exv10w2





Exhibit 10.2




SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

EL PASO ELBA EXPRESS COMPANY, L.L.C.




A DELAWARE LIMITED LIABILITY COMPANY



March 30, 2010



PREAMBLE



     THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of El Paso Elba Express
Company, L.L.C. (the “Company”) is made on the 30th day of March, 2010 (the “Effective Date”), by
El Paso Corporation (“El Paso”), and El Paso Pipeline Partners Operating Company, L.L.C. (“Opco”),
as members of this Company and by Edward J. Crenshaw, as Independent Member (as hereinafter
defined).



     WHEREAS, the Company was formed as a limited liability company under the Act (as hereinafter
defined) on March 16, 2009, pursuant to the filing of the Certificate of Formation of the Company
on March 16, 2009 and the execution of that certain Limited Liability Company Agreement dated as of
March 16, 2009 (the “Original Agreement”) by El Paso;



     WHEREAS, El Paso amended and restated the Original Agreement on May 11, 2009 by entering into
the First Amended and Restated Limited Liability Company Agreement of the Company;



     WHEREAS, El Paso and Opco desire to amend and restate the First Amended and Restated Limited
Liability Company Agreement in its entirety for the purposes and upon the terms and conditions
hereinafter set forth.



     NOW, THEREFORE, in consideration of the premises and covenants herein contained, the parties
hereto hereby agree as follows:



ARTICLE I.

DEFINITIONS AND TERMS




     SECTION 1.01 Definitions. Unless the context otherwise requires, the following terms
shall have the following meanings for the purposes of this Agreement:



 









 





          “AAA” shall have the meaning assigned to such term in Section 12.02(c).




          “Acquisition Proposal” shall have the meaning assigned to such term in Section
8.01(a).




          “Act” means the Delaware Limited Liability Company Act, 6 Del C. §§ 18-101, et seq., as
amended from time to time (or any corresponding provisions of succeeding law).




          “Additional Contributing Members” shall have the meaning assigned to such term in Section
3.06(a).




          “Additional Contribution” shall have the meaning assigned to such term in Section
3.06(a).




          “Adjusted Capital Account” means, with respect to any Member, the balance, if any, in such
Member’s Capital Account as of the end of the relevant fiscal year, after giving effect to the
following adjustments:





	 	i)	 	Credit to such Capital Account any amounts which such
Member is obligated to restore pursuant to any provision of this Agreement
or pursuant to Treasury Regulation §1.704-1(b)(2)(ii)(c) or is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulations §1.704-2(g)(1) and §1.704-2(i)(5);
	 
	 	ii)	 	Debit to such Capital Account the items described in
Treasury Regulation §§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).





     The foregoing definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulations §1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.



          “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
controls, is controlled by or is under common control with, the Person in question. As used in
this definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.




          “Affiliate’s Outside Activities” shall have the meaning assigned to such term in Section
7.05(d).




          “Agent” means Union Bank, N.A. (“Union Bank”), as Administrative Agent for the Lenders under
the Credit Agreement dated as of May 11, 2009 (as amended, restated or otherwise modified from time
to time, the “Credit Agreement“) by and among the Company, as Borrower, each of the Lenders from
time to time party hereto, Union Bank, as Joint Bookrunner, as Administrative Agent for the
Lenders, as Issuing Bank and as Collateral Agent for the Secured Parties and Barclays Capital, as
Joint Bookrunner.





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          “Agreement” means this Second Amended and Restated Limited Liability Company Agreement of the
Company, as the same may be amended from time to time.




          “Allocation Regulations” shall mean Treasury Regulation §§1.704-1(b), 1.704-2 and 1.704-3
(including any temporary regulations) as such regulations may be amended and in effect from time to
time and any corresponding provision of succeeding regulations.




          “Alternate Representative” shall have the meaning assigned to such term in Section
7.02(a)(ii).




          “Arbitration Notice” shall have the meaning assigned to such term in Section 12.02(c).




          “Arbitrator” shall have the meaning assigned to such term in Section 12.03(a).




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




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




          “Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date, the
following, without duplication:





	 	b)	 	the sum of (i) all cash and cash equivalents of the Company and its
Subsidiaries: (or the Company’s proportionate share of cash and cash equivalents in
the case of Subsidiaries that are not wholly owned) on hand at the end of such
Quarter, and (ii) if the Management Committee so determines, all or any portion of any
additional cash and cash equivalents of the Company and its Subsidiaries (or the
Company’s proportionate share of cash and cash equivalents in the case of Subsidiaries
that are not wholly owned) on hand on the date of determination of Available Cash with
respect to such Quarter resulting from Working Capital Borrowings made subsequent to
the end of such Quarter, less
	 
	 	c)	 	the amount of any cash reserves established by the Management Committee (or
the Company’s proportionate share of cash reserves in the case of Subsidiaries that
are not wholly owned) to (i) provide for the proper conduct of the business of the





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	 	 	 	Company and its Subsidiaries (including reserves for any of the following of the
Company and its Subsidiaries: (A) future maintenance capital expenditures, (B)
anticipated future credit needs and (C) possible refunds of collected rates subject to
refund or reasonably likely to be refunded as a result of a settlement or hearing
relating to FERC rate proceedings) subsequent to such Quarter or (ii) comply with
applicable Law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Company or any Subsidiary is a party or by
which it is bound or its assets are subject;




provided, however, that disbursements made by the Company or any Subsidiary or cash reserves
established, increased or reduced by the Company or any Subsidiary after the end of such Quarter
but on or before the date of the determination of Available Cash with respect to such Quarter shall
be deemed to have been made, established, increased or reduced, for purposes of determining
Available Cash, within such Quarter if the Management Committee so determines.




     Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.



          “Bankruptcy” or “Bankrupt” means the filing of any insolvency or reorganization case or
proceeding, instituting proceedings to have the Company, any Member or the Independent Member, as
applicable, adjudicated bankrupt or insolvent, instituting proceedings under any applicable
insolvency law, seeking any relief under any law relating to relief from debts or the protection of
debtors, consenting to the filing or institution of bankruptcy or insolvency proceedings against
the Company, any Member or the Independent Member, as applicable, filing a petition seeking or
consenting to reorganization, liquidation or relief with respect to the Company, any Member or the
Independent Member, as applicable, under any applicable federal or state law relating to
bankruptcy, reorganization or insolvency, seeking or consenting to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Company,
any Member or the Independent Member, as applicable, or a substantial part of its property, making
any assignment for the benefit of creditors, admitting in writing the inability of the Company, any
Member or the Independent Member, as applicable, to pay its debts as they become due, or taking
action in furtherance of any of the foregoing. The foregoing definition of “Bankruptcy” is
intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in
Sections 18-101(1) and 18-304 of the Act.




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




          “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States or the State of Alabama, New York or
Texas shall not be regarded as a Business Day.




          “Capital Account” means the capital account maintained by the Company for each Member in
accordance with Section 3.05.






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          “Capital Budget” means the annual capital budget for the Company that is approved (or deemed
approved) pursuant to Section 7.02(h)(ii)(C).




          “Capital Call” shall have the meaning assigned to such term in Section 3.01(a).




          “Capital Contribution” means any cash, cash equivalents or property that a Member contributes
to the Company. Any reference in this Agreement to the Capital Contribution of a Member shall
include a Capital Contribution of its predecessors in interest.




          “Carrying Value” means (a) with respect to property contributed to the Company, the fair
market value of such property at the time of contribution reduced (but not below zero) by all
depreciation, depletion (computed as a separate item of deduction), amortization and cost recovery
deductions charged to the Members’ Capital Accounts, (b) with respect to any property whose value
is adjusted pursuant to the Allocation Regulations, the adjusted value of such property reduced
(but not below zero) by all depreciation and cost recovery deductions charged to the Member’s
Capital Accounts and (c) with respect to any other Company property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.




          “Certificate” means the Certificate of Formation filed with the Secretary of State of the
State of Delaware on March 16, 2009, to form the Company pursuant to the Act, as originally
executed by Joyce Allen-Dennis (as an authorized person within the meaning of the Act) and as
amended, modified, supplemented or restated from time to time, as the context requires.




          “Claim” means any and all losses, claims, damages, liabilities (joint or several), expenses
(including reasonable legal fees and expenses), judgments, penalties, interest, settlements or
other amounts arising from any and all claims, demands, actions, suits or proceedings (whether
civil, criminal, administrative or investigative), deficiencies, levies, duties, imposts,
remediation and cleanup costs and natural resources damages.




          “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.




          “Contributing Member” shall have the meaning assigned to such term in Section 3.06(a).




          “Credit Agreement” is defined in the definition of Agent.




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




          “Deemed Tax Disposition” means any event or series of events that is treated for federal
income tax purposes as a sale or exchange of a Member’s Membership Interest or portion thereof for
purposes of Section 708(b)(1)(B) of the Code.






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




          “Default Rate” means a rate per annum equal to the lesser of (a) a varying rate per annum
equal to the sum of (i) the prime rate as published in The Wall Street Journal, with adjustments in
that varying rate to be made on the same date as any change in that rate is so published, plus (ii)
1% per annum, and (b) the maximum rate permitted by Law.




          “Discharge Date” has the meaning set forth in the Credit Agreement.




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




          “Disposing Member” shall have the meaning assigned to such term in Section 8.01(a).




          “Dispute” shall have the meaning assigned to such term in Section 12.01.




          “Dispute Notice” shall have the meaning assigned to such term in Section 12.02.




          “Disputing Member” shall have the meaning assigned to such term in Section 12.01.




          “Dissolution Event” shall have the meaning assigned to such term in Section 9.01.




          “Effective Date” means the date of this Agreement as specified in the preamble.





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




          “Exercise Period” shall have the meaning assigned to such term in Section 8.01(a).




          “FERC” means the Federal Energy Regulatory Commission or any Governmental Authority succeeding
to powers that, as of the date of this Agreement, are exercised by such Commission over the rates,
terms and conditions of the Company.




          “Financing Documents” has the meaning set forth in the Credit Agreement.




          “Governmental Authority” means a federal, state, local or foreign governmental authority; a
state, province, 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, including the FERC; any court or other judicial body;
and any officer, official or other representative of any of the foregoing.




          “Independent Member” shall mean a Person, who is not at the time of initial designation as the
Independent Member or at any time while serving as the Independent Member and has not been at any
time during the five (5) years preceding such initial designation: (i) a direct or indirect owner
of any equity interest in, member, officer, employee, director, manager (with the exception of
serving as the Independent Member) or contractor, bankruptcy trustee, attorney or counsel of the
Company or any of its Affiliates; (ii) a creditor, customer, supplier, or other Person who derives
any of its purchases or revenues from its business activities with the Company or any of its
Affiliates (other than any fee paid for its services as Independent Member); (iii) an Affiliate of
the Company or any Person excluded from serving as Independent Member under clause (i) or (ii) of
this definition; (iv) a member of the immediate family by blood or marriage of any Person excluded
from being an Independent Member under clause (i) or (ii) of this definition; or (v) a Person who
received, or a member or employee of a firm or business that received, fees or other income from
the Company or any Affiliate thereof in the aggregate in excess of five percent (5%) of the gross
income, for any applicable year, of such Person; provided however, that notwithstanding the
foregoing, for the purposes of clause (i), an equity interest shall be deemed to exclude de minimis
or otherwise immaterial holdings of equity interests of an Affiliate of the Company which are
traded on public stock exchanges. The Independent Member is Edward J. Crenshaw.




          “Interest Certificate” shall have the meaning assigned to such term in Section 8.02.




          “Law” means any applicable constitutional provision, statute, act, code (including the Code),
law, regulation, rule, ordinance, order, decree, ruling, proclamation, notice, resolution,





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judgment, decision, declaration, policy statement or interpretative or advisory opinion or letter
of a Governmental Authority having valid jurisdiction.




          “Liquidation Date” means in the case of any event giving rise to the dissolution of the
Company, the date on which such event occurs.




          “Liquidator” means such Person(s) selected by the Management Committee to perform the
functions described in Section 9.02 as liquidating trustee of the Company and to wind up
the business and affairs of the Company within the meaning of the Act.




          “Loan Notice” shall have the meaning assigned to such term in Section 3.02(a).




          “Majority Interest” shall have the meaning assigned to such term in Section 7.02(e).




          “Management Committee” means the committee comprised of the individuals designated by the
Members in accordance with Section 7.02 and all other individuals designated by the Members
to serve as a representative on such committee in accordance with Article VII; and
references in this Agreement to the Management Committee shall refer to such individuals
collectively in their capacity as representatives on such committee.




          “Member” means El Paso, Opco, and any other member or members, excluding the Independent
Member, admitted to the Company in accordance with this Agreement or any amendment or restatement
hereof.




          “Membership Interest” means the ownership interest of a Member in the Company at any time,
including the right of such Member to any and all benefits to which such Member may be entitled as
provided in this Agreement, together with the obligations of such Member to comply with all the
terms and provisions of this Agreement.




          “NGA” means the Natural Gas Act of 1938, 15 U.S.C.A. §717 et. seq. (1997), as amended from
time to time. A reference herein to a specific section or sections of the NGA shall be deemed to
include a reference to any corresponding provision of any successor law.




          “Non-Contributing Member” shall have the meaning assigned to such term in Section
3.06(a).




          “Officer” means any Person designated as an officer of the Company as provided in Section
7.02, but from and after the time any Person ceases to be an officer of the Company the term
“Officer” does not include such Person who has ceased to be an officer of the Company.




          “Operating Budget” means the annual operating budget established by the Management Committee
from time to time as the budget for the Company’s operations for a calendar year, as same may be
modified or amended by the Management Committee.




          “Percentage Interest” means, subject in each case to adjustments in accordance with this
Agreement or in connection with any Disposition of a Membership Interest, with





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respect to a Member, the percentage set forth opposite such Member’s name in Annex I
representing such Member’s Units divided by the total number of Units issued to all Members,
provided, however, that the total of all Percentage Interests shall always equal 100%.




          “Permitted Transferee” means any Person that is an Affiliate of a Member.




          “Person” has the meaning set forth in the Act.




          “Priority Interest” means the special distribution rights under Section 3.06(b)
received by each Additional Contributing Member, which rights include the right to receive the
return described in Section 3.06(b)(i) and which form part of the Additional Contributing
Member’s Interest.




          “Priority Interest Sharing Ratio” shall have the meaning assigned to such term in Section
3.06(b)(i).




          “Quarter” means unless the context requires otherwise, a fiscal quarter of the Company.




          “Regulatory Allocations” shall have the meaning assigned to such term in Section
5.02(c).




          “Representative” shall have the meaning assigned to such term in Section 7.02(a)(ii).




          “ROFR Acceptance” shall have the meaning assigned to such term in Section 8.01(a).




          “ROFR Buyer” shall have the meaning assigned to such term in Section 8.01(a).




          “Sole Discretion” means the following: (a) in the applicable Person’s sole and absolute
discretion, (b) with or without cause, (c) subject to such conditions as it may deem appropriate,
and (d) to the fullest extent permitted by law, without taking into account the interests of, and
without incurring liability to, the Company, any Member, any member of the Management Committee or
any officer or employee of the Company.




          “Subject Interest” shall have the meaning assigned to such term in Section 8.01(a).




          “Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one





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or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other
than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person,
or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.




          “Tax Matters Member” shall have the meaning assigned to such term in Section 10.03(a).




          “Transfer Notice” shall have the meaning assigned to such term in Section 8.01(a).




          “Treasury Regulations” means the regulations (including temporary regulations) promulgated by
the United States Department of the Treasury pursuant to and in respect of provisions of the Code.
All references herein to sections of the Treasury Regulations shall include any corresponding
provision or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.




          “Units” shall have the meaning assigned to such term in Section 4.02(a).




          “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in
the state of Delaware.




          “Withdraw,” “Withdrawing” or “Withdrawal” means the disassociation of a Member from the
Company as a member as provided in Section 11.02 and Section 11.03. Such terms
shall not include any Dispositions of a Membership Interest (which are governed by Sections
8.01(a) and (b)), even though the Member making a Disposition may cease to be a Member
as a result of the Disposition.




          “Withdrawn Member” shall have the meaning assigned to such term in Section 11.03.




          “Working Capital Borrowings” means borrowings used for working capital purposes or to pay
distributions to Members that are made pursuant to a credit facility, commercial paper facility or
other similar financing arrangements.




     SECTION 1.02 Terms Generally. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural, and vice-versa, (b) the gender
(or lack of gender) of all words used in this Agreement includes the masculine, feminine and
neuter; (c) references to Articles and Sections refer to Articles and Sections of this Agreement;
(d) references to Exhibits or Annexes refer to the Exhibits or Annexes attached to this Agreement,
each of which is made a part hereof for all purposes; (e) references to Laws refer to such Laws as
they may be amended from time to time, and references to particular provisions of a Law include any
corresponding provisions of any succeeding Law; (f) the term “include”, “includes”, “including” or
words of like report shall be deemed to be followed by the words “without limitation”; (g) the
terms “hereof”, “herein” or “hereunder” refer



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to this Agreement as a whole and not to any particular provision of this Agreement; and (h)
references to money refer to legal currency of the United States of America. The table of contents
and headings contained in this Agreement are for reference purposes only, and shall not affect in
any way the meaning or interpretation of this Agreement.




ARTICLE II.

FORMATION




     SECTION 2.01 Name. The name of the Company shall be as set forth in the Preamble
hereof. All business of the Company shall be conducted under such name and title to all property,
real, personal, or mixed, owned by or leased to the Company shall be held in such name.
Notwithstanding the preceding sentence, the Management Committee may change the name of the Company
or adopt such trade or fictitious names as it may determine.



     SECTION 2.02 Term. The term of the Company commenced on the date of filing of the
Certificate of Formation of the Company in the Office of the Secretary of State of the State of
Delaware and the execution of the Original Agreement. The term of the Company shall continue until
terminated as provided in Article IX hereof.



     SECTION 2.03 Purposes of the Company. The Company has been organized to engage in any
lawful act or activity for which a Delaware limited liability company may be formed.



     SECTION 2.04 Powers.




	 	a)	 	In furtherance of its purposes, but subject to all of the provisions of this
Agreement, the Company shall have and may exercise all the powers now or hereafter
conferred by Delaware law on limited liability companies formed under the Act. The
Company shall have the power to do any and all acts necessary, appropriate, proper,
advisable, incidental or convenient to or for the protection and benefit of the
Company, and shall have, without limitation, any and all of the powers that may be
exercised on behalf of the Company by the Management Committee.
	 
	 	b)	 	Notwithstanding Section 2.04(a), the Company shall conduct its
business separate and apart from any Affiliate thereof in accordance with the
following:






	 	i)	 	It shall segregate its property and not allow funds or
other assets thereof to be commingled with the funds or other assets of,
held by, or registered in the name of, any Member of the Company, any other
Affiliate of the Company or any other Person.
	 
	 	ii)	 	It shall prepare and maintain its own separate, full and
complete books and financial records separate from the books and financial
records of any Member of the Company, any other Affiliate of the Company or
any other Person.




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	 	iii)	 	It shall observe all material limited liability company
procedures and formalities, including without limitation, maintaining
minutes or records of meetings of the Company and acting on behalf of itself
only pursuant to due authorization of the member(s) and, as applicable, the
Independent Member.
	 
	 	iv)	 	It shall pay its liabilities only from its assets.
	 
	 	v)	 	It shall conduct its dealings with third parties in its
own name and as a separate and independent entity.
	 
	 	vi)	 	It shall not guarantee any debts of its Affiliates nor
allow any of its Affiliates to guarantee any debts of the Company. It shall
not acquire obligations or securities of, or make loans or advances to, any
of its Affiliates.
	 
	 	vii)	 	It shall maintain adequate capitalization in light of its
contemplated business and obligations.
	 
	 	viii)	 	It shall directly manage its own liabilities, including
paying its own operating expenses.
	 
	 	ix)	 	It shall pay the salaries of its own employees and
maintain a sufficient number of employees in light of its contemplated
business operations. It shall not permit employees of the Company to
participate in or receive payroll benefits or pension plans of or from any
of its Affiliates.
	 
	 	x)	 	It shall allocate fairly and reasonably any overhead for
shared office space.
	 
	 	xi)	 	It shall use separate invoices and checks.
	 
	 	xii)	 	It shall maintain separate bank accounts in its own name
and all investments made by or on behalf of the Company shall be made solely
in its name (except as required under the Accounts Agreement as defined in
the Credit Agreement).
	 
	 	xiii)	 	All formalities regarding the separate existence of the
Company shall be maintained. It shall conduct its own business in its own
name and through authorized agents pursuant to its organizational documents.
	 
	 	xiv)	 	All business transactions that are entered into by the
Company with any of its Affiliates shall be on terms and conditions not less
favorable to the Company than those that would be entered into by a prudent
Person in the position of the Borrower with a Person that is not one of its
Affiliates and shall have been approved in accordance with its
organizational documents and shall otherwise comply with the provisions of
the Financing Documents.




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	 	xv)	 	It shall hold itself out as a separate entity and shall
correct any misunderstanding regarding its separate entity status of which
the Company has knowledge.





     SECTION 2.05 Principal
Place of Business. The principal place of business of the
Company shall be located at 1001 Louisiana, Houston, Texas 77002. The Management Committee may
establish other offices at other locations.



     SECTION 2.06 Agent for Service of Process. The Corporation Trust Company shall be the
registered agent of the Company upon whom process against it may be served. The address of such
agent within the State of Delaware is: Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware 19801.



     SECTION 2.07 Business Opportunities; No Implied Duty or Obligation. Notwithstanding any
duty otherwise existing at law or in equity, each Member, its Representative(s) and Affiliates may
engage, directly or indirectly, without the consent of the other Member(s), the Company, the
Management Committee or any member of the Management Committee in other business opportunities,
transactions or other arrangements of any nature or description, independently or with others,
including any business of a nature that may compete or be competitive with or the same as or
similar to the business of the Company, regardless of the geographic location of such business, and
without any duty or obligation to account to the other Member, the Company or the Management
Committee in connection therewith.



ARTICLE III.

CAPITAL CONTRIBUTIONS




     SECTION 3.01 Capital Contributions.




	 	a)	 	Except as otherwise provided in the following provisions of this Section
3.01 or Section 3.02, the Management Committee may issue or cause to be
issued a notice to each Member for the making of Capital Contributions at such times
and in such amounts as the Management Committee shall determine (a “Capital Call”),
such determination to be made in accordance with Article VII. All amounts
timely received by the Company under this Section 3.01 shall be credited to
the respective Member’s Capital Account as of the specified date.
	 
	 	b)	 	Each Capital Call shall contain the following information:






	 	i)	 	The total amount of Capital Contributions required from
all Members;
	 
	 	ii)	 	The amount of Capital Contribution required from the
Member to which the notice is addressed, which amount must equal that
Member’s Percentage Interest of the total Capital Call;
	 
	 	iii)	 	The purpose for which the funds are to be applied in such
reasonable detail as the Management Committee shall direct; and




13









 












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






	 	c)	 	Each Member agrees that it shall make payments of its respective Capital
Contributions in accordance with Capital Calls issued as provided in this Section
3.01.





     SECTION 3.02 Loans.




	 	a)	 	Instead of making a Capital Call under Section 3.01, the Management
Committee by notice in writing (the “Loan Notice”) submitted to the Members may
request the Members to lend funds to the Company at such times, in such amounts and
under such terms and conditions as the Management Committee shall determine; provided,
however, that the Management Committee shall not issue any such Loan Notice to the
extent that incurring any such loan would breach or violate any financing or other
agreement of the Company.
	 
	 	b)	 	Each Loan Notice issued under Section 3.02(a) shall contain the
following information:






	 	i)	 	The total amount of loans requested from the Members;
	 
	 	ii)	 	The amount of the loan requested from the Member to which
the notice is addressed, which amount must equal (A) that Member’s
Percentage Interest of the total amount of loans requested in the Loan
Notice;
	 
	 	iii)	 	The purpose for which the funds are to be applied in such
reasonable detail as the Management Committee shall direct;
	 
	 	iv)	 	The date on which the loans to the Company are to be made
(which date shall not be earlier than the 30th Day following the date the
Loan Notice is given, unless an earlier date is approved by the Management
Committee) and the method of payment, provided that the date and the method
shall be the same for each of the Members; and
	 
	 	v)	 	All terms concerning the repayment of or otherwise
relating to the loans, provided that the terms shall be the same for each of
the Members.






	 	c)	 	No Member shall be obligated to make a loan or advance to the Company
following its receipt of a Loan Notice unless all Members agree to do so.





     SECTION 3.03 No Other Contribution Obligations. No Member shall be required or
permitted to make any Capital Contributions or loans to the Company except as provided in this
Article III.




14











 





     SECTION 3.04 Return of Contributions. Except as expressly provided in this
Agreement, a Member is not entitled to the return of any part of its Capital Contributions or to be
paid interest in respect of either its Capital Account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Company or of any Member. None of the Members are
required to contribute or to lend any cash or property to the Company to enable the Company to
return any Member’s Capital Contributions.



     SECTION 3.05 Capital Accounts.




	 	a)	 	The Company shall maintain for each Member (or a beneficial owner of
Membership Interests held by a nominee in any case in which the nominee has furnished
the identity of such owner to the Company in accordance with Section 6031(c) of the
Code or any other method acceptable to the Management Committee) owning a Membership
Interest a separate Capital Account with respect to such Membership Interest in
accordance with the rules of Treasury Regulation §1.704-1(b)(2)(iv). The aggregate
amount in the Capital Accounts existing as of the Effective Date hereof shall be based
on the assets and liabilities owned by the Company as of the Effective Date hereof and
allocated between the Members in accordance with their Percentage Interests. Each
Member’s Capital Account shall be increased by (i) the amount of money contributed by
that Member to the Company, (ii) the fair market value of property contributed by that
Member to the Company (net of liabilities secured by such contributed property that
the Company is considered to assume or take subject to under Section 752 of the Code),
and (iii) allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in Treasury
Regulation §1.704-1(b)(2)(iv)(g), but excluding income and gain described in Treasury
Regulation §1.704-1(b)(4)(i), and shall be decreased by (iv) the amount of money
distributed to that Member by the Company, (v) the fair market value of property
distributed to that Member by the Company (net of liabilities secured by such
distributed property that such Member is considered to assume or take subject to under
Section 752 of the Code), (vi) allocations to that Member of expenditures of the
Company described (or treated as described) in Section 705(a)(2)(B) of the Code, and
(vii) allocations of Company loss and deduction (or items thereof), including loss and
deduction described in Treasury Regulation §1.704-1(b)(2)(iv)(g), but excluding items
described in (vi) above and loss or deduction described in Treasury Regulation
§1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). The Members’ Capital Accounts shall also be
maintained and adjusted as permitted by the provisions of Treasury Regulation
§1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treasury Regulation
§§1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the
allocations to the Members of depreciation, depletion, amortization, and gain or loss
as computed for book purposes rather than the allocation of the corresponding items as
computed for tax purposes, as required by Treasury Regulation §1.704-1(b)(2)(iv)(g).
Thus, the Members’ Capital Accounts shall be increased or decreased to reflect a
revaluation of the Company’s property on its books based on the fair market value of
the Company’s property on the date of adjustment (as determined pursuant to
Section 3.05(b)), immediately prior to (A) the contribution of money or other
property to the 




15









 






	 	 	 	Company by a new or existing Member as consideration for a Membership Interest or
an increased Percentage Interest, (B) the distribution of money or other property by
the Company to a Member as consideration for a Membership Interest, or (C) the
liquidation of the Company. A Member who has more than one Membership Interest shall
have a single Capital Account that reflects all such Membership Interests, regardless
of the class of Membership Interests owned by such Member and regardless of the time
or manner in which such Membership Interests were acquired. Upon the Disposition of
all or a portion of a Membership Interest, the Capital Account of the Disposing Member
that is attributable to that Membership Interest shall carry over to the Assignee in
accordance with the provisions of Treasury Regulation §1.704-1(b)(2)(iv)(l). The
Capital Accounts shall not be deemed to be, nor have the same meaning as, the capital
account of the Company under the NGA.
	 
	 	b)	 	Whenever the fair market value of the Company’s property is required to be
determined pursuant to the third and fourth sentences of Section 3.05(a), the
Management Committee shall establish the fair market value in a notice to the Members.





     SECTION 3.06 Failure to Make a Capital Contribution.




	 	a)	 	General. If any Member fails to make a Capital Contribution when required in
a Capital Call under Section 3.01 of this Agreement (each such Member being a
“Non-Contributing Member”), then, provided the failure has not been cured, the Members
that have contributed their Capital Contributions in response to such Capital Call
(each, a “Contributing Member”) may (without limitation as to other remedies that may
be available) at any time following the 10th Day following the date the Capital
Contribution was due elect to pay the portion of the Capital Contribution owed and
unpaid by the Non-Contributing Member (the “Additional Contribution”), in which event
the Contributing Member(s) that elect to fund the Non-Contributing Members’ share (the
“Additional Contributing Members”) may treat the contribution as either: (i) a Capital
Contribution resulting in the Additional Contributing Members receiving a Priority
Interest under Section 3.06(b), or (ii) a permanent capital contribution that
results in an adjustment of Membership Interests under Section 3.06(c), as
determined by the Additional Contributing Members as set forth below.




No Contributing Member shall be obligated to elect to take the actions specified in the
preceding paragraph of this Section 3.06(a). The decision of the Contributing Members to
elect to take the action described in the preceding paragraph shall be made by the determination of
the Contributing Members holding the majority of the Percentage Interests of all Contributing
Members, provided that such treatment may not be elected unless at such time of determination there
is one or more Additional Contributing Members. The decision of the Additional Contributing
Members to elect the treatment described in the preceding paragraph of this Section 3.06(a)
shall be made by the determination of the Additional Contributing Members holding the majority of
the Percentage Interests of all Additional Contributing Members. Unless and until such
election is made, payment of the Additional Contribution shall be treated as a






16









 







Priority Interest under Section 3.06(a)(i). If the Additional Contributing Members make
the election under Section 3.06(a) to treat the contribution as a contribution for which
they receive a Priority Interest under Section 3.06(b), then the Additional Contributing
Members will have the option, exercisable at any time thereafter (by the election of Additional
Contributing Members holding a majority of the Percentage Interests of all Additional Contributing
Members) upon notice furnished to the other Members not less than 30 Days before the proposed
effective time of the option exercise, to change their election such that the amount of the payment
of the Non-Contributing Member’s portion of the Capital Contribution (less any amounts received by
the Additional Contributing Members as a payment of the applicable Priority Interest (other than
payment of the return amount forming a part thereof)) shall be treated as an Additional
Contribution as provided in Section 3.06(c). In that event, the accrued and unpaid return
forming part of the Priority Interest shall not be treated as an Additional Contribution but shall
continue as a Priority Interest as provided in Section 3.06(b) below (with such amount to
continue to compound return thereon).





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






	 	i)	 	Each Additional Contributing Member shall receive a
Priority Interest in the distributions from the Company that would otherwise
be due and payable to the Non-Contributing Member(s). The Priority Interest
received by each Additional Contributing Member shall be in the proportion
that the amount of the Additional Contribution paid by such Additional
Contributing Member bears to the amount of the Additional Contributions made
by all Additional Contributing Members (each Additional Contributing
Member’s percentage share of the Priority Interests shall be its “Priority
Interest Sharing Ratio”). All distributions from the Company that would
otherwise be due and payable to the Non-Contributing Member(s) instead shall
be paid to the Additional Contributing Members in accordance with their
respective Priority Interest Sharing Ratio and no distribution shall be made
from the Company to any Non-Contributing Member until all Priority Interests
have terminated. The Priority Interest shall terminate with respect to an
Additional Contributing Member when that Additional Contributing Member has
received either through the distributions it receives in respect of its
Priority Interest or through payment(s) to it by the Non-Contributing
Member(s) (which payment(s) may be made by the Non-Contributing Member(s) at
any time) of an amount equal to the Additional Contribution made by such
Additional Contributing Member, plus a return thereon of twelve percent
(12%) per annum (compounded quarterly on the outstanding balance). For
purposes of making this calculation, all amounts received by an Additional
Contributing Member shall be deemed to be applied first against a return on,
and then to the amount of, the Additional Contribution. For purposes of
maintaining Capital Accounts, any amount paid by a Non-Contributing Member
to a Contributing Member to reduce and/or terminate a Priority Interest
shall be treated as




17









 






	 	 	 	though such amount were contributed by the Non-Contributing Member to the
Company and thereafter distributed by the Company to the Contributing Member
with respect to its Priority Interest.
	 
	 	ii)	 	The Priority Interests shall not alter the Percentage
Interests, nor shall the Priority Interests alter any distributions to the
Contributing Members (in their capacity as Contributing Members, as opposed
to their capacity as Additional Contributing Members) in accordance with
their respective Percentage Interests. Notwithstanding any provision in
this Agreement to the contrary, a Member may not dispose of all or a portion
of its Priority Interest except to a Person to which it Disposes of all or
the applicable pro rata portion of its Membership Interest after compliance
with the requirements of this Agreement for the Disposition.
	 
	 	iii)	 	No Member that is a Non-Contributing Member may Dispose
of its Membership Interest unless, at the closing of such Disposition,
either the Non-Contributing Member or the proposed Assignee pays the amount
necessary to terminate the Priority Interest arising from such
Non-Contributing Member’s failure to contribute. No such transferee shall be
admitted to the Company as a Member until compliance with this Section
3.06(b)(iii) has occurred.






	 	c)	 	Permanent Contribution. Subject to Section 3.06(a), if the
Additional Contributing Members elect under Section 3.06(a) to have the
Additional Contribution treated as a permanent capital contribution, then each
Additional Contributing Member that funds a portion of the Additional Contribution
shall have its Capital Account increased accordingly and the Members’ Membership
Interests and Percentage Interests will be automatically adjusted to equal each
Member’s total Capital Contributions when expressed as a percentage of all Members’
Capital Contributions.
	 
	 	d)	 	Further Assurance. In connection with this Section 3.06, each Member
shall execute and deliver any additional documents and instruments and perform any
additional acts that may be necessary or appropriate to effectuate and perform the
provisions of this Section 3.06.





ARTICLE IV.

MEMBERS




     SECTION 4.01 Members. The members of the Company are the Members listed on Annex
I, the Independent Member and any other Person hereafter admitted to the Company as a Member or
Independent Member.



     SECTION 4.02 Membership Interests.



18









 






	 	a)	 	Units. The Membership Interests of the Company shall be comprised of
one class of interests (the “Units”). The Units will have the rights, designations and
preferences as provided in this Agreement.
	 
	 	b)	 	Units Authorized. There shall be 100 Units authorized.
	 
	 	c)	 	Certificated Units. All Units shall be certificated and issued as
provided in Section 8.02. Persons holding Units shall be admitted to the Company as
Members and such ownership shall be recorded by amendment to Annex I hereto,
which shall not be considered an amendment to this Agreement.





     SECTION 4.03 Independent Member.




	 	a)	 	The Company shall at all times have one Independent Member.
	 
	 	b)	 	No resignation, removal or withdrawal of the Independent Member, and no
designation of a successor Independent Member shall be effective until such successor
shall have accepted such designation as the Independent Member in writing. In the
event that no Person shall be designated as the Independent Member for any period, the
Member(s) shall promptly designate a successor Independent Member; provided, however,
that such successor Independent Member shall be acceptable to the Agent, in its
reasonable discretion.
	 
	 	c)	 	The Independent Member shall remain in place until his or her death,
disability or resignation, or upon removal by the Member(s) with prior written consent
of the Agent. Upon the death, disability, resignation or removal of the Independent
Member, a successor Independent Member, reasonably acceptable to the Agent, shall be
designated by the Member(s). After the Discharge Date, the Member(s) may amend this
Agreement to provide that the requirement to have an Independent Member and all
provisions relating to an Independent Member are deleted.
	 
	 	d)	 	The Independent Member may not delegate any of its powers to any other
Person.
	 
	 	e)	 	No other Member of the Company, other than the Independent Member, shall
receive compensation from the Company for being a member of the Company except as
permitted by the Credit Agreement.
	 
	 	f)	 	The Independent Member shall have no economic interest in the Company;
provided however, that notwithstanding the foregoing, for the purposes of this
section, an economic interest shall be deemed to exclude any economic interest the
Independent Member has in the Company as a result of holding an equity interest of an
Affiliate of the Company which are traded on public stock exchanges.





     SECTION 4.04 Representations, Warranties and Covenants. Each of El Paso and Opco
hereby represents, warrants and covenants to the Company and each other that the following
statements are true and correct as of the Effective Date and shall be true and correct at all times
that such Person remains a Member of the Company:



19









 






	 	a)	 	such Member is duly incorporated, organized or formed (as applicable),
validly existing, and (if applicable) in good standing under the Law of the
jurisdiction of its incorporation, organization or formation; if required by
applicable Law, such Member is duly qualified and in good standing in the jurisdiction
of its principal place of business, if different from its jurisdiction of
incorporation, organization or formation; and such Member has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder, and
all necessary actions by the board of directors, stockholders, managers, members,
partners, trustees, beneficiaries, or other applicable Persons necessary for the due
authorization, execution, delivery and performance of this Agreement by such Member
have been duly taken;
	 
	 	b)	 	such Member has duly executed and delivered this Agreement and this Agreement
constitutes the legal, valid and binding obligation of such Member enforceable against
it in accordance with its terms, except as may be limited by bankruptcy, insolvency or
similar Laws of general application and by the effect of general principles of equity,
regardless of whether considered at law or in equity; and
	 
	 	c)	 	such Member’s authorization, execution, delivery or performance of this
Agreement does not and will not (i) conflict with, or result in a breach, default or
violation of, (A) the organizational documents of that Member, (B) any contract or
agreement to which such Member is a party or is otherwise subject, or (C) any Law,
order, judgment, decree, writ, injunction or arbitral award to which such Member is
subject; or (ii) require any consent, approval or authorization from, filing or
registration with, or notice to, any Governmental Authority or other Person, unless
such requirement has already been satisfied.





     SECTION 4.05 Bankruptcy of a Member. Notwithstanding any other provision of this
Agreement, the occurrence or continuation of a Bankruptcy of a Member or the Independent Member
shall not cause such Member to cease to be a member of the Company or the Independent Member to
cease to be the Independent Member, and upon the occurrence of such an event, the business of the
Company shall continue without dissolution.



ARTICLE V.

DISTRIBUTIONS AND ALLOCATIONS




     SECTION 5.01 Distributions.




	 	a)	 	On or before the final Business Day of the calendar month immediately
following the end of each Quarter (commencing with the Quarter ending June 30, 2010),
the Management Committee shall review and determine the amount of Available Cash with
respect to that Quarter, and, subject to the terms of Section 3.06(b), an
amount equal to 100% of Available Cash with respect to that Quarter shall be
distributed in accordance with this Article V to the Members (other than a
Breaching Member) in




20









 






	 	 	 	proportion to their respective Percentage Interests (at the time the amounts of such
distributions are made); provided, however, that the amount of Available Cash required
to be distributed for the Quarter in which the Effective Date occurs, shall be pro
rated based upon a fraction, of which the numerator is the number of days in the
period that commences on the Effective Date and ends on March 31, 2010 and of which
the denominator is 92.
	 
	 	b)	 	Notwithstanding Section 5.01(a), in the event of the dissolution and
winding up of the Company, all receipts of the Company received during or after the
Quarter in which the Liquidation Date occurs shall be applied and distributed solely
in accordance with, and subject to the terms and conditions of Section
9.02(a)(iii)(C).
	 
	 	c)	 	Notwithstanding any provision to the contrary contained in this Agreement,
the Company shall not be required to make a distribution to a Member on account of its
interest in the Company if such distribution would violate the Act or any applicable
Law.





     SECTION 5.02 Allocations for Capital Account Purposes.




	 	a)	 	For purposes of maintaining the Capital Accounts pursuant to Section
3.05, except as provided in Section 5.02(b) and (c), each item of
income, gain, loss, expense, deduction and credit of the Company shall be allocated to
the Members in accordance with their respective Percentage Interests.
	 
	 	b)	 	With respect to each period during which a Priority Interest is outstanding,
each Additional Contributing Member shall be allocated items of income and gain in an
amount equal to the return that accrues with respect to that Additional Contributing
Member’s Additional Contribution pursuant to Section 3.06(b)(i), and items of
income and gain that would otherwise be allocable to the Non-Contributing Member(s)
shall be correspondingly reduced.
	 
	 	c)	 	Notwithstanding any other provision of this Section 5.02, the
following special allocations shall be made in the following order:






	 	i)	 	Minimum Gain Chargeback. Notwithstanding any other
provision hereof to the contrary, if there is a net decrease in Minimum Gain
(as generally defined under Treasury Regulation Section §1.704-1 or
§1.704-2) for a taxable year (or if there was a net decrease in Minimum Gain
for a prior taxable year and the Company did not have sufficient amounts of
income and gain during prior years to allocate among the Members under this
Section 5.02(c)(i), then items of income and gain shall be allocated
to each Member in an amount equal to such Member’s share of the net decrease
in such Minimum Gain (as determined pursuant to Treasury Regulation
§1.704-2(g)(2)). It is the intent of the Members that any allocation
pursuant to this Section 5.02(c)(i) shall constitute a “minimum gain
chargeback” under Treasury Regulations §1.704-2(f) and shall be interpreted
consistently therewith.




21









 






	 	ii)	 	Member Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Article V, except
Section 5.02(c)(i), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain (as generally defined under Treasury Regulation §1.704-1
or §1.704-2), during any taxable year, any Member who has a share of the
Member Nonrecourse Debt Minimum Gain shall be allocated such amount of
income and gain for such year (and subsequent years, if necessary)
determined in the manner required by Treasury Regulation §1.704-2(i)(4) as
is necessary to meet the requirements for a chargeback of Member Nonrecourse
Debt Minimum Gain.
	 
	 	iii)	 	Qualified Income Offset. Except as provided in
Section 5.02(c)(i) and (ii) hereof, in the event any Member
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation §1.704-1(b)(2)(ii)(d)(4),
§1.704-1(b)(2)(ii)(d)(5), or §1.704-1(b)(2)(ii)(d)(6), items of Company
income and gain shall be specially allocated to such Member in an amount and
manner sufficient to eliminate, to the extent required by the Allocation
Regulations, the deficit balance, if any, in its Adjusted Capital Account
created by such adjustments, allocations or distributions as quickly as
possible.
	 
	 	iv)	 	Gross Income Allocations. In the event any Member has a
deficit balance in its Adjusted Capital Account at the end of any Company
taxable period in excess of the sum of the amount such Member is obligated
to restore pursuant to any provision of this Agreement or pursuant to
Treasury Regulation §1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations
§§1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated
items of Company gross income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this
Section 5.02(c)(iv) shall be made only if and to the extent that
such Member would have a deficit balance in its Adjusted Capital Account
after all other allocations provided in this Section 5.02 have been
tentatively made as if Section 5.02(c)(iv) were not in the
Agreement.
	 
	 	v)	 	Company Nonrecourse Deductions. Company Nonrecourse
Deductions (as determined under Treasury Regulation §1.704-2(c)) for any
fiscal year shall be allocated among the Members in proportion to their
Percentage Interests.
	 
	 	vi)	 	Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions (as defined under Treasury Regulation §1.704-2(i)(2)) shall be
allocated pursuant to Treasury Regulation Section 1.704-2(i) to the Member
who bears the economic risk of loss with respect to the partner nonrecourse
debt to which it is attributable. Provided, however, that if more than one
Member bears the economic risk of loss for such debt, the Member Nonrecourse
Deductions attributable to such partner nonrecourse debt




22









 






	 	 	 	shall be allocated to and among the Members in the same proportion that they
bear the economic risk of loss for such partner nonrecourse debt. This
Section 5.02(c)(vi) is intended to comply with the provision of
Treasury Regulation §1.704-2(i) and shall be interpreted consistently
therewith.
	 
	 	vii)	 	Code Section 754 Adjustment. To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to the Allocation Regulations, to
be taken into account in determining Capital Accounts, 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 specially
allocated to the Members in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to the
Allocation Regulations.
	 
	 	viii)	 	Curative Allocation. The special allocations set forth
in Sections 5.02(c)(i)-(vii) (the “Regulatory Allocations”) are
intended to comply with the Allocation Regulations. Notwithstanding any
other provisions of this Section 5.02, the Regulatory Allocations
shall be taken into account in allocating items of income, gain, loss and
deduction among the Members such that, to the extent possible, the net
amount of allocations of such items and the Regulatory Allocations to each
Member shall be equal to the net amount that would have been allocated to
each Member if the Regulatory Allocations had not occurred.





     SECTION 5.03 Allocations for Tax Purposes.




	 	a)	 	Except as otherwise provided herein, for federal income tax purposes each
item of income, gain, loss and deduction shall be allocated among the Members in the
same manner as its correlative item of “book” income, gain, loss and deduction is
allocated pursuant to Section 5.02.
	 
	 	b)	 	Notwithstanding any provisions contained herein to the contrary, for income
tax purposes, income, gain, loss, and deduction with respect to property contributed
to the Company by a Member or revalued pursuant to Treasury Regulation
§1.704-1(b)(2)(iv)(f) shall be allocated among the Members in a manner that takes into
account the variation between the adjusted tax basis of such property and its Carrying
Value, as required by Section 704(c) of the Code and Treasury Regulation
§1.704-1(b)(4)(i), using the remedial allocation method permitted by Treasury
Regulation §1.704-3(d).





     SECTION 5.04 Varying Interests All items of income, gain, loss, deduction or
credit shall be allocated, and all distributions shall be made, to the Persons shown on the records
of the Company to have been Members as of the last calendar day of the period for which the
allocation or distribution is to be made. Notwithstanding the foregoing, if during any taxable



23









 




year there is a change in any Member’s Percentage Interest, the Members agree that their allocable
shares of items for the taxable year shall be determined on any method determined by the Management
Committee to be permissible under Code Section 706 and the related Treasury Regulations to take
account of the Members’ varying Percentage Interests.




ARTICLE VI.

BOOKS AND RECORDS, REPORTS, AND BANK ACCOUNTS




     SECTION 6.01 Books and Records. The Management Committee shall cause to be kept at
the principal office of the Company or at such other location approved by the Management Committee
complete and accurate books and records of the Company, including all books and records necessary
to provide to the Members any information required to be provided pursuant to Section 6.02,
supporting documentation of the transactions with respect to the conduct of the Company’s business
and minutes of the proceedings of the Members and the Management Committee, and any other books,
records and information that are required to be maintained by applicable Law.



     SECTION 6.02 Reports. With respect to each calendar year, and within the time frame
specified by the Management Committee, the Management Committee or any duly authorized Officer(s)
shall cause to be prepared and delivered to each Member such reports, financial statements,
forecasts, studies, budgets and other information as the Management Committee may request from time
to time.



     SECTION 6.03 Bank Accounts. Funds of the Company shall be deposited in such banks or
other depositories as shall be designated from time to time by the Management Committee, which may
include the El Paso Corporation cash management program.



ARTICLE VII.

MANAGEMENT OF THE COMPANY




     SECTION 7.01 Management. The business and affairs of the Company shall be managed
under the direction of the Members acting through the Management Committee. To facilitate the
orderly and efficient management of the business and affairs of the Company, the Members shall act
(a) collectively as a “committee of the whole” (such committee to be referred to as the Management
Committee) pursuant to Section 7.02, and (b) through the delegation by the Management
Committee of certain duties and authority to the Officers.



     SECTION 7.02 Management Committee. Decisions or actions taken by the Management
Committee in accordance with the provisions of this Agreement shall constitute decisions or actions
by the Company and shall be binding on each Member, Representative,



24









 




Officer and employee of the Company. The Management Committee shall conduct its affairs in
accordance with the following provisions and the other provisions of this Agreement:





	 	a)	 	Representatives.






	 	i)	 	Composition. The Management Committee shall be composed
of 4 Representatives designated as provided below by the Members. Each of
El Paso and Opco shall be entitled to designate the number of
Representatives and Alternate Representatives set forth opposite such
Member’s name in Annex I under the column entitled “Number of
Representatives and Alternate Representatives.”
	 
	 	ii)	 	Designation. To facilitate the orderly and efficient
conduct of Management Committee meetings, each Member shall notify the other
Members in writing, from time to time, of the identity of (A) one or more of
its officers, employees or agents who will represent it at meetings (each, a
“Representative”), such number of Persons so identified at any time not to
exceed the number of Representatives to be designated by such Member in
accordance with Section 7.02(a)(i), and (B) one or more of its
officers, employees or agents who will represent it at any meeting that any
one or more of that Member’s Representatives is unable to attend (each an
“Alternate Representative”; if an Alternate Representative is to be an
alternate for more than one Representative of a Member, the Member’s
notification shall specify same), such number of Persons so identified at
any time not to exceed the number of Alternate Representatives to be
designated by such Member in accordance with Section 7.02(a)(i).
(The term “Representative” shall also refer to any Alternate Representative
that is actually performing the duties of the applicable Representative.).
The initial Representatives and Alternate Representatives designated by each
Member are set forth in Annex I. A Member may designate different
Representatives or Alternate Representatives for any meeting of the
Management Committee by notifying each of the other Members on or before the
date scheduled for that meeting; provided, however, that if giving that
advance notice is not feasible, then any new Representative or Alternate
Representative shall present written evidence of his or her authority at the
commencement of such meeting. Alternate Representatives may attend all
Management Committee meetings but shall have no vote at any such meeting
attended except in the absence of the Representative for whom such Person is
the Alternate Representative. Upon the death, resignation or removal for
any reason of any Representative of a Member, such Member shall promptly
designate a successor as provided herein.
	 
	 	iii)	 	Authority. Each Representative shall have the full
authority to act on behalf of the Member that designated such
Representative; the action of the Representative(s) at a meeting (or through
a written consent) of the Management Committee shall bind the Member that
designated that




25









 






	 	 	 	Representative(s); and the other Member shall be entitled to rely upon such
action without further inquiry or investigation as to the actual authority
(or lack thereof) of such Representative(s). In addition, the act of an
Alternate Representative shall be deemed the act of the Representative for
which that Alternate Representative is acting, without the need to produce
evidence of the absence or unavailability of such Representative.
	 
	 	iv)	 	DISCLAIMER OF DUTIES; INDEMNIFICATION. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS AGREEMENT AND ANY DUTY OTHERWISE EXISTING AT
LAW, IN EQUITY, OR OTHERWISE, WITH RESPECT TO ANY VOTE, CONSENT OR APPROVAL
AT ANY MEETING OF THE MANAGEMENT COMMITTEE, OR ANY ACTION OTHERWISE TAKEN BY
A REPRESENTATIVE UNDER THIS AGREEMENT, THE ACT OR OTHERWISE, EACH
REPRESENTATIVE MAY ACT, AND GRANT OR WITHHOLD ITS VOTE, CONSENT OR APPROVAL,
IN ITS SOLE DISCRETION, FREE FROM ANY DUTY, FIDUCIARY OR OTHERWISE, TO THE
COMPANY OR ANY MEMBER (OTHER THAN TO THE MEMBER THAT APPOINTED SUCH
REPRESENTATIVE), OTHER THAN THE DUTY TO ACT IN ACCORDANCE WITH THE IMPLIED
CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING. THE PROVISIONS OF THIS
SECTION 7.02(a)(iv) SHALL APPLY NOTWITHSTANDING THE NEGLIGENCE,
GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY OR OTHER FAULT OR
RESPONSIBILITY OF A MEMBER OR ITS REPRESENTATIVE (OTHER THAN SUCH THAT WOULD
CONSTITUTE A VIOLATION OF THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND
FAIR DEALING).
	 
	 	v)	 	Attendance. Each Member shall use all reasonable efforts
to cause its Representative(s) or Alternate Representative(s) to attend each
meeting of the Management Committee, unless its Representative(s) is unable
to do so because of a “force majeure” event or other event beyond such
Person’s reasonable control, in which event such Member shall use all
reasonable efforts to cause its Representative(s) or Alternate
Representative to participate in the meeting by telephone or other
electronic communication pursuant to Section 7.02(g).






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




26









 






	 	c)	 	Time and Place of Meetings. The Management Committee shall meet no
less often than once each Quarter; provided, however, that in lieu of any such meeting
the Management Committee may elect to act by written consent. The time, date and
location of meetings of the Management Committee, and the agenda for each such
meeting, shall be as determined by the Management Committee from time to time.
Special meetings of the Management Committee may be called at such times, and in such
manner, as any Representative or Member determines to be necessary or appropriate.
Any Representative or Member calling for any such special meeting shall notify all
other Representatives and Members of the date and agenda for such meeting on or before
the third Business Day prior to the date of such meeting, provided that such three (3)
Business Day period may be waived by agreement of the other Representatives.
Attendance of a Member’s Representative at a meeting of the Management Committee shall
constitute a waiver of notice of that meeting, except where the Representative attends
the meeting for the express purpose of objecting to the transaction of any business on
the ground that the meeting was not properly called or convened in accordance with
this Agreement.
	 
	 	d)	 	Quorum. The presence, in person, by telephone or by other form of
two-way electronic communication permitted by Section 7.02(g), of a majority
of the Representatives (including, in the absence of a Representative, the Alternate
Representative of such Person) shall constitute a quorum for the transaction of
business at any meeting of the Management Committee, provided that such majority
includes at least one Representative (or Alternate Representative) of each Member
unless any Member is a Breaching Member, in which case a Representative (or Alternate
Representative) of such Breaching Member will not be required for a Quorum.
	 
	 	e)	 	Voting. Except as provided otherwise in this Agreement, each
Representative (or Alternate Representative, as the case may be) present and acting at
a meeting of the Management Committee shall be entitled to one vote on each matter
submitted to the Management Committee for its approval, consent or determination.
Except as otherwise provided in this Agreement, the affirmative vote of a majority of
the Representatives in attendance at a meeting of the Management Committee at which a
quorum is present (a “Majority Interest”) shall constitute the action of the
Management Committee.
	 
	 	f)	 	Action by Written Consent. Any action required or permitted to be
taken at a regular or special meeting of the Management Committee may be taken
without a meeting, without prior notice, and without a vote if a consent or consents
in writing, setting forth the action so taken, is signed either by all of the
Representatives (or if a Representative is unavailable, the Alternate Representative
for that unavailable Representative); provided that, as to any action set forth in
Section 7.03, such written consent shall also be signed by the Independent
Member. Notice of any meeting at which any action set forth in Section 7.03
shall be submitted to a vote for approval by the Management Committee shall also be
given to the Independent Member not less than ten (10) days before the date of such
meeting. The Independent Member may waive in writing the requirements for notice
before, at or




27









 






	 	 	 	after the meeting involved. Such written consents shall be filed with the minutes of
the Company proceedings and shall have the same force and effect as a vote at a
meeting.
	 
	 	g)	 	Meetings by Telephone or Other Communications Devices.
Representatives (including any Alternate Representative) may participate in and hold
any meeting by means of conference telephone, videoconference or similar
communications equipment by means of which all persons participating in the meeting
can communicate with and hear each other. Participation in a meeting shall constitute
presence in person at the meeting, except where a Member participates in the meeting
for the express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
	 
	 	h)	 	Matters Requiring Management Committee Approval. Except as expressly
provided elsewhere in this Agreement, none of the following actions may be taken by,
or on behalf of the Company, without first obtaining the vote of the Management
Committee described below:






	 	i)	 	Unanimous Interest. The following actions shall require
the approval of all Representatives or Members:






     (A) to the fullest extent permitted by law, dissolution of the
Company under Section 9.01(a);




     (B) to the fullest extent permitted by law, causing or
permitting the Company to become Bankrupt (but this provision is not
intended to require, nor shall it be construed to require, any
Member to ensure the profitability or solvency of the Company);




     (C) causing the Company to mortgage or pledge any of its
properties or assets with a value exceeding a total of $225 million
to secure the payment or performance of any obligation for the
repayment of borrowed money or any guarantee of such repayment;




     (D) the commencement before the FERC, or the resolution through
settlement, stipulation or other consensual means, in whole or in
part, before the FERC (or before any United States Court of Appeals
on an appeal of an order of the FERC), of any proceeding or
controversy, including any NGA Section 4 (15 U.S.C. Section 717(c))
general rate case, or an appeal of any order thereof, the outcome of
which would cause either:




     (i) the Company’s revenues to be reduced by a total of $50
million or more annually;



28









 






     (ii) the Company to pay penalties, refunds or interest of a
total of $50 million or more; or




     (iii) to agree to any
criminal penalty;




     (E) the creation of any additional Membership Interests of any
class and specifying the rights, class(es) and duties thereof, or
the proposed admission of any Person as a member of the Company,
whether as a result of the Disposition by a Member of all or any
part of its Membership Interest or otherwise, provided, however,
that the Disposition by a Member of all or any part of its
Membership Interest to a Permitted Transferee shall not require the
prior approval of the Management Committee;




     (F) any proposal to sell or otherwise Dispose of assets of the
Company, whether in a single transaction or any series of
transactions, outside the ordinary course of the Company’s business
with a value exceeding a total of $225 million in any calendar year;




     (G) the Disposition or abandonment of all or substantially all
of the assets of the Company, and any Disposition (including a
Deemed Tax Disposition, if such Disposition, when added to the total
of all other Dispositions (including Deemed Tax Dispositions) within
the preceding twelve months, results in the Company being considered
to have terminated within the meaning of Section 708(b)(1)(B) of the
Code;




     (H) causing or permitting the Company to merge with, or
consolidate or convert into, any other entity; or




     (I) entering into, conducting, or authorizing the Company to
conduct, any new activity or business that may cause the Company to
generate income for federal income tax purposes which will not
constitute “qualifying income” (as such term is defined pursuant to
Section 7704 of the Code).




	 	ii)	 	Majority Interest. Except for matters that are covered
by Section 7.02(h)(i) or matters that the law otherwise requires
approval by a greater percentage, a Majority Interest shall be required to
approve any action that requires approval of the Members or the
Representatives, including the following matters:






     (A) causing the Company to take any action under this Agreement
that requires Management Committee approval other than the actions
specified in Section 7.02(h)(i);



29









 






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




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




     (D) issuing or causing to be issued any Capital Call under
Section 3.01 or Loan Notice under Section 3.02;




     (E) any additions to (by acquisition, development, construction
or otherwise) or expansions or extensions of the Company’s
facilities, provided that any additions, expansions or extensions to
the facilities approved by any duly authorized Officer(s) pursuant
to authority delegated by the Management Committee shall be deemed
approved by the Management Committee for purposes hereof and shall
not require separate approval;




     (F) appointing Officers of the Company and determining their
authority to act on behalf of the Company;




     (G) designating Officers or employees to serve on the audit
committee of the Company, if one shall be established by the
Management Committee;




     (H) any change in the Company’s name;




     (I) causing the Company to enter into any short-term or
long-term indebtedness, but Working Capital Borrowings made from
time-to-time under an agreement previously approved as contemplated
herein need not be further approved by the Management Committee;




     (J) except for any commencement or resolution that requires the
unanimous approval of the Management Committee pursuant to
Section 7.02(i)(D) above, the commencement before the FERC,
or the resolution through settlement, stipulation or other
consensual means of any matter brought under the NGA Section 4 (15
U.S.C. Section 717(c)) or Section 5 (15 U.S.C. Section 717(d));
provided that the Management Committee may delegate to any duly
authorized Officer(s) the right(s) to



30









 





commence or resolve any such
proceeding involving $25 million or less;


     (K) making any tax elections under the Code; or




     (L) except for any mortgage or pledge of any properties or
assets that requires the unanimous approval of the Management
Committee pursuant to Section 7.02(i)(C) above, causing the
Company to mortgage or pledge any of its properties or assets to
secure the payment or performance of any obligation for the
repayment of borrowed money or any guarantee of such repayment.




	 	i)	 	Subcommittees. The Management Committee shall have the power and
authority to create such subcommittees, and delegate to such subcommittees such
authority and responsibility, and rescind any such delegations, as it may deem
appropriate.
	 
	 	j)	 	Officers.






     (A) The Management Committee shall have the power and authority
to appoint one or more Persons to be Officers of the Company. Any
Officers so designated shall have such titles and, subject to the
other provisions of this Agreement, have such authority and perform
such duties as the Management Committee may delegate to them and
shall serve at the pleasure of the Management Committee and report
to the Management Committee. Except as otherwise specifically
provided in this Agreement or by the Management Committee, the
authority and functions of the Officers shall be identical to the
authority and functions of the officers of a corporation organized
under the General Corporation Law of the State of Delaware. The
Management Committee shall have full power and authority to direct
the Officers to do all things and on such terms as it determines to
be necessary or appropriate to conduct the business of the Company.
In addition, the Management Committee shall have full power and
authority to select and dismiss Officers, employees, agents, outside
attorneys, accountants, consultants and contractors and to determine
their compensation and other terms of employment or hire, create and
operate employee benefit plans, employee programs and employee
practices.




     (B) The Officers may include a Chief Executive Officer, a
President and a Secretary, and may also include a Chief Operating
Officer, Chief Financial Officer, Treasurer, one or more Vice
Presidents (who may be further classified by such descriptions as
“executive,” “senior,” “assistant” or otherwise, as the Management
Committee shall determine), one or more Assistant Secretaries and
one or more Assistant Treasurers. If



31









 







Officers are appointed, each
Officer shall hold office until his or her successor is elected and
qualified or until his or her earlier death, resignation or removal.
Any number of offices may be held by the same Person. The compensation of Officers shall be
fixed from time to time by the Management Committee or by such
Officers as may be designated by the Management Committee.




     (C) Any Officer may resign at any time upon written notice to
the Company. Any Officer may be removed by the Management Committee
with or without cause at any time. The Management Committee may
delegate the power of removal of Officers to any Officer. Such
removal shall be without prejudice to a Person’s contract rights, if
any, but the appointment of any Person as an Officer shall not of
itself create contract rights.




     (D) Unless otherwise directed by the Management Committee or
specified in an employment or other agreement to which an Officer is
a party, a Person appointed as an Officer of the Company shall be
required to devote to the business affairs of the Company only the
portion of such Person’s full productive time as is required to
perform the duties delegated to such Person by the Management
Committee. In addition, it shall not constitute a breach or
violation of any duty owed to the Company or to any Member by a
Person appointed as an Officer for such Person to be a director,
manager, officer or employee of any Affiliate of the Company
provided that the Management Committee is advised of such Person’s
positions with such Affiliate(s) and does not object to same in a
timely manner.



     SECTION 7.03 Actions Requiring Consent of Independent Member. Notwithstanding any
other provision in this Agreement to the contrary, (other than Section 4.03(c)), the
limited liability company authorization of the following acts shall require the prior unanimous
written approval of the Management Committee and the Independent Member:




	 	a)	 	merging, consolidating or combining the Company or any subsidiary of the
Company with any other entity, to the fullest extent permitted by law, dissolving or
winding up the Company, selling, transferring or otherwise disposing of all or
substantially all of the assets of the Company, or approving any plan or agreement to
engage in any of the foregoing actions;
	 
	 	b)	 	amending, altering or changing of provisions of Section 4.03 or any
other Section of the Agreement; but only to the extent such amendment requires the
consent of the Independent Member as required therein;
	 
	 	c)	 	the authorization of or taking any action which would constitute a Bankruptcy
of the Company;




32









 






	 	d)	 	any contravention of any provision of this Agreement or engaging in any
activity other than those contemplated by Section 2.04;
	 
	 	e)	 	incurring, assuming or otherwise becoming obligated for any indebtedness
except pursuant to or as permitted by the Credit Agreement;
	 
	 	f)	 	any modification, amendment, termination or cancellation of any of the
Financing Documents, except as otherwise permitted under the Financing Documents;
	 
	 	g)	 	creating or permitting to exist any lien on any property of the Company
except pursuant to or as permitted under the Credit Agreement;
	 
	 	h)	 	entering into any contract (including any indemnification agreement) or
transaction with any Member or any Affiliate of any Member other than as expressly
provided for or contemplated by this Agreement, or pursuant to or as permitted by the
Credit Agreement;
	 
	 	i)	 	amending or modifying the Company’s certificate of formation.





     To the fullest extent permitted by applicable law, and notwithstanding anything to the
contrary in this Agreement, the Independent Member, in exercising its consent rights in connection
with the actions set forth in this Section 7.03, shall have no duty (including fiduciary
duty) or obligation (whether under this Agreement, at law or in equity or otherwise) to consider
the interests of the Company, and may solely consider the interests of the Agent and the Lenders
and their Affiliates and nominees. All right, power and authority of the Independent Member shall
be limited to the extent necessary to exercise those rights specifically set forth in this
Agreement. To the extent permitted by law, the Independent Member shall not be liable, responsible
or accountable in damages or otherwise to the Company or the Member(s) for any act or omission
performed or omitted in a manner reasonably believed by the Independent Member to be within the
scope of the authority granted to him or her by this Agreement. The Independent Member shall at no
time serve as trustee in bankruptcy for any Affiliate of the Company.



     At each meeting of the Management Committee at which any action set forth in this Section
7.03 or any other Section hereof that specifies that the approval of the Independent Member is
required, as applicable, shall be submitted to a vote for approval by the Management Committee, the
presence in person or by electronic means, as the case may be, of the Independent Member shall also
be necessary to constitute a quorum. Neither the presence or vote of the Independent Member nor
notice to the Independent Member shall be required for the Company to undertake any action other
than those specified in this Section 7.03 or any other Section hereof that specifies that
the approval of the Independent Member is required.



     SECTION 7.04 Prohibition on incurring Indebtedness other than Permitted Indebtedness.
Notwithstanding anything to the contrary contained herein, the Company is prohibited from incurring
any Indebtedness (as defined in the Credit Agreement) other than Permitted Indebtedness (as defined
in the Credit Agreement).



33









 





     SECTION 7.05 Conflicts of Interest; Outside Activities.




	 	a)	 	Each Member agrees to the terms of Section 2.07.
	 
	 	b)	 	In addition to the rights set forth in Section 2.07, any Member or
Affiliate or Affiliates of a Member (including any Subsidiary of a Member) shall have
the right to engage in businesses of every type and description and other activities
for profit and to engage in and possess an interest in other business ventures of any
and every type or description, whether in businesses engaged in or anticipated to be
engaged in by the Company or any Subsidiary, independently or with others, including
business interests and activities in direct competition with the business and
activities of the Company or any Subsidiary, and none of the same shall constitute a
breach of this Agreement or any duty otherwise existing at law, in equity or otherwise
to the Company, any Subsidiary or any Member. None of the Company, any Subsidiary or
any other Person shall have any rights by virtue of this Agreement or the relationship
established hereby in any business ventures of any Member or any Affiliate of a Member
(including any Subsidiary of a Member).
	 
	 	c)	 	Notwithstanding anything to the contrary in this Agreement, (i) the engaging
in competitive activities by any Person (including any Member or any Subsidiary or
other Affiliate of a Member) in accordance with the provisions of this Section
7.05 is hereby approved by the Company and all Members, (ii) it shall be deemed
not to be a breach of any Member’s or any other Person’s duties to the Company or any
Member or any other obligation of any type whatsoever of a Member or any other Person
to the Company or any Member for any such Person to engage in such business interests
and activities in preference to or to the exclusion of the Company or any Subsidiary,
(iii) none of the Members or any other Person shall have any obligation hereunder or
as a result of any duty otherwise existing at law, in equity or otherwise to present
business opportunities to the Company or any Subsidiary and (iv) the doctrine of
“corporate opportunity” or other analogous doctrine shall not apply to any Member or
other Person.
	 
	 	d)	 	The Company may transact business with any Member or Affiliate of a Member,
provided the terms of those transactions are approved by the Management Committee or
expressly contemplated by this Agreement or involve transportation agreements on the
Facilities with an Affiliate of a Member incurred in the ordinary course of the
Company’s business. Without limiting the generality of the foregoing, the Members
recognize and agree that their respective Affiliates currently, or in the future may,
engage in various activities involving natural gas marketing and trading (including
futures, options, swaps, exchanges of future positions for physical deliveries and
commodity trading), transportation, gathering, processing, storage, distribution,
development and ownership, as well as other commercial activities related to natural
gas and other hydrocarbons and that these and other activities by Members’ Affiliates
may be based on natural gas that is transported in the Facilities or otherwise made
possible or more profitable by reason of the Company’s activities (herein referred to
as “Affiliate’s Outside Activities”). No Affiliate of a Member shall be restricted in
its right to conduct, individually or jointly with others, for its




34









 






	 	 	 	own account any
Affiliate’s Outside Activities, and no Member or its Affiliates shall have any duty or
obligation, express or implied, fiduciary or otherwise, to
account to, or to share the results or profits of such Affiliate’s Outside Activities
with, the Company, any other Member or any Affiliate of any other Member, by reason of
such Affiliate’s Outside Activities.
	 
	 	e)	 	To the extent permitted by Law, the provisions of this Agreement, including
this Section 7.05 and Sections 7.02(a)(iv), 7.02(e)(ii),
7.08 and 7.09, constitute an agreement to modify or eliminate
fiduciary duties pursuant to the provisions of the Act.





     SECTION 7.06 Indemnification for Breach of Agreement. To the fullest extent
permitted by Law, each Member shall indemnify, protect, defend, release and hold harmless each
other Member, its Affiliates, and its and their respective directors, officers, trustees, employees
and agents from and against any Claims asserted by or on behalf of any Person (including another
Member) that result from a breach by the indemnifying Member of this Agreement; provided, however,
that this Section 7.06 shall not (a) apply to any Claim or other matter for which a Member
has no liability or duty, or is indemnified or released, pursuant to Section 7.05 or (b)
hold the indemnified Person harmless from special, consequential or exemplary damages, except in
the case where the indemnified Person is legally obligated to pay such damages to another Person.



     SECTION 7.07 General Regulatory Matters. Each Member shall:




	 	a)	 	cooperate fully with the Company and the Management Committee in securing
appropriate Authorizations for the development, construction and operation of the
Facilities, including supporting all applications submitted to the FERC by or on behalf
of the Company, and in connection with any reports prescribed by any other Governmental
Authority having jurisdiction over the Company;
	 
	 	b)	 	join in any eminent domain takings by the Company, to the extent, if any,
required by Law;
	 
	 	c)	 	devote such efforts as shall be reasonable and necessary to develop and promote
the Facilities for the benefit of the Company, taking into account the Member’s
Percentage Interest, resources and expertise; and
	 
	 	d)	 	cooperate fully with the Company and the Management Committee to ensure
compliance with FERC Standards of Conduct, if applicable.





     SECTION 7.08 Disclaimer Of Duties. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT AND ANY DUTY OTHERWISE EXISTING AT LAW, IN EQUITY OR OTHERWISE, WITH RESPECT TO ANY
ACTION, CONSENT OR APPROVAL, EACH MEMBER MAY TAKE OR NOT TAKE THE ACTION, OR GRANT OR WITHHOLD
CONSENT OR APPROVAL, IN ITS SOLE DISCRETION, FREE FROM ANY DUTY, FIDUCIARY OR OTHERWISE, TO THE
COMPANY OR ANY MEMBER OTHER THAN THE DUTY TO ACT IN ACCORDANCE WITH THE IMPLIED CONTRACTED COVENANT
OF GOOD FAITH AND FAIR DEALING. THE PROVISIONS OF THIS



35









 







SECTION 7.08 SHALL APPLY
NOTWITHSTANDING THE NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY OR OTHER
FAULT OR
RESPONSIBILITY OF ANY MEMBER (OTHER THAN SUCH THAT WOULD CONSTITUTE A BAD FAITH VIOLATION OF
THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING).



     SECTION 7.09 Sole Discretion. To the fullest extent permitted by law and
notwithstanding any other provision of this Agreement or in any other agreement contemplated herein
or any duty otherwise existing at law, in equity or otherwise, whenever in this Agreement any
Person is permitted or required to make a decision (a) in its Sole Discretion, such Person shall be
entitled to consider only such interests and factors as it desires, including its own interests,
and shall have no duty (including any fiduciary duty) or obligation to give any consideration to
any interest of or factors affecting the Company or any other Person or (b) in its “good faith” or
under another express standard, such Person shall act under such express standard and shall not be
subject to any other or different standard.



ARTICLE VIII.

DISPOSITIONS OF MEMBERSHIP INTERESTS





     SECTION 8.01 Dispositions and Encumbrances of Membership Interests.




	 	a)	 	Except to the extent permitted by this Section 8.01, a Member (the
“Disposing Member”) may not Dispose of all or any portion of its Membership Interest
(the “Subject Interest”) to a Person who is not a Permitted Transferee of such Member
unless and until (i) the other terms and conditions set forth in this Section
8.01 have been satisfied and (ii) such Disposition has been approved by the
requisite approval of the Management Committee. If any Disposing Member intends to
dispose of its Membership Interest pursuant to a bona fide offer (“Acquisition
Proposal”) from a Person who is not a Permitted Transferee, such Disposing Member
shall notify the Management Committee and the other Members in writing (“Transfer
Notice”), which Transfer Notice shall specify the identity of the proposed transferee
and the terms and conditions (including the cash and a description of the non-cash
consideration constituting the purchase price) of the proposed Disposition and shall
include a complete copy of the Acquisition Proposal. Except with respect to a
proposed Disposition to a Permitted Transferee, the Members (other than the Disposing
Member) shall have the right, at any time during the period (the “Exercise Period”)
that ends at 5:00 p.m. Houston, Texas time on the 30th day after receipt of the
Transfer Notice to elect to purchase the Subject Interest at the price and on the
terms and conditions set forth in the Acquisition Proposal. Any Member(s) who elect
to purchase the Subject Interest (each, a “ROFR Buyer”) must furnish written notice
(each, a “ROFR Acceptance”) to the Disposing Member prior to termination of the
Exercise Period.
	 
	 	b)	 	The Disposing Member shall not be bound to Dispose of any portion of the
Subject Interest to any ROFR Buyer(s) unless all of such Subject Interest is accepted
for




36









 






	 	 	 	purchase by ROFR Buyers in accordance with this Section 8.01. If there is
more than one ROFR Buyer who timely delivers a ROFR Acceptance, each such ROFR Buyer
shall be entitled to purchase its pro rata portion of the Subject Interest, based upon
the ratio that each such ROFR Buyer’s Percentage Interest bears to the total
Percentage Interests of all such ROFR Buyers. The ROFR Buyer(s) may substitute the
cash equivalent for any portion of the consideration specified in the Acquisition
Proposal which was other than cash or a promissory note payable in cash; provided,
however, that if the ROFR Buyer(s) desire to so substitute cash for any such non-cash
consideration, and if the ROFR Buyer(s)’ determination of the fair market value of
such non-cash consideration is less than the fair market value that was given for such
consideration by the Disposing Member in the Transfer Notice, the ROFR Buyer(s) shall
state their determination of such value in the ROFR Acceptance; and if the Disposing
Member and the ROFR Buyer(s) are unable to mutually agree upon the fair market value
of such non-cash consideration within five Business Days after the delivery of the
ROFR Acceptance, then the Disposing Member and the ROFR Buyer(s) shall promptly cause
such value to be determined through appraisal in the manner provided in Section
8.01(e). Such appraisal procedure shall delay, if necessary, any closing of the
sale of the Subject Interest. Any delayed closing shall occur, subject to the next
sentence, within 15 days after delivery to the parties of the appraiser’s
determination of the value of the non-cash consideration. The cash equivalent of any
such non-cash consideration that is to be paid at the closing of the purchase and sale
of the Subject Interest shall in such event be the amount determined by the appraisal.
	 
	 	c)	 	The closing of the Disposition of the Subject Interest pursuant to the
exercise of the rights of first refusal granted in Section 8.01(a) shall be at
9:00 a.m. Houston, Texas time on the 45th day following the end of the Exercise
Period at the Company’s principal office, or such other place as agreed by the
Disposing Member and ROFR Buyer(s), subject to any delay in the closing provided for
below or in connection with any appraisal conducted as contemplated in Section
8.01(e), unless the Disposing Member and the ROFR Buyer(s) otherwise agree. At
the closing, the consideration to be paid by the ROFR Buyer(s) shall be delivered by
the ROFR Buyer(s) to the Disposing Member (by wire transfer in immediately available
funds to the extent such consideration is cash), and the Disposing Member shall
deliver to the ROFR Buyer(s) an instrument of assignment of the Subject Interest
accompanied by the Interest Certificate evidencing same, free and clear of all liens,
encumbrances and adverse claims with respect thereto. The ROFR Buyer(s) shall be
entitled to pay for the Subject Interest in cash or with cash and a promissory note on
substantially similar terms to that set forth in the Transfer Notice. The Disposing
Member and the ROFR Buyer(s) shall cooperate in good faith in obtaining all necessary
governmental and other third Person approvals, waivers and consents required for the
closing. Any such closing shall be delayed, to the extent required, until the next
succeeding Business Day following the obtaining of all necessary governmental
approvals or the expiration of all government waiting periods; provided, however, that
in the case of such delay, the purchase price shall be increased by interest at
the Default Rate from the date that the closing would have otherwise occurred.




37









 






	 	d)	 	If, after completion of the foregoing procedures under this Section
8.01, the Members (other than the Disposing Member) fail to elect to purchase all
of the Subject Interest, the Disposing Member may, at any time within 120 days after
the expiration of the Exercise Period or after the decision of the appraisers, if
longer, Dispose of all (but not less than all) of the Subject Interest to the proposed
acquirer under the Acquisition Proposal on terms no more favorable to such acquirer
than those set forth in said Acquisition Proposal (and the Transfer Notice) and
offered to the Members (other than the Disposing Members). After the expiration of
such 120-day period, the Disposing Member may not Dispose of the Subject Interest
described in the Transfer Notice without complying again with the provisions of this
Section 8.01 if and to the extent then applicable.
	 
	 	e)	 	If the Disposing Member and the ROFR Buyer(s) are unable to agree within 30
days after the Transfer Notice is given upon one independent appraiser who will
determine the value of any non-cash consideration proposed as all or part of the
purchase price for any Subject Interest, then within 30 days after the Transfer Notice
is given, the Disposing Member, on the one hand, and the ROFR Buyer(s), collectively,
on the other, shall each appoint an independent appraiser who has at least 10 years’
experience in valuing interstate pipeline business activities similar to those
conducted by the Company. If the two parties each timely appoint an independent
appraiser and such appraisers are unable to agree upon the value of any non-cash
consideration proposed as all or part of the purchase price for the Subject Interest,
then a third appraiser shall be appointed by the two appraisers. The third appraiser
shall value the non-cash consideration proposed in the Acquisition Proposal for the
Subject Interest within 30 days of appointment. If such appraisal is less than the
lower of the two initial appraisers’ valuation of such consideration, then the value
shall equal the average of the lowest two of the three appraisers’ valuations. If
such appraisal exceeds the higher of the two initial appraisers’ valuations of such
consideration, then the value shall equal the average of the two highest appraisers’
valuations. The appraisers shall employ such persons and incur such expenses as are
necessary to reach such determination. The Disposing Member shall bear 50% of all
fees and expenses incurred by the appraisers in making such valuation determination,
and the ROFR Buyer(s), collectively, shall bear the other 50% of all such fees and
expenses. The determination of the appraisers shall be final and binding upon the
parties.
	 
	 	f)	 	Except for a Disposition to a Permitted Transferee or a Disposition effect in
accordance with and subject to the procedures in Sections 8.01(a)-(e) above, a
Member may not Dispose of a Membership Interest without the prior written approval of
the Management Committee. Any attempted Disposition of a Membership Interest, other
than in strict accordance with this Section 8.01, shall be, and is hereby
declared, null and void to the fullest extent permitted by law. The rights and
obligations constituting a Membership Interest may not be separated, divided, split
off or otherwise separated from the other attributes of a Membership Interest except
with the express prior written approval of the Management Committee and as
contemplated by the express provisions of this Agreement. Notwithstanding the
foregoing, a Member may not effect a Disposition (including a




38









 






	 	 	 	Deemed Tax Disposition) if such Disposition, when added to the total of all other
Dispositions (including Deemed Tax Dispositions) within the preceding twelve months,
results in the Company being considered to have terminated within the meaning of
Section 708(b)(1)(B) of the Code, unless such Disposition has been approved in
accordance with Section 7.02(h)(i)(G).
	 
	 	g)	 	Each Interest Certificate shall bear a legend as specified in Section
8.02(f).





     SECTION 8.02 Membership Interests and Interest Certificates.




	 	a)	 	Each Membership Interest shall constitute a “security” within the meaning of,
and shall be governed by, (i) Article 8 of the Uniform Commercial Code (including
Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware
and in the State of New York and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction that now or hereafter substantially includes the 1994
revisions to Article 8 thereof as adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995.
	 
	 	b)	 	Upon the issuance of Membership Interests to any Member in accordance with
the provisions of this Agreement, the Company may issue one or more Interest
Certificates (as defined herein) in the name of such Member. Each such Interest
Certificate shall be denominated in terms of the percentage of Membership Interests
evidenced by such Interest Certificate and shall be signed by an Officer on behalf of
the Company. “Interest Certificate” means a certificate issued by the Company
substantially in the form of Exhibit A hereto, which evidences the ownership
of Membership Interests. Each Interest Certificate shall bear, in effect, the
following legend: “The Interest shall constitute “securities” within the meaning of,
and shall be governed by, (i) Article 8 of the Uniform Commercial Code (including
Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware
and in the State of New York and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction that now or hereafter substantially includes the 1994
revisions to Article 8 thereof as adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995.”
	 
	 	c)	 	Upon a Member’s Disposition in accordance with the provisions of this
Agreement, including Section 8.01 hereof, of any or all Membership Interests
in the Company represented by a Interest Certificate, the transferee of such
Membership Interests shall deliver such endorsed Interest Certificate to the Company
for cancellation, and the Company shall thereupon issue a new Interest Certificate to
such transferee for the percentage of Membership Interests that is the subject of such
Disposition and, if applicable, cause to be issued to such Member a new Interest
Certificate for that percentage of Membership Interests that were represented by the
canceled Interest Certificate and that are not the subject of such Disposition.




39









 






	 	d)	 	The Company shall maintain books for the purpose of registering the
Disposition of Membership Interests. Notwithstanding any other provision of this
Agreement, a Disposition of Membership Interests in the Company requires delivery of
an endorsed Interest Certificate and shall be effective upon registration of such
Disposition in the books of the Company.
	 
	 	e)	 	The Company shall issue a new Interest Certificate in place of any Interest
Certificate previously issued if the holder of the Membership Interests represented by
such Interest Certificate, as reflected on the books and records of the Company:






	 	i)	 	makes proof by affidavit, in form and substance
satisfactory to the Company, that such previously issued Interest
Certificate has been lost, stolen or destroyed;
	 
	 	ii)	 	requests the issuance of a new Interest Certificate
before the Company has notice that such previously issued Interest
Certificate has been acquired by a purchaser for value in good faith and
without notice of an adverse claim;
	 
	 	iii)	 	if requested by the Company, delivers to the Company a
bond, in form and substance satisfactory to the Company, with such surety or
sureties as the Company may direct, to indemnify the Company against any
claim that may be made on account of the alleged loss, destruction or theft
of the previously issued Interest Certificate; and
	 
	 	iv)	 	satisfies any other reasonable requirements imposed by
the Company.






	 	f)	 	In addition to the legend referred to in Section 8.02(b), each
Interest Certificate that is issued shall bear the following legend:
	 
	 	 	 	“TO THE FULLEST EXTENT PERMITTED BY LAW, MEMBER’S LIMITED LIABILITY
COMPANY INTEREST (THE “INTEREST”) IN THE COMPANY IS NOT
TRANSFERABLE EXCEPT AS PROVIDED IN THE AGREEMENT, AND IS OTHERWISE
SUBJECT TO THE TERMS AND CONDITIONS OF THE AGREEMENT AND THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT, INCLUDING THOSE
IN SECTION 8.01 THEREOF. ”
	 
	 	g)	 	Notwithstanding any provision of this Agreement to the contrary, to the
extent that any provision of this Agreement is inconsistent with any non-waivable
provision of Article 8 of the Uniform Commercial Code, such provision of Article 8 of
the Uniform Commercial Code shall control.





     SECTION 8.03 Creation of Additional Membership Interests. Additional Membership
Interests may be created and issued to existing Members or to other Persons, and such other Persons
may be admitted to the Company as Members, only with the express prior



40









 




approval of the Management Committee or all the Members, and without the consent of any Member
or any other Person being required, and, if so approved, only on such terms and conditions as the
Management Committee may determine at the time of such approval or admission. The terms of
admission or issuance must specify the applicable Percentage Interests of the new and existing
Members and may provide for the creation of different classes or groups of Members having different
rights, powers and duties, including rights, powers and duties that are senior in preference to
existing Members. Any such admission shall be effective only after the new Member has executed and
delivered to each other Member an instrument containing the notice address of the new Member, the
new Member’s ratification of this Agreement and agreement to be bound by it, and its confirmation
that the representations and warranties in Section 4.04 are true and correct with respect
to it. The provisions of this Section 8.03 shall not apply to Dispositions of Membership
Interests or admissions of Assignees in connection therewith, such matters being governed by
Section 8.01.




     SECTION 8.04 Limitation of Liabilities of Members.




	 	a)	 	Except as otherwise expressly
provided by the Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be the debts, obligations and
liabilities solely of the Company, and neither the Members nor the Independent Member
shall be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a member of the Company.
	 
	 	b)	 	After the Effective Date, the Management Committee shall, and shall cause the
Officers to, use their respective reasonable efforts to prevent the Company from
entering into any contract, lease, sublease, note, indebtedness, deed of trust or
agreement or document that creates any liability, indebtedness or other obligation
unless there is contained therein an appropriate provision expressly limiting the
claims of all parties to such instruments or agreements and other beneficiaries
thereunder to the assets of the Company and expressly waiving any rights of such
parties and other beneficiaries to proceed against any Members for any such Company
obligation, without the prior written consent of all Members.





     SECTION 8.05 Use of Names and Trademarks. The Company, the Members and their
Affiliates shall not use the name or trademark of any Member or its Affiliates in connection with
public announcements regarding the Company, or marketing or financing activities of the Company,
without the prior consent of such Members or Affiliate, which shall not be unreasonably withheld.



ARTICLE IX.

DISSOLUTION, WINDING UP AND TERMINATION




     SECTION 9.01 Dissolution. The Company shall dissolve and its affairs shall be wound
up on the first to occur of the following events (each a “Dissolution Event”):



41









 






	 	a)	 	notice from the Management Committee to the Members dissolving the Company;
	 
	 	b)	 	entry of a decree of judicial dissolution of the Company under Section 18-802
of the Act;
	 
	 	c)	 	an event that makes it unlawful for all or substantially all of the business
or affairs of the Company to be carried on; or
	 
	 	d)	 	the termination of the legal existence of the last remaining member of the
Company or the occurrence of any other event which terminates the continued membership
of the last remaining member of the Company in the Company, unless the Company is
continued without dissolution in a manner permitted by this Agreement or the Act.





     SECTION 9.02 Winding Up and Termination.




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






	 	i)	 	as promptly as possible after dissolution and again after
final winding up, the Liquidator shall cause a proper accounting to be made
by a recognized firm of independent certified public accountants of the
Company’s assets, liabilities and operations through the last calendar day
of the month in which the dissolution occurs or the final winding up is
completed, as applicable;
	 
	 	ii)	 	the Liquidator shall discharge from Company funds all of
the indebtedness of the Company and other debts, liabilities and obligations
of the Company (including liabilities to Members, to the extent permitted by
law); and all expenses incurred in winding up and any loans described in
Section 3.02 or otherwise make reasonable provision for payment and
discharge thereof (including the establishment of a cash escrow fund for
contingent, conditional or unmatured liabilities in such amount and for such
term as the liquidator may reasonably determine in accordance with Section
18-804 of the Act); and
	 
	 	iii)	 	all remaining assets of the Company shall be distributed
to the Members as follows:






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



42









 






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




     (C) all Company property and all cash in excess of that required to
discharge liabilities or obligations as provided in Section
9.02(a)(ii) shall be distributed to the Members in accordance with, and
to the extent of, the positive balances in their respective Capital
Accounts, as determined after making all Capital Account adjustments
required herein. Distributions pursuant to this Section
9.02(a)(iii)(C) shall be made by the end of the taxable year of the
Company during which the liquidation of the Company occurs (or, if later,
the 90th Day after the date of the liquidation).




	 	b)	 	The distribution of cash or property to a Member in accordance with the
provisions of this Section 9.02 constitutes a complete return to the Member of
its Capital Contributions and a complete distribution to the Member of its Company
Membership Interest and all the Member’s property. To the extent that a Member
returns funds to the Company, it has no claim against any other Member for those
funds.
	 
	 	c)	 	No dissolution or termination of the Company shall relieve a Member from any
obligation to the extent such obligation has accrued as of the date of such
dissolution or termination. Upon such termination, any books and records of the
Company that there is a reasonable basis for believing will ever be needed again shall
be furnished to the Liquidator, which shall keep such books and records (subject to
review by any Person that was a Member at the time of dissolution) for a period of at
least three years. At such time as the Liquidator no longer agrees to keep such books
and records, it shall offer the Persons who were Members at the time of dissolution
the opportunity to take over such custody, shall deliver such books and records to
such Persons if they elect to take over such custody and may destroy such books and
records if they do not so elect. Any such custody by such Persons shall be on such
terms as they may agree upon among themselves.





     SECTION 9.03 Deficit Capital Accounts. No Member will be required to pay to the
Company, to any other Member or to any third party any deficit balance that may exist from time to
time in another Member’s Capital Account.



     SECTION 9.04 Certificate of Cancellation. On completion of the winding up of the
Company as provided herein and the Act, the Members (or such other Person or Persons as the Act may
require or permit) shall file a certificate of cancellation with the Secretary of State of the
State of Delaware and take such other actions as may be necessary to terminate the



43









 




existence of the Company. Upon the filing of such certificate of cancellation, the existence
of the Company shall terminate (and the term of the Company shall end), except as may be otherwise
provided by the Act or other applicable Law.




ARTICLE X.

TAXES




     SECTION 10.01 Tax Returns. The Tax Matters Member shall prepare and timely file (on
behalf of the Company) all federal, state and local tax returns required to be filed by the Company
and provide all Members, upon request, access to accounting and tax information and schedules as
shall be necessary for the preparation of such Member of its income tax returns and such Member’s
tax information reporting requirements, and provide all Members with a draft of the return for
their review and comment no later than February 15th of the year following. Each Member shall
furnish to the Tax Matters Member all pertinent information in its possession relating to the
Company’s operations that is necessary to enable the Company’s tax returns to be timely prepared
and filed. The Company shall bear the costs of the preparation and filing of its returns.



     SECTION 10.02 Tax Elections. The Company shall make the following elections on the
appropriate tax returns:




	 	a)	 	to adopt as the Company’s fiscal year the calendar year;
	 
	 	b)	 	to adopt the accrual method of accounting;
	 
	 	c)	 	to elect, pursuant to Section 754 of the Code in accordance with the
applicable Treasury Regulations thereunder, to adjust the basis of the Company’s
properties;
	 
	 	d)	 	to elect to amortize the organizational expenses of the Company ratably over
the period as permitted by Section 709(b) of the Code; and
	 
	 	e)	 	any other election the Management Committee may deem appropriate.




The Company intends to be classified as a partnership for federal income tax purposes. Neither the
Company nor any Member shall make an election for the Company to be excluded from the application
of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar provisions
of applicable state law and no provision of this Agreement shall be construed to sanction or
approve such an election.




     SECTION 10.03 Tax Matters Member.




	 	a)	 	The Management Committee shall designate El Paso to serve as the “tax matters
partner” of the Company pursuant to Section 6231(a)(7) of the Code (the “Tax Matters
Member”). The Tax Matters Member shall take such action as may be necessary to cause
to the extent possible each other Member to become a “notice partner” within the
meaning of Section 6223 of the Code. The Tax Matters Member shall inform each other
Member of all significant matters that may come to its attention in its capacity as
Tax Matters Member by giving notice thereof on or before the fifth Business Day
after becoming aware thereof and, within that time,




44









 






	 	 	 	shall forward to each other Member copies of all significant written communications it
may receive in that capacity.
	 
	 	b)	 	The Tax Matters Member shall provide any Member, upon request, access to
accounting and tax information and schedules as shall be necessary for the preparation
by such Member of its income tax returns and such Member’s tax information reporting
requirements.
	 
	 	c)	 	Any cost or expense incurred by the Tax Matters Member in connection with its
duties, including the preparation for or pursuance of administrative or judicial
proceedings, shall be reimbursed by the Company.
	 
	 	d)	 	The Tax Matters Member shall not bind any Member to a settlement agreement
without obtaining the consent of such Member. Any Member that enters into a
settlement agreement with respect to any Company item (as described in Code Section
6231(a)(3)) shall notify the other Members of the settlement agreement and its terms
on or before the 90th Day after the date of the settlement.
	 
	 	e)	 	No Member shall file a request pursuant to Code Section 6227 for an
administrative adjustment of Company items for any taxable year without first
notifying the other Members. If the Management Committee consents to the requested
adjustment, the Tax Matters Member shall file the request for the administrative
adjustment on behalf of the Members. If such consent is not obtained on or before the
30th Day after such notice, or within the period required to timely file the request
for administrative adjustment, if shorter, any Member, including the Tax Matters
Member, may file a request for administrative adjustment on its own behalf. Any
Member intending to file a petition under Code Sections 6226, 6228 or other Code
Section with respect to any item involving the Company shall notify the other Members
of such intention and the nature of the contemplated proceeding. In the case where
the Tax Matters Member is the Member intending to file such petition on behalf of the
Company, such notice shall be given within a reasonable period of time to allow the
other Members to participate in the selection of the forum in which such petition will
be filed.
	 
	 	f)	 	If any Member intends to file a notice of inconsistent treatment under Code
Section 6222(b), such Member shall give reasonable notice under the circumstances to
the other Members of such intent and the manner in which the Member’s intended
treatment of an item is (or may be) inconsistent with the treatment of that item by
the other Members.





     SECTION 10.04 Amounts Withheld. All amounts required to be withheld pursuant to
federal, state, local, or foreign tax laws shall be treated as amounts actually distributed to the
affected Members for all purposes under this Agreement. The Management Committee is hereby
authorized to withhold from distributions, or with respect to allocations, to the Members and to
pay over to any federal, state, local, or foreign government any amounts required to be so withheld
pursuant to federal, state, local or foreign law.



45









 





ARTICLE XI. WITHDRAWAL




     SECTION 11.01 No Right of Withdrawal. No Member shall voluntarily Withdraw from the
Company.



     SECTION 11.02 Deemed Withdrawal. A Member is deemed to have Withdrawn from the
Company upon the occurrence of any of the following events:




	 	a)	 	there occurs an event that makes it unlawful for the Member to continue to be
a Member;
	 
	 	b)	 	the Member commences liquidation or winding up; or
	 
	 	c)	 	notice from the Management Committee if the Member commits a Default and the
Default has not been cured.





     SECTION 11.03 Effect of Withdrawal. A Member that is deemed to have Withdrawn under
Section 11.02 (a “Withdrawn Member”), must comply with the following requirements in
connection with its Withdrawal:




	 	a)	 	The Withdrawn Member ceases to be a Member immediately upon the occurrence of
the applicable Withdrawal event.
	 
	 	b)	 	The Withdrawn Member shall not be entitled to receive any distributions from
the Company except as set forth in Section 11.03(e), and it shall not be
entitled to exercise any right of a Member, including any voting or consent rights or
to receive any further information (or access to information) from the Company. The
Percentage Interest of that Member shall not be taken into account in calculating the
Percentage Interests of the Members for any purposes. This Section 11.03(b)
shall also apply to a Breaching Member; but if a Breaching Member cures its breach
during the applicable cure period, then any distributions that were withheld from that
Member shall be paid to it, without interest.
	 
	 	c)	 	The Withdrawn Member must pay to the Company all amounts, if any, that it owes to
the Company.
	 
	 	d)	 	The Withdrawn Member shall remain obligated for all liabilities it may have
under this Agreement or otherwise with respect to the Company that accrue prior to the
Withdrawal.
	 
	 	e)	 	From the date of the Withdrawal to the date of the payment, the former
Capital Account balance of the Withdrawn Member shall be recorded as a contingent
obligation of the Company, and not as a Capital Account, until payment is made. The
rights of a Withdrawn Member under this Section 11.03(e) shall (i) be
subordinate to the rights of any other creditor of the Company, (ii) not include any
right on the part of the Withdrawn Member to receive any interest (except as may
otherwise be provided in the evidence of any indebtedness of the Company owed to




46









 






	 	 	 	such Withdrawn Member) or other amounts with respect thereto; (iii) not require the
Company to make any distribution (the Withdrawn Member’s rights under this Section
11.03(e) being limited to receiving such portion of distributions as the
Management Committee may, in its Sole Discretion, decide to cause the Company to
make); (iv) not require any Member to make a Capital Contribution or a loan to permit
the Company to make a distribution or otherwise to pay the Withdrawn Member; and (v)
be treated as a liability of the Company for purposes of Section 14.03.
Except as set forth in this Section 11.03(e), a Withdrawn Member shall not be
entitled to receive any return of its Capital Contributions or other payment from the
Company in respect of its Membership Interest.
	 
	 	f)	 	The Percentage Interest of the Withdrawn Member shall be allocated among the
remaining Members in the proportion that each Member’s Percentage Interest bears to
the total Percentage Interest of all remaining Members, or in such other proportion as
the Members may unanimously agree.
	 
	 	g)	 	Any Representative(s) and Alternate Representative(s) of such Member on the
Management Committee shall cease to be a member of the Management Committee
immediately upon the occurrence of the applicable Withdrawal event.





ARTICLE XII. DISPUTE RESOLUTION




     SECTION 12.01 Disputes. This Article XII shall apply to any dispute arising
under or related to this Agreement (whether arising in contract, tort or otherwise, and whether
arising at law or in equity), including (a) any dispute regarding the construction, interpretation,
performance, validity or enforceability of any provision of this Agreement or whether any Person is
in compliance with, or breach of, any provisions of this Agreement, and (b) the applicability of
this Article XII to a particular dispute. Notwithstanding the foregoing, this Article
XII shall not apply to any matters that, pursuant to the provisions of this Agreement, are to
be resolved by a vote of the Members or a determination by the Management Committee; provided,
however, that (i) any matter that is expressly stated herein to be determinable by arbitration may
be so determined pursuant to this Article XII and (ii) if a vote, approval, consent,
determination or other decision must, under the terms of this Agreement, be made (or withheld) in
accordance with a standard other than Sole Discretion (such as a reasonableness standard), then the
issue of whether such standard has been satisfied may be a dispute to which this Article
XII applies. Any dispute to which this Article XII applies is referred to herein as a
“Dispute.” With respect to a particular Dispute, each Member that is a party to such Dispute is
referred to herein as a “Disputing Member.” The provisions of this Article XII shall be
the exclusive method of resolving Disputes.



     SECTION 12.02 Negotiation to Resolve Disputes. If a Dispute arises, any
Disputing Member may initiate the dispute resolution procedure under this Article XII by
notifying the other Disputing Members (a “Dispute Notice”), after which the Disputing Members shall
attempt to resolve such Dispute through the following procedure:



47









 






	 	a)	 	first, within 10 Days after receipt of the Dispute Notice, one representative
selected by each Disputing Member shall meet (whether by phone or in person) in a good
faith attempt to resolve the Dispute;
	 
	 	b)	 	second, if the Dispute is still unresolved, then after the 20th Day following
the commencement of the efforts to resolve the matter described in Section
12.02(a) but in no event later than the 30th Day after receipt of the Dispute
Notice, the chief executive officer (or his designee) of the parent of each Disputing
Member shall meet (whether by phone or in person) in a good faith attempt to resolve
the Dispute; and
	 
	 	c)	 	third, if the Dispute is still unresolved, then after the 10th Day following
the commencement of the efforts to resolve the matter described in Section
12.02(b), any Disputing Party may submit the Dispute for resolution under the
Federal Arbitration Act by binding arbitration following the Commercial Arbitration
Rules of the American Arbitration Association (or, if that Association has ceased to
exist, its principal successor) (the “AAA”) then in effect, including its evidentiary
and procedural rules (excluding rules governing the payment of arbitration,
administrative or other fees or expenses to the Arbitrator(s) or the AAA), to the
extent that such rules do not conflict with the terms of this Agreement, by notifying
the other Disputing Members (an “Arbitration Notice”) within the applicable limitation
period provided by law.





     SECTION 12.03 Selection of Arbitrator.




	 	a)	 	For any case in which any claim, or combination of claims, is less than or
equal to $1,000,000, the arbitration shall be heard by a sole Arbitrator. Any case in
which any claim, or combination of claims, exceeds $1,000,000 will be subject to the
AAA’s Large, Complex Case Procedures and decided by the majority of a panel of three
neutral Arbitrators. The Arbitrator(s) shall be selected in accordance with this
Section 12.03.
	 
	 	b)	 	For arbitrations conducted by a single Arbitrator, the Disputing Member that
submits a Dispute to arbitration shall designate a proposed neutral sole Arbitrator in
its Arbitration Notice. If any other Disputing Member objects to a proposed sole
Arbitrator, it may, on or before the tenth Day following delivery of the Arbitration
Notice, notify all of the other Disputing Members of its objection. All of the
Disputing Members shall attempt to agree upon a mutually acceptable sole Arbitrator.
If they have not done so, then after the 20th Day following delivery of the notice
described in the immediately preceding sentence, any Disputing Member may request the
AAA to designate the sole Arbitrator. For arbitrations conducted by a panel of three
Arbitrators, the Disputing Member initiating arbitration shall nominate one Arbitrator
at the time it initiates arbitration. The other Disputing Member(s) shall
collectively nominate one Arbitrator on or before the 10th Day after receiving the
Arbitration Notice. The two Arbitrators shall appoint a third, neutral Arbitrator.
All Arbitrators shall be competent and experienced in matters involving the interstate
natural gas transportation business in the United States, with




48









 






	 	 	 	at least 10 years of legal, engineering, or business experience in the gas
transportation industry, and shall be impartial and independent of the Members (and
the other Arbitrators, in the case of arbitrations conducted by a panel of three
arbitrators, except for prior arbitrations). Each Disputing Member shall pay for the
expenses incurred by the Arbitrator it appoints, if applicable, and the costs of the
sole Arbitrator or the third Arbitrator shall be divided equally among the Disputing
Members. If any Arbitrator so chosen shall die, resign or otherwise fail or becomes
unable to serve as Arbitrator, a replacement Arbitrator shall be chosen in accordance
with this Section 12.03.





     SECTION 12.04 Conduct of Arbitration. The Arbitrator(s) shall expeditiously (and, if
possible, on or before the 90th Day after the Arbitrator(s)’s selection) hear and decide all
matters concerning the Dispute. Any arbitration hearing shall be held in Houston, Texas or such
other location as the Disputing Members may mutually agree. Except as expressly provided to the
contrary in this Agreement, the Arbitrator(s) shall have the power (a) to gather such materials,
information, testimony and evidence as it deems relevant to the dispute before it (and each Member
will provide such materials, information, testimony and evidence requested by the Arbitrator(s),
except to the extent any information so requested is proprietary, subject to a third-party
confidentiality restriction or to an attorney-client or other privilege) and (b) to grant
injunctive relief and enforce specific performance. If they deem necessary, the Arbitrator(s) may
propose to the Disputing Members that one or more other experts be retained to assist it in
resolving the Dispute. The retention of such other experts shall require the unanimous consent of
the Disputing Members, which shall not be unreasonably withheld. Each Disputing Member, the
Arbitrator(s) and any proposed expert shall disclose to the other Disputing Members any business,
personal or other relationship or affiliation that may exist or may have existed between the
Disputing Member (or the Arbitrator(s)) and the proposed expert; and any Disputing Member may
disapprove of the proposed expert on the basis of that relationship or affiliation. The decision
of the Arbitrator(s) (which shall be rendered in writing) shall be final, nonappealable and binding
upon the Disputing Members and may be enforced in any court of competent jurisdiction; provided,
however, that the Members agree that the Arbitrator(s) and any court enforcing the award of the
Arbitrator(s) shall not have the right or authority to award punitive, special, consequential,
indirect, exemplary or similar damages to any Disputing Member. The responsibility for paying the
costs and expenses of the arbitration, including compensation to any experts retained by the
Arbitrator(s), shall be divided equally among the Disputing Members. Each Disputing Member shall
be responsible for the fees and expenses of its respective counsel, consultants and witnesses,
unless the Arbitrator(s) determines that compelling reasons exist for allocating all or a portion
of those costs and expenses to one or more other Disputing Members.



ARTICLE XIII.

INDEMNIFICATION




     SECTION 13.01 General. Except to the extent expressly prohibited by the Act, the
Company shall indemnify each Person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that such Person or such Person’s
testator or intestate administrator is or was a member, Independent Member, any of their respective
Affiliates or attorneys, or an Officer of the Company, against judgments, fines (including excise
taxes assessed on a Person with respect to an employee benefit plan), penalties,



49









 




amounts paid in settlement and reasonable expenses, including reasonable attorneys’ fees, actually
and necessarily incurred in connection with such action or proceeding, or any appeal therefrom;
provided that no such indemnification shall be made if a judgment or other final adjudication
adverse to such Person establishes that his conduct constituted bad faith, fraud, gross negligence
or willful misconduct constituted; and provided, further, that no such indemnification shall be
required in connection with any settlement or other non-adjudicated disposition of any threatened
or pending action or proceeding unless the Company has given its prior consent to such settlement
or such other disposition, which consent shall not be unreasonably withheld.




     SECTION 13.02 Reimbursement. The Company shall advance or promptly reimburse, upon
request, any Person entitled to indemnification hereunder for all expenses, including reasonable
attorneys’ fees, reasonably incurred in defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such Person (in form and
substance satisfactory to the Company) to repay such amount if such Person is ultimately found not
to be entitled to indemnification or, where indemnification is granted, to the extent the expenses
so advanced or reimbursed exceed the amount to which such Person is entitled; provided that such
Person shall cooperate in good faith with any request by the Company that common counsel be
utilized by the parties to an action or proceeding who are similarly situated unless to do so would
be inappropriate due to actual or potential conflicts of interest between or among such parties;
and provided, further, that the Company shall only advance attorneys’ fees in
respect of legal counsel approved by the Company, such approval not to be unreasonably withheld.



     SECTION 13.03 Availability. The right to indemnification and advancement of expenses
under this provision is intended to be retroactive and shall be available with respect to any
action or proceeding which relates to events prior to the effective date of this provision.



     SECTION 13.04 Indemnification Agreement. The Company is authorized to enter into
agreements with any of its members, officers, or members of the Management Committee extending
rights to indemnification and advancement of expenses to such Person to the fullest extent
permitted by applicable law, but the failure to enter into any such agreement shall not affect or
limit the rights of such Person pursuant to this provision.



     SECTION 13.05 Enforceability. In case any provision in this Article XIII
shall be determined at any time to be unenforceable in any respect, the other provisions shall not
in any way be affected or impaired thereby, and the affected provisions shall be given the fullest
possible enforcement in the circumstances, it being the intention of the Company to provide
indemnification and advancement of expenses to its members and officers, acting in such capacities,
to the fullest extent permitted by law.



     SECTION 13.06 No Amendments. No amendment or repeal of this provision shall apply to
or have any effect on the indemnification of, or advancement of expenses to, the Members,
Independent Member, Management Committee or any officer of the Company for, or with respect to,
acts or omissions of such Person or officer occurring prior to such amendment or repeal.



50









 





     SECTION 13.07 Not Exclusive. The foregoing shall not be exclusive of any other rights
to which the Members, Independent Member, Management Committee or any officer may be entitled as a
matter of law and shall not affect any rights to indemnification to which Company personnel other
than the Management Committee or officers may be entitled by contract or otherwise.



ARTICLE XIV.

MISCELLANEOUS




     SECTION 14.01 Amendments and Consents. Unless otherwise provided herein (including,
without limitation Section 7.03), this Agreement may be modified or amended only by a
written instrument executed by such Member or Members holding a Majority Interest. Notwithstanding
any provision in this Agreement to the contrary, other than Section 4.03(c), the consent of
the Independent Member is required for any amendment to Sections 4.03 or any amendment to
this Section 14.01 or any other provision to the extent such amendment requires the consent
of the Independent Member as required therein.



     SECTION 14.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be given under this
Agreement must be in writing and must be delivered to the recipient in person, by courier, mail,
facsimile, email or other electronic transmission. A notice, request or consent given under this
Agreement is effective on receipt by the Member or other Person to receive it; provided, however,
that a facsimile or other electronic transmission that is transmitted after the normal business
hours of the recipient shall be deemed effective on the next Business Day. All notices, requests
and consents to be sent to a Member must be sent to or made at the addresses given for that Member
on Annex I or in the instrument described in Section 8.02, or such other address as
that Member may specify by notice to the other Members. Any notice, request or consent to the
Company must be given to all of the Members. Whenever any notice is required to be given by Law,
the Certificate or this Agreement, a written waiver thereof, signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed equivalent to the giving
of such notice. A copy of any notice delivered to the Independent Member shall also be delivered to
the Agent at the address set forth in the Credit Agreement. Any notice given to the Independent
Member shall not be effective unless also given to the Agent.



     SECTION 14.03 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before payment.



     SECTION 14.04 Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or default by any Member in
the performance by that Member of its obligations with respect to the Company is not a consent or
waiver to or of any other breach or default in the performance by that Member of the same or any
other obligations of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member or to declare any
Member in default with respect to the Company, irrespective of



51









 




how long that failure continues, does not constitute a waiver by that Member of its rights
with respect to that default until the applicable statute-of-limitations period has run.




     SECTION 14.05 Binding Effect. Subject to the restrictions on Dispositions set forth
in this Agreement, this Agreement is binding on and shall inure to the benefit of the Members and
their respective successors and permitted assigns.



     SECTION 14.06 Benefits of Agreement. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditor of the Company or any Member.



     SECTION 14.07 Integration. This Agreement constitutes the entire agreement pertaining
to the subject matter hereof and supersedes all prior and contemporaneous agreements in connection
therewith. No covenant, representation or condition not expressed in this Agreement shall affect,
or be effective to interpret, change or restrict, the express provisions of this Agreement.



     SECTION 14.08 Headings. The titles of Articles and Sections of this Agreement are for
convenience only and shall not be interpreted to limit or amplify the provisions of this Agreement.



     SECTION 14.09 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which, taken together, shall constitute one
and the same instrument, which may be sufficiently evidenced by one counterpart.



     SECTION 14.10 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE NGA AND THE RULES AND REGULATIONS OF THE FERC (TO THE EXTENT
APPLICABLE) AND 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; PROVIDED, HOWEVER, THAT, NOTWITHSTANDING THE FOREGOING, ANY MATTERS RELATING TO THE
INTERNAL AFFAIRS OF THE COMPANY (INCLUDING THE FORMATION, MANAGEMENT AND TERMINATION OF THE
COMPANY) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. WITHOUT LIMITING THE PROVISIONS OF
ARTICLE XII AND SUBJECT TO THE TERMS OF SECTION 12.04 REGARDING THE ENFORCEMENT OF
ANY ARBITRATOR(S)’ DECISION IN ANY COURT OF COMPETENT JURISDICTION, A PARTNER MAY BRING AN ACTION
ARISING UNDER OR RELATING TO THIS AGREEMENT, IF AT ALL, ONLY IN COURTS OF THE STATE OF DELAWARE OR
(IF IT HAS JURISDICTION) THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. In the
event of a direct conflict between the provisions of this Agreement and any mandatory, non-waivable
provision of the Act such provision of the Act shall control. If any provision of the Act provides
that it may be varied or superseded in a limited liability company agreement (or otherwise by
agreement of the members of a limited liability company), that provision shall be deemed superseded
and waived in its entirety if this Agreement contains a provision addressing the same issue or
subject matter. If any provision of this Agreement or the application thereof to



52









 




any Member or circumstance is held invalid or unenforceable to any extent, (a) the remainder
of this Agreement and the application of that provision to other Members or circumstances is not
affected thereby, and (b) the Members shall negotiate in good faith to replace that provision with
a new provision that is valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original provision had been
valid and enforceable.




[Remainder of page intentionally left blank; signature follows.]




53









 








     IN WITNESS WHEREOF, this Agreement has been duly executed by the Members and the Independent
Member, effective as of the date first set forth above.



	 	 	 	 	 
	 	Members:



EL PASO CORPORATION

 	 
	 	By:  	/s/ D. Mark Leland
 	 
	 	 	D. Mark Leland 	 
	 	 	Executive Vice President 	 
	 
	 	EL PASO PIPELINE PARTNERS

OPERATING COMPANY, L.L.C.

 	 
	 	By:  	/s/ John J. Hopper
 	 
	 	 	John J. Hopper 	 
	 	 	Vice President and Treasurer 	 
	 
	 	Independent Member:

 	 
	 	By:  	/s/ Edward J. Crenshaw
 	 
	 	 	Edward J. Crenshaw 	 
	 	 	 	 
	 



[SIGNATURE PAGE TO SECOND A&R LLC AGREEMENT OF EPC SPV]




 









 








Exhibit A




FORM OF LLC INTEREST CERTIFICATE



[See attached.]



 









 





Exhibit A




FORM OF



LLC INTEREST CERTIFICATE

El PASO ELBA EXPRESS COMPANY, L.L.C.,

a Delaware limited liability company

[                ], 2010



No.                     





     THIS CERTIFIES THAT (a) [                    ] (the “Member”) is the owner of [          ]Units of El
Paso Elba Express Company, L.L.C., a Delaware limited liability company (the “Company”) and
(b) the Member is entitled to all the rights and privileges and subject to all the obligations,
restrictions, and limitations of a Member of the Company in accordance with the provisions of the
Second Amended and Restated Limited Liability Company Agreement of the Company, dated as of March
[     ], 2010, as amended from time to time (the “Agreement”). TO THE FULLEST EXTENT
PERMITTED BY LAW, MEMBER’S LIMITED LIABILITY COMPANY INTEREST (THE “INTEREST”) IN THE
COMPANY IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE AGREEMENT, AND IS OTHERWISE SUBJECT TO THE
TERMS AND CONDITIONS OF THE AGREEMENT AND THE RESTRICTIONS ON TRANSFER SET FORTH IN THE AGREEMENT,
INCLUDING THOSE IN SECTION 8.01 THEREOF. Capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed thereto in the Agreement.



     The Interest shall constitute “securities” within the meaning of, and governed by, (i) Article
8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to
time in the State of Delaware and in the State of New York and (ii) Article 8 of the Uniform
Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes
the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on
February 14, 1995.



     This Interest Certificate shall be governed by the laws of the State of Delaware (without
reference to conflicts of laws).



[Remainder of page intentionally left blank; signature page follows.]




3









 








     IN WITNESS WHEREOF, the Company has caused this Interest Certificate to be signed by a duly
authorized officer and the issuance recorded in its limited liability company books as of the date
first set forth above.



	 	 	 	 	 
	 	EL PASO ELBA EXPRESS COMPANY, L.L.C.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


THE INTEREST REPRESENTED BY THIS INTEREST CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED
AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION EXISTS.




4









 









ANNEX I




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Number of	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Representatives and	 	 	 	Identity of
	Member Identity	 	 	 	 	 	Percentage	 	Alternate	 	Identity of	 	Alternate
	and Address	 	Number of  Units	 	Interest	 	Representatives	 	Representatives	 	Representatives
	El Paso Corporation

	 	 	49	 	 	 	49	%	 	1 Representatives
	 	Daniel B. Martin	 	 
	1001 Louisiana

	 	 	 	 	 	 	 	 	 	and up to 1	 	 	 	 
	Houston, Texas 

77002

	 	 	 	 	 	 	 	 	 	Alternate	 	 	 	 
	Attention: ___
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	El Paso Pipeline

	 	 	51	 	 	 	51	%	 	3 Representatives
	 	James C. Yardley	 	 
	Partners Operating

	 	 	 	 	 	 	 	 	 	and up to
	 	Norman G. Holmes	 	 
	Company, L.L.C.

	 	 	 	 	 	 	 	 	 	3 Alternates
	 	Michael J. Varagona	 	 
	El Paso Building
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1001 Louisiana
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Houston, Texas 

77002
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attention: ___