EXHIBIT 10.CC.3
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TOPAZ POWER VENTURES, L.L.C.
Dated as of April 24, 2002
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Project Gemstone
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TABLE OF CONTENTS
PAGE
ARTICLE I FORMATION AND CONTINUATION OF Topaz........................................................1
Section 1.1 Formation and Continuation of Topaz...................................................1
Section 1.2 Name..................................................................................2
Section 1.3 Business of Topaz.....................................................................2
Section 1.4 Location of Principal Place of Business; Registered Office............................2
Section 1.5 Filings; Registered Agent.............................................................2
Section 1.6 Term..................................................................................3
Section 1.7 Title to Topaz Property...............................................................3
Section 1.8 Payments of Individual Obligations....................................................4
ARTICLE II DEFINITIONS................................................................................4
Section 2.1 Definitions...........................................................................4
Section 2.2 Rules of Construction.................................................................4
ARTICLE III INTERESTS; MEMBERS; CAPITAL CONTRIBUTIONS; ADDITIONAL AGREEMENTS...........................4
Section 3.1 Interests.............................................................................4
Section 3.2 Topaz Minority Member, Topaz Majority Member and Topaz Second El Paso Member..........4
Section 3.3 Additional Capital Contributions......................................................5
Section 3.4 Additional Agreements Among Members...................................................6
ARTICLE IV ALLOCATION OF NET INCOME AND NET LOSS......................................................7
Section 4.1 Allocation of Net Income and Net Losses...............................................7
Section 4.2 [Reserved]............................................................................7
Section 4.3 [Reserved]............................................................................7
Section 4.4 Special Tax Allocations...............................................................7
Section 4.5 Curative Allocations..................................................................9
Section 4.6 Loss Limitation......................................................................10
Section 4.7 Other Allocation Rules...............................................................10
Section 4.8 Tax Allocations; Code Section 704(c).................................................10
Section 4.9 Order of Allocations.................................................................11
ARTICLE V DISTRIBUTIONS; WITHDRAWALS................................................................12
Section 5.1 Distributions........................................................................12
Section 5.2 More than One Topaz Minority Member or Topaz Majority Member.........................14
Section 5.3 Amounts Withheld.....................................................................14
Section 5.4 Deemed Contributions, Distributions and Payments on the Emerald Loan.................15
Section 5.5 Notice of Certain Distributions......................................................16
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TABLE OF CONTENTS
(continued)
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ARTICLE VI MANAGEMENT................................................................................16
Section 6.1 Management of Topaz..................................................................16
Section 6.2 Right to Rely on the Managing Member.................................................18
Section 6.3 Decisions Requiring Unanimous Member Consent.........................................19
Section 6.4 Consents of the Topaz Minority Member................................................22
Section 6.5 Duties and Obligations of the Managing Member........................................22
Section 6.6 Compensation and Expenses............................................................24
Section 6.7 Demand on El Paso Demand Loans held by Topaz.........................................24
Section 6.8 Execution of other Transaction Documents.............................................25
Section 6.9 Determination of Interest Rate on El Paso Demand Loans...............................25
Section 6.10 Administration of the Emerald Loan...................................................25
Section 6.11 Covenant of the Managing Member......................................................26
Section 6.12 Certain Covenants Relating to the Separateness of Topaz..............................26
ARTICLE VII ROLE OF NON-MANAGING MEMBERS..............................................................28
Section 7.1 Rights or Powers.....................................................................28
Section 7.2 Voting Rights........................................................................28
Section 7.3 Procedure for Consent................................................................28
Section 7.4 Special Rights of the Topaz Minority Member..........................................29
ARTICLE VIII ACCOUNTING; BOOKS AND RECORDS.............................................................29
Section 8.1 Accounting; Books and Records........................................................29
Section 8.2 Reports..............................................................................30
Section 8.3 Tax Matters..........................................................................32
Section 8.4 Proprietary Information..............................................................33
ARTICLE IX AMENDMENTS; MEETINGS......................................................................33
Section 9.1 Amendments...........................................................................33
Section 9.2 Meetings of the Members..............................................................34
Section 9.3 Unanimous Consent....................................................................34
ARTICLE X TRANSFERS OF INTERESTS....................................................................34
Section 10.1 Restriction on Dispositions of Interests.............................................34
Section 10.2 Prohibited Dispositions..............................................................36
ARTICLE XI RETIREMENT OPTION; PURCHASE OPTION; ASSET REMEDY; EXTENSION PERIOD........................36
Section 11.1 Topaz Majority Member's Retirement Option............................................36
Section 11.2 Topaz Majority Member's Purchase Option..............................................39
Section 11.3 Topaz Asset Remedy...................................................................42
Section 11.4 Asset Sales..........................................................................43
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TABLE OF CONTENTS
(continued)
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Section 11.5 Extension Period.....................................................................44
ARTICLE XII DISSOLUTION AND WINDING UP................................................................46
Section 12.1 Liquidating Events...................................................................46
Section 12.2 Winding Up...........................................................................46
Section 12.3 No Restoration of Deficit Capital Accounts; Compliance With Timing
Requirements of Regulations..........................................................47
Section 12.4 Deemed Distribution and Recontribution...............................................48
Section 12.5 Rights of Members....................................................................48
Section 12.6 Notice of Dissolution................................................................48
Section 12.7 Character of Liquidating Distributions...............................................48
Section 12.8 The Liquidator.......................................................................48
Section 12.9 Form of Liquidating Distributions....................................................49
Section 12.10 Liquidation Notice...................................................................49
ARTICLE XIII MISCELLANEOUS.............................................................................50
Section 13.1 Amendments...........................................................................50
Section 13.2 Notices..............................................................................51
Section 13.3 No Waiver; Cumulative Remedies.......................................................51
Section 13.4 Waiver of Jury Trial.................................................................51
Section 13.5 Counterparts.........................................................................51
Section 13.6 Survival of Representations, Warranties and Indemnities: Entire Agreement............51
Section 13.7 Severability.........................................................................52
Section 13.8 Construction.........................................................................52
Section 13.9 [Reserved]...........................................................................52
Section 13.10 Governing Law........................................................................52
Section 13.11 Waiver of Action for Partition.......................................................52
Section 13.12 Consent to Jurisdiction..............................................................52
Section 13.13 Specific Performance.................................................................53
Section 13.14 [Reserved]...........................................................................53
Section 13.15 Acknowledgement and Consent to Collateral Assignment by Topaz Minority Member........53
Section 13.16 Effectiveness........................................................................53
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SCHEDULES
Schedule 3.2(a) Members and Capital Accounts
Schedule 13.2 Notice Information
EXHIBITS
Exhibit A: Form of Membership Interest
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TOPAZ POWER VENTURES, L.L.C.
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT (this
"TOPAZ LLC AGREEMENT") of TOPAZ POWER VENTURES, L.L.C. ("TOPAZ"), dated as of
April 24, 2002, among TOPAZ, Gemstone Investor Limited, an exempted company
incorporated in the Cayman Islands ("INVESTOR"), EPED Holding Company, a
Delaware corporation ("EPED HOLDING"), and El Paso Corporation, a
Delaware
corporation ("EL PASO").
PRELIMINARY STATEMENTS
Topaz was formed as a limited liability company under and pursuant to
the provisions of the LLC Act, with EPED Holding as the initial member of Topaz,
pursuant to the filing of the Topaz Certificate of Formation on September 6,
2001 and the execution of the
Limited Liability Company Agreement of Topaz Power
Ventures, L.L.C. dated as of September 6, 2001 (the "ORIGINAL TOPAZ LLC
AGREEMENT"), as amended and restated by that certain Amended and Restated
Limited Liability Company Agreement, dated as of November 1, 2001 (the "EXISTING
TOPAZ LLC AGREEMENT").
On the Closing Date (i) Investor was admitted to Topaz as the sole
Topaz Minority Member, (ii) Investor made a Cash Capital Contribution in the
amount of $300,000,000 to Topaz, (iii) EPED Holding was converted to and
admitted as the sole Topaz Majority Member and Managing Member of Topaz, (iv)
EPED Holding made a Cash Capital Contribution in the amount of $500,000 to
Topaz, (v) El Paso was admitted to Topaz as the sole Topaz Second El Paso Member
and made a Cash Capital Contribution in the amount of $500,000 to Topaz and (vi)
Topaz made a loan in the amount of $301,000,000 to Emerald Finance, L.L.C.
("EMERALD") pursuant to the terms of the Emerald Loan Agreement.
The parties hereto have agreed to enter into this Topaz LLC Agreement
to further amend and restate the Existing Topaz LLC Agreement effective on and
as of the Effective Date in accordance with Section 13.16.
ARTICLE I
FORMATION AND CONTINUATION OF Topaz
Section 1.1 Formation and Continuation of Topaz. Topaz was formed as a
limited liability company under the LLC Act by the filing of the Topaz
Certificate of Formation on September 6, 2001, with the Secretary of State. The
parties hereto agree to continue Topaz as a limited liability company. The
Members agree that the Existing Topaz LLC Agreement is hereby amended and
restated in its entirety as set forth in, and is hereby superseded in its
entirety by, this Topaz LLC Agreement as of the Effective Date.
Topaz LLC Agreement
Section 1.2 Name. The name of Topaz shall continue to be "Topaz Power
Ventures, L.L.C.", and all business of Topaz shall continue to be conducted in
such name or, in the discretion of the Managing Member, under any other name;
provided, however, that (a) in no event shall the name of Topaz include (i) the
name of the Topaz Minority Member, (ii) to the extent that the Managing Member
shall have actual knowledge thereof, the name of any Affiliate of the Topaz
Minority Member, (iii) the name of the Class A Shareholder or (iv) any
abbreviation of any name described in clause (i), (ii) or (iii), and (b) the
Managing Member may change the name of Topaz only upon executing and filing an
amendment to the Topaz Certificate of Formation.
Section 1.3 Business of Topaz. The purposes of Topaz are limited to (i)
engaging in the business of owning investments in Topaz Permitted Assets
(including, but not limited to, the Emerald Loan), managing, protecting and
conserving such investments in Topaz Permitted Assets, and making additional
investments in Topaz Permitted Assets, (ii) entering into, performing its
obligations under and exercising its rights under and consummating the
transactions contemplated by, the Transaction Documents to which Topaz is a
party, (iii) engaging in such additional business endeavors as are permitted
under this Topaz LLC Agreement and (iv) engaging in activities related or
incidental to the foregoing. Topaz, and the Managing Member on behalf of Topaz,
may enter into and perform Topaz's obligations under the Transaction Documents
to which Topaz is a party and, subject to Sections 6.3 and 7.4, all documents,
agreements, certificates and financing statements required to be entered into in
order to consummate the transactions contemplated thereby, all without further
act, vote or approval of any Person. The authorization set forth in the
preceding sentence shall not be deemed a restriction on the power and authority
of the Managing Member to enter into other agreements or documents on behalf of
Topaz in accordance with the terms of this Topaz LLC Agreement and the other
Transaction Documents to which Topaz is a party, and the Managing Member is
hereby directed by the Members to enter into on behalf of Topaz, the Transaction
Documents to which Topaz is or is to be a party and which have not previously
been entered into by or on behalf of Topaz. The Managing Member shall have the
power to do any and all acts necessary, appropriate, proper, advisable,
incidental or convenient to or in furtherance of the purposes of Topaz set forth
in this Section 1.3 and shall have, without limitation, any and all powers that
may be exercised on behalf of Topaz by the Managing Member pursuant to Article
VI.
Section 1.4 Location of Principal Place of Business; Registered Office.
The principal place of business of Topaz shall be at c/o Wilmington Trust
Company, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration. The registered office of
Topaz in the State of
Delaware is located at c/o Wilmington Trust Company,
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration.
Section 1.5 Filings; Registered Agent.
(a) Filings. The Managing Member shall take any and all other actions
necessary to perfect and maintain the status of Topaz as a limited liability
company under the laws of the State of
Delaware, including the preparation,
execution and filing of amendments to the Topaz Certificate of Formation and
such other certificates, documents and instruments as may be required by law. In
addition, the Managing Member in its sole discretion may register or qualify
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Topaz LLC Agreement
Topaz as a limited liability company in any jurisdiction, including each
jurisdiction in which registration or qualification is necessary or appropriate
because the properties or activities of Topaz are located in that jurisdiction;
provided, however, that (i) the Managing Member shall notify the Topaz Minority
Member if, following reasonable investigation (which the Managing Member shall
be obligated to undertake), the Managing Member knows or reasonably should know
that, solely as a result of Topaz doing business in any other such jurisdiction,
the Topaz Minority Member would be required under the laws of such jurisdiction
to qualify to do business in such jurisdiction and (ii) Topaz shall not conduct
business in any jurisdiction other than the State of
Delaware wherein the
conduct by Topaz of business in such jurisdiction would reasonably be expected
to subject the Topaz Minority Member to any tax, penalty, liability or cost
except to the extent that (x) such tax, penalty, liability or cost results from
the activities of the Topaz Minority Member in such jurisdiction (other than
those activities in connection with the transactions contemplated hereby) or (y)
the Topaz Minority Member is indemnified (or would have been indemnified if it
had complied with the provisions of the Transaction Documents applicable to it)
for such tax, penalty, liability or cost under Section 5.5 or 6.1(a) of the
Participation Agreement or under any other provision of this Topaz LLC Agreement
or any other Transaction Document and such tax, penalty, liability or cost is
not a criminal penalty or liability.
(b) Delivery of Certificates, etc. in Connection With Qualification of
Topaz. At the request of the Managing Member, each Member shall execute,
acknowledge, swear to and deliver all certificates and other instruments
conforming with this Topaz LLC Agreement that are necessary or appropriate to
form, qualify, continue and terminate Topaz as a limited liability company under
the laws of the State of
Delaware and to qualify, continue and terminate Topaz
as a foreign limited liability company in all other jurisdictions in which Topaz
may so qualify, all to the extent contemplated and required by this Topaz LLC
Agreement.
(c) Registered Agent. The registered agent for service of process on
Topaz in the State of
Delaware shall be Wilmington Trust Company, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Administration or any successor as appointed by the Managing
Member in accordance with the LLC Act.
(d) Dissolution. Upon the dissolution and completion of the winding up
and liquidation of Topaz, the Liquidator, as an authorized person within the
meaning of the LLC Act, shall promptly execute and cause to be filed statements
of intent to dissolve and certificates of cancellation in accordance with the
LLC Act and the laws of any other states or jurisdictions in which the
Liquidator deems such filing necessary or advisable.
Section 1.6 Term. The term of Topaz commenced on the date the
certificate of formation described in Section 18-201 of the LLC Act (as amended
from time to time, the "TOPAZ CERTIFICATE OF FORMATION") was filed in the office
of the Secretary of State in accordance with the LLC Act and shall continue
until the winding up and liquidation of Topaz and the completion of its business
following a Liquidating Event as provided in Article XII.
Section 1.7 Title to Topaz Property. All Topaz Property shall be owned
by Topaz as an entity, and no Member shall have any ownership interest in such
property in its individual
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Topaz LLC Agreement
name or right. Each Member's interest in Topaz shall be personal property for
all purposes. Topaz shall hold all of its property in the name of Topaz and not
in the name of any Member.
Section 1.8 Payments of Individual Obligations. Topaz's credit and
assets shall be used solely for the benefit of Topaz, and no asset of Topaz
shall be transferred or encumbered for or in payment of any individual
obligation of any Member.
ARTICLE II
DEFINITIONS
Section 2.1 Definitions. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Topaz LLC Agreement
(including the Preliminary Statements and the Schedules and Exhibits hereto)
shall have the meanings set forth in Section 1.01 of Annex A to the Amended and
Restated Participation Agreement dated as of the Signing Date (as amended,
restated, supplemented or otherwise modified from time to time pursuant to the
provisions thereof and any other Transaction Document applicable thereto, the
"PARTICIPATION AGREEMENT"), among El Paso, EPED Holding, EPED B, Investor, the
Co-Issuer, Jewel, Topaz, Emerald, Citrine, Garnet, Diamond, Diamond Holdings,
Amethyst, Aquamarine, Peridot, the Share Trust, the Management Company (each, as
defined therein), Wilmington Trust Company and The Bank of New York.
Section 2.2 Rules of Construction. This Topaz LLC Agreement and the
definitions referred to in Section 2.1 shall be governed by, and construed in
accordance with, the rules of construction set forth in Section 1.02 of Annex A
to the Participation Agreement.
ARTICLE III
INTERESTS; MEMBERS; CAPITAL CONTRIBUTIONS; ADDITIONAL AGREEMENTS
Section 3.1 Interests. There shall be three classes of Topaz Interests:
a Topaz Minority Member Interest, a Topaz Majority Member Interest and a Topaz
Second El Paso Member Interest. Certificates in the form attached as Exhibit A
hereto (each, a "TOPAZ CERTIFICATE OF INTEREST") shall be issued to each of the
Topaz Minority Member, Topaz Majority Member and Topaz Second El Paso Member to
evidence their respective Topaz Interests herein. Each of the parties hereto
hereby acknowledges and agrees that the Topaz Interests shall constitute
"securities" governed by Article 8 of the Uniform Commercial Code as in effect
in any applicable jurisdiction. The holder of the Topaz Minority Member Interest
shall have all of the rights and obligations provided to the Topaz Minority
Member under this Topaz LLC Agreement and the LLC Act, the holder of the Topaz
Majority Member Interest shall have all of the rights and obligations provided
to the Topaz Majority Member under this Topaz LLC Agreement, and the holder of
the Topaz Second El Paso Member Interest shall have all of the rights and
obligations provided to the Topaz Second El Paso Member under this Topaz LLC
Agreement and the LLC Act.
Section 3.2 Topaz Minority Member, Topaz Majority Member and Topaz
Second El Paso Member.
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Topaz LLC Agreement
(a) Topaz Minority Member. On and as of the Closing Date, Investor, as
the Topaz Minority Member, made a Capital Contribution to Topaz in Cash in the
amount of $300,000,000 and after giving effect to such Capital Contribution and
the other transactions effected on and as of the Closing Date, (i) the name and
address of the Topaz Minority Member and the Capital Account balance of the
Topaz Minority Member was reflected in the books and records of Topaz as set
forth in Schedule 3.2(a) hereto, and (ii) the Managing Member executed on behalf
of Topaz a Topaz Certificate of Interest in the name of the Topaz Minority
Member representing its Topaz Minority Member Interest.
(b) Topaz Majority Member. On and as of the Closing Date, (i) EPED
Holding's interest in Topaz under the Original Topaz LLC Agreement was converted
into a Topaz Majority Member Interest and (ii) EPED Holding, as the Topaz
Majority Member, made a Capital Contribution to Topaz in Cash in the amount of
$500,000. After giving effect to such Capital Contribution and the other
transactions effected on and as of the Closing Date, (i) the name and address of
the Topaz Majority Member and the Capital Account balance of the Topaz Majority
Member on and as of the Closing Date was reflected in the books and records of
Topaz as set forth in Schedule 3.2(a) hereto, and (ii) the Managing Member
executed on behalf of Topaz a Topaz Certificate of Interest in the name of the
Topaz Majority Member representing its Topaz Majority Member Interest.
(c) Topaz Second El Paso Member. On and as of the Closing Date, El
Paso, as the Topaz Second El Paso Member, made a Capital Contribution to Topaz
in Cash in the amount of $500,000, and after giving effect to such Capital
Contribution and the other transactions effected on and as of the Closing Date,
(i) the name and address of the Topaz Second El Paso Member and the Capital
Account balance of the Topaz Second El Paso Member on and as of the Closing Date
was reflected in the books and records of Topaz as set forth in Schedule 3.2(a)
hereto, and the (ii) Managing Member executed on behalf of Topaz a Topaz
Certificate of Interest in the name of the Topaz Second El Paso Member
representing its Topaz Second El Paso Member Interest.
Section 3.3 Additional Capital Contributions.
(a) Capital Contributions by Topaz Majority Member.
(i) Capital Contributions. The Topaz Majority Member may at
any time make additional Capital Contributions to Topaz of Cash and/or
Financial Investments.
(ii) Deemed Capital Contributions. The Topaz Majority Member
shall be deemed to have made Capital Contributions to Topaz of Cash as
set forth in the last sentences of Sections 5.4(a) and 5.4(c).
(b) Capital Contributions by Topaz Minority Member.
(i) Limitation on Capital Contributions. The Topaz Minority
Member shall make no Capital Contributions to Topaz other than the
Capital Contribution described in Section 3.2(a) and the deemed Capital
Contribution described in Section 3.3(b)(ii).
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Topaz LLC Agreement
(ii) Overfund Account. The Topaz Minority Member shall be
deemed to have made, on the date any amounts are deposited into (1) the
Overfund Account pursuant to Section 5.04 of the Indenture or (2) the
Dollar Collection Account pursuant to Section 5.02(b)(v) of the
Indenture, a Capital Contribution to Topaz in an amount equal to the
lesser of (x) the excess of such amounts so deposited over the amount
of such deposits that have been deemed to have been contributed to
Diamond pursuant to Section 3.3(a)(iv) of the Diamond LLC Agreement and
(y) the cumulative amounts of Gross Income allocated to the Topaz
Minority Member pursuant to Section 4.4(d) that have not been
Distributed pursuant to Section 5.1(a) (or deemed to be so
Distributed).
(c) Capital Contributions by Topaz Second El Paso Member. The Topaz
Second El Paso Member may at any time make additional Capital Contributions to
Topaz of Cash and/or Financial Investments.
Section 3.4 Additional Agreements Among Members.
(a) Return of Capital Contributions. Except as otherwise provided in
Article V, Article XI or Article XII or in the LLC Act, no Member shall be
entitled to demand or receive a return of its Capital Contributions or withdraw
its capital from Topaz without the consent of all Members. Under circumstances
requiring a return of any Capital Contributions, no Member shall have the right
to receive property other than Cash except as specifically provided in this
Topaz LLC Agreement.
(b) Return on Capital. No Member shall receive any interest or return
with respect to its Capital Contributions or its Capital Account except as
otherwise provided in this Topaz LLC Agreement.
(c) Obligations of Topaz. No Member (including the Managing Member)
shall be liable for the debts, liabilities, contracts or any other Obligations
of Topaz. Except as otherwise required by mandatory provisions of Applicable
Law, no Member shall be required to lend any funds to Topaz or to make any
additional Capital Contributions to Topaz. No Member shall have personal
liability for the repayment of any Capital Contributions of the other Members.
(d) Other Investments. Subject, in the case of the Managing Member, to
Sections 6.5(d) and 6.5(e), each Member acknowledges that the other Members and
their Affiliates are free to engage or invest in an unlimited number of
activities or businesses, any one or more of which may be related to the
activities or businesses of Topaz, without having or incurring any obligation to
offer any interest in such activities or businesses to Topaz or any Member, and
neither this Topaz LLC Agreement nor any activity undertaken pursuant to this
Topaz LLC Agreement shall prevent any Member or its Affiliates from engaging in
such activities, or require any Member to permit Topaz or any Member or its
Affiliates to participate in any such activities, and as a material part of the
consideration for the execution of this Topaz LLC Agreement by each Member, each
Member hereby waives, relinquishes, and renounces any such right or claim of
participation. Each Member acknowledges that certain conflicts of interest may
thus arise and hereby agrees that the specific rights with respect to the
Members' and their Affiliates' freedom of action provided in this Section
3.4(d), together with the other provisions of this Topaz LLC Agreement, are
sufficient to protect their respective interests in relation to such
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Topaz LLC Agreement
possible conflicts and are to be in lieu of all other possible limitations which
might otherwise be implied in fact, in law or in equity.
ARTICLE IV
ALLOCATION OF NET INCOME AND NET LOSS
Section 4.1 Allocation of Net Income and Net Losses. The Members agree
to treat Topaz as a partnership and the Topaz Members as partners thereof for
U.S. federal income tax purposes and shall file all tax returns accordingly.
Except as otherwise provided in this Article IV, Topaz's Net Income or Net
Losses, as the case may be, and each item of income, gain, loss and deduction
entering into the computation thereof, for each Allocation Period shall be
allocated to the Topaz Members as follows:
(a) Net Income. Net Income shall be allocated in the following order
and priority:
(i) First, 100% to the Topaz Minority Member until the
aggregate amount of Net Income allocated pursuant to this Section
4.1(a)(i) for the current and all prior Allocation Periods equals the
aggregate amount of Net Losses allocated pursuant to Section 4.1(b)(ii)
for all prior Allocation Periods; and
(ii) Second, 100% to the Topaz Majority Member and to the
Topaz Second El Paso Member pro rata in proportion to their respective
positive Capital Account balances.
(b) Net Losses. Net Losses shall be allocated in the following order
and priority:
(i) First, 100% to the Topaz Majority Member and to the Topaz
Second El Paso Member pro rata in proportion to and to the extent of
their respective positive Capital Account balances; and
(ii) Second, 100% to the Topaz Minority Member.
Section 4.2 [Reserved].
Section 4.3 [Reserved].
Section 4.4 Special Tax Allocations.
(a) [Reserved].
(b) Minimum Gain Chargeback/Member Minimum Gain Chargeback. If there is
a net decrease in "partnership minimum gain" (within the meaning of Regulation
Section 1.704-2(d)) for an Allocation Period with respect to Topaz, then there
shall be allocated to each Topaz Member items of income and gain of Topaz for
that Allocation Period (and if necessary subsequent Allocation Periods) equal to
that Topaz Member's share of the net decrease in partnership minimum gain
(within the meaning of Regulation Section 1.704-2(g)(2)), subject to the
exceptions set forth in Regulation Section 1.704-2(f)(2) and (3), and to any
exceptions provided by the Commissioner of the Internal Revenue Service pursuant
to Regulation Section 1.704-2(f)(5), provided, that if Topaz
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Topaz LLC Agreement
has any discretion as to an exception provided pursuant to Regulation Section
1.704-2(f)(5), the Tax Matters Member may exercise reasonable discretion on
behalf of Topaz, which discretion shall be exercised in good faith so as not to
prejudice the interests of any Topaz Member. The foregoing is intended to be a
"minimum gain chargeback" provision as described in Regulation Section
1.704-2(f) and shall be interpreted and applied in all respects in accordance
with that Regulation.
If during an Allocation Period there is a net decrease in "partner
nonrecourse debt minimum gain" (as determined in accordance with Regulation
Section 1.704-2(i)(3)) with respect to Topaz, then, in addition to the amounts,
if any, allocated pursuant to the preceding paragraph, any Topaz Member with a
share of that partner nonrecourse debt minimum gain (determined in accordance
with Regulation Section 1.704-2(i)(5)) as of the beginning of the Allocation
Period shall, subject to the exceptions set forth in Regulation Section
1.704-2(i)(4), be allocated items of income and gain of such Allocation Period
for the Allocation Period (and, if necessary, for subsequent Allocation Periods)
equal to that Topaz Member's share of the net decrease in the partner
nonrecourse minimum gain. The foregoing is intended to be the "chargeback of
partner nonrecourse debt minimum gain" required by Regulation Section
1.704-2(i)(4) and shall be interpreted and applied in all respects in accordance
with that Regulation.
(c) Qualified Income Offset. If during any Allocation Period a Topaz
Member unexpectedly receives any adjustment, allocation or Distribution
described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which
causes or increases a deficit balance in such Topaz Member's Adjusted Topaz
Capital Account, then there shall be allocated to such Topaz Member items of
income and gain (consisting of a pro rata portion of each item of income,
including gross income, and gain of Topaz for such Allocation Period) in an
amount and manner sufficient to eliminate such deficit as quickly as possible,
provided that an allocation pursuant to this Section 4.4(c) shall be made only
if and to the extent that such Topaz Member would have a deficit balance in its
Adjusted Topaz Capital Account after all other allocations provided for in this
Article IV have been tentatively made as if this Section 4.4(c) were not in this
Topaz LLC Agreement. The foregoing is intended to be a "qualified income offset"
provision as described in Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and applied in all respects in accordance with that Regulation.
(d) Gross Income Allocations; Topaz Minority Member's Cumulative
Priority Return. In any Allocation Period ending on or prior to a ▇▇▇▇-to-Market
Measurement Date (other than a ▇▇▇▇-to-Market Measurement Date described in
clause (b) of the definition of ▇▇▇▇-to-Market Measurement Date), Gross Income
shall be allocated to the Topaz Minority Member on each Distribution Date and,
if different, as of the end of such Allocation Period in an amount equal to the
excess, if any, of (A) the Topaz Minority Member's Cumulative Priority Return as
of such date of allocation, over (B) amounts previously allocated pursuant to
this Section 4.4(d).
(e) Member Nonrecourse Deductions. Notwithstanding anything to the
contrary in this Article IV, losses, deductions, or expenditures subject to Code
Section 705(a)(2)(B) that are attributable to a particular partner nonrecourse
liability shall be allocated to the Topaz Member that bears the economic risk of
loss for the liability in accordance with the rules of Regulation Section
1.704-2(i).
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Topaz LLC Agreement
(f) Nonrecourse Deductions. Nonrecourse deductions within the meaning
of Regulation Sections 1.704-2(b)(1) and 1.704-2(c) shall be allocated 100% to
the Topaz Majority Member and to the Topaz Second El Paso Member pro rata in
proportion to their respective positive Capital Account balances.
(g) Section 754 Adjustments. To the extent Topaz Capital Accounts are
required under Code Section 734(b), including by reason of Regulation Section
1.704-1(b)(2)(iv)(m)(2) or (4), to reflect the adjustment to the adjusted tax
basis of an asset as a result of the Distribution to the Topaz Minority Member
in complete liquidation of the Topaz Minority Member Interest, the amount of
such adjustment shall be treated as an item of gain (if the adjustment is an
increase) or loss (if the adjustment is a decrease) that is allocated to the
Topaz Members in accordance with their interests pursuant to Regulation Section
1.704-1(b)(2)(iv)(m)(2) or to the Member to whom such Distribution was made
pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)(4) as applicable.
(h) Allocations Relating to Taxable Issuance of Membership Interests.
Any income, gain, loss or deduction realized as a direct or indirect result of
the issuance of an interest by Topaz to a Member, other than pursuant to Code
Section 707(a)(2) ("ISSUANCE ITEMS") shall be allocated among the Members and
other such allocations to be made under this Topaz LLC Agreement shall be
adjusted so that, to the extent possible, the net amount of such Issuance Items,
together with all other allocations under this Topaz LLC Agreement to the Topaz
Minority Member, shall be equal to the net amount that would have been allocated
to such Member if the Issuance Items had not been realized.
(i) Allocations Relating to Topaz Retirement Option or Topaz Purchase
Option. Notwithstanding any other provision of this Article IV, if the Topaz
Minority Member Interest is retired pursuant to Section 11.1 or is purchased
pursuant to Section 11.2, then items of income, gain, loss, deduction, and
expense of the year of retirement or of purchase shall be allocated as necessary
to cause the Topaz Minority Member's Capital Account (after all adjustments
hereunder) to equal the amount payable under Section 11.1, in the case of the
Topaz Retirement Option, or Section 11.2, in the case of the Topaz Purchase
Option (taking into account Section 11.2(h) to the extent applicable).
(j) Allocations Relating to a Repurchase of the Topaz Minority Member
Interest. Notwithstanding any other provision of this Article IV, if the Topaz
Minority Member Interest is repurchased pursuant to Section 11.5(e), then items
of income, gain, loss, deduction, and expense of the year of repurchase shall be
allocated as necessary to cause the Topaz Minority Member's Capital Account
(after all adjustments hereunder) to equal the Topaz Purchase Price, as if the
▇▇▇▇-to-Market Measurement Date was the Applicable Notice Date under Section
11.2(e).
Section 4.5 Curative Allocations. The allocations set forth in Sections
4.4(b), 4.4(c), 4.4(e), 4.4(f), and 4.4(g) (the "TOPAZ REGULATORY ALLOCATIONS")
are intended to comply with certain requirements of the Regulations. It is the
intent of the Members that, to the extent possible, all Topaz Regulatory
Allocations shall be offset either with other Topaz Regulatory Allocations or
with allocations of other items of income, gain, loss or deduction of Topaz
pursuant to this Section 4.5. Therefore, notwithstanding any other provision of
this Article IV (other than the Topaz Regulatory Allocations), the Managing
Member shall make such offsetting allocations of income, gain, loss or deduction
of Topaz in whatever manner it determines to be
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Topaz LLC Agreement
appropriate so that, after such offsetting allocations are made, each Member's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Topaz Member would have had if the Topaz Regulatory Allocations
were not part of this Topaz LLC Agreement and all items of Topaz were allocated
pursuant to this Article IV without regard to the Topaz Regulatory Allocations.
In exercising its discretion under this Section 4.5, the Managing Member shall
take into account future Topaz Regulatory Allocations under Section 4.4(c) that,
although not yet made, are likely to offset other Topaz Regulatory Allocations
previously made under Sections 4.4(e) and 4.4(f).
Section 4.6 Loss Limitation. The Net Losses allocated pursuant to
Section 4.1(b) and the items of loss or deduction allocated pursuant to Sections
4.4 and 4.5 shall not exceed the maximum amount of Net Losses and items of loss
or deduction that can be so allocated without causing any Topaz Member to have a
deficit balance in its Adjusted Topaz Capital Account at the end of any
Allocation Period. All Net Losses and items of loss or deduction in excess of
the limitation set forth in this Section 4.6 shall be allocated to the other
Topaz Members pro rata in accordance with their positive Adjusted Topaz Capital
Account balances.
Section 4.7 Other Allocation Rules.
(a) Net Income, Net Losses and any other items of income, gain, loss or
deduction shall be allocated to the Topaz Members pursuant to this Article IV as
of the last day of each Allocation Period; provided that Net Income, Net Losses
and such other items shall also be allocated at such other times as the Gross
Asset Values of Topaz Property are adjusted pursuant to clause (b) of the
definition of Gross Asset Value; provided, further, that Gross Income shall be
allocated at such other times as specified pursuant to Section 4.4(d). (b) The
Topaz Members hereby agree to be bound by the provisions of this Article IV in
reporting their shares of Topaz income and loss for income tax purposes, except
to the extent otherwise required by law. The Topaz Members agree, for purposes
of maintaining their Topaz Capital Accounts, to be bound by the allocations
contained in this Article IV, notwithstanding any allocations for income tax
purposes.
(c) Solely for purposes of determining the Topaz Members' proportionate
share of the "excess non recourse liabilities" of Topaz within the meaning of
Regulation Section 1.752-3(a)(3), the Topaz Members' interests in profits of
Topaz are as follows: 0% to the Topaz Minority Member and 100% to the Topaz
Majority Member and to the Topaz Second El Paso Member pro rata in proportion to
their respective positive Capital Account balances.
(d) To the extent permitted by Regulation Section 1.704-2(h)(3), the
Managing Member shall endeavor to treat Distributions of Cash as having been
made from the proceeds of a nonrecourse liability (within the meaning of
Regulation Section 1.704-2(b)(3)) only to the extent that such Distributions
would cause or increase any deficit balance of the Topaz Minority Member's
Adjusted Topaz Capital Account.
Section 4.8 Tax Allocations; Code Section 704(c). In accordance with
Code Section 704(c) and the applicable Regulations thereunder, income, gain,
loss, and deduction with respect to any property contributed to Topaz shall,
solely for tax purposes, be allocated among the Topaz
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Topaz LLC Agreement
Members so as to take account of any variation between the adjusted basis of
such property to Topaz for federal income tax purposes and its Initial Gross
Asset Value.
In the event the Gross Asset Value of any asset of Topaz is adjusted
pursuant to clause (b) or (d) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the applicable Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the Managing Member in any manner that reasonably reflects the purpose
and intention of this Topaz LLC Agreement, provided that Topaz shall elect to
apply any allocation method permitted by the Regulations under Code Section
704(c). In furtherance of the foregoing, Topaz shall use any reasonable method,
in the discretion of the Managing Member, such that the amount of such tax items
allocable to the Topaz Minority Member hereunder for any Allocation Period shall
be equal in the aggregate to the amount of book deductions allocable to the
Topaz Minority Member hereunder for such Allocation Period. Allocations pursuant
to this Section 4.8 are solely for purposes of federal, state, and local taxes
and shall not affect, or in any way be taken into account in computing, any
Topaz Member's Capital Account or share of Net Income, Net Losses, other items,
or Distributions pursuant to any provision of this Topaz LLC Agreement.
Except as otherwise provided in this Topaz LLC Agreement, for federal,
state and local income tax purposes, all items of income, gain, loss, deduction,
and any other allocations not otherwise provided for shall be allocated to the
Topaz Members in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Sections 4.1 and 4.4.
To the extent that allocations made pursuant to this Article IV for any
Allocation Period ending prior to a ▇▇▇▇-to-Market Measurement Date, if any,
include the allocation of an item of income or gain that is recaptured as
ordinary income under Code Sections 1245, 1250 and 1254 and that is attributable
to deductions taken prior to the Closing Date, such ordinary income shall be
allocated to the Member to whom the deduction was allocated.
Section 4.9 Order of Allocations. All allocations made pursuant to this
Article IV shall be made in the following order:
(i) Section 4.4(i);
(ii) Section 4.4(j);
(iii) Section 4.4(d);
(iv) Section 4.4(b);
(v) Section 4.4(c);
(vi) Section 4.4(e);
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Topaz LLC Agreement
(vii) Section 4.4(f);
(viii) Section 4.4(h); and
(ix) Section 4.1.
Such provisions shall be applied as if all Distributions and
allocations were made at the end of the applicable Allocation Period, and at
such other times as otherwise specified in Section 4.4(d). Where any provision
depends on the balance of a Capital Account of any Member, that Capital Account
shall be determined after the operation of all preceding provisions for the
applicable Allocation Period. These allocations shall be made consistently with
the requirements of Regulation Section 1.704-2(j).
ARTICLE V
DISTRIBUTIONS; WITHDRAWALS
Section 5.1 Distributions.
(a) Topaz Minority Member's Cumulative Priority Return.
(i) Prior to the Extension Period Commencement Date. Except as
otherwise provided in Article XII, on or before 3:30 p.m. (New York
City time) on the second Business Day next preceding each Distribution
Date occurring prior to both the ▇▇▇▇-to-Market Measurement Date and
the Extension Period Commencement Date, Available Cash of Topaz shall
be Distributed 100% to the Topaz Minority Member, until the Topaz
Minority Member receives an amount equal to the excess, if any, of (x)
the cumulative amounts of Gross Income allocated to the Topaz Minority
Member pursuant to Section 4.4(d) as of such Distribution Date, over
(y) all prior Distributions to the Topaz Minority Member pursuant to
this Section 5.1(a)(i) (including any deemed Section 5.1(a)
Distributions pursuant to Sections 5.4(a), 5.4(b) and 5.4(c)).
(ii) During the Extension Period. Except as otherwise provided
in Article XII, on or before 12:00 noon (New York City time) on each
Extension Period Payment Date (or, if such date is not a Business Day,
on the next succeeding Business Day) which is prior to the
▇▇▇▇-to-Market Measurement Date, Available Cash of Topaz shall be
Distributed 100% to the Topaz Minority Member, until the Topaz Minority
Member receives an amount equal to the excess, if any, of (x) the
cumulative amounts of Gross Income allocated to the Topaz Minority
Member pursuant to Section 4.4(d) as of such Extension Period Payment
Date, over (y) all prior Distributions to the Topaz Minority Member
pursuant to Section 5.1(a)(i) and this Section 5.1(a)(ii) (including
any deemed Section 5.1(a) Distributions pursuant to Sections 5.4(a),
5.4(b) and 5.4(c)).
(iii) Deemed Distributions. To the extent of any Topaz
External Amount or Garnet Political Risk Proceeds deemed (by virtue of
Section 5.4) to have been received by Topaz as payment of interest on
the Emerald Loan or as Capital Contributions by the Topaz Majority
Member or to the extent any amounts described in Section 3.3(b)(ii) are
deemed to have been received by Topaz as Capital Contributions by the
Topaz Minority
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Topaz LLC Agreement
Member, such proceeds shall be further deemed to have been Distributed
pursuant to Section 5.1(a)(i) or 5.1(a)(ii) to the Topaz Minority
Member to the extent that (x) the cumulative amount of Gross Income
allocated to the Topaz Minority Member pursuant to Section 4.4(d)
exceeds (y) all prior Distributions to the Topaz Minority Member
pursuant to Sections 5.1(a)(i) and 5.1(a)(ii) (including any deemed
Section 5.1(a) Distributions pursuant to Sections 5.4(a), 5.4(b) and
5.4(c)).
(b) [Reserved].
(c) Distributions in Connection with Asset Dispositions. In connection
with (A) the sale of or realization upon one or more assets pursuant to an
exercise of the Topaz Asset Remedy in connection with a Specified Equity Event
or (B) the consummation of an Asset Disposition, in each case prior to the
Extension Period Commencement Date, Topaz shall pay to the Topaz Minority
Member, not later than 12:00 noon (New York City time) on the date of any such
sale of assets(s) or realizations(s), as applicable, (or, if such sale or
realization occurs after 11:00 a.m. (New York City time), not later than 12:00
noon on the next succeeding Business Day), Cash in an aggregate amount equal to
the lesser of (1) the aggregate proceeds of such sale, realization or
disposition, as applicable, and (2) the sum of the accrued and unpaid Topaz
Minority Member's Cumulative Priority Return and the positive balance in the
Topaz Minority Member's Capital Account, in each case, as of such date after
taking into account all allocations required to be made to the Topaz Minority
Member pursuant to Article IV as of such date; provided, that the payment by
Topaz under this Section 5.1(c) of the proceeds of (A) any sale of or
realization upon assets pursuant to an exercise of the Topaz Asset Remedy in
connection with a Specified Equity Event after the repayment in full of all
Outstanding Notes or (B) the consummation of an Asset Disposition shall be
subject to the right of the Topaz Minority Member to elect not to receive all or
a portion of such proceeds pursuant to Section 6.3(i). Payments pursuant to this
Section 5.1(c)(i) shall be treated, for GAAP accounting, tax and all other
purposes of the Transaction Documents, as follows:
(x) first, as a payment to the Topaz Minority Member pursuant
to Section 5.1(a) in an amount up to the accrued and unpaid Topaz
Minority Member's Cumulative Priority Return; and
(y) second, the excess, as a Distribution to the Topaz
Minority Member.
(d) Distributions in Connection With Emerald Loan Principal Repayments.
Upon the receipt by Topaz of any amount representing payment or prepayment of
all or any portion of the principal amount of the Emerald Loan (or deemed
receipt of any such amount under Section 5.4 hereof), Topaz shall Distribute (or
with respect to any such amount deemed received pursuant to Section 5.4, shall
be deemed to have Distributed) to the Topaz Minority Member, not later than 4:00
p.m. (New York City time) on the date such amount is received (or deemed
received) by Topaz, Available Cash of Topaz in an amount equal to the lesser of
(x) the excess of the aggregate amount of all payments or prepayments of the
principal amount of the Emerald Loan received (or deemed received) prior to such
date, over the aggregate amounts previously taken into account pursuant to this
Section 5.1(d) and (y) the positive balance in the Topaz Minority Member's
Capital Account, in each case, as of such date after taking into account all
allocations
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Topaz LLC Agreement
required to be made to the Topaz Minority Member pursuant to Article IV and any
Distributions required to be made to the Topaz Minority Member pursuant to
Section 5.1(a) as of such date; provided, that no Distributions shall be made to
the Topaz Minority Member pursuant to this clause (d) after a ▇▇▇▇-to-Market
Measurement Date.
(e) Distributions to Topaz Majority Member and Topaz Second El Paso
Member. Except to the extent such Available Cash is required to be Distributed
as provided in Section 5.1(a) or 5.1(d), all Available Cash of Topaz shall be
Distributed to the Topaz Majority Member and the Topaz Second El Paso Member
(pro rata in accordance with their respective positive Capital Account
balances):
(i) prior to the Extension Period Commencement Date, on such
dates as the Topaz Majority Member shall direct; and
(ii) during the Extension Period, on such dates as the
Managing Member shall direct.
(f) Distribution in Cash. Except as permitted under Section 11.1(d) or
12.9, no Distribution shall be made to the Topaz Minority Member other than in
the form of Cash.
(g) No Other Distributions. Except as provided in this Section 5.1,
Section 5.3, Section 5.4, Section 11.1(d), Section 11.5(e) and Article XII, no
other Distributions shall be permitted other than any Distributions made with
the consent of all of the Members pursuant to Section 6.3(i).
Section 5.2 More than One Topaz Minority Member or Topaz Majority
Member.
(a) More than One Topaz Minority Member. In the event that there is
more than one Topaz Minority Member, allocations to the Topaz Minority Member
pursuant to Article IV, Distributions to the Topaz Minority Member, and all
other references in this Topaz LLC Agreement and the Transaction Documents
referring to amounts shall be divided among the Topaz Minority Members in
proportion to their respective Topaz Minority Percentages. All references in
this Topaz LLC Agreement and the other Transaction Documents to the Topaz
Minority Member (or words of similar import) shall be deemed to refer to all of
such Topaz Minority Members, collectively.
(b) More than One Topaz Majority Member. In the event that there is
more than one Topaz Majority Member, allocations to the Topaz Majority Member
pursuant to Article IV, Distributions to the Topaz Majority Member, and all
other references in this Topaz LLC Agreement and the other Transaction Documents
referring to amounts shall be divided among the Topaz Majority Members in
proportion to their respective Topaz Majority Percentages; provided, that all
other references to the Topaz Majority Member (or words of similar import)
(including any provisions with respect to notices to or by the Topaz Majority
Member or management rights of the Topaz Majority Member) shall be deemed to
refer solely to the original Topaz Majority Member.
Section 5.3 Amounts Withheld. All amounts withheld or required to be
withheld pursuant to the Code or any provision of any state, local or foreign
Tax law, with respect to any payment, Distribution or allocation to or by Topaz
or to or by the Members and treated by the
14
Topaz LLC Agreement
Code (whether or not withheld pursuant to the Code) or any other applicable Tax
law as amounts payable by or in respect of the Members or any Person owning an
interest, directly or indirectly, in such Member shall be treated as a
Distribution to the Members with respect to which such amount was withheld
pursuant to this Article V for all purposes under this Topaz LLC Agreement
(including an appropriate debit to such Member's Capital Account).
Section 5.4 Deemed Contributions, Distributions and Payments on the
Emerald Loan.
(a) Treatment of Topaz External Amount. Upon the receipt (without
duplication) of any External Proceeds under Section 5.05 of the Indenture and/or
Section 5.05 of the New Indenture, Topaz shall be deemed to have received, for
GAAP accounting and tax purposes and for all purposes of the Transaction
Documents, payments of principal of and interest on the Emerald Loan in an
amount equal to the lesser of: (i) the Topaz External Amount and (ii) the sum of
(A) the accrued interest on the Emerald Loan that has not been previously paid
to Topaz and (B) the outstanding principal amount of the Emerald Loan, each as
determined as of the date of distribution of such External Proceeds. If at the
time that the obligation to pay interest and principal on the Emerald Loan has
been satisfied, there remains an excess described in the previous sentence that
has not been treated as a deemed payment under the Emerald Loan, then the Topaz
Majority Member shall be deemed to have made a Capital Contribution in such
amount to Topaz.
(b) Overfund Account. Following any distribution of amounts deposited
into (1) the Overfund Account pursuant to Section 5.04 of the Indenture or (2)
the Dollar Collection Account pursuant to Section 5.02(b)(v) of the Indenture,
Topaz shall be deemed to have made, for GAAP accounting and tax purposes and for
all purposes of the Transaction Documents, on the date any such amounts are
distributed by the Indenture Trustee, a Distribution to the Topaz Minority
Member in an amount equal to the lesser of (x) the excess of such amounts so
deposited over the amount of such deposits that have been deemed to have been
contributed to Diamond pursuant to Section 3.3(a)(iv) of the Diamond LLC
Agreement and (y) the cumulative amount of Gross Income allocated to the Topaz
Minority Member pursuant to Section 4.4(d) that has not been Distributed
pursuant to Section 5.1(a) (or deemed to have been Distributed pursuant to
Sections 5.4(a), 5.4(b) or 5.4(c)).
(c) Political Risk Policy. Upon receipt by the Class A Shareholder of
any proceeds paid pursuant to the Political Risk Policy in respect of any
assets, activities or operations of Garnet (other than indirectly through
Garnet's Diamond Class B Member Interest) ("GARNET POLITICAL RISK PROCEEDS"),
Topaz shall be deemed to have received, for GAAP accounting and tax purposes and
for all purposes of the Transaction Documents, payments of principal and
interest pursuant to the Emerald Loan in an amount equal to the lesser of: (i)
the amount of such Garnet Political Risk Proceeds and (ii) the sum of (A) the
accrued interest on the Emerald Loan that has not been previously paid (or
deemed paid) to Topaz and (B) the outstanding principal amount of the Emerald
Loan, each as determined as of such date of receipt of such proceeds by the
Class A Shareholder. If at the time that the obligation to pay interest and
principal on the Emerald Loan has been satisfied, there remains an excess
described in the previous sentence that has not been treated as a deemed payment
under the Emerald Loan, then the Topaz Majority Member shall be deemed to have
made a Capital Contribution in such amount to Topaz.
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Topaz LLC Agreement
Section 5.5 Notice of Certain Distributions. If Topaz Distributes any
amount to the Topaz Minority Member in order to cause the redemption, in whole
or in part, of (a) the Notes pursuant to the terms of the Indenture and/or (b)
upon and after payment in full of the Outstanding Notes, the New Notes pursuant
to the terms of the New Indenture, Topaz shall notify Investor in writing (with
a copy to the Indenture Trustee and/or the New Indenture Trustee, as applicable)
that such Distribution is being made in order to cause such redemption and
specifying the amount of such Distribution to be used for such purpose and the
relevant Optional Redemption Date, Mandatory Redemption Date or Special
Redemption Date.
ARTICLE VI
MANAGEMENT
Section 6.1 Management of Topaz.
(a) Managing Member. The management of Topaz shall be vested in the
Managing Member, which shall be a "manager" within the meaning of the LLC Act,
and except as otherwise provided in this Topaz LLC Agreement, the Managing
Member shall have full power and authority to manage the business and affairs of
Topaz to the extent provided in the LLC Act, and no other Member shall have any
such management power or authority.
The Topaz Majority Member shall be the Managing Member at all times
prior to the appointment of a replacement Managing Member in accordance with
this Section 6.1(a). The Topaz Minority Member shall have the right to remove
the Topaz Majority Member as Managing Member upon the occurrence of any of the
following events: (i) the Bankruptcy of El Paso, EPED Holding, the Topaz
Majority Member or the Share Trust; (ii) a material breach by the Topaz Majority
Member, in its capacity as Managing Member, of its obligations as Managing
Member under this Topaz LLC Agreement, which breach continues and is uncured in
all material respects on the date occurring 30 days after the Topaz Majority
Member, El Paso or any Affiliate of El Paso receives written notice or has
actual knowledge thereof; (iii) the gross negligence or willful misconduct of
the Topaz Majority Member, in its capacity as Managing Member, in the
performance of its obligations as Managing Member under this Topaz LLC
Agreement; (iv) the removal of (x) Garnet as the Managing Member of Diamond
pursuant to Section 6.1(a) of the Diamond LLC Agreement or (y) EPED B as the
Managing Member of Garnet pursuant to Section 6.1(a) of the Garnet LLC
Agreement; (v) any representation or warranty made by El Paso under Section 4.3
of the Participation Agreement shall prove to have been incorrect in any
material respect when made (or deemed made) and such misrepresentation continues
to remain materially incorrect for 30 days after the earlier of (x) El Paso
having actual knowledge of such misrepresentation and (y) the giving of written
notice of such misrepresentation to El Paso by the Class A Shareholder; (vi) the
60th day following the occurrence of a Note Trigger Event; (vii) a Specified
Equity Event or (viii) the occurrence of an El Paso Debt Obligation Repayment
Event of the type described in clause (b) of the definition thereof. The Topaz
Minority Member shall exercise such right of removal by providing written notice
of such exercise to the Topaz Majority Member after the occurrence of any of the
foregoing events and such notice shall become effective (x) in the case of any
notice under clause (i) or (vii) above, immediately and (y) in the case of any
notice under clause (ii), (iii), (iv), (v), (vi), (viii), (ix), (x) or (xi)
above, upon the expiration of the applicable grace and cure
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Topaz LLC Agreement
periods, if any, referred to in any such clause; provided, however, that, in
each case, if the Share Purchase Option is exercised and consummated in
accordance with Section 7.1 of the Investor Shareholders Agreement, then such
notice shall be deemed to have been revoked and shall be of no further force or
effect. On the date any notice under this Section 6.1(a) becomes effective, the
Topaz Minority Member or its designee shall (unless revoked or unless the Topaz
Majority Member shall be actively contesting such removal in good faith by
appropriate proceedings) without further act become the Managing Member of Topaz
for all purposes of this Topaz LLC Agreement and the Topaz Majority Member shall
no longer be the Managing Member.
The Topaz Minority Member shall also have the right to remove the Topaz
Majority Member as Managing Member by delivering written notice of its exercise
of such right of removal to the Topaz Majority Member no earlier than five days
prior to the end of any Fiscal Quarter and no later than the tenth day of the
next succeeding Fiscal Quarter (each a "QUARTERLY MANAGEMENT REPLACEMENT
WINDOW"); provided, that if such QMR Notice is not given by the Topaz Minority
Member during any such Quarterly Management Replacement Window, then the Topaz
Majority Member shall continue as Managing Member. If a QMR Notice is delivered
during a Quarterly Management Replacement Window and El Paso has not exercised
its Share Purchase Option in accordance with Section 7.1 of the Investor
Shareholders Agreement on or prior to the tenth day following such delivery,
then such QMR Notice shall become effective on such tenth day following delivery
of any such QMR Notice, and the Topaz Minority Member or its designee shall, on
such tenth day, without further act become the Managing Member of Topaz for all
purposes of this Topaz LLC Agreement and the Topaz Majority Member shall no
longer be the Managing Member; provided, however, that if El Paso exercises its
Share Purchase Option in accordance with Section 7.1 of the Investor
Shareholders Agreement on or prior to such tenth day after delivery of such QMR
Notice, then such QMR Notice shall not become effective until the sixtieth day
following the date of such exercise by El Paso of its Share Purchase Option and
then if, and only if, the Share Purchase Option shall not have been consummated
prior to such sixtieth day.
(b) Authority of Managing Member. The Managing Member shall have the
authority on behalf and in the name of Topaz to perform all acts necessary and
desirable to the objects and purposes of Topaz, subject only to the restrictions
expressly set forth in this Topaz LLC Agreement (including Sections 6.3 and 6.5)
and subject to the rights of the Liquidator to liquidate Topaz and take all
actions incidental thereto in accordance with Article XII. Subject to such
restrictions, the authority of the Managing Member shall include the authority
to:
(i) engage in transactions and dealings on behalf of Topaz,
including transactions and dealings with any Member or any Affiliate of
any Member;
(ii) call meetings of Members or any class thereof;
(iii) vote any Equity Interests or Topaz Permitted Assets (if
applicable);
(iv) purchase or otherwise acquire, or dispose of, Topaz
Permitted Assets;
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Topaz LLC Agreement
(v) determine and make Distributions, in Cash or otherwise, on
the Topaz Interests in accordance with the provisions of this Topaz LLC
Agreement and the LLC Act;
(vi) appoint (and dismiss from appointment) officers,
attorneys and agents on behalf of Topaz, and engage (and dismiss from
engagement) any and all Persons providing legal, accounting or
financial services to Topaz, or such other Persons as the Managing
Member reasonably deems necessary or desirable for the management and
operation of Topaz;
(vii) incur and pay all expenses and obligations incidental to
the operation and management of Topaz, including all Company Expenses
of Topaz;
(viii) open accounts (including, without limitation, the Topaz
Investor's Account);
(ix) subject to Article XII, effect a dissolution of Topaz
after the occurrence of a Liquidating Event;
(x) bring and defend (or settle) on behalf of Topaz actions
and proceedings at law or equity before any court or governmental,
administrative or other regulatory agency, body or commission or any
arbitrator or otherwise;
(xi) prepare or cause to be prepared reports, statements and
other relevant information for distribution to the Members as may be
required by this Topaz LLC Agreement or the LLC Act and any additional
information determined to be appropriate by the Managing Member from
time to time;
(xii) subject to Section 7.4, execute, deliver and perform on
behalf of Topaz, Topaz's obligations under and exercise on behalf of
Topaz, Topaz's rights under, any Transaction Documents to which Topaz
is a party, including any certificates and other documents and
instruments related thereto;
(xiii) prepare and file all necessary returns and statements
and pay all taxes, assessments and other impositions applicable to
Topaz Property pursuant to Section 8.3; and
(xiv) execute all other documents or instruments, perform all
duties, exercise all powers, and do all things for and on behalf of
Topaz necessary or desirable to accomplish any of, or incidental to,
the foregoing.
Section 6.2 Right to Rely on the Managing Member.
(a) Any Person dealing with Topaz may rely (without duty of further
inquiry) upon a certificate signed by the Managing Member as to:
(i) The identity of the Managing Member, the Topaz Minority
Member, the Topaz Majority Member or the Topaz Second El Paso Member;
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Topaz LLC Agreement
(ii) The existence or nonexistence of any fact or facts that
constitute a condition precedent to acts by the Managing Member or that
are in any other manner germane to the affairs of Topaz;
(iii) The Persons who are authorized to execute and deliver
any instrument or document of Topaz; and
(iv) Any act or failure to act by Topaz or any other matter
whatsoever involving Topaz or any Member.
(b) The signature of the Managing Member shall be sufficient to convey
title to any property owned by Topaz, and all of the Members agree that a copy
of this Topaz LLC Agreement may be shown to the appropriate parties in order to
confirm the same, and further agree that the signature of the Managing Member
shall be sufficient to execute any documents necessary to effectuate this or any
other provision of this Topaz LLC Agreement.
Section 6.3 Decisions Requiring Unanimous Member Consent.
Notwithstanding any power or authority granted the Managing Member under the LLC
Act, the Topaz Certificate of Formation or this Topaz LLC Agreement (including
Sections 6.1 and 6.5), the Managing Member may not make any decision or take any
action for which the consent of all the Members is expressly required by the
Topaz Certificate of Formation or this Topaz LLC Agreement, without first
obtaining such consent. Notwithstanding any power or authority granted to the
Managing Member under the LLC Act, the Topaz Certificate of Formation or this
Topaz LLC Agreement (including Sections 6.1 and 6.5), the Managing Member shall
not have the authority to, and covenants and agrees that it shall not, take any
of the following actions without the consent of all of the Members (provided
that no approval of the Topaz Majority Member or Topaz Second El Paso Member
shall be required for any action of the Topaz Minority Member pursuant to
Section 7.4, 11.3 or 11.4(a)):
(a) Contravention. Act in contravention of this Topaz LLC Agreement or
any other Transaction Document applicable to Topaz or, when acting on behalf of
Topaz, engage in activities inconsistent with the purposes of this Topaz LLC
Agreement;
(b) [Reserved].
(c) Character of Permitted Investments. Cause or permit Topaz to
acquire by purchase, contribution or exchange (including by way of merger,
liquidation or consolidation with or into any other Person) any assets other
than Topaz Permitted Assets, regardless of amount;
(d) Dispositions by Topaz. Cause or permit Topaz to Dispose of the
Emerald Loan, other than a Disposition (x) that constitutes the granting of a
Lien under the Collateral Agreement, (y) that constitutes the granting of any
Permitted Lien of the type described in clause (i) of the definition thereof or
(z) in connection with the repayment or prepayment thereof (to the extent
permitted under Section 2.04(a) or 2.05 of the Emerald Loan Agreement);
provided, however, that this clause (d) shall not apply to any Disposition of
assets in connection with, or to produce funds used to successfully effect, (x)
a Purchase Option, a Retirement Option, an Asset Remedy or an Investor Asset
Sale, (y) any enforcement of, or levy on, a judgment obtained in
19
Topaz LLC Agreement
accordance with Section 2.05(f) of the New Indenture by the New Indenture
Trustee or the New Noteholders in connection with a New Indenture Event of
Default or (z) an Asset Disposition;
(e) [Reserved].
(f) [Reserved].
(g) Indebtedness, Etc. Cause or permit Topaz to incur, assume or
obligate itself by contract for any Permitted Financial Obligations owing by
Topaz (except that Topaz may enter into and incur obligations under the
Transaction Documents, including costs, expenses, indemnities, fees (including
reasonable attorneys' and accountants' fees), Additional Financing Costs and
Taxes);
(h) Issuance of Additional Topaz Interests; Admission of Additional
Members. Cause or permit Topaz to issue Topaz Interests other than the Topaz
Minority Member Interest, the Topaz Majority Member Interest and the Topaz
Second El Paso Member Interest, or to admit any Topaz Minority Member, Topaz
Majority Member or Topaz Second El Paso Member to Topaz other than pursuant to
Article X or Article XI; provided that Capital Contributions permitted hereby
and made by any existing Member of Topaz shall not constitute the admission of a
member or the issuance of Topaz Interests;
(i) Distributions or Redemptions of Member Interests. Cause or permit
(i) any Distribution in respect of Topaz Interests or (ii) any redemption of
Topaz Interests, other than, in each case in clause (i) or (ii) above, as
permitted or contemplated by the Transaction Documents; provided, that the Topaz
Minority Member may, by written notice to Topaz, elect not to receive all or any
portion of any payment by Topaz under Section 5.1(c) of the proceeds of (A) any
sale of or realization upon assets pursuant to an exercise of the Topaz Asset
Remedy in connection with a Specified Equity Event after the repayment in full
of all Outstanding Notes, or (B) the consummation of an Asset Disposition, and
the consent of the Topaz Majority Member to such election shall be deemed to
have been given upon delivery of the written notice by the Topaz Minority Member
to Topaz. Any amount not paid by Topaz pursuant to such election shall be
treated as accrued but unpaid Topaz Minority Member's Cumulative Priority Return
or amounts required to be Distributed pursuant to Section 5.1, and the Topaz
Minority Member shall have the right to receive such amounts by consenting to a
payment by Topaz, to which the consent of the Topaz Majority Member shall be
deemed to have been given, at any time to pay to the Topaz Minority Member Cash
in an aggregate amount equal to the lesser of (1) the aggregate amount of all
such proceeds retained by Topaz pursuant to this Section 6.3(i), and (2) the sum
of the accrued and unpaid Topaz Minority Member's Cumulative Priority Return and
the positive balance in the Topaz Minority Member's Capital Account, in each
case, as of the date of such payment to the Topaz Minority Member after taking
into account all allocations required to be made to the Topaz Minority Member
pursuant to Article IV as of such date, and such payments shall be treated, for
GAAP accounting, tax and all other purposes of the Transaction Documents, as set
forth in Section 5.1(c).
(j) Transactions with Affiliates. Cause or permit any violation of the
second sentence of Section 6.5(a)(ii);
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Topaz LLC Agreement
(k) Changes to Transaction Documents to which Topaz is a Party. (i)
Cause or consent to any amendment, waiver or other modification of Topaz's
rights or obligations under any Transaction Document to which Topaz is a party,
(ii) give or withhold any consent or authorization required under any
Transaction Document to which Topaz is a party to the extent that Topaz is
expressly entitled to give or withhold such consent or authorization pursuant to
the terms of such Transaction Document to which Topaz is a party, or (iii)
consent to any termination or assignment by any other Person (other than the
Topaz Minority Member) party to any Transaction Document to which Topaz is a
party of such other Person's rights or obligations thereunder to the extent that
such termination or assignment is expressly prohibited pursuant to the terms of
such Transaction Document to which Topaz is a party without the consent of Topaz
(except, in each case described in this clause (k), (x) to cure any ambiguity,
omission, defect or inconsistency (so long as such amendment, waiver or other
modification shall have no adverse effect on the Topaz Minority Member) or (y)
to comply with Section 5.1(a) of the Participation Agreement), unless the
Managing Member shall have delivered to each Member a legal opinion of
nationally recognized outside counsel experienced in structured finance
(including ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇) to the effect that such consent,
authorization, amendment, waiver or other modification (1) does not materially
adversely affect the rights or obligations of the Noteholders (if any Notes are
then Outstanding) and/or the rights or obligations of the New Noteholders (if
any New Notes are then Outstanding) and (2) does not modify Topaz's rights or
obligations under any Transaction Document to which it is a party (provided,
that the opinion described in this clause (2) shall not be required if El Paso
shall have consummated its Share Purchase Option);
(l) Amendments to Emerald Loan Agreement, Collateral Agreement or El
Paso Demand Loans. Cause or consent to any amendment, waiver or modification of
any rights or obligations of Topaz under, or cause or give any consent, approval
or make any election under, the Emerald Loan Agreement, the Collateral
Agreement, any El Paso Demand Loan or any El Paso Note; provided, however, that
this clause (l) shall not apply to any demand for payment under any El Paso
Demand Loan or any El Paso Note in accordance with the terms thereof;
(m) Mergers. Cause or permit Topaz to legally merge or consolidate with
or into any Person or to liquidate or to sell any or substantially all of its
assets (other than pursuant to Article XII);
(n) Bankruptcy. Cause or permit Topaz to commence any Voluntary
Bankruptcy;
(o) [Reserved];
(p) [Reserved];
(q) [Reserved];
(r) [Reserved];
(s) ERISA. Cause or permit Topaz to create or contribute to any
multiple employer plan, multi-employer plan or single-employer plan as defined
in Section 4001 of ERISA;
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Topaz LLC Agreement
(t) Possession of Property. Under any circumstances possess Topaz
Property for other than a purpose of Topaz;
(u) [Reserved];
(v) Tax Treatment, etc. Cause Topaz to be treated as a corporation or
other association taxable as a corporation for federal income tax purposes or to
take a position inconsistent with Topaz not being treated as a corporation or
other association taxable as a corporation except as required by Applicable Law;
(w) Liens. Cause or permit Topaz to create, assume or permit to exist
any Lien whatsoever other than Permitted Liens;
(x) Confessing Judgment. Cause Topaz to confess a judgment against
Topaz or settle or cause or permit a settlement of actions in proceedings at law
or in equity in relation to Topaz before any court or other Governmental
Authority, unless such confession of judgment or settlement (i) is for an amount
less than or equal to $1,000,000 or (ii) would not have an Issuer Material
Adverse Effect; or
(y) Limitation on Certain New Investments After Trigger Event. Cause or
permit Topaz to acquire, by purchase, contribution or exchange, any El Paso Debt
Obligation after the occurrence of a Note Trigger Event, Specified Equity Event,
Shareholder Trigger Event or El Paso Debt Obligation Repayment Event.
Section 6.4 Consents of the Topaz Minority Member. The Topaz Minority
Member consents, to the extent that such actions require the consent of the
Topaz Minority Member pursuant to Section 6.3 (but such consent shall not
constitute a waiver of any other provision hereof), to the execution and
delivery by the Managing Member, on behalf of Topaz, of each Transaction
Document to which Topaz is a party.
Section 6.5 Duties and Obligations of the Managing Member.
(a) Actions of Topaz. Anything in this Topaz LLC Agreement to the
contrary notwithstanding, for so long as any Obligation of Topaz is outstanding,
the Managing Member covenants to conduct the affairs of Topaz such that:
(i) [Reserved].
(ii) All transactions between El Paso (or any of its
Affiliates), on the one hand, and Topaz, on the other, shall be duly
authorized and documented and recorded accurately in the appropriate
books and records of such entities, except where normal industry
practice does not normally require authorization or documentation. The
Managing Member shall not cause or permit Topaz to enter into any
transaction with El Paso or any Affiliate of El Paso (other than
transactions among Topaz and any of its Subsidiaries or among
Subsidiaries of Topaz), other than transactions in any calendar quarter
which, taken as a whole, are fair and reasonable to Topaz and provide,
in the aggregate, for receipt by Topaz of fair consideration and
reasonably equivalent value; provided, however, that nothing herein
shall be deemed to prohibit or restrict any sales or
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Topaz LLC Agreement
transfers of assets to El Paso or its designee(s) pursuant to Section
6.1(c)(v) of the Participation Agreement. The Members hereby agree that
each of the Transaction Documents satisfies the standards set forth in
the preceding sentence.
(b) Trigger Events, Specified Equity Event and Liquidating Events. The
Managing Member shall notify the Members of the occurrence of any acceleration
of the New Notes as a result of a New Indenture Event of Default, Note Trigger
Event, Specified Equity Event, Shareholder Trigger Event or Liquidating Event or
any event that with notice or lapse of time or both would constitute such an
event and the action that the Managing Member has taken or proposes to take with
respect thereto, promptly, but no later than five Business Days, after any
Responsible Officer of El Paso has actual knowledge of such occurrence;
provided, that in the case of a Specified Equity Event, the Managing Member
shall provide the Members, within three Business Days after a Responsible
Officer of El Paso obtains knowledge of the occurrence of any Underlying Default
which is continuing or of any event not theretofore remedied which with notice
or lapse of time, or both, would constitute an Underlying Default, 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 of El
Paso to cure the effect of such Underlying Default.
(c) Maintenance of Topaz's Existence, etc. At Topaz's expense, the
Managing Member shall take all actions that may be necessary or appropriate (i)
for the continuation of Topaz's valid existence as a limited liability company
under the laws of the State of
Delaware and its qualification to do business
under the laws of each other jurisdiction in which such existence or
qualification is necessary to protect the limited liability of the Members or to
enable Topaz to conduct the business in which it is engaged or to perform its
obligations under any agreement to which it is a party, (ii) for the
accomplishment of Topaz's purposes, including the acquisition, management,
maintenance, preservation, and operation of Topaz Permitted Assets in accordance
with the provisions of this Topaz LLC Agreement and applicable laws and
regulations and (iii) to enforce Topaz's rights under the Emerald Loan
Agreement, the Collateral Agreement, any El Paso Demand Loan or El Paso Note
held by Topaz and each of the Transaction Documents to which Topaz is a party.
Without limitation of the foregoing, the Managing Member shall cause Topaz to
maintain all licenses, permits, registrations, authorizations, use agreements,
consents, orders or approvals of governmental or quasi-governmental agencies and
authorities (whether Federal, state, local, municipal or foreign) necessary to
own its properties and to conduct its activities in accordance with all
applicable laws, rules, regulations and orders, except where any failure to do
so would not have an Aggregate JV Material Adverse Effect or an Issuer Material
Adverse Effect.
(d) Devotion of Time; Other Activities. The Managing Member and any of
its Affiliates shall be required to devote only such time to the affairs of
Topaz as is necessary to manage and operate Topaz and each such Person shall be
free to serve any other Person or enterprise in any capacity that it may deem
appropriate in its discretion.
(e) Fiduciary Duty. Except as otherwise provided in the proviso to the
second sentence of Section 6.5(a)(ii), the Managing Member shall be under a
fiduciary duty to conduct the affairs of Topaz in the best interests of Topaz,
including the safekeeping and use of all Topaz Property and the use thereof for
the exclusive benefit of Topaz and will not conduct the affairs of
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Topaz LLC Agreement
Topaz so as to benefit any other business now owned or hereafter acquired by any
Member if such conduct also produces a detriment to Topaz. Without limiting the
foregoing duty, the Managing Member shall perform its obligations hereunder
using a degree of skill and attention no less than that which El Paso exercises
with respect to its own business.
(f) Making of Payments. Unless otherwise expressly provided herein, all
Distributions or payments to the Members pursuant to any provision of this Topaz
LLC Agreement shall be made no later than 3:30 p.m., New York City time, on the
day of Distribution or payment, and, at the time of any such Distribution or
payment, the Managing Member shall provide to the Members a notice identifying
the nature of the Distribution or payment, the Section or Sections of this Topaz
LLC Agreement pursuant to which it is being made and the amount being
Distributed or paid pursuant to each such Section.
(g) Compliance with Topaz LLC Agreement. The Managing Member shall
cause Topaz to comply with all of the obligations of Topaz set forth in this
Topaz LLC Agreement; provided, however, that the Managing Member shall have no
obligation to cause Topaz to pay the Topaz Minority Member's Priority Return or
make any other Cash Distributions or other payments in respect of the Topaz
Minority Member Interest under this Topaz LLC Agreement except to the extent
that there are funds on deposit in the Topaz Investor's Account that are freely
available to be applied to such payment at the time such payment is due, and
then only from such funds; and provided, further, that in no event shall the
Managing Member have any personal obligation or liability with respect to any
obligations of Topaz.
(h) Notice Regarding Qualification to Do Business. The Managing Member
shall provide notice to the Members of any state or jurisdiction in which Topaz
is qualified to do business (other than its jurisdiction of organization and any
jurisdiction in which Topaz was qualified to do business on the Closing Date).
(i) [Reserved].
Section 6.6 Compensation and Expenses. Except as provided in Section
5.5 of the Participation Agreement, and except pursuant to, or as contemplated
by, the Management Agreement, no Member or Affiliate of any Member shall receive
any salary, fee, or draw for services rendered to or on behalf of Topaz or
otherwise in its capacity as a Member, nor shall any Member or Affiliate of any
Member be reimbursed for any expenses incurred by such Member or Affiliate on
behalf of Topaz or otherwise in its capacity as a Member.
Section 6.7 Demand on El Paso Demand Loans held by Topaz. The Managing
Member shall cause Topaz to make demand on any El Paso Demand Loans held by it
(i) within a sufficient time to provide Topaz with sufficient funds to enable
Topaz to make any Distributions to the Topaz Minority Member when due pursuant
to Section 5.1(a)(i), (ii) on the occurrence of a Liquidating Event, (iii) if
requested by the Topaz Majority Member, on any Purchase Date or Retirement Date,
(iv) to acquire additional Topaz Permitted Assets, (v) upon the occurrence of an
El Paso Debt Obligation Repayment Event, (vi) upon expiration of the Asset Sale
Standstill Period, if requested by the Topaz Minority Member in an Asset Sale
Notice delivered pursuant to this Topaz LLC Agreement and (vii) to otherwise
satisfy the obligations of Topaz.
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Topaz LLC Agreement
Section 6.8 Execution of other Transaction Documents.
(a) Execution of Transaction Documents. On the Signing Date,
simultaneously with the execution and delivery of this Topaz LLC Agreement, the
Managing Member on behalf of Topaz shall execute and deliver, or cause to be
executed and delivered, all Transaction Documents to be entered into by Topaz on
or prior to the Signing Date (to the extent not previously executed), and any
amendments, restatements or supplements thereto, and take such further actions,
in each case, as are contemplated in the Closing Agreement and otherwise in
connection with the consummation of the Exchange Offer and the transactions
contemplated thereby.
(b) [Reserved].
(c) [Reserved].
(d) [Reserved].
Section 6.9 Determination of Interest Rate on El Paso Demand Loans.
Subject to Section 6.3(l), the Managing Member shall administer all El Paso
Demand Loans held by Topaz. Each Member agrees that in order for the Managing
Member to manage effectively such El Paso Demand Loans, the following provisions
shall apply:
(a) The Managing Member shall determine the El Paso Applicable
Rate for each Eurodollar Period for each El Paso Demand Loan made by
Topaz, and shall notify El Paso of each such determination.
(b) Each Member shall promptly notify the Managing Member in
the event any Member receives a notice from any financial institution
to the effect that the Eurodollar Rate does not reflect the cost of
funds for such financial institution in connection with any proposed or
current borrowings by such Member from such financial institution. In
the event any Member has given the notice described in the first
sentence of this clause (b), such Member agrees that in the event
subsequent thereto, it receives a notice from such financial
institution to the effect that the Eurodollar Rate would again reflect
the cost of funds for such financial institution in connection with any
proposed or current borrowings by such Member from such financial
institution, such Member shall promptly notify the Managing Member that
it has received such a notice.
(c) Upon its receipt of any notice described in clause (b) of
this Section, the Managing Member shall promptly notify El Paso of the
change in the El Paso Applicable Rate required pursuant to the
applicable El Paso Demand Loan.
Section 6.10 Administration of the Emerald Loan. Subject to Sections
6.3(l) and 7.4, the Managing Member shall administer the Emerald Loan. Each
Member agrees that in order for the Managing Member to manage effectively such
Emerald Loan, the following provisions shall apply:
(a) Each Member consents to the administration of the Emerald
Loan by the Managing Member and, subject to Sections 6.3(l) and 7.4,
authorizes the Managing
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Topaz LLC Agreement
Member to take such action on its behalf and to exercise such powers as
are granted to Topaz pursuant to the terms of the Emerald Loan
Agreement and the Collateral Agreement, together with such actions and
powers as are reasonably incidental thereto.
(b) Each Member shall promptly notify the Managing Member in
the event that any Member obtains knowledge of (i) the occurrence of
any default under or any breach of the terms of the Emerald Loan
Agreement or (ii) any other information material to the administration
of the Emerald Loan.
Section 6.11 Covenant of the Managing Member. Except as otherwise
permitted by this Topaz LLC Agreement, the Managing Member hereby covenants and
agrees not to (i) take any action to file a certificate of cancellation or its
equivalent with respect to itself, (ii) withdraw or attempt to withdraw from
Topaz, (iii) exercise any power under the LLC Act to dissolve Topaz, (iv) except
incident to a Permitted Transfer, Dispose of all or any portion of its Topaz
Interest or (v) petition for judicial dissolution of Topaz. Further, except
incident to a Permitted Transfer, the Managing Member hereby covenants and
agrees to continue to carry out the duties of the Managing Member under this
Topaz LLC Agreement until Topaz is dissolved and liquidated pursuant to Article
XII.
Section 6.12 Certain Covenants Relating to the Separateness of Topaz.
Topaz shall maintain its separate existence and, specifically, shall conduct its
affairs in accordance with, and the Managing Member and each Member agrees that
it will not take any actions in its dealings with Topaz or with other Persons
(including their creditors) that are inconsistent with, the following:
(a) Topaz shall: (i) maintain and prepare separate financial
reports (if any) and financial statements (if any) in accordance with
GAAP, showing its assets and liabilities separate and apart from those
of any other Person, and will not have its assets listed on the
financial statement of any other Person (provided, however, that
Topaz's assets may be included in a consolidated financial statement of
a Member if inclusion on such consolidated financial statement is
required to comply with the requirements of GAAP, but only if (x) such
consolidated financial statement shall be appropriately footnoted to
the effect that Topaz's assets are owned by Topaz and that they are
being included on the consolidated financial statement of such Member
solely to comply with the requirements of GAAP, and (y) such assets
shall be listed on Topaz's own separate balance sheet); (ii) maintain
its books, records and bank accounts separate from those of its
Affiliates, any constituent party and any other Person; and (iii) not
permit any Affiliate or constituent party (other than the Managing
Member, the Members and the Management Company) independent access to
its bank accounts.
(b) Topaz shall not commingle or pool any of its funds or
other assets with those of any Affiliate or constituent party or any
other Person, and it shall hold all of its assets in its own name.
(c) Topaz shall conduct its own business in its own name and
shall not operate, or purport to operate, collectively as a single or
consolidated business entity with respect to any Person.
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Topaz LLC Agreement
(d) Topaz shall, insofar as is consistent with commercial and
business circumstances affecting its business and financial condition,
remain solvent and pay its own debts, liabilities and expenses
(including overhead expenses, if any) only out of its own assets as the
same shall become due (except for certain legal fees, accounting fees
and other out-of-pocket costs and expenses incurred by Topaz in
connection with the formation, administration and activities of Topaz,
which items may be paid by the Topaz Majority Member, the Topaz Second
El Paso Member or Emerald, or an Affiliate of any of them) (provided,
that this covenant shall not constitute a guaranty or "keep well"
obligation by any of the Managing Member, any Member, Emerald, the
Management Company, any administrator of or with respect to Topaz or
any other Person in respect of Topaz or its debt, liabilities or
expenses, or any financial or balance sheet condition or ratio of or
relating to Topaz).
(e) Topaz has done, or caused to be done, and shall do, all
things necessary to observe all
Delaware limited liability company
formalities and other organizational formalities, and preserve its
existence (subject to Article XII and the other express provisions
hereof), and it shall not, nor will it permit any Affiliate or
constituent party to, amend, modify or otherwise change this Topaz LLC
Agreement in a manner which would adversely affect the existence of
Topaz as a special purpose entity.
(f) Topaz shall not have any employees.
(g) Topaz does not, and shall not, (i) guarantee, become
obligated for, or hold itself or its credit out to be responsible for
or available to satisfy, the debts or obligations of any other Person
or (ii) control the decisions or actions respecting the daily business
or affairs of any other Person other than pursuant to the Transaction
Documents.
(h) Topaz shall, to the extent it utilizes stationery,
invoices and checks, maintain and utilize separate stationery, invoices
and checks bearing its own name.
(i) Topaz shall, at all times, hold itself out to the public
as a legal entity separate and distinct from any other Person and shall
correct any known misunderstanding regarding its separate identity.
(j) Topaz shall not identify itself as a division of any other
Person.
(k) Topaz shall maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate, constituent party or any
other Person.
(l) Topaz shall not use its separate existence to abuse
creditors or to perpetrate a fraud, injury, or injustice on creditors
in violation of Applicable Law.
(m) Topaz shall not, in connection with the Transaction
Documents, act with an intent to hinder, delay, or defraud any of its
creditors in violation of Applicable Law.
(n) Topaz shall not be consensually merged or legally
consolidated with any other Person (other than being consolidated with
certain Affiliates for financial reporting and
27
Topaz LLC Agreement
federal tax purposes), but without prejudice to the right to dissolve,
liquidate or wind up in accordance with this Topaz LLC Agreement or
Applicable Law.
(o) Topaz shall not incur any Relevant Indebtedness except to
the extent not prohibited by the Transaction Documents.
(p) Topaz shall not make loans or advances to any Person,
except as permitted by the Transaction Documents.
(q) Topaz shall not pledge its assets for the benefit of any
Person, except pursuant to the Transaction Documents.
(r) The issuances of the Topaz Majority Member Interest to
Investor, the Topaz Minority Member Interest to EPED Holding and the
Topaz Second El Paso Member Interest to El Paso were and are intended
to be, and shall be accounted for on the books, records and financial
statements of Topaz, Investor, EPED Holding and El Paso as, the
issuance of equity capital and not as a loan by Investor, EPED Holding
or El Paso, as the case may be, to Topaz.
(s) Topaz shall make no transfer of its assets except in
accordance with the Transaction Documents.
ARTICLE VII
ROLE OF NON-MANAGING MEMBERS
Section 7.1 Rights or Powers. No Member (other than the Managing
Member) shall have any right or power to take part in the management or control
of Topaz or its business and affairs or to act for or bind Topaz in any way.
Notwithstanding the foregoing, the Members shall have all the rights and powers
specifically set forth in this Topaz LLC Agreement, including those rights set
forth in Section 7.4. Any Member, any Affiliate thereof or an employee,
stockholder, agent, member, manager, director or officer of a Member or any
Affiliate thereof, may also be an employee or agent of Topaz or a member,
manager or officer of the Managing Member. The existence of these relationships
and acting in such capacities will not result in such Member being deemed to be
participating in the control of the business of Topaz or otherwise affect the
limited liability of such Member.
Section 7.2 Voting Rights. Except for the Managing Member acting in its
capacity as such, each Member shall have the right to vote only on those matters
expressly reserved for its vote (i) as provided in this Topaz LLC Agreement or
(ii) as required by mandatory provisions of the LLC Act; provided, that, except
as otherwise provided in Section 3.4(a), 6.3, 8.3(a), 11.5(c), 12.1(c), 12.3,
12.9(a) or 12.9(b), any such actions of Topaz requiring the vote of the Members
shall be taken by a vote of the Members whereby the Topaz Majority Member shall
represent 80% of the voting rights, the Topaz Minority Member shall represent
20% of the voting rights and the Topaz Second El Paso Member shall have no
voting rights.
Section 7.3 Procedure for Consent. In any circumstances requiring the
approval or consent of any Member specified in this Topaz LLC Agreement, such
approval or consent may,
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Topaz LLC Agreement
except as expressly provided to the contrary in this Topaz LLC Agreement, be
given or withheld in the sole and absolute discretion of such Member. Each
Member agrees to use its best efforts to respond promptly to any request for any
such approval or consent. If the Managing Member receives the necessary approval
or consent of the Members to such action, the Managing Member shall be
authorized and empowered to implement such action without further authorization
by the Members.
Section 7.4 Special Rights of the Topaz Minority Member.
Notwithstanding any other provision hereof, the Topaz Minority Member shall have
the following rights:
(a) the right and power to control the liquidation of Topaz as
Liquidator as set forth in Article XII;
(b) the right to exercise the right of Topaz to give or
withhold consent (i) to the terms of any "Subordinated Indebtedness"
(as defined in the Emerald Loan Agreement), (ii) pursuant to Section
6.09(a) of the Emerald Loan Agreement, to any amendment, waiver or
other modification of any Transaction Documents to which Emerald,
Citrine, Garnet or Amethyst is a party, (iii) pursuant to Section
6.09(b) of the Emerald Loan Agreement, to assignments of the rights or
obligations of Emerald or Citrine under any Transaction Documents to
which Emerald or Citrine is a party, (iv) to any matter described in
Section 6.10(b) of the Emerald Loan Agreement, (v) pursuant to Section
6.11 of the Emerald Loan Agreement, to the issuance by Emerald of any
additional membership interests, (vi) pursuant to Section 8.05(b) of
the Emerald Loan Agreement, to any amendment, discharge, termination or
waiver of the Emerald Loan Agreement or any provision thereof, or (vii)
pursuant to Section 8.07 of the Emerald Loan Agreement, to any
assignment by Emerald of any of its rights or obligations thereunder;
and
(c) the right to direct the Collateral Agent in the exercise
of certain voting rights of the Garnet Preferred Member as set forth in
Section 5.04(c) of the Collateral Agreement;
(d) the right to become the Managing Member or to appoint a
replacement Managing Member pursuant to Section 6.1(a); and
(e) the sole right (i) to cause a Topaz Asset Remedy pursuant
to Section 11.3 and (ii) to cause one or more Investor Asset Sales
pursuant to Section 11.4.
ARTICLE VIII
ACCOUNTING; BOOKS AND RECORDS
Section 8.1 Accounting; Books and Records.
(a) Maintenance of Books and Records. Topaz shall maintain at its
principal place of business or, upon notice to the Members, at such other place
as the Managing Member shall determine, separate books of account for Topaz,
which shall include a record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in
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Topaz LLC Agreement
connection with the conduct of Topaz and the operation of its business in
accordance with this Topaz LLC Agreement.
(b) Accounting Methods.
(i) Topaz shall maintain appropriate books and records in a
manner as necessary to comply with GAAP and with the Code and the
Regulations.
(ii) All amounts payable under any agreement between Topaz on
the one hand and the Members or their Affiliates (excluding Topaz) on
the other hand, other than Distributions, shall be treated as occurring
between Topaz and a Person who is not a Member within the meaning of
Section 707(a)(1) of the Code and such amounts payable by Topaz to any
Member or such Member's Affiliates shall be considered an expense or
capital cost, as the case may be, of Topaz for income tax and financial
reporting purposes, and, except as specifically contemplated by Article
V shall not be considered a Distribution to such Member, including in
maintaining such Member's Capital Account, and any such amounts payable
by any Member or its Affiliates to Topaz shall not, except as
specifically contemplated by Article III, be considered a contribution
to Topaz, including in maintaining such Member's Capital Account.
(c) Access to Books, Records, etc. Subject to Section 8.4, each Member
or any agents or representatives of any Member (including the Class A
Shareholder), upon reasonable notice and with reasonable frequency, may (i)
examine any information with respect to Topaz or its assets that it may
reasonably request and make copies of and abstracts from the financial and
operating records and books of account of Topaz, and (ii) discuss the affairs,
finances and accounts of Topaz with the Managing Member and its officers,
directors and independent accountants, all at such reasonable times and as often
as such Member or any agents or representatives of such Member may reasonably
request, and Topaz shall pay or reimburse the Topaz Minority Member for its
reasonable costs and expenses incurred in connection with such examinations;
provided, however, that Topaz shall have no obligation to pay the expense of
such examinations in any calendar year to the extent that the aggregate amount
of all expenses of the Topaz Minority Member, together with all expenses of the
Diamond Class A Member incurred in connection with visits, inspections and
examinations pursuant to Section 8.1(c) of the Diamond LLC Agreement and all
expenses of the Garnet Preferred Member incurred in connection with visits,
inspections and examinations pursuant to Section 8.1(c) of the Garnet LLC
Agreement, in each case incurred during such calendar year, exceeds $50,000 or,
following delivery of a QMR Notice, $2,000,000 (provided, that such amount
following delivery of a QMR Notice shall be calculated from the date of such QMR
Notice without regard to calendar year) unless a Note Trigger Event, Specified
Equity Event or Shareholder Trigger Event has occurred and is continuing in
which case there shall be no limit.
Section 8.2 Reports.
(a) In General. The Managing Member shall be responsible for the
preparation of financial reports of Topaz and the coordination of financial
matters of Topaz with Topaz's accountants. Each report delivered by Topaz to the
Members pursuant to this Section 8.2 shall be accompanied by a representation of
an Authorized Officer of El Paso that such report presents
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Topaz LLC Agreement
fairly in all material respects the information contained therein, subject, in
the case of the reports to be delivered pursuant to Section 8.2(c), to year-end
audit adjustments.
(b) Annual Reports. Within 120 days after the end of each Fiscal Year
commencing with the Fiscal Year ending December 31, 2001, the Managing Member
shall cause to be prepared and to be delivered to each other Member the
following:
(i) Financial Reports. A balance sheet as of the last day of
such Fiscal Year and an income statement and statement of cash flows
for Topaz for (x) in the case of the Fiscal Year ending December 31,
2001, the period from formation of Topaz to December 31, 2001, and (y)
in the case of any other Fiscal Year, such Fiscal Year, and notes
associated with each, in each case prepared in accordance with GAAP and
audited by the JV Accountants; and
(ii) Officer's Certificate. Written certification by an
Authorized Officer of the Managing Member that Topaz is in compliance
with Section 6.5(a)(ii).
The financial statements described in clause (i) of this Section 8.2(b) shall be
accompanied by a representation of the Managing Member stating that (x) the
financial statements described in clause (i) of this Section 8.2(b) present
fairly, in all material respects, the financial position of Topaz at the end of
the most recently completed Fiscal Year and the results of its operations and
its cash flows for such applicable period, in conformity with GAAP and (y) after
reasonable inquiry, the Managing Member has no actual knowledge of the
occurrence of any acceleration of the New Notes as a result of a New Indenture
of Default, Note Trigger Event, Specified Equity Event, Shareholder Trigger
Event or Liquidating Event, in any such case, that is then continuing or, if the
Managing Member has such actual knowledge, specifying the then continuing event
and the action that the Managing Member has taken or proposes to take with
respect thereto.
(c) Quarterly Reports. Within 60 days after the close of each of the
first three Fiscal Quarters during any Fiscal Year beginning with the Fiscal
Quarter ending March 31, 2002, the Managing Member shall cause to be prepared
and to be delivered to each other Member the following:
(i) Financial Reports. Unaudited financial statements
consisting of a balance sheet as of the last day of such Fiscal Quarter
and an income statement and a statement of cash flows for Topaz for
such Fiscal Quarter, in each case prepared in accordance with GAAP
except that such quarterly financial statements need not include
footnote disclosure and may be subject to ordinary year-end adjustment;
and
(ii) Officer's Certificate. Written certification by an
Authorized Officer of the Managing Member that Topaz is in compliance
with Section 6.5(a)(ii).
The financial statements described in clause (i) of this Section 8.2(c) shall be
accompanied by a representation of the Managing Member stating that (x) the
financial statements described in clause (i) of this Section 8.2(c) present
fairly, in all material respects, the financial position of Topaz at the end of
the most recently completed Fiscal Quarter and the results of its operations and
its cash flows for such Fiscal Quarter, in conformity with GAAP, subject to year
end audit requirements, and (y) after reasonable inquiry, the Managing Member
has no actual knowledge
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Topaz LLC Agreement
of the occurrence of any acceleration of the New Notes as a result of a New
Indenture Event of Default, Note Trigger Event, Specified Equity Event,
Shareholder Trigger Event or Liquidating Event, in any such case, that is then
continuing or, if the Managing Member has such actual knowledge, specifying the
then continuing event and the action that the Managing Member has taken or
proposes to take with respect thereto.
(d) Retirement, Purchase Option and Liquidation Date Reports. The
Managing Member shall cause to be prepared and to be delivered to each Member
(x) on any JV Final Payment Date with respect to Topaz, a balance sheet as of
the ▇▇▇▇-to-Market Measurement Date setting forth the aggregate ▇▇▇▇-to-Market
Value for each of the Topaz Permitted Assets (a "▇▇▇▇-TO-MARKET BALANCE SHEET")
together with a certificate by the Managing Member that such statements have
been prepared in accordance with this Topaz LLC Agreement, subject to adjustment
as a result of the audit to be provided pursuant to the following clause (y) and
(y) on the date on which final Distributions are made to the Members pursuant to
Section 12.2 hereof and not later than seventy-five (75) days after the
Retirement Date on which the Topaz Minority Member Interest is retired or the
Purchase Date, certification by the JV Accountants that such statements have
been prepared in accordance with this Topaz LLC Agreement.
(e) Valuation Reports. The Managing Member shall cause to be prepared
contemporaneously with any adjustment to the Gross Asset Values of Topaz assets
in accordance with clause (b) of the definition of Gross Asset Value, reports
required to determine the ▇▇▇▇-to-Market Value of such assets and (x) in the
event any Topaz Permitted Asset is acquired (whether by contribution or
purchase), sold or Distributed by Topaz, with respect to such Topaz Permitted
Asset only and (y) upon the occurrence of any adjustment to the Gross Asset
Value of all Topaz Permitted Assets, with respect to all Topaz Permitted Assets,
and the Managing Member shall furnish such reports to each Member.
(f) [Reserved].
Section 8.3 Tax Matters.
(a) Actions by Managing Member. The Managing Member is authorized to
make any and all elections for federal, state, and local tax purposes including
any election, if permitted by applicable law: (i) to adjust the basis of Topaz
Property pursuant to Code Sections 754, 734(b) and 743(b), or comparable
provisions of state or local law, in connection with Dispositions of Topaz
Interests and in connection with Topaz Distributions; (ii) with the consent of
the Members, to extend the statute of limitations for assessment of tax
deficiencies against the Members with respect to adjustments to Topaz's federal,
state, or local tax returns; and (iii) to the extent provided in Code Sections
6221 through 6231, to represent Topaz and the Members before taxing authorities
or courts of competent jurisdiction in tax matters affecting Topaz or the
Members in their capacities as Members, and to file or cause to be filed any tax
returns and execute any agreements or other documents relating to or affecting
such tax matters, including agreements or other documents that bind the Members
with respect to such tax matters or otherwise affect the rights of Topaz and the
Members. The Managing Member is specifically authorized to act as the "TAX
MATTERS MEMBER" under the Code and in any similar capacity under state or local
law.
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Topaz LLC Agreement
(b) Tax Information and Filings. The Managing Member shall deliver or
cause to be delivered to each Member necessary tax information for each Member's
estimated quarterly tax filings as soon as practicable after the end of each
quarter of each Fiscal Year of Topaz. The Managing Member shall deliver or cause
to be delivered to each Member: (i) on or prior to March 30 of each Fiscal Year,
the Managing Member's good faith estimate of the amount of such Member's
allocable share of taxable income or loss of Topaz for the preceding Fiscal
Year, (ii) on or prior to July 30 of each Fiscal Year, an update of the estimate
for the preceding Fiscal Year delivered pursuant to clause (i) and (iii) as soon
as practicable after the end of each Fiscal Year of Topaz but not later than
September 15 of the next succeeding Fiscal Year, necessary tax information for
each Member's annual tax filings. The Managing Member shall file or cause to be
filed tax or information returns and all other filings for Topaz prepared in
accordance with the Code, the Regulations and applicable state and local tax
laws. The Managing Member shall use reasonable efforts to provide the Topaz
Minority Member with details concerning the foregoing information upon the Topaz
Minority Member's reasonable inquiries.
(c) Tax Classification.
(i) The Managing Member shall take such action as may be
required under the Code and Regulations to cause Topaz to be treated as
a partnership for United States federal income tax purposes.
(ii) To the extent Section 8.3(c)(i) does not govern the state
and local tax classification of Topaz, the Managing Member shall take
such action as may be required under applicable state and/or local law
to cause Topaz to be treated as, and in a manner consistent with a
partnership (or the functional equivalent thereof) for state and local
income and franchise tax purposes; provided, that the Managing Member
shall not take any action under this clause (c)(ii) which would be
inconsistent with its obligations under Section 8.3(c)(i).
Section 8.4 Proprietary Information. Notwithstanding any provision of
this Topaz LLC Agreement or any other Transaction Document to the contrary, the
Topaz Minority Member shall not have access to (i) information that the Managing
Member reasonably believes to be in the nature of trade secrets or proprietary
information, (ii) any information subject to the attorney-client privilege
unless disclosure to the Topaz Minority Member would not result in a waiver of
such privilege, (iii) any information that is required to be kept confidential
by Applicable Law or (iv) any information that is required to be kept
confidential by any Contractual Obligation entered into by Topaz, the Topaz
Majority Member or the Topaz Second El Paso Member with any third person in good
faith in the ordinary course of business and in any context that is not
unreasonable in light of the contemplated transaction.
ARTICLE IX
AMENDMENTS; MEETINGS
Section 9.1 Amendments. Amendments to this Topaz LLC Agreement may be
proposed by the Members. Following such proposal, the Managing Member shall
submit to the Members a verbatim statement of any proposed amendment if counsel
for Topaz shall have
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Topaz LLC Agreement
approved of the same in writing as to form, and the Managing Member shall
include in any such submission a recommendation as to the proposed amendment.
The Managing Member shall seek the written vote of the Members on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. A proposed amendment shall be adopted and
be effective as an amendment to this Topaz LLC Agreement only if it receives the
affirmative vote of all of the Members.
Section 9.2 Meetings of the Members. (a) (a) Meetings of the Members
may be called by the Managing Member and shall be called upon the written
request of any Member. The notice shall state the nature of the business to be
transacted. Subject to other requirements specified herein regarding notice
periods, notice of any such meeting shall be given to all Members not less than
five Business Days nor more than thirty days prior to the date of such meeting.
Members may vote in person, by proxy or by telephone at such meeting. Whenever
the vote or consent of Members is permitted or required under this Topaz LLC
Agreement, such vote or consent may be given at a meeting of Members or may be
given in accordance with the procedure prescribed in Section 9.3. Except as
otherwise expressly provided in this Topaz LLC Agreement, the unanimous vote of
the Members shall be required to constitute the act of the Members.
(b) For the purpose of determining the Members entitled to vote on, or
to vote at, any meeting of the Members or any adjournment thereof, the Managing
Member or the Member requesting such meeting may fix, in advance, a date as the
record date for any such determination. Such date shall not be more than thirty
days nor less than one Business Day before any such meeting.
(c) Each Member may authorize any Person or Persons to act for it by
proxy on all matters in which the Member is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Member or its attorney-in-fact. No proxy shall be
valid after the expiration of eleven months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Member executing it or as provided under the terms of such proxy.
(d) Each meeting of Members shall be conducted by the Managing Member
or such other Person as the Managing Member may appoint pursuant to such rules
for the conduct of the meeting as the Managing Member or such other Person deems
appropriate.
Section 9.3 Unanimous Consent. In the event the consent of the Members
is required for any action to be taken by Topaz, such consent may be given at a
meeting, which may be conducted by conference telephone call, or provided in a
writing executed by all the Members.
ARTICLE X
TRANSFERS OF INTERESTS
Section 10.1 Restriction on Dispositions of Interests.
(a) Dispositions of Topaz Minority Member Interest. Except as provided
in Article XI or Section 13.15, the Topaz Minority Member shall not Dispose of
(other than by a
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Topaz LLC Agreement
retirement, repurchase or redemption) all or any portion of its Topaz Minority
Member Interest or withdraw from Topaz without the prior written consent of the
Topaz Majority Member in its sole discretion; provided, however, that (1)
following the occurrence of a Note Trigger Event, Specified Equity Event,
Shareholder Trigger Event or, after the repayment in full of the Outstanding
Notes, an acceleration of the New Notes as a result of a New Indenture Event of
Default, or (2) during the Extension Period, no such consent shall be required
in connection with the Disposition by the Topaz Minority Member of its Topaz
Minority Member Interest to a Qualified Holder at any time after (x) if the
Outstanding Notes and New Notes have not been paid in full, the occurrence of
the applicable Asset Remedy Standstill Expiration Date or, in the case of a
Specified Equity Event, the earliest of the Special Management Replacement Date,
the date on which an Asset Remedy Notice becomes effective in accordance with
Section 11.3(a) or the date on which a Liquidation Notice becomes effective
under Section 12.10, or (y) if the Outstanding Notes and New Notes have been
paid in full, the earlier of a Specified Equity Event and the expiration of the
Asset Sale Standstill Period, as applicable, for such Disposition. Following any
such Disposition by Investor of its entire Topaz Minority Member Interest,
Investor shall be deemed withdrawn from Topaz as a Topaz Minority Member. Upon
any Disposition, in whole or in part, made in accordance with this Section
10.1(a), the transferee of such Topaz Interest will be admitted as a Topaz
Minority Member without further action or consent by any other Member.
(b) (i) Dispositions of Topaz Majority Member Interest. The Topaz
Majority Member shall not Dispose of its Topaz Majority Member Interest to any
Person or withdraw from Topaz without the prior written consent of the Topaz
Minority Member in its sole discretion; provided, however, that the Topaz
Majority Member may Dispose of all or any portion of its Topaz Majority Member
Interest to any El Paso Affiliate that is a Qualified Holder. Following any
Disposition of the Topaz Majority Member Interest in whole, the Topaz Majority
Member shall be deemed withdrawn from Topaz as a Topaz Majority Member. Upon any
Disposition made in accordance with this Section 10.1(b)(i), the transferee of
such Topaz Interest will be admitted as a Topaz Majority Member without further
action or consent by any other Member.
(i) Dispositions of Topaz Second El Paso Member Interest. The
Topaz Second El Paso Member shall not Dispose of its Topaz Second El
Paso Member Interest to any Person or withdraw from Topaz without the
prior written consent of the Topaz Minority Member in its sole
discretion; provided, however, that the Topaz Second El Paso Member may
Dispose of its Topaz Second El Paso Member Interest in whole (but not
in part) to any El Paso Affiliate that is a Qualified Holder. Following
any Disposition of the Topaz Second El Paso Member Interest in whole,
the Topaz Second El Paso Member shall be deemed withdrawn from Topaz as
a Topaz Second El Paso Member. Upon any Disposition made in accordance
with this Section 10.1(b)(ii), the transferee of such Topaz Interest
will be admitted as a Topaz Second El Paso Member without further
action or consent by any other Member.
(c) Permitted Transfers. Any Disposition permitted by this Section 10.1
shall be referred to in this Topaz LLC Agreement as a "PERMITTED TRANSFER," the
Person to which the applicable Topaz Interest is transferred shall be a
"PERMITTED TRANSFEREE" and the Topaz Interest transferred shall be a
"TRANSFERRED INTEREST." A Permitted Transferee shall be entitled to become
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Topaz LLC Agreement
a substituted Member in Topaz in respect of the applicable Transferred Interest
without any further act on the part of any other Member or the Managing Member
being required. Any Permitted Transferee of 100% of the Topaz Majority Member
Interest shall become the successor Managing Member hereunder without any
further act on the part of any other Member being required; provided, that such
successor Managing Member shall be subject to replacement as set forth in
Section 6.1(a).
Section 10.2 Prohibited Dispositions. (a) (a) Any purported Disposition
of a Topaz Interest that is not a Permitted Transfer shall be null and void and
of no effect whatever; provided, however, that, if Topaz is required to
recognize a Disposition of a Topaz Interest that is not a Permitted Transfer,
the Transferred Interest shall be strictly limited to the transferor's rights to
allocations and Distributions as provided by this Topaz LLC Agreement with
respect to the Transferred Interest, which allocations and Distributions may be
applied (without limiting any other legal or equitable rights of Topaz) to
satisfy any debts or obligations, or liabilities for damages that the transferor
or transferee of such Topaz Interest may have to Topaz.
(b) To the fullest extent permitted by law, in the case of a
Disposition or attempted Disposition of a Topaz Interest that is not a Permitted
Transfer, the parties engaging or attempting to engage in such Disposition shall
be liable to indemnify and hold harmless Topaz and the other Members from all
losses, costs, liability, and damages that any of such indemnified Persons may
incur (including incremental tax liability and reasonable lawyers' fees and
expenses) as a result of such Disposition or attempted Disposition and efforts
to enforce the indemnity granted hereby.
ARTICLE XI
RETIREMENT OPTION; PURCHASE OPTION;
ASSET REMEDY; EXTENSION PERIOD
Section 11.1 Topaz Majority Member's Retirement Option.
(a) Retirement Option. The Topaz Majority Member may, without the
consent of the Topaz Minority Member, at any time elect to cause not less than
all of the Topaz Minority Member Interest to be retired in accordance with this
Section 11.1 (the "TOPAZ RETIREMENT OPTION"), by making an Irrevocable Election
and giving written notice thereof (a "RETIREMENT NOTICE") to the Topaz Minority
Member, the other Members (if any), the Indenture Trustee (if any Notes are
Outstanding) or the Fiscal Agent (if any Notes are not then Outstanding) and the
New Indenture Trustee (if any New Notes are then Outstanding) (which notice
shall include notification as to the matters set forth in Section 5.5);
provided, however, that the Topaz Retirement Option may not be exercised without
the consent of the Topaz Minority Member: (i) after the earliest to occur of (x)
a Liquidating Event and (y) if a Note Trigger Event has occurred, the applicable
Asset Remedy Standstill Expiration Date, provided, that, following the exercise
and consummation of the Share Purchase Option, the Topaz Retirement Option may
be exercised by the Topaz Majority Member after a Specified Equity Event or
delivery of a QMR Notice without the consent of the Topaz Minority Member; or
(ii) during the Extension Period at any time following the date on which an
Asset Sale Notice shall have become effective pursuant to Section 11.4(a) of
this Topaz LLC Agreement or Section 11.4(a) of the Garnet LLC
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Topaz LLC Agreement
Agreement until the earlier of the date of (x) the rescission of such Asset Sale
Notice by the Topaz Minority Member or Garnet Preferred Member, as the case may
be, and (y) the receipt by Topaz or Garnet, as the case may be, of the proceeds
received from the sale of all assets identified in such Asset Sale Notice and,
in the case of any such Asset Sale Notice delivered under the Garnet LLC
Agreement, the distribution of such proceeds by Garnet to Citrine and by Citrine
to Emerald, and the application of such proceeds by Emerald to the repayment of
the Emerald Loan; and provided, further, that the Topaz Retirement Option may
not be exercised (x) if the Topaz Retirement Amount payable in connection with
such Topaz Retirement Option would exceed the balance of the Topaz Minority
Member's Capital Account immediately after giving effect to the adjustments and
allocations required by the first sentence of Section 11.1(c), and (y) unless
the Diamond Class B Member exercises, simultaneously with the exercise of the
Topaz Retirement Option, either the Diamond Purchase Option or the Diamond
Retirement Option. Notwithstanding the foregoing, (i) the Topaz Retirement
Option may be exercised without the consent of the Topaz Minority Member at any
time during a FRCA Option Period so long as the Diamond Class B Member
exercises, simultaneously with the exercise of the Topaz Retirement Option,
either the Diamond Purchase Option or the Diamond Retirement Option and (ii) The
Topaz Retirement Option may not be exercised after (x) if a Specified Equity
Event has occurred, the earliest of (A) a Special Management Replacement Date,
(B) the date on which an Asset Remedy Notice becomes effective in accordance
with Section 11.3(a) of the Diamond LLC Agreement, Garnet LLC Agreement or Topaz
LLC Agreement, or (C) the date on which a Liquidation Notice becomes effective
under Section 12.10 of the Diamond LLC Agreement, the Topaz LLC Agreement or the
Garnet LLC Agreement, or (y) the delivery of a QMR Notice.
(b) Retirement Notice. Any Retirement Notice shall include the
following:
(i) a statement that the entire Topaz Minority Member Interest
is to be retired;
(ii) the date on which the retirement Distribution shall be
made to the Topaz Minority Member (the "RETIREMENT DATE"), which date
shall not be less than ten Business Days nor more than ninety days
after the date on which the Retirement Notice was given; provided,
however, that prior to the Extension Period Commencement Date and so
long as any Notes or New Notes are Outstanding, if an Asset Remedy
Notice or Liquidation Notice has been delivered pursuant to this Topaz
LLC Agreement or a Specified Equity Event has occurred, in each case
prior to the delivery of such Retirement Notice, the Retirement Date
shall not be later than (A) the applicable Asset Remedy Standstill
Expiration Date or (B) in the case of a Specified Equity Event, the
earlier of the Special Management Replacement Date or the date on which
an Asset Remedy Notice becomes effective in accordance with Section
11.3(a);
(iii) a statement specifying the Topaz Retirement Amount to be
Distributed on the Retirement Date and showing the calculation thereof
in reasonable detail; and
(iv) a representation and warranty by the Topaz Majority
Member that Topaz has, or will have on the Retirement Date, Cash in an
amount equal to or greater than the Topaz Retirement Amount.
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Topaz LLC Agreement
(c) ▇▇▇▇-to-Market. On the Retirement Date, the Gross Asset Values of
all of Topaz assets shall be adjusted to equal their respective ▇▇▇▇-to-Market
Values as of the ▇▇▇▇-to-Market Measurement Date and any Net Income, Net Losses
and other items of income, gain, loss and deduction of Topaz shall be allocated
among the Members as of such ▇▇▇▇-to-Market Measurement Date in accordance with
Article IV. Solely for GAAP accounting purposes, the retirement of the Topaz
Minority Member Interest pursuant to this Section 11.1(c) shall be deemed to be
effective on the applicable ▇▇▇▇-to-Market Measurement Date. For all purposes of
the Transaction Documents, on and after the retirement of the Topaz Minority
Member Interest pursuant to this Section 11.1(c), the Topaz Minority Member
shall be deemed to have withdrawn as, and to no longer be, a Topaz Minority
Member hereunder.
(d) Retirement Amount. On the Retirement Date, Topaz shall Distribute
to the Topaz Minority Member Cash in an amount (the "TOPAZ RETIREMENT AMOUNT")
that is equal to the excess of (x) the fair market value of the Topaz Minority
Member Interest as of the Applicable Notice Date, which fair market value shall
be presumed to be the Topaz Value as of the Applicable Notice Date (unless an
Appraised Value Election has been made, in which case such fair market value
shall be presumed to be the Appraised Price of the Topaz Minority Member
Interest), over (y) the product of (I) the Topaz Percentage and (II) all
repayments of and proceeds of, and all interest and earnings on, Financial
Investments to the extent paid in Cash into the Accounts during the period from
the Applicable Notice Date to (and including) the Retirement Date and not
otherwise taken into account in the calculation of Topaz Value or Appraised
Price, as the case may be. In addition, as a condition to the retirement of the
Topaz Minority Member Interest on the Retirement Date, Topaz shall pay all
Administrative Expenses and New Administrative Expenses then due and owing (to
the extent such expenses are invoiced and notice thereof has been given to
Garnet or Topaz at least three Business Days prior to the Retirement Date) to
the extent not paid by Garnet, El Paso or any other Person on or prior to the
Retirement Date. Notwithstanding the foregoing, (i) the Topaz Minority Member
may make an Appraised Value Election by delivering written notice of such
election to the Topaz Majority Member, the Topaz Second El Paso Member and Topaz
no later than ten Business Days following the Applicable Notice Date; provided,
however, that the Topaz Minority Member shall not be permitted to make an
Appraised Value Election hereunder unless the Topaz Minority Member
simultaneously makes an Appraised Value Election under the Diamond LLC Agreement
with respect to its Diamond Class A Member Interest; and provided, further, that
(i) any such election by the Topaz Minority Member shall be irrevocable upon
delivery of such notice by the Topaz Minority Member, (ii) the General Appraisal
Procedures shall be implemented, (iii) the Topaz Minority Member shall pay and
assume liability for, and indemnify the other Members and Topaz against, all
fees, costs and expenses in any way relating to or arising out of the General
Appraisal Procedures, including all fees and expenses of all of the appraisers
engaged in connection therewith and (iv) Topaz shall be obligated to Distribute
the Topaz Value on the Retirement Date, and the remainder of the Topaz
Retirement Amount (or, if the Topaz Retirement Amount is less than the amount
Distributed on the Retirement Date, a rebate in respect thereof) shall be
Distributed to the Topaz Minority Member (or reimbursed to Topaz, as the case
may be) through the post-closing adjustments described in Section 11.2(h). Topaz
shall Distribute to the Topaz Minority Member an amount equal to the Topaz
Value, and the Topaz Minority Member Interest in Topaz shall be retired, at
12:00 noon (New York City time) on the Retirement Date. Distributions to the
Topaz Minority Member in connection with a
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Topaz LLC Agreement
retirement of the Topaz Minority Member Interest shall consist solely of Cash
unless otherwise consented to by the Topaz Minority Member.
(e) Treatment as a Retirement under Section 736. Payments made in
liquidation of the Topaz Interest of the retiring Topaz Minority Member shall be
made in exchange for the interest of such Member in Topaz Property pursuant to
Section 736(b)(1) of the Code, including the interest of such Member in the
goodwill of Topaz.
Section 11.2 Topaz Majority Member's Purchase Option.
(a) Purchase Option. The Topaz Majority Member may, at any time
permitted pursuant to Section 11.2(b), elect to purchase or to cause the
purchase of the Topaz Minority Member's entire Topaz Minority Member Interest
(the "TOPAZ PURCHASE OPTION"); provided, that the Topaz Majority Member makes an
Irrevocable Election and the Electing Purchasers give written notice (the
"PURCHASE OPTION NOTICE") to the Topaz Minority Member, the Indenture Trustee
(if any Notes are then Outstanding) or the Fiscal Agent (if any Notes are not
then Outstanding) and the New Indenture Trustee (if any New Notes are then
Outstanding) (which notice shall include notification as to the matters set
forth in Section 5.5). The Topaz Majority Member may designate any Person as
having the right, and may assign to any Person the right, to purchase all or a
portion of the Topaz Minority Member Interest (the Topaz Majority Member and
each such designee or assignee, an "ELECTING PURCHASER").
(b) Exercise of Purchase Option. The Topaz Purchase Option may be
exercised at any time; provided, however that the Topaz Purchase Option may not
be exercised without the consent of the Topaz Minority Member: (i) after the
earliest to occur of (x) a Liquidating Event and (y) if a Note Trigger Event has
occurred, the applicable Asset Remedy Standstill Expiration Date, provided,
that, following the exercise and consummation of the Share Purchase Option, the
Topaz Purchase Option may be exercised by the Topaz Majority Member after a
Specified Equity Event or delivery of a QMR Notice without the consent of the
Topaz Minority Member; or (ii) during the Extension Period at any time following
the date on which an Asset Sale Notice shall have become effective pursuant to
Section 11.4(a) of this Topaz LLC Agreement or Section 11.4(a) of the Garnet LLC
Agreement until the earlier of the date of (x) the rescission of such Asset Sale
Notice by the Topaz Minority Member or Garnet Preferred Member, as the case may
be, and (y) the receipt by Topaz or Garnet, as the case may be, of the proceeds
received from the sale of all assets identified in such Asset Sale Notice and,
in the case of any such Asset Sale Notice delivered under the Garnet LLC
Agreement, the Distribution of such proceeds by Garnet to Citrine and by Citrine
to Emerald, and the application of such proceeds by Emerald to the repayment of
the Emerald Loan; and provided, further, that the Topaz Purchase Option may not
be exercised unless the Diamond Class B Member exercises, simultaneously with
the exercise of the Topaz Purchase Option, either the Diamond Purchase Option or
the Diamond Retirement Option. Notwithstanding the foregoing, (i) the Topaz
Purchase Option may be exercised without the consent of the Topaz Minority
Member at any time during a FRCA Option Period so long as the Diamond Class B
Member exercises, simultaneously with the exercise of the Topaz Purchase Option,
either the Diamond Purchase Option or the Diamond Retirement Option and (ii) the
Topaz Purchase Option may not be exercised after (x) if a Specified Equity Event
has occurred, the earliest of (A) a Special Management Replacement Date, (B) the
date on which an Asset Remedy Notice becomes effective in accordance with
Section 11.3(a) of the
39
Topaz LLC Agreement
Diamond LLC Agreement, Garnet LLC Agreement or Topaz LLC Agreement, or (C) the
date on which a Liquidation Notice becomes effective under Section 12.10 of the
Diamond LLC Agreement, the Topaz LLC Agreement or the Garnet LLC Agreement, or
(y) the delivery of a QMR Notice.
(c) Purchase Option Notice. Any Purchase Option Notice shall include
the following:
(i) a statement that the entire Topaz Minority Member Interest
is to be purchased;
(ii) a statement listing the Electing Purchasers and
specifying the amount of the Topaz Minority Member Interest that each
such Electing Purchaser has agreed to purchase;
(iii) a statement specifying the date on which the closing of
the purchase and sale of the Topaz Minority Member Interest shall occur
(the "PURCHASE DATE"), which Purchase Date shall not be less than ten
Business Days nor more than ninety days after the date on which the
Purchase Option Notice was given; provided, however, that prior to the
Extension Period Commencement Date and so long as any Notes or New
Notes are Outstanding, if an Asset Remedy Notice or Liquidation Notice
has been delivered pursuant to this Topaz LLC Agreement or a Specified
Equity Event has occurred, in each case prior to the delivery of such
Purchase Option Notice, then the Purchase Date shall not be later than
(A) in the case of an Asset Remedy Notice or Liquidation Notice, the
applicable Asset Remedy Standstill Expiration Date or (B) in the case
of a Specified Equity Event, the earlier to occur of the Special
Management Replacement Date or the date on which an Asset Remedy Notice
becomes effective in accordance with Section 11.3(a); and
(iv) a statement specifying the Topaz Purchase Price to be
paid on the Purchase Date and showing the calculation thereof in
reasonable detail.
(d) ▇▇▇▇-to-Market. On the Purchase Date, the Gross Asset Values of all
of Topaz assets shall be adjusted to equal their respective ▇▇▇▇-to-Market
Values as of the ▇▇▇▇-to-Market Measurement Date and any Net Income, Gross
Income, Net Losses and other items of income, loss, gain, deduction and credit
of Topaz shall be allocated among the Members as of such ▇▇▇▇-to-Market
Measurement Date in accordance with Article IV.
(e) Purchase Price. On the Purchase Date, the Electing Purchaser(s)
shall pay to the Topaz Minority Member, in consideration for the Topaz Minority
Member Interest, an amount of Cash (the "TOPAZ PURCHASE PRICE") that is equal to
the excess of (x) the fair market value of the Topaz Minority Member Interest as
of the Applicable Notice Date, which fair market value shall be presumed to be
the Topaz Value as of the Applicable Notice Date (unless an Appraised Value
Election has been made, in which case such fair market value shall be presumed
to be the Appraised Price of the Topaz Minority Member Interest), over (y) the
product of (I) the Topaz Percentage and (II) all repayments of and proceeds of,
and all interest and earnings on, Financial Investments to the extent paid in
Cash into the Account during the period from the Applicable
40
Topaz LLC Agreement
Notice Date to (and including) the Purchase Date and not otherwise taken into
account in the calculation of Topaz Value or Appraised Price, as the case may
be. In addition, as a condition to the purchase of the Topaz Minority Member
Interest on the Purchase Date, Topaz shall pay all Administrative Expenses and
New Administrative Expenses then due and owing (to the extent such expenses are
invoiced and notice thereof has been given to Garnet or Topaz at least three
Business Days prior to the Purchase Date) to the extent not paid by Garnet, El
Paso or any other Person on or prior to the Purchase Date. Notwithstanding the
foregoing, the Topaz Minority Member may make an Appraised Value Election by
delivering written notice of such election to the Electing Purchaser(s) no later
than ten Business Days following the Applicable Notice Date; provided, however,
that the Topaz Minority Member shall not be permitted to make an Appraised Value
Election hereunder unless it simultaneously makes an Appraised Value Election
under the Diamond LLC Agreement with respect to its Diamond Class A Member
Interest; and provided, further, that (i) any such election by the Topaz
Minority Member shall be irrevocable upon delivery of such notice by the Topaz
Minority Member, (ii) the General Appraisal Procedures shall be implemented,
(iii) the Topaz Minority Member shall pay and assume liability for, and
indemnify the other Members and the Electing Purchaser(s) against, all fees,
costs and expenses in any way relating to or arising out of the General
Appraisal Procedures, including all fees and expenses of all of the appraisers
engaged in connection therewith and (iv) the Electing Purchaser(s) shall be
obligated to pay the Topaz Value on the Purchase Date, and the remainder of the
Topaz Purchase Price (or, if the Topaz Purchase Price is less than the amount
paid on the Purchase Date, a rebate in respect thereof) shall be paid to the
Topaz Minority Member (or Electing Purchaser(s), as the case may be) through the
post-closing adjustments described in Section 11.2(h).
(f) Consummation of Purchase.
(i) The closing of the purchase and sale of the Topaz Minority
Member Interest shall occur on the Purchase Date specified in the
Purchase Option Notice; provided, that the Topaz Purchase Price shall
be subject to post-closing adjustments as set forth in Section 11.2(h).
(ii) The closing shall occur at such place as is mutually
agreeable to the Members, or upon the failure to agree, at the
principal place of business of Topaz. On the Purchase Date, the Topaz
Minority Member shall deliver to the Electing Purchasers good title to
the Topaz Minority Member Interest purchased, free and clear of any
liens, claims, encumbrances, security interests or options.
(iii) On the Purchase Date, the Members shall execute such
documents and instruments of conveyance as may be reasonably necessary
or appropriate to effectuate the transaction contemplated hereby,
including the Disposition of the Topaz Minority Member Interest. The
reasonable costs of such Disposition and closing, including attorneys'
fees and filing fees of the Members, shall be paid by the Electing
Purchasers in proportion to their Topaz Minority Member Interests.
(iv) Solely for GAAP accounting purposes and for purposes of
the LLC Act, the purchase of the Topaz Minority Member Interest
pursuant to this Section 11.2 shall be deemed to be effective as of the
close of business on the applicable ▇▇▇▇-to-Market
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Topaz LLC Agreement
Measurement Date and, thereafter, the Electing Purchasers shall be
admitted as substitute Topaz Minority Members of Topaz in respect of
the portions of Investor's (or its successor's) Topaz Minority Member
Interest acquired thereby and the Topaz Minority Member shall be deemed
withdrawn as, and shall no longer be, a Topaz Minority Member
hereunder.
(g) Appraised Value Election. (x) In the event that the Topaz Minority
Member shall have made an Appraised Value Election in accordance with Section
11.1(d) or Section 11.2(e) then, in each case, the Fair Market Value (determined
as of the applicable Purchase Date or Retirement Date) of all Appraised Value
Property shall be appraised in accordance with the General Appraisal Procedures.
The Topaz Minority Member shall pay and assume liability for, and indemnify the
other Members and Topaz against, all fees, costs and expenses in any way
relating to or arising out of the General Appraisal Procedures, including all
fees and expenses of all of the appraisers engaged in connection therewith.
(h) Post-Closing Adjustments. Upon completion of the General Appraisal
Procedures with respect to Topaz and Diamond, if the Appraised Price with
respect to the Topaz Minority Member Interest exceeds the Topaz Value paid or
Distributed on the Purchase Date or Retirement Date, Topaz (in the case of a
Topaz Retirement Option) or the Electing Purchaser(s) (in the case of a Topaz
Purchase Option) shall pay or Distribute to the Topaz Minority Member an amount
equal to such excess. In the event that the Appraised Price with respect to the
Topaz Minority Member Interest is less than the Topaz Value paid or Distributed
on the Purchase Date or Retirement Date, the Topaz Minority Member shall be
obligated to pay (or cause to be paid) to Topaz (in the case of a Topaz
Retirement Option) or the Electing Purchaser(s) (in the case of a Topaz Purchase
Option) such shortfall; provided, however, that in no event shall the Topaz
Minority Member be obligated to pay an amount in excess of (a) the amount
received by the Topaz Minority Member on the Retirement Date or Purchase Date,
as applicable, over (b) the product of (i) the Topaz Percentage and (ii) any
amounts specified in clause (a) used to redeem the Notes and/or the New Notes
(after having applied monies derived from all other sources to the redemption of
the Notes and/or the New Notes). Any amounts paid pursuant to this Section
11.2(h) shall be treated as adjustments to the Topaz Purchase Price or the Topaz
Retirement Amount, as the case may be.
(i) Treatment as Purchase Under Section 741. The Members agree to treat
the Disposition of the Topaz Minority Member Interest to the Electing Purchasers
pursuant to this Section 11.2 as a purchase and sale under Section 741 of the
Code and not as a retirement under Section 736 of the Code.
Section 11.3 Topaz Asset Remedy. Without limitation of the Topaz
Minority Member's rights pursuant to Section 7.4 hereof or the Collateral
Agreement:
(a) Exercise of Topaz Asset Remedy. So long as any Notes or New Notes
are outstanding, the Topaz Minority Member may, at any time following a Note
Trigger Event, Shareholder Trigger Event or, after the repayment in full of all
Outstanding Notes, a Specified Equity Event, elect to (i) cause the sale of or
realization upon one or more assets of Topaz in accordance with clause (b) below
and/or the Distribution of Cash and/or proceeds of such asset sales pursuant to
Section 5.1(a) or 5.1(d) (as applicable) and/or (ii) exercise the rights of
Topaz
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Topaz LLC Agreement
under the Emerald Loan Agreement (including the right to deliver an Emerald Loan
Default Notice and declare the Emerald Loan due and payable in whole or in part)
and Collateral Agreement, in each case, by delivering an Asset Remedy Notice to
the Managing Member (and, if the Topaz Majority Member is not the Managing
Member, the Topaz Majority Member), and such Asset Remedy Notice shall, unless
the Topaz Minority Member Interest is retired pursuant to Section 11.1 or
purchased pursuant to Section 11.2 on or prior to (A) the applicable Asset
Remedy Standstill Expiration Date or (B) in the case of a Specified Equity
Event, the delivery of such Asset Remedy Notice, become effective on, and permit
a Topaz Asset Remedy on and after, (x) the applicable Asset Remedy Standstill
Expiration Date or (y) in the case of a Specified Equity Event, the delivery of
such Asset Remedy Notice; provided, however, that the Topaz Minority Member may
rescind such Asset Remedy Notice by delivering to the Managing Member (and, if
the Topaz Majority Member is not the Managing Member, the Topaz Majority Member)
written notice of such rescission; provided, further, that in the case of a
Specified Equity Event, if the Share Purchase Option is consummated on or prior
to the tenth Business Day following delivery of such Asset Remedy Notice, then
such notice shall be deemed to have been revoked and shall be of no further
force and effect. Any such rescission shall not affect the Topaz Minority
Member's right to deliver any subsequent Asset Remedy Notice.
(b) Dispositions; Rights With Respect to Emerald Loan. After delivery
of an Asset Remedy Notice and after the occurrence of the Asset Remedy
Standstill Expiration Date or after repayment in full of the Outstanding Notes,
the Special Management Replacement Date, the Topaz Minority Member shall have
the right and authority to (i) cause Topaz to Dispose of any Topaz Property
(provided, that no such Disposition shall be made to any Person that is the
Topaz Minority Member or a Restricted Person), (ii) cause Topaz to deliver to
Emerald and EPED B an Emerald Loan Default Notice and exercise any or all of the
rights of Topaz under the Emerald Loan Agreement and (iii) exercise its right
under the Collateral Agreement to direct the Collateral Agent to exercise its
right under the Pledged Citrine Interest to elect a Garnet Asset Remedy.
Section 11.4 Asset Sales.
(a) Exercise of Asset Sale Rights. So long as no Notes or New Notes are
Outstanding, the Topaz Minority Member may, at any time (x) following the
occurrence of a Shareholder Trigger Event or a Specified Equity Event or (y)
during the Extension Period, elect to cause the sale of or realization upon one
or more assets of Topaz and/or the Distribution of Cash and/or proceeds of such
asset sales pursuant to Section 5.1(a) or 5.1(d) (as applicable) by delivering
to the Managing Member (and, if the Topaz Majority Member is not the Managing
Member, the Topaz Majority Member) an Asset Sale Notice and such Asset Sale
Notice shall become effective to permit the sale of the assets specified therein
on the 10th Business Day following delivery of such Asset Sale Notice; provided,
however, that the Topaz Minority Member may rescind such Asset Sale Notice by
delivering to the Managing Member (and, if the Topaz Majority Member is not the
Managing Member, the Topaz Majority Member) written notice of such rescission;
and provided, further, that if an Irrevocable Election has been made by the
Topaz Majority Member and a Purchase Option Notice or a Retirement Notice has
been delivered pursuant to this Topaz LLC Agreement on or prior to such 10th
Business Day, no Asset Sale Notice shall become effective to permit the sale of
the assets specified therein until the day after the Purchase Date or Retirement
Date, as the case may be, specified in such notice (and
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Topaz LLC Agreement
then if, but only if, such purchase or retirement is not consummated). Any such
rescission shall not affect the Topaz Minority Member's right to deliver any
subsequent Asset Sale Notice.
(b) Standstill; Dispositions. Notwithstanding any delivery of an Asset
Sale Notice by the Topaz Minority Member in accordance with Section 11.4(a), (i)
(a) neither the Topaz Minority Member nor Topaz (at the direction of the Topaz
Minority Member) may enter into any binding agreement to dispose of or realize
upon any assets of Topaz until the expiration of the applicable Asset Sale
Standstill Period and (b) such agreements may be entered into only with respect
to the assets specified in the applicable Asset Sale Notice that has become
effective and (ii) no sale or other Disposition of any asset of Topaz shall be
made to any Person that is a Topaz Minority Member or a Restricted Person.
Section 11.5 Extension Period.
(a) Exercise of Rights Under Emerald Loan Agreement and Collateral
Agreement. Without limitation of the Topaz Minority Member's rights pursuant to
Section 7.4 hereof or the Collateral Agreement, during the Extension Period the
Topaz Minority Member may, at any time and from time to time after the
expiration of the Asset Sale Standstill Period, exercise the rights of Topaz
under the Emerald Loan Agreement and Collateral Agreement.
(b) [Reserved].
(c) Restrictions on Authority of Managing Member. Notwithstanding any
power or authority granted the Managing Member under the LLC Act, the Topaz
Certificate of Formation or this Topaz LLC Agreement, during the Extension
Period, the Managing Member shall not have the authority to, and covenants and
agrees that it shall not, take any of the following actions without the consent
of all of the Members: (i) cause or permit Topaz to acquire (by purchase,
contribution, exchange or otherwise) any additional assets, (ii) cause or permit
Topaz to incur any additional Permitted Financial Obligations, or (iii) cause or
permit Topaz to make any Dispositions other than Dispositions to provide Cash
for the purpose of enabling Topaz to make Distributions under Section 5.1(b).
(d) Expiration of Extension Period. If no Liquidating Event shall have
occurred, then on and after the Extension Period Termination Date and
notwithstanding any other provision of this Topaz LLC Agreement: (i) the Topaz
Minority Member shall have no right or authority to cause Topaz to take any
action and, without limitation of the foregoing, all of the Topaz Minority
Member's rights under Sections 7.4, 11.3 and 11.4 shall be terminated and the
Topaz Majority Member shall, without further action, have all of the rights
given to the Topaz Minority Member under such Sections, (ii) the Topaz Majority
Member shall have the right and authority to cause Topaz to admit one or more
additional Members and/or issue additional membership interests, and (iii) the
Topaz Majority Member shall have the right to cause Topaz to retire the Topaz
Minority Member Interest for an amount equal to the Topaz Minority Member's then
current Capital Account balance.
(e) Repurchase of Topaz Minority Member Interest. If on any date during
the Extension Period (assuming that such date was a Repurchase Date):
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Topaz LLC Agreement
(i) the sum of (w) the Topaz Minority Member's Capital Account
in Topaz, (x) the Diamond Class A Member's Capital Account in Diamond,
(y) the accrued and unpaid Diamond Class A Member's Cumulative Priority
Return and (z) the accrued and unpaid Diamond Class A Member's
Cumulative Extension Period Return, would, if paid or Distributed to
the Topaz Minority Member and the Diamond Class A Member (as
applicable), result in Investor achieving or exceeding the Target IRR;
(ii) the sum of the Topaz Repurchase Price and the Diamond
Repurchase Price equals the amount described in clause (i); and
(iii) the amount of Available Cash of Diamond together with
the amount that would be receivable by Diamond from the sale or
repayment of Diamond Permitted Assets of the type described in clause
(b), (c), (d) or (e) of the definition thereof held by Diamond, equals
or exceeds the Diamond Repurchase Price,
then Topaz shall (1) to the extent necessary to produce sufficient Cash to pay
the Topaz Repurchase Price (as defined below), (x) if an Emerald Loan Event of
Default shall have occurred and be continuing, demand repayment of the Emerald
Loan and/or (y) sell the Emerald Loan or sell or demand repayment of any
Financial Investments held by Topaz and (2) repurchase the Topaz Minority Member
Interest in accordance with the procedures set forth in Sections 11.2(f)(ii) and
11.2(f)(iii) on the Repurchase Date for an amount (the "TOPAZ REPURCHASE PRICE")
equal to the lesser of (x) the balance of the Topaz Minority Member's Capital
Account and (y) the amount of Available Cash of Emerald and Topaz (without
duplication), after giving effect to any such repayment of the Emerald Loan or
any such sale or repayment of Financial Investments but excluding any such
Available Cash that was received by Topaz or Emerald as a Capital Contribution
for the Topaz Majority Member or the sole member of Emerald, as the case may be,
after the date of the delivery of an Asset Sale Notice; provided, however, that
in no event shall the sum of the Diamond Repurchase Price and the Topaz
Repurchase Price equal an amount that would, if paid or Distributed to the Topaz
Minority Member and the Diamond Class A Member (as applicable), result in
Investor achieving an Internal Rate of Return in excess of or less than the
Target IRR. For all purposes of the Transaction Documents, for GAAP accounting
purposes and for purposes of the LLC Act, on and after the Repurchase Date, the
Topaz Minority Member shall be deemed withdrawn as, and shall no longer be, a
Topaz Minority Member hereunder.
The Members agree to treat payments in respect of the repurchase
pursuant to this Section 11.5(e) for U.S. federal income tax purposes as made in
liquidation of the Topaz Minority Member Interest, pursuant to Section 736(b)(1)
of the Code, including the interest of such Member in the goodwill of Topaz.
(f) Repurchase Date; ▇▇▇▇-to-Market. On the Repurchase Date, the Gross
Asset Values of all of Topaz's assets shall be adjusted to equal their
respective ▇▇▇▇-to-Market Values as of the ▇▇▇▇-to-Market Measurement Date and
any Net Income, Gross Income, Net Losses and other items of income, loss, gain,
deduction and credit of Topaz shall be allocated among the Members as of such
▇▇▇▇-to-Market Measurement Date in accordance with Article IV.
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Topaz LLC Agreement
ARTICLE XII
DISSOLUTION AND WINDING UP
Section 12.1 Liquidating Events. Topaz shall dissolve and commence
winding up and liquidating upon the first to occur of any of the following
(collectively, "LIQUIDATING EVENTS"):
(a) [Reserved].
(b) Liquidation Notice. The date on which, pursuant to Section
12.10, a Liquidation Notice becomes effective to cause a Liquidating
Event.
(c) Unanimous Vote. The unanimous vote of the Members to
dissolve, wind up, and liquidate Topaz.
(d) [Reserved].
(e) Illegality, etc. The happening of any event that makes it
unlawful, impossible, or impractical to carry on the business of Topaz
or the
Delaware Court of Chancery has entered a decree pursuant to
Section 18-802 of the LLC Act, and such decree has become final.
(f) Fourth Anniversary of Extension Period Commencement Date.
The fourth anniversary of the Extension Period Commencement Date shall
have occurred and there has been no prior Extension Period Termination
Date.
The Members hereby agree that, notwithstanding any provision of the LLC Act,
Topaz shall not dissolve prior to the occurrence of a Liquidating Event.
Section 12.2 Winding Up. Upon the occurrence of a Liquidating Event,
Topaz shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members, and no Member shall take any action with respect to Topaz
that is inconsistent with the winding up of Topaz's business and affairs;
provided that all covenants contained in this Topaz LLC Agreement and
obligations provided for in this Topaz LLC Agreement shall continue to be fully
binding upon the Members until such time as Topaz Property has been distributed
pursuant to this Section 12.2 and the Topaz Certificate of Formation has been
canceled pursuant to the LLC Act. The Liquidator shall be responsible for
overseeing the winding up and dissolution of Topaz. On the occurrence of a
Liquidating Event, the Gross Asset Values of all of Topaz's assets shall be
adjusted to equal their respective ▇▇▇▇-to Market Values as of the
▇▇▇▇-to-Market Measurement Date and any Net Income, Gross Income, Net Losses and
other items of income, loss, deduction, gain and credit of Topaz shall be
allocated among the Members as of such ▇▇▇▇-to-Market Measurement Date in
accordance with Article IV. The Liquidator shall take full account of Topaz's
liabilities and the Topaz Property and, except as otherwise provided in Section
12.3, shall, within 75 days of the occurrence of a Liquidating Event or, in the
event that the certification by the JV Accountants required by Section 8.2(d)
has not been delivered by such 75th day as soon as practicable after delivery of
such accountant's certification but in any event within 90 days of such
Liquidating Event, cause the Topaz Property or the proceeds from the sale or
disposition thereof (as
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Topaz LLC Agreement
determined pursuant to Section 12.9), to the extent sufficient therefor, to be
applied and distributed, to the maximum extent permitted by Applicable Law and
notwithstanding anything in this Topaz LLC Agreement to the contrary, in the
following order (without duplication):
(a) First, to creditors (including the Topaz Minority Member
to the extent such Member is a creditor, to the extent otherwise
permitted by Applicable Law), other than the Topaz Majority Member, the
Topaz Second El Paso Member and their respective Affiliates, in
satisfaction of all of Topaz's debts and liabilities other than
liabilities for which reasonable provision for payment has been made;
(b) Second, to the payment and discharge of all of Topaz's
debts and liabilities incurred in accordance herewith to the Topaz
Majority Member, the Topaz Second El Paso Member and their respective
Affiliates to the extent adequate provision therefor has not been made;
and
(c) Third, the balance to the Members in accordance with their
respective Capital Accounts, as provided under Article IV, immediately
after giving effect to the adjustments and allocations required by the
third sentence of this Section 12.2.
The Managing Member shall not receive any additional compensation for any
services performed pursuant to this Article XII.
Each of the Topaz Majority Member and the Topaz Second El Paso Member
understands and agrees that by accepting the provisions of this Section 12.2
setting forth the priority of the distribution of the assets of Topaz to be made
upon its liquidation, it expressly waives any right that it, as a creditor of
Topaz, might otherwise have under the LLC Act to receive distributions of assets
pari passu with the other creditors of Topaz in connection with a distribution
of assets of Topaz in satisfaction of any liability of Topaz, and hereby
subordinates to said creditors any such right.
Section 12.3 No Restoration of Deficit Capital Accounts; Compliance
With Timing Requirements of Regulations. In the event Topaz is "liquidated"
within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), (x) Distributions
shall be made pursuant to this Article XII to the Members who have positive
Capital Accounts in compliance with Regulation Section 1.704-1(b)(2)(ii)(b)(2),
and (y) if the Topaz Majority Member's Capital Account, the Topaz Second El Paso
Member's Capital Account or the Topaz Minority Member's Capital Account has a
deficit balance (after giving effect to all contributions, Distributions, and
allocations for all Allocation Periods, including the Allocation Period during
which such liquidation occurs), the Member whose Capital Account has a negative
balance shall have no obligation to contribute to the capital of Topaz the
amount necessary to restore such deficit balance to zero, and such deficit shall
not be considered a debt owed to Topaz or to any other Person for any purpose
whatsoever.
In the discretion of the Liquidator, with the consent of the Members, a
portion (determined in the manner provided below) of the distributions that
would otherwise be made to the Members pursuant to this Article XII may be:
(a) Distributed to a trust established for the benefit of the
Members solely for the purposes of liquidating Topaz Property,
collecting amounts owed to Topaz, and paying
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Topaz LLC Agreement
any contingent or unforeseen liabilities or obligations of Topaz or of
the Managing Member arising out of or in connection with Topaz. The
assets of any such trust shall be distributed to the Members from time
to time, in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by Topaz would
otherwise have been distributed to the Members pursuant to Section
12.2; or
(b) Withheld to provide a reasonable reserve for liabilities
(contingent or otherwise) of Topaz and to allow for the collection of
the unrealized portion of any installment obligations owed to Topaz;
provided, however, that such withheld amounts shall be distributed to
the Members as soon as practicable.
The portion of the distributions that would otherwise have been made to each of
the Members that is instead distributed to a trust pursuant to Section 12.3(a)
or withheld to provide a reserve pursuant to Section 12.3(b) shall be determined
in the same manner as the expense or deduction would have been allocated if
Topaz had realized an expense equal to such amounts immediately prior to
distributions being made pursuant to Section 12.2.
Section 12.4 Deemed Distribution and Recontribution. Notwithstanding
any other provision of this Article XII, in the event Topaz is liquidated within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event
has occurred, the Topaz Property shall not be liquidated, Topaz's debts and
other liabilities shall not be paid or discharged and Topaz's affairs shall not
be wound up. Instead, solely for federal income tax purposes, Topaz shall be
deemed to have contributed all of the Topaz Property and liabilities to a new
limited liability company in exchange for an interest in such new company and,
immediately thereafter, Topaz will be deemed to liquidate by Distributing
interests in the new company to the Members.
Section 12.5 Rights of Members. Each Member shall look solely to the
Topaz Property for the return of its Capital Contribution and, except as
otherwise provided in Section 12.9, shall have no right or power to demand or
receive property other than Cash from Topaz.
Section 12.6 Notice of Dissolution. The Managing Member shall promptly
provide written notice to each of the Members of the occurrence of any
acceleration of the New Notes as a result of a New Indenture Event of Default,
Note Trigger Event, Specified Equity Event, Shareholder Trigger Event or
Liquidating Event in accordance with Section 6.5(b).
Section 12.7 Character of Liquidating Distributions. All payments made
in liquidation of the Topaz Interest of a withdrawing Member (whether pursuant
to Article XI or Article XII, but excluding payments pursuant to Section
12.2(a)), shall be made in exchange for the interest of such Member in Topaz
Property pursuant to Code Section 736(b)(1), including the interest of such
Member in goodwill of Topaz.
Section 12.8 The Liquidator.
(a) Definition. The "LIQUIDATOR" means (i) in the case of any
Liquidating Event described in clause (c) or (e) of Section 12.1, the Topaz
Majority Member or any other Affiliate of El Paso appointed as Liquidator by the
Topaz Majority Member and (ii) in the case of any other Liquidating Event, the
Topaz Minority Member or any other Person appointed as Liquidator by the Topaz
Minority Member.
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Topaz LLC Agreement
The Topaz Majority Member (or the Topaz Minority Member if it may then
appoint the Liquidator) may appoint an appointee to be Liquidator on or prior to
the date on which a Liquidating Event occurs by delivering written notice of
such appointment to the other Members. Any such appointment may be subsequently
withdrawn by similar written notice.
The Liquidator shall have the rights set forth in Section 18-803(b) of
the LLC Act and exclusively shall have the rights, power and authority of the
Managing Member necessary or appropriate in its discretion to effect the
dissolution, winding up and liquidation of Topaz. The actions of the Liquidator
shall for all purposes be the actions of Topaz.
(b) Fees. Topaz is authorized to pay a reasonable fee to the Liquidator
for its services performed pursuant to this Article XII and to reimburse the
Liquidator for its reasonable costs and expenses incurred in performing those
services.
(c) Resignation of Liquidator. At any time any Liquidator may, in its
discretion, resign as Liquidator and the Topaz Majority Member (or the Topaz
Minority Member if it may then appoint the Liquidator) shall appoint a
replacement Liquidator pursuant to Section 12.8(a).
Section 12.9 Form of Liquidating Distributions.
(a) In General. Except as provided in this Section 12.9, for purposes
of making distributions required by Section 12.2, the Liquidator may determine
whether to distribute all or any portion of Topaz Property in-kind or to sell
all or any portion of Topaz Property and distribute the proceeds therefrom,
provided that the Liquidator shall not distribute Topaz Property other than Cash
to the Topaz Minority Member without its consent, and the Liquidator shall be
required to reduce Topaz Property to Cash to the extent necessary to make
distributions to the Topaz Minority Member pursuant to Section 12.2 in Cash.
(b) Topaz Minority Member In-Kind Election. At the election of the
Topaz Minority Member, the Liquidator may be required to distribute all of the
Topaz Property in-kind. In such event, Topaz Property to be distributed to each
Member shall be determined by the Liquidator; provided, that, subject to the
next sentence, distributions to the Topaz Minority Member of any Topaz Property
other than the Emerald Loan or any El Paso Notes or Financial Investments held
by Topaz shall require the consent of all of the Members. If the liquidation of
Topaz is caused by the Bankruptcy of El Paso, the Topaz Majority Member, the
Managing Member, the Topaz Second El Paso Member or Topaz, upon the request of
the Topaz Minority Member and to the extent so requested, the Liquidator shall
distribute to the Topaz Minority Member, to the extent practicable, the Emerald
Loan and any El Paso Notes or Financial Investments held by Topaz.
Section 12.10 Liquidation Notice.
(a) Liquidating Events Prior to Extension Period. Prior to the
Extension Period Commencement Date, the Topaz Minority Member may, at any time
on or after the occurrence of a Note Trigger Event or a Specified Equity Event,
deliver to the Managing Member (and, if the Topaz Majority Member is not the
Managing Member, the Topaz Majority Member) a written notice (a "LIQUIDATION
NOTICE") stating that such Note Trigger Event or such Specified Equity Event
constitutes a Liquidating Event; provided, however, that: (i) the delivery of a
Liquidation Notice shall not become effective to cause a Liquidating Event until
(A) the
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Topaz LLC Agreement
applicable Asset Remedy Standstill Expiration Date or (B) in the case of a
Specified Equity Event, the delivery of such Liquidation Notice; (ii) except in
the case of a Specified Equity Event, the Topaz Minority Member may rescind such
Liquidation Notice by delivering to the Managing Member (and, if the Topaz
Majority Member is not the Managing Member, the Topaz Majority Member) a
rescission notice prior to the applicable Asset Remedy Standstill Expiration
Date; and (iii) except in the case of a Specified Equity Event, if both (x) an
Irrevocable Election has been made by the Topaz Majority Member and a Purchase
Option Notice or Retirement Notice has been delivered pursuant to this Topaz LLC
Agreement on or prior to the applicable Asset Remedy Standstill Expiration Date
and (y) an Irrevocable Election has been made by the Diamond Class B Member and
a Purchase Option Notice or Retirement Notice has been delivered pursuant to the
Diamond LLC Agreement on or prior to the applicable Asset Remedy Standstill
Expiration Date, then no Liquidation Notice shall become effective to cause a
Liquidating Event until the day after the Purchase Date or Retirement Date, as
the case may be, specified in such notices (and then if, but only if, each of
the Topaz Minority Member Interest and the Diamond Class A Member Interest shall
not have been either purchased or retired).
(b) Liquidating Events During Extension Period. The Topaz Minority
Member may, on any date during the Extension Period, elect to cause a
Liquidating Event by delivering to the Managing Member (and, if the Topaz
Majority Member is not the Managing Member, the Topaz Majority Member) a
Liquidation Notice; provided, however, that: (i) the delivery of such
Liquidation Notice shall not become effective to cause a Liquidating Event until
the 10th Business Day following delivery of such Liquidation Notice; (ii) the
Topaz Minority Member may rescind such Liquidation Notice by delivering to the
Managing Member (and, if the Topaz Majority Member is not the Managing Member,
the Topaz Majority Member) a rescission notice prior to such 10th Business Day;
and (iii) if both (x) an Irrevocable Election has been made by the Topaz
Majority Member and a Purchase Option Notice or Retirement Notice has been
delivered pursuant to this Topaz LLC Agreement on or prior to such 10th Business
Day and (y) an Irrevocable Election has been made by the Diamond Class B Member
and a Purchase Option Notice or Retirement Notice has been delivered pursuant to
the Diamond LLC Agreement on or prior to such 10th Business Day, no Liquidation
Notice shall become effective to cause a Liquidating Event until the day after
the Purchase Date or Retirement Date, as the case may be, specified in such
notices (and then if, but only if, each of the Topaz Minority Member Interest
and the Diamond Class A Member Interest shall not have been either purchased or
retired).
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Amendments. No amendment or waiver of any provision of
this Topaz LLC Agreement, and no consent to any departure by any party herefrom,
shall in any event be effective unless the same shall be in writing and signed
by all Members in accordance with Section 9.1. 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.
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Topaz LLC Agreement
Section 13.2 Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Topaz LLC 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 not, on the next succeeding Business Day), if sent by
facsimile (followed by a hard copy of the facsimiled communication sent by
regular mail, postage and charges prepaid), or by courier or delivery service or
by mail, addressed, if to any Member or the Managing Member, to such person at
its address or facsimile number set forth on Schedule 13.2 hereto or to such
other address as such Person may from time to time specify by notice, and if to
any other Person, at its address specified in the Transaction Document pursuant
to which such Person is to receive notice or 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 under
the relevant Transaction Document.
Section 13.3 No Waiver; Cumulative Remedies. No failure on the part of
any Person to exercise, and no delay in exercising, any right under this Topaz
LLC Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Topaz LLC Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Topaz LLC Agreement are cumulative and not exclusive of any
remedies provided by Applicable Law.
Section 13.4 Waiver of Jury Trial. EACH PARTY TO THIS TOPAZ LLC
AGREEMENT 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 TOPAZ LLC AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.5 Counterparts. This Topaz LLC 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 but one and the same agreement.
Delivery of an executed signature page to this Topaz LLC Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof, and the party delivering such signature page by facsimile transmission
shall promptly thereafter deliver to each other party hereto an original, duly
executed counterpart of such signature page.
Section 13.6 Survival of Representations, Warranties and Indemnities:
Entire Agreement. All representations, warranties and indemnities and
undertakings to pay costs and expenses contained in this Topaz LLC Agreement or
made by or on behalf of the parties hereto, as the case may be, in connection
with this Topaz LLC Agreement shall survive (a) the execution and delivery of
this Topaz LLC Agreement and the other Transaction Documents, (b) performance by
each party of its Obligations under this Topaz LLC Agreement and each other
Transaction Document to which it is a party and (c) the Disposition (whether or
not such
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Topaz LLC Agreement
Disposition was a Permitted Transfer) by (i) EPED Holding of all or a portion of
its Topaz Majority Member Interest in Topaz or any termination of its status as
a Topaz Majority Member of Topaz pursuant to this Topaz LLC Agreement or (ii)
any other Member of all or a portion of its Topaz Interest or any termination of
such Person's status as a Member of Topaz, and may be relied upon by the Persons
permitted thereunder, regardless of any investigation made at any time by or on
behalf of such Persons or any such assignee.
Section 13.7 Severability. If any term, provision, covenant or
condition of this Topaz LLC Agreement, or the application thereof to any party
hereto or any circumstance, is held to be unenforceable, invalid or illegal (in
whole or in part) for any reason (in any relevant jurisdiction), the remaining
terms, provisions, covenants and conditions of this Topaz LLC Agreement,
modified by the deletion of the unenforceable, invalid or illegal portion (in
any relevant jurisdiction), will continue in full force and effect, and such
unenforceablity, invalidity or illegality will not otherwise affect the
enforceability, validity or legality of the remaining terms, provisions,
covenants or conditions of this Topaz LLC Agreement so long as this Topaz LLC
Agreement as so modified continues to express, without material change, the
original intentions of the parties hereto as to the subject matter hereof and
the deletion of such portion of this Topaz LLC Agreement will not substantially
impair the respective expectations or reciprocal obligations of the parties
hereto or the practical realization of the benefits that would otherwise be
conferred upon such parties. If any provision hereof is held to be
unenforceable, invalid or illegal as stated above, the parties hereto will
endeavor in good faith negotiations to replace such provision with a valid
provision, the economic effect of which comes as close as possible to that of
the prohibited unenforceable provision.
Section 13.8 Construction. Every covenant, term, and provision of each
Transaction Document shall be construed simply according to its fair meaning and
not strictly for or against any party thereto.
Section 13.9 [Reserved].
Section 13.10 Governing Law. THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS TOPAZ
LLC AGREEMENT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION OF THE
RIGHTS AND DUTIES OF THE MEMBERS.
Section 13.11 Waiver of Action for Partition. Each of the Members
irrevocably waives any right that it may have to maintain any action for
partition with respect to any of the Topaz Property.
Section 13.12 Consent to Jurisdiction. Each Member (i) irrevocably
submits to the jurisdiction of any Delaware State court or federal court sitting
in Wilmington, Delaware and of any New York State court or Federal court sitting
in the Borough of Manhattan in any action arising out of this Topaz LLC
Agreement, (ii) agrees that all claims in such action may be decided in such
court, (iii) waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum and (iv) consents to the service of process by mail. A
final judgment in any such action shall be conclusive and may be enforced in
other jurisdictions. Nothing herein shall
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Topaz LLC Agreement
affect the right of any party to serve legal process in any manner permitted by
law or affect its right to bring any action in any other court.
Section 13.13 Specific Performance. Each Member agrees with the other
Members that the other Members would be irreparably damaged if any of the
provisions of this Topaz LLC Agreement are not performed in accordance with
their specific terms and that monetary damages would not provide an adequate
remedy in such event. Accordingly, it is agreed that, in addition to any other
remedy to which the nonbreaching Members may be entitled, at law or in equity,
the nonbreaching Members shall be entitled to injunctive relief to prevent
breaches of the provisions of this Topaz LLC Agreement and specifically to
enforce the terms and provisions of this Topaz LLC Agreement in any action
instituted in any court of the United States or any state thereof having subject
matter jurisdiction thereof.
Section 13.14 [Reserved].
Section 13.15 Acknowledgement and Consent to Collateral Assignment by
Topaz Minority Member.
(a) Pursuant to the terms of the Indenture, the Topaz Minority Member
has granted a first priority security interest in substantially all of its
assets (including, without limitation, all of the rights of the Topaz Minority
Member under (i) the Topaz Minority Member Interest and (ii) this Topaz LLC
Agreement, but excluding the Excepted Rights) to the Indenture Trustee for the
benefit of the holders from time to time of the Notes. Each of Topaz, the Topaz
Majority Member and the Topaz Second El Paso Member hereby acknowledges and
consents, for the benefit of the Topaz Minority Member and the Indenture
Trustee, on behalf of the holders of the Notes, to such grant by the Topaz
Minority Member to the Indenture Trustee (or to any subsequent transferee
following foreclosure on such security interest) and agrees that the Indenture
Trustee, on behalf of the holders of the Notes (or any subsequent transferee
following foreclosure on such security interest), shall, on or after a Note
Trigger Event have the right to pursue any remedy available to the Topaz
Minority Member under this Topaz LLC Agreement, the other Transaction Documents
or in law to secure the performance by Topaz, the Topaz Majority Member, the
Topaz Second El Paso Member or any other Person of its obligations hereunder or
thereunder.
(b) The parties hereto further acknowledge the rights of action of the
New Indenture Trustee to enforce, and institute and maintain any suit, action or
proceeding against the Investor to enforce, or otherwise act in respect of, the
rights of the New Noteholders under the New Indenture and to maintain any
proceeding against the assets of the Investor to enforce, or levy on, any
judgment resulting therefrom, subject to Section 2.05(f) of the New Indenture.
Section 13.16 Effectiveness. This Topaz LLC Agreement shall take effect
as of the Effective Date.
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IN WITNESS WHEREOF, the undersigned have executed this Topaz LLC
Agreement as of the date above first written.
TOPAZ MINORITY MEMBER:
GEMSTONE INVESTOR LIMITED
By: /s/ ▇. ▇. ▇▇▇▇
--------------------------------------
Name: ▇.▇. ▇▇▇▇
Title: Director
TOPAZ MAJORITY MEMBER:
EPED HOLDING COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
TOPAZ SECOND EL PASO MEMBER:
EL PASO CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Topaz LLC Agreement Signature Page
ACKNOWLEDGED AND AGREED:
EPED HOLDING COMPANY, as Managing Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ACKNOWLEDGED AND AGREED:
TOPAZ POWER VENTURES, L.L.C.
By: EPED HOLDING COMPANY, its Managing Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Topaz LLC Agreement Signature Page