EEX CORPORATION UNDERTAKING
UNDERTAKING dated as of December 17, 1999 made by EEX Corporation, a Texas
corporation ("EEX") in favor of Xxx Xxxx Treasure L.L.C., a Delaware limited
liability company (the "Purchaser").
WHEREAS, EEX E&P Company, L.P., a Delaware limited partnership ("the
Seller"), has entered into a Natural Gas Inventory Forward Sale Agreement of
even date herewith (the "Forward Sale Agreement") with the Purchaser; and
WHEREAS, each of the partners of Seller is wholly-owned by EEX Reserves
Funding LLC, a Delaware limited liability company ("EEX Reserves Funding"); and
WHEREAS, the membership interests of EEX Reserves Funding are owned as
follows: fifty percent (50%) by Purchaser, forty-nine percent (49%) by EEX
Operating LLC, a Delaware limited liability company ("EEX Operating"), and one
percent (1%) by EEX Capital, Inc., a Delaware corporation ("EEX Capital"); and
WHEREAS, EEX Operating and EEX Capital are wholly-owned by EEX and EEX
Capital is the initial Managing Member of EEX Reserves Funding; and
WHEREAS, a precondition to Purchaser's purchasing Natural Gas pursuant to
the Forward Sale Agreement is that EEX deliver a corporate undertaking whereby
EEX would agree to cause EEX Reserves Funding to cause the performance by Seller
of certain provisions of the Forward Sale Agreement to the extent only that
Seller has the means to perform by delivery of volumes of Natural Gas and/or
making payments but would not be required to put funds in Seller (or EEX
Reserves Funding) to cause such performance;
NOW THEREFORE, in consideration of the premises, and in order to induce
Purchaser to purchase Natural Gas pursuant to the Forward Sale Agreement, EEX
hereby covenants and agrees as follows:
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Forward Sale
Agreement. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Undertaking:
"Subsidiary" shall mean any corporation of which at least a majority
of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by EEX or one or more of its Subsidiaries or
by EEX and one or more of its Subsidiaries.'
Section 2. Representations and Warranties of EEX. EEX represents and
warrants to Purchaser as follows:
(a) Corporate Status and Authority. EEX is a corporation, duly
formed, validly existing and in good standing under the laws of the State
of Texas and has all requisite power and authority to execute, deliver and
perform this Undertaking.
(b) Power and Authority. The execution, delivery and performance by
EEX of this Undertaking and the consummation of the transactions
contemplated by this Undertaking are within EEX's power and authority and
have been duly authorized by all necessary corporate action.
(c) Consents and Approvals. No authorization, consent or approval
of, or other action by, or notice to or filing with, any governmental
authority, regulatory body or any other Person is required for the due
authorization, execution, delivery or EEX of this Undertaking, any other
Definitive Document to which it is a party or the consummation of the
transactions contemplated by this Undertaking, except those approvals that
have been obtained, and those notices and filings that have been made,
copies of all of which have been delivered to Purchaser.
(d) Execution and Delivery. This Undertaking has been duly executed
and delivered to Purchaser by EEX and is the legal, valid and binding
obligation of EEX enforceable against EEX in accordance with its terms,
except as the enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general principles of equity.
(e) Sufficiency of Reserves. To the best of EEX's knowledge and
belief, the Designated Properties contain readily recoverable Natural Gas
reserves in excess of those required to meet all of Seller's obligation to
deliver Natural Gas to Purchaser under the Forward Sale Agreement in the
Required Delivery Quantities at the designated Delivery Points during each
Delivery Month.
(f) Solvency. EEX (i) has assets that exceed its liabilities, (ii)
has or has access to sufficient capital to carry on its business as
presently conducted and (iii) is able to pay its debts as they become due.
(g) Accuracy of Information. All information, engineering and other
reports and data delivered by EEX or Seller in connection with this
Undertaking and the transactions contemplated hereby are accurate in all
material respects, do not contain any material misstatement of fact or omit
any fact necessary to make said information or reports not misleading. Each
delivery of any such material, report or information shall automatically
constitute a reaffirmation of this warranty.
(h) Litigation and Similar Proceedings. There are no suits,
investigations or proceedings pending, or to EEX's knowledge, threatened
against EEX or the Designated Properties except those disclosed on Schedule
2(h) hereto. None of said lawsuits can reasonably be expected to have a
material adverse effect on EEX's ability to perform its obligation
hereunder.
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Section 3. Undertaking. EEX agrees and hereby covenants to Purchaser that
EEX and its Subsidiaries will cause the performance by Seller of the provisions
of Article II and Clauses (i), (ii), (iii), (iv) and (v) of Section 5.01(i) and
5.01(j) of the Forward Sale Agreement, and will cause EEX Reserves Funding and
its Subsidiaries, including Seller, to maintain aggregate general and
administrative expenses below $1,900,000 each year, to the extent only that
Seller has the means to perform by delivery of volumes of Natural Gas and/or
making payments; provided, however, that none of EEX or any of its Subsidiaries
shall be required to put funds in Seller to cause such performance.
Section 4. Indemnity. EEX will, and hereby does, indemnify Purchaser, its
affiliates and their respective directors, officers, agents, representatives,
and employees (the "Indemnitees") against all claims, losses, actions,
liabilities, judgments, costs, reasonable attorneys' fees and other charges of
whatsoever kind or nature, including, without limitation, consequential and
punitive damages (collectively, "Claims") made against or incurred by them or
any of them by third parties unaffiliated with the Indemnities which arise out
of or in connection with any action by EEX in connection with the Forward Sale
Agreement. IT IS THE EXPRESS INTENTION OF EEX THAT EEX'S INDEMNIFICATION
OBLIGATIONS WITH RESPECT TO THE FOREGOING MATTERS SHALL INCLUDE ANY CLAIMS
RESULTING FROM THE SOLE, JOINT OR CONCURRENT NEGLIGENCE OF ANY INDEMNITEE OR ANY
CLAIM ARISING UNDER ANY THEORY OF STRICT LIABILITY; PROVIDED, THAT NO INDEMNITEE
SHALL BE ENTITLED TO INDEMNIFICATION FOR ANY CLAIM RESULTING FROM ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION IN A FINAL, NONAPPEABLE JUDGMENT. If any Claim is asserted against
any Indemnitee and such Indemnitee intends to claim indemnification from EEX
under this Section 4, such Indemnitee shall promptly notify EEX, but the failure
to so promptly notify EEX shall not affect EEX's obligations under this Section
4. Each Indemnitee may, and if requested by Seller in writing shall, in good
faith contest the validity, applicability, and amount of such claim, demand,
action, or cause of action with counsel selected by such Indemnitee and
reasonably acceptable to Seller, the cost of which defense shall be borne by
EEX, and shall permit EEX to participate in such contest. Any Indemnitee that
proposes to settle to compromise any claim or proceeding for which EEX may be
liable for payment of indemnity hereunder shall give EEX written notice of the
terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding and shall obtain EEX's prior
written consent, which consent shall not be unreasonably withheld, provided, any
Indemnified Party may settle such claim without EEX's consent if such Indemnitee
simultaneously releases EEX for any liability therefor. In connection with any
claim, demand, action, or cause of action covered by this Section 4 against more
than one Indemnitee, each Indemnitee shall be represented by legal counsel
selected by it.
Section 5. Specific Performance; Reliance.
(a) EEX agrees that a breach of any of the covenants contained in
Section 3 will cause irreparable injury to Purchaser, and no adequate
remedy at law in respect of such breach and, as a consequence, that the
covenants contained in this Section 3 shall be specifically enforceable
against EEX and its Subsidiaries. EEX hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenant except for a defense that no breach has occurred and is
continuing.
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(b) EEX acknowledges that Purchaser in relying on this Undertaking
in entering into the Forward Sale Agreement and that, but for this
Undertaking, would not enter into the Forward Sale Agreement.
Section 6. Governing Law. This Undertaking shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws that would result in the application
of the laws of another jurisdiction.
Section 7. Severability. In the event that one or more of the provisions
contained in this Undertaking shall be invalid, illegal or unenforceable in any
respect under any applicable law the validity, legality or enforceability of the
remaining provisions hereof shall not be affected or impaired thereby. Each of
the provisions of this Undertaking is hereby declared to be separate and
distinct.
Section 8. Benefit of the Agreement. This Agreement shall inure to the
benefit of and be binding upon EEX, the Purchaser and their respective
successors and assigns.
Section 9. Assignment and Transfer. EEX may not assign any rights or
delegate any obligations hereunder, except to an Affiliate of EEX, without the
prior written consent of Purchaser in its sole discretion. Prior to any Default
hereunder or under the Forward Sale Agreement, Purchaser may not assign its
rights hereunder to any third party without the prior written consent of EEX,
which consent shall not be unreasonably withheld, except to affiliates of
Purchaser or to financial institutions, to whom it may assign without consent.
Section 10. Amendments. This Agreement may not be modified or amended
except by an instrument in writing signed by the Purchaser and EEX or by their
respective successors or permitted assigns.
Section 11. No Waivers, Remedies. No failure to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law except
as otherwise expressly provided herein.
Section 12. Time of the Essence. Time shall be of the essence of this
Agreement.
IN WITNESS WHEREOF, EEX has caused this Undertaking to be duly executed and
delivered as of the day and year first above written.
EEX CORPORATION
By:________________________________
Name: X. X. Xxxxx
Title: Vice President, Finance and Treasurer
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