EXHIBIT 10.EE.2
-----------------------------
SECOND AMENDED AND RESTATED
EL PASO AGREEMENT
-----------------------------
ORIGINALLY DATED AS OF JUNE 30, 1999,
AMENDED AND RESTATED AS OF NOVEMBER 22, 1999, AMENDED AS OF
NOVEMBER 17, 2000 AND AMENDED AND RESTATED AS OF MARCH 29, 2002
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINED TERMS; RULES OF CONSTRUCTION
1.1. Definitions.....................................................................................1
1.2. Use of Certain Terms............................................................................1
1.3. Accounting Terms................................................................................2
1.4. No Presumption Against Any Party................................................................2
1.5. Headings and References.........................................................................2
SECTION 2 REPRESENTATIONS AND WARRANTIES
2.1. Due Formation...................................................................................3
2.2. Authorization of Operative Documents............................................................3
2.3. Governmental Approvals..........................................................................3
2.4. Enforceability..................................................................................3
2.5. Accounts........................................................................................3
2.6. Compliance with Laws, Etc.......................................................................4
2.7. Litigation......................................................................................4
2.8. Taxes...........................................................................................4
2.9. Title to Property...............................................................................4
2.10. ERISA.......................................................................................... 5
2.11. Intentionally Omitted...........................................................................5
2.12. Investment Company; Holding Company.............................................................5
2.13. El Paso Parties ..............................................................................5
2.14. Priority........................................................................................6
2.15. No Default......................................................................................6
2.16. Disclosure......................................................................................6
SECTION 3 PERFORMANCE GUARANTEE AND INDEMNIFICATION
3.1. Subsidiary Guaranties...........................................................................7
3.2. General Indemnities.............................................................................8
3.3. Survival of Indemnification Obligations........................................................10
3.4. Limitations on Indemnification Obligations.....................................................11
3.5. Procedural Requirements........................................................................11
3.6. Intentionally Omitted..........................................................................13
3.7. Limitation with Respect to Obligations Under Sponsor Credit Documents..........................13
3.8. Waiver of Fiduciary Duty.......................................................................14
SECTION 4 PAYMENTS
4.1. Payments.......................................................................................14
4.2. Taxes..........................................................................................15
i
SECTION 5 EL PASO COVENANTS
5.1. Separate Existence.............................................................................17
5.2. Affirmative Covenants..........................................................................20
5.3. Negative Covenants.............................................................................22
5.4. Reporting Requirements.........................................................................27
5.5. Restrictions on Material Subsidiaries..........................................................29
SECTION 6 MISCELLANEOUS
6.1. Amendments.....................................................................................29
6.2. Addresses for Notices..........................................................................29
6.3. No Waiver; Cumulative Remedies.................................................................30
6.4. Waiver of Jury Trial...........................................................................30
6.5. Jurisdiction, Etc..............................................................................30
6.6. Assignment.....................................................................................31
6.7. Governing Law..................................................................................31
6.8. Counterparts...................................................................................31
6.9. Survival of Representations, Warranties and Indemnities; Entire Agreement......................31
6.10. Severability...................................................................................32
6.11. No Third-Party Beneficiaries...................................................................32
6.12. Obligations Absolute...........................................................................32
6.13. Waiver.........................................................................................33
6.14. Subrogation....................................................................................33
ANNEX I FINANCIAL MODEL
ANNEX II SUPPLEMENT TO FINANCIAL MODEL
SCHEDULE 2.8 SPONSOR SUBSIDIARIES INCLUDED IN TAX RETURN
ii
SECOND AMENDED AND RESTATED
EL PASO AGREEMENT
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 (this "AGREEMENT"), by El Paso Corporation, a Delaware corporation ("EL
PASO"), in favor of Red River Investors L.L.C., a Delaware limited liability
company ("RED RIVER"), and the other Indemnified Persons (as defined below).
PRELIMINARY STATEMENTS
A. El Paso is, through one or more wholly owned subsidiaries,
the owner of 100% of the member interests of Sabine. Sabine is the Trinity Class
A Member and controls Trinity.
B. El Paso and Sabine desire Red River to become a Trinity
Class B Member in accordance with the Trinity Company Agreement.
C. Red River is willing to become a member of Trinity only on
the condition, among others, that El Paso provides certain assurances set forth
in this Agreement.
In consideration of the premises, and intending to be legally
bound by this Agreement, El Paso agrees as follows:
SECTION 1
DEFINED TERMS; RULES OF CONSTRUCTION
1.1. Definitions.
As used in this Agreement, capitalized terms defined in the
preamble and other Sections of this Agreement shall have the meanings set forth
therein and capitalized terms used herein (including in the Preliminary
Statements) but not otherwise defined herein shall have the meanings set forth
in Exhibit A to the 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 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "TRINITY COMPANY
AGREEMENT").
1.2. Use of Certain Terms.
In this Agreement, in the computation of periods of time from
a specified date to a later specified date, the word "FROM" means "FROM AND
INCLUDING" and the words "TO" and "UNTIL" mean "to but excluding". Unless the
context of this Agreement requires otherwise, the plural includes the singular
the singular includes the plural, and "INCLUDING" has the 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.
References to any agreement or contract are to such agreement or contract as
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof. 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.
1.3. Accounting Terms.
All accounting terms not specifically defined herein shall be
construed in accordance with, and certificates of compliance with financial
covenants shall be based upon, GAAP applied consistently.
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
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. Headings and References.
Section and other headings are for reference only, and shall
not affect the interpretation or meaning of any provision of this Agreement.
Unless otherwise provided, references to Articles, Sections, Schedules, and
Exhibits shall be deemed references to Articles and Sections of, and Schedules
and Exhibits to, this Agreement. Whether or not specified herein or therein,
references to this Agreement and any other Operative Document include this
Agreement and the other Operative Documents 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, a reference to any law shall mean that law as it may be
amended, modified or supplemented from time to time, and any successor law. 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 governing the assignment of rights and obligations
under or the binding effect of any provision of this Agreement, including
Section 6.6.
SECTION 2
REPRESENTATIONS AND WARRANTIES
El Paso hereby represents and warrants as of the First Closing
Date, the Second Closing Date, the Third Closing Date, the Syndication Date and,
with respect to Section 2.16 only, the date of each Information Memorandum as
follows:
2
2.1. Due Formation.
El Paso is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each El Paso Party
(other than Trinity or any Sponsor Subsidiary or any Subsidiary of any of the
foregoing) (each such El Paso Party, other than those excluded in the
immediately preceding parenthetical clause, a "RELEVANT EL PASO PARTY") is duly
incorporated or formed, validly existing and in good standing in the
jurisdiction of its incorporation or formation. Each of El Paso and the Relevant
El Paso Parties possesses all corporate, limited liability company or other
applicable Business Entity powers and other authorizations and licenses
necessary to engage in its business and operations as now conducted, the failure
to obtain or maintain which would have a Material Adverse Effect.
2.2. Authorization of Operative Documents.
The execution, delivery and performance by each of El Paso and
the Relevant El Paso Parties of each Operative Document to which it is a party
are within its applicable Business Entity powers, have been duly authorized by
all necessary corporate, limited liability company or other applicable Business
Entity action, and do not contravene (i) its Organizational Documents or (ii)
any law or material contractual restriction binding on or affecting it.
2.3. Governmental Approvals.
No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by each of El Paso and the Relevant
El Paso Parties of each Operative Document to which it is a party, except those
necessary to comply with laws, rules, regulations and orders required in the
ordinary course to comply with the ongoing obligations of El Paso under Sections
5.2 and 5.3 and of the Relevant El Paso Parties under the Operative Documents
and to perfect security interests.
2.4. Enforceability.
Each Operative Document to which any of El Paso and the
Relevant El Paso Parties is a party constitutes the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
its terms, except as may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors rights generally
or by general principles of equity.
2.5. Accounts.
(a) The consolidated balance sheet of El Paso and its
consolidated Subsidiaries as at December 31, 2000 and the related consolidated
statements of income and cash flows of El Paso and its consolidated Subsidiaries
for the fiscal year then ended, reported on by PricewaterhouseCoopers LLP,
independent public accountants, fairly present the consolidated financial
condition of El Paso and its consolidated Subsidiaries as at such date and the
consolidated results of operations of El Paso and its consolidated Subsidiaries
for the period ended on such date, all in accordance with GAAP consistently
applied, and since December 31, 2000 there has been no material adverse change
in such condition or operations.
3
(b) The unaudited consolidated balance sheet of El Paso and
its consolidated Subsidiaries as of September 30, 2001, and the related
consolidated statements of income and cash flows of El Paso and its consolidated
Subsidiaries for the three months then ended, certified by the chief financial
officer of El Paso, fairly present the consolidated results of operations of El
Paso and its consolidated Subsidiaries for the three months then ended, all in
accordance with GAAP consistently applied (except as approved by the chief
financial officer of El Paso and as disclosed therein) and subject to normal
year end audit adjustments.
2.6. Compliance with Laws, Etc.
Each of El Paso and the Relevant El Paso Parties is in
compliance with all laws, rules, regulations and orders of any governmental
authority applicable to it or its property, except where the failure to so
comply, individually or in the aggregate, would not in the reasonable judgment
of El Paso be expected to result in a Material Adverse Effect.
2.7. Litigation.
There is no action, suit or proceeding pending, or to the
knowledge of El Paso threatened, against or involving El Paso or any Relevant El
Paso Party or Principal Subsidiary in any court, or before any arbitrator of any
kind, or before or by any governmental body, which, in the reasonable judgment
of El Paso (taking into account the exhaustion of all appeals), would have a
Material Adverse Effect, or which purports to affect the legality, validity,
binding effect or enforceability of any Operative Document.
2.8. Taxes.
El Paso, each Relevant El Paso Party and each Principal
Subsidiary have duly filed all tax returns required to be filed, and have duly
paid and discharged all taxes, assessments and governmental charges upon it or
against its properties now due and payable, the failure to pay which would have
a Material Adverse Effect, unless and to the extent only that the same are being
contested by any such Person in good faith and by appropriate proceedings. Each
Sponsor Subsidiary that is eligible to be included in the U.S. federal income
tax consolidated return of El Paso will elect to be so included. The Sponsor
Subsidiaries listed on Schedule 2.8 hereto are included in the U.S. federal
income tax consolidated return of El Paso.
2.9. Title to Property.
El Paso, each Relevant El Paso Party and each Principal
Subsidiary have good title to their respective properties and assets, free and
clear of all mortgages, liens and encumbrances, except for mortgages, liens and
encumbrances (including covenants, restrictions, rights, easements and minor
irregularities in title) which do not materially interfere with the business or
operations of such Person as presently conducted or which are permitted by
Section 5.3(a) and except that no representation or warranty is made with
respect to Margin Stock.
4
2.10. ERISA.
(a) No ERISA Termination Event has occurred or is reasonably
expected to occur with respect to any Plan which, with the giving of notice or
lapse of time, or both, would constitute an El Paso Event under clause (g) of
the definition thereof.
(b) Each Plan has complied with the applicable provisions of
ERISA and the Code where the failure to so comply would reasonably be expected
to result in an aggregate liability that would exceed 10% of the Net Worth of El
Paso.
(c) The statement of assets and liabilities of each Plan and
the statements of changes in fund balance and in financial position, or the
statement of changes in net assets available for plan benefits, for the most
recent plan year for which an accountant s report with respect to such Plan has
been prepared, fairly present the financial condition of such Plan as at such
date and the results of operations of such Plan for the plan year ended on such
date.
(d) Neither El Paso nor any ERISA Affiliate has incurred, or
is reasonably expected to incur, any Withdrawal Liability to any Multiemployer
Plan which, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liability (as of the date of
determination), would exceed 10% of the Net Worth of El Paso.
(e) Neither El Paso nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization, insolvent or has
been terminated, within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization, to become insolvent or to
be terminated within the meaning of Title IV or ERISA, the effect of which
reorganization, insolvency or termination would be the occurrence of an El Paso
Event under clause (g) of the definition thereof.
2.11. Intentionally Omitted.
2.12. Investment Company; Holding Company.
(a) Neither El Paso nor any El Paso Party is an "investment
company" within the meaning of the Investment Company Act of 1940.
(b) Neither El Paso nor any El Paso Party is a "holding
company" or a "subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935.
2.13. El Paso Parties.
(a) The Red River El Paso Member is a wholly owned Subsidiary
of El Paso.
(b) Each Sponsor Subsidiary Member is an El Paso Company.
5
(c) No Sponsor Subsidiary, Intermediate Holder, or Underlying
Business (other than EPPC, the Sponsor Subsidiary that owns all of the Equity
Interests in EPPC, and any Intermediate Holder relating thereto) is:
(i) a Principal Subsidiary, a Restricted Subsidiary, or a
Material Subsidiary; or
(ii) directly owned by El Paso.
2.14. Priority.
The obligations of El Paso and any Affiliate of El Paso under
or in respect of the El Paso Demand Loans and interest on the A-Loans (including
any guarantee by El Paso of El Paso Demand Loans or A-Loans made to Affiliates
of El Paso pursuant to the El Paso Guaranty) rank in priority of payment pari
passu with all other senior unsecured Debt of El Paso or such Affiliate of El
Paso (as applicable).
2.15. No Default.
As of the First Closing Date, the Second Closing Date and the
Third Closing Date, no Event of Default, Notice Event, Liquidating Event,
Termination Event or Incipient Event has occurred and is continuing.
2.16. Disclosure.
With respect to the First Closing Date, the Second Closing
Date, the Third Closing Date, the Syndication Date or the date of each
Information Memorandum (each, a "RELEVANT DATE"), as the case may be:
(a) Subject to the Disclosure Qualification, all information
that has been made available to the Agent, CXC, the APA Purchasers and
the Equity Investors (and the members of the Equity Investors or their
agents (it being agreed that Citibank, N.A. and its Affiliates are not
agents of the Equity Investors)) by El Paso or any of its directors,
partners, officers, employees, agents, advisors or representatives (all
of the foregoing, collectively, "REPRESENTATIVES") prior to such
Relevant Date in connection with the Operative Documents and the
transactions contemplated by the Operative Documents, in each case
taken as a whole and as modified or supplemented from time to time
prior to such Relevant Date, was complete and correct in all material
respects on such Relevant Date and did not on such Relevant Date
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained
therein not misleading in any material respect in light of the
circumstances under which such statements were made.
(b) Any historical financial data provided by El Paso or its
affiliates or any of their respective Representatives to the Agent,
CXC, the APA Purchasers and the Equity Investors (and the members of
the Equity Investors or their agents) prior to such Relevant Date in
connection with the transactions contemplated by the Operative
Documents was prepared in accordance with GAAP then in effect (or with
appropriate reconciliation to
6
such GAAP if required by Applicable Law or requested by the Agent or
the Equity Investors) and fairly presents the financial condition and
results of operations of El Paso and the Underlying Businesses that are
Controlled Businesses (subject to year end audit adjustments) except as
otherwise disclosed therein or in the footnotes thereto or as otherwise
disclosed in writing to the Agent and the Equity Investors.
(c) All financial projections that were prepared by El Paso or
its Representatives and made available to the Agent, CXC, the APA
Purchasers and the Equity Investors (and the members of the Equity
Investors of their agents) prior to such Relevant Date in connection
with the transactions contemplated by the Operative Documents were
prepared in good faith based upon assumptions believed by El Paso to be
reasonable in the circumstances (it being understood that such
projections are subject to significant uncertainties and contingencies,
many of which are beyond El Paso's control, and that no assurance can
be given that the projections will be realized).
(d) The financial model for Red River dated as of the Second
Closing Date attached hereto as Annex I and the supplement thereto
dated as of the Third Closing Date attached hereto as Annex II (the
"FINANCIAL Model"), subject to the qualifications and assumptions set
forth in the Financial Model, (x) contains formulas which are
consistent with and fairly reflect (i) the allocations provided in the
Trinity Company Agreement and (ii) the other relevant financial terms
of the Sponsor Subsidiary Credit Agreement, the Trinity Company
Agreement and the Red River Company Agreement and (y) sets forth
computed amounts that fairly reflect the application of such formulae
to the assumptions contained in the Financial Model.
(e) El Paso is not obligated to supplement any information or
projection or other materials referred to in this Section 2.16 after
the First Closing Date or the Second Closing Date or the Third Closing
Date except with respect to the making of the foregoing representations
and warranties on the Syndication Date and on the date of any
Information Memorandum and except as otherwise required pursuant to the
Operative Documents.
SECTION 3
PERFORMANCE GUARANTEE AND INDEMNIFICATION
3.1. Subsidiary Guaranties.
Subject to Section 3.7, El Paso hereby absolutely,
unconditionally and irrevocably guarantees, for the benefit of the Indemnified
Persons, the following Obligations:
(a) Sponsor Subsidiary Obligations. The due and punctual
payment, performance and observance by each Sponsor Subsidiary of each
of its Obligations under each Operative Document to which it is a
party, including (in the case of Sabine) the obligations of Sabine as
the Trinity Class A Member under Section 4 of the Trinity Company
Agreement and the obligations of Sabine to make additional Capital
Contributions pursuant to Section 5.3 of the Trinity Company Agreement,
but excluding
7
any obligation of Sabine as the Trinity Class A Member to cause Trinity
to make any Preferred Payment under the Trinity Company Agreement
(except to the extent that there are funds on deposit in the Trinity
Operating Account that are available to be applied to such payment at
the time such payment is due, and then only from such funds) (such
non-excluded Obligations, the "SPONSOR SUBSIDIARY OBLIGATIONS").
(b) Sponsor Subsidiary Member Obligations. The due and
punctual payment, performance and observance by each Sponsor Subsidiary
Member of each of its Obligations under the Sponsor Subsidiary Company
Agreement of the Sponsor Subsidiary of which it is a member and each
other Operative Document to which it is a party, including the
obligations of each Sponsor Subsidiary Managing Member under Section 4
of each such Sponsor Subsidiary Company Agreement and the obligation of
each Sponsor Subsidiary Member to make additional Capital Contributions
(as defined in each Sponsor Subsidiary Company Agreement) pursuant to
each such Sponsor Subsidiary Company Agreement (the "SPONSOR SUBSIDIARY
MEMBER OBLIGATIONS").
3.2. General Indemnities.
Subject to Sections 3.4 and 3.7, El Paso agrees to the fullest
extent permitted by Applicable Law to indemnify and hold harmless each
Indemnified Person for and against, and to pay on an After-Tax Basis, all
Expenses (the Expenses on an After-Tax Basis being referred to collectively as
the "INDEMNIFIED AMOUNTS") that may be incurred or realized by or asserted
against such Indemnified Person relating to, growing out of or resulting from:
(a) Sponsor Subsidiary Obligations. Any breach by any Sponsor
Subsidiary of any Sponsor Subsidiary Obligation; or
(b) Sponsor Subsidiary Member Obligations. Any breach by any
Sponsor Subsidiary Member of any Sponsor Subsidiary Member Obligation;
or
(c) El Paso Obligations. Any breach by El Paso or any El Paso
Party (other than any Sponsor Subsidiary, Trinity or any Sponsor
Subsidiary Member) in the performance or observance of each of its
covenants and obligations under this Agreement and each other Operative
Document to which it is a party; or
(d) Representations and Warranties. Any inaccuracy in, or any
breach of, any written certification, representation or warranty made
or deemed made:
(i) by El Paso in this Agreement or by El Paso or any
El Paso Party or other Affiliate of El Paso (or any officer or
other authorized representative thereof) to or for the benefit
of any Indemnified Person, any Sponsor Subsidiary or Trinity
in any Operative Document to which El Paso, any El Paso Party
or any such Affiliate is a party; or
(ii) by El Paso or any El Paso Party or any other
Affiliate of El Paso (or any officer or other authorized
representative thereof) in any written report or certification
required hereunder or under any Operative Document to which El
Paso, any El Paso Party or any such Affiliate is a party,
8
in each case (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;
or
(e) Investigations; Litigation; Proceedings; Enforcement. (i)
Enforcement of this Agreement or any other Operative Document to which
an El Paso Party is a party and (ii) any investigation, litigation or
proceeding, whether or not such Indemnified Person is a party thereto,
that:
(A) 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 El Paso or any El Paso Party
(whether relating to Trinity, any Sponsor Subsidiary or
otherwise) in the performance or observance of its obligations
under or in relation to the Operative Documents or the
transactions contemplated thereby; and
(B) would not have resulted in Indemnified Amounts
incurred or realized by or asserted against such Indemnified
Person but for their being a party to, or a direct or indirect
participant in, or having a relationship described in the
definition of "Indemnified Person" to a party to, or a direct
or indirect participant in, the Operative Documents or any of
the transactions contemplated thereby; or
(f) Substantive Consolidation. (i) Any petition or proceeding
(x) seeking or asserting or (y) a court ordering, in any case or
proceeding under the United States Bankruptcy Code involving El Paso,
any El Paso Party or any other Subsidiary of El Paso, as debtor, that
the assets and liabilities of Trinity or any Sponsor Subsidiary be
consolidated substantively with the assets and liabilities of El Paso,
any El Paso Party (other than Trinity or any Sponsor Subsidiary) or any
other Subsidiary of El Paso (other than Trinity or any Sponsor
Subsidiary) and (ii) defending against any petition, proceeding or
order referred to in clause (i) above; it being agreed that upon the
occurrence of an event described in clause (i)(y) above which is or
becomes a final judgment or order, the Indemnified Persons involved
shall be entitled to recover from El Paso, as liquidated damages for
Indemnified Amounts under such clause (i) (but without prejudice to
amounts recoverable under clause (ii) above or any other provision of
the Operative Documents), and not as a penalty, an aggregate amount
equal to the sum of the amount that would be paid to Red River as the
"Purchase Amount" (as defined in the Purchase Option Agreement) and all
accrued and unpaid payments owing to Red River pursuant to the Trinity
Company Agreement through the date of payment in full of such amount in
addition to all other Indemnified Amounts hereunder; or
(g) ERISA. Any liability or other Indemnified Amounts that
Trinity or any Sponsor Subsidiary may incur in connection with any Plan
or Multiemployer Plan or otherwise under Title IV of ERISA; or
(h) Expenses. Any amendment, supplement, modification, consent
or waiver of, to or under any Operative Document (to the extent not
otherwise reimbursed pursuant to any Operative Document); or
9
(i) Freely Transferable Project Interests. The portion of any
Contributed Investment purported to be the Freely Transferable Portion
of such Contributed Investment not being Freely Transferable at the
time of any attempted Disposition thereof by the Sponsor Subsidiary
Collateral Agent; or
(j) Environmental Liabilities. The actual or alleged presence
of Hazardous Materials on any property of any Intermediate Holder, any
Underlying Business, any Sponsor Subsidiary, Trinity, or any other El
Paso Party or any Environmental Action relating in any way to any
Intermediate Holder, any Underlying Business, any Sponsor Subsidiary,
Trinity, or any other El Paso Party; or
(k) Casualty, Etc. Any casualty, theft, personal injury, tort
or other liability to a third party arising under or in connection with
or attributable to any Contributed Investment, any Intermediate Holder
or any Underlying Business relating thereto; or
(l) Fraudulent Transfer or Conveyance. Any transfer, pledge or
conveyance by any Sponsor Subsidiary upon its accession to the Sponsor
Subsidiary Credit Agreement or the issuance of the EPPC Note or the
transfer, pledge or conveyance thereof to the extent found in any
bankruptcy, insolvency, receivership or other similar proceeding to be
a "fraudulent transfer" or "fraudulent conveyance" or "fraudulent
preference"; or
(m) Consolidated Tax Liability. Any Consolidated Taxes paid by
any Sponsor Subsidiary with respect to any taxable period for which
such Sponsor Subsidiary was a member of the El Paso Consolidated group
(including, without limitation, by reason of the application of
Treasury Regulation Section 1.1502-6 or any similar provision of state,
local or foreign tax law or regulation). If the shares of any Sponsor
Subsidiary and any assets directly or indirectly held thereby
(including any assets held by any partnership in which the Sponsor
Subsidiary is a partner) are sold following a Liquidating Event, the
benefits of this Section 3.2(m) shall inure to the purchaser of such
shares or assets with respect to any such taxable period for which such
Sponsor Subsidiary was a member of the El Paso Consolidated group.
3.3. Survival of Indemnification Obligations.
All indemnities provided for in this Agreement shall survive
the Transfer of any Trinity Membership Interest or any Sponsor Subsidiary
Membership Interest or the liquidation of Trinity or any Sponsor Subsidiary.
After any such Transfer or liquidation, the provisions of Section 3.2 shall
inure to the benefit of each Indemnified Person with respect to Indemnified
Amounts arising in respect of the period during which the member or shareholder
or other holder of an Equity Interest (as applicable) who has Transferred its
Trinity Membership Interest or Sponsor Subsidiary Membership Interest (as
applicable) was a member (including with respect to actions taken or omitted to
be taken, and events occurring and circumstances existing, during such period)
of Trinity or any Sponsor Subsidiary (as applicable).
10
3.4. Limitations on Indemnification Obligations.
The indemnities provided in Section 3.2 shall be subject to
the following limitations:
(a) Limitation by Law. Such Sections shall be enforced only to
the maximum extent permitted by Applicable Law.
(b) Misconduct, Etc. No Person shall be indemnified or held
harmless for, and El Paso shall have no liability for or in respect of,
any Expenses with respect to such Person to the extent caused by or
resulting from (i) the actual fraud, willful misconduct, bad faith or
gross negligence of such Person or any of its Related Persons or (ii)
any inaccuracy in, or breach of, any written certification,
representation or warranty made by such Person or any of its Related
Persons in any Operative Document or in any written report or
certification required hereunder or under any other 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 Section 3.2
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.
3.5. Procedural Requirements.
(a) Notice of Claims. Any Indemnified Person that proposes to
assert a right to be indemnified under this Section 3 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 El Paso
under this Section 3 (an "INDEMNIFIED PROCEEDING"), or the incurrence or
realization of Indemnified Amounts in respect of which a claim is to be made
against El Paso under this Section 3, notify El Paso 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 El Paso promptly of any such Indemnified Proceeding or
incurrence or realization shall not relieve (i) El Paso from any liability that
it may have to such Indemnified Person under this Section 3 or otherwise,
except, as to El Paso's liability under this Section 3, to the extent, but only
to the extent, that El Paso 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 El Paso of
the commencement thereof, El Paso 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 El Paso to such
Indemnified Person of El Paso's election so to assume the defense thereof
11
and the failure by such Indemnified Person to object to such counsel within ten
Business Days following its receipt of such notice, El Paso 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 El Paso has been authorized in writing by El Paso (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 El Paso
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) El Paso shall not have the
right to direct the defense of such Indemnified Proceeding on behalf of
the Indemnified Person);
(iii) El Paso shall not have employed ▇▇▇▇▇, Day, ▇▇▇▇▇▇ and
▇▇▇▇▇, 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 shall not be deemed to contribute a waiver of
any conflict of interest which may arise with respect to any such
counsel); or
(iv) any counsel employed by El Paso 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 El Paso; provided that without the prior
written consent of such Indemnified Person, El Paso 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,
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 El Paso, 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
12
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.
3.6. Intentionally Omitted.
3.7. Limitation with Respect to Obligations Under Sponsor
Credit Documents.
(a) Notwithstanding anything to the contrary contained in this
Agreement or in any other Operative Document, neither El Paso nor any Affiliate
of El Paso (other than any Sponsor Subsidiary) guaranties:
(i) any payment obligation or deficiency of any Sponsor
Subsidiary for or in respect of principal or interest under the Sponsor
Subsidiary Credit Documents (or any instrument or security evidencing
any obligation in respect thereof); provided, however, that without
having or incurring any liability itself to make such payment, El Paso
will exercise its power as direct or indirect owner of all of the
Equity Interests issued by each Sponsor Subsidiary and each Sponsor
Subsidiary Member to cause such Sponsor Subsidiary and such Sponsor
Subsidiary Member to deposit into the Sabine Operating Account or the
Cash Reserve (as applicable) any amounts that are required to be
deposited into the Sabine Operating Account or the Cash Reserve
pursuant to the Sponsor Subsidiary Credit Documents and to direct that
payment of such items of principal or, interest be made from the Sabine
Operating Account or the Cash Reserve (as applicable) to the extent
that there are funds on deposit in the Sabine Operating Account or the
Cash Reserve that, pursuant to the Operative Documents, are available
to be applied to such payment at the time such payment is due, but then
only from such available funds; or
(ii) any obligation of any Sponsor Subsidiary under Section
5.04(a), Section 5.04(b), Section 5.04(d), Section 5.04(e), Section
5.06(a) or Section 5.07(f) of the Sponsor Subsidiary Credit Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any other Operative Document, (x) neither El Paso nor any
Affiliate of El Paso (other than any Sponsor Subsidiary) shall have any
liability to indemnify or hold harmless any Indemnified Person for, or to pay,
any Expense arising out of any failure by any Sponsor Subsidiary to pay any
payment obligation or any deficiency of any Sponsor Subsidiary for or in respect
of principal or interest under the Sponsor Subsidiary Credit Documents (or any
instrument or security evidencing any obligation in respect thereof) and (y)
neither El Paso nor any Affiliate of El Paso (other than EPPC) shall have any
liability to indemnify or hold harmless any Indemnified Person for, or to pay,
any Expense arising out of any failure by EPPC to pay, and neither El Paso nor
any such Affiliate (other than EPPC) shall otherwise be liable for, any payment
obligation for or in respect of principal or interest under the EPPC Notes;
provided, however, that without having
13
or incurring any liability itself to make such payment, El Paso will exercise
its power as direct or indirect owner of all of the Equity Interests issued by
each Sponsor Subsidiary and each Sponsor Subsidiary Member to cause such Sponsor
Subsidiary and such Sponsor Subsidiary Member to deposit into the Sabine
Operating Account or the Cash Reserve (as applicable) any amounts that are
required to be deposited into the Sabine Operating Account or the Cash Reserve
pursuant to the Sponsor Subsidiary Credit Documents and to direct that payment
of such items of principal or interest be made from the Sabine Operating Account
or the Cash Reserve (as applicable) to the extent that there are funds on
deposit in the Sabine Operating Account or the Cash Reserve after payment of all
amounts referred to in Section 3.7(a) that are then owing, which funds, pursuant
to the Operative Documents, are available to be applied to such payment at the
time such payment is due, but then only from such available funds.
(c) The foregoing clauses (a) and (b) are not intended to
limit any claim under this Agreement (including this Section 3) that is
measured, in whole or in part, by reference to the payment obligations of the
Sponsor Subsidiaries under the Sponsor Subsidiary Credit Documents (it being
understood, for example, that although this Agreement does not constitute a
direct or indirect guaranty of the principal or interest on the Advances, if a
Sponsor Subsidiary breaches the covenant as to Indebtedness under Section
5.09(b) of the Sponsor Subsidiary Credit Agreement and as a result there is
deficiency with respect to the payment of the Advances, a claim may be made
hereunder against El Paso for such deficiency, the damages for which claim may
be measured by the amount of such deficiency).
3.8. Waiver of Fiduciary Duty.
El Paso hereby agrees that the Independent Manager (as defined
in each Sponsor Subsidiary Company Agreement) of each Sponsor Subsidiary shall
not be bound by a fiduciary duty to act in the best interests of such Sponsor
Subsidiary or any holder of any interest therein, but shall be entitled to vote
in a manner and to take actions which it shall determine, in its sole
discretion, to be in the best interests of Trinity, Red River and the members
and creditors of Red River, and shall be fully indemnified and held harmless in
so voting or acting in accordance with this Section 3.
SECTION 4
PAYMENTS
4.1. Payments.
All payments to be made by El Paso under Section 3 shall be
paid by El Paso within two Business Days following demand therefor, accompanied,
as may be appropriate in the context, by supporting documentation in reasonable
detail. 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 10:00 AM (
New York time) on the date for such payment in
immediately available funds.
14
4.2. Taxes.
(a) Any and all payments by El Paso hereunder to each
Indemnified Person shall be made, in accordance with Section 4.1, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, imposed by the
jurisdiction under the laws of which such Indemnified Person is organized,
domiciled, resident or doing business, or any political subdivision thereof or
by any jurisdiction in which such Indemnified Person holds any interest in
connection with this Agreement or any other Operative Document (including,
without limitation, in the case of each lender or APA Purchaser or CXC, the
jurisdiction of such Person's lending or funding office) or any political
subdivision thereof, other than by any jurisdiction with which the Indemnified
Person's connection arises solely from having executed, delivered or performed
obligations or received a payment under, or enforced, this Agreement or any
other Operative Document (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "TAXES"). If El Paso shall be required by Applicable Law to deduct any Taxes
from or in respect of any sum payable hereunder to any Indemnified Person, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 4.2) such Indemnified Person receives an amount equal to the
sum it would have received had no such deductions been made, (ii) El Paso shall
make or cause to be made such deductions and (iii) El Paso shall pay or cause to
be paid the full amount deducted to the relevant taxation authority or other
authority in accordance with Applicable Law, provided that El Paso shall not be
required to pay any additional amount (and shall be relieved of any liability
with respect thereto) pursuant to this Section 4.2 (a) to any Indemnified Person
that either (A) on the date such Person became an Indemnified Person hereunder,
(I) was not entitled to submit a U.S. Internal Revenue Service form W-8BEN
(relating to such Indemnified Person, and entitling it to a complete exemption
from United States withholding taxes on all amounts to be received by such
Indemnified Person pursuant to this Agreement) or any applicable successor form
to similar effect or a U.S. Internal Revenue Service form W-8ECI (relating to
all amounts to be received by such Indemnified Person pursuant to this
Agreement) or any applicable successor form to similar effect and (II) was not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) or (B) has failed to submit any form or certificate that it was required
to file or provide pursuant to Section 4.2 (d) and is entitled to file or give,
as applicable, under Applicable Law, provided further that should an Indemnified
Person become subject to Taxes because of its failure to deliver a form required
hereunder, El Paso shall take such steps as such Indemnified Person shall
reasonably request to assist such Indemnified Person to recover such Taxes, and
provided further that each Indemnified Person (other than CXC), with respect to
itself, agrees to indemnify and hold harmless El Paso from any taxes, penalties,
interest or other expenses, costs and losses incurred or payable by El Paso as a
result of the failure of El Paso to comply with its obligations under Section
4.2(a)(ii) or (iii) in reliance on any form or certificate provided to it by
such Indemnified Person pursuant to this Section 4.2. If any Indemnified Person
(other than CXC) receives a net credit or refund in respect of such Taxes or
amounts so paid by El Paso, it shall promptly notify El Paso of such net credit
or refund and shall promptly pay such net credit or refund to El Paso, provided
that El Paso agrees to return such net credit or refund if the Indemnified
Person to which such net credit or refund is applicable is required to repay it.
15
(b) In addition, El Paso agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made by El Paso hereunder or from
the execution, delivery or performance of, or otherwise with respect to, this
Agreement (hereinafter referred to as "OTHER TAXES").
(c) El Paso will indemnify each Indemnified Person for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
4.2) paid by such Indemnified Person and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto except as a
result of the gross negligence (which shall in any event include the failure of
such Indemnified Person to provide to El Paso any form or certificate that it
was required to provide pursuant to subsection (d) below) or willful misconduct
of such Indemnified Person, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Indemnified Person makes written demand therefor.
(d) On or prior to the date on which each Indemnified Person
organized under the laws of a jurisdiction outside the United States becomes an
Indemnified Person hereunder, such Indemnified Person shall provide El Paso with
U.S. Internal Revenue Service form W-BEN or W-8ECI, as appropriate, or any
successor form prescribed by the U.S. Internal Revenue Service, certifying that
such Indemnified Person is fully exempt from United States withholding taxes
with respect to all payments to be made to such Indemnified Person hereunder, or
other documents satisfactory to El Paso indicating that all payments to be made
to such Indemnified Person hereunder are fully exempt from such taxes.
Thereafter and from time to time (but only so long as such Indemnified Person
remains lawfully able to do so), each such Indemnified Person shall submit to El
Paso such additional duly completed and signed copies of one or the other of
such Forms (or such successor Forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by El Paso to
such Indemnified Person and (ii) required under then-current United States law
or regulations to avoid United States withholding taxes on payments in respect
of all amounts to be received by such Indemnified Person pursuant to this
Agreement. Upon the request of El Paso from time to time, each Indemnified
Person that is a United States person (as such term is defined in Section
7701(a)(30) of the Code) shall submit to El Paso a certificate to the effect
that it is such a United States person. If any Indemnified Person determines, as
a result of any change in Applicable Law, or in any official application or
interpretation thereof, that it is unable to submit to El Paso any form or
certificate that such Indemnified Person is obligated to submit pursuant to this
subsection (d), or that such Indemnified Person is required to withdraw or
cancel any such form or certificate previously submitted, such Indemnified
Person shall promptly notify El Paso of such fact.
(e) Any Indemnified Person claiming any additional amounts
payable pursuant to this Section 4.2 shall use its best efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending or funding office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
which may thereafter accrue and would not, in the reasonable judgment of such
Indemnified Person, be otherwise disadvantageous to such Indemnified Person.
16
(f) Without prejudice to the survival of any other agreement
of El Paso hereunder, the agreements and obligations of El Paso and each
Indemnified Person contained in this Section 4.2 shall survive the payment in
full of principal and interest owing under the Sponsor Subsidiary Credit
Agreement.
(g) Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by El Paso under this Section 4.2
shall not be payable under Section 3.
SECTION 5
EL PASO COVENANTS
5.1. Separate Existence.
El Paso hereby covenants and agrees that, so long as Red
River, or its successors and assigns (other than El Paso or any Subsidiary of El
Paso), holds an interest in Trinity, El Paso will, and will cause each of the El
Paso Companies (including the El Paso Parties), Trinity (for so long as the
Trinity Class A Member is an El Paso Company and has the power and authority to
manage the business and affairs of Trinity) and each Sponsor Subsidiary, to
comply with the following undertakings (except for such non-compliance that, in
the aggregate, is not material):
(i) El Paso and the El Paso Companies (other than Trinity and
any Sponsor Subsidiary) will maintain their 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 or any Sponsor Subsidiary, as the case may be.
(ii) El Paso and the El Paso Companies (other than Trinity and
any Sponsor Subsidiary) will maintain their 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 their assets and liabilities separate and distinct
from the assets and liabilities of Trinity or any Sponsor Subsidiary,
as the case may be.
(iii) El Paso and the El Paso Companies (other than Trinity
and any Sponsor Subsidiary) on the one hand, will not commingle any of
their assets, funds, liabilities or business functions with the assets,
funds, liabilities or business functions of Trinity or any Sponsor
Subsidiary, as the case may be, on the other hand.
(iv) El Paso and the El Paso Companies (other than Trinity and
any Sponsor Subsidiary) will each observe all requisite corporate
procedures and formalities, including the holding of periodic and
special meetings of shareholders and boards of directors, the
recordation and maintenance of minutes of such meetings, and the
recordation and maintenance of resolutions adopted at such meetings.
(v) Each of Trinity and the Sponsor Subsidiaries will observe
all requisite organizational procedures and formalities, including the
holding of meetings of members and boards of managers as required by
the Trinity Company Agreement and the Sponsor
17
Subsidiary Company Agreements, as applicable, the recordation and
maintenance of minutes of such meetings, and the recordation of and
maintenance of resolutions adopted at such meetings.
(vi) None of El Paso and the El Paso Companies (other than
Trinity and any Sponsor Subsidiary) will be consensually merged or
consolidated with Trinity or any Sponsor Subsidiary, as the case may be
(other than, with respect to Trinity and any Sponsor Subsidiary, for
financial reporting purposes, and with respect to any Sponsor
Subsidiary, for tax purposes). None of El Paso and the El Paso
Companies will be consensually merged or consolidated with Red River
for any purpose.
(vii) El Paso will include in its consolidated financial
statements footnotes that clearly disclose, among other things, the
separate existence and identity of Trinity and each Sponsor Subsidiary
from El Paso and its other Subsidiaries, and that each of Trinity and
the Sponsor Subsidiaries has separate assets and liabilities. Red River
will not be consolidated with El Paso for the purposes of El Paso's
consolidated financial statements.
(viii) All transactions, agreements and dealings between El
Paso and the El Paso Companies (other than Trinity and any Sponsor
Subsidiary), on the one hand, and Trinity or any Sponsor Subsidiary, as
the case may be, on the other hand (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.
(ix) Transactions between Trinity or any Sponsor Subsidiary,
on the one hand, and any third parties, on the other hand, will be
conducted in the name of Trinity or such Sponsor Subsidiary (as
applicable) as an entity separate and distinct from El Paso or any El
Paso Company (other than Trinity and any Sponsor Subsidiary).
(x) Except as otherwise specified in the Operative Documents,
each of Trinity and the Sponsor Subsidiaries, on the one hand, will pay
its liabilities and losses from its respective assets, and El Paso and
the El Paso Companies (other than Trinity and any Sponsor Subsidiary),
on the other hand, will pay their liabilities and losses from their
respective assets.
(xi) Representatives and agents of Trinity or any Sponsor
Subsidiary (whether or not they are "loaned" employees of El Paso or
any El Paso Company (other than Trinity and the Sponsor Subsidiaries))
will, when purporting to act on behalf of Trinity or any Sponsor
Subsidiary (as applicable), hold themselves out to third parties as
being representatives or agents, as the case may be, of Trinity or such
Sponsor Subsidiary (as applicable), and will utilize business cards,
letterhead, purchase orders, invoices and the like of Trinity or such
Sponsor Subsidiary (as applicable).
(xii) Each of Trinity and the Sponsor Subsidiaries will
compensate all consultants, independent contractors and agents from its
own funds for services provided to it by such consultants, independent
contractors and agents.
(xiii) To the extent that Trinity or any Sponsor Subsidiary,
on the one hand, and El Paso or any of the El Paso Companies (other
than Trinity and any Sponsor
18
Subsidiary), 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 or any Sponsor Subsidiary, on the one hand, and El
Paso or any of the El Paso Companies (other than Trinity and any
Sponsor Subsidiary), 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.
(xiv) Each of Trinity and the Sponsor Subsidiaries will have
annual financial statements prepared in accordance with GAAP, separate
from El Paso and the El Paso Companies (other than Trinity and any
Sponsor Subsidiary), provided that El Paso may consolidate Trinity and
any Sponsor Subsidiary for El Paso's financial reporting purposes.
(xv) None of El Paso and the El Paso Companies (other than
Trinity and the Sponsor Subsidiaries) will make any inter-entity loans,
advances, guarantees, extensions of credit or contributions of capital
to, from or for the benefit of Trinity or any Sponsor Subsidiary, as
the case may be, without proper documentation and accounting in
accordance with GAAP and only in accordance with, or as contemplated
by, the provisions of the Trinity Company Agreement or the relevant
Sponsor Subsidiary Company Agreement, as the case may be, and the other
Operative Documents.
(xvi) Trinity will not be included in the consolidated tax
returns of El Paso and the consolidated El Paso Companies (other than
Trinity).
(xvii) El Paso and the El Paso Companies (other than Trinity
and the Sponsor Subsidiaries) will not refer to Trinity or any Sponsor
Subsidiary, as the case may be, as a department or division of El Paso
or any of the El Paso Companies (other than Trinity and any Sponsor
Subsidiary) and will not otherwise refer to Trinity or any Sponsor
Subsidiary, as the case may be in a manner inconsistent with its status
as a separate and distinct legal entity. In addition, each of Trinity
and the Sponsor Subsidiaries will hold itself out as separate and
distinct from El Paso and the El Paso Companies (other than Trinity and
the Sponsor Subsidiaries).
(xviii) El Paso shall cause Lord Securities to be elected as
an independent manager of each Sponsor Subsidiary pursuant to the terms
of each Sponsor Subsidiary Company Agreement at each election of the
Board of Managers of such Sponsor Subsidiary.
(xix) El Paso and the El Paso Companies (other than Trinity
and Sabine) will not hold out the credit of either Trinity or Sabine as
being available to satisfy the obligations of El Paso or the El Paso
Companies (other than Trinity and Sabine, respectively).
19
(xx) El Paso and the El Paso Companies (other than Trinity and
Sabine) will not acquire the obligations or securities of Trinity or
Sabine (except as contemplated by or permitted under the Operative
Documents).
(xxi) El Paso and the El Paso Companies (other than Trinity
and Sabine) will not use stationery, invoices, and checks bearing the
name of either Trinity or Sabine.
(xxii) El Paso and the El Paso Companies (other than Trinity
and Sabine) will not pledge their respective assets for the benefit of
Trinity or Sabine (except as contemplated by or permitted under the
Operative Documents).
(xxiii) El Paso and the El Paso Companies (other than Trinity
and Sabine) will correct any known misunderstanding regarding their
respective identities as separate from the identity of each of Trinity
and Sabine.
(xxiv) None of El Paso and the El Paso Companies (other than
Trinity and Sabine) will use the separate existence of Trinity or
Sabine to abuse creditors or to perpetrate a fraud, injury, or
injustice on creditors.
(xxv) All transactions between El Paso and the El Paso
Companies (other than Trinity and Sabine), on the one hand, and each of
Trinity and Sabine, 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 will be made in good
faith and without any intent to hinder, delay, or defraud creditors.
(xxvi) No El Paso Company (including Trinity and Sabine) has
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 of such
Person to the exclusion in whole or in part of others in violation of
Applicable Law or with an intent to hinder, delay or defraud any of its
creditors.
(xxvii) The assets of each El Paso Company (including Trinity
and Sabine) are, as of the date hereof, 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.
(xxviii) El Paso shall cause the Sponsor Subsidiary Members to
appoint a Sponsor Subsidiary Liquidator in compliance with, and to the
extent required by, Section 11.9 of each Sponsor Subsidiary Company
Agreement.
5.2. Affirmative Covenants.
El Paso hereby covenants and agrees that, until the Collection
Date, it will:
(a) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each Relevant El Paso Party and each Principal
Subsidiary to preserve and maintain, its corporate existence, rights
(organizational and statutory) and material franchises, except in the
case of each such Person as otherwise permitted by
20
Section 5.3(d) or 5.3(e); provided, however, that nothing herein shall
prevent any change in Business Entity form of El Paso or any Principal
Subsidiary.
(b) Compliance with Laws, Etc. Comply, and cause each Relevant
El Paso Party and each Principal Subsidiary to comply, in all material
respects with all Applicable Laws (including, without limitation, all
environmental laws and laws requiring payment of all taxes, assessments
and governmental charges imposed upon it or upon its property except to
the extent contested in good faith by appropriate proceedings) the
failure to comply with which would have a Material Adverse Effect.
(c) Visitation Rights. At any reasonable time and from time to
time, permit Red River, the Agent, the Collateral Agent, the Equity
Investors and the Surety (as such terms are defined in the Red River
Credit Agreement) or any agents or representatives thereof, to examine
and make copies of and abstracts from the records and books of account
of, and visit the properties of El Paso or any Relevant El Paso Party
and to discuss the affairs, finances and accounts of El Paso, any
Relevant El Paso Party and any of El Paso's Subsidiaries (other than
Trinity and the Sponsor Subsidiaries) with any of their respective
officers and with their respective independent certified public
accountants. El Paso shall assume or pay all reasonable costs and
expenses associated with any such discussion or examination; provided,
however, that prior to the occurrence of a Notice Event, El Paso shall
only be liable for costs and expenses associated with any such
discussion or examination once per Fiscal Year.
(d) Books and Records. Keep, and cause each of its
Subsidiaries (other than Trinity and the Sponsor Subsidiaries) and each
Relevant El Paso Party to keep, proper books of record and account, in
which full and correct entries shall be made of all its respective
financial transactions and the assets and business of El Paso, each of
its Subsidiaries (other than Trinity and the Sponsor Subsidiaries) and
each Relevant El Paso Party, as applicable, in accordance with GAAP
either (i) consistently applied or (ii) applied in a changed manner
provided such change shall have been disclosed to the Agent, Red River,
the Equity Investors and the Surety (as such terms are defined in the
Red River Credit Agreement) and shall have been consented to by the
accountants which (as required by Section 5.4(b)) report on the
financial statements of El Paso and its consolidated Subsidiaries for
the fiscal year in which such change shall have occurred.
(e) Maintenance of Properties, Etc. Maintain and preserve, and
cause each Principal Subsidiary and each Relevant El Paso Party to
maintain and preserve, all of its properties which are used in the
conduct of its business in good working order and condition, ordinary
wear and tear excepted, to the extent that any failure to do so would
have a Material Adverse Effect.
(f) Maintenance of Insurance. Maintain, and cause each
Principal Subsidiary and each Relevant El Paso Party to maintain,
insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which El Paso, such Subsidiary
or such Relevant El Paso Party operates.
21
(g) El Paso Companies. Cause each Relevant El Paso Party to be
an El Paso Company.
(h) Turnover. To the extent that El Paso is making any payment
that, pursuant to the Operative Documents, is required to be paid into
the Cash Reserve or the Trinity Operating Account, as the case may be,
make such payment into the Cash Reserve or the Trinity Operating
Account, as the case may be. To the extent that any El Paso Company is
making any payment that, pursuant to the Operative Documents, is
required to be paid into the Cash Reserve or the Trinity Operating
Account, as the case may be, cause such El Paso Company to direct that
such payment be so paid into the Cash Reserve or the Trinity Operating
Account, as the case may be.
(i) Income Tax Liabilities. Pay, or cause to be paid by any
Relevant El Paso Party, all Taxes based on net income of the Sponsor
Subsidiaries (other than Publicly Traded Investments) to the extent
that such Sponsor Subsidiaries are included in a consolidated,
combined, unitary or any similar Tax return with El Paso or with any
Relevant El Paso Party (the "CONSOLIDATED TAXES").
(j) Trinity Liquidator Notices. Upon receipt of a notice from
the Trinity Liquidator following the occurrence of a Liquidating Event,
El Paso will: (i) contribute to the capital of the Sponsor Subsidiaries
(other than Publicly Traded Investments) or, at El Paso's sole option
waive repayment of, those amounts receivable from such Sponsor
Subsidiaries in respect of Consolidated Taxes as may be specified in
the notice from the Trinity Liquidator and (ii) cause those Sponsor
Subsidiaries (other than Publicly Traded Investments) that the Trinity
Liquidator may request to make the election provided in Code Section
754 provided that the underlying Sponsor Subsidiary member agreement or
partnership agreement permits such election to be made and that such
Sponsor Subsidiary is classified as a partnership for U.S. federal
income tax purposes.
5.3. Negative Covenants.
El Paso hereby covenants and agrees that, until the Collection
Date, it will not at any time:
(a) Liens, Etc. (i) Create, assume or suffer to exist, or
permit any Principal Subsidiary or any Relevant El Paso Party to
create, assume or suffer to exist, any Relevant Liens upon or with
respect to its Equity Interests in any Principal Subsidiary or any
Relevant El Paso Party, whether now owned or hereafter acquired, or
(ii) create or assume, or permit any Principal Subsidiary or any
Relevant El Paso Party to create or assume, any Relevant Liens upon or
with respect to any other assets material to the consolidated
operations of El Paso and its consolidated Subsidiaries taken as a
whole securing the payment of Relevant Indebtedness and Guaranties in
an aggregate amount (determined without duplication of amount (so that
the amount of a Guaranty will be excluded to the extent the Relevant
Indebtedness Guaranteed thereby is included in computing such aggregate
amount)) exceeding the greater of (x) $300,000,000 and (y) 10% of Net
Worth as at the date of such creation or assumption; provided, however,
that this Section 5.3(a) shall not apply to:
22
(A) Relevant Liens on the Equity Interests in, or
Indebtedness or other obligations of, or assets of any Project
Financing Subsidiary (or Equity Interests in, or Indebtedness
or other obligations of, any Business Entity which is directly
or indirectly owned by a Project Finance Subsidiary) securing
the payment of a Project Financing and related obligations;
(B) Relevant Liens on (1) assets acquired by El Paso
or any of its Subsidiaries after February 11, 1992, to the
extent that such Relevant Liens existed at the time of such
acquisition and were not placed thereon by or with the consent
of El Paso in contemplation of such acquisition and (2) Equity
Interests acquired after February 11, 1992 in a Business
Entity that has become or becomes a Subsidiary of El Paso, or
on assets of any such Business Entity, to the extent that such
Relevant Liens existed at the time of such acquisition and
were not placed thereon by or with the consent of El Paso in
contemplation of such acquisition;
(C) Relevant Liens created by any Alternate Program
or any document executed by any "Borrower" or any "Subsidiary"
(other than any Sponsor Subsidiary, any Controlled Business or
Trinity) under and as defined in the El Paso Revolving Credit
Facility Agreement or the El Paso Additional Credit Facility
Agreement in connection therewith;
(D) Relevant Liens on Margin Stock; and
(E) Permitted Relevant Liens;
(F) Relevant Liens arising out of the refinancing,
extension, renewal or refunding of any Indebtedness or
Guaranty or other obligation secured by any Lien permitted by
any of the foregoing clauses of this Section, provided that
the principal amount of such Indebtedness or Guaranty or other
obligation is not increased (except by the amount of costs
reasonably incurred in connection with the issuance thereof)
beyond the highest previous amount thereof and such
Indebtedness or Guaranty or other obligation is outstanding
immediately prior to the refinancing, extension, renewal or
refunding and is not secured by any additional assets that
would not have been permitted by this Section to secure the
Indebtedness or Guaranty or other obligation refinanced,
extended, renewed or refunded; and
(G) Relevant Liens on products and proceeds
(including dividend, interest and like payments on, and
insurance and condemnation proceeds and rental, lease,
licensing and similar proceeds) of, and property evidencing or
embodying, or constituting rights or other general intangibles
directly relating to or arising out of, and accessions and
improvements to, collateral subject to Liens permitted by this
Section 5.3(a).
(b) Consolidated Debt and Guarantees to Capitalization. Permit
the ratio of (i) the sum of (A) the aggregate amount of consolidated
Debt of El Paso and its
23
consolidated Subsidiaries (without duplication of amounts under this
clause (i) and determined as to all of the foregoing entities on a
consolidated basis) plus (B) the aggregate amount of consolidated
Guaranties of El Paso and its consolidated Subsidiaries (without
duplication of amounts under this clause (i) and determined as to all
of the foregoing entities on a consolidated basis) to (ii)
Capitalization of El Paso (without duplication and determined as to all
of the foregoing entities on a consolidated basis) to exceed 0.7 to 1.
(c) Debt, Etc. Permit any of its consolidated Subsidiaries to
incur or become liable for any Debt, any Guaranty or any reimbursement
obligation with respect to any letter of credit (other than any Project
Financing), if, immediately after giving effect to such Debt, Guaranty
or reimbursement obligation and the receipt and application of any
proceeds thereof or value received in connection therewith, the
aggregate amount (determined without duplication of amount) of Debt,
Guaranties and letter of credit reimbursement obligations of El Paso's
consolidated Subsidiaries owing to Persons other than El Paso and its
consolidated Subsidiaries (other than any Project Financing) would
exceed the greater of (i) $600,000,000 and (ii) 10% of Net Worth
determined as at the date of incurrence or assumption thereof;
provided, however, that the following Debt, Guaranties or reimbursement
obligations shall be excluded from the application of, and calculation
set forth in, this paragraph (c): (A) Debt, Guaranties or reimbursement
obligations incurred by (x) Mojave or (y) EPNGC, (B) Debt, Guaranties
or reimbursement obligations arising under (x) the EPTPC Facility or
(y) the El Paso Existing 364-Day Facility, or the El Paso Existing
3-Year Facility, (C) Debt, Guaranties or reimbursement obligations
incurred by El Paso Field Services Company up to an amount not to
exceed at any time outstanding the tangible net worth of El Paso Field
Services Company, provided that such Debt may be guaranteed by El Paso,
(D) Excluded Acquisition Debt, (E) successive extensions, refinancings
or replacements (at the same Subsidiary or at any other consolidated
Subsidiary of El Paso) of Debt, Guaranties or reimbursement obligations
(or commitments in respect thereof) referred to in clauses (A), (B) and
(D) above and in an amount not in excess of the amounts so extended,
refinanced or replaced (or the amount of commitments in respect
thereof) and (F) Debt, Guarantees or reimbursement obligations incurred
by Tennessee pursuant to one or more commercial paper programs allowing
for the issuance by Tennessee of items of commercial paper having
maturity dates not later than one year from the dates of their
respective issuance, provided that such Debt, Guarantees or
reimbursement obligations of Tennessee shall be in an aggregate
principal amount not to exceed at any time the excess of (x) the sum of
(1) the aggregate amount of "Commitments" as defined in the El Paso
Existing 364-Day Facility and (2) the aggregate amount of "Commitments"
as defined in the El Paso Existing 3-Year Facility, over (y) the sum of
(1) the aggregate amount of "Advances", as defined in and outstanding
pursuant to, the El Paso Existing 364-Day Facility, (2) the aggregate
amount of "Advances", as defined in and outstanding pursuant to, the El
Paso Existing 3-Year Facility, and (3) the aggregate principal amount
of commercial paper outstanding from time to time that (I) is issued by
El Paso and its Subsidiaries (other than Tennessee), and (II) relies
upon credit availability under either the El Paso Existing 364-Day
Facility or the El Paso Existing 3-Year Facility for commercial paper
liquidity purposes.
24
(d) Sale, Etc., of Assets. Sell, lease or otherwise transfer,
or permit any Principal Subsidiary or Relevant El Paso Party to sell,
lease or otherwise transfer, (in either case, whether in one
transaction or in a series of transactions) assets constituting all or
substantially all of the consolidated assets of El Paso and its
Principal Subsidiaries taken as a whole, provided that the provisions
of this clause (d) shall not apply to:
(i) any sale of receivables and related rights
pursuant to any Alternate Program;
(ii) any Project Financing Subsidiary and the assets
thereof;
(iii) sales, leases or other transfers of assets or
capital stock of any Subsidiary of El Paso other than any
Principal Subsidiary;
(iv) any sale of Margin Stock;
(v) any sale of up to 20% of the equity of El Paso
Field Services Company in an initial public offering of such
Person's Equity Interests;
(vi) any sale, lease or other transfer to El Paso or
any Principal Subsidiary, or to any Business Entity that after
giving effect to such transfer will become and be either (A) a
Principal Subsidiary in which El Paso's direct or indirect
equity interest will be at least as great as its direct or
indirect equity interest in the transferor immediately prior
thereto or (B) a directly or indirectly wholly-owned Principal
Subsidiary;
(vii) any transfer permitted by Section 5.3(e); and
(viii) any transfer to El Paso or any of its
Subsidiaries of any stock or assets other than FERC regulated
assets (or stock or any other equity interest in an entity
owning FERC regulated assets) used in the mainline gas
transmission business; provided that no El Paso Event or El
Paso Default shall have occurred and be continuing before and
immediately after giving effect to such transfer.
(e) Merger, Etc. Merge or consolidate with any Person, or
permit any of its Principal Subsidiaries to merge or consolidate with
any Person, except that (i) any Principal Subsidiary may merge or
consolidate with (or liquidate into) any other Subsidiary (other than a
Project Financing Subsidiary, unless the successor Business Entity is
not treated as a Project Financing Subsidiary under this Agreement) or
may merge or consolidate with (or liquidate into) El Paso, provided
that (A) if such Principal Subsidiary merges or consolidates with (or
liquidates into) El Paso either (x) El Paso shall be the continuing or
surviving Business Entity or (y) the continuing or surviving Business
Entity is organized under the laws or the United States or a State
thereof and unconditionally assumes by agreement all of the performance
obligations and payment obligations of El Paso under this Agreement and
the other Operative Documents to which El Paso is a party, and (B) if
any such Principal Subsidiary merges or consolidates with (or
liquidates into) any other Subsidiary of El Paso, one or more Business
Entities that are Subsidiaries are the continuing or surviving Business
Entity and, if either such Subsidiary
25
is not directly or indirectly wholly owned by El Paso, such merger or
consolidation is on an arm's length basis, and (ii) El Paso or any
Principal Subsidiary may merge or consolidate with any other Business
Entity (that is, in addition to El Paso or any Subsidiary of El Paso),
provided that (A) if El Paso merges or consolidates with any such other
Business Entity, either (x) El Paso is the continuing or surviving
Business Entity, or (y) the continuing or surviving Business Entity is
organized under the laws of the United States or a State thereof and
unconditionally assumes by agreement all of the performance obligations
and payment obligations of El Paso under this Agreement and the other
Operative Documents to which El Paso is a party, (B) if any Principal
Subsidiary merges or consolidates with any such other Business Entity,
the surviving Business Entity is a directly or indirectly wholly owned
Principal Subsidiary of El Paso, and (C) if either El Paso or any
Principal Subsidiary merges or consolidates with any such other
Business Entity, after giving effect to such merger or consolidation no
El Paso Event or El Paso Default shall have occurred and be continuing.
(f) Trinity, Sponsor Subsidiary or Red River Bankruptcy. (i)
Consent to, vote for, or otherwise cause or permit (or permit any of
its Affiliates, to consent to, or vote for, or otherwise cause or
permit) Trinity or any Sponsor Subsidiary or any El Paso Party
voluntarily to take any action of the type referred to in clause
(a)(iii) or (b), or clause (c) insofar as such clause (c) refers to
clause (a)(iii) or (b), of the definition of "VOLUNTARY BANKRUPTCY".
(ii) Consent to, vote for, or otherwise cause (or permit any
of its Affiliates, to consent to, or vote for, or otherwise cause) Red
River voluntarily to take any action of the type referred to in clause
(a)(iii) or (b), or clause (c) insofar as such clause (c) refers to
clause (a)(iii) or (b), of the definition of "VOLUNTARY BANKRUPTCY".
(g) Principal Subsidiaries and Material Subsidiaries. Permit
at any time any Sponsor Subsidiary, Intermediate Holder, Underlying
Business (other than EPPC, the Sponsor Subsidiary that owns all of the
Equity Interests in EPPC, and any Intermediate Holder relating
thereto), or Trinity to be:
(i) a Principal Subsidiary or a Material Subsidiary
of El Paso; or
(ii) directly owned by El Paso.
(h) Consolidated Taxes. Notwithstanding the El Paso Natural
Gas Company Income Tax Provision and Settlement Policy dated July 1,
1992 or any successor agreement or document (with respect to which El
Paso, on its own behalf and on behalf of any affiliated party, hereby
waives any right to payment as long as this Agreement is in effect),
permit any Sponsor Subsidiary (other than Publicly Traded Investments)
to pay any Consolidated Taxes (including, without limitation, any
Consolidated Taxes attributable to such Sponsor Subsidiary) or to pay
or reimburse El Paso, any Relevant El Paso Party or any other El Paso
Affiliate for or in respect of any Consolidated Taxes (including,
without limitation, any Consolidated Taxes attributable to such Sponsor
Subsidiary).
26
5.4. Reporting Requirements.
El Paso hereby covenants and agrees that, until the Collection
Date, it will furnish to Red River the following:
(a) as soon as publicly available and in any event within 60
days after the end of each of the first three fiscal quarters of each
fiscal year of each of El Paso and EPNGC, a consolidated balance sheet
of each of El Paso and EPNGC and their respective consolidated
subsidiaries as of the end of such quarter, and consolidated statements
of income and cash flows of each of El Paso and EPNGC and their
respective consolidated subsidiaries each for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified (subject to normal year-end adjustments) as being
fairly stated in all material respects by the chief financial officer,
controller or treasurer of El Paso and accompanied by a certificate of
such officer stating (i) whether or not such officer has knowledge of
the occurrence of any El Paso Event that is continuing or of any event
not theretofore remedied that with notice or lapse of time or both
would constitute an El Paso Event and, if so, stating in reasonable
detail the facts with respect thereto, (ii) all relevant facts in
reasonable detail to evidence, and the computations as to, whether or
not El Paso is in compliance with the requirements set forth in
Sections 5.3 (b) and (c), and (iii) a listing of all Principal
Subsidiaries and consolidated Subsidiaries of El Paso showing the
extent of its direct and indirect holdings of their stocks;
(b) as soon as publicly available and in any event within 120
days after the end of each fiscal year of each of El Paso and EPNGC, a
copy of the annual report for such year for each of El Paso and EPNGC
and their respective consolidated Subsidiaries containing financial
statements for such year reported on by PricewaterhouseCoopers LLP or
other nationally recognized independent public accountants accompanied
by (i) a report signed by said accountants stating that such financial
statements have been prepared in accordance with generally accepted
accounting principles and (ii) a letter from such accountants stating
that in making the investigations necessary for such report they
obtained no knowledge, except as specifically stated therein, of any
event of default (however described) under the El Paso Existing 3-Year
Facility or El Paso Existing 364-Day Facility that is continuing or of
any event not theretofore remedied that with notice or lapse of time or
both would constitute such an event of default;
(c) within 120 days after the close of each of El Paso's
fiscal years, a certificate of the chief financial officer, controller
or treasurer of El Paso stating (i) whether or not such chief financial
officer, controller or treasurer has knowledge of the occurrence of any
El Paso Event that is continuing or of any event not theretofore
remedied that with notice or lapse of time or both would constitute
such an El Paso Event and, if so, stating in reasonable detail the
facts with respect thereto, (ii) all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not El Paso
is in compliance with the requirements set forth in Sections 5.3(b) and
(c) and (iii) a listing of all Principal Subsidiaries and consolidated
Subsidiaries of El Paso showing the extent of its direct and indirect
holdings of their stocks;
27
(d) promptly after the sending or filing thereof, copies of
all publicly available reports that El Paso or any Principal Subsidiary
sends to any of its security holders and copies of all publicly
available reports and registration statements that El Paso or any
Principal Subsidiary files with the Securities and Exchange Commission
or any national securities exchange other than registration statements
relating to employee benefit plans and to registrations of securities
for selling security holders;
(e) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies against or
involving El Paso or any Principal Subsidiary except any litigation or
proceeding that in the reasonable judgment of El Paso (taking into
account the exhaustion of all appeals) is not likely to have a material
adverse effect on the consolidated financial condition of El Paso and
its consolidated Subsidiaries taken as a whole;
(f) within three Business Days after an officer of El Paso
obtains knowledge of the occurrence of any Notice Event, Liquidating
Event, Termination Event, Event of Default or Incipient Event that is
continuing, notice of such occurrence together with a detailed
statement by a responsible officer of El Paso of the steps being taken
by El Paso or the appropriate Subsidiary to cure the effect of such
event;
(g) as soon as practicable and in any event (i) within 30 days
after El Paso or any ERISA Affiliate knows or has reason to know that
any ERISA Termination Event described in clause (a) of the definition
of ERISA Termination Event with respect to any Plan has occurred and
(ii) within 10 days after El Paso or any ERISA Affiliate knows or has
reason to know that any other ERISA Termination Event with respect to
any Plan has occurred, a statement of the chief financial officer or
treasurer of El Paso describing such ERISA Termination Event and the
action, if any, which El Paso or such ERISA Affiliate proposes to take
with respect thereto;
(h) promptly and in any event within two Business Days after
receipt thereof by El Paso or any ERISA Affiliate, copies of each
notice received by El Paso or any ERISA Affiliate from the Pension
Benefit Guaranty Corporation (or any successor) stating its intention
to terminate any Plan or to have a trustee appointed to administer any
Plan;
(i) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan;
(j) promptly and in any event within five Business Days after
receipt thereof by El Paso or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by El Paso or any
ERISA Affiliate concerning (i) the imposition of Withdrawal Liability
by a Multiemployer Plan, (ii) the determination that a Multiemployer
Plan is, or is expected to be, in reorganization or insolvent within
the meaning of Title IV of ERISA, (iii) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (iv) the
amount of liability incurred, or expected to be
28
incurred, by El Paso or any ERISA Affiliate in connection with any
event described in clause (i), (ii) or (iii) above; and
(k) as soon as practicable but in any event within 60 days of
any notice of request therefor, such other information respecting the
financial condition and results of operations of El Paso or any
Subsidiary of El Paso as a Beneficiary may from time to time reasonably
request.
Each balance sheet and other financial statement furnished
pursuant to Section 5.4(a) or (b) shall contain comparative financial
information that conforms to the presentation required in Forms 10-Q and 10-K,
as appropriate, under the Securities Exchange Act of 1934, as amended.
5.5. Restrictions on Material Subsidiaries.
El Paso will not, and will not permit any Material Subsidiary
to, enter into any agreement or understanding (a) pursuant to which any
non-equity interest claim El Paso may have against any Material Subsidiary would
be subordinate in any manner to the payment of any other obligation of such
Material Subsidiary (other than waivers or subordination of subrogation,
contribution or similar rights under Guaranties and similar agreements) or (b)
that by its terms limits or restricts the ability of such Material Subsidiary to
make funds available to El Paso (whether by dividend or other distribution, by
replacement of any inter-company advance or otherwise) if, in any such case
referred to in this Section 5.5, there is, at the time any such agreement is
entered into, a reasonable likelihood that all such agreements and
understandings, considered together, would materially and adversely affect the
ability of El Paso to meet its obligations as they become due.
SECTION 6
MISCELLANEOUS
6.1. Amendments.
No amendment or waiver of any provision of this Agreement, and
no consent to any departure by El Paso herefrom, shall in any event be effective
unless the same shall be in writing and signed by Red River and El Paso. No such
waiver of a provision or consent to a departure in any one instance shall be
construed as a further or continuing waiver of or consent to subsequent
occurrences, or a waiver of any other provision or consent to any other
departure. Any such amendment, waiver or consent signed by Red River shall be
binding on all Indemnified Persons.
6.2. Addresses for 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 during the recipient s normal business hours if during a Business Day, or,
if
29
not, on the next succeeding Business Day), if sent by facsimile (followed by a
hard copy of the facsimiled communication sent by certified mail, postage and
charges prepaid), or by courier or delivery service or by mail, addressed as
follows, or to such other address as such Person may from time to time specify
by notice, if to El Paso, at its address at c/o El Paso Corporation, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇, if to Red River, at its address specified in
Section 2.2 of the Trinity Company Agreement, and if to any other Beneficiary,
at its address specified by notice given in the manner provided herein to each
other Person entitled to receive notice hereunder, or, in each case, to such
other address (and with copies to such other Persons) as the Person entitled to
receive notice hereunder shall specify by notice given in the manner provided
herein to the other Persons entitled to receive notice hereunder.
6.3. No Waiver; Cumulative Remedies.
No failure on the part of any Indemnified Person to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by Applicable Law.
6.4. Waiver of Jury Trial.
EL PASO AND, BY ACCEPTING THE BENEFITS HEREOF, EACH
INDEMNIFIED PERSON, EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT 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.
6.5. Jurisdiction, Etc.
(a) El Paso hereby irrevocably submits to the jurisdiction of
any
New York State or Federal court sitting in
New York City and any appellate
court from any thereof in any action or proceeding by any Indemnified Person in
respect of, but only in respect of, any claims or causes of action arising out
of or relating to this Agreement (such claims and causes of action,
collectively, being "PERMITTED CLAIMS"), and El Paso hereby irrevocably agrees
that all Permitted Claims may be heard and determined in such
New York State
court or in such Federal court. El Paso hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any aforementioned court in
respect of Permitted Claims. El Paso hereby irrevocably appoints CT Corporation
System (the "PROCESS AGENT"), with an office on the date hereof at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as its agent to receive on behalf of El
Paso and its property service of copies of the summons and complaint and any
other process which may be served by any Indemnified Person in any such action
or proceeding in any aforementioned court in respect of Permitted Claims. Such
service may be made by delivering a copy of such process to El Paso by courier
and by certified mail (return receipt requested), fees and postage prepaid, both
(i) in care of the Process Agent at the Process Agent's above address and (ii)
at El Paso's address specified pursuant to Section 6.2, and El Paso hereby
irrevocably authorizes and directs the Process Agent
30
to accept such service on its behalf. El Paso agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law.
(b) Nothing in this Section 6.5 shall affect the right of any
Indemnified Person to serve legal process in any other manner permitted by
Applicable Law or affect any right otherwise existing of any Indemnified Person
to bring any action or proceeding against El Paso or its property in the courts
of other jurisdictions or (ii) shall be deemed to be a general consent to
jurisdiction in any particular court or a general waiver of any defense or a
consent to jurisdiction of the courts expressly referred to in subsection (a)
above in any action or proceeding in respect of any claim or cause of action
other than Permitted Claims..
6.6. Assignment.
All covenants and other agreements and obligations in this
Agreement shall (a) be binding upon El Paso and its successors, but El Paso may
not assign its obligations hereunder without the consent of Red River, except
pursuant to a merger or consolidation not prohibited by Section 5.3(e), and (b)
inure to the exclusive benefit of, and be enforceable by, Red River and any
Indemnified Person and, in each case, by its respective permitted successors,
transferees and assigns (including any assignee for security purposes or Person
holding a security interest herein).
6.7. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of
New York.
6.8. Counterparts.
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. This agreement may be delivered by
facsimile transmission of the relevant signature pages hereof.
6.9. Survival of Representations, Warranties and Indemnities;
Entire Agreement.
All representations, warranties and indemnities and
undertakings to pay costs and expenses contained herein or made by or on behalf
of El Paso, as the case may be, in connection herewith or in connection with the
Operative Documents shall survive (a) the execution and delivery of this
Agreement, (b) the completion of the performance by (i) any Sponsor Subsidiary
of the Sponsor Subsidiary Obligations, (ii) any Sponsor Subsidiary Member of the
Sponsor Subsidiary Member Obligations, or (iii) each other El Paso Party of its
Obligations under the Operative Documents to which it is a party, and (c) the
Transfer (whether or not such Transfer was a permitted Transfer) by (A) any
Sponsor Subsidiary of all or a portion of its Trinity Class A Membership
Interest or any termination of its status as a Trinity Class A Member pursuant
to the Trinity Company Agreement or (B) any Sponsor Subsidiary Member or any
Trinity Member of all or a portion of their respective interests in any Sponsor
Subsidiary or Trinity or any
31
termination of such Person's status as a member of any Sponsor Subsidiary or
Trinity, and may be relied upon by any Indemnified Person, or any assignee of
such Indemnified Person permitted hereunder, regardless of any investigation
made at any time by or on behalf of any Indemnified Person or any such assignee.
6.10. Severability.
Every provision of this Agreement that is prohibited by or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6.11. No Third-Party Beneficiaries.
This Agreement is intended for the exclusive benefit of the
Indemnified Persons and no other Person shall have any rights hereunder, whether
as a third-party beneficiary or otherwise.
6.12. Obligations Absolute.
(a) To the fullest extent permitted under Applicable Law, El
Paso covenants and agrees that its obligations hereunder will be performed
strictly in accordance with the terms of this Agreement, regardless of any
Applicable Law now or hereafter in effect in any jurisdiction affecting the
ability of any El Paso Party to perform its obligations under any Operative
Document or the rights of any Indemnified Person with respect thereto.
(b) To the fullest extent permitted under Applicable Law, any
action or actions may be brought hereunder by any Indemnified Person without the
necessity of joining any prior or other Indemnified Person in such action or
actions. To the fullest extent permitted under Applicable Law, the liability of
El Paso under this Agreement shall be irrevocable, absolute and unconditional
irrespective of, and El Paso hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the following:
(i) Any change in the time, manner or place of performance, or
in any other term, of all or any of the Obligations of El Paso or any
El Paso Party under any other Operative Document or the Sponsor
Subsidiary Obligations, or any other amendment, supplement or waiver of
or any consent to departure from any of the Operative Documents,
including any increase in or modification of the Obligations of El Paso
or any El Paso Party thereunder or of the Sponsor Subsidiary
Obligations, or the dissolution of any of the El Paso Parties;
(ii) Any change, restructuring or termination of the
corporate, limited liability company, or partnership structure, as the
case may be, or in the existence or ownership of any of the El Paso
Parties;
(iii) Any act or omission of any Indemnified Person or any
prior or subsequent Indemnified Person hereunder (other than any
written amendment or waiver of, or
32
consent to departure from, this Agreement meeting the requirements of
Section 6.1 and except to the extent contemplated by Section 3.4);
(iv) Any failure of any Indemnified Person to disclose to El
Paso any information relating to the financial condition, operations,
properties or prospects of Trinity, any Sponsor Subsidiary, any Red
River El Paso Member or any Sponsor Subsidiary Member now or in the
future known to any Indemnified Person (El Paso waiving any duty on the
part of each Indemnified Person to disclose such information);
(v) Any lack of validity or unenforceability of any of the
Sponsor Subsidiary Obligations or the Sponsor Subsidiary Member
Obligations;
(vi) Any Sponsor Subsidiary Obligation being unenforceable or
not allowable due to the existence of a Bankruptcy involving any
Sponsor Subsidiary;
(vii) Any Sponsor Subsidiary Member Obligation being
unenforceable or not allowable due to the existence of a Bankruptcy
involving any Sponsor Subsidiary Member; or
(viii) Any other circumstance (including any statute of
limitations or any existence of or reliance on any representation by
any Indemnified Person) that might otherwise constitute a defense
available to, or a discharge of, any of the El Paso Parties or El Paso
or a guarantor or indemnitor generally other than payment and
performance when due.
(c) El Paso s obligations under this Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
by El Paso or any El Paso Party in satisfaction of any of the obligations of El
Paso or any El Paso Party under the Operative Documents, or any Sponsor
Subsidiary Member Obligation is rescinded or must otherwise be returned upon the
insolvency, bankruptcy or reorganization of El Paso or any El Paso Party, or any
Subsidiary of such Person, or otherwise, all as though such payment had not been
made.
6.13. Waiver.
Subject to the provisions of Section 3, El Paso hereby waives
(to the extent it may do so under Applicable Law) promptness, diligence, and any
notice from any Indemnified Person with respect to any of El Paso s obligations
under this Agreement and any requirement that any Indemnified Person exhaust any
right or take any action against any of the El Paso Parties or any other Person.
6.14. Subrogation.
Until indefeasible payment in full of (a) El Paso's
obligations hereunder (b) the Sponsor Subsidiary Obligations, and (c) any other
obligations of any other El Paso Party under the Operative Documents, El Paso
hereby waives any rights that it may acquire by way of subrogation hereunder, by
any payment made hereunder or otherwise. If any amount shall be paid to El Paso
on account of such subrogation rights at any time prior to such obligations
having been paid in full, such amount shall be held in trust for the benefit of
the relevant Indemnified
33
Person and shall forthwith be paid to such Indemnified Person to be credited and
applied to any such obligations, whether matured or unmatured, in accordance
with the terms hereof.
[Remainder of page intentionally left blank]
34
IN WITNESS WHEREOF, El Paso and Red River have each caused
this Agreement to be duly executed and delivered by its officer or other duly
authorized signatory thereunto duly authorized as of the date first above
written.
EL PASO CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
35
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
36