EXHIBIT 10.D
MASTER SETTLEMENT AGREEMENT
This MASTER SETTLEMENT Agreement is made and entered into as of
June 24, 2003, by and between, on the one hand, El Paso Corporation, El Paso
Natural Gas Company, and El Paso Merchant Energy, L.P.; and, on the other hand,
the Attorney General of the State of California, the Governor of the State of
California, the California Public Utilities Commission, the California
Department of Water Resources, the California Energy Oversight Board, the
Attorney General of the State of Washington, the Attorney General of the State
of Oregon, the Attorney General of the State of Nevada, Pacific Gas & Electric
Company, Southern California Edison Company, the City of Los Angeles, the City
of Long Beach, and classes consisting of all individuals and entities in
California that purchased natural gas and/or electricity for use and not for
resale or generation of electricity for the purpose of resale, between September
1, 1996 and March 20, 2003, inclusive, represented by class representatives
Continental Forge Company, Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxx X. Xxxxxx, United
Church Retirement Homes of Long Beach, Inc., doing business as Plymouth West,
Long Beach Brethren Manor, Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx
Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx
Xxxxxx, SierraPine, Ltd., Xxxx Xxxxxx and Xxxxxxxx Xxxxxx, Xxxx W.H.K. Xxxxxxx,
and Xxxx Xxxxxxxxxx.
1. DEFINITIONS.
The following terms with initial capital letters, which are in addition
to other terms with initial capital letters defined in the body of this
Agreement or by the context in which they appear in this Agreement, have the
following meanings when used in this Agreement:
1.1 "AB1X" means Assembly Xxxx 1 of the 2001-02 First Extraordinary
Session, which amended the California Water Code by adding Division 27,
authorizing the CDWR to, among other things, enter into contracts with energy
suppliers.
1.2 "Acceptable Collateral" means (a) any Letter of Credit, (b) any Oil
& Gas Collateral, or (c) any Other Collateral.
1.3 "Actions" means, collectively, the civil actions, class actions,
attorney general investigations, and FERC proceedings described in Paragraph 2
of this Agreement.
1.4 "Active FERC Parties" means, collectively, CPUC, CEOB, CDWR,
Edison, and PG&E, and their respective successors and assigns. Each of the
Active FERC Parties may be individually referred to herein as an "Active FERC
Party."
1.5 "Additional Payees" means the payees of any Additional Payments.
1.6 "Additional Payments" means any payments to be made by the El Paso
Settling Parties to any persons which the El Paso Settling Parties have agreed
in writing with such persons shall be secured by the Collateral, but only if
approved in writing by the Designated Representative.
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1.7 "Administrator" has the meaning given to it in Paragraph 8.6(b) of
this Agreement.
1.8 "Affiliates" means, (a) with respect to a specified Person (other
than Edison), any other Person (i) that, as of March 20, 2003, directly, or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with the specified Person, (ii) as of March 20, 2003, at
least 51% of the Equity Interests of which are owned, legally or beneficially,
by the specified Person directly, or indirectly through one or more
intermediaries or (iii) is a predecessor, successor or assign (including by
merger or other operation of law) of such specified Person or any other
applicable Person described in clauses 1.8(a)(i) or (ii) above; and (b) with
respect to Edison, has the same meaning as the term "Subsidiaries," as defined
in Paragraph 1.114. For purposes of this Agreement "beneficial ownership" shall
have the meaning set forth in Rule 13d-3(a) as currently promulgated under the
Securities Exchange Act of 1934, as amended.
1.9 "AG" means the Attorney General of California and the People of the
State of California, by and through the Attorney General, Xxxx Xxxxxxx.
1.10 "AG 206 Complaint" has the meaning given to it in Paragraph 2.18
of this Agreement.
1.11 "AG Subpoena" has the meaning given to it in Paragraph 2.2 of this
Agreement.
1.12 "AG Investigation" has the meaning given to it in Paragraph 2.2 of
this Agreement.
1.13 "Agreement" means this Master Settlement Agreement and any
amendments or modifications to this Master Settlement Agreement that are
approved in writing in accordance with the terms of Paragraph 12.2 hereof.
1.14 "Allocation Agreement" means that certain agreement by and among
the Settling Claimants pursuant to which the Settling Claimants, among other
things, address how the Consideration shall be allocated among the Settling
Claimants.
1.15 "AP Portion" has the meaning given to it in Paragraph 8.3(a) of
this Agreement.
1.16 "Bankruptcy Code" mean the United State Bankruptcy Code, as
codified at 11 U.S.C. Section 101 et seq., as the same may be amended from time
to time, and any successor to Title 11 of the United States Code hereinafter
enacted into law.
1.17 "Bankruptcy Court" means the United States Bankruptcy Court for
the Northern District of California, San Francisco Division.
1.18 "Business Day" means any day other than a Saturday, Sunday, or
legal holiday in the State of California in which state government is not
generally open for business to the public.
1.19 "Business Entity" means a partnership, limited partnership,
limited liability partnership, corporation (including a business trust), limited
liability company, unlimited liability
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company, joint stock company, trust, unincorporated association, joint venture
or other entity or organization of any type, including the Settlement Fund.
1.20 "CAISO" means the California Independent System Operator
Corporation.
1.21 "California Executive" means the Governor of the State of
California, acting on behalf of the agencies, departments, subdivisions, boards,
and commissions of the executive branch of the State of California, including,
without limitation, CDWR. California Executive shall not include the CPUC or any
other body created by the California Constitution.
1.22 "Cal PX" means the California Power Exchange.
1.23 "Capacity Allocation Proceeding" means the consolidated
proceedings at the FERC in Docket Nos. RP00-336-000, et al.
1.24 "CDWR" means the State of California Department of Water
Resources, including without limitation, the California Energy Resources
Scheduling Division, and its successors and/or assigns.
1.25 "CEOB" means the California Electricity Oversight Board.
1.26 "Civil Actions" means, collectively, the civil actions identified
in the following Paragraphs: 2.7 (City of Los Angeles Action); 2.8 (Long Beach);
2.11 (Nevada Action), and 2.12 (Xxxxxxxxxx Action).
1.27 "Claim" means any (a) right to payment, whether or not such right
is reduced to a judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, (b)
right to an equitable remedy for breach of performance if such breach gives rise
to a right of payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured, and/or (c) right granted by statute,
regulation or order of any state or federal agency.
1.28 "Class" means all individuals and entities in California that
purchased natural gas and/or electricity for use and not for resale or
generation of electricity for the purpose of resale, between September 1, 1996
and March 20, 2003, inclusive. Excluded from the Class are the defendants in the
Class Actions, the defendants' predecessors, affiliates, subsidiaries, officers
and directors, federal agencies, state agencies, cities, counties and other
municipalities, any and all judges and justices assigned to hear any aspect of
the Class Actions, along with their spouses and any minor children residing in
their households, and any persons within the third degree of relationship of any
judge or justice assigned to hear any aspect of the Class Actions. Also excluded
from the Class are the Counties of Los Angeles and San Bernardino, the Cities of
Long Beach, Upland, Xxxxxx, and Xxxxxx City, the California Dairies Plaintiffs,
Dry Creek Corporation, Xxxxx Glass Company, World Oil Corporation, and Xxxxxxxxx
Oil Co.
1.29 "Class Actions" means, collectively, the Continental Forge, Xxxx
Xxxxxxx, Xxxx W.H.K. Phillip, Berg, Long Beach, and Sweetie's Actions (as
defined below in Paragraphs 2.3, 2.4, 2.5, 2.6, 2.8, and 2.9, respectively).
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1.30 "Class Action Court" means the court in which the Class Actions
are pending, i.e., the California Superior Court for the County of San Diego.
1.31 "Class Counsel" means, subject to appointment by the Class Action
Court as counsel for the Class, the law firms of Xxxxxxxx & Rice, P.C.; Xxxxx,
Xxxxxx & Xxxxx, P.C.; Xxxxxxxx, Xxxxxxxx & Lack, P.C.; Girardi & Xxxxx; Xxxxxx,
Xxxxxxx & Xxxxxx, LLP; Lieff, Cabraser, Xxxxxxx & Xxxxxxxxx LLP; M. Xxxxx
XxXxxxx; X'Xxxxxxx & Xxxxxxxx LLP; Xxxxxxx X. Xxxxx; Xxxxxxx X. Xxxxxxxxx; and
Xxxxxxx X. Xxxxxx.
1.32 "Class Plaintiffs" means the plaintiffs in the Class Actions.
1.33 "Closing" has the meaning given to it in Paragraph 3.1 of this
Agreement.
1.34 "Collateral" means any and all assets of the El Paso Pledgors
given as of the Effective Date or from time to time thereafter as security by
the El Paso Pledgors to the Collateral Agent pursuant to the terms of a Security
Document to secure the Secured Obligations.
1.35 "Collateral Agent" means any Person from time to time selected by
the Designated Representative acceptable to El Paso Corporation (whose consent
shall not be unreasonably withheld, conditioned or delayed) to act in such
capacity under the Security Documents, and any successor thereto, provided that
if, under any applicable law, any of the Collateral may not be held on behalf of
the Settlement Fund by an agent, for purposes of that Collateral the Settlement
Fund may act as and shall be deemed to be the Collateral Agent.
1.36 "Compliance Certificate" has the meaning given to it in Paragraph
8.3(b) of this Agreement.
1.37 "Compliance Program" means the antitrust compliance program
described in Paragraph 4.1(a) of this Agreement.
1.38 "Consideration" means, collectively, the consideration agreed to
be given by El Paso to the Settling Claimants and/or the Settlement Fund (of
which the Settling Claimants hold 100% of the beneficial interests) pursuant to
the terms of Paragraph 4.1 of this Agreement.
1.39 "Control" means the possession, directly, or indirectly through
one or more intermediaries, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. Without limiting the generality of the
foregoing, a Person shall be deemed to be Controlled by another Person if such
other Person possesses directly, or indirectly through one or more
intermediaries, legal or beneficial ownership of (a) at least 51% of the Equity
Interests having power to elect, designate or otherwise cause the designation of
the board of directors, managing partners or the equivalent of such Person, or
(b) at least 51% of the Equity Interests of such Person. "Controlling" and
"Controlled" have meanings correlative thereto.
1.40 "CPUC" means the California Public Utilities Commission or its
successor.
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1.41 "CPUC 241 Complaint" means the complaint filed by the CPUC at the
FERC on April 4, 2000, in Docket No. RP00-241-000.
1.42 "CPUC and CEOB 206 Complaints" has the meaning given to it in
Paragraph 2.17 of this Agreement.
1.43 "CPUC Gas OII" means CPUC Investigation 00-00-000, instituted
pursuant to the November 21, 2002, Order Instituting Investigation into the Gas
Market Activities of Southern California Gas Company, San Diego Gas and
Electric, Southwest Gas, Pacific Gas and Electric, and Southern California
Edison and their impact on the Gas Price Spikes experienced at the California
Border from March 2000 through May 2001.
1.44 "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under the Bankruptcy Code.
1.45 "Deferred Payments" has the meaning given to it in Paragraph
4.1(d) of this Agreement.
1.46 "Designated Representative" means, collectively, (a) the Settling
Claimant or other person selected pursuant to the Designated Representative
Agreement to act in such capacity, and (b) in the event of a Monetization, any
assignee(s) of the Settlement Fund's rights in and to the Deferred Payments and
Collateral, but only with respect to the rights, duties and obligations relating
thereto.
1.47 "Designated Representative Agreement" means a written agreement
executed by each of the Settling Claimants and in a form reasonably acceptable
to El Paso appointing the Designated Representative. At the option of the
Settling Claimants, the Designated Representative Agreement may be incorporated
in or appended to the Allocation Agreement.
1.48 "Discounted Amount" means, at any single point in time, with
respect to any Deferred Payments (or Additional Payments, as the case may be,
solely for the purposes of Paragraphs 8.3(a) and 8.3(f)(B)) remaining due and
payable (after giving effect to any adjustments pursuant to Paragraphs
4.1(d)(i)(B), 4.1(d)(i)(C), or 4.1(d)(ii)(C)), (a) if El Paso Corporation is not
Investment Grade at that time, the net present value of such Deferred Payments
or Additional Payments, as the case may be, payable in equal semi-annual
installments through January 1, 2024, discounted at the rate per annum of
7.86196381773051%, and (b) if El Paso Corporation is Investment Grade at that
time, the net present value of such Deferred Payments or Additional Payments, as
the case may be, payable in equal semi-annual installments through January 1,
2019, discounted at the rate per annum of 7.48071747914203%; provided that for
purposes of determining at any time the collateral maintenance requirements set
forth in Paragraph 8.3(a) of this Agreement, the Deferred Payment or Additional
Payment, as the case may be, maturity date will be January 1, 2024, and the net
present value of the Deferred Payments or Additional Payment, as the case may
be, at that point in time shall be calculated with a discount rate of
7.86196381773051%, and further provided that if El Paso Corporation becomes
Investment Grade after the date hereof, then for purposes of this definition it
shall remain Investment Grade notwithstanding any subsequent rating agency
downgrade.
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1.49 "Edison" means Southern California Edison Company, a California
corporation, and its successors and assigns.
1.50 "Effective Date" means the date on which all of the conditions
precedent set forth in Paragraph 3.2 have been satisfied, including, without
limitation, delivery of the Closing certificates required by the terms of
Paragraphs 3.2(o) and 3.2(p) of this Agreement.
1.51 "Electric Power" means electric energy and related products,
including capacity and ancillary services such as regulation, spinning reserve,
non-spinning reserve and replacement reserve.
1.52 "El Paso" means one or more of the El Paso Settling Parties.
1.53 "El Paso Corporation" means El Paso Corporation, a Delaware
corporation, and its successors and assigns.
1.54 "El Paso Pledgors" means, collectively, those El Paso Settling
Parties and direct and indirect wholly-owned Subsidiaries of the El Paso
Settling Parties who have provided Collateral in favor of the Collateral Agent
for the benefit of the Settlement Fund.
1.55 "El Paso Settling Parties" means, collectively, El Paso
Corporation, EPNG, and EPME. Each of the El Paso Settling Parties may be
individually referred to herein as an "El Paso Settling Party."
1.56 "El Paso Releasees" means and includes the El Paso Settling
Parties and their Releasees.
1.57 "El Paso Releasors" means and includes the El Paso Settling
Parties and their Releasors.
1.58 "EPME" means El Paso Merchant Energy, L.P., a Delaware limited
partnership, and its successors and assigns.
1.59 "EPNG" means El Paso Natural Gas Company, a Delaware corporation.
1.60 "Equity Interests" means (a) any capital stock, partnership, joint
venture, membership interest, limited liability interest, unlimited liability
interest, beneficial interest in a trust or similar Person, or other equity,
beneficial or ownership interest in another Person of whatever type or nature
and (b) any securities, shares or rights representing, convertible into or
exercisable for any of the foregoing described in clause (a) above as well as
any preemptive, subscription, acquisition or other outstanding right, option,
warrant, conversion right, exercise right, stock appreciation right, redemption
right, repurchase right, or similar right related to any of the foregoing
described in clause (a) above.
1.61 "Escrow Account" means an account in the name of the Settlement
Fund held by the Escrow Agent into which Consideration or the proceeds of
Consideration may be deposited from time to time as provided in Paragraph 4.1 of
this Agreement.
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1.62 "Escrow Agent" means Citibank, N.A. and any successor to Citibank,
N.A. so long as such successor is reasonably acceptable to El Paso if chosen by
the Designated Representative between the date hereof and the Effective Date.
1.63 "Escrow Agreement" means an agreement governing the Escrow Account
reasonably acceptable to and executed by each of the Parties or their authorized
representatives, and the Escrow Agent.
1.64 "Escrow Effective Date" means the date on which an Escrow
Agreement has been signed by all Parties or their authorized representatives,
and the Escrow Agent.
1.65 "Event of Default" has the meaning given to it in Paragraph 9.1 of
this Agreement.
1.66 "Federal Court" means the United States District Court for the
Central District of California.
1.67 "FERC" means the Federal Energy Regulatory Commission, or an
agency or authority of the United States from time to time succeeding to its
authority.
1.68 "FERC Natural Gas Proceeding" has the meaning given to it in
Paragraph 2.1 of this Agreement.
1.69 "FERC Settlement Agreement" means the joint settlement agreement
described in the attached Appendix 1.69, as the same may be amended, modified,
supplemented, or replaced from time to time after the date hereof in accordance
with the terms set forth therein.
1.70 "FERC Settling Parties" means EPNG, El Paso Merchant Energy
Company, El Paso Merchant Energy-Gas, L.P., the CPUC, PG&E, Edison, and the City
of Los Angeles, as each of those Parties is defined individually herein. Each of
the FERC Settling Parties may be individually referred to herein as a "FERC
Settling Party."
1.71 "Final" means, with respect to a judgment or order, that either
(a) the time to appeal therefrom has expired and no appeal has been taken, or
(b) an appeal therefrom has been taken or other challenge thereto has been made,
and that all such appeals or challenges have been finally disposed of in a
manner that affirms the judgment or order without modification and no
petition(s) for certiorari are pending.
1.72 "Gas" means any natural gas or natural gas-related product or
service.
1.73 "Independent Consultant" means, with respect to the Oil & Gas
Collateral, Xxxxxxxxx & Co., Inc., or any other independent engineering firm,
gas consulting firm or other expert of recognized competency in valuing Oil &
Gas Collateral selected by El Paso Corporation and used by it in connection with
its SEC reporting.
1.74 "Investment Grade" means, with respect to a Person's non-credit
enhanced, senior unsecured long-term debt, an investment grade credit rating by
both Xxxxx'x Investor Services (i.e., Baa3 or higher) and Standard & Poor's
Investment Advisor Services (i.e., BBB- or higher).
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1.75 "Investment Grade Discounted Amount" means, after El Paso
Corporation becomes Investment Grade after the date hereof, with respect to any
Deferred Payments due at any single point in time (after giving effect to any
adjustments pursuant to Paragraphs 4.1(d)(i)(B), 4.1(d)(i)(C), or
4.1(d)(ii)(C)), the net present value of such Deferred Payments at that point in
time using a discount rate of 7.48071747914203% based on a maturity date of
January 1, 2019. For any Deferred Payments prepayment made in full on or before
July 1, 2004, the Investment Grade Discounted Amount shall equal
$525,375,643.20. If El Paso Corporation becomes Investment Grade after the date
hereof, then for purposes of this definition it shall remain Investment Grade
notwithstanding any subsequent ratings agency downgrade.
1.76 "Just and Reasonable" has the meaning given to it in Sections 205
and/or 206 of the Federal Power Act, 16 U.S.C. Sections 824d and/or 824e, and/or
Sections 4 and/or 5 of the Natural Gas Act, 15 U.S.C. Sections 717c and/or 717d.
1.77 "Letter of Credit" means an irrevocable, standby letter of credit
in usual and customary form as mutually agreed by El Paso Corporation and the
Designated Representative issued by a U.S. commercial bank or foreign bank with
a U.S. branch (a) whose non-credit enhanced, senior unsecured long-term debt, at
the time of issuance of the Letter of Credit, has a credit rating of at least A-
from S&P or A3 from Xxxxx'x Investor Service, and (b) that is after issuance of
such Letter of Credit, at least Investment Grade and otherwise acceptable to the
Designated Representative.
1.78 "Liabilities" means any and all costs, expenses, actions, causes
of actions, suits, judgments, controversies, damages, claims, liabilities or
demands of any nature, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, liquidated or unliquidated, matured or unmatured,
contingent or direct, whether arising at common law, in equity, or under any
statute, regulation or order, based in whole or in part upon any act or omission
or other occurrence taking place on or prior to March 20, 2003.
1.79 "Measurement Date" means December 31 of each calendar year.
1.80 "Memorandum of Understanding" means that certain Memorandum of
Understanding dated March 20, 2003, by and among, inter alia, the Parties.
1.81 "Monetization" means a structured financing transaction, which may
or may not include the issuance of securities, pursuant to which the Settlement
Fund sells, assigns, pledges or otherwise conveys some or all of its rights in
and to the Deferred Payments and the Collateral relating thereto for the
Monetization Amount to one or more third parties.
1.82 "Monetization Amount" means, with respect to any Monetization, the
gross proceeds raised by that Monetization.
1.83 "MSA Portion" has the meaning given to it in Paragraph 8.3(a) of
this Agreement.
1.84 "Nevada AG" means the Attorney General of Nevada and the People of
the State of Nevada, by and through the Attorney General, Xxxxx Xxxxxxxx, acting
as chief law enforcement officer of his state and as parens patriae.
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1.85 "Nevada Power Proceeding" has the meaning given to it in Paragraph
2.21 of this Agreement.
1.86 "Non-Investment Grade Discounted Amount" means, with respect to
any Deferred Payments due at any single point in time (after giving effect to
any adjustments pursuant to Paragraph 4.1(d)(i)(B), 4.1(d)(i)(C), or
4.1(d)(ii)(C)), while El Paso Corporation is not Investment Grade, the net
present value of such obligation at that point in time using a discount rate of
7.86196381773051% based on a maturity date of January 1, 2024. For any Deferred
Payment prepayment made in full on or before July 1, 2004, the Non-Investment
Grade Discounted Amount shall equal $442,677,625.29.
1.87 "Northwest AGs" means the Attorneys General of Washington and
Oregon as chief law enforcement officers of their respective states, and to the
full extent of their legal authority to bring claims against any El Paso
Releasee.
1.88 "Notice Order" has the meaning given to it in Paragraph 3.3 of
this Agreement.
1.89 "Oil & Gas Collateral" has the meaning set forth in Appendix 1.89
hereto.
1.90 "Original Contract" means that certain Master Power Purchase and
Sale Agreement dated as of February 9, 2001, between EPME and CDWR, and the
Confirmation Letter dated February 13, 2001, between EPME and CDWR, together
with any exhibits, schedules, other confirmation letters and written supplements
thereto.
1.91 "Other Collateral" means any Collateral, other than a Letter of
Credit or any Oil & Gas Collateral, that is reasonably satisfactory to the
Designated Representative.
1.92 "Paragraph" means a numbered paragraph of this Agreement, unless
otherwise noted, and all references to a Paragraph shall include all subparts or
subparagraphs of that Paragraph.
1.93 "PG&E" means Pacific Gas and Electric Company, a California
corporation, and its successors and assigns.
1.94 "Parties" means and includes the Persons and governmental
authorities and units listed in the preamble of this Agreement, collectively,
and their successors and assigns. Each of the Parties may be individually
referred to herein as a "Party."
1.95 "Person" means an individual or Business Entity.
1.96 "Private Parties" means, collectively, the named plaintiffs in the
Civil Actions (excluding the Nevada AG), and the named plaintiffs in their
respective representative capacities in each of the Class Actions.
1.97 "Puget Sound Proceeding" has the meaning given to it in Paragraph
2.20 of this Agreement.
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1.98 "Refund Proceeding" has the meaning given to it in Paragraph 2.13
of this Agreement.
1.99 "Released Claims" means any and all of the claims released or
waived pursuant to the terms of Paragraph 5 of this Agreement.
1.100 "Releasees," with respect to a Party and PG&E Corporation, means
and includes that person or entity and its current or former directors,
officers, employees, Affiliates (provided they are identified in Appendix
7.5(c), Appendix 7.6 or Appendix 7.7 hereto and otherwise satisfy the definition
of "Affiliates" in Paragraph 1.8), parents, Subsidiaries (provided they are
identified in Appendix 7.5(c), Appendix 7.6 or Appendix 7.7 hereto and otherwise
satisfy the definition of "Subsidiaries" in Paragraph 1.114), predecessors,
successors, assigns, and attorneys.
1.101 "Releasors," with respect to a Party and PG&E Corporation, means
and includes that person or entity and its predecessors, successors, and
assigns, and, with respect to the El Paso Settling Parties, PG&E, PG&E
Corporation, and Edison, also includes their respective Affiliates and
Subsidiaries.
1.102 "Renegotiated Contract" means the agreement to be executed and
delivered by EPME and CDWR pursuant to the terms of Paragraph 4.1(g) of this
Agreement, together with any exhibits, schedules, confirmation letters and any
written supplements thereto.
1.103 "Reported Value" means the estimated future gross revenue to be
generated from the production of proved reserves, net of estimated production
and future development costs, using prices and costs in effect at the
determination date, before income taxes, and without giving effect to
non-property-related expenses, discounted to a present value using an annual
discount rate of 10% in accordance with guidelines of the SEC.
1.104 "Responsible Officer" means, with respect to any Person, the
chief executive officer, the president, the chief financial officer or the
treasurer of such Person, or any other senior officer of such Person having
substantially the same authority and responsibility.
1.105 "Requests for Exclusion" has the meaning given to it in Paragraph
3.3 of this Agreement.
1.106 "SEC" means the U.S. Securities and Exchange Commission, or an
agency or authority of the United States from time to time succeeding to its
authority.
1.107 "Secured Obligations" means and includes (a) the Deferred
Payments and any Additional Payments; (b) all interest, if any, in respect of
the Deferred Payments and any such Additional Payments due under Paragraph 4.5;
(c) any attorneys' fees, costs or expenses payable to the Collateral Agent under
this Agreement arising from or relating to Deferred Payments or Additional
Payments; (d) any attorneys' fees, costs or expenses payable to the Collateral
Agent under the Security Documents; (e) any of the foregoing arising after any
El Paso Settling Party or El Paso Pledgor (to the extent in respect of the
Deferred Payments or Additional Payments) has commenced or becomes subject to
any case under the Bankruptcy Code, and any interest that accrues after the
filing of the bankruptcy petition (even if the interest cannot be collected in
the proceeding under the Bankruptcy Code).
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1.108 "Security Documents" means, collectively, (a) any Letter of
Credit, (b) any mortgage, deed of trust, security agreement, pledge agreement,
control agreement, guaranty agreement, hypothication agreement, credit default
swap agreement, or other document, instrument or agreement that grants the
Collateral Agent a lien on, or security interest in, Collateral, or generally
secures Additional Payments and the obligations of the El Paso Settling Parties
to the Settlement Fund under this Agreement, and (c) such other ancillary
agreements, including any intercreditor agreements, as may be necessary or
appropriate to evidence, secure, maintain and protect the rights of the
Collateral Agent (on behalf of the Settlement Fund) in the Collateral and with
respect to the Secured Obligations, in each and every case (i) in form and
substance reasonably satisfactory to the Designated Representative, and (ii) in
the case of any Oil & Gas Collateral, containing, among other provisions, the
provisions substantially similar to those identified in Appendix 1.89 hereto
unless otherwise agreed upon by the Designated Representative.
1.109 "Settlement Fund" means and refers to the settlement fund
described in Paragraph 8.6 of this Agreement into which Consideration shall be
deposited by El Paso as provided in Paragraph 4.1 of this Agreement, and from
which expenses incurred in connection with this Agreement shall be paid as
provided in Paragraph 4.1(i) hereof.
1.110 "Settlement Hearing" has the meaning given to it in Paragraph 3.3
of this Agreement.
1.111 "Settling Claimants" means, collectively, the AG; California
Executive; CPUC; CDWR; CEOB; Northwest AGs; Nevada AG; Edison; PG&E; the Private
Parties; and the successors and assigns of each of the foregoing.
1.112 "Stipulated Judgment" has the meaning given to it in Paragraph
3.4 of this Agreement.
1.113 "Stock" means 26,371,308 shares of common stock of El Paso
Corporation as adjusted to reflect any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other like change
affecting the number of shares of Stock outstanding on the date hereof.
1.114 "Subsidiaries" means, as to any specified Person, (a) any Person
the accounts of which, as of March 20, 2003, are, or are required to be,
consolidated with those of the specified Person's consolidated financial
statements, (b) any Person of which, as of March 20, 2003, at least 51% of the
Equity Interests having power to elect, designate or otherwise cause the
designation of the board of directors, managing partners or the equivalent of
such Person are legally or beneficially owned by such specified Person directly
or indirectly through one or more intermediaries, or which is otherwise
Controlled by such specified Person, and (c) any Person of which, as of March
20, 2003, at least 51% of the Equity Interests of such Person are legally or
beneficially owned by such specified Person directly or indirectly through one
or more intermediaries.
11
2. RECITALS.
2.1 On April 4, 2000, the CPUC filed a complaint against EPNG, El Paso
Merchant Energy-Gas, L.P., and El Paso Merchant Energy Company at the FERC
(Docket No. RP00-241-000) alleging that firm contracts held by El Paso Merchant
Energy-Gas, L.P., and El Paso Merchant Energy Company for transportation
capacity on the EPNG system were obtained in violation of the FERC's Standards
of Conduct and raising issues regarding the exercise of market power (the "FERC
Natural Gas Proceeding"). Edison, PG&E, the City of Los Angeles, and the County
of Los Angeles, among others, subsequently intervened in that proceeding.
2.2 In September 2001, the People of the State of California, by and
through Attorney General Xxxx Xxxxxxx, served a subpoena (the "AG Subpoena") on
El Paso pursuant to its investigation In the Matter of the Investigation of
Possibly Unlawful, Unfair, or Anti-Competitive Behavior Affecting Electricity
Prices in California (the "AG Investigation"). The AG Investigation includes an
inquiry into facts relating to El Paso's participation in the California Gas and
Electric Power markets from 1998 to the present. To date, the AG Subpoena and AG
Investigation have resulted in production by El Paso of hundreds of thousands of
pages of documents and numerous investigative hearings.
2.3 On September 25, 2000, class representative Continental Forge
Company filed a class action complaint against El Paso, and other defendants, in
the California Superior Court for Los Angeles County (Case No. BC 237336),
alleging that El Paso and others had committed antitrust violations and engaged
in unfair competition in the California Gas markets (the "Continental Forge
Action"). The Continental Forge Action seeks (a) monetary damages, (b)
injunctive relief, and (c) restitution and disgorgement by El Paso to the Class
and the general public.
2.4 On December 13, 2000, class representative Xxxx Xxxxxxx filed a
class action complaint against El Paso, and other defendants, in the California
Superior Court for San Diego County (Case No. GIC 759425), alleging that El Paso
and others had committed antitrust violations and engaged in unfair competition
in the California Electric Power markets (the "Xxxx Xxxxxxx Action"). The Xxxx
Xxxxxxx Action sought (a) monetary damages, (b) injunctive relief, and (c)
restitution and disgorgement by El Paso to the Class and the general public.
2.5 On December 13, 2000, class representative Xxxx W.H.K. Xxxxxxx
filed a class action complaint against El Paso, and other defendants, in the
California Superior Court for San Diego County (Case No. GIC 759426), alleging
that El Paso and others had committed antitrust violations and engaged in unfair
competition in the California Gas markets (the "Xxxx W.H.K. Xxxxxxx Action").
Xxxx W.H.K. Xxxxxxx withdrew from this action and Xxxxxxx and Xxxxxxx Xxxxx and
Xxxxx and Xxxxxxxx Xxxxxx replaced him as class representative. The Xxxx W.H.K.
Xxxxxxx Action seeks (a) monetary damages, (b) injunctive relief, and (c)
restitution and disgorgement by El Paso to the Class and the general public.
2.6 On December 18, 2000, class representatives Xxxxxx Xxxx, Xxxxxx
Xxxx, and Xxxxxx X. Xxxxxx filed a class action complaint against El Paso, and
other defendants, in the California Superior Court for Los Angeles County (Case
No. BC 241951), alleging that El Paso and others had committed antitrust
violations and engaged in unfair competition in the California
12
Gas markets (the "Xxxx Action"). Xxxx Xxxxxxx Xxxxxx and SierraPine Limited
later joined as class representatives. The Xxxx Action seeks (a) monetary
damages, (b) injunctive relief, and (c) restitution and disgorgement by El Paso
to the Class and the general public.
2.7 On March 20, 2001, the City of Los Angeles filed a complaint
against El Paso, and other defendants, in the California Superior Court for Los
Angeles County (Case No. BC 247125), alleging that El Paso and others had
committed antitrust violations and engaged in unfair competition in the
California Gas markets (the "City of Los Angeles Action"). The City of Los
Angeles Action seeks (a) monetary damages, (b) injunctive relief, (c)
restitution and disgorgement by El Paso, and (d) civil penalties.
2.8 On March 20, 2001, the City of Long Beach and class representatives
United Church Retirement Homes, Long Beach Brethren Manor, and Xxxxxx Xxxxxx
filed a class action complaint against El Paso, and other defendants, in the
California Superior Court for Los Angeles County (Case No. BC 247114), alleging
that El Paso and others had committed antitrust violations and engaged in unfair
competition in the California Gas markets (the "Long Beach Action"). The Long
Beach Action seeks (a) monetary damages, (b) injunctive relief, (c) restitution
and disgorgement by El Paso, and (d) civil penalties.
2.9 On March 22, 2001, class representative Sweetie's filed a class
action complaint against El Paso in the California Superior Court for San
Francisco County (Case No. 319840), alleging that El Paso had committed
antitrust violations and engaged in unfair competition in the California Gas
markets (the "Sweetie's Action"). Xxxxxxx Xxxxxxx Xxxxx and Xxxxxx X. Xxxxxx
later joined as plaintiffs in the Sweetie's Action, and Sweetie's later withdrew
from the litigation. The Sweetie's Action seeks (a) monetary damages, (b)
injunctive relief, and (c) restitution and disgorgement by El Paso to the Class
and the general public.
2.10 In February 2002, the Continental Forge, Xxxx Xxxxxxx, Xxxx W.H.K.
Phillip, Berg, City of Los Angeles, City of Long Beach, and Sweetie's Actions
were coordinated in the California Superior Court for San Diego County.
2.11 On November 15, 2002, the State of Nevada, in its proprietary
capacity and as parens patriae, by and through its Attorney General, and class
representative Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxxxx Xxxxxx, and Xxxx
Xxxxxx, filed a complaint against El Paso, and other defendants, in the Nevada
District Court for Xxxxx County (Case No. A458583), alleging that El Paso and
others had engaged in unfair trade practices in the Southern Nevada and Southern
California Gas and Electric Power markets (the "Nevada Action"). The Nevada
Action seeks (a) monetary damages, and (b) civil penalties.
2.12 On November 20, 2002, California Lieutenant Governor Xxxx
Xxxxxxxxxx, on behalf of the general public and as a representative taxpayer,
filed a class action complaint against El Paso, and other defendants, in the
California Superior Court for Los Angeles County (Case No. BC 285598), alleging
that El Paso and others had committed unfair business practices affecting the
California Gas and Electric Power markets (the "Xxxxxxxxxx Action"). The
Xxxxxxxxxx Action seeks (a) injunctive relief, (b) restitution and disgorgement
by El Paso, and (c) civil fines.
13
2.13 On August 2, 2000, San Diego Gas & Electric Company, the CAISO and
the Cal PX filed a complaint under Section 206 of the Federal Power Action at
the FERC (Docket No. EL00-95-000, et al.) which complaint was consolidated with
complaints filed by other persons or entities, alleging, among other things,
that the energy markets in California operated by the Cal PX and CAISO resulted
in prices paid for electric energy and energy-related products that were not
Just and Reasonable (the "Refund Proceeding").
2.14 On January 17, 2001, Governor Xxxx Xxxxx proclaimed a state of
emergency in California due to "unanticipated and dramatic increases in the
price of electricity" which "threatened the solvency of California's major
public utilities, preventing them from continuing to acquire and provide
electricity sufficient to meet California's energy needs." In his emergency
proclamation, the Governor ordered the CDWR to enter into necessary contracts
and arrangements with public and private entities for the purchase and sale of
electricity. Pursuant to this emergency proclamation, the CDWR began purchasing
electricity to accommodate the unmet demand for power of the retail end-use
customers in California served by the three investor-owned utilities and to
assure reliability of the transmission system.
2.15 In connection with the Governor's plan to manage the energy
crisis, the California State Legislature authorized the CDWR to, among other
things, enter into contracts with energy suppliers, pursuant to AB1X.
2.16 In compliance with the Governor's directive and pursuant to its
authority under AB1X, and to help further the objective of assuring a reliable
supply of Electric Power for California's retail end-use consumers, the CDWR and
El Paso entered into the Original Contract.
2.17 On February 25, 2002, and February 26, 2002, the CPUC and the
CEOB, respectively, filed complaints under Section 206 of the Federal Power Act
at the FERC (Docket Nos. EL02-60-000 and EL02-62-000), alleging, among other
things, that the terms and the rates under the Original Contract are not Just
and Reasonable or consistent with the public interest (together, the "CPUC and
CEOB 206 Complaints").
2.18 On March 20, 2002, the People of the State of California, by and
through Attorney General Xxxx Xxxxxxx, filed a complaint under Sections 205 and
206 of the Federal Power Act at the FERC (Docket No. EL02-71-000), alleging,
among other things, that Electric Power sellers which had made sales to CDWR,
the Cal PX, and the CAISO were in violation of certain reporting and filing
requirements, which matter is currently pending before the United States Court
of Appeals for the Ninth Circuit, Docket No. 02-73093 (the "AG 206 Complaint").
Certain of the Parties sought to intervene or are otherwise participating in
that proceeding.
2.19 In May 2002, the People of the State of California, by and through
Attorney General Xxxx Xxxxxxx, provided El Paso with a draft complaint that it
represented it intended to file in the California Superior Court for the County
of San Francisco against El Paso alleging that El Paso was in violation of
certain reporting and filing requirements with respect to the sale of Electric
Power (the "AG Draft Complaint"). The AG Draft Complaint sought civil penalties
against El Paso pursuant to California Business and Professions Code Section
17200.
14
2.20 On October 26, 2000, Puget Sound Energy, Inc. filed a complaint
under Section 206 of the Federal Power Act at the FERC (Docket No. EL01-10-000),
seeking an order capping the prices at which sellers subject to FERC
jurisdiction may sell capacity or energy into the Pacific Northwest's wholesale
power markets. Puget Sound Energy, Inc. has moved to withdraw its complaint. The
motion has not been ruled upon and the proceeding continues to be informally
known as the "Puget Sound Proceeding" and remains pending with other parties.
Certain of the Parties sought to intervene or are otherwise participating in
that proceeding.
2.21 On December 5, 2001, Nevada Power Company and Sierra Pacific Power
Company filed a complaint against El Paso under Section 206 of the Federal Power
Act at the FERC (Docket No. EL02-33-000), alleging, among other things, that the
terms and rates of certain Electric Power contracts that each had entered into
were not Just and Reasonable or consistent with the public interest (the "Nevada
Power Proceeding"). Certain of the Parties sought to intervene or are otherwise
participating in that proceeding.
2.22 On February 13, 2002 (in Docket No. PA02-2-000), the FERC directed
its staff to investigate whether any entity had manipulated short-term prices
for Electric Power and Gas in the western region of the United States or
otherwise exercised undue influence over these prices and whether this had
resulted in rates that are not Just and Reasonable in long-term power sales
contracts (the "Fact-Finding Investigation"). Certain of the Parties sought to
intervene or are otherwise participating in that proceeding.
2.23 Beginning in late 2000 and continuing through 2002, the Attorneys
General of Washington and Oregon have conducted an investigation into facts
relating to El Paso's direct and indirect participation in the Oregon and
Washington Electric Power and Gas markets from 1998 to the present (the
"Northwest AGs' Investigations"). The Northwest AGs worked cooperatively with
the AG in sharing documents and information related to El Paso and other
companies. The Northwest AGs have asserted that El Paso may be subject to civil
liability, including civil penalties and/or restitution, as a result of
potential illegal activity.
2.24 Edison and PG&E have both prepared and are ready to file federal
court actions alleging that El Paso's manipulation of the California energy
market during the energy crisis violated federal and state antitrust and unfair
competition laws. The complaints in these planned actions are based, legally and
factually, in large part, on investigation and analysis undertaken by Edison,
the CPUC, and PG&E in the FERC Natural Gas Proceeding.
2.25 Before commencing the Class Actions and during the course of the
litigation and settlement negotiations, Class Counsel conducted a thorough
examination and evaluation of the relevant law and facts to assess the merits of
their claims and to determine how best to serve the interests of Class
Plaintiffs and the Class. In the course of their examination, Class Counsel have
reviewed hundreds of thousands of pages of documents produced by El Paso, have
taken depositions, and have conducted discussions with El Paso executives. Class
Counsel also have retained and consulted with experts concerning the facts
discovered in this matter, the merits of Class Plaintiffs' claims, and the
defenses raised by El Paso. The other Settling Claimants likewise performed due
diligence investigations to assess the merits of their respective claims and the
defenses raised by El Paso.
15
2.26 Based upon their discovery, investigation and evaluation of the
facts and law relating to the matters alleged in the pleadings, Class Plaintiffs
and Class Counsel have agreed to settle the Class Actions pursuant to the
provisions of this Agreement, after considering such factors as (a) the
substantial benefits to Class Plaintiffs and the Class under the terms of this
Agreement, (b) the substantial expense, burdens and uncertainties associated
with continued litigation of the claims, and (c) the desirability of
consummating this Agreement promptly, in order to provide effective relief to
Class Plaintiffs and the Class. The other Settling Claimants undertook a similar
cost/benefit analysis before agreeing to the settlement set forth herein.
2.27 The proposed settlement has been reviewed by legal counsel,
various consultants and experts retained by Class Plaintiffs, and Class
Plaintiffs each agree that this Agreement is fair, reasonable, and adequate
because it provides substantial benefits to the Class and is in the best
interests of the Class.
2.28 El Paso expressly and vigorously denies any wrongdoing alleged in
any of the Actions, including without limitation the Class Actions, and does not
admit or concede any actual or potential fault, wrongdoing or liability in
connection with any fact or claim that has been or could have been alleged
against it in any of the Actions, including without limitation the Class
Actions. Nevertheless, El Paso considers it desirable for the Class Actions, and
the other Actions, to be settled, resolved, and dismissed at this time because
this settlement will (a) confer substantial benefits on El Paso and its
shareholders, including the avoidance of further expense and disruption of the
management and operation of El Paso's business due to the pendency and defense
of the Class Actions and other Actions, (b) finally put Class Plaintiffs' claims
and the other matters to rest, (c) avoid the substantial burdens and
uncertainties associated with continued litigation of those claims, and (d)
provide substantial benefits to the people of the states of California, Nevada,
Oregon, and Washington.
2.29 After extensive negotiations, the Parties entered into the
Memorandum of Understanding. The Parties thereafter engaged in further
negotiations to, among other things, resolve issues not addressed in the
Memorandum of Understanding, and to refine the structure of the Consideration,
including payment of $875,626,072 of cash over a twenty (20) year period in lieu
of providing $875,626,072 of natural gas over the same period, thereby enabling
those Parties who remain interested in obtaining natural gas to purchase a
defined (and therefore predictable) volume of natural gas. The substitution of
cash for delivered gas also provides El Paso with additional flexibility in
meeting their settlement obligations. It avoids the physical constraints imposed
by a requirement to actually deliver gas over a twenty year period to the
California border while still permitting El Paso to use its entire portfolio of
gas reserves as a possible source of funding for the payments. The Parties now
wish to enter into this definitive settlement agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed between and
among the Parties as follows.
16
3. CLOSING PROVISIONS.
3.1 Closing and Effective Date. Consummation of the settlement
contemplated by this Agreement ("Closing") shall take place at such place on
such date and in such manner (e.g., in person, by facsimile or by overnight
mail) as the Designated Representative and El Paso Corporation may mutually
agree, but in no event shall Closing take place more than twenty (20) Business
Days following satisfaction of the conditions precedent set forth below in
Paragraphs 3.2(a) through 3.2(i), unless otherwise agreed to in writing by the
Designated Representative. At Closing, all conditions precedent set forth in
Paragraph 3.2 that have not been satisfied prior to Closing shall be satisfied.
The releases and waivers set forth in Paragraph 5 of this Agreement shall become
effective only after all of the conditions precedent set forth in Paragraph 3.2
have been satisfied, including, without limitation, delivery of the Closing
certificates required by the terms of Paragraphs 3.2(o) and 3.2(p) of this
Agreement. Upon the Effective Date, all claims by the El Paso Settling Parties
to Consideration on deposit in the Escrow Account shall, without any further
action, be released and fully discharged and the Settlement Fund shall be free
to distribute such amounts to the Settling Claimants in accordance with the
Allocation Agreement and as authorized by the Class Action Court.
3.2 Conditions Precedent. The following conditions precedent shall be
satisfied on or before the Effective Date unless waived in writing by the
Parties entitled to enforce such condition:
a. the Class Action Court shall have entered a final judgment of
dismissal with prejudice as to each of the El Paso Releasees that are
defendants in each of the Class Actions, which judgment shall have
become Final;
b. the Federal Court shall have entered an order approving the
Stipulated Judgment without material change;
c. the FERC shall have entered an order approving the FERC
Settlement Agreement pursuant to Paragraph 10.1 or 10.2 thereof,
whichever is applicable;
d. the Bankruptcy Court shall have entered an order approving the
settlement embodied in this Agreement as to PG&E, the debtor and
debtor-in-possession in a Chapter 11 case pending in the Bankruptcy
Court;
e. El Paso and the Private Parties in those Class Actions in which
there are one or more defendants in addition to the El Paso Settling
Parties, the City of Los Angeles Action, and the Long Beach Action
shall obtain a judicial determination pursuant to California Code of
Civil Procedure Section 877.6, or other applicable provisions of law,
that this Agreement was made in good faith, and such determination
shall have become Final. The Private Parties in those actions and each
of the El Paso Releasees that are defendants in those actions shall
seek to have the hearing(s) on their request for such determination
held prior to, or in conjunction with, the hearing before the Class
Action Court on final approval of the settlement set forth in this
Agreement;
f. the Nevada Action shall be dismissed with prejudice as to each
of the El Paso Releasees that are defendants in that action, which
dismissal shall have become
17
Final. The El Paso Releasees that are defendants in that action and the
Nevada AG shall obtain a judicial determination, pursuant to N.R.S.
17.245, that this Agreement was made in good faith, and such
determination shall have become Final;
g. the Xxxxxxxxxx Action shall be dismissed with prejudice as to
each of the El Paso Releasees that are defendants in that action;
h. the City of Los Angeles Action shall be dismissed with
prejudice as to each of the El Paso Releasees that are defendants in
that action;
i. the Long Beach Action shall be dismissed with prejudice as to
each of the El Paso Releasees that are defendants in that action;
j. the El Paso Settling Parties shall have delivered to the
Designated Representative fully executed original copies of the
Security Documents;
k. the El Paso Settling Parties shall have deposited the cash
payment required by Paragraph 4.1(b) hereof in the Escrow Account;
l. El Paso shall have fulfilled its obligations under Paragraphs
4.1(e), 4.1(g), and 4.1(j);
m. the El Paso Settling Parties shall have paid in full all
invoices due as of the Effective Date under Paragraph 4.1(i);
n. the AG, each of the Northwest AGs, and the Nevada AG shall have
delivered to El Paso the written approvals required by Paragraph 4.1(a)
hereof;
o. El Paso Corporation shall have delivered, or cause to be
delivered, to the Designated Representative, a certificate from each El
Paso Settling Party signed by a Responsible Officer of each such El
Paso Settling Party certifying to the Settling Claimants, the
Settlement Fund, the Collateral Agent, PG&E Corporation, and Edison
International that the representations and warranties made by that El
Paso Settling Party in Paragraphs 7.1 and 7.5 of this Agreement are
true and correct as of the date of Closing, and that all conditions
precedent set forth in this Paragraph 3.2 applicable to the El Paso
Settling Parties have been satisfied or waived;
p. Settling Claimants, PG&E Corporation, and Edison International,
through the Designated Representative, shall have delivered to El Paso
Corporation a certificate signed by each Settling Claimant, PG&E
Corporation, and Edison International, or each such party's Responsible
Officer or duly authorized representative when that party is not a
Person, certifying to the El Paso Settling Parties that the
representations, warranties, and other agreements made by that Settling
Claimant, PG&E Corporation, or Edison International in Paragraphs 7.1,
7.2, 7.3, 7.4, 7.6, and 7.7 of this Agreement (to the extent
applicable) are true and correct as of the date of Closing, and that
all conditions precedent set forth in this Paragraph 3.2 applicable to
that Settling Claimant, PG&E Corporation, and Edison International have
been satisfied or waived;
18
q. El Paso Corporation shall have delivered, or caused to be
delivered, to the Designated Representative the Compliance Certificate
and Independent Consultant's report referred to in Paragraph 8.3(b),
and such other reports, legal opinions, title policies, and documents,
agreement, and instruments as the El Paso Settling Parties may be
required to deliver under the terms of this Agreement and any of the
Security Documents;
r. an Escrow Agreement shall have been executed by and copies
delivered to the Parties and the Escrow Agent; and
s. a Designated Representative Agreement shall have been executed
by the Settling Claimants and delivered to El Paso.
3.3 Class Action Court Approval of Agreement. No later than ten (10)
days after the date on which this Agreement is executed by all Parties, Class
Plaintiffs shall apply to the Class Action Court for entry of an order (the
"Notice Order"), to be agreed upon by El Paso and Class Plaintiffs. The Notice
Order shall request, among other things:
a. certification of the Class (as to each of the El Paso Releasees
that is a defendant in the Class Actions) for settlement purposes only;
b. preliminary approval of the class settlement set forth in this
Agreement; and
c. approval of the dissemination to the Class of a settlement
notice or notices, in a form to be agreed upon by El Paso and the Class
Plaintiffs, which shall set forth the general terms of the class
settlement contained in this Agreement and the date of the Class
Settlement Hearing as defined below. El Paso and Class Plaintiffs shall
propose to the Class Action Court that notice be provided by such
methods as are agreed upon by El Paso and Class Plaintiffs.
Class Plaintiffs shall request that after notice is given, the Class Action
Court hold a hearing (the "Settlement Hearing") at which the Class Action Court
shall approve settlement of the Class Actions as set forth herein as fair,
adequate and reasonable to the Class, and enter a final judgment of dismissal
with prejudice as to each of the El Paso Releasees that are defendants in the
Class Actions in each of the Class Actions pursuant to the settlement.
If, prior to the Settlement Hearing, any persons who otherwise would be
members of the Class have timely requested exclusion ("Requests for Exclusion")
from the Class in accordance with the provisions of the Notice Order and the
notice given pursuant thereto, and such persons in the aggregate represent more
than that fraction of the Class set forth in Appendix 3.3, which shall not be
filed with the Class Action Court, or, if required to be filed, shall be filed
under seal, and/or if any Class Plaintiffs have timely requested exclusion from
the Class, then El Paso shall have the option, in its sole and absolute
discretion, to terminate this Agreement, either as to the Class Actions or in
its entirety. Copies of all Requests for Exclusion received, together with
copies of any written revocations of Requests for Exclusion received, shall be
delivered to El Paso's counsel at least ten (10) days before the Settlement
Hearing.
19
Solely for the purposes of the settlement of the Class Actions, the
Parties agree to the certification of the Class as defined above in Paragraph
1.28, as to each of the El Paso Releasees that is a defendant in the Class
Actions, for settlement purposes; and Class Plaintiffs and each of the El Paso
Releasees that is a defendant in the Class Actions, agree to jointly request the
Court to enter an order, which, among other things, certifies the Class, as set
forth in this Paragraph 3.3. In the event this Agreement, and the settlement
proposed herein, is not finally approved, or is terminated, cancelled, or fails
to become effective for any reason, this class certification solely for the
purpose of the settlement of the Class Actions shall be null and void and the
Class Plaintiffs and El Paso Releasees that are defendants in the Class Actions
shall revert to their respective positions prior to the execution of this
Agreement. Under no circumstances may this Agreement be used as an admission or
evidence concerning the appropriateness of class certification should this
Agreement be terminated in whole or part or otherwise fail to become effective.
El Paso reserves the right to oppose class certification should the Agreement be
terminated in whole or part or otherwise fail to become effective. The
stipulation and request for class certification, and class certification,
referred to herein shall be without prejudice to any other party to any of the
Actions asserting that certification of any class, as to that party, is or would
be improper.
3.4 Federal Court Approval of Structural Relief. As soon as practicable
after the date of this Agreement, the AG, Edison, and PG&E shall commence a
single proceeding, or three separate proceedings and thereafter request
consolidation of such proceedings into a single proceeding, and thereafter
obtain Federal Court approval of the stipulated judgment described in Appendix
3.4 attached hereto (the "Stipulated Judgment"). The AG and the FERC Settling
Parties shall cooperate, each at its own expense, in obtaining approval of the
Stipulated Judgment.
3.5 FERC Approval of FERC Settlement Agreement.
a. Request for Approval. The FERC Settling Parties shall jointly
request and urge FERC to approve the FERC Settlement Agreement without
condition or modification, and shall obtain such approval in accordance
with the terms of Paragraph 10.1 or 10.2 of the FERC Settlement
Agreement, whichever is applicable.
b. Cooperation. The FERC Settling Parties shall cooperate, each at
its own expense, in securing all necessary governmental approvals for
the FERC Settlement Agreement and in defending against any litigation
affecting the validity and enforceability of the FERC Settlement
Agreement, or any provision thereof.
3.6 Bankruptcy Court Approval of Agreement. PG&E shall promptly after
the date hereof seek approval of this Agreement from the Bankruptcy Court
pursuant to Federal Rule of Bankruptcy Procedure 9019. The contents of PG&E's
filing with the Bankruptcy Court shall be consistent with the terms and
conditions of this Agreement.
20
4. CONSIDERATION FOR AGREEMENT.
4.1 El Paso Settling Parties. To induce the Settling Claimants to give
the releases described in Paragraph 5 of this Agreement, and to make the
representations, warranties, covenants, and other agreements set forth herein,
the El Paso Settling Parties jointly and severally agree to the following:
a. Antitrust Compliance Program. El Paso shall institute within
thirty (30) Business Days after the Effective Date an antitrust
compliance program, consistent with the provisions of section 8A1.2 of
the Federal Sentencing Guidelines, approved in writing on or before the
Effective Date by the AG, each of the Northwest AGs, and the Nevada AG,
which approval shall not be unreasonably withheld. The antitrust
compliance program shall include not less than the following for
directors, officers and employees of EPNG, El Paso Merchant Energy
Company and El Paso Corporation: (i) mandatory antitrust training for
each officer and employee; (ii) written compliance standards to be
distributed to each officer and employee; (iii) annual review of the
compliance program by El Paso officers and directors, including all
outside directors; (iv) appointment of an antitrust compliance officer
and antitrust compliance committee, which may be the Ethics Officer and
the Ethics and Compliance Committee of El Paso; (v) confidential
reporting and monitoring systems; (vi) disciplinary mechanisms to
ensure enforcement of standards; and (vii) protocols and procedures for
initiating and concluding internal investigations. For purposes of this
Paragraph, (i) with respect to EPNG and El Paso Merchant Energy
Company, the term "employee" shall mean all U.S. exempt employees at
the manager level or above, and the terms "officers" and "directors"
shall mean the officers and directors of those companies, and (ii) with
respect to El Paso Corporation, the term "employee" shall mean all U.S.
exempt employees at the manager level or above and the terms "officers"
and "directors" shall mean the officers and directors of that company,
except that, these terms are limited to those employees, officers and
directors with responsibility for the management of the operations or
personnel of EPNG or El Paso Merchant Energy Company.
b. Bonus Pool Payments. On or before the later of the Effective
Date and the Escrow Effective Date, El Paso shall deposit $2,000,000 in
the Escrow Account in immediately available funds from a pool set up by
El Paso for bonus payments for officers.
c. Cooperation. The El Paso Settling Parties shall cooperate with
the Settling Claimants and the Settlement Fund as more fully set forth
herein, including, without limitation, in Paragraphs 5.7, 8.3(c), 8.8,
and 12.6 of this Agreement.
d. Deferred Payments.
(i) Amount of Deferred Payments. The El Paso Settling Parties
jointly and severally (subject to Paragraph 4.1(d)(iv) below as to
EPNG only) agree to pay to the Settlement Fund the principal
amount of Eight Hundred Seventy-Five Million Six Hundred
Twenty-Six Thousand Seventy Two Dollars ($875,626,072) (the
"Deferred Payments"), which amount shall be paid in forty (40)
semi-annual
21
installments, each in the amount of $21,890,651.80, unless
adjusted as provided below, commencing on July 1, 2004, and
thereafter on the first day of each January and July until paid in
full; provided, however, that:
(A) if the Effective Date does not occur on or before
July 1, 2004, then the first installment due hereunder (and
any other installments due prior to the Effective Date) shall
be paid into the Escrow Account on such date; and
(B) if El Paso Corporation is Investment Grade for a
period of at least six (6) consecutive months at any time
after the date of this Agreement (but before January 1, 2019)
and no Monetization has taken place, then all Deferred
Payments outstanding shall, at the option of and after
written notice by the Designated Representative, be
reamortized, commencing as of the next payment date, to
thereafter provide for equal semi-annual installments in an
amount sufficient to retire the balance of the Deferred
Payments by January 1, 2019; and
(C) if El Paso Corporation is Investment Grade for a
period of at least six (6) consecutive months at any time
after the date of this Agreement (but before January 1, 2019)
(the "Investment Grade Date") and one or more Monetizations
have taken place while El Paso Corporation was not Investment
Grade, then the Deferred Payments due hereunder shall, at the
option of and after written notice to El Paso Corporation by
the Designated Representative, be bifurcated into the
following amortized obligations: (1) the Monetization
obligations, which shall remain unchanged and continue to
have a maturity date as set forth in the Monetization, and
(2) an obligation having a maturity date of January 1, 2019,
payable to the Settlement Fund in equal, semi-annual
installments, commencing as of the next payment date, that
has a discounted value as of the Investment Grade Date equal
to the difference between the Investment Grade Discounted
Amount of all Deferred Payments outstanding and the
Non-Investment Grade Discounted Amount of all Deferred
Payments outstanding used to secure the Monetization, using a
discount rate of 7.48071747914203%.
(ii) Prepayments. Deferred Payments may be prepaid by any of
the El Paso Settling Parties as follows:
(A) Prior to the Effective Date. The El Paso Settling
Parties may prepay the Deferred Payments in full or in part
at any time on or before the Effective Date without premium.
The amount of a prepayment in full on or before the Effective
Date shall be the Non-Investment Grade Discounted Amount if
El Paso Corporation is not Investment Grade at the time of
prepayment, and the Investment Grade Discounted Amount if El
Paso Corporation is Investment Grade at the time of
prepayment. The amount of any partial prepayment is the
dollar amount the El Paso Settling
22
Parties desire to pay in part. If any El Paso Settling Party
becomes Investment Grade within forty-five (45) days after
prepaying Deferred Payments on or before the Effective Date,
then the El Paso Settling Parties shall, within ten (10)
Business Days after the Investment Grade upgrade, make an
additional payment to the Settlement Fund in immediately
available funds in an amount equal to the difference, as of
the prepayment date, between (i) the Investment Grade
Discounted Amount and the Non-Investment Grade Discounted
Amount, if paid in full, and (ii) the prorated Investment
Grade Discounted Amount and the prorated Non-Investment Grade
Discounted Amount, if paid in part. If El Paso Corporation
becomes Investment Grade following a merger or acquisition
announcement with respect to El Paso Corporation within one
hundred twenty (120) days after prepaying Deferred Payments
on or before the Effective Date, and the merger or
acquisition transaction has directly resulted in the upgrade
to Investment Grade, then the El Paso Settling Parties shall,
within ten (10) Business Days after closing of the announced
merger or acquisition, make an additional payment to the
Settlement Fund in immediately available funds in an amount
equal to the difference between (y) the Investment Grade
Discounted Amount and the Non-Investment Grade Discounted
Amount, if paid in full, and (z) the prorated Investment
Grade Discounted Amount and the prorated Non-Investment Grade
Discounted Amount, if paid in part. All prepayments made
prior to the Effective Date shall be deposited in the Escrow
Account. The terms of Paragraph 4.1(d)(iii) below shall
govern the manner of payment, as well as the location of
making any payment due hereunder after the Effective Date.
(B) After the Effective Date. The El Paso Settling
Parties, at the sole and absolute discretion of the
Designated Representative, may if El Paso Corporation is then
Investment Grade prepay the Deferred Payments in full at any
time after the Effective Date, but before the second
anniversary of the Effective Date, by paying the Discounted
Amount then due. The El Paso Settling Parties may, if El Paso
Corporation is not then Investment Grade, prepay the Deferred
Payments at any time after the Effective Date, but before the
second anniversary of the Effective Date, by prepaying the
full Discounted Amount then due, or any lesser desired
amount. Prepayments made after the Effective Date shall be
without premium; provided, however, that if one or more
Monetizations have been completed prior to the date of
prepayment, then the Deferred Payment payoff with respect to
such Monetizations shall equal one hundred two percent (102%)
of the Monetization Amount reduced by all principal payments
made in respect thereof as of the prepayment date. If El Paso
Corporation becomes Investment Grade within forty-five (45)
days after prepaying the Deferred Payments after the
Effective Date, then the El Paso Settling Parties shall,
within ten (10) Business Days after the Investment Grade
upgrade, make an additional payment to the Settlement Fund in
immediately available funds in an amount equal to the
difference at the
23
time of prepayment between (i) the Investment Grade
Discounted Amount and the Non-Investment Grade Discounted
Amount, if paid in full, and (ii) the prorated Investment
Grade Discounted Amount and the prorated Non-Investment Grade
Discounted Amount, if paid in part, in each case less any
prepayment premium paid by El Paso in connection with payoff
of a Monetization. If El Paso Corporation becomes Investment
Grade following a merger or acquisition announcement with
respect to El Paso Corporation within one hundred twenty
(120) days after prepaying the Deferred Payments after the
Effective Date, and the merger or acquisition transaction has
directly resulted in the upgrade to Investment Grade, then
the El Paso Settling Parties shall, within ten (10) Business
Days after closing of the announced merger or acquisition,
make an additional payment to the Settlement Fund in
immediately available funds in an amount equal to the
difference at the time of prepayment between (y) the
Investment Grade Discounted Amount and the Non-Investment
Grade Discounted Amount, if paid in full, and (z) the
prorated Investment Grade Discounted Amount and the prorated
Non-Investment Grade Discounted Amount, if paid in part, in
each case less any prepayment premium paid by El Paso in
connection with payoff of a Monetization. The terms of
Paragraph 4.1(d)(iii) below shall govern the manner of
payment, as well as the location of making any payment due
hereunder after the Effective Date.
(C) Treatment of Partial Prepayments. Partial
prepayments of the Deferred Payments shall reduce the
remaining nominal balance (originally $875,626,072) of the
Deferred Payments by an amount equal to the following: the
sum of the equal semi-annual payments needed to produce a net
present value of the prepayment equal to the amount of the
prepayment using a discount rate of (0) 0.00000000000000%
over a 20-year term if El Paso Corporation is not Investment
Grade at the time of prepayment, and (0) 0.00000000000000%
over a 15-year term if El Paso Corporation is Investment
Grade at the time of prepayment. The amount of each
semi-annual installment of the Deferred Payments shall
thereafter be adjusted correspondingly (with all installments
to be adjusted on an equal proportionate basis) to reflect
the prepayment. No partial prepayment will affect the due
date of any subsequent installment unless agreed to in
writing by the Designated Representative.
(iii) Manner of Payment. All Deferred Payments made after the
Effective Date shall be made in immediately available funds to the
account or account(s) designated by the Designated Representative
in writing in lawful currency of the United States of America.
(iv) Joint and Several Obligations of EPNG. Upon satisfaction
of the following conditions, EPNG's joint and several obligations
hereunder with respect to the Deferred Payments (including,
without limitation, its obligations under Paragraph 4.5 of this
Agreement) shall, without any further action by any
24
other Party, be converted from those of a primary obligor to those
of a secondary obligor, and effective as of such date, EPNG
irrevocably and unconditionally guarantees the full and punctual
payment when due (whether at maturity, by acceleration or
otherwise), and the performance, of the Secured Obligations:
(A) confirmation of deposit of the $243,229,464 payment
in immediately available funds in the Escrow Account as
required by Paragraph 4.1(e); and
(B) delivery of a solvency certificate in usual and
customary form by EPNG to the Designated Representative that
is in substance reasonably acceptable to the Designative
Representative, and clearly gives effect to the net present
value of the Secured Obligations guaranteed by EPNG.
EPNG's guaranty of the Secured Obligations is and shall be an
absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of the Secured Obligations and
not of their collectibility only and is in no way conditioned upon
any requirement that the Settlement Fund first attempt to collect
any of the Secured Obligations from the other El Paso Settling
Parties or any El Paso Pledgor, or resort to any Collateral or
other means of obtaining its payment. Payments by EPNG under this
Paragraph may be required by the Settlement Fund on any number of
occasions. Furthermore, if for any reason any other El Paso
Settling Party has no legal existence or is under no legal
obligation to discharge any of the Secured Obligations, or if any
of the Secured Obligations have become irrecoverable from the
other El Paso Settling Parties by operation of law or for any
other reason, then the guaranty provided for in this Paragraph
shall nevertheless be binding on EPNG to the same extent as EPNG
at all times had been the primary obligor on all such Secured
Obligations. In the event that acceleration of the time for
payment of the Secured Obligations is stayed upon the insolvency,
bankruptcy or reorganization of another El Paso Settling Party, or
for any other reason, then all such amounts otherwise subject to
acceleration under the terms of this Agreement and the Security
Documents shall be immediately due and payable by EPNG. Upon
written request by the Designated Representative, EPNG shall
execute and deliver to the Settlement Fund a separate guaranty
agreement consistent with the terms of this Agreement.
e. Escrow Account Payments.
(i) Payments. The El Paso Settling Parties shall deposit
$78,590,070 in immediately available funds in the Escrow Account
upon the later of (A) the execution of this Agreement by all
Parties, and (B) the Escrow Effective Date. The El Paso Settling
Parties shall deposit another $243,229,464 in immediately
available funds in the Escrow Account by the later of one hundred
eighty (180) days after the date on which this Agreement is
executed, and the Escrow Effective Date. If any El Paso Settling
Party issues debt securities for the express purpose of raising
any or all of the $243,229,464 second payment, then
25
that El Paso Settling Party shall, upon receipt, immediately
deposit all funds raised by the debt securities issuance for that
purpose in the Escrow Account (or the first Business Day
immediately following the Escrow Effective Date if the Escrow
Effective Date has not yet occurred).
(ii) Letter of Credit Option. If El Paso determines in its
reasonable business judgment that it is necessary to delay the
issuance of debt securities to fund all or a portion of the
$243,229,464 second payment beyond the required deposit date of
such second payment, then El Paso may, in lieu of the deposit of
such second payment, deliver a Letter of Credit in favor of the
Settlement Fund or its assignees that shall entitle the
beneficiary to draw the amount of $243,229,464, plus interest
thereon at the rate then applicable to 3-month U.S. Treasury
bills, if (i) the second payment funds have not been deposited in
the Escrow Account on the Business Day immediately preceding the
Effective Date, or (ii) such Letter of Credit will expire in
thirty (30) days or less, and the El Paso Settling Parties have
not replaced such expiring Letter of Credit with another Letter of
Credit in the same amount and on the same terms. Such Letter of
Credit shall be surrendered upon the deposit of the second payment
together with interest thereon at the rate then applicable to
3-month U.S. Treasury bills from that date which is one hundred
eighty (180) days after the date on which this Agreement is
executed through and including the date on which the second
payment funds are deposited in the Escrow Account.
f. Releases. The El Paso Settling Parties agree to give the
Settling Claimants the releases described in Paragraph 5 of this
Agreement.
g. Renegotiated Contract. EPME shall reduce the price of the
Original Contract by $125,000,000 pro rata effective as of the date
hereof to the end of the term of the Original Contract (the
"Renegotiated Contract Price"), and the Original Contract shall be
amended, effective as of the Effective Date, to reflect the contract
price adjustment provided for herein. Between the date hereof (or the
Escrow Effective Date if the Escrow Account has not been opened as of
the date hereof) and the Effective Date, CDWR shall pay, when and as
due as provided in the Original Contract, (i) EPME for all Electric
Power purchased by CDWR during the applicable billing period pursuant
to the terms of the Original Contract at the Renegotiated Contract
Price, and (ii) the Escrow Agent (for the account of the Settlement
Fund) for all Electric Power purchased by CDWR during the applicable
billing period pursuant to the terms of the Original Contract at a rate
equal to the Original Contract price less the Renegotiated Contract
Price. Upon receipt, the Escrow Agent shall immediately deposit such
sums in the Escrow Account, where they shall remain pending Closing. On
the Effective Date, the Escrow Agent shall withdraw from the Escrow
Account and pay to CDWR all amounts paid to the Escrow Agent (for the
account of the Settlement Fund) under the terms of this Paragraph,
together with all interest accrued thereon. If this Agreement is
terminated pursuant to the provisions of Paragraph 10.1 hereof, then
the terms of Paragraph 10.2 of this Agreement shall govern distribution
of the monies paid to the Escrow Agent pursuant to the terms of this
Paragraph.
26
h. Security. El Paso agrees to secure the Secured Obligations in
accordance with the terms of Paragraph 8.3 of this Agreement by
executing and delivering the Security Documents.
i. Settlement Expenses. El Paso shall pay all reasonable expenses
of administration of the settlement described in this Agreement (not to
include any Party's attorneys' fees except as provided herein in
Paragraph 9.4), any expenses incurred in providing parens patriae
notice (if required), expenses for any appraisals of the Collateral
required by the terms of this Agreement or the Security Documents in
connection with the substitution or addition of Collateral, expenses of
the Independent Consultant under Paragraph 8.3(b), any costs and
expenses reimbursable under the terms of the Security Documents, and
expenses of notice of the proposed settlement pursuant to a notice
program approved by the Class Action Court. All such expenses shall be
billed to the Settlement Fund c/o the Designated Representative. The
Designated Representative shall prepare invoices to El Paso for such
expenses as they are billed to the Settlement Fund. El Paso shall
within thirty (30) Business Days of receipt of any such invoices,
deposit in the Escrow Account monies sufficient to cover any of the
expenses that the Designated Representative has invoiced and, prior to
the Effective Date, promptly thereafter instruct the Escrow Agent to
release sufficient monies to the Designated Representative to enable
the Designated Representative to pay the invoiced expenses. Any late
fees incurred as a result of El Paso's failure to pay any invoices
within ten (10) Business Days after receipt of the same from the
Designated Representative shall be borne by El Paso.
j. Stock. Following the effective date of (i) an amendment to El
Paso Corporation's current shelf registration statement to permit the
issuance of stock in connection with the settlement of litigation, or
(ii) a new shelf registration statement that permits such issuances
(or, in either case, of any amendment thereto), El Paso Corporation
shall, at its own expense within ten (10) days after receipt of written
direction from the Designated Representative, sell so much of the Stock
as El Paso Corporation is directed to sell by the Designated
Representative. The gross proceeds from such sale shall be deposited
immediately by El Paso Corporation in the Escrow Account, where they
shall be held in escrow pending the Effective Date. Notwithstanding the
foregoing, El Paso Corporation may delay the use of the amendment or
new shelf registration statement in connection with a sale of the
Stock, (A) for up to sixty (60) days after receipt of written direction
from the Designated Representative, if El Paso Corporation determines
in good faith that the use of such amendment or new shelf registration
statement might (1) interfere with or affect the negotiation or
completion of any transaction that is being contemplated by El Paso
Corporation at the time the right to delay is exercised, or (2) involve
initial or continuing disclosure obligations of material, non-public
information that would not be in the best interests of El Paso
Corporation's stockholders, (B) for any required lock-up period or
other similar restrictive period to which El Paso Corporation is then
subject set forth in an underwriting agreement or other similar
agreement entered into in connection with the issuance by El Paso
Corporation of any of its equity securities or any securities
convertible into its equity securities, or (C) for the period of time
required to effect any necessary amendment to the shelf registration
statement, if El Paso Corporation
27
determines in good faith that the amendment or new shelf registration
statement should be amended, or El Paso Corporation is required to make
any such amendment; provided, however, in the event of any delay, the
amount El Paso Corporation shall deposit in the Escrow Account upon
sale of such Stock after the delay ends shall equal the average trading
price of the Stock for the ten (10) day period following receipt of
written direction from the Designated Representative, multiplied by the
number of shares of Stock El Paso Corporation was directed to sell by
the Designated Representative, plus interest on that amount from the
tenth (10) day following receipt of written direction from the
Designated Representative to sell Stock to the date on which the
foregoing amount is placed in the Escrow Account. The interest rate on
such amount shall equal the rate then applicable to 3-month U.S.
Treasury bills. Notwithstanding any exercise by El Paso Corporation of
its right to delay a sale of Stock hereunder, the Designated
Representative shall be permitted to deliver one or more written
directions to sell additional Stock during the continuation of any
delay, provided that such further requests shall also be subject to El
Paso Corporation's right to delay the sales so requested in accordance
with the terms of this Paragraph. El Paso Corporation shall provide
written notice to the Designated Representative of the effectiveness of
its amendment or new shelf registration statement within three (3)
Business Days after receipt of notice of the effectiveness thereof by
the SEC. Notwithstanding the foregoing, should the Designated
Representative elect to sell the Stock through more than three (3)
block trades, then El Paso Corporation may deduct the actual cost of
commissions paid in effecting the fourth and subsequent trades from the
proceeds of such block trades. El Paso Corporation shall use its
reasonable best efforts to cause the above-referenced amendment or new
shelf registration statement to become effective as soon as possible
after the date hereof and remain effective until the Effective Date. In
no event shall sale of the Stock and the deposit of the sale proceeds
(and interest thereon, if any) be deferred beyond the date of Closing
set by the Designated Representative and El Paso Corporation pursuant
to Paragraph 3.2 of this Agreement.
k. Structural Relief. El Paso shall provide the structural relief
set forth in the FERC Settlement Agreement and the Stipulated Judgment.
4.2 Settling Claimants. To induce the El Paso Settling Parties to give
the releases described in Paragraph 5 of this Agreement, and to make the
representations, warranties, covenants, and other agreements set forth herein,
each Settling Claimant, for itself, agrees to:
a. give the El Paso Releasees the releases applicable to it
described in Paragraph 5 of this Agreement;
b. cooperate with the El Paso Settling Parties (and to the extent
applicable, the El Paso Releasees) as more fully set forth herein,
including, without limitation, in Paragraphs 5.7, 8.3(c), 8.8, and 12.6
of this Agreement; and
c. include in the allocation process claims of California
municipalities and California state and municipal departments and
agencies that are non-core gas customers (excluding those that
purchased gas for resale or for generation of electricity for resale)
on a pro rata basis.
28
4.3 Acknowledgement. The Parties understand and acknowledge that none
of the Consideration represents any civil fines or penalties, and all
Consideration represents payment for alleged damages, overcharges, and/or
restitution.
4.4 Application of Payments. The El Paso Settling Parties irrevocably
waive the right to direct the application of any and all payments at any time or
times hereafter received by the Settlement Fund from any of the El Paso Settling
Parties, or from any other source, on account of this Agreement, and the El Paso
Settling Parties do hereby irrevocably agree that the Designated Representative
shall have the continuing exclusive right to apply any and all payments received
at any time or times on account of this Agreement in such manner as he, she or
it may deem advisable.
4.5 Interest. If any amount of any Deferred Payment is not paid in full
when due (whether at stated maturity, by acceleration or otherwise), then the El
Paso Settling Parties shall pay interest on such unpaid amount, from the date
such amount becomes due until the date such amount is paid in full, payable on
demand of the Designated Representative at a rate equal to ten percent (10%) per
annum; provided, however, that if the preceding default interest rate is in
excess of the maximum interest rate permitted under applicable law, then the
highest interest rate permitted under applicable law shall apply. All
computations of interest shall be made on the basis of a year of 365 or 366
days, as the case may be, for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
payable. The obligations of the El Paso Settling Parties under this Paragraph
are joint and several.
5. MUTUAL RELEASES, WAIVERS AND RELATED AGREEMENTS.
5.1 Mutual Releases Between Private Parties and El Paso. As of the
Effective Date, each of the Private Parties on the one hand, and the El Paso
Settling Parties on the other hand, on behalf of themselves and their respective
Releasors, heirs, executors, and administrators, hereby releases all Claims and
Liabilities against the other's Releasees, and covenants that it will not now or
hereafter institute, maintain or assert against the other's Releasees, either
directly or indirectly, derivatively, on their own behalf, on behalf of any
class or on behalf of any other person or entity, and do hereby forever release
and discharge the other's Releasees from, any and all Claims and Liabilities of
any nature whatsoever, whether accrued or unaccrued, whether based on federal,
state or local law, statute, ordinance, regulation, contract, common law, or any
other source (whether based on breach of contract, tort, antitrust, consumer
protection, unfair business practices, fraud, securities fraud, negligence,
conspiracy or any other theory) that have been, could have been, may be or could
be alleged or asserted now or in the future against the other's Releasees on the
basis of, connected with, arising out of, or related to, in whole or in part,
natural gas, natural gas pipeline capacity and/or Electric Power, the price or
supply of natural gas, natural gas pipeline capacity and/or Electric Power,
and/or any act, omission, or transaction concerning or relating to natural gas,
natural gas pipeline capacity and/or Electric Power, including without
limitation, the purchase, sale, contracting for, scheduling, allocation,
transportation, bidding, trading, price reporting, marketing, transmission,
generation, production, and withholding of natural gas, natural gas pipeline
capacity and/or Electric Power, based in whole or in part on any alleged act,
omission, fact, matter, transaction or occurrence through March 20, 2003. This
release, covenant not to xxx and waiver includes, without limitation:
29
a. any or all of the acts, omissions, facts, matters, transactions
or occurrences that have been, could have been, may be or could be
directly or indirectly alleged, asserted, described, set forth or
referred to in any of the Actions;
b. any violations or claimed violations of any rules, regulations,
orders or protocols of any state or federal agency having or claiming
to have regulatory authority over any conduct that is the subject of
any of the above released matters including, without limitation, the
Natural Gas Act, the Natural Gas Policy Act of 1978, and the Federal
Power Act and/or any rules, regulations, tariffs, protocol or orders;
c. any Claims for refunds, contract reformation or any other
relief, any federal or state antitrust Claims, any Claims under
California Business & Professions Code Section 17200 et seq. or other
unfair competition or consumer protection statutes or laws of any
state, and any other representative, taxpayer, and class Claims;
d. any and all acts, omissions, facts, matters, transactions,
occurrences, and oral or written statements and representations made or
allegedly made in connection with or directly or indirectly relating to
this Agreement or the settlement of the Actions, except as provided in
Paragraph 5.6(n) below; and/or
e. any and all Claims for attorneys' fees, costs or disbursements
in connection with or related in any manner to any of the Actions,
settlement of the Actions, the administration of such settlement and/or
the released matters except to the extent otherwise specified in this
Agreement.
5.2 California Executive, CPUC, CEOB, CDWR, Edison, Edison
International, PG&E, PG&E Corp., AG, Northwest AGs, and Nevada AG Release of El
Paso. As of the Effective Date, each of the California Executive, the AG, the
Nevada AG, the Northwest AGs, the Active FERC Parties, and PG&E Corporation, on
behalf of themselves and their respective Releasors, and Edison International,
on behalf of itself only, hereby releases, acquits and discharges the El Paso
Releasees from any and all Claims and Liabilities of any nature whatsoever that
it has, ever had, now has, could assert, could have asserted, or hereafter may
have against the El Paso Releasees arising out of or relating to, during the
period September 1, 1996 through March 20, 2003, the exercise of market power,
manipulation or misreporting of Gas or Electric Power prices, reduction of the
supply of Gas, of natural gas pipeline capacity or of Electric Power, or other
acts or omissions of El Paso Releasees which increased, or could have increased,
Gas prices, natural gas pipeline capacity prices, or Electric Power prices in
California, Nevada, Oregon, or Washington, including, without limitation, Claims
that EPNG violated its certificates, its FERC Gas Tariff, the 1996 rate case
settlement, the Natural Gas Act, the Natural Gas Policy Act, the Federal Power
Act, and/or FERC Regulations or orders, and including, without limitation, any
Claims that were raised or any such Claims that could have been raised in the
Actions, including, without limitation, the FERC Natural Gas Proceeding, the
Federal Antitrust Proceedings, the Class Actions, the Civil Actions, and/or the
CPUC and CEOB 206 complaints.
5.3 El Paso Release of California Executive, CPUC, CEOB, CDWR, Edison,
Edison International, PG&E, PG&E Corp., AG, Northwest AGs, and Nevada AG. As of
the Effective
30
Date, the El Paso Releasors, and each of them, on behalf of themselves, their
heirs, executors, and administrators, hereby release all Claims and Liabilities
against the California Executive, CPUC, CEOB, CDWR, Edison, PG&E, PG&E
Corporation, AG, Northwest AGs, and Nevada AG, each of their respective
Releasees, and Edison International, and the El Paso Releasors covenant that
they will not now or hereafter institute, maintain or assert, either directly or
indirectly, derivatively, on the El Paso Releasees' own behalf, on behalf of any
class or on behalf of any other person or entity, and do hereby forever release
and discharge them from, any and all Claims and Liabilities of any nature
whatsoever, whether accrued or unaccrued, whether based on federal, state or
local law, statute, ordinance, regulation, contract, common law, or any other
source (whether based on breach of contract, tort, antitrust, consumer
protection, unfair business practices, fraud, securities fraud, negligence,
conspiracy or any other theory) that have been, could have been, may be or could
be alleged or asserted now or in the future against them on the basis of,
connected with, arising out of, or related to, in whole or in part, natural gas,
natural gas pipeline capacity and/or Electric Power, the price or supply of
natural gas, natural gas pipeline capacity and/or Electric Power, and/or any
act, omission, or transaction concerning or relating to natural gas, natural gas
pipeline capacity and/or Electric Power, including without limitation, the
purchase, sale, contracting for, scheduling, allocation, transportation,
bidding, trading, price reporting, marketing, transmission, generation,
production, and withholding of natural gas, natural gas pipeline capacity and/or
Electric Power, based in whole or in part on any alleged act, omission, fact,
matter, transaction or occurrence through March 20, 2003.
5.4 Amounts Owed for Power Sales by El Paso to PG&E through the ISO and
PX. The El Paso Releasors sold power to the California ISO and PX from May 2000
to January 17, 2001, portions of which power were then purchased by PG&E. The El
Paso Releasors have not been paid by PG&E for some of the power sold through the
ISO and PX, and have asserted a claim in PG&E's bankruptcy for the unpaid
amounts. PG&E has alleged in the Refund Proceeding and related proceedings that
the prices for that power were excessive, and has sought refunds on the amounts
charged for such power. The El Paso Releasors agree to release any Claim for
amounts owed for sales of power to PG&E through the ISO and PX. In turn, PG&E,
PG&E Corp., and their respective Releasors agree to release any Claim to a
refund from any of the El Paso Releasees (as distinguished from a refund from
other market participants, which PG&E remains free to pursue). In order to
implement this arrangement, the El Paso Releasors will withdraw their claim in
the PG&E bankruptcy proceeding for power sold through the ISO and PX to PG&E
(Claim No. 0008837). Any funds received by any of the El Paso Releasors from ISO
and PX in respect to power sales to PG&E shall be paid over to PG&E.
Additionally, the El Paso Releasors will assign to PG&E their rights to receive
funds from the ISO/PX related to power sales through the ISO and PX to PG&E.
This assignment is to be an assignment of rights to receive money, and will not
include or in any respect carry with it an obligation to pay money. In no event
will PG&E, PG&E Corp., or their respective Releasors be required to make any
payment to the El Paso Releasors or to the ISO and PX under this Paragraph.
5.5 Limitations on and Exclusions From Releases. Notwithstanding
anything to the contrary contained herein:
a. Bodily Injury and Property Damage Claims of Class Members. This
Agreement does not release Claims that any member of the Class other
than a named
31
plaintiff may have against El Paso for bodily injuries or physical
damage to real or personal property.
b. Contract-Based Claims Between El Paso and Private Parties or
Class Members. This Agreement does not release Claims that any Private
Party or Class member, or their Releasors, may have against any El Paso
Releasee, or Claims that any El Paso Releasor may have against any
Private Party or Class member, or their Releasees, based solely on the
performance or non-performance of the parties under a contract between
the parties. However, no such performance-based Claim between such
parties shall rely upon or be based on a claim or defense that any of
the conduct or matters referred to in Paragraph 5.2 either (i)
wrongfully or improperly influenced or otherwise affected the price or
service under the contract and/or (ii) extinguished, diminished or
otherwise modified the obligations of the parties under the contract.
c. Contract-Based Claims Between El Paso and Other Parties.
Because certain Settling Claimants and El Paso have now and will
continue to have business relationships, and have obligations pursuant
to those relationships, this Agreement does not release Claims that the
California Executive, CPUC, CEOB, CDWR, Edison, PG&E, AG, Northwest
AGs, or Nevada AG, or their respective Releasors, or Edison
International, may have against any El Paso Releasee, or Claims that
any El Paso Releasor may have against any of those Parties or their
Releasees for monies owed for services, products or goods provided
after January 1, 2003. Notwithstanding any contrary provision in this
Agreement, this Agreement does not release any Claims based solely on
the performance or non-performance of the parties under a power
purchase contract and/or related interconnection agreement (jointly,
"QF Contract") between a utility and a qualifying facility who are
subject to the releases set forth above ("Performance-based QF Claim").
However, except as necessary to participate in the specific CPUC
proceeding described in the next sentence and to defend such orders as
the CPUC may make in that proceeding, no such Performance-based QF
Claim between such parties shall rely upon or be based on a claim or
defense that any of the conduct or matters released in Paragraphs 5.2
and 5.3 above either (i) wrongfully or improperly altered, influenced
or otherwise affected the price applicable to energy sold under the QF
Contract and/or (ii) extinguished, diminished or otherwise modified the
obligations of the parties under the QF Contract, including, but not
limited to, the obligation of the utility to pay the contract price for
power delivered by a qualifying facility in accordance with the terms
of the QF Contract. Nor does anything in this Agreement release any
potential liability that any qualifying facility may have in connection
with the Order Instituting Rulemaking into Implementation of Pub. Util.
Code 390, Docket No. R.00-00-000, which is currently pending before the
CPUC.
d. Original Contract Claims. This Agreement does not release
Claims that the El Paso Releasors have asserted or may assert against
any Party or their Releasees for monies owed under the Original
Contract (until such time as the Renegotiated Contract is in effect).
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e. No Release Between Settling Claimants. Nothing in this
Agreement shall constitute or be construed as a release of any Claim or
Liability as between any Settling Claimant and any other Settling
Claimant, or their respective Releasees.
f. Matters of General Applicability. The releases set forth above
in Paragraphs 5.1 through 5.3 do not include matters of general
applicability, including, without limitation, environmental,
permitting, health, safety, and taxation.
g. On-Going and Future Proceedings.
(i) Subject to the provisos set forth in Paragraph 11.5 of
the FERC Settlement Agreement, nothing in this Agreement shall
replace or supplant any remedies available to shippers resulting
from the Capacity Allocation Proceeding.
(ii) Nothing in this Agreement shall bind the CPUC in any
ruling in proceedings before the CPUC, including, but not limited
to, the CPUC's Order Instituting Rulemaking into Implementation of
Public Utilities Code Section 390, Rulemaking 99-11-02.
(iii) Nothing in this Agreement shall limit the CEOB, CDWR or
the CPUC in collecting information or in investigating any matter
that is not related to the Claims released in Paragraph 5.2.
(iv) Nothing in this Agreement shall restrict the ability of
the CPUC to continue its investigation of the manipulation of
natural gas prices or services, generator operation and
maintenance, or to carry out its responsibilities under SB 39XX.
(v) Nothing in this Agreement shall restrict the ability of
the CPUC to continue its investigation of generator operation and
maintenance, or from collecting information or investigating any
matter for the purposes of making policy and/or legal arguments
for rule changes, market reform, market mitigation, or related
matters, or from making such policy arguments in any forum, based
on information resulting from such investigation.
(vi) The Parties expressly acknowledge that the CPUC and CEOB
206 Complaints, the Refund Proceeding, the AG 206 Complaint, and
the Puget Sound Proceeding are continuing with respect to entities
other than the El Paso Releasees, and agree that nothing herein
shall preclude any Settling Claimant from seeking relief from
parties other than El Paso Releasees or from continuing its
participation in such proceedings or any other proceedings
(including the Capacity Allocation Proceeding, any actions on
appeal, any CPUC proceedings, any public utility commission
proceedings or like proceedings in the states of Washington and
Oregon, and any of the Civil Actions or Class Actions).
(vii) Nothing in this Agreement shall restrict the ability of
any of the Settling Claimants or their Releasors to continue to
participate in any existing proceeding, or to bring or participate
in any future proceeding, that does not
33
include specific released Claims against any El Paso Releasees,
but could indirectly affect any of them, such as but not limited
to proceedings concerning market structure, scheduling rules,
generally applicable market rules, and generally applicable price
mitigation.
(viii) Nothing in this Agreement shall be construed to
prohibit the Settling Claimants or their Releasors from
participating in a proceeding in which other parties to that
proceeding have asserted, or may assert Claims against any El Paso
Releasee.
h. Predecessor and Successor Releases. All releases granted herein
to predecessors or inuring to the benefit of successors or assigns
(including by merger or other operation of law), whether through the
definition of "Releasee" or otherwise, shall not extend to Claims or
Liabilities based on acts or omissions of the predecessor, successor or
assign that were committed independently, or in concert with others, by
that person or entity at a time when that person or entity did not
qualify as one of the Settling Claimants, the El Paso Settling Parties,
or their respective Affiliates and Subsidiaries.
5.6 Additional Release Provisions.
a. Releases by AG, the Northwest AGs and the Nevada AG. Nothing in
this Agreement affects the right of the AG, the Northwest AGs or the
Nevada AG to pursue criminal prosecution for any offense or to assert
unknown Claims of willful fraud for any acts or omissions by any El
Paso Releasee both before or subsequent to the Effective Date. Nothing
in this Agreement affects the rights of the Nevada AG with respect to
the Nevada Power Proceeding with respect to parties to that proceeding
other than El Paso Releasees.
b. Retraxit. Neither this Agreement, the releases provided herein,
any judgment entered thereon, nor any dismissal entered pursuant to
this Agreement shall constitute or be construed as a retraxit.
c. Standing. Nothing contained in Paragraph 5.6(j) of this
Agreement shall create or be deemed to create in favor of any of
Settling Claimant any rights, express or implied, with respect to the
Original Contract or Renegotiated Contract that did not exist prior to
the date of this Agreement .
d. Waivers. Notwithstanding anything herein to the contrary,
nothing in this Agreement shall constitute a limitation on, or waiver
of, any right to enforce any obligation or pursue any remedy provided
for under this Agreement or under any Security Document.
e. No Third Party Beneficiaries of Releases. No parties other than
the Settling Claimants, PG&E Corporation, their respective Releasees,
Edison International, and the El Paso Releasees shall be entitled to
the benefits of, or entitled to enforce, the releases provided for in
this Agreement.
34
f. AG Authority and Notices. The AG enters into these releases on
behalf of the State of California, each of California's public agencies
(except for the CPUC, CEOB, and CDWR, who are themselves Parties to
this Agreement), and each of California's political subdivisions,
including all of California's cities, counties and other municipal
entities and their respective political subdivisions and agencies, to
the fullest extent of the AG's authority allowed by law. The AG agrees
to ensure that the long form class notice will be sent to California
municipalities and California state and municipal departments and
agencies that are also non-core gas customers, and that the long form
notice will state that those entities (excluding those that purchased
gas for resale or for generation of electricity for resale) have the
right to make a claim for allocation of settlement proceeds on a pro
rata basis.
g. Northwest AGs' Authority. The Attorneys General of the States
of Oregon and Washington enter into these releases as chief law
enforcement officers of their respective states, and to the full extent
of their legal authority to bring Claims against any El Paso Releasee.
h. Nevada AG Authority. The Nevada AG enters into these releases
as chief law enforcement officer of the State of Nevada and on behalf
of individuals and entities residing in Nevada to the full extent of
its parens patriae authority.
i. Fairness of Settlement. The Parties agree that this settlement
is fair and reasonable and adequate to provide complete satisfaction of
the interests of the People of the State of California, California
consumers and taxpayers, the State of California, and its political
subdivisions and public agencies, as well as the People of the States
of Nevada, Oregon, and Washington, including full and adequate
restitution of any allegedly unjust gains or allegedly improper
overcharges obtained by the El Paso Releasees, or any of them, for the
claims released herein.
j. Renegotiated Contract Challenges. Each of the Parties further
waives and releases all rights to challenge the terms, conditions,
rates and/or validity of the Renegotiated Contract, and whether such
contract is Just and Reasonable, or in the public interest, for and
with respect to the entire term thereof, including any rights under
Sections 205 and/or 206 of the Federal Power Act to request the FERC to
revise the terms and conditions and the rates or services specified in
the Renegotiated Contract, and hereby further covenants to make no
filings at the FERC or with any other state or federal agency, board,
court or tribunal challenging the rates, terms and conditions of the
Renegotiated Contract as to whether it is lawful, Just and Reasonable,
or in the public interest. The Parties stipulate and agree that the
foregoing shall be effective regardless of what, if any, action the
FERC may take as a result of its ongoing proceeding entitled Proposed
Policy Statement Regarding the Standard of Review for Proposed Changes
to Market Based Rate Contracts for Wholesale Sales of Electric Energy
by Public Utilities, FERC Stat. & Regs. 32,562 (Aug. 1, 2002).
k. Section 1542 Waiver. Except for unknown Claims expressly
preserved in this Paragraph 5, each Party expressly waives the benefits
of any statutory provision or common law rule that provides, in sum or
substance, that a release does not extend to
35
Claims which the party does not know or suspect to exist in its favor
at the time of executing the release, which if known by it, would have
materially affected its settlement with the other party. In particular,
but without limitation, the Parties expressly understand the provisions
of California Civil Code Section 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Each Party hereby agrees (i) that the provisions of California Civil
Code Section 1542 are hereby knowingly and voluntarily waived and
relinquished, and (ii) that the provisions of all similar federal or
state laws, rights, rules, or legal principles of any other
jurisdiction, to the extent that they are found to be applicable
herein, also are hereby knowingly and voluntarily waived and
relinquished. Notwithstanding the foregoing waiver of California Civil
Code Section 1542, the Parties acknowledge that the releases set forth
in this Agreement are specific to the matters set forth in the releases
and are not intended to create general releases as to all claims, or
potential claims, between the releasing and released Parties.
l. Other Unknown Claims. In connection with the releases contained
herein, each Party acknowledges that it is aware that it may hereafter
discover Claims presently unknown or unsuspected, or facts in addition
to or different from those which it now knows or believes to be true
with respect to the matters released herein. Nevertheless, it is the
intention of each Party in executing this Agreement to fully, finally
and forever settle and release all such matters, and all Claims
relating thereto, which exist, hereafter may exist, or might have
existed (whether or not previously or currently asserted in any
Action), in accordance with the releases contained herein.
m. Essential Terms. All Parties hereby expressly agree and
acknowledge that each of the releases contained herein constitutes an
essential term of this Agreement and that the Agreement shall be null
and void if any release shall not be approved or shall be deemed
ineffective.
n. Limitations on Waivers. Nothing in the above releases shall
constitute a limitation to, or waiver of, any right to enforce any
obligation or pursue any remedy provided under this Agreement
(including the enforcement of the releases provided by the Parties
hereunder), the Renegotiated Contract, the Stipulated Judgment, the
FERC Settlement Agreement, any Security Document, or any other document
delivered hereunder.
o. Attorneys' Fees and Costs. The Parties stipulate and agree that
the Consideration being provided by El Paso pursuant to this settlement
is inclusive of and constitutes full payment of any claim for
attorneys' fees and costs, and the Parties hereby waive and release any
and all further Claims for attorneys' fees or costs, statutory or
otherwise, related in any way to disputes pre-dating this Agreement or
related to the
36
Parties' entry into and any required Court and regulatory approvals of
this Agreement and the FERC Settlement Agreement.
p. Negotiation of Releases. Each of the Parties acknowledges and
agrees that the various releases in this Agreement were individually
negotiated with the various releasing parties under such releases and
that such releases should be interpreted individually in the context of
this Agreement without regard to other releases herein.
q. Breaches of Agreement. The Parties expressly understand that
both direct and indirect breaches of the provisions of this Agreement
are proscribed. Therefore, the Settling Claimants, PG&E Corporation,
their respective Releasors, and Edison International, on the one hand,
and the El Paso Releasors, on the other hand, covenant that each will
not institute or prosecute, against the other or their respective
Releasees any action or other proceeding based in whole or in part upon
their respective Claims released by this Agreement, except as expressly
permitted in Paragraph 5 of this Agreement.
5.7 Cooperation.
a. With the AG and Northwest AGs. The El Paso Settling Parties
agree to cooperate with the AG and the Northwest AGs in their civil law
enforcement investigations of the western Electric Power and Gas
markets, provided that such cooperation shall not obligate any of the
El Paso Settling Parties to waive any privileges and shall have the
right to be represented by counsel at any stage of the investigations.
As part of their ongoing cooperation obligations, the El Paso Settling
Parties shall make available for interviews and depositions by the AG
and the Northwest AGs at mutually convenient times and locations
witnesses over whom they have the legal authority to direct or compel
attendance. The AG and Northwest AGs agree to make transcripts or
recordings of these interviews and depositions available for inspection
by El Paso, its witnesses, or its counsel upon request, with reasonable
notice, by El Paso. The El Paso Settling Parties shall have the right
to have counsel present at all interviews and depositions. The AG and
the Northwest AGs will seek information in a focused manner, and will
work with the El Paso Settling Parties to streamline information and
requests as appropriate. The witness interviews, depositions and all
documents disclosed pursuant to this Paragraph 5.7 shall be subject to
the existing or future confidentiality agreements and protective orders
between the El Paso Settling Parties and the AG and the Northwest AGs
and the confidentiality provisions of: as to the AG, Calif. Gov't Code
Section 11180, et seq.; as to the Oregon Attorney General, Or. Rev.
Stat. Section 646.836; and as to the Washington Attorney General, Wash.
Rev. Code Section 19.86.110. As a further part of their ongoing
cooperation, the El Paso Settling Parties will continue to produce
documents to the AG and the Northwest AGs as requested. All documents
provided to the AG and the Northwest AGs pursuant to this Agreement
will also be treated as confidential by the AG under Calif. Gov't Code
Section 11180, et seq., and by the Northwest AGs under Or. Rev. Stat.
Section 646.836 as to the Oregon Attorney General, and Wash. Rev. Code
Section 19.86.110 as to the Washington Attorney General. The El Paso
Settling Parties shall not contend that the AG has violated Cal. Gov't
Code Section 11180 et seq. by providing documents received from the El
Paso Settling Parties to the Northwest AGs. The documents produced to
the AG and
37
the Northwest AGs by the El Paso Settling Parties under this Agreement
and pursuant to the AG and the Northwest AGs subpoenas can be used by
the AG and the Northwest AGs in litigation against third parties
pursuant to a court approved protective order. The AG and the Northwest
AGs shall give reasonable notice to the El Paso Settling Parties of
their intent to use such documents in litigation, which notice shall
specify the terms of the protective order under which they may be used.
The AG and the Northwest AGs will promptly notify the El Paso Settling
Parties in writing when their investigations are closed and will, upon
request by El Paso and at El Paso's sole cost and expense, return any
documents produced by El Paso during the course of their
investigations. This provision for continuing cooperation by the El
Paso Settling Parties shall extend to the conclusion of the AG and the
Northwest AGs litigation and active investigations of the Western
energy markets, and include cooperation through any trials and appeals
as necessary.
b. With the Class Plaintiffs and Private Parties. Each of the El
Paso Settling Parties covenants that it will fully cooperate with
ongoing investigations and discovery in the Civil Actions and Class
Actions by the Class Plaintiffs and Private Parties. As part of their
ongoing cooperation obligations, the El Paso Settling Parties shall
make witnesses over whom they have the legal authority to direct or
compel attendance available for depositions by the Class Plaintiffs and
Private Parties, and shall use their best efforts in good faith to make
their former employees available for depositions by the Class
Plaintiffs and Private Parties, at mutually convenient times and
locations and shall complete their responses to existing document
requests. The depositions and document productions shall be subject to
the existing and future confidentiality agreements and protective
orders between the El Paso Settling Parties and the Class Plaintiffs
and Private Parties. The El Paso Settling Parties shall respond to
existing and future discovery in the Civil Actions and Class Action
with all the rights and obligations as if they were parties to those
Actions. It is specifically understood, acknowledged and agreed on by
the El Paso Settling Parties, Class Plaintiffs and the Private Parties
that the rule of Dart Industries Co. v. Westwood Chemical Co., 649 F.2d
646 (9th Cir. 1980), and any similar rule, insofar as it might deny,
limit or restrict a plaintiff's request to engage in discovery against
a defendant following a release of that defendant, is inapplicable with
respect to this Agreement and is not intended by the parties hereto to
be the result of entry into this Agreement, release, or any
accompanying agreement, dismissal or judgment, as grounds, either in
whole or in part, for objecting to any present or future discovery that
Class Plaintiffs or the Private Parties have or may have against the El
Paso Settling Parties.
c. With the Active FERC Parties. Each of the El Paso Settling
Parties covenants that it will fully cooperate with ongoing
investigations and discovery in the Refund Proceeding by the Active
FERC Parties and in the CPUC Gas OII. As part of their ongoing
cooperation obligations, the El Paso Settling Parties shall make
witnesses over whom they have the legal authority to direct or compel
attendance available for depositions by the Active FERC Parties, and
shall use their best efforts in good faith to make their former
employees available for depositions by the Active FERC Parties, at
mutually convenient times and locations and shall complete their
responses to existing document requests. The depositions and document
productions shall be subject to the existing and future confidentiality
agreements and protective orders between the El Paso
38
Settling Parties and the Active FERC Parties. The El Paso Settling
Parties shall respond to existing and future discovery in the Refund
Proceeding with all the rights and obligations as if they were parties
to that proceeding. It is specifically understood, acknowledged and
agreed on by the El Paso Settling Parties and the Active FERC Parties
that the rule of Dart Industries Co. v. Westwood Chemical Co., 649 F.2d
646 (9th Cir. 1980), and any similar rule, insofar as it might deny,
limit or restrict a plaintiff's request to engage in discovery against
a defendant following a release of that defendant, is inapplicable with
respect to this Agreement and is not intended by the parties hereto to
be the result of entry into this Agreement, release, or any
accompanying agreement, dismissal or judgment, as grounds, either in
whole or in part, for objecting to any present or future discovery that
the Active FERC Parties have or may have against the El Paso Settling
Parties.
6. DISMISSALS, TERMINATIONS, AND RELATED ACTION.
6.1 AG and Northwest AGs' Investigations and Subpoenas. The AG and each
of the Northwest AGs (i) upon the Effective Date of this settlement, shall
promptly voluntarily withdraw or dismiss with prejudice (or, if necessary by
applicable rule, request withdrawal or dismissal with prejudice from the court
or tribunal) all pending claims or actions against any of the El Paso Releasees,
including without limitation the AG 206 Complaint, and will terminate all
outstanding investigations and all subpoenas to the El Paso Releasees relating
to the released matters, including without limitation the AG Investigation and
the AG Subpoena, and (ii) will not file any actions or initiate any formal or
informal investigations against any of the El Paso Releasees based on, arising
out of or related to any released matters or any legal theory based on or
related to conduct underlying any of the released matters. All pending claims,
actions, investigations and discovery are stayed pending the Effective Date of
the settlement.
6.2 CDWR, CPUC, and CEOB Investigations. CDWR, CPUC, and CEOB each
agree that promptly after the Effective Date, it will terminate any and all
investigations as to El Paso as they relate to the pursuit of claims released in
Paragraph 5.2 and will not initiate any new investigations against El Paso that
are related to the pursuit of claims released in Paragraph 5.2.
6.3 Class Actions. Class Plaintiffs shall seek and obtain from the
Class Action Court, as a condition of settlement, an Order and Judgment which
shall, among other things, (a) approve this Agreement as fair, reasonable, and
adequate, and (b) dismiss the Class Actions as to El Paso with prejudice, as set
forth above in Paragraph 3, effective as of the Effective Date. The contents of
each such filing shall be consistent with the terms and conditions of this
Agreement.
6.4 CPUC and CEOB 206 Complaints. Within forty-five (45) calendar days
following execution of this Agreement, the CPUC and the CEOB shall file a motion
consistent with the terms of this Agreement for partial dismissal of the CPUC
and CEOB 206 Complaints effectuating the releases and withdrawals with prejudice
of any and all Claims, Liabilities and proposed remedies, or other relief sought
insofar as they pertain to the El Paso Releasees, as specified in this
Agreement; provided, however, that (i) such dismissal shall be contingent upon
the settlement becoming effective, and shall be void ab initio if the Effective
Date never occurs, and (ii) El Paso shall so stipulate in a writing to be filed
with such motion.
39
6.5 Retraxit. All documents of dismissal required by this Paragraph 6
shall include express language that dismissal shall not act as a retraxit.
6.6 Stay of Actions/Tolling. The Parties hereby stipulate that the time
between the date hereof and the date on which Closing occurs, or the date on
which this Agreement is terminated as provided in Paragraph 10 hereof, shall not
be counted or utilized by a Party hereto in determining the date of the running
of any statute of limitations or mandatory dismissal statute, or the
applicability or viability of any laches defense, estoppel defense, waiver
defense, and/or bar date, and/or any other similar legal or equitable defense,
denial or objection, regarding the Released Claims or any of the Actions. The
Parties hereby further stipulate to a stay of all Actions, the AG Subpoena, and
the AG Investigation as to the El Paso Releasees pending on the Effective Date
of the settlement memorialized by this Agreement, except as may be necessary to
consummate this Agreement; provided, however, that the foregoing stipulation
shall not preclude any Party hereto from seeking relief from parties other than
the El Paso Releasees, or from continuing its participation in such proceedings
or any other proceedings pending on the Effective Date of the settlement
memorialized by this Agreement.
6.7 FERC Proceedings. Within forty-five (45) calendar days following
execution of this Agreement, Settling Claimants who are parties to or
intervenors or participants in the Refund Proceeding, the Puget Sound
Proceeding, the Nevada Power Proceeding, the Fact Finding Investigation and the
AG Complaint shall file motions consistent with the terms of this Agreement in
the appropriate FERC dockets for partial dismissal effectuating the releases and
withdrawals with prejudice of any and all Claims, Liabilities and proposed
remedies, or other relief sought insofar as they pertain to any of the El Paso
Releasees, as specified in this Agreement; provided, however, that (i) such
dismissals shall be contingent upon the settlement becoming effective, and shall
be void ab initio if the Effective Date never occurs, and (ii) El Paso shall so
stipulate in a writing to be filed with such motion.
6.8 Essential Terms. All Parties hereby expressly agree and acknowledge
that dismissal of each of the Actions to the extent set forth in this Agreement
constitutes an essential term of this Agreement and that, if any of the Actions
is not dismissed in accordance with this Agreement, the Agreement shall be null
and void and of no further effect, with all rights, duties and obligations of
the Parties thereafter restored as if this Agreement had never been executed.
7. REPRESENTATIONS AND WARRANTIES.
7.1 All Parties. Except as set forth in Paragraph 7.2, each of the
Parties hereto, Edison International, and PG&E Corporation, represents and
warrants, as to itself, to each other Party, Edison International, and PG&E
Corporation, and each El Paso Settling Party, for itself, further represents and
warrants to the Settlement Fund and Collateral Agent, as of the date hereof as
follows (to the extent applicable):
a. the recitals with respect to it set forth in Paragraph 2 of
this Agreement are true and accurate in all respects;
b. it has the full power and authority to enter into this
Agreement and the Security Documents on behalf of itself, its company,
Class members, citizenry, and/or
40
government, and to perform all transactions, duties and obligations
herein and therein set forth;
c. it has taken all necessary actions duly and validly to
authorize the execution and delivery of this Agreement and the other
documents and agreements provided for herein to be executed and
delivered by it (including without limitation the Security Documents
and Renegotiated Contract) in accordance with applicable law;
d. it has authorized and directed its respective attorneys to have
such papers executed and to take such other action as is necessary and
appropriate to effectuate the terms of this Agreement;
e. it has duly and validly executed and delivered this Agreement
and, on the Effective Date, will have duly and validly executed and
delivered, the Security Documents and the other documents and
agreements provided for herein to be executed and delivered by it;
f. this Agreement constitutes, and the Security Documents and
other documents and agreements provided for herein to be executed and
delivered by it will constitute on and after Closing, its legal, valid
and binding obligations, enforceable against it in accordance with this
Agreement's terms and the respective terms of the other documents and
agreements provided for herein to be executed and delivered by it
(including, without limitation, the Security Documents and Renegotiated
Contract);
g. it has not sold, assigned, transferred, or encumbered, or
otherwise disposed of, in whole or in part, voluntarily or
involuntarily, any claim of any nature whatsoever released pursuant to
this Agreement;
h. no promise, inducement or agreement not expressed herein has
been made in connection with this Agreement;
i. to the extent that it deemed it necessary and desirable, it
independently received appropriate, adequate, and competent technical,
economic and legal and other advice with respect to this Agreement and
the other documents delivered by or on behalf of the Parties under or
in connection with this Agreement, and has not relied upon any
technical, economic, legal or other advice provided to it by any other
Party with respect hereto;
j. it is represented by competent counsel with respect to this
Agreement and all matters covered by it; and
k. it has been fully advised by said counsel with respect to its
rights and obligations and with respect to the execution of this
Agreement.
7.2 Required Votes. The Board of Commissioners of the Los Angeles
Department of Water and Power and the Long Beach City Council have not yet had
an opportunity to conduct the required votes on whether to approve this
Agreement. Accordingly, this Agreement is executed by counsel for each of these
Parties subject to such approval. Not later than five (5)
41
Business Days after each such vote is taken, counsel for each of these Parties
shall certify the results of their respective votes in writing to each of the
other Parties to this Agreement, and these writings shall be appended to and
made a part of this Agreement.
7.3 CDWR, CEOB, and CPUC. Each of the CDWR, CEOB, and CPUC represents
and warrants, for itself, to each other Party that as of the date hereof, it is
not aware of any pending or existing lawsuits, claims, or formal or informal
investigations or inquiries by or on behalf of it against any of the El Paso
Settling Parties related to the claims it is releasing in this Agreement other
than the claims it is releasing in this Agreement and the claims,
investigations, and inquiries described in this Agreement.
7.4 AG, Northwest AGs and Nevada AGs. Each of the AG, the Northwestern
AGs and the Nevada AG, for himself or herself, represents and warrants, to each
other Party that as of the date hereof, he or she is not aware of any pending or
existing lawsuits, claims, or formal or informal investigations or inquiries by
or on behalf of him or her against any of the El Paso Settling Parties related
to the claims it is releasing in this Agreement other than the claims he or she
is releasing in this Agreement and the claims, investigations, and inquiries
described in this Agreement.
7.5 El Paso Settling Parties.
a. Non Contravention. Each El Paso Settling Party represents and
warrants, for itself, to the Settling Claimants, Settlement Fund, and
Collateral Agent that the execution and delivery of this Agreement by
it, and the performance of its obligations hereunder, will not (i)
violate any material statute, rule or regulation applicable to it, (ii)
violate any order of any governmental authority applicable to it, or
(iii) result in a default under any provision of any indenture, credit
agreement, or other agreement relating to repayment of borrowed money
or any guarantee of the foregoing.
b. Reasonably Equivalent Value and Solvency. El Paso Corporation
and EPNG each represent and warrant, for itself, to the Settling
Claimants, Settlement Fund, and Collateral Agent as follows as of the
date hereof:
(i) Reasonably Equivalent Value. It has made an independent
determination of the fair market value of all Consideration it is
providing to the Settling Claimants and the Settlement Fund and
has determined that the fair market value of that Consideration is
reasonably equivalent to the fair market value of all
consideration received by it pursuant to this Agreement from the
Settling Claimants.
(ii) Solvency. Before and after giving effect to the
transactions contemplated by this Agreement, (A) its financial
condition is and will be such that the fair value of its property
(exclusive of property transferred, concealed or removed with
intent to hinder, delay or defraud any creditor) exceeds the sum
of its debts, (B) it has not incurred and will not have incurred,
and does not intend to incur, debts beyond its ability to pay as
they become due, and (C) it has and will have sufficient capital
to conduct its business affairs.
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c. Subsidiaries and Affiliates. The El Paso Settling Parties
represent and warrant to the Settling Claimants that attached hereto as
Appendix 7.5(c) is a complete list of their Affiliates and
Subsidiaries, which list shall be conclusively deemed exclusive with
respect to the scope of the releases granted by the Settling Claimants
to the El Paso Releasees pursuant to Paragraphs 5.1 and 5.2; provided
that such releases may not be enforced in favor of such Affiliates or
Subsidiaries if (i) they do not in fact meet the definition of an
Affiliate or Subsidiary under Paragraphs 1.8 and 1.114 hereof, and (ii)
they do not qualify as an El Paso Releasee under any other provision of
this Agreement.
7.6 Edison. Edison represents and warrants to the El Paso Settling
Parties that attached hereto as Appendix 7.6 is a complete list of its
Affiliates and Subsidiaries, which list shall be conclusively deemed exclusive
with respect to the scope of the release granted by the El Paso Releasors to
Edison pursuant to Paragraph 5.3; provided that such release may not be enforced
in favor of such Affiliates or Subsidiaries if (i) they do not in fact meet the
definition of an Affiliate or Subsidiary under Paragraphs 1.8 and 1.114 hereof,
and (ii) they do not qualify as a Releasee under any other provision of this
Agreement.
7.7 PG&E and PG&E Corporation. PG&E and PG&E Corporation represent and
warrant to the El Paso Settling Parties that attached hereto as Appendix 7.7 is
a complete list of their Affiliates and Subsidiaries, which list shall be
conclusively deemed exclusive with respect to the scope of the releases granted
by the El Paso Releasors to PG&E and PG&E Corporation pursuant to Paragraph 5.3;
provided that such releases may not be enforced in favor of such Affiliates or
Subsidiaries if (i) they do not in fact meet the definition of an Affiliate or
Subsidiary under Paragraphs 1.8 and 1.114 hereof, and (ii) they do not qualify
as a Releasee under any other provision of this Agreement.
7.8 Survival of Representations and Warranties. The representations and
warranties of the Parties set forth in Paragraphs 7.1 through 7.7 of this
Agreement shall survive the Closing indefinitely.
8. COVENANTS AND OTHER AGREEMENTS.
8.1 Allocation and Distribution of Consideration.
a. Distribution of Consideration. The Settling Claimants agree to
apportion all Consideration among themselves in accordance with the
terms of the Allocation Agreement.
b. Northwest AGs' Consideration. The portion of the Consideration
allocated to the Northwest AGs in the Allocation Agreement shall be
used for the benefit of energy consumers in their respective states at
the sole discretion of the Northwest AGs. At the Northwest AGs'
discretion, such benefit may be direct or indirect. Up to twelve
percent (12%) of the total amount of the Northwest AGs' apportionment
may be used by the Northwest AGs' to pay for costs, attorneys' fees and
administrative expenses incurred in the Northwest AGs' Investigation
and settlement negotiations, including, but not limited to, costs,
attorneys' fees, and administrative expenses related to implementation
of this Agreement.
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c. CPUC Approval of Accounting Rules. The Settling Claimants
acknowledge and agree that the CPUC has jurisdiction over the rate
treatment and accounting for any Consideration received by
investor-owned California Gas or Electric Power public utilities.
Accordingly, as soon as practicable after the date of this Agreement,
the CPUC shall conduct proceedings and issue a decision adopting rules
governing the California public utilities' accounting treatment for any
Consideration they receive, including how that Consideration shall be
allocated for the benefit of their ratepayers.
d. El Paso Responsibilities. El Paso shall have no responsibility
for, and no liability whatsoever with respect to, the allocation among
Class Plaintiffs, Class Plaintiffs' Counsel, all other non-El Paso
Parties, and any other Person or governmental unit that may assert some
claim thereto, of any part of the Consideration, and El Paso takes no
position with respect to such matters, including, without limitation,
Paragraphs 8.1(a), 8.1(b), and 8.1(c) of this Agreement, nor shall
anything contained within these provisions constitute a condition
precedent to the effectiveness of this Agreement.
8.2 Clawback. If under any applicable state or federal law all or any
part of any Consideration paid or delivered to the Settlement Fund or any of its
designee(s) or any of the Settling Claimants by an El Paso Settling Party is
subsequently invalidated, declared to be fraudulent or preferential, or set
aside, then, to the extent the Settlement Fund, any of its designee(s), or any
Settling Claimants are required to return such property or pay the value thereof
or refund any payment, the other El Paso Settling Parties' obligations hereunder
shall be reinstated to the extent of the avoided Consideration.
8.3 Covenants Relating to Collateral and Secured Obligations. The El
Paso Settling Parties and the Settling Claimants covenant and agree with each
other as follows:
a. Collateral Coverage. Each of the El Paso Settling Parties
covenants and agrees that the aggregate Value of the Acceptable
Collateral shall be equal to or greater than the sum of the following,
measured as of the close of each calendar quarter, so long as any
Deferred Payments or Additional Payments, as the case may be, remain
outstanding: (1) the Discounted Amount of the Deferred Payments, and
(2) the Discounted Amount of the Additional Payments. As used herein,
the "Value" of the Collateral shall be the following:
(i) with respect to any Letter of Credit or cash equivalent
Collateral, 100% of the stated amount thereof (as reduced from
time to time in accordance with the terms thereof);
(ii) with respect to any Oil & Gas Collateral, 130% of the
Reported Value thereof, as determined by an Independent Consultant
in the most recent report delivered with respect to Oil & Gas
Collateral pursuant to this Agreement; and
(iii) with respect to any Other Collateral, that percentage
of the fair market value thereof determined by the Designated
Representative in its
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reasonable discretion at the time such Other Collateral is pledged
to the Settling Claimants pursuant to any Security Documents.
The El Paso Settling Parties shall be entitled to designate as of
the date of any Compliance Certificate a portion of the Collateral to
be held exclusively for the benefit of the Settling Claimants (the "MSA
Portion") and a portion of the Collateral to be held exclusively for
the benefit of the Additional Payees (the "AP Portion") to be
allocated, respectively, between the Settling Claimants and the
Additional Payees in proportion to the Deferred Payments of the
Settling Claimants and the Additional Payments of the Additional
Payees, provided that at the time of such designation, the El Paso
Settling Parties are in compliance with the Collateral maintenance
requirements set forth in this Paragraph 8.3(a) (as determined as of
the date of such Compliance Certificate).
b. Compliance Certificate and Independent Consultant's Reports. On
the Effective Date and not more than three months after each
Measurement Date thereafter, El Paso Corporation shall deliver or cause
to be delivered to the Designated Representative a report of one or
more Independent Consultants addressed to the Designated Representative
confirming the Reported Value of the Oil & Gas Collateral. On the
Effective Date and within sixty (60) days after the close of each
calendar quarter thereafter, El Paso Corporation shall deliver or cause
to be delivered to the Designated Representative a certificate of a
Responsible Officer of El Paso Corporation to the effect that the El
Paso Settling Parties are in compliance with the collateral maintenance
requirements set forth in Paragraph 8.3(a) of this Agreement (and, for
purposes of such certificate, such officer may rely on any report
referred to in this Paragraph) (the "Compliance Certificate"). In the
case of any allocation of Collateral to the Settling Claimants and the
Additional Payees, such compliance shall be determined separately with
respect to the MSA Portion and AP Portion. Upon written reasonable
request by the Designated Representative, El Paso Corporation shall
deliver to the Designated Representative such production reports and
other internally prepared reports as it may have to enable the
Designated Representative to confirm independently El Paso
Corporation's compliance with the terms of Paragraph 8.3(a) of this
Agreement.
c. Cooperation with Pledge or Sale by Settling Claimants. Each of
the El Paso Settling Parties covenants and agrees that the Settlement
Fund shall have the right, upon ninety (90) days prior written notice
to, but without the consent of, El Paso Corporation, any other El Paso
Settling Party, or any El Paso Pledgor, to sell, pledge or otherwise
assign or convey in a Monetization or otherwise any or all of its
interest in the Deferred Payments, together with its rights in the
related Collateral, to one or more third parties. El Paso Corporation
agrees to cooperate, and shall cause each El Paso Settling Party and El
Paso Pledgor to cooperate, reasonably and in good faith in connection
with any such transaction, including, without limitation, (i) executing
such additional documents, instruments, or agreements to reaffirm or
separately evidence the Deferred Payments, (ii) causing to be delivered
to any such third parties any notices, certificates or other documents
required to be delivered by the El Paso Pledgors under the Security
Documents, and (iii) delivering to such third parties customary
estoppel certificates or acknowledgements, acknowledging the sale,
pledge or assignment to such third parties. The Settlement Fund shall
bear the cost thereof, including reasonable attorneys'
45
fees and other out-of-pocket costs incurred by any El Paso Settling
Party or any El Paso Pledgor. Each Settling Claimant whose interests in
the Settlement Fund are so transferred shall promptly reimburse the
Settlement Fund its pro rata share of such fees and costs. To ensure
prompt payment of such amounts, the Settling Claimants hereby authorize
the Designated Representative to setoff from amounts owing to each
responsible Settling Claimant the fees and costs owed by that Settling
Claimant under the terms of this Paragraph.
d. Designees. The El Paso Settling Parties covenant and agree that
the Settlement Fund shall be entitled to the benefit of the Collateral,
exercise any rights with respect to the Collateral and the Secured
Obligations, and take any and all other actions relating to the
Collateral, the Secured Obligations, this Agreement and the Security
Documents, by or through the Collateral Agent.
e. Security Documents. El Paso Corporation covenants and agrees
that as of the Effective Date, and at all times thereafter until the
Secured Obligations are satisfied in full, (i) each Security Document
shall create in favor of the Collateral Agent a valid and enforceable
lien on, or security interest in, all right, title, and interest of
each El Paso Pledgor that is a party to such Security Document, in the
Collateral described therein, prior and superior in right to any other
party, except as expressly permitted in such Security Document, and
except as may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and (ii) all financing statements, mortgages, deeds of trust
or other instruments shall have been filed or recorded and other action
reasonably necessary to perfect any lien on, or security interest in,
Collateral created pursuant to a Security Document have been taken,
including providing control to the Collateral Agent, delivering
certificated Collateral, and providing the Collateral Agent with
possession of Collateral for which possession can provide perfection.
f. Collateral Release and Substitution. So long as no Event of
Default has occurred and is continuing and provided that, both before
and after giving effect to any of the following actions by any El Paso
Pledgor, the El Paso Settling Parties are in compliance with the
Collateral maintenance requirements set forth in Paragraph 8.3(a) of
this Agreement (as determined as of the date of the most recent
Compliance Certificate delivered to the Designated Representative by El
Paso Corporation, but after giving effect to releases, substitutions
and additions of Collateral, and in the case of any allocation of
Collateral to the Settling Claimants and the Additional Payees, such
compliance to be determined separately with respect to the MSA Portion
and AP Portion), any El Paso Pledgor may (i) obtain the release of any
Collateral and/or the surrender of any Letters of Credit, and (ii) make
substitutions of Collateral and/or Letters of Credit, subject to the
following:
(A) all actions required under Paragraph 8.3(e) are taken in
connection with such substitution or addition;
(B) following any such release, substitution or addition
after a Monetization has been effected, the ratio of the aggregate
stated amount of Letters
46
of Credit divided by the Discounted Amount of the Deferred
Payments shall be the same or greater than such ratio immediately
prior thereto;
(C) if any Oil & Gas Collateral is added, El Paso Corporation
has provided to the Collateral Agent (1) a supplemental report
from an Independent Consultant confirming the Reported Value of
the Oil & Gas Collateral which is to be added, and (2) a
Compliance Certificate; and
(D) if any Other Collateral is added, (1) El Paso Corporation
has provided to the Collateral Agent (x) an appraisal by an
appraiser selected by El Paso Corporation and reasonably
acceptable to the Designated Representative confirming the fair
market value of the Other Collateral, and (y) a Compliance
Certificate, and (2) the Designated Representative has received
evidence from any rating agency rating any securities issued in
connection with a Monetization that any rating on such securities
will not be withdrawn or downgraded as a result of such
substitution or addition and/or release.
The foregoing conditions shall also apply to any addition of Collateral
by El Paso for purposes of maintaining the Collateral coverage required
in Paragraph 8.3(a).
Additionally, all Collateral and Letters of Credit shall be deemed
to be automatically released upon the satisfaction in full of the
Secured Obligations. In the case of any surrender of Letters of Credit
or release of Collateral, the Settling Parties irrevocably authorize
the Collateral Agent to surrender any Letters of Credit, and to execute
and deliver to the applicable El Paso Pledgor such documents and
instruments as reasonably requested by such El Paso Pledgor as shall be
necessary to evidence termination of all liens and security interests
given by such El Paso Pledgor, in order to accomplish any such release
or substitution. The Collateral Agent shall provide any documentation
of any requested release within ten (10) days after the request
therefor.
g. Letter of Credit Drawings and Realizations Upon Collateral. If,
within thirty (30) days prior to the expiration date stated in the
expiring Letter of Credit, the El Paso Settling Parties fail to replace
such expiring Letter of Credit with another Letter of Credit in the
same amount or with other Collateral meeting the requirements of
Paragraph 8.1 of this Agreement or fail to deliver a Compliance
Certificate demonstrating that, after giving effect to the expiration
and surrender of the Letter of Credit, the Collateral coverage
requirements of Paragraph 8.3(a) will continue to be satisfied, then
the Collateral Agent may draw on the expiring Letter of Credit. If any
drawing shall be made under any Letter of Credit or the Collateral
Agent shall receive or obtain any amounts in respect of any Collateral
(whether as a result of any realization upon any Collateral or
otherwise), and the aggregate amount of funds held by the Collateral
Agent shall exceed the balance then due in respect of any Secured
Obligations, then such amount, when received by the Collateral Agent,
shall be held by the Collateral Agent in an interest bearing account
opened by the Collateral Agent as cash collateral for Secured
Obligations, as part of the Collateral. Amounts held in such cash
collateral account shall be applied by the Collateral Agent to the
payment of the Secured Obligations or released to the extent permitted
by Paragraph 8.3(f). Such cash collateral shall be held pursuant to
47
such lien documentation as shall be in form and substance reasonably
satisfactory to the Designated Representative (which documents are
hereby consented to by the El Paso Settling Parties). The El Paso
Pledgors shall execute such further agreements, documents, instruments
or financing statements as the Collateral Agent reasonably deems
necessary in connection therewith.
8.4 Legal Fees. Class Counsel may submit one or more applications to
the Class Action Court, and Edison, PG&E, CPUC, the AG, and CDWR may submit one
or more applications to the Federal Court, for an award of attorneys' fees and
litigation expenses, including the fees of experts and consultants, which shall
be paid solely out of the Consideration. Any attorneys' fees and/or litigation
expenses so awarded shall be paid to the applicant(s) from the Escrow Account,
as ordered, within five (5) Business Days after the Effective Date.
Notwithstanding the foregoing, after entry of an order(s) awarding attorneys'
fees and litigation expenses by the Class Action Court, prior to the Effective
Date, Class Counsel may be paid from the Escrow Account, in the aggregate, up to
50% of the attorneys' fees and litigation expenses so awarded, provided that
each law firm or attorney receiving such payment shall provide El Paso with a
letter of credit, issued by a financial institution and on terms acceptable to
El Paso, equal to 110% of the amount of the payment. In the event that a
terminating event occurs pursuant to Paragraphs 10.1, or the judgment approving
the class settlement or the order making the fee and/or expense award is
reversed or modified on appeal, and, in the event that Class Counsel have been
paid or reimbursed to any extent, then, within five (5) Business Days from the
date Class Counsel are given notice that such terminating event has occurred, or
within five days following such reversal or modification, they shall restore to
the Escrow Account the fees and expenses previously paid to them in full or any
amount consistent with such reversal or modification, plus interest thereon (at
the same rate earned on 90-day United States Treasury Bills) through the date of
such restoration. If such restoration is not made within this five (5) Business
Day period, El Paso may exercise the applicable letter of credit to the extent
of any such deficiency.
8.5 Renegotiated Contract. CDWR, the AG, the CPUC, and the CEOB each
stipulate and agree that CDWR shall have no right to demand collateral or
margining from EPME on account of or as a consequence of effectuating the
reduction in price set forth in the Renegotiated Contract.
8.6 Settlement Fund.
a. Qualified Settlement Fund. The Parties intend that the
Settlement Fund shall be, and agree to treat the Settlement Fund as
being, at all times a single "qualified settlement fund" within the
meaning of Treas. Reg. Section 1.468B-1. Further, the Parties, as
appropriate, shall jointly and timely make the "relation-back election"
(as provided for in Treas. Reg. Section 1.468B-1(j)(2)) back to the
earliest permitted date. Such election shall be made in compliance with
the procedures and requirements contained in the Treasury Regulations.
b. Duties of Administrator. For the purposes of Section 468B of
the Internal Revenue Code of 1986, and Treas. Reg. Section
1.468B-2(k)(3), the "administrator" shall be a party appointed by the
Settling Claimants pursuant to the Designated Representative
48
Agreement (the "Administrator"). The Administrator shall timely and
properly file or cause to be filed all informational and other tax
returns necessary or advisable with respect to the Settlement Fund
(including without limitation the returns described in Treas. Reg.
Section 1.468B-2(k)(1) and Treas. Reg. Section 1.468B-2(1)). Such
returns shall reflect that all taxes (including any estimated taxes,
interest or penalties) on the income earned by the Settlement Fund
shall be paid out of the Settlement Fund.
c. Payment of Taxes and Other Expenses. All (i) taxes (including
any estimated taxes, interest or penalties) arising with respect to the
income earned by the Settlement Fund ("Taxes"), and (ii) expenses and
costs incurred in connection with the operation and implementation of
the Settlement Fund (including, without limitation, expenses of tax
attorneys and/or accountants and mailing and distribution costs and
expenses relating to filing (or failing to file) tax returns ("Tax
Expenses"), shall be paid out of the Settlement Fund. Further, Taxes
and Tax Expenses shall be timely paid by the Administrator out of the
Settlement Fund without prior order from the Class Action Court, and
the Administrator shall be obligated (notwithstanding anything herein
to the contrary) to withhold from distribution any funds necessary to
pay such amounts (as well as any amounts that may be required to be
withheld under Treas. Reg. Section 1.468B-2(1)(2)). All Parties to this
Agreement agree to cooperate with the Escrow Agent, Administrator, each
other, and the Settlement Fund's tax attorneys and accountants to the
extent reasonably necessary to carry out the provisions of this
Paragraph 8.6.
8.7 Procurement of Gas. For a period of time, commencing upon the date
of this Agreement and ending on September 30, 2003, El Paso agrees to provide,
at no cost to CDWR, its knowledge, experience, expertise, and contacts to assist
CDWR in brokering an acceptable gas supply contract for CDWR. Xxxxx Xxxxx shall
be assigned primary responsibility for assisting CDWR in brokering an acceptable
gas supply contract.
8.8 Financial Modeling. The Parties agree to cooperate with each other
to create promptly after the date hereof an agreed upon financial model for the
purpose of making the various calculations required in Paragraph 4.1(d) of this
Agreement.
8.9 No Assignment of Released Claims. Each Releasor, and Edison
International, hereby covenants and agrees that it will not assign or transfer,
or purport to assign or transfer, to any person or entity, including without
limitation any of its Affiliates or Subsidiaries, any Claim it is releasing
pursuant to this Agreement.
9. EVENTS OF DEFAULT AND REMEDIES.
9.1 Events of Default. Upon the occurrence and continuance of any one
of the following events, the Designated Representative may, at its option, upon
prior notice to El Paso Corporation, accelerate the Deferred Payments, making
the entire Discounted Amount thereof immediately due and payable in full, and
thereafter exercise (or cause the Collateral Agent to exercise) any of the
rights and remedies enumerated hereunder, under any of the Security Documents,
or under applicable law to recover the Deferred Payments and/or any of the other
Secured Obligations (each an "Event of Default"):
49
a. the failure by El Paso Corporation (or any El Paso Settling
Party) to pay when due any installment of the Deferred Payments, within
ten (10) Business Days after the date on which such amount is due, and
such payment obligation is not satisfied during such 10 day period
through the application of any funds then held by the Collateral Agent
as part of the Collateral or through a drawing under any Letter of
Credit;
b. the failure by El Paso Corporation to comply with the
collateral maintenance requirements set forth in Paragraph 8.3(a) of
this Agreement by an amount in excess of 0.70% of the then Discounted
Amount of the Deferred Payments, and such breach remains uncured within
thirty (30) days after the earlier of written notice thereof by the
Designated Representative, and a Responsible Officer of El Paso
Corporation becoming aware of such failure; provided, however, that if
such breach is not cured within such thirty (30) day period, but El
Paso Corporation has undertaken in good faith and with due diligence to
cure such breach during the 30-day cure period and such breach is
capable of being cured, then El Paso Corporation shall have an
additional thirty (30) days to cure the breach;
c. an event of default shall exist under any Security Document
that is not cured within any applicable cure period;
d. either El Paso Corporation or EPNG pursuant to or within the
meaning of the Bankruptcy Code (i) commences a voluntary case, (ii)
consents to the entry of any order for relief against it in any
involuntary case, (iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property, or (iv) makes a
general assignment for the benefit of its creditors;
e. a court of competent jurisdiction (i) enters an order or decree
under the Bankruptcy Code that is for relief against El Paso
Corporation or EPNG in an involuntary case, (ii) appoints a Custodian
of either El Paso Corporation or EPNG or for all or substantially all
of any property of El Paso Corporation or EPNG, or (iii) orders the
liquidation of El Paso Corporation or EPNG; and the order or decree
remains unstayed and in effect for ninety (90) days; or
f. the dissolution, winding-up, assignment of substantially all
assets, or liquidation of either EPNG or El Paso Corporation unless in
connection with such action, an Investment Grade Person assumes, and
agrees in writing to be bound by the terms of this Agreement with
respect to the Deferred Payments and Collateral relating thereto.
The Deferred Payments and the Additional Payments and all Secured Obligations
relating thereto shall enjoy equal and ratable ranking in the event of any
liquidation or foreclosure or other realization upon the Collateral, including
any draw under any Letter of Credit, and proceeds thereof shall be distributed
to the Settling Claimants and the Additional Payees in accordance with their
respective interests in the Secured Obligations; provided that in the case of
any allocation of Collateral to the Settling Claimants and the Additional
Payees, any proceeds of the MSA Portion shall be allocated first to the Settling
Claimants and second to the Additional Payees, and any proceeds of the AP
Portion shall be allocated first to the Additional Payees and second to the
Settling Claimants.
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9.2 Provisions Affecting Exercise of Rights and Remedies. To the extent
that any El Paso Settling Party is secondarily liable for any of the Secured
Obligations, whether under Paragraph 4.1(d) hereof or otherwise, and with
respect to Paragraphs 9.2(b) through (d) below to the extent that any El Paso
Settling Party is primarily liable for any of the Secured Obligations, each El
Paso Settling Party agrees as follows:
a. Release or Exoneration. The Settlement Fund or its designee(s)
may do or suffer any of the following, by action or inaction, without
releasing or exonerating any El Paso Settling Party or El Paso Pledgor
from any of its obligations under this Agreement (including any release
or exoneration that might occur under California Civil Code Sections
2819, 2845, 2848, 2849, or 2850):
(i) renew, extend, rearrange, alter or otherwise modify this
Agreement or any other document delivered by or on behalf of any
El Paso Settling Party or El Paso Pledgor under or in connection
with this Agreement (including any of the Security Documents), or
any of the other Secured Obligations;
(ii) release any El Paso Settling Party or El Paso Pledgor
from any of the Secured Obligations;
(iii) sell, release, subordinate, impair, waive or otherwise
fail to obtain or perfect (or continue the perfection of) a
security interest in any Collateral;
(iv) fail to realize upon any Collateral;
(v) perform on behalf of any El Paso Settling Party or El
Paso Pledgor any obligation due hereunder or under any other
document delivered by or on behalf of any El Paso Settling Party
or El Paso Pledgor under or in connection with this Agreement
(including any of the Security Documents) to cure any defaults of
El Paso under the same;
(vi) foreclose on any Collateral in a manner that diminishes,
impairs or precludes the right of an El Paso Settling Party or El
Paso Pledgor to enjoy any rights of subrogation against another El
Paso Settling Party or El Paso Pledgor, or to obtain
reimbursement, performance, or indemnification for payment or
performance under this Agreement (including any of the foregoing
that results from the direct or indirect application of California
Code of Civil Procedure Sections 580a, 580b, 580c, 580d, and 726,
and Commercial Code Sections 1103 and 9501 et seq.);
(vii) permit or suffer the impairment of any of the Secured
Obligations in a case under the Bankruptcy Code by or against any
El Paso Settling Party or El Paso Pledgor;
(viii) make an election under Bankruptcy Code Section
1111(b)(2) in a case by or against any El Paso Settling Party or
El Paso Pledgor;
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(ix) permit or suffer the creation of secured or unsecured
credit or debt under Bankruptcy Code Section 364 in a case by or
against any El Paso Settling Party or El Paso Pledgor;
(x) permit or suffer the disallowance, avoidance or
subordination of any of the Secured Obligations or Collateral;
(xi) fail to exercise any right or remedy it may have with
respect to the payment or performance of the Secured Obligations;
or
(xii) fail to obtain a guaranty, other assurance of payment,
or credit enhancement from any other Person.
b. Strict Performance. The Designated Representative's failure to
require strict performance of the terms, covenants and agreements of
this Agreement or any other document delivered by or on behalf of any
El Paso Settling Party or El Paso Pledgor under or in connection with
this Agreement (including any of the Security Documents), or any delay
or omission on the part of the Designated Representative in exercising
any right, or any acceptance of partial or adequate payment or
performance shall not waive, affect or diminish such right or the El
Paso Settling Parties' or El Paso Pledgors' duty of compliance and
performance therewith. A waiver on any one occasion shall not be
construed as a bar to or waiver of the same or any other right on the
same or any future occasion.
c. Waiver of Demands and Notices. Each of the El Paso Settling
Parties hereby waives the rights of demand, protest, notice of
acceptance, notice of default or dishonor, presentment, notice of
collateral received or delivered or other action taken by the
Designated Representative, and all other demands and notices of any
description, unless specifically required by the terms of this
Agreement. No El Paso Settling Party shall be released or exonerated
from its obligations hereunder if it is not notified of these events.
d. Waiver of Priority of Collection. Each El Paso Settling Party
hereby waives all rights under California Civil Code Sections 2845 or
2849 to require the Settlement Fund or its designee(s) first to proceed
against the Collateral, against another El Paso Settling Party or El
Paso Pledgor, or to exercise in any particular order any right provided
for herein or in any other document delivered by or on behalf of any El
Paso Settling Party or El Paso Pledgor under or in connection with this
Agreement (including any of the Security Documents). All rights and
remedies of the Settlement Fund and their designee(s) under this
Paragraph 9 and in the other documents delivered by or on behalf of any
El Paso Settling Party under or in connection with this Agreement
(including any of the Security Documents), shall be cumulative and may
be exercised singularly or concurrently.
e. Waiver of Subrogation, Reimbursement, Indemnification, and
Contribution. For so long as Consideration remains due hereunder, each
El Paso Settling Party waives and agrees that it will not seek to
exercise any of the following rights it may have against
52
any other El Paso Settling Party or El Paso Pledgor arising from or
relating in any way to its payment or performance of the Consideration:
(i) subrogation (including any rights arising under
Bankruptcy Code Section 509 and under California Civil Code
Sections 2848 and 2849);
(ii) reimbursement (including any rights arising under
California Civil Code Section 2847);
(iii) performance (including any rights arising under
California Civil Code Section 2846);
(iv) indemnification; and
(v) contribution (including any rights arising under
Bankruptcy Code Section 509 and under California Civil Code
Sections 1432, 2848 and 2849).
f. Waiver of Termination, Setoff, Recoupment and other Rights:
Each El Paso Settling Party hereby further:
(i) waives any right it may have under California Civil Code
Section 2815 to terminate or revoke the continuing nature of its
obligations hereunder and under the Security Documents, except as
expressly provided in Paragraph 10 hereof;
(ii) waives all rights of set-off, counterclaim, or
recoupment against any of the Settling Claimants and the
Settlement Fund or its designee(s) in respect of the
Consideration; and
(iii) waives all defenses which may be available by virtue of
any valuation, stay, moratorium law or other similar law now or
hereafter in effect.
9.3 Acknowledgment of Waivers and Loss of Defenses. Each El Paso
Settling Party acknowledges that certain provisions in this Paragraph 9 operate
as waivers of rights that it might otherwise have under applicable law. Other
provisions in this Paragraph 9 permit the Settlement Fund or its designee(s)
(and the Collateral Agent) to (a) take actions that they may otherwise not have
a right to take, or (b) fail to take actions that they would otherwise have an
obligation to take, or (c) take actions that may prejudice an El Paso Settling
Parties' rights and obligations under this Agreement. In the absence of these
provisions, one or more El Paso Settling Parties might have defenses against its
obligations under this Agreement. These defenses might permit an El Paso
Settling Party to avoid some or all of its obligations under this Agreement.
Each of the El Paso Settling Parties intends by the waivers and other provisions
of this Agreement, including the acknowledgment set forth in this Paragraph 9.3,
to be liable to the greatest extent permitted by law for all of the El Paso
Settling Parties' obligations under this Agreement to the Settlement Fund or its
designee(s). Each El Paso Settling Party intends to have this liability even if
the terms of this Agreement change or if it does not have any rights against any
other El Paso Settling Party or El Paso Pledgor.
53
9.4 Cost of Collection and Enforcement. The El Paso Settling Parties
jointly and severally agree to pay to the Designated Representative, within
thirty (30) days after written demand is sent to El Paso Corporation by the
Designated Representative, upon demand, all actual costs of collection and
attempted collection of Consideration, including, without limitation: (a) those
expenses incurred or paid to protect, preserve, collect, sell, advertise,
locate, take possession of, liquidate or otherwise deal with any Collateral
given by the El Paso Pledgors to secure Consideration, (b) expenses of dealing
with any person or entity in any bankruptcy proceeding, (c) all expenses
incurred by the Settlement Fund for its reasonable attorneys' and paralegal
fees, disbursements, and costs, all at such rates and with respect to such
services as the Settlement Fund in its sole discretion may elect to pay (as such
rates may vary from time to time during the course of the performance of such
services), and (d) the costs of appraisers, investment bankers, and other
experts that may be retained by the Settlement Fund in connection with such
collection efforts.
9.5 WAIVER OF JURY TRIAL. THE EL PASO SETTLING PARTIES AND EACH OF THE
SETTLING CLAIMANTS EACH EXPRESSLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS,
WHETHER ARISING UNDER THE UNITED STATES OR ANY STATE CONSTITUTION, ANY RULES OF
CIVIL PROCEDURE, COMMON LAW OR OTHERWISE, TO DEMAND A TRIAL BY JURY IN ANY
ACTION, LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE
BASED UPON, OR ARISING OUT OF THIS PARAGRAPH 9, THE SECURITY DOCUMENTS, OR ANY
OTHER DOCUMENTS RELATING TO PAYMENT AND PERFORMANCE OF THE CONSIDERATION.
NEITHER THE EL PASO SETTLING PARTIES, THE SETTLING CLAIMANTS, NOR ANY ASSIGNEE
OR SUCCESSOR OF ANY OF THE FOREGOING (INCLUDING THE SETTLEMENT FUND) SHALL SEEK
A JURY TRIAL IN ANY SUCH ACTION. EACH PARTY AGREES THAT IT SHALL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION WHEN A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. THE
FOREGOING PARTIES HAVE NOT IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER OF
THE SAME PARTIES THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
10. TERMINATION.
10.1 Termination Events. This Agreement and the transactions
contemplated hereby may be terminated prior to Closing as follows:
a. All Parties (Modification of Agreement). This Agreement may be
terminated at the option and discretion of El Paso or the Settling
Claimants if the Class Action Court or any appellate court reviewing
any order entered by the Class Action Court with respect to this
Agreement or the proposed settlement, FERC, the Federal Court, the
Bankruptcy Court, or the court in which the Nevada Action is pending
rejects, modifies or denies approval of any portion of this Agreement
or the proposed settlement that the terminating party in its (or their)
sole judgment and discretion reasonably determines is material,
including, without limitation, the terms of relief, the definition of
the Class, and/or any portion of the releases; provided, however, that
with respect to the FERC, the provisions of this Paragraph are subject
to Paragraphs 10.3 and 10.4 of the
54
FERC Settlement Agreement. The terminating party must exercise the
option to withdraw from and terminate this Agreement, as provided in
this Paragraph, no later than thirty (30) days after receiving notice
of the event prompting the termination. Notwithstanding the foregoing,
reversal accompanied by remand for additional findings or otherwise for
further consideration by the trial court shall not be a basis for
termination, unless and until the reversal takes effect as a final
disposition.
b. All Parties (Mutual Written Consent). This Agreement may be
terminated at any time by the mutual written consent of the Settling
Claimants and El Paso Settling Parties.
c. El Paso. El Paso may terminate this Agreement (i)(A) pursuant
to the provisions of Paragraph 3.3 relating to Requests for Exclusion;
or (B) if the court in which the Xxxxxxxxxx Action is pending denies a
request made pursuant to this Agreement to dismiss that action with
prejudice as to El Paso; or (C) if the Class Action Court does not make
a determination that this Agreement was entered into in good faith as
provided in Paragraph 3.2(e), or such determination is reversed by any
appellate court; or (D) if the court in which the Nevada Action pending
does not make a determination that this Agreement was entered into in
good faith as provided in Paragraph 3.2(f), or such determination is
reversed by any appellate court; or (ii) if there has been a material
misrepresentation, a material breach of warranty, or a material failure
to comply with any covenant or agreement on the part of any of the
Settling Claimants with respect to their representations, warranties,
covenants or agreements set forth herein, and such misrepresentation,
breach, or failure to comply has not been cured in all material
respects within ten (10) Business Days of receipt by the Designated
Representative from El Paso of written notice thereof. Notwithstanding
the foregoing, reversal accompanied by remand for additional findings
or otherwise for further consideration by the trial court shall not be
a basis for termination, unless and until the reversal takes effect as
a final disposition.
d. Settling Claimants. The Settling Claimants or their designee(s)
may terminate this Agreement if there has been a material
misrepresentation, a material breach of warranty, or a material failure
to comply with any covenant or agreement on the part of any of the El
Paso Settling Parties with respect to their representations,
warranties, covenants or agreements set forth herein, and such
misrepresentation, breach, or failure to comply has not been cured in
all material respects within ten (10) Business Days of receipt by El
Paso from the Designated Representative of written notice thereof.
10.2 Effect of Termination.
a. If the Agreement is terminated pursuant to Paragraphs 10.1(a),
10.1(b), or 10.1(c)(i), then:
(i) this Agreement shall be null and void and shall have no
force or effect, and no party to this Agreement shall be bound by
any of its terms, except for the terms of this Paragraph 10;
55
(ii) this Agreement, all of its provisions, and all
negotiations, statements, and proceedings relating to it shall be
without prejudice to the rights of any Party, all of whom shall be
restored to their respective positions existing immediately before
the execution of this Agreement;
(iii) the El Paso Settling Parties and their current and
former directors, officers, employees, agents, attorneys and
representatives expressly and affirmatively reserve all defenses,
arguments and motions as to all claims that have been or might
later be asserted in the Actions, including (without limitation)
any applicable statutes of limitation and the argument that the
Actions may not be litigated as class actions and that the Class
should not be certified;
(iv) Class Plaintiffs and the other Parties and their current
and former predecessors, successors, heirs, agents and assigns
expressly and affirmatively reserve all motions as to, and
arguments in support of, all claims that have been or might later
be asserted in the Actions;
(v) neither this Agreement, nor the fact of its having been
made, shall be admissible or entered into evidence for any purpose
whatsoever;
(vi) any order or judgment entered in any of the Actions
after the date of execution of this Agreement will be deemed
vacated and will be without any force or effect; and
(vii) any and all amounts in the Escrow Account, including
accrued interest, shall be returned to El Paso by the Escrow
Agent.
b. If this Agreement is terminated pursuant to Paragraph 10.1 or
any other provision of this Agreement, then all amounts in the Escrow
Account, including accrued interest, shall be returned to El Paso by
the Escrow Agent within ten (10) Business Days after such termination,
less an amount mutually determined by the Designated Representative and
El Paso Corporation to be sufficient to cover any then outstanding
settlement expenses El Paso is obligated to pay under Paragraph 4.1(i)
of this Agreement.
c. If this Agreement is terminated pursuant to Paragraph
10.1(c)(ii), then El Paso shall have all rights available to it at law
or in equity, including, without limitation, the right to specific
performance.
d. If this Agreement is terminated pursuant to Paragraph 10.1(d),
then the Settling Claimants or their designees shall have all rights
available to them at law or in equity, including, without limitation,
the right to specific performance.
56
11. NOTICE.
11.1 Form of Notice and Addresses. All notices required or permitted
under this Agreement shall be in writing to the other Party and shall be
delivered in person, by facsimile, by overnight mail, or by registered or
certified mail, to the Parties at the following addresses and facsimile numbers:
If to the El Paso Settling Parties:
General Counsel
El Paso Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to a Settling Claimant or the Designated Representative:
Xxxxxxx Xxxx, Esq.
Office of the Attorney General
0000 Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
11.2 Date of Delivery. Any notice required or permitted under this
Agreement shall: (a) if delivered in person, be deemed to have been given or
made at the time of delivery; (b) if sent via certified or registered mail, be
deemed to have been given or made on the date of receipt; and (c) if sent by
facsimile or other similar form of communication, be deemed to have been given
or made on the first Business Day following the day on which it was sent.
11.3 Address Changes. The El Paso Settling Parties and the Designated
Representative may each give written notice of a change of address in the same
manner described in this Paragraph, in which event all subsequent written
communications shall be given to that Party at the changed address.
12. GENERAL PROVISIONS.
12.1 Admissions. El Paso expressly denies any wrongdoing alleged in any
of the Actions and does not admit or concede any actual or potential fault,
wrongdoing or liability in connection with any facts or claims that have been or
could have been alleged against it in any of the Actions. The Parties agree that
the terms of this Agreement reflect a good-faith settlement of all Parties
hereto, reached voluntarily after consultation with experienced legal counsel.
Neither this Agreement nor the settlement contained herein, nor any act
performed or document executed pursuant to or in furtherance of this Agreement
or the settlement: (a) is or may be deemed to be or may be used as an admission
of, or evidence of, the validity of any Released Claim, or of any wrongdoing or
liability of any of the El Paso Releasees; (b) is or may be deemed to be or may
be used as an admission of, or evidence of, any fault or omission of any of the
El Paso Releasees in any civil, criminal or administrative proceeding in any
court, administrative agency or other
57
tribunal; or (c) shall be offered in evidence or alleged in any pleading by any
Party. In no event shall the Agreement, any of its provisions or any
negotiations, statements or court proceedings relating to them or the settlement
contained herein in any way be construed as, offered as, received as, used as or
deemed to be evidence of any kind in any action, or in any judicial,
administrative, regulatory or other proceeding, except in a proceeding to
enforce this Agreement. Without limiting the foregoing, this Agreement, the
settlement contained herein, any related negotiations, statements and documents
delivered hereunder, and any court and regulatory proceedings shall not be
construed as, offered as, received as, used as or deemed to be evidence of or an
admission or concession of any liability or wrongdoing whatsoever on the part of
El Paso, or as a waiver by El Paso of any applicable defense. The Parties, and
any other party entitled to enforce this Agreement, may use and file this
Agreement and/or judgment from the Actions in any other action that has been or
may be brought against them in order to support a defense or counterclaim based
on principles of res judicata, collateral estoppel, release, good-faith
settlement, judgment bar or reduction or any theory of claim preclusion or issue
preclusion or similar defense or counterclaim. The Parties and their counsel
agree that this Agreement is without prejudice to class certification issues or
any other issues concerning the defendants in the Actions who are not an El Paso
Releasee.
12.2 Amendments. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by all of the
Parties hereto. No waiver of any provision of this Agreement nor consent to any
departure therefrom by any Party shall be effective unless the same shall be in
writing and signed by the El Paso Settling Parties, with respect to any waiver
or consent requested by the Designated Representative, and by the Designated
Representative with respect to any waiver or consent requested by an El Paso
Settling Party. In either case, such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that without the approval of the Class Action Court (or the FERC or
Federal Court with respect to those matters specifically governed by the FERC
Settlement Agreement and Stipulated Judgment), no amendment, waiver or consent
shall do any of the following: (i) subject the Settling Claimants to any
additional obligations; (ii) reduce any amount payable to the Settlement Fund by
more than five thousand dollars ($5,000.00); (iii) postpone for more than ninety
(90) days any date fixed for any payment in respect of any amount payable to the
Settlement Fund; or (iv) change any definition or provision of this Agreement.
12.3 Appendices. The Appendices attached to this Agreement are hereby
made a part of this Agreement. Any conflict between the terms contained in the
main body of this Agreement and any Appendix hereto shall be controlled by the
terms contained in the main body of this Agreement.
12.4 Confidentiality. The Parties and their counsel, and each of them,
agree, to the extent permitted by law, that all agreements made and orders
entered during the course of the Actions relating to the confidentiality of
information shall survive this Agreement.
12.5 Construction of Agreement. The language of this Agreement shall be
construed as a whole, according to its fair meaning and intendment, and not
strictly for or against any Party, regardless of who drafted or was principally
responsible for drafting the Agreement or any
58
specific terms or conditions hereof. This Agreement shall be deemed to have been
drafted by all Parties, and no Party shall urge otherwise.
12.6 Cooperation. The Parties (a) acknowledge that it is their intent
to consummate this Agreement; and (b) agree to cooperate to the extent necessary
to effectuate and implement all terms and conditions of this Agreement and to
exercise their best efforts to accomplish the terms and conditions of this
Agreement. This cooperation shall include, without limitation, each Party, at
its own expense, taking all necessary action to satisfy as to itself the
conditions precedent in Paragraph 3.2 pertaining to it, and, to the extent
reasonably required, cooperating with each other Party to secure the consents
and satisfy the conditions precedent enumerated in Paragraph 3.2 hereof; working
together cooperatively to obtain all judicial, administrative, and regulatory
approvals necessary to ensure the enforceability of the stipulations provided
for in Paragraph 6.6 of this Agreement; the execution of such instruments of
conveyance, assignment, transfer and delivery, release and waiver as may be
required to implement and consummate the terms of this Agreement; the filing of
additional complaints by the Settling Claimants as necessary to consummate the
terms of this Agreement; the provision of submissions, stipulations and other
filings with courts and regulatory agencies; and the provision of such
additional documents or taking of such other action as any Party may reasonably
request to effectuate the terms of this Agreement.
12.7 Costs. Except as otherwise provided herein, each Party shall bear
its own costs in connection with the negotiation, execution, administration, and
enforcement of this Agreement.
12.8 Counterparts. This Agreement may be executed in multiple original
and/or facsimile counterparts, each of which, when taken together, shall
constitute a duplicate original, and each such duplicate original is equally
admissible in evidence and shall be deemed to be one and the same instrument.
This Agreement shall not take effect until each Party has signed a counterpart.
12.9 Enforcement of Agreement. This Agreement may be pleaded as a full
and complete defense to any claim that may be instituted, prosecuted or
attempted in breach of this Agreement. The Parties, their respective counsel or
any other member of the Class may file this Agreement in any proceeding brought
to enforce any of its terms or provisions. The Parties further agree that their
respective duties and obligations hereunder may be specifically enforced through
an action seeking equitable relief or a petition for writ of mandamus by the
Party or Parties for whose benefit such duty or obligation is to be performed,
but no breach of any duty or obligation by any Party hereunder shall entitle any
other Party to rescind or terminate this Agreement, except as provided expressly
herein. In any such action, and in any action to enforce the provisions of this
Agreement, the prevailing party shall recover its reasonable attorneys' fees and
costs.
12.10 Governing Law. This Agreement and any ancillary agreements
executed in connection with this Agreement shall be governed by and interpreted
according to the laws of the state of California (except with respect to (a) the
releases by the Attorneys General of the states of Nevada, Oregon, and
Washington, as to which the laws of the states of Nevada, Oregon, and
Washington, respectively, shall apply, (b) matters subject to the jurisdiction
of FERC under the Natural Gas Act, the Natural Gas Policy Act of 1978, and the
Federal Power Act, and (c) any
59
Security Document, to the extent applicable choice of law principles govern the
creation, perfection or priority of security interests and liens thereunder or
to the exercise of foreclosure and other remedies provided for therein upon
default), excluding any conflict of laws or choice of law provisions that would
require reference to the laws of another state.
12.11 Headings. The headings in this Agreement are for convenience
only. They in no way limit, alter or affect the meaning of this Agreement.
12.12 Integration. This Agreement, together with its appendices, the
Security Documents and all other documents, instruments, and agreements
delivered in connection herewith or therewith constitute the entire agreement
among the Parties with respect to the subject matter hereof, and no
representations, warranties or inducements have been made to any Party
concerning this Agreement other than the representations, warranties and
covenants contained and memorialized in such documents.
12.13 Mistakes of Fact or Law. In entering and making this Agreement,
the Parties assume the risk of any mistake of fact or law. If the Parties, or
any of them, should later discover that any fact they relied upon in entering
this Agreement is not true, or that their understanding of the facts or law was
incorrect, then the Parties shall not be entitled to seek rescission of this
Agreement by reason thereof. This Agreement is intended to be final and binding
upon the Parties regardless of any mistake of fact or law.
12.14 Retention of Jurisdiction. Pursuant to California Code of Civil
Procedure section 664.6, the Class Action Court shall retain jurisdiction over
the settlement embodied by this Agreement to enforce the provisions of this
Agreement, except with respect to those matters addressed in the FERC Settlement
Agreement and the Stipulated Judgment, as to which matters the FERC and Federal
Court shall retain jurisdiction as provided therein. All parties hereto submit
to the jurisdiction of the Class Action Court for purposes of implementing and
enforcing the provisions of this Agreement that are not governed by the FERC
Settlement Agreement or the Stipulated Judgment.
12.15 Successors and Assigns. This Agreement shall be binding upon and
for the benefit of any of the Parties and their successors and assigns. Nothing
in this Agreement shall be construed or interpreted to impart any rights or
obligations to any third party (other than a permitted successor or assignee
bound to this Agreement), except as specifically provided in Paragraph 5.
12.16 Time of the Essence. Time shall be of the essence for purposes of
construing and enforcing this Agreement.
12.17 Waivers. The failure of any Party hereto to enforce any condition
or provision in this Agreement at any time shall not be construed as a waiver of
that condition or provision unless such waiver is in writing and signed by the
waiving Party, nor shall it forfeit any rights to future enforcement thereof.
60
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement and made it effective as of the date set forth at the beginning of
this Agreement.
THE GOVERNOR OF THE STATE OF CALIFORNIA
/s/ illegible By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Xxxxxxx X. Xxxxxxxxx, Senior Deputy Legal Affairs
Secretary, Office of the Governor of the State of California
THE CALIFORNIA DEPARTMENT OF WATER RESOURCES
/s/ illegible By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxx X. Xxxxxx
----------------------------------------------------------
Title: Deputy Director
--------------------------------------------------------
THE CALIFORNIA ELECTRICITY OVERSIGHT BOARD
/s/ Xxxxxx Mannheim By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxx X. Xxxxxxxxx
---------------------------------------------------------
Title: Chief Counsel and Acting Director
--------------------------------------------------------
THE CALIFORNIA PUBLIC UTILITIES COMMISSION
/s/ illegible By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx X. Xxxxxx
---------------------------------------------------------
Title: Principal Counsel
--------------------------------------------------------
PEOPLE OF THE STATE OF CALIFORNIA, EX REL. XXXX XXXXXXX,
ATTORNEY GENERAL
/s/ illegible By: /s/ Xxxxxx Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx Xxxxxx
---------------------------------------------------------
Title: Senior Assistant Attorney General
--------------------------------------------------------
ATTORNEY GENERAL OF THE STATE OF OREGON
/s/ illegible By: /s/ Xxxxx Xxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxx Xxxx
---------------------------------------------------------
Title: Assistant Attorney General
Oregon Department of Justice
--------------------------------------------------------
61
ATTORNEY GENERAL OF THE STATE OF WASHINGTON
/s/ illegible By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxx X. Xxxxxxx
---------------------------------------------------------
Title: Assistant Attorney General
--------------------------------------------------------
ATTORNEY GENERAL OF THE STATE OF NEVADA
/s/ illegible By: /s/ Xxxxxxx Xxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxxx Xxx
---------------------------------------------------------
Title: Chief Deputy Attorney General
--------------------------------------------------------
PACIFIC GAS & ELECTRIC CO., FOR ITSELF AND ON BEHALF OF ALL
OF ITS SUBSIDIARIES AND AFFILIATES
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
PG&E CORPORATION, FOR ITSELF AND ON BEHALF OF ALL OF ITS
SUBSIDIARIES AND AFFILIATES, AS TO THE RELEASE PROVISIONS
CONTAINED IN PARAGRAPHS 5 AND 8.9, AND THE REPRESENTATIONS AND
WARRANTIES IN PARAGRAPHS 7.1 AND 7.7, ONLY, AND NOT AS A PARTY
TO THIS AGREEMENT
/s/ Xxxxx X. Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxx X. Xxxxxxxxxxx
---------------------------------------------------------
Title: Senior Vice President and General Counsel
--------------------------------------------------------
SOUTHERN CALIFORNIA EDISON COMPANY, FOR ITSELF AND ON BEHALF
OF ALL OF ITS SUBSIDIARIES
/s/ illegible By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxxx X. Xxxxxxx
---------------------------------------------------------
Title: SVP and General Counsel
--------------------------------------------------------
62
EDISON INTERNATIONAL, FOR ITSELF ONLY, AS TO THE RELEASE
PROVISIONS CONTAINED IN PARAGRAPHS 5 AND 8.9, AND THE
REPRESENTATIONS AND WARRANTIES IN PARAGRAPHS 7.1 AND 7.6, AND
NOT AS A PARTY TO THIS AGREEMENT
/s/ illegible By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx X. Xxxxxx
---------------------------------------------------------
Title: Exec. V.P. and General Counsel
--------------------------------------------------------
CITY OF LOS ANGELES
(subject to approval as provided in Paragraph 7.2)
/s/ Xxx Xxxx By: /s/ Xxxxxx Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx Xxxxxx
---------------------------------------------------------
Title: Chief Deputy
--------------------------------------------------------
CITY OF LONG BEACH
(subject to approval as provided in Paragraph 7.2)
/s/ illegible By: /s/ M. Xxxxx XxXxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: M. Xxxxx XxXxxxx
---------------------------------------------------------
Title: Principal
--------------------------------------------------------
LIEFF, CABRASER, XXXXXXX & XXXXXXXXX, LLP,
XXXXXXX X. SCRAPULLA
/s/ illegible By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxx X. Xxxxxxxxxxx
---------------------------------------------------------
Attorneys for Xxxxxx X. Xxxxxx, and Xxxxxxx Xxxxxxx Xxxxx
63
GIRARDI & XXXXX
XXXXXXXX & XXXX, P.C.
X'XXXXXXX & XXXXXXXX, LLP
XXXXX, XXXXXX & XXXXX, P.C.
XXXXXXXX, XXXXXXXX & LACK, P.C.
/s/ illegible By: /s/ Xxxxxx Lack
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxx Lack
---------------------------------------------------------
Attorneys for Continental Forge Company; Xxxxxx and Xxxxxx
Xxxx, individually and d/b/a Wave Length Hair Productions;
Xxxxxx X. Xxxxxx; Xxxx Xxxxxxx Xxxxxx; Xxxxx and Xxxxxxxx
Xxxxxx; Xxxxxxx and Xxxxxxx Xxxxx; SierraPine, Limited; City
of Long Beach; United Church Retirement Homes of Long Beach,
Inc.; Long Beach Brethren Manor; Xxxxxx Xxxxxx; Xxxx W.H.K.
Xxxxxxx; City of Los Angeles; and Xxxx Xxxxxx and Xxxxxxxx
Xxxxxx
XXXXXXX X. XXXXX
XXXXXXX X. XXXXXX
/s/ illegible By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxxxxx X. Xxxxx
---------------------------------------------------------
Attorneys for Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx
LAW OFFICES OF M. XXXXX XXXXXXX
/s/ illegible By: /s/ M. Xxxxx XxXxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: M. Xxxxx XxXxxxx
---------------------------------------------------------
Attorneys for City of Long Beach; United Church Retirement
Homes of Long Beach, Inc.; Long Beach Brethren Manor; and
Xxxxxx Xxxxxx
XXXXXX, XXXXXXX & XXXXXX, LLP
/s/ illegible By: /s/ Xxxx X. Xxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Xxxx X. Xxxxxx
Attorneys for Plaintiff Xxxx Xxxxxxxxxx
64
EL PASO CORPORATION
/s/ illegible By: /s/ Xxxxxx Xxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: D. Xxxxxx Xxxxx
---------------------------------------------------------
Title: EVP and Chief Financial Officer
--------------------------------------------------------
EL PASO NATURAL GAS COMPANY
/s/ illegible By: /s/ Xxxx X. Xxxxxxxxxxx XX
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxx X. Xxxxxxxxxxx XX
---------------------------------------------------------
Title: Chairman of the Board and CEO
--------------------------------------------------------
EL PASO MERCHANT ENERGY, L.P.
/s/ illegible By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------- -----------------------------------------------------------
Witness Name: Xxxx X. Xxxxxxxx
---------------------------------------------------------
Title: President
--------------------------------------------------------
65
LIST OF APPENDICES
Description of Appendix Tab
----------------------- ---
Appendix 1.69 (FERC Settlement Agreement)....................................................................A
Appendix 1.89 (Security Document Provisions).................................................................B
Appendix 3.3 (Class Opt Out Formula).........................................................................C
Appendix 3.4 (Federal Court Stipulated Judgment).............................................................D
Appendix 7.5(c) (El Paso Subsidiaries and Affiliates)........................................................E
Appendix 7.6 (Edison Subsidiaries and Affiliates)............................................................F
Appendix 7.7 (PG&E and PG&E Corporation Subsidiaries and Affiliates).........................................G
1
APPENDIX 1.69
(FERC Settlement Agreement)
[insert FERC settlement agreement
or Description of same]
1
APPENDIX 1.89
(Security Document Provisions)
The Security Documents shall include, in addition to the terms and
conditions set forth in the main body of this Agreement and without limitation,
the following provisions:
1. Representations and Warranties. Representations and warranties
regarding the Collateral relating to title, maintenance and quality of
Collateral, absence of liens or other encumbrances on the Collateral (except
usual and customary permitted encumbrances), material compliance with applicable
environmental laws with respect to the Collateral, the solvency of the El Paso
Pledgor executing the Security Document, and permits and licenses and third
party and governmental approvals and consents with respect to the grant of
security interests in the Collateral.
2. Maintenance, Certification and Monitoring of Collateral Coverage
Ratio. Agreement to (a) permit the Settlement Fund or its designee(s) (or any of
its agents), at their cost and expense, to enter upon El Paso's property upon
reasonable advance notice from time to time to inspect the property, appraise
the property, and perform such other due diligence as the Settlement Fund or its
designee(s) may reasonably require to confirm the El Paso Pledgors' compliance
at all times with the terms of this Agreement and the Security Documents, and
(b) provide such other reports and certificates as may be reasonably requested.
3. Title Insurance; Title Opinions. Requirements to provide adequate
title insurance and/or title opinions that are usual and customary in secured
lending transactions where the collateral is of a similar type and quality to
the Collateral.
4. Other Covenants. Covenants regarding the Collateral that are
reasonably necessary to preserve the value of the Collateral, including material
compliance with laws and regulations with respect to the Collateral, payment of
material taxes and other material obligations in respect of the Collateral,
maintenance of Collateral, maintenance of insurance (subject to usual and
customary exceptions for self-insurance and deductibles), maintenance of the
validity, perfection and priority of the liens against the Collateral, cure of
any material title defects, prohibition against encumbrances (except usual and
customary permitted encumbrances) environmental indemnities and prohibition on
disposition of Collateral (except in connection with a permitted release or
substitution under this Agreement and usual and customary permitted dispositions
where the collateral is of a similar type and quality to the Collateral);
provided that unless an Event of Default exists, no restrictions on the
distribution of income or other economic benefits of ownership shall be imposed.
5. Substitution and Release of Collateral. Provisions relating to the
terms and conditions under which Collateral may be substituted and/ or released
in accordance with the terms of this Agreement.
6. Events of Default. Events of default pertaining to the Collateral,
including material breach of representation of warranty, material breach of
covenants, invalidity of the
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Security Documents or the liens and security interests, or failure to maintain
the perfection or priority of such liens and security.
7. Remedies. Customary remedies, including the right to foreclose,
accept deeds-in-lieu or otherwise realize on the Collateral and to exercise all
other remedies at law or in equity.
The foregoing is intended to be representative of some of the terms and
conditions to be included in the Security Documents, but is not an exclusive
list of the types or substance of the provisions to be included in the
definitive Security Documents.
As used in this Agreement, the following terms relating to the Oil &
Gas Collateral shall have the following meanings:
"Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, and all other liquid and
gaseous hydrocarbons produced or to be produced in conjunction therewith from a
well bore and all products, by-products, and other substances derived therefrom
or the processing thereof, and all other minerals and substances produced in
conjunction with such substances, including, but not limited to, sulfur,
geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores,
or substances of value and the products and proceeds therefrom.
"Leases" means (a) to the extent applicable to Oil and Gas Properties,
all oil and gas and/or oil, gas, and mineral leases and leasehold interests, fee
mineral interests, term mineral interests, subleases, farmouts, royalties,
overriding royalties, net profits interests, production payments, contract
rights to oil, gas, and mineral leases and leasehold interests under joint
exploration or joint development agreements, and similar interests or estates
including any reversionary or carried interests relating to any of the
foregoing, (b) all production units and drilling and spacing units (and the Oil
and Gas Properties covered thereby) which may affect all or any portion of such
interests including those units and any units created by agreement or
designation or under orders, regulations, rules or other official acts of any
federal, state or other governmental body or agency having jurisdiction, (c) all
surface leases, rights-of-way, easements and servitudes relating to Oil and Gas
Properties, (d) any and all non-consent interests owned or held by, or otherwise
benefiting, a Person and arising out of, or pursuant to, any contracts or
agreements relating to Oil and Gas Properties the Person is a party to, (e) any
other interest in, to or relating to (i) all or any part of the land relating to
or described in the leases or other instruments set forth in (a) through (c)
above, or (ii) any of the estates, property rights or other interests referred
to above, (f) any instrument executed in amendment, correction, modification,
confirmation, renewal or extension of the same, and (g) all tenements,
hereditaments and appurtenances now existing or hereafter obtained in connection
with any of the aforesaid, including any rights arising under unitization
agreements, orders or other arrangements, communitization agreements, orders or
other arrangements or pooling orders, agreements or other arrangements,
including without limitation all units created under orders, regulations and
rules of any governmental agency or authority having jurisdiction.
"Oil & Gas Collateral" means Oil and Gas Properties of the El Paso
Pledgors included in the Collateral.
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"Oil and Gas Properties" means any one or more of the following: (a)
all Leases; (b) all operating agreements, contracts and other agreements which
relate to any of the Leases or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Leases; (c) all
Hydrocarbons in and under and which may be produced, saved, processed or
attributable to the Leases, including all oil in tanks, the lands covered
thereby and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Leases; (d) all accounts (including accounts
resulting from the sale of Hydrocarbons at the wellhead), contract rights and
general intangibles, including all accounts, contract rights and general
intangibles now or hereafter arising regardless of whether any of the foregoing
is in connection with the sale or other disposition of any Hydrocarbons or
otherwise, including all Liens securing the same; (e) all oil and gas
properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or hereafter
acquired, used or held for use in connection with the operating, working or
development of any of such Leases or Property and including any and all oil
xxxxx, gas xxxxx, injection xxxxx or other xxxxx, buildings, structures, fuel
separators, liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, tanks and tank batteries, fixtures, valves, fittings,
machinery and parts, engines, boilers, meters, apparatus, appliances, tools,
implements, cables, wires, towers, casing, tubing and rods, and similar
equipment; and (f) all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing, but in each case excluding any
Property that is not in material compliance with applicable environmental laws,
and excluding coalbed methane Property that is permanently, or reasonably
expected to be permanently, shut-in due to water production limitations, or at
the time that such Property is given as Collateral, will be temporarily shut due
to water production limitations.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
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APPENDIX 3.3
(Class Opt Out Formula)
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APPENDIX 3.4
(Stipulated Judgment)
[insert stipulated judgment
or Description of same]
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APPENDIX 7.5(c)
(El Paso Subsidiaries and Affiliates)
[insert EL PASO Subsidiary and Affiliate List]
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APPENDIX 7.6
(Edison Subsidiaries and Affiliates)
[insert EDISON Subsidiary and Affiliate List]
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APPENDIX 7.7
(PG&E and PG&E Corporation Subsidiaries and Affiliates)
[insert PG&E and PG&E Corporation
Subsidiary and Affiliate List]
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