EXHIBIT 2.3
Execution Copy
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GULFTERRA ENERGY COMPANY, L.L.C.
(a DELAWARE LIMITED LIABILITY COMPANY)
DATED AS OF DECEMBER 15, 2003
TABLE OF CONTENTS
Article I Definitions.............................................................2
Article II ORGANIZATION..........................................................15
2.1 Formation......................................................15
2.2 Name...........................................................15
2.3 Registered Office; Registered Agent; Principal Office in the
United States; Other Offices...................................15
2.4 Purpose........................................................15
2.5 Foreign Qualification..........................................16
2.6 Term...........................................................16
2.7 Mergers and Exchanges..........................................16
2.8 Business Opportunities - No Implied Duty or Obligation.........16
Article III MEMBERSHIP; TRANSFERS OF INTERESTS...................................17
3.1 Members........................................................17
3.2 Membership Interests...........................................17
3.3 Representations and Warranties.................................17
3.4 Restrictions on the Transfer of a Membership Interest..........18
3.5 Additional Membership Interests................................23
3.6 Information....................................................23
3.7 Liability to Third Parties.....................................24
3.8 Resignation....................................................24
3.9 Lack of Member Authority.......................................25
3.10 Tag Along Rights...............................................25
3.11 Right to Sell Highest Incentive Distribution Splits............26
3.12 Change of Member Control.......................................27
Article IV CAPITAL CONTRIBUTIONS.................................................29
4.1 Capital Account Balances.......................................29
4.2 Capital Contributions by the Company to the Partnership........29
4.3 Return of Contributions........................................30
4.4 Advances by Members............................................30
4.5 Capital Accounts...............................................30
Article V ALLOCATIONS AND DISTRIBUTIONS..........................................32
5.1 Allocations for Capital Account Purposes.......................32
5.2 Allocations for Tax Purposes...................................35
5.3 Distributions..................................................35
5.4 Sharing of Distributions.......................................36
5.5 Distribution Restrictions......................................37
Article VI MANAGEMENT OF THE COMPANY.............................................37
6.1 Management.....................................................38
6.2 Directors as Agents............................................38
6.3 Matters Requiring Member Approval..............................38
6.4 Resolutions of Conflicts of Interest; Affiliate Transactions...40
6.5 Duties of the Members and Directors............................41
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6.6 Matters Requiring Director Approval............................43
Article VII MEETINGS.............................................................43
7.1 Meetings of Members............................................44
7.2 Voting List....................................................45
7.3 Proxies........................................................45
7.4 Votes..........................................................45
7.5 Conduct of Meetings............................................45
7.6 Action by Written Consent......................................46
7.7 Records........................................................46
Article VIII Liability and INDEMNIFICATION.......................................46
8.1 Liability of Indemnitees.......................................46
8.2 Indemnification................................................47
Article IX TAXES.................................................................48
9.1 Tax Returns....................................................48
9.2 Tax Elections..................................................49
9.3 Tax Matters Partner............................................49
Article X BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS.............................49
10.1 Maintenance of Books...........................................49
10.2 Financial Statements...........................................50
10.3 Tax Statements.................................................50
10.4 Accounts.......................................................50
Article XI BANKRUPTCY OF A MEMBER................................................50
11.1 Bankrupt Members...............................................50
Article XII DISSOLUTION, LIQUIDATION, AND TERMINATION............................51
12.1 Dissolution....................................................51
12.2 Liquidation and Termination....................................51
12.3 Provision for Contingent Claims................................53
12.4 Deficit Capital Accounts.......................................53
Article XIII AMENDMENT OF THE AGREEMENT..........................................54
13.1 Amendments to be Adopted by the Company........................54
13.2 Amendment or Restatement.......................................54
Article XIV CERTIFICATED MEMBERSHIP INTERESTS....................................55
14.1 Membership Interest Certificates...............................55
14.2 Restrictive Legend.............................................55
14.3 Lost, Stolen or Destroyed Certificates.........................56
14.4 Registered Holders.............................................56
Article XV GENERAL PROVISIONS....................................................56
15.1 Offset.........................................................56
15.2 Notices........................................................56
15.3 Entire Agreement...............................................57
15.4 Successors.....................................................57
15.5 Specific Performance...........................................57
15.6 Time...........................................................57
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15.7 Counterparts...................................................58
15.8 Headings.......................................................58
15.9 Governing Law..................................................58
15.10 Expenses ......................................................58
15.11 Construction...................................................58
15.12 Incorporation of Exhibits, Annexes, and Schedules..............58
15.13 Effect of Waiver or Consent....................................58
15.14 Further Assurances.............................................59
15.15 Waiver of Certain Rights.......................................59
15.16 Notice to Members of Provisions of this Agreement..............59
15.17 Counterparts...................................................59
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GULFTERRA ENERGY COMPANY, L.L.C.
(A
DELAWARE LIMITED LIABILITY COMPANY)
DATED AS OF DECEMBER 15, 2003
This Second Amended and Restated Limited Liability Company Agreement of
GulfTerra Energy Company, L.L.C. (as amended, restated, supplemented or
otherwise modified from time to time, this "AGREEMENT") is adopted by GulfTerra
GP Holding Company, a
Delaware corporation (together with its successors and
assigns, "EL PASO GP Holdco"), and the Investor (as defined below) as of the
date first written above. This Agreement shall amend and restate in its
entirety, and shall supersede, the First Amended and Restated Limited Liability
Company Agreement of GulfTerra Energy Company, L.L.C. (the "FIRST AMENDED AND
RESTATED AGREEMENT") adopted as of October 2, 2003.
RECITALS:
WHEREAS, on the date hereof, El Paso GP Holdco has sold to the
Investor, and the Investor has purchased from El Paso GP Holdco, a portion of El
Paso GP Holdco's Class B Membership Interest (as defined in the First Amended
and Restated Agreement); and
WHEREAS, pursuant to the terms of this Agreement, the portion of El
Paso GP Holdco's Class B Membership Interest (as defined in the First Amended
and Restated Agreement) sold to Investor shall convert in connection with such
sale (the "CLASS B CONVERSION") into a Class C Membership Interest (as defined
below); and
WHEREAS, pursuant to the terms of this Agreement, the Class A
Membership Interest (as defined in the First Amended and Restated Agreement)
previously held by Xxxxxxx, Xxxxx & Co., a New York limited partnership
("GOLDMAN"), and subsequently transferred to El Paso GP Holdco pursuant to
Section 3.11(b) of the First Amended and Restated Agreement shall convert in
connection with such transfer (the "CLASS A CONVERSION") into a Class B
Membership Interest with a 9.9% Sharing Ratio; and
WHEREAS, the Partnership (as defined below) has agreed, upon the
satisfaction of certain conditions, to merge with and into a newly formed,
wholly owned subsidiary of Enterprise MLP (as defined below) pursuant to the
terms of the Merger Agreement, with the Partnership surviving the merger as a
wholly owned subsidiary of Enterprise MLP (the "MLP MERGER"); and
WHEREAS, wholly independent from the consummation of the MLP Merger,
this Agreement is necessary to effect (i) the Class A Conversion and (ii) the
Class B Conversion;
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein made, and in consideration of the
representations, warranties and
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covenants contained herein, the First Amended and Restated Agreement shall be
amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
"ACT" means the
Delaware Limited Liability Company Act, as amended and
in effect from time to time, or any successor Law.
"ACTION" means any action, appeal, petition, plea, charge, complaint,
claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry,
investigation or similar event, occurrence, or proceeding.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Member as of the end of each taxable year of the Company, (a) increased by
any amounts that such Member is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5)), and
(b) decreased by (i) the amount of all losses and deductions that, as of the end
of such taxable year, are reasonably expected to be allocated to such Member in
subsequent years under sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such taxable year, are reasonably expected to be made to
such Member in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Member's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 5.1(d) or
5.1(e)). The foregoing definition of Adjusted Capital Account is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and will be interpreted consistently therewith.
"ADJUSTED PROPERTY" means any property, the Carrying Value of which has
been adjusted pursuant to Section 4.5(d).
"ADMINISTRATIVE SERVICES AGREEMENT" means the Amended and Restated
General and Administrative Services Agreement by and between DeepTech
International Inc., El Paso Energy Partners Company and El Paso Field Services,
L.P. dated November 27, 2002.
"AFFILIATE" means, with respect to any relevant Person, any other
Person that directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, the relevant
Person. Notwithstanding the foregoing, the Partnership and its Subsidiaries will
not be deemed to be Affiliates of any Member or any of their Affiliates, and
vice versa.
"AGREED VALUE" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the Board using such reasonable method of valuation as it may
adopt. The Board shall, in its sole discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties in a single or integrated transaction among such properties on a
basis proportional to their fair market value.
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"AGREEMENT" is defined in the Preamble.
"APPRAISAL NOTICE" is defined in Section 3.4(f)(iv).
"ASSUMED TAX" means an amount equal to the product of (a) 38% times (b)
the Company income or gain allocated to the Class D Member as a result of sale
or contribution of any Highest Incentive Distribution Splits pursuant to Section
3.10.
"AVAILABLE CASH" means, as of any Distribution Date,
(a) all cash and cash equivalents of the Company on hand on
such date, less
(b) the amount of any cash reserves consented to by the Class
C Member, which consent shall not be unreasonably withheld, that are
necessary or appropriate in the commercially reasonable discretion of
the Board to (i) provide for the proper conduct of the business of the
Company (including reserves for anticipated future working capital,
contingencies, credit needs of the Company and any other purpose as the
Board may determine to be in the best interest of the Company and its
Members) subsequent to such date or (ii) comply with applicable Law or
any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Company is a party or by
which it is bound or its assets are subject. Notwithstanding the
foregoing, Available Cash with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
"BANKRUPT MEMBER" means (except to the extent the Members approve
otherwise) any Member:
(a) that (i) makes a general assignment for the benefit of
creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes
the subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency proceeding; (iv) files a
petition or answer seeking for the Member a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any Law; (v) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the Member in a proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks,
consents, or acquiesces to the appointment of a trustee, receiver, or
liquidator of the Member or of all or any substantial part of the
Member's properties; or
(b) against which a proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any Law has been commenced and 120 days have
expired without dismissal thereof or with respect to which, without the
Member's consent or acquiescence, a trustee, receiver, or liquidator of
the Member or of all or any substantial part of the Member's properties
has been appointed and 90 days have expired without such appointment
having been vacated or stayed, or 90 days have expired after the date
of expiration of a stay, if the appointment has not previously been
vacated.
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"BASIS" means any past or current fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction about which the relevant Person has
knowledge that forms or could form the basis for any specified consequence.
"BOARD" means the Board of Directors of the Company.
"BOOK-TAX DISPARITY" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Member's share of the Company's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Member's Capital Account balance as maintained pursuant to Section
4.5 and the hypothetical balance of such Member's Capital Account computed as if
it had been maintained strictly in accordance with federal income tax accounting
principles. The determination of Book-Tax Disparity and a Member's share thereof
will be determined consistently with Section 1.704-3(d) of the Treasury
Regulations.
"BREACH" means any breach, inaccuracy, failure to perform, failure to
comply, conflict with, default, violation, acceleration, termination,
cancellation, modification, or required notification.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
States of New York or Texas will not be regarded as a Business Day.
"BUY-OUT RIGHT" is defined in Section 3.12(a).
"CAPITAL ACCOUNT" means the capital account maintained for each Member
pursuant to Section 4.5.
"CAPITAL CONTRIBUTION" means any contribution by a Member to the
capital of the Company, as contemplated by Section 4.2.
"CARRYING VALUE" means (a) with respect to Contributed Property and
Adjusted Property, the Agreed Value of such property reduced (but not below
zero) by all depreciation, amortization and cost recovery deductions relating to
such property charged to the Members' Capital Accounts, and (b) with respect to
any other Company property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying Value of
any property will be adjusted from time to time in accordance with Section
4.5(d) and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Company properties, as deemed
appropriate by the Board.
"CERTIFICATE" is defined in Section 2.1.
"CHANGE OF MEMBER CONTROL" means, in the case of any Member, an event
(such as a Disposal of voting securities) or series of related events that
result in (i) a Member ceasing to be Controlled by the Person that was such
Member's Parent immediately prior to such event, or
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(ii) a Required Economic Interest ceasing to be owned, directly or indirectly,
by the Person that was such Member's Parent immediately prior to such event.
"CHANGING MEMBER" is defined in Section 3.12(a).
"CLASS A CONVERSION" is defined in the Recitals.
"CLASS B CONVERSION" is defined in the Recitals.
"CLASS B MEMBER" means any Person holding the Class B Membership
Interest who has been admitted to the Company as a Member pursuant to the terms
of this Agreement.
"CLASS B MEMBERSHIP INTEREST" is defined in Section 3.1.
"CLASS C MEMBER" means any Person holding the Class C Membership
Interest who has been admitted to the Company as a Member pursuant to the terms
of this Agreement.
"CLASS C MEMBERSHIP INTEREST" is defined in Section 3.1.
"CLASS D MEMBER" means (a) any Member that has been issued the Class D
Membership Interest pursuant to Section 3.11 or (b) any Person holding the Class
D Membership Interest who has been admitted to the Company pursuant to the terms
of this Agreement.
"CLASS D MEMBERSHIP INTEREST" is defined in Section 3.11(c).
"CODE" means the United States Internal Revenue Code of 1986, as
amended and in effect from time to time, or any successor Law.
"COMMITMENT" means (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange
rights, or other Contracts that could require a Person to issue any of its
Equity Interests or to sell any Equity Interests it owns in another Person; (b)
any other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory or contractual pre-emptive rights or pre-emptive
rights granted under a Person's organizational or constitutive documents; and
(d) stock appreciation rights, phantom stock, profit participation, or other
similar rights with respect to a Person.
"COMPANY" means GulfTerra Energy Company, L.L.C., a
Delaware limited
liability company and the general partner of the Partnership.
"COMPANY MINIMUM GAIN" means the amount determined pursuant to Treasury
Regulation Section 1.704-2(d).
"COMPETITOR" includes any Person (other than El Paso Parent and its
Affiliates) that, together with its Affiliates, derives aggregate revenues of at
least $25 million from oil and natural gas production, extraction, processing,
transportation, gathering, fractionation, storage or power generation, in each
case, that is in competition with the Partnership and such revenues constitute a
substantial portion of its total revenues.
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"CONFLICTS AND AUDIT COMMITTEE" means one of the committees that may be
established by the Board pursuant to Exhibit B.
"CONTRACT" means any contract, agreement, arrangement, commitment,
letter of intent, memorandum of understanding, heads of agreement, promise,
obligation, right, instrument, document, or other similar understanding, whether
written or oral.
"CONTRIBUTED PROPERTY" means each property or other asset, in such form
as may be permitted by the Act, but excluding cash and cash equivalents,
contributed to the Company. Once the Carrying Value of a Contributed Property is
adjusted pursuant to Section 4.5(d), such property will no longer constitute a
Contributed Property for purposes of Section 5.2, but will be deemed an Adjusted
Property for such purposes.
"CONTRIBUTING MEMBER" is defined in Section 4.2.
"CONTROL" (and its derivatives and similar terms) means the possession,
directly or indirectly, of the power and authority to direct or cause the
direction of the management and policies of a Person, whether through ownership
or control of Voting Stock, by Contract or otherwise.
"CONTROL NOTICE" is defined in Section 3.12(a).
"DAMAGES" means all damages (including incidental and consequential
damages), losses (including any diminution in value), Liabilities, payments,
amounts paid in settlement, obligations, fines, penalties, costs, expenses
(including reasonable fees and expenses of outside attorneys, accountants and
other professional advisors and of expert witnesses and other costs (including
the allocable portion of the indemnitee's internal costs) of investigation,
preparation and litigation in connection with any Action or Threatened Action)
of any kind or nature whatsoever.
"DEFAULT" means, for any Member: (a) the failure to remedy, within five
(5) Business Days of such Member's receipt of written notice thereof from the
Company or any other Member, the failure of such Member to make any Capital
Contribution required hereunder; (b) the occurrence of any event that causes
such Member to become a Bankrupt Member; or (c) the failure to remedy, within
ten (10) Business Days of such Member's receipt of written notice thereof from
the Company, the Partnership or any other Member, the non-performance of or
non-compliance with any other material obligation or undertaking of such Member
or any of its Affiliates contained in this Agreement or in any of the other
Transaction Documents.
"DIRECTORS" is defined in Section 6.1.
"DISPOSE," "DISPOSING" or "DISPOSITION" means with respect to any asset
(including a Membership Interest or any portion thereof), any sale, assignment,
transfer, conveyance, gift, exchange or other disposition of such asset, whether
such disposition be voluntary, involuntary or by operation of Law.
"DISPOSITION NOTICE" is defined in Section 3.4(f)(i).
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"DISSOLUTION EVENT" is defined in Section 12.1.
"DISTRIBUTION DATE" is defined in Section 5.3.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"EL PASO GP HOLDCO" is defined in the Preamble.
"EL PASO PARENT" means El Paso Corporation, a
Delaware corporation, and
any Person that is a successor thereto by reason of (x) a merger, consolidation
or other business combination of El Paso Corporation, (y) the acquisition by any
Person of 100% of the Voting Stock of El Paso Corporation or (z) a Person with
publicly traded equity Controlling El Paso Corporation.
"ENCUMBRANCE" means any Order, Security Interest, Contract, easement,
covenant, community property interest, equitable interest, preferential purchase
right, right of first offer or refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"ENFORCEABLE" means a Contract is "Enforceable" if it is the legal,
valid, and binding obligation of the applicable Person enforceable against such
Person in accordance with its terms, except as such enforceability may be
subject to the effects of bankruptcy, insolvency, reorganization, moratorium, or
other Laws relating to or affecting the rights of creditors, and general
principles of equity.
"ENTERPRISE GP" means Enterprise Products GP, LLC, a
Delaware limited
liability company and the general partner of Enterprise MLP.
"ENTERPRISE MLP" means Enterprise Products Partners, L.P., a
Delaware
limited partnership, and any Person that is a successor thereto by reason of (x)
a merger, consolidation or other business combination of Enterprise MLP, (y) the
acquisition by any Person of 100% of the Voting Stock of Enterprise MLP or (z) a
Person with publicly traded equity Controlling Enterprise MLP.
"EQUITY INTEREST" means (a) with respect to a corporation, any and all
shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership, limited liability company,
trust or similar interests, and any Commitments with respect thereto, and (c)
any other direct or indirect equity ownership or participation in a Person.
"EXCESS AMOUNT" is defined in Section 4.2.
"FAILING MEMBER" is defined in Section 4.2.
"FAIR MARKET VALUE" is defined in Section 3.12(a).
"FIRST AMENDED AND RESTATED AGREEMENT" is defined in the Preamble.
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"FMV NOTICE" is defined in Section 3.12(a).
"FORMATION DATE" means the date the Certificate was initially filed
with the
Delaware Secretary of State.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOLDMAN" is defined in the Recitals.
"GOVERNANCE AND COMPENSATION COMMITTEE" means a committee that may be
established by the Board pursuant to Exhibit B.
"GOVERNMENTAL AUTHORITY" means any legislature, agency, bureau, branch,
department, division, commission, court, tribunal, magistrate, justice,
multi-national organization, quasi-governmental body, or other similar
recognized organization or body of any federal, state, county, municipal, local,
or foreign government or other similar recognized organization or body
exercising similar powers or authority.
"GP CONTRIBUTION" is defined in Section 4.2.
"HIDS NOTICE" is defined in Section 3.11(b).
"HIDS PARTICIPATING MEMBER" is defined in Section 3.11(c).
"HIDS SELLER" is defined in Section 3.11(b).
"HIGHEST INCENTIVE DISTRIBUTION SPLITS" means the right of partners of
the Partnership to (i) receive distributions of Cash from Operations pursuant to
Section 5.5(a)(viii) and Section 5.5(b)(viii) of the Partnership Agreement and
(ii) receive allocations of Net Termination Gain pursuant to Section
5.1(c)(i)(G) of the Partnership Agreement. Capitalized terms used in this
definition but not defined in this Agreement shall have the meanings assigned to
such terms in the Partnership Agreement. References to sections of the
Partnership Agreement in the definitions include references to such sections as
they may be amended in accordance with the Incentive Distribution Reduction
Agreement.
"INCENTIVE DISTRIBUTIONS" has the meaning set forth in the Partnership
Agreement.
"INCENTIVE DISTRIBUTION REDUCTION AGREEMENT" means the Incentive
Distribution Reduction Agreement, dated as of October 2, 2003, between the
Company and the Partnership, as amended, restated, supplemented or otherwise
modified from time to time.
"INDEMNITEE" is defined in Section 8.2(a).
"INDEPENDENT DIRECTOR" means a Director who is eligible to serve on the
Conflicts and Audit Committee of the Board and is otherwise independent as
defined in (a) Sections 303.01(B)(2)(a) and (3) or any successor provision of
the listing standards of the New York
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Stock Exchange or (b) the applicable provisions of the listing standards of the
principal exchange or quotation system on which the Partnership's common units
are listed for trading or quoted.
"INITIAL MEMBERS" means El Paso GP Holdco and the Investor.
"INVESTOR" means Enterprise Products GTM, LLC.
"LAW" means any law (statutory, common, or otherwise), constitution,
treaty, convention, ordinance, equitable principle, code, rule, regulation,
executive order, or other similar authority enacted, adopted, promulgated, or
applied by any Governmental Authority, each as amended and now and hereinafter
in effect.
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
"LIQUIDATION DATE" means the date on which a Dissolution Event arises
pursuant to Section 12.1.
"LIQUIDATOR" is defined in Section 12.2.
"MANAGING MEMBER" is defined in Section 6.1.
"MEMBER" means the Initial Members and any Person hereafter admitted to
the Company as an additional Member or a Substituted Member as provided in this
Agreement, but does not include (i) any Person who has ceased to be a Member in
the Company or (ii) any Member during the period in which such Member is in
Default. Effective upon the execution of this Agreement and in compliance with
the terms of this Agreement, the Investor shall be admitted to the Partnership
as the Class C Member.
"MEMBERS" means, collectively, all of the Members, including the Class
B Member, the Class C Member, and (if applicable) the Class D Member , and, if
there is only one Member, the Member.
"MEMBER NONRECOURSE DEBT" has the same meaning as the term "partner
nonrecourse debt" set forth in Treasury Regulation Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i), are attributable to a Member Nonrecourse Debt.
"MEMBERSHIP INTEREST" means the ownership interest of a Member in the
Company, including rights to distributions (liquidating or otherwise),
allocations, information, and to consent or approve (subject to the limitations
set forth in this Agreement).
"MEMBERSHIP INTEREST CERTIFICATES" is defined in Section 14.1(a).
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"MERGER AGREEMENT" means the Merger Agreement dated December 15, 2003
among Enterprise MLP, Enterprise GP, the Partnership, the Company, and
Enterprise Products Management, LLC, as amended, restated, supplemented or
otherwise modified from time to time.
"MINIMUM GAIN ATTRIBUTABLE TO MEMBER NONRECOURSE DEBT" means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-2(i)(3).
"MLP MERGER" is defined in the Recitals.
"NET AGREED VALUE" means (a) in the case of any Contributed Property,
the fair market value of such property reduced by any liability either assumed
by the Company upon such contribution or to which such property is subject when
contributed, as determined under Section 752 of the Code; provided, however, the
fair market value of any Contributed Property set forth on Exhibit A will be
deemed to be the Agreed Value of such Contributed Property set forth therein,
and (b) in the case of any property distributed to a Member or Transferee by the
Company, the Company's Carrying Value of such property at the time such property
is distributed, reduced by any indebtedness either assumed by such Member or
Transferee upon such distribution or to which such property is subject at the
time of distribution as determined under Section 752 of the Code.
"NET INCOME" means, for any taxable period, the excess, if any, of the
Company's items of income and gain for such taxable period over the Company's
items of loss and deduction for such taxable period. The items included in the
calculation of Net Income will be determined in accordance with Section 4.5(b)
and will not include any items specifically allocated under Sections 5.1(d)
through 5.1(l). For purposes of Sections 5.1(a) and 5.1(b), in determining
whether Net Income has been allocated to any Member for any previous taxable
period, any Unrealized Gain or Unrealized Loss allocated pursuant to Section
4.5(b) will be treated as an item of gain or loss in computing Net Income.
"NET LOSS" means, for any taxable period, the excess, if any, of the
Company's items of loss and deduction for such taxable period over the Company's
items of income and gain for such taxable period. The items included in the
calculation of Net Loss will be determined in accordance with Section 4.5(b) and
will not include any items specifically allocated under Sections 5.1(d) through
5.1(l). For purposes of Sections 5.1(a) and 5.1(b), in determining whether Net
Income has been allocated to any Member for any previous taxable period, any
Unrealized Gain or Unrealized Loss allocated pursuant to Section 4.5(b) will be
treated as an item of gain or loss in computing Net Loss.
"NON-CASH CONSIDERATION" is defined in Section 3.4(f)(iv).
"NON-CHANGING MEMBER" is defined in Section 3.12(a).
"NONRECOURSE BUILT-IN GAIN" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Members pursuant to Section 5.2(a) if such properties
were disposed of in a taxable transaction in full satisfaction of such
Liabilities and for no other consideration.
10
"NONRECOURSE DEBT" is defined in Treasury Regulation Section
1.704-2(b)(4).
"NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction, or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b)(1) are
attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" is defined in Treasury Regulation Section
1.704-2(b)(3).
"OFFICERS" is defined in Section 14 of Exhibit B.
"ORDER" means any order, ruling, decision, verdict, decree, writ,
subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction, or other similar determination or finding by, before, or
under the supervision of any Governmental Authority, arbitrator, or mediator.
"PARENT" means the Person that Controls and owns a Required Economic
Interest in a Member and that has no other Person that Controls and owns a
Required Economic Interest in it; provided that (i) for so long as El Paso
Parent (or any successor by merger, consolidation or other business combination)
Controls and owns a Required Economic Interest in a Member, it will be the
Parent of such Member, and (ii) for so long as Enterprise MLP (or any successor
by merger, consolidation or other business combination) Controls and owns a
Required Economic Interest in a Member, it will be the Parent of such Member.
"PARTNERSHIP" means GulfTerra Energy Partners, L.P., a
Delaware limited
partnership.
"PARTNERSHIP AGREEMENT" means the Agreement of Limited Partnership of
the Partnership, as amended, restated, supplemented or otherwise modified from
time to time.
"PERMITTED TRANSFEREE" is defined in Section 3.4(c).
"PERSON" means any individual or entity, including any corporation,
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or Governmental Authority (or any
department, agency or political subdivision thereof).
"PREFERENTIAL RIGHT" is defined in Section 3.4(f)(i).
"PREFERENTIAL RIGHT PREMIUM" is defined in Section 3.4(f)(i).
"PRICING COMMITTEE" means a committee that may be established by the
Board pursuant to Exhibit B.
"PROPOSED TAG-ALONG TRANSFER" is defined in Section 3.10.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"PURCHASING MEMBER" is defined in Section 3.4(f)(i).
"QUARTER" means, unless the context requires otherwise, a calendar
quarter.
"RECAPTURE INCOME" means any gain recognized by the Company (computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any
11
property or asset of the Company, which gain is characterized as ordinary income
because it represents the recapture of deductions previously taken with respect
to such property or asset.
"RECORD DATE" means the date established by the Board for determining
(a) the identity of Members (or Transferees, if applicable) entitled to notice
of, or to vote at any meeting of Members or entitled to vote by ballot or give
approval of Company action in writing without a meeting or entitled to exercise
rights in respect of any lawful action of Members, or (b) the identity of Record
Holders entitled to receive any report or distribution; provided, that with
respect to (b), if the Board does not establish such date for a relevant
quarterly distribution, such date will be the last day of the Quarter ending
immediately prior to the date of such distribution.
"RECORD HOLDER" means the Person in whose name a Membership Interest is
registered on the Register of the Company as of the opening of business on a
particular Business Day.
"REDUCTION IN DISTRIBUTIONS" means the reduction in distributions from
the Partnership to the Company and attributable to any Separation Event, after
taking into account the effect of any continuing support or services provided to
the Partnership by El Paso Parent and its Subsidiary Affiliates following such
Separation Event.
"REGISTER" is defined in Section 14.1(b).
"REMEDIAL METHOD" is defined in Section 5.2(a).
"REQUIRED ECONOMIC INTEREST" means the right to more than 25% of the
distributions from the Company (including liquidating distributions).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder of the
Securities and Exchange Commission or any successor Governmental Authority, all
as the same shall be in effect at the time.
"SECURITY INTEREST" means any security interest, deed of trust,
mortgage, pledge, lien, Encumbrance, charge, claim, or other similar interest,
right, or obligation, whether created by operation of Law or otherwise.
"SELLING MEMBER" is defined in Section 3.10(b).
"SELL-OUT RIGHT" is defined in Section 3.12(a).
"SEPARATION EVENT" means the expiration of the term of the
Administrative Services Agreement, any termination of the Administrative
Services Agreement or any amendment to the Administrative Services Agreement
that materially diminishes the services provided, or materially increases the
payments made for such services, pursuant to the Administrative Services
Agreement; provided, however, an amendment to (or failure to amend) the
Administrative Services Agreement in connection with an acquisition by the
Partnership of assets, businesses or operations shall not be deemed to be a
Separation Event if such amendment (or failure to amend) does not materially
diminish the services provided, or materially increase the payments made for
such services, with respect to the Partnership's assets, businesses and
operations existing prior to such acquisition, notwithstanding the fact that
such amendment (or
12
failure to amend) (i) may not require that the same level of service be provided
with respect to such acquired assets, businesses or operations or (ii) may
increase the aggregate payments made by the Partnership thereunder as a result
of the provision of services with respect to such acquired assets, businesses or
operations.
"SHARING RATIO" means the economic percentage interest attributable to
any Member or Membership Interest, as applicable, at any given time as recorded
in the Company's Register.
"SUBSIDIARY" means with respect to any relevant Person, (a) a
corporation of which more than 50% of the Voting Stock is owned, directly or
indirectly, at the date of determination, by such relevant Person, by one or
more Subsidiaries of such relevant Person or a combination thereof, (b) a
partnership (whether general or limited) in which such relevant Person, one or
more Subsidiaries of such relevant Person or a combination thereof is, at the
date of determination, a general or limited partner of such partnership, but
only if more than 50% of the partnership interests of such partnership
(considering all of the partnership interests of the partnership as a single
class) is owned, directly or indirectly, at the date of determination, by such
relevant Person, by one or more Subsidiaries of such relevant Person, or a
combination thereof, or (c) any other Person (other than a corporation or a
partnership) in which such relevant Person, one or more Subsidiaries of such
relevant Person, or a combination thereof, directly or indirectly, at the date
of determination, has (i) at least a majority ownership interest or (ii) the
power to elect or direct the election of a majority of the directors or other
governing body of such other Person.
"SUBSIDIARY AFFILIATE" means, with respect to any Member and its
Parent, any direct or indirect wholly owned Subsidiary of such Parent.
"SUBSTITUTED MEMBER" means a Person that has complied with the
requirements of Section 3.4 in place of and with all the rights of a Member and
who is shown as a Member on the books and records of the Company.
"SUPPORT PERIOD" means the three-year period commencing upon the
occurrence of a Separation Event.
"SUCCESSOR" is defined in Section 3.4(c).
"TAG-ALONG ACCEPTANCE NOTICE" is defined in Section 3.10 (b).
"TAG-ALONG ELECTING MEMBER" is defined in Section 3.10(b).
"TAG-ALONG MEMBER" is defined in Section 3.10.
"TAG-ALONG MEMBERSHIP INTEREST" is defined in Section 3.10.
"TAG-ALONG NOTICE" is defined in Section 3.10(a).
"TAG-ALONG OFFER" is defined in Section 3.10.
"TAG-INITIATING MEMBER" is defined in Section 3.10.
13
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs, ad valorem, duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX MATTERS PARTNER" is defined in Section 9.3.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes required to be filed with
any Governmental Authority, including any schedule or attachment thereto, and
including any amendment thereof.
"THREATENED" means a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing), or any other event
has occurred or any other circumstances exist that would lead a prudent Person
to conclude that a cause of Action or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
"TRANSFER" or "TRANSFERRED" means a voluntary or involuntary sale,
assignment, transfer, conveyance, exchange, foreclosure, bequest, devise, gift,
mortgage, pledge, grant of a Security Interest, Encumbrance, or any other
alienation (in each case, with or without consideration) of any right, interest,
or obligation with respect to all or any portion of the record or beneficial
ownership of any Membership Interest, including a transfer by operation of Law
or any Change of Member Control of a Member; provided, however, a Transfer shall
not include a Security Interest or Encumbrance incurred in connection with a
bona fide financing by a Member or any foreclosure by a third party or Transfer
to or pledge in lieu of foreclosure with respect to such Security Interest or
Encumbrance.
"TRANSFEREE" means a Person who receives all or part of a Member's
Membership Interest through a Transfer but who has not become a Substituted
Member.
"TRANSFEROR" means a Member, Substituted Member or a predecessor
Transferor who Transfers a Membership Interest.
"TREASURY REGULATION" means any temporary or final regulation published
by the Treasury Department.
"UNREALIZED GAIN" attributable to any item of Company property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to Section
4.5(d) as of such date). In determining such Unrealized Gain, the aggregate cash
amount and fair market value of any Company asset (including cash or cash
equivalents) will be determined by the Board using such reasonable method of
valuation as it may adopt.
"UNREALIZED LOSS" attributable to any item of Company property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 4.5(d) as of such date) over (b) the fair
14
market value of such property as of such date. In determining such Unrealized
Loss, the aggregate cash amount and fair market value of any Company asset
(including cash or cash equivalents) will be determined by the Board using such
reasonable method of valuation as it may adopt.
"VOTING STOCK" means, with respect to any Person, Equity Interests in
such Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of, or otherwise appoint,
directors (or Persons with management authority performing similar functions) of
such Person.
ARTICLE II
ORGANIZATION
2.1 Formation. The Company has been organized as a Delaware limited
liability company as of the Formation Date by the filing of a Certificate of
Formation (the "CERTIFICATE") with the Secretary of State of the State of
Delaware pursuant to the Act. The Members intend that, after the execution of
this Agreement, the Company will continue to be classified as a partnership for
federal, state and local income tax purposes only. For all other purposes, the
Company has been, and will continue to be, classified as a limited liability
company under the Act.
2.2 Name. The name of the Company is as set forth in the Certificate,
and all Company business must be conducted in that name or such other names that
comply with applicable Law as the Board may select from time to time.
2.3 Registered Office; Registered Agent; Principal Office in the United
States; Other Offices. The registered office of the Company required by the Act
to be maintained in the State of Delaware will be the office of the registered
agent named in the Certificate or such other office (which need not be a place
of business of the Company) as the Board may designate from time to time in the
manner provided by Law. The registered agent of the Company in the State of
Delaware will be the registered agent named in the Certificate or such other
Person or Persons as the Board may designate from time to time in the manner
provided by Law. The principal office of the Company in the United States will
be at such place as the Board may designate from time to time, which need not be
in the State of Delaware. The Company may have such other offices as the Board
may designate from time to time.
2.4 Purpose. The purposes of the Company are the transaction of any or
all lawful business for which limited liability companies may be organized under
the Act; provided, however, that for so long as it is the general partner of the
Partnership, the Company's sole purpose will be to act as the general partner of
the Partnership and to undertake activities that are ancillary or related
thereto. The Company will have no employees, and will have no assets, operations
or obligations other than those directly related to (a) its interest in the
Partnership or (b) the operation of the Partnership; provided, that except as
otherwise provided in this Agreement, the Company is expressly permitted to:
(i) own cash, cash equivalents and similar
investments;
15
(ii) own or lease incidental assets related to its
operation, such as office space, office materials and office
supplies;
(iii) own or lease any other assets necessary or
appropriate to manage and operate the Partnership and the
Partnership's businesses (including entering into general and
administrative services agreements or similar agreements with
Affiliates or third parties;
(iv) have operations directly related to its own
existence and maintenance;
(v) incur Liabilities owed to the Partnership or any
of its Subsidiaries;
(vi) guarantee Liabilities of the Partnership or any
of its Subsidiaries (and to grant Security Interests in
support of any such guarantees); and
(vii) incur other Liabilities incidental to the
Company's existence, including Tax Liabilities and
non-contractual third party claims.
2.5 Foreign Qualification. Prior to conducting business in any
jurisdiction other than the State of Delaware, the Company will comply (to the
extent procedures are available and reasonably within the Company's control)
with all requirements necessary to qualify the Company as a foreign limited
liability company, and (if necessary) keep the Company in good standing, in that
jurisdiction.
2.6 Term. Subject to earlier termination pursuant to other provisions
of this Agreement or the Act, the term of the Company will be perpetual.
2.7 Mergers and Exchanges. Except as otherwise provided in this
Agreement or by applicable Law, the Company may be a party to any merger,
consolidation, exchange or acquisition, or any other type of reorganization.
2.8 Business Opportunities - No Implied Duty or Obligation. Except to
the extent expressly agreed in writing to the contrary by any Member or its
Affiliate, the Members and their respective Affiliates may engage, directly or
indirectly, without consent of the other Members or the Company, in other
business opportunities, transactions, ventures, or other arrangements of any
nature or description, independently or with others, including business of a
nature which may be competitive with or the same as or similar to the business
of the Company or its Subsidiaries, regardless of the geographic location of
such business, and without any duty or obligation to offer or account to the
other Members, the Company, or its Subsidiaries in connection therewith. Nothing
herein is intended to create a partnership, joint venture, agency, or other
relationship creating fiduciary or quasi-fiduciary duties or similar duties and
obligations or to subject the Members to joint and several or vicarious
liability or to impose any duty, obligation, or liability that would arise
therefrom with respect to any or all of the Members or their Affiliates.
16
ARTICLE III
MEMBERSHIP; TRANSFERS OF INTERESTS
3.1 Members. El Paso GP Holdco and the Investor hereby acknowledge that
contemporaneously with the execution of this Agreement, (A) the Class A
Membership Interest (as defined in the First Amended and Restated Agreement)
previously held by Xxxxxxx and Transferred to El Paso GP Holdco has been
converted into a Class B Membership Interest with a 9.9% Sharing Ratio in the
Company concurrently with the consummation of such sale; (B) the portion of El
Paso GP Holdco's Class B Membership Interest and Sharing Ratio in the Company
sold to the Investor has been (i) Transferred to the Investor and (ii) converted
into a Class C Membership Interest with a 50.0% Sharing Ratio in the Company
concurrently with the consummation of such Transfer; (C) Xxxxxxx has withdrawn
as a Class A Member (as defined in the First Amended and Restated Agreement) of
the Company; (D) El Paso GP Holdco (previously admitted as a Class B Member of
the Company in respect of the retained Class B Membership Interest with a 40.1%
Sharing Ratio in the Company not sold to the Investor) likewise is admitted as a
Class B Member of the Company in respect of its Class B Membership Interest with
a 9.9% Sharing Ratio received from Xxxxxxx, after which time it will hold a
Class B Membership Interest with a 50.0% Sharing Ratio in the Company (the
"CLASS B MEMBERSHIP INTEREST"); and (E) the Investor is admitted as a Class C
Member of the Company holding a Class C Membership Interest with a 50.0% Sharing
Ratio in the Company (the "CLASS C MEMBERSHIP INTEREST"). As a consequence, the
sole Members of the Company after giving effect to the transactions described in
this Section 3.1 shall be El Paso GP Holdco as the holder of the Class B
Membership Interest and the Investor as the holder of the Class C Membership
Interest.
3.2 Membership Interests. The Membership Interests and Sharing Ratios
of the Company shall be as set forth in Exhibit A to this Agreement.
3.3 Representations and Warranties. Each of El Paso GP Holdco and the
Investor represents and warrants to the Company and each other party that the
statements in this Section 3.3 are correct and complete as of the date such
party becomes a party to this Agreement.
(a) Such party is an entity duly created, formed or organized,
validly existing, and in good standing under the Laws of the
jurisdiction of its creation, formation, or organization. There is no
pending or, to such party's knowledge, Threatened, Action (or Basis
therefor) for the dissolution, liquidation, insolvency, or
rehabilitation of such party.
(b) Such party has the entity power and authority to execute
and deliver this Agreement and to perform and consummate the
transactions contemplated herein. Such party has taken all actions
necessary to authorize the execution and delivery of this Agreement,
the performance of such party's obligations hereunder, and the
consummation of the transactions contemplated herein. This Agreement
has been duly authorized, executed, and delivered by, and is
Enforceable against, such party.
(c) The execution and the delivery of this Agreement by such
party and the performance and consummation of the transactions
contemplated herein by such party will not (i) Breach any provision of
its organizational documents, (ii) Breach any Law to which such party
is subject, (iii) Breach any Contract or Order to which such party is a
17
party or by which such party is bound or to which any of such party's
assets is subject, or (iv) require any approval, consent, ratification,
permission, waiver or authorization not already obtained.
(d) In acquiring the Membership Interest, such party is not
offering or selling, and shall not offer or sell the Membership
Interest, for the Company in connection with any distribution thereof,
and such party does not have a participation and shall not participate
in any such undertaking or in any underwriting of such an undertaking
except in compliance with applicable federal and state securities laws.
Such party acknowledges that it is able to fend for itself, can bear
the economic risk of its investment in the Membership Interest, and has
such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of an investment in the
Membership Interest. Such party is an "accredited investor" as such
term is defined in Regulation D under the Securities Act. Such party
understands that the Membership Interest shall not have been registered
pursuant to the Securities Act or any applicable state securities laws,
that the Membership Interest shall be characterized as a "restricted
security" under federal securities laws and that under such laws and
applicable regulations the Membership Interest cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom.
(e) Such party is not a "public utility company," a "holding
company," a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in PUHCA; nor is such
party subject to regulation under PUHCA.
3.4 Restrictions on the Transfer of a Membership Interest. A Membership
Interest may be Transferred only in accordance with applicable Law and the terms
of this Agreement, including the provisions of this Section 3.4. Any purported
Transfer in breach of the terms of this Agreement will be null and void ab
initio, and the Company will not recognize any such prohibited Transfer.
(a) Effect of Attempted or Permitted Transfers.
(i) Except as otherwise provided in this Agreement or
by applicable Law, (A) a Transfer of a Membership Interest
will be effective only to give the Transferee the right to
receive the share of allocations and distributions to which
the Transferor would otherwise be entitled and (B) no
Transferee of a Membership Interest will have the right to
become a Substituted Member.
(ii) Unless and until a Transferee is admitted as a
Substituted Member, (A) the Transferee will have no right to
exercise any of the powers, rights and privileges of a Member
hereunder other than to receive its share of allocations and
distributions pursuant to Section 3.4(a)(i) and (B) the Member
who has Transferred its Membership Interest to such Transferee
will cease to be a Member with respect to such Membership
Interest upon Transfer of such Membership Interest and
thereafter will have no further powers, rights and privileges
as a Member hereunder with respect to such Membership Interest
(to the extent so
18
Transferred), but will, unless otherwise relieved of such
obligations by approval of all of the other Members or by
operation of Law, remain liable for all obligations and duties
as a Member with respect to such Membership Interest;
provided, however, that if the Transferee reconveys such
Membership Interest to the Transferor within ten (10) days
after the Transferor becomes aware that the Transferee will
not become a Substituted Member, the Transferor once again
will be entitled to all of the powers, rights, and privileges
of a Member hereunder.
(iii) Notwithstanding anything to the contrary
contained herein and in addition to any other requirements of
this Agreement and applicable Law, before any Transferee
becomes a Substituted Member, the Transferee must make the
representations and warranties set forth in Section 3.3 and
agree in writing to become a party to and be bound by all the
terms and conditions of this Agreement as then in effect.
(iv) At the time a Transferee has become a
Substituted Member through compliance with all of the
provisions of this Section 3.4, (A) such Substituted Member
will have all of the powers, rights, privileges, duties, and
Liabilities of a Member, as provided in this Agreement, the
Certificate, and by applicable Law to the extent of the
Membership Interest so Transferred and (B) any Member that
Transfers its Membership Interest to a non-Affiliate will be
relieved of all of the Liabilities with respect to such
Membership Interest; provided, however, that such Member will
remain fully liable for all Liabilities relating to such
Membership Interest that accrued prior to such Transfer,
including the obligation to make its proportionate share of
any applicable Capital Contributions required to be made prior
to such Transfer; and provided, further, that any Member that
Transfers its Membership Interest to an Affiliate will remain
fully liable for all Liabilities relating to such Membership
Interest, including the obligation to make its proportionate
share of any applicable Capital Contributions, whether such
Liabilities accrued prior to or after such Transfer to an
Affiliate.
(v) Neither the Company nor any Member will be bound
or otherwise affected by the Transfer of any Membership
Interest of which such Person has not received notice in
accordance with the terms of this Agreement.
(vi) Upon the consummation of the Transfer of any
Membership Interest (whether to a Member or any other
Transferee) in compliance with the provisions of this
Agreement, the applicable Transferee will become party to and
be bound by this Agreement, and thereafter will have all of
the rights and obligations of a Member hereunder.
(vii) The Company may, in its reasonable discretion,
charge a Member a reasonable fee to cover the additional
administrative expenses incurred in connection with or as a
consequence of any Transfer of all or part of such Member's
Membership Interest; provided, however, that the Company shall
not charge any fee in connection with any of the transactions
described in Section 3.1,
19
Transfers to Permitted Transferees made in compliance with
Section 3.4(c) and Transfers made in compliance with Section
3.4(f).
(viii) If a Transferee does not become a Substituted
Member, any payment by the Company to the applicable
Transferor will acquit the Company, its subsidiaries, and the
Members of all liability to any other Persons who may be
interested in such payment by reason of a Transfer by such
Transferor.
(b) General Transfer Restrictions. Notwithstanding anything to
the contrary contained herein, no Person will Transfer any rights or
obligations arising out of or relating to this Agreement, a Membership
Interest, or any interest herein or therein:
(i) Unless such Transfer consists of all (but not
less than all) of such Member's Membership Interest
(including, in the case of El Paso GP Holdco, its rights and
obligations as Managing Member);
(ii) At any time between the effectiveness of this
Agreement and the consummation of the MLP Merger; provided,
however, that such restriction on Transfer shall not apply if
the Merger Agreement is terminated in accordance with its
terms other than upon consummation of the MLP Merger;
(iii) Except pursuant to an applicable exemption from
registration under the Securities Act and other applicable
securities Laws;
(iv) If such Transfer would result in the violation
of the Act, the Securities Act, or any other Law;
(v) If such Transfer (including the taking of any
action, filing, election, or other action which could result
in a deemed Transfer), either considered alone or aggregated
with prior Transfers by the same Member or any other Members
or Transferees, could reasonably be expected to result in the
Company being taxed as a corporation or otherwise being taxed
as an entity for federal income tax purposes; and
(vi) Subject to the restrictions imposed by Section
3.4(b)(ii), other than (A) the consummation of the
transactions contemplated by Section 3.1, (B) Transfers to
Permitted Transferees made in compliance with Section 3.4(c),
and (C) Transfers made in compliance with Section 3.4(f).
(c) Parent and Subsidiary Affiliate Transfers. Subject to this
Section 3.4 and the Transferee assuming (by operation of Law or express
agreement in form and substance reasonably acceptable to the Board) all
of the Transferor's Liabilities under this Agreement, any Member may
Transfer its Membership Interest to its Parent or a Subsidiary
Affiliate of its Parent which remains a Subsidiary Affiliate of such
Parent for so long as such Subsidiary Affiliate Transferee holds a
Membership Interest in the Company, and such Parent or Subsidiary
Affiliate Transferee (a "PERMITTED TRANSFEREE") will be admitted as a
Substituted Member; provided, that (i) if the Transferor's Membership
Interest is subject to a guaranty, the guaranty will apply to the
Parent or
20
Subsidiary Affiliate Transferee and its Membership Interest, (ii) the
Transferor is not released from any of its Liabilities under this
Agreement unless such release is agreed to in writing by all of the
non-Transferring Members, and (iii) such Transfer to a Parent or
Subsidiary Affiliate must consist of all (but not less than all) of the
Membership Interest (including, in the case of El Paso GP Holdco, its
rights and obligations as Managing Member) and such Membership Interest
(and rights and obligations as Managing Member) shall not, by operation
of Law, or otherwise, thereafter be subdivided between or among or
Transferred to multiple Subsidiary Affiliates of such Parent. Any
Parent or Subsidiary Affiliate Transferee shall at all times remain
subject to the terms and conditions of this Agreement notwithstanding
that such Parent or Subsidiary Affiliate has not been admitted as a
Substituted Member pursuant hereto. If El Paso GP Holdco Transfers its
Class B Membership Interest to its Parent or a Subsidiary Affiliate of
such Parent pursuant to this Section 3.4(c) or to a non-Affiliate
pursuant to Section 3.4(f)(i) (such transferee, a "SUCCESSOR"), all
references herein to the rights and obligations of El Paso GP Holdco
under this Agreement shall be deemed to instead refer to the rights and
obligations of such Successor as sole Class B Member of the Company and
all references to the Managing Member (as defined below) shall be
deemed to refer to such Successor rather than El Paso GP Holdco.
(d) Documentation; Validity of Transfer. The Company will not
be required to recognize for any purpose any purported Transfer of all
or any part of a Membership Interest unless and until all applicable
provisions of this Section 3.4 have been satisfied and the Company has
received the acknowledgment in substantially the form attached hereto
as Appendix A executed by both the Transferor (or if the Transfer is on
account of the bankruptcy, or liquidation of the Transferor, a trustee
or representative) and the Transferee. Each Transfer and, if
applicable, admission of a Substituted Member complying with the
provisions of this Section 3.4 is effective when (x) the Company
receives the documents required by this Section 3.4 reflecting such
Transfer and (y) all other requirements of this Section 3.4 have been
met.
(e) Member in Default. A Member in Default or a permitted
Transferee not admitted to the Company as a Member in accordance with
this Agreement may not Transfer its Membership Interest except upon the
written consent of the other Member(s).
(f) Preferential Purchase Right.
(i) Procedure. If at any time any Member proposes to
Dispose of its Membership Interest to a non-Affiliate, the
Disposing Member shall promptly give notice thereof
("DISPOSITION NOTICE") to the non-Disposing Member. Such
Disposition Notice shall constitute an offer to sell such
Membership Interest in accordance with this Section 3.4. The
Disposition Notice shall include as an attachment the purchase
and sale agreement entered into by the Disposing Member which
shall set forth all relevant information with respect to the
bona fide third party offer received by the Member (which
offer shall be a legal, valid and binding obligation of the
potential Transferee) and the proposed Disposition, including
the name and address of the prospective Transferee, the
Membership Interest that is the subject of the Disposition,
the price to be paid for such
21
Membership Interest, any other terms and conditions of the
offer and proposed Disposition and, if any portion of the
purchase price is to be paid in Non-Cash Consideration, the
information required by Section 3.4(f)(iv). The non-Disposing
Member shall have the preferential right ("PREFERENTIAL
RIGHT") but not the obligation to acquire all, but not less
than all, of the Membership Interest subject to such
Disposition Notice on the same terms and conditions as are set
forth in the Disposition Notice, except that the purchase
price will be equal to one hundred three percent (103%) of the
price specified in the Disposition Notice (the excess over the
price in the Disposition Notice being the "PREFERENTIAL RIGHT
PREMIUM"). The fair market value of any Non-Cash Contribution
to be received shall be determined in accordance with Section
3.4(f)(iv). The non-Disposing Member shall have 15 Business
Days following the receipt of the Disposition Notice in which
to notify the Disposing Member whether the non-Disposing
Member desires to exercise its Preferential Right (in such
capacity, a "PURCHASING MEMBER"). If the non-Disposing Member
fails to exercise its Preferential Right during such 15
Business Day period, then the non-Disposing Member's
Preferential Right (but not any future Preferential Right)
shall be deemed to have been waived.
(ii) If the Preferential Right is deemed exercised in
accordance with Section 3.4(f)(i), the closing of the purchase
of the Membership Interest shall occur at the principal place
of business of the Company on the terms set forth in the
Disposition Notice, unless the Disposing Member and the
Purchasing Member agree upon a different place or date. At the
closing, the Disposing Member shall execute and deliver to the
Purchasing Member an assignment of the Membership Interest
that is subject to Disposition, free and clear of Encumbrances
other than those created pursuant to this Agreement or the
Purchasing Member and any other instruments reasonably
requested by the purchasing Member to give effect to the
purchase. The Purchasing Member shall deliver to the Disposing
Member in immediately available funds the purchase price
provided for in Section 3.4(f)(i). Upon the completion of the
closing of the purchase, the Membership Interests, Sharing
Ratios and Capital Accounts of the Members shall be deemed
adjusted to reflect the effect of the purchase.
(iii) If the non-Disposing Member waives or is deemed
to have waived the Preferential Right, the Disposing Member
shall have the right to Dispose of the Membership Interest
described in the Disposition Notice to the proposed Transferee
strictly in accordance with the Disposition Notice for a
period of 90 Days after the expiration of the last applicable
period referred to in such Section 3.4(f)(i). If, however, the
Disposing Member fails so to Dispose of its Membership
Interest within such 90-Day period, the proposed Disposition
shall again become subject to the Preferential Right in
accordance with Section 3.4(f)(i).
(iv) If any portion of the purchase price is to be
paid in a form other than cash or cash equivalents (including
real or personal property, promissory notes, securities,
contractual benefits, assumption of liabilities or anything
else of
22
value) ("NON-CASH CONSIDERATION"), the Disposing Member shall
state in its Disposition Notice its determination of the
aggregate fair market value of such Non-Cash Consideration. If
the non-Disposing Member disagrees with such determination, it
shall notify the Disposing Member of such disagreement within
ten Business Days of receiving the Disposition Notice. If a
dispute as to the aggregate fair market value of the Non-Cash
Consideration is not resolved within five Business Days after
such notice, the Disposing Member or the non-Disposing Member
may require an appraisal by delivering a written notice
("APPRAISAL NOTICE") requesting an independent appraisal. In
such event, the value of the Non-Cash Consideration shall be
determined by one investment banking firm of nationally
recognized standing, agreed upon by the Disposing Member and
the non-Disposing Member or, failing such agreement, appointed
by the Presiding Judge of the United States District Court for
the Southern District of Texas, Houston Division, pursuant to
a petition to compel appraisal. The fair market value of the
Non-Cash Consideration shall be the amount determined by the
appraiser. The Disposing Member, on the one hand, and the
non-Disposing Member, on the other hand, shall bear the
expenses associated with any such appraisal equally.
(v) A Membership Interest may only be Transferred to
a Competitor pursuant to this Section 3.4.
3.5 Additional Membership Interests. Additional Persons may be admitted
to the Company as Members, and Membership Interests may be created and issued to
those Persons and to existing Members upon approval thereof by the Members and
subject to the terms and conditions set forth herein. Such admission must comply
with any additional terms and conditions the Members may, in their sole
discretion, determine at the time of admission. A document (which may be an
amendment to this Agreement), in a form acceptable to the Members, will specify
the terms of admission or issuance and will include, among other things, the
Membership Interest applicable thereto. Such document may also provide for the
creation of different classes of Membership Interests or groups of Members
having different rights, powers and duties. Any such admission of a new Member
will not be effective unless such new Member has agreed in writing to be bound
by all terms and conditions of this Agreement as then in effect. The provisions
of this Section 3.5 will not apply to Transfers of Membership Interests.
3.6 Information.
(a) In addition to the other rights specifically set forth in
this Agreement, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated.
(b) The Members acknowledge that, from time to time, they may
receive information from or regarding the Company, the Partnership, or
any other Member in the nature of trade secrets or secret or
proprietary information or information that is otherwise confidential,
the release of which may be damaging to the Company, the Partnership,
the Member, or their respective Affiliates, as applicable, or Persons
with which they do business. Each Member will hold in strict confidence
any written
23
information it receives regarding the Company or the Partnership and
may not use or disclose such information to any Person other than
another Member, except for uses or disclosures (i) compelled by Law
(but such Member must notify the Company promptly of any such request
for information, before disclosing it, if practicable), (ii) to
advisers or representatives of the Member or Persons to which that
Member's Membership Interest may be Transferred as permitted by this
Agreement, but only if the recipients of such information have agreed
to be bound by the provisions of this Section 3.6(b), (iii) of
information that a Member also has received from a source independent
of the Company or the Partnership and that such Member reasonably
believes such source obtained such information without breach of any
obligation of confidentiality, (iv) of information obtained prior to
the formation of the Company, or (v) of public information. The Members
acknowledge that a breach of the provisions of this Section 3.6(b) may
cause irreparable injury to the Company, the Partnership, or another
Member or an Affiliate thereof for which monetary damages are
inadequate, difficult to compute, or both. Accordingly, the Members
agree that the provisions of this Section 3.6(b) may be enforced by
specific performance, injunctive or other equitable relief by a court
of competent jurisdiction. Each Member agrees that it will not give any
such information to the other Member that the other Member is
prohibited by this Section 3.6(b) from using without (x) expressly
notifying the other Member that it intends to give such information to
such other Member and (y) receiving an express notification from the
other Member that such other Member is willing to accept such
information.
(c) The Members acknowledge that, from time to time, the
Company or the Partnership may need information from any or all of such
Members for various reasons, including for complying with various
federal and state Laws. Each Member will provide to the Company or the
Partnership all information reasonably requested by the Company within
a reasonable amount of time from the date such Member receives such
request. The Company will reimburse each such Member for any and all
reasonable costs associated with furnishing information pursuant to
this Section 3.6(c); provided that no Member will be obligated to
provide such information to the Company to the extent such disclosure
(i) could reasonably be expected to result in the breach or violation
of any contractual obligation (if a waiver of such obligation cannot
reasonably be obtained) or (ii) involves secret, confidential, or
proprietary information.
3.7 Liability to Third Parties. Except as required by the Act or as
otherwise expressly agreed to in writing by such Member, no Member will be
liable to any Person (including any third party or to another Member) (i) as a
result of any act or omission of another Member or (ii) for losses, obligations,
or Liabilities of the Company.
3.8 Resignation. No Member has the right to, and will not attempt to,
withdraw or resign from the Company as a Member without the prior written
consent of all other Members, which consent may be granted or withheld in each
such other Member's sole discretion. Any resignation in violation of the
previous sentence is void ab initio, and a Member purporting to resign in
violation of the previous sentence shall not be entitled to the fair market
value of its Membership Interest pursuant to Section 18-604 of the Act or
pursuant to any other theory.
24
3.9 Lack of Member Authority. No Member has the authority or power to
act as agent for or on behalf of the Company, do any act that would be binding
on the Company, or incur any expenditures on behalf of the Company, unless
authorized to do so in writing by the Company.
3.10 Tag Along Rights. If a Member (the "TAG-INITIATING MEMBER")
proposes to Transfer its Membership Interest to a non-Affiliate (such proposed
Transfer is referred to herein as a "PROPOSED TAG-ALONG TRANSFER"), then the
Tag-Initiating Member shall offer (the "TAG-ALONG OFFER") to include in the
Proposed Tag-Along Transfer all, but not less than all, of the Membership
Interest (the "TAG-ALONG MEMBERSHIP INTEREST") held by the other Member (a
"TAG-ALONG MEMBER"). The mechanics for a Tag-Along Offer are as follows:
(a) The Tag-Initiating Member shall give the Tag-Along Member
written notice prior to the expected consummation of the Proposed
Tag-Along Transfer (the "TAG-ALONG NOTICE") of the Proposed Tag-Along
Transfer as to which the Tag-Along Member may elect to Transfer all,
but not less than all, of its Membership Interest under this Section
3.10. Such Tag-Along Notice shall specify the name of the proposed
Transferee, the Membership Interest to be Transferred to such proposed
Transferee, the material terms of such Proposed Tag-Along Transfer,
including the amount and type of consideration to be received therefor
and the anticipated place and date on which the Proposed Tag-Along
Transfer is to be consummated.
(b) If the Tag-Along Member wishes to include its Membership
Interest in the Proposed Tag-Along Transfer in accordance with the
terms of this Section 3.10 (the "TAG-ALONG ELECTING MEMBER"), such
Tag-Along Electing Member shall so notify the Tag-Initiating Member not
more than fifteen (15) days after its receipt of the Tag-Along Notice
("TAG-ALONG ACCEPTANCE NOTICE"). The Tag-Along Offer shall be
conditioned upon the Tag-Initiating Member's Transfer of its Membership
Interest pursuant to the transaction(s) contemplated in the Tag-Along
Notice with the proposed Transferee named therein. If any Tag-Along
Member timely accepts the Tag-Along Offer in accordance with this
Section 3.10, then the Tag-Initiating Member shall permit the Tag-Along
Electing Member to sell its Membership Interest under this Section
3.10, and the Tag-Initiating Member and the Tag-Along Electing Member
(collectively, the "SELLING MEMBERS") shall sell the Membership
Interests specified in the Tag-Along Offer to the proposed Transferee
in accordance with the terms set forth in the Tag-Along Notice;
provided, however, that the Tag-Initiating Member may elect in its sole
discretion (and shall not otherwise be deemed to owe any duty or
responsibility to the Tag-Along Electing Member to proceed) to
terminate or otherwise not to sell its Membership Interest in the
Proposed Tag-Along Transfer, in which case, the obligations under this
Section 3.10 in respect of such Proposed Tag-Along Transfer shall
cease.
(c) If the proposed consideration to be paid to the Selling
Members by the non-Affiliate purchaser in the Proposed Tag-Along
Transfer does not consist entirely of cash and/or marketable
securities, then a Tag-Along Electing Member may elect to receive, in
lieu of such other consideration, cash equal to the fair market value
of such consideration. If the Tag-Initiating Member and the Tag-Along
Electing Member do not agree on the fair market value of such
consideration within ten (10) days following the date of receipt of the
Tag-Along Acceptance Notice by the Tag-Along Electing Member, the fair
market
25
value of such consideration shall be determined by one investment
banking firm of nationally recognized standing, agreed upon by the
Selling Members or, failing such agreement, appointed by the Presiding
Judge of the United States District Court for the Southern District of
Texas, Houston Division, pursuant to a petition to compel appraisal.
The determination of fair market value of the consideration by the
selected firm, however such firm was selected, shall be final, binding
and conclusive on all parties. The aggregate fees and expenses of any
such firms shall be borne one-half by the Tag-Initiating Member and
one-half by the Tag-Along Electing Member. Such cash election shall be
made in the Tag-Along Acceptance Notice provided by the Tag-Along
Electing Member to the Tag-Initiating Member. Upon receipt of such an
election, the Tag-Initiating Member shall be obligated to pay such
consideration or to cause such consideration to be paid to the
Tag-Along Electing Member in cash.
(d) If at the time of the proposed Tag-Along Transfer, one of
the Members is a Class D Member, then (i) if the Tag-Initiating Member
is the Class D Member, then the consideration payable to the Tag-Along
Electing Member shall equal the consideration payable to the
Tag-Initiating Member pursuant to the proposed Tag-Along Transfer, less
the fair market value of the Class D Membership Interest and (i) if the
Tag Along Electing Member is the Class D Member, then the consideration
payable to the Tag-Along Electing Member shall equal the consideration
payable to the Tag-Initiating Member pursuant to the proposed Tag-Along
Transfer, plus the fair market value of the Class D Membership
Interest. The fair market value of the Class D Membership Interest such
consideration will be determined in the manner set forth in Section
3.10(c) if the parties do not agree.
(e) If for any reason an agreement for such Proposed Tag-Along
Transfer is not executed by the Selling Members and the prospective
Transferee within one-hundred eighty (180) days after the date of the
Tag-Along Notice or, if so executed, the transaction with such
prospective Transferee thereafter should fail to close, the
Tag-Initiating Member must comply with the provisions set forth in this
Section 3.10, to the extent applicable, prior to making any subsequent
Transfer of its Membership Interest.
3.11 Right to Sell Highest Incentive Distribution Splits.
Notwithstanding anything in this Agreement to the contrary (including the
requirements for Member approval in Section 6.3(b)), if the Merger Agreement is
terminated in accordance with its terms, each Member shall have the right,
exercisable at any time following the termination of the Merger Agreement in its
sole discretion (subject to the terms of this Section 3.11), to cause the
Company to sell or to contribute directly or indirectly to the Partnership its
Sharing Ratio of all right, title and interest of the Company in and to the
Highest Incentive Distribution Splits, such that after giving effect to such
sale or contribution the Company's right to distributions with respect to such
portion of the Highest Incentive Distribution Splits will be eliminated from the
Partnership Agreement (and the Company will cause the Partnership Agreement to
be amended as necessary to effectuate such sale or contribution) and will cease
to be an asset owned by the Company; provided, however, that a sale or
contribution of the Highest Incentive Distribution Splits pursuant to this
Section 3.11 may only be made if each of the following conditions are satisfied:
26
(a) the Merger Agreement shall have been terminated in
accordance with its terms;
(b) the Member who proposes to cause the Company to make such
sale or contribution (the "HIDS SELLER") shall have delivered notice to
the other Member (the "HIDS PARTICIPATING MEMBER"), which notice may be
given orally and shall be promptly confirmed in writing, of the
proposed sale or contribution of the Highest Incentive Distribution
Splits, such notice to be given not less than fifteen (15) Business
Days prior to the proposed sale or contribution and which notice shall
include a summary of the consideration proposed to be paid to the
Company for the sale or contribution of such portion of the Highest
Incentive Distribution Splits (such notice, the "HIDS NOTICE").
(c) the HIDS Participating Member shall have the right,
exercisable at any time during the period commencing upon its receipt
of the HIDS Notice and ending immediately prior to the closing of such
sale or contribution, to cause the Company to include the HIDS
Participating Member's Sharing Ratio of the Highest Incentive
Distribution Splits in the proposed sale or contribution. The HIDS
Participating Member shall exercise its right under this Section 3.11
by delivery to the HIDS Seller of written notice of such election
(which notice, once so delivered to the HIDS Seller, shall be
irrevocable. Upon any such exercise, the Company shall sell or
contribute directly or indirectly to the Partnership its entire right
to distributions with respect to the Highest Incentive Distribution
Splits. If the HIDS Participating Member does not deliver to the HIDS
Seller written notice of its election pursuant to this Section 3.11
prior to the closing of the sale or contribution of the Highest
Incentive Distribution Splits, then upon such closing, the HIDS
Participating Member shall be issued a Class D Membership interest (a
"CLASS D MEMBERSHIP INTEREST") having a right to distributions in
accordance with SECTION 5.3.
3.12 Change of Member Control.
(a) In the event of a Change of Member Control, the Member
with respect to which the Change of Member Control has occurred
("CHANGING MEMBER") shall promptly (and in all events within five
Business Days after the Change of Member Control) give notice thereof
("CONTROL NOTICE") to the other Member (in such capacity, the
"NON-CHANGING MEMBER"). If the Control Notice is not given by the
Changing Member as provided above and the Non-Changing Member becomes
aware of such Change of Member Control, such Non-Changing Member shall
have the right to give the Control Notice to the Changing Member. The
Non-Changing Member shall have the right, but not the obligation,
either: (i) to acquire the Membership Interest of the Changing Member
for the fair market value thereof (as such, a "BUY-OUT RIGHT") or (ii)
to sell the Membership Interest of the Non-Changing Member to the
Changing Member for the fair market value thereof (as such, a "SELL-OUT
RIGHT"). For purposes of this Section 3.12, "fair market value" means
the cash value for which a willing buyer and willing seller under no
compulsion would be willing to buy or sell the Membership Interest of
the Changing Member. If the Non-Changing Member elects to proceed under
clause (i), then the Changing Member shall deliver its proposed fair
market value ("FMV NOTICE") of its Membership Interest to the
Non-Changing Member within five Business Days after the
27
delivery of the Control Notice. The Non-Changing Member shall then have
15 Business Days after receipt of the FMV Notice to dispute the fair
market value set forth therein by notice to the Changing Member. If the
Non-Changing Member disputes the fair market value set forth in the FMV
Notice, then the parties shall attempt to resolve such dispute. If such
dispute is not resolved within 15 Business Days after delivery of the
dispute notice, then the fair market value of the Changing Member's
Membership Interest shall be determined by one investment banking firm
of nationally recognized origin agreed upon by the Changing Member and
the Non-Changing Member or failing such agreement, appointed by the
Presiding Judge of the United States District Court for the Southern
District of Texas, Houston Division, pursuant to a petition to compel
appraisal. If such dispute is submitted to the appraiser, the fair
market value of the Changing Member's Membership Interest shall be the
amount determined by the appraiser. The fair market value of the
Changing Member's Membership Interest determined as set forth in this
Section 3.12(a) shall be the "FAIR MARKET VALUE." The Changing Member
shall pay the expenses associated with any such appraisal.
Alternatively, if the Non-Changing Member elects to proceed under
clause (ii), then the Non-Changing Member shall deliver its proposed
fair market value ("FMV NOTICE") of its Membership Interest to the
Changing Member within five Business Days after the delivery of the
Control Notice. The Changing Member shall then have 15 Business Days
after receipt of the FMV Notice to dispute the fair market value set
forth therein by notice to the Non-Changing Member. If the Changing
Member disputes the fair market value set forth in the FMV Notice, then
the parties shall attempt to resolve such dispute. If such dispute is
not resolved within 15 Business Days after delivery of the dispute
notice, then the fair market value of the Non-Changing Member's
Membership Interest shall be determined by one investment banking firm
of nationally recognized standing, agreed upon by the Changing Member
and the Non-Changing Member or failing such agreement, appointed by the
Presiding Judge of the United States District Court for the Southern
District of Texas, Houston Division, pursuant to a petition to compel
appraisal. If such dispute is submitted to the appraiser, the fair
market value of the Non-Changing Member's Membership Interest shall be
the amount determined by the appraiser. The fair market value of the
Non-Changing Member's Membership Interest determined as set forth in
this Section 3.12(a) shall also be the "FAIR MARKET VALUE." The
Non-Changing Member shall pay the expenses associated with any such
appraisal.
(b) If either the Buy-out Right or the Sell-out Right is
exercised in accordance with Section 3.12(a), the closing of the
purchase of the Membership Interest shall occur at the principal place
of business of the Company on the 30th Day after the expiration of the
last applicable period referred to in such Section 3.12(a), unless the
Changing Member and the Non-Changing Members, as applicable, agree upon
a different place or date. At the closing, following the course of
events specified in Section 3.12(a)(i), the Changing Member shall
execute and deliver to the Non-Changing Member, as applicable, an
assignment of the Membership Interest that is subject to such Change of
Member Control free and clear of Encumbrances, other than those created
by this Agreement or by the Non-Changing Member, and any other
instruments reasonably requested by the Non-Changing Member, as
applicable, to give effect to the purchase. The Non-Changing Member, as
applicable, shall deliver to the Changing Member in immediately
available funds the purchase price provided for in Section 3.12(a), and
the Membership Interests,
28
Sharing Ratios and Capital Accounts of the Members shall be deemed
adjusted to reflect the effect of the purchase. Alternatively, at the
closing following the events specified in Section 3.12(a)(ii), the
Non-Changing Member shall execute and deliver to the Changing Member,
as applicable, an assignment of the Membership Interest that is subject
to such Change of Member Control free and clear of Encumbrances, other
than those created by this Agreement or by the Changing Member, and any
other instruments reasonably requested by the Changing Member, as
applicable, to give effect to the purchase. The Changing Member, as
applicable, shall deliver to the Non-Changing Member in immediately
available funds the purchase price provided for in Section 3.12(a), and
the Membership Interests, Sharing Ratios and Capital Accounts of the
Members shall be deemed adjusted to reflect the effect of the purchase.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Capital Account Balances.
(a) Upon consummation of the transactions contemplated in
Section 3.1, the balance of the Capital Account of the Class C Member
shall be $425,000,000, as set forth on Exhibit A, and the balance of
the Capital Account of the Class B Member shall be $425,000,000, as set
forth on Exhibit A.
(b) No Member shall have any obligation or right to make any
Capital Contribution to the Company except as provided in Sections 4.2
and 4.4.
4.2 Capital Contributions by the Company to the Partnership. Pursuant
to Section 4.4(c)(iii) of the Partnership Agreement, upon the issuance of any
Units (as defined in the Partnership Agreement) or other Partnership Securities
(as defined in the Partnership Agreement) by the Partnership, the Company, as
general partner of the Partnership, is required to make (a) an additional
capital contribution to the Partnership or (b) convert a number of Partnership
Securities owned by the Company into additional general partner interests, such
that the Company shall at all times have a balance in its Partnership capital
account equal to 1.0% of the total positive capital account balances of all
partners of the Partnership. Concurrently with the capital contribution required
to be made by the Company to the Partnership pursuant to Section 4.4(c)(iii) of
the Partnership Agreement (the "GP CONTRIBUTION"), each of the Class B Member
and the Class C Member shall contribute to the Company its pro rata share of the
GP Contribution based on its respective Sharing Ratio. Such contribution to the
Company by the Class B Member and Class C Member may be in cash or in
Partnership Securities (as defined in the Partnership Agreement), as such
contributing Member may elect in its sole discretion. The value of any such
Partnership Securities contributed to the Company pursuant to this Section 4.2
shall be the Agreed Value of same as of the date of the contribution. In the
event any Member fails to contribute to the Company its pro rata share of the GP
Contribution in accordance with this Section 4.2 (the "FAILING MEMBER"), the
other Member(s) may elect to additionally contribute to the Company (the
"CONTRIBUTING MEMBER") such Failing Member's pro rata share of the GP
Contribution. If such contribution is made by a Contributing Member, as a
penalty for Default, the Failing Member shall forfeit all future distributions
of Available Cash from the Company pursuant to Section 5.3 and such Failing
Member's distributions shall instead be
29
distributed to the Contributing Member until such time as an amount equal to
150% of the amount so contributed by the Contributing Member on behalf of the
Failing Member shall be distributed to the Contributing Member (the amount to be
distributed in excess of the amount contributed by a Contributing Member is
referred to as the "EXCESS AMOUNT"). In no event shall the Class D Member be
obligated to make any capital contributions to the Company in its capacity as
such.
4.3 Return of Contributions. No Member is entitled (i) to the return of
any part of any Capital Contribution or (ii) to be paid interest in respect of
either its Capital Account or any Capital Contribution. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any other Member's Capital Contributions.
4.4 Advances by Members.
(a) If the Company does not have sufficient cash to pay its
obligations, and subject to the obligations of the Members as set forth
in Section 4.2 above, the Company, with the agreement of all of the
Members, may allow one or more Members to advance all or part of the
needed funds to or on behalf of the Company. An advance described in
this Section 4.4(a) constitutes a loan or, if all Members agree, a
Capital Contribution, from the Member to the Company and will be
subject to such terms and conditions as may be agreed upon by the
Company and such Member. However, if there is any ambiguity as to the
nature of the advance contemplated by the preceding sentence or if all
of the Members fail to agree to treat the amount as a Capital
Contribution, the advance will be conclusively deemed a loan for any
and all purposes.
(b) A loan by any Member to the Company as contemplated by
Section 4.4(a) or otherwise will not be considered a Capital
Contribution and will not increase the Capital Account balance of such
Member. Except as otherwise provided in this Agreement or by applicable
Law, such loan will be treated as a Liability of the Company and will
be paid in accordance with its terms as if such loan was made by an
unrelated creditor.
4.5 Capital Accounts. A separate capital account ("CAPITAL ACCOUNT")
shall be established and maintained for each Member in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). The initial balance of the Capital Account
of each Member as of the execution of this Agreement will be as set forth in
Section 4.1. The Capital Account of each Member shall thereafter be adjusted as
follows:
(a) Increases and Decreases. Each Member's Capital Account
will be (i) increased by (A) the amount of cash or cash equivalents
contributed by that Member to the Company as capital, (B) the Net
Agreed Value of property contributed by that Member to the Company as
capital (contributions contemplated by subparagraphs (A) and (B) will
be referred to as "CAPITAL CONTRIBUTIONS"), and (C) allocations to that
Member of Company income and gain (or items thereof), including income
and gain exempt from Tax and income and gain described in Treasury
Regulation Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treasury Regulation Section 1.704-1(b)(4)(i); and (ii)
decreased by (A) the amount of cash or cash equivalents
30
distributed to that Member by the Company, (B) the Net Agreed Value of
property distributed to that Member by the Company, and (C) allocations
of Company losses and deductions (or items thereof), including losses
and deductions described in Treasury Regulation Section
1.704-1(b)(2)(iv)(g) (but excluding losses or deductions described in
Treasury Regulation Section 1.704-1(b)(4)(i) or (iii));
(b) Method for Determining Income, Gain, Loss and Deductions.
For purposes of computing the amount of any item of income, gain, loss
or deduction to be reflected in the Members' Capital Accounts, the
determination, recognition and classification of any such item will be
the same as its determination, recognition and classification for
federal income tax purposes (including any method of depreciation, cost
recovery or amortization used for that purpose), provided that:
(i) All fees and other expenses incurred by the
Company to promote the sale of (or to sell) any interest that
can neither be deducted nor amortized under Section 709 of the
Code, if any, will, for purposes of Capital Account
maintenance, be treated as an item of deduction at the time
such fees and other expenses are incurred and will be
allocated among the Members pursuant to Sections 5.1 and 5.2.
(ii) Except as otherwise provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), the computation of
all items of income, gain, loss and deduction will be made
without regard to any election under Section 754 of the Code
which may be made by the Company and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor
capitalized for federal income tax purposes.
(iii) Any income, gain or loss attributable to the
taxable disposition of any Company property will be determined
as if the adjusted basis of such property as of such date of
disposition were equal in amount to the Company's Carrying
Value with respect to such property as of such date.
(iv) In accordance with the requirements of Section
704(b) of the Code, any deductions for depreciation, cost
recovery or amortization attributable to any Contributed
Property will be determined as if the adjusted basis of such
property on the date it was acquired by the Company was equal
to the Agreed Value of such property on the date it was
acquired by the Company. Upon an adjustment pursuant to
Section 4.5(d) to the Carrying Value of any Company property
subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or
amortization attributable to such property will be determined
(A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery
or amortization derived from the same method and useful life
(or, if applicable, the remaining useful life) as is applied
for federal income tax purposes; provided, however, that if
the asset has a zero adjusted basis for federal income tax
purposes, depreciation, cost recovery or
31
amortization deductions will be determined using any
reasonable method that the Company may adopt.
(v) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing Net Income or Net Loss will be added to such taxable
income or loss.
(c) Succession in Interests. A Transferee will succeed to the
Capital Account of the Transferor relating to the Membership Interest
so Transferred.
(d) (i) Additional Membership Interests. Consistent with the
provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an
issuance of additional Membership Interests for cash or Contributed
Property, the Capital Accounts of all Members and the Carrying Value of
each Company property immediately prior to such issuance will be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Company property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had
been allocated to the Members at such time pursuant to Section 5.1.
(ii) Adjustments Prior to a Distribution. In
accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any distribution to
a Member of any Company property (other than a distribution of
cash or cash equivalents that are not in redemption or
retirement of a Membership Interest), the Capital Accounts of
all Members and the Carrying Value of each Company property
will be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Company property,
as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such property immediately prior to
such distribution for an amount equal to its fair market value
(which will be determined by the Company using any valuation
method it deems reasonable under the circumstances), and had
been allocated to the Members at such time, pursuant to
Section 5.1.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Members
among themselves, the Company's items of income, gain, loss and deduction
(computed in accordance with Section 4.5(b)) will be allocated among the Members
for each taxable year (or portion thereof) as provided below:
(a) Net Income. All items of income, gain, loss and deduction
taken into account in computing Net Income for such taxable period,
determined after any special allocations required by Sections 5.1(d)
through 5.1(l) have first been made, will be allocated to each Member
in proportion to its respective Sharing Ratio.
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(b) Net Loss. All items of income, gain, loss and deduction
taken into account in computing Net Loss for such taxable period,
determined after any special allocations required by Sections 5.1(d)
through 5.1(l) have first been made, will be allocated to each Member
in proportion to its respective Sharing Ratio.
(c) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Members agree that Nonrecourse
Liabilities of the Company in excess of the sum of (A) the amount of
Company Minimum Gain and (B) the total amount of Nonrecourse Built-in
Gain will be allocated to each Member in accordance with its respective
Sharing Ratio.
(d) Company Minimum Gain Chargeback. Notwithstanding the other
provisions of this Section 5.1, except as provided in Treasury
Regulation Section 1.704-2(f)(2) through (5), if there is a net
decrease in Company Minimum Gain during such taxable period, each
Member will be allocated items of Company income and gain for such
period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Section 1.704-2(f)(6) and
(g)(2) and Section 1.704-2(j)(2)(i), or any successor provisions. For
purposes of this Section 5.1(d), each Member's Adjusted Capital Account
balance will be determined, and the allocation of income or gain
required hereunder will be effected, prior to the application of any
other allocations pursuant to this Section 5.1 with respect to such
taxable period (other than an allocation pursuant to Section 5.1(h) or
(i)).
(e) Chargeback of Minimum Gain Attributable to Member
Nonrecourse Debt. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1(d), except as provided in Treasury
Regulation Section 1.704-2(i)(4)), if there is a net decrease in
Minimum Gain Attributable to Member Nonrecourse Debt during such
taxable period, any Member with a share of Minimum Gain Attributable to
Member Nonrecourse Debt at the beginning of such taxable period will be
allocated items of Company income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 5.1, each
Member's Adjusted Capital Account balance will be determined and the
allocation of income or gain required hereunder will be effected, prior
to the application of any other allocations pursuant to this Section
5.1, other than Sections 5.1(d), (h) and (i), with respect to such
taxable period.
(f) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4)
through (6) (or any successor provisions), items of Company income and
gain will be specifically allocated to such Member in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 5.1(d)
or 5.1(e).
33
(g) Gross Income Allocations. In the event any Member has a
deficit balance in its Adjusted Capital Account at the end of such
taxable period, such Member will be specifically allocated items of
Company gross income and gain in the amount of such excess as quickly
as possible; provided that an allocation pursuant to this Section
5.1(g) will be made only if and to the extent that such Member would
have a deficit balance in its Adjusted Capital Account after all other
allocations provided in this Section 5.1 have been tentatively made for
such taxable period as if this Section 5.1(g) was not in the Agreement.
(h) Nonrecourse Deductions. Nonrecourse Deductions for any
such taxable period will be allocated to the Members in proportion to
their respective Sharing Ratios. If the Members determine in their good
faith discretion that the Company's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements
of the Treasury Regulations promulgated under Section 704(b) of the
Code, the Company is authorized, upon notice to the Members, to revise
the prescribed ratio to the numerically closest ratio which does
satisfy such requirements.
(i) Member Nonrecourse Deductions. Member Nonrecourse
Deductions for any taxable period will be allocated 100% to the Member
that bears the Economic Risk of Loss for such Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i) (or any
successor provision). If more than one Member bears the Economic Risk
of Loss with respect to a Member Nonrecourse Debt, such Member
Nonrecourse Deductions attributable thereto will be allocated between
or among such Members ratably in proportion to their respective shares
of such Economic Risk of Loss.
(j) Allocation in Event of Failure to Contribute. In the event
a Contributing Member is distributed cash pursuant to the last sentence
of Section 4.2 in excess of the amount of cash contributed by such
Contributing Member due to the failure to contribute by a Failing
Member, such Contributing Member will be allocated items of Company
gross income and gain in the amount of such excess.
(k) Class D Interests. Following the issuance of a Class D
Membership Interest, all items of income, gain, loss and deduction
attributable to the portion of the Highest Incentive Distribution
Splits that was excluded from the sale or contribution of any Highest
Incentive Distribution Splits pursuant to Section 3.10, shall be
allocated to the Member holding such Class D Membership Interest.
(l) Administrative Services Allocation. The Investor shall be
allocated items of income and gain equal to the amount of any
distribution received pursuant to Section 5.4(c).
34
5.2 Allocations for Tax Purposes. Except as otherwise provided herein,
for federal income tax purposes, each item of income, gain, loss and deduction
which is recognized by the Company for federal income tax purposes will be
allocated among the Members in the same manner as its correlative item of "book"
income, gain, loss or deduction is allocated pursuant to Section 5.1.
(a) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of
income, gain, loss, depreciation, amortization and cost recovery
deductions will be allocated for federal income tax purposes among the
Members in accordance with Treasury Regulation Section 1.704-3(d) (the
"REMEDIAL METHOD").
(b) For the proper administration of the Company, the Company
will (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions;
provided, that such depreciation, amortization and cost recovery
methods will be the most accelerated methods allowed under federal tax
Laws, and (ii) amend the provisions of this Agreement as appropriate to
reflect the promulgation of Treasury Regulations under Section 704(b)
or Section 704(c) of the Code. The Company may adopt such conventions,
make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(b) only if such conventions, allocations
or amendments are consistent with the principles of Section 704 of the
Code.
(c) Any gain allocated to the Members upon the sale or other
taxable disposition of any Company asset will, to the extent possible,
after taking into account other required allocations of gain pursuant
to this Section 5.2 be characterized as Recapture Income in the same
proportions and the same extent as such Members (or their predecessors
in interest) have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
(d) All items of income, gain, loss, deduction and credit
recognized by the Company for federal income tax purposes and allocated
to the Members in accordance with the provisions hereof will be
determined without regard to any election under Section 754 of the Code
which may be made by the Company; provided, however, that such
allocations, once made, will be adjusted as necessary or appropriate to
take into account those adjustments permitted or required by Sections
734 and 743 of the Code.
5.3 Distributions. Except as provided for in Section 12.2, within
forty-five (45) days following each Quarter (the "DISTRIBUTION DATE"), the
Company shall distribute to the Members in accordance with Section 5.5 one
hundred percent (100%) of the Company's Available Cash on such Distribution
Date, any non-cash consideration received by the Company in connection with any
sale or contribution of any Highest Incentive Distribution Splits pursuant to
Section 3.11, and any other property of the Company the Managing Member
determines should be distributed to the Members. Each distribution in respect of
a Membership Interest shall be paid by the Company only to the Record Holder
thereof as of the Distribution Date, unless otherwise directed by the Record
Holder. Such payment shall constitute full payment and satisfaction of
35
the Company's Liability with respect to such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of Transfer or
otherwise.
5.4 Sharing of Distributions.
(a) Subject to Sections 5.4(b), 5.4(c) and 12.2, all
distributions shall be made to the Members in proportion to their
respective Sharing Ratios.
(b) If the Company has issued a Class D Membership Interest,
then:
(i) The portion of the Company's Available Cash on
any Distribution Date attributable to any sale or contribution
of any Highest Incentive Distribution Splits pursuant to
Section 3.11 and any non-cash consideration received by the
Company in connection with any sale or contribution of any
Highest Incentive Distribution Splits pursuant to Section 3.11
shall be distributed (A) first, to the Members in proportion
to their respective Sharing Ratios until the Class D Member
has received an amount equal to any Assumed Tax that such
Member will be deemed to incur in respect of the year in which
the sale or contribution of any Highest Incentive Distribution
Splits pursuant to Section 3.11 occurs as a result of such
sale or contribution, and (B) the remainder to the HIDS
Seller; and
(ii) The portion of the Company's Available Cash on
the Distribution Date and any other property received by the
Company attributable to the portion of the Highest Incentive
Distribution Splits that was excluded from the sale or
contribution of any Highest Incentive Distribution Splits
pursuant to Section 3.11 shall be distributed to the Class D
Member.
(c) During the Support Period, the Company shall first
distribute to the Investor an amount of Available Cash equal to 100% of
the Reduction in Distributions since the immediately preceding
Distribution Date, determined as follows:
(i) At least 10 Business Days prior to each
Distribution Date during the Support Period, El Paso GP Holdco
will notify Investor of its good faith estimate of the
Reduction in Distributions since the immediately preceding
Distribution Date, such notice to include the basis of El Paso
GP Holdco's calculation of such amount and reasonable
supporting documentation therefore;
(ii) Absent manifest error, the good faith estimate
provided by El Paso GP Holdco of the Reduction in
Distributions shall be used for purposes of determining the
distributions to be made hereunder upon such Distribution
Date;
(iii) El Paso GP Holdco shall provide any additional
information and access to relevant personnel as may reasonably
be requested by Investor in connection with determining
whether the good faith estimate provided by El Paso GP Holdco
of the Reduction in Distributions since the immediately
preceding Distribution Date equals the actual Reductions in
Distributions since such Distribution Date; and
36
(iv) Investor shall have the right (and such right
shall survive the expiration of the Support Period) to make a
claim against El Paso GP Holdco for any shortfall between any
estimate of the Reduction in Distributions used to determine
the distributions hereunder and the actual Reduction in
Distributions for a period of 18 months following the
applicable Distribution Date.
5.5 Distribution Restrictions. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not make a distribution
to a Member to the extent that such distribution is not permitted under any
applicable Law, including the Act.
ARTICLE VI
MANAGEMENT OF THE COMPANY
6.1 Management.
(a) Number of Directors; Managing Member; Powers of Directors
and Managing Member. The business, affairs, operations and property of
the Company shall be managed by or under the direction of the Board,
which shall consist of a number of individuals designated as directors
of the Company (the "DIRECTORS"), a majority of whom must be
Independent Directors. Each Director shall serve for a term of one year
from the date of his of her designation or until his or her earlier
resignation, removal or inability to serve. For as long as El Paso GP
Holdco retains ownership of the Class B Membership Interest and so
elects to serve, El Paso GP Holdco shall serve as the Managing Member
of the Company for purposes of the Act (in such capacity, the "MANAGING
MEMBER"). If El Paso GP Holdco Transfers its Class B Membership
Interest (and in so doing, transfer its status as Managing Member) to
any other Person, all references to the Managing Member in this
Agreement shall thereafter be deemed to refer to such transferee. The
Directors (including the Independent Directors) shall be designated by
the Managing Member. Except to the extent the Managing Member
specifically retains such power or authority herein, the power and
authority granted to the Board hereunder shall include all those
necessary or convenient for the furtherance of the purposes of the
Company and shall include the power to make or delegate to Officers all
decisions with regard to the management, operations, assets, financing
and capitalization of the Company and/or the Partnership (as
appropriate). The number of Directors shall initially be five (5), but
such number may be increased or decreased from time to time by
resolution of the Board or by the Managing Member; provided, however,
that a majority of the Directors elected must be Independent Directors;
and provided, further, that if at any time a majority of the Directors
are not Independent Directors the Board shall still have all powers and
authority granted to it hereunder but that the Board and the Managing
Member shall endeavor to elect additional Independent Directors to come
into compliance with this Section 6.1.
(b) Other Board Matters. The Board shall be governed by
Exhibit B, which Exhibit B may be amended, supplemented, modified or
replaced from time to time by the Managing Member or by the affirmative
vote of a majority of the entire Board.
37
6.2 Directors as Agents. No Director, in such capacity, acting singly
or with any other Director, shall have any authority or right to act on behalf
of or bind the Company other than by exercising the Director's voting power as a
member of the Board, unless specifically authorized by the Board in each
instance.
6.3 Matters Requiring Member Approval. (a) Without Member approval
(which shall include the approval of the Managing Member and the Class C Member
except as set forth in Section 3.4(f)(v), Section 6.3(b), Section 6.3(c) and
Section 7.4 or as otherwise provided for in this Agreement), the Company shall
not, and shall not permit any of its Subsidiaries to:
(i) make (for itself or on the Partnership's behalf)
a general assignment for the benefit of creditors,
(ii) file (for itself or on the Partnership's behalf)
a voluntary bankruptcy petition,
(iii) file (for itself or on the Partnership's
behalf) a petition or answer seeking for the Company or the
Partnership a reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief
under any Law;
(iv) file (for itself or on the Partnership's behalf)
an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against the
Company or the Partnership in a proceeding (A) of the type
described in (i) through (iii) above or (B) in any federal or
state bankruptcy or insolvency proceeding; or
(v) seek, consent, or acquiesce (for itself or on the
Partnership's behalf) to the appointment of a trustee,
receiver, or liquidator of the Company or the Partnership or
of all or any substantial part of its or the Partnership's
properties.
(b) Without Member approval (which shall include the approval
of the Managing Member and the Class C Member except as set forth in
Section 3.4(f)(v), this Section 6.3(b), Section 6.3(c) and Section 7.4
or as otherwise provided for in this Agreement), except in connection
with the MLP Merger or as contemplated by the Merger Agreement, the
Company shall not, and shall not permit any of its wholly owned
Subsidiaries or, with respect to clauses (xii) and (xiii) below, the
Partnership, to:
(i) effect any merger, consolidation or share
exchange into or with any other Person, or any other similar
business combination transaction involving the Company or any
of its significant subsidiaries (as defined in Rule 1-02(w) of
Regulation S-X promulgated by the Securities and Exchange
Commission, as amended from time to time) or reorganization,
recapitalization or financial restructuring of the Company;
(ii) effect any amendment or repeal of the
Certificate other than to effect (A) changes pursuant to
Section 13.1, (B) non-substantive changes or
38
(C) changes that do not adversely affect any Member (unless
such affected Member's consent has been obtained);
(iii) effect any amendment to (A) Section 2.4 of this
Agreement or (B) any other provision of this Agreement that
would (i) materially adversely affect the rights of the Class
C Member hereunder or (ii) if the Class C Member also is the
Class D Member, materially adversely affect the rights of the
Class D Member hereunder;
(iv) effect any amendment to the Partnership
Agreement that would reduce the Company's allocable share of
distributions from the Partnership or that would otherwise (i)
materially adversely affect the Class C Member or (ii) if the
Class D Member also is the Class C Member, materially
adversely affect the Class D Member;
(v) effect any sale, lease, transfer, pledge or other
disposition of all or substantially all of the properties or
assets of the Company or the Company and any of its
Subsidiaries taken as a whole;
(vi) other than equity securities issued upon
exercise of convertible securities approved pursuant to this
Section 6.3, effect any authorization, sale and/or issuance by
the Company of any Membership Interests or other equity
securities, whether in a private or public offering, including
an initial public offering, or the grant, sale or issuance of
other securities (including rights, warrants and options)
convertible into, exchangeable for or exercisable for any
Membership Interests, partnership interests, capital stock, or
other equity securities, whether or not presently convertible,
exchangeable or exercisable;
(vii) effect any (A) incurrence of any indebtedness
by the Company, (B) assumption, incurrence, or undertaking by
the Company of, or the grant by the Company of any security
for, any financial commitment of any type whatsoever,
including any purchase, sale, lease, loan, contract, borrowing
or expenditure, or (C) lending of money by the Company to, or
the guarantee by the Company of the debts of, any other Person
other than the Partnership or its Subsidiaries (collectively,
"COMPANY OBLIGATIONS") other than Company Obligations incurred
(x) pursuant to Section 4.4 and, (y) pursuant to joint and
several liability for the Partnership's Liabilities under
Delaware Law; provided, however, that no consent of the
Members shall be required for the Company to make a capital
contribution to the Partnership pursuant to Section
4.4(c)(iii) of the Partnership Agreement;
(viii) limit, restrict or terminate distributions of
Available Cash by the Company to the Members, other than
pursuant to Sections 4.2 and 15.1;
(ix) assign, transfer, sell or otherwise dispose of
the Company's general partner interest in the Partnership or
any Incentive Distribution (or Highest Incentive Distribution
Splits) rights relating to the Partnership which are owned by
the Company;
39
(x) own or lease any assets other than the Company's
general partner interest and Incentive Distributions (and
Highest Distribution Interest Splits) in the Partnership
unless the Company shall be reimbursed for the cost of such
ownership or lease by the Partnership;
(xi) file any federal or material state Tax Return on
behalf of the Company or the Partnership or settle or
compromise any material claim with respect to Taxes of the
Company or the Partnership;
(xii) any merger or consolidation involving the
Partnership in respect of which the Partnership would not
control at least 51% of the Voting Power of the surviving
entity in the transaction; or
(xiii) any Disposition, whether in one transaction or
a series of transactions, of all or substantially all of the
properties or assets of the Company or the Partnership.
provided, however, that notwithstanding the foregoing provisions in this Section
6.3(b), the approval of the Members shall not be required for the Company to
take any of the actions set forth in this Section 6.3(b) in connection with any
sale of Highest Incentive Distribution Splits pursuant to Section 3.11.
(c) No Member in Default shall be entitled to consent on any
of the matters set forth in this Section 6.3.
6.4 Resolutions of Conflicts of Interest; Affiliate Transactions.
(a) Unless otherwise expressly provided in this Agreement,
whenever a potential conflict of interest exists or arises between the
Company, on the one hand, and any Director or Officer, on the other
hand, any resolution or course of action in respect of such conflict of
interest shall be permitted, and shall not constitute a breach of this
Agreement, any other agreement contemplated herein, or any duty stated
or implied by Law or equity (including fiduciary duties), if the
resolution or course of action is reasonable and fair to the Company.
(b) Unless otherwise expressly provided in this Agreement,
whenever a transaction is proposed between El Paso Parent or any of its
Subsidiaries (excluding the Company), on the one hand, and the
Partnership or any of its Subsidiaries, on the other hand, any
resolution or course of action in respect of such transaction shall be
permitted, and shall not constitute a breach of this Agreement, any
other agreement contemplated herein, or any duty of the Company, the
Board, any Director or any Member stated or implied by applicable Law
or equitable principles (including fiduciary duties), if such
transaction is approved on behalf of the Partnership or its applicable
Subsidiary or Subsidiaries by the Partnership's Conflicts and Audit
Committee (as defined in the Partnership Agreement).
(c) Unless otherwise expressly provided in this Agreement,
whenever a transaction is proposed between El Paso Parent or any of its
Subsidiaries (excluding the
40
Company), on the one hand, and the Company or any of its Subsidiaries,
on the other hand, any resolution or course of action in respect of
such transaction shall be permitted, and shall not constitute a breach
of this Agreement, any other agreement contemplated herein, or any duty
stated or implied by applicable Law or equitable principles (including
fiduciary duties), if such transaction is approved by a majority of the
Independent Directors and consented to by the Class C Member, which
consent shall not be unreasonably withheld; provided, however, that the
consent of the Class C Member shall not be required for any arrangement
or transaction whereby the Company utilizes shared services with, or
employees of, El Paso Parent or its Subsidiaries (excluding the
Company) to perform services on behalf of the Company provided that the
terms of such arrangement are no less favorable in the aggregate to the
Company and its Subsidiaries than would be reasonably expected in a
similar transaction with an unaffiliated Person.
(d) The Board or Independent Directors, as applicable, shall
be authorized in connection with its resolution of any conflict of
interest to consider (i) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and
burdens relating to such interest; (ii) any customary or accepted
industry practices and any customary or historical dealings with a
particular Person; (iii) any applicable generally accepted accounting
or engineering practices or principles; and (iv) such additional
factors as the Board determines in its sole discretion to be relevant,
reasonable or appropriate under the circumstances.
(e) Whenever a particular transaction, course of action,
arrangement or resolution of a conflict of interest is required under
this Agreement to be "fair and reasonable" to any Person, the fair and
reasonable nature of such transaction, course of action, arrangement or
resolution shall (unless otherwise provided herein) be considered in
the context of all similar or related transactions, as well as in the
context of any other matters considered by the Board pursuant to
clauses (i) - (iv) of Section 6.4(d).
(f) The Board may rely upon any resolution, certificate,
statement, instrument, opinion, report, notice, request consent, Order,
bond, debenture, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties and any act taken or omitted in reliance upon any such paper or
document shall be conclusively presumed to have been done or omitted in
good faith.
(g) The Board may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected by it and any act taken or omitted in
reliance upon the opinion or advice of such Persons as to matters that
the Board reasonably believes to be within such Persons' professional
or expert competence shall be conclusively presumed to have been done
or omitted in good faith and in accordance with such opinion or advice.
6.5 Duties of the Members and Directors.
(a) The Managing Member shall be "manager" of the Company
within the meaning of the Act. However, the business and affairs of the
Company shall be fully vested in, and managed by, the Board and any
Officers elected or appointed to the Board
41
pursuant to Section 14 of Exhibit B. Except as otherwise specifically
provided in this Agreement, the authority and functions of the Board,
on the one hand, and the Officers on the other and, shall be identical
to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under the General Corporation
Law of the State of Delaware. The Officers shall be vested with such
powers and duties as are set forth in Exhibit B and as are specified by
the Board. Accordingly, except as otherwise specifically provided in
this Agreement, the business and affairs of the Company shall be
managed under the direction of the Board and the day-to-day activities
of the Company shall be conducted on the Company's behalf by the
Officers who shall be agents of the Company. In addition to the powers
and authorities expressly conferred on the Board by this Agreement, the
Board may exercise such powers of the Company and do all such acts and
things as are not restricted by this Agreement, the Act or applicable
Laws.
(b) No provision in this Agreement other than Section 2.8,
this Section 6.5 and Article VIII shall in any way restrict, limit or
otherwise modify (1) the duties (including fiduciary duties) and
Liabilities relating thereto that the Directors of the Company owe to
the Members under the Laws of the State of Delaware or (2) any duties
and Liabilities relating thereto that any Member may owe to the other
Members under the Laws of the State of Delaware; provided, that under
no circumstances shall any such duty of a Member hereunder restrict the
exercise by Member of its rights under Section 2.8 or Section 6.3
hereof, which such rights may be exercised in any manner that a Member,
in its sole discretion and without consideration of the interests of
any other Person, deems appropriate, and any provision of this
Agreement other than Section 2.8, this Section 6.5 and Article VIII
that purports to restrict, limit or otherwise modify the duties and
Liabilities relating thereto that the Directors or Members owe to the
Members under the Laws of the State of Delaware shall be null and void
and of no force and effect
(c) No Director shall have any personal liability to the
Company or any Member for monetary damages for any breach of duty set
forth in this Agreement or any other duty existing under the Laws of
the State of Delaware; provided, however, that this provision shall not
eliminate or limit the liability of any Director for (i) any breach of
the Director's duty of loyalty to the Company or its Members, (ii) acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (ii) any unlawful distribution or
unlawful redemption of a membership interest, or (iii) any transaction
in which the Director derived an improper personal benefit. In
addition, it shall not constitute a breach of any fiduciary duty to the
Company or its Members arising under this Agreement or applicable Law
for any Director(s) that are then serving on the Conflicts and Audit
Committee (as such term is defined in the Partnership Agreement) to
take such actions while serving in such capacity (including granting or
withholding of Special Approval (as defined in the Partnership
Agreement)), as such Conflicts and Audit Committee determines to be
appropriate or necessary to resolve conflicts of interest on behalf of
the Partnership in a manner that such Committee determines to be fair
and reasonable to the Partnership notwithstanding that such resolution
may not be in the best interests of the Company.
42
(d) The provisions of Section 2.8, Section 6.1(c), this
Section 6.5 and Article VIII, to the extent they restrict the fiduciary
and other duties and Liabilities of a Person otherwise existing at Law
or in equity, constitute an agreement to restrict and replace such
fiduciary and other duties and Liabilities of such Person pursuant to
the provisions of Section 18-1101(c) of the Act. To the extent that, at
Law or in equity, a Member or a Director has duties (including
fiduciary duties) and Liabilities relating thereto to the Company, a
Member, a Director or to any other Person that is a party to or is
otherwise bound by this Agreement, such Member or Director shall not be
liable to the Company, to any Member, to any Director or to any other
Person that is a party to or is otherwise bound by this Agreement for
its good faith reliance on the provisions of this Agreement.
6.6 Matters Requiring Director Approval. Notwithstanding anything to
the contrary in this Agreement, the Company will not take any of the following
actions unless all of the Directors have voted in favor of, or consented to,
such action:
(a) make (for itself or on the Partnership's behalf) a general
assignment for the benefit of creditors;
(b) file (for itself or on the Partnership's behalf) a
voluntary bankruptcy petition;
(c) file (for itself or on the Partnership's behalf) a
petition or answer seeking for the Company or the Partnership a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Law;
(d) file (for itself or on the Partnership's behalf) an answer
or other pleading admitting or failing to contest the material
allegations of a petition filed against the Company or the Partnership
in a proceeding (i) of the type described in (a) through (c) above or
(ii) in any federal or state bankruptcy or insolvency proceeding; or
(e) seek, consent, or acquiesce (for itself or on the
Partnership's behalf) to the appointment of a trustee, receiver, or
liquidator of the Company or the Partnership or of all or any
substantial part of its or the Partnership's properties.
None of this Section 6.6, Section 2.4 or Section 6.4 may be amended without the
approval of all Independent Directors.
ARTICLE VII
MEETINGS
7.1 Meetings of Members.
(a) A quorum will be present at a meeting of the Members held
to vote on any matter if Members of each class of Membership Interests
that are entitled to vote on the matter are represented at the meeting
in person or by proxy. The Members shall be deemed to have approved any
action, proposal, resolution or other matter if (i) a majority of each
class of Membership Interests that are entitled to vote on the matter
have consented to such action, proposal, resolution or other matter or
(ii) Members holding a
43
majority of each class of Membership Interests that are entitled to
vote on the matter present at a meeting at which a quorum is present
vote in favor of such action, proposal, resolution or other matter.
(b) All meetings of the Members will be held at the principal
place of business of the Company or at such other place within or
without the State of Delaware as will be specified or fixed in the
notices or waivers of notice thereof; provided that any or all Members
or their representatives may participate in any such meeting by means
of conference telephone or similar communications equipment.
(c) Notwithstanding the other provisions of this Agreement, a
majority of Membership Interests represented (in person or by proxy) at
a meeting at which a quorum is present will have the power to adjourn
such meeting from time to time, without any notice other than an
announcement at the meeting of the time and place of the resumption of
the adjourned meeting. The time and place of such adjournment will be
determined by a vote of such Membership Interest. Upon the resumption
of such adjourned meeting, any business may be transacted that might
have been transacted at the meeting as originally called.
(d) Unless otherwise expressly provided in a written notice
issued by the Members, meetings of the Members for the transaction of
such business as may properly come before such meeting will be held at
the principal office of the Company, which meetings will be held at
such dates as to which the Members mutually agree. Regularly scheduled,
periodic meetings of the Members may be held without special notice to
the Members or Member representatives at such times and places as will
from time to time be determined by resolution of the Members or such
Member representatives and communicated to all Members or their
representatives. Each Member will use reasonable efforts to inform the
other Members or committee representatives of any business matters that
it intends to raise at any regular meeting of the Members within a
reasonable time prior to such meeting.
(e) Special meetings of the Members or any class of Members,
for any purpose or purposes, unless otherwise prescribed by Law, may be
called upon reasonable notice by (i) the Chairman of the Board, if
applicable, (ii) the Chief Executive Officer, if applicable, or any
other person performing similar functions, or (iii) more of the
Directors.
(f) The date on which notice of a meeting of the Members is
mailed will be the Record Date for the determination of the Members or
Member representatives entitled to notice of or to vote at such
meeting, including any adjournment thereof, or the Members or Member
representatives entitled to receive such notice.
7.2 Voting List. The Officer or the designated Member who is
responsible for the maintenance of the Company's records will make, at least ten
(10) days before each meeting of Members, a complete list of the Members or
their representatives, as the case may be, entitled to vote thereat or any
adjournment thereof, arranged in alphabetical order, with the address of and the
Membership Interest held or represented by each, which list, for a period of ten
(10) days
44
prior to such meeting, will be kept on file at the registered office or
principal place of business of the Company and will be subject to inspection by
any Member or Member representative at any time during usual business hours.
Such list will also be produced and kept open at the time and place of the
meeting and will be subject to the inspection of any Member or Member
representative during the whole time of the meeting. The original Company
records will be prima facie evidence as to who are the Members or their
representatives entitled to examine such list or transfer records or to vote at
any meeting of the Members. Failure to comply with the requirements of this
Section 7.2 will not affect the validity of any action taken at the meeting.
7.3 Proxies. A Member or Member representative may vote either in
person or by proxy executed in writing by the Member or Member representative. A
telegram, telex, cablegram or similar transmission by the Member or Member
representative or a photographic, photostatic, facsimile, electronic mail in
"portable document format" form or similar reproduction of writing executed by
the Member or Member representative will be treated as an execution in writing
for purposes of this Section 7.3. Proxies for use at any meeting of the Members
or in connection with the taking of any action by written consent will be filed
with the Company before or at the time of the meeting or execution of the
written consent, as the case may be. All proxies will be received and taken
charge of and all ballots will be received and canvassed by an inspector or
inspectors appointed by the Chief Executive Officer, the President, a Vice
President or, if applicable, Person(s) with similar functions who will decide
all questions touching upon the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes.
7.4 Votes. On those matters for which a Member is entitled to vote,
each Member or Member representative is entitled to one vote (or a fraction
thereof) per percent (or fraction thereof) of Membership Interest held by such
Member, as reflected in the Register of the Company; provided, however, that for
purposes of determining a quorum, the Membership Interest of any relevant Member
will not be counted and such interest will be apportioned pro rata among the
remaining Members as applicable if the relevant Member is not permitted to vote
under this Agreement because the relevant Member is in Default or is not deemed
to be a Substituted Member. Except as specifically provided in the definition of
Available Cash and in Sections 3.4(a)(ii), 3.4(b)(iv), 3.4(f), 3.9, 4.4(a), 6.3,
6.5(c), 9.3, 11.1, 12.1(a), 12.1(b) and 13.2 and the Act, (a) the Class C Member
shall not be entitled to vote on any matter and (b) there shall be no voting as
a separate class and any percentage vote shall be of all Membership Interests
voting as a single class. A Member in Default shall not be entitled to vote on
any matter, including those set forth in Section 6.3.
7.5 Conduct of Meetings. All meetings of the Members will be presided
over by the chairman of the meeting, who will be designated by, in order of
priority, the Chairman of the Board (if any), Chief Executive Officer (if any),
President (if any), Vice President (if any) or other appropriate Officer. The
chairman of any meeting of the Members will determine the order of business and
the procedure at the meeting, including regulation of the manner of voting and
the conduct of discussion.
45
7.6 Action by Written Consent.
(a) Except as otherwise provided by applicable Law, any action
required or permitted to be taken at any meeting of Members may be
taken without a meeting, and without a vote, if a consent or consents
in writing, setting forth the action so taken, will be signed by the
holder or holders or representatives of not less than the minimum
percentage of Membership Interest that would be necessary to take such
action at a meeting at which the holders of all Membership Interests
entitled to vote on the action were present and voted. To the extent
required by Law, every written consent will bear the date of signature
of each Member or Member representative who signs the consent. Any such
written consent will be effective to take the action that is the
subject of such consent unless the Company is not notified of such
consent within sixty (60) days after the date of the latest-dated
consent. The Company will give prompt written notice (after its
notification) of the taking of any action by the Members without a
meeting by less than unanimous written consent to those Members or
Member representatives who did not consent in writing to the action.
(b) The Record Date for determining Members or their
representatives entitled to consent to an action in writing without a
meeting will be the first date on which the Company is notified of a
signed written consent setting forth the action taken or proposed to be
taken.
7.7 Records. An Officer or a designated Member representative will be
responsible for maintaining the records of the Company, including keeping
minutes at the meetings of the Members and the filing of consents in the records
of the Company.
ARTICLE VIII
LIABILITY AND INDEMNIFICATION
8.1 Liability of Indemnitees.
(a) Except as provided in Section 6.5(c), no Indemnitee (as
defined below) shall be liable for Damages to the Company, any Member
or any other Person that is a party to or is otherwise bound by the
provisions of this Agreement for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in
good faith.
(b) Subject to its obligations and duties as set forth in this
Article VIII, the Board and any committee thereof may exercise any of
the powers granted to it by this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through
Officers or other agents, and neither the Board nor any committee
thereof shall be responsible for any misconduct or negligence on the
part of any such agent appointed by the Board or any committee thereof
in good faith.
(c) Any amendment, modification or repeal of this Section 8.1
or any provision hereof shall be prospective only and shall not in any
way affect the limitations on liability under this Section 8.1 as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in
whole or in
46
part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
8.2 Indemnification.
(a) To the fullest extent permitted by Law, but subject to the
limitations expressly provided in this Section 8.2, the Company shall
indemnify and hold harmless each Person from and against any and all
Damages suffered or incurred by such Person by reason of its status as
(i) a Member or any Affiliate thereof, (ii) an officer, director,
member, manager, employee, partner, agent or trustee of any Member or
any of its Affiliates, (iii) a Person serving at the request of the
Company in another Person in a similar capacity, (iv) an Officer,
Director, manager or other representative of the Company or any
Subsidiary thereof or (v) an officer, director, employee, agent or
other representative of the Partnership (or of the general partner of
the Partnership) (each indemnified Person, an "INDEMNITEE"); provided,
however, that in each case the Indemnitee acted in good faith and, to
the extent the Damages relate to the Indemnitee's status as an officer,
director, employee, agent or other representative of the Partnership
(or of the general partner of the Partnership), in the manner which
such Indemnitee reasonably believed to be in, or not opposed to, the
best interests of the Partnership. The termination of any Action,
judgment, Order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 8.2 shall be made only out of
the assets of the Company, it being agreed that the Members, in their
capacity as such, shall not be personally liable for such
indemnification nor shall they have any obligation to contribute or
loan any monies or property to the Company to enable the Company to
effectuate such indemnification. The indemnification provided by this
Section 8.2 shall be in addition to any other rights to which an
Indemnitee may be entitled under any agreement, as a matter of Law or
otherwise, both as to actions in the Indemnitee's capacity as (A) a
Member or any Affiliate thereof, (B) an officer, director, member,
manager, employee, partner, agent or trustee of any Member or any of
its Affiliates, (C) a Person serving at the request of the Company in
another Person in a similar capacity, (D) an Officer, Director or other
representative of the Company or any Subsidiary thereof or (E) an
officer, director, employee, agent or other representative of the
Partnership (or of the general partner of the Partnership), and as to
actions in any other capacity, and shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns and administrators of the Indemnitee.
(b) To the fullest extent permitted by Law, expenses
(including legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to this Section 8.2 in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such Action
upon receipt by the Company of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as authorized in this
Section 8.2.
47
(c) The Company may purchase and maintain insurance, on behalf
of such Persons as the Board shall determine, against any liability
that may be asserted against, or expense that may be incurred by, such
Person in connection with the Company's activities, regardless of
whether the Company would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(d) For purposes of this Section 8.2, the Company shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Company also imposes duties on, or otherwise involves services by,
it to the plan or participants or beneficiaries of the plan; excise
Taxes assessed on an Indemnitee with respect to an employee benefit
plan pursuant to applicable Law shall constitute "fines" within the
meaning of this Section 8.2; and action taken or omitted by it with
respect to an employee benefit plan in the performance of its duties
for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a
purpose which is in, or not opposed to, the best interests of the
Company.
(e) In no event may an Indemnitee subject any Member to
personal liability by reason of the indemnification provisions set
forth in this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 8.2 because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by Section 6.4.
(g) The provisions of this Section 8.2 are for the benefit of
the Indemnitees, their successors, permitted assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons. No amendment, modification or repeal of this Section 8.2
or any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Company, nor the obligation of the Company to indemnify any such
Indemnitee under and in accordance with the provisions of this Section
8.2 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such Actions may arise or be asserted.
Notwithstanding the foregoing, nothing herein shall limit the power or
authority of the Members to amend any provision of this Agreement
regarding indemnification and reimbursement or similar provisions
hereof.
ARTICLE IX
TAXES
9.1 Tax Returns. (a) The Company will cause to be prepared and timely
filed all necessary Tax Returns for the Company, including making the elections
described in Section 9.2. Upon written request by the Company, each Member will
furnish to the Company all pertinent information in its possession relating to
Company operations that is necessary to enable the Company's Tax Returns to be
prepared and filed. The Company shall deliver a copy of each such Tax Return to
the Members within ten days following the date on which any such Tax
48
Return is filed, together with such additional information as may be required by
the Members. The Company shall bear the costs of the preparation and filing of
its Tax Returns.
(b) The Company shall cause to be prepared and timely filed (on behalf
of the Partnership) all federal, state and local Tax Returns required to be
filed by the Partnership. The Company shall deliver a copy of each such Tax
Return to the Members within ten days following the date on which any such Tax
Return is filed, together with such additional information as may be required by
the Members.
9.2 Tax Elections. The Company will make the following elections on the
appropriate Tax Returns:
(a) to adopt the accrual method of accounting;
(b) an election pursuant to Section 754 of the Code;
(c) to elect to amortize the organizational expenses of the
Company and the start-up expenditures of the Company under Section 195
of the Code ratably over a period of sixty (60) months as permitted by
Section 709(b) of the Code; and
(d) any other election that the Company may deem appropriate
and in the best interests of the Company or Members, as the case may
be.
Neither the Company nor any Member may make an election for the Company
to be excluded from the application of the provisions of subchapter K of chapter
1 of subtitle A of the Code or any similar provisions of applicable state Law,
and no provision of this Agreement will be construed to sanction or approve such
an election.
9.3 Tax Matters Partner. The Company will select one of the Members as
the "TAX MATTERS PARTNER" of the Company pursuant to Section 6231(a)(7) of the
Code. The Tax Matters Partner will take such action as may be necessary to cause
each Member to become a "NOTICE PARTNER" within the meaning of Section 6223 of
the Code and will inform each Member of all significant matters that may come to
its attention in its capacity as Tax Matters Partner by giving notice thereof on
or before the fifth Business Day after becoming aware thereof and, within that
time, will forward to each other Member copies of all significant written
communications it may receive in that capacity. The Tax Matters Partner may not
take any action contemplated by sections 6222 through 6232 of the Code, file any
federal or material state Tax Return on behalf of the Company or the
Partnership, or settle or compromise any material claim with respect to taxes of
the Company or the Partnership without Member approval, but this sentence does
not authorize the Tax Matters Partner to take any action left to the
determination of an individual Member under sections 6222 through 6232 of the
Code. The initial Tax Matters Partner will be El Paso GP Holdco.
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
10.1 Maintenance of Books. The Company will keep books and records of
accounts and will keep minutes of the proceedings of the Board and the Members.
The books of account
49
for the Company will be maintained on an accrual basis in accordance with the
terms of this Agreement and GAAP, except that the Capital Accounts of the
Members will be maintained in accordance with Section 4.5. The accounting year
of the Company will be determined by the Board. The initial custodian of the
company records will be the Tax Matters Partner.
10.2 Financial Statements. On or before the last day of each calendar
month during the term of the Company, the Company will cause each Member to be
furnished with an operating report, a balance sheet, an income statement and a
statement of cash flows, a statement of changes in each Member's Capital
Account, an accounts receivable schedule and an accounts payable schedule for,
or as of the end of, the calendar month immediately preceding such calendar
month. On or before the last day of each March during the term of the Company,
the Company will cause each Member to be furnished with an accounts receivable
schedule, an accounts payable schedule, and audited financial statements,
including, a balance sheet, an income statement, a statement of cash flows, and
a statement of changes in each Member's Capital Account for, or as of the end
of, the immediately preceding calendar year. Annual financial statements must be
prepared in accordance with GAAP. The Company also may cause to be prepared or
delivered such other reports as it may deem, in its sole judgment, appropriate.
The Company will bear the costs of all such reports and financial statements.
10.3 Tax Statements. The Company shall use reasonable efforts to
furnish, within 30 days of the close of each taxable year of the Company,
estimated tax information reasonably required by the Members for federal and
state income tax reporting purposes.
10.4 Accounts. The Company will establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company's name with financial institutions and firms that the Board or the
Officers may determine. The Company may not commingle the Company's funds with
the funds of any other Person. All such accounts will be and remain the property
of the Company and all funds will be received, held and disbursed for the
purposes specified in this Agreement.
ARTICLE XI
BANKRUPTCY OF A MEMBER
11.1 Bankrupt Members. If any Member becomes a Bankrupt Member, the
Company, by approval of at least a majority in interest of the Members excluding
any Bankrupt Member or, if the Company does not exercise the relevant option,
the non-Bankrupt Members which desire to participate, will have the option,
exercisable by notice from the Company or the Members, as the case may be, to
the Bankrupt Member (or its representative) at any time prior to the 180th day
after receipt of notice of the occurrence of the event causing it to become a
Bankrupt Member, to buy, and, on the exercise of this option, the Bankrupt
Member or its representative will sell, its Membership Interest. The purchase
price will be an amount equal to the fair market value thereof determined by
agreement by the Bankrupt Member (or its representative) and the potential
purchaser; however, if those Persons do not agree on the fair market value on or
before the 90th day following the date of receipt by such potential purchaser of
notice of the occurrence of the event causing the Member to become a Bankrupt
Member, either such Person, by written notice to the other, may require the
determination of fair market value to be made by an investment banking firm of
nationally recognized standing specified in such notice. If the Person
50
receiving that notice objects on or before the tenth (10th) day following
receipt to the investment banking firm designated in that notice, and those
Persons otherwise fail to agree on an investment banking firm, either such
Person may petition the United States District Judge for the Southern District
of Texas then senior in active service to designate an independent appraiser,
whose determination of the independent appraiser, however designated, is final
and binding on all parties. The Bankrupt Member and the potential purchaser each
will pay one-half of the costs of the appraisal and court costs in appointing an
appraiser (if any). If the potential purchaser then elects, within ten (10) days
after the fair market value has been decided by agreement, by an investment
banking firm or by an independent appraiser, to exercise the purchase option,
the purchasing Person will pay the fair market value as so determined in cash on
closing. The payment to be made to the Bankrupt Member or its representative
pursuant to this Section 11.1, is in complete liquidation and satisfaction of
all the rights and interest of the Bankrupt Member and its representative (and
of all Persons claiming by, through, or under the Bankrupt Member and its
representative) in and in respect of the Company, including any Membership
Interest, any rights in specific Company property, and any rights against the
Company or its Subsidiaries and its Officers, agents, and representatives and
(insofar as the affairs of the Company are concerned) against the Members.
ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION
12.1 Dissolution. Subject to the provisions of Section 12.2 and any
applicable Laws, the Company will dissolve and its affairs will be wound up on
the first to occur, and only in the event of, the following events (each a
"DISSOLUTION EVENT"):
(a) the affirmative vote or consent of a majority of the
Independent Directors and the Class C Member;
(b) the consent of all of the Members; and
(c) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act.
Each Member expressly agrees that the bankruptcy or dissolution of a
Member or other event described in Section 18-801(b) of the Act that terminates
the continued membership of a Member of the Company will not, in and of itself,
cause or result in the dissolution of the Company.
12.2 Liquidation and Termination. Subject to Section 3.4, Section 3.5
and Section 7.4, upon dissolution of the Company, a representative of the
Company selected by the Board (not including any Member in Default at the time
of dissolution) will act as a liquidator or may appoint one or more Members as
liquidator ("LIQUIDATOR"). The Liquidator will proceed diligently to wind up the
affairs of the Company and make final distributions as provided herein and in
the Act. The costs of liquidation will be borne as a Company expense. Until
final distribution, the Liquidator will continue to operate the Company
properties for a reasonable period of time to allow for the sale of all or a
part of the assets thereof with all of the power and authority of the Members.
The steps to be accomplished by the Liquidator are as follows:
51
(a) as promptly as possible after dissolution and again after
final liquidation, the Liquidator will cause a proper accounting to be
made of the Company's assets, liabilities, and operations through the
last day of the calendar month in which the dissolution occurs or the
final liquidation is completed, as applicable;
(b) the Liquidator will cause any notices required by Law to
be mailed to each known creditor of and claimant against the Company in
the manner described by such Law;
(c) subject to the terms and conditions of this Agreement and
the Act (including Section 18-803 thereof), the Liquidator will
distribute the assets of the Company in the following order:
(i) the Liquidator will pay, satisfy or discharge
from Company funds all of the debts, liabilities and
obligations of the Company, including all expenses incurred in
liquidation or otherwise make adequate provision for payment
and discharge thereof (including the establishment of a cash
escrow fund or trust for contingent liabilities in such amount
and for such term as the Liquidator may reasonably determine);
provided, however, such payments will not include any Capital
Contributions described in Article IV or any other obligations
in favor of the Members created by this Agreement other than a
loan made pursuant to any provision;
(ii) the Liquidator will pay, satisfy or discharge
from Company funds all of the advances and loans (but not
Capital Contributions) made to the Company by Members, as
described in Section 4.4; and
(iii) all remaining assets of the Company will be
distributed to the Members as follows:
(A) the Liquidator may sell any or all
Company property, including to one or more of the
Members (other than any Member in Default at the time
of dissolution); provided any such sale to a Member
is made on an arms' length basis under terms which
are in the best interest of the Company and any
resulting gain or loss from each sale will be
computed and allocated to the Capital Accounts of the
Members (i) first, to the Contributing Members to the
extent that an amount equal to the Excess Amounts (as
described in Section 4.2) with respect to such
Contributing Members has not already been allocated
to such Contributing Members pursuant to Section
5.1(j), and (ii) thereafter, on a pro rata basis in
accordance with each of their respective Sharing
Ratio;
(B) with respect to all Company property
that has not been sold, the fair market value of that
property (as determined by the Liquidator using any
method of valuation as it, in good faith, deems
reasonable) will be determined and the Capital
Accounts of the Members will be adjusted to reflect
the manner in which the unrealized income,
52
gain, loss, and deduction inherent in property that
has not been reflected in the Capital Accounts
previously would be allocated among the Members
(including pursuant to Section 12.2(c)(iii)(A)
hereof) if there were a taxable disposition of that
property for the fair market value of that property
on the date of distribution; and
(C) Company property will be distributed
among the Members ratably in proportion to each
Member's Capital Account balances, as determined
after taking into account all Capital Account
adjustments for the taxable year of the Company
during which the liquidation of the Company occurs
(other than those made by reason of this clause (C)),
and in each case, those distributions will be made by
the end of the taxable year of the Company during
which the liquidation of the Company occurs (or, if
later, ninety (90) days after the date of the
liquidation);
All distributions in kind to the Members will be made subject to the
liability of each distributee for costs, expenses, and liabilities theretofore
incurred or for which the Company has committed prior to the date of termination
and those costs, expenses, and liabilities will be allocated to the distributee
pursuant to this Section 12.2. The distribution of cash and/or property to a
Member in accordance with the provisions of this Section 12.2 constitutes a
complete return to the Member of its Capital Contributions and a complete
distribution to the Member of its Membership Interest and all the Company's
property. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.
12.3 Provision for Contingent Claims.
(a) The Liquidator will make a reasonable provision to pay all
Liabilities, claims and obligations, including all contingent,
conditional or unmatured claims and obligations, actually known to the
Company but for which the identity of the claimant is unknown; and
(b) If there are insufficient assets to both pay the creditors
pursuant to Section 12.2(c)(i) and to establish the provision
contemplated by Section 12.3(a), the claims will be paid as provided
for in accordance to their priority, and, among claims of equal
priority, ratably to the extent of assets therefor.
12.4 Deficit Capital Accounts. Notwithstanding anything to the contrary
contained in this Agreement, and notwithstanding any custom or rule of Law to
the contrary, a deficit, if any, in the Capital Account of any Member resulting
from or attributable to any adjustments, allocations, losses, deductions,
distributions or similar events, including deductions and losses of the Company
(including non-cash items such as depreciation) or distributions of money
pursuant to this Agreement to all Members ratably in proportion to their
respective Sharing Ratio, upon the dissolution and winding up of the Company
will not be an asset of the Company and no such Member will be obligated to
contribute any amounts to the Company to bring the balance of such Member's
capital account to zero.
53
ARTICLE XIII
AMENDMENT OF THE AGREEMENT
13.1 Amendments to be Adopted by the Company. The appropriate Officer,
in accordance with and subject to the limitations contained in Section 6.3 and
Section 6.6 and Article VII, may amend the Certificate and this Agreement and
execute, swear to, acknowledge, deliver, file and record whatever documents may
be required to reflect:
(a) a change in the name of the Company, the location of the
principal place of business of the Company or the registered agent or
office of the Company;
(b) any change in the Members, address, Capital Account
balances, Membership Interests or Sharing Ratio as set forth on Exhibit
A;
(c) admission or substitution of Members effected in
accordance with this Agreement;
(d) a change that the Board believes is reasonable and
necessary or appropriate to qualify or continue the qualification of
the Company as a limited liability company under the Laws of any state
or foreign jurisdiction or that is necessary or advisable in the
opinion of the Company to ensure that the Company will not be taxable
as a corporation or otherwise taxed as an entity for federal income tax
purposes;
(e) a change that the Board believes is necessary or
appropriate for the Company to satisfy any requirements, conditions,
guidelines or interpretations contained in any opinion, interpretative
release, directive, Order, ruling or regulation of any Governmental
Authority (including the Act);
(f) an amendment that is necessary, in the opinion of counsel
selected by the Board, to prevent the Company or its officers from in
any manner being subjected to the provisions of the Investment Company
Act of 1940, as amended, or "PLAN ASSET" regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, whether or
not substantially similar to plan asset regulations currently applied
or proposed by the United States Department of Labor; and
(g) subject to the terms of Section 3.5, an amendment that the
Board determines to be necessary or appropriate in connection with the
authorization for issuance of any Membership Interest pursuant to
Section 3.5.
13.2 Amendment or Restatement. This Agreement may be amended or
restated only by a written instrument executed by all Members. Notwithstanding
the foregoing, each Member agrees that the Board of Directors, without the
approval of any Member, may amend any provision of this Agreement, and may
authorize any Officer to execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect
any change that is expressly permitted under this Agreement or does not
adversely affect the Members in any material respect; provided, however, that
any amendment to the following rights of Investor or its successors or Permitted
Transferees shall be deemed to materially affect the Members: (i) the right to
approve of the making of any loans and the rates of interest thereon
54
pursuant to Section 6.3(b)(vii), (ii) the consent rights pursuant to Section
6.3(a) and Section 6.3(b), (iii) the voting rights pursuant to Sections 7.1,
7.2, 7.3 and 7.4, (iv) the preferential purchase rights pursuant to Section
3.4(f), (v) the consent rights in respect of amendments and restatements of this
Agreement pursuant to Section 13.1 and this Section 13.2, (vi) the Tag-Along
rights pursuant to Section 3.10, (vii) the rights under Section 3.11 with
respect to the Highest Incentive Distribution Splits, (viii) the restrictions on
Transfer pursuant to Section 3.4, (ix) the rights under Section 3.12 with
respect to a Change in Member Control, and (x) the distribution and allocation
provisions of Article V.
ARTICLE XIV
CERTIFICATED MEMBERSHIP INTERESTS
14.1 Membership Interest Certificates. (a) Certificates ("MEMBERSHIP
INTEREST CERTIFICATES") evidencing the Membership Interests shall be in the form
attached as Exhibit C. The Company shall issue to each Member a Membership
Interest Certificate certifying its Membership Interest (and the class and
Sharing Ratio of such Membership Interest) held by such Member. Membership
Interest Certificates shall be consecutively numbered and shall be entered in
the books and records of the Company as they are issued and shall exhibit the
holder's name, and each Membership Interest Certificate shall bear a restrictive
legend as required in Section 14.2 below.
(b) The Company shall keep or cause to be kept on behalf of
the Company a register (the "REGISTER") that will provide for the
registration and transfer of Membership Interests. The Company shall
not recognize Transfers of Membership Interests unless the same are
effected in compliance with Section 3.4 and in the manner described in
this Section 14.1. Upon surrender for registration of Transfer of any
Membership Interest Certificate, and subject to the provisions of
Section 14.1(c), the Company shall issue, in the name of the holder or
the designated Transferee, as required pursuant to the Record Holder's
instructions, one or more new Membership Interest Certificates
evidencing the same class and the appropriate aggregate Sharing Ratio
of the Membership Interest so Transferred or retained.
(c) The Company shall not recognize any Transfer of a
Membership Interest until the Membership Interest Certificate
evidencing such Membership Interest is surrendered to the Company for
registration of Transfer and the requirements of Section 3.4 have been
satisfied. The Company may require the payment of a sum sufficient to
cover any Tax or other governmental charge that may be imposed with
respect thereto.
(d) For purposes of providing for Transfer of, perfecting a
Security Interest in, and other relevant matters related to, a
Membership Interest, the Membership Interest will be deemed to be a
"security" subject to the rules set forth in Chapters 8 and 9 of the
Texas Uniform Commercial Code and any similar Uniform Commercial Code
provision adopted by the States of New York or Delaware or any other
relevant jurisdiction.
14.2 Restrictive Legend. In the absence of a more restrictive legend,
any Membership Interest Certificate will be stamped or typed in a conspicuous
place with the following legend:
55
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, AS IT EXISTS FROM TIME
TO TIME, WHICH RESTRICTS ANY SALE, ASSIGNMENT, TRANSFER, CONVEYANCE,
ENCUMBRANCE, PLEDGE OR OTHER TRANSFER OR ALIENATION (WITH OR WITHOUT
CONSIDERATION) OF SUCH MEMBERSHIP INTEREST. THE COMPANY WILL FURNISH TO THE
RECORD HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS, A COPY OF SUCH LIMITED LIABILITY
COMPANY AGREEMENT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
14.3 Lost, Stolen or Destroyed Certificates. The Company may issue a
new Membership Interest Certificate or certificates in place of any certificate
or certificates theretofore issued by the Company alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the Person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new Membership Interest Certificate or certificates,
the Company may, as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it will require
and/or to give the Company a bond in such sum as it may direct as indemnity
against any claim that may be made against the Company with respect to the
certificate alleged to have been lost, stolen or destroyed.
14.4 Registered Holders. The Company will be entitled to recognize the
exclusive right of a Record Holder as the owner of the indicated Membership
Interest and will not be bound to recognize any equitable or other claim to or
interest in such Membership Interest on the part of any Person other than such
Record Holder, whether or not it will have express or other notice thereof,
except as otherwise provided by Law.
ARTICLE XV
GENERAL PROVISIONS
15.1 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that a Member owes the COMPANY under this Agreement shall be deducted
from that sum before payment.
15.2 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder will be deemed duly given if (and then three
(3) Business Days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the Company as set forth
below:
56
GulfTerra Energy Company, L.L.C.
Attn: President
Four Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx, 00000
Tel: (000) 000-0000
With a copy to:
El Paso Corporation
Attn: General Counsel
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Tel: (000) 000-0000
or to any Member at the address specified for such Member on Exhibit A. The
Company, or any Member, may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication will be deemed to have
been duly given unless and until it actually is received by the intended
recipient. The Company, and any Member, may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the Company and the other Members notice in the manner
herein set forth.
15.3 Entire Agreement. This Agreement, together with the Exhibits
hereto and the certificates, documents, instruments and writings that are
delivered pursuant hereto, constitutes the entire agreement and understanding of
the Members in respect of its subject matter and supersedes all prior
understandings, agreements, or representations by or among the Members, written
or oral, to the extent they relate in any way to the subject matter hereof.
Except for Indemnitees with respect to Article VIII, there are no third party
beneficiaries having rights under or with respect to this Agreement.
15.4 Successors. All of the terms, agreements, covenants,
representations, warranties, and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the Members and their
respective successors.
15.5 Specific Performance. Each Member acknowledges and agrees that the
other Members would be damaged irreparably if any provision of this Agreement is
not performed in accordance with its specific terms or is otherwise Breached.
Accordingly, each Member agrees that the other Members will be entitled to an
injunction or injunctions to prevent Breaches of the provisions of this
Agreement and to enforce specifically this Agreement and its terms and
provisions in any Action instituted in any court of the United States or any
state thereof having jurisdiction over the Members and the matter, in addition
to any other remedy to which they may be entitled, at Law or in equity.
15.6 Time. Time is of the essence in the performance of this Agreement.
57
15.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
15.8 Headings. The article and Section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.
15.9 Governing Law. This Agreement and the performance of the
transactions and obligations of the Members hereunder will be governed by and
construed in accordance with the Laws of the State of Delaware, without giving
effect to any choice of Law principles.
15.10 Expenses. Except as otherwise expressly provided in this
Agreement, each of the Company and the Members will bear its own costs and
expenses incurred in connection with the preparation, execution and performance
of this Agreement including all fees and expenses of agents, representatives,
financial advisors, legal counsel and accountants.
15.11 Construction. The Members have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Members and no presumption or burden of proof will arise favoring
or disfavoring any Member because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local, or foreign Law will be
deemed also to refer to the Law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The terms
"herein," "hereby," "hereunder," "hereof," "hereinafter" and other equivalent
words refer to this Agreement in its entirety and not solely to the particular
portion of the Agreement in which such word is used. The words "including,"
"include" and "includes" will be deemed to be followed by "without limitation."
The Members intend that each representation, warranty, and covenant contained
herein will have independent significance. If any Member has Breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) that the
Member has not breached will not detract from or mitigate the fact that the
Member is in Breach of the first representation, warranty, or covenant.
15.12 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits
identified in this Agreement are incorporated herein by reference and made a
part hereof.
15.13 Effect of Waiver or Consent. A waiver or consent, express or
implied, to or of any Breach by any Person in the performance by that Person of
its obligations with respect to the Company is not a consent or waiver to or of
any other Breach in the performance by that Person of the same or any other
obligations of that Person with respect to the Company. Failure on the part of a
Person to complain of any act of any other Person or to declare any Person in
Breach with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that Breach until the applicable statute-of-limitations period has
run.
58
15.14 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member will execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and any actions related therefor, or contemplated thereby.
15.15 Waiver of Certain Rights. Except as otherwise expressly provided
herein, each Member irrevocably waives any right it may have to maintain any
action for dissolution of the Company or for partition of the property of the
Company.
15.16 Notice to Members of Provisions of this Agreement. By executing
this Agreement, each party hereto acknowledges that it has actual notice of (a)
all of the provisions of this Agreement, and (b) all of the provisions of the
Certificate. Each party hereto hereby agrees that this Agreement shall
constitute adequate notice of all such provisions.
15.17 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts will be construed together and constitute the same
instrument.
[The remainder of this page is intentionally left blank; the next
page is the signature page.]
59
IN WITNESS WHEREOF, El Paso GP Holdco and the Investor have executed
this Agreement as of the date first above written.
EL PASO GP HOLDCO:
GULFTERRA GP HOLDING COMPANY
By: /s/ XXXX XXXXXX
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
THE INVESTOR:
ENTERPRISE PRODUCTS GTM, LLC
By: Enterprise Products Operating L.P.,
its sole member
By: Enterprise Products OLPGP, Inc.,
general partner of Enterprise Products
Operating L.P.
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
60
EXHIBIT A
NAME AND ADDRESS CAPITAL ACCOUNT MEMBERSHIP INTEREST
OF EACH MEMBER BALANCE AND SHARING RATIO
----------------------------------------------------------------------------------
CLASS B MEMBER: $ 425,000,000 Class B Membership
Interest: 50.0 %
GulfTerra GP Holding Company*+
El Paso Building
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxx, III
----------------------------------------------------------------------------------
CLASS C MEMBER: $ 425,000,000 Class C Membership
Interest: 50.0%
Enterprise Products GTM, LLC.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
Attn: Chief Financial Officer
----------------------------------------------------------------------------------
TOTAL MEMBERSHIP INTEREST: 100%
----------------------------------------------------------------------------------
--------
* Tax Matters Partner
+ Managing Member
1
EXHIBIT B
MATTERS CONCERNING THE BOARD
SECTION 1. THIS EXHIBIT. This Exhibit B shall constitute part of the
Agreement to which it is attached, but may be amended, supplemented, modified or
replaced from time to time by the Managing Member or by the affirmative vote of
a majority of the entire Board. Terms not otherwise defined herein shall have
the meanings attributed to such term in the Agreement.
SECTION 2. ELECTION; TERM OF OFFICE; RESIGNATION; VACANCIES. Each
Director shall hold office until the annual meeting of the Members next
succeeding his election and until his successor is elected and qualified or
until his earlier resignation or removal. Any Director may resign at any time
upon written notice to the Board, the Chairman of the Board, to the Chief
Executive Officer or to any other Officer. Such resignation shall take effect at
the time specified therein, and unless otherwise specified therein no acceptance
of such resignation shall be necessary to make it effective. Unless otherwise
provided in the Agreement or in this Exhibit B, vacancies and newly created
directorships resulting from any increase in the authorized number of Directors
or from any other cause may be filled by a majority of the Directors then in
office, although less than a quorum.
SECTION 3. REMOVALS. Any Director may be removed, with or without
cause, by the Managing Member at any time, and the vacancy in the Board caused
by any such removal may be filled by the Managing Member or by the Board in
accordance with Section 2 of this Exhibit B.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board may be held
at such places within or without the State of Delaware and at such times as the
Board may from time to time determine, and if so determined notice thereof need
not be given.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board may be held
at any time or place within or without the State of Delaware whenever called by
the Chairman of the Board, the Chief Executive Officer, the President or by any
two Directors. Reasonable notice thereof shall be given by the person or persons
calling the meeting.
SECTION 6. TELEPHONIC MEETINGS PERMITTED. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board or
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
SECTION 7. QUORUM; VOTE REQUIRED FOR ACTION. At all meetings of the
Board, Directors constituting a majority of the entire Board, of which
aforementioned majority the Independent Directors shall be a majority, shall
constitute a quorum for the transaction of business. The vote of a majority of
the Directors present at any meeting at which a quorum is present shall be the
act of the Board unless this Exhibit B or the Agreement shall require a vote
1
of a greater number. If at any meeting of the Board a quorum shall not be
present, the Directors present may adjourn the meeting from time to time until a
quorum shall attend.
SECTION 9. WRITTEN CONSENT OF DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board, or of any committee thereof,
may be taken without a meeting if all members of the Board or of such committee,
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
SECTION 10. ADVISORY DIRECTORS. The Board may, from time to time, elect
one or more Advisory Directors, each of whom shall serve until the first meeting
of the Board next following the annual meeting of the Members or until his
earlier resignation or removal by the Board. Advisory Directors shall serve as
advisors and consultants to the Board, shall be invited to attend all meetings
of the Board and may participate in all discussions occurring during such
meetings. Advisory Directors shall not be privileged to vote on matters brought
before the Board and shall not be counted for the purpose of determining whether
a quorum of the Board is present.
SECTION 11. COMPENSATION. Each Director who is not a full-time salaried
Officer of the Company or any of its Affiliates, or of the Partnership, when
authorized by resolution of the Board, may receive as a Director a stated salary
or an annual retainer, and any other benefits as the Board may determine, and in
addition may be allowed a fixed fee or reimbursement of his or her reasonable
expenses for attendance at each regular or special meeting of the Board or any
committee thereof.
SECTION 12. COMMITTEES OF THE BOARD. The Board may designate one or
more committees (with such names as may be determined from time to time by the
Board), including the Conflicts and Audit Committee and the Governance and
Compensation Committee, each such committee to consist of one or more Directors.
The Board may also designate from time to time Pricing Committees to determine
the final terms of transactions approved by the Board, which committees may
consist of one or more Directors or Officers. The Board may designate one or
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Vacancies in any such
committee shall be filled by the Board, but in the absence or disqualification
of a member of such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another Director to act at the meeting in place
of any such absent or disqualified member. Any such committee will have and may
exercise all the powers and authority provided in the resolution establishing
such committee, subject to any limitations contained in the Agreement or in the
Act.
SECTION 13. COMMITTEE RULES. Unless the Board otherwise provides, each
committee may make, alter or repeal rules for the conduct of its business. In
the absence of a Board resolution or a provision in the committee's rules to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum is then present shall be the act of such committee, and in other respects
such committee
2
shall conduct its business in the same manner as the Board conducts its business
pursuant to this Agreement.
SECTION 14. OFFICERS.
(a) GENERAL PROVISIONS. The Board may elect or appoint any person(s) as
the Company's and/or the Partnership's officers (the "OFFICERS") to act for the
Company and/or the Partnership (as appropriate) and to delegate to such Officers
such of the powers as are granted to the Board under this Agreement. Any
decision or act of an Officer within the scope of the Officer's designated or
delegated authority will control and shall bind the Company and/or the
Partnership (as appropriate) and any business entity for which the Company
and/or the Partnership (as appropriate) exercises direct or indirect executory
authority. The Officers may have such titles as the Board deems appropriate,
which may include Chairman of the Board, President, Chief Executive Officer,
Executive Vice President, Vice President, Chief Operating Officer, Chief
Financial Officer, Treasurer, Controller or Secretary. A Director may be an
Officer. Unless the authority of an Officer is limited by the Board, any Officer
so appointed shall have the same authority to act for the Company and/or the
Partnership (as appropriate) as a corresponding officer of a Delaware
corporation would have to act for a Delaware corporation in the absence of a
specific delegation of authority. In addition, the Chairman of the Board, the
Chief Executive Officer, the President, the Vice Presidents, the Secretary, the
Treasurer and the Controller shall have those powers and/or duties given to it
by Sections 14(b) - (h) of this Exhibit B (as applicable). Each Officer will
hold office until his or her respective successor is chosen and qualify or until
his or her earlier death, resignation or removal. Any Officer elected or
appointed by the Board may be removed at any time by the Board.
(b) CHAIRMAN OF THE BOARD. The Chairman of the Board shall, when
present, preside at all meetings of the Members and the Board; have authority to
call special meetings of the Members and of the Board; have authority to sign
and acknowledge in the name and on behalf of the Partnership or the Company (as
applicable) all stock certificates, contracts or other documents and instruments
except where the signing thereof shall be expressly delegated to some other
officer or agent by the Board or required by Law to be otherwise signed or
executed and, unless otherwise provided by Law or by the Board may authorize any
officer, employee or agent of the Partnership or the Company (as applicable) to
sign, execute and acknowledge in his place and stead all such documents and
instruments; he shall fix the compensation of officers of the Partnership or the
Company (as applicable), other than his own compensation, and the compensation
of officers of its principal operating subsidiaries reporting directly to him
unless such authority is otherwise reserved to the Board or a committee thereof;
and he shall approve proposed employee compensation and benefit plans of
subsidiary companies not involving the issuance or purchase of capital stock of
the Partnership or the Company (as applicable). He shall have the power to
appoint and remove any Vice President, Controller, General Counsel, Secretary or
Treasurer of the Partnership or the Company (as applicable). He shall also have
the power to appoint and remove such associate or assistant officers of the
Company with such titles and duties as he may from time to time deem necessary
or appropriate. He shall have such other powers and perform such other duties as
from time to time may be assigned to him by the Board or the Executive Committee
of the Board.
3
(c) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall assist
the Chairman of the Board in the performance of his duties and shall perform
those duties assigned to him in other provisions of this Agreement and such
other duties as may from time to time be assigned to him by the Board or the
Chairman of the Board. In the absence or disability of the Chairman of the
Board, or at his request, the Chief Executive Officer may preside at any meeting
of the Members or of the Board and, in such circumstances, may exercise any of
the other powers or perform any of the other duties of the Chairman of the
Board. Subject to delegations by the Chairman of the Board pursuant to Section
14(b) of this Exhibit B, the Chief Executive Officer may sign or execute, in the
name of the Partnership or the Company (as applicable), all stock certificates,
deeds, mortgages, bonds, contracts or other documents and instruments, except in
cases where the signing or execution thereof shall be required by Law or shall
have been expressly delegated by the Board or this Agreement to some other
officer or agent of the Partnership or the Company (as applicable).
(d) PRESIDENT. The President shall have general control of the
business, affairs, operations and property of the Partnership or the Company (as
applicable), subject to the Chairman of the Board, the Chief Executive Officer
and the Board. He may sign or execute, in the name of the Partnership or the
Company (as applicable), all deeds, mortgages, bonds, contracts or other
undertakings or instruments, except in cases where the signing or execution
thereof shall have been expressly delegated by the Chairman of the Board or the
Board to some other officer or agent of the Partnership or the Company (as
applicable). He shall have and may exercise such powers and perform such duties
as may be provided by Law or as are incident to the office of President of a
corporation and such other duties as are assigned by this Agreement and as may
from time to time be assigned by the Chairman of the Board, the Chief Executive
Officer of the Board.
(e) VICE PRESIDENTS. Each Executive Vice President, Senior Vice
President, Vice President and Assistant Vice President shall have such powers
and perform such duties as may be provided by Law or as may from time to time be
assigned to him, either generally or in specific instances, by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President.
Any Executive Vice President or Senior Vice President may perform any
of the duties or exercise any of the powers of the Chairman of the Board, the
Chief Executive Officer or the President at the request of, or in the absence or
disability of, the Chairman of the Board, the Chief Executive Officer or the
President or otherwise as occasion may require in the administration of the
business and affairs of the Partnership or the Company (as applicable).
Each Executive Vice President, Senior Vice President, Vice President
and Assistant Vice President shall have authority to sign or execute all deeds,
mortgages, bonds, contracts or other instruments on behalf of the Partnership or
the Company (as applicable), except in cases where the signing or execution
thereof shall have been expressly delegated by the Board or this Agreement to
some other officer or agent of the Partnership or the Company (as applicable).
(f) SECRETARY. The Secretary shall keep the minutes of meetings of the
Members and of the Board in books provided for the purpose; he shall see that
all notices are duly given in accordance with the provisions of this Agreement,
or as required by Law; he shall be custodian
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of the records and of the corporate seal or seals of the Partnership or the
Company (as applicable); he shall see that the corporate seal is affixed to all
documents requiring same, the execution of which, on behalf of the Partnership
or the Company (as applicable), under its seal is duly authorized, and when said
seal is so affixed he may attest same; and, in general, he shall perform all
duties incident to the office of the secretary of a corporation, and such other
duties as from time to time may be assigned to him by the Board, the Chairman of
the Board, the Chief Executive Officer or the President or as may be provided by
Law. Any Assistant Secretary may perform any of the duties or exercise any of
the powers of the Secretary at the request of, or in the absence or disability
of, the Secretary or otherwise as occasion may require in the administration of
the business and affairs of the Partnership or the Company (as applicable).
(g) TREASURER. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Partnership or the
Company (as applicable), and shall deposit, or cause to be deposited, in the
name of the Partnership or the Company (as applicable), all moneys or other
valuable effects in such banks, trust companies or other depositories as shall,
from time to time, be selected by or under authority of the Board; if required
by the Board, he shall give a bond for the faithful discharge of his duties,
with such surety or sureties as the Board may determine; he shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Company and shall render to the Chairman of the Board, the Chief
Executive Officer, the President and the Board, whenever requested, an account
of the financial condition of the Partnership or the Company (as applicable);
and, in general, he shall perform all the duties incident to the office of
treasurer of a corporation, and such other duties as may be assigned to him by
the Board, the Chairman of the Board, the Chief Executive Officer or the
President or as may be provided by Law.
(h) CONTROLLER. The Controller shall be the chief accounting officer of
the Partnership or the Company (as applicable). He shall keep full and accurate
accounts of the assets, liabilities, commitments, receipts, disbursements and
other financial transactions of the Partnership or the Company (as applicable);
shall cause regular audits of the books and records of account of the Company
and supervise the preparation of the Partnership's or the Company's (as
applicable) financial statements; and, in general, he shall perform the duties
incident to the office of controller of a corporation and such other duties as
may be assigned to him by the Board, the Chairman of the Board, the Chief
Executive Officer or the President or as may be provided by Law. If no
Controller is elected by the Board, the Treasurer shall perform the duties of
the office of controller.
SECTION 15. FISCAL YEAR. The fiscal year of the Company shall end on
the 31st day of December in each year, or on such other day as may be fixed from
time to time by the Board.
SECTION 16. WAIVER OF NOTICES. Whenever notice is required to be given
by Law or under this Agreement, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Members, the Board or any committee thereof
need be specified in any written waiver of notice.
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EXHIBIT C
CERTIFICATE EVIDENCING MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY
NUMBER MEMBERSHIP INTEREST
[CLASS B]
GULFTERRA ENERGY COMPANY, L.L.C. [CLASS C]
[SHARING RATIO: ___%]
A LIMITED LIABILITY COMPANY UNDER THE
LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT _____________________________ is the owner of a [Class B]
[Class C] Membership Interest (the "MEMBERSHIP INTEREST") in GulfTerra Energy
Company L.L.C. (hereinafter referred to as the "COMPANY"), which includes a
Sharing Ratio of __% (as defined in the Agreement (as defined below),
transferable on the books of the Company by the holder hereof in person or by
duly authorized attorney upon surrender of this certificate (the "MEMBERSHIP
INTEREST CERTIFICATE") properly endorsed. The designations, preferences and
relative participating, optional or other special rights, powers and duties of
the Membership Interest are set forth in the Second Amended and Restated Limited
Liability Company Agreement of the Company, as amended, supplemented or restated
from time to time (the "AGREEMENT") and this Membership Interest Certificate,
and the Membership Interest represented hereby is issued and shall in all
respects be subject to all of the provisions of the Agreement. Copies of the
Agreement are on file at, and will be furnished without charge on delivery of
written request to the Company at, the principal office of the Company located
at Four Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000. Capitalized terms used but not
defined herein shall have the meaning given them in the Agreement.
The holder hereof, by accepting this Membership Interest Certificate, is deemed
to have (i) requested admission as, and agreed to become, a Member of the
Company and to have agreed to comply with and be bound by and to have executed
the Agreement, (ii) represented and warranted that the holder has all right,
power and authority and, if an individual, the capacity necessary to enter into
the Agreement, and (iii) made the waivers and given the consents and approvals
contained in the Agreement.
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
LIMITED LIABILITY AGREEMENT OF THE COMPANY, AS IT EXISTS FROM TIME TO TIME,
WHICH RESTRICTS ANY SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, ENCUMBRANCE, PLEDGE
OR OTHER TRANSFER OR ALIENATION (WITH OR WITHOUT CONSIDERATION) OF SUCH
MEMBERSHIP INTEREST. THE COMPANY WILL FURNISH TO THE RECORD HOLDER OF THIS
CERTIFICATE, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS, A COPY OF SUCH LIMITED LIABILITY AGREEMENT. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
Witness the signature of the duly authorized representative of the Company.
GULFTERRA ENERGY COMPANY, L.L.C.
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Dated: _______________, ____
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GULFTERRA ENERGY COMPANY, L.L.C.
The Company will furnish without charge to each Member who so requests a
statement of the designations, preferences and relative participating, optional
or other special rights, powers and duties relating to the applicable class of
Membership Interest. Any such request should be made to the Secretary of the
Company at its principal place of business.
For Value Received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
--------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
POSTAL ZIP CODE, OF ASSIGNEE)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
of the Membership Interest represented by the within Membership Interest
Certificate, and do hereby irrevocably constitute and appoint
__________________________ Attorney to transfer said Membership Interest on the
books of the within-named Company with full power of substitution in the
premises.
Dated:___________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
SIGNATURE(s) GUARANTEED:
-------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
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APPENDIX A
ACKNOWLEDGMENT AND ACCEPTANCE AGREEMENT
This
Acknowledgment and Acceptance Agreement, dated as of , 200 (the
"AGREEMENT"), is executed by (the "TRANSFEREE") and by ___________ (the
"TRANSFEROR") in accordance with the provisions of the Second Amended and
Restated Limited Liability Company Agreement of GulfTerra Energy Company,
L.L.C., a Delaware limited liability company (the "COMPANY"), dated as of
December [___], 2003, as amended from time to time (the "LLC AGREEMENT"), to
acknowledge its (a) receipt of a Class Membership Interest (the "MEMBERSHIP
INTEREST") of the Company, representing an initial Sharing Ratio of %, which
such Membership Interest has been transferred by the Transferor to the
Transferee pursuant to that certain , dated and (b) review and acceptance of the
terms and conditions of the LLC Agreement. The Transferor retains a Class __
Membership Interest with a Sharing Ratio of ___% as a result of the transfer
described above. Capitalized terms used herein without definition are defined in
the LLC Agreement and are used herein with the same meanings set forth therein.
By the execution of this Agreement, the Transferee agrees as follows:
1. Acknowledgment. The Transferee acknowledges that: (a) it has
received and reviewed the LLC Agreement, and (b) it is acquiring the Membership
Interest of the Company subject to the terms and conditions of the LLC
Agreement.
2. Agreement. The Transferee (a) agrees to become a party to and be
bound by the LLC Agreement with respect to the Membership Interest acquired by
it and (b) agrees, with respect to itself, that the representations and
warranties set forth in Section 3.3 of the LLC Agreement are true and complete
as of the date hereof; provided, that the agreement of the Transferee to become
a party to the LLC Agreement shall not constitute its admission as a Class
Member unless and until it is duly admitted as a Class Member by the Company in
accordance with the terms of the LLC Agreement.
3. Notice. Any notice required or permitted by the LLC Agreement shall
be given to the Transferee at the address listed beneath its signature below.
By execution of this Agreement, the Transferor and Transferee represent
and warrant that the Transfer of the Membership Interest was made in accordance
with all applicable Laws, including the Act, the Securities Act and state
securities Laws and the terms and conditions of the LLC Agreement.
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EXECUTED AND DATED on this ______ day of ________________________, 200_____.
Transferor: Transferee:
---------------------------- -----------------------------
By: By:
--------------------------------- --------------------------------------
Name: Name:
------------------------------- ------------------------------------
Title: Title:
------------------------------ -----------------------------------
Address:
---------------------------------
------------------------------------------
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