EL PASO ENERGY PARTNERS, L.P.
El Paso Energy Building
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
March 5, 2002
Xxxxxxx X. Xxxxxx
Executive Vice President
Crystal Gas Storage, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Re: Letter agreement regarding distributions on the Series B
Preference Units (the "Preference Units") issued by El Paso
Energy Partners, L.P. ("El Paso Partners") to Crystal Gas
Storage, Inc. ("Crystal")
Dear Xxxx:
In connection with El Paso Partners' acquisition of Petal and
Hattiesburg gas storage businesses from Crystal, we entered into an Agreement
and Plan of Merger dated August 28, 2000 (the "Merger Agreement") and various
other transaction documents and El Paso Partners issued to you 170,000
Preference Units, with specific rights, privileges and preferences. This letter
agreement (i) acknowledges and confirms our original intent regarding the
priority the Preference Units should have over other units with respect to
certain distributions and (ii) to the extent there are any transaction documents
or other documents or instruments containing an ambiguity, inconsistency or
mistake with respect thereto, modifies the agreements embodied in such documents
to the extent necessary to conform them to our original intent.
We both acknowledge and agree that the following evidences our original
and current agreement:
The Preference Units are senior to all other units
regarding rights to certain distributions. In particular, commencing
with distributions paid after December 31, 2010, El Paso Partners may
not
[Xxxxxxx X. Xxxxxx]
March 5, 2002
Page 2
make distributions on its common units or any other units if El Paso
Partners is in arrears with respect to any accretions on the Preference
Units that relate to any calendar quarter after the third quarter of
2010. Stated more technically, with respect to the calendar quarter
commencing on October 1, 2010 and each calendar quarter thereafter, El
Paso Partners may not make distributions of available cash on its
common units or any other units unless El Paso Partners has made
aggregate distributions of available cash on the Preference Units with
respect to the period commencing on October 1, 2010 in an amount at
least equal to the aggregate accretions on the Preference Units with
respect to the same period. El Paso Partners will not be prohibited
from making distributions on its common units or other units merely
because El Paso Partners has not made distributions on the Preference
Units with respect to all accretions relating to the period commencing
on the Preference Unit issuance date and ending on September 30, 2010.
Xxxxxxx confirms, acknowledges and agrees that, to the extent any
agreement, document or other instrument grants or purports to xxxxx Xxxxxxx any
rights with respect to distributions on the Preference Units that are
inconsistent with the rights expressed in the immediately preceding paragraph:
1. Crystal hereby waives, relinquishes and forfeits any such right
forever;
2. Crystal is the sole holder of the Preference Units and has not
(directly or indirectly) sold, assigned, transferred or otherwise
alienated any of its rights or interest in any of the outstanding
Preference Units, other than transfers to wholly-owned subsidiaries
of El Paso Corporation; and
3. Xxxxxxx agrees to cooperate and work diligently, exercising
commercially reasonable efforts, to take (or to cause to be taken)
all actions and to do (or to cause to be done) all things
necessary, proper or advisable (now or in the future) under
applicable laws to consummate and make effective the transactions
contemplated by this letter agreement, including making appropriate
annotations on all certificates, if any, evidencing the existence
of the Preference Units.
This letter agreement (i) shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns, (ii)
shall be subject to any and all governmental rules, regulations and laws
(whether now existing or hereafter arising) which are applicable to the parties
hereto, (iii) may be executed in multiple counterparts, each of which shall
constitute but one and the same instrument, (iv) contains all necessary terms
and conditions for the agreements described herein to be binding upon the
parties hereto, and the parties agree to be bound by the terms and
[Xxxxxxx X. Xxxxxx]
March 5, 2002
Page 3
conditions of this letter agreement, (v) shall be valid in all jurisdictions
except to the extent any term or provision of this letter agreement is invalid
or unenforceable in any jurisdiction; provided, however, any such term or
provision that is invalid or unenforceable in any jurisdiction shall be
ineffective as to such jurisdiction, to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining terms
and provisions of this letter agreement or affecting the validity or
enforceability of any terms and provisions of this letter agreement in any other
jurisdiction, and (vi) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ANY CONFLICT OR CHOICE OF LAW
PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT OR REQUIRE THE APPLICATION OF THE LAW
OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE INTERNAL LAWS OF THE
STATE OF DELAWARE ARE REQUIRED TO BE APPLIED.
**********
If the foregoing accurately represents your understanding of the
agreement of the parties hereto, please so indicate by signing this letter
agreement in the appropriate space provided below and returning one fully
executed copy to me.
Sincerely,
EL PASO ENERGY PARTNERS, L.P.
/s/ D. XXXX XXXXXX
----------------------------
D. Xxxx Xxxxxx
Senior Vice President
AGREED TO AND ACCEPTED AS OF
THE DATE OF THIS AGREEMENT:
CRYSTAL GAS STORAGE, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
[Signature Page of El Paso Partners/Crystal Letter Agreement Regarding
Series B Preference Units]
