EXHIBIT ▇▇.▇▇.
TRINITY RIVER ASSOCIATES, L.L.C.
THIRD AMENDED AND RESTATED COMPANY AGREEMENT
ORIGINALLY DATED AS OF JUNE 29, 1999
AMENDED AND RESTATED AS OF JUNE 30, 1999 AND NOVEMBER 22, 1999, AMENDED
AS OF NOVEMBER 17, 2000 AND JANUARY 31, 2002 AND AMENDED AND RESTATED
AS OF AND MARCH 29, 2002
TABLE OF CONTENTS
PAGE
----
SECTION 1 DEFINED TERMS; RULES OF CONSTRUCTION............................................................1
1.1. Definitions.....................................................................................1
1.2. Computation of Time Periods.....................................................................1
1.3. Accounting Terms................................................................................1
1.4. No Presumption Against Any Party................................................................1
1.5. Use of Certain Terms............................................................................2
1.6. Headings and References.........................................................................2
SECTION 2 ORGANIZATIONAL MATTERS..........................................................................2
2.1. Continuation....................................................................................2
2.2. Members.........................................................................................2
2.3. First Amended and Restated Trinity Company Agreement............................................4
2.4. Name............................................................................................4
2.5. Powers..........................................................................................4
2.6. Purposes........................................................................................4
2.7. Principal Place of Business.....................................................................4
2.8. Term............................................................................................5
2.9. Fiscal Year.....................................................................................5
2.10. Agent for Service of Process....................................................................5
2.11. Filings; Cancellation Certificates..............................................................5
2.12. Compensation and Expenses.......................................................................5
2.13. Independent Activities; Transactions with Affiliates............................................5
2.14. Payments of Individual Obligations..............................................................6
2.15. Representations and Warranties..................................................................6
2.16. Liability to Third Parties......................................................................8
2.17. Admission of New Members........................................................................8
2.18. No Withholding Tax..............................................................................8
2.19. Covenant of Each Trinity Member.................................................................8
2.20. Title to Trinity Property......................................................................13
2.21. Trinity Member Requirements....................................................................13
SECTION 3 MEMBERS........................................................................................13
3.1. Rights of Members..............................................................................13
3.2. Trinity Membership Interests...................................................................13
3.3. Additional Covenants of Trinity Class A Member.................................................14
3.4. Trinity Class B Member.........................................................................14
3.5. Meetings of Members............................................................................14
3.6. Partition......................................................................................15
3.7. Covenant Not to Dissolve.......................................................................15
3.8. Termination of Status as Trinity Member........................................................16
i
Trinity
Company Agreement
SECTION 4 MANAGEMENT.....................................................................................17
4.1. Management of Trinity..........................................................................17
4.2. Reliance by Third Parties......................................................................18
4.3. Restrictions on Authority......................................................................18
4.4. [Intentionally Omitted.].......................................................................21
4.5. Compliance with Agreement......................................................................21
4.6. No Employees...................................................................................21
4.7. Affiliate Transactions.........................................................................21
4.8. Limitations on Member Activities...............................................................21
4.9. Required Actions...............................................................................21
4.10. Compliance with Applicable Laws................................................................22
4.11. Trinity Custodian..............................................................................22
4.12. Additional Financing Costs and Transaction Costs...............................................22
4.13. Payment of Trinity Expenses....................................................................23
SECTION 5 COMPANY CAPITAL................................................................................23
5.1. Capital Accounts...............................................................................23
5.2. Closing Date and Other Contributions by the Trinity Members....................................24
5.3. Mandatory Capital Contributions................................................................25
5.4. Trinity Custodian Notification.................................................................25
5.5. No Withdrawal of Capital.......................................................................25
5.6. No Return on Capital...........................................................................25
5.7. Cash Capital Contributions.....................................................................25
SECTION 6 ALLOCATIONS....................................................................................25
6.1. Allocations Generally..........................................................................25
6.2. Special Allocations............................................................................26
6.3. Timing of Allocations..........................................................................27
6.4. Other Allocation Rules.........................................................................27
SECTION 7 PAYMENTS, DISTRIBUTIONS AND RETIREMENTS........................................................27
7.1. Payments and Distributions -- Trinity Class B Member...........................................27
7.2. Distributions..................................................................................28
7.3. Mandatory Retirement of the Class B Membership Interest........................................28
7.4. Admission and Withdrawal of Trinity Class B Member.............................................28
7.5. Making of Payments, Etc........................................................................28
7.6. Payment Reports................................................................................28
7.7. Determination of the Preferred Payment.........................................................29
SECTION 8 ACCOUNTING; BOOKS AND RECORDS; REPORTS.........................................................29
8.1. Accounting; Books and Records..................................................................29
8.2. Tax Matters....................................................................................30
ii
Trinity
Company Agreement
SECTION 9 REPORTS AND INFORMATION; TRINITY OPERATING ACCOUNT.............................................31
9.1. Periodic Reporting.............................................................................31
9.2. Notices........................................................................................32
9.3. Trinity Operating Account......................................................................32
SECTION 10 TRANSFERS OF MEMBERSHIP INTERESTS..............................................................32
10.1. Restriction on Transfers.......................................................................32
10.2. Permitted Transfer -- Trinity Class B Member...................................................33
10.3. Conditions to Permitted Transfers..............................................................33
10.4. Pledge of Trinity Class B Membership Interest; Foreclosure Transfers...........................34
10.5. Prohibited Transfers...........................................................................34
10.6. Rights of Unadmitted Transferees...............................................................35
10.7. Admission as Substituted Trinity Members.......................................................35
10.8. Distributions with Respect to Transferred Trinity Membership Interests.........................36
SECTION 11 POWER OF ATTORNEY..............................................................................36
11.1. Attorney-in-Fact...............................................................................36
11.2. Nature of Special Power........................................................................37
SECTION 12 DISSOLUTION AND WINDING UP.....................................................................38
12.1. Liquidation....................................................................................38
12.2. Winding Up.....................................................................................38
12.3. No Restoration of Deficit Capital Accounts.....................................................39
12.4. [Intentionally Omitted.].......................................................................39
12.5. Rights of Members..............................................................................39
12.6. Occurrence of Liquidating Event................................................................39
12.7. Allocations and Distributions During Period of Liquidation.....................................40
12.8. Character of Liquidating Distributions.........................................................40
12.9. The Trinity Liquidator.........................................................................40
12.10. Liquidation Procedures.........................................................................41
12.11. Form of Liquidating Distributions to Trinity Members...........................................42
SECTION 13 INDEMNIFICATION................................................................................42
13.1. Indemnification of the Trinity Members.........................................................42
13.2. Indemnification for Business Qualification Requirements........................................43
13.3. Trinity Liquidator Indemnification.............................................................43
13.4. Survival of Indemnification Obligations........................................................43
13.5. Limitations on Indemnification Obligations.....................................................43
13.6. Payments; No Reduction of Capital Account......................................................44
13.7. Procedural Requirements........................................................................44
iii
Trinity
Company Agreement
SECTION 14 MISCELLANEOUS..................................................................................46
14.1. Notices........................................................................................46
14.2. Binding Effect.................................................................................46
14.3. Severability...................................................................................47
14.4. Setoff.........................................................................................47
14.5. Construction...................................................................................47
14.6. Governing Law..................................................................................47
14.7. Counterpart Execution..........................................................................47
14.8. Specific Performance...........................................................................47
14.9. Amendments.....................................................................................48
14.10. Waiver of Jury Trial...........................................................................48
14.11. Consent to Jurisdiction and Service of Process.................................................48
Exhibit A Definitions
Exhibit B Form of Confidentiality Agreement
Exhibit C-1 Form of Compliance Certificate - 5.03(b) or (c) of the Sponsor Subsidiary Credit
Agreement
Exhibit C-2 Form of Compliance Certificate - 5.07(f) of the Sponsor Subsidiary Credit
Agreement
Exhibit C-3 Form of Compliance Certificate - 5.09(e), 7.03(j), or 7.04(g) of the Sponsor
Subsidiary Credit Agreement
Exhibit C-4 Form of Compliance Certificate - 9.1(a) or 9.1(b) of the Trinity
Company
Agreement
Exhibit D Form of Operating Report
Exhibit E Form of Transferee Certificate
Exhibit F Form of Transferor Certificate
iv
Trinity
Company Agreement
TRINITY RIVER ASSOCIATES, L.L.C.
THIRD AMENDED AND RESTATED
COMPANY AGREEMENT
THIRD AMENDED AND RESTATED
COMPANY AGREEMENT OF TRINITY RIVER
ASSOCIATES, L.L.C. ("TRINITY") originally dated as of June 29, 1999 and amended
and restated as of June 30, 1999 and November 22, 1999, amended as of November
17, 2000 and January 31, 2002 and further amended and restated as of March 29,
2002 by and between SABINE RIVER INVESTORS, L.L.C., a
Delaware limited liability
company ("SABINE") and RED RIVER INVESTORS, L.L.C., a
Delaware limited liability
company ("RED RIVER").
PRELIMINARY STATEMENTS
A. Trinity was formed as a
Delaware limited liability company
on June 29, 1999, with Sabine as the Initial Trinity Member.
B. The parties to this Agreement desire that (i) the Second
Amended and Restated Trinity
Company Agreement, dated as of November 22, 1999,
as amended as of November 17, 2000 and January 31, 2002 (the "SECOND AMENDED AND
RESTATED TRINITY COMPANY AGREEMENT"), between Red River and Sabine be amended
and restated in its entirety and (ii) Trinity continue on the terms set forth in
this Agreement.
In consideration of the premises and intending to be legally
bound by this Agreement, the parties hereby further amend and restate the First
Amended and Restated Trinity Company Agreement and agree as follows:
SECTION 1
DEFINED TERMS; RULES OF CONSTRUCTION
1.1. Definitions. As used in this Agreement, capitalized terms
defined in the preamble, Preliminary Statements and other Sections of this
Agreement shall have the meanings set forth therein, and terms defined in
Exhibit A shall have the meanings set forth therein.
1.2. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word or phrase "FROM" and "COMMENCING ON" mean "from and including" and the
words or phrase "TO" and "UNTIL" and "ENDING ON" mean "to but excluding".
1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP applied consistently,
except with respect to Capital Accounts and items entering into the computation
of Capital Accounts, and except to the extent otherwise specified in the terms
hereof.
1.4. No Presumption Against Any Party. Neither this Agreement
nor any uncertainty or ambiguity herein shall be construed against any
particular party, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by
Trinity Company Agreement
each of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
1.5. Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the singular
includes the plural, and "INCLUDING" has the inclusive meaning of "including
without limitation". The words "HEREOF", "HEREIN", "HEREBY", "HEREUNDER", and
other similar terms of this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. All pronouns and any
variations thereof shall be deemed to refer to masculine, feminine, or neuter,
singular or plural, as the identity of the Person or Persons may require.
1.6. Headings and References. Section and other headings are
for reference only, and shall not affect the interpretation or meaning of any
provision of or to this Agreement. Unless otherwise provided, references to
Articles, Sections, Schedules, and Exhibits shall be deemed references to
Articles, Sections, Schedules, and Exhibits of or to this Agreement. Whether or
not specified herein or therein, references in this Agreement and in Exhibit A
to this Agreement and to any other Operative Document or any other agreement
include this Agreement and the other Operative Documents and agreements as the
same may be modified, amended, restated or supplemented from time to time
pursuant to the provisions hereof or thereof as permitted by the Operative
Documents. Whether or not specified herein or in Exhibit A hereto, a reference
to any Applicable Law or law (as the case may be) shall mean that Applicable Law
or law (as the case may be) as it may be amended, modified or supplemented from
time to time, and any successor Applicable Law or law (as the case may be). A
reference to a Person includes the successors and assigns of such Person, but
such reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement and the other Operative Documents governing the
assignment of rights and obligations under or the binding effect of any
provision of this Agreement.
SECTION 2
ORGANIZATIONAL MATTERS
2.1. Continuation. Trinity shall continue as a limited
liability company under the Act upon the terms and conditions in this Agreement.
2.2. Members. On and after the Third Closing Date, (i) Sabine
shall continue as a Trinity Class A Member and (ii) Red River shall continue as
a Trinity Class B Member. The names and addresses of the Trinity Members as of
the date hereof are as follows:
Trinity Class A Member Sabine River Investors, L.L.C.
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
2
Trinity Company Agreement
with a copy to:
El Paso Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
El Paso Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director Treasury Operations
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Trinity Class B Member Red River Investors, L.L.C.
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Nueces River Holdings L.L.C.
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and with a copy to:
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director,
Capital Structuring
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
3
Trinity Company Agreement
and with a copy to:
Citibank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Relationship Manager,
El Paso Corporation
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and with a copy to:
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Global Securitization
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
2.3. Second Amended and Restated Trinity Company Agreement.
This Agreement completely amends, restates and supersedes the Second Amended and
Restated Trinity Company Agreement.
2.4. Name. The name of Trinity shall continue to be "Trinity
River Associates, L.L.C." All business of Trinity shall be conducted in such
name.
2.5. Powers. Trinity shall possess and may exercise all of the
powers and privileges granted by the Act, by any other Applicable Law and by
this Agreement, together with any powers incidental thereto, so far as such
powers and privileges are necessary or convenient to the conduct, promotion or
attainment of the permitted business purposes or activities of Trinity as set
forth in Section 2.6 hereof.
2.6. Purposes. The purposes of Trinity are to (i) make and
hold the Advances, (ii) enter into and perform the Operative Documents to which
it is a party, (iii) establish and hold the Trinity Operating Account and make
Investments in Cash Equivalents from the proceeds of such account, (iv) engage
in such additional business activities as are permitted under this Agreement or
otherwise as the Trinity Members may unanimously agree in writing, and (v)
engage in activities related or incidental to the foregoing and necessary or
appropriate therefor as permitted by this Agreement.
2.7. Principal Place of Business. The principal place of
business of Trinity shall be c/o Wilmington Trust Company, ▇▇▇▇▇▇ Square North,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Dept. The Trinity Class A Member may change the principal place of business of
Trinity to any other place; provided that in any event (i) such location shall
be within the United States and within a state that permits the qualification as
a foreign limited liability company of a limited liability company organized
under the laws of the State of
Delaware and (ii) Trinity is duly qualified to do
business under the laws of such state. The registered office of Trinity in the
State of
Delaware is located at The Corporation Trust Company, Corporation Trust
Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
4
Trinity Company Agreement
2.8. Term. The term of Trinity commenced on the date its
certificate of formation was filed in the office of the Secretary of State of
the State of
Delaware in accordance with the Act and shall continue until the
winding up and liquidation of Trinity and the completion of its business
following a Liquidating Event, as provided in Section 12.
2.9. Fiscal Year. The fiscal year of Trinity for financial
statement and Federal income tax purposes shall be the same and shall end on
December 31 of each year, except as may be required by the Code.
2.10. Agent for Service of Process. The registered agent for
service of process on Trinity in the State of
Delaware shall be The Corporation
Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or any successor as appointed by the Trinity Class
A Member in accordance with the Act.
2.11. Filings; Cancellation Certificates. (a) The Trinity
Class A Member has caused the certificate of formation to be filed in the office
of the Secretary of State of the State of
Delaware in accordance with the
provisions of the Act. The Trinity Class A Member shall take any action and all
other actions reasonably necessary to perfect and maintain the status of Trinity
as a limited liability company under the Laws of the State of
Delaware. The
Trinity Class A Member shall cause amendments to the certificate of formation to
be filed whenever required by the Act.
(b) Upon the happening of any event specified in Section
18-203 of the Act with respect to Trinity, the Trinity Class A Member (or, if
any Trinity Liquidator has been appointed, such Trinity Liquidator) shall
promptly execute and cause to be filed certificates of cancellation in
accordance with the Act and the Applicable Laws of any other states or other
jurisdictions in which the Trinity Class A Member or such Trinity Liquidator, as
the case may be, deems such filing necessary or advisable.
2.12. Compensation and Expenses. No Trinity Member or
Affiliate of any Trinity Member shall receive any salary, fee, or draw for
services rendered to or on behalf of Trinity or otherwise in its capacity as a
Trinity Member, nor shall any Trinity Member or Affiliate of any Trinity Member
be reimbursed by Trinity for any expenses incurred by such Trinity Member or
Affiliate on behalf of Trinity or otherwise in its capacity as a Trinity Member,
except as otherwise contemplated by this Agreement and the other Operative
Documents.
2.13. Independent Activities; Transactions with Affiliates.
(a) The Trinity Class A Member and any of its officers and directors shall be
required to devote only such time to the affairs of Trinity as the Trinity Class
A Member determines in its reasonable discretion may be necessary to manage and
operate Trinity, and each such Person shall be free to serve any other Person or
enterprise in any capacity that it may deem appropriate in its discretion,
except as set forth in Section 4.8.
(b) Except as set forth in Section 4.8, each Trinity Member
acknowledges that the Affiliates of the other Trinity Members are free to engage
or invest in an unlimited number of activities or businesses, any one or more of
which may be related to the activities or businesses of Trinity, without having
or incurring any obligation to offer any interest in such activities or
5
Trinity Company Agreement
businesses to Trinity or any Trinity Member, and neither this Agreement nor any
activity undertaken pursuant to this Agreement shall prevent any such Affiliate
of any such Trinity Member from engaging in such activities, or require any
Trinity Member to permit Trinity or any such Affiliate of any such Trinity
Member to participate in any such activities, and as a material part of the
consideration for the execution of this Agreement by each Trinity Member, each
Trinity Member hereby waives, relinquishes, and renounces any such right or
claim of participation.
2.14. Payments of Individual Obligations. Trinity's credit and
assets shall be used solely for the benefit of Trinity, and no asset of Trinity
shall be transferred or encumbered for or in payment of any individual
obligation of any Trinity Member, except as expressly provided herein.
2.15. Representations and Warranties. As of the First Closing
Date, the Second Closing Date, the Third Closing Date and as of the Syndication
Date, each Trinity Member hereby makes the representations and warranties
applicable to such Trinity Member as set forth in this Section 2.15 as follows,
and all of such representations and warranties shall survive the execution of
this Agreement:
(a) Representations and Warranties of Sabine. Sabine makes the
representations and warranties set forth in Section 4.01 and Section
4.02 of the Sponsor Subsidiary Credit Agreement, in respect of itself,
its Subsidiaries, any Contributed Investment and any Intermediate
Holder and Underlying Business relating to such Contributed Investment,
as if such representations and warranties were set out in full herein.
(b) Representations and Warranties of Red River.
(i) Due Formation. Red River is duly formed, validly
existing and in good standing as a limited liability company
in each case under the laws of the State of
Delaware. Red
River has all requisite powers and all material governmental
licenses, authorizations, consents and approvals required in
each case to carry on its business as now conducted.
(ii) Authorization of Agreement. Red River has the
power and authority to execute and deliver this Agreement and
the other Operative Documents to which it is a party and to
perform its obligations hereunder and thereunder. The
execution, delivery and performance by Red River of this
Agreement and each other Operative Document to which it is a
party have been duly authorized by all necessary company
action. Each of this Agreement and each other Operative
Document to which Red River is a party constitutes the legal,
valid and binding obligation of Red River and is enforceable
against Red River in accordance with its terms, except as the
enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and by
general principles of equity.
6
Trinity Company Agreement
(iii) No Conflict with Restrictions; No Default. The
execution, delivery and performance by Red River of each
Operative Document to which it is a party do not (A)
contravene, or constitute a default under, (1) any provision
of Applicable Law (including, without limitation, Regulation
T, U, or X issued by the Board of Governors of the Federal
Reserve System), (2) the Organizational Documents of Red
River, or (3) any judgment, injunction, order, decree or
agreement binding upon Red River, or (B) result in or require
the creation or imposition of any Lien on any asset of Red
River, except for Permitted Liens.
(iv) Authorizations. The execution, delivery and
performance by Red River of each Operative Document to which
it is a party do not require, in respect of Red River, any
action by or in respect of (including any license or permit),
or filing with, any governmental body, agency or official, or
any other Person that has not been obtained or made and that
is not in full force and effect, except for (A) actions or
filings expressly required by Section 4(c) of the Purchase
Option Agreement, in each case that are to be performed or
filed at a date after the date of the relevant Operative
Document and (B) the filing of financing statements under the
UCC in relevant jurisdictions permitted by the provisions of
the Operative Documents to be performed or filed at a later
date.
(v) Litigation. There are no actions, suits,
proceedings or known investigations pending or, to the
knowledge of Red River, threatened against or affecting Red
River or any of its properties, assets, rights or businesses
in any court or before or by any governmental department,
board, agency or instrumentality, domestic or foreign, or any
arbitrator. Red River has not received any currently effective
notice of any default, and Red River is not in default, under
any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental
department, board, agency or instrumentality, domestic or
foreign, or any arbitrator.
(vi) Investment Company Act; Public Utility Holding
Company Act. Assuming that each of the Lender, EPRR (as
defined in the Red River Company Agreement) and the Class C
Member (as defined in the Red River Company Agreement) is a
"qualified purchaser" as defined in Section 2(a)(51) of the
Investment Company Act, Red River is not an "investment
company" within the meaning of the Investment Company Act.
Without regard to Red River's ownership of the Trinity Class B
Membership Interest or the EPRR's or the Class C Member's
ownership of Red River, Red River is not subject to, or is
exempt from, regulation as a "holding company" or a
"subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(c) Investigation; Intent. Without limiting any of the
representations and warranties of any party under any Operative
Document, (i) each Trinity Member is acquiring (or did acquire pursuant
to the original terms of the Trinity Company Agreement) its Trinity
Membership Interest based upon its own investigation, and the exercise
by such Trinity Member of its rights and the performance by such
Trinity
7
Trinity Company Agreement
Member of its obligations under this Agreement will be based upon its
own investigation, analysis and expertise, (ii) each Trinity Member's
acquisition of its Trinity Membership Interest is being made (or was
made pursuant to the original terms of the Trinity Company Agreement)
for its own account for investment, and not with a view to the sale or
distribution thereof, (iii) each Trinity Member intends hereby to form
a limited liability company for the purpose of making an economic
profit from the transactions proposed to be entered into by Trinity and
it is not acting as an agent or in some other representative capacity
for any other Person, (iv) each Trinity Member is an "accredited
investor" as defined in the rules adopted pursuant to the Securities
Act and a "qualified purchaser" as defined in the Investment Company
Act and the rules adopted pursuant thereto and (v) each Trinity Member
has obtained from Trinity all such information as it has requested to
evaluate its investment in Trinity.
Notwithstanding the foregoing, Red River makes no
representation or warranty with respect to any law, rule, regulation, conflict,
breach, default, violation, Lien, imposition, registration, declaration, filing,
consent, approval, license, permit, order, other authorization, action, suit,
proceeding, or investigation applicable solely by reason of Red River's
ownership of the Trinity Class Membership Interest or Trinity's or its
Affiliates' ownership of their respective property.
2.16. Liability to Third Parties. The debts, obligations and
liabilities of Trinity, whether arising in contract, tort or otherwise, shall be
solely the debts, obligations and liabilities of Trinity, and no Trinity Member
shall be obligated personally for any such debt, obligation or liability of
Trinity solely by reason of being a Member of Trinity.
2.17. Admission of New Members. Subject to the restrictions
and requirements set forth in Sections 3.3, 4.3(p) and Section 10 of this
Agreement, the Trinity Class A Member may admit one or more new Trinity Members.
In no event shall Trinity have more than ten Trinity Members. For purposes of
this provision, the number of Trinity Members shall be determined in accordance
with Treas. Reg. Section 1.7704-1.
2.18. No Withholding Tax. Neither Red River nor any affiliate
members nor any indirect holders of any interests in Red River through
partnerships or other pass-through entities is, as to the United States, a
nonresident alien individual, foreign partnership, foreign corporation or other
foreign person with respect to whom (taking into account statutory or treaty
exemptions) distributions, allocations or payments from Trinity are subject to
withholding tax at a rate in excess of zero percent under Sections 1441, 1442 or
any other provision of the Code imposing U.S. federal tax withholding
requirements upon distributions, allocations or payments to a foreign person,
other than Section 1446 of the Code.
2.19. Covenant of Each Trinity Member. Each Trinity Member
hereby covenants to each other Trinity Member that such Trinity Member will, in
connection with any transaction, agreement or dealing with or relating to Red
River, Trinity, or Sabine, or any other Person, as applicable, comply (except
for such noncompliance that, in the aggregate, is not material) with the
following undertakings, and, in the case of Sabine, Sabine will, within the
scope of its authority hereunder, cause Trinity to comply with the following
undertakings (it being understood that Red River is only assuming responsibility
with respect to itself):
8
Trinity Company Agreement
(a) Such Trinity Member will maintain its books, financial
records and accounts, including checking and other bank accounts and
custodian and other securities safekeeping accounts, separate and
distinct from those of Trinity, as the case may be. Trinity will
maintain its books, financial records and accounts, including checking
and other bank accounts and custodian and other securities safekeeping
accounts, separate and distinct from those of any other Person.
(b) Such Trinity Member will maintain its books, financial
records and accounts (including inter-entity transaction accounts) in a
manner so that it will not be difficult or costly to segregate,
ascertain or otherwise identify its assets and liabilities separate and
distinct from the assets and liabilities of Trinity. Trinity will
maintain its books, financial records and accounts (including
inter-entity transaction accounts) in a manner so that it will not be
difficult or costly to segregate, ascertain or otherwise identify its
assets and liabilities separate and distinct from the assets and
liabilities of any other Person.
(c) Such Trinity Member will not commingle any of its assets,
funds, liabilities or business functions with the assets, funds,
liabilities or business functions of Trinity, and such Trinity Member
will hold all of its own assets in its own name, except as otherwise
contemplated in the Operative Documents. Trinity will not commingle any
of its assets, funds, liabilities or business functions with the
assets, funds, liabilities or business functions of any other Person,
and Trinity will hold all of its own assets in its own name, except as
otherwise contemplated in the Operative Documents.
(d) Such Trinity Member will conduct its own business in its
own name, and will observe all requisite organizational and internal
procedures and formalities, including the holding of periodic and
special meetings of shareholders, managers and boards of directors or
managers (or other governing body), as applicable, the recordation and
maintenance of minutes of such meetings, and the recordation and
maintenance of resolutions adopted at such meetings. Trinity will
conduct its own business in its own name, and will observe all
requisite organizational and internal procedures and formalities,
including the holding of periodic and special meetings of shareholders,
managers and boards of directors or managers (or other governing body),
as applicable, the recordation and maintenance of minutes of such
meetings, and the recordation and maintenance of resolutions adopted at
such meetings.
(e) Such Trinity Member will not be consensually merged or
consolidated with Trinity (other than for financial reporting
purposes). Trinity will not be consensually merged or consolidated with
any other Person (other than certain affiliates for financial reporting
purposes).
(f) Each Trinity Member that prepares or agrees to be included
in consolidated financial statements will include or cause to be
included in its or such consolidated financial statements footnotes
that clearly disclose, among other things, the separate existence and
identity of Trinity from such Trinity Member, and that Trinity has
separate assets and liabilities. If Trinity prepares consolidated
financial statements, it will include in its consolidated financial
statements footnotes that clearly disclose, among
9
Trinity Company Agreement
other things, the separate existence and identity of Trinity from such
consolidated entities, and that Trinity has separate assets and
liabilities from such consolidated entities.
(g) All transactions, agreements and dealings between such
Trinity Member and Trinity (including transactions, agreements and
dealings pursuant to which the assets or property of one is used or to
be used by the other) will reflect the separate identity and legal
existence of each entity. All transactions, agreements and dealings
between Trinity and any other Person (including transactions,
agreements and dealings pursuant to which the assets or property of one
is used or to be used by the other) will reflect the separate identity
and legal existence of Trinity from such other Person.
(h) Transactions between Trinity, on the one hand, and any
third parties, on the other hand, will be conducted by Trinity in the
name of Trinity as an entity separate and distinct from any other
Person.
(i) Except as otherwise specified in the Operative Documents,
Trinity will pay its own liabilities from its own assets, and such
Trinity Member will not pay its own liabilities from Trinity's assets.
(j) Representatives and agents of Trinity (whether or not they
are "loaned" employees of such Trinity Member) will, when purporting to
act on behalf of Trinity, hold themselves out to third parties as being
representatives or agents, as the case may be, of Trinity and will
utilize business cards, letterhead, purchase orders, invoices and the
like of Trinity. Representatives and agents of such Trinity Member
(whether or not they are "loaned" employees of any Trinity Member or
any affiliates) will, when purporting to act on behalf of such Trinity
Member (other than, if applicable, in its capacity as managing member
of Trinity), not hold themselves out to third parties as being
representatives or agents, as the case may be, of Trinity and will not
utilize business cards, letterhead, purchase orders, invoices and the
like of Trinity.
(k) Trinity will compensate all consultants, independent
contractors and agents from its own funds for services provided to it
by such consultants, independent contractors and agents. Such Trinity
Member will not compensate any consultants, independent contractors and
agents from the funds of Trinity for services provided to such Trinity
Member by such consultants, independent contractors and agents.
(l) To the extent that Trinity, on the one hand, and such
Trinity Member, on the other hand, jointly contract or do business with
vendors or service providers or share overhead expenses, the costs and
expenses incurred in so doing will be fairly and nonarbitrarily
allocated between or among such entities, with the result that each
such entity bears its fair share of all such costs and expenses. To the
extent that Trinity, on the one hand, and such Trinity Member, on the
other hand, contracts or does business with vendors or service
providers where the goods or services are wholly or partially for the
benefit of the other, then the costs incurred in so doing will be
fairly and nonarbitrarily allocated to the entity for whose benefit the
goods or services are provided, with the result that each such entity
bears its fair share of all such costs, except to the extent otherwise
provided in the Operative Documents. To the extent that Trinity, on the
one
10
Trinity Company Agreement
hand, and any other Person, on the other hand, jointly contract or do
business with vendors or service providers or share overhead expenses,
the costs and expenses incurred in so doing will be fairly and
nonarbitrarily allocated between or among such entities, with the
result that each such entity bears its fair share of all such costs and
expenses. To the extent that Trinity, on the one hand, and any other
Person, on the other hand, contracts or does business with vendors or
service providers where the goods or services are wholly or partially
for the benefit of the other, then the costs incurred in so doing will
be fairly and nonarbitrarily allocated to the entity for whose benefit
the goods or services are provided, with the result that each such
entity bears its fair share of all such costs, except to the extent
otherwise provided in the Operative Documents.
(m) Trinity will have annual financial statements prepared in
accordance with GAAP, separate from such Trinity Member and any other
Person; provided that Trinity and such Trinity Member may be
consolidated with El Paso and its Subsidiaries for financial reporting
purposes. Such Trinity annual financial statements will show Trinity's
assets and liabilities separate and apart from those of any other
Person.
(n) Such Trinity Member will not make any loans, advances,
guarantees, extensions of credit or contributions of capital to, from
or for the benefit of Trinity without proper documentation and proper
accounting in accordance with GAAP and other than in accordance with
the provisions of the Operative Documents. Trinity will not make any
loans, advances, guarantees, extensions of credit or contributions of
capital to, from or for the benefit of any other Person without proper
accounting in accordance with GAAP and proper documentation.
(o) Trinity will cause to be prepared and filed all legally
required tax returns for itself (including Federal and state income tax
returns) separately from the tax returns of any other Person, and will
not file a consolidated tax return with any other Person. Each Trinity
Member will cause to be prepared and filed all legally required tax
returns for itself (including Federal and state income tax returns)
separately from the tax returns of Trinity.
(p) Such Trinity Member will not refer to Trinity as a
department or division of such Trinity Member and will not otherwise
refer to Trinity in a manner inconsistent with its status as a separate
and distinct legal entity. In addition, Trinity will hold itself out as
separate and distinct from such Trinity Member and from any other
Person. Trinity will not refer to itself as a department or division of
such Trinity Member and will not otherwise refer to itself in a manner
inconsistent with its status as a legal entity separate and distinct
from any other Person. In addition, such Trinity Members will hold
themselves out as separate and distinct from Trinity.
(q) Trinity will maintain adequate capital in light of its
contemplated business operations.
(r) Trinity will not hold out its credit as being available to
satisfy the obligations of any other Person. Such Trinity Member will
not hold out the credit of
11
Trinity Company Agreement
Trinity as being available to satisfy the obligations of such Trinity
Member (except as permitted under the Operative Documents).
(s) Trinity will not acquire the obligations or securities of
its affiliates or owners (except as permitted under the Operative
Documents). Such Trinity Member will not acquire the obligations or
securities of Trinity (except as permitted under the Operative
Documents).
(t) Trinity will not buy or hold evidence of indebtedness
issued by any other Person (except as permitted under the Operative
Documents).
(u) Trinity will use separate stationery, invoices, and checks
bearing its own name. Such Trinity Member will not use stationery,
invoices, and checks bearing Trinity's name (except in its capacity as
a managing member of Trinity).
(v) Trinity will not pledge its assets for the benefit of any
other Person (except as permitted under the Operative Documents). Such
Trinity Member will not pledge its assets for the benefit of Trinity
(except as permitted under the Operative Documents).
(w) Trinity will correct any known misunderstanding regarding
its separate identity from any other Person. Such Trinity Member will
correct any known misunderstanding regarding its identity as separate
from the identity of Trinity.
(x) Trinity will not use its separate existence, no Trinity
Member (or any of its affiliates) will use the separate existence of
Trinity, and Trinity will not permit that its separate existence will
be used by any such Trinity Member (or any of its affiliates), in each
case, to abuse creditors or to perpetrate a fraud, injury, or injustice
on creditors.
(y) All transactions between a Trinity Member (or any of its
affiliates), on the one hand, and Trinity, on the other, are, and will
be, duly authorized and documented, and recorded accurately in the
appropriate books and records of such entities. All such transactions
are, and will be, fair to each party, constitute exchanges for fair
consideration and for reasonably equivalent value, and are, and will
be, made in good faith and without any intent to hinder, delay, or
defraud creditors. Trinity will not take any action, and will not
engage in transactions with any Trinity Member (or any of its
affiliates), unless the respective Boards of Managers, managing
members, or officers, as appropriate, of Trinity and the applicable
Trinity Member, as the case may be, determine in a reasonable fashion
that such actions or transactions are in their respective companies'
best interests. The parties hereto agree that the Transactions satisfy
the requirements of this Section 2.19(y).
(z) Trinity and each Trinity Member have not entered into the
transactions contemplated by this Agreement or any Operative Document
to which it is a party in contemplation of insolvency or with a design
to prefer one or more creditors to the exclusion in whole or in part of
others or with an intent to hinder, delay or defraud any of its
creditors.
12
Trinity Company Agreement
(aa) The assets of Trinity and of each Trinity Member are now,
and are intended to be, sufficient to pay the ongoing business expenses
of each such respective entity as they are incurred and to discharge
all of their respective liabilities.
2.20. Title to Trinity Property. All Trinity Property shall be
owned by Trinity as an entity, and no Trinity Member shall have any ownership
interest in such property in its individual name or right. Each Trinity Member's
interest in Trinity shall be personal property for all purposes. Trinity shall
hold all of the Trinity Property in the name of Trinity or the name of the
Trinity Custodian (on behalf of Trinity) and not in the name of any Trinity
Member.
2.21. Trinity Member Requirements. Trinity shall at all times
have at least one Trinity Member that is a Special Purpose LLC. A "SPECIAL
PURPOSE LLC" means a limited liability company that has a manager on its board
of managers or other managing body who is not an Affiliate of El Paso. Sabine
shall be the initial Special Purpose LLC. The Special Purpose LLC shall at all
times be a limited liability company whose Organizational Documents contain
restrictions on its activities and impose requirements intended to preserve its
separateness that are substantially similar to those contained in this
Agreement, and provide, among other things, that it:
(a) is organized for a limited purpose;
(b) has restrictions on its ability to incur indebtedness,
dissolve, liquidate, consolidate, merge and/or sell its assets;
(c) may not file voluntarily a bankruptcy petition on its own
behalf (and/or on behalf of Trinity) without the consent of the manager
who is not an Affiliate of El Paso; and
(d) shall conduct itself (and/or cause Trinity to conduct
itself) in accordance with certain "separateness covenants", including
the maintenance of books, records, bank accounts and assets separate
from those of any other Person and/or certain specified other Persons.
SECTION 3
MEMBERS
3.1. Rights of Members. The Trinity Members shall have the
rights and obligations provided in this Agreement and, to the extent consistent
with this Agreement, the Act.
3.2. Trinity Membership Interests. There shall be two classes
of Trinity Membership Interests, each of which shall have the rights set forth
below:
(a) Class A Membership Interest. The Trinity Class A Member
shall have the following rights under this Agreement (in addition to
the other rights granted hereunder):
13
Trinity Company Agreement
(i) the right to receive Distributions and to share
in the Profits and Losses of Trinity, all to the extent
provided in this Agreement;
(ii) the right to receive liquidating Distributions
to the extent provided in Section 12;
(iii) the right to vote upon, approve or consent to
actions of Trinity and to participate in the management of
Trinity, all to the extent provided in this Agreement; and
(iv) the right to appoint or remove the Trinity
Liquidator as provided in Section 12.9.
(b) Trinity Class B Membership Interest. The Trinity Class B
Member shall have the following rights under this Agreement (in
addition to the other rights granted hereunder):
(i) the right to receive Distributions and to share
in the Profits and Losses of Trinity, all to the extent
provided in this Agreement;
(ii) the right to receive liquidating Distributions
to the extent provided in Section 12;
(iii) the right to vote upon, approve or consent to
actions of Trinity and the Trinity Class A Member, all to the
limited extent, but only to the limited extent, provided in
this Agreement; and
(iv) the right to appoint or remove the Trinity
Liquidator as provided in Section 12.9.
3.3. Additional Covenants of Trinity Class A Member. Except as
otherwise permitted by this Agreement, the Trinity Class A Member hereby
covenants and agrees not to transfer all or any portion of its Trinity
Membership Interest as the Trinity Class A Member. Further, the Trinity Class A
Member hereby covenants and agrees to continue to carry out the duties of the
Trinity Class A Member under this Agreement until Trinity is dissolved and
liquidated pursuant to Section 12 hereof.
3.4. Trinity Class B Member. (a) No Management Rights or
Powers. The Trinity Class B Member shall not have any right or power to take
part in the management or control of Trinity or its business and affairs or to
act for or bind Trinity in any way, except as expressly provided in any
Operative Document.
(b) Voting Rights. The Trinity Class B Member shall have the
right to vote only on those matters specifically reserved for its vote as set
forth in this Agreement.
3.5. Meetings of Members. (a) Notice. Meetings of the Trinity
Members shall be called upon the written request of any Trinity Member. The
notice shall state the nature of the business to be transacted. Notice of any
such meeting shall be given to all Trinity
14
Trinity Company Agreement
Members not less than five Business Days nor more than 30 days prior to the date
of such meeting. Trinity Members may vote in person, by proxy or by telephone at
such meeting.
(b) Record Date. For the purpose of determining the Trinity
Members entitled to vote on, or to vote at, any meeting of the Trinity Members
or any adjournment thereof, the Trinity Member requesting such meeting may fix,
in advance, a date as the record date for any such determination. Such date
shall not be more than 30 days nor less than seven Business Days before any such
meeting.
(c) Proxy. Any Trinity Member may authorize any Person or
Persons to act for it by proxy on all matters in which such Trinity Member is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by such Trinity Member or
its attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every proxy given
by a Trinity Member shall be revocable at the pleasure of the Trinity Member
executing it unless otherwise expressly stated in such proxy.
(d) Consents. The approval or consent of any Trinity Member
required under this Agreement may, except as expressly provided to the contrary
in this Agreement, be given or withheld in the sole and absolute discretion of
such Trinity Member. If the Trinity Class A Member receives the necessary
approval or consent of the Trinity Members to such action, the Trinity Class A
Member shall be authorized and empowered to implement such action without
further authorization by the Trinity Members.
(e) Conduct of Meeting. Each meeting of the Trinity Members
shall be conducted by the Trinity Class A Member or such other Person as the
Trinity Class A Member may appoint pursuant to such rules for the conduct of the
meeting as the Trinity Class A Member or such other Person deems appropriate.
Any meeting duly called at which the Trinity Class A Member does not appear
shall be conducted by the Trinity Class B Member.
(f) Consent in Lieu of Meeting. In the event the consent of
any Trinity Member is required for any action to be taken by Trinity, such
consent may be given at a meeting, which may be conducted by conference
telephone call, or provided in writing, executed by the Member necessary to
authorize such action at a meeting.
(g) No Meeting Required for Certain Actions. Any action,
consent or approval that by the terms of this Agreement may be taken by any
class of Trinity Member acting as a class or alone may be taken without the
necessity of calling or holding a meeting of Trinity Members.
3.6. Partition. To the fullest extent permitted under
Applicable Law, each Trinity Member waives any and all rights that it may have
to maintain an action for partition of Trinity's property.
3.7. Covenant Not to Dissolve. Except as otherwise permitted
by this Agreement, to the fullest extent permitted under Applicable Law, each
Trinity Member hereby covenants and agrees not to (a) take any action to file a
certificate of dissolution or its equivalent
15
Trinity Company Agreement
with respect to itself, (b) exercise any power under the Act to dissolve Trinity
or (c) petition for judicial dissolution of Trinity.
3.8. Termination of Status as Trinity Member. (a) Certain
Events. A Person shall cease to be a Trinity Member only upon the first to occur
of:
(i) The Transfer of all of its Trinity Membership Interest
(other than by way of the imposition of a Permitted Lien); provided
that the transferee of such Membership Interest is admitted as a
substituted Trinity Member in accordance with this Agreement.
(ii) The happening of any of the events specified in Section
18-801(b) of the Act (which shall not relieve such Person from any
liability under this Agreement, including liabilities for an
unpermitted resignation).
(iii) The involuntary Transfer by operation of Applicable Law
(other than by way of imposition of a Permitted Lien) of its Trinity
Membership Interest (which shall not relieve such Person from any
liability under this Agreement, including liabilities for an
unpermitted resignation).
(iv) The vote of the Trinity Members required to approve a
request by such Trinity Member to withdraw pursuant to Section 3.8(b).
(v) In the case of the Trinity Class B Member, the withdrawal
of the Trinity Class B Member pursuant to the occurrence of the events
specified in Section 7.4.
The happening of the foregoing events shall not cause a dissolution of Trinity
except as provided in Section 12. Except to the extent specifically set forth
herein, upon the termination of a Person's status as a Trinity Member, such
Person shall not be entitled to any Distributions from Trinity, including a
Distribution based on the fair value of such Person's Trinity Membership
Interest.
(b) Withdrawal. No Trinity Member may withdraw from Trinity,
except (i) with the prior written consent of the Trinity Members or (ii) as a
consequence of a Permitted Transfer pursuant to which the Transferee is admitted
as a Trinity Member.
(c) Continuing Obligations. Any debts, obligations, or
liabilities in damages to Trinity of any Person who ceases to be a Trinity
Member shall be collectible by any legal means and Trinity is authorized, in
addition to any other remedies at law or in equity, to apply any amounts
otherwise distributable or payable by Trinity to such Person to satisfy such
debts, obligations or liabilities.
(d) Transferee. Except as otherwise provided in this
Agreement, in the event a Person ceases to be a Trinity Member without having
Transferred all of its Trinity Membership Interest in accordance with this
Agreement (including upon removal or resignation), such Person shall be treated
as an unadmitted transferee pursuant to Section 10.6.
16
Trinity Company Agreement
SECTION 4
MANAGEMENT
4.1. Management of Trinity. (a) Trinity Class A Member. The
management of Trinity shall be vested in the Trinity Class A Member who shall be
a "manager" within the meaning of the Act, and except as otherwise provided in
this Agreement the Trinity Class A Member shall have full power and authority to
manage the business and affairs of Trinity to the extent provided in the Act,
and no other Trinity Member shall have any such management power and authority.
(b) Authority of Trinity Class A Member. The Trinity Class A
Member shall have the authority on behalf and in the name of Trinity to perform
all acts necessary and desirable to the objects and purposes of Trinity, subject
only to the restrictions expressly set forth in this Agreement (including
Section 2.19, Section 4.3 and Section 4.8) and subject to the rights of the
Trinity Liquidator to liquidate Trinity and take all actions incidental thereto
during the Liquidation Period. Subject to such restrictions, the authority of
the Trinity Class A Member shall include the authority to:
(i) engage in transactions and dealings on behalf of Trinity,
including transactions and dealings with any Trinity Member or any
Affiliate of any Trinity Member;
(ii) call meetings of Trinity Members or any class thereof;
(iii) vote any securities held by Trinity;
(iv) enter into any Operative Document on behalf of Trinity
and make Investments in Permitted Assets;
(v) determine and make Distributions, in cash or otherwise, on
Trinity Membership Interests in accordance with the provisions of this
Agreement and the Act;
(vi) appoint (and dismiss from appointment) officers,
attorneys and agents on behalf of Trinity, and engage (and dismiss from
engagement) any and all Persons providing legal, accounting or
financial services to Trinity, or such other Persons as the Trinity
Class A Member deems necessary or desirable for the management and
operation of Trinity;
(vii) incur and pay all expenses and obligations incidental to
the operation and management of Trinity;
(viii) open accounts (including, without limitation, the
Trinity Operating Account) with the Trinity Custodian and delegate to
the Trinity Custodian the duties of the Trinity Custodian set forth in
the Trinity Custody Agreement;
(ix) subject to Section 12, effect a dissolution of Trinity
after the occurrence of a Liquidating Event;
17
Trinity Company Agreement
(x) bring and defend (or settle) on behalf of Trinity actions
and proceedings at law or equity before any court or governmental,
administrative or other regulatory agency, body or commission or any
arbitrator or otherwise;
(xi) prepare or cause to be prepared reports, statements and
other relevant information for distribution to the Trinity Members as
may be required by this Agreement or the Act and any additional
information determined to be appropriate by the Trinity Class A Member
from time to time;
(xii) execute and deliver, perform Trinity's obligations under
and exercise Trinity's rights under, any Operative Documents to which
Trinity is a party, including any certificates and other documents and
instruments related thereto;
(xiii) prepare and file all necessary returns and statements
and pay all taxes, assessments and other impositions applicable to the
Trinity Property pursuant to Section 8.2; and
(xiv) execute all other documents or instruments, perform all
duties, exercise all powers, and do all things for and on behalf of
Trinity necessary or desirable for or incidental to the foregoing.
4.2. Reliance by Third Parties. Persons dealing with Trinity
are entitled to rely conclusively upon the power and authority of the Trinity
Class A Member set forth in this Agreement.
4.3. Restrictions on Authority. The Trinity Class A Member
shall not be authorized to take any of the actions set forth in this Section 4.3
without the prior written approval of the Trinity Class B Member. The Trinity
Class A Member covenants and agrees that it shall not, without such approval:
(a) Contravention. Do any act in contravention of this
Agreement;
(b) Impossibility. Do any act that would make it impossible to
carry on the ordinary business of Trinity, except as otherwise
expressly provided in this Agreement;
(c) Litigation, Etc. Confess a judgment against Trinity or
settle on behalf of Trinity actions and proceedings at law or in equity
before any court, any governmental, administrative or other regulatory
agency, body or commission or any arbitrator or otherwise (i) to which
El Paso, any Sponsor Subsidiary or any of their respective Affiliates
is a party in opposition to Trinity or (ii) as a result of which it is
reasonably likely, after giving effect to any contribution pursuant to
Section 5.3 hereof, that the rights, assets or interests of Trinity or
the Trinity Members as such would be adversely affected;
(d) Possession of Trinity Property. Possess Trinity Property
or assign rights in Trinity Property, for other than a Trinity purpose;
18
Trinity Company Agreement
(e) Liability. Perform any act that would cause, or knowingly
fail to perform any act the failure to perform which would cause, any
Trinity Member to be obligated personally for any debt, obligation or
liability of Trinity in any jurisdiction solely by reason of such
Trinity Member being a Trinity Member (other than pursuant to Section
5.3 hereof);
(f) Bankruptcy, Insolvency. Cause or permit Trinity
voluntarily to take any action of the type referred to in the
definition of "VOLUNTARY BANKRUPTCY";
(g) Indebtedness. Cause or permit Trinity to incur, assume or
obligate itself for any Indebtedness, except that Trinity may enter
into and incur obligations under the Operative Documents and
Indebtedness of the type described in clause (i) of the definition
thereof constituting Trinity Expenses incurred in the ordinary course
of business;
(h) Custody Agreements. Direct the Trinity Custodian to (i)
release any property from its custody under the Trinity Custody
Agreement other than pursuant to the terms of the Trinity Custody
Agreement or this Agreement, (ii) appoint a substitute Trinity
Custodian or (iii) close any account established pursuant to the
Trinity Custody Agreement except to the extent such account is replaced
with a new account thereunder;
(i) Liens. Cause or permit Trinity to incur or suffer to exist
any Liens on any of its assets, except for Permitted Liens;
(j) Investments, Etc. Cause or permit Trinity to acquire by
purchase or contribution or otherwise to hold or maintain or become
obligated to hold or maintain:
(i) any assets other than Permitted Assets; and
(ii) any Cash Equivalent that is in default; provided
that Trinity may maintain any defaulted Cash Equivalent for a
reasonable period after the occurrence of such default to
Dispose of such Cash Equivalent in an orderly fashion or to
diligently pursue collection or enforcement thereof;
(k) Merger. Cause or permit Trinity to merge or consolidate
with or into any other Person;
(l) Tax and Accounting Matters. Take any initial tax or
accounting position, practice or policy that is inconsistent with the
purposes of the Operative Documents or, except as may be required by
Applicable Law, cause or permit changes in any material tax position or
policy of Trinity, or cause or permit changes in or adoption of any
accounting position, practice or policy (including a change in its
fiscal year) of Trinity not in accordance with GAAP;
(m) Distributions. Cause or permit Distributions to the
Trinity Members of cash or other Trinity Property except as expressly
provided in this Agreement;
19
Trinity Company Agreement
(n) Dissolution. Cause or permit Trinity voluntarily to take
any action that would cause a dissolution of Trinity except to the
extent that the Trinity Class A Member may in its capacity as the
Trinity Class A Member and in accordance with this Agreement vote to
dissolve, wind up and liquidate Trinity;
(o) Reimbursement. Cause or permit Trinity to reimburse any
Trinity Member for any liability, loss, cost or Expense other than as
expressly provided for in or contemplated by this Agreement or any
other Operative Document;
(p) Admission of Members. Cause or permit the admission of any
Trinity Member other than pursuant to Sections 2.2 and 10;
(q) Operative Documents. Cause or consent to (i) any
termination or cancellation of, or any assignment, delegation or other
transfer of, or (ii) any amendment, modification, supplement or waiver
of, Trinity's or any other Person's rights or obligations under this
Agreement or any other Operative Document to which Trinity is a party
(other than to the Trinity Custodian pursuant to the Trinity Custody
Agreement, to the Sponsor Subsidiary Collateral Agent pursuant to the
Sponsor Subsidiary Credit Documents and the Sponsor Subsidiary
Collateral Agent Agreement and any such consent provided in or required
pursuant to an Operative Document);
(r) Affiliate Transactions. Cause or permit Trinity to enter
into any contracts (including any indemnification agreements) or
transactions with any Trinity Member or any Affiliate of any Trinity
Member other than as expressly provided for in or contemplated by this
Agreement (including Section 4.7 hereof) or in or by any other
Operative Document;
(s) Disposition of the Trinity Property. Cause or permit
Trinity to Dispose of all or any portion of the Trinity Property,
except for (i) Dispositions of the Trinity Property in connection with
the liquidation, dissolution and winding up of Trinity pursuant to
Section 12, (ii) Dispositions of amounts on deposit in the Trinity
Operating Account for value in connection with Trinity's investment and
reinvestment in Cash Equivalents, (iii) payments and Distributions
pursuant to Section 7 and (iv) payments of obligations and expenses
permitted to be incurred under or required to be paid pursuant to this
Agreement;
(t) Actions Under the Sponsor Subsidiary Credit Documents.
Subject to Section 4.9, cause or permit Trinity to (i) agree, elect or
consent to or approve the taking by any Sponsor Subsidiary of any
action requiring the prior approval, election or consent of Trinity
under the Sponsor Subsidiary Credit Documents (including any action
constituting a Trinity Required Action, except to the extent taken as
provided in Section 4.9) or decline or fail to enforce the obligations
of any Sponsor Subsidiary under the Sponsor Subsidiary Credit Documents
or exercise any discretionary right, remedy or privilege granted to or
reserved for Trinity in its capacity as the lender and secured party
under the Sponsor Subsidiary Credit Documents, or (ii) cause or consent
to (A) any termination or cancellation of, (B) any assignment,
delegation or other transfer of Trinity's or any Sponsor Subsidiary's
rights or obligations under, or (C) any amendment,
20
Trinity Company Agreement
modification, supplement or waiver of Trinity's or any Sponsor
Subsidiary's rights or obligations under, the Sponsor Subsidiary Credit
Documents (other than as a result of payment in full of obligations
thereunder), or (iii) agree to (A) the Calculation Agent delivering a
Pool II Borrowing Base Determination or Pool II Borrowing Base
Redetermination pursuant to Section 2.10 of the Sponsor Subsidiary
Credit Agreement or (B) a Revised Aggregate Pool I Loan Value Amount
pursuant to Section 2.12 of the Sponsor Subsidiary Credit Agreement.
4.4. [Intentionally Omitted].
4.5. Compliance with Agreement. The Trinity Class A Member
shall cause Trinity to comply with all of the obligations of Trinity set forth
in this Agreement (including, without limitation, Section 2.19) and the other
Operative Documents to which it is a party.
4.6. No Employees. The Trinity Class A Member shall not permit
Trinity to have any employees.
4.7. Affiliate Transactions. Except as otherwise provided in
this Agreement, the Trinity Class A Member, when acting on behalf of Trinity, is
hereby authorized to deal with any Trinity Member, acting on its own behalf, or
any Affiliate of any Trinity Member; provided that any such transaction, other
than any transaction otherwise permitted or contemplated by the Operative
Documents, shall be made on terms and conditions that, taken as a whole, are no
less favorable to Trinity than if the transaction had been made with an
independent third party and (excluding any Disposition of any of the Trinity
Property to such Trinity Member or such Affiliate of such Trinity Member) shall
be in the ordinary course of Trinity's business. The Trinity Members agree that
the Operative Documents (and the transactions contemplated thereby) satisfy this
third-party standard and the Trinity Members hereby authorize the Trinity Class
A Member to cause Trinity to enter into the Operative Documents to which Trinity
is a party (and to consummate the transactions contemplated thereby).
4.8. Limitations on Member Activities. The Trinity Class A
Member shall not engage in any business or other activity other than as
specified in Section 2.6 of the Sabine Company Agreement as in effect on the
date hereof, except with the written consent of the Trinity Class B Member. The
Trinity Class B Member shall not engage in any business or other activity other
than as specified in Section 2.6 of the Red River Company Agreement as in effect
on the date hereof, except with the written consent of the Trinity Class A
Member.
4.9. Required Actions. The Trinity Class A Member shall take
or cause to be taken each of the Trinity Required Actions (as such Trinity
Required Actions may be requested, and as any determinations or calculations to
be made in connection therewith may be made, by the Trinity Class B Member in
accordance with the Operative Documents), promptly (and, in any event on the
next succeeding Business Day) upon receipt of a written request therefor from
the Trinity Class B Member, which notice shall provide in reasonable detail the
Trinity Required Action to be taken. In the event that the Trinity Class A
Member shall fail to take any Trinity Required Action requested by the Trinity
Class B Member prior to the close of business on the next succeeding Business
Day after receipt of such request, the Trinity Class B Member may, on behalf of
Trinity, direct the Trinity Custodian or the Sponsor Subsidiary Collateral
Agent, as the
21
Trinity Company Agreement
case may be, to take such Trinity Required Action, and in connection therewith
the Trinity Custodian or the Sponsor Subsidiary Collateral Agent, as the case
may be, shall have all requisite power and authority to bind Trinity for the
purpose of, and to the extent of the exercise of, such Trinity Required Actions.
4.10. Compliance with Applicable Laws. The Trinity Class A
Member shall cause Trinity to comply with all Applicable Laws except for such
non-compliance (a) as is attributable solely to any action taken by the Trinity
Class B Member, or in the case of any action required to be taken by the Trinity
Class B Member, omitted to be taken or (b) that would not have a Material
Adverse Effect.
4.11. Trinity Custodian. Simultaneously with the execution of
this Agreement, the Trinity Class A Member shall, on behalf of Trinity, enter
into the Trinity Custody Agreement and the Sponsor Subsidiary Collateral Agent
Agreement and all other documents as may be reasonably required to be executed
by Trinity in connection therewith and take such other actions as may be
reasonably necessary to consummate the transactions contemplated thereby and
appoint the Trinity Custodian and the Sponsor Subsidiary Collateral Agent, as
the case may be. The Trinity Members acknowledge that the Trinity Class A Member
has delegated certain responsibilities to Wilmington Trust Company, as Trinity
Custodian and as Sponsor Subsidiary Collateral Agent, pursuant to this
Agreement, the Trinity Custody Agreement, the Sponsor Subsidiary Collateral
Agent Agreement and the other Operative Documents, and agree that (x) such
delegation is reasonable and appropriate under the circumstances and (y) the
Trinity Class A Member shall have no responsibility or liability for errors and
omissions of Wilmington Trust Company, as Trinity Custodian or as Sponsor
Subsidiary Collateral Agent as the case may be, in performing such
responsibilities. The Trinity Class A Member shall instruct the Trinity
Custodian to make all payments to be made on behalf of Trinity, including all
payments in respect of Preferred Payments, Additional Financing Costs,
Transaction Costs, Disposition Costs and other Trinity Expenses in accordance
with the Trinity Custody Agreement.
4.12. Additional Financing Costs and Transaction Costs. (a)
The Trinity Class B Member, the Agent or the Sponsor Subsidiary Collateral Agent
(each, a "CLAIMANT") may deliver to the Trinity Class A Member (on behalf of
Trinity and on behalf of the Sponsor Subsidiaries under the Sponsor Subsidiary
Credit Agreement) written notice with supporting documents therefor provided to
such Claimant under the Red River Company Agreement or any Red River Loan
Document, as the case may be, certifying in reasonable detail the nature of, and
if applicable, the method of computation of, any Additional Financing Costs or
Transaction Costs. Such delivery to the Trinity Class A Member shall be deemed a
demand by Trinity under the Sponsor Subsidiary Credit Agreement from the Sponsor
Subsidiaries for payment of such Additional Financing Costs or Transaction Costs
(as the case may be) pursuant to Section 2.06 of the Sponsor Subsidiary Credit
Agreement. The Claimant shall specify whether such Additional Financing Costs or
Transaction Costs (as the case may be) will be recurring, and, if known, the
duration of such recurrence. Recurring amounts claimed shall be paid on each
specified recurrence without further notice by the Claimant. Such notice shall
specify whether the Claimant requests the amount claimed to be paid on the
immediately following Payment Date (for which no less than 2 Business Days prior
notice shall be required) after the initial occurrence or after each specified
recurrence or, with respect to claims for amounts other than recurring amounts,
on a day other than a Payment Date (for which no less than 6 Business Days prior
22
Trinity Company Agreement
notice shall be required); provided, however, that (x) any Additional Financing
Costs arising by reason of the late payment of the Advance under the Sponsor
Subsidiary Credit Agreement or (y) any Transaction Costs of the kind described
in clause (b) of the definition thereof shall, in each case, be payable upon
demand. The Claimant shall notify the Trinity Class A Member if any such
recurring cost ceases to be recurring (or if the amount thereof decreases)
promptly after becoming aware thereof and agrees to refund any excess payment
received in respect of such ceased or reduced recurring costs.
(b) Upon receipt by Trinity pursuant to the Sponsor Subsidiary
Credit Agreement of amounts claimed pursuant to Section 4.12(a), the Trinity
Class A Member shall instruct the Trinity Custodian to pay, on behalf of
Trinity, to the Trinity Class B Member all such amounts so received.
4.13. Payment of Trinity Expenses. The Trinity Class A Member
shall promptly cause Trinity to pay all Trinity Expenses when due; provided,
however, that the Trinity Class A Member shall not be required to cause Trinity
to pay and Trinity shall not be required to pay any such Trinity Expenses that
are being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained in accordance with GAAP, unless and
until any Lien resulting therefrom attaches to Trinity's property and becomes
enforceable against its other creditors.
SECTION 5
COMPANY CAPITAL
5.1. Capital Accounts. A Capital Account shall be established
for each Trinity Member in the books of Trinity. Upon the making of the initial
Capital Contributions pursuant to Section 5.2(a) on the First Closing Date, the
initial Capital Account of the Trinity Class A Member shall be $125,000,000, and
the initial Capital Account of the Trinity Class B Member shall be $500,000,000,
in each case reflecting the initial Capital Contribution of each such Trinity
Member to Trinity. Upon the making of additional Capital Contributions pursuant
to Section 5.2(b) on the Second Closing Date, the Capital Account of the Trinity
Class A Member on such date shall be $250,000,000 and the Capital Account of the
Trinity Class B Member shall be $980,000,000, in each case less any
Distributions made to the Trinity Class A Member or the Trinity Class B Member
(as applicable) pursuant to Article VII through the Second Closing Date. The
Capital Account of each Trinity Member shall be maintained in accordance with
the following provisions:
(a) To each Trinity Member's Capital Account there shall be
credited such Trinity Member's Capital Contributions made pursuant to
Section 5.2 or 5.3, as the case may be, such Trinity Member's
Distributive share of Profits, any items in the nature of income or
gain that are specially allocated to such Trinity Member pursuant to
this Agreement, and the amount of any Trinity liabilities paid,
discharged or assumed (pursuant to an enforceable instrument of
assumption and release) by such Trinity Member or any Affiliate of such
Trinity Member or that are secured at the time of distribution by the
Trinity Property distributed to such Trinity Member.
23
Trinity Company Agreement
(b) To each Trinity Member's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any Trinity
Property Distributed to such Trinity Member pursuant to Section 7
(other than Section 7.1(e)) or Section 12, such Trinity Member's
Distributive share of Losses and any items in the nature of expenses or
losses that are specially allocated to such Trinity Member pursuant to
Section 6 and the amount of the liabilities of such Trinity Member
assumed by Trinity or that are secured by any property contributed by
such Trinity Member to Trinity.
(c) In the event all or any portion of any Trinity Membership
Interest is Transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the Transferred Trinity Membership
Interest.
(d) In determining the amount of any liability for the
purposes of clauses (a) and (b), there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
The Trinity Class A Member shall maintain the Trinity Members' Capital Accounts
in accordance with this Agreement. However, in the event any Trinity Member
disputes in an appropriate judicial proceeding the determination of its Capital
Account, an independent de novo determination of the Trinity Members' Capital
Accounts shall be made.
5.2. Closing Date and Other Contributions by the Trinity
Members. (a) On the First Closing Date:
(i) the Trinity Class A Member shall make a Capital
Contribution to Trinity of $125,000,000 in cash; and
(ii) the Trinity Class B Member shall make a Capital
Contribution to Trinity of $500,000,000 in cash; and
(b) on the Second Closing Date:
(i) the Trinity Class A Member shall make a Capital
Contribution to Trinity of $125,000,000 in cash; and
(ii) the Trinity Class B Member shall make a Capital
Contribution to Trinity of $480,000,000 in cash,
in each case subject to the satisfaction (or waiver in writing by such Trinity
Member) of the following conditions:
(A) No Liquidating Event, Termination Event, Notice Event,
Event of Default or Incipient Event shall have occurred and be
continuing before or after giving effect to any such Capital
Contribution; and
(B) Funding is available, after satisfaction of relevant
conditions to funding under the Operative Documents, to the Trinity
Class B Member from existing or
24
Trinity Company Agreement
simultaneous equity investments in the Trinity Class B Member and from
existing credit facilities in an aggregate amount sufficient to enable
such Trinity Member to make the Capital Contribution.
5.3. Mandatory Capital Contributions. (a) Deficiency
Contributions. In the event Trinity is required to make any payment (without
duplication) (i) in respect of Trinity Expenses (subject to the proviso to
Section 4.13 hereof) or (ii) pursuant to Section 13, the Trinity Class A Member
shall make additional Capital Contributions to Trinity in an amount equal to
such required payment; provided, however, that in the case of Trinity Expenses
comprising Additional Financing Costs, Transaction Costs and/or Disposition
Costs, the Trinity Class A Member shall only be required to make additional
Capital Contributions to Trinity in respect of such Trinity Expenses to the
extent such Trinity Expenses are not paid when due by the Sponsor Subsidiaries
to Trinity pursuant to the terms of the Sponsor Subsidiary Credit Agreement.
Such contributions shall be made in immediately available funds to the Trinity
Operating Account so that Trinity may make such payment when such payment is
due. The Trinity Class A Member shall instruct the Trinity Custodian to make
such payment when such payment is due.
(b) Exclusivity. Except as provided in Section 5.2 and as
provided by Section 18-607 of the Act, the Trinity Class B Member shall have no
obligation of any kind to make Capital Contributions to or assume or pay
liabilities of Trinity.
5.4. Trinity Custodian Notification. If the Trinity Class A
Member or the Trinity Class B Member makes a Capital Contribution under Section
5.3 or otherwise (except under Section 5.2) to Trinity, the Trinity Class A
Member shall notify the Trinity Custodian of the provision, if any, of this
Agreement pursuant to which such Capital Contribution is made or the reason such
Capital Contribution is made.
5.5. No Withdrawal of Capital. Except as otherwise provided in
this Agreement, no Trinity Member shall demand or receive a return of its
Capital Contributions. Under circumstances requiring a return of any Capital
Contributions, no Trinity Member shall have the right to receive property other
than cash except as may be specifically provided in this Agreement.
5.6. No Return on Capital. No Trinity Member shall receive any
yield or return with respect to its Capital Contributions on its Capital
Account, except as otherwise provided in this Agreement.
5.7. Cash Capital Contributions. No Trinity Member shall make
any Capital Contribution hereunder otherwise than in cash.
SECTION 6
ALLOCATIONS
6.1. Allocations Generally. For the purposes of maintaining
the Capital Accounts provided for in Section 5.1, Profits or Losses or items
thereof (and for Federal and state income tax purposes the corresponding items
of income, gain, loss, deduction, and credit)
25
Trinity Company Agreement
for each Fiscal Year shall be allocated 100% to the Trinity Class A Member
except as provided in the succeeding provisions of this Section 6.
6.2. Special Allocations.
(a) Advances.
(i) Any deduction or loss realized with respect to the
Advances shall be specially allocated as follows:
(X) First, 100% to the Trinity Class A Member until
the Capital Account of the Trinity Class A Member is reduced
to zero; and
(Y) Second, 100% to the Trinity Class B Member.
(ii) Any gains (but not interest income) realized in respect
of the Advances shall be specially allocated as follows:
(X) First, 100% to the Trinity Class B Member until
the cumulative amount of gains allocated to the Trinity Class
B Member for the current Fiscal Year and all prior Fiscal
Years pursuant to this Section 6.2(a)(ii)(X) equals the
cumulative amount of deductions and losses allocated to the
Trinity Class B Member for the current Fiscal Year and all
prior Fiscal Years pursuant to Section 6.2(a)(i)(Y); and
(Y) Second, 100% to the Trinity Class A Member.
(b) Quarterly Cash Flow. The Members shall be specially
allocated items of gross income or gain each Fiscal Quarter as follows:
(i) First, to the Trinity Class B Member in an amount equal to
the excess of all amounts paid or payable (without duplication) to the
Trinity Class B Member pursuant to Section 7.1 hereof (including for
this purpose amounts paid or payable by virtue of Section 12.7 hereof
but excluding, in all events, amounts paid or payable pursuant to
Section 7.1(e) hereof) in respect of the current and all prior Fiscal
Years over all amounts allocated pursuant to this Section 6.2(b)(i) for
all prior Fiscal Years; provided, however, that in determining the
amount paid pursuant to Section 7.1 for any Fiscal Year for this
purpose, such amounts paid within the first 20 days of the next
succeeding Fiscal Year shall be included as paid in respect of the
prior Fiscal Year, and such amounts shall not be taken into account
again as paid in respect of any such subsequent Fiscal Year; and
(ii) Second, to the Trinity Class A Member all other items of
Profit or gain for such Fiscal Quarter.
(c) Trinity Expenses. All Trinity Expenses shall be specially
allocated to the Trinity Class A Member.
26
Trinity Company Agreement
6.3. Timing of Allocations. Profits, Losses and any other
items of income, gain, loss or deduction to be allocated pursuant to this
Section 6 shall be allocated to the Capital Accounts by the Trinity Class A
Member on:
(a) the last day of each Fiscal Year (taking into account the
Distribution to be paid in January of the following Fiscal Year
relating to the Payment Period ending in January of such following
Fiscal Year); and
(b) on the date of determination of the ▇▇▇▇-to-Market Value
of any Trinity Property following the occurrence of a ▇▇▇▇-to-Market
Event.
6.4. Other Allocation Rules. For the purposes of determining
the Profits, Losses, or any other items allocable to any period, Profits,
Losses, and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the Trinity Class A Member using any permissible
method under section 706 of the Code and the Regulations thereunder. The Trinity
Members hereby agree to be bound by the provisions of this Section 6 in
reporting their shares of the income, gain, loss, deduction, and credit of
Trinity for income tax purposes, except as may otherwise be required by
Applicable Law.
SECTION 7
PAYMENTS, DISTRIBUTIONS AND RETIREMENTS
7.1. Payments and Distributions -- Trinity Class B Member.
Trinity shall make the following Distributions and payments to the Trinity Class
B Member at the following times:
(a) On the Payment Date next succeeding the last day of each
Payment Period, a Distribution in an amount equal to the Preferred
Payment for such Payment Period.
(b) (i) On the date of any Distribution to the Trinity Class B
Member pursuant to Section 7.3 or Section 12, if such date of payment
is other than a Payment Date, an amount equal to the sum of (1) all
accrued and unpaid Preferred Payments to such date on the amount of the
Trinity Class B Member's positive Capital Account balance so
Distributed and (2) all accrued and unpaid Additional Financing Costs
and Transaction Costs that are then payable pursuant to Section
4.12(a).
(c) On each Payment Date or other date specified in a notice
referred to in Section 4.12(a), all accrued and unpaid Additional
Financing Costs and Transaction Costs then payable pursuant to Section
4.12(a).
(d) [Intentionally omitted]
(e) At the times specified in Section 13, all indemnities
owing under Section 13.
27
Trinity Company Agreement
(f) On the Purchase Closing Date, if such date of payment is
other than a Payment Date, an amount equal to all accrued and unpaid
Additional Financing Costs and Transaction Costs that are then payable
pursuant to Section 4.12(a).
7.2. Distributions. Except as otherwise provided in Section
12, after making any payments pursuant to Section 7.1 and Section 7.3 and paying
all Trinity Expenses, in each case then due and payable, all remaining cash
shall be Distributed by Trinity on the Payment Date next succeeding the last day
of each Payment Period to the Trinity Class A Member.
7.3. Mandatory Retirement of the Class B Membership Interest.
Trinity shall Distribute to the Trinity Class B Member, as a Distribution of
Capital, immediately upon the receipt of any payments or prepayments of the
principal amount of any Advance (whether at scheduled maturity, on prepayment,
acceleration, setoff or otherwise) or the proceeds of the sale of any Advance
(or any interest therein) 100% of the principal amount of such payment or
prepayment, until the Capital Account of the Trinity Class B Member is reduced
to zero.
7.4. Admission and Withdrawal of Trinity Class B Member. If
any retirement or liquidating distribution would result in the Capital Account
of the Trinity Class B Member being reduced to zero, or if El Paso or its
designee purchases in full the Trinity Class B Membership Interest pursuant to
an exercise of the Purchase Option, upon such retirement or purchase and the
payment in full of all amounts due and owing to the Trinity Class B Member by El
Paso or Trinity or any Affiliate thereof the following shall occur in the
following order: first, the Trinity Class A Member shall admit a Person selected
by the Trinity Class A Member to be the Trinity Class B Member and second, Red
River shall be deemed to withdraw as the Trinity Class B Member. Such admission
shall not affect the allocations, distributions or the rights of the withdrawing
Trinity Class B Member through the date of such withdrawal. Following such
admission, Red River shall be deemed to have withdrawn from Trinity. This
Section 7.4 shall not apply to a Trinity Class B Member admitted under this
Section 7.4.
7.5. Making of Payments, Etc. All payments to the Trinity
Members pursuant to any provision of this Agreement shall be made in immediately
available funds no later than 12:00 noon (New York City time) on the day of such
payment, and, at the time of the making of any such payment, the Trinity Class A
Member shall provide (or shall cause the Trinity Custodian to provide) to the
Trinity Class B Member and the Administrator a notice identifying the nature of
such payment, the Section or Sections of this Agreement pursuant to which it is
being made and the amount being distributed or paid pursuant to each such
Section. The Trinity Class A Member or, after the Liquidation Start Date, the
Trinity Liquidator, shall notify the Trinity Custodian of the amount of each
such payment hereunder, the calculation thereof, in reasonable detail, and the
Section of this Agreement pursuant to which such payment is to be made no later
than 12:00 noon (Wilmington, Delaware time) on the second Business Day prior to
any such payment pursuant to Section 7.1(a) and to the extent practicable with
respect to each other payment under Sections 7.1, 7.2 and 7.3.
7.6. Payment Reports. Trinity shall prepare and furnish to
each Trinity Member not later than 45 days after the date on which any payment
to a Trinity Member is made after the Liquidation Start Date that reduces a
Trinity Member's Capital Account to zero or less:
28
Trinity Company Agreement
(a) a ▇▇▇▇-to-Market Schedule as of immediately prior to the
making of such payment;
(b) a statement of the Trinity Members' Capital Accounts and
the Unrecovered Capital of the Trinity Class B Member as of immediately
prior to the making of such payment; and
(c) a certificate of the Trinity Class A Member that such
statements have been prepared in accordance with this Agreement.
7.7. Determination of the Preferred Payment. (a) Certain
Notices. The Trinity Class B Member shall notify the Trinity Class A Member on
behalf of Trinity and on behalf of the Sponsor Subsidiaries (which shall be
deemed notice under Section 2.03(b) of the Sponsor Subsidiary Credit Agreement),
(x) three Business Days prior to the Payment Date for each Payment Period (in
respect of any payments to be made under Section 7.1(a) and (y) no later than
10:00 am (New York City time) on the date of any other payment under Section
7.1, 7.2 or 7.3, (i) of the Funding Rate applicable to such Payment Period (or
portion thereof) and (ii) whether the Notified Amount used in the calculation of
such Funding Rate was based on the CXC Rate or the Purchaser Rate, or if
applicable, both. The Notified Amount shall initially be based on the CXC Rate.
Each determination by the Trinity Class B Member of the Funding Rate, Notified
Amount, Equity Amount and Fee Amount hereunder shall be conclusive and binding
for all purposes, absent manifest error, and shall be accompanied by such
supporting documentation as to the determination of the Funding Rate, Notified
Amount, Equity Amount and Fee Amount as the Trinity Class A Member and the
Sponsor Subsidiaries may reasonably request.
(b) Computation. The Preferred Payment for any Payment Period
(or portion thereof) shall be computed by the Trinity Class A Member or, if the
Liquidation Start Date has occurred, the Trinity Liquidator, based upon the
information provided by the Trinity Class B Member pursuant to clause (a) above,
and on the basis of a year having 360 days and for the actual days elapsed
(including the first day but excluding the last day) occurring in the related
Payment Period (or portion thereof). The Trinity Class A Member or the Trinity
Liquidator, as the case may be, shall notify the Trinity Custodian of the amount
of such Preferred Payment on a timely basis consistent with the Trinity Custody
Agreement.
SECTION 8
ACCOUNTING; BOOKS AND RECORDS; REPORTS
8.1. Accounting; Books and Records. (a) Maintenance. Trinity
shall maintain at its principal place of business or, upon notice to the Trinity
Members, at such other place within the United States as the Trinity Class A
Member shall determine, separate books of account for Trinity, which shall
include a record of all costs and expenses incurred, all charges made, all
credits made and received, and all income derived in connection with the conduct
of Trinity and the operation of its business in accordance with this Agreement.
29
Trinity Company Agreement
(b) Accounting Methods. The accounts of Trinity shall be
prepared in accordance with GAAP.
(c) Access to Books, Records, Etc. Any Trinity Member or any
agents or representatives of such Trinity Member, at Trinity's expense, may
visit and inspect any of the properties of Trinity and examine any information
it may reasonably request from Trinity financial and operating records and books
of account of Trinity, and discuss the affairs, finances and accounts of Trinity
with the Trinity Class A Member and the officers of the Trinity Class A Member,
all at such reasonable times (i.e., during normal business hours, at reasonable
intervals and upon reasonable notice) and, other than during the continuance of
any Incipient Event, Event of Default, Notice Event, Termination Event or
Liquidating Event, at such reasonable intervals as such Trinity Member or any
agents or representatives of such Trinity Member may reasonably request for
purposes related to this Agreement. In addition, any Trinity Member may discuss
the affairs, finances and accounts of Trinity with the independent accountants
of Trinity at reasonable intervals and with the knowledge of the Trinity Class A
Member where feasible. The rights granted to a Trinity Member pursuant to this
Section 8.1(c) are expressly subject to compliance by such Trinity Member with
the reasonable confidentiality procedures and guidelines of Trinity, as such
procedures and guidelines may be established by the Trinity Class A Member in
its reasonable judgment from time to time.
8.2. Tax Matters. (a) Company Reporting. All returns filed by
Trinity in respect of Federal, state and local income taxes shall be filed on
the basis that Trinity is a partnership for Federal, state and local income tax
purposes unless otherwise (i) required by Applicable Law, or (ii) unanimously
agreed by all Trinity Members. The Trinity Members shall take all steps pursuant
to Applicable Law in order to achieve partnership classification for Trinity for
Federal, state and local income tax purposes and, in this connection, the
Trinity Class B Member will join in the making of any election requested in good
faith by the Trinity Class A Member in furtherance of this objective; provided
that any such election could not reasonably be expected to reduce the amount or
change the timing, treatment, or character, of the receipts of any payments
expected to be received by the Trinity Class B Member.
(b) Tax Matters Member. The Trinity Class A Member is
authorized, in the case of material elections with the consent of the Trinity
Class B Member, not to be unreasonably withheld, to make any and all elections
for Federal, state, and local tax purposes. The Trinity Class A Member is
authorized, to the extent provided in Code Sections 6221 through 6231, to
represent Trinity and the Trinity Members before taxing authorities or courts of
competent jurisdiction in tax matters affecting Trinity or the Trinity Members
in their capacities as Trinity Members, and to file any tax returns and execute
any agreements or other documents relating to or affecting such tax matters,
including agreements or other documents that bind the Trinity Members with
respect to such tax matters or otherwise affect the rights of Trinity and the
Trinity Members. The Trinity Class A Member is specifically authorized to act as
the "Tax Matters Member" under the Code and in any similar capacity under
Applicable Law. Notwithstanding the generality of the foregoing, the Tax Matters
Member shall make regular and current reports to the Trinity Class B Member on
the status of all representations of Trinity and the Trinity Members before
taxing authorities and courts of competent jurisdiction. The Tax Matters Member
shall provide to the Trinity Class B Member copies of all material notices,
correspondence and other written materials received from or sent to the taxing
authorities of
30
Trinity Company Agreement
Trinity. Furthermore, without the prior written consent of the Trinity Class B
Member (which consent shall not be unreasonably withheld), the Tax Matters
Member may not enter into any agreements or documents that would affect the
amount, timing, treatment or character of any items of income, gain, loss,
deduction or credit allocated to, or otherwise realized by, the Trinity Class B
Member.
(c) Tax Information. Necessary tax information shall be
delivered to each Trinity Member as soon as practicable after the end of each
Fiscal Year of Trinity but not later than 120 days after the end of each such
Fiscal Year. The Trinity Class A Member shall file tax returns for Trinity
prepared in accordance with the Code and the Regulations.
(d) Partnership Treatment. Trinity and each of the Trinity
Members will treat Trinity and every Trinity Membership Interest as a
partnership and as partnership interests, respectively, for all Federal, state
and local income tax purposes, except as otherwise required by Applicable Law
and by a final judicial or administrative determination or as may be unanimously
agreed in writing by all Trinity Members.
SECTION 9
REPORTS AND INFORMATION; TRINITY OPERATING ACCOUNT
9.1. Periodic Reporting. Trinity shall furnish or cause to be
furnished to each Trinity Member the following:
(a) Annual Reports. Within 120 days after the end of each
Fiscal Year beginning with the Fiscal Year ended December 31, 1999, the
following:
(i) a Compliance Certificate, executed by a
Responsible Officer of El Paso;
(ii) for each Fiscal Year, audited balance sheets as
of the last day of such Fiscal Year and the preceding Fiscal
Year (if any) and audited income statements and statements of
cash flows for such periods and the notes associated with
each, for Trinity; and
(iii) a statement of such Trinity Member's Capital
Account balances at the end of the Fiscal Year and a statement
of the changes therein since the end of the prior Fiscal Year
(if any).
(b) Quarterly Reports. Within 60 days after the close of each
Fiscal Quarter (other than the final Fiscal Quarter of any Fiscal Year)
the following:
(i) unaudited statements of cash flows of Trinity for
such Fiscal Quarter and the notes associated therewith;
(ii) balance sheets of Trinity as of the end of such
Fiscal Quarter and for the comparable quarter of the prior
Fiscal Year (if any);
31
Trinity Company Agreement
(iii) income statements of Trinity for such Fiscal
Quarter, for the year to date ending such Fiscal Quarter and
for the comparable periods of the prior Fiscal Year (if any);
(iv) a Compliance Certificate executed by a
Responsible Officer of the Trinity Class A Member; and
(v) a certification by the Trinity Class A Member
that the statements described in Sections 9.1(b)(i) and (iii)
and the balance sheets referred to in Section 9.1(b)(ii) are
fairly stated in all material respects.
(c) Other Notices. A notice of the occurrence of any
Liquidating Event, Termination Event, Notice Event or Incipient Event
promptly, but in any event no later than three Business Days, after a
Responsible Officer of the Trinity Class A Member or El Paso has actual
knowledge of such occurrence or such event becomes generally publicly
known, and a notice setting forth details of the actions that the
Trinity Class A Member or El Paso has taken or proposes to take with
respect thereto within ten Business Days after such Responsible Officer
obtains actual knowledge of such event or after such event becomes
generally publicly known.
(d) Additional Information. Promptly following any such
request, such other information as is reasonably requested by any
Trinity Member.
9.2. Notices. (a) Trinity shall provide to each Trinity Member
(other than any Trinity Member furnishing any such information to Trinity),
promptly after receipt by Trinity, copies of any material report, statement,
notice, certificate, instrument or other information furnished to Trinity under
or with respect to the Permitted Assets (including any Redetermination Notice,
Reserve Report, draft Pool II Borrowing Base Report, final Pool II Borrowing
Base Report, and the comments of Sabine (if any) on any draft Pool II Borrowing
Base Report, in each case, furnished pursuant to Section 2.10 of the Sponsor
Subsidiary Credit Agreement and any request by Sabine to increase the Aggregate
Pool I Loan Value Amount pursuant to Section 2.12 of the Sponsor Subsidiary
Credit Agreement).
(b) Trinity shall provide to the Red River Collateral Agent
and the Agent simultaneously with delivery to the Trinity Members, copies of all
material reports, statements, notices, certificates, instruments and other
information delivered to the Trinity Members pursuant to this Section 9.
9.3. Trinity Operating Account. Trinity shall maintain the
Trinity Operating Account with the Trinity Custodian. All amounts received by
Trinity on any account whatsoever shall be deposited into the Trinity Operating
Account.
SECTION 10
TRANSFERS OF MEMBERSHIP INTERESTS
10.1. Restriction on Transfers. Except as otherwise permitted
by this Agreement, Section 7.01 of the Red River Credit Agreement and with
respect to the pledges
32
Trinity Company Agreement
described in Section 1 of the Sponsor Subsidiary Security Agreement, and any
other provision of any other Red River Loan Document, no Trinity Member shall
Transfer all or any portion of its Trinity Membership Interest; provided,
however, that the Trinity Class A Member Interest may be pledged solely in
connection with the Sponsor Subsidiary Credit Documents, and any foreclosure
thereon and Transfer thereof pursuant to such Sponsor Subsidiary Credit
Documents shall similarly be permitted hereunder, without regard to Section 10.3
hereof, and shall be deemed to satisfy Section 10.7 hereof.
10.2. Permitted Transfer -- Trinity Class B Member. Subject to
the conditions and restrictions set forth in Section 10.3, all or any portion of
the Trinity Membership Interest of the Trinity Class B Member may be Transferred
to any Person; provided that (a) any Transfer by the Trinity Class B Member must
be consented to by the Trinity Class A Member (such consent not to be
unreasonably withheld) and (b) in no event shall the total number of Trinity
Class B Members exceed one except as otherwise provided in Section 7.4.
10.3. Conditions to Permitted Transfers. Subject to Section
10.4, no Transfer shall be treated as a Permitted Transfer under Section 10.2
unless and until the following conditions are satisfied:
(a) Documentation. The transferor and transferee shall execute
and deliver to Trinity (i) such documents and instruments of conveyance
as may be necessary or appropriate in the opinion of counsel to Trinity
to effect such Transfer and to confirm the agreement of the transferee
to be bound by the provisions of this Agreement and (ii) unless the
requirement of this clause (ii) has been waived by the Required Trinity
Members, in the case of the transferee, a confidentiality agreement in
the form of Exhibit B hereto.
(b) Tax Information. The transferor and transferee shall
furnish Trinity with the transferee's taxpayer identification number,
sufficient information to determine the transferee's initial tax basis
in the Transferred Trinity Class B Membership Interests, the amount
realized by the transferor in respect of the transfer, and any other
information reasonably necessary to permit Trinity to file all required
Federal and state tax returns and other legally required information
statements or returns. Without limiting the generality of the
foregoing, Trinity shall not be required to make any Distribution
otherwise provided for in this Agreement with respect to any
Transferred Trinity Class B Membership Interests until it has received
such information.
(c) [Intentionally omitted]
(d) Securities Law Opinion. Such Transfer will be exempt from
all applicable registration requirements, including the requirements
under the Securities Act, and any applicable state securities law, and
will not violate any Applicable Laws regulating the Transfer of
securities, and, except in the case of a Transfer of Trinity Class B
Membership Interests to another Member or to a Wholly Owned Affiliate
of the transferor or of any other Member or, unless waived by the
Required Trinity Members, the transferor shall provide an opinion of
counsel to such effect. Such counsel and opinion shall be reasonably
satisfactory to the Required Trinity Members.
33
Trinity Company Agreement
(e) Investment Company Act Opinion. Such Transfer will not
cause Trinity to be deemed to be an "investment company" under the
Investment Company Act, and the transferor shall provide an opinion of
counsel to such effect, unless waived by the Required Trinity Members.
Such counsel and opinion shall be reasonably satisfactory to the
Required Trinity Members, and the Trinity Members shall provide to such
counsel any information available to the Trinity Members, as the case
may be, and relevant to such opinion.
(f) Certificates. Unless waived by the Required Trinity
Members, the transferor of the Trinity Class B Membership Interest
shall execute a Transferor Certificate and the transferee of the
Trinity Class B Membership Interest shall execute a Transferee
Certificate.
(g) Expenses. Unless the requirements of this paragraph have
been waived by the Required Trinity Members, Trinity shall be
reimbursed by the transferor and/or transferee for all Trinity Expenses
that it reasonably incurs in connection with such Transfer.
10.4. Pledge of Trinity Class B Membership Interest;
Foreclosure Transfers. (a) Nothing in this Section 10 prevents the creation of
any Lien in the Trinity Class B Membership Interest in favor of the Red River
Collateral Agent as contemplated by the Red River Loan Documents.
(b) The Trinity Class A Member hereby irrevocably consents to:
(i) any transfer or assignment of the Trinity Class B
Membership Interest to the Red River Collateral Agent in connection
with the creation of such Lien; and
(ii) any subsequent transfer or assignment of the Trinity
Class B Membership Interest to any Person consequent upon the exercise
by the Red River Collateral Agent of the security interests created
under the Red River Loan Documents (a "FORECLOSURE TRANSFER").
(c) If a Foreclosure Transfer is effected under and in
accordance with the terms of the Escrowed Document:
(i) none of the requirements of Section 10.3 shall apply to
such Foreclosure Transfer (except to the extent expressly contemplated
by Section 3 of the Escrowed Document); and
(ii) such Foreclosure Transfer shall be treated for the
purposes of this Agreement as having satisfied all of the requirements
of Section 10.7.
10.5. Prohibited Transfers. (a) Except as provided in Sections
10.1 and 10.4, any purported Transfer of a Trinity Membership Interest that is
not a Permitted Transfer shall be null and void and of no effect whatever;
provided that, if Trinity is required to recognize a Transfer that is not a
Permitted Transfer, the interest Transferred shall be strictly limited to the
transferor's rights to allocations and Distributions as provided by this
Agreement with respect to
34
Trinity Company Agreement
the Transferred Trinity Membership Interest, which allocations and Distributions
may be applied (without limiting any other legal or equitable rights of Trinity)
to satisfy any debts, obligations, or liabilities for damages that the
transferor or transferee of such Trinity Membership Interest may have to
Trinity.
(b) In the case of a Transfer or attempted Transfer of a
Trinity Membership Interest that is not a Permitted Transfer, the parties
engaging or attempting to engage in such Transfer shall indemnify and hold
harmless Trinity and the other Trinity Members from all cost, liability, and
damage that any of such indemnified Persons may incur (including incremental tax
liability and attorneys' fees and expenses) as a result of such Transfer or
attempted Transfer and efforts to enforce the indemnity granted hereby.
10.6. Rights of Unadmitted Transferees. (a) In General. A
Person who acquires a Trinity Class A Membership Interest in contravention of
Section 10.1 or a Person who acquires a Trinity Class B Membership Interest but
who is not admitted as a substituted Trinity Class B Member pursuant to Section
10.7 shall be entitled only to allocations and Distributions with respect to
such acquired Trinity Membership Interest in accordance with this Agreement, but
shall have no right to any information or accounting of the affairs of Trinity,
shall not be entitled to inspect the books or records of Trinity, and shall not
have any of the rights of a Trinity Member under the Act or this Agreement.
(b) Trinity Members. Following a Transfer to a transferee who
acquires any Trinity Membership Interest from a Trinity Member under this
Agreement but who is not admitted as a Trinity Member, the transferor shall not
cease to be a Trinity Member and shall continue to be a Trinity Member until
immediately after the time, if any, the transferee is admitted as a Trinity
Member under this Agreement.
10.7. Admission as Substituted Trinity Members. Subject to
Section 10.4, a transferee of a Trinity Membership Interest may, subject to the
other provisions of this Section 10, be admitted to Trinity as a substituted
Trinity Member only upon satisfaction of the further conditions set forth below:
(i) In the case of a transfer of the Trinity Class B
Membership Interest, the Trinity Class A Member shall consent to such
admission, which consent may not unreasonably be withheld or delayed;
(ii) The Trinity Membership Interest was acquired by means of
a Permitted Transfer;
(iii) The transferee becomes a party to this Agreement as a
Trinity Member and executes such documents and instruments as the
Trinity Members consenting to such admission may reasonably request as
may be necessary or appropriate to confirm such transferee as a Trinity
Member, including such transferee's agreement to be bound by the terms
and conditions of this Agreement;
(iv) Unless the requirements of this Section 10.7(iv) have
been waived by the Trinity Members consenting to such admission, the
transferee pays or reimburses Trinity for all reasonable legal, filing,
publication and other costs that Trinity incurs in
35
Trinity Company Agreement
connection with the admission of the transferee as a Trinity Member
with respect to the Transferred Trinity Membership Interest; and
(v) Unless the requirements of this Section 10.7(v) have been
waived by the Trinity Members consenting to such admission, if the
transferee is a partnership, limited liability company or corporation,
such transferee provides Trinity with evidence satisfactory to counsel
for Trinity that such transferee has made representations and
warranties substantially the same as those set forth in Sections
2.15(b) and (c) as of the date of the Transfer.
10.8. Distributions with Respect to Transferred Trinity
Membership Interests. Except as otherwise provided in Section 7.2, if any
Trinity Membership Interest is Transferred in compliance with the provisions of
this Section 10, all Distributions on or before the date of such Permitted
Transfer shall be made to the transferor, and all Distributions thereafter shall
be made to the transferee. Solely for purposes of making such Distributions,
Trinity shall recognize such Permitted Transfer not later than the end of the
calendar month during which it is given notice of such Permitted Transfer;
provided, however, that if Trinity is given notice of a Permitted Transfer at
least fourteen (14) days prior to the Permitted Transfer, Trinity shall
recognize such Permitted Transfer as of the date of such Permitted Transfer, and
provided further that if Trinity does not receive a notice stating the date such
Trinity Membership Interest was Transferred and such other information as the
Trinity Class A Member may reasonably require within 30 days after the end of
the Fiscal Quarter during which the Permitted Transfer occurs, all Distributions
shall be made to the Person who, according to the books and records of Trinity,
on the last day of the Fiscal Quarter during which the Permitted Transfer
occurs, was the record owner of the Trinity Membership Interest. Neither Trinity
nor any Trinity Member shall incur any liability for making Distributions in
accordance with the provisions of this Section 10.8, whether or not the Trinity
Class A Member or Trinity has knowledge of any Transfer of ownership of the
Trinity Membership Interest.
SECTION 11
POWER OF ATTORNEY
11.1. Attorney-in-Fact. Each Trinity Member hereby makes,
constitutes, and appoints the Trinity Class A Member and, effective as of the
Liquidation Start Date, the Trinity Liquidator, severally, with full power of
substitution and resubstitution, its true and lawful attorney-in-fact for it and
in its name, place, and stead and for its use and benefit, to sign, execute,
certify, acknowledge, swear to, file, publish and record (a) all certificates of
Trinity, amended name or similar certificates, and other certificates and
instruments (including counterparts of this Agreement in the form identical to
the original counterpart thereof manually executed by such Trinity Member (as
amended, restated or modified in accordance with clause (b) below)) that the
Trinity Class A Member or Trinity Liquidator may deem necessary to be filed by
Trinity under the laws of the State of Delaware or any other state or
jurisdiction in which Trinity is doing or intends to do business approved by the
Trinity Members; (b) any and all amendments, restatements or modifications to
this Agreement and the instruments described in clause (a), as now or hereafter
amended, which the Trinity Class A Member or the Trinity Liquidator may deem
necessary to effect a change or modification of Trinity in the form
36
Trinity Company Agreement
approved by the Trinity Members in accordance with the terms of this Agreement,
including amendments, restatements or modifications to reflect (i) the exercise
by any Trinity Member of any power granted to it under this Agreement, (ii) any
amendments adopted by the Trinity Members in accordance with the terms of this
Agreement, (iii) the admission of any substituted Trinity Member and (iv) the
disposition by any Trinity Member of its Trinity Membership Interest; (c) all
certificates of cancellation and other instruments that the Trinity Class A
Member or Trinity Liquidator deems necessary or appropriate to effect the
dissolution and termination of Trinity pursuant to the terms of this Agreement;
and (d) any other instrument that is now or may hereafter be required by
Applicable Law to be filed on behalf of Trinity or is deemed necessary by the
Trinity Class A Member or Trinity Liquidator to carry out fully the provisions
of this Agreement in accordance with its terms; provided that nothing in this
Section 11 shall authorize or be deemed to authorize any such attorney-in-fact
to take any action for or in the name, place or stead of any Trinity Member, or
otherwise referred to in this Section 11 with respect to any Trinity Member, to
the extent such action requires the consent of such Trinity Member pursuant to
the terms of this Agreement and such Trinity Member has not so consented. Each
Trinity Member authorizes each such attorney-in-fact to take any further action
that such attorney-in-fact shall consider necessary in connection with any of
the foregoing, hereby giving each such attorney-in-fact full power and authority
to do and perform each and every act or thing whatsoever requisite to be done in
connection with the foregoing as fully as such Trinity Member might or could do
personally, and hereby ratifying and confirming all that any such
attorney-in-fact shall lawfully do or cause to be done by virtue thereof or
hereof.
11.2. Nature of Special Power. The power of attorney granted
pursuant to this Section 11:
(a) Is a special power of attorney coupled with an interest
and is irrevocable;
(b) May be exercised by any such attorney-in-fact by listing
the Trinity Members executing any agreement, certificate, instrument,
or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Trinity Members;
and
(c) Shall survive and not be affected by the subsequent
Bankruptcy, insolvency, dissolution, or cessation of existence of a
Trinity Member and shall survive the delivery of a permitted assignment
by a Trinity Member of the whole or a portion of its Trinity Membership
Interest (except that where the assignment is of all of such Trinity
Member's Membership Interest in Trinity and the assignee, with the
consent of the Required Trinity Members, is admitted as a substituted
Member, the power of attorney shall survive the delivery of such
assignment for the sole purpose of enabling any such attorney-in-fact
to effect such substitution) and shall extend to such Member's or
assignee's successors and assigns.
37
Trinity Company Agreement
SECTION 12
DISSOLUTION AND WINDING UP
12.1. Liquidation. (a) Liquidating Events. Trinity shall
dissolve and commence winding up and liquidating upon, and only upon, the
occurrence of a Liquidating Event.
(b) Termination Notice. At any time on or after the occurrence
and during the continuance of any Notice Event, the Trinity Class B Member may
elect to cause such Notice Event to result in a Termination Event by delivering
to the Trinity Class A Member a notice (a "TERMINATION NOTICE") of such
election. Such Termination Notice shall be effective on the Business Day it is
delivered (unless stated to be effective on any other day after the day of
delivery) to the Trinity Class A Member (or if such delivery day or such other
day is not a Business Day, the immediately following Business Day). Any such
Termination Notice may be rescinded by the Trinity Class B Member giving such
Termination Notice prior to its effectiveness by delivery of a rescission notice
to the Trinity Class A Member.
12.2. Winding Up. (a) Distribution of Assets. Upon the
occurrence of a Liquidating Event, Trinity shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets,
and satisfying the claims of its creditors and Trinity Members, and no Trinity
Member shall take any action with respect to Trinity that is inconsistent with
the winding up of Trinity's business and affairs; provided that all covenants
contained in this Agreement and obligations provided for in this Agreement shall
continue to be fully binding upon the Trinity Members until the Trinity Property
has been distributed pursuant to this Section 12.2 and the certificate of
formation has been canceled pursuant to the Act. The Trinity Liquidator shall be
responsible for overseeing the winding up and dissolution of Trinity (including
taking any actions required by Section 12.10), shall take full account of
Trinity's liabilities and the Trinity Property, and shall cause the Trinity
Property or the proceeds from the Disposition thereof and the proceeds from the
repayment of the Advances (to the extent not setoff against distributions owing
to the Trinity Class A Member), to the extent sufficient therefor, to be applied
and distributed, to the maximum extent permitted by Applicable Law, in the
following order:
(i) First, as provided in Section 18-804(a)(1) of the Act; and
(ii) Second, the balance, if any, to the Trinity Members in an
amount equal to their Capital Account balances (in the case of the
Trinity Class A Member, as reduced by any setoff against amounts owing
by the Trinity Class A Member under the Sponsor Subsidiary Credit
Agreement), after giving effect to all contributions, Distributions,
and allocations made for all periods through the end of the Liquidation
Period; provided that cash (as opposed to other property) shall be
first applied and distributed to the Trinity Class B Member and second
to the Trinity Class A Member.
(b) Reserves. In the reasonable good faith discretion of the
Trinity Liquidator, with the consent of the Trinity Class B Member, a portion
(determined in the manner
38
Trinity Company Agreement
provided below) of the Distributions that would otherwise be made to the Trinity
Members pursuant to Section 12.2(a) may be:
(i) Distributed to a trust established for the benefit of the
Trinity Members solely for the purposes of liquidating Trinity
Property, collecting amounts owed to Trinity, and paying any reasonably
anticipated contingent or unforeseen liabilities or obligations of
Trinity arising out of or in connection with Trinity. The assets of any
such trust shall be distributed to the Trinity Members from time to
time, in the reasonable good faith discretion of the Trinity
Liquidator, in the same proportions (as determined below) as the amount
distributed to such trust by Trinity would otherwise have been
distributed to the Trinity Members pursuant to Section 12.2(a); or
(ii) Withheld to provide a reasonable reserve for reasonably
anticipated Trinity liabilities (contingent or otherwise) and to allow
for the collection of the unrealized portion of any installment
obligations owed to Trinity; provided that such withheld amounts shall
be distributed to the Trinity Members as soon as practicable.
The portion of the Distributions that would otherwise have been made to each of
the Trinity Members that is instead distributed to a trust pursuant to Section
12.2(b)(i) or withheld to provide a reserve pursuant to Section 12.2(b)(ii)
shall be determined in the same manner as the expense or deduction that would
have been allocated if Trinity had realized an expense equal to such amounts
immediately prior to a Distribution being made pursuant to Section 12.2(a).
12.3. No Restoration of Deficit Capital Accounts.
Notwithstanding anything in this Agreement to the contrary, if a Liquidating
Event has occurred and Trinity is wound up in accordance with Section 12.2, no
Trinity Member shall be obligated to make any Capital Contributions to Trinity
in respect of a deficit balance in its Capital Account, and such deficit shall
not be considered to be a debt owed to Trinity or to any other Person for any
purpose whatsoever; provided, however, that the Trinity Class A Member shall be
obligated to make such a Capital Contribution in cash to the extent of any
amounts required to be contributed by the Trinity Class A Member pursuant to
Section 5.3 that have not yet been contributed.
12.4. [Intentionally Omitted]
12.5. Rights of Members. Each Trinity Member shall look solely
to the Trinity Property for the return of its Capital Contribution and, except
as otherwise provided in Section 12.11, shall have no right or power to demand
or receive property other than cash from Trinity.
12.6. Occurrence of Liquidating Event. (a) A "LIQUIDATING
EVENT" will occur (the date of such occurrence being the "LIQUIDATION START
DATE") on the first Business Day occurring immediately after the expiration of
the Purchase Option Period following the occurrence of a Termination Event.
(b) The Trinity Members hereby agree that Trinity shall not be
dissolved or required to be wound up notwithstanding the occurrence of an event
that caused the last Trinity Member to cease to be a Trinity Member, if within
ninety (90) days after such event the Personal Representative (as defined in the
Act) of such last remaining Member agrees in writing to
39
Trinity Company Agreement
continue the business of Trinity and to the admission, effective as of the date
of such event, of one or more additional Trinity Members.
12.7. Allocations and Distributions During Period of
Liquidation. During the Liquidation Period, the Trinity Members shall continue
to share Profits, Losses and other items of Trinity income, gain, loss or
deduction in the manner provided in Section 6 and Preferred Payments,
Distributions and other payments shall continue to be made as set forth in
Section 7. In addition, the Trinity Liquidator, in its sole discretion, may make
cash Distributions to the Class B Member at any time.
12.8. Character of Liquidating Distributions. All payments
made in liquidation of Trinity Interests shall be made in exchange for the
interest of such Trinity Member in Trinity Property pursuant to Section
736(b)(1) of the Code, including the interest of such Trinity Member in Trinity
goodwill.
12.9. The Trinity Liquidator. (a) Definition. The "TRINITY
LIQUIDATOR" shall mean (a) in the event that a liquidation of Trinity results
from a Termination Event described in clauses (a) or (d) of the definition of
Termination Event, the Trinity Class A Member or any other Affiliate of El Paso
appointed as Trinity Liquidator by the Trinity Class A Member; provided,
however, that, if the Collection Date does not occur within 180 days after the
Liquidation Start Date, then the Trinity Liquidator shall be appointed by the
Trinity Class B Member upon written notice to the Trinity Class A Member and (b)
in any other circumstance, the Trinity Custodian or any other Person appointed
as Trinity Liquidator by the Trinity Class B Member.
The Trinity Class B Member (or the Trinity Class A Member if
it may then appoint the Trinity Liquidator) may appoint an appointee to be
Trinity Liquidator prior to the Liquidation Start Date by delivering written
notice of such appointment to the other Trinity Members. Any such appointment
may be subsequently withdrawn by similar written notice.
The Trinity Liquidator shall have the rights set forth in
Section 18-803(b) of the Act and exclusively shall have the rights, power and
authority of the Trinity Class A Member necessary or appropriate in its
discretion to effect the dissolution, winding up and liquidation of Trinity. In
furtherance of the foregoing and not as a limitation, the Trinity Liquidator
shall have the authority to enter into any agreement or incur obligations on
behalf of Trinity to the extent necessary, in its sole judgment, to facilitate
the liquidation of Trinity and the marshalling or collection of its assets,
including, without limitation, the authority to engage sales agents or other
professional advisors on market terms. The actions of the Trinity Liquidator
shall for all purposes be the actions of Trinity.
(b) Fees and Expenses. Trinity is authorized to pay a
reasonable fee to the Trinity Liquidator for its services performed pursuant to
this Section 12 and to reimburse the Trinity Liquidator for its reasonable costs
and expenses incurred in performing those services, including costs and expenses
of counsel, accountants, sales agents and other professional advisors to the
Trinity Liquidator.
40
Trinity Company Agreement
(c) Resignation of Trinity Liquidator. At any time any Trinity
Liquidator may, in its discretion, resign as Trinity Liquidator and the Trinity
Class B Member (or the Trinity Class A Member if it may then appoint the Trinity
Liquidator) shall appoint a replacement Trinity Liquidator pursuant to Section
12.9(a).
(d) Notification to the Trinity Custodian. The Trinity Class B
Member shall notify the Trinity Custodian of the identity of the Trinity
Liquidator and any change in the identity of the Trinity Liquidator.
12.10. Liquidation Procedures. Upon the occurrence of the
Liquidation Start Date, the Trinity Liquidator shall commence the winding up of
Trinity's business and in so doing shall, among other things, cause the
following to occur:
(a) Demand under the Advances. The Trinity Liquidator shall
accelerate and demand payment in full under the Advances and take all
necessary action in furtherance thereof and to enforce such payment
including exercising any right of setoff of amounts owing under the
Advances against Distributions owing to the Trinity Class A Member.
(b) Sale of Trinity Property. The Trinity Liquidator shall
commence the sale and/or liquidation of the Trinity Property. Trinity
shall comply with all Applicable Laws and all applicable transfer
restrictions, except to the extent that such transfer restrictions
shall be waived or any transfer shall be consented to by any relevant
parties. The Trinity Liquidator shall sell and/or liquidate the Trinity
Property in a commercially reasonable manner in order to maximize the
proceeds of such sale and/or liquidation. With respect to the Trinity
Property consisting of any obligation owing to Trinity under the
Sponsor Subsidiary Credit Documents, no such obligation shall be
disposed of until 90 days after the Liquidation Start Date.
(c) Reporting Requirement. As soon as practicable but in any
event not later than the fifth Business Day after the Liquidation Start
Date, the Trinity Class A Member shall instruct the Trinity Custodian
to prepare and deliver to the Trinity Class B Member a notice stating:
(i) the amount of cash held by the Trinity Custodian (including any
cash received upon demand under the Sponsor Subsidiary Credit Agreement
and from the sale of any Trinity Property) and (ii) the face value less
unamortized discount, if any, of any Cash Equivalents (other than cash)
held by the Trinity Custodian.
(d) Audit Report. If, following completion of the Liquidation
Period, the Unrecovered Capital of the Trinity Class B Member is
greater than zero, then not later than 120 days after the last day of
the Liquidation Period, the Trinity Class A Member shall cause to be
delivered to each Trinity Member an audited statement of the Trinity
Members' Capital Accounts and a balance sheet reflecting ▇▇▇▇-to-Market
Values of the Trinity Property, each as of such last day, together with
a report of a nationally recognized accounting firm stating that such
statement and balance sheet were prepared and fairly stated in
accordance with this Agreement.
(e) Liquidating Distributions. All Distributions to be made
pursuant to Section 12.2 shall be made by the Trinity Liquidator from
time to time immediately upon
41
Trinity Company Agreement
receipt of any proceeds of the liquidation of Trinity Property, but in
any event not later than the last day of the Liquidation Period. Any
Distribution to the Trinity Class A Member shall be subject to any and
all rights to set off by Trinity pursuant to Section 14.4(b).
(f) Discretion to Sell. Except to the extent otherwise
expressly provided herein, the Trinity Liquidator shall have the
discretion to Dispose of Trinity Property in any manner in its sole
discretion.
12.11. Form of Liquidating Distributions to Trinity Members.
For purposes of making Distributions required by Section 12.2, the Trinity
Liquidator may determine whether to distribute to the Trinity Members all or any
portion of the Trinity Property in kind or to sell or otherwise liquidate all or
any portion of the Trinity Property and distribute the proceeds therefrom;
provided that the Trinity Liquidator shall not, without the prior written
consent of the Trinity Class B Member, distribute Trinity Property other than
cash to the Trinity Class B Member. Following the payment in full in cash of all
amounts due and payable to the Trinity Class B Member hereunder, and if
requested by the Trinity Class A Member, Distributions in kind of the Trinity
Property shall be made to the Trinity Class A Member.
SECTION 13
INDEMNIFICATION
13.1. Indemnification of the Trinity Members. Subject to the
limitations set forth in Section 13.5, each of the Trinity Class A Member and
Trinity hereby agrees jointly and severally, to the fullest extent permitted by
Applicable Law, (i) to indemnify and hold harmless, and the Trinity Liquidator,
or any receiver or trustee of Trinity (each of the foregoing Persons being an
"INDEMNITOR") (in the case of the Trinity Liquidator, receiver or trustee, to
the extent of Trinity Property) shall indemnify and hold harmless, each
Indemnified Person from and against, and (ii) to pay on an After-Tax Basis, all
Expenses (the Expenses, on an After-Tax Basis, being collectively referred to as
"INDEMNIFIED AMOUNTS") that may be incurred or realized by or asserted against
such Indemnified Person, relating to, growing out of or resulting from:
(a) Trinity Obligations. Any failure by Trinity to perform or
observe each of its covenants and obligations under this Agreement or
any other Operative Document to which it is a party (collectively, the
"COVERED DOCUMENTS"), including Indemnified Amounts resulting from or
arising out of or in connection with enforcement of the Covered
Documents (or determining whether or how to enforce any Covered
Documents, whether through negotiations, legal proceedings or
otherwise), or responding to any subpoena or other legal process or
informal investigative demand in connection herewith or therewith; or
(b) Representations and Warranties. Any inaccuracy in, or any
breach of, any written certification, representation or warranty made
by or on behalf of Trinity in any Covered Document or in any written
report or certification required hereunder or under any other Covered
Document, in each case (i) if but only if such certification,
representation or warranty is made as of a specific date, as of the
date as of which the
42
Trinity Company Agreement
facts stated therein were certified, represented or warranted and (ii)
in all other cases, as of any date or during any period to which such
certification, representation or warranty may be applicable; or
(c) Investigations; Litigation; Proceedings. Any
investigation, litigation or proceeding, whether or not such
Indemnified Person is a party thereto, that (i) relates to, grows out
of or results from any action or omission, or alleged action or
omission, by or on behalf of or attributable to Trinity and (ii) would
not have resulted in Indemnified Amounts incurred or realized by or
asserted against such Indemnified Person but for the Operative
Documents or the transactions thereunder or contemplated thereby.
13.2. Indemnification for Business Qualification Requirements.
Subject to the limitations set forth in Section 13.5, each Indemnitor shall
indemnify and save harmless (in the case of a receiver or trustee, to the extent
of Trinity Property) each Indemnified Person from and against, and pay to each
Indemnified Person, all Indemnified Amounts with respect to such Indemnified
Person resulting from the failure of the Trinity Class B Member or any other
Indemnified Person to qualify to do business in any state (other than Delaware)
or other jurisdiction in which the Trinity Class B Member or a direct or
indirect member, partner, shareholder or other equity holder of the Trinity
Class B Member would not be required to qualify to do business but for its being
a Trinity Class B Member, or a direct or indirect member, partner, shareholder
or other equity holder of the Trinity Class B Member.
13.3. Trinity Liquidator Indemnification. Subject to the
limitations set forth in Section 13.5, Trinity, or in the event that the
liquidation of Trinity has been completed, the Trinity Class A Member, shall
indemnify and save harmless each Indemnified Person from and against, and pay to
each Indemnified Person, all Indemnified Amounts incurred on behalf of Trinity
by each Indemnified Person or otherwise incurred, realized by or asserted
against each Indemnified Person, in connection with any Disposition of Trinity
Property or the liquidation of Trinity, or by reason of any act performed or
omitted to be performed by any Indemnified Person in connection therewith,
including reasonable attorneys' fees incurred by each Indemnified Person in
connection with the defense of any litigation or other proceeding based on any
such act or omission, or alleged act or omission, or any other investigation,
litigation or proceeding, whether or not such Indemnified Person is a party
thereto, arising in connection with any such Disposition or liquidation, and
including any indemnity claims against the Trinity Liquidator arising under
Section 13.1.
13.4. Survival of Indemnification Obligations. All indemnities
provided for in this Agreement shall survive the Transfer of any Trinity
Membership Interest and the liquidation of Trinity. After any such Transfer or
liquidation, the provisions of this Section 13 shall inure to the benefit of
each Transferring Member with respect to Indemnified Amounts arising in respect
of the period during which such Transferring Member was a Trinity Member
(including with respect to actions taken or omitted to be taken, and events
occurring and circumstances existing, during such period).
13.5. Limitations on Indemnification Obligations. The
indemnities provided in Sections 13.1, 13.2 and 13.3 shall be subject to the
following limitations:
43
Trinity Company Agreement
(a) Limitation by Law. Such sections shall be enforced only to
the maximum extent permitted by Applicable Law.
(b) Misconduct, Etc. No Indemnified Person shall be
indemnified or held harmless for, and no Indemnitor shall have any
liability with respect to any Indemnified Person for or in respect of,
any Expenses to the extent caused by or resulting from (i) the actual
fraud, willful misconduct, bad faith or gross negligence of such
Indemnified Person or any of its Related Persons or (ii) any inaccuracy
in, or breach of, any written certification, representation or warranty
made by such Indemnified Person or any of its Related Persons in any
Operative Document or in any written report or certification required
under any Operative Document (unless and to the extent such inaccuracy
or breach is attributable to any written information provided by El
Paso or its Affiliates), in each case under this clause (ii) (A) if,
but only if, such certification, representation or warranty is made as
of a specific date, as of the date as of which the facts stated therein
were certified, represented or warranted and (B) in all other cases, as
of any date or during any period to which such certification,
representation or warranty may be applicable.
(c) No Duplication. Indemnified Amounts under this Section 13
shall be without duplication of any amounts payable under
indemnification provisions of any other Operative Document or other
agreement or any amounts actually paid thereunder.
13.6. Payments; No Reduction of Capital Account. Any amounts
subject to the indemnification provisions of this Section 13 shall be paid by
the applicable Indemnitor within ten Business Days following demand therefor,
accompanied, as may be appropriate in the context, by supporting documentation
in reasonable detail. Payments to a Trinity Member pursuant to this Section 13
shall not reduce the Capital Account of such Trinity Member. To the extent
Trinity is required to indemnify any Indemnified Person hereunder, each such
Indemnified Person shall be a creditor of Trinity to the extent of the
Indemnified Amounts owing to such Indemnified Person hereunder from time to
time. Payment shall be made to the bank account or at another location as such
Indemnified Person shall designate in writing or as is expressly required under
any Operative Document the obligations under which are the subject of any such
payment, not later than 1:00 p.m. (New York City time) on the date for such
payment in immediately available funds.
13.7. Procedural Requirements. (a) Notice of Claims. Any
Indemnified Person that proposes to assert a right to be indemnified under this
Section 13 will, promptly after receipt of notice of commencement of any action,
suit or proceeding against such Indemnified Person in respect of which a claim
is to be made against the relevant Indemnitor under this Section 13 (an
"INDEMNIFIED PROCEEDING"), or the incurrence or realization of Indemnified
Amounts in respect of which a claim is to be made against such Indemnitor under
this Section 13, notify such Indemnitor of the commencement of such Indemnified
Proceeding or of such incurrence or realization, enclosing a copy of all
relevant documents, including all papers served and claims made, but the
omission so to notify such Indemnitor promptly of any such Indemnified
Proceeding or incurrence or realization shall not relieve (i) such Indemnitor
from any liability that it may have to such Indemnified Person under this
Section 13 or otherwise, except, as to such Indemnitor's liability under this
Section 13, to the extent, but only to the extent, that such
44
Trinity Company Agreement
Indemnitor shall have been prejudiced by such omission or (ii) any other
indemnitor from liability that it may have to any Indemnified Person under the
Operative Documents.
(b) Defense of Proceedings. In case any Indemnified Proceeding
shall be brought against any Indemnified Person and it shall notify the relevant
Indemnitor of the commencement thereof, such Indemnitor shall be entitled to
participate in, and to assume the defense of, such Indemnified Proceeding with
counsel reasonably satisfactory to such Indemnified Person, and after notice
from such Indemnitor to such Indemnified Person of such Indemnitor's election so
to assume the defense thereof and the failure by such Indemnified Person to
object to such counsel within ten Business Days following its receipt of such
notice, such Indemnitor shall not be liable to such Indemnified Person for legal
or other expenses incurred after such notice of election to assume such defense
except as provided below and except for the reasonable costs of investigating,
monitoring or cooperating in such defense subsequently incurred by such
Indemnified Person reasonably necessary in connection with the defense thereof.
Such Indemnified Person shall have the right to employ its counsel in any such
Indemnified Proceeding, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless:
(i) the employment of counsel by such Indemnified Person at
the expense of such Indemnitor has been authorized in writing by such
Indemnitor (which authorization shall not be unreasonably withheld or
delayed);
(ii) such Indemnified Person shall have reasonably concluded
in its good faith (which conclusion shall be determinative unless a
court determines that conclusion was not reached reasonably and in good
faith) that there is or may be a conflict of interest between such
Indemnitor and such Indemnified Person in the conduct of the defense of
such Indemnified Proceeding or that there are or may be one or more
different or additional defenses, claims, counterclaims, or causes of
action available to such Indemnified Person (it being agreed that in
any case referred to in this clause (ii) such Indemnitor shall not have
the right to direct the defense of such Indemnified Proceeding on
behalf of the Indemnified Person);
(iii) such Indemnitor shall not have employed ▇▇▇▇▇, Day,
▇▇▇▇▇▇ & ▇▇▇▇▇, or other counsel reasonably acceptable to the
Indemnified Person, to assume the defense of such Indemnified
Proceeding within a reasonable time after notice of the commencement
thereof (provided, however, that this clause (iii) shall not constitute
a waiver of any conflict of interest which may arise with respect to
any such counsel); or
(iv) any counsel employed by such Indemnitor shall fail to
timely commence or maintain the defense of such Indemnified Proceeding,
in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of such Indemnitor; provided that without the
prior written consent of such Indemnified Person, such Indemnitor shall not
settle or compromise, or consent to the entry of any judgment in, any pending or
threatened Indemnified Proceeding, unless such settlement, compromise or consent
or related judgment includes an unconditional release of such Indemnified Person
from all liability for Expenses arising out of such claim, action,
45
Trinity Company Agreement
investigation, suit or other legal proceeding. No Indemnified Person shall
settle or compromise, or consent to the entry of any judgment in, any pending or
threatened Indemnified Proceeding in respect of which any payment would result
hereunder or under the other Operative Documents without the prior written
consent of such Indemnitor, such consent not to be unreasonably withheld or
delayed. Only one counsel shall be retained by all Indemnified Persons with
respect to any Indemnified Proceeding, unless counsel for any Indemnified Person
reasonably concludes in good faith (which conclusion shall be determinative
unless a court determines that conclusion was not reached reasonably and in good
faith) that there is or may be a conflict of interest between such Indemnified
Person and one or more other Indemnified Persons in the conduct of the defense
of such Indemnified Proceeding or that there are or may be one or more different
or additional defenses, claims, counterclaims, or causes of action available to
such Indemnified Person (it being agreed that in any case referred to in this
sentence such Indemnified Person may retain separate counsel together with all
other Indemnified Persons subject to the same conflict of interest or sharing
such additional defenses, claims, counterclaims or causes of action).
THE FOREGOING INDEMNITIES SHALL EXPRESSLY INCLUDE ANY INDEMNIFIED AMOUNTS
ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY INDEMNIFIED
PERSON.
SECTION 14
MISCELLANEOUS
14.1. Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing or by facsimile and shall be deemed to have been delivered, given, and
received for all purposes (a) if delivered personally to the Person or to an
officer of the Person to whom the same is directed, or (b) when the same is
actually received (if a Business Day, or, if not, on the next succeeding
Business Day), if sent either by courier or delivery service or certified mail,
postage and charges prepaid, or by facsimile, if such facsimile is followed by a
hard copy of the facsimile communication sent by courier or delivery service,
certified mail, postage and charges prepaid, addressed as follows, or to such
other address as such Person may from time to time specify by notice to the
Trinity Members:
(i) If to Trinity, to the address set forth in the first
sentence of Section 2.7, with copies sent to the Trinity Class A Member
at the address set forth in Section 2.2; and
(ii) If to a Trinity Member, to the address set forth in
Section 2.2.
14.2. Binding Effect. Except as otherwise provided in this
Agreement, every covenant, term and provision of this Agreement shall be binding
upon the Trinity Members and inure to the benefit of the Trinity Members and
each Indemnified Person and their respective permitted successors, transferees,
and assigns (including any assignee for security purposes or Person holding a
security interest). This Agreement and the rights and obligations hereunder may
not be assigned to any Person other than a Permitted Transferee, without the
prior written consent of the Required Trinity Members.
46
Trinity Company Agreement
14.3. Severability. Except as otherwise provided in the
succeeding sentence, every provision of this Agreement is intended to be
severable, and, if any term or provision of this Agreement is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement. The preceding sentence
of this Section shall be of no force or effect if the consequence of enforcing
the remainder of this Agreement without such illegal or invalid term or
provision would be to cause any Trinity Member to lose the benefit of its
economic bargain.
14.4. Setoff. (a) Except to the extent set forth in Sections
3.8(c) and 10.5, Trinity shall not be entitled to offset against any payments
required to be made by it hereunder any claims that it may have against any
Trinity Class B Member, and hereby waives any setoff rights that it may have in
respect of any such Trinity Class B Member.
(b) On and after the Liquidation Start Date, Trinity is hereby
authorized at any time and from time to time, to the fullest extent permitted by
Applicable Law, to setoff and otherwise apply any and all deposits (general or
special, time or demand, provisional or final) at any time held, and any and all
Distribution or liquidation payments pursuant to Section 7 or 12 of this
Agreement or other indebtedness at any time owing by Trinity to or for the
credit or the account of the Trinity Class A Member against any and all of the
obligations of the Trinity Class A Member now or hereafter existing under the
Sponsor Subsidiary Credit Agreement irrespective of whether Trinity shall have
made any demand under the Sponsor Subsidiary Credit Agreement. The rights of
Trinity under this Section 14.4(b) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) that Trinity may have
against the Trinity Class A Member.
14.5. Construction. The terms of this Agreement are intended
to embody the economic relationship among the Trinity Members and shall not be
subject to modification by or conform with any actions by any governmental
authority except as this Agreement may be explicitly so amended.
14.6. Governing Law. The internal laws of the State of
Delaware shall govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the Trinity Members.
14.7. Counterpart Execution. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
14.8. Specific Performance. Each Trinity Member agrees with
the other Trinity Members that the other Trinity Members would be irreparably
damaged if any of the provisions of this Agreement are not performed in
accordance with their specific terms and that monetary damages would not provide
an adequate remedy in such event. Accordingly, it is agreed that, in addition to
any other remedy to which the nonbreaching Trinity Members may be entitled, at
law or in equity, the nonbreaching Trinity Members shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and
specifically to enforce the terms and provisions
47
Trinity Company Agreement
of this Agreement in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction thereof.
14.9. Amendments. Amendments, restatements and corrections to,
and waivers of any provisions of, and cancellation of, this Agreement may be
proposed by any Trinity Member by notice to Trinity and each other Member.
Following such proposal, the Trinity Class A Member on behalf of Trinity shall
submit to the Trinity Members a verbatim statement of any proposed amendment,
restatement, correction, waiver, or cancellation and shall seek the written vote
of the Trinity Members thereon or shall call a meeting to vote thereon and to
transact any other business that it may deem appropriate. A proposed amendment,
restatement, correction, waiver, or cancellation shall be adopted and be
effective as an amendment, restatement, correction, waiver, or cancellation of
this Agreement only if such amendment, restatement, correction, waiver, or
cancellation receives the affirmative vote of all the Trinity Members.
14.10. WAIVER OF JURY TRIAL. EACH TRINITY MEMBER HEREBY
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
14.11. Consent to Jurisdiction and Service of Process. The
parties hereto hereby (a) consent to the non-exclusive jurisdiction of (i) the
courts of the State of Delaware and (ii) the United States District Court for
the District of Delaware sitting in Wilmington, Delaware and (b) and consent to
service of process delivered by certified mail addressed to the address of each
Trinity Member set forth in Section 2.2. This Section 14.11 shall not be
construed as limiting a party's ability to bring an action in any other
jurisdiction or to serve process by any other legal means. Notwithstanding the
foregoing to the contrary, to the fullest extent permitted by Applicable Law,
the parties agree that any action brought in any court of the State of Delaware
shall be brought in a court sitting in New Castle County, Delaware.
48
Trinity Company Agreement
IN WITNESS WHEREOF, the parties have entered into this Amended
and Restated Company Agreement as of the date first above set forth.
Trinity Class A Member: SABINE RIVER INVESTORS, L.L.C.
By: EL PASO RED RIVER HOLDING COMPANY,
Its Sole Member
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
Trinity Class B Member: RED RIVER INVESTORS L.L.C.
By: NUECES RIVER HOLDINGS L.L.C.,
its Managing Member
By: WHITECLAY WTC, INC., its
managing member
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Trinity Company Agreement
EXHIBIT A TO THE
TRINITY COMPANY
AGREEMENT
DEFINITIONS
"A-LOAN" means any loan made by a Sponsor Subsidiary to El Paso or
an Affiliate of El Paso evidenced by an A-Loan Note.
"A-LOAN NOTE" means (a) an A-Loan Promissory Note made by El Paso in
favor of a Sponsor Subsidiary in the form of Exhibit C-1 to the Sponsor
Subsidiary Credit Agreement and (ii) an A-Loan Promissory Note made by an
Affiliate of El Paso in favor of a Sponsor Subsidiary in the form of Exhibit C-2
to the Sponsor Subsidiary Credit Agreement.
"ACCEPTABLE CREDIT ENHANCEMENT" means, with respect to the
obligations of any Person under a Hedge Agreement permitted under Section
5.09(b)(iii) of the Sponsor Subsidiary Agreement, (a) a letter of credit
supporting such obligations from a bank or other financial institution having,
at all times during the term of such Hedge Agreement, an Acceptable Rating,
(b)(i) a guarantee of such obligations from any Person having, at all times
during the term of such Hedge Agreement, an Acceptable Rating or (ii) a
guarantee of such obligations from any Parent of such Person supported by a
perfected, first priority security interest in cash or cash equivalents pledged
by such Parent to support the obligations under such guarantee, (c) a surety
bond supporting such obligations issued by an institutional surety having, at
all times during the term of such Hedge Agreement, an Acceptable Rating, or (d)
a perfected, first priority security interest in cash or cash equivalents
pledged by such Person or any Parent of such Person or by any other Person that
has, at all times during the term of such Hedge Agreement, an Acceptable Rating,
to support such obligations. For the purposes of this definition, a Person is a
"PARENT" of another Person if such other Person is a Subsidiary of the first
Person.
"ACCEPTABLE DEBT RATING" means, with respect to the senior unsecured
long-term debt of any Person, a published or implied rating of at least (a) BBB
by S&P, (b) Baa3 by ▇▇▇▇▇'▇ or (c) an equivalent investment grade rating by any
other Acceptable Rating Agency.
"ACCEPTABLE RATING" means, with respect to the senior unsecured
long-term debt of any Person, (a) if such debt of such Person is rated by both
S&P and ▇▇▇▇▇'▇, an Acceptable Debt Rating from each of S&P and ▇▇▇▇▇'▇ and (b)
if such debt of such Person is not rated by both S&P and ▇▇▇▇▇'▇, an Acceptable
Debt Rating from any Acceptable Rating Agency.
"ACCEPTABLE RATING AGENCY" means S&P, ▇▇▇▇▇'▇, Fitch and Dominion
Bond Rating Service, and any other domestic or foreign statistical rating agency
acceptable to Trinity, Red River, the Agent, the Equity Investors, and the
Lender.
"ACQUISITION/ACCESSION DATE" has the meaning set forth in Section
9.02(d) of the Sponsor Subsidiary Credit Agreement.
"ACQUISITION/ACCESSION NOTICE" means a notice in substantially the
form of Exhibit 9.02 - 1 to the Sponsor Subsidiary Credit Agreement.
"ACT" means the Delaware Limited Liability Company Act of 1992, and
any successor statute, as the same may be amended from time to time.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-2
"ADDITIONAL FINANCING COSTS" means, at any time, the "Additional
Financing Costs" under the Red River Credit Agreement at such time.
"ADDITIONAL SPONSOR SUBSIDIARY" has the meaning set forth in Section
9.02 of the Sponsor Subsidiary Credit Agreement.
"ADJUSTED BASIS" shall have the meaning set forth in Section 1011 of
the Code.
"ADJUSTED REDETERMINATION THRESHOLD" has the meaning set forth in
Section 2.10(b)(vii) of the Sponsor Subsidiary Credit Agreement.
"ADMINISTRATION AGREEMENT" has the meaning set forth in the Red
River Credit Agreement.
"ADMINISTRATOR" has the meaning set forth in the Red River Credit
Agreement.
"ADVANCE" has the meaning set forth in Section 2.01(a) of the
Sponsor Subsidiary Credit Agreement.
"AFFILIATE", when used with respect to a Person, means any other
Person that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such Person. The term
"control" (including the correlative term "controlled") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
stock, by contract, or otherwise. For the purpose of Sections 2, 5.2, 5.3, 5.4
and 5.5 of the El Paso Agreement only, neither a director nor any officer of a
Person, in such capacity, shall be deemed an "Affiliate" of such Person.
"AFTER-TAX BASIS" means, with respect to any payment to be made on
an "AFTER-TAX Basis", that such payment will be grossed-up by the payor to make
the payee whole for the net amount of additional Taxes payable as a result of
the receipt or accrual of such payment and such gross-up amount (taking into
account all available credits or deductions attributable to the payment or
accrual of such additional Taxes). In calculating the gross-up amount, the Tax
rates used shall be the highest marginal Tax rates in effect for (and payable
by) the payee (or in the case of a payee that is a pass-through entity for any
Tax purposes, the Persons who are required to take into account any items of
income, gain, loss, deduction or credit with respect to such entity) on the date
of such payment or accrual.
"AGENT" has the meaning set forth in the Red River Credit Agreement.
"AGGREGATE POOL I LOAN VALUE AMOUNT" means, at any time of
determination, subject to Section 2.12 of the Sponsor Subsidiary Credit
Agreement, an amount equal to the aggregate Pool I Loan Values of all Pool I
Contributed Investments since the First Closing Date less:
(a) the aggregate amount of all Gross Cash Proceeds received from
the Disposition of all Pre-approved Pool I Contributed Investments
pursuant to Section 5.02(d) of the Sponsor Subsidiary Credit Agreement;
(b) the aggregate amount of the Pool I Loan Values attributable to
all other Pool I Contributed Investments Disposed of pursuant to Section
5.02(d) of the Sponsor Subsidiary Credit Agreement;
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-3
(c) the aggregate amount of all Gross Cash Proceeds received from
the Disposition of all or substantially all of the assets of, or Equity
Interests in, all Pool I Intermediate Holders and Pool I Underlying
Businesses relating to Pre-approved Pool I Contributed Investments (other
than Energy Partners), as contemplated by Section 5.09(d) of the Sponsor
Subsidiary Credit Agreement; and
(d) the aggregate amount of the Pool I Loan Values attributable to
all other Pool I Contributed Investments (other than Pool I Publicly
Traded Investments), of which all or substantially all of the assets of,
or Equity Interests in, the Pool I Intermediate Holders or Pool I
Underlying Businesses relating to such other Pool I Contributed
Investments are Disposed of pursuant to Section 5.09(d) of the Sponsor
Subsidiary Credit Agreement,
in each case since the First Closing Date.
"ALTERNATE POOL II BORROWING BASE" has the meaning set forth in
Section 2.14 of the Red River Credit Agreement.
"ALTERNATE PROGRAM" means any program providing for the sale or
other disposition of trade or other receivables entered into by El Paso or a
Subsidiary that is in addition to or in replacement of the program evidenced by
either Receivables Purchase and Sale Agreement (whether or not either
Receivables Purchase and Sale Agreement shall then be in effect); provided that
such program is on terms (a) substantially similar to either Receivables
Purchase and Sale Agreement (as modified to comply with FASB 125 or similar
policies or guidelines from time to time in effect) or (b) customary for similar
transactions as reasonably determined by the "Administrative Agent" under and as
defined in the El Paso Existing 364-Day Facility, or the El Paso Existing 3-Year
Facility.
"AMENDMENTS TO THE SPONSOR SUBSIDIARY COMPANY AGREEMENTS" shall mean
the Amendment to each of the Sponsor Subsidiary Company Agreements dated as of
March 29, 2002.
"APA PURCHASERS" has the same meaning as "Purchaser" in the Red
River Credit Agreement.
"APA PURCHASERS INFORMATION MEMORANDUM" means any information
memorandum prepared for the prospective APA Purchasers in connection with the
syndication of the commitments under the Red River Credit Agreement, together
with any amendments, supplements or exhibits thereto, including, without
limitation, the Supplement thereto dated March 2002, and any other materials or
documents prepared for the prospective APA Purchasers in connection with the
syndication of the commitments under the Red River Credit Agreement, in each
case in form and substance approved in writing by El Paso.
"APPLICABLE LAW" means any legally binding law, statute, treaty,
constitution, regulation, rule, ordinance, order or Governmental Approval, or
other legally binding governmental restriction, requirement or determination, of
or by any Governmental Authority.
"APPRAISAL" means:
(a) in the case of a Pool I Contributed Investment (other than a
Pool I Publicly Traded Investment), an appraisal by an Appraiser of the fair
market value for such Pool I Contributed Investment, the Intermediate Holder (if
any) thereof and the Underlying Business related thereto, determined as follows:
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-4
(i) the "fair market value" of such Pool I Contributed Investment
shall be the estimated amount in Dollars at which the relevant asset would
be sold in an exchange between a willing buyer and a willing seller, both
knowledgeable of the pertinent facts, neither party acting under any
compulsion to buy or sell, and with equity to both parties;
(ii) the Pool I Underlying Business related to such Pool I
Contributed Investment is valued as a going-concern;
(iii) such sale is assumed to be concluded within a reasonable
period from the date of the relevant Appraisal Event (or, in the case of
an Appraisal obtained pursuant to Section 9.02 of the Sponsor Subsidiary
Credit Agreement, the Acquisition/Accession Date) for such Pool I
Contributed Investment, Pool I Intermediate Holder and Pool I Underlying
Business taking into account the nature of such Pool I Contributed
Investment, Pool I Intermediate Holder or Pool I Underlying Business, as
the case may be; and
(iv) such valuation shall account for any FERC regulations of
general applicability that restrict or otherwise affect the Disposition of
such Pool I Contributed Investment and the nature of such Pool I
Contributed Investment and the Pool I Intermediate Holder (if any) and
Pool I Underlying Business related thereto; and
(b) in the case of a Pool I Publicly Traded Investment, the
determination by the Appraiser of the Fair Market Value of such Pool I Publicly
Traded Investment on the date of the relevant Appraisal Event.
"APPRAISAL DATE" has the meaning set forth in Section 5.07 of the
Sponsor Subsidiary Credit Agreement.
"APPRAISAL EVENT" means:
(a) with respect to any Pool I Contributed Investment that is a Pool
I Publicly Traded Investment:
(i) the date of the Acquisition/Accession Notice with respect to
such Pool I Contributed Investment;
(ii) the Acquisition Accession Date with respect to such Pool I
Contributed Investment;
(iii) the occurrence of each Coverage Test Date;
(iv) the date of Disposition of such Publicly Traded Investment; and
(v) the occurrence of any event described in either clause (j) of
the definition of Termination Event or clause (f) of the definition of El
Paso Event with respect to any Underlying Business or any Intermediate
Holder (regardless of whether such Underlying Business or Intermediate
Holder is a Principal Subsidiary); provided that, for the purposes of this
definition, the reference to $100,000,000 in clause (f) of the definition
of El Paso Event shall be deemed to be a reference to $10,000,000; and
(b) with respect to all other Pool I Contributed Investments:
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-5
(i) January 1 of each Fiscal Year;
(ii) the date of any Disposition described in Section 5.09(d)(vii)
of the Sponsor Subsidiary Credit Agreement; and
(iii) the occurrence of any event described in either clause (j) of
the definition of Termination Event or clause (f) of the definition of El
Paso Event with respect to any Underlying Business or any Intermediate
Holder (regardless of whether such Underlying Business or Intermediate
Holder is a Principal Subsidiary); provided that, for the purposes of this
definition, the reference to $100,000,000 in clause (f) of the definition
of El Paso Event shall be deemed to be a reference to $10,000,000.
"APPRAISER" means:
(a) in relation to a Pool I Contributed Investment (other than a
Pool I Publicly Traded Investment), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or another independent
professional appraiser appointed by Red River at the direction of the Agent
(with the consent of Sabine, not to be unreasonably withheld or delayed); and
(b) in relation to a Pool I Publicly Traded Investment, prior to the
Liquidation Start Date, Sabine, and on and after the Liquidation Start Date, the
Sponsor Subsidiary Liquidator of the Sponsor Subsidiary that owns such Pool I
Publicly Traded Investment.
"APPROVED HEDGE COUNTERPARTY" in relation to a Hedge Agreement
permitted under Section 5.09(b)(iii) of the Sponsor Subsidiary Credit Agreement,
means:
(a) El Paso or an Affiliate of El Paso; provided that, at the date
of such Hedge Agreement and at all times during the term of such Hedge
Agreement, El Paso or such Affiliate, as the case may be, has an
Acceptable Debt Rating from both S&P and ▇▇▇▇▇'▇;
(b) an Affiliate of El Paso; provided that, at the date of such
Hedge Agreement and at all times during the term of such Hedge Agreement,
El Paso has an Acceptable Debt Rating from both S&P and ▇▇▇▇▇'▇ and the
obligations of such Affiliate under such Hedge Agreement are supported by
a guarantee from El Paso;
(c) any other Person (i) having, at the date of such Hedge Agreement
and at all times during the term of such Hedge Agreement, an Acceptable
Rating or (ii) whose net obligations under such Hedge Agreement are, at
the date of such Hedge Agreement and at all times during the term of such
Hedge Agreement, supported by Acceptable Credit Enhancement;
(d) any recognized commodities exchange acting in a capacity as a
hedge counterparty; and
(e) as to any such Hedge Agreement entered into prior to the
consummation of the merger between El Paso and Sonat only, any Person
constituting a counterparty under such Hedge Agreement, and any extension
or renewal of any such Hedge Agreement; provided, however, that such
renewal or extension is made on substantially the same terms as the terms
of such Hedge Agreement existing on the date of consummation of such
merger.
"ASSET PURCHASE AGREEMENT" has the meaning specified in the Red
River Credit Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-6
"ASSIGNED AGREEMENTS" has the meaning set forth in the Sponsor
Subsidiary Security Agreement.
"ASSIGNED EQUITY AGREEMENTS" has the meaning set forth in the
Sponsor Subsidiary Security Agreement.
"BANKRUPTCY" means, with respect to any Person, a Voluntary
Bankruptcy or an Involuntary Bankruptcy. A "Voluntary Bankruptcy" means, with
respect to any Person: (a) (i) the inability of such Person generally to pay its
debts as such debts become due, (ii) the failure of such Person generally to pay
its debts as such debts become due or (iii) an admission in writing by such
Person of its inability to pay its debts generally or a general assignment by
such Person for the benefit of creditors; (b) the filing of any petition by such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself
any liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or its debts under any
Applicable Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its property or the
filing of an answer or other pleading admitting or failing to contest the
allegations of a petition filed against it in any proceeding of the foregoing
nature; or (c) action taken by such Person to authorize any of the actions set
forth above. An "Involuntary Bankruptcy" means, with respect to any Person,
without the consent or acquiescence of such Person, the entering of an order for
relief or approving a petition for relief or reorganization or any other
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar Applicable Law, or the filing of any such
petition against such Person, that shall not be dismissed or stayed within 60
days, or, without the consent or acquiescence of such Person, the entering of an
order appointing a trustee, custodian, receiver or liquidator of such Person or
of all or any substantial part of the property of such Person that shall not be
dismissed or stayed within 60 days. This definition is intended to supersede the
definition of Bankruptcy and similar events set forth in Section 18-304 of the
Act.
"BASE RATE" has the meaning set forth in the Red River Credit
Agreement.
"BEAR CREEK" means Bear Creek Storage Company, a Louisiana
partnership.
"BEAR CREEK CONTRACT" means the Service Agreement, dated as of June
7, 1981, between Bear Creek Storage Company, a Louisiana partnership, and
Tennessee Gas Pipeline Company, a Delaware corporation.
"BUSINESS DAY" means (a) any day of the year except Saturday, Sunday
and any day on which banks are not required or authorized by law to close in New
York, New York, Wilmington, Delaware or Houston, Texas and (b) if the applicable
Business Day relates to any day on which interest under the Sponsor Subsidiary
Credit Agreement is based on the LIBO Rate, any day that is a "Business Day"
described in clause (a) and that is also a day for trading by and between banks
in the London interbank market.
"BUSINESS ENTITY" means a corporation (including a business trust),
limited liability company, partnership, limited partnership, limited liability
partnership, unlimited liability company, trust, joint stock company,
unincorporated association, joint venture or other entity.
"CALCULATION AGENT" means Citibank, N.A. or another independent
professional adviser appointed by Red River at the direction of the Agent (with
the consent of Sabine, not to be unreasonably withheld).
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-7
"CAPITAL ACCOUNT" means, in relation to any Trinity Member, the
capital account established for such Trinity Member pursuant to Section 5.1 of
the Trinity Company Agreement.
"CAPITAL CONTRIBUTION" means, with respect to any Trinity Member,
the amount of money and the initial Gross Asset Value of any property (other
than money) contributed to Trinity by such Trinity Member (or its predecessors
in interest) with respect to the Trinity Membership Interests held by such
Trinity Member.
"CAPITAL EXPENDITURES" means, for any Underlying Business for any
period, the sum of, without duplication, (a) all cash expenditures made,
directly or indirectly, by such Underlying Business or any of its Subsidiaries
during such period for equipment, fixed assets, real property or improvements,
or for replacements or substitutions therefor or additions thereto, that have
been or should be, in accordance with GAAP, reflected as additions to property,
plant or equipment on a consolidated balance sheet of such Person or have a
useful life of more than one year plus (b) the aggregate principal of and
interest on all Indebtedness (including Obligations under Capitalized Leases)
payable during such period in connection with any such Indebtedness assumed or
incurred in connection with such property, plant or equipment. For purposes of
this definition, the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment or with insurance
proceeds shall be included in Capital Expenditures only to the extent that the
gross amount of such purchase price is greater than the credit granted by the
seller of such equipment for the equipment being traded in at such time or the
amount of such insurance proceeds, as the case may be.
"CAPITALIZED LEASES" means all leases that have been or should be,
in accordance with GAAP, recorded as capitalized leases.
"CARRYING VALUE" for any Pool I Contributed Investment at any time
of determination means an amount equal to:
(a) if such Pool I Contributed Investment is a Pool I Publicly
Traded Investment, the Fair Market Value of such Pool I Contributed
Investment at the time such determination is made; or
(b) in all other cases,
(i) initially and until the first Appraisal Event occurs after
the contribution thereof, the Fair Market Value established pursuant
to the initial Appraisal for such Pool I Contributed Investment; and
(ii) upon the occurrence of each Appraisal Event and until the
completion of the next Appraisal following the occurrence of the
next Appraisal Event, the Fair Market Value of such Pool I
Contributed Investment as established pursuant to the Appraisal to
which such Appraisal Event relates,
provided that, in each case under this clause (b), (1) such amount shall
be modified pursuant to Section 5.09(e)(ii), Section 7.03(j) and Section
7.04(i) and (2) if an Appraisal is not completed on or within 30 days
after the occurrence of the relevant Appraisal Event, the Carrying Value
of such Pool I Contributed Investment shall be $0.
"CASH COLLATERAL AMOUNT" has the meaning set forth in Section
5.06(c) of the Sponsor Subsidiary Credit Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-8
"CASH COLLATERAL AMOUNT DISTRIBUTION DATE" has the meaning set forth
in Section 7.04(g) of the Sponsor Subsidiary Credit Agreement.
"CASH EQUIVALENTS" means cash and any of the following: (a) amounts
credited to current accounts, deposit accounts, time deposits, insured
certificates of deposit or freely marketable and transferable debt obligations
of any United States bank that is a member of the United States Federal Reserve
System and whose (or whose parent's) short-term unsecured and non-credit
enhanced debt obligations are rated at least "A-1" and "P-1" by S&P and ▇▇▇▇▇'▇,
respectively, or any then equivalent rating announced by S&P or ▇▇▇▇▇'▇,
respectively, and that is not subject to currency controls; (b) U.S. Treasury
securities or any other freely negotiable and marketable debt securities issued
by the government of the United States or any agency or instrumentality thereof
or obligations unconditionally guaranteed by the full faith and credit of the
same; and (c) any commercial paper issued in the United States by a Person whose
short-term unsecured and non-credit enhanced debt obligations are rated at least
"A-1" and "P-1" by S&P and ▇▇▇▇▇'▇, respectively, or any then equivalent rating
announced by S&P or ▇▇▇▇▇'▇, respectively, (other than such commercial paper
issued by El Paso or its Affiliates); provided, however, that items described in
clauses (a) through (c) shall not constitute Cash Equivalents unless (i) such
items are denominated in Dollars, (ii) if issued by a non-governmental entity,
such items are issued by an issuer whose long-term debt obligations are rated at
least "A-" by S&P, "A3" by ▇▇▇▇▇'▇, or any then equivalent rating announced by
S&P or ▇▇▇▇▇'▇, respectively, or an equivalent investment grade rating from a
nationally recognized debt rating agency, (iii) such items are not issues the
interest or dividend on which is exempt from Federal income tax (or would be so
exempt if the issue were held by a citizen or resident of the United States or a
domestic corporation (as defined in Section 7701(a) of the Code)) and (iv) if
other than cash or demand obligations, such items have a remaining maturity of
not longer than ninety (90) days.
"CASH RESERVE" has the meaning set forth in Preliminary Statement C
of the Sponsor Subsidiary Security Agreement.
"CLAIMANT" has the meaning set forth in Section 4.12 of the Trinity
Company Agreement.
"CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.
"COLLATERAL AGENT" has the meaning set forth in the Red River Credit
Agreement.
"COLLECTION DATE" means the date on which (a) if El Paso exercises
the Purchase Option, all amounts due and payable by El Paso (or its designee)
under the Purchase Option Agreement and all amounts payable by Trinity in
respect of such exercise are paid in full or (b) otherwise, after the occurrence
of the Liquidation Start Date, all amounts in respect of the retirement or
redemption of Capital Accounts shall have been paid in full and all other
amounts owing in respect of Red River's Trinity Class B Membership Interest
through the date of the payment of amounts in respect of the retirement or
redemption of Capital Accounts shall have been paid in full and all other
amounts, if any, owing to Red River under the Purchase Option Agreement shall
have been paid in full and (if applicable) Red River shall have received the
report described in Section 12.10(d) of the Trinity Company Agreement; provided,
however, that if, after any payment that would otherwise have constituted
"payment in full" of any such amount, such payment or any part thereof is deemed
to be fraudulent or preferential, set aside or required to be paid to a trustee,
receiver or similar Person by a court of competent jurisdiction at any time
during the one-year period following such payment in the case of any fraudulent
conveyance, or during the 90-
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
day period following such payment in the case of any preference or otherwise,
then the amount of such payment or such part thereof shall be reinstated and
outstanding or unpaid as if such payment or part thereof had not occurred unless
such payment or such part thereof shall have been discharged in bankruptcy.
A-9
"COMMITMENT LETTER" means the letter agreement captioned "Commitment
Letter" dated as of June 28, 1999 among El Paso, Citibank, N.A. and Citicorp
North America, Inc., with respect to, among other things, the syndication of the
commitments of the APA Purchasers.
"COMPLIANCE CERTIFICATE" means a written certification that no
Incipient Event, Event of Default, Liquidating Event, Termination Event or
Notice Event has occurred and is continuing or, if any such event has occurred
and is continuing, the action that El Paso, Trinity, or the relevant Sponsor
Subsidiary (as applicable) is taking or proposes to take with respect to such
event, and:
(a) in the case of a Compliance Certificate to be delivered under
Section 5.03(b) or (c) of the Sponsor Subsidiary Credit Agreement, a
written certification by a Responsible Officer of each relevant Sponsor
Subsidiary of the following information in substantially the form of
Exhibit C-1 to the Trinity Company Agreement:
(i) an Operating Report,
(ii) the amount of the Maximum Clawback Amount, if any, as at
the end of the relevant Fiscal Year or Fiscal Quarter (as
applicable),
(iii) the Excess Distribution, if any, for such Fiscal Year or
Fiscal Quarter,
(iv) calculations of the financial covenants in Section 5.04
of the Sponsor Subsidiary Credit Agreement in sufficient detail, and
(v) details of the aggregate amount of A-Loans outstanding and
the Total Cash Collateral Amount as at the Coverage Test Date with
respect to such Fiscal Year or Fiscal Quarter;
(b) in the case of a Compliance Certificate to be delivered under
Section 5.07(f) of the Sponsor Subsidiary Credit Agreement, a written
certification of a Responsible Officer of El Paso of pro forma
calculations of the financial covenants in Section 5.04(a), (b) and (d)
and the second sentence of Section 5.06(a) of the Sponsor Subsidiary
Credit Agreement in sufficient detail, together with copies of the
Appraisals referred to in Section 5.07 of the Sponsor Subsidiary Credit
Agreement, all in substantially the form of Exhibit C-2 to the Trinity
Company Agreement;
(c) in the case of a Compliance Certificate to be delivered under
Section 5.09(e)(ii) or 7.03(j) of the Sponsor Subsidiary Credit Agreement,
a written certification of a Responsible Officer of El Paso dated no
earlier than five Business Days prior to the delivery thereof,
demonstrating that the Sponsor Subsidiaries would be in compliance, on a
pro forma basis and as of the date of the most recent financial statements
delivered pursuant to Section 5.03(c) of the Sponsor Subsidiary Credit
Agreement, with the financial covenant set forth in Section 5.04(b) of the
Sponsor Subsidiary Credit Agreement calculated pursuant thereto (but
subject to the modifications set forth in clauses (1) through (3) thereof)
and substantially in the form of Exhibit C-3 to the Trinity Company
Agreement;
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-10
(d) in the case of a Compliance Certificate to be delivered under
the first proviso to 7.04(g) of the Sponsor Subsidiary Credit Agreement, a
written certification of a Responsible Officer of El Paso showing (i) the
amount of the Total Cash Collateral Amount to be transferred pursuant
thereto and (ii) the calculation of the financial covenant set forth in
the second sentence of Section 5.06(a) of the Sponsor Subsidiary Credit
Agreement and substantially in the form of Exhibit C-3 to the Trinity
Company Agreement;
(e) in the case of a Compliance Certificate to be delivered under
Section 7.04(i) or the second proviso to 7.04(g) of the Sponsor Subsidiary
Credit Agreement, a written certification of a Responsible Officer of El
Paso as to compliance on a pro forma basis as of the last date of delivery
of financial statements pursuant to Section 5.03(c) of the Sponsor
Subsidiary Credit Agreement, with the financial covenant set forth in
Section 5.04(b) of the Sponsor Subsidiary Credit Agreement calculated
pursuant thereto (but subject to the modifications set forth in clauses
(1) through (3) of Section 7.04(i) of the Sponsor Subsidiary Credit
Agreement) and substantially in the form of Exhibit C-3 to the Trinity
Company Agreement;
(f) in the case of a Compliance Certificate to be delivered under
Section 9.1(a) of the Trinity Company Agreement, certified by a
Responsible Officer of El Paso and substantially in the form of Exhibit
C-4 to the Trinity Company Agreement; and
(g) in the case of a Compliance Certificate to be delivered under
Section 9.1(b) of the Trinity Company Agreement, certified by a
Responsible Officer of the Trinity Class A Member and substantially in the
form of Exhibit C-4 to the Trinity Company Agreement.
"CONSOLIDATED" refers to the consolidation of the accounts of El
Paso and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED TAXES" has the meaning set forth in Section 5.2(i) of
the El Paso Agreement.
"CONTINGENT GUARANTY" has the meaning set forth in the definition of
"Guaranty".
"CONTRIBUTED INVESTMENT" means each Pledged Share, Pledged Interest,
Pledged Debt (other than any Pledged Debt evidenced by any A-Loan Note, El Paso
Demand Note, or EPPC Note) and Energy Partners.
"CONTRIBUTED VALUE" (a) of a Pool I Contributed Investment, means
the value of such Pool I Contributed Investment, as determined by the initial
Appraisal of such Pool I Contributed Investment pursuant to Section 9.02 of the
Sponsor Subsidiary Credit Agreement; and
(b) of any Pool I Intermediate Holder, Pool I Underlying Business or
all or substantially all of the assets of, or Equity Interests in, any Pool I
Intermediate Holder or Pool I Underlying Business, means the Contributed Value
of the Pool I Contributed Investment to which such Pool I Intermediate Holder or
Pool I Underlying Business or the assets or Equity Interests thereof relates.
"CONTROLLED BUSINESS" means each Intermediate Holder (if any) and
Underlying Business relating to each Contributed Investment (other than any
Publicly Traded Investment).
"COVERAGE TEST DATE" has the meaning set forth in Section 5.04(a) of
the Sponsor Subsidiary Credit Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-11
"COVERED DOCUMENTS" has the meaning set forth in Section 13.1 of the
Trinity Company Agreement.
"CURRENT POOL II BORROWING BASE" has the meaning set forth in
Section 2.10(b)(vi) of the Sponsor Subsidiary Credit Agreement.
"CURRENT REIMBURSEMENT OBLIGATIONS" means, with respect to any
Person, non-contingent obligations of such Person to reimburse a bank or other
Person in respect of amounts paid under a letter of credit or similar instrument
that are paid on or prior to the fifth Business Day after the due date therefor.
"CURRENT RETURN" has the meaning set forth in the Red River Company
Agreement.
"CXC" shall mean CXC, LLC, a Delaware limited liability company
(formerly known as CXC
Incorporated).
"CXC RATE" has the meaning set forth in the Red River Credit
Agreement.
"DEBT" means, as to any Person, all Relevant Indebtedness of such
Person other than (a) any Project Financing of such Person, (b) in the case of
El Paso or a Subsidiary, any liabilities of El Paso or such Subsidiary, as the
case may be, under any Alternate Program, or any document executed by El Paso or
such Subsidiary, as the case may be, in connection therewith, (c) any
obligations of El Paso or a Subsidiary with respect to lease payments for the
headquarters building of El Paso located in Houston, Texas and (d) Current
Reimbursement Obligations of such Person; provided, however, that for purposes
of Section 5 of the El Paso Agreement, "Debt" shall not include up to an
aggregate amount (determined without duplication of amount) of $200,000,000 of
(i) the amount of optional payments in lieu of asset repurchase or other
payments to similar effect, including extension or renewal payments, on
off-balance sheet leases and (ii) the amount of the purchase price for optional
acquisition of such asset (in either case, calculated at the lower amount
payable in respect of such asset under clause (i) or (ii) above).
"DEBT COLLECTION DATE" means the day on which the aggregate
outstanding principal amount of the Advances shall have been paid in full
together with (without duplication) all accrued interest, fees, expenses,
Additional Financing Costs and Transaction Costs and indemnities and other
Obligations under the Sponsor Subsidiary Credit Documents.
"DEFAULT" means any event that would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
"DISCLOSURE QUALIFICATION" shall mean that (i) no representation,
warranty or covenant is made with respect to any information concerning the
Surety, CNAI, any APA Purchaser, the Administrator, the Trinity Custodian, the
Sponsor Subsidiary Collateral Agent or Red River, any other lender, credit
enhancer or surety provider to or for, or any direct or indirect members of, Red
River (other than any member that is an Affiliate of El Paso), or any Affiliates
or agents or other representatives of any of the foregoing, (ii) no
representation, warranty or covenant is made with respect to any Financial
Projections, Securitization Information or Third Party Information, (iii) no
representation, warranty or covenant is made with respect to the terms or
effects of or any Person's rights or obligations under any agreement or document
other than the Operative Documents to which El Paso or an Affiliate of El Paso
is a party and any documents with respect to any Contributed Investment, and
(iv) any representation, warranty or covenant that is stated to be subject to
the Disclosure Qualification in any Information Memorandum is subject to the
foregoing clauses (i) to (iii) and to the additional qualifications, assumptions
and disclaimers set forth in such Information Memorandum.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-12
"DISPOSITION" means, with respect to any property, any sale,
assignment, gift, exchange, lease, conversion, transfer, or other disposition of
such property, including any transfer by way of a capital contribution and the
creation of any, or material increase in any existing, royalty, overriding
royalty, reversionary interest, production payment, or similar burden. "DISPOSE"
and "DISPOSED" shall have correlative meanings. A Pool II Controlled Business
shall be deemed to have Disposed of such of its Oil and Gas Properties which it
assigns, contributes, or otherwise transfers to a Person in which it makes an
Investment, as permitted by Section 5.09(e)(iv) of the Sponsor Subsidiary Credit
Agreement, if Sabine provides notice in writing to Trinity, the Agent, and the
Equity Investors, within 2 Business Days after such assignment, contribution, or
transfer, electing to have such assignment, contribution, or other transfer
treated as a Disposition for the purposes of the Operative Documents.
"DISPOSITION COSTS" means all expenses, costs, liabilities, fees,
Taxes and other amounts incurred or payable in connection with a Disposition.
"DISTRIBUTION" means, as applicable, any distribution or dividend or
return of capital or any other distribution, payment, remittance or delivery of
property or cash in respect of, or the redemption, retirement, purchase or other
acquisition, directly or indirectly, of, any Trinity Membership Interest or any
Sponsor Subsidiary Membership Interest or in respect of any Contributed
Investment now or hereafter outstanding or the setting aside of any funds for
any of the foregoing purposes. "Distribute", "Distributed" and "Distributive"
shall have correlative meanings.
"DOLLARS" and the sign "$" each shall mean the lawful currency of
the United States.
"EBITDA" means, for any period and for any Underlying Business, the
sum of (a) net income (or net loss), (b) interest expense, (c) income tax
expense, (d) depreciation expense, (e) amortization expense, (f) all
extraordinary noncash losses otherwise deducted from the determination of net
income (or net loss) for such period (other than any such noncash losses that
require an accrual or reserve for cash charges for any future period and any
write-downs or write-offs of accounts receivables) less all extraordinary
noncash gains otherwise added in the determination of net income (or net loss)
for such period, and (g) all non-recurring losses or expenses deducted from the
determination of net income (or net loss) for such period to the extent such
losses or expenses were funded from capital contributions from any holder of
Equity Interests in such Underlying Business, in each case of such Underlying
Business and its consolidated subsidiaries, determined on a consolidated basis
in accordance with GAAP for such period.
"ELIGIBLE INVESTMENT" means those equity and debt Investments with
respect to which:
(a) the Underlying Business and, if any, each Intermediate Holder,
in which any Sponsor Subsidiary directly or indirectly holds an interest,
is organized under the laws of any Permitted Jurisdiction or political
subdivision thereof;
(b) such business is conducted exclusively in, and the sources of
its operating income are derived at least 95% from any Permitted
Jurisdiction and after giving effect to the contribution of such
Investment:
(i) Pool I Contributed Investments conducting business outside
the United States shall not have an aggregate Pool I Loan Value in
excess of 25% of the Aggregate Pool I Loan Value Amount; and
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-13
(ii) Pool II Contributed Investments conducting business
outside the United States shall not account for more than 25% of the
Pool II Borrowing Base for all Pool II Contributed Investments;
(c) with respect to the Pool I Contributed Investments, immediately
after giving effect to the contribution of such Investment to a Sponsor
Subsidiary or the accession of a Sponsor Subsidiary to the Sponsor
Subsidiary Credit Agreement pursuant to the terms thereof, the Pool I Loan
Value of no Pool I Contributed Investment shall account for more than 25%
of the Aggregate Pool I Loan Value Amount; provided that such limitation
shall not apply to Pre-approved Pool I Contributed Investments (including
for purposes of assessing the eligibility of other Pool I Contributed
Investments);
(d) the Fair Market Value of such Investment on the date of its
contribution shall be at least $25,000,000;
(e) the business conducted by the Underlying Business related
thereto shall be as follows:
(i) in the case of any Pool I Contributed Investment,
primarily in the gathering, transmission, storage and/or processing
of natural gas or the non-nuclear electric power generation
business, in all cases primarily using proven technology, and shall
specifically exclude: the lines of business that El Paso Energy
Marketing Company currently and in the future may conduct in
marketing, trading and integrated risk management, and other lines
of business that are not typically financed by major money center
commercial banks; and
(ii) in the case of any Pool II Contributed Investment,
primarily in the production and development of Proved Reserves
primarily using proven technology;
(f) with respect to any Pool I Contributed Investment, Trinity shall
have determined (and received all consents to such determination required
under the Operative Documents) at the time of its contribution or
acquisition the amount of the "POOL I LOAN VALUE" for such Pool I
Contributed Investment in its discretion; and
(g) the Intermediate Holders (if any) and the Underlying Business
related thereto shall have received equity contributions in an amount
equal to at least the amount of all Indebtedness that would not be
permitted Indebtedness with respect to such Intermediate Holder and
Underlying Business under Section 5.09 of the Sponsor Subsidiary Credit
Agreement (after giving effect to the Exception Schedule to the Sponsor
Subsidiary Credit Agreement related to such Contributed Investment), and
all such unpermitted Indebtedness shall have been paid in full with the
proceeds of such equity contributions to the satisfaction of Trinity.
"EL PASO" means El Paso Corporation, a Delaware corporation, and any
successor not prohibited by the terms of the El Paso Agreement.
"EL PASO AGREEMENT" means the Second Amended and Restated El Paso
Agreement, originally dated as of June 30, 1999 and amended and restated as of
November 22, 1999, amended as of November 17, 2000 and further amended and
restated as of March 29, 2002, executed by El Paso in favor of Red River and the
other beneficiaries described therein.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-14
"EL PASO COMPANY" shall mean a corporation, partnership or other
Business Entity with respect to which El Paso directly, or indirectly through
one or more intermediaries, controls (a) in the case of any such corporation (i)
more than 50% of the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors and (ii) issued and
outstanding capital stock entitled to receive more than 50% of dividends
declared in respect of all issued and outstanding shares of capital stock of
such corporation or (b) in the case of any such partnership or other Business
Entity (i) more than 50% of the interests in such partnership or other Business
Entity (A) entitled to manage or direct the management of such entity or (B)
having voting power to elect a managing partner or member, board of managers or
any similar managing Person or body of such partnership or other Business Entity
responsible for the management of such entity and (ii) more than 50% of the
interests in the capital or profits of such partnership or other Business
Entity.
"EL PASO DEFAULT" means any event that would constitute an El Paso
Event but for the requirement that notice be given or time elapse or both.
"EL PASO DEMAND LOAN" means a demand loan by a Sponsor Subsidiary to
El Paso or an Affiliate of El Paso evidenced by an El Paso Demand Note and, in
the case of a demand loan to an Affiliate of El Paso, guaranteed by El Paso
pursuant to the El Paso Guaranty.
"EL PASO DEMAND NOTE" means (a) in relation to an El Paso Demand
Loan to El Paso, a note evidencing such El Paso Demand Loan in the form of
Exhibit E-1 to the Sponsor Subsidiary Credit Agreement or (b) in relation to an
El Paso Demand Loan to an Affiliate of El Paso, a note evidencing such El Paso
Demand Loan in the form of Exhibit E-2 to the Sponsor Subsidiary Credit
Agreement.
"EL PASO EVENT" shall mean the occurrence and continuance of any of
the following events:
(a) El Paso or any Affiliate of El Paso (as applicable) shall fail
to pay (i) the principal of any El Paso Demand Loan (including, in each
case, pursuant to the El Paso Guaranty) after the same becomes due and
payable or is demanded or (ii) any amount payable by it under the El Paso
Agreement or interest or any other amounts owing on any A-Loan (other than
principal) or El Paso Demand Loan (including, in each case, pursuant to
the El Paso Guaranty) or any Affiliate Loan (or pursuant to any guaranty
thereof), in each case under this clause (ii) within five Business Days
after the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by El Paso in
the El Paso Agreement or by El Paso (or any of its officers) in connection
with the El Paso Agreement shall prove to have been incorrect in any
material respect when made or deemed made; or
(c) (i) El Paso shall fail to perform or observe any other term,
covenant or agreement contained in the El Paso Agreement or (ii) El Paso
or any El Paso Party shall fail to perform or observe any other term,
covenant or agreement contained in any other Operative Document (other
than the Trinity Company Agreement or any Sponsor Subsidiary Company
Agreement) on its part to be performed or observed, in each case above if,
in the case of any such term, covenant or agreement referred to in clause
(i) or (ii) above, such failure shall remain unremedied for 30 days after
written notice thereof shall have been given to El Paso by Red River or
the Agent; or
(d) El Paso or any Principal Subsidiary shall fail to pay any Debt
or Guaranty (excluding Debt evidenced by or incurred pursuant to any
Operative Document) of El Paso or such Principal Subsidiary (as the case
may be) in an aggregate principal amount of $200,000,000 or more, at such
time, or any installment of principal thereof or interest or premium
thereon,
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-15
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after
the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt or Guaranty; or any other default under
any agreement or instrument relating to any such Debt, or any other event,
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such default
or event is to accelerate the maturity of such Debt; or any such Debt
shall be required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof, as a result of
either (i) any default under any agreement or instrument relating to any
such Debt or (ii) the occurrence of any other event (other than an
issuance, sale or other disposition of stock or other assets, or an
incurrence or issuance of Relevant Indebtedness or other obligations,
giving rise to a repayment or prepayment obligation in respect of such
Debt) the effect of which would otherwise be to accelerate the maturity of
such Debt; provided that, notwithstanding any provision contained in this
clause (d) to the contrary, to the extent that pursuant to the terms of
any agreement or instrument relating to any Debt or Guaranty referred to
in this clause (d) (or in the case of any such Guaranty, relating to any
obligations Guaranteed thereby), any sale, pledge or disposal of Margin
Stock, or utilization of the proceeds of such sale, pledge or disposal,
would result in a breach of any covenant contained therein or otherwise
give rise to a default or event of default thereunder and/or acceleration
of the maturity of the Debt or obligations extended pursuant thereto, or
payment pursuant to any Guaranty, and as a result of such terms or of such
sale, pledge, disposal, utilization, breach, default, event of default or
acceleration or nonpayment under such Guaranty, or the provisions thereof
relating thereto, the El Paso Agreement or any other Operative Document or
any extension of credit under any of the foregoing would otherwise be
subject to the margin requirements or any other restriction under
Regulation U issued by the Board of Governors of the Federal Reserve
System, then such breach, default, event of default or acceleration, or
nonpayment under any Guaranty, shall not constitute an El Paso Event under
this clause (d); or
(e) [Intentionally Omitted]
(f) Any judgment or order of any court for the payment of money in
excess of $100,000,000 shall be rendered against El Paso or any Principal
Subsidiary and either (i) enforcement proceedings shall have been
commenced and are continuing or have been completed by any creditor upon
such judgment or order (other than any enforcement proceedings consisting
of the mere obtaining and filing of a judgment lien or obtaining of a
garnishment or similar order so long as no foreclosure, levy or similar
process in respect of such lien, or payment over in respect of such
garnishment or similar order, has commenced and is continuing or has been
completed) or (ii) there shall be any period of 30 consecutive days during
which a stay of execution or of enforcement proceedings (other than those
referred to in the parenthesis in clause (i) above) in respect of such
judgment or order, by reason of a pending appeal, bonding or otherwise,
shall not be in effect; or
(g) (i) Any ERISA Termination Event with respect to a Plan shall
have occurred and, 30 days after notice thereof shall have been given to
El Paso by Red River or the Agent, such ERISA Termination Event shall
still exist; or (ii) El Paso or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan; or (iii) El Paso or any
ERISA Affiliate shall have been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization, or is insolvent or
is being terminated, within the meaning of Title IV of ERISA; or (iv) any
Person shall engage in a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan; and in each
case in clauses (i) through (iv) above, such event or condition, together
with all other such events or conditions, if any, would result in an
aggregate
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-16
liability of El Paso or any ERISA Affiliate that would exceed 10% of the
Net Worth of El Paso; or
(h) Upon completion of, and pursuant to, a transaction, or a series
of transactions (which may include prior acquisitions of capital stock of
El Paso in the open market or otherwise), involving a tender offer (i) a
"person" (within the meaning of Section 13(d) of the Securities Exchange
Act), other than El Paso, a Subsidiary of El Paso or any employee benefit
plan maintained for employees of El Paso and/or any of its Subsidiaries or
the trustee therefor, shall have acquired direct or indirect ownership of
and paid for in excess of 50% of the outstanding capital stock of El Paso
entitled to vote in elections for directors of El Paso and (ii) at any
time before the later of (A) six months after the completion of such
tender offer and (B) the next annual meeting of the shareholders of El
Paso following the completion of such tender offer more than half of the
directors of El Paso consists of individuals who (1) were not directors
before the completion of such tender offer and (2) were not appointed,
elected or nominated by the Board of Directors in office prior to the
completion of such tender offer (other than any such appointment, election
or nomination required or agreed to in connection with, or as a result of,
the completion of such tender offer); or
(i) The El Paso Agreement or any other Operative Document to which
El Paso or any El Paso Party is a party in whole or in material part shall
for any reason cease to be the legal, valid and binding obligations of El
Paso or such El Paso Party, as the case may be, or the validity of any
such agreement shall be contested in writing by El Paso or any such El
Paso Party, or El Paso or any such El Paso Party shall in writing deny
liability under the El Paso Agreement or any such other Operative
Document; or
(j) El Paso shall fail to perform or observe any term, covenant or
agreement contained in the Commitment Letter and such failure shall remain
unremedied for ten Business Days after written notice thereof shall have
been given to El Paso by the Agent; or
(k) El Paso shall fail to have, directly or indirectly, beneficial
ownership of 100% of the equity voting interest in each Sponsor
Subsidiary; or
(l) Any representation or warranty made or deemed made under Section
2.12 of any Subordinated Note or Section 1.7 of any EPPC Note shall prove
to have been incorrect in any material respect when made or deemed made.
"EL PASO EXISTING 364-DAY FACILITY" means the $3,000,000,000 364-Day
Revolving Credit and Competitive Advance Facility Agreement, dated as of June
11, 2001, among El Paso, EPNGC, Tennessee, the several banks and financial
institutions from time to time parties thereto, The Chase Manhattan Bank, as
administrative agent and CAF advance agent, Citibank, N.A. and ABN AMRO Bank,
N.V., as co-documentation agents, and Bank of America, N.A. and Credit Suisse
First Boston, as co-syndication agents, and ▇▇ ▇▇▇▇▇▇ Securities, Inc., as sole
lead arranger and book manager, as the same may be amended, supplemented and
modified from time to time.
"EL PASO EXISTING 3-YEAR FACILITY" means the $1,000,000,000 3-year
Revolving Credit and Competitive Advance Facility Agreement, dated as of August
4, 2000, among El Paso, EPNGC, Tennessee, the several banks and financial
institutions from time to time parties thereto, The Chase Manhattan Bank, as
administrative agent and CAF advance agent, Citibank, N.A. and ABN AMRO Bank,
N.V., as co-documentation agents, and Bank of America, N.A., as syndication
agent, as the same may be amended, supplemented or modified from time to time.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-17
"EL PASO GUARANTY" means the Second Amended and Restated Guaranty
Agreement, originally dated as of June 30, 1999 and amended and restated as of
November 22, 1999 and March 29, 2002, made by El Paso in favor of the Sponsor
Subsidiaries.
"EL PASO PARTY" means any of Sabine, each other Sponsor Subsidiary,
Trinity, each Sabine Member, each other Sponsor Subsidiary Member, each Red
River El Paso Member and, if any, the other Affiliates of El Paso that are
parties to the Operative Documents.
"EL PASO RA EVENT" has the meaning set forth in Section 2.05(b)(ix)
of the Sponsor Subsidiary Credit Agreement.
"ENERGY PARTNERS" means (a) when the context requires such
expression to be construed as a "Contributed Investment", 5,750,000 common units
of El Paso Energy Partners, L.P., a Delaware limited partnership and (b) when
used in any other context, El Paso Energy Partners, L.P., a Delaware limited
partnership (formerly known as Leviathan Gas Pipeline Partners, L.P.).
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand
letter, claim, notice of noncompliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental Permit
or Hazardous Material or arising from alleged injury or threat to health, safety
or the environment, including, without limitation, (a) by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
or damages and (b) by any Governmental Authority or third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive relief.
"ENVIRONMENTAL LAW" means any Federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the environment, health, safety or
natural resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"EPNGC" means El Paso Natural Gas Company, a Delaware corporation.
"EPPC" means El Paso Production Company (formerly known as Sonat
Exploration Company), a Delaware corporation.
"EPPC NOTE" means the two promissory notes each for $500,000,000,
each in the form of Exhibit A to the Sponsor Subsidiary Credit Agreement and
each issued by EPPC in favor of a Sponsor Subsidiary.
"EPPGOM" means El Paso Production GOM, Inc. (formerly known as Sonat
Exploration GOM Inc.), a Delaware corporation.
"EPRR" means El Paso Red River Holding Company, a Delaware
corporation.
"EPTPC" means El Paso Tennessee Pipeline Co., a Delaware
corporation.
"EPTPC FACILITY" means the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among
EPTPC, the several financial
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-18
institutions from time to time parties thereto, and The Chase Manhattan Bank, as
administrative agent and CAF advance agent thereunder, as the same may be
amended, modified or supplemented from time to time.
"EQUITY AMOUNT" means, for any Payment Period (or any portion
thereof), an amount equal to the aggregate amount of the Current Return and the
Fee and Expense Amount (as defined in the Red River Company Agreement) for such
Payment Period (or portion thereof).
"EQUITY INTERESTS" means any capital stock, partnership, joint
venture, member or limited liability or unlimited liability company interest,
beneficial interest in a trust or similar entity or other equity interest or
investment of whatever nature.
"EQUITY INVESTOR" means each "Participant" under and as defined in
the Red River Company Agreement.
"EQUITY INVESTORS INFORMATION MEMORANDUM" means any information
memorandum prepared for the prospective equity investors in connection with,
together with any amendments, supplements, or exhibits thereto and any other
materials or documents prepared for the prospective equity investors in
connection with, the sale of the Red River Member Interests under the Red River
Company Agreement, in each case in form and substance as approved in writing by
El Paso.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
from time to time thereunder.
"ERISA AFFILIATE" means any Person who is a member of El Paso's
controlled group within the meaning of Section 4001(a)(14)(A) of ERISA.
"ERISA TERMINATION EVENT" means (a) a "reportable event," as such
term is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC under subsection .21,
..22, .23, .25, .27, .28, .31, .33, .35 or.64 of PBGC Reg. ss. 4043), or an event
described in Section 4062(e) of ERISA, or (b) the withdrawal of El Paso or any
ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was
a "substantial employer," as such term is defined in Section 4001(a)(2) of ERISA
or the incurrence of liability by El Paso or any ERISA Affiliate under Section
4064 of ERISA upon the termination of a Multiple Employer Plan, or (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(e) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of El Paso or any ERISA
Affiliate for failure to make a required payment to a Plan are satisfied, or (f)
the adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA, or (g) the occurrence of any other
event or the existence of any other condition which would reasonably be expected
to result in the termination of, or the appointment of a trustee to administer,
any Plan under Section 4042 of ERISA.
"ESCROW AGENT" shall mean Citicorp North America, Inc. or any
successor escrow agent appointed pursuant to the terms of the Escrow Agreement
and acting as such pursuant to the Escrow Agreement.
"ESCROW AGREEMENT" means the Amended and Restated Escrow Agreement,
originally dated as of June 30, 1999 and amended and restated as of November 22,
1999, among El Paso, Trinity, Red River, the Agent, the Red River Collateral
Agent and the Escrow Agent.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-19
"ESCROWED DOCUMENT" has the meaning set forth in the Escrow
Agreement.
"EVENT OF DEFAULT" has the meaning specified in Section 6.01 of the
Sponsor Subsidiary Credit Agreement.
"EXCEPTION SCHEDULE" means, with respect to each Contributed
Investment and each related Intermediate Holder (if any) and each Underlying
Business related thereto, the written schedule of exceptions to the
representations and warranties in Section 4.02 of the Sponsor Subsidiary Credit
Agreement and the covenants in Section 5.08 and 5.09 of the Sponsor Subsidiary
Credit Agreement, as agreed between the Trinity Class B Member (on behalf of
Trinity) and Sabine (on behalf of all Sponsor Subsidiaries) pursuant to Section
9.02 of the Sponsor Subsidiary Credit Agreement.
"EXCESS DISTRIBUTION" means, as at any date during any Fiscal
Quarter, the amount (if any) by which (a) the cumulative Distributions received
by all Sponsor Subsidiaries in respect of all Pool I Underlying Businesses
(excluding Pool I Publicly Traded Investments) during such Fiscal Quarter
through such date exceed (b) the aggregate amount of retained earnings of all
Pool I Underlying Businesses (excluding Pool I Publicly Traded Investments) as
at the end of the period to which the most recent accounts delivered pursuant to
Section 5.03(b) or (c) of the Sponsor Subsidiary Credit Agreement (as
applicable) relate, as disclosed in the balance sheet of such accounts.
"EXCLUDED ACQUISITION DEBT" means (a) Debt, Guaranties or
reimbursement obligations of any Business Entity acquired by El Paso or any of
its Subsidiaries and which Debt, Guaranties or reimbursement obligations exist
immediately prior to such acquisition (provided that (i) such Debt, Guaranties
or reimbursement obligations are not incurred solely in anticipation of such
acquisition and (ii) immediately prior to such acquisition such Business Entity
is not a Subsidiary of El Paso), (b) Debt, Guaranties or reimbursement
obligations of EPTPC and its Subsidiaries in existence on the date of the merger
of EPTPC with El Paso Merger Company or (c) Debt, Guaranties or reimbursement
obligations in respect of any asset acquired by El Paso or any of its
Subsidiaries and which Debt, Guaranties or reimbursement obligations exist
immediately prior to such acquisition (provided that (i) such Debt, Guaranties
or reimbursement obligations are not incurred solely in anticipation of such
acquisition and (ii) immediately prior to such acquisition such asset is not an
asset of El Paso or any of its Subsidiaries).
"EXCLUDED PAYMENTS" means any indemnification or other payments
under the Operative Documents payable to Persons other than any Sponsor
Subsidiary in its own right.
"EXPENSES" means (i) any and all judgments, damages or penalties
with respect to, or amounts paid in settlement of, claims (including negligence,
strict or absolute liability, liability in tort and liabilities arising out of
violation of laws or regulatory requirements of any kind), actions, or suits and
(ii) any and all liabilities, obligations, losses, costs, expenses (including
reasonable fees and disbursements of counsel and claims, damages, losses,
liabilities and expenses relating to environmental matters) but excluding Taxes.
"FAIR MARKET VALUE" for any Contributed Investment at any time of
determination means an amount equal to:
(a) if such Contributed Investment is a Publicly Traded Investment,
the average of the quoted market closing prices on the last five trading
days for such securities preceding the time of determination of such Fair
Market Value; or
(b) for each other Pool I Contributed Investment, the fair market
value established pursuant to the most recent Appraisal for such Pool I
Contributed Investment; or
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-20
(c) for each other Pool II Contributed Investment, the fair market
value as certified in writing by Sabine to Trinity; or
(d) in the case of the Disposition of a Contributed Investment that
is not a Publicly Traded Investment, or any related Intermediate Holder or
Underlying Business, or all or substantially all of the assets of, or
Equity Interests in, such Intermediate Holder or Underlying Business, the
amount of the Net Cash Proceeds of such Disposition together with, in the
case of any such Disposition to El Paso or an Affiliate of El Paso, the
amount by which the Net Cash Proceeds from any subsequent Disposition of
such Contributed Investment, Intermediate Holder, Underlying Business or
assets or Equity Interests, as the case may be, by El Paso or any
Affiliate of El Paso to a third party made within 180 days of such initial
Disposition to El Paso or such Affiliate, exceeds the Net Cash Proceeds
from the initial Disposition to El Paso or such Affiliate of El Paso.
"FEDERAL" means United States federal.
"FEE AMOUNT" means, for any Payment Period (or any portion thereof),
an amount equal to the aggregate amount of fees payable by Red River pursuant to
Sections 2.04(a), 2.04(b) and 2.04(c) of the Red River Credit Agreement for such
Payment Period (or portion thereof).
"FERC" means the United States Federal Energy Regulatory Commission,
or any Federal agency or authority from time to time succeeding to its function.
"FINAL BORROWING BASE RESERVE REPORT DELIVERY DATE" has the meaning
set forth in Section 2.10(b) of the Sponsor Subsidiary Credit Agreement.
"FINANCIAL PROJECTIONS" shall mean (a) any forward looking statement
(as defined in Rule 175 under the Securities Act), (b) any prospective financial
statement, financial forecast or financial projection (as defined in guidelines
published by the American Institute of Certified Public Accountants) and (c) any
information under the heading "Financial Forecasts and Assumptions" (or any
summary thereof), in each case included in (including as an exhibit to) any
Information Memorandum.
"FIRST CLOSING DATE" means June 30, 1999.
"FISCAL QUARTER" means (a) the period commencing on June 30, 1999
and ending on September 30, 1999 and (b) any subsequent period commencing on
each of January 1, April 1, July 1 and October 1 and ending on the earlier to
occur of (i) the last date before the next such date and (ii) the date on which
all Trinity Property is distributed pursuant to Section 12.2 of the Trinity
Company Agreement and Trinity's certificate of formation has been canceled
pursuant to the Act.
"FISCAL YEAR" means (a) the period commencing on June 30, 1999 and
ending on December 31, 1999 and (b) any subsequent period commencing on January
1 and ending on the earlier to occur of (i) the next December 31 and (ii) the
date on which all Trinity Property is distributed pursuant to Section 12.2 of
the Trinity Company Agreement and Trinity's certificate of formation has been
canceled pursuant to the Act.
"FREELY TRANSFERABLE" means, with respect to any Contributed
Investment, that the Subsequent Transfer thereof will not:
(a) conflict with the Organizational Documents of the issuer of such
Contributed Investment, the applicable Intermediate Holders, if any, or
the applicable Underlying Business;
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-21
(b) constitute a violation of, or a default under, any Material
Agreement related to such Contributed Investment, the applicable
Intermediate Holders, if any, or the applicable Underlying Business;
(c) under any Material Agreement, cause the creation of, or result
in, or be subject to any Transfer Restriction, Payment Restriction or
Rights Restriction;
(d) contravene any provisions of any Applicable Law (assuming
compliance with applicable securities laws and FERC regulations of general
applicability);
(e) under any Applicable Law (assuming compliance with applicable
securities laws and FERC regulations of general applicability), cause the
creation of, or result in or be subject to, any Transfer Restriction,
Payment Restriction or Rights Restriction (other than under applicable
securities laws and FERC regulations of general applicability); or
(f) require any Governmental Approval that has not been obtained and
is not in full force and effect, necessary to authorize or that is
otherwise required in connection with the consummation of such Subsequent
Transfer (other than filings, if any, under the HSR Act and applicable
securities laws and the expiration of any applicable waiting period
imposed thereby and Governmental Approvals necessary or required under
FERC regulations of general applicability).
"FREELY TRANSFERABLE PORTION" when used in connection with a
Contributed Investment, means that portion of such Contributed Investment
(expressed as a percentage) designated as the "Freely Transferable Portion" in
Schedule I to the Sponsor Subsidiary Security Agreement.
"FREELY TRANSFERRED" means, with respect to any Contributed
Investment, the transfer of such Contributed Investment to a Sponsor Subsidiary
did not:
(a) conflict with the Organizational Documents of the issuer of such
Contributed Investment, the applicable Intermediate Holders, if any, or
the applicable Underlying Business;
(b) constitute a violation of, or a default under, any Material
Agreement related to such Contributed Investment, the applicable
Intermediate Holder, if any, or the applicable Underlying Business (other
than any Material Agreement as to which waivers or consents have been
obtained);
(c) under any Material Agreement, cause the creation of, or result
in, or cause such Contributed Investment to be subject to, any Transfer
Restriction, Payment Restriction or Rights Restriction;
(d) contravene any provisions of any Applicable Law;
(e) under any Applicable Law, cause the creation of, or result in or
cause such Contributed Investment to be subject to, any Transfer
Restriction, Payment Restriction or Rights Restriction (other than under
applicable securities laws and FERC regulations of general applicability);
or
(f) require any Governmental Approval that has not been obtained and
is not in full force and effect, to authorize or consummate such transfer.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-22
"FUNDING RATE" means for any Payment Period (or any portion thereof)
or any Interest Period (or any portion thereof) (the "Relevant Period"), the
rate per annum equal to the product of (a) the quotient obtained by dividing 360
by the actual number of days in such Relevant Period times (b) the quotient
obtained by dividing:
(i) the sum of (A) the Notified Amount for such Relevant Period, (B)
the Equity Amount for such Relevant Period and (C) the Fee Amount for such
Relevant Period, by
(ii) the Unrecovered Capital of the Trinity Class B Member for such
Relevant Period.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"GOVERNMENTAL APPROVAL" means any order, directive, decree, permit,
concession, grant, franchise, license, consent, authorization or validation of,
or filing, recording or registration with, any Governmental Authority pursuant
to Applicable Laws.
"GOVERNMENTAL AUTHORITY" means any Federal, national, state,
provincial, municipal, local, territorial or other governmental department,
commission, board, bureau, agency, regulatory authority, instrumentality or
judicial or administrative body, whether domestic or foreign; provided that,
with respect to any issuer of a Contributed Investment, any Intermediate Holder
or any Underlying Business, such Governmental Authorities shall be limited to
the jurisdictions in which such Person is organized or operates.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
Adjusted Basis, except as follows:
(a) The Gross Asset Values of all Trinity Property shall be adjusted
to equal their respective ▇▇▇▇-to-Market Values on the occurrence of each
▇▇▇▇-to-Market Event; and
(b) The Gross Asset Value of any Trinity Property Distributed to any
Trinity Member shall be the ▇▇▇▇-to-Market Value of such asset on the date
of such Distribution.
"GROSS CASH PROCEEDS" means, with respect to any Disposition of any
Contributed Investment by a Sponsor Subsidiary or the Disposition of all or
substantially all of the assets of, or Equity Interests in, any Intermediate
Holder or Underlying Business, the aggregate amount (without reduction by reason
of the fact that some of such proceeds may be received after the time of such
Disposition) of cash received or to be received from time to time (whether as
initial consideration or deferred consideration) by or on behalf of such Sponsor
Subsidiary, Intermediate Holder or Underlying Business (as applicable) in
connection with such transaction.
"GUARANTY", "GUARANTEED" and "GUARANTEEING" each means any act by
which any Person assumes, guarantees, endorses or otherwise incurs direct or
contingent liability in connection with, or agrees to purchase or otherwise
acquire or otherwise assures a creditor against loss in respect of, any Debt or
Project Financing of any Person other than El Paso or any of its consolidated
Subsidiaries (excluding (a) any liability by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (b) any liability in connection with obligations of El Paso
or any of its consolidated Subsidiaries, including, obligations under any
conditional sales agreement, equipment trust financing or equipment lease and
(c) any such act in connection with a Project Financing that either (i)
guarantees to the provider of such Project Financing or any other Person
performance of the
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-23
acquisition, improvement, installation, design, engineering, construction,
development, completion, maintenance or operation of, or otherwise affects any
such act in respect of, all or any portion of the project that is financed by
such Project Financing or performance by a Project Financing Subsidiary of
certain obligations to Persons other than the provider of such Project
Financing, except during any period, and then only to the extent, that such
guaranty is a guaranty of payment of such Project Financing (other than a
guaranty of payment of the type referred to in subclause (ii) below) or (ii) is
contingent upon, or the obligation to pay or perform under which is contingent
upon, the occurrence of any event other than or in addition to the passage of
time or any Project Financing becoming due (any such act referred to in this
clause (c) being a "Contingent Guaranty"); provided, however, that for purposes
of this definition the liability of El Paso or any of its Subsidiaries with
respect to any obligation as to which a third party or parties are jointly, or
jointly and severally, liable as a guarantor or otherwise as contemplated hereby
and have not defaulted on its or their portions thereof, shall be only its pro
rata portion of such obligation.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products and
by-products or breakdown products thereof, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and (b)
any other chemicals, materials or substances designated, classified or regulated
as hazardous or toxic or as a pollutant or contaminant under any Environmental
Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts, commodity swap and forward agreements and
other similar agreements.
"HSR ACT" means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976.
"HYDROCARBON INTEREST" means all rights, titles, interests and
estates now or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, operating rights, net
profit interests, production payment interests and other similar types of
interests, including any reserved or residual interest of whatever nature.
"INCIPIENT EVENT" means any event that, with notice or lapse of
time, or both, would constitute a Termination Event, Notice Event, Liquidating
Event or Event of Default.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than any
portion of any trade payable obligation that shall not have remained unpaid for
91 days or more from the later of (i) the original due date of such portion and
(ii) the customary payment date in the industry and relevant market for such
portion), (c) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (d) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (whether or not the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capitalized
Leases, (f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all obligations of such
Person to purchase, redeem, retire, defease or otherwise acquire for value any
partnership or member or other equity interests of such Person, (h) the net
amount of all financial obligations of such Person in respect of Hedge
Agreements, (i) the net amount of all other financial obligations of such Person
under any contract or other agreement to which such Person is a party, (j) all
Indebtedness of other Persons of the type described in clauses (a) through (i)
above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or purchase such Indebtedness or to advance or supply funds for the
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-24
payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for property
or services irrespective of whether such property is received or such services
are rendered) or (iv) otherwise to assure a creditor against loss, and (k) all
Indebtedness of the type described in clauses (a) through (j) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for payment of such Indebtedness.
"INDEMNIFIED AMOUNT" when used:
(a) in the El Paso Agreement, shall have the meaning set forth in
Section 3.2 of the El Paso Agreement;
(b) in the Trinity Company Agreement, shall have the meaning set
forth in Section 13.1 of the Trinity Company Agreement; and
(c) in the Sponsor Subsidiary Credit Agreement, shall have the
meaning set forth in Section 10.01 of the Sponsor Subsidiary Credit
Agreement.
"INDEMNIFIED PERSON" means:
(a) as used in the El Paso Agreement and Section 13.1 and Section
13.2 of the Trinity Company Agreement and Section 13.5, Section 13.6, and
Section 13.7 of the Trinity Company Agreement (as such Sections relate to
the indemnities under Section 13.1 or Section 13.2 of the Trinity Company
Agreement), Red River, the Agent, the Red River Collateral Agent, each
Lender, each APA Purchaser, each agent for the APA Purchasers, the RCE
Agent, the Surety, Lord Securities, the Sponsor Subsidiary Collateral
Agent, the Residual Credit Enhancer, the Administrator, the Trinity
Custodian, any Appraiser, the Equity Investor and any successor and
permitted assignee of any such Person (whether pursuant to an assignment
for security or otherwise, but excluding any assignee for security of any
Equity Investor), and the direct and indirect members, partners,
shareholders, and other equity holders (including the CBI Holder and the
RI Holder (each as defined in the Red River Company Agreement)) of any of
the foregoing, and each of the respective directors, officers, trustees,
managers, employees, administrators and agents (including sales agents) of
any of the foregoing;
(b) as used in Section 13.3 of the Trinity Company Agreement and
Section 13.5, Section 13.6, and Section 13.7 of the Trinity Company
Agreement (as such Sections relate to the indemnities under Section 13.3
of the Trinity Company Agreement), the Trinity Liquidator, its officers,
directors, agents (including sales agents) or employees; and
(c) as used in the Sponsor Subsidiary Credit Agreement, Trinity, Red
River, the Agent, the Red River Collateral Agent, each Lender, each APA
Purchaser, each agent for the APA Purchasers, the RCE Agent, the Surety,
Lord Securities, the Sponsor Subsidiary Collateral Agent, the Residual
Credit Enhancer, the Administrator, the Trinity Custodian, any Appraiser,
each Equity Investor and any successor and permitted assignee of any such
Person (whether pursuant to an assignment for security or otherwise, but
excluding any assignee for security of any Equity Investor), and the
direct and indirect members, partners, shareholders, and other equity
holders (including the CBI Holder and the RI Holder (each as defined in
the Red River Company Agreement)) of any of the foregoing, and each of the
respective directors, officers,
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-25
trustees, managers, employees, administrators and agents (including sales
agents) of any of the foregoing.
"INDEMNIFIED PROCEEDING" (a) as used in the El Paso Agreement, has
the meaning set forth in Section 3.5 of the El Paso Agreement, (b) as used in
the Trinity Company Agreement, has the meaning set forth in Section 13.7 of the
Trinity Company Agreement and (c) as used in the Sponsor Subsidiary Credit
Agreement, has the meaning set forth in Section 10.05 of the Sponsor Subsidiary
Credit Agreement.
"INDEMNITOR" has the meaning set forth in Section 13.1 of the
Trinity Company Agreement.
"INFORMATION MEMORANDUM" means each Equity Information Memorandum
and each APA Purchaser Information Memorandum.
"INITIAL EVENT QUARTER" has the meaning set forth in Section
5.09(e)(i)(I) of the Sponsor Subsidiary Credit Agreement.
"INITIAL TRINITY MEMBER" means Sabine as the initial member of
Trinity under the original terms of the Trinity Company Agreement.
"INTEREST PERIOD", as used in the Sponsor Subsidiary Credit
Agreement, means, in relation to the Advance made available under Section
2.01(a)(i) of the Sponsor Subsidiary Credit Agreement, the period commencing on
the First Closing Date and ending on October 1, 1999, and, in relation to the
Advance made available under Section 2.01(a)(ii) of the Sponsor Subsidiary
Credit agreement, the period commencing on the Second Closing Date and ending on
January 1, 2000, and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the next
succeeding first Business Day of the next succeeding January, April, July or
October, as the case may be, of each year; provided, however, that, in the case
of any Interest Period that commences before the Maturity Date or the
Liquidation Start Date, as applicable, and would otherwise end on a date
occurring after the Maturity Date or the Liquidation Start Date, as applicable,
such Interest Period shall end on the Maturity Date or the Liquidation Start
Date, as applicable, and the duration of each Interest Period that commences on
or after the Maturity Date or the Liquidation Start Date, as applicable, shall
be initially the period commencing on the Maturity Date or the Liquidation Start
Date, as applicable, and ending on the first Business Day of the immediately
following calendar quarter and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on the next
succeeding first Business Day of January, April, July or October, as the case
may be, of each year or of such other duration as shall be selected by the
Trinity Class B Member in its sole discretion.
"INTERMEDIATE HOLDER" means with respect to a Contributed
Investment, the Business Entity that has issued the applicable Pledged Shares,
Pledged Interests and/or Pledged Debt that comprises such Contributed
Investment, and each other Business Entity in which such Business Entity has
directly or indirectly made or holds an Investment, excluding the Underlying
Business relating to such Contributed Investment. If, in relation to a
Contributed Investment, the Business Entity that has issued the applicable
Pledged Shares, Pledged Interests and/or Pledged Debt that comprises such
Contributed Investment is the Underlying Business relating to such Contributed
Investment, then there shall be no "Intermediate Holder" relating to such
Contributed Investment.
"INVESTMENT" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest in or other securities
of such Person, any capital contribution to
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-26
such Person or any other investment in such Person, including any arrangement
pursuant to which the Person making such investment incurs Indebtedness of the
types referred to in clauses (j) and (k) of the definition of "Indebtedness" in
respect of such Person.
"INVESTMENT COMPANY ACT" means the United States Investment Company
Act of 1940, as amended.
"INVOLUNTARY BANKRUPTCY" has the meaning set forth in the definition
of Bankruptcy.
"LENDER" has the meaning set forth in the Red River Credit
Agreement.
"LIBO RATE" has the meaning set forth in the Red River Credit
Agreement.
"LIEN" means any mortgage, pledge, hypothecation, assignment for
security, encumbrance, lien (statutory or other), security interest or other
security device or arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any lease having
substantially the same effect as any of the foregoing).
"LIQUIDATING EVENT" has the meaning set forth in Section 12.6 of the
Trinity Company Agreement.
"LIQUIDATION AMOUNT" has the meaning set forth in the Red River
Credit Agreement.
"LIQUIDATION INDEMNITY" means each of the following:
(a) the Amended and Restated Liquidation Indemnity Agreement
(Trinity), originally dated as of June 30, 1999 and amended and restated
as of November 22, 1999, made by El Paso in favor of the beneficiaries
named therein;
(b) the Amended and Restated Liquidation Indemnity Agreement
(Sabine), originally dated as of June 30, 1999 and amended and restated as
of November 22, 1999, made by the Sabine Managing Member in favor of the
beneficiaries name therein; and
(c) any other Liquidation Indemnity Agreement executed by a Sponsor
Subsidiary Member pursuant to Section 9.02 of the Sponsor Subsidiary
Credit Agreement.
"LIQUIDATION PERIOD" means (a) in relation to Trinity, the period
commencing on the Liquidation Start Date and ending on the date of the
Disposition or collection of or realization upon all of the Trinity Property and
(b) in relation to a Sponsor Subsidiary, the period commencing on the
Liquidation Start Date and ending on the date of Disposition or collection of or
realization upon all of the Sponsor Subsidiary Property of such Sponsor
Subsidiary.
"LIQUIDATION START DATE" in relation to (a) Trinity, has the meaning
set forth in Section 12.6 of the Trinity Company Agreement, (b) in relation to
Sabine, has the meaning set forth in Section 11.6 of the Sabine Company
Agreement, and (c) in relation to any other Sponsor Subsidiary, has the meaning
set forth in Section 11.6 of the Sponsor Subsidiary Company Agreement of such
Sponsor Subsidiary.
"LORD SECURITIES" means BSCS I, Inc., a Delaware corporation.
"LOSSES" has the meaning set forth in the definition of Profits and
Losses.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-27
"MAINTENANCE CAPITAL EXPENDITURES" means, for any Underlying Business for
any period, the sum of, without duplication, (a) all cash expenditures made,
directly or indirectly, by such Underlying Business or any of its subsidiaries
during such period for maintenance or replacement of equipment, fixed assets,
real property or improvements, that have been or should be, in accordance with
GAAP, reflected as property, plant or equipment on a consolidated balance sheet
of such Person plus (b) the aggregate principal of and interest on all
Indebtedness (including Obligations under Capitalized Leases) payable during
such period in connection with any such Indebtedness incurred in connection with
such property, plant or equipment. For purposes of this definition, the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment or with insurance proceeds shall be included in Maintenance
Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment for the equipment
being traded in at such time or the amount of such proceeds, as the case may be.
"MARGIN STOCK" means "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"▇▇▇▇-TO-MARKET EVENT" means (a) the occurrence of the Purchase Exercise
Date, (b) the retirement in full of a Trinity Membership Interest under the
Trinity Company Agreement, or (c) the liquidation of Trinity within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g) in connection with a Liquidating
Event.
"▇▇▇▇-TO-MARKET SCHEDULE" means a schedule setting forth the
▇▇▇▇-to-Market Value for each of the following as individual line items: all
Cash Equivalents and the Advances.
"▇▇▇▇-TO-MARKET VALUE" means the following as determined by the Trinity
Class B Member:
(a) In respect of the Advances:
(i) at any time other than such time as the sum of (x) the aggregate
of the Fair Market Value of all Contributed Investments held by all
Sponsor Subsidiaries and (y) the Total Cash Collateral Amount and
Permitted Assets (other than A-Loans) held by the Sponsor Subsidiaries is
less than the Unrecovered Capital of Red River in Trinity, the
▇▇▇▇-to-Market Value of the Advances shall be equal to the aggregate
principal amount outstanding under the Advances, together with all accrued
but unpaid amounts under the Sponsor Subsidiary Credit Agreement
(including, without limitation, interest and fees) at that time; and
(ii) the ▇▇▇▇-to-Market Value of the Advances at any other time
shall be equal to the sum of (x) the aggregate of the Fair Market Value of
all Contributed Investments held by all Sponsor Subsidiaries and (y) the
Total Cash Collateral Amount and Permitted Assets (other than A-Loans)
held by the Sponsor Subsidiaries,
provided that, for purposes of this clause (a), El Paso Demand Loans shall be
deemed to be valued at their outstanding principal amount at the time of
determination;
(b) the ▇▇▇▇-to-Market Value of any Cash Equivalent shall be equal to its
face value less unamortized discount, if any, unless such Cash Equivalent is
in default, in which case its ▇▇▇▇-to-Market Value shall be $0; and
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-28
(c) the ▇▇▇▇-to-Market Value of any other Trinity Property shall be its
fair market value at the time of determination.
"MATERIAL ADVERSE EFFECT", as used in:
(a) the Trinity Company Agreement and the Sponsor Subsidiary Credit
Agreement (except as set forth in clause (c) below), shall mean (i) a
material adverse effect on (x) the financial condition or operations of El
Paso and its Consolidated Subsidiaries on a Consolidated basis or (y) the
financial condition of any of Sabine, the other Sponsor Subsidiaries, Trinity
or Red River, (ii) a material adverse effect on the ability of any of El
Paso, Sabine, the other Sponsor Subsidiaries, Trinity or Red River to perform
its obligations under any Operative Document to which it is a party, (iii) a
material adverse effect on the rights or remedies of any Indemnified Person
under any Operative Document, (iv) a material adverse effect on the rights or
remedies of Trinity or the Sponsor Subsidiary Collateral Agent under any
Sponsor Subsidiary Credit Document or Assigned Agreement, or (v) a material
adverse effect on the financial condition or operations of the issuer of any
Contributed Investment, and the related Intermediate Holder and Underlying
Business, taken as a whole on a consolidated basis;
(b) the El Paso Agreement, shall mean a material adverse effect on the
financial condition or operations of El Paso and its Consolidated
Subsidiaries on a Consolidated basis; and
(c) Sections 4.02 and 5.08 of the Sponsor Subsidiary Credit Agreement and
Section 2.12 of each Subordinated Note, shall mean a material adverse effect
on the financial condition or operations of the issuer of any Contributed
Investment, and the related Intermediate Holder and Underlying Business,
taken as a whole on a consolidated basis; and
"MATERIAL AGREEMENT" means any agreement, covenant, indenture, lease,
deed, instrument or other legal obligation (other than the Operative Documents)
of or relating to each Contributed Investment and any Intermediate Holder and
Underlying Business relating thereto, the violation, termination, acceleration,
invalidity, or unenforceability of which could reasonably be likely to result in
(a) a material adverse effect on the ability of any Sponsor Subsidiary to
perform its obligations under any Operative Document, (b) a material adverse
effect on the financial condition or operations of such Intermediate Holder and
such Underlying Business, taken as a whole, or (c) the Freely Transferable
Portion of any such Contributed Investment otherwise not being Freely
Transferable.
"MATERIAL SUBSIDIARY" means any Subsidiary of El Paso (other than a
Project Financing Subsidiary) that itself (on an unconsolidated, stand-alone
basis) owns in excess of 10% of the book value of the consolidated assets of El
Paso and its consolidated Subsidiaries.
"MATURITY DATE" means June 23, 2004.
"MAXIMUM CLAWBACK AMOUNT", in relation to a Pool I Contributed Investment,
means, at any time of determination:
(a) where the Pool I Intermediate Holder or Pool I Underlying Business is
a Pool I Controlled Business, the amount (if any) by which (i) the amount of
retained earnings of such Pool I Controlled Business, as reported in the most
recent balance sheet of such Pool I Controlled Business prior to the time of
determination, is less than (ii) the sum of (A) the amount of retained
earnings of such Pool I Controlled Business, as reported in the most recent
balance sheet of such Pool I Controlled Business prior to the
Acquisition/Accession Date of the Pool I Contributed Investment relating to
such Pool I Controlled Business plus (B) any Pre-Contribution Excess
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-29
Distribution to the extent the capital contribution by the Sponsor
Subsidiaries in respect thereof described in Section 9.02(e) of the Sponsor
Subsidiary Credit Agreement is not reflected in the balance sheets referred
to in clause (A) above, plus (C) the amount of any gains from the Disposition
of any property, plant and/or equipment (as defined under GAAP) of such Pool
I Controlled Business included in the amount of income of such Pool I
Controlled Business for the period from the Acquisition/Accession Date of the
Pool I Contributed Investment relating to such Pool I Controlled Business
through the time of determination, as reported in the accounts of such Pool I
Controlled Business from time to time; and
(b) where the Pool I Contributed Investment is a Publicly Traded
Investment, the amount (if any) by which (i) the amount of the aggregate
cumulative Distributions received by the relevant Sponsor Subsidiary from the
Pool I Underlying Business relating to such Publicly Traded Investment for
the period from the Acquisition/Accession Date of such Publicly Traded
Investment through the time of determination exceeds (ii) the aggregate
cumulative net income accrued by such Sponsor Subsidiary in respect of such
Publicly Traded Investment for the period from such Acquisition/Accession
Date through the time of determination, provided, however, that the aggregate
Maximum Clawback Amount for all Pool I Contributed Investments shall not
exceed the aggregate amount of funds in the Cash Reserve actually distributed
pursuant to Section 7.04(a)(6) of the Sponsor Subsidiary Credit Agreement.
"MOJAVE" means Mojave Pipeline Company, a Texas general partnership.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor rating
agency.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which El Paso or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions and in
respect of which El Paso or an ERISA Affiliate has any liability (contingent or
otherwise), such plan being maintained pursuant to one or more collective
bargaining agreements.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (a) is maintained for employees of El Paso
or an ERISA Affiliate and at least one Person other than El Paso and its ERISA
Affiliates or (b) was so maintained and in respect of which El Paso or an ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"NET CASH PROCEEDS" means, with respect to any Disposition of any
Contributed Investment by a Sponsor Subsidiary or the Disposition of all or
substantially all of the assets of, or Equity Interests in, any Intermediate
Holder or Underlying Business or any Disposition described in Sections
5.09(d)(iv), (v), (vi) and (vii) of the Sponsor Subsidiary Credit Agreement, the
Gross Cash Proceeds with respect to such Disposition after deducting therefrom
(without duplication) (a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other similar
fees and commissions and (b) the amount of taxes payable in connection with or
as a result of such transaction, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable or an obligation to pay which has been incurred or, in
the case of taxes, that are estimated by El Paso to be payable to a Person that
is not El Paso or an Affiliate of El Paso and are properly attributable to such
transaction.
"NET INCOME ESTIMATE" has the meaning set forth in Section 2.05(b)(ix)(C)
of the Sponsor Subsidiary Credit Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-30
"NET WORTH" means with respect to El Paso, as of any date of
determination, the sum of the preferred stock and stockholders' equity of El
Paso as shown on the most recent consolidated balance sheet of El Paso delivered
to Red River pursuant to Section 5.4 of the El Paso Agreement plus the
cumulative amount by which stockholders' equity of El Paso shall have been
reduced by reason of non-cash write-downs of long term assets from and after
August 4, 2000.
"NON-PRINCIPAL PROPERTY" of a Controlled Business, means the following
property of that Controlled Business:
(a) motor vehicles, aircraft and watercraft;
(b) computer hardware and software;
(c) buildings and office space and fixtures thereon;
(d) office furniture and equipment;
(e) trademarks, trade names, trade styles, trade secrets, service marks,
logos, copyrights, patents, and patent applications; and
(f) in relation to any Pool II Controlled Business only, any equipment and
other tangible personal property and any fixtures, in each case, located on
or used in connection with any Oil and Gas Property owned by such Pool II
Controlled Business.
"NOTICE EVENT" means the occurrence of any of the following events:
(a) Trinity or the Trinity Class A Member shall fail:
(i) to distribute in cash to the Trinity Class B Member all amounts due
and payable to the Trinity Class B Member pursuant to Section 7.3 of the
Trinity Company Agreement when the same shall become due and payable in
accordance with such Section 7.3; or
(ii) to make any other payment or capital contribution required to be
made by it under the Trinity Company Agreement when due if such failure
shall remain unremedied for five Business Days after such payment or
contribution becomes due and payable under the Trinity Company Agreement;
or
(iii) to perform or observe any term, covenant or obligation on its
part to be performed or observed under (A) Section 4.3 (other than clauses
(a), (m), (o) or (r)), Section 4.6, Section 4.9, Section 9.1(c) or Section
10.1 of the Trinity Company Agreement, (B) Section 4.3(m), Section 4.3(o),
Section 4.3(r), Section 4.7, Section 4.8, Section 4.11, Section 4.12 or
Section 9.1 (other than clause (c) thereof) of the Trinity Company
Agreement if such failure shall remain unremedied for five Business Days
after the occurrence thereof and (c) any other term, covenant or
obligation under the Trinity Company Agreement (including Section 4.3(a)
of the Trinity Company Agreement, but only to the extent the obligations
referred to in Section 4.3(a) of the Trinity Company Agreement are not
covered more specifically in any other Section or clause of the Trinity
Company Agreement referred to in clause (A) or (B) above (excluding any
Section or clause referred to in the parenthetical phrase in clause (A)
above)) in any material
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-31
respect, if such failure shall remain unremedied for 30 days following
notice thereof by the Trinity Class B Member if such failure is reasonably
curable; or
(b) The Trinity Class A Member has been grossly negligent or has
engaged in willful misconduct in managing or otherwise conducting the
business and affairs of Trinity; or
(c) A Sponsor Subsidiary Member has been grossly negligent or has been
engaged in willful misconduct in managing or otherwise conducting the
business and affairs of a Sponsor Subsidiary; or
(d) Any Sponsor Subsidiary Member shall fail to make any capital
contribution as required by the terms of the relevant Sponsor Subsidiary
Company Agreement if such failure shall remain unremedied for five Business
Days after such contribution becomes due and payable; or
(e) The occurrence of an El Paso Event; or
(f) The occurrence of any Event of Default under the Sponsor Subsidiary
Credit Agreement.
"NOTIFIED AMOUNT" means, for any Payment Period (or any portion
thereof), an amount equal to the aggregate amount of interest payable by Red
River pursuant to the Red River Loan Documents for such Payment Period (or
portion thereof).
"NOTIONAL AMORTIZATION" means, at any time of determination, an amount
equal to 1/7th of the Pool I Exposure as at the time of determination.
"OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding. Without limiting the generality of the foregoing, the Obligations of
each Sponsor Subsidiary under the Sponsor Subsidiary Credit Documents include
the joint and several obligations to (a) pay principal, interest, costs,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable under any Sponsor Subsidiary Credit Document and (b) reimburse any
amount in respect of any of the foregoing that Trinity, in its sole discretion,
or the Sponsor Subsidiary Collateral Agent, at the direction of Trinity, may
elect to pay or advance on behalf of any Sponsor Subsidiary.
"OIL AND GAS PROPERTIES" means Hydrocarbon Interests; the properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority having
jurisdiction) which may affect all or any portion of the Hydrocarbon Interests;
all operating agreements, contracts and other agreements which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of hydrocarbons from or attributable to any Hydrocarbon Interests;
all hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, the lands covered thereby and all
rents, issues, profits, proceeds, products, revenues and other income from or
attributable to the Hydrocarbon Interests.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-32
"OPERATING REPORT" means a periodic report, in the form attached to
Exhibit D to the Trinity Company Agreement, on the business activity of the Pool
I Underlying Businesses and the Pool II Contributed Investments, delivered
pursuant to Section 5.03(b) or (c) of the Sponsor Subsidiary Credit Agreement.
"OPERATIVE DOCUMENTS" means, collectively, the Trinity Company Agreement,
the Red River Company Agreement, the certificate of formation of Trinity, the
Sabine Company Agreement, each other Sponsor Subsidiary Company Agreement, the
Amendments to the Sponsor Subsidiary Company Agreements, the certificate of
formation of Sabine, the certification of formation of each other Sponsor
Subsidiary, the Trinity Custody Agreement, each Sponsor Subsidiary Credit
Document, the Red River Loan Documents, the Tax Indemnity Agreement, each El
Paso Demand Note, each A-Loan Note, the El Paso Agreement, the El Paso Guaranty,
the Purchase Option Agreement, each Liquidation Indemnity, each Subordinated
Note and each EPPC Note.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person, any
certificate of incorporation, charter, by-laws, memorandum of association,
articles of association, partnership agreement, limited liability company
agreement, certificate of limited partnership, certificate of formation,
certificate of trust, trust agreement or other agreement or instrument under
which such Person is formed or organized under Applicable Laws.
"ORIGINAL SPONSOR SUBSIDIARY CREDIT AGREEMENT" means the Sponsor
Subsidiary Credit Agreement, originally dated as of June 30, 1999, among
Trinity, as lender, Sabine and the other Sponsor Subsidiaries described therein,
as borrowers, and the Sponsor Subsidiary Collateral Agent, as collateral agent
for Trinity.
"OTHER TAXES" (a) as used in the Sponsor Subsidiary Credit Documents, has
the meaning set forth in Section 2.08(b) of the Sponsor Subsidiary Credit
Agreement and (b) as used in the El Paso Agreement, has the meaning set forth in
Section 4.2(b) of the El Paso Agreement.
"OUTSIDE DATE" has the meaning set forth in Section 2.10(b)(vi) of the
Sponsor Subsidiary Credit Agreement.
"PAYMENT DATE" means the fifth Business Day of each January, April, July
and October in each year, commencing October 7, 1999 or, if notification of any
amount required to determine the Preferred Payment is not timely made, the third
Business Day after such notification is made; provided that, in any event, the
Payment Date occurring in April 2002 shall be April 5, 2002; provided that,
after the Maturity Date or the Liquidation Start Date, as applicable, the
Payment Date shall be each day selected by the Trinity Class B Member in its
sole discretion.
"PAYMENT PERIOD" means the period commencing on the First Closing Date and
ending on October 1, 1999 and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Payment Period and ending on the next
succeeding first Business Day of January, April, July or October, as the case
may be, of each year; provided, however, that in the case of any Payment Period
under the Trinity Company Agreement that commences before the Maturity Date or
the Liquidation Start Date, as applicable, and would otherwise end on a date
occurring after the Maturity Date or the Liquidation Start Date, as applicable,
such Payment Period shall end on the Maturity Date or the Liquidation Start
Date, as applicable, and the duration of each Payment Period that commences on
or after the Maturity Date or the Liquidation Start Date, as applicable, shall
be initially the period commencing on the Maturity Date or the Liquidation Start
Date, as applicable, and ending on the first Business Day of the immediately
following calendar quarter and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Payment Period and ending on the next
succeeding first Business Day
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-33
of January, April, July or October, as the case may be, of each year or of such
other duration as shall be selected by the Trinity Class B Member in its sole
discretion.
"PAYMENT RESTRICTION" means, with respect to any Contributed Investment,
any restriction or limitation on the rights of the holder of any Contributed
Investment to receive, or the ability of any related Intermediate Holder or
Underlying Business to pay, any dividend, distribution, return of capital,
income, interest, principal or other payment, in respect of such Contributed
Investment.
"PERMITTED ACTIVITY" with respect to any Sponsor Subsidiary, has the
meaning set forth in the Sponsor Subsidiary Company Agreement of such Sponsor
Subsidiary.
"PERMITTED ASSETS" (a) means with respect to Trinity, (i) the Advances,
Trinity's rights under the Sponsor Subsidiary Credit Documents and the other
Operative Documents and all proceeds thereof of whatever kind, (ii) the Trinity
Operating Account, and (iii) Cash Equivalents; (b) with respect to Sabine, has
the meaning set forth in Exhibit A to the Sabine Company Agreement; and (c) with
respect to any other Sponsor Subsidiary, has the meaning set forth in Exhibit A
to the relevant Sponsor Subsidiary Company Agreement.
"PERMITTED INVESTMENTS" has the meaning set forth in Section 7.03 of the
Sponsor Subsidiary Credit Agreement.
"PERMITTED JURISDICTION" means Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, Japan, The Netherlands,
Norway, Spain, Sweden, Switzerland, the United States of America and the United
Kingdom.
"PERMITTED LIENS", as used in:
(a) the Trinity Company Agreement, means (i) bankers' rights of setoff for
uncollected items and routine fees and expenses arising in the ordinary
course of business, (ii) Liens created by or pursuant to, or expressly
permitted under, any Operative Document, (iii) Liens for taxes and other
governmental charges and assessments (and other Liens imposed by Applicable
Law) not yet delinquent or being contested in good faith and by proper
proceedings and as to which appropriate reserves (in the good faith judgment
of the relevant Person) are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable against
its other creditors, (iv) restrictions on transfers of securities or voting
under Applicable Laws and (v) with respect to Trinity, restrictions on the
transfer of assets of Trinity under the Trinity Company Agreement and any
other Operative Documents; and
(b) any Sponsor Subsidiary Credit Document, means (i) bankers' rights of
set-off for uncollected items and routine fees and expenses arising in the
ordinary course of business, (ii) Liens created by or pursuant to, or
expressly permitted under, any Operative Document to which such Sponsor
Subsidiary is a party, (iii) Liens for taxes and other governmental charges
and assessments (and other Liens imposed by Applicable Law) not yet
delinquent or being contested in good faith and by proper proceedings and as
to which appropriate reserves (in the good faith judgment of such Sponsor
Subsidiary) are being maintained, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against its other
creditors, (iv) restrictions on transfers of securities or voting under
Applicable Laws and agreements, (v) in the case of Sabine, restrictions on
the transfer of its Trinity Class A Membership Interest or any of its other
assets under the Trinity Company Agreement and any other Operative Document,
(vi) restrictions on the transfer or assignment of rights under the terms of
the Assigned Agreements and (vii) rights of first refusal, rights of first
negotiation or first offer, tag-along or co-sale rights,
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-34
and other similar contractual restrictions upon the transfer of any
Contributed Investment (or any portion thereof).
"PERMITTED RELEVANT LIENS" means:
(i) inchoate Liens and charges imposed by law and incidental to
construction, maintenance, development or operation of properties, or the
operation of business, in the ordinary course of business if payment of the
obligation secured thereby is not yet overdue or if the validity or amount of
which is being contested in good faith by El Paso or any of its Subsidiaries;
(ii) Liens for taxes, assessments, obligations under workers' compensation
or other social security legislation or other governmental requirements,
charges or levies, in each case not yet overdue;
(iii) Liens reserved in any oil, gas or other mineral lease entered into
in the ordinary course of business for rent, royalty or delay rental under
such lease and for compliance with the terms of such lease;
(iv) easements, servitudes, rights-of-way and other rights, exceptions,
reservations, conditions, limitations, covenants and other restrictions that
do not materially interfere with the operation, value or use of the
properties affected thereby;
(v) conventional provisions contained in any contracts or agreements
affecting properties under which El Paso or any of its Subsidiaries is
required immediately before the expiration, termination or abandonment of a
particular property to reassign to such Person's predecessor in title all or
a portion of such Person's rights, titles and interests in and to all or
portion of the such property;
(vi) any Lien reserved in a grant or conveyance in the nature of a
farm-out or conditional assignment to El Paso or any of its Subsidiaries
entered into in the ordinary course of business on reasonable terms to secure
undertakings of El Paso or any such Subsidiary in such grant or conveyance;
(vii) any Lien consisting of (A) statutory landlord's liens under leases
to which El Paso or any of its Subsidiaries is a party or other Liens on
leased property reserved in leases thereof for rent or for compliance with
the terms of such leases, (B) rights reserved to or vested in any
municipality or governmental, statutory or public authority to control or
regulate any property of El Paso or any of its Subsidiaries, or to use such
property of El Paso or any such Subsidiary in any manner which does not
materially impair the use of such property for the purposes for which it is
held, (C) obligations or duties to any municipality or public authority with
respect to any franchise, grant, license, lease or permit and the rights
reserved or vested in any governmental authority or public utility to
terminate any such franchise, grant, license, lease or permit or to condemn
or expropriate any property, and (D) zoning laws and ordinances and municipal
regulations;
(viii) any Lien on any assets (including Equity Interests and other
obligations) securing Indebtedness or other obligations incurred or assumed
for the purpose of financing all or any part of the cost of acquiring,
improving, installing, designing, engineering, developing (including
drilling), or constructing such assets, provided that such Lien attaches to
such assets concurrently with or within 365 days after the acquisition or
completion of development, construction or installation thereof or
improvement thereto; and
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-35
(ix) the creation of interests in property of the character commonly
referred to as a "royalty interest" or "overriding royalty interest",
production payments, farmouts, leases, subleases, rights of way and other
easements, participants, joint venture, joint operating, unitization, pooling
and communication agreements, or other similar transactions in the ordinary
course of business.
"PERMITTED TRANSFER", as used in the Trinity Company Agreement, means any
Transfer of Trinity Membership Interests permitted by Section 10.2 of the
Trinity Company Agreement.
"PERMITTED TRANSFEREE", as used in the Trinity Company Agreement, means
any Person to which a Trinity Membership Interest is Transferred pursuant to a
Permitted Transfer.
"PERSON" means any individual, a Business Entity, or a country or any
political subdivision thereof or any agency or instrumentality of such country
or subdivision.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLEDGED DEBT" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.
"PLEDGED INTERESTS" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.
"PLEDGED SHARES" has the meaning set forth in the Sponsor Subsidiary
Security Agreement.
"POOL I" or "POOL II" when used as a pre-fix to "Contributed Investment",
"Intermediate Holder", "Underlying Business", "Controlled Business", or
"Publicly Traded Investment", shall mean an Intermediate Holder or Underlying
Business or a Controlled Business or Publicly Traded Investment, as applicable,
of or constituting a Pool I Contributed Investment or Pool II Contributed
Investment, as applicable.
"POOL I CONTRIBUTED INVESTMENTS" means (a) the Pre-approved Pool I
Contributed Investments and (b) those other Eligible Investments that become
Contributed Investments pursuant to Section 9.02 of the Sponsor Subsidiary
Credit Agreement (other than Pool II Contributed Investments).
"POOL I EXPOSURE" means at any time of determination an amount equal to
(a) the Unrecovered Capital of Red River in Trinity at such time less (b) the
Total Cash Collateral Amount at such time less (c) the Pool II Borrowing Base as
determined pursuant to Section 2.10 of the Sponsor Subsidiary Credit Agreement.
"POOL I AFFILIATE LOANS" has the meaning set forth in Section 5.09(e)(i)
of the Sponsor Subsidiary Credit Agreement.
"POOL I DISTRIBUTIONS SUB-ACCOUNT" has the meaning set forth in Section
5.09(k) of the Sponsor Subsidiary Credit Agreement.
"POOL I LOAN VALUE" means (a) in the case of the Pre-approved Pool I
Contributed Investments as a group, $360,000,000 and (b) in the case of any
other Contributed Investment, the loan value notified to the relevant Additional
Sponsor Subsidiary or existing Sponsor Subsidiary pursuant to Section 9.02(c) of
the Sponsor Subsidiary Credit Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-36
"POOL I LOAN VALUE VOTING DATE" has the meaning set forth in Section 2.15
of the Red River Credit Agreement.
"POOL I NOTIONAL INTEREST" means at any time of determination the amount
equal to the product of a percentage equal to the per annum Funding Rate
applicable during the most recently completed Payment Period and the Pool I
Exposure at such time.
"POOL II AFFILIATE LOANS" has the meaning set forth in Section
5.09(e)(iii) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE" means:
(a) on any date prior to the effective date of the first Pool II Borrowing
Base Determination or Pool II Borrowing Base Redetermination pursuant to
Section 2.10 of the Sponsor Subsidiary Credit Agreement, the amount
determined pursuant to Section 2.10(a) of the Sponsor Subsidiary Credit
Agreement; and
(b) thereafter, the amount determined pursuant to a Pool II Borrowing Base
Determination or a Pool II Borrowing Base Redetermination under Section 2.10
of the Sponsor Subsidiary Credit Agreement,
provided, however, that the Pool II Borrowing Base Amount shall not at any time
exceed $700,000,000.
"POOL II BORROWING BASE DETERMINATION" has the meaning set forth in
Section 2.10(b) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE DETERMINATION DATE" has the meaning set forth in
Section 2.14 of the Red River Credit Agreement.
"POOL II BORROWING BASE EFFECTIVE DATE" has the meaning set forth in
Section 2.10(b) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE PERIOD" has the meaning set forth in Section
2.10(b)(vi) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE RECOMMENDATION" has the meaning set forth in
Section 2.10(b) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE REDETERMINATION" has the meaning set forth in
Section 2.10(c) of the Sponsor Subsidiary Credit Agreement.
"POOL II BORROWING BASE REPORT" means a report prepared by the Calculation
Agent in substantially the form of Exhibit 2.10 to the Sponsor Subsidiary Credit
Agreement.
"POOL II BORROWING BASE VOTING DATE" has the meaning set forth in Section
2.14 of the Red River Credit Agreement.
"POOL II CONTRIBUTED INVESTMENTS" means the Contributed Investments
comprising all of the Equity Interests in:
(a) EPPGOM; and
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-37
(b) EPPC.
"POOL II HOLDBACK AMOUNT" means, for any Fiscal Quarter (the "RELEVANT
FISCAL Quarter"), an amount equal to the sum of (i) the aggregate amount of
Distributions made by Pool II Contributed Investments during the Relevant Fiscal
Quarter and (ii) the aggregate amount of Distributions made by Pool II
Contributed Investments during each prior Fiscal Quarter (if any) in the Fiscal
Year in which the Relevant Fiscal Quarter falls.
"POOL II NOTIONAL INTEREST" means at any time of determination the amount
equal to the product of a percentage equal to the per annum Funding Rate
applicable during the most recently completed Payment Period and the Pool II
Borrowing Base at such time.
"PRE-APPROVED POOL I CONTRIBUTED INVESTMENTS" means those Pool I
Contributed Investments of which Energy Partners, Mojave and Bear Creek are the
Underlying Businesses.
"PRE-CONTRIBUTION EXCESS DISTRIBUTION" means the amount (if any) by which
(a) the cumulative Distributions made by the Pool I Underlying Business relating
to any Pre-approved Pool I Contributed Investment during the period from January
1, 1999 to the Acquisition/Accession Date of such Pre-approved Pool I
Contributed Investment exceed (b) the aggregate cumulative net income of such
Pool I Underlying Business during the period from January 1, 1999 to such
Acquisition/Accession Date, as determined by reference to the most recent
accounts of such Pool I Underlying Business prior to such Acquisition/Accession
Date.
"PREFERRED PAYMENT" means an amount determined for each Payment Period or
portion thereof equal to the product of the Unrecovered Capital of the Trinity
Class B Member at the time of determination and the Funding Rate for such
Payment Period (or portion thereof).
"PRINCIPAL PROPERTY" of a Controlled Business means all property of such
Controlled Business other than Non-Principal Property.
"PRINCIPAL SUBSIDIARY" means, at any time, any Subsidiary of El Paso
(other than a Project Financing Subsidiary) either (a) having assets that are,
or owning subsidiaries with assets that together with its assets are, at such
time greater than or equal to 5% of the consolidated assets of El Paso and its
consolidated Subsidiaries at such time or (b) constituting a "Borrowing
Subsidiary" (or any analogous term) under the El Paso Existing 364-Day Facility
or the El Paso Existing 3-Year Facility.
"PROCEEDS ACCOUNT" means a deposit or securities account to be established
by each Pool I and Pool II Underlying Business with Mellon Bank or any other
financial institution reasonably acceptable to Trinity on or prior to the Third
Closing Date, with the specific account information to be provided by El Paso to
Trinity immediately thereafter.
"PROFITS" AND "LOSSES" in relation to Trinity, means, for each Fiscal
Year, an amount equal to Trinity's taxable income or loss for such Fiscal Year,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of Trinity that is exempt from Federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of "Profits" and "Losses" shall be added to such taxable income or
loss;
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-38
(b) Any expenditures of Trinity described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-1(b)(2)(iv)(g) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Trinity Property is
adjusted, the amount of such adjustment shall be taken into account as gain
or loss from the Disposition of such asset for purposes of computing Profits
or Losses;
(d) Gain or loss resulting from any Disposition of Trinity Property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property
Disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(e) All Taxes paid or accrued by Trinity shall be treated as deductions in
computing Profits and Losses; and
(f) Any items that are specially allocated pursuant to Section 6.2 of the
Trinity Company Agreement shall not be taken into account in computing
Profits or Losses.
The amounts of the items of income, gain, loss or deduction available to be
specially allocated pursuant to Section 6.2 of the Trinity Company Agreement
shall be determined by applying rules analogous to those set forth in clauses
(a) through (g) above.
"PROJECT FINANCING" means any Relevant Indebtedness incurred to finance or
refinance the acquisition, improvement, installation, design, engineering,
construction, development, completion, maintenance or operation of, or otherwise
in respect of, all or any portion of any project, or any asset related thereto,
and any Guaranty with respect thereto, other than any portion of such Relevant
Indebtedness or Guaranty permitting or providing for recourse against El Paso or
any of its Subsidiaries other than (a) recourse to the Equity Interests in,
Relevant Indebtedness or other obligations of, or assets of, one or more Project
Financing Subsidiaries, and (b) such recourse as exists under any Contingent
Guaranty.
"PROJECT FINANCING SUBSIDIARY" means any Subsidiary of El Paso whose
principal purpose is to incur Project Financing, or to become a direct or
indirect partner, member or other equity participant or owner in a Business
Entity so created, and substantially all the assets of which Subsidiary or
Business Entity are limited to those assets being financed (or to be financed),
or the operation of which is being financed (or to be financed), in whole or in
part by a Project Financing or to Equity Interests in, or Relevant Indebtedness
or other obligations of, one or more other such Subsidiaries or Business
Entities or to Relevant Indebtedness or other obligations of El Paso or its
Subsidiaries or other Persons.
"PROPERTY" means any real property and improvements owned, leased, used,
operated or occupied by El Paso, any of its Subsidiaries or any El Paso Party.
"PROVED DEVELOPED RESERVES" means, at any time, Proved Reserves that can
be expected to be recovered through existing ▇▇▇▇▇ with existing equipment and
operating methods and are classified as proved developed reserves in the most
recent Reserve Report pertaining thereto.
"PROVED RESERVES" means, at any time, recoverable hydrocarbon reserves
that have been proved to a high degree of certainty by analysis of the producing
history of a reservoir and/or by
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-39
volumetric analysis of adequate geological and engineering data and are
classified as proved reserves in the most recent Reserve Report.
"PUBLICLY TRADED INVESTMENT" means a Contributed Investment which is
publicly traded and which is not a Subsidiary of a Sponsor Subsidiary.
"PURCHASE AMOUNT" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASE CLOSING DATE" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASE DEFAULT" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASE EXERCISE DATE" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASE EXERCISE NOTICE" has the meaning set forth in the Purchase
Option Agreement.
"PURCHASE OPTION" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASE OPTION AGREEMENT" means the Amended and Restated Purchase Option
Agreement, originally dated as of June 30, 1999 and amended and restated as of
November 22, 1999, among El Paso, Red River, the Red River El Paso Member, the
Red River Collateral Agent and the Equity Investors.
"PURCHASE OPTION PERIOD" has the meaning set forth in the Purchase Option
Agreement.
"PURCHASER RATE" has the meaning set forth in the Red River Credit
Agreement.
"RECEIVABLES PURCHASE AND SALE AGREEMENT" means the collective reference
to (a) the Receivables Purchase and Sale Agreement dated as of January 14, 1992
among EPNCC, ▇▇▇▇▇▇ ▇.▇., a New York limited partnership, Corporate Asset
Funding Company, a Delaware corporation and Citicorp North America, Inc., as
agent, as amended as of the date hereof, and (b) the Amended and Restated
Receivables Sale Agreement dated as of December 31, 1996 among El Paso Energy
Credit Corporation, Asset Securitization Cooperative Corporation and Canadian
Imperial Bank of Commerce, as administrative agent, as such Agreement may be
amended, supplemented, restated or otherwise modified from time to time;
provided that no such amendment, supplement, restatement or modification shall
change the scope of such Agreement from that of a receivables securitization
transaction.
"REDETERMINATION NOTICE" has the meaning set forth in Section 2.10(c) of
the Sponsor Subsidiary Credit Agreement.
"REDETERMINATION THRESHOLD" has the meaning set forth in Section
2.10(b)(vii) of the Sponsor Subsidiary Credit Agreement.
"RED RIVER" means Red River Investors L.L.C., a Delaware limited liability
company.
"RED RIVER COLLATERAL AGENT" means the "Collateral Agent" as such term is
defined in the Red River Credit Agreement.
"RED RIVER COMPANY AGREEMENT" means the Second Amended and Restated
Company Agreement of Red River Investors L.L.C., originally dated as of June 28,
1999, amended and restated as
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-40
of June 30, 1999 and November 22, 1999, and amended as of March 29, 2002, among
Nueces River Holdings L.L.C., Lord Securities and the Red River El Paso Member.
"RED RIVER CREDIT AGREEMENT" means the $950,000,000 Second Amended and
Restated Credit and Security Agreement, originally dated as of June 30, 1999 and
amended and restated as of November 22, 1999 and March 29, 2002, among Red
River, CXC as the initial lender thereunder and Citicorp North America, Inc., as
agent and as collateral agent.
"RED RIVER EL PASO MEMBER" means EPRR.
"RED RIVER LOAN DOCUMENTS" has the same meaning as "Loan Documents" in the
Red River Credit Agreement.
"RED RIVER MEMBER INTEREST" has the meaning set forth for the term "Member
Interest" in the Red River Company Agreement.
"REGULATIONS" means the income tax regulations, including temporary
regulations, promulgated under the Code.
"RELATED PERSONS" means, with respect to any Indemnified Person, each
Affiliate of such Indemnified Person and all officers, directors, employees,
advisers and representatives of such Indemnified Person or any of its
Affiliates.
"RELEVANT ASSETS" has the meaning set forth in Section 2.10(e) of the
Sponsor Subsidiary Credit Agreement.
"RELEVANT EL PASO PARTY" has the meaning set forth in Section 2.1 of the
El Paso Agreement.
"RELEVANT INDEBTEDNESS" of any Person means, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
(other than any portion of any trade payable obligation of such Person that
shall not have remained unpaid for 91 days or more from the original due date of
such portion) to pay the deferred purchase price of property or services, and
(c) obligations of such Person as lessee under leases that shall have been or
should be, in accordance with GAAP, recorded as capital leases, except that
where such indebtedness or obligation of such Person is made jointly, or jointly
and severally, with any third party or parties other than any consolidated
Subsidiary of such Person, the amount thereof for the purposes of this
definition only shall be the pro rata portion thereof payable by such Person, so
long as such third party or parties have not defaulted on its or their joint and
several portions thereof.
"RELEVANT LIEN" means any lien, security interest or other charge or
encumbrance, or any assignment of the right to receive income, or any other type
of preferential arrangement, in each case to secure any Relevant Indebtedness or
any Guaranty of any Person.
"RELEVANT TAX" as used in the Sponsor Subsidiary Credit Agreement, has the
meaning set forth in Section 2.08(a) of the Sponsor Subsidiary Credit Agreement.
"REPRESENTATIVES" as used in the El Paso Agreement, has the meaning set
forth in Section 2.16 of the El Paso Agreement.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-41
"REQUIRED CASH RESERVE BALANCE" means, at any time of determination, an
amount equal to the lesser of (i) $200,000,000 and (ii) 20% of the Unrecovered
Capital of Red River in Trinity as at such time.
"REQUIRED TRINITY MEMBERS" means, collectively, the Trinity Class A Member
and the Trinity Class B Member.
"RESERVE REPORT" means each report pertaining to the Oil and Gas
Properties of any Pool II Controlled Business that is delivered by Sabine to the
Calculation Agent under the terms of the Sponsor Subsidiary Credit Agreement,
and such Reserve Report shall:
(a) be prepared by (x) ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Engineers or such
other certified independent petroleum engineers acceptable to the Calculation
Agent, Sabine and Trinity in respect of a Reserve Report furnished under
Section 2.10(b) or Section 2.10(d) of the Sponsor Subsidiary Credit Agreement
and (y) Sabine in respect of a Reserve Report furnished under Section 2.10(e)
of the Sponsor Subsidiary Credit Agreement;
(b) set forth the Proved Reserves attributable to the Oil and Gas
Properties of each Pool II Controlled Business, together with a projection of
the rate of production and future net income, taxes, operating expenses and
capital expenditures with respect thereto as of the date thereof, based on
pricing and escalation assumptions and discount factors acceptable to the
Calculation Agent and Trinity, and such other information as Trinity may
reasonably request; and
(c) otherwise be in form and substance reasonably satisfactory to the
Calculation Agent and Trinity.
"RESERVE REPORT DATE" means (a) December 31 of the preceding calendar
year, if a Reserve Report is delivered pursuant to Section 2.10(b)(i) of the
Sponsor Subsidiary Credit Agreement or (b) the date of delivery of the
Redetermination Notice, in all other cases under the Sponsor Subsidiary Credit
Agreement.
"RESIDUAL CREDIT ENHANCER" means Royal Bank of Canada, New York Branch or
any other provider of "Residual Credit Enhancement" under the Red River Credit
Agreement.
"RESPONSIBLE OFFICER" means, with respect to (a) El Paso, the Chief
Financial Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of El Paso; and
(b) any other Person, the President, any Vice President, the Treasurer, any
Assistant Treasurer, or the Secretary of such Person or of a managing member,
manager or general partner of such Person, in each case of clauses (a) and (b)
responsible for the administration of, or monitoring compliance with, this
Agreement or any other Operative Document.
"RESTRICTED SUBSIDIARY" has the meaning set forth in the Indenture, dated
as of June 1, 1986, between Sonat and Manufacturers Hanover Trust Company.
"REVISED AGGREGATE POOL I LOAN VALUE AMOUNT" has the meaning set forth in
Section 2.12 of the Sponsor Subsidiary Credit Agreement.
"RIGHTS RESTRICTION" means, with respect to any Contributed Investment,
any material restriction or material limitation on the rights of the holder of
such Contributed Investment (other than any Payment Restriction or Transfer
Restriction).
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-42
"S&P" means Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc. and any successor rating agency.
"SABINE" means Sabine River Investors, L.L.C., a Delaware limited
liability company.
"SABINE COMPANY AGREEMENT" means the amended and restated limited
liability company agreement of Sabine, originally dated as of June 29, 1999,
amended and restated as of June 30, 1999 and November 22, 1999 and amended as of
March 29, 2002, made by EPRR.
"SABINE MEMBER" means each member of Sabine.
"SABINE OPERATING ACCOUNT" has the meaning set forth in Preliminary
Statement D of the Sponsor Subsidiary Security Agreement.
"SECOND AMENDED AND RESTATED TRINITY COMPANY AGREEMENT" has the meaning
set forth in the Preliminary Statements to the Trinity Company Agreement.
"SECOND CLOSING DATE" means November 22, 1999.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time. "SECURITIZATION INFORMATION" shall mean any
information included in any Information Memorandum concerning (a) the Asset
Purchase Agreement, (b) the Insurance Agreement, (c) the Residual Credit
Enhancement Agreement, (d) the Administration Agreement, (e) the Red River
Credit Agreement, (f) the Investor Note (as defined in the Red River Credit
Agreement), (g) the Surety Bond (as defined in the Red River Credit Agreement),
(h) any other contract, agreement or instrument entered into in connection with
the Transactions by any other lender, credit enhancer or surety provider to or
for, or any direct or indirect members of, Red River (other than any Red River
Member that is an Affiliate of El Paso) or (i) any other Person who is a party
to any of foregoing agreements, instruments or documents or any of the
transactions contemplated thereby, other than any such contract, agreement or
instrument (excluding any consents entered into in connection with the
Transactions) to which (x) El Paso, (y) Sabine, any other Sponsor Subsidiary or
Trinity or (z) any other Affiliate of El Paso is a party and, in each case
above, any Affiliates or agents or other representatives of any such
non-excluded Persons.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of El Paso or an
ERISA Affiliate and no Person other than El Paso and its ERISA Affiliates or (b)
was so maintained and in respect of which El Paso or an ERISA Affiliate could
have liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"SONAT" means Sonat Inc., a Delaware corporation (which merged into El
Paso on October 25, 1999, with El Paso as the surviving entity).
"SPLIT RATED" means, with respect to the long-term senior unsecured debt
obligations of El Paso, that such debt obligations are rated either (x) at least
BBB- by S&P and less than Baa3 by ▇▇▇▇▇'▇ or (y) at least Baa3 by ▇▇▇▇▇'▇ and
less than BBB- by S&P.
"SPONSOR SUBSIDIARY" means (a) Sabine and (b) each Additional Sponsor
Subsidiary.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-43
"SPONSOR SUBSIDIARY ACCESSION AGREEMENT" means an accession agreement in
the form of Exhibit 9.02 - 3 to the Sponsor Subsidiary Credit Agreement.
"SPONSOR SUBSIDIARY COLLATERAL AGENT" means Wilmington Trust Company, a
Delaware banking corporation, in its capacity as collateral agent for Trinity.
"SPONSOR SUBSIDIARY COLLATERAL AGENT AGREEMENT" means the Amended and
Restated Sponsor Subsidiary Collateral Agent Agreement, originally dated as of
June 30, 1999 and amended and restated as of November 22, 1999, between Sabine
(in its own capacity and on behalf of each other Sponsor Subsidiary), Trinity
and the Sponsor Subsidiary Collateral Agent.
"SPONSOR SUBSIDIARY COLLATERAL AGENT FEE LETTER" as used in the Sponsor
Subsidiary Credit Agreement means the letter, originally dated as of June 30,
1999 and amended and restated as of November 22, 1999, from the Sponsor
Subsidiary Collateral Agent to Sabine setting out details of the fee payable
under Section 8.04 of the Sponsor Subsidiary Credit Agreement.
"SPONSOR SUBSIDIARY COMPANY AGREEMENT" means any of (a) the Sabine Company
Agreement and (b) the limited liability company agreement for each other Sponsor
Subsidiary, in form and substance satisfactory to Trinity, Red River, the Equity
Investor, the Agent and the Lender, each as amended, amended and restated,
supplemented or otherwise modified from time to time.
"SPONSOR SUBSIDIARY CREDIT AGREEMENT" means the Second Amended and
Restated Sponsor Subsidiary Credit Agreement, originally dated as of June 30,
1999 and amended and restated as of November 22, 1999 and March 29, 2002, among
Trinity, as lender, Sabine and the other Sponsor Subsidiaries described therein
as borrower, and the Sponsor Subsidiary Collateral Agent, as collateral agent
for Trinity.
"SPONSOR SUBSIDIARY CREDIT DOCUMENTS" means the Sponsor Subsidiary Credit
Agreement, the Sponsor Subsidiary Security Agreement, each Sponsor Subsidiary
Accession Agreement, each Sponsor Subsidiary Security Agreement Supplement, the
Sponsor Subsidiary Collateral Agent Agreement, and the Sponsor Subsidiary
Collateral Agent Fee Letter, as each such agreement may be amended, supplemented
or otherwise modified from time to time as permitted by the terms of the
Operative Documents, and any other instrument or security evidencing an Advance
or other amount owing under the Sponsor Subsidiary Credit Agreement.
"SPONSOR SUBSIDIARY EXPENSES" means, with respect to any Sponsor
Subsidiary, (i) any and all judgments, damages or penalties with respect to, or
amounts paid in settlement of, claims (including negligence, strict or absolute
liability, liability in tort and liabilities arising out of violation of laws or
regulatory requirements of any kind), actions or suits and (ii) any and all
liabilities, obligations, losses, costs and expenses (including reasonable fees
and disbursements of counsel and claims, damages, losses, liabilities and
expenses relating to environmental matters), including Taxes.
"SPONSOR SUBSIDIARY LIQUIDATOR" with respect of any Sponsor Subsidiary,
has the meaning set forth in Exhibit A to each Sponsor Subsidiary Company
Agreement.
"SPONSOR SUBSIDIARY MEMBER" means (a) each Sabine Member and (b) each
member of each other Sponsor Subsidiary.
"SPONSOR SUBSIDIARY MEMBERSHIP INTEREST" in relation to a Sponsor
Subsidiary Member means the interest of such Sponsor Subsidiary Member in the
relevant Sponsor Subsidiary.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-44
"SPONSOR SUBSIDIARY MEMBER OBLIGATIONS" has the meaning set forth in
Section 3.1(b) of the El Paso Agreement.
"SPONSOR SUBSIDIARY OBLIGATIONS" has the meaning set forth in Section
3.1(a) of the El Paso Agreement.
"SPONSOR SUBSIDIARY PROPERTY" means, with respect to a Sponsor Subsidiary
at any time, all property owned at such time by such Sponsor Subsidiary, and
shall include tangible and intangible property.
"SPONSOR SUBSIDIARY REQUIRED ACTIONS" means:
(a) after the occurrence of a Liquidating Event, subject to the exercise
of the Purchase Option, taking all actions reasonably necessary or advisable
to allow for an orderly liquidation of the relevant Sponsor Subsidiary;
(b) making demand, or enforcing any right, under each El Paso Demand Loan
and the El Paso Guaranty, if applicable, in accordance with the terms of the
relevant El Paso Demand Note and the El Paso Guaranty, as applicable;
(c) calling for and applying additional capital contributions from each
Sponsor Subsidiary Member pursuant to the terms of each Sponsor Subsidiary
Company Agreement to enable (i) (in the case of Sabine) Sabine to meet its
obligations to provide additional Capital Contributions under Section 5.3 of
the Trinity Company Agreement or (ii) (in the case of each Sponsor
Subsidiary) each Sponsor Subsidiary to meet its obligations, if any, with
respect to the provision of any additional capital contribution under or in
respect of any Contributed Investment;
(d) making demand, or enforcing any rights, under any A-Loan for the
payment of interest in accordance with the terms of the A-Loan Note;
(e) directing the Sponsor Subsidiary Collateral Agent to pay Sponsor
Subsidiary Expenses from amounts, if any, on deposit in the Cash Reserve to
the extent not timely paid when the same are due and payable; and
(f) making demand, or enforcing any rights, under an EPPC Note for the
payment of interest or principal (as applicable) in accordance with the terms
of such EPPC Note.
"SPONSOR SUBSIDIARY SECURITY AGREEMENT" means the Second Amended and
Restated Sponsor Subsidiary Security Agreement, originally dated as of June 30,
1999, amended and restated as of November 22, 1999, amended pursuant to
Amendment No. 1 to the Amended and Restated Sponsor Subsidiary Security
Agreement and Release of Collateral dated as of January 31, 2002, and further
amended and restated as of March 29, 2002, made between each Sponsor Subsidiary
and the Sponsor Subsidiary Collateral Agent, as supplemented from time to time
by each Sponsor Subsidiary Security Agreement Supplement and each Sponsor
Subsidiary Accession Agreement.
"SPONSOR SUBSIDIARY SECURITY AGREEMENT SUPPLEMENT" means an agreement in
the form of Exhibit 9.02 - 4 to the Sponsor Subsidiary Credit Agreement.
"SUBORDINATED NOTE" means each promissory note issued by a Sponsor
Subsidiary in favor of El Paso or any Affiliate of El Paso (other than another
Sponsor Subsidiary or any Intermediate
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-45
Holder or Underlying Business) in substantially the form of Exhibit B to the
Sponsor Subsidiary Credit Agreement.
"SUBSEQUENT TRANSFER" means a transfer of all or part of the rights of the
holder of a Contributed Investment in such Contributed Investment for value by
or on behalf of any Sponsor Subsidiary to a third party that is not an Affiliate
of El Paso, including any such transfer by the Sponsor Subsidiary Liquidator or
by or on behalf of a secured creditor of such Sponsor Subsidiary who has a
security interest in such rights (including, without limitation, the Sponsor
Subsidiary Collateral Agent).
"SUBSIDIARY" (a) when used in the El Paso Agreement, means, as to any
Person, any Business Entity of which shares of stock or other Equity Interests
having ordinary voting power (other than stock or such other Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such Business Entity are
at the time owned, directly or indirectly through one or more Subsidiaries, or
both, such Person; and
(b) when used in any other Operative Document, means, as to any Person,
any corporation, partnership, joint venture, limited liability company, trust or
estate of which (or in which) more than 50% of (i) the issued and outstanding
capital stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time capital stock
of any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (ii) the right or power to
direct, in the case of any entity of which such Person or any of its
Subsidiaries is a general partner, or both the beneficial ownership of and the
right or power to direct, in any other case, such limited liability company,
partnership or joint venture or (iii) the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries.
"SUPER-MAJORITY INSTRUCTING GROUP" means, at any time of determination,
such combination of Lenders, APA Purchasers, and/or the Equity Investors (all
voting as a single class), the Commitments (as defined in the Red River Company
Agreement) of which (without double counting) at such time and/or the
Unrecovered Capital (as defined in the Red River Company Agreement) in Red River
of which at such time in the aggregate equal at least 75% of the aggregate
amount of the Commitments of all the Lenders and the APA Purchasers at such time
and the Unrecovered Capital of all of the Equity Investors in Red River at such
time.
"SURETY" has the meaning given to the term "SURETY PROVIDER" in the Red
River Credit Agreement.
"SYNDICATION DATE" means the date on which the closing of the syndication
of the commitments of the APA Purchasers occurs, as notified to El Paso by the
Agent.
"TAX" or "TAXES" (a) as used in the El Paso Agreement, has the meaning set
forth in Section 4.2(a) of the El Paso Agreement, and (b) as used in any other
Operative Document, means any and all taxes (including net income, gross income,
franchise, value added, ad valorem, gross receipts, leasing, excise, fuel,
excess profits, sales, use, property (personal or real, tangible or intangible)
and stamp taxes), levies, imposts, duties, charges, assessments, or withholdings
of any nature whatsoever, general or special, ordinary or extraordinary, now
existing or hereafter created or adopted, together with any and all penalties,
fines, additions to tax and interest thereon.
"TAX INDEMNITY AGREEMENT" means the Amended and Restated Tax Indemnity
Agreement, originally dated as of June 30, 1999 and amended and restated as of
November 22, 1999, among El Paso and the Class A Members of Red River.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-46
"TAX MATTERS MEMBER" means the Trinity Class A Member when acting pursuant
to its authority under Section 8.2(b) of the Trinity Company Agreement.
"TENNESSEE" means Tennessee Gas Pipeline Company, a Delaware corporation.
"TENTH ANNIVERSARY" means the tenth anniversary of the First Closing Date,
or if such day is not a Business Day, the immediately preceding Business Day.
"TERMINATION EVENT" means the occurrence of any of the following events:
(a) The occurrence of the Tenth Anniversary; or
(b) (x) The date on which a Termination Notice becomes effective pursuant
to Section 12.1(b) of the Trinity Company Agreement, to cause a Notice Event
to become a Termination Event and (y) the date on which a Termination Notice
becomes effective pursuant to Section 11.1(b) of any Sponsor Subsidiary
Company Agreement, to cause a Notice Event (as defined therein) to become a
Termination Event (as defined therein); or
(c) The Bankruptcy of Trinity, the Trinity Class A Member (if other than
Sabine), or any Sponsor Subsidiary; or
(d) (i) The unanimous vote of the Trinity Members to dissolve, wind up and
liquidate Trinity, (ii) the unanimous vote of the Sabine Members to dissolve,
wind up and liquidate Sabine or (iii) the unanimous vote of the Sponsor
Subsidiary Members of any Sponsor Subsidiary (other than Sabine) holding any
Permitted Assets to wind up such Sponsor Subsidiary; or
(e) The happening of any event that makes it unlawful or impossible to
carry on the business of Trinity, Sabine or any other Sponsor Subsidiary
holding any Permitted Assets, or the Delaware court of Chancery has entered a
final decree of dissolution of Trinity, Sabine or any other Sponsor
Subsidiary holding any Permitted Assets pursuant to Section 18-802 of the
Act; or
(f) The Transfer by a Trinity Class A Member of all or any portion of its
Trinity Membership Interest or a transfer by Sponsor Subsidiary Member of its
Sponsor Subsidiary Membership Interest otherwise than in accordance with the
Sponsor Subsidiary Company Agreement of the relevant Sponsor Subsidiary; or
(g) After the delivery by El Paso of a Purchase Exercise Notice, any
Purchase Default shall occur; or
(h) At any time that El Paso Demand Loans cease to be Permitted
Investments, El Paso or any El Paso Party, as applicable, fails to post a
letter of credit, in form and substance satisfactory to the Lenders and the
Equity Investors, for all capital contribution obligations under Section 5.3
of the Trinity Company Agreement or under any Section of any Sponsor
Subsidiary Company Agreement relating to mandatory capital contributions or
Obligations under Section 3 of the El Paso Agreement to the extent of any
accrued and unpaid Obligations of El Paso or such El Paso Party thereunder as
of such time; or
(i) [Intentionally Omitted]
(j) El Paso or any Principal Subsidiary shall (A) generally not pay its
debts as such debts become due; or (B) admit in writing its inability to pay
its debts generally; or (C) make a
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-47
general assignment for the benefit of creditors; or (ii) any proceeding shall
be instituted or consented to by El Paso or any Principal Subsidiary seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property; or (iii) any such
proceeding shall have been instituted against El Paso or any Principal
Subsidiary and either such proceeding shall not be stayed or dismissed for 60
consecutive days or any of the actions referred to above sought in such
proceeding (including the entry of an order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for
it or any substantial part of its property) shall occur; or (iv) El Paso or
any Principal Subsidiary shall take any corporate action to authorize any of
the actions set forth above in this subsection (e).
"TERMINATION NOTICE" when used with reference to the Trinity Company
Agreement, has the meaning set forth in Section 12.1(b) of the Trinity Company
Agreement and when used with reference to a Sponsor Subsidiary Company
Agreement, has the meaning set forth in Exhibit A to such Sponsor Subsidiary
Company Agreement.
"THIRD CLOSING DATE" means March 29, 2002.
"THIRD PARTY INFORMATION" shall mean any information included in an
Information Memorandum (a) that is available from generally recognized public
sources or (b) for which the source is any separately identified third party
source or any other Person not affiliated with or acting as agent or
representative for El Paso or any Affiliate of El Paso.
"TOTAL CASH COLLATERAL AMOUNT" means, at any time, (a) the aggregate
amount of all Cash Collateral Amounts that have been paid or deemed to have been
paid by the Sponsor Subsidiary Members to the Cash Reserve less (b) the
aggregate amount of all Cash Collateral Amounts that have been Distributed from
the Cash Reserve on the Cash Collateral Amount Distribution Dates, in each case
pursuant to the terms of the Sponsor Subsidiary Credit Agreement, prior to such
time.
"TRANSACTION COSTS" has the meaning set forth in the Red River Company
Agreement.
"TRANSACTIONS" shall mean all the transactions and activities referred to
in or contemplated by the Operative Documents to which El Paso or any El Paso
Party is a party.
"TRANSFER" means, with respect to any Trinity Membership Interest as a
noun, any voluntary or involuntary transfer or sale of, assignment of an
interest (including a security interest) in or other disposition of such Trinity
Membership Interest (other than a retirement or redemption of such Trinity
Membership Interest), and, as a verb, voluntarily or involuntarily to transfer,
sell, assign (including assign for security) or otherwise dispose of, such
Trinity Membership Interest (other than to retire or redeem such Member's
interest), including, in each case, any transfer by operation of Applicable Law,
merger or bankruptcy or otherwise. The adjective "Transferred" has the
correlative meaning.
"TRANSFER RESTRICTION" means, with respect to any Contributed Investment,
any restriction on the transferability of such Contributed Investment, in whole
or in part, including pursuant to a Subsequent Transfer, including any such
restriction in the form of a Lien, any rights granted to or in favor of any
Person in the nature of a right of first refusal, a right of first offer, call
rights or tag-along rights or any such restriction arising as a result of a
requirement that the holder of the Contributed Investment be (or not be) a
specified Person or affiliate thereof or any limit on the number of holders of
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-48
such interest of the same class (in each case other than pursuant to securities
laws applicable to any transfer, any FERC regulation of general applicability or
the Operative Documents).
"TRANSFEREE CERTIFICATE" means a certificate executed by a prospective
transferee of a Trinity Membership Interest in accordance with Section 10.3(f)
of the Trinity Company Agreement and in the form of Exhibit E thereof.
"TRANSFEROR CERTIFICATE" as used in the Trinity Company Agreement means a
certificate executed by a prospective transferor of a Trinity Membership
Interest in accordance with Section 10.3(f) of the Trinity Company Agreement and
in the form of Exhibit F thereof.
"TRINITY" means Trinity River Investors, L.L.C., a Delaware limited
liability company.
"TRINITY CLASS A MEMBER" means any Person that is the holder of a Trinity
Class A Membership Interest.
"TRINITY CLASS A MEMBERSHIP INTEREST" means an interest in Trinity
described in Section 3.2(a) of the Trinity Company Agreement.
"TRINITY CLASS B MEMBER" means any Person that is the holder of a Trinity
Class B Membership Interest.
"TRINITY CLASS B MEMBERSHIP INTEREST" means an interest in Trinity
described in Section 3.2(b) of the Trinity Company Agreement.
"TRINITY COMPANY AGREEMENT" means the Third Amended and Restated Company
Agreement of Trinity River Investors, L.L.C., originally dated as of June 29,
1999, amended and restated as of June 30, 1999 and November 22, 1999, amended as
of November 17, 2000 and January 31, 2002 and amended and restated as of March
29, 2002, between Sabine and Red River.
"TRINITY CUSTODIAN" means Wilmington Trust Company, or any successor
thereto pursuant to the Trinity Custody Agreement.
"TRINITY CUSTODY AGREEMENT" means the Amended and Restated Custody
Agreement, originally dated as of June 30, 1999 and amended and restated as of
November 22, 1999, between Trinity and the Trinity Custodian.
"TRINITY EXPENSES" means, without duplication, all interest, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Additional Financing Costs, Transaction Costs, Liquidation Amounts,
Disposition Costs, Taxes and other payment obligations incurred or owing by
Trinity (excluding any Preferred Payment and any liquidating distributions in
respect of a Trinity Member's Capital Account pursuant to Section 12 of the
Trinity Company Agreement).
"TRINITY LIQUIDATOR" has the meaning set forth in Section 12.9 of the
Trinity Company Agreement.
"TRINITY MEMBER" means a Trinity Class A Member or a Trinity Class B
Member.
"TRINITY MEMBERSHIP INTEREST" means any Trinity Class A Membership
Interest or Trinity Class B Membership Interest.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-49
"TRINITY OPERATING ACCOUNT" has the meaning set forth in the Trinity
Custody Agreement.
"TRINITY PROPERTY" means at any time all property owned at such time by
Trinity, and shall include both tangible and intangible property.
"TRINITY REQUIRED ACTIONS" means the delivery of all notices, certificates
and other documents, the making of all determinations (including discretionary
determinations), and the taking of all discretionary and mandatory actions, in
each case to be delivered, made or taken by Trinity under the Operative
Documents, and the exercise of all other rights and remedies of Trinity under
the Operative Documents, including:
(a) after the occurrence of a Liquidating Event, taking all actions
reasonably necessary or advisable to allow for an orderly liquidation of
Trinity;
(b) accelerating the Advances upon the occurrence and during the
continuance of an Event of Default;
(c) the notification to Sabine of the Funding Rate and the basis thereof,
as required pursuant to Section 2.03 of the Sponsor Subsidiary Credit
Agreement;
(d) the demand by Trinity for the payment by the Sponsor Subsidiaries
pursuant to Section 2.06(a) or Section 2.06(b) of the Sponsor Subsidiary
Credit Agreement of any Additional Financing Costs or Transaction Costs and
the delivery by Trinity to Sabine pursuant to Section 2.06(c) of the Sponsor
Subsidiary Credit Agreement of a certificate as to any such amount;
(e) the delivery of any notice referred to in Section 4.12(b) of the
Trinity Company Agreement;
(f) the making of any request by Trinity pursuant to Section 5.01(j) of
the Sponsor Subsidiary Credit Agreement;
(g) the delivery of any notices referred to in Section 6.01(e) of the
Sponsor Subsidiary Credit Agreement;
(h) any determination to be made, and any other direction or notice to be
given, by Trinity pursuant to Section 6.01 of the Sponsor Subsidiary Credit
Agreement;
(i) any determination of the duration of a Payment Period to be made by
Trinity pursuant to the Sponsor Subsidiary Credit Agreement;
(j) the delivery of any notices or instructions, or any request for
proxies or other instruments, under Section 8 of the Sponsor Subsidiary
Security Agreement;
(k) the exercise of remedies under the Sponsor Subsidiary Security
Agreement and the other Sponsor Security Credit Documents; and
(l) the making of any discretionary determination to be made by Trinity
under the definition of "Eligible Investment".
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY
A-50
"UCC" means, with respect to any state or territory of the United States,
the "UNIFORM COMMERCIAL CODE" in effect in such state or territory.
"UNDERLYING BUSINESS" means, with respect to a Contributed Investment:
(a) the ultimate Business Entity or Business Entities relating to such
Contributed Investment; and
(b) any Business Entity in which any Controlled Business makes an
Investment pursuant to Section 5.09(e)(ii) of the Sponsor Subsidiary Credit
Agreement which Investment is not treated as a Disposition pursuant to the
third sentence of the definition of "Disposition".
"UNITED STATES" and "U.S." each mean the United States of America.
"UNITED STATES BANKRUPTCY CODE" shall mean Title 11 of the United States
Code entitled "Bankruptcy" as in effect from time to time, or any successor
thereto.
"UNRECOVERED CAPITAL" means:
(a) with respect to the Trinity Class A Member at any time the excess of
(i) the sum of (A) the aggregate amount contributed to Trinity by the Trinity
Class A Member on the First Closing Date, the Second Closing Date, and from
time to time thereafter, including pursuant to Section 5.3 of the Trinity
Company Agreement (if any) over (ii) the aggregate amount of the Capital
Account of the Trinity Class A Member retired and paid to the Trinity Class A
Member pursuant to Section 7 and Section 12 of the Trinity Company Agreement;
and
(b) with respect to the Trinity Class B Member at any time the excess of
(i) the aggregate amount contributed to Trinity by the Trinity Class B Member
on the First Closing Date, the Second Closing Date and from time to time
thereafter (if any) over (ii) the aggregate amount of the Capital Account of
the Trinity Class B Member retired and paid to the Trinity Class B Member
pursuant to Section 7.3 and Section 12 of the Trinity Company Agreement.
"VOLUNTARY BANKRUPTCY" has the meaning set forth in the definition of
Bankruptcy.
"VOTING INTERESTS" means shares of capital stock issued by a corporation,
or equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.
"WHOLLY OWNED AFFILIATE" of any Person means (a) an Affiliate of such
Person 100% of the capital stock (or its equivalent in the case of entities
other than corporations) of which is owned beneficially by such Person, directly
or indirectly through one or more Wholly Owned Affiliates, or by any Person who,
directly or indirectly, owns beneficially 100% of the capital stock (or its
equivalent in the case of entities other than corporations) of such Person, or
(b) an Affiliate of such Person who, directly or indirectly, owns beneficially
100% of the capital stock (or its equivalent in the case of entities other than
corporations) of such Person; provided that, for purposes of determining the
ownership of the capital stock of any Person, de minimis amounts of stock held
by directors, nominees and similar persons pursuant to statutory or regulatory
requirements shall not be taken into account.
"WITHDRAWAL LIABILITY" has the meaning given such term under Part 1 of
Subtitle E of Title IV or ERISA.
THIS DOCUMENT IS NON-PUBLIC
CONFIDENTIAL AND PROPRIETARY