AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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REGENCY ENERGY PARTNERS LP | NEXUS GAS HOLDINGS, LLC | NEXUS GAS PARTNERS, LLC | Regency GP, LLC | Regency NX, LLC

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware Date: 3/26/2008
Industry: Natural Gas Utilities Law Firm: Vinson Elkins;Dechert Sector: Utilities

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

among

NEXUS GAS PARTNERS, LLC,

NEXUS GAS HOLDINGS, LLC,

REGENCY ENERGY PARTNERS LP

and

REGENCY NX, LLC

February 22, 2008

_________________________________

TABLE OF CONTENTS

Article I DEFINITIONS AND INTERPRETATIONS		2
1.1	Definitions	2
1.2	Interpretations	2
Article II THE MERGER; CLOSING		2
2.1	The Merger	2
2.2	Effective Time; Closing	2
2.3	Effect of the Merger	3
2.4	Governing Instruments; Directors and Officers of the Surviving Company	3
2.5	Conversion of Securities	3
2.6	Withholding Taxes	4
2.7	Regency Payments	4
2.8	Merger Consideration Adjustments	5
Article III REPRESENTATIONS AND WARRANTIES OF MEMBER		8
3.1	Member’s Representations and Warranties	8
Article IV REPRESENTATIONS AND WARRANTIES REGARDING THE NEXUS COMPANIES		10
4.1	Representations and Warranties Regarding the Nexus Companies	10
Article V REPRESENTATIONS AND WARRANTIES REGARDING REGENCY AND MERGER SUB		23
5.1	Representations and Warranties Regarding Regency and Merger Sub	23
Article VI COVENANTS		24
6.1	Satisfaction of Conditions Precedent; Cooperation	24
6.2	Notices and Consents	25
6.3	Conduct of Business.	25
6.4	Access and Information	28
6.5	Evaluation and Inspection	29
6.6	HSR Act	30
6.7	Employees	31
6.8	Financial and Internal Controls Information	32
6.9	Payoff Letters; Releases	32
6.10	Tax Matters	32
6.11	Support of Sonat Abandonment Application	35
6.12	Notice of Breaches of Representations and Warranties	35
6.13	Auditor Matters	35
6.14	Termination of Agreements	35
6.15	Transfer of Certain Assets of Member	36
Article VII CONDITIONS PRECEDENT; CASUALTY LOSS; CLOSING DELIVERIES		36
7.1	Conditions to Obligation of Regency and Merger Sub	36
7.2	Conditions to Obligation of Member and Nexus	37
7.3	Casualty Loss	38

7.4	Deliveries at the Closing	39
7.5	Frustration of Closing Conditions	40
Article VIII POST-CLOSING COVENANTS		40
8.1	Further Assurances; Access to Records and Excluded Records	40
8.2	Permits, Licenses and Approvals	41
8.3	Removal of Logos and Signs	41
8.4	Recording and Regulatory Filings	41
8.5	Post-Closing Consents	42
8.6	Sonat Purchase Agreement	42
8.7	Non-Solicitation	43
Article IX INDEMNIFICATION		44
9.1	Survival	44
9.2	Indemnification Provisions for Benefit of Regency	45
9.3	Indemnification Provisions for Benefit of Member	48
9.4	Certain Limitations	49
9.5	Sonat Cash Payment Offset	51
9.6	Deduction of Insurance or Third Party Proceeds, Etc	51
9.7	Subrogation	52
9.8	Inter-Party Claims	53
9.9	Matters Involving Third Parties	53
9.10	Recourse under Prior Acquisition Agreements	55
9.11	Damages	55
9.12	Tax Treatment of Indemnity Payments	55
9.13	Right to Indemnification	56
9.14	Control of Environmental Matters	56
Article X TERMINATION OF AGREEMENT		57
10.1	Termination of Agreement	57
10.2	Procedure for and Effect of Termination	58
Article XI ESCROW		59
11.1	Escrow Fund	59
11.2	Release from Escrow	59
11.3	Escrow Distribution Date	60
11.4	Subsequent Distribution(s)	60
Article XII MISCELLANEOUS		60
12.1	Press Releases and Public Announcements	60
12.2	No Third Party Beneficiaries	61
12.3	Succession and Assignment	61
12.4	Counterparts	61
12.5	Notices	61
12.6	Governing Law	62
12.7	Entire Agreement; Amendment	63
12.8	Severability	63
12.9	Transaction Expenses	63

12.10	Confidentiality	63
12.11	Disclosure Schedules	64
12.12	Incorporation of Exhibits and Schedules	64
12.13	Non-Waiver	64
12.14	Captions	65
12.15	No Affiliate Liability	65
12.16	Time of the Essence	65
12.17	Specific Performance	65
12.18	Limitations	65
12.19	Waiver of Jury Trial	66
12.20	Certain Understandings	66
12.21	Disclaimer	67

Schedules

Schedule A

Permitted Contacts

Schedule B

Consents

Schedule C

Sample Balance Sheet

Schedule C

Prohibited Actions

Schedule E

Permitted Encumbrances

Schedule F

Identified Member Assets

Exhibits

Exhibit A

Definitions and Interpretations

Exhibit B

Certificate of Merger

Exhibit C

Escrow Agreement

Exhibit D

Facilities

Exhibit E

Release

Exhibit F

System(s)

Exhibit G

Application Parameters

Disclosure Schedules

3.1(b)

Member – Authorization of Transaction; Governmental Authorizations

3.1(d)

Member – Brokers’ Fees

3.1(f)

Member – Consents

4.1(a)

Organization

4.1(b)

Capitalization

4.1(c)

Authorization of Transaction; Governmental Authorizations

4.1(d)

Noncontravention

4.1(e)

Brokers’ Fees

4.1(f)

Consents

iii

4.1(g)

Compliance with Laws; Permits

4.1(h)

Properties

4.1(k)

Taxes

4.1(l)

Material Contracts

4.1(m)

Financial Statements; Undisclosed Liabilities

4.1(n)

Pipeline Matters

4.1(o)

Affiliate Transactions

4.1(r)

List of Employee Benefit Plans and Certain Contracts

4.1(s)

Environmental Matters

4.1(t)

List of Insurance Policies

4.1(v)

List of Guarantees

4.1(w)

Labor Matters

4.1(y)

Sonat Matters

6.3(a)

Conduct of Business – Exceptions

6.3(b)

Conduct of Business – Exceptions (Negative Covenants)

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of February 22, 2008, is made and entered into by and among Nexus Gas Partners, LLC, a Delaware limited liability company (“ Member ”), Nexus Gas Holdings, LLC, a Delaware limited liability company (“ Nexus ”), Regency Energy Partners LP, a Delaware limited partnership (“ Regency ”), and Regency NX, LLC, a Delaware limited liability company (“ Merger Sub ”). Member, Nexus, Regency and Merger Sub are sometimes referred to collectively herein as the “Parties” and individually as a “Party.”

RECITALS

A. The board of directors of Regency GP, LLC, on behalf of Regency GP, LLC, in its capacity as the general partner of Regency GP LP, the general partner of Regency, has approved this Agreement and the transactions contemplated hereby whereby Merger Sub will merge with and into Nexus (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement.

B. Regency Gas Services LLC, a wholly-owned subsidiary of Regency and the sole member of Merger Sub, and Member, as the sole member of Nexus, have approved this Agreement and the Merger.

C. As a result of the Merger, and in accordance with the Delaware Limited Liability Company Act (the “ DLLCA ”), the issued and outstanding membership interests in Nexus shall be converted into the right to receive the Merger Consideration as set forth herein.

D. Each of Fritz Brinkman and Mike Davis has executed and delivered to Regency a Non-Competition Agreement (collectively, the “ Non-Competition Agreements ”) simultaneously with the execution of this Agreement.

E. Each of Fritz Brinkman, Paul Coscia and Mike Davis and Member has executed and delivered to Regency, and each of Regency and Merger Sub has executed and delivered to Member, a Release simultaneously with the execution of this Agreement.

F. Each of Fritz Brinkman, Paul Coscia and Mike Davis has executed and delivered to Regency a resignation effective as of Closing from each and every position of employment and as an officer and each other capacity in which such individual serves each Nexus Company (collectively, the “ Resignations ”) simultaneously with the execution of this Agreement.

G. Each of Fritz Brinkman, Paul Coscia and Mike Davis has executed and delivered to Nexus Gas Gathering, LP and Member an Employment Separation and General Release Agreement (collectively, the “ Separation Agreements ”) simultaneously with the execution of this Agreement.

H. The Parties acknowledge that Regency and Merger Sub have determined the value of the Nexus Companies and the amount of the Merger Consideration based, in part, on the Audited Financial Statements and the representations and warranties of Member and the Nexus Companies contained in Section 4.1(m)(i) , (ii) , and (iii) of this Agreement.

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

1.1 Definitions . Capitalized terms in this Agreement that are not defined in the text of the body of this Agreement shall have the meanings given such terms as set forth in Exhibit A attached to this Agreement, which Exhibit A is incorporated herein by reference with the same force and effect as is set forth herein in full.

1.2 Interpretations . Unless expressly provided to the contrary in this Agreement, this Agreement shall be interpreted in accordance with the provisions set forth in Section 1.2 of Exhibit A .

ARTICLE II

THE MERGER; CLOSING

2.1 The Merger . Upon the terms and subject to the conditions set forth in Article VII , and in accordance with applicable Laws, at the Effective Time, Merger Sub shall be merged with and into Nexus. The Merger shall have the effects specified herein and in the DLLCA. As a result of the Merger, the separate existence of Merger Sub shall cease and Nexus shall continue as the surviving entity of the Merger (the “ Surviving Company ”), and as an indirect wholly owned subsidiary of Regency.

2.2 Effective Time; Closing . The closing of the Merger (the “ Closing ”) shall take place at the offices of Vinson & Elkins LLP in Dallas, Texas, at 9:00 a.m., Dallas, Texas time, or such other place and time as Member and Regency shall agree:

(a) on the second Business Day after the conditions set forth in Article VII have been satisfied or waived (other than those conditions that are to be satisfied at Closing, but subject to their satisfaction or waiver) (such second Business Day, the “ Alternative Satisfaction Date ”) if the Alternative Satisfaction Date shall have occurred on or before April 14, 2008; provided that if HSR Approval is obtained on any date on or between March 26, 2008, and April 14, 2008, and all other conditions set forth in Article VII have been satisfied or waived (other than those conditions that are to be satisfied at Closing, but subject to their satisfaction or waiver), then, at the election of Regency, the Closing shall occur on any date from and after the date HSR Approval is obtained prior to the Alternative Satisfaction Date; or

(b) if the Alternative Satisfaction Date shall not have occurred on or before April 14, 2008, then, upon the written election of Member requesting an extension of the Termination Date pursuant to Section 10.1(b) , (i) if the Alternative Satisfaction Date occurs on or after April 15, 2008, and on or before April 28, 2008, the Closing shall occur on the Alternative Satisfaction Date, (ii) if the Alternative Satisfaction Date occurs on or after April 29, 2008, and on or before May 1, 2008, the Closing shall occur on May 1, 2008, or (iii) if the Alternative Satisfaction Date occurs after May 1, 2008, the Closing shall occur on the Alternative Satisfaction Date, subject to Section 10.1(b) .

The date of the Closing is herein called the “ Closing Date .” Immediately following the Closing, and on the Closing Date, the Parties shall cause the Merger to be consummated by duly filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of

Delaware in the form attached hereto as Exhibit B (the date and time of such filing being the “ Effective Time ”).

2.3 Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in the applicable Laws of the State of Delaware. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the real estate, property, rights, privileges, powers, franchises and other assets of Nexus and Merger Sub shall vest in the Surviving Company, and all debts, liabilities, obligations and duties of Nexus and Merger Sub shall become the debts, liabilities, obligations and duties of the Surviving Company.

2.4 Governing Instruments; Directors and Officers of the Surviving Company .

(a) The certificate of formation of the Surviving Company shall be amended as set forth in the Certificate of Merger, and as so amended, shall be the certificate of formation of the Surviving Company until duly amended in accordance with its terms and applicable Laws.

(b) The limited liability company agreement of Merger Sub, as in effect immediately prior to the Effective Time, shall be the limited liability company agreement of the Surviving Company until duly amended in accordance with its terms and applicable Laws.

(c) The directors and officers of Merger Sub at the Effective Time shall be the initial directors and officers, respectively, of the Surviving Company from the Effective Time until their respective successors have been duly elected or appointed in accordance with the certificate of formation and limited liability company agreement of the Surviving Company and applicable Laws.

2.5 Conversion of Securities .

(a) At the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof, each limited liability company interest of Merger Sub that is issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and continue as a limited liability company interest of the Surviving Company.

(b) At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub or Nexus, all of the issued and outstanding Membership Interests held by a Person immediately prior to the Effective Time shall be canceled and shall be converted automatically into the right to receive, subject to the other terms and conditions of this Agreement, (i) a Pro Rata Portion of the Closing Payment Amount, (ii) a Pro Rata Portion of the amount, if any, of the Merger Consideration Surplus in accordance with Section 2.8(d)(ii) , (iii) a Pro Rata Portion of the Sonat Cash Payment, if applicable, and (iv) a Pro Rata Portion of all amounts, if any, distributable to Member from the Escrow Fund pursuant to Article XI and the Escrow Agreement (collectively, the “ Merger Consideration ”). From and after the Effective Time, the holders of Membership Interests outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Membership Interests except for the right to receive the Merger Consideration in respect of such Membership Interests and except as otherwise provided herein or by applicable Laws. At the Effective Time, the transfer books of Nexus shall be closed and, thereafter, there shall be no further registration of transfers of membership interests of Nexus on the records of Member.

2.6 Withholding Taxes . Notwithstanding anything in this Agreement to the contrary, Regency, Merger Sub and the Surviving Company shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of Membership Interests pursuant to this Agreement any amount required to be deducted and withheld with respect to the making of such payment under applicable Tax laws. To the extent that amounts are so withheld by Regency, Merger Sub or the Surviving Company, as the case may be, and are paid over to the appropriate Governmental Authority in accordance with applicable Laws, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Membership Interests in respect of which such deduction and withholding was made.

2.7 Regency Payments .

(a) At the Closing:

(i) Regency shall pay to Member, by wire transfer of immediately available funds to the account designated in writing by Member to Regency at least two Business Days prior to Closing, an amount in cash equal to the Closing Payment Amount;

(ii) Regency shall pay to the Escrow Agent, by wire transfer of immediately available funds, an amount in cash equal to the Escrow Amount;

(iii) Regency shall pay to each holder of any Third-Party Debt, by wire transfer of immediately available funds to the account(s) designated by such Persons in the applicable Debt Payoff Letters, the amounts specified in the Debt Payoff Letters; and

(iv) to the extent unpaid, Regency shall pay to the payees of any Expenses by wire transfer of immediately available funds to the account(s) designated by such Persons in the applicable Payoff Letters, the amounts specified in the Payoff Letters less, to the extent applicable, any Medicaid, Social Security, income tax, unemployment tax and other amounts required to be withheld.

(b) Subject to Section 9.5 and the terms of this Section 2.7(b) , if Regency, the Surviving Company (or any other Affiliate of Regency or any assignee of the Surviving Company’s rights under the Sonat Purchase Agreement) consummates the Sonat Acquisition on or prior to the second anniversary of the Closing Date, then Regency shall pay to Member, within five (5) Business Days following the date of consummation, the amount of Twenty-Five Million dollars ($25,000,000) in cash (the “ Sonat Cash Payment ”). Notwithstanding the foregoing, if (x) the Surviving Company consummates the Sonat Acquisition on the basis of the receipt by Sonat of an order or orders from FERC that, collectively, do not constitute a Final FERC Approval Order and (y) such order or orders from FERC differ from the Selected Application Parameter and those differences together constitute a material deviation from the Application Parameters as described on Exhibit G that is adverse to the Surviving Company and the other Nexus Companies (taken as a whole), then neither Regency nor the Surviving Company (nor any other Regency Affiliate) shall be required to pay Member the Sonat Cash Payment. From and after the Closing, Regency and the Surviving Company shall use all commercially reasonable efforts (i) to comply with the terms of, and to perform the Surviving Company’s obligations under, the Sonat Purchase Agreement and the Sonat CIOM Agreement

and (ii) to satisfy on a timely basis all conditions to the obligations of the Surviving Company contained in the Sonat Purchase Agreement that are within its control; provided , however , that the Surviving Company shall not be required by the provisions of this Agreement to consummate the transactions contemplated by the Sonat Purchase Agreement unless the parties to the Sonat Purchase Agreement have received a Final FERC Approval Order. The foregoing provisions of this subsection (b) shall not require Regency or the Surviving Company (x) to waive or forego any rights or benefits available to either of them under any law, regulation or the Sonat Purchase Agreement, including the right to seek clarification or rehearing consistent with the Selected Application Parameter of any FERC order or orders bearing on the Sonat Acquisition, (y) to reject or to seek modification of any proposed settlement of the Sonat Acquisition consistent with the Selected Application Parameter, or (z) to expend funds (other than reasonable expenses in prosecuting the Sonat Abandonment Application) or to sustain financial detriment in order to obtain the consent, concurrence or agreement of any producer or shipper on the Sonat Facilities to the Sonat Abandonment Application consistent with the Selected Application Parameter. Notwithstanding anything herein to the contrary, Regency shall and, from and after the Closing, shall cause the Surviving Company and the other Nexus Companies to, act in good faith (including without limitation without the primary intent to hinder Member’s ability to receive the Sonat Cash Payment) with respect to consummating the Sonat Acquisition pursuant to the Sonat Purchase Agreement, the transactions contemplated thereby and the other provisions hereof relating to the ability of Member to receive the Sonat Cash Payment.

(c) Regency shall be entitled to deliver to Member all amounts to which any Person who holds any Membership Interests immediately prior to the Effective Time shall be entitled under this Agreement, and, to the extent any such Person shall be entitled to any amounts so delivered to Member in accordance herewith, Member shall hold such amounts in trust for such Person and shall be responsible for delivering such amounts to such Person, and Regency shall have no further obligation to any such Person for any such amounts.

2.8 Merger Consideration Adjustments .

(a) Preparation of Estimated Closing Statement . Nexus shall prepare in good faith and deliver to Regency, at least four (4) Business Days prior to the Closing Date and at the sole expense of Nexus, a statement (the “ Estimated Closing Statement ”), setting forth (i) Expenses, the Debt Payoff Amount and a reasonably detailed determination of Nexus’ estimate of Net Working Capital, (ii) based on such Estimated Net Working Capital, the Estimated Working Capital Adjustment Amount, if any, and (iii) Nexus’ calculation of the Closing Payment Amount. The Expenses and the Debt Payoff Amount to be set forth on the Estimated Closing Statement shall be based on amounts set forth in the Payoff Letters, or, to the extent a Payoff Letter has not been provided for any Expense or Third Party Debt, Nexus’ good faith estimate of such amount, and in each case, shall be subject to final determination in the preparation of the Final Closing Statement. If Regency has any questions or disagreements regarding the Estimated Closing Statement, Regency shall contact Member at least two (2) Business Days prior to the Closing Date, and in such case Member and Regency shall in good faith attempt to resolve any disagreements. If Regency and Member agree on changes to Nexus’ proposed Estimated Closing Statement (including the Expenses, the Debt Payoff Amount, the calculation of the Estimated Net Working Capital, Estimated Working Capital Adjustment

Amount or Closing Payment Amount set forth therein) based on such discussions, then the Closing Payment Amount to be paid at Closing shall be determined giving effect to such changes (and the Estimated Closing Statement, as so adjusted, shall be deemed to be the Estimated Closing Statement for all purposes herein). If Regency and Member do not agree on changes to such amounts, then the Closing Payment Amount to be paid at Closing shall be determined based on the amounts set forth in the Estimated Closing Statement initially delivered by Nexus. In either such case, appropriate adjustments to the Merger Consideration shall be made after the Closing pursuant to Sections 2.8(a) , 2.8(b) , and 2.8(c) .

(b) Preparation of Closing Statement . As soon as reasonably practicable after the Closing Date (and, in any event, within 90 days after the Closing Date), Regency shall prepare and deliver to Member, at the sole expense of Regency, a closing statement as of 11:59 p.m. on the Measurement Date (the “ Proposed Closing Statement ”), setting forth (i) Expenses, the Debt Payoff Amount and a reasonably detailed proposed final calculation of Net Working Capital and the Working Capital Adjustment Amount, if any, and (iii) based on such amounts, the Merger Consideration Surplus or Merger Consideration Deficit. From the Closing and until the determination of the Final Closing Statement, Regency shall provide Member and its accountants and other Representatives access, during normal business hours and upon reasonable prior notice, to the Records (including the work papers and other accounting documents of the Nexus Companies related to periods on or prior to the Closing Date) and personnel of the Nexus Companies in order to review (or, if applicable, prepare as provided in the last sentence of this Section 2.8(b) ) the Proposed Closing Statement and assist Member in its review of the Final Closing Statement. If Regency does not deliver the Proposed Closing Statement when required, Member may, but shall not be required to, prepare and deliver the Proposed Closing Statement to Regency within 180 days after Closing, and, in such case, Regency shall have Members’ objection rights under Section 2.8 (c) and, if neither Member nor Regency prepares and delivers a Proposed Closing Statement as provided herein, then the Estimated Closing Statement shall be deemed also to be the Final Closing Statement.

(c) Examination of Proposed Closing Statement . Member shall review the Proposed Closing Statement to confirm the accuracy of the Proposed Closing Statement and Regency’s calculations. If Member fails to give Regency written notice of any disputed amounts within 45 days after Member receives the Proposed Closing Statement (the “ Review Period ”), then the Proposed Closing Statement shall become the Final Closing Statement for purposes hereof. If Member gives Regency written notice of any disputed items within the Review Period, Regency and Member shall attempt in good faith to agree on any adjustments that should be made to the Proposed Closing Statement. If Regency and Member fail to resolve any disputed amounts within 30 days after Member gives Regency notice of any disputed amounts in the Proposed Closing Statement, Regency and Member will engage the Audit Firm to resolve any such disputed matters in accordance with the terms of this Agreement, and, in connection with such engagement Regency, the Surviving Company and Member shall execute any engagement, indemnity and other agreements as the Audit Firm may require as a condition to such engagement. The Audit Firm’s engagement shall be limited to the resolution of disputed amounts set forth in the Proposed Closing Statement that have been identified by Member, which resolution shall be in accordance with this Agreement including the Sample Balance Sheet, and no other matter relating to the Proposed Closing Statement shall be subject to determination by the Audit Firm except to the extent affected by resolution of the disputed amounts. In resolving

any disputed item, the Audit Firm shall not assign a value to any item greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Parties agree that the adjustments contemplated by this Section 2.8 are intended to show the change between the Estimated Net Working Capital and the actual Net Working Capital and actual Expenses and Debt Payoff Amount as compared to Expenses and Debt Payoff Amount set forth on the Estimated Closing Statement and that such change can only be measured if each calculation is done in a manner consistent with this Agreement. The Parties shall cooperate diligently with any reasonable request of the Audit Firm in an effort to resolve any disputed matter as soon as reasonably possible after the Audit Firm is engaged. If possible, the decision of the Audit Firm shall be made within 30 days after being engaged. The decision of the Audit Firm shall be set forth in a written statement delivered to Member and Regency and shall be final and binding on the Parties, absent fraud or manifest error. Judgment may be entered on the decision of the Audit Firm in any court of competent jurisdiction. The Proposed Closing Statement, in the form agreed to by the Parties as final, in the form deemed in accordance with the second sentence of this Section 2.8(c) as final or as revised, if necessary, to reflect the final determination by the Audit Firm, as applicable, is referred to herein as the “ Final Closing Statement ”).

(d) Adjustments .

(i) If the Final Adjustment Amount is less than the Estimated Adjustment Amount (the amount of such shortfall, if any, being hereinafter referred to as the “ Merger Consideration Deficit ”), Member and Regency shall execute and deliver to the Escrow Agent Joint Instructions instructing the Escrow Agent to disburse to Regency from the Escrow Fund an amount in cash equal to the Merger Consideration Deficit within five Business Days after the final determination of the Final Closing Statement. By way of example, if the Estimated Adjustment Amount is negative five and the Final Adjustment Amount is negative nine, the Final Adjustment Amount shall be less than the Estimated Adjustment Amount by, and the Merger Consideration Deficit shall be, four.

(ii) If the Final Adjustment Amount is greater than the Estimated Working Amount (the amount of such excess being hereinafter referred to as the “ Merger Consideration Surplus ”), Regency shall deliver to Member an amount in cash equal to the Merger Consideration Surplus within five Business Days after the final determination of the Final Closing Statement. By way of example if the Estimated Adjustment Amount is negative five and the Final Adjustment Amount is negative one, the Final Adjustment Amount shall be greater than the Estimated Adjustment Amount by, and the Merger Consideration Surplus shall be, four.

(e) No Duplicative Effect . The provisions of this Section 2.8 and of any other Transaction Document shall apply in such a manner so as not to give the components and calculations duplicative effect to any item of adjustment and, the Parties covenant and agree that no amount shall be (or is intended to be) included, in whole or in part (either as an increase or reduction) more than once in the calculation of (including any component of) Net Working Capital or any other calculated amount pursuant to this Agreement if the effect of such additional inclusion (either as an increase or reduction) would be to cause such amount to be overstated or understated for purposes of such calculation. The Parties acknowledge and agree that, if there is

a conflict between a determination, calculation or methodology set forth in the Sample Balance Sheet or the definitions contained in this Agreement, as applicable, on the one hand, and those provided by GAAP, on the other hand, (i) the determination, calculation or methodology set forth in the Sample Balance Sheet or the definitions contained in this Agreement, as applicable, shall control to the extent that the matter is included in the Sample Balance Sheet or the definitions contained in this Agreement, as applicable, as a line item or specific adjustment and (ii) the determination, calculation or methodology prescribed by GAAP shall control to the extent the matter is not so addressed in the Sample Balance Sheet or the definitions contained in this Agreement, as applicable, or requires reclassification as an asset or liability to be included in a line item or specific adjustment.

(f) Fees and Expenses of the Audit Firm . If the Parties submit any disputed amounts to the Audit Firm for resolution as provided in Section 2.8 (c) above, the fees and expenses of the Audit Firm (the “ Audit Fees ”) will be paid by and apportioned between Regency and Member based on the aggregate dollar amount of the amount in dispute and inversely related to the relative recovery as determined by the Audit Firm of Member and Regency, respectively. For example, if the aggregate dollar amount of the amount in dispute is $1,000,000 and the relative recovery of Member and Regency as determined by the Audit Firm is $900,000 and $100,000, respectively, then Regency will be apportioned 90% of the Audit Fees and Member will be apportioned 10% of the Audit Fees. Member and Regency shall promptly, and in any event within five (5) Business Days after the final determination of the Final Closing Statement, pay to the Audit Firm the amount of Audit Fees payable by Member and Regency pursuant to this Section 2.8(f) .

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MEMBER

3.1 Member’s Representations and Warranties . Member represents and warrants to Regency and Merger Sub as follows:

(a) Organization of Member . Member is a limited liability company, which is duly organized, validly existing and in good standing under the laws of the State of Delaware. Member has full legal power and right to both carry on its business as such is now being conducted, to own the Membership Interests held by it and, subject to making or obtaining the notices, filings, authorizations, consents or approvals set forth in Section 3.1(b) of the Disclosure Schedule and obtaining the consents set forth in Section 3.1(f) of the Disclosure Schedule , to perform its obligations under this Agreement.

(b) Authorization of Transaction; Governmental Authorizations . Member has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or shall be a party and, subject to making or obtaining the notices, filings, authorizations, consents or approvals set forth in Section 3.1(b) of the Disclosure Schedule and obtaining the consents set forth in Section 3.1(f) of the Disclosure Schedule , to perform its obligations hereunder and thereunder, and the execution, delivery and performance by Member of this Agreement and the other Transaction Documents to which it is or shall be a party have been duly and validly authorized and approved by all necessary limited liability company action of Member. This Agreement and the other Transaction Documents to which it is

or shall be a party constitute (or upon execution will constitute) the valid and legally binding obligation of Member enforceable in accordance with their respective terms and conditions, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally, and to general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law). Except for filings under the HSR Act and as set forth in Section 3.1(b) of the Disclosure Schedule , Member is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to execute this Agreement or the other Transaction Documents to which it is or shall be a party, consummate the transactions contemplated by, or otherwise perform its obligations under, this Agreement or the other Transaction Documents to which it is or shall be a party.

(c) Noncontravention . Neither the execution and delivery nor performance by Member of this Agreement or the other Transaction Documents to which Member is or shall be a party, nor the consummation by Member of the transactions contemplated hereby or thereby, will (i) subject to obtaining HSR Approval and making or obtaining the notices, filings, authorizations, consents or approvals set forth in Section 3.1(b) of the Disclosure Schedule , violate any Law to which Member is subject, (ii) violate any provision of Member’s Organizational Documents, (iii) result in the creation or imposition of any Lien on any of the Assets, or (iv) subject to obtaining the consents set forth in Section 3.1(f) of the Disclosure Schedule , conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any Contract, lease, license, instrument, or other arrangement to which Member is a party or by which it is bound, except in the case of this clause (iv), for such violations, defaults, breaches or other occurrences that, individually or in the aggregate, do not constitute a Material Adverse Effect.

(d) Brokers’ Fees . Except as set forth in Section 3.1(d) of the Disclosure Schedule , Member does not have any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

(e) Title to Interests . Member has good and valid record and beneficial title to all outstanding Membership Interests, free and clear of any and all Liens (other than any Liens that may arise under this Agreement, be imposed by applicable state or federal securities Laws or be created by Regency), and such Membership Interests constitute all of the outstanding Equity Interests of Nexus. Neither Member nor Nexus is a party to (a) any option, warrant, purchase right or other Contract (other than this Agreement) that could require Member, or after the Closing, Regency or any of its Affiliates, to sell, transfer or otherwise dispose of any Equity Interest of the Surviving Company, (b) any voting trust, proxy or other Contract with respect to the voting of any Equity Interest of Nexus.

(f) Consents . Except as set forth in Section 3.1(f) of the Disclosure Schedule , no consent, authorization or approval of any third party is required, under any Contract to which Member is a party or otherwise, for the execution and delivery by Member of this Agreement or any other Transaction Document to which Member is or shall be a party, the consummation of the Merger or the performance by any Member of its obligations hereunder or thereunder.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE NEXUS COMPANIES

4.1 Representations and Warranties Regarding the Nexus Companies . Nexus and Member, jointly and severally, represent and warrant to Regency and Merger Sub as follows:

(a) Organization of Nexus . Nexus is a limited liability company, which is duly organized, validly existing and in good standing under the laws of the State of Delaware. Nexus has full legal power and right to carry on its business as such is now being conducted. Nexus is duly qualified to do business in all the jurisdictions set forth opposite its name on Section 4.1(a) of the Disclosure Schedule , and such jurisdictions constitute all jurisdictions in which the business Nexus is conducting, or the operation, ownership or leasing of its properties, makes such qualification necessary, except jurisdictions in which the failure to be so qualified does not constitute a Material Adverse Effect.

(b) Capitalization .

(i) The Membership Interests held by Member constitute all of the outstanding Equity Interests of Nexus. All of the outstanding Membership Interests have been duly authorized and validly issued, are, except as provided in Section 18-607(b) of the DLLCA, fully paid and non-assessable and were not issued in violation of any preemptive rights or other preferential rights of subscription or purchase of any Person. Nexus is not obligated, under any Contract or otherwise, to issue any Equity Interests or Equity Interest Equivalents.

(ii) Member has heretofore provided to Regency true and complete copies of the Organizational Documents of each Nexus Company. Section 4.1(b) of the Disclosure Schedule sets forth a true and complete list of the Nexus Companies together with, for each such entity, (A) a specification of the nature of its legal organization and (B) the jurisdiction of its organization.

(iii) Except as set forth in Section 4.1(b) of the Disclosure Schedule , Nexus, directly or indirectly through another Nexus Company, owns, of record and beneficially, all of the outstanding Equity Interests of each other Nexus Company free and clear of all Liens (other than any Liens that may arise under this Agreement, be imposed by applicable state or federal securities Laws or be created by Regency). The Nexus Companies are the only corporations, limited partnerships, limited liability companies and other Persons in which Nexus owns, directly or indirectly, an Equity Interest. Section 4.1(b) of the Disclosure Schedule sets forth all of the authorized, issued and outstanding Equity Interests of each Nexus Company and the record and beneficial owners thereof. None of the Nexus Companies has any outstanding Equity Interests Equivalents or is obligated, under any Contract or otherwise, to issue any Equity Interests or Equity Interest Equivalents.

(iv) Each Nexus Company is duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization, is duly qualified to do business as a foreign limited liability company or limited partnership in good standing to conduct business in each jurisdiction set forth opposite such Nexus Company’s name in Section 4.1(b) of the Disclosure Schedule , which are all the jurisdictions in which the business it

is conducting, or the operation, ownership or leasing of its properties, makes such qualification necessary, except jurisdictions in which the failure to be so qualified would not constitute a Material Adverse Effect. Each Nexus Company has the requisite power and authority (as a limited partnership or limited liability company) to carry on its respective business as it is now being conducted and to own, operate and lease the assets it now owns, operates or holds under lease.

(v) All the outstanding partnership interests, membership interests and other Equity Interests of each Nexus Company (other than Nexus) (A) have been duly authorized and validly issued and, except as provided in Section 18-607(b) of the DLLCA or Section 607(b) of the Texas Revised Limited Partnership Act, are fully paid and non assessable and (B) were not issued in violation of any preemptive rights or other preferential rights of subscription or purchase of any Person.

(c) Authorization of Transaction; Governmental Authorizations . Each Nexus Company has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or shall be a party and to perform such Nexus Company’s obligations hereunder and thereunder, and the execution, delivery and performance by such Nexus Company of this Agreement and the other Transaction Documents to which it is or shall be a party have been duly and validly authorized and approved by all necessary limited partnership or limited liability company action of such Nexus Company. This Agreement and the other Transaction Documents to which it is or shall be a party constitute (or upon execution will constitute) the valid and legally binding obligation of each Nexus Company enforceable in accordance with their respective terms and conditions, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally, and to general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law). Except for filings under the HSR Act and as set forth in Section 4.1(c) of the Disclosure Schedule or Section 4.1(f) of the Disclosure Schedule , no Nexus Company is required to give any notice to, to make any filing with, to or obtain any authorization, consent, or approval of any Governmental Authority in order to execute this Agreement or the other Transaction Documents to which it is or shall be a party, to consummate the transactions contemplated by, or to otherwise perform such Nexus Company’s obligations under, this Agreement or the other Transaction Documents to which it is or shall be a party.

(d) Noncontravention . Neither the execution and delivery nor performance by any Nexus Company of this Agreement or the other Transaction Documents to which any Nexus Company is or shall be a party, nor the consummation by any Nexus Company of the transactions contemplated hereby or thereby, will (i) subject to obtaining HSR Approval and making or obtaining the notices, filings, authorizations, consents or approvals set forth in Section 4.1(c) of the Disclosure Schedule or Section 4.1(f) of the Disclosure Schedule , violate any Law to which any Nexus Company is subject, (ii) violate any provision of any Nexus Company’s Organizational Documents, (iii) result in the creation or imposition of any Lien on any of the assets of the Nexus Companies (other than Liens created by Regency or its Affiliates) or (iv) except as set forth in Section 4.1(d) of the Disclosure Schedule and subject to obtaining the consents set forth in Section 4.1(f) of the Disclosure Schedule , conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any Contract, lease, license,

instrument, or other arrangement to which any Nexus Company is a party or by which it is bound, except, in the case of this clause (iv), the occurrence of which or the failure of which to obtain would not constitute a Material Adverse Effect.

(e) Brokers’ Fees . Except as set forth in Section 4.1(e) of the Disclosure Schedule , no Nexus Company has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

(f) Consents . Except as set forth in Section 4.1(f) of the Disclosure Schedule , no material consent, authorization or approval of any third party is required, under any Contract to which any Nexus Company is a party or to which any of the Assets are bound or otherwise, for the execution and delivery by Nexus of this Agreement or any other Transaction Document to which Nexus is or shall be a Party, the consummation of the Merger or the performance by Nexus of its obligations hereunder or thereunder.

(g) Compliance with Laws; Permits . The representations and warranties in this Section 4.1(g) do not cover environmental matters. Representations and warranties of Nexus and Member regarding environmental matters are contained solely in Section 4.1 (s) . Except as set forth in Section 4.1(g) of the Disclosure Schedule :

(i) Each Nexus Company has owned and operated, and currently owns and operates, the assets held by it in compliance in all material respects with all applicable Laws.

(ii) Each Nexus Company is in compliance in all material respects with all Laws applicable to it.

(iii) The Nexus Companies, individually and in the aggregate, possess all material licenses, franchises, permits, certificates, consents, approvals and certificates and other governmental or quasi-governmental authorizations pertaining to the Assets necessary for the ownership, use and operation of the Assets or otherwise necessary for the operation of the business of the Nexus Companies in the Ordinary Course of Business (collectively, but excluding any such item the primary purpose of which is to create a Real Property Interest, the “ Permits ”). Each Nexus Company is in compliance in all material respects with all terms, provisions and conditions of the Permits, and no outstanding violations, assessments, orders or notices of noncompliance issued by any Governmental Authority exists which affects or relates to the Permits. Section 4.1(g) of the Disclosure Schedule sets forth a list of all material Permits possessed by the Nexus Companies.

(h) Properties .

(i) The Nexus Companies, individually or together, own or hold by valid leaseholds, easements, agreements providing for rights of use or access or similar agreements all of the assets reflected in the Consolidated Balance Sheet (other than any assets reflected in the Consolidated Balance Sheet that have been sold or otherwise disposed of since the date of the Consolidated Balance Sheet without breaching Section 4.1(q)(i) or Section 6.3 ) and all other assets (including Real Property Interests) (collectively, including the Pipeline Assets, but, for the avoidance of doubt, excluding any assets that are the subject matter of the Sonat Purchase Agreement, the “ Assets ”) other than the Pipeline Assets, free and clear of all

Title Defects. The Nexus Companies, individually or together, have such title or interest to or in the Pipeline Assets, as is sufficient to enable them to conduct their business as conducted with the Pipeline Assets in the Ordinary Course of Business without material interference. Except as set forth in Section 4.1(h) of the Disclosure Schedule , neither Member nor any Nexus Company has received any written notice of any claim or, to Member’s Knowledge, oral notice of any claim, in each case asserting the existence of a Title Defect in connection with any material Assets. To Member’s Knowledge, there are no assessments against the Assets for public improvements. There has been no actual or, to Member’s Knowledge, threatened taking (whether permanent, temporary, whole or partial) of any part of the Assets by reason of condemnation.

(ii) The Assets constitute all of the material assets, rights and properties, tangible or intangible, real or personal, that are used in connection with the operation of the business of the Nexus Companies in the Ordinary Course of Business. The personal property owned or leased by the Nexus Companies is sufficient to enable them to conduct their business as currently conducted. There are no preferential rights, rights to purchase, rights of first refusal, rights of first offer or similar rights to purchase any material Asset or material portion of the Assets.

(iii) Neither Member nor any Nexus Company has received any written notice of default or termination or, to Member’s Knowledge, oral notice of default or termination or is in default under the terms of any Real Property Interests that has resulted in or might result in a material impairment or loss of title to the Real Property Interests or that has or would hinder or impede in any material respect the operations of the Pipeline Assets or adversely affect in any material respect the ability of the Nexus Companies to own and operate the Pipeline Assets in the Ordinary Course of Business.

(iv) The Assets of the Nexus Companies, other than the Pipeline Assets, that are tangible assets are, in all material respects, in good operating and working order, subject to normal wear and maintenance; and, to Member’s Knowledge, the Pipeline Assets are in all material respects in good operating and working order, subject to normal wear and maintenance.

(i) Litigation . The representations and warranties in this Section 4.1(i) do not cover environmental matters. Representations and warranties of Nexus and Member regarding environmental matters are contained solely in Section 4.1 (s) .

(i) There is no (A) Proceeding by any Person or Governmental Authority pending or, to Member’s Knowledge, overtly threatened against Member or any Nexus Company or to which Member or any Nexus Company is a party, or (B) injunction, judgment, order or decree to which Member or any Nexus Company is a party, which, in the case of (A) or (B), (x) if determined adversely to any Nexus Company, reasonably would be expected to give rise to a material liability of the Nexus Companies, taken as a whole, or (y) constitutes or, if determined adversely to any Nexus Company, would constitute a Material Adverse Effect.

(ii) There are no bankruptcy, insolvency, reorganization, or arrangement Proceedings pending, being contemplated by, or, to Member’s Knowledge, threatened against Member or any Nexus Company.

(j) FCC Licenses . Neither Member nor any Nexus Company holds any FCC Licenses, and no FCC Licenses are required for the operations of the Nexus Companies in the Ordinary Course of Business.

(k) Taxes . Except as disclosed on Section 4.1(k) of the Disclosure Schedule :

(i) All Tax Returns required to be filed by or with respect to each Nexus Company have been duly and timely filed. Each such Tax Return is true, correct and complete in all material respects. All material Taxes owed by each Nexus Company, or for which it may be liable, that are or have become due have been paid in full. All material Tax withholding and deposit requirements imposed on or with respect to each Nexus Company have been satisfied in full in all respects. There are no Liens (other than Permitted Encumbrances) on any of the assets of any Nexus Company that arose in connection with any failure (or alleged failure) to pay any material Tax.

(ii) There is no claim against any Nexus Company for any Taxes, and no assessment, deficiency, or adjustment has been asserted, proposed, or threatened with respect to any Taxes or Tax Returns of or with respect to any Nexus Company. No Tax audits or administrative or judicial Proceedings are being conducted, pending or threatened with respect to any Nexus Company. No claim has ever been made by an authority in a jurisdiction where any Nexus Company does not file Tax Returns that such Nexus Company is or may be subject to taxation in that jurisdiction.

(iii) There is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to any Nexus Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax of or with respect to any Nexus Company.

(iv) Member or Nexus has provided or made available to Regency true and complete copies of all Income Tax and other material Tax Returns filed by each Nexus Company for the last three years and all correspondence to each Nexus Company from, or from each Nexus Company to, a Taxing Authority relating thereto.

(v) No Nexus Company is a party to or bound by any Tax allocation, sharing or like indemnity agreement dealing principally with Taxes. No Nexus Company has any liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any corresponding provisions of state, local or foreign Tax law), or as a transferee or successor, or by contract or otherwise (other than for another Nexus Company).

(vi) No Nexus Company has entered into any agreement or arrangement with any Taxing Authority that requires it to take any action or to refrain from taking any action. No Nexus Company is a party to any agreement with any Taxing Authority that would be terminated or adversely affected as a result of the transactions contemplated by this Agreement.

(vii) No power of attorney that is currently in force has been granted with respect to any matter relating to Taxes that could affect any Nexus Company.

(viii) All of the property of each Nexus Company that is subject to property Tax has been properly listed and described on the property tax rolls of the appropriate taxing jurisdiction for all periods prior to Closing, and no portion of the property of any Nexus Company constitutes omitted property for property tax purposes.

(ix) Immediately prior to Closing, each Nexus Company will be disregarded as separate from Member for federal income tax purposes under Treasury Regulation Sections 301.7701-2 and 301.7701-3, and each Nexus Company has at all times since inception been a partnership or disregarded as separate from Member for federal income tax purposes under Treasury Regulation Sections 301.7701-2 and 301.7701-3. No Nexus Company has ever owned any interest in any Person other than another Nexus Company.

(x) Except for Sections 4.1 (k) (v) , 4.1 (k) (vi) and 4.1 (k) (ix) , the representations of the Nexus Companies made by this Section 4.1(k) refer only the Pre-Closing Periods of the Nexus Companies and may only be relied upon for these periods, and are not intended to serve as a representation to, or a guarantee of, nor can they be relied upon for, any Tax position taken after the Closing Date.

(l) Contracts .

(i) Section 4.1(l) of the Disclosure Schedule contains a true and complete list of all Material Contracts. A true, correct and complete copy of each Material Contract has been made available to Regency. No Nexus Company has received from any other party to a Material Contract any written notice of any breach or violation, or, to Member’s Knowledge, oral notice of any material breach or violation, by any Nexus Company of such Material Contract or termination or intention to terminate such Material Contract. Each Nexus Company has performed all of its obligations under the Material Contracts in accordance with the terms of the Material Contracts in all material respects, and, to Member’s Knowledge, no event has occurred which (with or without notice or lapse of time, or both) would constitute a default or an event of default by a Nexus Company under the terms of any Material Contract such that any other party to such Material Contract would have the right (with or without notice or lapse of time or both) to terminate, amend or modify such Material Contract or be entitled to any material payment under such Material Contract. To Member’s Knowledge, each of the Material Contracts is enforceable and in full force and effect and constitutes a legal, valid and binding obligation of each Nexus Company which is a party thereto and, to Member’s Knowledge, each other party thereto and, to Member’s Knowledge, no other party to any Material Contract is in material breach of the terms, provisions or conditions of such Material Contract.

(ii) Except as set forth in Section 4.1(l) of the Disclosure Schedule , there are no pending or threatened claims by any Nexus Company, and there are no pending or, to Member’s Knowledge, threatened claims against any Nexus Company, for indemnity or otherwise, under, related to or arising out of the Sonat Purchase Agreement, the Sonat CIOM

Agreement or either of the Prior Acquisition Agreements or the transactions contemplated thereby.

(m) Financial Statements; Absence of Undisclosed Liabilities; Controls and Procedures . Except as set forth in Section 4.1 (m) of the Disclosure Schedule :

(i) Nexus has delivered to Regency true and correct copies of the audited consolidated balance sheet (the “ Consolidated Balance Sheet ”) and related audited consolidated statements of operations, statements of cash flows and statements of changes in members’ capital of Member and the Nexus Companies for the year ended December 31, 2007, together with the notes thereto and the related audit report of Hein & Associates LLP thereon (collectively, the “ Audited Financial Statements ”).

(ii) The Audited Financial Statements have been prepared in accordance with the books and records of the Member and Nexus Companies. The balance sheet included in the Audited Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated financial position of the Nexus Companies, as of the date thereof, and each of the consolidated statements of operations, statements of cash flows and statements of changes in members’ capital included in the Audited Financial Statements (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, cash flows and members’ capital, as the case may be, of Member and the Nexus Companies for the periods set forth therein, in each case in accordance with GAAP.

(iii) There are no obligations or liabilities (contingent or otherwise) of any Nexus Company that would be required by GAAP to be reflected or reserved against in a consolidated balance sheet of the Nexus Companies prepared and audited in accordance with GAAP other than obligations or liabilities that are (a) so reflected or reserved on the Consolidated Balance Sheet or obligations or liabilities incurred since December 31, 2007, in the Ordinary Course of Business, (b) liabilities or obligations arising out of any Contracts to which any Nexus Company is a party thereto (except to the extent such liability or obligation is in respect of a breach or violation of such Contract prior to the Closing Date), (c) obligations or liabilities under, or expenses incurred in connection with the transactions contemplated by, this Agreement or the Sonat Purchase Agreement and Sonat CIOM Agreement, (d) the matters disclosed in or arising out of matters disclosed in Section 4.1(m) of the Disclosure Schedule or (e) other liabilities and obligations which do not, individually or in the aggregate, exceed $25,000.

(iv) All Records of the Nexus Companies have been prepared, assembled and maintained in the Ordinary Course of Business. The Nexus Companies maintain books and records reflecting in all material respects their assets and liabilities that in reasonable detail accurately and fairly reflect their transactions and dispositions of their assets, and maintain or cause to be maintained a system of internal accounting controls sufficient to provide reasonable assurance that: (A) transactions are accurately recorded in all material respects and as necessary to permit preparation of the consolidated financial statements of the Nexus Companies and to maintain accountability for the consolidated assets; (B) transactions are executed in accordance with management’s authorization; (C) access to the records of the Nexus Companies

is permitted only in accordance with management’s authorization; (D) the reporting of the Nexus Companies’ assets is compared with existing assets at regular intervals; and (E) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

(v) The Nexus Companies’ accountants have not advised any Nexus Company of any material deficiencies in the Nexus Companies’ disclosure controls and procedures.

(vi) Nexus has made available to Regency a summary of (A) any significant deficiencies in the design or operation of internal controls that would, to Member’s Knowledge, reasonably be expected to adversely affect the Nexus Companies’ ability to record, process, summarize and report financial data in any material respect, (B) any material weaknesses in the Nexus Companies’ internal controls, (C) any fraud, whether or not material, that involves management or other employees who have a significant role in the Nexus Companies’ internal controls and (D) any material change in the internal controls or disclosure controls and procedures of any Nexus Company effected since January 1, 2007.

(vii) Member has no assets except as set forth in Section 4.1(m) of the Disclosure Schedule .

(n) Pipeline Matters . Section 4.1(n) of the Disclosure Schedule sets forth summary throughput and other operating data reflected therein with respect to the Pipeline Assets for the periods indicated therein (the “ Pipeline Data ”), which Pipeline Data is true and correct in all material respects. Subsequent to the periods covered by the Pipeline Data and through the date of this Agreement, there have been no material adverse changes in the volumes of Hydrocarbons transported through the Systems and no Person has provided written or, to Member’s Knowledge, oral notice to Member or any Nexus Company of its intent to reduce materially the volume of Hydrocarbons transported through the Systems. To Member’s Knowledge, as of the date hereof, no fact or circumstance exists that would result in a material decrease in such volumes excluding, however, changes that may result from (a) market conditions, (b) matters that affect the energy industry in general or in the area in which the Systems are located, or (c) non-performance by a party under the Hydrocarbon Contracts other than a Nexus Company.

(o) Affiliate Transactions . Section 4.1(o) of the Disclosure Schedule describes all material services provided to any Nexus Company by an Affiliate of any Nexus Company (other than another Nexus Company or any director, officer or employee of any Nexus Company in such capacity). Except as disclosed in Section 4.1(o) of the Disclosure Schedule , there are (i) no services provided by any Affiliate of any Nexus Company (other than another Nexus Company or any director, officer or employee of any Nexus Company in such capacity) at an actual cost to any Nexus Company below the approximate cost at which such services could be obtained from a third party unaffiliated service provider and all charges charged or allocated to any Nexus Company by any Affiliate of any Nexus Company as of the date of the applicable Pipeline Data are reflected in such Pipeline Data and (ii) to Member’s Knowledge, no Contracts involving a Nexus Company in which any Manager, Officer, Director or Affiliate of any Nexus

Company has a financial interest (other than compensation arrangements disclosed in Section 4.1(r) of the Disclosure Schedule ).

(p) Regulatory Status . The representations and warranties in this Section 4.1(p) do not cover environmental matters. Representations and warranties of Nexus and Member regarding environmental matters are contained solely in Section 4.1 (s) .

(i) No portion of the Assets is subject to the jurisdiction of the FERC under the Natural Gas Act of 1938, as amended (the “ NGA ”), the Natural Gas Policy Act of 1978 (the “ NGPA ”) or the Interstate Commerce Act. No Nexus Company is subject to regulation as a public utility company or public service company.

(ii) To Member’s Knowledge, (i) the representations made by Nexus concerning the jurisdictional status of the Nexus Companies’ facilities and operations to natural gas purchasers and interstate or intrastate pipelines in order to effect sales or to facilitate transportation transactions (whether for the Nexus Companies or any other Person) are, and were when made, true and correct in all material respects, and (ii) each Nexus Company has complied in all material respects with the terms and conditions of such sales, transportation or interconnect or similar arrangements (including “on behalf of” certificates).

(iii) The gathering rates charged by any Nexus Company for services related to the Assets and the terms and conditions applied by such Nexus Company to such services, are non-discriminatory and otherwise in compliance with all applicable Laws.

(iv) No rate refunds, rebates, offsets or like obligations are accrued or owed by any Nexus Company with respect to services related to the Assets.

(v) There is no regulatory Proceeding pending or, to Member’s Knowledge, any material regulatory proceeding overtly threatened against or involving any Nexus Company or to which its units would be subject or its Assets.

(q) No Adverse Change or Event . Since December 31, 2007, the Assets have been operated in the Ordinary Course of Business and there has not been (i) any sale or transfer by any Nexus Company of any Real Property Interest or any material piece of equipment, personal property or other asset used in connection with the operation or maintenance of the Pipeline Assets, (ii) as of the date of this Agreement, any fact, circumstance, event, change, effect or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes, effects or occurrences since December 31, 2007, that has had, has or reasonably would be expected to have any material adverse changes in the throughput capacity or operational capability of the System(s) or the Facilities, or (iii) as of the date of this Agreement, any event or occurrence that constitutes a Material Adverse Effect.

(r) Employee Benefit Liabilities and Employees .

(i) Except as set forth in Section 4.1 (r) of the Disclosure Schedule , (A) no Nexus Company has sponsored or contributed to any Employee Benefit Plan (including any multiemployer plan within the meaning of Section 3(37) of ERISA), (B) except for benefits to be provided to Employees pursuant to the terms of the Nexus Related Employee Benefit Plans,

no Nexus Company has any liability (including any contingent liability) to any employee, independent contractor, leased employee or consultant with respect to any Employee Benefit Plan, and (C) no obligation exists, other than the obligations to pay base salaries and bonuses in the normal course and other compensation or to provide benefits pursuant to the terms of such Nexus Related Employee Benefit Plan, under any Employee Benefit Plan maintained, sponsored or contributed to by any ERISA Affiliate for which any Nexus Company would be jointly, severally or otherwise liable. Each Employee Benefit Plan set forth in Section 4.1 (r) of the Disclosure Schedule (each such plan referred to as a “ Nexus Related Employee Benefit Plan ”) has been maintained in all material respects in compliance with its terms and with the applicable requirements of ERISA, the Code and all other applicable Laws. No fact or circumstance exists that would reasonably be expected to materially affect the qualification or tax-exempt status of such Nexus Related Employee Benefit Plan and no prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred.

(ii) Section 4.1 (r) of the Disclosure Schedule lists all employees of any Nexus Company and all employees of Member, the primary duties or activities of which are to perform services for the Nexus Companies (collectively, the “ Employees ”), identifies the employer of each such Employee and sets forth, (A) each Employee’s position of employment, current annual salary or hourly rate, as applicable, classification as exempt or non-exempt, date of employment, and facility or other location where such Employee works, (B) whether such Employee is on inactive status for any reason, such as a leave of absence or disability and (C) the number of days of accrued but unused vacation and sick time with respect to each Employee (the “ Current Salary/Benefits ”).

(iii) All obligations of the Nexus Companies for salaries, vacation and holiday pay, sick pay, bonuses and other forms of compensation payable by the Nexus Companies to the Officers, Directors or Employees in respect of the services rendered by any of them have been paid or adequate accruals therefor have been made in the Audited Financial Statements for obligations accrued through the date thereof.

(iv) Except as set forth in Section 4.1 (r) of the Disclosure Schedule , there is no pending or, to Member's Knowledge, overtly threatened claim in respect of any of the Nexus Related Employee Benefit Plans other than claims for benefits in the Ordinary Course of Business. The Nexus Companies have complied in all material respects with the health care continuation requirements of Part 6 of Title I of ERISA. The Nexus Companies have no obligation under any Nexus Related Employee Benefit Plans or otherwise to provide health or other welfare benefits to any prior employees or any other person, except as required by applicable Laws.

(v) Except as set forth in Section 4.1 (r) of the Disclosure Schedule , there exists no Severance Obligations or Change of Control Amounts.

(s) Environmental Matters . Except as set out in Section 4.1(s) of the Disclosure Schedule ,

(i) no Nexus Company has caused or allowed the generation, use, treatment, storage, or disposal of Hazardous Substances at or on the Assets in material violation of applicable Health, Safety and Environmental Laws;

(ii) there has been no release of any Hazardous Substances at, on, or underlying any of the Assets by any Nexus Company for which any Nexus Company could reasonably be expected to be held responsible in material violation of or in a manner that could give rise to a Nexus Company material liability under applicable Health, Safety and Environmental Laws;

(iii) the Nexus Companies have secured all Permits required under Health, Safety and Environmental Laws for the ownership or operation of the Assets and the Nexus Companies are in compliance in all material respects with such Permits;

(iv) no Nexus Company has received any written request for information or written notice, nor does any Nexus Company have any reason to suspect or believe such Nexus Company will receive any such request for information or notice, of any actual or, to Member’s Knowledge, overtly threatened Proceedings, or Third Party Claims (in each case other than as have been finally resolved (formally or informally) or satisfied with no further obligation of any Nexus Company) related to or arising under any Health, Safety and Environmental Laws;

(v) no Nexus Company has transported or arranged for the transportation or disposal of any Hazardous Substances except in compliance in all material respects with all applicable Health, Safety and Environmental Laws;

(vi) without limiting the specificity of the foregoing clauses (i) through (v), the Nexus Companies have conducted the operation of the Assets in compliance in all material respects with Health, Safety and Environmental Laws;

(vii) no Nexus Company is currently operating or required to be operating under any compliance order, decree or agreement, any consent, decree, order or agreement, or corrective action decree, order or agreement issued by or entered into with any Governmental Authority under any Health, Safety and Environmental Laws; and

(viii) other than as may be contained in the documents listed in Section 4.1(s) of the Disclosure Schedule , no Nexus Company has any Contractual obligations to indemnify, or assume from, any third party any Environmental Costs or Liabilities.

(t) Insurance . As of the date of this Agreement, the Nexus Companies carry policies of insurance as set forth in Section 4.1(t) of the Disclosure Schedule , which insurance (i) covers such risks, is in such amounts, has such deductibles and retentions and is underwritten by such companies as described in Section 4.1(t) of the Disclosure Schedule and (ii) is in accordance with all statutory and regulatory criteria required. As of the date of this Agreement, all such policies are in full force and effect, all premiums due and payable thereon have been paid (other than retroactive or retrospective premium adjustment that are not yet, but may be, required to be paid with respect to any period ending prior to the Closing Date), and no written notice of cancellation or termination has been received by Member or any Nexus Company with

respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation. There are no outstanding claims under any such insurance policies and, to Member’s Knowledge, no event has occurred, and no circumstance or condition exists, that has given rise to or serves as the basis for or (with or without notice or lapse of time) reasonably would be expected to give rise to or serve as the basis for any such claim under any such policy. No Nexus Company has received any written or, to Member’s Knowledge, oral notice from any insurer or reinsurer of any reservation of rights with respect to pending or paid claims. No Nexus Company is a party to any Contract, and the insurance policies listed on Section 4.1(t) of the Disclosure Schedules do not contain any provision, that would affect the rights of any Nexus Company under such insurance policies upon or as a result of the consummation of the transactions contemplated by this Agreement.

(u) Hydrocarbon Imbalances; Future Delivery of Hydrocarbons . No Nexus Company has imbalances of Hydrocarbons pertaining to the operation of the System(s) or the Facilities. No Nexus Company is obligated by virtue of any hydrocarbon imbalance, prepayment arrangement under any Contract for the sale of hydrocarbons, forward sale of production or any other obligation to deliver hydrocarbons at some future time without receiving full payment therefor, other than in a manner consistent with the normal cycle of billing.

(v) Guarantees . Except as set forth in Section 4.1(v) of the Disclosure Schedule , there are no surety bonds, performance bonds guarantees or financial assurances of which any Nexus Company is a principal or guarantor (the “ Guarantees ”).

(w) Labor Matters .

(i) Each Nexus Company has furnished Regency copies of all material claims, complaints, charges, reports or other documents in their files made by or against any of them since January 9, 2007 and, to Member’s Knowledge, in the past six (6) years with respect to any current or former Employee pursuant to workers’ compensation laws, Title VII of The Civil Rights Act of 1964, The Civil Rights Act of 1865, The Occupational Safety and Health Act, The National Labor Relations Act, The Employee Retirement Income Security Act, The Equal Pay Act, The Americans With Disabilities Act, The Family and Medical Leave Act, The Older Workers Benefit Protection Act, The Fair Labor Standards Act, The Civil Rights Act of 1991, The False Claims Act, and any other applicable Laws relating to employment and labor.

(ii) The Nexus Companies have complied in all material respects with all applicable Laws relating to the employment of labor.

(iii) Neither Member nor any of the Nexus Companies has agreed to recognize any labor union or other collective bargaining representative and, to Member’s Knowledge, no labor union or other collective bargaining representative claims to or is seeking to represent any Employees. To Member’s Knowledge, no union organizational campaign or representation petition is currently pending with respect to any employee of any Nexus Company.

(iv) Except as set forth in Section 4.1(w) of the Disclosure Schedule , neither Member nor any Nexus Company is a party to or bound by any collective bargaining

agreement, other labor contract or individual agreement applicable to any of its respective employees. No collective bargaining agreements, other labor contract or individual agreements relating to any employees of any Nexus Company are being negotiated by any Nexus Company.

(v) There is no labor strike or labor dispute, slow down, lockout or stoppage actually pending or, to Member’s Knowledge, threatened against or affecting any Nexus Company, and no Nexus Company has experienced any labor strikes or material labor disputes, slowdowns, lockouts or stoppages. No Nexus Company is engaged, nor has engaged, in any unfair labor practices, and no Nexus Company has had any unfair labor practice charges or complaints before any Governmental Authority pending or, to Member’s Knowledge, threatened against such Nexus Company. No Nexus Company has had any material grievances, arbitrations, or other Proceedings, or, since December 31, 2006, any grievances, arbitrations or other Proceedings, arising or asserted to arise out of or under any employment or similar Contract or individual Contract, pending or, to Member’s Knowledge, threatened, against such Nexus Company.

(vi) To Member’s Knowledge, all Employees are lawfully authorized to work in the United States according to applicable immigration Laws. Member and all Nexus Companies are in compliance in all material respects with all applicable Laws relating to documentation and recordkeeping of their employees’ work authorization status.

(vii) As of the date hereof, and in the past four years, there have not been any plant closing, mass layoffs or other terminations of employees of Member or any Nexus Company that would create any obligations upon or liabilities for Member or any Nexus Company under the Worker Adjustment and Retraining Notification Act or similar Laws.

(x) Intellectual Property . To Member’s Knowledge there are no material trademarks, trade names, patents, service marks, brand names, computer programs, databases, industrial designs, copyrights or other intangible property (“ Intellectual Property ”) that are used in connection with the operating of the business of the Nexus Companies in the Ordinary Course of Business for which the Nexus Companies do not hold valid title or a valid right to use in connection with the use thereof. In the past two years, and, to Member’s Knowledge, in the past four years no Nexus Company has received any written notice of infringement, misappropriation or conflict or, to Member’s Knowledge, oral notice of any infringement, misappropriation or conflict, in each case with respect to Intellectual Property from any Person with respect to the operation of the Assets owned by any Nexus Company.

(y) Sonat Matters . Except as disclosed in Section 4.1(y) of the Disclosure Schedule , there are no material consents of third parties that are required in order for the Surviving Company to transfer the 14-inch Line and the 16-inch Line (in the case of Alternative B) or the 14-inch Line (in the case of Alternative C), together in each case with any required Permits and environmental permits, to Regency Intrastate Gas LLC (“ RIGS ”) under any rights-of-way, Hydrocarbon Contracts or such Permits or environmental permits.

ARTICLE V

REPRESENTATIONS AND WARRANTIES REGARDING

REGENCY AND MERGER SUB

5.1 Representations and Warranties Regarding Regency and Merger Sub . Regency and Merger Sub, jointly and severally, represent and warrant to Nexus and Member as follows:

(a) Organization . Merger Sub is a limited liability company, duly organized and validly existing under the Laws of the State of Delaware and, as of Closing will be, qualified to do business and in good standing in the State of Texas. Regency is a limited partnership, which is duly organized and validly existing under the Laws of the State of Delaware and is qualified to do business and is in good standing in the State of Texas. Each of Merger Sub and Regency has full legal power and right to carry on its business as such is now being conducted.

(b) Authorization of Transaction . Each of Regency and Merger Sub has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or shall be a party and to perform its obligations hereunder and thereunder and the execution, delivery and performance by each of Regency and Merger Sub of this Agreement and the other Transaction Documents to which it is or shall be a party have been duly and validly authorized and approved by all necessary limited partnership or limited liability company actions of each of Regency and Merger Sub. This Agreement and the other Transaction Documents to which each of Regency and Merger Sub is or shall be a party constitute (or upon execution will constitute) the valid and legally binding obligation of Regency or Merger Sub, as applicable, enforceable in accordance with their respective terms and conditions, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting creditors’ rights generally and to general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law). Except as contemplated by Section 6.6 , neither Regency nor Merger Sub is required give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or any Third Party in order to execute this Agreement or the other Transaction Documents to which Regency or Merger Sub, as applicable, is or shall be a party, consummate the transactions contemplated by, or otherwise perform the obligations of Regency or Merger Sub, as applicable, under this Agreement or the other Transaction Documents to which Regency or Merger Sub, as applicable, is or shall be a party.

(c) Noncontravention . Neither the execution and delivery nor performance by Regency or Merger Sub is or of this Agreement or the other Transaction Documents to which Regency or Merger Sub shall be a party, nor the consummation of the transactions contemplated hereby or thereby, will (i) subject to obtaining HSR Approval, violate any Law to which Regency or Merger Sub is subject, (ii) violate any provision of the Organizational Documents or Regency or Merger Sub or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, approval or consent under any Contract, lease, license or other instrument to which Regency or Merger Sub is a party or by which it is bound or to which any of its assets is subject, except, in this case of this clause (iii), for such violations, defaults, breaches, or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Regency or Merger Sub, as applicable, to perform

its obligations under this Agreement or the other Transaction Documents to which it is or shall be a party or to consummate the Merger or the transactions contemplated by this Agreement and the other Transaction Documents. The performance by the Surviving Corporation of its obligations under the Sonat Purchase Agreement will not (i) violate any provision or Merger Subs’ Organizational Documents or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, approval or consent under any Contract, lease, license or other instrument to which Merger Sub is a party or by which it is bound or to which any of its assets is subject, except, in the case of this clause (ii), for such violations, defaults, breaches or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Surviving Corporation to perform its obligations under the Sonat Purchase Agreement.

(d) Brokers’ Fees . Neither Regency nor Merger Sub has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the Merger.

(e) Litigation .

(i) There is no Proceeding by any Person or Governmental Authority pending or, to Regency’s Knowledge, overtly threatened against Regency or Merger Sub or to which Regency or Merger Sub is a party, and no injunction, judgment, order or decree to which Merger Sub, Regency or their respective properties is subject, that reasonably may be expected to have a material adverse effect upon the ability of Regency or Merger Sub to consummate the transactions contemplated in this Agreement the other Transaction Documents to which it is or shall be a party or the consummation of the transaction contemplated by the Sonat Purchase Agreement.

(ii) There are no bankruptcy, insolvency, reorganization, or arrangement Proceedings pending, being contemplated by, or, to Regency’s Knowledge, threatened against Regency or Merger Sub or any Affiliate that controls Regency.

(f) Sufficient Funds . Regency has cash available and existing committed borrowing facilities which together are sufficient to enable it to pay the Merger Consideration upon consummation of the Merger.

ARTICLE VI

COVENANTS

6.1 Satisfaction of Conditions Precedent ; Cooperation .

(a) From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement, subject to the other terms of this Agreement and without limiting the provisions set forth in Section 6.6 , each Party will use all commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the Merger as soon as possible, including the satisfaction of the conditions precedent set forth in Sections 7.1 and 7.2 .

(b) Prior to the Closing, Member and Nexus shall reasonably cooperate with Regency and Regency’s financing sources. Nexus shall use all commercially reasonable efforts to furnish to Regency, as promptly as practicable upon Regency’s reasonable request, any updated financial information and operating data related to the Nexus Companies, including monthly financial and Pipeline Data, with respect to periods subsequent to periods covered by the financial information contained in the Audited Financial Statements and Pipeline Data provided by Member (copies of which may be provided to Regency’s lenders or financing sources).

6.2 Notices and Consents .

(a) Member will, and will cause each Nexus Company to, use all commercially reasonable efforts to obtain prior to Closing each consent set forth in Sections 4.1(c) and 4.1(f) of the Disclosure Schedule and all other consents required to be obtained prior to Closing with respect to the Merger and Regency shall use all commercially reasonable efforts in cooperating with Member in obtaining such consents. The costs of obtaining such consents shall be borne by Member.

(b) Subject to the other terms of this Agreement and without limiting the provisions set forth in Section 6.6 , each of the Parties will give any notices to, make any filings with, and use all commercially reasonable efforts to obtain or assist the other party in obtaining any authorizations, consents, and approvals of Governmental Authorities necessary for the consummation of the Merger.

6.3 Conduct of Business .

(a) Member and Nexus covenant and agree that until the earlier of the Closing or the termination of this Agreement, except as otherwise set forth in Section 6.3(a) of the Disclosure Schedule or unless Regency otherwise consents in writing (which consent shall not unreasonably withheld, conditioned or delayed), Member and Nexus shall cause the Nexus Companies to:

(i) operate in the Ordinary Course of Business;

(ii) preserve substantially intact their business organizations, and use all commercially reasonable efforts to (A) maintain their rights, privileges and immunities and to maintain their relationships with their customers and suppliers and (B) retain the services of the Employees it would otherwise retain in the Ordinary Course of Business, except for such Employees for whom Regency has requested a Release in connection with this Agreement or the transactions contemplated hereby or those Employees designated in writing by Regency to be terminated by the applicable Nexus Company prior to Closing;

(iii) use all commercially reasonable efforts consistent with past practice to maintain and to keep their properties and assets in good working order, repair and condition, ordinary wear and tear excepted; if there is any casualty loss or material damage to any properties or assets of any Nexus Company prior to Closing, Member shall, to the extent practicable, consult with Regency regarding the replacement or repair of such property or asset;

(iv) use all commercially reasonable efforts to keep in full force and effect insurance applicable to their assets and operations comparable in amount and scope of coverage to that currently maintained;

(v) (A) keep and maintain accurate (in all material respects) books, Records and accounts; (B) pay or accrue all Taxes, assessments and other governmental charges imposed upon any of their Assets or with respect to their franchises, business, or income when due and before any penalty or interest accrues thereon, except for any Taxes the validity of which is being contested in good faith by appropriate legal Proceedings and for which adequate reserves have been set aside; (C) accrue and pay when due and payable all wages and other compensation incurred with respect to all Employees and independent contractors of and consultants to the Nexus Companies and (D) comply in all material respects with the requirements of all applicable Laws and all actions and requirements of any Governmental Authority necessary in the operation of its business, and comply and enforce (in all material respects) the provisions of all Material Contracts;

(vi) subject to Section 8.6 , comply with its obligations under the Sonat Purchase Agreement and the Sonat CIOM Agreement; and

(vii) use all commercially reasonable efforts to obtain authorization to the extent required by Health, Safety and Environmental Laws from the Louisiana Department of Environmental Quality for the equipment at the Nexus Companies’ Logansport, Louisiana facility that have the potential to emit condensate “flash gas,” including, but not limited to, the installation of a flare or any controls required to reduce the emissions of such “flash gas.”

(b) Except pursuant to the terms of this Agreement, as otherwise set forth in Section 6.3(b) of the Disclosure Schedule or unless Regency otherwise agrees in writing from and after the execution of this Agreement and until the earlier of the Closing or the termination of this Agreement, Member shall not sell, transfer or otherwise dispose of, or grant any Lien with respect to, any Membership Interests or any other Equity Interests of any Nexus Company and Member and Nexus shall not, and shall not permit any Nexus Company to, take any of the following actions (and shall take all action necessary (including exercising their respective rights with respect to the Membership Interests) to prevent any Nexus Company from taking any action prohibited by this Section 6.3(b) ):

(i) (A) redeem, purchase or acquire, or offer to purchase or acquire, any of the outstanding Equity Interests of any Nexus Company, (B) effect any reorganization or recapitalization, (C) split, combine or reclassify any of the Equity Interests of any Nexus Company, or (D) declare, set aside or pay any dividend or other distribution in respect of its Equity Interests, other than wholly in cash to the extent such dividend or other distribution would not cause Net Working Capital immediately following such dividend or other distribution to be less than the Base Working Capital;

(ii) (A) offer, sell, transfer, issue, dispose of or grant, or authorize the offering, sale, transfer, issuance, grant or disposition of, any Membership Interests or any of its Equity Interests or (B) grant, or authorize the grant of, any Lien with respect to any Membership Interests or any of its Equity Interests;

(iii) acquire, directly or indirectly, (A) whether by merger or consolidation, by purchasing an Equity Interest or otherwise, any business or division of any Person or (B) any material assets or properties other than the acquisition of assets from suppliers or vendors in the Ordinary Course of Business;

(iv) sell, lease, exchange or otherwise dispose of any of its assets, except for dispositions of Hydrocarbon inventories or leases of its properties, in each case in the Ordinary Course of Business;

(v) grant, create, or assume, or (except for Permitted Encumbrances) incur, any Lien with respect to any of its respective assets;

(vi) adopt any amendments to its Organizational Documents;

(vii) (A) make any material change in its methods of accounting in effect on the date hereof, except as may be required to comply with changes in GAAP, (B) make or revoke any Tax election or materially change (or make a request to change) its Tax accounting methods, policies, or procedures, (C) settle or compromise any Proceeding relating to material Taxes, except, in each case, as may be required by Law; (D) revalue any asset except as required by GAAP consistently applied on a basis consistent with past practice and the preparation of the Audited Financial Statements, or (E) consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment;

(viii) incur or guarantee any additional Indebtedness, except for (A) intercompany loans among the Nexus Companies, or issue or sell any debt securities or warrants or rights to acquire any debt securities or guaranty any debt securities of others or (B) Indebtedness incurred under the Credit Facility in the Ordinary Course of Business;

(ix) incur, or commit to incur, any liability or obligation to make capital expenditures in excess of $25,000 individually or $100,000 in the aggregate, except (A) in the case of emergency or as required by a Governmental Authority, in which case such Nexus Company may make all reasonable and necessary capital expenditures without the prior written consent of Regency but shall provide prompt written notice to Regency of such capital expenditures and (B) liability or obligations for capital expenditures incurred in the Ordinary Course of Business which have been fully paid and discharged on or before the Measurement Date;

(x) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing a liquidation, dissolution, merger, consolidation or other restructuring;

(xi) (A) amend, modify, waive or assign any rights or obligations under or otherwise change in any material respect any Contract, (B) terminate any Contract before the expiration of the term thereof, other than to the extent any such Contract terminates pursuant to its terms in the Ordinary Course of Business, or (C) enter into any Contract with any Affiliate of Member; provided, however , that with respect to actions under the foregoing clause (B) that would require Regency’s prior consent pursuant to this Section 6.3 but for such action being in

the Ordinary Course of Business, Member shall promptly notify Regency in writing of any such action;

(xii) enter into or assume (A) any Contract that would constitute a Material Contract or (B) any other Contract with any Person (including an Affiliate of any Nexus Company), other than Contracts entered into in the Ordinary Course of Business with a Person (other than an Affiliate of any Nexus Company);

(xiii) (A) employ any common law employees, of the Nexus Companies, other than the Employees employed as of the date of this Agreement and replacements for, and on substantially similar terms as, any such Employees whose employment is terminated after the date of this Agreement, (B) engage any independent contractors, consultants or agents pursuant to any Contract which shall either constitute a Material Contract or for which any Nexus Company shall have any continuing obligation after the Closing, (C) enter into or become obligated to make payments under or with respect to, (1) any Nexus Related Employee Benefit Plan, (2) any other equity based, incentive or deferred compensation plan or arrangement or other fringe benefit plan, (3) any consulting, employment, severance, bonus, termination or similar Contract with any Person or (4) any amendment or extension of any such plan or Contract, except as required by Law or as is immaterial in amount and authorized pursuant existing terms of such plans, arrangements or Contracts, (D) grant, pay, or otherwise become liable for or obligated to pay, any Severance Obligation, Change of Control Amounts, bonus or increase in compensation or benefits to, or forgive any Indebtedness of, any Director, Officer, Manager or Employee or any former independent contractor, consultant or agent of any Nexus Company; or (E) make any loan to, or enter into any other transaction with, any of its Directors, Officers, Managers or Employees;

(xiv) waive any claims or rights pertaining to the business of the Nexus Companies other than claims which are immaterial in amount and consequence to the business of the Nexus Companies; or

(xv) agree in writing or otherwise to do any of the foregoing.

(c) Notwithstanding anything to the contrary herein, Member and the Nexus Companies shall be permitted to take any action they reasonably deem necessary or advisable in order to comply with applicable Law or the terms of any Material Contract in effect on the date hereof or, subject to Section 8.6 and except for actions described on Schedule D , to consummate the transactions contemplated by the Sonat Purchase Agreement (including with respect to the Sonat Abandonment Application and obtaining Final FERC Approval Order).

(d) The parties agree that if Regency agrees in writing to any of the preceding Sections 6.3(a) and 6.3(b) , each applicable section of Disclosure Schedules shall be automatically updated for all purposes under this Agreement to include such action to which Regency agreed.

6.4 Access and Information . During the period from the date of this Agreement until the time of Closing, during Nexus’ normal business hours and in a manner so as not to interfere with the normal business operations of the Nexus Companies, Member and Nexus will permit

representatives of Regency to have reasonable access to the Employees and to all the Records. Any information obtained by Regency or its Representatives under this Section 6.4 shall be deemed to be Confidential Information under the Confidentiality Agreement, except that if the Closing occurs, the obligation of confidentiality shall terminate. During the period from the date of this Agreement until the time of Closing, Member and Nexus shall also make available to Regency, upon reasonable notice during normal business hours, personnel of the Nexus Companies as Regency may reasonably request. No investigations by Regency will reduce or otherwise affect the obligation or liability of Member or Nexus with respect to any express representations, warranties, covenants or agreements made herein or in any instrument, agreement or document executed and delivered in connection with this Agreement.

6.5 Evaluation and Inspection .

(a) During the period from the date of this Agreement until the time of Closing, Regency shall, at reasonable time upon reasonable prior notice to Member have the right to enter upon the property subject to the Real Property Interests to conduct non-invasive, non-destructive inspections of the Real Property Interests, the System(s) and the Facilities. Regency agrees that it will not perform any other types of inspections of the property subject to the Real Property Interests (such as, by way of example but not limitation, sampling or testing of soil, groundwater or surface water) prior to Closing, unless agreed to in advance by Member.

(b) Member and Nexus agree to cooperate reasonably with Regency in conducting the inspections referred to in Section 6.5 (a) , but any and all such inspections of the Assets shall be conducted solely by Regency and shall be performed at Regency’s sole risk and expense. All “due diligence” activities of Regency shall be conducted in accordance with applicable Laws. Regency shall, if the Closing does not occur, restore the property subject to the Real Property Interests, to the extent reasonably possible, to the same condition as it was in prior to the conducting by Regency or its representatives of the inspections.

(c) During the period from the date of this Agreement until the time of Closing, to the extent that any Nexus Company has any alignment sheets relating to the System(s) and the Facilities and documents containing data on the size and type of the various portions of the pipelines included in the Assets in such Nexus Company’s possession or otherwise reasonably available to such Nexus Company, Member and Nexus will provide copies thereof or make copies thereof available to Regency and Regency may review such documents during its inspections hereunder.

(d) REGENCY SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD MEMBER AND THE OTHER MEMBER INDEMNITEES (INCLUDING THE NEXUS COMPANIES PRIOR TO CLOSING) HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES ARISING OUT OF OR RELATING TO THE DUE DILIGENCE CONDUCTED BY REGENCY, REGENCY’S AFFILIATES OR ANY PERSON ACTING ON REGENCY’S OR ITS AFFILIATE’S BEHALF, IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHETHER SUCH DAMAGES ARE CAUSED BY (IN WHOLE OR IN PART) THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL FAULT OF

MEMBER OR ANY OTHER MEMBER INDEMNITEES, EXCEPTING ONLY THOSE DAMAGES ACTUALLY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MEMBER OR ANY MEMBER INDEMNITEES (INCLUDING THE NEXUS COMPANIES PRIOR TO CLOSING). All due diligence conducted by Regency, Regency’s Affiliates or any Person acting on Regency’s or its Affiliate’s behalf pursuant to or in connection with this Agreement or the transactions contemplated hereby shall be conducted so as not to unreasonably disrupt the normal operations of Member or any of its Affiliates and shall be subject to the terms of the Confidentiality Agreement. Neither Member nor any of the Nexus Companies shall be obligated to comply with any of the terms of Sections 6.4 or 6.5 if compliance with such terms reasonably would be expected to violate any attorney-client privilege or the terms of any confidentiality agreement or Contract to which Member or any Nexus Company is a party or by which it is bound or applicable Law. Notwithstanding anything herein to the contrary, Regency acknowledges and agrees that the terms of Sections 6.4 and 6.5 do not give Regency or any of its Affiliates or Representatives the right to contact, directly or indirectly, any customer, supplier or other third Person with whom any of the Nexus Companies has any business relationship in connection with this Agreement or the transactions contemplated hereby without the express prior written consent of Member (and then only on terms as reasonably specified in writing by Member); provided that Member hereby gives its consent for Regency and its Representatives to contact and engage in such discussions with the Persons listed on Schedule A .

6.6 HSR Act .

(a) Member and Nexus shall cause the ultimate parent entity of Nexus to (i) file as soon as practicable and in any event within one (1) Business Day following the date of this Agreement, exclusive thereof, with the DOJ and the FTC the notification report form required by the HSR Act for the transactions contemplated hereunder, requesting early termination of the waiting period thereunder, (ii) respond promptly to inquiries from the FTC or the DOJ in connection with such filing and (iii) comply in all material respects with the requirements of the HSR Act.

(b) Regency and Merger Sub shall cause the ultimate parent entity of Regency to (i) file as soon as practicable and in any event within one (1) Business Day following the date of this Agreement, exclusive thereof, with the DOJ and the FTC the notification report form required by the HSR Act for the transactions contemplated hereunder, requesting early termination of the waiting period thereunder, (ii) respond promptly to inquiries from the FTC or the DOJ and (iii) comply in all material respects with the requirements of the HSR Act.

(c) Subject to regulatory constraints, each Party shall cooperate with each other and promptly furnish all information to the other Party that is necessary in connection with the Parties’ compliance with the HSR Act and to obtain HSR Approval.

(d) The Nexus Companies and Regency shall coordinate their initial filing of the notification and report form so that such filings are made on the same day. The Parties shall each keep the other Parties fully advised with respect to any requests from or communications with the DOJ or the FTC and shall consult with the other Parties with respect to all filings and responses thereto.

(e) The filing fees with respect to any filing under the HSR Act shall be paid at the time of filing by Regency.

(f) Subject to Section 6.6(g) , the Parties shall use all commercially reasonable efforts to cause the expiration or termination of the applicable waiting period under the HSR Act as soon as practicable.

(g) Notwithstanding anything herein to the contrary, nothing in this Agreement shall require Regency or any of its Affiliates to dispose of any of its assets or to limit its freedom of action with respect to any of its businesses, or to consent to any disposition of its assets or limits on its freedom of action with respect to any of its businesses, whether prior to or after the Effective Time, or to commit or agree to any of the foregoing, to obtain any consents, approvals, permits or authorizations or to remove any impediments to the Merger relating to Antitrust Laws or to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any Proceeding relating to the HSR Act or other antitrust, competition, premerger, notification or trade-regulation law, regulation or order (“ Antitrust Laws ”). In addition, notwithstanding anything to the contrary herein, nothing in this Section 6.6 shall require any of the Parties to disclose to the other Parties confidential information about third parties in connection with seeking approvals from Governmental Authorities to the extent that such disclosures would constitute violations of Contractual obligations or legal duties, provided that this sentence shall not permit any Party to fail to disclose any information required to be filed with a Governmental Authority by this Agreement.

(h) Subject to Section 6.6 (g) , if any action or Proceeding is instituted (or threatened), challenging the transaction contemplated by this Agreement as violative of any Antitrust Laws, or if any decree, judgment, injunction or other order is entered, enforced or attempted to be entered or enforced, by a court or other Governmental Authority, which decree, judgment, injunction or other order would make the transactions contemplated by this Agreement illegal or would otherwise prohibit, prevent, restrict, impair or delay consummation of the transactions contemplated hereby, each of Regency, Member and the Nexus Companies shall use all commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any such decree, judgment, injunction or other order, whether temporary, preliminary, or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transaction contemplated by this Agreement and to have such decree, judgment, injunction or other order repealed, rescinded or made inapplicable so as to permit consummation of the transactions contemplated by this Agreement; provided that no Party shall have any obligation under this Section 6.6(h) at any time that Member shall have the right to terminate this Agreement pursuant to Section 10.1(g) unless, and then only during the period for which, Member shall have waived such right to terminate this Agreement pursuant to Section 10.1(g) .

6.7 Employees .

(a) Except for those Employees designated in writing by Regency to be terminated by the applicable Nexus Company prior to Closing, each Nexus Company will not terminate any, and will use all commercially reasonable efforts to continue to employ each Employee until the Closing.

(b) Member and each Nexus Company shall reasonably cooperate with Regency in arranging interviews with the Employees prior to Closing for potential continued employment with the Nexus Companies or an Affiliate of Regency after the Closing.

(c) Nothing in this Agreement, whether express or implied, shall constitute an obligation of Regency, the Nexus Companies or any of Affiliates of Regency to maintain the employment of any particular Employee after the Closing. No Employee is intended to be a beneficiary of the provisions of this Section 6.7 .

(d) Prior to Closing, the Nexus Companies will (i) adopt appropriate corporate resolutions and use all commercially reasonable efforts to terminate the Fidelity Advisor SIMPLE IRA Plan of Nexus Gas Midstream Services, LLC and the Humana Group Medical, Dental and Voluntary Life Insurance Plan, with each such termination being effective at or as soon as possible after Closing, and (ii) otherwise take all action as necessary such that no contributions, premiums or other liabilities will accrue to the Surviving Company or any of the other Nexus Companies with respect to the plans identified in Section 6.7(d)(i) from and after Closing.

6.8 Financial and Internal Controls Information . From the date of this Agreement until the Closing, Nexus shall promptly disclose to Regency in summary form the existence, to Member’s Knowledge, of any of the following (i) any significant deficiencies in the design or operation of internal controls of the Nexus Companies that would reasonably be expected to adversely affect the Nexus Companies’ ability to record, process, summarize and report financial data, (ii) any material weaknesses in the Nexus Companies’ internal controls, (iii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Nexus Companies’ internal controls and (iv) any change in the internal controls or disclosure controls and procedures of the Nexus Companies effected since January 1, 2007.

6.9 Payoff Letters; Releases .

(a) At least two (2), but no more than five (5) Business Days prior to the Closing Date, Nexus shall cause the Nexus Companies to use all commercially reasonable efforts to cause each payee of Expenses and Third-Party Debt, as the case may be, to deliver a Payoff Letter to the Nexus Companies, copies of which shall be promptly delivered to Regency.

(b) Member and Nexus shall, and shall cause the other Nexus Companies to, use all commercially reasonable efforts to (i) obtain and deliver to Regency at the Closing an executed Release from each Officer, Director and Manager who has not delivered a Release prior to the Closing and (ii) cause each of Fritz Brinkman, Paul Coscia and Mike Davis and any other Officer, Director or Manager who has delivered a Release prior to the Closing to reaffirm such Release as of the Closing in accordance with the terms of such Release.

6.10 Tax Matters .

(a) Filing of Tax Returns; Payment of Taxes . Regency shall prepare or cause to be prepared all Tax Returns of each Nexus Company required to be filed after the Closing Date for all Pre-Closing Periods and all Straddle Periods. Such Tax Returns shall be prepared on a basis consistent with past practice except to the extent otherwise required by applicable Law.

Not later than thirty (30) days prior to the due date for filing any such Tax Return Regency shall deliver a copy of such Tax Return, together with all supporting documentation and workpapers, to Member for its review and reasonable comment. Regency will cause such Tax Return (as revised to incorporate the Member’s reasonable comments) to be timely filed and will provide a copy to Member. Not later than five (5) days prior to the due date for payment of Taxes with respect to any Tax Return for a Pre-Closing Period or Straddle Period, Member shall pay to Regency the amount of any Regency Indemnified Taxes with respect to such Tax Return.

(b) Proration of Straddle Period Taxes . In the case of Taxes that are payable with respect to any Straddle Period, the portion of any such Taxes that is attributable to the portion of the period ending on the Measurement Date shall be:

(i) in the case of Taxes that are either (A) based upon or related to income or receipts, or (B) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), deemed equal to the amount that would be payable if the Tax period of each Nexus Company ended with (and included) the Measurement Date; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on and including the Measurement Date and the period beginning after the Measurement Date in proportion to the number of days in each period; and

(ii) in the case of Taxes that are imposed on a periodic basis with respect to the assets or capital of a Nexus Company, deemed to be the amount of such Taxes for the entire Straddle Period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period), multiplied by a fraction the numerator of which is the number of calendar days in the portion of the period ending on and including the Measurement Date and the denominator of which is the number of calendar days in the entire period.

(c) Cooperation on Tax Returns and Tax Proceedings . Regency, each Nexus Company, and Member shall cooperate fully as and to the extent reasonably requested by the other party in connection with the filing of Tax Returns and any audit, litigation or other Proceeding (each a “ Tax Proceeding ”) with respect to Taxes (other than a Proceeding described in Section 9.9 , which shall be governed by Section 9.9 ) imposed on or with respect to the assets, operations or activities of any Nexus Company. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information that are reasonably relevant to any such Tax Return or Tax Proceeding and making employees reasonably available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Member and Regency further agree, upon request, to use all commercially reasonable efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed on Regency, Member (or any direct or indirect owners of Member) or on any Nexus Company (including, but not limited to, any Tax with respect to the transactions contemplated hereby).

(d) Transfer Taxes . Member and Regency will equally share all sales, real property, use, excise, stock, stamp, documentary, filing, recording, permit, license, authorization and similar Taxes, filing fees and similar charges (“ Transfer Taxes ”) resulting from the Merger. Regency and/or the relevant Nexus Company shall prepare and timely file all Tax Returns or other documentation relating to such Transfer Taxes; provided , however , that to the extent required by applicable Laws, Member will join in the execution of any such Tax Returns or other documents relating to such Taxes. Regency and/or the relevant Nexus Company shall provide Member with copies of each such Tax Return or other document at least five (5) days prior to the date on which such Tax Return or other document is required to be filed for review and approval by Member, such approval not to be unreasonably withheld. Regency and Member shall reasonably cooperate in procuring any available exemptions from any Transfer Taxes and shall reasonably cooperate in procuring any documentation that may be necessary to establish any such exemption.

(e) Purchase Consideration Allocation for Tax Purposes .

(i) Member and Regency agree to use all commercially reasonable efforts to agree within ninety (90) days following the Closing Date (the “ Allocation Period ”) to an allocation of the Merger Consideration and any other consideration paid by Regency (including any liabilities of the Nexus Companies assumed or paid by Regency) in connection with the transactions contemplated herein (the “ Tax Consideration ”) among the Assets. Except as provided in Section 6.10(e)(ii) , below, (A) if at the end of the Allocation Period, there is a dispute between Member and Regency with respect to the allocation of the Tax Consideration among the Assets, such dispute shall be resolved pursuant to the principles of Section 2.8(c) , and (B) Member and Regency agree to report the federal, state and local income and other tax consequences of the transactions contemplated herein, and in particular to report the information required by Section 1060(b) of the Code, in a manner consistent with such agreed or resolved allocation, as the case may be, and will not take any position inconsistent therewith upon examination of any Tax Return, in any refund claim, in any litigation, investigation or otherwise unless required to do so by applicable Law after notice to and discussions with the other Party, or with such other Party’s prior written consent. Member and Regency agree that each will furnish the other a copy of Form 8594 (Asset Acquisition Statement under Section 1060) as filed with the Internal Revenue Service by such party or any affiliate thereof within ninety (90) days of the filing of such form with the Internal Revenue Service. Member and Regency further agree to use all commercially reasonable efforts to revise such allocation to reflect any adjustments to the Merger Consideration, by reason of Section 2.8 or any Sonat Cash Payment or otherwise, in a manner consistent with, and to comply with the tax reporting and other requirements provided in, the Proceeding sentences of this Section 6.10(e) .

(ii) Notwithstanding anything provided herein to the contrary, Regency shall not be bound by any agreement or resolution described in Section 6.10(e)(i) , above, nor shall Regency be required to report on any Tax Return, any allocation of Tax Consideration among the Assets in a manner that would be inconsistent with any allocation or valuation required by Regency’s auditors for GAAP purposes.

(f) Escrow Agreement .

(i) The Parties agree to report on all applicable Tax Returns any payment made to Member pursuant to Section 2.7(c) or pursuant to Article XI and the Escrow Agreement as an installment payment pursuant to Section 453 of the Code.

(ii) The Parties agree to report on all applicable Tax Returns any distributions of earnings from the Escrow Fund to Member pursuant to the Escrow Agreement as a payment of interest in respect of the installment obligation by Regency to Member pursuant to Section 453 of the Code.

6.11 Support of Sonat Abandonment Application . If the application for abandonment to be filed by Sonat pursuant to the terms of the Sonat Purchase Agreement (the “ Sonat Abandonment Application ”) is filed by Sonat prior to Closing, from the time of such filing until the Closing, subject to Section 8.6 , Member shall provide, and shall cause each Nexus Company to provide, diligent and timely support of the Sonat Abandonment Application, which support shall include (a) motion in support of the Sonat Abandonment Application, (b) good faith cooperation in the prosecution of the Sonat Abandonment Application and (c) assistance to Regency, as Regency may reasonably request from time to time, in obtaining the Final FERC Approval Order consistent with the parties’ intentions under the Sonat Purchase Agreement.

6.12 Notice of Breaches of Representations and Warranties . Following the execution of this Agreement and prior to Closing, Regency and Merger Sub shall promptly (and in any event prior to the earlier of five (5) Business Days following discovery or the Closing Date) notify Member of any matter of which any Officers of the Managing General Partner has actual knowledge that, to the actual knowledge of such officer, constitutes a breach of any representation or warranty of Member or any Nexus Company contained in Article III or Article IV ; provided, however, any such notification will not affect the rights or obligations of Member, any Nexus Company, Regency, or Merger Sub, under this Agreement and the failure to provide such notification will not affect any rights of any Regency Indemnitee or any obligations of Member or any Nexus Company under this Agreement or any other Transaction Document except as contemplated by Section 9.1(b) .

6.13 Auditor Matters . Prior to Closing, Member shall use all commercially reasonable efforts to obtain from Hein & Associates LLP a written acknowledgement that they are engaged jointly by Member and Nexus for purposes of their audit of the Audited Financial Statements and deliver to such auditors written instructions directing and authorizing such auditors to, from and after Closing, cooperate with the Surviving Company at the Surviving Company’s sole cost in producing such financial information relating to the Nexus Companies as may be requested by the Surviving Company.

6.14 Termination of Agreement s .

(a) Member shall terminate the Management Agreement, including without limitation the provisions of Section 4 thereof, with respect to each Nexus Company, effective at or prior to the Closing, without any further liability or obligation of any Nexus Company thereunder, including without limitation under Section 4 of the Management Agreement.

(b) Member shall cause Nexus Gas Gathering, LP to terminate the Swap Agreement, effective at or prior to the Closing, without any further liability or obligation of any Nexus Company thereunder.

6.15 Transfer of Certain Assets of Member . Prior to Closing, Member shall transfer, convey and assign to the Nexus Companies, pursuant to conveyance documents in form reasonably acceptable to Regency, all of Member’s rights, title and interest in, to and under all assets which constitute a part of the Systems, the Facilities or are otherwise used in, or are necessary for use in connection with, the Pipeline Assets in the Ordinary Course of Business, including without limitation the assets identified in Schedule F (collectively, the “ Identified Member Assets ”).

ARTICLE VII

CONDITIONS PRECEDENT; CASUALTY LOSS; CLOSING DELIVERIES

7.1 Conditions to Obligation of Regency and Merger Sub . The obligation of Regency and Merger Sub to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(a) Title Representations shall be true and correct as of the Closing Date as if made as of the Closing Date;

(b) the representations and warranties contained in Article III and in Article IV, other than the Title Representations, shall be true and correct in all respects ( provided , however , that for purposes of determining whether such representations and warranties are true and correct, all qualifications in such representations and warranties as to materiality, Material Adverse Effect, in all material respects and similar materiality qualifications contained in such representations and warranties (other than in Section 4.1(q)(iii) or in any defined term such as “Material Contract”) shall be disregarded when made and as of the Closing Date as if made on and as of the Closing Date, except (i) that such representations and warranties may be untrue or incorrect as a result of actions or transactions expressly permitted or required by this Agreement or actions or transactions of Member or Nexus made with the prior written consent of Regency, (ii) for such representations and warranties made as of a specified date, which shall be required to be true and correct only on and as of such specified date, and (iii) for those failures to be true and correct that, individually or in the aggregate, do not constitute a Material Adverse Effect;

(c) each of Member and Nexus shall have performed in all material respects each and every material covenant, agreement and obligation required by this Agreement to be performed or complied with by Member or Nexus, as applicable, prior to or at the Closing;

(d) there shall not be any injunction, judgment, order, decree, ruling, or charge of any Governmental Authority in effect preventing consummation of the Merger;

(e) all consents, authorizations and approvals set forth on Schedule B shall have been obtained and delivered to Regency;

(f) HSR Approval shall have been obtained;

(g) all documents, instruments, certificates or other items required to be delivered to the Escrow Agent pursuant to Section 7.4(a)(vi) and to Regency pursuant to Section 7.4(a) (i) through (vii) shall have been delivered;

(h) from the date of this Agreement to the Closing Date no Material Adverse Effect shall have occurred;

(i) none of the Non-Competition Agreements, the Releases or the Separation Agreements shall have been terminated and there shall not be pending in a court of competent jurisdiction or threatened by any party to a Non-Competition Agreement, Release or Separation Agreement any Proceeding challenging the effectiveness or enforceability of any Non-Competition Agreement, any Release or any Separation Agreement;

(j) the Sonat Purchase Agreement shall be in full force and effect and shall not have been terminated and neither Nexus nor Sonat shall be in breach of the Sonat Purchase Agreement to the extent which gives the other any right to terminate the Sonat Purchase Agreement;

(k) the Management Agreement shall have been terminated with respect to the Nexus Companies in accordance with Section 6.14(a) ;

(l) the Swap Agreement shall have been terminated in accordance with Section 6.14(b) ;

(m) the Identified Member Assets shall have been transferred to a Nexus Company in accordance with Section 6.15 ; and

(n) none of the Resignations or the Separation Agreements shall have been revoked.

Regency, on behalf of Merger Sub, may waive any condition specified in Section 7.1 (other than Section 7.1 (d) or Section 7.1(f) or any other conditions that may not be waived under applicable Law) if it executes a writing so stating at or before the Closing.

7.2 Conditions to Obligation of Member and Nexus . The obligation of Member and Nexus to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions:

(a) the representations and warranties of Regency and Merger Sub contained in Article V shall be true and correct when made and as of the Closing Date as if made on and as of the Closing Date, except (i) that such representations and warranties may be untrue or incorrect as a result of actions or transactions expressly permitted or required by this Agreement or actions or transactions of Regency and Merger Sub made with the prior written consent of Member, (ii) for such representations and warranties made as of a specified date, which shall be required to be true and correct only on and as of such specified date, and (iii) for those failures to be true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on the ability of Regency or Merger Sub to perform

their respective obligations under this Agreement and the other Transaction Documents to which it is or shall be a party or consummate the Merger;

(b) each of Regency and Merger Sub shall have performed in all material respects all of its covenants, agreements and obligations hereunder through the Closing;

(c) there shall not be any injunction, judgment, order, decree, ruling, or charge of any Governmental Authority in effect preventing consummation of the Merger;

(d) the HSR Approval shall have been obtained;

(e) Sonat shall not be in breach of the Sonat Purchase Agreement to the extent which gives Nexus any right to terminate the Sonat Purchase Agreement (unless Regency shall have consented to Nexus waiving such right to terminate, in which case this condition shall not apply); and

(f) all documents, instruments, certificates or other items required to be delivered to the Escrow Agent pursuant to Section 7.4(b)(i) and to Member pursuant to Section 7.4(b)(ii)(A) through (E) shall have been delivered.

Member, on behalf of Nexus, may waive any condition specified in Section 7.2 (other than Section 7.2(c) or Section 7.2(d) or any other conditions that may not be waived under applicable Law) if it executes a writing so stating at or before the Closing.

7.3 Casualty Loss . If, prior to Closing, any of the Assets are damaged or destroyed by fire or other casualty or are taken or threatened to be taken in condemnation or under the right of eminent domain (“ Casualty Loss ”) and the estimated cost to repair or replace, as applicable, such Asset(s) (with equipment of similar utility) as reasonably agreed to by Regency and Nexus in good faith exceeds the aggregate proceeds actually received by the Nexus Companies as of Closing under any indemnity, bond, insurance policy or similar recovery right with respect to such Casualty Loss (the amount of such estimated cost in excess of proceeds received, the “ Excess Casualty Loss ”), then the Closing Payment Amount shall be reduced by the amount of such Excess Casualty Loss; provided , however , (A) if the estimated cost to repair or replace, as applicable, such Asset(s) (with equipment of similar utility) as reasonably agreed to by Regency and Nexus in good faith, in the aggregate with respect to all Assets, exceeds $15,000,000 and/or any material portions of the System(s) or the Facilities will be reasonably unlikely to operate within twenty (20) days after the occurrence of such Casualty Loss at a rate equal to or greater than eighty percent (80%) of its average volume for the three (3) month period immediately prior to the occurrence of the Casualty Loss, then in either or both such events, at Regency’s option, Regency may elect to terminate this Agreement and (B) if the Closing Payment Amount is reduced by the Excess Casualty Loss with respect to a Casualty Loss and Regency, the Surviving Company or any of the Nexus Companies shall receive after the Closing any additional proceeds with respect to such Casualty Loss under any indemnity, bond, insurance policy or similar recovery right with respect to such Casualty Loss, such proceeds, up to the amount by which the Closing Payment Amount was reduced, shall be delivered by Regency to Member within two (2) Business Days of receipt thereof. If the Excess Casualty Loss exceeds $1,000,000, Member may elect to terminate this Agreement without any liability unless Regency agrees to reduce the

Closing Payment Amount with respect to such Casualty Loss by only $1,000,000 rather than the full amount of the Excess Casualty Loss and waive any right to receive or recover from Member any additional amount in respect thereof.

7.4 Deliveries at the Closing .

(a) Deliveries of Member and Nexus . At Closing, Member and Nexus shall deliver or cause to be delivered to Regency each of the following, together with any additional items which Regency may reasonably request upon written notice to effect the transactions contemplated herein (the receipt of all of which items described in Section 7.4(a)(i) through (vi) are conditions to the obligation of Regency and Merger Sub to close the transactions contemplated hereby):

(i) a certificate of Member, dated as of the Closing Date certifying as to the matters set forth in Sections 7.1(a) , 7.1(b) and 7.1(c) ;

(ii) certified copies of the resolutions of the appropriate governing body of Member and Nexus, authorizing and approving the execution, delivery and performance of this Agreement, and all other Transaction Documents to which such Person shall be a party, by such Person;

(iii) a certificate of existence and, if applicable, good standing in respect of each Nexus Company, issued by the Secretary of State for the state where such Nexus Company was organized;

(iv) all consents, authorizations and approvals obtained by Member or any Nexus Company as of the Closing Date in satisfaction of the conditions in Section 7.1(e) of this Agreement;

(v) a certificate of non-foreign status from Member that meets the requirements of Treasury Regulation Section 1.1445-2(b)(2). Failure to provide such certificate shall result in a withholding pursuant to Section 1445 of the Code;

(vi) a counterpart of the Escrow Agreement duly executed by Member, with an original counterpart also delivered to the Escrow Agent;

(vii) the written resignation of each Director, Officer and Manager in his or her capacity as such, effective concurrently with the Closing on the Closing Date; and

(viii) any other documents or agreements contemplated hereby and/or necessary to consummate the transactions contemplated hereby.

(b) Regency’s Deliveries . At Closing, Regency shall deliver each of the following, together with any additional items which Member may reasonably request upon written notice to effect the transactions contemplated herein (the receipt of all of which items described in Section 7.4(b)(i) and Section 7.4(b)(ii)(A) through (E) , are conditions to the obligation of Member and Nexus to close the transactions contemplated hereby):

(i) to the Escrow Agent,

(A) an amount equal to the Escrow Amount by wire transfer of immediately available funds in accordance with Section 2.7(a)(ii) ; and

(B) a counterpart of the Escrow Agreement duly executed by Regency;

(ii) to Member:

(A) an amount equal to the Closing Payment Amount by wire transfer of immediately available funds in accordance with Section 2.7(a)(i) ;

(B) a certificate of Regency, dated as of the Closing Date certifying as to the matters set forth in Sections 7.2(a) and 7.2(b) ;

(C) a certified copy of the resolutions of the governing body of Regency and Merger Sub authorizing and approving the execution, delivery and performance of this Agreement, and all other Transaction Documents to which any such Person shall be a party, by such Person;

(D) a certificate of existence and, if applicable, good standing in respect of each of Regency and Merger Sub, issued by the Secretary of State for the State of Delaware;

(E) an executed counterpart of the Escrow Agreement duly executed by Regency; and

(F) any other documents or agreements contemplated hereby and/or necessary or appropriate to consummate the transactions contemplated hereby.

7.5 Frustration of Closing Conditions . Neither Regency or Merger Sub, on the one hand, nor Member, on the other hand, may rely on the failure of any condition set forth in Section 7.1 or 7.2 , respectively, to be satisfied if such failure was caused by such Party’s or Parties’ failure to use all commercially reasonable efforts to cause the Closing to occur, to the extent required by Section 6.1 .

ARTICLE VIII

POST-CLOSING COVENANTS

8.1 Further Assurances; Access to Records and Excluded Records .

(a) In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution, acknowledgement and delivery of such further instruments and documents) as the other Party reasonably may request, all at the sole cost and expense of the requesting Party.

(b) From and after the Closing until the fifth anniversary of the Closing, Member shall provide to Regency and its Representatives, during normal business hours and upon reasonable request, reasonable access to and, upon request by Regency, copies of all Records of Member to the extent related to the Nexus Companies or the business or operations conducted with respect to the Pipeline Assets, in each case prior to Closing, in connection with any purpose contemplated by this Agreement or any other proper business purpose. If Member desires to destroy or dispose of such Records, Member will offer first in writing at least sixty (60) days prior to such destruction or disposition to surrender such Records to Regency and Member may, at any time after Closing, deliver all such Records to Regency upon which delivery Member’s obligations under this Section 8.1 (b) shall terminate.

(c) From and after the Closing, Regency shall provide to Member and its Representatives, during normal business hours and upon reasonable request, reasonable access to and, upon request by Member, copies of all Records of the Surviving Company and the other Nexus Companies existing on the Closing Date in connection with any purpose contemplated by this Agreement or any other proper business purpose. Regency will cause all such Records to be maintained and not disposed of for a period of five (5) years from the Closing Date or such longer time as may be required by Law, and thereafter, if it desires to destroy or dispose of such Records, will offer first in writing at least sixty (60) days prior to such destruction or disposition to surrender them to Member.

8.2 Permits, Licenses and Approvals . For a period of 120 days from and after the Closing, Member shall cooperate reasonably with and provide reasonable assistance to Regency, as reasonably requested by Regency and provided Regency shall reimburse Member for any out-of-pocket expenses incurred by Member in connection with such cooperation and assistance, in completing and submitting all documents, applications, or filings necessary to transfer (or, if transfer is prohibited, newly obtain) all permits, licenses or other approvals of any Governmental Authority that are necessary for Regency (or any Affiliate of Regency) to own and/or operate the Assets in compliance with all applicable Laws, including Health, Safety and Environmental Laws.

8.3 Removal of Logos and Signs . Within ninety (90) days after the Closing Date, Regency shall remove from any publicly visible portion of the physical Assets any logo or sign indicating that such assets are owned or operated by Member or any Affiliates of Member (including signs displaying Member’s or its Affiliate’s emergency contact telephone number or otherwise using or displaying the name “Nexus,” in whole or in part) and execute such documentation as Member shall reasonably request in order to transfer to Member all of the Nexus Companies’ rights, title and interest in the name “Nexus” and all derivatives thereof. As promptly as practical after the Closing Date, Regency shall post Regency’s emergency contact telephone numbers in place of any emergency contact telephone numbers of any Member or any Affiliate.

8.4 Recording and Regulatory Filings .

(a) Regency shall be responsible for all filings with state and federal agencies for change of owner or operator, and shall promptly provide Member with copies of all such filings when made and confirmation thereof when received. All recording and filing fees shall

be paid by Regency and where paid by Member, reimbursed by Regency to Member promptly after receipt of an invoice.

(b) Member hereby agrees for a period of 120 days from and after the Closing, to reasonably cooperate with, and provide and furnish to, Regency any and all information reasonably requested by Regency with respect to the applications and other filings which may be required in connection with the Merger, including without limitation any information required in connection with filings with any Governmental Authority, provided Regency shall reimburse Member for any out of pocket cash or expenses incurred by Member related to the services provided by Member under this Section 8.4 (b) .

8.5 Post-Closing Consents . Member agrees that, for a period of 120 days from and after the Closing, Member will cooperate with Regency and will use all commercially reasonable efforts to obtain each consent required with respect to the Merger which shall not have been obtained prior to Closing, provided , however , the cost of obtaining such consents, including any amounts the party providing such consent shall reasonably require as a condition to providing such consent, shall be borne by Member, and shall be paid promptly by Member upon such party providing such consent being prepared to tender such consent.

8.6 Sonat Purchase Agreement .

(a) Member and Nexus will use all commercially reasonable efforts to ensure that Sonat does not file the Sonat Abandonment Application with FERC until after Regency shall have advised Member and Nexus of Regency’s election regarding the Application Parameters. Within the period commencing on the day following the date of this Agreement and ending on March 26, 2008 (the “ Election Period ”), Regency will advise Member and Nexus in writing (the “ Election Notice ”) as to its election among the three alternative Application Parameters set forth in Exhibit G (the alternative so selected being the “ Selected Application Parameter ”).

(b) Member and Nexus hereby authorize Regency to act on behalf of the “Purchaser” (as such term is defined in the Sonat Purchase Agreement), during the Election Period, to negotiate with the “Upstream Pipeline” (as such term is defined in the Sonat Purchase Agreement) to obtain a resolution of the “Upstream Intrastate Pipeline Issue” (as such term is defined in the Sonat Purchase Agreement) that both complies with Section 5.02(g) of the Sonat Purchase Agreement and is reasonably satisfactory to Regency in accordance with Exhibit G .

(c) Member and Nexus hereby authorize Regency to act on behalf of the “Purchaser” (as such term is defined in the Sonat Purchase Agreement), during the Election Period, to negotiate with Sonat to obtain the agreement of Sonat to file and prosecute diligently the Sonat Abandonment Application incorporating the Selected Application Parameter.

(d) Prior to the Effective Time, Member and Nexus will use all commercially reasonable efforts:

(i) to cause Sonat to provide to Member and Nexus and to Regency, at least five (5) Business Days prior to filing the Sonat Abandonment Application, the draft Sonat Abandonment Application reflecting the Selected Application Parameter for Regency’s and Member’s review; and

(ii) to cause Sonat to give effect in the Sonat Abandonment Application to any comments and requests offered by Regency or Member after their review of thereof that are reasonably necessary to explain, justify or better support Regency’s Selected Application Parameter.

(e) Following the giving and receipt of such Election Notice, Member and Nexus will, until the Effective Time, use all commercially reasonable efforts, and Regency and the Surviving Company will, following the Effective Time, use all commercially reasonable efforts, in each case, (i) to cause Sonat to file the Sonat Abandonment Application in accordance with the Selected Application Parameter and (ii) to file a motion in support of the Sonat Abandonment Application as so filed. From the date of filing of the Sonat Abandonment Application until the consummation or termination of the Sonat Purchase Agreement, Member and Nexus will, until the Effective Time, and Regency and the Surviving Company will, following the Effective Time, use all commercially reasonable efforts to provide diligent and timely support and prosecution of the Sonat Abandonment Application. Each of Member, Nexus, Regency and the Surviving Company shall cooperate diligently with the others in the prosecution of the Sonat Abandonment Application and shall provide, as reasonably requested from time to time, assistance to the others in obtaining the Final FERC Approval Order of the Sonat Abandonment Application as so filed.

(f) Regency shall keep Member fully informed on a reasonably current basis and in reasonable detail of the status of its efforts to obtain a Final FERC Approval Order, its negotiations with the Upstream Pipeline and Sonat pursuant to subsections (b) and (c) of this Section 8.6 and its efforts to consummate the transactions contemplated by the Sonat Purchase Agreement. Neither Regency nor any Affiliate of Regency shall be authorized to enter into, and shall not enter into, without Member’s prior written consent, any Contract that would be binding on Member or Nexus (other than a Contract that would be binding on Nexus only upon the Closing).

(g) The Parties acknowledge that: the future course of the Sonat Abandonment Application is difficult to predict; FERC, the staff of FERC and third parties may take substantive or procedural positions that are contr

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