schedule 4 as the initial Senior
Management Team of the Partnership.



     7.11 Budgets.



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     (a) Operating Budget.




     (i) The initial Operating Budget of the Partnership is attached as Exhibit
E. By execution of this Agreement, the Partners hereby (and the Management
Committee is deemed to) approve and consent to such initial Operating Budget and
acknowledge and agree that such initial Operating Budget shall be deemed to be the
Operating Budget of the Partnership for the period commencing on the Effective Date
and terminating on December 31, 2009
(subject to any amendments or modifications approved by the Management
Committee).




     (ii) No later than November 30th of each calendar year, the
Management Committee will cause a proposed Operating Budget for the following
calendar year to be prepared. It is the intention of the Partners that the
Management Company will, in accordance with the terms of the MSA, prepare and
deliver such proposed Operating Budget to the Management Committee. The proposed
Operating Budget shall be subject to the approval of the Management Committee. Once
approved by the Management Committee, such proposed Operating Budget shall be the
Operating Budget for the Partnership for such following calendar year (subject to
any amendments or modifications approved by the Management Committee).
Notwithstanding the foregoing, if the Management Committee fails to approve an
Operating Budget with respect to any calendar year, then (i) the Operating Budget
previously approved by the Management Committee for the prior calendar year shall
remain in effect after giving effect to any dispositions or other material changes
to the assets of the Partnership during such prior calendar year, (ii) any items of
the proposed Operating Budget that have been approved by the Management Committee
shall become effective, and (iii) the Senior Management Team and the Management
Company will be entitled to expend Partnership funds, in any calendar quarter, in an
amount equal to the lesser of (1) the actual expenses incurred by the Partnership
and its subsidiaries in such calendar quarter, and (2) the budgeted amount for the
corresponding calendar quarter in the Operating Budget previously approved by the
Management Committee for the prior calendar year increased by the CPI Price Factor
(excluding any nonrecurring maintenance and capital expenditures). For the
avoidance of doubt, if, with respect to any calendar year, the Operating Budget for
the prior calendar year remains in effect pursuant to this Section 7.11(a),
then such prior calendar year’s Operating Budget shall be deemed to exclude any
Expansion Capital Expenditures set forth in such prior calendar year’s Operating
Budget and expended during such prior calendar year.




     (b) Haynesville Expansion Budget. The Haynesville Expansion Budget is attached
as Exhibit F. By execution of this Agreement, the Partners hereby (and the
Management Committee is deemed to) approve and consent to such Haynesville Expansion Budget
and acknowledge and agree that such Haynesville Expansion Budget shall be deemed to be the
Haynesville Expansion Budget for purposes of the MSA. The Haynesville Expansion Budget may
only be amended with the consent of the Management Committee.



-34-









 





ARTICLE VIII

TAX MATTERS




     8.1 Tax Returns. The Partnership shall cause a nationally recognized accounting firm
to prepare, at the expense of the Partnership, for each calendar year (or part thereof), federal
tax returns in compliance with the provisions of the Code and any required state and local tax
returns. Each Partner shall furnish to the Partnership all pertinent information in its possession
relating to the Partnership’s operations that is necessary to enable the Partnership’s tax
returns to be timely prepared and filed. Not less than 60 days prior to the due date (as extended)
of the Partnership’s federal income tax return or any state income tax return, the return proposed
by the Management Committee to be filed by the Partnership shall be furnished to the Partners for
review. In addition, not more than ten days after the date on which the Partnership files its
federal income tax return or any state income tax return, a copy of the return so filed shall be
furnished to the Partners.



     8.2 Partner Tax Return Information. The Partnership, at its expense, shall cause to
be delivered to each Partner within 75 days after the end of the Partnership’s taxable year an IRS
Form K-1 or a good faith estimate of the amounts to be included on such IRS Form K-1 for such
Partner and such other information as shall be necessary (including a statement for that year of
each Partner’s share of net income, net losses and other items allocated to such Partner) for the
preparation and timely filing by the Partners of their federal, state and local income and other
tax returns.



     8.3 Tax Matters Partner.




     (a) The “Tax Matters Partner” of the Partnership for purposes of Section 6231(a)(7) of
the Code shall be Regency HIG so long as its Ultimate Parent is Regency Energy Partners LP,
and otherwise shall be the Partner selected by the Management Committee for such purposes.
The Tax Matters Partner shall take such action as may be necessary to cause any Partner so
requesting to become a “notice partner” within the meaning of Section 6231(a)(8) of the
Code. The Tax Matters Partner shall inform each other Partner of all significant matters
that may come to its attention in its capacity as Tax Matters Partner by giving notice
thereof on or before the fifth day after becoming aware thereof and, within that time, shall
forward to each other Partner copies of all significant written communications it may
receive in that capacity. Any cost or expense incurred by the Tax Matters Partner in
connection with its duties, including the preparation for or pursuance of administrative or
judicial proceedings, shall be paid by the Partnership.




     (b) Without first obtaining the approval of the Management Committee, the Tax Matters
Partner shall not, with respect to Partnership tax matters: (i) enter into a settlement
agreement with respect to any tax matter which purports to bind Partners, (ii) intervene in
any action pursuant to Code Section 6226(b)(5), (iii) enter into an agreement extending the
period of limitations for making assessments on behalf of Partners, or (v) file a petition
pursuant to Code Section 6226(a) or 6228. If an audit of any of the Partnership’s tax
returns shall occur, the Tax Matters Partner shall not settle or otherwise compromise
assertions of the auditing agent which may be adverse to any Partner as



-35-









 







compared to the
position taken on the Partnership’s tax returns without the prior written consent of each
such affected Partner.




     (c) No Partner shall file a request pursuant to Code Section 6227 for an administrative
adjustment of Partnership items for any taxable year, or a petition under Code Sections 6226
or 6228 or other Code sections with respect to any item involving the Partnership, without
first notifying other Partners. Any Partner that enters into a
settlement agreement with respect to any Partnership item (within the meaning of Code
Section 6231(a)(3)) shall notify the other Partners of such settlement agreement and its
terms within 90 days from the date of the settlement.




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



     8.4 Tax Elections. The Partnership shall make the following elections on the
appropriate forms or tax returns:




     (a) to adopt the calendar year as the Partnership’s fiscal year, if permitted under the
Code;




     (b) to adopt the accrual method of accounting;




     (c) if there is a distribution of Partnership property as described in Code Section 734
or a transfer of Partnership Interests as described in Code Section 743, upon request by
notice from any Partner, to elect, pursuant to Code Section 754, to adjust the basis of
Partnership property;




     (d) to elect to amortize the organizational expenses of the Partnership as permitted by
Code Section 709(b);




     (e) to take all available bonus depreciation for federal, state and local tax purposes,
unless otherwise determined by the Management Committee; and




     (f) any other election the Management Committee may deem appropriate.



     8.5 Tax Reimbursement. If Texas law requires the Partnership and any Partner both to
participate in the filing of a Texas franchise tax combined group report, and if such Partner or
any other member of the Partner’s combined group pays the franchise tax liability due in connection
with such combined report, the parties agree that the Partnership shall promptly reimburse such
Partner for the franchise tax paid on behalf of the Partnership as a combined group member. The
franchise tax paid on behalf of the Partnership shall equal the excess, if any of (i) the franchise
tax that the combined group including the Partnership pays over (ii) the amount the combined group
would have paid if it had computed its franchise tax liability for the report period without the
Partnership as a member of the combined group, but in no event more than what the Partnership would
have paid had it filed the franchise tax return not as a member of a group. In such event, the
parties agree that such Partner shall be considered as paying such



-36-









 







amount on behalf of the
Partnership and the Partnership shall deduct for federal income tax purposes 100% of the Texas
franchise tax attributable to the Partnership; provided that in the event that such deduction may
not be properly taken by the Partnership, the Partnership shall reimburse such Partner for the
after-tax cost of such payment of Texas franchise tax paid on the Partnership’s behalf.



     8.6 Tax Partnership. It is the intention of the Partners that the Partnership be
classified as a partnership for U.S. federal tax purposes. Neither the Partnership nor any Partner
shall make an election for the Partnership to be excluded from the application of the provisions of
subchapter K of chapter 1 of subtitle A of the Code or any similar provisions of applicable state
law or to be classified as other than a partnership pursuant to Treasury Regulation Section
301.7701-3 or any similar provision of state or local law.



ARTICLE IX

BOOKS AND RECORDS; ADDITIONAL COVENANTS




     9.1 Maintenance of Books. The Partnership shall keep complete and accurate books and
records of Partnership, including all books and records necessary to provide to the Partners any
information required to be provided pursuant to Section 9.2, supporting documentation of
the transactions with respect to the conduct of the Partnership’s business and minutes of the
proceedings of the Partners and the Management Committee, and any other books, records and
information that are required to be maintained by applicable Law.



     9.2 Financial Statements and Reports. With respect to each calendar year, and within
the time frame specified by the Management Committee, the Partnership shall, or shall cause the
Management Company to, prepare and deliver to each Partner:




     (a) no later than 60 days after the end of each calendar year, annual financial
statements of the Partnership, consisting of a profit and loss statement, balance sheet,
statement of cash flows and statement of Capital Accounts, as of the end of and for the
prior calendar year, which shall be prepared in accordance with generally accepted
accounting principles consistently applied (“GAAP”) and audited by the Partnership’s
independent certified public accountants, which shall be a nationally recognized accounting
firm;




     (b) no later than 40 days after the end of each calendar quarter, unaudited quarterly
financial statements of the Partnership, consisting of a profit and loss statement, balance
sheet and statement of cash flows and statement of Capital Accounts, as of the end of and
for the prior calendar quarter, which shall be prepared in accordance with GAAP except for
normal year end adjustments and the absence of footnotes;




     (c) no later than 40 days after the end of each calendar month, monthly financial and
business reports, which shall consist of a profit and loss statement, balance sheet and
statement of cash flows and statement of Capital Accounts, as of the end of and for the
prior calendar month, which shall be prepared in accordance with GAAP except for normal year
end adjustments and the absence of footnotes;



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     (d) weekly construction reports and monthly operating reports with respect to the
Haynesville Expansion Project reasonably acceptable to the Partners; and




     (e) such other information as a Partner may reasonably request.



     9.3 Bank Accounts. Funds of the Partnership shall be deposited in such banks or other
depositories as shall be designated from time to time by the Management Committee. All
withdrawals from any such depository shall be made only as authorized by the Management
Committee or the Management Company and shall be made only by check, wire transfer, debit
memorandum or other written instruction. The Partnership will have its own bank account and its
funds will not be commingled with those of any other Person.



     9.4 Confidentiality.




     (a) Each Partner agrees that all Confidential Information shall be kept confidential by
such Partner, shall only be used for the purpose of reviewing and evaluating the performance
of the Partnership and the Partner’s interest therein, and shall not be disclosed in any
manner, except to such of the Partner’s Authorized Representatives who have a need to know
and who agree to be, or are otherwise, bound by the Partner’s obligations hereunder and
except as otherwise expressly permitted in this Section 9.4. Each Partner shall be
responsible for any breach of this Section 9.4 by itself or any of its Authorized
Representatives, and each Partner covenants and agrees that it shall promptly notify the
Partnership of any actual, potential or threatened breach of this Section 9.4 and
shall, at its own expense, enforce, and assist the Partnership in its enforcement of, the
provisions of this Section 9.4, including, to the extent reasonably necessary,
seeking specific enforcement through court proceedings. Subject to Section 9.4(b),
if a Partner or any of its Authorized Representatives is requested or required by applicable
Law to disclose any Confidential Information, such Partner shall, to the maximum extent
permitted by applicable Law, provide the Partnership with prompt written notice thereof and
will use reasonable efforts to resist disclosure, until an appropriate protective order or
motion to quash may be sought or a waiver of compliance with this Section 9.4 may be
granted. If, in the absence of a protective order or the receipt of a waiver hereunder,
such Partner or any of its Authorized Representatives is, in the opinion of its legal
counsel, legally required to disclose Confidential Information, then such Partner or its
Authorized Representatives may disclose only that portion of the Confidential Information
legally required to be disclosed, without liability hereunder; provided, that such Partner
or its Authorized Representatives uses reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information. Each Partner
acknowledges and agrees that the Partnership and the other Partners may be irreparably
harmed by disclosure of the Confidential Information, that money damages would not be a
sufficient remedy for any breach of this Section 9.4 by such Partner or its
Authorized Representatives and that, in addition to any other remedies available at law or
in equity, specific performance and injunctive or other equitable remedies shall be
available to the Partnership and the Partners as a remedy for any such breach or threatened
breach, without the requirement of posting bond or other security. The Partnership and the
other Partners shall be entitled to recover their costs and expenses, including attorneys’
fees, incurred in connection with any successful action



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brought by them to enforce the terms
of this Agreement. With respect to Confidential Information that is subject to
confidentiality agreements under any third-party confidentiality agreements, each Partner
covenants and agrees to, and shall cause its Authorized Representatives to, treat such
Confidential Information confidentially in accordance with, and to comply with the terms of,
the confidentiality provisions contained in those third-party confidentiality agreements
that have been disclosed to such Partner, including, any provisions thereof that impose more
stringent or additional
obligations than those set forth herein (provided, that such has been disclosed to such
Partner). The obligations of a Partner pursuant to this Section 9.4 shall continue
following the time such Person ceases to be a Partner, but thereafter such Person shall not
have the right to enforce the provisions hereof.




     (b) Notwithstanding anything to the contrary in this Agreement, each Partner may
disclose any information about the Partnership, including any Confidential Information,
without any liability to the Partnership or to any other Partner or to their respective
Affiliates and without any notice to any Partner, to the extent that such disclosing Partner
believes that such disclosure is necessary or appropriate to satisfy its (or its Affiliates)
public disclosure obligations under the Securities Act, the Exchange Act, the rules of any
stock exchange, or any similar public disclosure obligations; provided that such disclosing
Partner shall give each of the other Partners prior opportunity to review and comment on any
such disclosure to the extent such disclosure relates to any such other Partner or its
Affiliates.



     9.5 Conflicts of Interest.




     (a) Except as expressly provided in Section 9.5(b) and Section 9.5(c),
a Partner or an Affiliate of a Partner may engage in and possess interests in other business
ventures of any and every type and description, independently or with others, including ones
in competition with the Partnership and specifically including business ventures engaged in
the Partnership Business, with no obligation to offer to the Partnership, any other Partner
or any Affiliate of another Partner the right to participate therein. The Partnership may
transact business with any Partner or Affiliate of a Partner, subject to Sections
7.3(h) and (i). Without limiting the generality of the foregoing, the Partners
recognize and agree that the Partners and/or their respective Affiliates currently, or in
the future may, subject to Section 9.5(b) and Section 9.5(c), engage in
various activities similar or related to the Partnership Business (herein referred to as
“Outside Activities”). Subject to Section 9.5(b) and Section 9.5(c), no
Partner or Affiliate of a Partner shall be restricted in its right to conduct, individually
or jointly with others, for its own account any Outside Activities, and no Partner or its
Affiliates shall have any duty or obligation, express or implied, fiduciary or otherwise, to
account to, or to share the results or profits of such Outside Activities with, the
Partnership, any other Partner or any Affiliate of any other Partner, by reason of such
Outside Activities.




     (b) Notwithstanding anything to the contrary in Section 9.5(a), Regency HIG
hereby agrees to be bound by the terms and conditions of that certain AMI Agreement, dated
as of the Effective Date, by and among Regency Energy Partners LP, the Partnership and the
Alinda Investors (the “AMI Agreement”), and the Partners consent to



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the Partnership
complying with its obligations under the AMI Agreement. For the avoidance of doubt, if the
Company elects not to pursue (or is deemed to have elected not to pursue) an AMI Opportunity
pursuant to the terms of the AMI Agreement, then Regency HIG (or any of its Affiliates)
shall have the right to pursue such AIM Opportunity independently of the Partnership and the
other Partners in accordance with the terms of the AMI Agreement.




     (c) Notwithstanding anything to the contrary in Section 9.5(a), each of the
Partners hereby acknowledges and agrees that no Partner (or any Affiliate of any Partner)
shall have the right to pursue or engage in any Partnership Specific Opportunity other than
through the Partnership.



     9.6 Haynesville Expense Reimbursement. In accordance with the terms of Article 2 of
the Contribution Agreement, the Partnership shall distribute to Regency HIG the Pre-Closing
Expenditures (as defined in the Contribution Agreement). For the avoidance of doubt, the Partners
hereby acknowledge and agree that, for all purposes, the agreed net fair market value of Regency
HIG’s Initial Capital Contribution (after giving effect to such distribution) is equal to
$400,000,000.



     9.7 Haynesville Expansion Cost Overruns. Regency HIG shall contribute to the
Partnership an amount equal to any Cost Overruns (as defined in the Contribution Agreement) in
accordance with Section 5.5 of the Contribution Agreement. Notwithstanding anything to the
contrary in this Agreement, the Partnership shall not issue Regency HIG any GP Units with respect
to any Capital Contributions made by Regency HIG pursuant to this Section 9.7.



     9.8 Financing. The Partners agree to use good faith and commercially reasonable
efforts to cause the Partnership to obtain, following the completion of the Haynesville Expansion
Project, financing on reasonable commercial terms in a principal amount of not less than three
times Consolidated EBITDA.



     9.9 Permitted Investments. Notwithstanding anything to the contrary in this
Agreement, the Partnership shall cause all cash Capital Contributions contributed to the
Partnership to be invested in Permitted Investments until such cash Capital Contributions are
expended by the Partnership in accordance with any Budget, distributed as Available Cash or as
otherwise approved by the Management Committee.



ARTICLE X

DISSOLUTION, LIQUIDATION, AND TERMINATION




     10.1 Dissolution. The Partnership shall dissolve and its affairs shall be wound up on
the first to occur of the following (each a “Dissolution Event”):




     (a) notice from the Management Committee to the Partners dissolving the Partnership;




     (b) entry of a decree of judicial dissolution of the Partnership under Section 15-801
of the Act;



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




     (d) an event that makes it unlawful for all or substantially all of the business or
affairs of the Partnership to be carried on.



     10.2 Winding Up and Termination.




     (a) On the occurrence of a Dissolution Event, the Management Company (or such other
Person as may be designated by the Management Committee) shall serve as liquidator under the
supervision of the Management Committee. The liquidator shall proceed diligently to wind up
the affairs of the Partnership and to make final distributions as provided in this Agreement
and in the Act. The costs of winding up shall be borne as a Partnership expense. Until
final distribution, the liquidator shall continue to operate the Partnership’s properties
with all of the power and authority of the Partners. The steps to be accomplished by the
liquidator are as follows:




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




     (ii) the liquidator shall discharge from the Partnership’s funds all of the
indebtedness of the Partnership and other debts, liabilities and obligations of the
Partnership or otherwise make adequate provision for the payment and discharge
thereof (including the establishment of a cash escrow fund for contingent
liabilities in such amount and for such term as the liquidator may reasonably
determine); and




     (iii) all remaining assets of the Partnership shall be distributed to the
Partners as follows:




     (1) the liquidator may sell any or all the Partnership’s property,
including to Partners, and any resulting gain or loss from each sale shall
be computed and allocated to the Capital Accounts of the Partners in
accordance with the provisions of Section 6.2;




     (2) with respect to all Partnership property that has not been sold,
the Book Value of that property shall be determined and the Capital Accounts
of the Partners shall be adjusted to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in such property that
has not previously been reflected in the Capital Accounts would be allocated
among the Partners as if there were a taxable disposition of that property
for the Book Value of that property on the date of distribution; and



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     (3) Partnership property (including cash) shall be distributed among
the Partners in accordance with Section 6.1(b), and those
distributions shall be made by the end of the taxable year of the
Partnership during which the liquidation of the Partnership occurs (or, if
later, the 90th day after the date of the liquidation).




     (b) The distribution of cash or property to a Partner in accordance with the provisions
of this Section 10.2 constitutes a complete return to the Partner of its Capital
Contributions and a complete distribution to the Partner of its Partnership Interest
and all the Partner’s property. To the extent that a Partner returns funds to the
Partnership, it has no claim against any other Partner for those funds.




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



     10.3 Deficit Capital Accounts. No Partner will be required to pay to the Partnership,
to any other Partner or to any third party any deficit balance that may exist from time to time in
another Partner’s Capital Account.



     10.4 Statement of Dissolution. On completion of the distribution of Partnership
assets as provided in this Article X, the Partners (or such other Person or Persons as the
Act may require or permit) shall file a statement of dissolution with the Secretary of State of the
State of Delaware, cancel any other filings made pursuant to Section 2.5, and take such
other actions as may be necessary to terminate the existence of the Partnership. Upon the filing
of such statement of dissolution, the existence of the Partnership shall terminate (and the Term
shall end), except as may be otherwise provided by the Act or other applicable Law.



ARTICLE XI

EXCULPATION AND INDEMNIFICATION




     11.1 Exculpation.




     (a) No Management Person (solely in such individual’s capacity as a Management Person)
shall be liable to the Partnership or to any Partner for any claims, losses, expenses,
costs, obligations, liabilities, actions, suits, proceedings, judgments, or settlements,
fines, penalties, interests or other amounts (including attorneys’ fees) (whether civil,
criminal, administrative or investigative) (collectively, “Claims”) arising or resulting
from or relating to the performance of any of such Management Person’s



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obligations or duties
under this Agreement in its capacity as a Management Person, or otherwise attributable to
any breach of duty owed by such Management Person (by virtue of being a Management Person)
to the Partnership or the Partners, except to the extent such Claims or breach of duty is
based upon such Management Person’s fraud, bad faith, gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the doing of any act or the
failure to do any act by any Management Person, which shall not constitute fraud, bad faith,
gross negligence or willful misconduct, the effect of which may cause or result in loss or
damage to the
Partnership, shall not subject any Management Person to any liability. The Management
Persons do not, in any way, guarantee the return of the Partners’ Capital Contributions or a
profit for the Partners from the operations of the Partnership. No Management Person shall
be responsible to any Partners because of a loss of their investments or a loss in
operations, unless the loss shall have been the result of fraud, bad faith, gross negligence
or willful misconduct. For the avoidance of doubt, nothing in this Section 11.1
shall be deemed to be a limitation on the Partnership’s indemnification obligations pursuant
to the MSA.




     (b) In performing its obligations or duties under this Agreement, a Management Person
(solely in such individual’s capacity as a Management Person) shall be fully protected in
relying in good faith upon the records of the Partnership and upon such information,
opinions, reports or statements presented to the Partnership by any Person as to matters the
Management Person reasonably believes are within such other Person’s professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Partnership, including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, Profits, Losses or Available Cash or any other facts
pertinent to the existence and amount of assets from which distributions to Partners might
properly be paid.



     11.2 Indemnification.




     (a) To the fullest extent permitted by applicable Law, the Partnership shall protect,
defend, indemnify and hold harmless each Covered Person from and against all Claims actually
and reasonably incurred arising from any and all pending or completed Claims (including
negligence, strict or absolute liability, liability in tort and liabilities arising out of
violation of Laws or regulatory requirements of any kind) in which any Covered Person may be
involved, or is threatened to be involved, as a party or otherwise, by reason of its status
as a Covered Person; provided, that no Covered Person shall be entitled to be indemnified
pursuant to this Section 11.2(a) (x) with respect to any criminal proceeding, if
such Covered Person had reasonable cause to believe its conduct was unlawful, (y) in respect
of any Claim arising from or related to such Covered Person’s fraud, bad faith, gross
negligence or willful misconduct or (z) with respect to any Claims by or in the name of the
Partnership in respect of any Claims as to which such Covered Person shall have been
adjudged to be liable to the Partnership unless and only to the extent that the Delaware
Court of Chancery, or other court of appropriate jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the circumstances
of the case, such Covered Person is fairly and reasonably entitled to indemnity of such
expenses which the Delaware Court of Chancery, or other court of appropriate jurisdiction,
shall deem proper. The termination of any action, suit or



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proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Covered Person acted in a manner contrary to that specified
above.




     (b) Any amendment, modification or repeal of this Section 11.2 or any provision
in this Section 11.2 shall be prospective only and shall not in any way affect the
rights of any Covered Person under this Section 11.2 as in effect immediately prior
to such amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when claims relating
to such matters may arise or be asserted.




     (c) Any indemnification pursuant to this Section 11.2 shall be made only out of
the assets of the Partnership, it being agreed that the Partners shall not be personally
liable for such indemnification and shall have no obligation to contribute or loan any
monies or property to the Partnership to enable it to effectuate such indemnification.




     (d) In no event may a Covered Person subject any Partner to personal liability by
reason of the indemnification provisions set forth in this Agreement.




     (e) The provisions of this Section 11.2 are for the benefit of the Covered
Persons, their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.



     11.3 Indemnification Procedures.




     (a) Subject to the other provisions of this Article XI, in the event that any
action, suit, claim, demand or proceeding is commenced by a third party involving a Claim (a
“Third Party Claim”) in respect of any matter that, if true (without any responsibility for
independent investigation of the facts or law contained in such notice from the third
party), would be subject to indemnification by the Partnership under any provision of
Article XI to a Covered Person entitled to such indemnification (an “Indemnified
Party”), the Indemnified Party shall promptly deliver written notice to the Partnership of
such Third Party Claim describing in reasonable detail (i) the nature of the Third Party
Claim, (ii) if practicable, the Indemnified Party’s best estimate of the amount of Losses
attributable to the Third Party Claim, (iii) the basis of the Indemnified Party’s request
for indemnification under this Agreement and (iv) a copy of all papers served with respect
to such claim (if any) (the “Claim Notice”). Failure to timely provide such Claim Notice
shall not affect the right of the Indemnified Party’s indemnification hereunder, except to
the extent the Partnership is materially prejudiced by such delay or omission.




     (b) The Partnership shall have the right to take control of all aspects of the
investigation and defense of the Indemnified Party against such Third Party Claim, except
that the Indemnified Party’s consent shall be required with respect to taking control of any
investigation or defense (i) if the liabilities involved in such proceedings involve any
material risk of the sale, forfeiture, or loss of, or the creation of any lien or other
encumbrance on, any property of such Indemnified Party or (ii) which could entail



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a risk of
criminal liability to any Indemnified Party. If the Partnership notifies the Indemnified
Party that the Partnership elects to assume the defense of the Third Party Claim within 30
days of such Partnership’s receipt of the Claim Notice (such election to be without
prejudice to the right of the Partnership to dispute whether such claim is an indemnifiable
Claim under this Article XI), then the Partnership shall have the right to defend
such Third Party Claim with counsel selected by the Partnership (who shall be reasonably
satisfactory to the Indemnified Party), by all appropriate proceedings, to a
final conclusion or settlement at the discretion of the Partnership in accordance with
this Section 11.3(b). The Partnership shall have full control of such
investigation, defense and proceedings, including any compromise or settlement thereof;
provided, that the Partnership shall not enter into any settlement agreement without the
written consent of the Indemnified Party (which consent shall not be unreasonably withheld,
conditioned or delayed); provided, further, that such consent shall not be required if (i)
the settlement agreement contains a complete and unconditional general release by the third
party asserting the Third Party Claim of all Indemnified Parties affected by the claim and
(ii) the settlement agreement does not contain any sanction or restriction upon the conduct
of any business by any Indemnified Party or its Affiliates; provided, further, that the
Partnership shall in no event, without the consent of the Indemnified Party, take or refrain
from taking any action that would reasonably be expected to materially impair the
indemnification of such Indemnified Party hereunder or would require such Indemnified Party
to take or refrain from taking any action or to make any public statement, which such Person
reasonably considers materially adversely affect its interests. If requested by the
Partnership, the Indemnified Party agrees to cooperate reasonably with the Partnership, at
the Partnership’s cost and expense, and its counsel in contesting any Third Party Claim
which the Partnership elects to contest, including the making of any related counterclaim
against the Person asserting the Third Party Claim or any cross complaint against any
Person. The Indemnified Party may participate in, but not control, any investigation,
defense or settlement of any Third Party Claim controlled by the Partnership pursuant to
this Section 11.3(b), and the Indemnified Party shall bear its own costs and
expenses with respect to such participation.




     (c) If the Partnership does not notify the Indemnified Party within 30 days of such
Partnership’s receipt of the Claim Notice that the Partnership elects to take control of the
investigation and defense of the Indemnified Party pursuant to Section 11.3(b), then
the Indemnified Party shall have the right to defend, and be reimbursed for its reasonable
cost and expense (but only if the Indemnified Party is actually entitled to indemnification
hereunder) in regard to the Third Party Claim with counsel selected by the Indemnified
Party, by all appropriate proceedings, which proceedings shall be prosecuted diligently by
the Indemnified Party. In such circumstances, the Indemnified Party shall defend any such
Third Party Claim in good faith and have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into any compromise or
settlement of such Third Party Claim if indemnification is to be sought hereunder, without
the consent of the Partnership of such proposed settlement (which consent shall not be
unreasonably withheld, conditioned or delayed); provided, further, that such consent shall
not be required if (i) the settlement agreement contains a complete and unconditional
general release by the third party asserting the Third Party Claim of all Indemnified
Parties affected by the claim and (ii) the settlement agreement



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does not contain any
sanction or restriction upon the conduct of any business by any Partnership or its
Affiliates. The Partnership may participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this Section 11.3(c), and the
Partnership shall bear its own costs and expenses with respect to such participation.




     (d) Subject to the other provisions of this Article XI, a claim for
indemnification by any Indemnified Party for any matter not involving a Third Party Claim
shall be asserted by delivery of a Claim Notice to the Partnership promptly after such
Indemnified Party becomes aware of the facts or circumstances giving rise to such claim.



     11.4 Expenses. To the fullest extent permitted by applicable Law, if the Partnership
does not elect to take control of the investigation and defense of an Indemnified Party pursuant to
Section 11.3(b), reasonable expenses (including legal fees) incurred by such Indemnified
Party in defending any indemnified Third Party Claim pursuant to Section 11.3(c) shall,
from time to time, be advanced by the Partnership to such Indemnified Party at reasonable intervals
prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of an undertaking by or on behalf of such Indemnified Party to repay such amount if
it shall be finally determined by a court of competent jurisdiction that such Indemnified Party is
not entitled to be indemnified as authorized in Section 11.2.



     11.5 Insurance. As of the Effective Date the Partnership will cause the Management
Company to provide insurance of the types, limits and coverages described on Exhibit G and
shall use commercially reasonable efforts to maintain such insurance after the Effective Date,
except to the extent the Management Committee decides to obtain and maintain other insurance (or
not maintain insurance). The Partnership may enter into indemnity contracts with Covered Persons
and such other Persons as the Management Committee shall determine and may adopt written procedures
pursuant to which arrangements are made for the advancement of expenses and the funding of
obligations under Section 11.3 and containing such other procedures regarding
indemnification as are appropriate.



     11.6 Acts Performed Outside the Scope of the Partnership. Each Partner (each Partner
in such capacity, an “Indemnitor”) shall indemnify, defend, save and hold harmless each other
Partner (an “Indemnitee”) from any and all Claims actually and reasonably incurred that shall or
may arise by virtue of any act or thing done or omitted to be done by the Indemnitor (directly or
through agents or employees) outside the scope of, or in breach of, the terms of this Agreement;
provided, however, that the Indemnitor shall be properly notified of the existence of the Claim,
and shall be given reasonable opportunity to cure any act or omission causing liability, and shall
be entitled to participate in the defense thereof. The Indemnitee’s failure to give such notice
shall not affect the Indemnitor’s obligations hereunder, except to the extent of any actual
prejudice arising therefrom.



     11.7 Attorneys’ Fees. All of the indemnities provided in this Agreement shall include
reasonable attorneys’ fees, including appellate attorneys’ fees and court costs.



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     11.8 Subordination of Other Rights to Indemnity. The interests of the Partners (if
any) in any proceeds of the Partnership by way of repayment of loans, return of any Capital
Contributions, or any distributions from the Partnership, shall be subordinated to the right of
Partners to the indemnities provided by this Article XI.



     11.9 Survival of Indemnity Provisions. Except as otherwise specifically provided
herein, all of the indemnity provisions contained in this Agreement shall survive a Partner’s
ceasing to be a Partner hereunder.



     11.10 Reimbursement Obligation. Notwithstanding anything to the contrary in this
Agreement, if any Partner (a “Reimbursed Partner”) actually pays or incurs any liability of the
Partnership as a result of such Reimbursed Partner being jointly and severally liable for the
Partnership’s obligations by operation of Law or otherwise (other than any liability arising from
any breach of this Agreement by such Reimbursed Partner), then such Reimbursed Partner may deliver
a notice to each other Partner (each, a “Reimbursing Partner”) setting forth in reasonable detail
the nature of such liability and the costs actually paid or incurred by such Reimbursed Partner
(the “Reimbursable Costs”). Promptly after receipt of any such notice, each Reimbursing Partner
shall reimburse the Reimbursed Partner for such Reimbursing Partner’s pro rata share of the
Reimbursable Costs (based on the Partners’ respective Sharing Ratios at the time such Reimbursable
Costs are paid or incurred).



ARTICLE XII

REPRESENTATIONS, WARRANTIES AND COVENANTS




     12.1 Representations, Warranties and Covenants. Each Partner hereby severally (and
not jointly and severally) as to itself only represents, warrants and covenants to the Partnership
and the other Partners as follows:




     (a) The Partner understands that the purpose of the Partnership is to engage in the
Partnership Business. The Partner has read and is familiar with, and has been given full
and complete access to, information, financial or otherwise, regarding the Partnership and
has utilized such access to the Partner’s satisfaction and has obtained any other relevant
information the Partner has sought. The Partner has been given the opportunity to ask
questions of, and receive answers from, the Partnership concerning the terms and conditions
of, and other matters pertaining to, its purchase and ownership of the GP Units.




     (b) The Partner has read this Agreement and understands that the GP Units being
acquired by the Partner will be governed by the terms of this Agreement. The Partner agrees
to be bound, in all respects, by the terms of this Agreement.




     (c) The Partner has sufficient knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of acquiring and owning the GP
Units. The Partner is able to bear the economic risk of a total loss of the value of the GP
Units.




     (d) The Partner is acquiring the GP Units for its own account and not with a view to,
or for, resale in connection with any distribution thereof. The Partner



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understands and
acknowledges that the GP Units are not securities and the sale of the GP Units has not been
registered under the Securities Act or under state securities laws. In addition, the
Partner acknowledges that the GP Units are subject to restrictions on
transferability in this Agreement that will make it difficult for the Partner to
Transfer the GP Units. The Partner further understands that any certificates representing
the GP Units may contain legends restricting the Transfer of the GP Units.




     (e) The Partner is fully authorized and qualified to become a Partner of the
Partnership and is authorized to make the Initial Capital Contribution to the Partnership,
and the person executing this Agreement on the Partner’s behalf has been duly authorized to
do so.




     (f) The Partner understands and acknowledges that (i) the Partnership may need to raise
additional capital from time to time in order to engage in the Partnership Business and
achieve any other objectives and goals that may be established for the Partnership by the
Management Committee, (ii) the Partnership may raise additional capital by selling GP Units
to one or more Partners or other Persons in accordance with the terms of this Agreement,
(iii) the Partner has no right to participate in any future offering, or to buy any
additional GP Units that may be issued, by the Partnership except to the extent set forth in
this Agreement, and (iv) the Partner’s Sharing Ratio in the Partnership may be diluted as a
result of any such sale of additional GP Units.




     (g) The Partner will indemnify and hold harmless the Partnership and its MC Members,
officers, Partners and Affiliates, and any other Person who controls or is controlled by any
of them, against any and all loss, liability, claim, damage and expense whatsoever,
including reasonable attorney’s fees, arising out of or based upon any false representation
or warranty or any breach by the Partner of any term or condition contained in this
Article XII.




     (h) All of the information provided to the Partnership by the Partner and all of the
Partner’s representations and warranties are true and correct as of the date of this
Agreement. The Partner’s representations, warranties and covenants shall survive the
delivery of the Partner’s Capital Contribution.



ARTICLE XIII

GENERAL PROVISIONS




     13.1 Offset. Whenever the Partnership is to pay any sum to any Partner or former
Partner, any amounts that a Partner or former Partner owes the Partnership may be deducted from
that sum before payment.



     13.2 Notices. Except as expressly set forth to the contrary in this Agreement, all
notices, requests or consents provided for or permitted to be given under this Agreement must be in
writing and must be delivered to the recipient in person, by courier or mail or by facsimile or
other electronic transmission. A notice, request or consent given under this Agreement is
effective on receipt by the Partner to receive it; provided, however, that a facsimile or other
electronic transmission that is transmitted after the normal business hours of the recipient shall



-48-









 







be deemed effective on the next Business Day. All notices, requests and consents to be sent to a
Partner must be sent to or made at the addresses given for that Partner on Schedule 1 or
such other address as that Partner may specify by notice to the other Partners. Any notice,
request or
consent to the Partnership must be given to all of the Partners. Whenever any notice is
required to be given by Law, the Certificate or this Agreement, a written waiver thereof, signed by
the Person entitled to notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.



     13.3 Entire Agreement. This Agreement and any other agreements expressly mentioned in
this Agreement constitute the entire agreement of the Partners and their respective Affiliates
relating to the Partnership and supersede all prior contracts or agreements with respect to the
Partnership, whether oral or written.



     13.4 Waivers. A waiver or consent, express or implied, to or of any breach or default
by any Person in the performance by that Person of its obligations with respect to the Partnership
is not a consent or waiver to or of any other breach or default in the performance by that Person
of the same or any other obligations of that Person with respect to the Partnership. Failure on
the part of a Person to complain of any act of any Person or to declare any Person in default with
respect to the Partnership, irrespective of how long that failure continues, does not constitute a
waiver by that Person of its rights with respect to that default until the applicable
statute-of-limitations period has run.



     13.5 Amendment or Restatement. Except as expressly set forth herein, this Agreement
(including the Exhibits and Schedules) may be amended or restated only by a written instrument
adopted, executed and agreed to by all of the Partners. The Certificate may be amended or restated
only with the approval of all of the Partners.



     13.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Partners and their respective heirs, legal representatives, successors and assigns.



     13.7 Governing Law; Jurisdiction. THIS AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE
OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF
ANOTHER JURISDICTION. A PARTNER AND THE PARTNERSHIP MAY BRING AN ACTION ARISING UNDER OR RELATING
TO THIS AGREEMENT, IF AT ALL, ONLY IN A FEDERAL OR STATE COURT OF COMPETENT JURISDICTION IN
WILMINGTON, DELAWARE. EACH PARTNER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON-CONVENIENCE,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF SUCH ACTION OR PROCEEDING IN ANY SUCH
RESPECTIVE JURISDICTION.



     13.8 Severability. In the event of a direct conflict between the provisions of this
Agreement and any mandatory, non-waivable provision of the Act, such provision of the Act shall
control. If any provision of the Act provides that it may be varied or superseded in a



-49-









 







partnership
agreement (or otherwise by agreement of the partners of a partnership), that provision shall be
deemed superseded and waived in its entirety if this Agreement contains a provision addressing the
same issue or subject matter. If any provision of this Agreement or the
application thereof to any Partner or circumstance is held invalid or unenforceable to any
extent, (a) the remainder of this Agreement and the application of that provision to other Partners
or circumstances is not affected thereby, and (b) the Partners shall negotiate in good faith to
replace that provision with a new provision that is valid and enforceable and that puts the
Partners in substantially the same economic, business and legal position as they would have been in
if the original provision had been valid and enforceable.



     13.9 Tax Disclosure Authorization. Notwithstanding anything herein to the contrary,
the Partners (and each Affiliate and Person acting on behalf of any Partner) agree that each
Partner (and each employee, representative, and other agent of such Partner) may disclose to any
and all Persons, without limitation of any kind, the transaction’s tax treatment and tax structure
(as such terms are used in Sections 6011 and 6112 of the Code and the Treasury Regulations
thereunder) contemplated by this Agreement and all materials of any kind (including opinions or
other tax analyses) provided to such Partner or such Person relating to such tax treatment and tax
structure, except to the extent necessary to comply with any applicable federal or state securities
laws.



     13.10 Further Assurances. In connection with this Agreement and the transactions
contemplated hereby, each Partner shall execute and deliver any additional documents and
instruments and perform any additional acts that may be necessary or appropriate to effectuate and
perform the provisions of this Agreement and those transactions.



     13.11 Waiver of Certain Rights. Each Partner irrevocably waives any right it may have
to maintain any action for dissolution of the Partnership or for partition of the property of the
Partnership.



     13.12 No Third Party Beneficiary. Except as provided in Section 11.2(e) or
otherwise explicitly set forth in this Agreement, nothing contained in this Agreement is intended,
or shall be deemed, to benefit any third party or creditor of the Partnership.



     13.13 Counterparts. This Agreement may be executed in multiple counterparts
(including facsimile counterparts), each of which, when executed, shall be deemed an original, and
all of which shall constitute but one and the same instrument.



     13.14 Reliance on Counsel. Each of the Partners agrees that it has been represented
by independent counsel of its choice during the negotiation and execution of this Agreement and
that it has executed the same upon the advice of such independent counsel. Each Partner and its
counsel cooperated in the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto shall be deemed the work product of the Partners
and may not be construed against any Partner by reason of its preparation. Therefore, the Partners
waive the application of any Law or rule of construction providing that ambiguities in an agreement
or other document will be construed against the party drafting such agreement or document.



Signature Page Follows





-50-









 





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



	 	 	 	 	 
	 	 	REGENCY HAYNESVILLE INTRASTATE GAS LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Byron Kelley
	 

	 	 	 	 
	 

	 	Name:	 	Byron Kelley
	 

	 	 	 	 
	 

	 	Title:	 	Chairman and President
	 

	 	 	 	 






	 	 	 	 	 
	 	 	EFS HAYNESVILLE, LLC
	 
	 	 	 	 
	 

	 	By:
	 	EFS Equity Holdings, LLC, its Managing

Member
	 
	 	 	 	 
	 

	 	By:
	 	Aircraft Services Corporation, its Managing

Member
	 
	 	 	 	 
	 

	 	By:	 	/s/ Tyson Yates 
	 

	 	 	 	 
	 

	 	Name:	 	Tyson Yates 
	 

	 	 	 	 
	 

	 	Title:	 	Vice President 
	 

	 	 	 	 






	 	 	 	 	 	 	 
	 	 	ALINDA GAS PIPELINE I, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	Alinda Gas Pipeline I GP LLC, its General

Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Chris Beale 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Chris Beale 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	President 
	 

	 	 	 	 	 	 






	 	 	 	 	 	 	 
	 	 	ALINDA GAS PIPELINE II, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	Alinda Gas Pipeline II GP LLC,

its General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Chris Beale 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Chris Beale 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	President 
	 

	 	 	 	 	 	 






Signature Page

RIGS Haynesville Partnership Co. Amended and Restated Partnership Agreement




 









 








SCHEDULE 1




PARTNERS; GP UNITS; CAPITAL CONTRIBUTIONS




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Initial Capital	 	Total Capital	 	 	 	 
	Partner	 	Contribution	 	Contributions	 	GP Units	 	Sharing Ratio
	Regency Haynesville
Intrastate Gas LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	400,000,000	 	 	$	400,000,000	 	 	 	400,000	 	 	 	38	%
	2001 Bryan Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 3700
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: Chief Legal
Officer
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facsimile: 214-750-1749
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: 214-750-1771
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EFS Haynesville, LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o GE Energy Financial
	 	$	126,500,000	 	 	$	126,500,000	 	 	 	126,500	 	 	 	12	%
	Services
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	800 Long Ridge Road
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stamford, CT 06927
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facsimile: 203-357-6632
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: 203-357-4151
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alinda Gas Pipeline I, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Alinda Capital Partners
	 	$	308,531,000	 	 	$	308,531,000	 	 	 	308,531	 	 	 	29.3	%
	LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	150 East 58th Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	39th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10155
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	with copy to:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Alinda Capital Partners
LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	150 East 58th Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	39th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10155
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






Schedule 1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Initial Capital	 	Total Capital	 	 	 	 
	Partner	 	Contribution	 	Contributions	 	GP Units	 	Sharing Ratio
	Attention: Sanjay Khettry
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facsimile: 212-838-6480
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: 212-838-6400
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alinda Gas Pipeline II, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Alinda Capital Partners
	 	$	217,969,000	 	 	$	217,969,000	 	 	 	217,969	 	 	 	20.7	%
	LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	150 East 58th Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	39th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10155
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	with copy to:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Alinda Capital Partners
LLC
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	150 East 58th Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	39th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10155
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: Alex Black
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facsimile: 212-838-6480
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Telephone: 212-838-6400
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







Schedule 1









 





SCHEDULE 2




INITIAL MC MEMBERS




MC Member Designated by GE Investor

Mark Mellana




MC Member Designated by Regency HIG

Pat Giroir




MC Member Designated by Alinda Investor 1

Sanjay Khettry




MC Member Designated by Alinda Investor 2

Alex Black




Schedule 2









 








SCHEDULE 3(a)




INITIAL OFFICERS




	 	 	 
	Name	 	Title
	Executive Vice Presidents
 
	 	 
	L. Patrick Giroir
	 	Executive Vice President
	Dennie Dixon
	 	Executive Vice President
	Brian Reese
	 	Executive Vice President
	Chris D. Rozzell
	 	Executive Vice President
	 
	 	 
	Functional Vice Presidents
 
	 	 
	Martin Anthony
	 	Vice President, Business Development
	Ramon Suarez
	 	Vice President, Treasury Service
	Jay Ford
	 	Vice President, Right-of-Way
	David L. Johnson
	 	Vice President, Operations
	 
	 	 
	Other Vice Presidents
 
	 	 
	Troy Sturrock
	 	Vice President
	Francie Kilborne
	 	Vice President
	Deena Jordan
	 	Vice President






Schedule 3(a)









 






SCHEDULE 3(b)




DELEGATION OF AUTHORITY TO OFFICERS



The delegation of authority set forth in this Schedule 3(b) applies to the Partnership and
each of its subsidiaries, including all their operating units and divisions. For this purpose,
subsidiaries shall mean each legal entity controlled directly or indirectly by the Partnership
through ownership, by contract, or otherwise. All actions taken by any officer in accordance with
this Schedule 3(b) and the terms of this Agreement shall constitute actions of the
Partnership.




Expenditure Authority



(i) General Expenditure Authority:



Subject to Section 7.1(b) of this Agreement, each officer is hereby delegated the following
authority to expend the Partnership’s funds in the name and on behalf of the Partnership and/or its
subsidiaries as provided below, provided the same is in furtherance of the Partnership Business and
is within a then-current Budget; provided, that such officer may expend funds in excess of a
then-current Budget in cases of Emergency to the extent set forth in Section (ii) of this
Schedule 3(b) below:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Issuance of	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Letters of	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Credit and	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Parental	 	Drawing
	 	 	Authorization	 	Expenditures	 	Expenses and	 	 	 	 	 	Sale or	 	Firm	 	Guarantees	 	Down
	 	 	for Capital	 	related to	 	Commitments	 	Gas Sales/	 	Disposal of	 	Transportation	 	per Letter	 	Revolver
	 	 	Expenditures	 	Approved	 	other than	 	Purchases	 	Fixed	 	Revenue	 	of Credit	 	Debt per
	 	 	(“AFEs”) per	 	AFEs per	 	AFEs per	 	Per	 	Assets per	 	Contracts per	 	or	 	Draw
	 	 	AFE	 	AFE	 	Commitment	 	Contract	 	Transaction	 	Contract	 	Guarantee	 	Down
	Executive Vice
Presidents
	 	up to $1 million(1)	 	up to $2.5 million(1)	 	up to
$250,000(1)(2)	 	up to 35,000 MMBtu/d(1)	 	up to
$100,000(1)	 	up to 30,000 MMBtu/d(1)	 	up to $2 million(1)	 	up to $10 million(1)
	Vice
President,

Business

Development
	 	 	—	 	 	 	—	 	 	up to $25,000	 	up to 35,000 MMBtu/d	 	 	—	 	 	up to 30,000 MMBtu/d	 	 	—	 	 	 	—	 
	Vice President,

Treasury Services
	 	 	—	 	 	 	—	 	 	up to $25,000	 	 	—	 	 	 	—	 	 	 	—	 	 	up to $2 million	 	up to $10 million
	Vice President,

Right-of-Way
	 	 	 	 	 	 	 	 	 	up to	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	—	 	 	 	—	 	 	$	25,000	(3)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Vice President,
Operations
	 	up to $100,000	 	up to $500,000	 	up to $100,000	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Other Vice

Presidents
	 	up to $10,000	 	up to $25,000	 	up to $25,000	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 






Schedule 3(b)









 







			
	Notes:
	 
	(1)	 	Each Executive Vice President may delegate its authority to make such expenditures to the
following employees of the Management Company as follows: (i) managers, supervisors, engineers and
the general accounting manager of Management Company may be delegated expenditure authority up to
$25,000, and (ii) all other supervisors and professional staff of the Management Company may be
delegated expenditure authority up to $10,000.
	 
	(2)	 	In addition to the general authorization to expend up to $250,000 with respect to any expenses
or commitments other than AFEs, each Executive Vice President has the authority to pay or caused to
be paid, in the name and on behalf of the Partnership, any amounts due and payable by the
Partnership under the MSA (including the G&A Payment (as defined in the MSA), any Third Party
Expenses (as defined in the MSA) and any Reimbursable Personnel Expenses (as defined in the MSA)).
	 
	(3)	 	Limited to purchases of right-of-way only.




(ii) Expenditure Authority in case of Emergency:



In cases of an Emergency, the expenditures of an officer may exceed a then-current Budget to the
extent required to proceed with maintenance or repair work necessary to keep the Partnership’s
natural gas transportation and storage assets operating or to restore such facilities to operating
condition or to minimize damage to property or to minimize the risk of injury or death to Persons,
without necessity for consent of the Management Committee; provided that the foregoing shall not
affect the expenditure limits of individual officers for individual items set forth in the table in
Section (i) of this Schedule 3(b) above. For purposes of this Agreement, an “Emergency”
shall be a sudden or unexpected event which causes, or risks causing, material property damage to
the Partnership’s natural gas transportation or storage assets, or death or injury to any Person,
which is of such a nature that a response cannot, in the reasonable discretion of the applicable
officer, await the decision of the Management Committee.




Other Authority



Subject to Section 7.1(b) of this Agreement and the expenditure authority limits set forth
above, each Executive Vice President is hereby delegated the authority, and authorized, to take, in
the name and on behalf of the Partnership and its subsidiaries, any and all actions relating to the
conduct of the Partnership Business in the ordinary course, including causing the Partnership or
any of its subsidiaries to enter into any contract or agreement, causing the Partnership or any of
its subsidiaries to make any necessary regulatory filings, communicating with the any counterparty
to any contract or agreement entered into by the Partnership or any of its subsidiaries and causing
the Partnership or any of its subsidiaries to exercise its rights and fulfill its obligations under
any contract or agreement entered into by the Partnership or any of its subsidiaries.



Subject to Section 7.1(b) of this Agreement and the expenditure authority limits set forth
above, each officer is hereby delegated the authority, and authorized, to take, in the name and on
behalf of the Partnership and its subsidiaries, any and all actions necessary in connection with
any expenditures expended by such officer in accordance with the expenditure authority delegated to
such officer in accordance with this Schedule 3(b). In addition, each such officer may
delegate the authority to take any such actions (other than the authority to make expenditures) to
any other officer.




Schedule 3(b)









 








SCHEDULE 4




INITIAL SENIOR MANAGEMENT TEAM



Name




L. Patrick Giroir

Martin Anthony

Brian Reese




Schedule 4









 








EXHIBIT C




HAYNESVILLE EXPANSION PROJECT



The Haynesville Expansion Project is an expansion of the existing pipeline system indirectly owned
by the Partnership that is located in North Louisiana. The project is expected to add 128 miles of
pipeline to the existing pipeline system. Specifically, the Bienville Loop Pipeline will add 28
miles of pipeline, the Elm Grove Pipeline will add 23 miles of pipeline and the Winnsboro Loop
Pipeline will add 77 miles of pipeline. The additional pipeline will range in diameter from 36 to
42 inches with the Bienville Loop and the Elm Grove Pipeline each expected to have a diameter of 36
inches and with the Winnsboro Pipeline expected to have a diameter of 42 inches. The project is
expected to add approximately 14,200 horsepower of compression at the Elm Grove and Haughton
Stations and approximately 1.1 Bcf/d of capacity to the existing pipeline system. The project is
expected to be completed in one phase by the end of the first quarter of 2010. The estimated total
cost of construction of the project is $653 million.




C-1














 





EXHIBIT D

TRANSFER RIGHTS




     Capitalized terms used in this Exhibit D that are not defined in this Exhibit shall
have the meanings given to them in the Amended and Restated General Partnership Agreement to which
this Exhibit D is attached. Unless the context requires otherwise, all references in this
Exhibit to Sections refer to the Sections of this Exhibit.



1. General Rules.



(a) No Partner may Transfer all or any portion of its GP Units other than in accordance with the
terms of this Exhibit D, and any attempted Transfer that is not in accordance with this
Exhibit D shall be, and is hereby declared, null and void ab initio.



(b) No Partner shall Transfer all or any of his or its GP Units or permit an indirect transfer of
GP Units if such Transfer or indirect transfer would (i) subject the Partnership to the reporting
requirements of the Exchange Act, (ii) subject the Partnership to the registration requirements,
under the Securities Act or any applicable state securities law or violate any applicable Laws
regulating the transfer of securities, (iii) cause the Partnership to be deemed to be an
“investment company” under the Investment Company Act, (iv) cause the Partnership to lose its
status as a partnership for federal income tax purposes or cause the Partnership to be classified
as a “publicly traded partnership” within the meaning of Code Section 7704 or (v) be in violation
of any Law relating to terrorism or money laundering, including Executive Order No. 13224 on
Terrorist Financing, effective Sept. 24, 2001 and the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56.



(c) The Partners agree that a breach of the provisions of this Exhibit D may cause
irreparable injury to the Partnership and the Partners for which monetary damages (or other
remedies at law) are inadequate in view of (i) the complexities and uncertainties in measuring the
actual damages that would be sustained by reason of the failure of a Person to comply with such
provisions and (ii) the uniqueness of the Partnership’s business and the relationship among the
Partners. Accordingly, the Partners agree that the provisions of this Exhibit D may be
enforced by specific performance.



2. Transfer Restrictions.



(a) No Partner may Transfer (other than pursuant to a Permitted Transfer) a portion of its GP Units
that is less than 5% of all of the issued and outstanding GP Units; provided, that if a Partner
owns less than 5% of all the issued and outstanding GP Units, such Partner may Transfer all (but
not less than all) of its GP Units, subject to, and in accordance with, the other provisions of
this Exhibit D.



(b) No Partner may Transfer (other than pursuant to a Permitted Transfer) all or any portion of its
GP Units to any Person for any type of consideration other than cash, cash equivalents or readily
marketable securities, without the prior written consent of each of the other Partners in their
Sole Discretion.



D-1









 





(c) Subject to the other provisions of this Exhibit D (including the right of first offer
set forth in Section 3 of this Exhibit D), prior to the third anniversary of the
Effective Date, no Partner may Transfer (other than pursuant to a Permitted Transfer or pursuant to
Transfer in connection with the foreclosure (or in lieu of foreclosure) of any pledge,
hypothecation, or encumbrance of any GP Units for security purposes) all or any portion of its GP
Units without the prior written consent of each of the other Partners in their Sole Discretion.



(d) Subject to the other provisions of this Exhibit D (including the right of first offer
set forth in Section 3 of this Exhibit D), at any time on or after the third
anniversary of the Effective Date, a Partner may Transfer all or any portion of its GP Units to any
Person without the consent of the Partnership or any other Partner.



3. Right of First Offer.



(a) If any Partner desires to Transfer all or any portion of its GP Units to any Person (other than
pursuant to a Permitted Transfer) or is subject to a demand or request to Transfer all or any
portion of its GP Units to any Person in connection with the foreclosure (or in lieu of
foreclosure) of any pledge, hypothecation, or encumbrance of its GP Units, then such Partner (the
"Disposing Partner”) shall promptly give written notice (a “Disposition Notice”) to the other
Partners (such other Partners, the “ROFO Partners”) that such Disposing Partner desires to effect
such a Transfer and setting forth the portion of GP Units proposed to be transferred by the
Disposing Partner (the “Sale GP Units”), the amount of consideration that such Disposing Partner
proposes to be paid for such Sale GP Units (the “Sale Price”) and any other material terms sought
by the Disposing Partner. The delivery of a Disposition Notice shall constitute an offer by the
Disposing Partner to sell to the ROFO Partners the Sale GP Units at the Sale Price in accordance
with the terms of this Section 3.



(b) Upon receipt of the Disposition Notice, each ROFO Partner may exercise the right of first offer
with respect to all or any portion of the Sale GP Units by delivering a written notice to the
Disposing Partner and the other ROFO Partners within 20 Business Days after the receipt of the ROFO
Partners Notice (such 20-Business Day period being referred to herein as the “ROFO Partners
Election Period”) setting forth the amount of the Sale GP Units such ROFO Partner is electing to
purchase, up to its pro rata share (based on the relative Sharing Ratios of the ROFO Partners as of
the date of such determination) plus any additional portion of the Sale GP Units it desires to
purchase in excess of its pro rata share (the “ROFO Over-Allotment Amount”) if other ROFO Partners
do not exercise all or any portion of their rights hereunder. The right of each ROFO Partner to
purchase Sale GP Units in excess of its pro rata share shall be based on the relative Sharing
Ratios of the ROFO Partners desiring to purchase ROFO Over-Allotment Amounts (or in such other
manner as all of the ROFO Partners who elect to exercise the right of first offer (the “Exercising
ROFO Partners”) agree to allocate the right to purchase among themselves).



(c) The closing of the purchase and sale of the Sale GP Units to the Exercising ROFO Partners shall
occur no later than the 20th Business Day following the end of the ROFO Partners Election Period
unless the Exercising ROFO Partners and the Disposing Partner otherwise agree
in writing. At the closing, each of the Exercising ROFO Partners shall deliver to the Disposing
Partner cash (by wire transfer in immediately available funds) in the amount of the Sale Price



D-2









 







applicable to the Sale GP Units to be purchased by such Exercising ROFO Partner, and the Disposing
Partner shall represent and warrant to each of the Exercising ROFO Partners pursuant to a written
agreement delivered at such closing that the Disposing Partner owns such Sale GP Units free and
clear of all liens, encumbrances and adverse claims, and shall deliver to each of the Exercising
ROFO Partners, as applicable, executed transfer instruments as are deemed reasonably necessary by
the Management Committee for the proper transfer of such Sale GP Units on the books of the
Partnership. The Disposing Partner and the Exercising ROFO Partners shall cooperate in good faith
in obtaining all necessary governmental and other third Person approvals, waivers and consents
required for the closing. Notwithstanding the foregoing, any such closing shall be delayed, to the
extent required, to obtain any necessary governmental approvals, waivers and consents required for
the closing (including any approvals under the HSR Act); provided, that if such approval, waiver or
consent is required by any Exercising ROFO Partner to consummate such closing and such approval,
waiver or consent is not obtained within 40 Business Days following the end of the ROFO Partners
Election Period, then the Exercising ROFO Partners shall be deemed to have rejected the offer to
purchase any of the Sale GP Units and no Exercising ROFO Partner shall be deemed to have breached
any obligation to purchase any portion of the Sale GP Units.



(d) If the ROFO Partners fail to notify the Disposing Partner prior to the expiration of the ROFO
Partners Election Period of their election to acquire all of the Sale GP Units pursuant to any
Disposition Notice, then the ROFO Partners shall be deemed to have rejected the offer to purchase
any of the Sale GP Units. If the ROFO Partners are deemed to have rejected the offer to purchase
any of the Sale GP Units, the Disposing Partner shall be free to Transfer all of the Sale GP Units
to any Person during the 90-Business Day period following the expiration of the ROFO Partners
Election Period; provided, that the consideration and other terms offered by the Disposing Partner
shall be no more favorable to the transferee taken as a whole than those offered in the Disposition
Notice. If the consideration constituting the Sale Price includes any readily marketable
securities, then, for purposes of this Section 3, the cash value of such readily marketable
securities shall be deemed to be an amount equal to (i) in the case of securities that are
primarily traded on a National Securities Exchange (other than The Nasdaq Stock Market, Inc.), the
average of their last sale prices, regular way, as reported in the principal consolidated
transaction reporting system of such National Securities Exchange on each trading day during the 21
trading-day period ending immediately prior to the date of the determination, or if no sales
occurred on any such day, the mean between the closing “bid” and “asked” prices on such day and
(ii) if the principal market for such securities is, or is deemed to be, in the over-the-counter
market or The Nasdaq Stock Market, Inc., the average of their closing sale prices on each trading
day or, if not so quoted, the mean between their closing “bid” and “asked” prices on such day
during the 21 trading-day period ending immediately prior to the date of the determination, as
published by The Nasdaq Stock Market, Inc., in the case of securities primarily traded on The
Nasdaq Stock Market, Inc., or the FINRA/NASDAQ Trade Reporting Facility or such other system then
in use, in the case of a principal market that is the over-the-counter market, or if such price is
not so published on any such day, the mean between their closing “bid” and “asked” prices, if
available, on any such day, which prices may be obtained from any professional market maker making
a market in such securities, or any reputable pricing service, broker or dealer. For purposes of
this Section 3, “National Securities Exchange” means an exchange registered with the United
States Securities and Exchange Commission under Section 6(a) of the Securities



D-3









 







Exchange Act, and
any successor to such statute. Any Sale GP Unit not sold during such 90-Business Day period shall
be subject again to right of first offer set forth in this Section 3.



4. Co-Sale (Tag-Along) Rights.



(a) The remaining provisions of this Section 4 shall not apply to a Permitted Transfer.



(b) If any Partner (the “Co-Sale Seller”) desires to Transfer all or a portion of its GP Units that
is equal to or greater than 20% of the GP Units held by such Co-Sale Partner (the “Proposed Co-Sale
Transfer”), then such Co-Sale Seller shall offer (the “Co-Sale Offer”) to include in the Proposed
Co-Sale Transfer the GP Units owned and designated by any other Partner on the same terms as the
Co-Sale Seller, in each case, according to the remaining terms of this Section 4.



(c) The Co-Sale Seller shall give written notice to each other Partner (the “Co-Sale Notice”) at
least 20 Business Days prior to the scheduled closing of the Proposed Co-Sale Transfer or, if
earlier, on the date any applicable purchase agreement is signed. The Co-Sale Notice shall specify
the proposed transferee (the “Co-Sale Buyer”), the GP Units proposed to be Transferred as part of
the Proposed Co-Sale Transfer, the amount and type of consideration to be received therefor and the
place and date on which the Transfer is to be consummated and shall include a complete and accurate
copy of the applicable purchase agreement.



(d) If a Partner (a “Co-Sale Electing Partner”) wishes to accept the Co-Sale Offer and participate
in the Proposed Co-Sale Transfer, such Co-Sale Electing Partner must notify the Co-Sale Seller no
later than ten Business Days following the date the Co-Sale Seller gives the Co-Sale Notice. Each
Co-Sale Electing Partner may, unless otherwise agreed by each other Co-Sale Electing Partner and
the Co-Sale Seller, elect to Transfer to the Co-Sale Buyer a portion of such Co-Sale Electing
Partner’s GP Units up to an amount equal to the product of (i) the aggregate number of GP Units
that the Co-Sale Buyer desires to purchase, multiplied by (ii) a fraction, the numerator of which
shall be the number of GP Units held by such Co-Sale Electing Partner and the denominator of which
shall be the aggregate number of GP Units held by all of the Co-Sale Electing Partners and the
Co-Sale Seller. The number of GP Units that may be sold by the Co-Sale Seller to the Co-Sale Buyer
shall be reduced by the aggregate number of GP Units that the Co-Sale Electing Partners elect to
Transfer hereunder. Each Co-Sale Electing Partner shall participate in the Proposed Co-Sale
Transfer upon the same terms and conditions as the Co-Sale Seller. The closing date of the
Proposed Co-Sale Transfer will be the date specified in the Co-Sale Notice. Notwithstanding the
foregoing, such closing date shall be delayed, to the extent required, to obtain any necessary
governmental approvals, waivers and consents required for the closing (including any approvals
under the HSR Act); provided, that if such approval, waiver or consent is required by any Co-Sale
Electing Partner to consummate such closing and such approval, waiver or consent is not obtained
within 40 Business Days after the closing date set forth in the Co-Sale Notice, then such Co-Sale
Electing Partner shall be deemed to have rejected the offer to participate in the Proposed Co-Sale
Transfer and such Co-Sale Electing Partner shall not be deemed to have breached any obligation to
participate in such Proposed Co-Sale Transfer.



5. Dispositions of Upper Tier Entities.



D-4









 





(a) If at any time an Indirect Transfer occurs with respect to any Partner (any such Partner, a
"Transferred Partner”), then, as of the date of such Indirect Transfer, such Transferred Partner
shall be deemed to have offered to each other Partner the right to purchase all of such Transferred
Partner’s GP Units (the “Indirect Transfer GP Units”) for an amount equal to the FMV (or with
respect to an Indirect Transfer that occurs prior to the third anniversary of the Effective Date
(other than an Indirect Transfer occurring prior to the third anniversary of the Effective Date as
a result of the foreclosure (or in lieu of foreclosure) of any pledge, hypothecation, or
encumbrance of any interests in any Person that Controls such Transferred Partner), 90% of the FMV)
of such Indirect Transfer GP Units (the “Indirect Transfer Sale Price”). The Transferred Partner
shall notify the Partnership in writing of any such Indirect Transfer promptly after the occurrence
thereof. The Partnership shall promptly notify each Partner after it receives notice of any such
Indirect Transfer (the “Indirect Transfer Notice”). Each other Partner shall have the right, but
not the obligation, to purchase the Indirect Transfer GP Units pursuant to the following terms:




(i) Upon receipt of the Indirect Transfer Notice, each non-Transferred Partner may exercise
the right of first offer with respect to all or any portion of the Indirect Transfer GP
Units by delivering a written notice to the Transferred Partner and the Partnership and the
other non-Transferred Partners within ten Business Days after the receipt of such notice
(such ten-Business Day period being referred to herein as the “Indirect Transfer Election
Period”) setting forth the amount of such Indirect Transfer GP Units such non-Transferred
Partner is electing to purchase (the “Indirect Transfer Participating Partner”), up to its
pro rata share (based on the relative Sharing Ratios of the non-Transferred Partners as of
the date of such Indirect Transfer) plus any additional portion of such Indirect Transfer GP
Units it desires to purchase in excess of its pro rata share (the “Indirect Transfer
Over-Allotment Amount”) if the other non-Transferred Partners do not exercise all or any
portion of their rights hereunder. The right of each Indirect Transfer Participating
Partner to purchase Indirect Transfer GP Units in excess of its pro rata share shall be
based on the relative Sharing Ratios of the Indirect Transfer Participating Partners
desiring to purchase Indirect Transfer Over-Allotment Amounts (or in such other manner as
all of the Indirect Transfer Participating Partners agree to allocate the right to purchase
among themselves).




(ii) If the non-Transferred Partners fail to notify the Transferred Partner and the
Partnership prior to the expiration of the Indirect Transfer Election Period of their
election to acquire all of the Indirect Transfer GP Units, then the other Partners shall be
deemed to have rejected the offer to purchase any of the Indirect Transfer GP Units, and the
Management Committee shall designate reasonably and in good faith the new Ultimate Parent of
such Transferred Partner.



D-5









 






(iii) The closing of the purchase and sale of the Indirect Transfer GP Units shall occur no
later than the 20th Business Day following the end of the Indirect Transfer Election Period
unless the Transferred Partner and each of the Indirect Transfer Participating Partners
otherwise agree in writing. At the closing, each Indirect Transfer Participating Partner
shall deliver to the Transferred Partner cash (by wire transfer in immediately available
funds) in the amount of the Indirect Transfer Sale Price applicable to the Indirect Transfer
GP Units to be purchased by such Indirect Transfer Participating Partner, and the
Transferred Partner shall represent and warrant to each of the Indirect Transfer
Participating Partners pursuant to a written instrument to be delivered at such closing that
the Transferred Partner owns such Indirect Transfer GP Units free and clear of all liens,
encumbrances and adverse claims, and shall deliver to each of the Indirect Transfer
Participating Partners, as applicable, executed transfer instruments as are deemed
reasonably necessary by the Management Committee for the proper transfer of such Indirect
Transfer GP Units on the books of the Partnership. The Transferred Partner and the other
Partners shall cooperate in good faith in obtaining all necessary governmental and other
third Person approvals, waivers and consents required for the closing. Notwithstanding the
foregoing, any such closing shall be delayed, to the extent required, to obtain any
necessary governmental approvals, waivers and consents required for the closing (including
any approvals under the HSR Act); provided, that if any such approval, waiver or consent is
required by any Indirect Transfer Participating Partner to consummate such closing and such
approval, waiver or consent is not obtained within 40 Business Day following the end of the
Indirect Transfer Election Period, as applicable, then the non-Transferred Partners shall be
deemed to have rejected the offer to purchase any of the Indirect Transfer GP Units and no
non-Transferred Partner shall be deemed to have breached any obligation to purchase any
Indirect Transfer GP Units.



(b) Each Partner hereby makes, constitutes and appoints the Partnership as its true and lawful
attorney-in-fact for it and in its name, place, and stead and for its use and benefit, to sign,
execute, certify, acknowledge, swear to, file and record any instrument that is now or may
hereafter be deemed necessary by the Partnership in its reasonable discretion to carry out fully
the provisions and the agreements, obligations and covenants of such Partner in this Section
5 if such Partner is deemed to be a Transferred Partner. Each Partner hereby gives such
attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever
requisite or advisable to be done in connection with such Partner’s obligations and agreements
pursuant to this Section 5 as fully as such Partner might or could do personally, and
hereby ratifies and confirms all that any such attorney-in-fact shall lawfully do or cause to be
done by virtue of the power of attorney granted hereby. The power of attorney granted pursuant to
this Section 5(b) is a special power of attorney, coupled with an interest, and is
irrevocable, and shall survive the bankruptcy, insolvency, dissolution or cessation of existence of
the applicable Partner.



6. Conditions to Transfers.



(a) As a condition to any Transfer permitted under the Agreement (including Permitted Transfers),
any transferee of GP Units shall be required to become a party to the Agreement by executing an
adoption agreement in the form attached as Annex 1 to this Exhibit D (an “Adoption
Agreement”). If any Person acquires GP Units from a Partner in a Transfer, notwithstanding such
Person’s failure to execute an Adoption Agreement
in accordance with the preceding sentence (whether such Transfer resulted by operation of law or
otherwise), such Person and such GP Units shall be subject to the Agreement as if such GP Units
were still held by the transferor.



(b) No GP Units may be Transferred by a Person unless the transferee first delivers to the
Partnership, at the transferring Partner’s sole cost and expense, evidence reasonably satisfactory
to the Partnership (such as an opinion of counsel) to the effect that such Transfer is not required



D-6









 







to be registered under the Securities Act; provided, that the Partnership, with the approval of the
Management Committee, may waive the requirements of this Section 6(b).



7. Cooperation. Subject to the other terms of this Exhibit D, if any Partner with
a Sharing Ratio of more than 10% (or in the case of the Alinda Investors only, a combined Sharing
Ratio of more than 10%) desires to Transfer (and is permitted to do so in accordance with terms of
the Agreement and this Exhibit D) any GP Units held thereby, at the request thereof, the
Partnership and the subsidiaries will cooperate in all reasonable respects to assist such Partner
with such proposed Transfer, which cooperation will include the Partnership and the subsidiaries’
furnishing the proposed transferee information, including confidential information, about the
Partnership and the subsidiaries and making the Partnership’s and the Subsidiaries’ executive
personnel and site managers available to answer questions; provided, the Partnership and the
subsidiaries shall not be required to furnish confidential information to the proposed transferee
until the proposed transferee has entered into a customary non-disclosure agreement in form
satisfactory to the Partnership. The requesting Partner shall reimburse the Partnership for its
reasonable out-of-pocket expenses incurred in connection with the cooperation provided by the
Partnership pursuant to this Section 7.



8. Regulatory Requirements. Notwithstanding anything else set forth herein to the
contrary, in the event of any reasonable determination in good faith by a Partner that, by reason
of any existing or future Law or any other federal or state rule, regulation, guideline, order,
request or directive (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) (collectively, a “Regulatory Requirement”), such Partner is
effectively restricted or prohibited from holding any of the GP Units then held by such Partner,
the Partnership and the other Partners shall use reasonable good faith efforts to take such action
as they may determine is reasonably necessary and appropriate to permit such Partner to transfer
the GP Units to an Affiliate to comply with such Regulatory Requirement. All such actions shall be
taken at the expense of such Partner. The Partner shall give written notice to the Partnership of
any reasonable determination by it hereunder and the transfer it believes may be necessary or
appropriate to permit it to comply with such Regulatory Requirement.



9. Fair Market Value. For purposes of this Exhibit D, “FMV” means, with respect to
any GP Units redeemed or Transferred pursuant to Section 5 as a result of an Indirect
Transfer, the fair market value of such GP Units as determined (in accordance with this Section
9) by an independent appraiser of nationally recognized standing selected by the Management
Committee (provided, that any MC Member designated by the applicable Transferred Partner shall not
be entitled to participate in any decision by the Management Committee to select such appraiser);
provided, however, that if the applicable Indirect Transfer occurred as a result of a bona fide
arms’ length transaction transfer, sale or assignment of all of the interests in a Person
whose principal assets were the applicable GP Units and the only consideration paid for such
interests was cash or cash equivalents, then the aggregate FMV of the applicable GP Units shall be
the amount of consideration paid for such interests pursuant to such transfer, sale or assignment.
The independent appraiser selected by the Management Committee shall determine the FMV of any GP
Units in accordance with the following principles: (i) fair market value shall mean the price at
which the GP Units being redeemed or Transferred would change hands between a willing buyer and
willing seller, neither being under any compulsion and both having reasonable knowledge of the
relevant facts and (ii) the presence or absence of voting or control rights and



D-7









 







any other relevant
discounts shall be considered. The FMV of any GP Units shall be determined as of whichever of the
following dates results in the lowest FMV for such GP Units: (x) the date of the applicable
Indirect Transfer or (y) the date the Partnership first receives written notice from the applicable
Transferred Partner of the applicable Indirect Transfer.



D-8









 





ANNEX 1




FORM OF ADOPTION AGREEMENT




     This Adoption Agreement (this “Adoption Agreement”) is executed as of                      pursuant to
the terms of the Amended and Restated General Partnership Agreement of RIGS Haynesville Partnership
Co. dated as of March 17, 2009, and the Schedules and Exhibits thereto, as amended or restated from
time to time, a copy of which is attached hereto (the “Partnership Agreement”), by the transferee
(“Transferee”) executing this Adoption Agreement. By the execution of this Adoption Agreement, the
Transferee agrees as follows:



1. Acknowledgment. Transferee acknowledges that Transferee is acquiring certain [describe
GP Units acquired] having a Sharing Ratio equal to ___%, subject to the terms and conditions of the
Partnership Agreement. Capitalized terms used herein without definition are defined in the
Partnership Agreement and are used herein with the same meanings set forth therein. Transferee (a)
agrees that [describe GP Units] acquired by Transferee shall be bound by and subject to the terms
of the Partnership Agreement and (b) hereby joins in, and agrees to be bound by, the Partnership
Agreement (including the Exhibits) with the same force and effect as if the Transferee were
originally a party thereto.



2. Representations. Transferee hereby makes each of the representations and warranties set
forth in Article XII of the Partnership Agreement to the Partnership and each other Partner with
the same force and effect as if the Transferee were originally a party thereto.



3. Notice. Any notice required by the Partnership Agreement shall be given to Transferee
at the address listed beside Transferee’s signature below.



	 	 	 	 	 
	 	 	TRANSFEREE:
	 
	 	 	 	 
	 	 	[Transferee]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Notice Information:
	 	 	[                    ]
	 	 	[                    ]







D-9









 








EXHIBIT G




INSURANCE




The Partnership shall maintain, or shall cause to be maintained with respect to its properties that
are of an insurable character and are customarily insured and with respect to its officers and
directors, as applicable, (i) property all risk insurance against such risks, including earthquake,
fire, machinery breakdown, and other risks insured against by extended coverage, (ii) sudden and
accidental pollution liability, (iii) third party liability and (iv) D&O insurance (or similar) in
each case as is customary with companies of a similar size operating in the same or similar
businesses covering its operations and exposures and in accordance with contractual obligations.



(a) Levels of self insurance, limits, deductibles, policy terms and conditions to be maintained in
accordance with industry practice as determined by the Management Committee (with any advise as may
be required by third party consultants).



(b) All commercial insurance shall be provided by insurers or reinsurers which have an A.M. Best
policyholders rating of not less than A X or a Standard & Poor rating of not less than A, or, if
the relevant insurance is not available from such insurers, such other insurers as the Management
Committee may approve, acting reasonably.



(c) All insurance shall (i) provide that no cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least 30 days (or, in the case of
non-payment of premium, 10 days) after receipt by the Management Committee of written notice
thereof and (ii) be reasonably satisfactory in all other respects to the Management Committee. In
addition, all property insurance shall have a breach of warranty clause.



(d) In the event the insurance required is not available on commercially reasonable terms and
conditions or the Management Committee determines it may make a material change to the level of
self insurance, this shall be supported by evidence or an opinion from a third party acceptable to
the Management Committee.




G-1









 








ANNEX 1




FORM OF GP UNIT CERTIFICATE




THE GP UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
OTHER TERMS AND CONDITIONS SET FORTH IN THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF THE
PARTNERSHIP, DATED AS OF MARCH 17, 2009, A COPY OF WHICH MAY BE OBTAINED FROM THE PARTNERSHIP AT
ITS PRINCIPAL OFFICE.



Certificate of GP Units of RIGS Haynesville Partnership Co.




Certificate No. __          Number of GP Units:                     




RIGS Haynesville Partnership Co., a Delaware general partnership (the “Partnership”), hereby
certifies that                                          is the registered owner of ___GP Units of the
Partnership. The rights, preferences and limitations of the GP Units are set forth in the Amended
and Restated Partnership Agreement of the Partnership dated as of March 17, 2009, as amended,
supplemented or restated from time to time (the “Partnership Agreement”), a copy of which is on
file at the principal office of the Partnership.



This Certificate and the GP Units evidenced hereby are not negotiable or transferable except as
provided in the Partnership Agreement. This Certificate and the GP Units evidenced hereby are
governed by Article 8 of the Uniform Commercial Code.



	 	 	 	 	 
	Dated:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	RIGS HAYNESVILLE PARTNERSHIP CO.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:

	 	MC Member designated by
        
       
       
                
 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:

	 	MC Member designated by         
       
       
                
 	 	 







Annex 1