EXHIBIT 1.B
GULFTERRA ENERGY PARTNERS, L.P.
1,118,881 Common Units
80 Series F Convertible Units
PLACEMENT AGENCY AGREEMENT
May 16, 2003
Xxxxxxx Xxxxx & Associates, Inc.
as Placement Agent
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Dear Sir or Madam:
GulfTerra Energy Partners, L.P. (formerly El Paso Energy
Partners, L.P.), a Delaware limited partnership (the "Partnership"), of which
GulfTerra Energy Company, L.L.C., a Delaware limited liability Company (the
"General Partner"), is the general partner, proposes to issue and sell common
units representing limited partner interests in the Partnership (the "Common
Units") in the aggregate amount of 1,118,881 common units ("Purchased Common
Units") and an aggregate of 80 Series F Convertible Units, each comprised of two
separate, detachable units - a Series F1 Convertible Unit and a Series F2
Convertible Unit - representing limited partner interests in the Partnership
("Series F Units" and, together with the Purchased Common Units, the "Units").
The Partnership desires to engage you as its placement agent
(the "Placement Agent") in connection with such offer and sale. The Units are
more fully described in the Registration Statement (as hereinafter defined).
The Partnership and the Placement Agent hereby agree as
follows:
1. Agreement to Act as Placement Agent. On the basis of the
representations, warranties and agreements of the Partnership herein contained
and subject to all the terms and conditions of this agreement (the "Agreement"),
the Placement Agent agrees to act as the exclusive placement agent in connection
with the issuance and sale, on a best efforts basis, by the Partnership of the
Units to the Investor. The Partnership shall pay to the Placement Agent 3.00% of
the gross proceeds received from the sale of the Units, as set forth on the
cover page of the Prospectus, at the Closing, and 3.00% of the gross
consideration (in the form of cash, indebtedness of the Partnership valued at
the aggregate principal amount then outstanding plus accrued but unpaid interest
to the date of tender or some combination of the two) received by the
Partnership upon each conversion of Series F Units, as soon as practical
following such conversion.
2. Delivery and Payment. On the date hereof (the "Closing
Date"), the Partnership issued to an investor (the "Investor") the Units at an
aggregate purchase price of $40,000,000.00.
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3. Representations and Warranties. The Partnership represents
and warrants to the Placement Agent as of the date hereof that:
(a) The Partnership has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(file number 333-81772) on Form S-3, including a related base prospectus, for
registration under the Securities Act of 1933, as amended (the "Act"), of the
offering and sale of the Units, and Amendment No. 1 thereto on Form S-3 (the
"Initial Registration Statement"). At the time of the filing of Amendment No. 1
and on the effective date of the Initial Registration Statement, the Partnership
met the requirements for use of Form S-3 under the Act. The Initial Registration
Statement and any post-effective amendment thereto, each in the form heretofore
delivered to you, have been declared effective by the Commission in such form.
Other than (i) a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Act, which shall become effective upon filing, (ii) documents
incorporated by reference in the base prospectus contained in the Initial
Registration Statement, (iii) any amendment or supplement filed thereto and any
documents incorporated by reference to such amendment or supplement, no other
document with respect to the Initial Registration Statement has heretofore been
filed with the Commission. No stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission. The various
parts of the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including (x) the
information contained in the form of a final prospectus supplement relating to
this offering to the base prospectus included in the Initial Registration
Statement, which will be filed with the Commission on or before the date hereof
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement and (y) the documents incorporated by reference in such
final prospectus supplement are hereinafter collectively called the
"Registration Statement." Such final prospectus supplement, in the form first
filed pursuant to Rule 424(b) under the Act, together with the base prospectus
included in the Initial Registration Statement along with any subsequently filed
amendments, supplements or other documents incorporated therein, is hereinafter
called the "Prospectus." Any reference herein to the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Act, as of the date of such Prospectus, as the
case may be. Any reference to any amendment or supplement to the Prospectus
shall be deemed to refer to and include any documents filed after the date of
such Prospectus, as the case may be, under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and incorporated by reference in such
Prospectus, as the case may be. Any reference to any amendment or supplement to
the Registration Statement or Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of the
Prospectus, as the case may be, deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be, as well as the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act.
(b) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and the rules and regulations
of the Commission thereunder, and none of such
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documents contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that the foregoing representations and warranties in this Section 3(b)
shall not apply to any statements or omissions made in reliance upon and in
conformity with information concerning the Agent furnished in writing to the
Partnership by the Placement Agent expressly for use therein.
(c) No order preventing or suspending the use of any
Prospectus has been issued by the Commission. The Registration Statement
conforms, and the Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all material respects
to the requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not: (i) with respect to the Registration
Statement, as of the applicable effective date as to the Registration Statement
and any amendment thereto contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) with respect to the Prospectus, as of
the applicable filing date as to the Prospectus and any amendment or supplement
thereto, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and warranties
in this Section 3(c) shall not apply to any statements or omissions made in
reliance upon and in conformity with information concerning the Agent furnished
in writing to the Partnership by the Placement Agent expressly for use therein.
(d) The Partnership has been duly formed and is validly
existing as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act (the "Delaware Act"), with full partnership power and authority
to own or lease, as the case may be, and to operate its properties and conduct
its business as described in the Registration Statement and as described in the
Prospectus, and has been qualified or registered to do business as a foreign
limited partnership and is in good standing under the laws of each jurisdiction
that requires such qualification, other than any jurisdiction where the failure
to be so qualified would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business or
properties of the Partnership and its Subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business. "Subsidiary"
of any person or entity means any corporation, limited liability company,
partnership (general or limited), joint venture or other legal entity of which
such person or entity (either alone or through or together with any other
Subsidiary), owns more than 50% of the stock or other equity interests the
holder of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation, limited liability
company, partnership, joint venture or other legal entity.
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(e) The Partnership and its Subsidiaries have good and
marketable title to all property (real and personal) described the Registration
Statement and in the Prospectus as currently being owned by each of them, free
and clear of all liens, claims, security interests or other encumbrances, except
(1) such as are described or referred to in the Registration Statement and the
Prospectus, (2) such as do not materially interfere with the ownership or
benefits of ownership of such property, and (3) for Permitted Encumbrances. All
the property described in the Registration Statement and the Prospectus as
currently being held under lease by the Partnership or a Subsidiary is held
thereby under valid, subsisting and enforceable leases, subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer and conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, (ii) general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and (iii) securities
laws and public policy underlying such laws with respect to rights to
indemnification and contribution (such exceptions described in clauses (i), (ii)
and (iii) referred to as "Enforceability Exceptions").
(f) The General Partner has been duly organized and is
validly existing as a limited liability company in good standing under the laws
of the State of Delaware, with full limited liability company power and
authority to own or lease, as the case may be, and to operate its properties, to
conduct its business and to act as general partner of the Partnership, as
described in the Registration Statement and as described in the Prospectus, and
has been qualified or registered to do business as a foreign entity and is in
good standing under the laws of each jurisdiction which requires such
qualification, other than any jurisdiction where the failure to be so qualified
would not, individually or in the aggregate: (i) have a material adverse effect
on the condition (financial or otherwise), earnings, business or properties of
the Partnership and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, or (ii) subject the
limited partners of the Partnership to any material liability or disability.
(g) The General Partner is the sole general partner of the
Partnership with a 1.0% general partner interest in the Partnership. Such
general partner interest is duly authorized and validly issued to the General
Partner in accordance with the Second Amended and Restated Agreement of Limited
Partnership of the Partnership (as amended, the "Partnership Agreement"), which
Partnership Agreement, has been duly authorized, executed and delivered by the
General Partner and is a valid and legally binding agreement of the General
Partner, enforceable against the General Partner in accordance with its terms,
subject to the Enforceability Exceptions. The General Partner owns such general
partner interest free and clear of any lien, adverse claim, security interest or
other encumbrance, other than any lien, adverse claim, security interest or
other encumbrance created by or arising under (i) the Delaware Act; (ii) the
Sixth Amended and Restated Credit Agreement among the Partnership, El Paso
Energy Partners Finance Corporation, the several lenders from time to time
parties thereto, and JPMorgan Chase Bank, as Administrative Agent, dated as of
March 23, 1995, as amended and restated through November 21, 2002, and the
collateral documents related thereto (the "Credit Agreement"); (iii) the Amended
and Restated Credit Agreement among EPN Holding Company, L.P., the lenders party
thereto, Banc One Capital Markets, Inc. and Wachovia Bank, National Association,
as Co-Syndication Agents, Fleet National Bank and Fortis Capital Corp., as
Co-Documentation Agents, and JPMorgan Chase Bank, as Administrative Agent, dated
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April 8, 2002, as amended and restated through November 21, 2002, the indenture
into which the Partnership entered on November 27, 2002, and the related
collateral documents ("EPN Holdings Term Loan"); (iv) the credit agreement to
which Poseidon Oil Pipeline Company, L.L.C., a Delaware limited liability
company in which a Subsidiary of the Partnership owns a 36% membership interest,
is party, and the collateral documents related thereto; (v) the financial
arrangements to which Sabine River Investors I, L.L.C. ("Sabine I"), Sabine
River Investors II, L.L.C. ("Xxxxxx XX"), DeepTech International Inc.
("DeepTech"), El Paso EPN Investments, L.L.C. ("EPN Investments"), El Paso
Corporation, a Delaware corporation ("El Paso Corporation") or GulfTerra GP
Holding Company, a Delaware corporation ("GulfTerra Holding") are parties; (vi)
the indenture into which the Partnership entered on May 27, 1999, as amended and
supplemented; (vii) the indenture into which the Partnership entered on May 17,
2001, as amended and supplemented, (viii) the indenture into which the
Partnership entered on March 24, 2003; and (ix) the credit agreement to which
Deepwater Gateway, L.L.C., a Delaware limited liability company in which a
Subsidiary of the Partnership owns a 50% membership interest ((i)-(ix) the
"Permitted Encumbrances") all as disclosed in the Registration Statement and the
Prospectus.
(h) Sabine I and Xxxxxx XX own 11,674,245 Common Units,
DeepTech owns (prior to the General Partner making the contribution required in
connection with the issuance of the Units to maintain its 1% capital account
balance) 124,584 Series B preference units representing limited partner
interests in the Partnership ("Series B Preference Units"), and EPN Investments
owns 10,937,500 Series C units representing limited partner interests in the
Partnership ("Series C Units") all as disclosed in the Prospectus. All of such
Common Units, Series B Preference Units and Series C Units and the limited
partner interests represented thereby have been duly authorized and validly
issued and are fully paid and nonassessable (except as such nonassessability may
be affected by the Delaware Act); and Sabine I, Xxxxxx XX, DeepTech and EPN
Investments own such limited partner interests free and clear of any lien,
adverse claim, security interest or other encumbrance, other than Permitted
Encumbrances.
(i) The Partnership's authorized and outstanding
partnership interests are as set forth in the Prospectus. The partnership
interests of the Partnership and the Partnership Agreement conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus. All of the outstanding Common Units and the
limited partner interests represented thereby have been duly and validly
authorized and issued, are fully paid and nonassessable (except as such
nonassessability may be affected by the Delaware Act) and are free of any
preemptive or similar rights, except as set forth in the Partnership Agreement.
The Units and the limited partner interests represented thereby have been duly
and validly authorized and, when issued, delivered and paid for by the Investor
pursuant to this Agreement, are fully paid and nonassessable (except as such
nonassessability may be affected by the Delaware Act) and free of any preemptive
rights or similar rights, except as set forth in the Partnership Agreement, and
the Investor has acquired the Units free and clear of any lien, adverse claim,
security interest, equity or other encumbrance. No options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, partnership
interests or ownership interests in the Partnership are outstanding, other than:
(i) as set forth in the Partnership Agreement and (ii) those granted pursuant to
compensation or option plans disclosed in the Partnership's Annual Report on
Form 10-K for the year ended December 31, 2002 (the "Existing Commitments"). The
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Common Units that may be issued upon conversion of the Series F Units have been
duly authorized and, when issued, delivered and paid for in accordance with the
Statement of Series F Convertible Unit of the Partnership, will be duly and
validly authorized issued, fully paid and nonassessable (except as such
nonassessability may be affected by the Delaware Act) and free of any preemptive
or similar rights, except as set forth in the Partnership Agreement.
(j) All of the issued and outstanding membership interests
of the General Partner have been duly and validly issued, are fully paid and
nonassessable, and are owned by GulfTerra Holding, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except for
Permitted Encumbrances. GulfTerra Holding is an indirect, wholly-owned
Subsidiary of El Paso Corporation.
(k) The entities listed on Schedule A are the only
Subsidiaries of the Partnership. All of the outstanding shares of capital stock,
limited partner interests, general partner interests or limited liability
company interests of each of the Partnership's Subsidiaries (other than the
Chaco Liquids Plant Trust) have been duly and validly authorized and issued and
are fully paid and (except (i) as required to the contrary by the Delaware
Limited Liability Company Act and the Delaware Act and (ii) with respect to any
general partner interests) nonassessable, and, except as otherwise set forth in
Schedule A are owned by the Partnership, directly or indirectly through one or
more wholly-owned Subsidiaries, free and clear of any lien, adverse claim,
security interest or other encumbrance, other than Permitted Encumbrances.
(l) Chaco Liquids Plant Trust has been properly
constituted under the laws of the State of Massachusetts. The Partnership is the
sole beneficiary of the Chaco Liquids Plant Trust, free and clear of any lien,
adverse claim, security interest or other encumbrance, other than Permitted
Encumbrances.
(m) Each of the Partnership's Subsidiaries has been duly
formed or incorporated and is validly existing as a corporation, limited
partnership, general partnership or limited liability company in good standing
(except in the case of good standing with respect to general partnerships) under
the laws of the jurisdiction in which it is chartered or organized, with full
entity power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as set forth in the Registration
Statement and as described in the Prospectus, and is duly qualified to do
business as a corporation, limited partnership, general partnership or limited
liability company and is in good standing (except in the case of good standing
with respect to general partnerships) under the laws of each jurisdiction listed
on Schedule B, which are the only jurisdictions that require such qualification,
other than any jurisdiction where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
(n) There is no material franchise, contract or other
document of a character required to be described in the Registration Statement
and the Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required. The statements in the Registration Statement and the
Prospectus under the headings "Description of Limited Partner Interests,"
"Certain Other Partnership Agreement Provisions," "Income Tax Considerations,"
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"Investments By Employee Benefits Plans" and "Recent tax developments" insofar
as such statements summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.
(o) This Agreement has been duly authorized, executed and
delivered by the Partnership and constitutes a valid and binding obligation of
the Partnership enforceable against the Partnership in accordance with its
terms, subject to Enforceability Exceptions.
(p) Each of the Partnership and the General Partner is not
and, after giving effect to the offering and sale of the Units and the
application of the proceeds thereof as described in the Prospectus, will not be
(i) an "investment company" as defined in the Investment Company Act of 1940, as
amended or (ii) a "holding company" within the meaning of, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended,
and the rules and regulations promulgated by the Commission thereunder.
(q) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained under
the Act (except for the filing of the Prospectus pursuant to Rule 424(b)
promulgated under the Act) and such as may be required by the New York Stock
Exchange for listing the Common Units or under the blue sky laws of any
jurisdiction in connection with the purchase of the Units by the Investor in the
manner contemplated herein and in the Prospectus.
(r) Neither the issue and sale of the Units nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, or result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Partnership or any of its Subsidiaries or the General Partner
pursuant to, (i) the partnership agreement, limited liability company agreement,
charter, by-laws or similar organizational document of the Partnership or any of
its Subsidiaries or the General Partner, as applicable, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Partnership or any of its Subsidiaries or the General Partner is a
party or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Partnership or any of its Subsidiaries or the General Partner of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Partnership or any of its Subsidiaries or
the General Partner or any of its or their properties, except, in the case of
(ii) and (iii), where such conflict, breach, violation or imposition would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
(s) No holders of securities of the Partnership have
rights to the registration of such securities under the Registration Statement,
except for such rights (i) of the General Partner and its affiliates in Section
6.14 of the Partnership Agreement; (ii) of Xxxxxx XX pursuant to the
Registration Rights Agreement executed in connection with the acquisition by the
Partnership of an additional interest in Viosca Xxxxx Gathering Company; (iii)
of DeepTech
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pursuant to the Registration Rights Agreement executed in connection with the
acquisition by the Partnership of the Crystal storage facilities; and (iv) of El
Paso Corporation pursuant to the Registration Rights Agreement between El Paso
Corporation and the Partnership dated as of November 27, 2002, which relates to
the Series C Units.
(t) The consolidated historical financial statements and
schedules of the Partnership and its consolidated subsidiaries included in the
Registration Statement and the Prospectus present fairly in all material
respects the financial condition, results of operations, cash flows and changes
in financial position of the Partnership and its consolidated subsidiaries as of
the dates and for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
(u) No action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving the
Partnership or any of its Subsidiaries or the General Partner or its or their
respective assets or properties is pending or, to the knowledge of the
Partnership or the General Partner, threatened that (i) would reasonably be
expected to have a material adverse effect on the performance of this Agreement
or the consummation of any of the transactions contemplated hereby or (ii) would
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of the Partnership
and its Subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in the Registration
Statement or the Prospectus.
(v) Each of the Partnership, its Subsidiaries and the
General Partner owns or leases all such properties as are necessary to the
conduct of its operations as presently conducted, except where the lack of such
ownership or leasing would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), earnings,
business or properties of the Partnership and its Subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business.
(w) Each of the Partnership and its Subsidiaries own, or
have obtained valid and enforceable licenses for, or other rights to use, the
inventions, patents, trademarks, tradenames, copyrights, trade secrets and other
proprietary information (collectively, "Intellectual Property") described in the
Registration Statement and the Prospectus as being owned or licensed by them or
which are necessary for the conduct of their respective businesses, except where
the failure to own, license or have such rights would not, individually or in
the aggregate, have a material adverse effect on the condition (financial or
otherwise), earnings, business or properties of the Partnership and its
Subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business. Neither the Partnership nor any of its Subsidiaries
has received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property invalid
or inadequate to protect the interest of any of the Partnership or its
Subsidiaries, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or
in the aggregate, could reasonably be expected to result in a material adverse
effect on the condition (financial or otherwise), earnings, business or
properties of the Partnership and its Subsidiaries, taken as a whole.
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(x) None of the Partnership, any of its Subsidiaries or
the General Partner is in violation or default of (i) any provision of its
partnership agreement, limited liability company agreement, charter, by-laws or
similar organizational document, as applicable, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or, to
the knowledge of the General Partner and the Partnership, any other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject, or (iii) to the knowledge of the General
Partner and the Partnership, any statute, law, rule, regulation, judgment, order
or decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Partnership or
such Subsidiary or the General Partner or any of their respective properties,
except, in the case of (ii) and (iii), where such violation or default would not
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
(y) PricewaterhouseCoopers, LLP, who have certified
certain financial statements of each of the Partnership and its consolidated
subsidiaries, Poseidon Oil Pipeline Company, L.L.C., the General Partner and its
consolidated subsidiaries, GulfTerra Energy Finance Corporation, GulfTerra Texas
Pipeline, L.P., El Paso Gas Storage Company, El Paso Hub Services L.L.C., the
assets and businesses referred to as the "El Paso Field Services Gathering and
Processing Businesses," the "El Paso Field Services San Xxxx Gathering and
Processing Businesses," the "Typhoon Gas Pipeline," the "Typhoon Oil Pipeline"
and the "Coastal Liquids Partners NGL Business" in the applicable financial
statements, and delivered their report with respect to the audited financial
statements and schedules for such entities, assets and businesses included in or
incorporated by reference into the Prospectus, are independent public
accountants as required by the Act and the applicable published rules and
regulations thereunder. Xxxxxx Xxxxxxxx, LLP, who have previously certified
certain financial statements of Poseidon Oil Pipeline Company, L.L.C. and
previously delivered their report with respect to the audited financial
statements and schedules included in or incorporated by reference into the
Prospectus, are independent public accountants with respect to Poseidon Oil
Pipeline Company, L.L.C. as required by the Act and the applicable rules and
regulations thereunder.
(z) The Partnership and each of its Subsidiaries maintains
insurance covering its properties, operations, personnel and businesses as the
Partnership deems adequate and as previously disclosed to the Placement Agent;
such insurance insures against such losses and risks to an extent which is
consistent with insurance coverage maintained by similar companies and
businesses; all such insurance is fully in force on the date hereof and will be
fully in force at the time of purchase and any additional time of purchase.
(aa) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance or sale of the Units or the conversion of any
Series F Unit.
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(bb) Each of the Partnership, its Subsidiaries and the
General Partner has filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof (except in any case
in which the failure so to file would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
earnings, business or properties of the Partnership and its Subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary course of
business), except as set forth in the Prospectus and has paid all taxes required
to be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as would not, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), earnings, business or properties of
the Partnership and its Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in the
Registration Statement and the Prospectus.
(cc) No labor problem or dispute with the employees of the
Partnership or any of its Subsidiaries or the General Partner exists or is
threatened or, to the Partnership's Knowledge or the General Partner's
Knowledge, imminent, and neither the Partnership nor the General Partner is
aware of any existing or imminent labor disturbance by the employees of any of
its or its Subsidiaries' principal suppliers, contractors or customers, that
would, individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in the
Registration Statement and the Prospectus.
(dd) Except as contemplated in the documents under which
Permitted Encumbrances arise, no Subsidiary of the Partnership is currently
prohibited, directly or indirectly, from paying any dividends to the
Partnership, from making any other distribution on such Subsidiary's capital
stock, limited liability company interests or other equity interests, from
repaying to the Partnership any loans or advances to such Subsidiary from the
Partnership or from transferring any of such Subsidiary's property or assets to
the Partnership or any other Subsidiary of the Partnership, except as described
in the Registration Statement and the Prospectus.
(ee) Each of the Partnership, its Subsidiaries and the
General Partner (i) possesses all licenses, certificates, permits and other
authorizations issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and (ii) has not
received any notice of proceedings relating to the revocation or modification of
any such license, certificate, authorization or permit which, in the case of (i)
and (ii) singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, or otherwise, would have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in the
Registration Statement and the Prospectus.
(ff) Except as otherwise set forth in the Registration
Statement and the Prospectus, such as are not material to the condition
(financial or otherwise), earnings, business or properties of the Partnership
and its Subsidiaries, taken as a whole, or as do not materially
10
interfere with ownership or benefits of ownership of such properties, taken as a
whole, and except for Permitted Encumbrances, the Partnership and its
Subsidiaries have good and defensible title to their interests in their oil and
gas properties.
(gg) The information that was supplied by the Partnership
to Netherland, Xxxxxx & Associates, Inc. ("Netherland & Xxxxxx"), independent
petroleum engineers, for purposes of evaluating the oil and gas reserves of the
Partnership and its subsidiaries as of December 31, 2002, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was, to the knowledge of the Partnership, true and correct in all
material respects on the dates such estimates were made and such information was
supplied and was prepared in accordance with customary industry practices, as
indicated in the letter of Netherland & Xxxxxx dated May 9, 2003 (the
"Netherland & Xxxxxx Letter"); to the Partnership's knowledge, Netherland &
Xxxxxx was, as of the date of the Netherland & Xxxxxx Letter, and is, as of the
date hereof, independent with respect to the Partnership and its Subsidiaries;
other than normal production of the reserves and intervening spot market product
price fluctuations, the Partnership is not aware of any facts or circumstances
that would result in a materially adverse change in the reserves, or the present
value of future net cash flows therefrom, as described in the Registration
Statement and the Prospectus and as reflected in the Netherland & Xxxxxx Letter
and the reserve report referenced therein; estimates of such reserves and
present values as described in the Registration Statement and the Prospectus and
reflected in the Netherland & Xxxxxx Letter and the reserve report referenced
therein comply in all material respects to the applicable requirements of
Regulation S-X and Industry Guide 2 under the Act.
(hh) Any statistical and market-related data included in
the Registration Statement and the Prospectus are based on or derived from
sources that the Partnership believes to be reliable and accurate, and the
Partnership has obtained the written consent to the use of such data from such
sources to the extent required.
(ii) Each of the Partnership and its Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(jj) None of the Partnership, the General Partner or their
respective affiliates has taken, directly or indirectly, any action designed to
or which has constituted or which would reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Partnership to facilitate the sale or resale of
the Units.
(kk) The Partnership, its Subsidiaries and the General
Partner are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic
11
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants,
except where such non- compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in the
Prospectus. Except as set forth in the Registration Statement and the
Prospectus, to the knowledge of the Partnership, none of the Partnership, any of
its Subsidiaries or the General Partner have been named as a "potentially
responsible party" under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1989, as amended.
(ll) In the ordinary course of its business, the
Partnership periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Partnership and its Subsidiaries, in
the course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such review,
the Partnership has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business or
properties of the Partnership and its Subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business, except as set
forth in the Registration Statement and the Prospectus.
(mm) Each of the Partnership, its Subsidiaries and the
General Partner has fulfilled its obligations, if any, under the minimum funding
standards of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income
Security Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of the
Partnership, its Subsidiaries and the General Partner are eligible to
participate and each such plan is in compliance in all material respects with
the presently applicable provisions of ERISA and such regulations and published
interpretations. The Partnership and its Subsidiaries and the General Partner
have not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary course) or
to any such plan under Title IV of ERISA.
(nn) Each of the Partnership, its Subsidiaries and the
General Partner has such consents, easements, rights-of-way or licenses from any
person ("rights-of-way") as are necessary to conduct its business in the manner
as described in the Prospectus, subject to such qualifications as set forth in
the Prospectus, except for such rights-of-way which, if not obtained, would,
singly or in the aggregate, be expected not to have a have a material adverse
effect on the condition (financial or otherwise), earnings, business or
properties of the Partnership and its Subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business. Each of the
Partnership, its Subsidiaries and the General Partner has fulfilled and
12
performed all its material obligations with respect to such rights-of-way and no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or would result in any impairment of the
rights of the holder of any such rights-of-way, except for such revocations,
terminations and impairments that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business or properties of the
Partnership and its Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, subject in each case to such
qualifications as may be set forth in the Prospectus; and except as set forth in
the Prospectus, none of such rights-of-way contains any restriction that is
materially burdensome to the Partnership and its Subsidiaries, taken as a
whole.
(oo) The Partnership has not sent or received any
communication regarding termination of, or intent not to renew, any of the
contracts or agreements referred to or described in, or filed as an exhibit to,
the Registration Statement, and no such termination or non-renewal has been
threatened by the Partnership or, to the Partnership's knowledge, any other
party to any such contract or agreement, except where such termination or
non-renewal would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business or
properties of the Partnership and its Subsidiaries, taken as a whole.
(pp) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (i) any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or otherwise),
earnings, business properties or results of operations of the Partnership and
the Subsidiaries taken as a whole, (ii) any transaction which is material to the
Partnership and the Subsidiaries taken as a whole, (iii) any obligation, direct
or contingent (including any off-balance sheet obligations), incurred by the
Partnership or the Subsidiaries, which is material to the Partnership and the
Subsidiaries taken as a whole, or (iv) any change in the capital stock or
outstanding indebtedness of the Partnership or the Subsidiaries.
(qq) The Partnership has provided you true, correct, and
complete copies of all documentation pertaining to any outstanding extension of
credit in the form of a personal loan made, directly or indirectly, by the
Partnership to any executive officer of the Partnership or director of the
General Partner, or to any family member or affiliate of any executive officer
of the Partnership or director of the General Partner. Since July 30, 2002, the
Partnership has not, directly or indirectly, including through any subsidiary:
(i) extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any executive officer of the
Partnership or director of the General Partner, or to or for any family member
or affiliate of any executive officer of the Partnership or director of the
General Partner; or (ii) made any material modification, including any renewal
thereof, to any term of any personal loan to any executive officer of the
Partnership or director of the General Partner, or any family member or
affiliate of any executive officer of the Partnership or director of the General
Partner, which loan was outstanding on July 30, 2002.
(rr) Neither the Partnership nor any of its Subsidiaries
nor, to the Partnership's knowledge, any employee or agent of the Partnership or
its Subsidiaries has made any payment of funds of the Partnership or its
Subsidiaries or received or retained any funds in
13
violation of any law, rule or regulation, which payment, receipt or retention of
funds is of a character required to be disclosed in the Registration Statement
or the Prospectus.
4. Agreements of the Partnership. The Partnership hereby
agrees with the Placement Agent as follows:
(a) to qualify, as necessary, the Units for offer and sale
to the Investor under the securities or blue sky laws of Texas, California, New
York and Delaware; provided that the Partnership shall not be required to
qualify as a foreign corporation or to consent to the service of process under
the laws of any such state (except service of process with respect to the
offering and sale of the Units); and to promptly advise you of the receipt by
the Partnership of any notification with respect to such qualifications, or the
initiation or threatening of any proceeding with respect to such qualifications;
(b) if not filed substantially contemporaneously with the
execution and delivery of this Agreement, to file the Prospectus in a form
approved by you pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement;
(c) (i) to advise you promptly upon receipt of notice from
the Commission or any state securities regulator of any action, request, order
or proceeding that is being or will be taken or given by it with respect to the
offering of the Units, or the Prospectus and Registration Statement in
connection with the offering of the Units, or the happening of any event that
would require the making of any change in the Prospectus in connection with the
offering of the Units so that the Prospectus would not include an untrue
statement of material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under and the date on
which they are made, not misleading, (ii) to furnish you with drafts of any
proposed amendments or supplements to the Prospectus or Registration Statement
that may be necessary as a result of any such action, request, order or
proceeding or the happening of any such event in advance of such filing and
(iii) to file no such amendment or supplement which shall be disapproved by you
promptly after reasonable notice thereof; provided that you will not
unreasonably disapprove any such amendment or supplement;
(d) to make generally available to its unitholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) of the
Act), an earnings statement of the Partnership complying with Section 11(a) of
the Act;
(e) to apply the net proceeds from the sale of the Units
in the manner set forth under the caption "Use of Proceeds" in the Prospectus;
(f) to use its best efforts to cause the Common Units to
be listed on the New York Stock Exchange;
(g) to maintain a transfer agent and, if necessary under
the jurisdiction of formation of the Partnership, a registrar for the Units;
14
(h) the Placement Agent may not, without the Placement
Agent's prior consent (which will not be unreasonably withheld), be quoted or
referred to in any document, release or communication prepared, issued or
transmitted by the Partnership or the General Partner, including any entity
controlled by the Partnership or the General Partner, and any director, officer,
employee or agent thereof, except for (i) disclosures required by legal process,
(ii) disclosures required by law, (iii) disclosures required by the New York
Stock Exchange, and (iv) the filing of the Prospectus and this Agreement with
the Commission and the New York Stock Exchange; and
(i) that, following the Closing, the Placement Agent shall
have the right to place usual and customary advertisements in financial and
other newspapers and journals, at its own expense, describing its services to
the Partnership, but any disclosures of information concerning the Investor
(including its identity) must be approved by the Investor.
5. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Partnership
shall pay all costs and expenses incident to the performance of the obligations
of the Partnership under this Agreement (other than any fees, disbursements and
other charges of counsel for the Placement Agent except as set forth in (5) and
(6) below and in the last sentence of this Section), including but not limited
to costs and expenses of or relating to (1) the preparation, printing and filing
of the Registration Statement (including each pre- and post-effective amendment
thereto) and exhibits thereto, the Prospectus and any amendment or supplement to
the Prospectus, including all fees, disbursements and other charges of counsel
to the Partnership, (2) the preparation and delivery of certificates
representing the Units, (3) the listing of the Common Units on the New York
Stock Exchange, (4) any filings required to be made by the Placement Agent with
the National Association of Securities Dealers, Inc. and the fees, disbursements
and other charges of counsel for the Placement Agent in connection therewith,
(5) the registration or qualification of the Units for offer and sale under the
securities or blue sky laws of such jurisdictions designated pursuant to Section
4(a), and (6) fees, disbursements and other charges of counsel to the
Partnership; provided, however, that the Placement Agent shall reimburse the
Partnership for the fees and expenses paid by the Partnership to an independent
financial advisor that values the Series F Units (not to exceed $100,000). The
Partnership shall promptly reimburse the Placement Agent, without duplication,
on a fully accountable basis, for all travel, legal and other out-of-pocket
expenses incurred in connection with the engagement hereunder, except as
provided above, not to exceed $15,000 in the aggregate.
6. Indemnification.
(a) The Partnership agrees to indemnify and hold harmless
the Placement Agent, together with their respective officers, directors,
shareholders, employees and agents, and each person, if any, who controls the
Placement Agent and any of its affiliates within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act (all of the foregoing are referred to
collectively as "Indemnified Parties" and individually as an "Indemnified
Party"), from and against any and all losses, suits, actions, judgments,
penalties, fines, costs, expenses, damages, liabilities or claims of any kind or
nature, whether joint or several, (including, without limitation, any
investigative, legal or any other expenses as they are reasonably incurred by an
Indemnified Party in connection with, and any amount paid in settlement of, the
preparation for
15
or defense of any action, claim or proceeding asserted, whether or not resulting
in any liability) (all of the foregoing being collectively defined as "Claims")
to which such Indemnified Party may become subject or liable or which may be
incurred by or assessed against any Indemnified Party under any statute, common
law, contract or otherwise, to the extent relating to or arising out of any of
("Indemnified Claims"): (i) any untrue statement or alleged untrue statement
made by the Partnership in Section 3 of this Agreement, (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus arising out of or relating to this
offering or the subject matter of this Agreement and (B) any application or
other document, or any amendment or supplement thereto, executed by the
Partnership based upon written information furnished by or on behalf of the
Partnership filed in any jurisdiction in order to qualify the Units under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or (iii)
the omission or alleged omission to state in the Registration Statement or the
Prospectus or any supplement to the Registration Statement or the Prospectus or
any Application a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that neither the Partnership nor the
General Partner will be liable to the extent that such Claim arises from the
sale of the Units in the public offering to any person and is based solely on an
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Placement Agent
furnished in writing to the Partnership by the Placement Agent expressly for
inclusion in the Registration Statement or the Prospectus; provided, further,
that the Partnership shall not be liable to an Indemnified Party in any such
case solely to the extent that any Claim is found, in a final, unappealable
judgment by a court of competent jurisdiction, to have resulted solely and
exclusively and as a direct and proximate cause from any Indemnified Party's
willful misconduct or gross negligence in the performance of their duties. This
indemnity agreement will be in addition to any liability which the Partnership
may otherwise have. The Partnership will not, without the prior written consent
of the Placement Agent (which will not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment in any pending or threatened
Claim in respect of which indemnification may be sought hereunder (whether or
not such Placement Agent or any person who controls such Placement Agent within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a
party to each Claim), unless such settlement, compromise or consent includes an
unconditional release of the Placement Agent and each such controlling person
from all liability arising out of such Claim.
(b) If for any reason (other than as specifically provided
herein) the indemnity for an Indemnified Claim as provided by Section 6(a) of
this Agreement is unavailable to an Indemnified Party or insufficient to fully
hold any Indemnified Party harmless, then the Partnership shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
Indemnified Claim in such proportion as is appropriate to reflect the relative
benefits received by and fault of the Partnership on the one hand, and the
relative benefits received by and fault of the Indemnified Party on the other
hand, as well as any relevant equitable considerations. Notwithstanding any
provisions herein to the contrary, the aggregate contribution of all of the
Indemnified Parties for all Indemnified Claims shall not exceed the amount of
fees actually received by the Placement Agent pursuant to the Agreement. It is
hereby further agreed that the relative fault of the Partnership on the one hand
and an Indemnified Party on the other hand with respect to the transactions
shall be determined by reference to, among
16
other things, whether any untrue or alleged untrue statement of a material fact
or incorrect opinion or conclusion or the omission or alleged omission to state
a material fact related to information supplied by the Partnership on the one
hand or by the Indemnified Party on the other hand, as well as the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, opinion, conclusion or omission. No Indemnified Party
shall have any liability to the Partnership or any other person in connection
with the services rendered pursuant to this Agreement except for any liability
for Claims finally judicially determined to have resulted solely and exclusively
from actions taken or omitted to be taken as a direct result of any Indemnified
Party's gross negligence or willful misconduct. The indemnity, contribution and
expense reimbursement agreements and obligations set forth herein shall be in
addition to any other rights, remedies or indemnification which any Indemnified
Party may have or be entitled to at common law or otherwise, and shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Indemnified Party. The Partnership further agree that the
indemnity, contribution and expense reimbursement agreements and obligations set
forth herein shall apply whether or not the Placement Agent or any other
Indemnified Party is a formal party in any such Indemnified Claim. The
Partnership will not be permitted to settle any Indemnified Claim without the
prior consent of the Placement Agent or any Indemnified Party involved therein
if any admission of wrong doing, negligence or improper activity of any kind of
the Placement Agent or such Indemnified Party is a part of such settlement. The
Partnership shall not, without the prior written consent of an Indemnified
Party, effect any settlement of any pending or threatened action, suit or
proceeding in respect of which an Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on matters that are the subject matter of such Claim.
(c) The Placement Agent agrees to indemnify and hold
harmless each of the Partnership and the General Partner, together with their
respective officers, directors, shareholders, employees and agents, and each
person, if any, who controls the Partnership or the General Partner and any of
their respective affiliates within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act (all of the foregoing are referred to
collectively as "Selling Indemnified Parties" and individually as an "Selling
Indemnified Party"), from and against any and all Claims of any kind or nature,
whether joint or several, (including, without limitation, any investigative,
legal or any other expenses as they are reasonably incurred by a Selling
Indemnified Party in connection with, and any amount paid in settlement of, the
preparation for or defense of any Claim asserted, whether or not resulting in
any liability) (all of the foregoing being collectively defined as the "Selling
Indemnified Claims") to which any Selling Indemnified Party may become subject
or liable or which may be incurred by or assessed against any Selling
Indemnified Party under any statute, common law, contract or otherwise, to the
extent relating to or arising out of any of an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to the Placement Agent furnished in writing to the
Partnership by the Placement Agent expressly for inclusion in the Registration
Statement or the Prospectus; provided, however, that the Placement Agent shall
not be liable to a Selling Indemnified Party in any such case solely to the
extent that any Selling Indemnified Claim is found, in a final, unappealable
judgment by a court of competent jurisdiction, to have resulted solely and
exclusively and as a direct and proximate cause from any Selling Indemnified
Party's willful misconduct or gross negligence in the performance of their
duties. This indemnity agreement will be in addition to any liability which
17
the Placement Agent may otherwise have. The Placement Agent will not, without
the prior written consent of the Selling Indemnified Party (which will not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not such Selling Indemnified Party or any
person who controls such Selling Indemnified Party within the meaning of Section
15 of the Act or Section 20 of the Exchange Act is a party to each Claim),
unless such settlement, compromise or consent includes an unconditional release
of the Selling Indemnified Party and each such controlling person from all
liability arising out of such Claim. As of the date hereof, no information
relating to the Placement Agent has been furnished in writing to the Partnership
by the Placement Agent expressly for inclusion in the Registration Statement or
the Prospectus.
(d) If for any reason (other than as specifically provided
herein) the foregoing indemnity for a Selling Indemnified Claim as provided by
Section 6(c) of this Agreement is unavailable to a Selling Indemnified Party or
insufficient to fully hold any Selling Indemnified Party harmless, then the
Placement Agent shall contribute to the amount paid or payable by such Selling
Indemnified Party as a result of such Selling Indemnified Claim in such
proportion as is appropriate to reflect the relative benefits received by and
fault of the Placement Agent on the one hand, and the relative benefits received
by and fault of the Selling Indemnified Party on the other hand, as well as any
relevant equitable considerations. Notwithstanding any provisions herein to the
contrary, the aggregate contribution of all of the Selling Indemnified Parties
for all Selling Indemnified Claims shall not exceed the amount of funds actually
received by the Partnership pursuant to the Agreement. It is hereby further
agreed that the relative fault of the Placement Agent on the one hand and a
Selling Indemnified Party on the other hand with respect to the transactions
shall be determined by reference to, among other things, whether any untrue or
alleged untrue statement of a material fact or incorrect opinion or conclusion
or the omission or alleged omission to state a material fact concerning the
Placement Agent related to information supplied by the Placement Agent on the
one hand or by the Selling Indemnified Party on the other hand, as well as the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, opinion, conclusion or omission. No Selling
Indemnified Party shall have any liability to the Placement Agent or any other
person in connection with the services rendered pursuant to this Agreement
except for any liability for losses, claims, damages or liabilities finally
judicially determined to have resulted solely and exclusively from actions taken
or omitted to be taken as a direct result of such Selling Indemnified Party's
gross negligence or willful misconduct. The indemnity, contribution and expense
reimbursement agreements and obligations set forth herein shall be in addition
to any other rights, remedies or indemnification which any Selling Indemnified
Party may have or be entitled to at common law or otherwise, and shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Selling Indemnified Party. The Placement Agent further
agrees that the indemnity, contribution and expense reimbursement agreements and
obligations set forth herein, shall apply whether or not the Placement Agent or
any other Selling Indemnified Party is a formal party in any such Selling
Indemnified Claim. The Placement Agent will not be permitted to settle any
Selling Indemnified Claim without the prior consent of the Partnership and any
Selling Indemnified Party involved therein if any admission of wrong doing,
negligence or improper activity of any kind of the Partnership or such Selling
Indemnified Party is a part of such settlement. The Placement Agent shall not,
without the prior written consent of a Selling Indemnified Party, effect any
settlement of any pending or
18
threatened action, suit or proceeding in respect of which a Selling Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Selling Indemnified Party, unless such settlement includes an
unconditional release of such Selling Indemnified Party from all liability on
claims that are the subject matter of such action, suit or proceeding.
(e) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 6 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. The
Partnership will not, without the prior written consent of the Placement Agent
(which consent will not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification has been sought hereunder
(whether or not the Placement Agent or any person who controls the Placement
Agent within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agent and each such controlling person from all liability arising out
of such claim, action, suit or proceeding. An indemnifying party will not be
liable for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld).
19
7. Submission to Jurisdiction. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Partnership consents to the jurisdiction of such courts and personal service
with respect thereto. The Partnership hereby consents to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any way
relating to this Agreement is brought by any third party against the Placement
Agent or any Indemnified Party. The Placement Agent and the Partnership (on its
behalf and, to the extent permitted by applicable law, on behalf of its
unitholders and affiliates) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement. The Partnership agrees
that a final judgment in any Claim brought in any such court shall be conclusive
and binding upon the Partnership and may be enforced in any other courts to the
jurisdiction of which the Partnership is or may be subject, by suit upon such
judgment.
8. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Partnership, at the offices of the Partnership
at 0 Xxxxxxxx Xxxxx, Xxxxxxxxx: Chief Financial Officer, with a copy (which
shall not constitute notice) to J. Xxxxxxx Xxxxxxxx, Xxxx Xxxx Xxxxxxx Xxxxx &
Xxxx, L.L.P., 0000 Xxxxxxxx Xxxxx, Xxxxx Tower, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000 or (b) if to the Placement Agent, at the office of the Placement
Agent at 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, 00000, Attention: Xxxxx
Xxxx, with a copy (which shall not constitute notice) to Xxxx X. Xxxxxx,
Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000. Any such notice shall be effective only upon receipt.
9. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Partnership and
the Placement Agent set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Partnership, the
General Partner, any of their respective officers or directors, the Placement
Agent or any controlling person referred to in Section 6 hereof and (ii)
delivery of and payment for the Units.
10. Successors. This Agreement shall inure to the benefit of
and shall be binding upon the Placement Agent, the Partnership and each of their
respective successors and assigns, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnification and
contribution contained in Section 6 of this Agreement shall also be for the
benefit of the Indemnified Parties, (ii) the indemnification and contribution
contained in Section 6 of this Agreement shall also be for the benefit of the
Selling
20
Indemnified Parties, and (iii) the General Partner is entitled to rely on the
agreement of the Placement Agent set forth in Section 14 of this Agreement. The
Placement Agent may not, directly or indirectly, assign, transfer or otherwise
alienate any of its rights or benefits under this Agreement to any individual or
entity without obtaining the Partnership's prior written consent, which consent
may be granted or withheld in the Partnership's sole discretion.
11. Applicable Law. The validity and interpretations of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. Entire Agreement. This Agreement, constitutes the entire
understanding between the parties hereto as to the matters covered hereby and
supersedes all prior understandings, written or oral, relating to such subject
matter.
14. Agreement Non-Recourse to General Partner. The Placement
Agent agrees that all of the obligations of the Partnership are non-recourse
with respect to the General Partner, and the Placement Agent agrees that it will
not seek to enforce against or recover damages from the General Partner in
connection with the existence of this Agreement, the offering of the Units, or
the Partnership's performance or failure to perform under this Agreement.
21
If the foregoing correctly sets forth the understanding among
the Partnership and the Placement Agent, please so indicate in the space
provided below for the purpose, whereupon this agreement and your acceptance
shall constitute a binding agreement among the Partnership and the Placement
Agent.
Very truly yours,
GulfTerra Energy Partners, L.P.
By: GulfTerra Energy Company, L.L.C.
its General Partner
By: /s/ XXXXX XXXXXX
---------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President and Chief
Financial Officer
Accepted and agreed to as of the
date first above written
XXXXXXX XXXXX & ASSOCIATES, INC.
By: /s/ XXXXX XXXXXXXX
------------------------------
Title: Managing Director
22
SCHEDULE A
JURISDICTION OF
ENTITY NAME FORMATION OWNERSHIP
----------- --------------- ---------
Arizona Gas Storage, L.L.C. Delaware 60%
Chaco Liquids Plant Trust Massachusetts 100%
Crystal Holding, L.L.C. Delaware 100%
El Paso Energy Warwink I Company, L.P. Delaware 100%
El Paso Energy Warwink II Company, L.P. Delaware 100%
El Paso Offshore Gathering and Transmission, L.P. Delaware 100%
EPN Gathering and Treating Company, L.P. Delaware 100%
EPN Gathering and Treating GP Holding, L.L.C. Delaware 100%
First Reserve Gas, L.L.C. Delaware 100%
Flextrend Development Company, L.L.C. Delaware 100%
GulfTerra Alabama Intrastate, L.L.C. Delaware 100%
GulfTerra Arizona Gas, L.L.C. Delaware 100%
GulfTerra Energy Finance Corporation Delaware 100%
GulfTerra Field Services, L.L.C. Delaware 100%
GulfTerra GC, L.P. Delaware 100%
GulfTerra Holding I, L.L.C. Delaware 100%
GulfTerra Holding II, L.L.C. Delaware 100%
GulfTerra Holding III, L.L.C. Delaware 100%
GulfTerra Holding IV, L.P. Delaware 100%
GulfTerra Holding V, L.P. Delaware 100%
GulfTerra Intrastate, L.P. Delaware 100%
GulfTerra NGL Storage, L.L.C. Delaware 100%
GulfTerra Oil Transport, L.L.C. Delaware 100%
GulfTerra Operating Company, L.L.C. Delaware 100%
GulfTerra South Texas, L.P. Delaware 100%
GulfTerra Texas Pipeline, L.P. Delaware 100%
Hattiesburg Gas Storage Company Delaware 100%
Hattiesburg Industrial Gas Sales, L.L.C. Delaware 100%
High Island Offshore System, L.L.C. Delaware 100%
Manta Ray Gathering Company, L.L.C. Delaware 100%
Petal Gas Storage, L.L.C. Delaware 100%
Poseidon Pipeline Company, L.L.C. Delaware 100%
Warwink Gathering and Treating Company Delaware 100%
23
SCHEDULE B
JURISDICTION OF FOREIGN QUALIFICATION
ENTITY NAME FORMATION JURISDICTIONS
----------- --------------- ---------------------
Arizona Gas Storage, L.L.C. Delaware Arizona, Louisiana
Chaco Liquids Plant Trust Massachusetts --
Crystal Holding, L.L.C. Delaware --
El Paso Energy Warwink I Company, L.P. Delaware Texas
El Paso Energy Warwink II Company, L.P. Delaware Texas
El Paso Offshore Gathering and Transmission, L.P. Delaware Texas
EPN Gathering and Treating Company, L.P. Delaware Texas, New Mexico
EPN Gathering and Treating GP Holding, L.L.C. Delaware Texas
First Reserve Gas, L.L.C. Delaware Mississippi
Flextrend Development Company, L.L.C. Delaware Texas, Louisiana, Alabama
GulfTerra Alabama Intrastate, L.L.C. Delaware --
GulfTerra Arizona Gas, L.L.C. Delaware --
GulfTerra Energy Finance Corporation Delaware Texas
GulfTerra GC, L.P. Delaware Texas, Louisiana, Alabama, New Mexico
GulfTerra Holding I, L.L.C. Delaware Texas
GulfTerra Holding II, L.L.C. Delaware Texas
GulfTerra Holding III, L.L.C. Delaware Texas
GulfTerra Holding IV, L.P. Delaware Texas
GulfTerra Holding V, L.P. Delaware Texas
GulfTerra Intrastate, L.P. Delaware Texas, Louisiana
GulfTerra NGL Storage, L.L.C. Delaware Mississippi, Nevada
GulfTerra Oil Transport, L.L.C. Delaware Texas, Louisiana, Alabama
GulfTerra Operating Company, L.L.C. Delaware Texas, Louisiana, Massachusetts, New Mexico
GulfTerra South Texas, L.P. Delaware Texas
GulfTerra Texas Pipeline, L.P. Delaware Texas
Hattiesburg Gas Storage Company Delaware --
Hattiesburg Industrial Gas Sales, L.L.C. Delaware Mississippi
High Island Offshore System, L.L.C. Delaware Texas, Louisiana
24
JURISDICTION OF FOREIGN QUALIFICATION
ENTITY NAME FORMATION JURISDICTIONS
----------- --------------- ---------------------
Manta Ray Gathering Company, L.L.C. Delaware Texas, Louisiana
Petal Gas Storage, L.L.C. Delaware Mississippi
Poseidon Pipeline Company, L.L.C. Delaware Texas
Warwink Gathering and Treating Company Delaware --
25
