EXHIBIT 10.EE.1
U.S. $1,230,000,000
SECOND AMENDED AND RESTATED
Originally dated as of June 30, 1999
Amended and Restated as of November 22, 1999
Amended as of November 17, 2000 and
Amended and Restated as of March 29, 2002
among
SABINE RIVER INVESTORS, L.L.C.
as borrower
and
THE OTHER SPONSOR SUBSIDIARIES PARTY HERETO
as co-obligors
and
TRINITY RIVER ASSOCIATES, L.L.C.
as lender
and
WILMINGTON TRUST COMPANY
as Sponsor Subsidiary Collateral Agent
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms...........................................................................1
Section 1.02. Computation of Time Periods.....................................................................1
Section 1.03. No Presumption Against Any Party................................................................1
Section 1.04. Use of Certain Terms............................................................................1
Section 1.05. Headings and References.........................................................................1
Section 1.06. Accounting Terms................................................................................2
Section 1.07. Balance in Cash Reserve.........................................................................2
Section 1.08. Face Value Amount...............................................................................2
Section 1.09. Supplements to Schedules........................................................................2
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The Advances....................................................................................3
Section 2.02. Making the Advances.............................................................................3
Section 2.03. Interest .......................................................................................3
Section 2.04. Repayment of Advances...........................................................................3
Section 2.05. Prepayment of Advances..........................................................................3
Section 2.06. Additional Financing Costs, Etc.................................................................9
Section 2.07. Payments and Computations; Additional Amounts...................................................9
Section 2.08. Taxes..........................................................................................10
Section 2.09. Evidence of Indebtedness.......................................................................11
Section 2.10. Pool II Contributed Investments - Pool II Borrowing Base Determinations........................11
Section 2.11. Pool II Reserve Amount.........................................................................14
Section 2.12. Adjustments to Pool I Loan Values/Aggregate Pool I Loan Value Amount...........................16
ARTICLE III
CONDITIONS TO ADVANCES
Section 3.01. Conditions Precedent to Making the Advances on the First Closing Date..........................17
Section 3.02. Conditions Precedent to Making the Advances on the Second Closing Date.........................20
Section 3.03. Conditions Precedent to Effectiveness of this Agreement........................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties with Respect to Each Sponsor Subsidiary.........................27
Section 4.02. Representations and Warranties with Respect to Intermediate Holders and Underlying
Businesses.....................................................................................32
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ARTICLE V
COVENANTS OF SPONSOR SUBSIDIARIES
Section 5.01. Affirmative Covenants with Respect to Sponsor Subsidiaries.....................................34
Section 5.02. Negative Covenants with Respect to Sponsor Subsidiaries........................................36
Section 5.03. Reporting Requirements.........................................................................40
Section 5.04. Financial Covenants............................................................................42
Section 5.05. [Intentionally Omitted]........................................................................44
Section 5.06. A-Loans and Total Cash Collateral Amount.......................................................44
Section 5.07. Appraisals.....................................................................................45
Section 5.08. Affirmative Covenants with Respect to Controlled Businesses....................................46
Section 5.09. Negative Covenants with Respect to Each Controlled Business....................................48
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default..............................................................................58
ARTICLE VII
ADMINISTRATION, SETTLEMENT AND COLLECTION
Section 7.01. Maintaining the Cash Reserve and the Sabine Operating Account..................................60
Section 7.02. Deposit of Funds into the Cash Reserve.........................................................61
Section 7.03. Permitted Investments and El Paso Demand Loans.................................................62
Section 7.04. Transfers from the Cash Reserve................................................................65
Section 7.05. Transfers from the Sabine Operating Account....................................................69
Section 7.06. Subsisting Event of Default or Incipient Event.................................................69
Section 7.07. Transfers from the Cash Reserve and the Sabine Operating Account in Respect of
Payments on the Maturity Date and Application of Proceeds of Collateral Pursuant to
the Sponsor Subsidiary Security Agreement......................................................69
ARTICLE VIII
THE COLLATERAL AGENT
Section 8.01. Authorization and Action.......................................................................70
Section 8.02. Sponsor Subsidiary Collateral Agent's Reliance, Etc............................................70
Section 8.03. Trinity Credit Decision........................................................................71
Section 8.04. Fee............................................................................................71
ARTICLE IX
ASSIGNMENTS; ACQUISITIONS OF CONTRIBUTED INVESTMENTS
Section 9.01. No Assignment by any Sponsor Subsidiary........................................................72
Section 9.02. Additional Sponsor Subsidiaries and Acquisitions of Contributed Investments....................72
Section 9.03. Permitted Assignment by Trinity................................................................76
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ARTICLE X
INDEMNIFICATION
Section 10.01. Indemnities by Sponsor Subsidiaries............................................................76
Section 10.02. Survival of Indemnification Obligations........................................................77
Section 10.03. Limitations on Indemnification Obligations.....................................................77
Section 10.04. Payments.......................................................................................77
Section 10.05. Procedural Requirements........................................................................78
ARTICLE XI
MISCELLANEOUS
Section 11.01. Amendments, Etc................................................................................79
Section 11.02. Notices, Etc...................................................................................79
Section 11.03. No Waiver, Remedies............................................................................80
Section 11.04. Costs and Expenses.............................................................................80
Section 11.05. Right of Setoff................................................................................81
Section 11.06. Binding Effect.................................................................................81
Section 11.07. Governing Law..................................................................................81
Section 11.08. Execution in Counterparts......................................................................81
Section 11.09. Non-Recourse Liability.........................................................................81
Section 11.10. WAIVER OF JURY TRIAL...........................................................................81
Section 11.11. Authorization of Sabine as Sponsor Subsidiaries' Agent.........................................82
Section 11.12. Consent to Jurisdiction........................................................................82
SCHEDULES
Schedule 4.01(p) Amendments to Assigned Agreements
Schedule 4.01(t) A-Loans
Schedule 9.02 Documentary Conditions Precedent to Accession of Additional
Sponsor Subsidiary or Acquisition of Contributed Investment
EXHIBITS
EXHIBIT A Form of EPPC Note
EXHIBIT B Form of Subordinated Note
EXHIBIT C-1 Form of El Paso A-Loan Note
EXHIBIT C-2 Form of El Paso Affiliate A-Loan Note
EXHIBIT D-1 Intentionally Omitted
EXHIBIT D-2 Intentionally Omitted
EXHIBIT E-1 Form of El Paso Demand Loan (El Paso)
EXHIBIT E-2 Form of El Paso Demand Loan (El Paso Affiliates)
EXHIBIT 2.10 Form of Pool II Borrowing Base Report
EXHIBIT 9.02-1 Acquisition/Accession Notice
EXHIBIT 9.02-2 El Paso Officer's Certification
EXHIBIT 9.02-3 Sponsor Subsidiary Accession Agreement
EXHIBIT 9.02-4 Sponsor Subsidiary Security Agreement Supplement
iii
SECOND AMENDED AND RESTATED
Originally dated as of June 30, 1999,
Amended and Restated as of November 22, 1999,
Amended as of November 17, 2000 and
Amended and Restated as of March 29, 2002
SABINE RIVER INVESTORS, L.L.C., a Delaware limited liability
company ("SABINE"), as borrower, each other Sponsor Subsidiary listed on the
signature pages hereof and each other Additional Sponsor Subsidiary that
executes a Sponsor Subsidiary Accession Agreement, TRINITY RIVER ASSOCIATES,
L.L.C., a Delaware limited liability company ("TRINITY"), as lender, and
WILMINGTON TRUST COMPANY, a Delaware banking corporation ("WILMINGTON"), as
collateral agent for Trinity (the "SPONSOR SUBSIDIARY COLLATERAL AGENT"), agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. Words and expressions
defined in Exhibit A to the Third Amended and Restated Company Agreement of
Trinity, dated as of the date of this Agreement, between Sabine and Red River
Investors L.L.C., shall have the same meanings in this Agreement. A reference to
this "AGREEMENT" is a reference to this Second Amended and Restated , as further amended, supplemented or modified from
time to time.
Section 1.02. Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date to a later specified
date, the word "FROM" means "from and including" and the words "TO", "THROUGH"
and "UNTIL" each mean "to but excluding".
Section 1.03. No Presumption Against Any Party. Neither this
Agreement nor any uncertainty or ambiguity herein shall be construed against any
particular party, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by each party and its counsel and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.
Section 1.04. Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the singular
includes the plural, and "INCLUDING" has the inclusive meaning of "including
without limitation". The words "HEREOF", "HEREIN", "HEREBY", "HEREUNDER" and
other similar terms of this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. All pronouns and any
variations thereof shall be deemed to refer to masculine, feminine, or neuter,
singular or plural, as the identity of the Person or Persons may require.
Section 1.05. Headings and References. Section and other
headings are for reference only, and shall not affect the interpretation or
meaning of any provision of or to this Agreement. Unless otherwise provided,
references to Articles, Sections, Schedules, and Exhibits shall be deemed to be
references to Articles, Sections, Schedules, and Exhibits of or to this
Agreement. Whether or not stated
herein or therein, references to this Agreement and to any other Operative
Document or any other agreement include this Agreement and the other Operative
Documents and agreements as the same may be modified, amended, restated or
supplemented from time to time pursuant to the provisions hereof or thereof as
permitted by the Operative Documents. Whether or not stated herein, a reference
to any law or Applicable Law shall mean that law or Applicable Law as it may be
amended, modified or supplemented from time to time, and any successor law or
Applicable Law. A reference to a Person includes the successors and assigns of
such Person, but such reference shall not increase, decrease or otherwise modify
in any way the provisions in this Agreement governing the assignment of rights
and obligations under or the binding effect of any provision of this Agreement.
Section 1.06. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with, and
certificates of compliance with covenants shall be based upon, GAAP.
Section 1.07. Balance in Cash Reserve. A reference in this
Agreement to a "BALANCE IN" or the "BALANCE OF" the Cash Reserve at any time is
a reference to the aggregate value of:
(a) the cash balance standing to the credit of the Cash
Reserve at that time; and
(b) the face value amount of all Permitted Investments in the
Cash Reserve at that time. Any Investments that are not Permitted
Investments at such time shall be deemed to have no value.
Section 1.08. Face Value Amount. A reference in this Agreement
to the "FACE VALUE AMOUNT" of any Permitted Investment at any time is a
reference to:
(a) where the Permitted Investment is a Cash Equivalent, the
face value of such Cash Equivalent less any unamortized discount at
such time; or
(b) where the Permitted Investment is an El Paso Demand Loan,
the outstanding principal amount of such El Paso Demand Loan at that
time.
Section 1.09. Supplements to Schedules. The following
Schedules to this Agreement and the Sponsor Subsidiary Security Agreement shall
be supplemented as follows:
(a) Parts I, II, III, and IV of Schedule I to the Sponsor
Subsidiary Security Agreement shall be automatically supplemented by
Parts I, II, III, and IV, respectively, of any Exception Schedule
attached to a Sponsor Subsidiary Accession Agreement or to a Sponsor
Subsidiary Security Agreement Supplement on the applicable
Acquisition/Accession Date; and
(b) Schedule 4.01(t) shall be automatically supplemented by
the delivery of each supplemental Schedule 4.01(t),
whereupon, in each case, any reference in any Sponsor Subsidiary Credit Document
to any such Schedule shall be a reference to each such Schedule as supplemented
in accordance with this Section 1.09.
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ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The Advances. (a) On the terms and conditions
hereinafter set forth, Trinity agrees to make available to Sabine:
(i) an advance on the First Closing Date in a principal amount
of $625,000,000; and
(ii) an advance on the Second Closing Date in a principal
amount of $605,000,000 (each such advance being an "ADVANCE").
(b) Amounts borrowed hereunder and repaid or prepaid may not
be reborrowed.
(c) Each Sponsor Subsidiary shall be jointly and severally
liable for the repayment of the principal amount of, and for the payment of
interest and all other amounts in respect of, each Advance made to Sabine
hereunder and each Sponsor Subsidiary shall be jointly and severally liable for
all Obligations hereunder as a primary obligor and not as a surety.
Section 2.02. Making the Advances. (a) Subject to satisfaction
of the conditions precedent set forth herein, Trinity shall make and Sabine
shall borrow the Advances on the First Closing Date and the Second Closing Date
(as applicable).
(b) Trinity shall make such Advances available to Sabine by
deposit of the proceeds thereof to the Sabine Operating Account on the First
Closing Date or the Second Closing Date (as applicable).
(c) The Sponsor Subsidiaries shall jointly and severally
indemnify Trinity against any cost or expense incurred by Trinity as a result of
any failure to fulfill on or before the First Closing Date or the Second Closing
Date (as applicable) the applicable conditions set forth in Article III,
including any Liquidation Amount. A notice by Trinity to Sabine of the amount of
such cost or expense shall, in the absence of manifest error, be conclusive and
binding for all purposes.
Section 2.03. Interest. (a) The Sponsor Subsidiaries shall
jointly and severally pay interest on the unpaid principal amount of each
Advance outstanding from time to time from the First Closing Date or the Second
Closing Date (as applicable) until the principal amount shall be paid in full at
a rate per annum at all times during each Interest Period equal to the Funding
Rate for such Interest Period, payable on the Payment Date next succeeding the
last day of such Interest Period.
(b) Trinity shall determine the Funding Rate for each Interest
Period (or portion thereof) and shall notify Sabine of such Funding Rate three
Business Days prior to the Payment Date for such Interest Period. A notice by
Trinity to Sabine of the Funding Rate shall be binding on each Sponsor
Subsidiary. A notice to Sabine pursuant to Section 7.7(a) of the Trinity Company
Agreement shall be deemed to satisfy the foregoing notification requirement.
Section 2.04. Repayment of Advances. The Sponsor Subsidiaries
shall jointly and severally repay on the Maturity Date the principal amount of
all Advances then outstanding in full.
Section 2.05. Prepayment of Advances. (a) Voluntary. A Sponsor
Subsidiary may, upon at least five Business Days' notice to Trinity stating the
proposed date and the aggregate principal amount of the prepayment, and, if such
notice is given, such Sponsor Subsidiary shall, prepay the
3
outstanding principal amount of an Advance in whole or in part together with all
other amounts required to be paid pursuant to Section 2.07(c) in connection with
such prepayment; provided, however, that each partial prepayment shall be in an
aggregate principal amount of not less than $1,000,000.
(b) Mandatory. (i) Disposition of Pool I Contributed
Investments. (A) Upon a Disposition of any Pool I Contributed Investment by a
Sponsor Subsidiary (whether to El Paso, an Affiliate of El Paso or any other
Person), the Sponsor Subsidiaries shall forthwith, on receipt of the proceeds of
such Disposition, prepay Advances in a principal amount equal to:
(1) in the case of the Disposition of a Pre-approved Pool I
Contributed Investment, the Net Cash Proceeds from such Disposition;
and
(2) in the case of the Disposition of any other Pool I
Contributed Investment, an amount equal to the Pool I Loan Value of
such Pool I Contributed Investment,
in each case together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
(B) If, following a Disposition to El Paso or to an Affiliate
of El Paso of any Pre-approved Pool I Contributed Investment by a Sponsor
Subsidiary, such Pre-approved Pool I Contributed Investment (or part thereof) is
subsequently Disposed of to a Person other than El Paso or an Affiliate of El
Paso within 180 days after the initial Disposition by the relevant Sponsor
Subsidiary to El Paso or an Affiliate of El Paso (as applicable) for aggregate
Net Cash Proceeds in excess of the Net Cash Proceeds (or corresponding part
thereof) received in connection with such initial Disposition, then the Sponsor
Subsidiaries shall on the date of such subsequent Disposition prepay Advances in
a principal amount equal to such excess, together with all other amounts
required to be paid pursuant to Section 2.07(c) in connection with such
prepayment.
(ii) Excess Distribution. On the date of each Distribution by
a Pool I Underlying Business, the Sponsor Subsidiaries shall prepay Advances in
a principal amount equal to the Excess Distribution (if any) calculated as of
such date, together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
(iii) Disposition of Assets of Pool I Underlying Businesses.
(A) If all or substantially all of the assets of, or Equity Interests in, any
Intermediate Holder or Underlying Business relating to a Pool I Contributed
Investment (other than a Pool I Publicly Traded Investment) are Disposed of
(whether to El Paso, an Affiliate of El Paso or any other Person) at any time
after the Acquisition/Accession Date of such Pool I Contributed Investment, then
the Sponsor Subsidiaries shall forthwith on receipt of the proceeds of such
Disposition prepay Advances in a principal amount equal to:
(1) in the case of the Disposition of all or substantially all
of the assets of, or Equity Interests in, any Intermediate Holder or
Underlying Business relating to a Pre-approved Pool I Contributed
Investment (other than any Intermediate Holder or Underlying Business
relating to Energy Partners), the Net Cash Proceeds from such
Disposition; and
(2) in the case of the Disposition of all or substantially all
of the assets of, or Equity Interests in, any Intermediate Holder or
Underlying Business relating to any other Pool I Contributed Investment
(other than a Pool I Publicly Traded Investment), the Pool I Loan Value
of the Pool I Contributed Investment to which such Intermediate Holder
or Underlying Business relates,
4
in each case together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
(B) If, following a Disposition to El Paso or an Affiliate of
El Paso of all or substantially all of the assets of, or Equity Interests in,
any Intermediate Holder or Underlying Business relating to a Pre-approved Pool I
Contributed Investment (other than Energy Partners), such assets or Equity
Interests (as applicable) (or part thereof) are subsequently Disposed of to a
Person other than El Paso or an Affiliate of El Paso within 180 days after the
initial Disposition to El Paso or such Affiliate of El Paso (as applicable) for
aggregate Net Cash Proceeds in excess of the Net Cash Proceeds (or corresponding
part thereof) received in connection with such initial Disposition, then the
Sponsor Subsidiaries shall on the date of such subsequent Disposition prepay
Advances in a principal amount equal to such excess, together with all other
amounts required to be paid pursuant to Section 2.07(c) in connection with such
prepayment.
(iv) A-Loans. (A) If El Paso or any Affiliate of El Paso
prepays any principal under any A-Loan Note, the Sponsor Subsidiaries shall
forthwith prepay Advances in a principal amount equal to the principal amount of
such prepayment, together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
(B) If the Sponsor Subsidiaries prepay the Advances (other
than in accordance with clause (A) above), then El Paso or any Affiliate of El
Paso that is an obligor under an A-Loan Note shall (x) be deemed to have prepaid
the principal amount outstanding under such A-Loan Note in the principal amount
of such prepayment of the Advances by the Sponsor Subsidiaries and (y) pay
interest accrued on the principal deemed to have been so prepaid under such
A-Loan Note in accordance with the terms thereof; provided that the amount
described in clause (x) above shall be deemed to be Distributed to El Paso or
such Affiliate of El Paso and the outstanding principal amount of the A-Loan
Notes shall be reduced by the principal amount of such deemed prepayment.
(v) Pool II Borrowing Base Reductions. The Sponsor
Subsidiaries shall prepay (including by causing any Underlying Business relating
thereto to prepay on behalf of any Sponsor Subsidiary) Advances in a principal
amount equal to the amount, and at the times, specified in Section 2.11(a) and
Section 5.09(j)(i) or (ii), together with all other amounts required to be paid
pursuant to Section 2.07(c) in connection with such prepayment.
(vi) Prepayment of EPPC Notes. If the issuer of any EPPC Note
prepays any principal under any EPPC Note, the Sponsor Subsidiaries shall
forthwith prepay Advances in a principal amount equal to the amount of such
prepayment, together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
(vii) Minimum Unrecovered Capital. If, as a result of any
voluntary or mandatory prepayment under this Section 2.05, the Unrecovered
Capital of Red River in Trinity would be less than $300,000,000, then the
Sponsor Subsidiaries shall on the date of such voluntary or mandatory prepayment
prepay the Advances in full together with all other amounts required to be paid
pursuant to Section 2.07(c) in connection with such prepayment.
(viii) Deemed Receipt of Disposition Proceeds. All proceeds
(including any deferred proceeds) from a Disposition described in Section
2.05(b)(i), (iii) or (ix)(A) shall be deemed to have been received no later than
the date of any such Disposition.
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(ix) El Paso RA Event. If the senior unsecured long-term debt
credit ratings of El Paso fall below BBB- by S&P and below Baa3 by Xxxxx'x (an
"EL PASO RA EVENT"), then the Sponsor Subsidiaries shall prepay the Advances in
a principal amount equal to:
(A) the Net Cash Proceeds from any Dispositions described in
Section 5.09(d)(iv), (v), (vi) and (vii) and occurring during the
continuance of an El Paso RA Event; provided that such prepayment of
the Advances shall be made at the earlier of (x) the next Payment Date
following any such Disposition and (y) any date, following the initial
occurrence of such El Paso RA Event and thereafter following the making
of any prepayment under this clause (A), on which the aggregate amount
of Net Cash Proceeds from all such Dispositions is at least $5,000,000;
(B) on each Payment Date during the continuance of an El Paso
RA Event, the lesser of (x) the excess of (1) the gross revenues (other
than proceeds from sales of assets (other than current assets as
defined under GAAP) or capital contributions) for the Fiscal Quarter in
which such El Paso RA Event occurs (and in each subsequent Fiscal
Quarter while such El Paso RA Event continues) of the Pool I
Contributed Investments (other than any Publicly Traded Investment)
over (2) the aggregate amount of all operating expenditures in the
ordinary course of business and all Maintenance Capital Expenditures
paid (or in respect of which an obligation to pay any such expenditure
was incurred) in any such Fiscal Quarter with respect to Pool I
Contributed Investments (other than any Publicly Traded Investment)
(such aggregate amount not to exceed $11,000,000 in any such Fiscal
Quarter solely for purposes of the calculation in this clause (B)(2)),
and (y) the aggregate amount of the net income of the Pool I
Contributed Investments (other than any Publicly Traded Investment)
reflected in the most recent financial statements delivered pursuant to
Section 5.03(c); provided that an amount (if any) equal to the positive
value of the difference between the amount described in clause (x)
above and the amount described in clause (y) above shall be deposited
into the applicable Proceeds Account and held therein; and provided
further that:
(I) if such prepayment of the Advances falls on the first
Payment Date following the end of the fourth Fiscal
Quarter of the immediately preceding Fiscal Year, the
amount described in clause (y) above shall be the
amount of such net income as reflected in the
financial statements as of the end of the third
Fiscal Quarter of the immediately preceding Fiscal
Year, and such amount shall be (aa) increased by the
absolute amount (if any) by which the amount of net
income reflected in the financial statements as of
the end of such third Fiscal Quarter of the
immediately preceding Fiscal Year exceeds the amount
of net income used to determine the required
prepayment of the Advances on the first Payment Date
following the end of such third Fiscal Quarter of the
immediately preceding Fiscal Year or (bb) reduced by
the absolute amount (if any) by which the amount of
net income reflected in financial statements as of
the end of the third Fiscal Quarter of the
immediately preceding Fiscal Year is less than the
amount of net income used to determine the required
prepayment of the Advances on the first Payment Date
following the end of such third Fiscal Quarter of the
immediately preceding Fiscal Year;
(II) if such prepayment of the Advances falls on the first
Payment Date following the end of the first Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the amount of
such net income as reflected in the financial
statements as of the end of the third Fiscal Quarter
of the immediately preceding Fiscal Year;
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(III) if such prepayment of the Advances falls on the first
Payment Date following the end of the second Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the amount of
such net income as reflected in the financial
statements as of the end of the first Fiscal Quarter
of the current Fiscal Year, and such amount shall be
(aa) increased by the absolute amount (if any), by
which the amount of net income reflected in financial
statements as of the end of the fourth Fiscal Quarter
of the immediately preceding Fiscal Year and as of
the end of the first Fiscal Quarter of the current
Fiscal Year, respectively, exceeds the amount of net
income used to determine the required prepayment of
the Advances on the first Payment Date following the
end of such fourth Fiscal Quarter of the immediately
preceding Fiscal Year and the end of such first
Fiscal Quarter of the current Fiscal Year,
respectively, or (bb) reduced by the absolute amount
(if any) by which the amount of net income reflected
in financial statements as of the end of the fourth
Fiscal Quarter of the immediately preceding Fiscal
Year and as of the end of the first Fiscal Quarter of
the current Fiscal Year, respectively, is less than
the amount of net income used to determine the
required prepayment of the Advances on the first
Payment Date following the end of such fourth Fiscal
Quarter of the immediately preceding Fiscal Year and
the end of such first Fiscal Quarter of the current
Fiscal Year, respectively; and
(IV) if such prepayment of the Advances falls on first the
Payment Date following the end of the third Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the amount of
such net income as reflected in the financial
statements as of the end of the second Fiscal Quarter
of the current Fiscal Year, and such amount shall be
(aa) increased by the absolute amount (if any) by
which the amount of net income reflected in financial
statements as of the end of the second Fiscal Quarter
of the current Fiscal Year exceeds the amount of net
income used to determine the required prepayment of
the Advances on the first Payment Date following the
end of such second Fiscal Quarter of the current
Fiscal Year or (bb) reduced by the absolute amount
(if any) by which the amount of net income reflected
in financial statements as of the end of the second
Fiscal Quarter of the current Fiscal Year is less
than the amount of net income used to determine the
required prepayment of the Advances on the first
Payment Date following the end of such second Fiscal
Quarter of the current Fiscal Year.
(C) on each Payment Date during the continuance of an El Paso
RA Event, the lesser of (x) the excess of (1) the gross revenues (other
than proceeds from sales of Relevant Assets or capital contributions)
for the Fiscal Quarter in which such El Paso RA Event occurs (and in
each subsequent Fiscal Quarter while such El Paso RA Event continues)
of the Pool II Contributed Investments over (2) the aggregate amount of
all operating expenditures in the ordinary course of business and all
Capital Expenditures permitted by Section 5.09(h) hereof (such
aggregate amount not to exceed $100,000,000 in any Fiscal Quarter
solely for purposes of the calculation in this clause (C)) and (y) a
good faith estimate (based on reasonable assumptions) of the amount of
net income of the applicable Pool II Contributed Investment (the "NET
INCOME ESTIMATE") for such Fiscal Quarter determined by the Chief
Financial Officer of such Pool II Contributed Investment (or of the
Underlying Businesses relating thereto, as the case may be) and set
forth in a certificate of such Chief Financial Officer to be delivered
to Trinity on or prior to the date of such prepayment of the Advances;
provided that an amount (if any) equal to the positive value of the
difference between the amount described in clause (x) and the amount
described in clause (y)
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above shall be deposited into the applicable Proceeds Account and held
therein; and provided further that:
(I) if such prepayment of the Advances falls on the first
Payment Date following the end of the fourth Fiscal
Quarter of the immediately preceding Fiscal Year, the
amount described in clause (y) above shall be the Net
Income Estimate for such fourth Fiscal Quarter of the
immediately preceding Fiscal Year, and such amount
shall be (aa) increased by the absolute amount (if
any) by which the amount of net income reflected in
the financial statements as of the end of the third
Fiscal Quarter of the immediately preceding Fiscal
Year exceeds the Net Income Estimate for such third
Fiscal Quarter of the immediately preceding Fiscal
Year or (bb) reduced by the absolute amount (if any)
by which the amount of net income reflected in
financial statements as of the end of the third
Fiscal Quarter of the immediately preceding Fiscal
Year is less than the Net Income Estimate for such
third Fiscal Quarter of the immediately preceding
Fiscal Year;
(II) if such prepayment of the Advances falls on the first
Payment Date following the end of the first Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the Net Income
Estimate for such first Fiscal Quarter of the current
Fiscal Year;
(III) if such prepayment of the Advances falls on the first
Payment Date following the end of the second Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the Net Income
Estimate for such second Fiscal Quarter of the
current Fiscal Year, and such amount shall be (aa)
increased by the absolute amount (if any), by which
the amount of net income reflected in financial
statements as of the end of the fourth Fiscal Quarter
of the immediately preceding Fiscal Year and as of
the end of the first Fiscal Quarter of the current
Fiscal Year, respectively, exceeds the Net Income
Estimate for such fourth Fiscal Quarter of the
immediately preceding Fiscal Year and for such first
Fiscal Quarter of the current Fiscal Year,
respectively, or (bb) reduced by the absolute amount
(if any) by which the amount of net income reflected
in financial statements as of the end of the fourth
Fiscal Quarter of the immediately preceding Fiscal
Year and as of the end of the first Fiscal Quarter of
the current Fiscal Year, respectively, is less than
the Net Income Estimate for such fourth Fiscal
Quarter of the immediately preceding Fiscal Year and
for such first Fiscal Quarter of the current Fiscal
Year, respectively; and
(IV) if such prepayment of the Advances falls on the first
Payment Date following the end of the third Fiscal
Quarter of the current Fiscal Year, the amount
described in clause (y) above shall be the Net Income
Estimate for such third Fiscal Quarter of the current
Fiscal Year, and such amount shall be (aa) increased
by the absolute amount (if any) by which the amount
of net income reflected in financial statements as of
the end of the second Fiscal Quarter of the current
Fiscal Year exceeds the Net Income Estimate for such
second Fiscal Quarter of the current Fiscal Year or
(bb) reduced by the absolute amount (if any) by which
the amount of net income reflected in financial
statements as of the end of the second Fiscal Quarter
of the current Fiscal Year is less than the Net
Income Estimate for such second Fiscal Quarter of the
current Fiscal Year;
8
provided, however, that with respect to each of clause (B) and clause
(C) above, if in any Fiscal Quarter (1) the amount described in clause
(x) thereof is greater than the amount described in clause (y) thereof,
and (2) the sum of all cumulative amounts described in such clause (x)
for all prior Fiscal Quarters is less than the sum of all cumulative
amounts described in such clause (y) for all such prior Fiscal
Quarters, then the Sponsor Subsidiaries shall make an additional
prepayment of Advances in a principal amount equal to the lesser of (I)
the amount described in clause (x) for such current Fiscal Quarter
minus the amount described in clause (y) for such current Fiscal
Quarter, and (II) the sum of all cumulative amounts described in such
clause (y) for all such prior Fiscal Quarters minus the sum of all
cumulative amounts described in such clause (x) for all such prior
Fiscal Quarters.
(D) any Distributions made by Energy Partners to a Sponsor
Subsidiary on the date any such Distribution is received during the
continuance of an El Paso RA Event, and
(E) the Pool II Holdback Amount then in effect on the date of
an El Paso RA Event,
in each case together with all other amounts required to be paid pursuant to
Section 2.07(c) in connection with such prepayment.
Section 2.06. Additional Financing Costs, Etc. (a) Each
Sponsor Subsidiary shall on demand by Trinity delivered to Sabine not later than
12:30 p.m. on the Business Day prior to any Payment Date pay to Trinity on such
Payment Date additional amounts sufficient to pay Trinity in full (without
duplication) for any Additional Financing Costs or Transaction Costs so demanded
by Trinity.
(b) Without limiting Section 2.06(a), Trinity may at any time
deliver written notice to Sabine requiring the Sponsor Subsidiaries jointly and
severally to pay additional amounts sufficient to indemnify Trinity in full for
any Additional Financing Costs or Transaction Costs. The Sponsor Subsidiaries
shall jointly and severally pay to Trinity such Additional Financing Costs or
Transaction Costs on or before the date falling five Business Days after the
date of such notice; provided, however, that (x) any Additional Financing Costs
arising by reason of the late payment of the Advance or (y) any Transaction
Costs of the kind described in clause (b) of the definition thereof shall, in
each case, be payable on demand.
(c) A demand under Section 2.06(a) or (b) shall be accompanied
by a certificate from Trinity or Red River (or, in the case of a deemed demand
under Section 2.06(d), the Claimant) which shall set out in reasonable detail
the nature of and, if applicable, the method for computation of the Additional
Financing Costs or Transaction Costs that are the subject of the demand. Such
certificate shall be conclusive and binding for all purposes, in the absence of
manifest error.
(d) The Sponsor Subsidiaries hereby acknowledge that the
delivery to Sabine by a Claimant of a demand for Additional Financing Costs
and/or Transaction Costs under Section 4.12 of the Trinity Company Agreement
shall be deemed to be a demand by Trinity against the Sponsor Subsidiaries under
this Section 2.06 and Section 2.07(c) (as applicable) for the payment of such
Additional Financing Costs and/or Transaction Costs.
Section 2.07. Payments and Computations; Additional Amounts.
(a) Trinity Operating Account. Each Sponsor Subsidiary shall make each payment
hereunder, irrespective of any right of setoff or counterclaim, no later than
10:00 a.m. (
New York City time) on the day when due in immediately available
Dollars to the Trinity Operating Account.
9
(b) Calculation. All computations of interest hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed (except that where
interest is calculated by reference to the Base Rate, the computation of
interest hereunder shall be made on the basis of a year of 365 days or 366 days,
as applicable). Each determination by Trinity of an interest rate hereunder
shall be conclusive and binding for all purposes, in the absence of manifest
error.
(c) Additional Amounts. All payments of principal under this
Agreement (whether on prepayment or otherwise) shall be made together with
(without duplication) all accrued interest to the date of such payment or
prepayment on the principal amount paid or prepaid, any accrued and unpaid fees
to the date of such payment or prepayment, expenses, Additional Financing Costs
and Transaction Costs and indemnities and other Obligations of the Sponsor
Subsidiaries (including any interest on the principal amount paid or prepaid)
owing hereunder (and as to which, in the case of Additional Financing Costs and
Transaction Costs, demand for payment with respect to which has been received by
Sabine on or before 12:30 p.m. on the Business Day immediately preceding the
date on which any such payment or prepayment of principal is made).
(d) Notice. Each payment under this Agreement shall be
accompanied by written notice by Sabine identifying the nature of the payment.
Section 2.08. Taxes. (a) Any and all payments by each Sponsor
Subsidiary hereunder shall be made free and clear of and without deduction for
any and all present or future Taxes and all liabilities with respect thereto,
excluding, in the case of Trinity, taxes imposed on its net taxable income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which (or
by a jurisdiction under the laws of a political subdivision of which) Trinity is
organized or any political subdivision thereof and taxes imposed on its net
taxable income, and franchise taxes imposed on it, by any jurisdiction or any
political subdivision thereof out of which Trinity makes the Advances in
connection with this Agreement (all such non-excluded taxes, levies, imposts,
deductions, charges, fees, duties, withholdings and liabilities being
hereinafter referred to as "RELEVANT TAXES"). If a Sponsor Subsidiary shall be
required by Applicable Law to deduct any Relevant Taxes from or in respect of
any sum payable hereunder to Trinity, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.08)
Trinity receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Sponsor Subsidiary shall make such deductions,
and (iii) such Sponsor Subsidiary shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable
Law.
(b) In addition, the Sponsor Subsidiaries agree jointly and
severally to pay any present or future transfer, ad valorem, registration,
title, license, stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any transfer made under, from
possession arising under, from any action of the Sponsor Subsidiary Collateral
Agent contemplated in, or any payment made under, or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Sponsor Subsidiary Credit Document (hereinafter referred to as "OTHER
TAXES").
(c) Each Sponsor Subsidiary, to the fullest extent permitted
by Applicable Law, jointly and severally indemnifies Trinity and the Trinity
Members, on an after-tax basis, for the full amount of Relevant Taxes or Other
Taxes (including any Taxes, including Relevant Taxes and Other Taxes, imposed by
any jurisdiction on amounts payable under this Section 2.08) paid by Trinity and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Relevant Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within two
Business Days from the date Trinity makes written demand therefor.
10
(d) Within 30 days after the date of any payment of Relevant
Taxes by or at the direction of any Sponsor Subsidiary, Sabine will furnish to
Trinity the original or a certified copy of a receipt evidencing payment
thereof.
Section 2.09. Evidence of Indebtedness. Trinity shall maintain
an account or accounts evidencing the indebtedness of each Sponsor Subsidiary to
Trinity resulting from the Advances, including the amounts of principal and
interest payable and paid to Trinity from time to time hereunder.
Section 2.10. Pool II Contributed Investments - Pool II
Borrowing Base Determinations. The Pool II Borrowing Base shall be determined
from time to time in the manner described in this Section 2.10.
(a) Initial Pool II Borrowing Base Determination. (i) The Pool
II Borrowing Base shall be $0 during the period from the Second Closing
Date until the Pool II Borrowing Base is either increased or determined
pursuant to clause (a)(ii) or (a)(iii), as applicable.
(ii) If the Pool II Contributed Investments are contributed
before December 31, 1999, then the Pool II Borrowing Base shall be
increased by $560,000,000 on the Acquisition/Accession Date relating to
the Pool II Contributed Investments.
(iii) If the Pool II Contributed Investments are contributed
after December 31, 1999, then the Pool II Borrowing Base shall be
determined in accordance with the procedure set forth in Section
2.10(b) below; provided that the reference to "March 1" in Section
2.10(b)(i) shall be construed as the date of the Acquisition/Accession
Notice relating to the contribution of Pool II Contributed Investments.
(b) Scheduled Pool II Borrowing Base Determinations. A
determination of the Pool II Borrowing Base (each, a "POOL II BORROWING
BASE DETERMINATION") shall be made once during each calendar year in
accordance with this Section 2.10(b).
(i) No later than March 1 of each calendar year,
Sabine shall deliver a Reserve Report dated as of the Reserve
Report Date to the Calculation Agent, with a copy to Trinity;
provided that Sabine shall have the right to prepare such
Reserve Report on a pro forma basis, reflecting the Proved
Reserves attributable to the Oil and Gas Properties to be
acquired and/or Disposed of prior to the effectiveness of the
Pool II Borrowing Base to be determined based on such pro
forma Reserve Report.
(ii) No later than 30 days after the date of delivery
of the Reserve Report pursuant to clause (i) above, the
Calculation Agent on behalf of Trinity shall deliver to Sabine
a copy of a draft Pool II Borrowing Base Report.
(iii) No later than 10 days after the date of
delivery of the draft Pool II Borrowing Base Report pursuant
to clause (ii) above, Sabine shall deliver to the Calculation
Agent, with a copy to Trinity, its written comments and
adjustments to the draft Pool II Borrowing Base Report.
(iv) No later than 5 days after the date of delivery
of Sabine's written comments and adjustments to the draft Pool
II Borrowing Base Report pursuant to clause (iii) above, the
Calculation Agent on behalf of Trinity shall deliver to Sabine
the final Pool II Borrowing Base Report (the date of delivery
of such final report, the "FINAL BORROWING BASE REPORT
DELIVERY DATE") containing the Calculation Agent's
11
recommendation for the Pool II Borrowing Base (the "POOL II
BORROWING BASE RECOMMENDATION"). The Pool II Borrowing Base
Recommendation shall (A) take into account the projected cash
flows from Proved Reserves only, (B) ignore any rights or
benefits of any Person other than a Sponsor Subsidiary or a
Controlled Business under any Hedge Agreement permitted by
Section 5.09(b)(ii) and (C) be determined in accordance with
the Calculation Agent's normal and customary oil and gas
lending criteria.
(v) No later than 15 days after the Final Borrowing
Base Report Delivery Date, the Calculation Agent with the
agreement of Trinity shall furnish written notice to Sabine of
the Pool II Borrowing Base Determination, which shall contain
the determination of the new Pool II Borrowing Base.
(vi) Such new Pool II Borrowing Base shall become
effective, at Sabine's discretion and upon delivery by Sabine
of written notice to the Calculation Agent, on any date (the
"POOL II BORROWING BASE EFFECTIVE DATE") from, and including,
the date of the notice to Sabine under clause (v) above to,
and including, the date falling 60 days after the date of such
notice (the "OUTSIDE DATE"; it being understood that if Sabine
does not deliver such written notice to the Calculation Agent,
the Pool II Borrowing Base Effective Date shall be the Outside
Date) and shall remain effective during the period from such
date to the effective date of the next change to the Pool II
Borrowing Base occurring thereafter pursuant to this Section
2.10 (such period being the "POOL II BORROWING BASE PERIOD").
The Pool II Borrowing Base in effect during a Pool II
Borrowing Base Period is referred to as the "CURRENT POOL II
BORROWING BASE".
(vii) During each Pool II Borrowing Base Period, (A)
the "REDETERMINATION THRESHOLD" for such Pool II Borrowing
Base Period shall be an amount equal to 10% of the Current
Pool II Borrowing Base, (B) the "ADJUSTED REDETERMINATION
THRESHOLD" for such Pool II Borrowing Base Period shall be an
amount equal to the Redetermination Threshold for such Pool II
Borrowing Base Period minus the aggregate amount of Net Cash
Proceeds from all Dispositions of Relevant Assets that have
occurred during the Threshold Adjustment Period for such Pool
II Borrowing Base Period, and (C) the "THRESHOLD ADJUSTMENT
PERIOD" for such Pool II Borrowing Base Period shall be a
period starting from the Reserve Report Date in respect of the
Current Pool II Borrowing Base and ending on the Pool II
Borrowing Base Effective Date for such Pool II Borrowing Base
Period.
(viii) Notwithstanding anything to the contrary
contained herein, in the event the Reserve Report used to
determine a new Pool II Borrowing Base was prepared on a pro
forma basis, a new Pool II Borrowing Base shall not become
effective until any proposed acquisition reflected in such
Reserve Report has been completed. If a Pool II Borrowing Base
shall fail to become effective due to the failure of one or
more proposed acquisitions reflected in such Reserve Report to
be completed prior to or on the Outside Date relating to such
Pool II Borrowing Base, the Pool II Borrowing Base shall be
adjusted by the Calculation Agent by subtracting therefrom the
aggregate amount of the Pool II Borrowing Base attributable to
the Relevant Assets in connection with each of such proposed
acquisitions, and such adjusted Pool II Borrowing Base shall
become effective on the Outside Date.
(c) Optional Redeterminations of the Pool II Borrowing Base.
(i) In addition to the annual Pool II Borrowing Base Determination
pursuant to Section 2.10(b), redeterminations of
12
the Pool II Borrowing Base (each a "POOL II BORROWING BASE
REDETERMINATION") may be made from time to time upon notice (each a
"REDETERMINATION NOTICE") under Section 2.10(d) and Section 2.10(e),
and subject to this Section 2.10(c).
(ii) A Pool II Borrowing Base Redetermination shall become
effective on the Pool II Borrowing Base Effective Date applicable
thereto and shall remain effective during the period from such date to
the effective date of the next change to the Pool II Borrowing Base
occurring thereafter pursuant to this Section 2.10.
(d) Pool II Borrowing Base Redeterminations - Annual Option.
(i) Trinity may, not more than once per calendar year, deliver to
Sabine and the Calculation Agent a Redetermination Notice under this
Section 2.10(d) (and identifying this Section 2.10(d)), following which
the Pool II Borrowing Base shall be determined in accordance with the
procedure set forth in Section 2.10(b) above; provided that the
reference to "March 1" in Section 2.10(b)(i) shall be construed as a
reference to the date falling 30 days after the date of delivery of the
Redetermination Notice.
(ii) Sabine may, not more than once per calendar year, deliver
a Redetermination Notice to Trinity and the Calculation Agent under
this Section 2.10(d) (and identifying this Section 2.10(d)), following
which the Pool II Borrowing Base shall be determined pursuant to the
procedure set forth in Section 2.10(b) above; provided that the
reference to "March 1" in Section 2.10(b)(i) shall be construed as a
reference to the date of delivery of the Redetermination Notice.
(e) Pool II Borrowing Base Redeterminations - Acquisitions and
Dispositions. If:
(i) a Pool II Controlled Business acquires any Oil
and Gas Properties, as permitted by Section 5.09(d)(ii);
(ii) a Pool II Controlled Business makes an
Investment in any Person, as permitted by Section 5.09(e)(iv),
and Sabine does not elect that such Investment shall be
treated as a Disposition in accordance with the third sentence
of the definition of "Disposition" in Exhibit A to the Trinity
Company Agreement;
(iii) a Pool II Controlled Business Disposes of any
of its Oil and Gas Properties (otherwise than to another Pool
II Controlled Business), as permitted by Section 5.09(d)(v);
or
(iv) a Pool II Controlled Business Disposes of Equity
Interests in any Person (otherwise than to another Pool II
Controlled Business), as permitted by Section 5.09(d)(v)
(the Oil and Gas Properties so acquired, or the Oil and Gas Properties
of the Person in which such Investment is made, or the Oil and Gas
Properties Disposed of, or the Oil and Gas Properties of the Person in
which such Equity Interests are Disposed of, the "RELEVANT ASSETS"),
and:
(A) the aggregate amount of the purchase price of the
Relevant Assets acquired, together with any other Relevant
Assets acquired in the circumstances described in this Section
2.10(e) during the current Pool II Borrowing Base Period; or
(B) the aggregate amount of Net Cash Proceeds from
the Relevant Assets Disposed of, together with any other
Relevant Assets Disposed of in the circumstances described in
this Section 2.10(e) during the current Pool II Borrowing Base
Period,
13
in either case exceeds the Adjusted Redetermination Threshold for such
current Pool II Borrowing Base Period, then either Sabine or Trinity
may deliver a Redetermination Notice to the other under this Section
2.10(e) (and identifying this Section 2.10(e)), following which the
Pool II Borrowing Base shall be redetermined in accordance with the
procedure set forth in Section 2.10(b) above; provided that Sabine may,
at its discretion, prepare a new Reserve Report to be dated as of the
date of delivery of such Redetermination Notice and in contemplation of
the occurrence of acquisitions and/or Dispositions that will result in
an option to deliver a Redetermination Notice as provided above, on a
pro forma basis reflecting the Proved Reserves attributable to the Oil
and Gas Properties to be acquired and/or Disposed of and deliver such
Reserve Report to the Calculation Agent, with a new Pool II Borrowing
Base becoming effective at the later of (x) the date on which all of
such proposed acquisitions are completed and (y) the new Pool II
Borrowing Base Effective Date determined in accordance with the
procedure set forth in Section 2.10(b) above (it being agreed that the
date referred to in this clause (y) may be contemporaneous with the
date referred to in clause (x) above); and provided further that, in
making such redetermination, the reference to "March 1" in Section
2.10(b)(i) shall be construed as a reference to (1) the date of
delivery of the Redetermination Notice (where Sabine delivers such
Redetermination Notice) and (2) the date falling 30 days after the date
of delivery of the Redetermination Notice (where Trinity delivers such
Redetermination Notice).
For the purposes of the calculation to be made pursuant to the
immediately preceding paragraph, the value of the Relevant Assets
acquired or Disposed of shall be determined as follows:
(1) for any Relevant Assets that are acquired, the
value of such Relevant Assets shall be deemed to be the
purchase price for such Relevant Assets; and
(2) for any Relevant Assets that are treated as
having been Disposed of in accordance with the third sentence
of the definition of "Disposition" in Exhibit A to the Trinity
Company Agreement, the value of such Relevant Assets shall be
determined using the standardized methodology prescribed by
the Securities and Exchange Commission for the calculation of
the discounted present value of Proved Reserves for Securities
and Exchange Commission reporting purposes (commonly known as
the "PV-10"); and
(3) for any Relevant Assets otherwise Disposed of,
the value of such Relevant Assets shall be deemed to be the
Net Cash Proceeds received from such Disposal.
(f) Further Assurance. Each Sponsor Subsidiary shall provide
all documents and other information reasonably necessary to enable each
Pool II Borrowing Base Determination and Pool II Borrowing Base
Redetermination to be completed in accordance with this Section 2.10.
Section 2.11. Pool II Reserve Amount. The following provisions
shall apply in respect of each annual Pool II Borrowing Base Determination made
pursuant to Section 2.10(b).
(a) If, following any such annual Pool II Borrowing Base
Determination, the Pool II Borrowing Base determined pursuant to the
immediately preceding annual Pool II Borrowing Base Determination
(including, for the purposes of this Section 2.11, the initial
determination of the Pool II Borrowing Base pursuant to Section
2.10(a)(ii) or Section 2.10(a)(iii), as applicable) exceeds the new
Pool II Borrowing Base arising therefrom (such excess, the "POOL II
BORROWING
14
BASE REDUCTION"), then the Sponsor Subsidiaries shall on the Pool II
Borrowing Base Effective Date either:
(i) (A) prepay Advances from amounts standing to the
credit of the Cash Reserve at such time in an aggregate
principal amount equal to the lesser of (1) the Pool II
Borrowing Base Reduction and (2) the amount equal to the
balance of the Cash Reserve less (x) the Pool II Holdback
Amount for the most recently completed Fiscal Quarter, (y) the
Required Cash Reserve Balance at such time and (z) the Total
Cash Collateral Amount at such time; and
(B) pay, or make a deemed payment of, additional Cash
Collateral Amounts to the Cash Reserve in an aggregate
principal amount equal to the difference between the Pool II
Borrowing Base Reduction and the amounts pre-paid pursuant to
clause (i)(A); or
(ii) pay, or make a deemed payment of, additional
Cash Collateral Amounts to the Cash Reserve in an aggregate
principal amount equal to the Pool II Borrowing Base
Reduction;
provided, however, that, with respect to clause (a)(i)(A) above, such
prepayment of Advances shall be required and, with respect to clause
(a)(i)(B) and clause (a)(ii) above, such payment of additional Cash
Collateral Amounts shall be required only if the Unrecovered Capital of
Red River in Trinity at such time shall be greater than the sum of (x)
the Aggregate Pool I Loan Value Amount, (y) the new Pool II Borrowing
Base and (z) the Total Cash Collateral Amount at such time.
(b) Subject to clause (d) below, if the Sponsor Subsidiaries
prepay Advances in accordance with clause (a)(i)(A) above or if there
is no Pool II Borrowing Base Reduction or if no prepayments or payments
are required pursuant to the proviso of Section 2.11(a), then the
Sponsor Subsidiaries may on the Pool II Borrowing Base Effective Date
Distribute from the Cash Reserve (free of any Lien under the Sponsor
Subsidiary Credit Documents) to the Sabine Member or such other Person
(including to the holder of any Subordinated Note, but only to the
extent permitted by, and in accordance with the terms of, such
Subordinated Note) or account as Trinity directs (upon request therefor
from Sabine) an amount equal to the amount (if any) by which the Pool
II Holdback Amount for the Fiscal Year ended immediately prior to such
Pool II Borrowing Base Effective Date exceeds the difference between
the Pool II Borrowing Base Reduction and the amounts pre-paid pursuant
to clause (a)(i)(A) above.
(c) Subject to clause (d) below, if the Sponsor Subsidiaries
pay, or make a deemed payment of, Cash Collateral Amounts to the Cash
Reserve in accordance with clause (a)(i)(B) or (a)(ii) above or if
there is no Pool II Borrowing Base Reduction or if no prepayments or
payments are required pursuant to the proviso of Section 2.11(a), then
the Sponsor Subsidiaries may on the Pool II Borrowing Base Effective
Date Distribute from the Cash Reserve (free from any Lien under the
Sponsor Subsidiary Credit Documents) to the Sabine Member or such other
Person (including to the holder of any Subordinated Note, but only to
the extent permitted by, and in accordance with the terms of, such
Subordinated Note) or account as Trinity directs (upon request therefor
from Sabine) an amount equal to the Pool II Holdback Amount for the
Fiscal Year ended immediately prior to such Pool II Borrowing Base
Effective Date.
(d) The Sponsor Subsidiaries may only make a Distribution
pursuant to clause (b) or (c) above:
15
(i) to the extent there are funds standing to the
credit of the Cash Reserve (after liquidation or calling in of
any Permitted Investments);
(ii) if immediately prior to and immediately after
such Distribution the Sponsor Subsidiaries are in compliance
with Section 5.04(c);
(iii) if no El Paso RA Event shall have occurred and
be continuing; and
(iv) if no Incipient Event, Event of Default, Notice
Event, Termination Event or Liquidating Event shall have
occurred and be continuing or would result therefrom;
provided, however, that, after the occurrence and during the
continuance of an El Paso RA Event, no such Distribution shall be
permitted to be made, and the Pool II Holdback Amount shall be applied
to prepay the Advances in accordance with Section 2.05(b)(ix)(E).
Section 2.12. Adjustments to Pool I Loan Values/Aggregate Pool
I Loan Value Amount. (a) Sabine may, at any time, but no more frequently than
twice in any calendar year, deliver a written request to Trinity for approval to
an increase in the Aggregate Pool I Loan Value Amount (such amount, the "REVISED
AGGREGATE POOL I LOAN VALUE AMOUNT"). Such request shall be accompanied by such
documents and evidence necessary to support the request for such increase.
(b) Trinity shall no later than the Pool I Loan Value Voting
Date advise Sabine in writing as to whether it agrees to the Revised Aggregate
Pool I Loan Value Amount.
(c) If Trinity agrees to the Revised Aggregate Pool I Loan
Value Amount, then as from the Pool I Loan Value Voting Date the Aggregate Pool
I Loan Value Amount shall be deemed to be the Revised Aggregate Pool I Loan
Value Amount and shall remain effective during the period from such date to the
effective date of the next change to the Aggregate Pool I Loan Value Amount
occurring thereafter pursuant to this Section 2.12; provided, however, that such
Aggregate Pool I Loan Value Amount shall be from time to time:
(i) increased by the amount of the Pool I Loan Value
attributable to any Pool I Contributed Investment acquired by an
existing Sponsor Subsidiary pursuant to Section 9.02 or owned by an
Additional Sponsor Subsidiary that accedes to the Sponsor Subsidiary
Credit Documents pursuant to Section 9.02;
(ii) decreased by the amount of the Pool I Loan Value
attributable to any Pool I Contributed Investment (other than a
Pre-approved Pool I Contributed Investment) Disposed of pursuant to
Section 5.02(d)(iii) or the Gross Cash Proceeds received from the
Disposition of any Pre-approved Pool I Contributed Investment Disposed
of pursuant to Section 5.02(d)(iii); or
(iii) decreased by the amount of the Pool I Loan Value
attributable to the Disposition pursuant to Section 5.09(d)(iii) of all
or substantially all of the assets of, or Equity Interests in, any
Intermediate Holder or Underlying Business (other than any Intermediate
Holder or Underlying Business relating to a Pool I Publicly Traded
Investment or a Pre-approved Pool I Contributed Investment) or the
Gross Cash Proceeds received from the Disposition pursuant to Section
5.09(d)(iii) of all or substantially all of the assets of, or Equity
Interests in, any Intermediate Holder or Underlying Business relating
to any Pre-approved Pool I Contributed Investment (other than any
Intermediate Holder or Underlying Business relating to Energy
Partners).
16
ARTICLE III
CONDITIONS TO ADVANCES
Section 3.01. Conditions Precedent to Making the Advances on
the First Closing Date. The agreement of Trinity to make the Advance on the
First Closing Date is subject to the following conditions precedent being
satisfied on or prior to the First Closing Date:
(a) In the case of El Paso and its Consolidated Subsidiaries,
since December 31, 1998, nothing shall have occurred that will have
resulted in a Material Adverse Effect (adopting for the purposes of
this Section 3.01(a) the definition of "Material Adverse Effect" set
forth in clause (b) of the definition thereof in Exhibit A to the
Trinity Company Agreement).
(b) Trinity shall have received the following documents, each
dated as of the First Closing Date (other than the documents described
in clause (b)(vi)) and duly executed by the respective party or parties
thereto, and otherwise in form and substance reasonably satisfactory to
Trinity and (except for the documents listed in clauses (b)(ii),
(b)(vi) and (b)(xi)) in four original counterparts:
(i) This Agreement and the Sponsor Subsidiary
Security Agreement.
(ii) Duly executed copies of proper financing
statements (Form UCC-1) under the UCC (or its equivalent) of
all jurisdictions that may be necessary or advisable in order
to perfect and protect the Liens created by the Sponsor
Subsidiary Security Agreement.
(iii) Evidence that all other actions to the extent
necessary to perfect and protect the Liens created by the
Sponsor Subsidiary Security Agreement have been taken.
(iv) (A) An original counterpart of the Sabine
Company Agreement and all amendments thereto and (B) an
original counterpart of the limited liability company
agreement of each other Sponsor Subsidiary (if any), in form
and substance satisfactory to Trinity, Red River, the Equity
Investors, the Agent and the Lender.
(v) An original counterpart of the El Paso Agreement.
(vi) Certificates of the Secretary of State of the
State of Delaware with respect to El Paso and each Sponsor
Subsidiary (each dated on, or a recent date prior to, the
First Closing Date), in each case attaching the charter or
certificate of formation of such Person and each amendment
thereto on file in such office and certifying that (A) such
charter or certificate of formation is a true and complete
copy thereof, (B) such amendments, if any, are the only
amendments to such charter or certificate of formation on file
in such office, (C) such Person has paid all franchise taxes
to the date of such certificate and (D) such Person is duly
formed and in good standing under the laws of the jurisdiction
of its formation.
(vii) An original executed counterpart of the Sponsor
Subsidiary Collateral Agent Fee Letter.
(viii) Certificates of each of El Paso, Sabine and
each other Sponsor Subsidiary (if any), signed on behalf of
each such Person by a Responsible Officer of
17
each such Person (the statements made in which certificate
shall be true and correct on and as of the First Closing
Date), certifying as to:
(A) the absence of any amendments to the
limited liability company agreement or other
constitutive document of such Person since the date
of the certificate referred to in Section
3.01(b)(vi);
(B) with respect to El Paso and each Sponsor
Subsidiary other than Sabine, a true and correct copy
of the by-laws or limited liability company agreement
(as applicable) of such Person as in effect on the
First Closing Date;
(C) the due incorporation or formation and
good standing of such Person as a corporation or
limited liability company, as the case may be, under
the laws of the jurisdiction of its organization, and
the absence of any proceeding for the dissolution or
liquidation of such Person;
(D) in the case of each such Person, that
attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors,
executive (or other) committee of the board of
directors, managing member or manager, as applicable,
of such Person authorizing the execution, delivery
and performance of each Operative Document to which
it is a party;
(E) in the case of each such Person, that
such resolutions have not been revoked, annulled or
modified in any manner and are in full force and
effect;
(F) in the case of each such Person, the
incumbency and specimen signature of each officer or
managing member of such Person executing the
Operative Documents described in clause (D) above,
and a certification of another officer or an
authorized representative of such Person or of a
managing member of such Person, as applicable, as to
the signature of the officers signing certificates
referred to in this clause (F);
(G) no Liquidating Event, Termination Event,
Notice Event, Event of Default or Incipient Event has
occurred and is continuing or would result from the
making of any Advance on the First Closing Date; and
(H) Sabine has made or is simultaneously
making all capital contributions required to be made
by Sabine on the First Closing Date pursuant to the
Trinity Company Agreement.
(ix) The legal opinions described in Section 3.01(b)
of the Red River Credit Agreement.
(x) An original executed counterpart of the El Paso
Guaranty.
(xi) A copy of each executed A-Loan Note and B-Loan
Note (as defined in the Original ).
(xii) An original counterpart of each other Operative
Document and such other certificates, documents and opinions
as Trinity may reasonably request.
18
(xiii) A certificate of Sabine certifying that, on
the First Closing Date and after giving effect to the use of
proceeds of the Advances borrowed on the First Closing Date,
and the other transactions contemplated by the Operative
Documents: (A) Sabine is the Trinity Class A Member and (B)
Sabine's Capital Account under and as defined in the Trinity
Company Agreement (after giving effect to all allocations
required to be made through the First Closing Date and the
making of additional capital contributions to Trinity in
respect of Sabine's Trinity Class A Membership Interest) is
not less than $125,000,000.
(xiv) A certificate of Sabine certifying that, on or
prior to the First Closing Date, Sabine has received capital
contributions from its members in an amount not less than
$125,000,000.
(xv) A copy of each notice by Sabine required
pursuant to Section 7.01(b) and Section 7.02(b) hereof.
(xvi) An original executed counterpart of the Sponsor
Subsidiary Collateral Agent Agreement.
(xvii) An original executed counterpart of each
Liquidation Indemnity.
(xviii) To the extent not covered by items (i)
through (xvii) of this Section 3.01(b), each of the documents
furnished to the Agent pursuant to Section 3.01(b) of the Red
River Credit Agreement (other than the documents referred to
in Section 3.01(b)(xxix) of the Red River Credit Agreement).
(c) Sabine shall be the Trinity Class A Member and shall have
made all required Capital Contributions to Trinity.
(d) All agreements related to, and the capital and legal
structure of, the Sponsor Subsidiaries (including, but not limited to,
the Operative Documents) and all organizational documents shall be
reasonably satisfactory to Trinity, Red River, the Equity Investors,
the Agent and the Lender.
(e) All necessary governmental and third-party approvals in
connection with the Transactions shall have been received, except for
such governmental and third party approvals that, pursuant to the
provisions hereof or the Operative Documents, are not required to be
obtained on or prior to the First Closing Date.
(f) No litigation by any entity (private or governmental)
shall be pending, or to Sabine's knowledge threatened, against or
involving any Sponsor Subsidiary, any Contributed Investment, or any
Intermediate Holder or any Underlying Business or affecting any of
their respective properties, assets, rights or businesses in any court,
or before any arbitrator of any kind, or before or by any governmental
body which, in the reasonable judgment of Sabine (taking into account
the exhaustion of all appeals) would have a Material Adverse Effect or
which purports to affect the legality, validity, binding effect or
enforceability of any Operative Document.
(g) All fees and reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses (and other compensation
contemplated hereby) payable to the Sponsor
19
Subsidiary Collateral Agent, required to be paid by the Sponsor
Subsidiaries hereunder shall have been paid to the extent due.
(h) Trinity, Red River, the Equity Investors, the Agent and
the Lender shall be reasonably satisfied with all legal issues
including tax and regulatory matters relating to the Operative
Documents and the Transactions.
(i) Evidence that the Cash Reserve has been established with
the Sponsor Subsidiary Collateral Agent.
(j) On the First Closing Date, the following statements shall
be true (and acceptance by a Sponsor Subsidiary of the proceeds of an
Advance on the First Closing Date shall constitute a representation and
warranty by such Sponsor Subsidiary that on the First Closing Date such
statements are true):
(i) the representations and warranties of each
Sponsor Subsidiary contained in each Operative Document to
which it is a party are correct in all material respects on
and as of the First Closing Date, before and after giving
effect to the Advances borrowed on the First Closing Date and
to the application of the proceeds therefrom, as though made
on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties shall
have been correct in all material respects on and as of such
earlier date));
(ii) no event has occurred and is continuing, or
would result from the making of the Advances on the First
Closing Date or from the application of the proceeds
therefrom, that constitutes an Event of Default or an
Incipient Event; and
(iii) the proceeds of the Advances to be borrowed on
the First Closing Date will be used to make A-Loans and
B-Loans (as defined in the Original ).
(k) Lord Securities shall have been appointed as an
independent manager of each Sponsor Subsidiary pursuant to the terms of
each Sponsor Subsidiary Company Agreement.
(i) Evidence that (i) the aggregate principal amount
of the A-Loans and B-Loans (as defined in the Original ) to be made on the First Closing
Date is at least equal to the aggregate principal amount of
the Advances to be made on the First Closing Date, (ii) the
aggregate principal amount of A-Loans to be made on the First
Closing Date is equal to $125,000,000, and (iii) the aggregate
principal amount of B-Loans (as defined in the Original
) to be made on the First
Closing Date is equal to $500,000,000.
(l) Trinity, Red River, the Equity Investors, the Agent and
the Lender shall be satisfied that all conditions set forth in Section
3.01 of the Red River Credit Agreement (other than the conditions set
forth in Section 3.01(e) of the Red River Credit Agreement) are
satisfied.
Section 3.02. Conditions Precedent to Making the Advances on
the Second Closing Date. The agreement of Trinity to make the Advance on the
Second Closing Date is subject to the following conditions:
20
(a) In the case of El Paso and its Consolidated Subsidiaries,
since December 31, 1998, nothing shall have occurred that will have
resulted in a Material Adverse Effect (adopting for the purposes of
this Section 3.02(a) the definition of "Material Adverse Effect" set
forth in clause (b) of the definition thereof in Exhibit A to the
Trinity Company Agreement).
(b) Trinity shall have received the following documents, each
dated as of the Second Closing Date and duly executed by the respective
party or parties thereto, and otherwise in form and substance
reasonably satisfactory to Trinity and (except for the documents listed
in clauses (b)(ii), (b)(vi) and (b)(xi)) in seven original
counterparts:
(i) An original counterpart of each Operative
Document amended and restated as of the Second Closing Date.
(ii) Duly executed copies of proper financing
statements (Form UCC-1) under the UCC (or its equivalent) of
all jurisdictions that may be necessary or advisable in order
to perfect and protect the Liens created by the Sponsor
Subsidiary Security Agreement.
(iii) Evidence that all other actions to the extent
necessary to perfect and protect the Liens created by the
Sponsor Subsidiary Security Agreement have been taken.
(iv) Certificates of the Secretary of State of the
State of Delaware with respect to El Paso and each Sponsor
Subsidiary (each dated on, or a recent date prior to, the
Second Closing Date), in each case attaching the charter or
certificate of formation of such Person and each amendment
thereto on file in such office and certifying that (A) such
charter or certificate of formation is a true and complete
copy thereof, (B) such amendments, if any, are the only
amendments to such charter or certificate of formation on file
in such office, (C) such Person has paid all franchise taxes
to the date of such certificate and (D) such Person is duly
formed and in good standing under the laws of the jurisdiction
of its formation.
(v) Certificates of each of El Paso, Sabine and each
other Sponsor Subsidiary (if any), signed on behalf of each
such Person by a Responsible Officer of each such Person (the
statements made in which certificate shall be true and correct
on and as of the Second Closing Date), certifying as to:
(A) the absence of any amendments to the
limited liability company agreement or other
constitutive document of such Person since the date
of the certificate referred to in Section
3.02(b)(iv);
(B) with respect to El Paso and each Sponsor
Subsidiary other than Sabine, a true and correct copy
of the by-laws or limited liability company agreement
(as applicable) of such Person as in effect on the
Second Closing Date;
(C) the due incorporation or formation and
good standing of such Person as a corporation or
limited liability company, as the case may be, under
the laws of the jurisdiction of its organization, and
the absence of any proceeding for the dissolution or
liquidation of such Person;
21
(D) in the case of each such Person, that
attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors,
executive (or other) committee of the board of
directors, managing member or manager, as applicable,
of such Person authorizing the execution and delivery
of the First Amendment to the Operative Documents and
each Operative Document amended or amended and
restated pursuant thereto and performance of the
transactions contemplated by the First Amendment to
the Operative Documents and such Operative Documents;
(E) in the case of each such Person, that
such resolutions have not been revoked, annulled or
modified in any manner and are in full force and
effect;
(F) in the case of each such Person, the
incumbency and specimen signature of each officer or
managing member of such Person executing the First
Amendment to the Operative Documents and each other
Operative Document, and a certification of another
officer or an authorized representative of such
Person or of a managing member of such Person, as
applicable, as to the signature of the officers
signing certificates referred to in this clause (F);
(G) no Liquidating Event, Termination Event,
Notice Event, Event of Default or Incipient Event has
occurred and is continuing or would result from the
making of any Advance on the Second Closing Date; and
(H) Sabine has made or is simultaneously
making all capital contributions required to be made
by Sabine on the Second Closing Date pursuant to the
Trinity Company Agreement (as amended and restated by
the First Amendment to the Operative Documents).
(vi) The legal opinions described in Section 3.02(b)
of the Red River Credit Agreement.
(vii) Such other certificates, documents and opinions
as Trinity may reasonably request.
(viii) A certificate of Sabine certifying that, on
the Second Closing Date and after giving effect to the use of
proceeds of the Advance borrowed on the Second Closing Date,
and the other transactions contemplated by the Operative
Documents, Sabine's Capital Account under and as defined in
the Trinity Company Agreement (after giving effect to all
allocations required to be made through the Second Closing
Date and the making of additional capital contributions to
Trinity in respect of Sabine's Trinity Class A Membership
Interest) is not less than $250,000,000.
(ix) A certificate of Sabine certifying that, on or
prior to the Second Closing Date, Sabine has received capital
contributions from its members in an amount not less than
$125,000,000 (in addition to any capital contributions
received on or prior to the First Closing Date).
(x) To the extent any El Paso Company is to accede to
this Agreement as an Additional Sponsor Subsidiary pursuant to
Article IX hereof on the Second Closing Date, the documents
required pursuant to Article IX in connection with such
accession.
22
(xi) To the extent not covered by items (i) through
(x) of this Section 3.02(b), each of the documents furnished
to the Agent pursuant to Section 3.02(b) of the Red River
Credit Agreement.
(xii) A copy of each notice by Sabine required
pursuant to Section 7.01(b) and Section 7.02(b) hereof (each
dated as of the Second Closing Date).
(c) Sabine shall have made all required Capital Contributions
to Trinity to be made on or before the Second Closing Date.
(d) All agreements related to, and the capital and legal
structure of, the Sponsor Subsidiaries (including, but not limited to,
the Operative Documents) and all organizational documents shall be
reasonably satisfactory to Trinity, Red River, the Equity Investors,
the Agent and the Lender.
(e) All necessary governmental and third-party approvals in
connection with the Transactions as they relate to the Advances made or
to be made on the Second Closing Date, the Pool II Contributed
Investments, and the Red River Loan Documents shall have been received,
except for such governmental and third party approvals that, pursuant
to the provisions hereof or the Operative Documents, are not required
to be obtained on or prior to the Second Closing Date.
(f) No litigation by any entity (private or governmental)
shall be pending, or to Sabine's knowledge threatened, against or
involving any Sponsor Subsidiary, any Contributed Investment, or any
Intermediate Holder or any Underlying Business or affecting any of
their respective properties, assets, rights or businesses in any court,
or before any arbitrator of any kind, or before or by any governmental
body which, in the reasonable judgment of Sabine (taking into account
the exhaustion of all appeals) would have a Material Adverse Effect or
which purports to affect the legality, validity, binding effect or
enforceability of any Operative Document.
(g) All fees and reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses (and other compensation
contemplated hereby) payable to the Sponsor Subsidiary Collateral
Agent, required to be paid by the Sponsor Subsidiaries under the
Operative Documents shall have been paid to the extent due.
(h) Trinity, Red River, the Equity Investors, the Agent and
the Lender under the Red River Credit Agreement shall be reasonably
satisfied with all legal issues including tax and regulatory matters
relating to the Operative Documents and the Transactions.
(i) On the Second Closing Date, the following statements shall
be true (and acceptance by a Sponsor Subsidiary of the proceeds of an
Advance borrowed on the Second Closing Date shall constitute a
representation and warranty by such Sponsor Subsidiary that on the
Second Closing Date such statements are true):
(i) the representations and warranties of each
Sponsor Subsidiary contained in each Operative Document to
which it is a party are correct in all material respects on
and as of the Second Closing Date, before and after giving
effect to the Advances borrowed on the Second Closing Date and
to the application of the proceeds therefrom, as though made
on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties shall
have been correct in all material respects on and as of such
earlier date));
23
(ii) no event has occurred and is continuing, or
would result from the making of the Advances on the Second
Closing Date or from the application of the proceeds
therefrom, that constitutes an Event of Default or an
Incipient Event; and
(iii) the proceeds of the Advances to be borrowed on
the Second Closing Date will be used to make A-Loans and
B-Loans (as defined in the Original ).
(j) Evidence that the aggregate principal amount of the
A-Loans and B-Loans (as defined in the Original ) on the Second Closing Date is at least equal to the
aggregate principal amount of the Advances outstanding on the Second
Closing Date.
(k) Trinity, Red River, the Equity Investors, the Agent and
the Lender under the Red River Credit Agreement shall be satisfied that
all conditions set forth in Section 3.01 of the Red River Credit
Agreement (other than the conditions set forth in Section 3.01(d) of
the Red River Credit Agreement) are satisfied.
Section 3.03. Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective as of the Third Closing Date
upon the satisfaction of the following conditions:
(a) In the case of El Paso and its Consolidated Subsidiaries,
since December 31, 2000, nothing shall have occurred that will have
resulted in a Material Adverse Effect (adopting for the purposes of
this Section 3.03(a) the definition of "Material Adverse Effect" set
forth in clause (b) of the definition thereof in Exhibit A to the
Trinity Company Agreement).
(b) Trinity shall have received the following documents, each
dated as of the Third Closing Date and duly executed by the respective
party or parties thereto, and otherwise in form and substance
reasonably satisfactory to Trinity and (except for the documents listed
in clauses (b)(ii), (b)(v) and (b)(vi)) in seven original counterparts:
(i) An original counterpart of the following
Operative Documents, each as amended and restated as of the
Third Closing Date:
(A) this Agreement;
(B) the Sponsor Subsidiary Security
Agreement;
(C) the El Paso Guaranty;
(D) the El Paso Agreement;
(E) the Amendments to the Sponsor Subsidiary
Company Agreements;
(F) the Trinity Company Agreement;
(G) the Red River Credit Agreement; and
(H) the Asset Purchase Agreement.
24
(ii) A replacement A-Loan Note (to be delivered
against receipt of the then existing A-Loan Note).
(iii) Certificates of each of El Paso, Sabine and the
other Sponsor Subsidiaries signed on behalf of each such
Person by a Responsible Officer of each such Person (the
statements made in which certificate shall be true and correct
on and as of the Third Closing Date), certifying as to:
(A) a true and correct copy of the by-laws or limited
liability company agreement (as applicable) of such Person as in effect
on the Third Closing Date or, if applicable, the absence of any
amendments to the limited liability company agreement or other
constitutive document of such Person since the Second Closing Date
(except the Amendments to the Sponsor Subsidiary Company Agreements
delivered under Section 3.03(b)(i)(E));
(B) [intentionally omitted];
(C) the due incorporation or formation and good standing of
such Person as a corporation or limited liability company, as the case
may be, under the laws of the jurisdiction of its organization, and the
absence of any proceeding for the dissolution or liquidation of such
Person;
(D) in the case of each such Person, that attached thereto is
a true and complete copy of resolutions duly adopted by the board of
directors, executive (or other) committee of the board of directors,
managing member or manager, as applicable, of such Person authorizing
the execution and delivery of each amended and restated Operative
Document and performance of the transactions contemplated by such
Operative Documents;
(E) in the case of each such Person, that such resolutions
have not been revoked, annulled or modified in any manner and are in
full force and effect;
(F) in the case of each such Person, the incumbency and
specimen signature of each officer or managing member of such Person
executing each Operative Document, and a certification of another
officer or an authorized representative of such Person or of a managing
member of such Person, as applicable, as to the signature of the
officers signing certificates referred to in this clause (F); and
(G) no Liquidating Event, Termination Event, Notice Event,
Event of Default or Incipient Event has occurred and is continuing or
would result from the amendment and restatement of the Operative
Documents on the Third Closing Date.
(iv) The legal opinions described in Section 3.03(b)
of the Red River Credit Agreement.
(v) Such other certificates, documents and opinions
as Trinity may reasonably request.
(vi) To the extent not covered by clauses (i) through
(v) of this Section 3.03(b), each of the documents furnished
to the Agent pursuant to Section 3.03(b) of the Red River
Credit Agreement.
25
(c) All agreements related to, and the capital and legal
structure of, the Sponsor Subsidiaries (including, but not limited to,
the Operative Documents) and all organizational documents shall be
reasonably satisfactory to Trinity, Red River, the Equity Investors,
the Agent and the Lender.
(d) All necessary governmental and third-party approvals in
connection with the Transactions shall have been received, except for
such governmental and third party approvals that, pursuant to the
provisions hereof or the Operative Documents, are not required to be
obtained on or prior to the Third Closing Date.
(e) No litigation by any entity (private or governmental)
shall be pending, or to Sabine's knowledge threatened, against or
involving any Sponsor Subsidiary, any Contributed Investment, or any
Intermediate Holder or any Underlying Business or affecting any of
their respective properties, assets, rights or businesses in any court,
or before any arbitrator of any kind, or before or by any governmental
body which, in the reasonable judgment of Sabine (taking into account
the exhaustion of all appeals) would have a Material Adverse Effect or
which purports to affect the legality, validity, binding effect or
enforceability of any Operative Document.
(f) All fees and reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses (and other compensation
contemplated hereby) payable to the Sponsor Subsidiary Collateral
Agent, required to be paid by the Sponsor Subsidiaries under the
Operative Documents shall have been paid to the extent due.
(g) Trinity, Red River, the Equity Investors, the Agent and
the Lender under the Red River Credit Agreement shall be reasonably
satisfied with all legal issues including tax and regulatory matters
relating to the Operative Documents and the Transactions.
(h) On the Third Closing Date, the following statements shall
be true:
(i) the representations and warranties of each
Sponsor Subsidiary contained in each Operative Document to
which it is a party are correct in all material respects on
and as of the Third Closing Date, as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date (in which case
such representations and warranties shall have been correct in
all material respects on and as of such earlier date)); and
(ii) no event has occurred and is continuing, or
would result from the amendment and restatement of the
Operative Documents, that constitutes an Event of Default or
an Incipient Event.
(i) Evidence that (A) all of the B-Loans (as defined in the
Original ) outstanding immediately
prior to the Third Closing Date have been converted into A-Loans and
(B) the Sponsor Subsidiaries have made or have been deemed to have made
initial payments of Cash Collateral Amounts in the aggregate amount of
U.S.$20,000,000 to the Cash Reserve.
(j) Evidence that the aggregate principal amount of the
A-Loans on the Third Closing Date is at least equal to the aggregate
principal amount of the Advances outstanding on the Third Closing Date.
26
(k) Evidence that, immediately after the Third Closing Date,
the Sponsor Subsidiaries shall be in compliance with the requirements
of Section 5.04(b) of this Agreement.
(l) Trinity, Red River, the Equity Investors, the Agent and
the Lender under the Red River Credit Agreement shall be satisfied that
all conditions set forth in Section 3.03 of the Red River Credit
Agreement (other than the conditions set forth in Section 3.03(d) of
the Red River Credit Agreement) are satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties with Respect to
Each Sponsor Subsidiary. Each Sponsor Subsidiary represents and warrants as
follows in respect of itself:
(a) Due Formation. It is duly formed, validly existing and in
good standing under the laws of the State of Delaware. It has all
requisite limited liability company powers to carry on its business as
now conducted and it has all governmental licenses, authorizations,
consents and approvals required in each case to carry on its business
as now conducted, except for such governmental licenses,
authorizations, consents and approvals of which the failure to obtain
could not reasonably be expected to have a Material Adverse Effect.
(b) Authorization of Agreements. It has the limited liability
company power and authority to execute and deliver this Agreement and
the other Operative Documents to which it is a party and to perform its
obligations hereunder and thereunder. The execution, delivery and
performance by it of this Agreement and each other Operative Document
to which it is a party have been duly authorized by all necessary
limited liability company action.
(c) Enforceability. Each of this Agreement and the other
Operative Documents to which it is a party constitutes the legal, valid
and binding obligation of it and is enforceable against it in
accordance with its terms, except as the enforceability thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general principles of equity.
(d) Compliance with Applicable Laws. It is in compliance with
all Applicable Laws applicable to it and all licensing requirements of
all Governmental Authorities the violation of which could reasonably be
expected to have a Material Adverse Effect, and it is not the subject
of any outstanding or threatened citation, order, or investigation by
any Governmental Authority that could reasonably be expected to have a
Material Adverse Effect.
(e) No Conflict with Restrictions; No Default. The execution,
delivery and performance by it of each Operative Document to which it
is a party does not (i) contravene, or constitute a breach or default
under, (A) any provision of Applicable Law (including Regulation T, U,
or X issued by the Board of Governors of the Federal Reserve System)
applicable to it, (B) its Organizational Documents, (C) any judgment,
injunction, order, decree or agreement binding upon it, (D) any
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other agreement or instrument binding upon or with respect to it, or
(E) any of its properties, or (ii) result in the creation or imposition
of any Lien on any of its assets, except for Permitted Liens. It is not
in violation of any such Applicable Law, or in breach of or in default
under any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other agreement or
27
instrument, except for any violation, breach or default which could not
reasonably be expected to have a Material Adverse Effect.
(f) Authorizations. (i) The execution, delivery and
performance by it of each Operative Document to which it is a party and
the consummation of the Transactions, (ii) the pledge by it of the
Collateral pursuant to the Sponsor Subsidiary Security Agreement, (iii)
the grant by it of the Liens pursuant to the Sponsor Subsidiary
Security Agreement, (iv) the perfection or maintenance of the Liens
created pursuant to the Sponsor Subsidiary Security Agreement
(including the first priority nature thereof, subject to Permitted
Liens) and (v) the exercise by the Sponsor Subsidiary Collateral Agent
or Trinity of their respective rights under the Operative Documents or
the remedies in respect of the Collateral pursuant thereto (other than
any consents, approvals, notices or filings that may be required under
the Securities Act and Article 9 of the UCC (or its equivalent) as in
effect in the relevant jurisdiction in connection with the perfection
of the security interests in or with foreclosure on, and Disposition
of, the Collateral and other than any consents, approvals, notices or
filings that may be required under any securities laws or FERC
regulations of general applicability in connection with the Disposition
of the Collateral), in each case do not require, any action by or in
respect of (including any license or permit), or filing with, any
Governmental Authority or any other Person that has not been obtained
or made and that is not in full force and effect, except for (A)
actions or filings expressly required by Section 4(d) of the Purchase
Option Agreement, that are to be performed or filed at a date after the
date of the Purchase Option Agreement, (B) the filing of financing
statements and any continuation statements with respect to filings
under the UCC (or its equivalent) in relevant jurisdictions permitted
by the provisions of the Operative Documents to be performed or filed
at a later date, and (C) the registration of the pledge of any
Collateral constituting uncertificated securities on the books of the
issuer thereof, and such consents, authorizations, approvals, actions,
notices and filings as (1) have been obtained, made, taken or given,
are in full force and effect and copies of which have been furnished to
Trinity and the Agent or (2) are not yet required to be obtained, made,
taken or given under the terms of the Operative Documents to which it
is a party.
(g) Litigation. There is no action, suit or proceeding
pending, or to its knowledge threatened, against or involving it or
affecting any of its properties, assets, rights or businesses
(excluding for the purposes of this representation and warranty, any
Intermediate Holder or Underlying Business relating to any Contributed
Investment) in any court, or before any arbitrator of any kind, or
before or by any governmental body, which, in its reasonable judgment
(taking into account the exhaustion of all appeals), would have a
Material Adverse Effect, or which purports to affect the legality,
validity, binding effect or enforceability of any Operative Document.
(h) Investment Company Act; Public Utility Holding Company
Act. It is not an "investment company" within the meaning of the
Investment Company Act. It is not a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935.
(i) No Event. No Incipient Event, Event of Default,
Liquidating Event, Termination Event or Notice Event has occurred and
is continuing or would result from the making of any Advance.
(j) Contributed Investments, Etc. After giving effect to the
Transactions on the First Closing Date, the Second Closing Date, the
Third Closing Date and each Acquisition/Accession Date:
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(i) Schedule I to the Sponsor Subsidiary Security
Agreement sets forth as of each such date a complete and
accurate list of each Contributed Investment and each
Intermediate Holder (if any) and each Underlying Business
relating thereto. Schedule I to the Sponsor Subsidiary
Security Agreement sets forth as of each such date for each
such Contributed Investment each outstanding class of
Investment with respect to each Intermediate Holder (if any)
and each Underlying Business related thereto and the
percentage of such class of such Investment held directly, or
indirectly through one or more Intermediate Holders, if any,
by each Sponsor Subsidiary. Each such Contributed Investment
has been duly authorized and validly issued by the issuer
thereof. Each such Contributed Investment is fully paid and
nonassessable and is not subject to any mandatory capital call
or similar obligation, except as otherwise described in
Schedule I to the Sponsor Subsidiary Security Agreement.
(ii) All of each Contributed Investment held by such
Sponsor Subsidiary has been Freely Transferred to it.
(iii) Each Contributed Investment is Freely
Transferable up to its Freely Transferable Portion. Each
Contributed Investment is or may be divided into units
representing such Freely Transferable Portion.
(iv) Each Contributed Investment is an Eligible
Investment.
(v) Part V of Schedule I to the Sponsor Subsidiary
Security Agreement sets forth all Material Agreements with
respect to each Contributed Investment.
(k) El Paso Company. It is an El Paso Company.
(l) No Prior Activities. Since the date of its formation, it
has not engaged in any activity other than that contemplated by the
Operative Documents or entered into any commitment or incurred any
Indebtedness other than pursuant to, or as permitted under, the
Operative Documents to which it is a party.
(m) Purpose. It was formed to carry out the activities set
forth in its Sponsor Subsidiary Company Agreement and, except in
connection therewith (and except as contemplated by the Operative
Documents), has no significant assets or liabilities.
(n) Collateral. (i) All of the existing Collateral (including
each Contributed Investment and each EPPC Note) pledged by it pursuant
to the Sponsor Subsidiary Security Agreement is owned legally and
beneficially by it free and clear of all Liens, except for Permitted
Liens and (with respect to any Contributed Investment) those listed in
any Exception Schedule with respect to any Contributed Investment and
any Intermediate Holder or Underlying Business relating thereto.
(ii) The Sponsor Subsidiary Credit Agreement and the pledge
and/or assignment of the Collateral created pursuant to the Sponsor
Subsidiary Security Agreement together with the financing statements to
be filed with respect thereto, the Sponsor Subsidiary Collateral
Agent's taking and maintaining possession of all instruments and
certificates representing or evidencing the Collateral, the
registration of any Collateral constituting uncertificated securities
on the books of the issuer thereof in the name of the Sponsor
Subsidiary Collateral Agent and the other actions taken by it in
accordance with Section 4 of the Sponsor Subsidiary Security Agreement
and the filing of the financing statements referred to in Section
3.01(b)(ii) and Section 3.02(b)(ii) of this
29
Agreement, create valid and enforceable perfected security interests in
and Liens on such Collateral, securing the payment of all Obligations
purported to be secured thereby.
(iii) Such security interests are first priority, subject to
Permitted Liens.
(iv) No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed in favor of
the Sponsor Subsidiary Collateral Agent relating to this Agreement.
(v) It has no trade names.
(vi) The Sponsor Subsidiaries do not own any securities that
are not Collateral (except those securities representing Equity
Interests in EPPC and 5,750,000 common units of Energy Partners).
(o) No Material Adverse Effect. Since the date of its
formation, there has been no event with respect to it that has
resulted, or is reasonably likely to result, in a Material Adverse
Effect.
(p) Agreement Collateral. (i) None of the Assigned Agreements
has been amended or otherwise modified (except any modifications made
on or before the First Closing Date in respect of any Pool I
Contributed Investments and any modifications made on or before the
Second Closing Date in respect of any Pool II Contributed Investment
and (in the case of each Assigned Agreement other than an Operative
Document) as disclosed in Schedule 4.01(p) hereto or, in relation to
any Assigned Equity Agreement, as disclosed in Part IV of Schedule I to
the Sponsor Subsidiary Security Agreement or Part IV of any Exception
Schedule, and as otherwise permitted by the Operative Documents), and
each Assigned Agreement is in full force and effect.
(ii) It is not and, to the best of its knowledge, no other
party to any Assigned Agreement is, in default of its material
obligations under any Assigned Agreement.
(iii) None of the Agreement Collateral (as defined in the
Sponsor Subsidiary Security Agreement) is evidenced by a promissory
note or other instrument (within the meaning of the UCC) that has not
been delivered to the Sponsor Subsidiary Collateral Agent pursuant to
Section 4 of the Sponsor Subsidiary Security Agreement.
(iv) Each party to the Assigned Agreements to which such
Sponsor Subsidiary is a party other than the Sponsor Subsidiaries and
the other parties to the Operative Documents has executed and delivered
to such Sponsor Subsidiary a consent, in substantially the form of
Exhibit A to the Sponsor Subsidiary Security Agreement, to the
assignment of the Assigned Agreement to the Sponsor Subsidiary
Collateral Agent pursuant to the Sponsor Subsidiary Security Agreement.
(q) Payments. It has instructed each other party to each of
the Assigned Agreements and each issuer of each Contributed Investment
that all payments (other than Excluded Payments) due or to become due
under or in connection with any such Assigned Agreement or such
Contributed Investment shall be made directly to the Cash Reserve and
it shall deposit, or cause such other parties to deposit, such amounts
directly to the Cash Reserve.
(r) Registered Office. Its chief place of business and chief
executive office are located at the address specified for Sabine in
Section 2.2 of the Trinity Company Agreement.
30
(s) Tort Claims. Neither it nor any of its officers or
directors nor any Responsible Officer of El Paso has actual knowledge
of any facts, circumstances, conditions or occurrences that could
reasonably be anticipated to form the basis of any tort claim against
any Sponsor Subsidiary or Trinity or any Sponsor Subsidiary Property or
Trinity Property that individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect.
(t) A-Loans. As of the Third Closing Date and the date of
delivery of each supplemental Schedule 4.01(t) pursuant to Section
1.09, the aggregate outstanding principal amount of all A-Loans made by
all Sponsor Subsidiaries equals at least the outstanding principal
amount of all Advances made hereunder to all Sponsor Subsidiaries as of
each such date, and Schedule 4.01(t) sets forth the outstanding
principal balance of all A-Loans as of each such date.
(u) Assets. It has no material assets other than Permitted
Assets and Permitted Investments.
(v) Taxes. It has filed and paid, or caused to be filed and
paid on a timely basis, all tax returns and Taxes (whether gains Taxes,
transfer Taxes, recording fees or Taxes and all other Taxes) due and
owing and such other tax returns and Taxes that arise in connection
with the Transactions on the First Closing Date and the Second Closing
Date, but excluding Taxes the non-timely filing or payment of which, in
the context of the Operative Documents, the Transactions and the rights
and remedies of the respective parties thereto, could not reasonably be
expected to have a Material Adverse Effect.
(w) Reserve Reports. On the date of delivery of each Reserve
Report pursuant to Section 2.10(b), Section 2.10(d) and Section 2.10(e)
(provided that the representations and warranties to be made under
clauses (ii) and (iii) below shall only be made with respect to each
Reserve Report prepared by Sabine):
(i) the information (excluding any projections or
estimates) contained in such Reserve Report and any other
information delivered therewith is true and correct in all
material respects;
(ii) any projections set forth in such Reserve Report
and the estimates of the Proved Reserves attributable to the
Oil and Gas Properties set forth therein were made in good
faith and arrived at after due and careful consideration and
are believed by Sabine to have been fair and reasonable as of
the date of such Reserve Report and Sabine is not aware of
anything which has occurred since the date of such Reserve
Report which would render the foregoing statements in this
clause inaccurate or misleading in any material respect;
(iii) all of the assumptions upon which such
projections and such estimates were predicated are outlined in
such Reserve Report and are believed by Sabine to have been
fair and reasonable as of the date of such Reserve Report and
Sabine is not aware of anything which has occurred since the
date of such Reserve Report which would render the foregoing
statements in this clause inaccurate or misleading in any
material respect;
(iv) after giving effect to all Liens permitted under
Section 5.09(a), each Pool II Controlled Business owns the net
interests in production attributable to the Oil and Gas
Properties of such Pool II Controlled Business reflected in
such Reserve Report free and clear of all Liens;
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(v) the ownership of such Oil and Gas Properties
shall not obligate such Pool II Controlled Business to bear
costs and expenses relating to the maintenance, development
and operations of each of its Oil and Gas Properties in an
amount in excess of the working interest of each of its Oil
and Gas Properties set forth in such Reserve Report; and
(vi) except as set forth in any certificate delivered
pursuant to Section 5.03(h), on a net basis there are no
material gas imbalances, take or pay prepayments, or other
prepayments, in each case with respect to the Oil and Gas
Properties evaluated in such Reserve Report which would
require any Pool II Controlled Business to deliver
hydrocarbons produced from such Oil and Gas Properties at some
future time without then or thereafter receiving payment
therefor.
(x) Principal Subsidiaries. No Sponsor Subsidiary,
Intermediate Holder, or Underlying Business (other than EPPC, the
Sponsor Subsidiary that owns all of the Equity Interests in EPPC, and
any Intermediate Holder relating thereto) is:
(i) a Principal Subsidiary, a Restricted Subsidiary
or a Material Subsidiary; or
(ii) directly owned by El Paso.
(y) Pool II Controlled Businesses - No Indebtedness. No Pool
II Controlled Business has any Indebtedness, except for Indebtedness
permitted under Section 5.09(b).
(z) Compliance with Financial Covenant. It is in compliance
with the requirements of Section 5.04(b) of this Agreement.
Section 4.02. Representations and Warranties with Respect to
Intermediate Holders and Underlying Businesses. Each Sponsor Subsidiary
represents and warrants as follows with respect to each Controlled Business
which is a direct or indirect Subsidiary of such Sponsor Subsidiary and (except
with respect to Pre-approved Pool I Contributed Investments) subject to Part VI
of the Exception Schedule with respect to each Controlled Business:
(a) Due Formation. Each Controlled Business is duly
incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation. Each
Controlled Business possesses all corporate, limited liability company
or other applicable Business Entity powers and other authorizations and
licenses necessary to engage in its business and operations as now
conducted, the failure to obtain or maintain which would have a
Material Adverse Effect.
(b) Authorization of Material Agreements/EPPC Notes. Part V of
the Exception Schedule with respect to each Controlled Business sets
forth all Material Agreements with respect to such Controlled Business.
The execution, delivery and performance by each Controlled Business of
each Material Agreement to which it is a party and each EPPC Note
issued by it are or were within its corporate, limited liability
company or other applicable Business Entity powers, have been duly
authorized by all necessary corporate, limited liability company or
other applicable Business Entity action, and do not contravene (i) its
Organizational Documents or (ii) any Applicable Law, except to the
extent that such contravention would not have a Material Adverse
Effect, or (iii) any material contractual restriction binding on or
affecting it.
32
(c) Governmental Approvals. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by each Controlled Business of each Material
Agreement to which it is a party and each EPPC Note issued by it,
except filings necessary to comply with Applicable Laws in the ordinary
course to enable the Sponsor Subsidiaries to comply with the ongoing
obligations set forth in Sections 5.08 and 5.09 and under such Material
Agreements and EPPC Notes and to perfect security interests.
(d) Enforceability. Each Material Agreement to which each
Controlled Business is a party and each EPPC Note issue by each
Controlled Business constitutes the legal, valid and binding obligation
of such Controlled Business, enforceable against such Controlled
Business in accordance with its terms, except as may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally or by general
principles of equity.
(e) Compliance with Laws, Etc. Each Controlled Business is in
compliance with all laws, rules, regulations and orders of any
governmental authority applicable to it or its property, except where
the failure to so comply, individually or in the aggregate, would not
in the reasonable judgment of such Sponsor Subsidiary be expected to
result in a Material Adverse Effect.
(f) Litigation. There is no action, suit or proceeding
pending, or to the knowledge of such Sponsor Subsidiary threatened,
against or involving any Controlled Business in any court, or before
any arbitrator of any kind, or before or by any governmental body,
which, in the reasonable judgment of such Sponsor Subsidiary (taking
into account the exhaustion of all appeals), would have a Material
Adverse Effect, or which purports to affect the legality, validity,
binding effect or enforceability of any Material Agreement or EPPC
Note.
(g) Taxes. Each Controlled Business has duly filed all tax
returns required to be filed, and has duly paid and discharged all
taxes, assessments and governmental charges upon it or against its
properties due and payable on the Acquisition/Accession Date with
respect to such Controlled Business, the failure to pay which would
have a Material Adverse Effect, unless and to the extent only that the
same are being contested by any such Person in good faith and by
appropriate proceedings.
(h) Title to Property. Each Controlled Business has good title
to its properties and assets, free and clear of all mortgages, liens
and encumbrances, except for mortgages, liens and encumbrances
(including covenants, restrictions, rights, easements and minor
irregularities in title) which do not materially interfere with the
business or operations of such Controlled Business as presently
conducted or which are permitted by Section 5.09(a) and except that no
representation or warranty is made with respect to Margin Stock.
(i) Investment Company; Holding Company. (i) No Controlled
Business is an "investment company" within the meaning of the
Investment Company Act of 1940.
(ii) No Controlled Business is a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935.
(j) Material Adverse Effect. Since December 31, 1998, there
has been no event with respect to any Controlled Business that has
resulted, or is reasonably likely to result, in a Material Adverse
Effect.
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ARTICLE V
COVENANTS OF SPONSOR SUBSIDIARIES
Section 5.01. Affirmative Covenants with Respect to Sponsor
Subsidiaries. Until the Debt Collection Date, each Sponsor Subsidiary will, at
all times, unless otherwise consented to in writing by Trinity, in respect of
itself:
(a) Compliance with Laws, Etc. Comply with, and cause its
properties to be maintained and used in accordance with, all Applicable
Laws applicable to it or its properties, except where the failure to do
so could not have a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge before the same
shall become delinquent (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all
lawful claims, which, in each case, if unpaid, might by law become a
Lien upon its property; provided, however, that such Sponsor Subsidiary
shall not be required to pay or discharge any such tax, assessment,
governmental charge, levy or claim that is being contested in good
faith and by proper proceedings and as to which appropriate reserves
are being maintained in accordance with GAAP, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors.
(c) Preservation of Existence, Etc. Preserve and maintain its
existence as a limited liability company and its rights (charter and
statutory) and authority.
(d) Inspection Rights. Upon reasonable notice, at any
reasonable time during normal business hours and not more often than is
reasonable under the circumstances, permit Trinity or the Sponsor
Subsidiary Collateral Agent or any agents or representatives thereof to
examine the records and books of account of such Sponsor Subsidiary and
to discuss the affairs, finances and accounts of such Sponsor
Subsidiary with any officer of such Sponsor Subsidiary and to disclose
to Trinity and the Sponsor Subsidiary Collateral Agent or any agents or
representatives thereof any and all financial statements and other
information of any kind relating to such Sponsor Subsidiary and, after
prior notice to Sabine, to discuss the affairs, finances and accounts
of such Sponsor Subsidiary with its independent certified public
accountants and permit such accountants to disclose to Trinity or the
Sponsor Subsidiary Collateral Agent any and all financial statements
and other information of any kind that they may have with respect to
such Sponsor Subsidiary. The Sponsor Subsidiaries jointly and severally
shall assume or pay all reasonable costs and expenses associated with
any such examination, discussion or copying; provided, however, that,
except (i) during the existence of an Event of Default, Incipient
Event, Notice Event, Termination Event or Liquidating Event or (ii)
where Trinity, Red River, the Equity Investors, the Agent or a Lender
acting in good faith reasonably believes there to be a reasonable
expectation that an Event of Default, Incipient Event, Notice Event,
Termination Event or Liquidating Event has occurred and is continuing,
the Sponsor Subsidiaries shall only be liable for the costs and
expenses of one such examination or discussion per Fiscal Year.
(e) Keeping of Books. Keep complete, proper and separate books
of record and account, including a record of all costs and expenses
incurred, all charges made, all credits made and received, and all
income derived in connection with the operation of the business of such
Sponsor Subsidiary, all in accordance with GAAP, in each case to the
extent necessary to enable such Sponsor Subsidiary to comply with the
periodic reporting requirements of this Agreement.
34
(f) Performance of Documents. (i) Perform and observe in all
material respects all of the terms and provisions of, and obligations
under, each Operative Document and each Assigned Agreement to be
performed or observed by it (including, in respect of Sabine, taking
the Trinity Required Actions and, in respect of each Sponsor
Subsidiary, taking the Sponsor Subsidiary Required Actions), (ii)
maintain, to the extent it has the capacity to do so, each such
Operative Document to which such Sponsor Subsidiary is a party and each
Assigned Agreement to which it is a party in full force and effect,
(iii) promptly enforce in all material respects its rights under each
such Operative Document and Assigned Agreement in accordance with its
terms (subject to the terms of Article VI hereof), (iv) take all such
action to such end (not in violation of its Organizational Documents)
as may be from time to time reasonably requested by Trinity or the
Sponsor Subsidiary Collateral Agent and, (v) upon request of Trinity,
make to each other party to each Operative Document to which such
Sponsor Subsidiary is a party or a beneficiary such demands and
requests for information and reports or for action as such Sponsor
Subsidiary is entitled to make under such Operative Document.
(g) Maintenance of Licenses and Permits. Maintain all licenses
and permits necessary to own its properties and to conduct its
activities in accordance with all Applicable Laws applicable to it or
its properties, except for such failures as could not reasonably be
expected to result in a Material Adverse Effect.
(h) Search Reports. Promptly following the First Closing Date,
the Second Closing Date and each Acquisition/Accession Date, deliver to
Trinity, in form and substance reasonably satisfactory to Trinity,
certified copies of reflective searches, or equivalent reports, listing
all effective financing statements filed in the jurisdictions referred
to in Section 3.01(b)(ii) and Section 3.02(b)(ii) that name such
Sponsor Subsidiary as debtor, together with copies of such other
financing statements.
(i) Maintenance of Insurance. Maintain, or cause to be
maintained, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses owning
similar properties in the same general areas in which such Sponsor
Subsidiary operates.
(j) Further Assurance. (i) Promptly upon request by Trinity,
correct any material defect or error that may be discovered in any
Operative Document to which it is a party or in the execution,
acknowledgment, filing or recording thereof.
(ii) Promptly upon request by Trinity or the Sponsor
Subsidiary Collateral Agent, do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such
further acts, deeds, conveyances, pledge agreements, mortgages, deeds
of trust, trust deeds, assignments, financing statements and
continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments as Trinity or
the Sponsor Subsidiary Collateral Agent may reasonably require from
time to time in order to (A) carry out more effectively the purposes of
the Sponsor Subsidiary Credit Documents, (B) to the fullest extent
permitted by Applicable Law, subject such Sponsor Subsidiary's
properties, assets, rights or interests to the Liens now or hereafter
intended to be covered by such Sponsor Subsidiary Credit Documents, (C)
perfect and maintain the validity, effectiveness and priority (subject
to Permitted Liens) of the Sponsor Subsidiary Credit Documents and any
of the Liens intended to be created thereunder, and (D) assure, convey,
grant, assign, transfer, preserve, protect and confirm more effectively
unto Trinity the rights granted or now or hereafter purported to be
granted to Trinity under any Sponsor Subsidiary Credit Document or
under any other instrument executed in
35
connection with any Sponsor Subsidiary Credit Document to which such
Sponsor Subsidiary is or is to be a party.
(k) Controlled Businesses. Exercise (and use all reasonable
efforts to cause each of its Affiliates to exercise) all of the rights
and remedies of such Sponsor Subsidiary and each of its Affiliates
under each document, instrument or agreement evidencing or relating to
such Sponsor Subsidiary's interest in any Controlled Business:
(i) to comply in all material respects with all
Applicable Laws (including all Environmental Laws and
Environmental Permits) binding on each Controlled Business,
except to the extent that non-compliance would not reasonably
be expected to have a Material Adverse Effect;
(ii) to comply in all respects with all contractual
obligations binding on each Controlled Business, except to the
extent non-compliance would not reasonably be expected to have
a Material Adverse Effect; and
(iii) to operate and maintain each Controlled
Business in accordance with prudent industry practice.
(l) Purpose. Apply the proceeds of the Advances solely for the
purpose of making A-Loans.
(m) Maintenance of Title to Assets. Maintain legal and
beneficial title to each of its assets, including each Contributed
Investment, except to the extent permitted by Section 5.02(d).
(n) El Paso Demand Loans. Demand repayment of each El Paso
Demand Loan in accordance with Section 7.03(d) and (e), as applicable.
(o) Sabine Trinity Interest. In the case of Sabine, take all
action necessary to maintain Sabine's Trinity Class A Membership
Interest (subject to the provisions of the Trinity Company Agreement
and the other Operative Documents) in full force and effect.
(p) Eligible Investments. Maintain each Contributed Investment
and each Intermediate Holder (if any) and Underlying Business with
respect to each Contributed Investment (except any Publicly Traded
Investment and any Intermediate Holder or Underlying Business with
respect thereto) as an Eligible Investment.
Section 5.02. Negative Covenants with Respect to Sponsor
Subsidiaries. Until the Debt Collection Date, each Sponsor Subsidiary will not,
at any time, without the written consent of Trinity:
(a) Liens, Etc. Create, incur, assume or suffer to exist any
Lien on or with respect to any of its properties or assets of any
character (including the Collateral) whether now owned or hereafter
acquired, or assign any accounts or other right to receive income,
excluding, however, from the operation of the foregoing restrictions
any Permitted Lien.
(b) Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness other than Indebtedness created, incurred or assumed:
36
(i) of the type described in clause (i) of the
definition of "Indebtedness" constituting Sponsor Subsidiary
Expenses incurred in the ordinary course of business; or
(ii) under any Operative Document to which such
Sponsor Subsidiary is a party.
(c) Mergers, Etc. Enter into any transaction of consolidation
or merger with or into any other Person, except (i) if immediately
prior to or contemporaneous with such consolidation or merger all
Advances are repaid in full together with all accrued interest, all
amounts required to be paid pursuant to Section 2.07(c), all
Indemnified Amounts and other amounts payable under the Sponsor
Subsidiary Credit Documents, (ii) any consolidation or merger of one
Sponsor Subsidiary with or into another Sponsor Subsidiary, or (iii) if
such Sponsor Subsidiary does not have any Contributed Investments, any
interest in any A-Loans, or any other material assets or rights of the
kind described in Section 1 of the Sponsor Subsidiary Security
Agreement, such Sponsor Subsidiary may consolidate with or merge into
any other Subsidiary of El Paso (other than another Sponsor
Subsidiary).
(d) Acquisitions, Sales, Etc., of Assets. Enter into any
partnership, joint venture or sale and leaseback transaction, or
purchase or otherwise acquire (in one or a series of related
transactions) any portion of the property or assets of any Person, or
Dispose of, or grant any option with respect to, directly or indirectly
(or agree to any of the foregoing at any future time), all or any
material portion of its property or assets (including any of the
Collateral), except that:
(i) Permitted Investments may be acquired and
disposed of in the ordinary course of business and subject to
and in accordance with the terms of Section 7.03;
(ii) Contributed Investments may be acquired pursuant
to Section 9.02;
(iii) Subject to Section 5.04(b), a Pool I
Contributed Investment may be Disposed of in whole (but not in
part) (whether to an El Paso Company or otherwise) for a price
in cash not less than:
(A) in the case of the Disposition of a
Pre-approved Pool I Contributed Investment, the
higher of (1) the Contributed Value of such
Pre-approved Pool I Contributed Investment and (2)
the Carrying Value of such Pre-approved Pool I
Contributed Investment on the date of Disposition;
and
(B) in the case of the Disposition of any
other Pool I Contributed Investment, the Pool I Loan
Value for such Pool I Contributed Investment,
provided, however, that such Sponsor Subsidiary shall apply the proceeds from
such Disposition on the date of receipt thereof to prepay the principal amount
of the Advances in accordance with Section 2.05(b)(i); and
(iv) Subject to Section 7.02(a)(iii), a Pool II
Contributed Investment may be Disposed of in whole (but not in
part) (whether to an El Paso Company or otherwise).
37
(e) Investments, Acquisitions of Contributed Investments, Etc.
Make or hold any Investment except:
(i) in the case of Sabine, for its acquisition and
holding of Sabine's Trinity Class A Membership Interest and
additional equity contributions in Trinity in accordance with
Section 5.3 of the Trinity Company Agreement;
(ii) any Investment in Permitted Assets (other than
any Contributed Investment);
(iii) the acquisition of any Contributed Investment
in accordance with Section 9.02 and the holding of any such
Contributed Investment;
(iv) the making and holding of Permitted Investments
in accordance with Section 7.03;
(v) the making of any contribution in respect of a
Contributed Investment required to be made under the terms
relating to such Contributed Investment;
(vi) the making of any capital contribution in
respect of a Contributed Investment with the proceeds of
equity capital contributions by the equity holders of such
Sponsor Subsidiary;
(vii) the making of any capital contribution in
respect of a Pool II Contributed Investment with the proceeds
of any Subordinated Note;
(viii) the acquisition (whether by assignment,
capital contribution, or otherwise) and holding of any EPPC
Note; and
(ix) the payment, including any deemed payment, of
any Cash Collateral Amounts to the Cash Reserve.
(f) Amendment, Etc., of Operative Documents. (i) Cancel or
terminate any Operative Document;
(ii) consent to or accept any cancellation or termination of
any Operative Document;
(iii) forgive any obligation under, or amend, modify, or
change in any manner any term or condition of any Operative Document;
(iv) give any consent, waiver, or approval under any Operative
Document;
(v) waive any default under or any breach of any term or
condition of any Operative Document; or
(vi) agree in any manner to any other amendment, modification
or change of any term or condition of any Operative Document,
other than any amendment, supplement, cancellation, termination,
consent, approval, waiver, forgiveness, or modification, or agreement
with respect thereto, in each case consented to or waived in writing by
Trinity, Red River, the Equity Investors, the Agent, and the Lender.
38
(g) Negative Pledge. Enter into or suffer to exist any
agreement prohibiting or conditioning the creation or assumption of any
Lien upon any of its property or assets other than (i) any such
agreement in favor of the Sponsor Subsidiary Collateral Agent and
Trinity or (ii) as provided in the other Operative Documents.
(h) Subsidiaries. Establish, create or acquire any direct
Subsidiary that holds all or any part, directly or indirectly, of any
Contributed Investment (other than any Pool II Contributed Investment
that comprises Equity Interests in EPPC) unless 100% of the stock of
such Subsidiary (or 65% if such Subsidiary is not organized under the
laws of the United States or any state thereof) is pledged to the
Sponsor Subsidiary Collateral Agent pursuant to the Sponsor Subsidiary
Security Agreement and such Sponsor Subsidiary has taken all actions
reasonably requested thereunder in respect of further assurances in
connection with such pledge.
(i) Nature of Activities. Engage in any activity other than a
Permitted Activity.
(j) Distributions. Declare or pay any Distributions; provided,
however, that:
(i) a Sponsor Subsidiary may make Distributions
constituting or in respect of Excluded Payments; and
(ii) if no Incipient Event, Event of Default, Notice
Event, Termination Event or Liquidating Event shall have
occurred and be continuing or shall result therefrom, the
Sponsor Subsidiaries may Distribute (v) on each Payment Date,
cash from the Cash Reserve in an amount equal to the amount
permitted to be so Distributed pursuant to Section 7.04(a)(6),
(w) on each Pool II Borrowing Base Effective Date, cash from
the Cash Reserve in an amount equal to the amount permitted to
be so Distributed pursuant to Section 2.11(b) or Section
2.11(c), (x) on each Cash Collateral Amount Distribution Date,
cash from the Total Cash Collateral Amount in the Cash Reserve
in an amount equal to the amount permitted to be so
Distributed pursuant to Section 7.04(g), (y) on each Payment
Date, cash from the Pool I Distributions Sub-Account in an
amount equal to the amount permitted to be so Distributed
pursuant to Section 7.04(i), and (z) from time to time, cash
from the Cash Reserve in an amount equal to the amount
permitted to be so Distributed pursuant to Section 7.04(h).
(k) Sponsor Subsidiary Member Transactions. (i) Purchase,
redeem, retire, defease or otherwise acquire any part of the interest
of any Sponsor Subsidiary Member in any Sponsor Subsidiary or (ii) make
any loan or advance or give any credit to any Sponsor Subsidiary
Member, except that, provided no Event of Default, Incipient Event,
Notice Event, Termination Event or Liquidating Event shall have
occurred and be continuing or shall result therefrom, such Sponsor
Subsidiary may make (A) El Paso Demand Loans to the extent such El Paso
Demand Loans are permitted by Section 5.02(p) and Section 7.03 and (B)
A-Loans to the extent permitted by this Agreement.
(l) Reimbursement. Reimburse any holder of an Equity Interest
in any Sponsor Subsidiary for any liability, loss, cost or expense
other than as expressly provided for in or contemplated by the
Operative Documents.
(m) Employees. Have any employees.
(n) Affiliate Transactions. Enter into any transaction or
series of related transactions, with any of its Affiliates, including
El Paso or any of its Affiliates, other than the
39
issue of Subordinated Notes, the transactions contemplated by the
Operative Documents to which it is a party, any transaction or series
of transactions expressly required or permitted, or on terms expressly
required or permitted, under the Operative Documents to which it is a
party and, if applicable, upon the terms required for such transaction
or series of transactions under the relevant Operative Document.
(o) Hedge Agreements. Enter into any Hedge Agreement without
the prior written consent of Trinity.
(p) El Paso Demand Loans. Make any Investment in El Paso or
any Affiliate of El Paso to be evidenced by, or acquire by purchase or
contribution, any El Paso Demand Loan except to the extent permitted by
Section 7.03 and unless at the time of such making or acquisition (i)
the borrowing evidenced by the El Paso Demand Loan has been duly
authorized by all required corporate action, such action has been duly
certified by the secretary or an assistant secretary of El Paso or such
Affiliate, and such certification has been delivered to it, together
with certificates as to incumbency and due authorization of the
officers of El Paso or such Affiliate authorized to execute and deliver
such El Paso Demand Loan (which certified action may be one so taken
and certification may be one so delivered before that Investment or
acquisition if the certified action remains in effect at the time of,
and is applicable to, that acquisition) and (ii) such El Paso Demand
Loan is the legal, valid and binding obligation of El Paso or the
Affiliate of El Paso (as applicable) enforceable against El Paso or
such Affiliate of El Paso in accordance with its terms.
(q) Subordinated Notes. Make any payment (whether of
principal, interest or otherwise) at any time under any Subordinated
Note otherwise than in accordance with the subordination provisions
governing any such Subordinated Note and otherwise from amounts (if
any) standing to the credit of the Cash Reserve as permitted by Section
2.11(b), Section 2.11(c), or Section 7.04(a)(6).
Section 5.03. Reporting Requirements. Until the Debt
Collection Date, each Sponsor Subsidiary will, unless otherwise consented to in
writing by Trinity, furnish to Trinity and, in the case of subsections (a), (d),
(e), (i) and (j) below, the Sponsor Subsidiary Collateral Agent (the accounts,
financial statements, reports, and other financial information to be provided
pursuant to this Section 5.03 to be prepared in accordance with GAAP):
(a) Default Notices. A notice of the occurrence of any Event
of Default, Liquidating Event, Termination Event, Notice Event or
Incipient Event promptly, but in any event no later than three Business
Days, after a Responsible Officer of the sole member of such Sponsor
Subsidiary has actual knowledge of such occurrence or such event
becomes generally publicly known, and a notice setting forth details of
the actions that such Sponsor Subsidiary has taken or proposes to take
with respect thereto within ten Business Days after such Responsible
Officer obtains actual knowledge of such event or after such event
becomes generally publicly known.
(b) Annual Reports. Within 120 days after the end of each of
its Fiscal Years beginning with the Fiscal Year ending December 31,
1999, the following:
(i) a Compliance Certificate;
(ii) for such Fiscal Year and with respect to (x)
each Sponsor Subsidiary that owns a Pool I Contributed
Investment and its consolidated Subsidiaries and (y) all of
the Sponsor Subsidiaries that own the Pool II Contributed
Investments and that hold the
40
EPPC Notes and their respective consolidated Subsidiaries on a
consolidated basis, audited consolidated (and, if more than
one Intermediate Holder and/or Underlying Business is directly
or indirectly owned by such Sponsor Subsidiary or Sponsor
Subsidiaries, consolidating) balance sheets as of the last day
of such Fiscal Year and the preceding Fiscal Year (if any) and
audited consolidated (and, if more than one Intermediate
Holder and/or Underlying Business is directly or indirectly
owned by such Sponsor Subsidiary or Sponsor Subsidiaries,
consolidating) income statements and statements of cash flows
for such periods and the notes associated with each, for such
Sponsor Subsidiary or Sponsor Subsidiaries and their
respective consolidated Subsidiaries; and
(iii) an Operating Report reflecting, among other
things, any Dispositions described in Section 5.09(d)(iii) or
(v) and made during such Fiscal Year.
(c) Quarterly Reports. Beginning with the Fiscal Quarter
ending September 30, 1999, within 60 days after the end of each Fiscal
Quarter in respect of the first three Fiscal Quarters of each Fiscal
Year, and within 120 days after the end of the last Fiscal Quarter of
each Fiscal Year, copies of each of the following:
(i) a Compliance Certificate;
(ii) for such Fiscal Quarter and with respect to (x)
each Sponsor Subsidiary that owns a Pool I Contributed
Investment and its consolidated Subsidiaries and (y) all of
the Sponsor Subsidiaries that own the Pool II Contributed
Investments and that hold the EPPC Notes and their respective
consolidated Subsidiaries on a consolidated basis, unaudited
consolidated (and, if more than one Intermediate Holder and/or
Underlying Business is directly or indirectly owned by such
Sponsor Subsidiary or Sponsor Subsidiaries, consolidating)
balance sheets as of the last day of such Fiscal Quarter and
for the comparable quarter of the prior year (if any) and
unaudited consolidated (and, if more than one Intermediate
Holder and/or Underlying Business is directly or indirectly
owned by such Sponsor Subsidiary or Sponsor Subsidiaries,
consolidating) income statements and statements of cash flows
for such Fiscal Quarter and, in respect of the first three
Fiscal Quarters of each Fiscal Year, for the Fiscal Year to
date, if any, ending on the last day of such Fiscal Quarter
and for the comparable periods of the prior Fiscal Year (if
any), and the notes associated therewith, for such Sponsor
Subsidiary or Sponsor Subsidiaries and their respective
consolidated Subsidiaries;
(iii) a certification by such Sponsor Subsidiary or
such Sponsor Subsidiaries together that the statements and
balance sheets described in Section 5.03(c)(ii) are fairly
stated in all material respects (subject to normal year-end
adjustments); and
(iv) an Operating Report reflecting, among other
things, any Dispositions described in Section 5.09(d)(iii) or
(v) and made during such Fiscal Quarter.
(d) Litigation. Promptly in writing, notice of all litigation
and of all proceedings of the kind contemplated by Section 4.01(g) and
Section 4.02(f).
(e) Other Notices. Promptly upon receipt thereof, copies of
any other notices, requests, reports, financial statements and other
information and documents received by such Sponsor Subsidiary under or
pursuant to any other Operative Document (other than those issued or
sent by or at the request of the Sponsor Subsidiary Collateral Agent or
Trinity) and, from time
41
to time upon request by Trinity, Red River, an Equity Investor or the
Agent, such information and reports required under such other Operative
Documents as Trinity, Red River, such Equity Investor or the Agent may
reasonably request.
(f) Dispositions and Distributions. The Sponsor Subsidiaries
shall, to the extent reasonably practicable to do so, give 5 Business
Days (or such lesser period as may be practicable) prior notice of any
proposed Disposition, Distribution, voluntary prepayment of any A-Loan,
or prepayment of any EPPC Note that would give rise to a prepayment
under Section 2.05(b)(i), (ii), (iii), (iv), (vi) or (ix), and, to the
extent it is not reasonably practicable to give such prior notice, the
Sponsor Subsidiaries shall give notice of any such Disposition,
Distribution, or prepayment immediately after such Disposition,
Distribution, or prepayment.
(g) FERC Forms. Within 10 days after sending or filing
thereof, a copy of FERC Form No. 2: Annual Report of Major Natural Gas
Companies, sent or filed by any Sponsor Subsidiary, Intermediate Holder
or Underlying Business to or with FERC with respect to each Fiscal
Year.
(h) Reserve Reports. (i) On or before March 1 of each calendar
year commencing March 1, 2000 and each other date required in
connection with a Pool II Borrowing Base Redetermination under Section
2.10(d) and Section 2.10(e), Sabine shall deliver a Reserve Report to
the Calculation Agent, with a copy to Trinity. Each Reserve Report
delivered in connection with a Pool II Borrowing Base Determination
under Section 2.10(b) shall be calculated and dated as of the
immediately preceding December 31 and each Reserve Report delivered in
connection with a Pool II Borrowing Base Redetermination under Section
2.10(d) or Section 2.10(e) shall be dated as of the date of the
applicable Redetermination Notice.
(ii) With the delivery of each Reserve Report, Sabine shall
provide to the Calculation Agent and Trinity a certificate from a
Responsible Officer of El Paso confirming that the representations and
warranties set forth in Section 4.01(w) are correct in all material
respects. Such certificate shall attach details of each acquisition and
Disposition described in Section 2.10(e) made since delivery of the
last Reserve Report.
(i) Notice of Redetermination Threshold. Sabine shall give
notice to Trinity of the attainment of the Redetermination Threshold
promptly after any accession, acquisition or Disposition referred to in
Section 2.10(e) which causes such Redetermination Threshold to be
attained.
(j) Other Information. As promptly as is reasonably
practicable, such other information relating to the business, financial
condition, operations, performance or properties of such Sponsor
Subsidiary, each Contributed Investment, each Intermediate Holder and
each Underlying Business in the possession or control of such Sponsor
Subsidiary, as reasonably requested in writing by Trinity, Red River,
an Equity Investor or the Agent (such written request to identify this
Section 5.03(j)).
Section 5.04. Financial Covenants. Until the Debt Collection
Date, the Sponsor Subsidiaries shall:
(a) Pool I Contributed Investments - Fixed Charge Coverage.
Maintain, at all times that the Pool I Exposure exceeds $0, as of the
date of each Compliance Certificate with respect to each Fiscal Quarter
pursuant to Section 5.03 (each such date a "COVERAGE TEST DATE") a
ratio of:
42
(i) the sum of (A) for all Pool I Controlled
Businesses, the aggregate EBITDA for the most recently
completed four Fiscal Quarters for the Pool I Underlying
Businesses of all such Pool I Controlled Businesses held by
Sponsor Subsidiaries at the end of such Fiscal Quarter less
(1) the aggregate amount of all Maintenance Capital
Expenditures payable during the most recently completed four
Fiscal Quarters by all such Pool I Underlying Businesses and
(2) the aggregate amount of all taxes paid in cash for the
most recently completed four Fiscal Quarters by all such Pool
I Underlying Businesses, (B) for Pool I Publicly Traded
Investments, the aggregate distributions on the equity
securities of such Pool I Publicly Traded Investments received
by the Sponsor Subsidiaries during the most recently completed
four Fiscal Quarters, (C) all earnings on Permitted
Investments for the most recently completed four Fiscal
Quarters, and (D) the sum of all interest accrued during each
of the most recently completed four Fiscal Quarters on A-Loans
in an aggregate principal amount equal to the Pool I Exposure
computed as at the end of each such corresponding Fiscal
Quarter,
to
(ii) the sum of (A) Pool I Notional Interest (after
giving effect to any payment, including any deemed payment, of
Cash Collateral Amounts to the Cash Reserve on the Coverage
Test Date) computed as of the end of the most recently
completed Payment Period and (B) the Notional Amortization
(after giving effect to any payment, including any deemed
payment, of additional Cash Collateral Amounts to the Cash
Reserve on the Coverage Test Date) computed as of the Coverage
Test Date,
greater than 1.3 to 1.
(b) Pool I Contributed Investments--Minimum Asset Coverage.
Maintain, at all times that the Pool I Exposure exceeds $0, as of each
Coverage Test Date and on the date of each Disposition of a Pool I
Contributed Investment or a Disposition of all or substantially all of
the assets of or Equity Interests in any Pool I Intermediate Holder or
Pool I Underlying Business (after giving effect to such Disposition,
Section 2.05(b)(i) and Section 2.05(b)(iii) hereof, and Section 7.3 of
the Trinity Company Agreement) a ratio of:
(A) the aggregate Carrying Value of the Freely
Transferable Portion of each Pool I Contributed Investment
(excluding all Pool I Contributed Investments, or the Pool I
Contributed Investments relating to the assets or Equity
Interests, Disposed of) on the Coverage Test Date and on the
date of such Disposition,
to
(B) the Pool I Exposure on the Coverage Test Date and
on the date of such Disposition (after giving effect to any
payment, including any deemed payment, of additional Cash
Collateral Amounts to the Cash Reserve on the Coverage Test
Date and on the date of such Disposition),
of not less than 2.0 to 1.
(c) Required Reserve Amount. Maintain on deposit in the Cash
Reserve at the end of each Fiscal Quarter an amount at least equal to
the Required Cash Reserve Balance as of the end of such Fiscal Quarter.
43
(d) Pool I Contributed Investments - Book Leverage. Maintain,
at all times that the Pool I Exposure exceeds $0, as at each Coverage
Test Date a ratio of:
(i) the Pool I Exposure on the Coverage Test Date
(after giving effect to any payment, including any deemed
payment, of additional Cash Collateral Amounts to the Cash
Reserve on the Coverage Test Date);
to
(ii) the aggregate amount of:
(A) the Pool I Exposure on the Coverage Test
Date (after giving effect to any payment, including
any deemed payment, of additional Cash Collateral
Amounts to the Cash Reserve on the Coverage Test
Date); and
(B) the sum of (1) the aggregate amount (on
a consolidated basis) of the book value of the equity
of the Pool I Controlled Businesses as reported in
the latest financial accounts of each such Pool I
Controlled Business prior to the Coverage Test Date
and (2) the aggregate amount of the Fair Market
Values of the Pool I Publicly Traded Investments as
at the Coverage Test Date,
of less than 0.55 to 1.
(e) Pool II Contributed Investments - Interest Coverage.
Maintain, at all times that the Pool II Borrowing Base exceeds $0, as
of each Coverage Test Date a ratio of:
(i) the aggregate EBITDA for the most recently
completed four Fiscal Quarters for the Underlying Businesses
of all Pool II Controlled Businesses,
to
(ii) Pool II Notional Interest computed as of the end
of the most recently completed Payment Period,
greater than 4.25 to 1.
(f) Calculations. In determining compliance with Section
5.04(a), "EBITDA" and "net income" of any Contributed Investment or
Underlying Business shall only include the portion thereof relating to
the aggregate percentage interest of the Underlying Business owned
directly or indirectly by the Sponsor Subsidiaries.
Section 5.05. [Intentionally Omitted].
Section 5.06. A-Loans and Total Cash Collateral Amount. (a)
Coverage. Each Sponsor Subsidiary shall ensure that the aggregate principal
amount of all A-Loans outstanding at any time is at least equal to the aggregate
principal amount of Advances outstanding at that time. The Total Cash Collateral
Amount shall at no time be less than the Unrecovered Capital of Red River in
Trinity less the sum of (i) the Aggregate Pool I Loan Value Amount at such time
and (ii) the then effective Pool II Borrowing Base.
44
(b) Payments of Cash Collateral Amounts. Subject to compliance
with clause (a) above and pursuant to clauses (c) and (d) below, the Sponsor
Subsidiaries may, on each date specified below, pay or make a deemed payment of
a Cash Collateral Amount to the Cash Reserve in order to ensure compliance with
the financial covenants in Section 5.04 on such date:
(i) each Coverage Test Date;
(ii) each Appraisal Date;
(iii) the date of any change in the Aggregate Pool I Loan
Value Amount;
(iv) the date referred to in Section 5.07(f);
(v) the date of any prepayment pursuant to Section 2.05; and
(vi) each Pool II Borrowing Base Effective Date.
(c) Cash Collateral Amounts. Subject to Section 5.06(b), each
Sponsor Subsidiary Member shall have the right to make a cash capital
contribution to the Cash Reserve in an amount necessary for all Sponsor
Subsidiaries to comply with the financial covenants in Section 5.04 (each such
cash capital contribution being a "CASH COLLATERAL AMOUNT").
(d) Deemed Cash Collateral Amounts. Notwithstanding anything
to the contrary in clause (c) above and subject to Section 5.06(b), each Sponsor
Subsidiary Member shall have the right to make a deemed payment of a Cash
Collateral Amount to the Cash Reserve in an amount specified by El Paso up to an
aggregate amount, if any, by which the balance of the Cash Reserve exceeds the
sum of (i) the Required Cash Reserve Balance, (ii) the Pool II Holdback Amount
and (iii) the Total Cash Collateral Amount (taking into account all other Cash
Collateral Amounts deemed paid under this Section 5.06(d)), each as in effect
immediately prior to such deemed payment); provided, however, that no portion of
such excess amount invested in El Paso Demand Loans (after giving effect to any
payment thereof on or prior to the date of such deemed payment of Cash
Collateral Amounts) shall be used to make such deemed payment of such Cash
Collateral Amount.
Section 5.07. Appraisals. (a) An Appraisal of each Pool I
Contributed Investment shall be undertaken by the Appraiser on the occurrence of
each Appraisal Event.
(b) The Sponsor Subsidiaries shall co-operate with the
Appraiser, Trinity, Red River and the Agent to ensure that each Appraisal is
timely completed in accordance with the provisions of this Section 5.07. The
Sponsor Subsidiaries shall, promptly following the occurrence of an Appraisal
Event, provide the Appraiser with access to all documents, records and other
information necessary for the Appraiser to complete the Appraisal in accordance
with this Section 5.07.
(c) Prior to the Liquidation Start Date under the Trinity
Company Agreement, Sabine shall, on the date of each Appraisal Event with
respect to a Pool I Publicly Traded Investment, deliver a certificate to Trinity
and the Sponsor Subsidiary Collateral Agent certifying the revised Carrying
Value of such Pool I Publicly Traded Investment. Absent manifest error, the
revised Carrying Value of such Pool I Publicly Traded Investment shall be deemed
to be the value set forth in such certificate.
(d) An Appraisal of a Pool I Contributed Investment (other
than an Appraisal pursuant to clause (c) above) shall be completed as soon as
reasonably practicable after the occurrence of the relevant Appraisal Event, but
in any event within 30 days after the date of occurrence of such Appraisal Event
(or,
45
if such 30th day is not a Business Day, the next succeeding Business Day) (the
date of completion of such Appraisal, the "APPRAISAL DATE").
(e) If an Appraisal of a Pool I Contributed Investment
pursuant to clause (d) above is not completed within 30 days after the date of
occurrence of the Appraisal Event giving rise to the Appraisal (or if such 30th
day is not a Business Day, the next succeeding Business Day), then the value of
such Pool I Contributed Investment shall be deemed to be $0 until the next
Appraisal Date for such Pool I Contributed Investment.
(f) Within 5 Business Days after the Appraisal Date, a
Responsible Officer of El Paso shall deliver to Trinity a Compliance
Certificate, showing the pro forma calculations of the financial covenants in
Section 5.04(a), (b) and (d) and the second sentence of Section 5.06(a) in
sufficient detail as of the date of such Compliance Certificate, together with
copies of any such Appraisals; provided that such pro forma calculations shall
use the newly appraised Carrying Values of all Pool I Contributed Investments
and the EBITDA and the book equity values of such Pool I Contributed Investments
as of date of the financial statements reflected in the last Compliance
Certificate delivered pursuant to Section 5.03(c). For the purposes of this
clause (f), an Appraisal of each Pool I Publicly Traded Investment shall be
undertaken on the date of such Compliance Certificate to enable calculation of
such financial covenants.
Section 5.08. Affirmative Covenants with Respect to Controlled
Businesses. Until the Debt Collection Date, each Sponsor Subsidiary will, at all
times, unless otherwise consented to in writing by Trinity, with respect to each
Controlled Business and subject to Part VII of the Exception Schedule with
respect to each Controlled Business (except Pre-approved Pool I Contributed
Investments):
(a) Compliance with Applicable Laws, Etc. Cause each
Controlled Business to comply with, and its properties to be maintained
and used in accordance with, all Applicable Laws applicable to it or
its properties, except where the failure to do so could not have a
Material Adverse Effect.
(b) Payment of Taxes, Etc. Cause each Controlled Business to
pay and discharge, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges or levies imposed upon it
or upon its property and (ii) all lawful claims which, if unpaid, might
by law become a Lien upon its property; provided, however, that a
Controlled Business shall not be required to pay or discharge any such
tax, assessment, governmental charge, levy or claim that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained in accordance with GAAP,
unless and until any Lien resulting therefrom attaches to its property
and becomes enforceable against its other creditors.
(c) Preservation of Existence, Etc. Cause each Controlled
Business to preserve and maintain its existence as a corporation,
limited liability company or other applicable Business Entity and its
rights (charter and statutory) and authority.
(d) Inspection Rights. Upon reasonable, and in any event at
least three Business Days', prior notice and during normal business
hours and not more often than is reasonable under the circumstances,
permit Trinity or the Sponsor Subsidiary Collateral Agent or any agents
or representatives thereof to examine the records and books of account
of each Controlled Business, and to discuss the affairs, finances and
accounts of such Controlled Business with any officer of such Sponsor
Subsidiary or its managing member and to disclose to Trinity and the
Sponsor Subsidiary Collateral Agent or any agents or representatives
thereof any and all financial statements and other information of any
kind relating to such Controlled Business and, after prior
46
notice to any Sponsor Subsidiary, to discuss the affairs, finances and
accounts of such Sponsor Subsidiary with its independent certified
public accountants and permit such accountants to disclose to Trinity
or the Sponsor Subsidiary Collateral Agent any and all financial
statements and other information of any kind that they may have with
respect to such Controlled Business. The Sponsor Subsidiaries jointly
and severally shall assume or pay all reasonable costs and expenses
associated with any such examination, discussion or copying; provided,
however, that, except (i) during the existence of an Event of Default,
Incipient Event, Notice Event, Termination Event or Liquidating Event
or (ii) where Trinity, Red River, an Equity Investor, the Agent or a
Lender acting in good faith reasonably believes there to be a
reasonable expectation that an Event of Default, Incipient Event,
Notice Event, Termination Event or Liquidating Event has occurred and
is continuing, the Sponsor Subsidiaries shall only be liable for the
costs and expenses of one such examination or discussion per Fiscal
Year.
(e) Keeping of Books. Cause each Controlled Business to keep
complete, proper and separate books of record and account, including a
record of all costs and expenses incurred, all charges made, all
credits made and received, and all income derived in connection with
the operation of the business of such Controlled Business, all in
accordance with GAAP, in each case to the extent necessary to enable
the Sponsor Subsidiaries to comply with the periodic reporting
requirements of this Agreement.
(f) Performance of Documents. Cause each Controlled Business
to (i) perform and observe in all material respects all of the terms
and provisions of each Material Agreement and EPPC Note to be performed
or observed by it, (ii) maintain, to the extent it has the capacity to
do so, each such Material Agreement to which such Controlled Business
is a party and each EPPC Note to which such Controlled Business has
issued; provided that a Sponsor Subsidiary may terminate a Material
Agreement if prior to or contemporaneously with such termination a
replacement or substitute agreement is entered into, the terms
(including the financial terms) of which are not materially less
favorable to such Sponsor Subsidiary than the terminated Material
Agreement, and such Sponsor Subsidiary delivers to Trinity and the
Sponsor Subsidiary Collateral Agent a revised Exception Schedule
reflecting such termination and replacement or substitution, (iii)
promptly enforce to the extent it is commercially reasonable to do so
in all material respects each such Material Agreement in accordance
with its terms (subject to the terms of Article VI hereof), (iv) take
all such action to such end (not in violation of its Organizational
Documents) as may be from time to time reasonably requested by Trinity
or the Sponsor Subsidiary Collateral Agent, and (v) upon the request of
Trinity, make to each other party to each such Material Agreement such
demands and requests for information and reports or for action as such
Controlled Business is entitled to make under such Material Agreement.
(g) Maintenance of Licenses and Permits. Cause each Controlled
Business to maintain all licenses and permits necessary to own its
properties and to conduct its activities in accordance with all
Applicable Laws applicable to it or its properties, except for such
failures as could not reasonably be expected to result in a Material
Adverse Effect.
(h) Maintenance of Insurance. Cause each Controlled Business
to maintain or cause to be maintained, insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general
areas in which such Controlled Business operates.
(i) Maintenance of Title to Assets. Cause each Controlled
Business to maintain legal and beneficial title to each of its assets,
except as otherwise permitted under Section 5.09(d).
47
(j) Maintenance of Properties. Cause each Controlled Business
to (i) maintain, develop and operate its Oil and Gas Properties (if
any) in a good and workmanlike manner as would a reasonably prudent
operator and in compliance with all operating agreements, leases and
other agreements related thereto and all Applicable Laws and (ii)
maintain and preserve its other properties in good working order and
condition, except, in each case above, for such failures as could not
reasonably be expected to result in a Material Adverse Effect.
(k) Transactions with Affiliates. Cause each Controlled
Business to conduct all transactions otherwise permitted under the
Operative Documents with any of its Affiliates, including El Paso and
any of its Affiliates:
(i) on terms required for any such transaction under
the Operative Documents; or
(ii) otherwise on terms that are fair and reasonable
and that provide for exchanges of fair consideration and
reasonably equivalent value between or among the parties
thereto.
Section 5.09. Negative Covenants with Respect to Each
Controlled Business. Until the Debt Collection Date, each Sponsor Subsidiary
will not, at any time, without the written consent of Trinity with respect to
each Controlled Business and subject to Part VII of the Exception Schedule with
respect to each Controlled Business (except Pre-approved Pool I Contributed
Investments):
(a) Liens, Etc. Permit any Controlled Business to create,
incur, assume or suffer to exist any Lien on or with respect to any of
its properties or assets of any character whether now owned or
hereafter acquired, or assign any accounts or other right to receive
income, excluding, however, from the operation of the foregoing
restrictions:
(i) Liens to secure the performance of tenders, bids,
leases, trade contracts (not for borrowed money), regulatory
or statutory obligations, surety or appeal bonds, tender or
performance and return of money bonds, bankers' acceptances,
government contracts or other obligations of a like nature
incurred in the ordinary course of business;
(ii) Liens to secure any purchase money Indebtedness
permitted by Section 5.09(b)(v) and covering only the property
acquired by such Indebtedness and the proceeds thereof;
(iii) Liens arising out of any conditional sale or
other title retention agreement permitted by Section
5.09(b)(vi) and covering only the property subject thereto and
the proceeds thereof;
(iv) Liens to secure any Indebtedness under any
capital lease permitted by Section 5.09(b)(vii) and covering
only the property subject thereto and the proceeds thereof;
(v) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; provided that
any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made
therefor;
48
(vi) Liens arising by operation of law of landlords
and carriers, warehousemen, mechanics, suppliers, sellers,
materialmen, or repairmen, or other similar Liens, in each
case arising in the ordinary course of business and with
respect to amounts not yet delinquent or that are being
contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made;
(vii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security;
(viii) easements, rights-of-way, municipal and zoning
and building ordinances and similar charges, encumbrances,
title defects or other irregularities, governmental
restrictions on the use of property or conduct of business,
and Liens in favor of governmental authorities and public
utilities, that do not materially interfere with the ordinary
course of business of any Controlled Business;
(ix) leases or subleases granted to other Persons
that do not materially interfere with the ordinary course of
business of any Controlled Business;
(x) any interest or title of a lessor in the property
subject to any capital lease or operating lease permitted by
Section 5.09(b) and the proceeds thereof;
(xi) any option or other agreement to purchase any
asset of any Controlled Business the purchase, sale or other
disposition of which is not prohibited by any other provision
of the Operative Documents;
(xii) Liens arising from the rendering of an interim
or final judgment or order against any Controlled Business;
provided that the aggregate principal amount of all Liens
arising under any judgment or order that is not stayed or
dismissed within 60 days of the date thereof does not exceed
$50,000,000, and Liens imposed against any Controlled Business
in connection with any claim against such Controlled Business
so long as the claim is being contested in good faith and does
not materially and adversely affect the business and
operations of such Controlled Business;
(xiii) Liens securing reimbursement obligations with
respect to letters of credit permitted by Section
5.09(b)(viii) that encumber documents and other property
relating to such letters of credit and the proceeds thereof;
(xiv) Liens encumbering customary initial deposits
and margin deposits;
(xv) royalties, overriding royalties, reversionary
interests, production payments and similar burdens with
respect to the Oil and Gas Properties of any Pool II
Controlled Business to the extent such burdens do not reduce
such Pool II Controlled Business' net interests in production
in its Oil and Gas Properties below the interests reflected in
the most recent Reserve Report or the interests warranted
under this Agreement and do not operate to deprive such Pool
II Controlled Business of any material rights in respect of
its Oil and Gas Properties;
49
(xvi) operator's Liens incidental to the maintenance,
development or operation of the Oil and Gas Properties of any
Pool II Controlled Business in each case arising in the
ordinary course of business securing amounts not yet
delinquent or that are being contested in good faith by
appropriate legal proceedings promptly instituted and
diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; and
(xvii) Liens extending, renewing or replacing any of
the foregoing Liens; provided that the principal amount of the
Indebtedness or other obligation secured by such Lien is not
increased or the maturity thereof shortened and such Lien is
not extended to cover any additional Indebtedness, obligations
or property, other than like obligations and the substitution
of like property (or categories of property to the extent the
terms of the Lien being extended, renewed or replaced,
extended to or covered such categories of property) or the
proceeds of the property subject thereto.
(b) Indebtedness. Permit any Controlled Business to create,
incur, assume or suffer to exist, any Indebtedness other than
Indebtedness created, incurred or assumed for or in respect of:
(i) Indebtedness of the type described in clause (i)
of the definition thereof constituting accounts payable
incurred in the ordinary course of business;
(ii) Hedge Agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates
incurred in the ordinary course of business and consistent
with prudent business practice;
(iii) In the case of any Pool II Controlled Business,
Hedge Agreements with Approved Hedge Counterparties designed
to hedge against fluctuations in oil and gas prices incurred
in the ordinary course of business and consistent with prudent
business practice so long as the aggregate volume of oil
and/or gas (as applicable) hedged under each such Hedge
Agreement of a Pool II Controlled Business does not materially
exceed the projected actual production of oil and/or gas (as
applicable) from Proved Reserves of such Pool II Controlled
Business for such period;
(iv) obligations as lessee under leases of
Non-Principal Property that have been or should be, in
accordance with GAAP, recorded as operating leases;
(v) obligations of any Controlled Business for the
deferred purchase price of property or services;
(vi) obligations of any Controlled Business created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Controlled
Business (whether or not the rights and remedies of the seller
or lender under such agreement in the event of default are
limited to repossession or sale of such property);
(vii) obligations of such Controlled Business in
respect of Capitalized Leases;
(viii) obligations, contingent or otherwise, of such
Controlled Business under acceptance, letter of credit or
similar facilities;
50
(ix) obligations of such Controlled Business
evidenced by bonds, notes, debentures or other similar
instruments, but only to the extent that such obligations
relate to any of the obligations referred to in clause (v),
(vi) or (viii) above;
(x) obligations of other Persons of the type
described in clause (v), (vi), (vii), (viii) or (ix) above
guaranteed directly or indirectly in any manner by such
Controlled Business;
(xi) any Indebtedness of such Controlled Business
(not otherwise described herein) secured by any Lien permitted
under Section 5.09(a);
(xii) obligations of such Controlled Business as
lessee under leases of Principal Property that have been or
should be, in accordance with GAAP, recorded as operating
leases, in respect of all Controlled Businesses; and
(xiii) in the case of EPPC only, any Indebtedness
evidenced by an EPPC Note,
provided, however, that:
(A) the aggregate amount of all Indebtedness of Pool I
Controlled Businesses under or in respect of clauses (v) to (xii)
(inclusive) shall not at any time exceed 10% of the Aggregate Pool I
Loan Value Amount at such time (taking the Indebtedness under clause
(xii) above at the net present value of the aggregate amount of
(without duplication) all remaining lease payments and liquidated
damages on or in respect of all such leases discounted to the time of
determination at a discount rate of 8% per annum); and
(B) the aggregate amount of all Indebtedness of Pool II
Controlled Businesses under or in respect of clauses (v) to (xii)
(inclusive) shall not at any time during a Pool II Borrowing Base
Period exceed 10% of the Current Pool II Borrowing Base for such Pool
II Borrowing Base Period (taking the Indebtedness under clause (xii)
above at the net present value of the aggregate amount of (without
duplication) all remaining lease payments and liquidated damages on or
in respect of all such leases discounted to the time of determination
at a discount rate of 8% per annum).
(c) Mergers, Etc. Permit any Controlled Business to enter into
any transaction of consolidation or merger with or into any other
Person, except (i) if immediately prior to or contemporaneous with such
consolidation or merger all Advances made available to all Sponsor
Subsidiaries are repaid in full together with all accrued interest, all
amounts required to be paid pursuant to Section 2.07(c), all
Indemnified Amounts and other amounts payable under the Sponsor
Subsidiary Credit Documents or (ii) in the case of a Pool I Controlled
Business, such merger or consolidation results in a Disposition
permitted by Section 5.02(d)(iii) and the proceeds from any Disposition
resulting from such consolidation or merger are used to repay Advances
in accordance with Section 2.05(b)(i) or Section 2.05(b)(iii) or (iii)
a Pool I Controlled Business may consolidate with or merge into another
Pool I Controlled Business and a Pool II Controlled Business may
consolidate with or merge into another Pool II Controlled Business
provided that in each case (A) immediately before and after giving
effect to such consolidation or merger no Notice Event, Termination
Event, Event of Default, Liquidating Event or Incipient Event has
occurred and is continuing and (B) the Contributed Investment or
Contributed Investments relating to such merged or consolidated Pool I
Controlled Businesses or Pool II Controlled Businesses, as the case may
be, are pledged, transferred and assigned to the Sponsor Subsidiary
51
Collateral Agent under the Sponsor Subsidiary Security Agreement and
such pledge, transfer and assignment is perfected in accordance with
the terms thereof.
(d) Acquisitions, Sales, Etc. of Assets. Permit any Controlled
Business to enter into any sale and leaseback transaction, or purchase
or otherwise acquire (in one or a series of related transactions) any
portion of the property or assets of any Person or Dispose of, or grant
any option with respect to, directly or indirectly (or agree to any of
the foregoing at any future time), all or any material portion of its
property or assets, except:
(i) in the case of any Pool I Controlled Business:
(A) any purchase or other acquisition of any
property or assets by such Pool I Controlled Business
the purchase price of which is individually or, if
such property or assets are purchased in a series of
related transactions, in the aggregate less than
$5,000,000; and
(B) any purchase or other acquisition of
property or assets by such Pool I Controlled Business
which would following such purchase or acquisition
become eligible for rate coverage under the
regulations promulgated by FERC;
(ii) in the case of any Pool II Controlled Business,
subject to Section 2.10(e), any purchase or other acquisition
of any Oil and Gas Properties located in any Permitted
Jurisdiction;
(iii) any Disposition of all or substantially all of
the assets of, or Equity Interests in, any Pool I Intermediate
Holder or Pool I Underlying Business relating to any Pool I
Contributed Investment (other than any Pool I Publicly Traded
Investment) for a price in cash not less than:
(A) in the case of the Disposition of all or
substantially all of the assets of, or Equity
Interests in, any Pool I Intermediate Holder or Pool
I Underlying Business relating to any Pre-approved
Pool I Contributed Investment (other than Energy
Partners), the higher of (1) the Contributed Value of
such Pool I Intermediate Holder or Pool I Underlying
Business and (2) the Fair Market Value of such Pool I
Intermediate Holder or Pool I Underlying Business;
and
(B) in the case of the Disposition of all or
substantially all of the assets of, or Equity
Interests in, any Pool I Intermediate Holder or Pool
I Underlying Business relating to any other Pool I
Contributed Investment, the Pool I Loan Value of the
Pool I Contributed Investment to which such Pool I
Intermediate Holder or Pool I Underlying Business
relates,
provided, however, that such Sponsor Subsidiary shall apply the proceeds from
such Disposition on the date of receipt thereof to prepay the principal amount
of the Advances in accordance with Section 2.05(b)(i) or (iii);
(iv) starting from the Third Closing Date, any
Disposition of any Relevant Assets if the aggregate amount of
Net Cash Proceeds from such Disposition (together with the Net
Cash Proceeds from any other Dispositions of such Relevant
Assets during the current Pool II Borrowing Base Period) does
not exceed the Adjusted Redetermination Threshold for such
Pool II Borrowing Base Period;
52
(v) starting from the Third Closing Date, any
Disposition of any Relevant Assets if the aggregate amount of
Net Cash Proceeds from such Disposition (together with the Net
Cash Proceeds from any other Dispositions of such Relevant
Assets during the current Pool II Borrowing Base Period)
exceeds the Adjusted Redetermination Threshold for such Pool
II Borrowing Base Period; provided, however, that the Net Cash
Proceeds from any such Disposition in excess of such Adjusted
Redetermination Threshold shall be deposited by the relevant
Pool II Underlying Business into the Proceeds Account of such
Pool II Underlying Business and shall be applied pursuant to
Section 5.09(j)(i) or (ii);
(vi) starting from the Third Closing Date, any
Disposition of property, plant and equipment (as defined under
GAAP) of a Pool I Underlying Business (not subject to clause
(iii) above) if the cumulative aggregate amount of Net Cash
Proceeds from such Disposition (together with all such other
Dispositions) does not exceed $15,000,000;
(vii) starting from the Third Closing Date, any
Disposition of property, plant and equipment (as defined under
GAAP) of a Pool I Underlying Business (not subject to clause
(iii) above) if the cumulative aggregate amount of Net Cash
Proceeds from such Disposition (together with all such other
Dispositions) exceeds $15,000,000; provided, however, that all
such Net Cash Proceeds in excess of $15,000,000 shall be
deposited by such Pool I Underlying Business into the Proceeds
Account of such Pool I Underlying Business and shall be
applied pursuant to Section 5.09(j)(iii);
(viii) any sale of current assets (as defined under
GAAP), other than as contemplated under clause (ix) below, of
an Underlying Business in the ordinary course of business of
such Underlying Business; and
(ix) the limited recourse sale of accounts receivable
providing, by their terms, for payment within 30 days from the
date of the original invoice in connection with the factoring
or securitization thereof, which sale is non-recourse, to the
extent customary in factoring or securitization transactions
(as applicable);
provided, however, that if, at the time of any such Disposition described in
clause (iv), (v), (vi) or (vii) above, an El Paso RA Event has occurred and is
continuing, such Sponsor Subsidiary shall apply such Net Cash Proceeds to prepay
the Advances in accordance with Section 2.05(b)(ix).
(e) Investments. Permit any Controlled Business to make or
hold any Investment other than:
(i) subject to clause (ii) below, demand loans made
by any Pool I Controlled Business ("POOL I AFFILIATE LOANS")
to El Paso or any of its Affiliates; provided that, on the
date any such Pool I Affiliate Loan is made, (A) in the case
of any Pool I Affiliate Loan made to El Paso, El Paso has, or
(B) in the case of any Pool I Affiliate Loan made to an
Affiliate of El Paso, such Pool I Affiliate Loan is guaranteed
by El Paso and El Paso has, senior unsecured long-term debt
credit ratings of at least BBB- by S&P and at least Baa3 by
Xxxxx'x; and provided further that, after the occurrence and
during the continuance of an El Paso RA Event, any existing
Pool I Affiliate Loans shall be permitted to be maintained but
no additional Pool I Affiliate Loans shall be permitted to be
made;
53
(ii) notwithstanding anything to the contrary
contained in clause (i) above, if, in any Fiscal Quarter, the
senior unsecured long-term debt of El Paso is Split Rated, (A)
any existing Pool I Affiliate Loans shall be permitted to be
maintained and (B) any additional Pool I Affiliate Loans shall
be permitted to be made to El Paso or any such Affiliate of El
Paso in such Fiscal Quarter (or any subsequent Fiscal Quarter
while such senior unsecured long-term debt of El Paso remains
Split Rated) only if, in the case of clause (B) above, (x) the
sum of the aggregate amount of such additional Pool I
Affiliate Loans to be made by a Pool I Controlled Business and
the aggregate amount of additional El Paso Demand Loans made
out of the Pool I Distributions Sub-Account pursuant to
Section 7.03(j) hereof does not exceed the net income of such
Pool I Controlled Business for the most recently completed
Fiscal Quarter in respect of which financial statements have
been delivered pursuant to Section 5.03(c) and (y) a
Responsible Officer of El Paso shall deliver a Compliance
Certificate, dated no earlier than five Business Days prior to
the delivery thereof, demonstrating that the Sponsor
Subsidiaries would be in compliance, on a pro forma basis and
as of the date of the most recent financial statements
delivered pursuant to Section 5.03(c), with the financial
covenant set forth in Section 5.04(b) calculated pursuant
thereto, with the following modifications:
(1) for purposes of such calculation made in
the Fiscal Quarter in which the senior unsecured
long-term debt of El Paso is initially Split Rated
(the "INITIAL EVENT QUARTER"), the Carrying Value of
the Freely Transferable Portion of each Pool I
Contributed Investment (other than any Pool I
Publicly Traded Investment) shall be reduced by the
amount of net income referred to in clause (x) above;
(2) for purposes of such calculation made in
any subsequent Fiscal Quarter, the Carrying Value
shall be reduced by (I) the outstanding principal
amount of Pool I Affiliate Loans actually made in
each Fiscal Quarter from, and including, the Initial
Event Quarter to, and including, the immediately
preceding Fiscal Quarter (after giving effect to any
prepayment thereof), (II) the aggregate amount of
Distributions or El Paso Demand Loans actually made
from the Pool I Distributions Sub-Account in each
Fiscal Quarter from, and including, the Initial Event
Quarter (except, if the senior unsecured long-term
debt of El Paso is initially Split Rated after the
Payment Date occurring in the Initial Event Quarter,
no Distributions actually made in such Initial Event
Quarter shall be included in the aggregate amount
described in this clause (II)) to, and including, the
immediately preceding Fiscal Quarter, and (III) the
amount of net income referred to in clause (x) above,
and
(3) after the next Appraisal Date, the
initial calculation of such financial covenant shall
be based on the newly appraised Carrying Value of the
Freely Transferable Portion of each Pool I
Contributed Investment (it being understood that the
Fiscal Quarter in which such Appraisal Date occurs
shall be a new Initial Event Quarter and that such
initial calculation shall be made pursuant to clause
(1) above);
(iii) demand loans made by any Pool II Underlying
Business ("POOL II AFFILIATE LOANS") to El Paso or any of its
Affiliates; provided that, on the date any such Pool II
Affiliate Loan is made, (A) in the case of any Pool II
Affiliate Loan made to El Paso, El Paso has, or (B) in the
case of any Pool II Affiliate Loan made to an Affiliate of El
Paso, such Pool II Affiliate Loan is guaranteed by El Paso and
El Paso has, a senior
54
unsecured long-term debt credit rating of at least BBB- by S&P
or at least Baa3 by Xxxxx'x; and provided further that, after
the occurrence and during the continuance of an El Paso RA
Event, any existing Pool II Affiliate Loans shall be permitted
to be maintained and no additional Pool II Affiliate Loans
shall be permitted to be made;
(iv) in the case of Pool II Controlled Businesses
only, subject to Section 2.10(e), any Investment in any Person
that primarily owns Oil and Gas Properties; provided, however,
that where Sabine elects to have such Investment treated as a
Disposition in accordance with the third sentence of the
definition of "Disposition" in Exhibit A to the Trinity
Company Agreement (an "EXCLUDED Business"), then the Sponsor
Subsidiaries shall not, and the Sponsor Subsidiaries shall not
permit any Controlled Business to, enter into, or agree to
enter into, any agreement or other arrangement (whether by
guarantee, indemnity, capital contribution obligation, or
otherwise) whereby any of the assets of any Sponsor Subsidiary
or any Controlled Business (other than the Equity Interests in
such Excluded Business) are in any way made available to
support the Obligations of such Excluded Business;
(v) Investments by any Controlled Business in any
Cash Equivalents;
(vi) Investments by any Controlled Business in any
Indebtedness permitted under Section 5.09(b); and
(vii) loans and advances to employees in the ordinary
course of the business of any such Controlled Business.
(f) Amendment, Etc. of Material Agreements. Permit any
Controlled Business to:
(i) cancel or terminate any Material Agreement;
(ii) consent to or accept any cancellation or
termination of any Material Agreement;
(iii) amend, modify or change in any manner any term
or condition of any Material Agreement;
(iv) give any consent, waiver or approval under any
Material Agreement;
(v) waive any default under or any breach of any term
or condition of any Material Agreement; or
(vi) agree in any manner to any other amendment,
modification or change of any term or condition of any
Material Agreement,
other than (A) any amendment, supplement, cancellation, termination,
consent, approval, waiver or modification consented to or waived by
Trinity or (B) any amendment, supplement, cancellation, termination,
consent, approval, waiver or modification which would not have a
material adverse effect on the business, operations, performance,
properties, or financial condition of any Controlled Business and
provided that after giving effect to any such amendment, supplement,
cancellation, termination, consent, approval, waiver or modification
the Sponsor Subsidiaries would be in compliance with the financial
covenants set forth in Section 5.04 on a pro-forma basis as of the last
date of the calculation of the covenants in Section 5.04.
55
(g) Negative Pledge. Permit any Controlled Business to enter
into or suffer to exist any agreement prohibiting or conditioning the
creation or assumption of any Lien upon any of its property or assets
except as set forth in the Operative Documents or except in connection
with:
(i) any purchase money Indebtedness permitted by
Section 5.09(b)(v) solely to the extent that the agreement or
instrument governing such Indebtedness prohibits a Lien on the
property acquired with the proceeds of such Indebtedness or
the proceeds thereof; or
(ii) any Capitalized Lease permitted by Section
5.09(b)(vii) solely to the extent that the agreement or
instrument governing such Capitalized Lease prohibits a Lien
on the property subject thereto or the proceeds thereof.
(h) Pool II Contributed Investments - Capital Expenditures.
Permit the Pool II Underlying Businesses, during any Fiscal Year (or
any part thereof), to incur Capital Expenditures for the purpose of
drilling, testing, equipping, or completing any well on any Oil and Gas
Properties of the Pool II Controlled Businesses (other than xxxxx
drilled to develop oil and gas reserves that are classified as Proved
Reserves in the most recent Reserve Report as at the time of
determination) in an aggregate amount exceeding 10% of the Pool II
Borrowing Base (as in effect on January 1 of such Fiscal Year) (or pro
rata part thereof), unless such excess is funded from capital
contributions from the Sponsor Subsidiaries.
(i) Amendment, Etc., of EPPC Notes. In respect of the Sponsor
Subsidiary that owns any Equity Interest in EPPC, permit EPPC to:
(i) cancel or terminate any EPPC Note or consent to,
or accept any cancellation or termination thereof, or amend,
modify, or change in any manner any term or condition of any
EPPC Note, or agree in any manner to any other amendment,
modification or change of any term or condition of any EPPC
Note, other than any amendment, supplement, cancellation,
termination, or modification, or agreement with respect
thereto, in each case consented to or waived in writing by
Trinity, Red River, the Equity Investors, the Agent, and the
Lender; or
(ii) novate, sell, assign, or otherwise transfer, or
purport to novate, sell, assign, or otherwise transfer, any
right or obligation under, or any title or interest in, any
EPPC Note or any Indebtedness evidenced by any EPPC Note.
(j) Application of Net Cash Proceeds on Deposit in the
Proceeds Accounts. The amounts deposited by any Underlying Business
into the Proceeds Account of such Underlying Business pursuant to
Section 2.05(b)(ix)(B), 2.05(b)(ix)(C), 5.09(d)(v) and 5.09(d)(vii)
may, at any time, be invested by such Underlying Business in Cash
Equivalents. Each Underlying Business from time to time shall also have
the right, subject to clauses (i), (ii) and (iii) below, to apply any
amounts on deposit in the Proceeds Account of such Underlying Business
(except any amounts deposited thereto pursuant to Section
2.05(b)(ix)(B) or (C)) to make Affiliate Loans or Distributions,
provided that:
(i) with respect to any amounts deposited into any
Proceeds Account pursuant to Section 5.09(d)(v), such amounts
shall be held in such Proceeds Account pending a Pool II
Borrowing Base Redetermination pursuant to Section 2.10(e)
(or, in the absence of such redetermination, a redetermination
pursuant to Section 2.10(b)) and, on or after the Pool II
Borrowing Base Effective Date occurring after any Disposition
56
referred to in Section 5.09(d)(v), may be applied by the
applicable Pool II Underlying Business to make Affiliate Loans
pursuant to Section 5.09(e) or to make Distributions to Sabine
by depositing such amounts into the Cash Reserve pursuant to
Section 7.02(a)(iii) and subsequently releasing such amounts
from the Cash Reserve pursuant to Section 7.04(h); provided
that, prior to such application of such amounts, to the extent
there is any Pool II Borrowing Base Reduction, the amount
necessary to cure such Pool II Borrowing Base Reduction (x)
shall have been deposited into the Cash Reserve as a Cash
Collateral Amount and/or (y) shall have been applied to prepay
the Advances in accordance with Section 2.05(b)(v) in order to
ensure compliance with the financial covenant set forth in the
second sentence of Section 5.06(a) after giving effect to such
deposit and/or prepayment;
(ii) notwithstanding anything to the contrary
contained in clause (i) above, if the new Pool II Borrowing
Base that will become effective on the next Pool II Borrowing
Base Effective Date has been determined on the basis of a pro
forma Reserve Report, such Pool II Underlying Business may
apply, immediately prior to or contemporaneously with such new
Pool II Borrowing Base becoming effective, the Net Cash
Proceeds from any Disposition referred to in Section
5.09(d)(v) solely to complete the proposed acquisition of the
Relevant Assets reflected in such pro forma Reserve Report and
in an aggregate amount not to exceed the purchase price for
such Relevant Assets, provided that (x) the new Pool II
Borrowing Base shall become effective, in accordance with
Section 2.10(e), immediately after or contemporaneously with
the completion of such acquisition, (y) to the extent there is
any Pool II Borrowing Base Reduction, the amount necessary to
cure such Pool II Borrowing Base Reduction (A) shall have been
deposited into the Cash Reserve as a Cash Collateral Amount
and/or (B) shall have been applied to prepay the Advances in
accordance with Section 2.05(b)(v) in order to ensure
compliance with the financial covenant set forth in the second
sentence of Section 5.06(a) after giving effect to such
deposit and/or prepayment, and (z) on or after such new Pool
II Borrowing Base Effective Date, the remaining balance, if
any, of the Net Cash Proceeds from any Disposition referred to
in Section 5.09(d)(v) may be applied by the applicable Pool II
Underlying Business to make Affiliate Loans pursuant to
Section 5.09(e) or to make Distributions to Sabine by
depositing such amounts into the Cash Reserve pursuant to
Section 7.02(a)(iii) and subsequently releasing such amounts
from the Cash Reserve pursuant to Section 7.04(h); and
(iii) with respect to any amounts deposited into any
Proceeds Account pursuant to Section 5.09(d)(vii), such
amounts shall be held in such Proceeds Account pending a new
Appraisal of such Pool I Underlying Business and, on or after
the date on which a Responsible Officer of El Paso delivers a
Compliance Certificate pursuant to Section 5.07(f), may be
applied by the applicable Pool I Underlying Business to make
Affiliate Loans pursuant to Section 5.09(e) or to make
Distributions to Sabine by depositing such amounts into the
Cash Reserve pursuant to Section 7.02(a)(iii) and subsequently
releasing such amounts from the Cash Reserve pursuant to
Section 7.04(h); provided that, prior to such application of
such amounts, to the extent that the Pool I Exposure then in
effect is greater than the Aggregate Pool I Loan Value Amount
at such time, an amount necessary to reduce such Pool I
Exposure (x) shall have been deposited into the Cash Reserve
as a Cash Collateral Amount and/or (y) shall have been applied
(by the Sponsor Subsidiaries or by any Underlying Businesses
relating thereto on behalf of such Sponsor Subsidiaries) to
prepay the Advances, together with all other amounts required
to be paid pursuant to Section 2.07(c) in connection with such
prepayment, in
57
order to ensure compliance with the financial covenant set
forth in the second sentence of Section 5.06(a) after giving
effect to such deposit and/or prepayment.
(k) Distributions. After the senior unsecured long-term debt
of El Paso is Split Rated, all Distributions made by the Pool I
Controlled Businesses (other than any Pool I Publicly Traded
Investment) to the applicable Sponsor Subsidiaries shall be deposited
into a special sub-account of the Cash Reserve (the "POOL I
DISTRIBUTIONS SUB-ACCOUNT") and shall be Distributed from such Pool I
Distributions Sub-Account pursuant to Section 7.04(i).
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. If any of the following
events (each an "EVENT OF DEFAULT") shall occur and be continuing:
(a) any Sponsor Subsidiary shall fail to pay:
(i) any principal on any Advance when the same
becomes due and payable; or
(ii) any interest on any Advance or any other amount
payable by it under this Agreement or under any other Sponsor
Subsidiary Credit Document when the same becomes due and
payable if such failure to pay shall remain unremedied for
five Business Days after such amount becomes due and payable;
or
(b) any written representation or warranty made or deemed made
by any Sponsor Subsidiary in any Operative Document, or in any
certificate or report prepared by or furnished by or on behalf of any
Sponsor Subsidiary pursuant to any Operative Document, shall prove to
have been incorrect in any material respect when made or deemed made;
or
(c) any Sponsor Subsidiary shall fail to perform or observe
any term, covenant or agreement contained in Section 5.01(m), 5.01(n),
5.01(p), 5.02(a), 5.02(b), 5.02(c), 5.02(d), 5.02(e), 5.02(f), 5.02(i),
5.02(m), 5.02(o), 5.02(p), 5.03(a), 5.04 (excluding 5.04(c)), 5.06 or
5.09 (other than Sections 5.09(d)(v) and (vii) (but only with respect
to the failure of the Sponsor Subsidiaries to, or to cause any
Controlled Business to, deposit into the relevant Proceeds Account any
Net Cash Proceeds from any Dispositions described in Section 5.09(d)(v)
or (vii) in an aggregate amount greater than the first $5,000,000 in
excess of the then effective Adjusted Redetermination Threshold or of
$15,000,000, respectively), and Section 5.09(g)) (but, in each case,
subject to any provisions relating to the cure of any Default or Event
of Default referred to therein) or Section 7.02(a) or 7.03(b) or
Section 20 of the Sponsor Subsidiary Security Agreement; or
(d) any Sponsor Subsidiary shall fail to perform or observe
any term, covenant or agreement contained in Section 5.02 (other than
as set forth in Section 6.01(c)), 5.03(b), 5.03(c), 5.03(d), 5.03(e),
5.03(f), 5.03(g), 5.03(h), 5.03(i), 5.03(j), 5.09(d)(v) or (vii) (but
only with respect to the failure of the Sponsor Subsidiaries to, or to
cause any Controlled Business to, deposit into the relevant Proceeds
Account any Net Cash Proceeds from any Dispositions described in
Section 5.09(d)(v) or (vii) in an aggregate amount not greater than the
first $5,000,000 in excess of the then effective Adjusted
Redetermination Threshold or of
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$15,000,000, respectively) or 5.09(g) if such failure shall remain
unremedied for five Business Days after the occurrence thereof; or
(e) any Sponsor Subsidiary shall fail to perform or observe in
any material respect any other term, covenant or agreement contained in
any Sponsor Subsidiary Credit Document (other than as set forth in
Section 6.01(a), Section 6.01(c), Section 6.01(d), or Section 6.01(m))
on its part to be performed or observed if such failure shall remain
unremedied for 30 days following notice thereof by Trinity if such
failure is reasonably curable; or
(f) [Intentionally omitted]
(g) any judgment or order for the payment of money in excess
of $50,000 (or the equivalent in any foreign currency) shall be
rendered against any Sponsor Subsidiary and either (i) enforcement
proceedings shall have been commenced by any creditor upon such
judgment or order (other than any enforcement proceedings consisting of
the mere obtaining and filing of a judgment lien or obtaining of a
garnishment or similar order so long as no foreclosure, levy or similar
process in respect of such lien, or payment over in respect of such
garnishment or similar order, has commenced) or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal, bonding or
otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered
against any Sponsor Subsidiary that is reasonably likely to have a
Material Adverse Effect, and there shall be any period of ten
consecutive Business Days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(i) any provision of any Sponsor Subsidiary Credit Document
after delivery thereof pursuant to Section 3.01, 3.02 or 3.03 shall for
any reason cease, in any material respect, to be valid and binding on
or enforceable against any Sponsor Subsidiary; or
(j) the Sponsor Subsidiary Collateral Agent shall, at any time
after the First Closing Date, not have a valid and perfected first
priority security interest in the Collateral (other than as a result of
Permitted Liens); or
(k) any Sponsor Subsidiary shall for any reason dissolve or
all of the holders of Equity Interests in any Sponsor Subsidiary shall
have voted or consented to the dissolution of such Sponsor Subsidiary,
except if immediately prior to such dissolution or at the time of such
vote or consent such Sponsor Subsidiary does not have any Contributed
Investments, any interest in any A-Loans, or any other material assets
or rights of the kind described in Section 1 of the Sponsor Subsidiary
Security Agreement; or
(l) a Liquidating Event shall have occurred, or the
Liquidation Period with respect to Trinity or a Sponsor Subsidiary
shall have expired or terminated; or
(m) Sabine shall fail to maintain a credit balance in the Cash
Reserve equal to at least the Required Cash Reserve Balance and such
failure remains unremedied for two Business Days; or
(n) any Person who holds an Equity Interest in any Sponsor
Subsidiary shall transfer its interest therein so that as a result of
any such transfer such Sponsor Subsidiary is caused to be
59
required to be registered as an "investment company" within the meaning
of the Investment Company Act,
then, and in any such event, Trinity may by notice to Sabine (in its individual
capacity and on behalf of all Sponsor Subsidiaries) declare all Advances, all
interest thereon, all amounts required to be paid pursuant to Section 2.07(c)
and all other amounts payable under this Agreement and the other Sponsor
Subsidiary Credit Documents to be forthwith due and payable, whereupon all
Advances, all such interest, amounts under Section 2.07(c) and other amounts
under the Sponsor Subsidiary Credit Documents shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by each Sponsor Subsidiary; provided,
however, that in the event of either (i) an actual or deemed entry of an order
for relief with respect to any Sponsor Subsidiary under the United States
Bankruptcy Code as then in effect or (ii) the occurrence of the event described
in clause (k) above, all Advances, all such interest, all such amounts under
Section 2.07(c) and all such other amounts shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind, all
of which are hereby expressly waived by each Sponsor Subsidiary. The Sponsor
Subsidiary Collateral Agent and Trinity shall each have, in addition to all
other rights and remedies under the Sponsor Subsidiary Credit Documents or
otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other Applicable Laws, which rights shall be
cumulative.
Without limiting the foregoing, after the occurrence of an
Event of Default:
(i) Trinity may (acting on the instructions of Red River):
(A) direct the Sponsor Subsidiary Collateral Agent to
apply all or any part of the credit balance in the Cash
Reserve in prepayment of any Obligations of any Sponsor
Subsidiary under the Sponsor Subsidiary Credit Documents;
and/or
(B) exercise the rights of each Sponsor Subsidiary
under each Sponsor Subsidiary Company Agreement to call for
mandatory capital contributions from the Sponsor Subsidiary
Members in respect of the Maximum Clawback Amount; and
(ii) the Sponsor Subsidiary Collateral Agent shall make such
demands under any letter of credit issued for the benefit of any
Sponsor Subsidiary or any El Paso Demand Loan and liquidate such other
Permitted Investments as are necessary to give effect to the prepayment
referred to in clause (i)(A) above.
ARTICLE VII
ADMINISTRATION, SETTLEMENT AND COLLECTION
Section 7.01. Maintaining the Cash Reserve and the Sabine
Operating Account. Until the Debt Collection Date:
(a) Sabine will maintain the Cash Reserve and the Sabine
Operating Account with the Sponsor Subsidiary Collateral Agent, such
accounts to be in the name of Sabine, but subject to the sole dominion
and control of the Sponsor Subsidiary Collateral Agent.
(b) It shall be a term and condition of the Cash Reserve and
the Sabine Operating Account, and on or prior to the date hereof Sabine
shall give to the Sponsor Subsidiary Collateral Agent written notice
and shall obtain the Sponsor Subsidiary Collateral Agent's written
agreement (such notice and agreement to be in form and substance
satisfactory to the Sponsor
60
Subsidiary Collateral Agent and Trinity) that, notwithstanding any term
or condition to the contrary in any other agreement relating to the
Cash Reserve and the Sabine Operating Account, no amount (including
interest on Permitted Investments held in the Cash Reserve and the
Sabine Operating Account) shall be paid or released from the Cash
Reserve to or for the account of, or withdrawn by or for the account
of, Sabine, any other Sponsor Subsidiary, or any other Person; provided
that:
(i) with respect to the Cash Reserve:
(A) a Sponsor Subsidiary may invest amounts standing
to the credit of the Cash Reserve in Permitted Investments in
accordance with Section 7.03; and
(B) withdrawals may be made from the Cash Reserve in
accordance with Sections 7.04 and 7.07; and
(ii) with respect to the Sabine Operating Account:
(A) Sabine may invest amounts standing to the credit
of the Sabine Operating Account in Permitted Investments in
accordance with Section 7.03; and
(B) withdrawals may be made from the Sabine Operating
Account in accordance with Sections 7.05 and 7.07.
The Cash Reserve and the Sabine Operating Account shall be
subject to Applicable Laws and applicable regulations of any competent banking
authority, as may now or hereafter be in effect.
Trinity shall give all necessary directions to the Sponsor
Subsidiary Collateral Agent to effect the payments or withdrawals under this
Section 7.01 and the Sponsor Subsidiary Collateral Agent may rely on such
directions as certifying that the requirements of the Operative Documents have
been met with respect to such payments and withdrawals.
Each Sponsor Subsidiary shall have an undivided interest in
the Cash Reserve to the extent of any funds deposited by or on behalf of such
Sponsor Subsidiary in the Cash Reserve.
Section 7.02. Deposit of Funds into the Cash Reserve. (a) Each
Sponsor Subsidiary shall deposit, or shall cause to be deposited, into the Cash
Reserve forthwith upon receipt thereof all amounts received by it or payable to
it on any account whatsoever (or, in the case of any Disposition referred to in
clause (iii)(x) below, received by or payable to any Intermediate Holder or
Underlying Business), including:
(i) any payments of principal and interest under the EPPC
Notes;
(ii) any payment of interest under the A-Loan Notes and any
prepayment of principal of the A-Loan Notes described in Section
2.05(b)(iv);
(iii) (w) the Net Cash Proceeds from the Disposition of any
Contributed Investment described in Section 5.02(d)(iii) and (iv), (x)
the Net Cash Proceeds from any Disposition described in Section
5.09(d)(iii), (y) the Net Cash Proceeds from Dispositions occurring
under the circumstances described in the last proviso of Section
5.09(d), and (z) all amounts Distributed
61
from the Proceeds Accounts pursuant to Section 5.09(j) and all amounts
deposited into the Pool I Distributions Sub-Account pursuant to Section
5.09(k);
(iv) in the case of Sabine, any Distribution in respect of
Sabine's Trinity Class A Membership Interest and any proceeds of
Sponsor Subsidiary Property in each case after the Liquidation Start
Date;
(v) the proceeds of any Distribution made by any Intermediate
Holder or Underlying Business; provided, however, that a Distribution
made by EPPC or any Intermediate Holder thereof shall not be required
to be deposited into the Cash Reserve to the extent that a capital
contribution in the amount of such Distribution is made by any Sponsor
Subsidiary Member pursuant to Section 5.2(h) of the relevant Sponsor
Subsidiary Company Agreement and such capital contribution is deposited
into the Cash Reserve on or before the date such Distribution is made;
(vi) the proceeds of any capital contribution made by any
Sponsor Subsidiary Member pursuant to the terms of the Sponsor
Subsidiary Company Agreement of the Sponsor Subsidiary of which it is a
member;
(vii) any payments of principal and interest on any El Paso
Demand Loan or any other Permitted Investment, and
(viii) any payments of Cash Collateral Amounts made pursuant
to Section 5.06(b),
but excluding (A) principal payments on the A-Loans (but including any amount
representing the prepayment of principal of the A-Loan Notes described in
Section 2.05(b)(iv)), (B) the proceeds of the Advances deposited into the Sabine
Operating Account in accordance with Section 2.02(b), and (C) Excluded Payments.
(b) On or prior to the date hereof, Sabine shall give to El
Paso written notice (such notice to be in form and substance satisfactory to
Trinity) irrevocably instructing:
(i) El Paso and its Affiliates that all amounts payable by El
Paso and its Affiliates to any Sponsor Subsidiary under the A-Loan
Notes (other than principal under the A-Loan Notes) (other than any
prepayment of principal of the A-Loan Notes described in Section
2.05(b)(iv)) and the El Paso Demand Loans (including the El Paso
Guaranty with respect to any of the foregoing) shall be deposited
directly into the Cash Reserve; and
(ii) EPPC that all amounts payable by EPPC to any Sponsor
Subsidiary under any EPPC Note shall be deposited directly into the
Cash Reserve.
(c) Sabine shall cause the Sponsor Subsidiary Collateral Agent
to promptly notify Sabine and Trinity of any such deposit made pursuant to this
Section 7.02 and to provide to Sabine and Trinity quarterly reports of holdings
and transactions in the Cash Reserve.
Section 7.03. Permitted Investments and El Paso Demand Loans.
(a) Provided no Event of Default or Incipient Event has occurred and is
continuing, Sabine on behalf of the Sponsor Subsidiaries may, subject to the
provisions set forth in Section 7.01 concerning withdrawals and Section 7.04 and
Section 7.05 concerning transfers, from time to time:
62
(i) invest amounts on deposit in the Cash Reserve and the
Sabine Operating Account in such Cash Equivalents as Sabine may select
in the name of the Sponsor Subsidiary Collateral Agent;
(ii) to the extent practicable, invest interest and other
earnings paid on the Permitted Investments referred to in Section
7.03(a)(i) above and reinvest other proceeds of any such Cash
Equivalents, in each case, in such Cash Equivalents as Sabine may
select in the name of the Sponsor Subsidiary Collateral Agent; and
(iii) invest amounts on deposit in the Cash Reserve (except
the Total Cash Collateral Amount) and the Sabine Operating Account in
El Paso Demand Loans, as provided in and subject to the terms of
Sections 7.03(b), (c), (d) and (e) below,
(the Cash Equivalents referred to in Sections 7.03(a)(i) and (ii) above and the
El Paso Demand Loans referred to in Section 7.03(a)(iii) above being the
"PERMITTED INVESTMENTS"); provided that Sabine gives notice of its investments
in such Permitted Investments to Trinity and the Sponsor Subsidiary Collateral
Agent promptly after the making of such Permitted Investment, and provided
further that the Sponsor Subsidiary Collateral Agent shall (at the direction of
Trinity or Sabine, in the case of clause (A) below, and at the direction of the
Sponsor Subsidiary Liquidator, in the case of clause (B) below) liquidate,
convert or call in, or demand payment of, any Permitted Investment prior to its
maturity, or demand any El Paso Demand Loan:
(A) if the proceeds of such liquidation, conversion or calling
in or demand are necessary for any payment required to be made by the
Sponsor Subsidiary Collateral Agent in accordance with the provisions
of Section 7.04 or Section 7.05 hereof; or
(B) pursuant to an exercise by the Sponsor Subsidiary
Collateral Agent of the rights and remedies available under the Sponsor
Subsidiary Credit Documents.
Sabine will give all necessary directions to the Sponsor
Subsidiary Collateral Agent to effect the investments made by Sabine pursuant to
this Section 7.03(a).
(b) No Sponsor Subsidiary shall make any additional El Paso
Demand Loans if a Notice Event shall have occurred and be continuing.
(c) Subject to clause (j) below, El Paso Demand Loans may only
be made to El Paso or an Affiliate of El Paso if, on the date any such El Paso
Demand Loan is made, (i) in the case of any El Paso Demand Loan made to El Paso,
El Paso has, or (ii) in the case of any El Paso Demand Loan made to an Affiliate
of El Paso, such El Paso Demand Loan is guaranteed by El Paso and El Paso has,
senior unsecured long term debt credit ratings of at least BBB- by S&P and at
least Baa3 by Xxxxx'x; provided that, if an El Paso RA Event has occurred and is
continuing, any existing El Paso Demand Loans shall be permitted to be
maintained but no additional El Paso Demand Loans shall be permitted to be made.
(d) If (i) a Termination Event occurs or (ii) the Sponsor
Subsidiaries fail to comply with any financial covenant under Section 5.04, then
each El Paso Demand Loan shall (A) cease to be a Permitted Investment and (B) no
Sponsor Subsidiary shall make or maintain any additional El Paso Demand Loans;
provided that any existing El Paso Demand Loan shall be permitted to be
maintained for a period of 10 Business Days after the occurrence of any event
described in clause (i) or (ii) above with respect to such El Paso Demand Loan,
and upon the expiration of such period, the Sponsor Subsidiaries shall forthwith
demand repayment of such El Paso Demand Loan.
63
(e) If a Liquidating Event occurs, the Sponsor Subsidiaries
shall forthwith demand repayment of each El Paso Demand Loan.
(f) Interest and proceeds that are not invested or reinvested
as provided in Section 7.03(a) above shall be deposited and held in the Cash
Reserve.
(g) The Sponsor Subsidiary Collateral Agent shall, as directed
by Trinity (at the request of Sabine) and to the extent reasonably practicable,
dispose of investments in the Cash Reserve and the Sabine Operating Account so
as to minimize any loss on such investments, but in no event shall the Sponsor
Subsidiary Collateral Agent be liable for any losses incurred as the result of
any sale or disposition of Permitted Investments, and Sabine hereby releases the
Sponsor Subsidiary Collateral Agent from any liability arising out of, or in
connection with, any investment or liquidation or conversion made by it
hereunder, except where such liability arises from the Sponsor Subsidiary
Collateral Agent's gross negligence or willful misconduct.
(h) Each Sponsor Subsidiary hereby acknowledges and agrees
that the Sponsor Subsidiary Collateral Agent has sole dominion and control of
the Cash Reserve and the Sabine Operating Account. Each Sponsor Subsidiary
agrees not to take any action inconsistent with the preceding sentence.
(i) To the extent that El Paso or its Affiliates have arranged
to have letters of credit issued for the benefit of any Sponsor Subsidiary in
respect of any obligations owing to such Sponsor Subsidiary by El Paso or such
Affiliates, the Sponsor Subsidiary Collateral Agent shall be entitled to draw
under such letters of credit in compliance therewith.
(j) Notwithstanding anything to the contrary contained in
clause (c) above, if, in any Fiscal Quarter, the senior unsecured long-term debt
of El Paso is Split Rated, (A) any existing El Paso Demand Loans shall be
permitted to be maintained and (B) any additional El Paso Demand Loans shall be
permitted to be made from the Pool I Distributions Sub-Account to El Paso or any
Affiliate of El Paso in such Fiscal Quarter (or any subsequent Fiscal Quarter
while such senior unsecured long-term debt of El Paso remains Split Rated) only
if, in the case of clause (B) above, (x) the sum of the aggregate amount of such
additional El Paso Demand Loans and the aggregate amount of additional Pool I
Affiliate Loans made pursuant to Section 5.09(e)(i) hereof does not exceed the
aggregate net income of all Pool I Contributed Investments for the most recently
completed Fiscal Quarter in respect of which financial statements have been
delivered pursuant to Section 5.03(c) and (y) a Responsible Officer of El Paso
delivers a Compliance Certificate, dated no earlier than five Business Days
prior to the delivery thereof, demonstrating that the Sponsor Subsidiaries would
be in compliance, on a pro forma basis as of the last date of the delivery of
financial statements pursuant to Section 5.03(c), with the financial covenant
set forth in Section 5.04(b) calculated pursuant thereto, with the following
modifications:
(1) for purposes of such calculation made in the Initial Event
Quarter, the Carrying Value of the Freely Transferable Portion of each
Pool I Contributed Investment (other than any Pool I Publicly Traded
Investment) shall be reduced by a portion of the amount of net income
referred to in clause (x) above respectively relating to such Pool I
Contributed Investment;
(2) for purposes of such calculation made in any subsequent
Fiscal Quarter, the Carrying Value shall be reduced by (I) the
outstanding principal amount of Pool I Affiliate Loans actually made in
each Fiscal Quarter from, and including, the Initial Event Quarter to,
and including, the immediately preceding Fiscal Quarter (after giving
effect to any prepayment thereof), (II) the aggregate amount of
Distributions or El Paso Demand Loans actually made from the Pool I
Distributions Sub-Account in each Fiscal Quarter from, and including,
the Initial Event Quarter (except, if the senior unsecured long-term
debt of El Paso is Split Rated after the
64
Payment Date occurring in the Initial Event Quarter, no Distributions
actually made in such Initial Event Quarter shall be included in the
aggregate amount described in this clause (II)) to, and including, the
immediately preceding Fiscal Quarter, and (III) the amount of net
income referred to in clause (x) above, and
(3) after the next Appraisal Date, the initial calculation of
such financial covenant shall be based on the newly appraised Carrying
Value of the Freely Transferable Portion of each Pool I Contributed
Investment (it being understood that the Fiscal Quarter in which such
Appraisal Date occurs shall be a new Initial Event Quarter and that
such initial calculation shall be made pursuant to clause (1) above).
Section 7.04. Transfers from the Cash Reserve. (a) Transfers
in Respect of Periodic Payments from the Cash Reserve. Subject to Section 7.06,
on each Payment Date Trinity shall direct the Sponsor Subsidiary Collateral
Agent to make the following transfers from the Cash Reserve (except in the case
of clauses (1) to (4) (inclusive) below), free from any Lien under the Sponsor
Subsidiary Credit Documents) to the following accounts, such transfers to be
applied in the following order of priority:
(1) First, to the Sabine Operating Account in respect of
Excluded Payments (to the extent not paid);
(2) Second, to the Sabine Operating Account, such amount as is
necessary to pay Sponsor Subsidiary Expenses (except any Sponsor
Subsidiary Expenses specified in clause (5) below) then due or that are
scheduled to become due within 30 days thereafter;
(3) Third, to the Sabine Operating Account, such amount as is
necessary to meet capital calls with respect to Contributed
Investments;
(4) Fourth, to the Sabine Operating Account, such amount as is
necessary to meet Sabine's obligation to make mandatory Capital
Contributions under Section 5.03 of the Trinity Company Agreement;
(5) Fifth, to the Trinity Operating Account such amount as is
necessary to satisfy the Obligations of the Sponsor Subsidiaries under
the Operative Documents payable on that Payment Date (including any
mandatory prepayments), such transfer in turn to be applied to the
Obligations of the Sponsor Subsidiaries in the following order of
priority (without duplication):
(i) First, to the aggregate amount of fees and other
amounts then due and payable to the Sponsor Subsidiary
Collateral Agent under the Sponsor Subsidiary Credit
Documents;
(ii) Second, to accrued and unpaid Additional
Financing Costs then due and payable;
(iii) Third, to accrued and unpaid interest then due
and payable under this Agreement;
(iv) Fourth, to any Indemnified Amount then due and
payable under Section 10;
(v) Fifth, to any prepayment of principal under
Section 2.05 (if any) to be made on such Payment Date;
65
(vi) Sixth, to any other payment to be made by the
Sponsor Subsidiaries under the Operative Documents on the
Payment Date; and
(vii) Seventh, to accrued but unpaid Transaction
Costs then due and payable; and
(6) Sixth, provided (A) no Incipient Event, Event of Default,
Notice Event, Termination Event or Liquidating Event shall have
occurred and be continuing or would result therefrom and (B) El Paso
has senior unsecured long-term debt credit ratings of at least BBB- by
S&P and at least Baa3 by Xxxxx'x, to the Sabine Member or such other
Person (including to the holder of any Subordinated Note, but only to
the extent permitted by, and in accordance with the terms of, such
Subordinated Note) or account as Trinity directs (upon request therefor
from Sabine) an amount equal to the balance (if any) standing to the
credit of the Cash Reserve less:
(x) (i) if, in relation to a Fiscal Year, such
Payment Date is the Payment Date falling prior to the
Pool II Borrowing Base Effective Date for the Pool II
Borrowing Base Determination to be made in such
Fiscal Year, the Pool II Holdback Amount for the last
Fiscal Quarter of the prior Fiscal Year plus the Pool
II Holdback Amount for the most recently completed
Fiscal Quarter or (ii) in any other case, the Pool II
Holdback Amount for the most recently completed
Fiscal Quarter;
(y) the Required Cash Reserve Balance at such time;
and
(z) the Total Cash Collateral Amount (subject to
Section 7.04(g) below).
(b) Transfers from the Cash Reserve in Respect of Sponsor
Subsidiary Expenses Otherwise Than on a Payment Date. Subject to Section 7.06
and so long as no Incipient Event, Event of Default, Notice Event, Termination
Event, or Liquidating Event would result therefrom, Trinity may from time to
time (other than on a Payment Date), at Sabine's request, direct the Sponsor
Subsidiary Collateral Agent to transfer from the Cash Reserve to the Sabine
Operating Account such amount as is necessary to pay Sponsor Subsidiary Expenses
then due or that are scheduled to become due within 30 days thereafter.
(c) Transfers from the Cash Reserve in Respect of Non-Periodic
Additional Financing Costs, Etc. Subject to Section 7.06, Trinity shall from
time to time (other than on a Payment Date) direct the Sponsor Subsidiary
Collateral Agent to transfer from the Cash Reserve (free from any Lien under the
Sponsor Subsidiary Credit Documents) to the Trinity Operating Account such
amount as is necessary to satisfy the Obligations of the Sponsor Subsidiaries to
pay Additional Financing Costs and Transaction Costs under Section 2.06(b).
(d) Transfers from the Cash Reserve in Respect of Prepayments
of Principal Under Section 2.05 Otherwise Than on a Payment Date. Subject to
Section 7.06, on the date (other than a Payment Date) of each prepayment under
Section 2.05, Trinity shall direct the Sponsor Subsidiary Collateral Agent to
transfer from the Cash Reserve (free from any Lien under the Sponsor Subsidiary
Credit Documents) to the Trinity Operating Account such amount as is necessary
to satisfy the Obligations of the Sponsor Subsidiaries under this Agreement in
respect of that prepayment (including amounts payable under Section 2.07(c) in
respect of such prepayment), such transfer to be applied to the Obligations of
the Sponsor Subsidiaries in the following order of priority (without
duplication):
(1) First, to the aggregate amount of fees and other amounts
then due and payable to the Sponsor Subsidiary Collateral Agent under
the Sponsor Subsidiary Credit Documents;
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(2) Second, to accrued and unpaid Additional Financing Costs
then due and payable in respect of such prepayment;
(3) Third, to accrued and unpaid interest then due and payable
under this Agreement in respect of such prepayment;
(4) Fourth, to the prepayment of principal under Section 2.05;
and
(5) Fifth, to accrued but unpaid Transaction Costs then due
and payable in respect of such prepayment.
(e) Transfers from the Cash Reserve in Respect of Excluded
Payments and Capital Contributions Otherwise Than on a Payment Date. (i) Trinity
may, upon Sabine's request, from time to time (other than on a Payment Date)
direct the Sponsor Subsidiary Collateral Agent to transfer from the Cash Reserve
to the Sabine Operating Account such amount as is represented by Excluded
Payments (to the extent not paid).
(ii) Trinity may, upon Sabine's request, from time to time
direct the Sponsor Subsidiary Collateral Agent to transfer from the Cash Reserve
to the Sabine Operating Account such amount as represents the proceeds of
capital contributions received from Sponsor Subsidiary Members in respect of
capital calls made in respect of the Contributed Investments, capital
contributions pursuant to the Sponsor Subsidiary Company Agreements and, in
respect of Sabine, mandatory capital calls under Section 5.3 of the Trinity
Company Agreement.
(f) Transfers from the Cash Reserve in Respect of
Distributions on the Pool II Borrowing Base Effective Date. Trinity shall, upon
Sabine's request, on the Pool II Borrowing Base Effective Date direct the
Sponsor Subsidiary Collateral Agent to transfer from the Cash Reserve in
accordance with Section 2.11(b) or 2.11(c) (as applicable) such amount as is
permitted to be Distributed thereby.
(g) Transfers from the Total Cash Collateral Amount in the
Cash Reserve. Subject to Section 7.06 and provided that (i) no Incipient Event,
Event of Default, Notice Event, Termination Event, or Liquidating Event shall
have occurred and be continuing or would result therefrom and (ii) El Paso has
senior unsecured long-term debt credit ratings of at least BBB- by S&P and at
least Baa3 by Xxxxx'x, Trinity shall have the right to direct the Sponsor
Subsidiary Collateral Agent to make transfers from the Total Cash Collateral
Amount in the Cash Reserve to the Sabine Member or such other Person (including
to the holder of any Subordinated Note, but only to the extent permitted by, and
in accordance with the terms of, such Subordinated Note) or account as Trinity
directs (upon request therefor from Sabine) in an amount not exceeding the
balance of the Total Cash Collateral Amount on (A) any date on which (x) any
reduction of the Unrecovered Capital of Red River in Trinity, (y) any increase
of the Pool II Borrowing Base or (z) any increase of the Aggregate Pool I Loan
Value Amount becomes effective pursuant to the terms of this Agreement, (B) each
Coverage Test Date and (C) the date referred to in Section 5.07(f) (each such
date being a "CASH COLLATERAL AMOUNT DISTRIBUTION DATE"); provided that such
transfers shall be permitted upon delivery by a Responsible Officer of El Paso
of a Compliance Certificate showing the amount of the Total Cash Collateral
Amount to be so transferred and the calculation of the financial covenant set
forth in the second sentence of Section 5.06(a); and provided however, that, if
the senior unsecured long-term debt of El Paso is Split Rated, such transfers
shall be permitted upon delivery by a Responsible Officer of El Paso of a
Compliance Certificate demonstrating that, after giving effect to such
transfers, the Sponsor Subsidiaries would be in compliance, on a pro forma basis
as of the last date of the delivery of financial statements pursuant to Section
5.03(c), with the financial covenant set forth in
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Section 5.04(b) calculated pursuant thereto (but subject to the modifications
set forth in clauses (1) through (3) of Section 7.04(i)).
(h) Transfers from the Cash Reserve in Respect of
Distributions from the Proceeds Accounts. Subject to Section 7.06, Trinity
shall, upon Sabine's request, from time to time direct the Sponsor Subsidiary
Collateral Agent to transfer from the Cash Reserve any amounts deposited into
the Cash Reserve pursuant to Section 7.02(a)(iii)(z) if, at any such time, Pool
I Affiliate Loans are permitted to be made pursuant to Section 5.09(e).
(i) Transfers from the Cash Reserve in Respect of Amounts in
the Pool I Distributions Sub-Account. Subject to Section 7.06, and so long as no
Incipient Event, Event of Default, Notice Event, Termination Event or
Liquidating Event shall have occurred and be continuing or would result
therefrom, on each Payment Date after the senior unsecured long-term debt of El
Paso is Split Rated, Trinity shall direct the Sponsor Subsidiary Collateral
Agent to make Distributions from the Pool I Distributions Sub-Account to the
Sabine Member or such other Person (including to the holder of any Subordinated
Note, but only to the extent permitted by, and in accordance with the terms of,
such Subordinated Note) or account as Trinity directs (upon request therefor
from Sabine) in an amount not to exceed the balance standing to the credit of
the Pool I Distributions Sub-Account; provided that such Distributions under
this Section 7.04(i) shall be permitted to be made in the Initial Event Quarter
(if the senior unsecured long-term debt of El Paso is Split Rated prior to the
Payment Date occurring therein) or in the next Fiscal Quarter (if the senior
unsecured long-term debt of El Paso is Split Rated after the Payment Date
occurring in the Initial Event Quarter) or in any subsequent Fiscal Quarter
while such senior unsecured long-term debt of El Paso remains Split Rated only
if, (A) on or prior to the Payment Date occurring in the Initial Event Quarter
(if the senior unsecured long-term debt of El Paso is Split Rated prior thereto)
or (B) on or prior to the first Business Day of the next Fiscal Quarter (if the
senior unsecured long-term debt of El Paso is Split Rated after the Payment Date
occurring in the Initial Event Quarter), a Responsible Officer of El Paso
delivers a Compliance Certificate demonstrating that, after giving effect to
such Distributions, the Sponsor Subsidiaries would be in compliance, on a pro
forma basis as of the last date of the delivery of financial statements pursuant
to Section 5.03(c), with the financial covenant set forth in Section 5.04(b)
calculated pursuant thereto, with the following modifications:
(1) for purposes of such calculation made in the Initial Event
Quarter, the Carrying Value of the Freely Transferable Portion of each
Pool I Contributed Investment (other than any Pool I Publicly Traded
Investment) shall be reduced by the amount of net income referred to in
clause (x) of Section 5.09(e)(ii);
(2) for purposes of such calculation made in any subsequent
Fiscal Quarter, the Carrying Value shall be reduced by (I) the
outstanding principal amount of Pool I Affiliate Loans actually made in
each Fiscal Quarter from, and including, the Initial Event Quarter to,
and including, the immediately preceding Fiscal Quarter (after giving
effect to any prepayment thereof), (II) the aggregate amount of
Distributions or El Paso Demand Loans actually made from the Pool I
Distributions Sub-Account in each Fiscal Quarter from, and including,
the Initial Event Quarter (except, if the senior unsecured long-term
debt of El Paso is Split Rated after the Payment Date occurring in the
Initial Event Quarter, no Distributions actually made in such Initial
Event Quarter shall be included from the aggregate amount described in
this clause (II)) to, and including, the immediately preceding Fiscal
Quarter, and (III) the amount of net income referred to in clause (x)
of Section 5.09(e)(ii), and
(3) after the next Appraisal Date, the initial calculation of
such financial covenant shall be based on the newly appraised Carrying
Value of the Freely Transferable Portion of each Pool I Contributed
Investment (it being understood that the Fiscal Quarter in which such
68
Appraisal Date occurs shall be a new Initial Event Quarter and that
such initial calculation shall be made pursuant to clause (1) above).
(j) Any transfers to be made from the Cash Reserve pursuant to
this Section 7.04 shall be made, to the extent applicable, in the last instance
from the Pool I Distributions Sub-Account.
Section 7.05. Transfers from the Sabine Operating Account. (a)
Excluded Payments. Trinity may from time to time, upon Sabine's request, direct
the Sponsor Subsidiary Collateral Agent to transfer from the Sabine Operating
Account to such account or Person as it designates (free from any Lien under the
Sponsor Subsidiary Credit Documents) such amount as is represented by Excluded
Payments (to the extent not paid).
(b) Sponsor Subsidiary Expenses. Trinity may from time to
time, upon request from Sabine, direct the Sponsor Subsidiary Collateral Agent
to transfer from the Sabine Operating Account to such account or Person as it
designates (free from any Lien under the Sponsor Subsidiary Credit Documents)
such amounts as are necessary to pay Sponsor Subsidiary Expenses when due.
(c) Contributed Investments Capital Calls. Trinity may from
time to time, upon Sabine's request, direct the Sponsor Subsidiary Collateral
Agent to transfer from the Sabine Operating Account to such account or Person as
it designates (free from any Lien under the Sponsor Subsidiary Credit Documents)
such amounts as are necessary to meet capital calls with respect to Contributed
Investments to the extent such funds have been transferred to the Sabine
Operating Account pursuant to Section 7.04(e)(ii).
(d) Trinity Mandatory Capital Calls. Trinity may direct the
Sponsor Subsidiary Collateral Agent to transfer from the Sabine Operating
Account to the Trinity Operating Account (free from any Lien under the Sponsor
Subsidiary Credit Documents) such amounts as are necessary to meet Sabine's
obligation to make mandatory Capital Contributions under Section 5.3 of the
Trinity Company Agreement when due to the extent such funds have been
transferred to the Sabine Operating Account pursuant to Section 7.04(e)(ii).
Section 7.06. Subsisting Event of Default or Incipient Event.
Notwithstanding anything to the contrary set forth in Section 7.04 or Section
7.05, if Trinity provides notice to the Sponsor Subsidiary Collateral Agent of
the occurrence and continuance of an Event of Default, Notice Event or Incipient
Event, and until such time as the Sponsor Subsidiary Collateral Agent receives
notice from Trinity that such Event of Default, Notice Event, or Incipient Event
no longer continues, the Sponsor Subsidiary Collateral Agent shall (and each
Sponsor Subsidiary agrees not to take any action inconsistent with any such
action by the Sponsor Subsidiary Collateral Agent) hold all funds in the Cash
Reserve and the Sabine Operating Account for application, following and during
the continuance of an Event of Default, pursuant to Section 13 of the Sponsor
Subsidiary Security Agreement and Section 7.07 hereof, as directed by Trinity.
Trinity shall promptly notify the Sponsor Subsidiary Collateral Agent if any
Incipient Event, Notice Event or Event of Default ceases to exist or is waived.
Section 7.07. Transfers from the Cash Reserve and the Sabine
Operating Account in Respect of Payments on the Maturity Date and Application of
Proceeds of Collateral Pursuant to the Sponsor Subsidiary Security Agreement.
Subject to Section 13 of the Sponsor Subsidiary Security Agreement, on
(a) the Maturity Date;
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(b) receipt by the Sponsor Subsidiary Collateral Agent of any
proceeds of Collateral upon and after any sale of, collection from, or
other realization upon, all or any part of the Collateral pursuant to
the exercise of remedies available to the Sponsor Subsidiary Collateral
Agent under the Sponsor Subsidiary Security Agreement; or
(c) receipt by the Sponsor Subsidiary Collateral Agent of any
proceeds of any Disposition of Sponsor Subsidiary Property after the
Liquidation Start Date,
the Sponsor Subsidiary Collateral Agent shall (and each Sponsor Subsidiary
agrees not to take any action inconsistent with such action by the Sponsor
Subsidiary Collateral Agent) transfer (free from any Lien under the Sponsor
Subsidiary Credit Documents) to the Trinity Operating Account all amounts on
deposit in the Cash Reserve and the Sabine Operating Account and such proceeds,
such transfer to be applied to the Obligations of the Sponsor Subsidiaries in
the following order of priority (without duplication):
(1) First, to the aggregate amount of fees and other amounts
then due and payable to the Sponsor Subsidiary Collateral Agent under
this Agreement;
(2) Second, to accrued and unpaid Additional Financing Costs
then due and payable;
(3) Third, to accrued and unpaid interest then due and payable
under this Agreement;
(4) Fourth, to the repayment of principal;
(5) Fifth, to accrued but unpaid Transaction Costs then due
and payable;
(6) Sixth, to any other payment to be made by the Sponsor
Subsidiaries on such date; and
(7) Seventh, the balance (if any) to Sabine.
ARTICLE VIII
THE COLLATERAL AGENT
Section 8.01. Authorization and Action. Trinity hereby
appoints and authorizes Wilmington as the Sponsor Subsidiary Collateral Agent
hereunder to take such action as Sponsor Subsidiary Collateral Agent on its
behalf and to exercise such powers under this Agreement and the other Sponsor
Subsidiary Credit Documents as are expressly delegated to the Sponsor Subsidiary
Collateral Agent by the terms hereof and thereof. As to any matters not
expressly provided for by the Sponsor Subsidiary Credit Documents, including
enforcement or collection of the Indebtedness resulting from the Advances and
enforcement of this Agreement, the Sponsor Subsidiary Collateral Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Trinity and such instructions
shall be binding upon Trinity; provided, however, that the Sponsor Subsidiary
Collateral Agent shall not be required to take any action that exposes it to
personal liability or that is contrary to this Agreement or Applicable Law. The
Sponsor Subsidiary Collateral Agent agrees to give to Trinity prompt notice of
each notice and copies of all other documents (if any) given to it by the
Sponsor Subsidiaries pursuant to the terms of this Agreement and the other
Sponsor Subsidiary Credit Documents.
Section 8.02. Sponsor Subsidiary Collateral Agent's Reliance,
Etc. Neither the Sponsor Subsidiary Collateral Agent nor any of its directors,
officers, agents or employees shall be liable
70
for any action taken or omitted to be taken by it or them under or in connection
with the Sponsor Subsidiary Credit Documents, except for its or their own gross
negligence, fraud or willful misconduct, and Trinity agrees that it will not
assert or seek to assert any claim it might have against any of them in
violation of this provision. Without limiting the generality of the foregoing:
(a) the Sponsor Subsidiary Collateral Agent may consult with
legal counsel (including counsel for any Sponsor Subsidiary),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants
or experts;
(b) the Sponsor Subsidiary Collateral Agent makes no warranty
or representation to Trinity and shall not be responsible to Trinity
for any statements, warranties or representations made in or in
connection with the Sponsor Subsidiary Credit Documents;
(c) the Sponsor Subsidiary Collateral Agent shall have no duty
to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of any Sponsor Subsidiary Credit
Document on the part of any Sponsor Subsidiary or to inspect the
property (including the books and records) of any Sponsor Subsidiary;
(d) the Sponsor Subsidiary Collateral Agent shall not be
responsible to Trinity for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of any Sponsor
Subsidiary Credit Document or any other instrument or document
furnished pursuant hereto or thereto;
(e) the Sponsor Subsidiary Collateral Agent shall not be
liable under or in respect of any Sponsor Subsidiary Credit Document by
acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopy) believed by it to be genuine and
signed or sent by the proper party or parties;
(f) the Sponsor Subsidiary Collateral Agent shall not be
liable to Trinity for any losses incurred as the result of any sale or
disposition of Permitted Investments or the transfer of any funds
pursuant to the terms hereof; and
(g) the Sponsor Subsidiary Collateral Agent makes no
representation or warranty and shall have no responsibility concerning
the value or validity of the Collateral or the validity or the
perfection of the pledge thereof.
Section 8.03. Trinity Credit Decision. Trinity acknowledges
that it has, independently and without reliance upon the Sponsor Subsidiary
Collateral Agent and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Trinity also acknowledges that it will, independently and without
reliance upon the Sponsor Subsidiary Collateral Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
Section 8.04. Fee. The Sponsor Subsidiaries shall jointly and
severally pay the Sponsor Subsidiary Collateral Agent an annual fee in the
amount set out in and pursuant to the terms of the Sponsor Subsidiary Collateral
Agent Fee Letter.
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ARTICLE IX
ASSIGNMENTS; ACQUISITIONS OF CONTRIBUTED INVESTMENTS
Section 9.01. No Assignment by any Sponsor Subsidiary. No
Sponsor Subsidiary may assign any of its rights or obligations under this
Agreement.
Section 9.02. Additional Sponsor Subsidiaries and Acquisitions
of Contributed Investments. (a) An El Paso Company may become a Sponsor
Subsidiary under this Agreement (an "ADDITIONAL SPONSOR SUBSIDIARY") and an
existing Sponsor Subsidiary may acquire a Contributed Investment in accordance
with the following provisions of this Section 9.02. Such accessions or
acquisitions shall not be requested more than two times in any Fiscal Year.
(b) If an El Paso Company desires to become an Additional
Sponsor Subsidiary or an existing Sponsor Subsidiary wishes to acquire a
Contributed Investment, such El Paso Company or existing Sponsor Subsidiary
shall deliver the following to Trinity and the Sponsor Subsidiary Collateral
Agent:
(i) written notice in the form of Exhibit 9.02 - 1 hereto (an
"ACQUISITION/ACCESSION NOTICE");
(ii) an Appraisal of any Pool I Contributed Investment of such
Additional Sponsor Subsidiary or any Pool I Contributed Investment to
be acquired by such existing Sponsor Subsidiary dated not more than 15
days prior to the date of the Acquisition/Accession Notice; provided
that the Appraisal of a Publicly Traded Investment (including Energy
Partners) shall be dated on the date of the Acquisition/Accession
Notice;
(iii) written certification of the Chief Financial Officer or
Treasurer of El Paso that such Contributed Investment is an Eligible
Investment, substantially in the form of Exhibit 9.02 - 2 hereto; and
(iv) a proposed Exception Schedule with respect to any such
Contributed Investment (other than any Pre-approved Pool I Contributed
Investment) and such other information in such detail as Trinity may
reasonably request (including financial information in order for
Trinity to calculate on a pro forma basis as of the last date of the
calculation of the covenants in Section 5.04 the continued compliance
by the Sponsor Subsidiaries with Section 5.04 hereof following
accession of such Additional Sponsor Subsidiary or acquisition of such
Contributed Investment, as applicable);
(c) The Trinity Class B Member on behalf of Trinity shall
within 60 days after receipt of the documents referred to in clause (b) above
notify such Additional Sponsor Subsidiary or existing Sponsor Subsidiary (as
applicable) in writing of the Exception Schedule (in the case of any Contributed
Investment other than a Pre-approved Pool I Contributed Investment) and (in the
case of a Pool I Contributed Investment other than a Pre-approved Pool I
Contributed Investment) the Pool I Loan Value for such Pool I Contributed
Investment that are acceptable to the Trinity Class B Member on behalf of
Trinity.
(d) Following receipt of notification under clause (c) above,
if the Pool I Loan Value (if applicable) and Exception Schedule applicable to
such Contributed Investment are acceptable to such Additional Sponsor Subsidiary
or existing Sponsor Subsidiary, as the case may be:
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(i) such Additional Sponsor Subsidiary shall automatically
accede to the Sponsor Subsidiary Credit Documents on the date that
Trinity notifies Sabine, the Sponsor Subsidiary Collateral Agent and
the Agent that the conditions referred to in clause (e) below have been
satisfied; and
(ii) such existing Sponsor Subsidiary may acquire such
Contributed Investment at any time within 30 days after the date that
Trinity notifies Sabine (and, where such Contributed Investment is a
Pool I Contributed Investment, in any event within 90 days from the
date of the Appraisal delivered pursuant to clause (b)(ii) above), the
Sponsor Subsidiary Collateral Agent and the Agent that the following
conditions referred to in clause (e) below have been satisfied and the
Sponsor Subsidiary Collateral Agent confirms to Trinity that such
Sponsor Subsidiary has delivered to it the certificates and instruments
relating to such Contributed Investment required to be delivered
pursuant to Section 4 of the Sponsor Subsidiary Security Agreement
(such notified date in clause (i) or (ii) above being the "ACQUISITION/ACCESSION
DATE").
(e) An Additional Sponsor Subsidiary may not accede to the
Sponsor Subsidiary Credit Documents and an existing Sponsor Subsidiary may not
acquire a Contributed Investment unless the following conditions are satisfied:
(i) such Additional Sponsor Subsidiary or existing Sponsor
Subsidiary delivers to Trinity and the Sponsor Subsidiary Collateral
Agent the following documents:
(A) a Sponsor Subsidiary Accession Agreement (in the
case of the accession of an Additional Sponsor Subsidiary) or
a Sponsor Subsidiary Security Agreement Supplement (in the
case of the acquisition by an existing Sponsor Subsidiary of a
Contributed Investment); and
(B) the documents listed in Schedule 9.02 (except the
notification referred to in clause (b)(ii) on Schedule 9.02)
in form and substance reasonably satisfactory to Trinity;
(ii) in the case of a Pool I Contributed Investment, no
material adverse event shall have occurred since the date of the
Appraisal with respect to such Pool I Contributed Investment that could
reasonably be expected to result in a material diminution of the value
determined in the Appraisal;
(iii) such Contributed Investment is an Eligible Investment;
(iv) no Event of Default, Incipient Event, Notice Event,
Termination Event or Liquidating Event shall be continuing or shall
occur as a result of such accession or acquisition;
(v) an Exception Schedule (in the case of any Contributed
Investment other than a Pre-approved Pool I Contributed Investment) to
the Acquisition/Accession Notice is approved (with or without changes)
by Trinity, Red River, the Agent, the Lender and the Equity Investors,
such approval to be evidenced by the execution by Trinity and the Agent
(in its own capacity and as agent for the Lender) and the Equity
Investors of such Acquisition/Accession Notice; whereupon such
Exception Schedule in the approved form shall become the basis for
completion of the schedules to the Sponsor Subsidiary Accession
Agreement or the Sponsor Subsidiary Security Agreement Supplement (as
applicable);
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(vi) in the case of the accession of a Sponsor Subsidiary that
owns a Pool I Contributed Investment (other than a Pre-approved Pool I
Contributed Investment) or the acquisition by an existing Sponsor
Subsidiary of a Pool I Contributed Investment (other than a
Pre-approved Pool I Contributed Investment), Trinity, Red River, the
Equity Investors, the Agent and the Lender shall have all consented to
such accession or acquisition, as the case may be, in their respective
sole discretion;
(vii) where the Contributed Investment to be contributed is a
Pre-approved Pool I Contributed Investment (A) in the case of each
Pre-approved Pool I Contributed Investment (other than Energy
Partners), 100% of the issued and voting capital stock or membership or
partnership interests (as applicable) therein is contributed and
pledged pursuant to the Sponsor Subsidiary Security Agreement, (B) in
the case of Energy Partners, not less than 5,750,000 common units in
Energy Partners are contributed, (C) in each case, El Paso has provided
to Trinity evidence, in form and substance reasonably satisfactory to
Trinity, Red River, the Equity Investors, the Agent and the Lender,
that El Paso or its Affiliates have made capital contributions in
respect of the Pool I Underlying Business relating to such Pre-approved
Pool I Contributed Investment in an amount not less than the
Pre-Contribution Excess Distribution for such Pool I Underlying
Business, together with details of the calculation of the amount of
such Pre-Contribution Excess Distribution in reasonable detail, and (D)
all of the Pre-approved Pool I Contributed Investments are contributed
on the same date;
(viii) if the Underlying Business of the Contributed
Investment to be acquired by an existing Sponsor Subsidiary or that is
owned by an Additional Sponsor Subsidiary is Bear Creek, then the Bear
Creek Contract shall have been renewed in form and substance reasonably
satisfactory to Trinity, Red River, the Equity Investors, the Agent and
the Lender;
(ix) if the Contributed Investment to be acquired by an
existing Sponsor Subsidiary or that is owned by an Additional Sponsor
Subsidiary comprises all of the Equity Interests in EPPC, then
Additional Sponsor Subsidiaries that have purchased the EPPC Notes
shall become Additional Sponsor Subsidiaries prior to or
contemporaneously with such acquisition or accession; and
(x) in the case of the Pool II Contributed Investments, both
Pool II Contributed Investments are contributed on the same date.
(f) Upon acceding to the Sponsor Subsidiary Credit Documents
in accordance with this Section 9.02, an Additional Sponsor Subsidiary shall:
(i) become jointly and severally liable for all existing and
future principal and interest under and in respect of each Advance, and
all Additional Financing Costs and Transaction Costs and all other
amounts (including the fee referred to in Section 8.04) payable under
the Sponsor Subsidiary Credit Documents;
(ii) become bound by all of the terms of this Agreement as if
it were an original party hereto;
(iii) pledge, transfer and assign to the Sponsor Subsidiary
Collateral Agent for the benefit of Trinity, and grant to the Sponsor
Subsidiary Collateral Agent for the benefit of Trinity, a security
interest in all right, title and interest of such Additional Sponsor
Subsidiary (whether then owned or thereafter acquired) in, to and under
the collateral described in Section 1 of the Sponsor Subsidiary
Security Agreement (including any EPPC Note held by such Additional
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Sponsor Subsidiary, but excluding, in the case of any Sponsor
Subsidiary that owns or acquires all of the Equity Interests in EPPC,
such Equity Interests, any certificates and instruments representing
and/or evidencing any such Equity Interests, and any right or
entitlement to receive any Distribution in respect of any such Equity
Interest), and shall become bound by all of the terms of the Sponsor
Subsidiary Security Agreement;
(iv) become bound by all of the terms of each other Operative
Document to which it is a party to the extent such terms relate to a
Sponsor Subsidiary; and
(v) acquire an equal pro rata interest in the A-Loans
outstanding on the Acquisition/Accession Date, and each Sponsor
Subsidiary hereby assigns and transfers (subject to the Liens created
pursuant to the Sponsor Subsidiary Credit Documents) to each such
Additional Sponsor Subsidiary a portion of its interest in the A-Loans
on such date in an amount equal to its pro rata share of the interest
to be acquired by such Additional Sponsor Subsidiary.
(g) Upon accession of an Additional Sponsor Subsidiary to the
Sponsor Subsidiary Credit Documents or acquisition by an existing Sponsor
Subsidiary of a Contributed Investment:
(i) every reference to a "Sponsor Subsidiary" in each
Operative Document shall thereafter be deemed to be a reference to such
Additional Sponsor Subsidiary and the Sponsor Subsidiaries existing
immediately prior to the Acquisition/Accession Date; and
(ii) every reference to a Contributed Investment, Intermediate
Holder, or Underlying Business in each Operative Document shall
thereafter be deemed to be a reference to (x) the Contributed
Investment acquired by such existing Sponsor Subsidiary and the
Intermediate Holder (if any) and Underlying Business relating thereto
and (y) the Contributed Investments existing immediately prior to the
Acquisition/Accession Date and the Intermediate Holders (if any) and
Underlying Businesses relating thereto.
(h) An Additional Sponsor Subsidiary shall not be entitled to
borrow any Advances hereunder.
(i) Delivery of an Acquisition/Accession Notice and a Sponsor
Subsidiary Accession Agreement executed by such Additional Sponsor Subsidiary or
a Sponsor Subsidiary Security Agreement Supplement executed by such existing
Sponsor Subsidiary (as applicable), shall constitute confirmation by that
Additional Sponsor Subsidiary or existing Sponsor Subsidiary that:
(i) the representations and warranties set forth in Article IV
in respect of such Additional Sponsor Subsidiary, any Contributed
Investment owned by it, and any Intermediate Holder and any Underlying
Business relating thereto, are correct in all material respects as if
made on the date of such Acquisition/Accession Notice, the date of the
Sponsor Subsidiary Accession Agreement or the Sponsor Subsidiary
Security Agreement Supplement (as applicable), and the
Acquisition/Accession Date;
(ii) on a pro forma basis determined as of the last date of
determination of compliance by the Sponsor Subsidiaries with Section
5.04 after giving effect to the Contributed Investments (if any) of
such Additional Sponsor Subsidiary, no Default or Event of Default
under Section 5.04 would result from the accession or acquisition;
(iii) in the case of accession of such Additional Sponsor
Subsidiary, no Incipient Event, Event of Default, Liquidating Event,
Termination Event or Notice Event has occurred and
75
is continuing or would result from the execution and delivery by such
Additional Sponsor Subsidiary of the Sponsor Subsidiary Accession
Agreement and performance by such Additional Sponsor Subsidiary of the
Sponsor Subsidiary Accession Agreement, the other Sponsor Subsidiary
Credit Documents to which it is a party and the other Operative
Documents to which it is a party; and
(iv) in the case of acquisition of such Contributed Investment
by such existing Sponsor Subsidiary, no Incipient Event, Event of
Default, Liquidating Event, Termination Event or Notice Event has
occurred and is continuing or would result from the execution, delivery
and performance by such existing Sponsor Subsidiary of the Sponsor
Subsidiary Security Agreement Supplement and the consummation of the
actions contemplated to be taken pursuant to this Agreement in
connection with such acquisition.
Section 9.03. Permitted Assignment by Trinity. After the
occurrence of a Liquidating Event, Trinity may assign any or all of its rights
or obligations under this Agreement to any Person; provided, however, that such
assignment shall only be valid if the assignee's ownership of an interest in an
Advance, and any interest thereon payable by a Sponsor Subsidiary, is reflected
in the books of such Sponsor Subsidiary.
ARTICLE X
INDEMNIFICATION
Section 10.01. Indemnities by Sponsor Subsidiaries. Each
Sponsor Subsidiary jointly and severally agrees, to the fullest extent permitted
by Applicable Law, to indemnify and hold harmless each Indemnified Person from
and against any and all claims, damages, liabilities and expenses (including
fees and disbursements of counsel and claims, damages, liabilities and expenses
relating to environmental matters) other than Relevant Taxes or Other Taxes (all
of the foregoing to the extent not expressly excluded being collectively
referred to as the "INDEMNIFIED AMOUNTS") for which any of them may become
liable or which may be incurred or realized by or asserted against any such
Indemnified Person, in each case in connection with or arising out of or by
reason of any investigation, litigation, or proceeding, whether or not any
Indemnified Person is a party thereto, arising out of, related to or in
connection with this Agreement, any Sponsor Subsidiary Credit Document, any
Operative Document, or any Assigned Agreement, or the use of proceeds of any
Advance, including any and all Indemnified Amounts relating to, growing out of
or resulting from:
(i) reliance on any representation or warranty or statement
made or deemed made by any Sponsor Subsidiary (or any of its members)
in any Operative Document that shall have been incorrect in any
material respect when made or deemed made;
(ii) the failure by any Sponsor Subsidiary to comply with any
Applicable Law with respect to any Operative Document or Assigned
Agreement, or the nonconformity of any Operative Document or Assigned
Agreement with any such Applicable Law;
(iii) the failure to vest in the Sponsor Subsidiary Collateral
Agent a valid and perfected first priority security interest in the
Collateral (subject to Permitted Liens);
(iv) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC (or its equivalent) of any applicable jurisdiction or other
Applicable Laws with respect to any Collateral;
76
(v) any dispute, claim, offset or defense of Trinity, the
Sponsor Subsidiary Collateral Agent or any other party to any Operative
Document or Assigned Agreement to the payment of any amount owing to
any Sponsor Subsidiary under the provisions thereof (including a
defense based on such payment or the related Operative Document or
Assigned Agreement not being a legal, valid and binding obligation of
such Person enforceable against it in accordance with its terms);
(vi) any failure by any Sponsor Subsidiary to perform any duty
or obligation (other than a payment obligation) in accordance with the
provisions hereof or to perform its duties and obligations under the
Assigned Agreements; or
(vii) any investigation, litigation or proceeding related to
this Agreement or any other Sponsor Subsidiary Credit Document or the
use of proceeds of any Advance or in respect of any Operative Document
or Assigned Agreement.
Section 10.02. Survival of Indemnification Obligations. All
indemnities provided for in this Agreement shall survive the termination of this
Agreement.
Section 10.03. Limitations on Indemnification Obligations. The
indemnities provided in Section 10.01 shall be subject to the following
limitations:
(a) Limitation by Law. Such sections shall be enforced only to
the maximum extent permitted by Applicable Law.
(b) Misconduct, Etc. No Indemnified Person shall be
indemnified or held harmless for and no Sponsor Subsidiary shall have
any liability for or in respect of, any Expenses with respect to such
Indemnified Person to the extent caused by or resulting from (i) the
actual fraud, willful misconduct, bad faith or gross negligence of such
Indemnified Person or any of its Related Persons or (ii) any inaccuracy
in, or breach of, any written certification, representation or warranty
made by such Indemnified Person or any of its Related Persons in any
Operative Document or in any written report or certification required
hereunder or under any other Operative Document (unless and to the
extent such inaccuracy or breach is attributable to any written
information provided by El Paso or its Affiliates), in each case under
this clause (ii) (A) if, but only if, such certification,
representation or warranty is made as of a specific date, as of the
date as of which the facts stated therein were certified, represented
or warranted and (B) in all other cases, as of any date or during any
period to which such certification, representation or warranty may be
applicable.
(c) No Duplication. Indemnified Amounts under this Article X
shall be without duplication of any amounts payable under
indemnification provisions of any other Operative Document or other
agreement or any amounts actually paid thereunder.
Section 10.04. Payments. Any amounts subject to the
indemnification provisions of this Article X shall be paid by each Sponsor
Subsidiary within two Business Days following demand therefor, accompanied, as
may be appropriate in the context, by supporting documentation in reasonable
detail. Payment shall be made to the bank account or at another location as such
Indemnified Person shall designate in writing or as is expressly required under
any Operative Document the obligations under which are the subject of any such
payment, not later than 10:00 AM (
New York time) on the date for such payment in
immediately available funds.
77
Section 10.05. Procedural Requirements. (a) Notice of Claims.
Any Indemnified Person that proposes to assert a right to be indemnified under
this Article X will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such Indemnified Person in respect of which a
claim is to be made against any Sponsor Subsidiary under this Article X (an
"INDEMNIFIED PROCEEDING"), or the incurrence or realization of Indemnified
Amounts in respect of which a claim is to be made against any Sponsor Subsidiary
under this Article X, notify Sabine of the commencement of such Indemnified
Proceeding or of such incurrence or realization, enclosing a copy of all
relevant documents, including all papers served and claims made, but the
omission so to notify Sabine promptly of any such Indemnified Proceeding or
incurrence or realization shall not relieve (x) any Sponsor Subsidiary from any
liability that it may have to such Indemnified Person under this Article X or
otherwise, except, as to each Sponsor Subsidiary's liability under this Article
X, to the extent, but only to the extent, that such Sponsor Subsidiary shall
have been prejudiced by such omission, or (y) any other indemnitor from
liability that it may have to any Indemnified Person under the Operative
Documents.
(b) Defense of Proceedings. In case any Indemnified Proceeding
shall be brought against any Indemnified Person and it shall notify Sabine of
the commencement thereof, the Sponsor Subsidiaries together shall be entitled to
participate in, and to assume the defense of, such Indemnified Proceeding with
counsel reasonably satisfactory to such Indemnified Person, and after notice
from Sabine to such Indemnified Person of such Sponsor Subsidiary's election so
to assume the defense thereof and the failure by such Indemnified Person to
object to such counsel within ten Business Days following its receipt of such
notice, no Sponsor Subsidiary shall be liable to such Indemnified Person for
legal or other expenses incurred after such notice of election to assume such
defense except as provided below and except for the reasonable costs of
investigating, monitoring or cooperating in such defense subsequently incurred
by such Indemnified Person reasonably necessary in connection with the defense
thereof. Such Indemnified Person shall have the right to employ its counsel in
any such Indemnified Proceeding, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless:
(i) the employment of counsel by such Indemnified Person at
the expense of the Sponsor Subsidiaries has been authorized in writing
by Sabine (which authorization shall not be unreasonably withheld or
delayed);
(ii) such Indemnified Person shall have reasonably concluded
in its good faith (which conclusion shall be determinative unless a
court determines that conclusion was not reached reasonably and in good
faith) that there is or may be a conflict of interest between a Sponsor
Subsidiary and such Indemnified Person in the conduct of the defense of
such Indemnified Proceeding or that there are or may be one or more
different or additional defenses, claims, counterclaims, or causes of
action available to such Indemnified Person (it being agreed that in
any case referred to in this clause (ii) the Sponsor Subsidiaries shall
not have the right to direct the defense of such Indemnified Proceeding
on behalf of the Indemnified Person);
(iii) the Sponsor Subsidiaries shall not have employed Xxxxx,
Day, Xxxxxx and Xxxxx, or other counsel reasonably acceptable to the
Indemnified Person, to assume the defense of such Indemnified
Proceeding within a reasonable time after notice of the commencement
thereof (provided, however, that this clause shall not be deemed to
constitute a waiver of any conflict of interest which may arise with
respect to any such counsel); or
(iv) any counsel employed by the Sponsor Subsidiaries shall
fail to timely commence or maintain the defense of such Indemnified
Proceeding;
78
in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of the Sponsor Subsidiaries jointly and
severally; provided that without the prior written consent of such Indemnified
Person, no Sponsor Subsidiary shall settle or compromise, or consent to the
entry of any judgment in, any pending or threatened Indemnified Proceeding,
unless such settlement, compromise or consent or related judgment includes an
unconditional release of such Indemnified Person from all liability for Expenses
arising out of such claim, action, investigation, suit or other legal
proceeding. No Indemnified Person shall settle or compromise, or consent to the
entry of any judgment in, any pending or threatened Indemnified Proceeding in
respect of which any payment would result hereunder or under the Operative
Documents without the prior written consent of El Paso, such consent not to be
unreasonably withheld or delayed. Only one counsel shall be retained by all
Indemnified Persons with respect to any Indemnified Proceeding, unless counsel
for any Indemnified Person reasonably concludes in good faith (which conclusion
shall be determinative unless a court determines that conclusion was not reached
reasonably and in good faith) that there is or may be a conflict of interest
between such Indemnified Person and one or more other Indemnified Persons in the
conduct of the defense of such Indemnified Proceeding or that there are or may
be one or more different or additional defenses, claims, counterclaims, or
causes of action available to such Indemnified Person (it being agreed that in
any case referred to in this sentence such Indemnified Person may retain
separate counsel together with all other Indemnified Persons subject to the same
conflict of interest or sharing such additional defenses, claims, counterclaims
or causes of action).
THE FOREGOING INDEMNITIES SHALL EXPRESSLY INCLUDE ANY INDEMNIFIED AMOUNTS
ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY INDEMNIFIED
PERSON.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Amendments, Etc. No amendment, waiver,
modification or supplement of any provision of this Agreement or any other
Sponsor Subsidiary Credit Document, nor consent to any departure by any Sponsor
Subsidiary therefrom, shall in any event be effective unless the same shall be
in writing and signed by Sabine and Trinity; provided that if the amendment,
waiver, modification, or supplement relates to the rights or obligations of the
Sponsor Subsidiary Collateral Agent under this Agreement, then the consent of
the Sponsor Subsidiary Collateral Agent also shall be required. Such amendment,
waiver, modification, supplement or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 11.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:
(a) if to any Sponsor Subsidiary, to Sabine at its address set
forth in Section 2.2 of the Trinity Company Agreement, with a copy to
El Paso at the address set forth in Section 2.2 of the Trinity Company
Agreement;
(b) if to Trinity, c/o Wilmington at Xxxxxx Square North, 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Corporate Trust Dept., Facsimile No.: (000) 000-0000 with a copy to
Citibank, N.A., Attention: Xxxxxx Xxxxxx, Managing Director, Capital
Structuring, Facsimile (000) 000-0000 and Citicorp North America, Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
Xxxxxxxxxx, Vice President, Global Securitization, Facsimile (212)
793-3728; and
79
(c) if to the Sponsor Subsidiary Collateral Agent, at Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000-0000, Attention: Xxxx Xxxxxxx, Facsimile No.: (000) 000-0000,
with a copy to Citibank, N.A., Attention: Xxxxxx Xxxxxx, Managing
Director, Capital Structuring, Facsimile (000) 000-0000 and Citicorp
North America, Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxxxxxxx, Vice President, Global Securitization,
Facsimile (000) 000-0000,
or at such other address as shall be designated by such party in a written
notice to the other parties. Any such notices and communications shall be deemed
to be delivered, given, and received for all purposes as of the date so
delivered, if delivered personally, or otherwise as of the date on which the
same was received (if a Business Day or, if not, on the next succeeding Business
Day).
Section 11.03. No Waiver, Remedies. No failure on the part of
Trinity or the Sponsor Subsidiary Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any other Sponsor Subsidiary Credit
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 11.04. Costs and Expenses. (a) Each Sponsor Subsidiary
jointly and severally agrees to pay pursuant to Section 7.04:
(i) all reasonable costs and expenses of the Sponsor
Subsidiary Collateral Agent and Trinity, in connection with the
administration, modification and amendment of any Sponsor Subsidiary
Credit Document (including (A) all due diligence, transportation,
computer, duplication, appraisal, audit, insurance, consultant, search,
filing, rating agency and recording fees and expenses, (B) the
preservation of, or the sale (other than any registration under the
securities laws with respect thereto) of, collection from, or other
realization upon, any of the Collateral, (C) the enforcement of any of
the rights of the Sponsor Subsidiary Collateral Agent or Trinity under
any Sponsor Subsidiary Credit Document and (D) the reasonable fees and
expenses of counsel for the Sponsor Subsidiary Collateral Agent and
Trinity with respect to advising such Person as to its rights and
responsibilities, or the perfection, protection, or preservation of
rights or interests, under any Sponsor Subsidiary Credit Document, with
respect to negotiations with any Sponsor Subsidiary or with other
creditors of any Sponsor Subsidiary arising out of any Incipient Event
or Event of Default or with Trinity or El Paso arising out of any
Notice Event, Termination Event or Liquidating Event or any events or
circumstances that may give rise to an Incipient Event or Event of
Default or a Notice Event, Termination Event or Liquidating Event and
with respect to presenting claims in or otherwise participating in or
monitoring any bankruptcy, insolvency or other similar proceeding
involving creditors' rights generally and any proceeding ancillary
thereto with respect to any Sponsor Subsidiary, Trinity or El Paso);
and
(ii) all reasonable out-of-pocket costs and expenses of the
Sponsor Subsidiary Collateral Agent and Trinity in connection with the
enforcement of any Sponsor Subsidiary Credit Document, whether in any
action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise
(including the reasonable fees and expenses of counsel for Trinity with
respect thereto), subject, in each case to the limitations set forth in
Section 10.03.
(b) If the Sponsor Subsidiaries fail to pay when due any
costs, expenses or other amounts payable by them under any Sponsor Subsidiary
Credit Document, including fees and expenses of counsel
80
and indemnities, but excluding principal and interest payments and commitment
fees, such amount may be paid on behalf of the Sponsor Subsidiaries by Trinity,
in its sole discretion.
(c) The indemnities set forth in Article X and this Section
11.04 shall be in addition to any other obligations or liabilities of any
Sponsor Subsidiary hereunder or at common law or otherwise; provided, however,
that the indemnities set forth in Article X and this Section 11.04 shall not
apply with respect to Relevant Taxes and liabilities with respect thereto, for
which the exclusive remedy of Trinity, the Agent and the Sponsor Subsidiary
Collateral Agent against each Sponsor Subsidiary shall be pursuant to Section
2.08 hereof. Without prejudice to the survival of any other obligation of any
Sponsor Subsidiary under this Agreement, but subject to the foregoing, the
indemnities and obligations contained in Article X and this Section 11.04 shall
survive the payment in full of the principal of and interest on the Advances or
the termination of this Agreement.
Section 11.05. Right of Setoff. On and after the Liquidation
Start Date, Trinity is hereby authorized at any time and from time to time, to
the fullest extent permitted by Applicable Law, to setoff and otherwise apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Trinity to or for
the credit or the account of any Sponsor Subsidiary against any and all of the
Obligations of any Sponsor Subsidiary now or hereafter existing under this
Agreement and although such obligations may be unmatured. The rights of Trinity
under this Section are in addition to other rights and remedies (including other
rights of setoff) that Trinity may have.
Section 11.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by each Sponsor Subsidiary party
hereto on the date of this Agreement, Trinity and the Sponsor Subsidiary
Collateral Agent and thereafter shall be binding upon and inure to the benefit
of each Sponsor Subsidiary (including each Additional Sponsor Subsidiary
pursuant to Section 9.02), Trinity and their respective successors and assigns
and each other Indemnified Person; provided, however, that the obligations of
Trinity under Article II hereof shall not become effective until satisfaction or
waiver by Trinity of each of the conditions set forth in Section 3.03 hereof.
Section 11.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
New York.
Section 11.08. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 11.09. Non-Recourse Liability. No recourse shall be
had against the principal amount of (as distinguished from any interest payable
on) any A-Loan (other than in respect of any prepayment of principal of the
A-Loan Notes described in Section 2.05(b)(iv)).
Section 11.10. WAIVER OF JURY TRIAL. EACH SPONSOR SUBSIDIARY,
THE SPONSOR SUBSIDIARY COLLATERAL AGENT AND TRINITY EACH HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE
SPONSOR SUBSIDIARY CREDIT DOCUMENTS, THE ADVANCES OR ACTIONS OF THE SPONSOR
SUBSIDIARY COLLATERAL AGENT OR TRINITY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
81
Section 11.11. Authorization of Sabine as Sponsor
Subsidiaries' Agent. Each Sponsor Subsidiary (other than Sabine) hereby (a)
appoints Sabine as its agent to take all actions, do all things, and exercise
all discretions, in each case for and on behalf of such Sponsor Subsidiary, that
are expressly delegated to Sabine under the Operative Documents and/or that such
Sponsor Subsidiary is entitled to take, do or exercise, under the Sponsor
Subsidiary Credit Documents or any other Operative Document and (b) authorizes
Sabine, for and on behalf of such Sponsor Subsidiary, to execute and deliver all
certificates and notices to be delivered by such Sponsor Subsidiary under the
Sponsor Subsidiary Credit Documents or any other Operative Document.
Section 11.12. Consent to Jurisdiction. (a) Each Sponsor
Subsidiary hereby irrevocably submits to the jurisdiction of any
New York State
or Federal court sitting in
New York City and any appellate court from any
thereof in any action or proceeding by Trinity or the Trinity Liquidator or any
other Indemnified Person (each such Person, a "CLAIMANT") in respect of, but
only in respect of, any claims or causes of action arising out of or relating to
any Sponsor Subsidiary Credit Document (such claims and causes of action,
collectively, being "PERMITTED CLAIMS"), and each Sponsor Subsidiary hereby
irrevocably agrees that all Permitted Claims may be heard and determined in such
New York State court or in such Federal court. Each Sponsor Subsidiary hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
aforementioned court in respect of Permitted Claims. Each Sponsor Subsidiary
hereby irrevocably appoints CT Corporation System (the "PROCESS AGENT"), with an
office on the date hereof at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, as its agent to receive on behalf of such Person and its property service
of copies of the summons and complaint and other process which may be served on
a Claimant in any such action or proceeding in any aforementioned court in
respect of Permitted Claims. Such service may be made by delivering a copy of
such process to a Sponsor Subsidiary by courier and by certified mail (return
receipt requested), fees and postage prepaid, both (i) in care of the Process
Agent at the Process Agent's above address and (ii) at El Paso's address
specified pursuant to Section 6.2 of the El Paso Agreement, and each Sponsor
Subsidiary hereby irrevocably authorizes and directs the Process Agent to accept
such service on its behalf. Each Sponsor Subsidiary agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Nothing in this Section 11.12 shall affect the right of
any Claimant to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Claimant to bring any action or
proceeding against any Sponsor Subsidiary or its property in the courts of other
jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in
any particular court or a general waiver of any defense or a consent to
jurisdiction of the courts expressly referred to in subsection (a) above in any
action or proceeding in respect of any claim or cause of action other than
Permitted Claims.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
SPONSOR SUBSIDIARIES
SABINE RIVER INVESTORS, L.L.C.
By: EL PASO RED RIVER HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS I, L.L.C.
By: EL PASO ENERGY PARTNERS
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS II, L.L.C.
By: EL PASO FIELD SERVICES HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS III, L.L.C.
By: TENNESSEE GAS PIPELINE COMPANY,
its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS IV, L.L.C.
By: SOUTHERN NATURAL GAS COMPANY,
its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS V, L.L.C.
By: EL PASO NATURAL GAS COMPANY,
its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS VI, L.L.C.
By: EL PASO PRODUCTION HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS VII, L.L.C.
By: EL PASO PRODUCTION HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS VIII, L.L.C.
By: EL PASO PRODUCTION HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SABINE RIVER INVESTORS IX, L.L.C.
By: EL PASO PRODUCTION HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
SPONSOR SUBSIDIARY COLLATERAL
AGENT
WILMINGTON TRUST COMPANY,
Not in its individual capacity, but
solely in its capacity as Sponsor
Subsidiary Collateral Agent
By: /s/ Xxx X. Xxxxxxx
-------------------------------
Name: Xxx X. Xxxxxxx
Title: Assistant Vice President
TRINITY
TRINITY RIVER ASSOCIATES, L.L.C.
By: Sabine River Investors, L.L.C.,
its Class A Member
By: EL PASO RED RIVER HOLDING
COMPANY, its Sole Member
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
