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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-14365
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EL PASO ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 76-0568816
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
EL PASO ENERGY BUILDING
1001 LOUISIANA STREET, HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, Including Area Code: (713) 420-2131
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING
----- -----------
<S> <C>
Common Stock, par value $3.00 per share
as of November 10, 1998 120,164,864 shares
</TABLE>
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GLOSSARY
The following abbreviations, acronyms, or defined terms used in this Form
10-Q are defined below:
<TABLE>
<CAPTION>
DEFINITIONS
-----------
<S> <C>
ALJ................... Administrative Law Judge
Bcf................... Billion cubic feet
Bcf/d................. Billion cubic feet per day
Board................. Board of directors of El Paso Energy Corporation
Company............... El Paso Energy Corporation and its subsidiaries which, after August 1,
1998, is the successor company to El Paso Natural Gas Company
Court of Appeals...... United States Court of Appeals for the District of Columbia Circuit
Dynegy................ Dynegy Inc., formerly known as NGC Corporation
EBIT.................. Earnings before interest expense and income taxes, excluding affiliated
interest income
Edison................ Southern California Edison Company
EPA................... United States Environmental Protection Agency
EPEC.................. El Paso Energy Corporation, unless the context otherwise requires
EPFS.................. El Paso Field Services Company, a wholly owned indirect subsidiary of El
Paso Energy Corporation
EPNG.................. El Paso Natural Gas Company, a wholly owned subsidiary of El Paso Energy
Corporation subsequent to August 1, 1998
EPTPC................. El Paso Tennessee Pipeline Co., a wholly owned indirect subsidiary of El
Paso Energy Corporation
FERC.................. Federal Energy Regulatory Commission
GSR................... Gas supply realignment
MW(s)................. Megawatt(s)
PCB(s)................ Polychlorinated biphenyl(s)
PLN................... Perusahaan Listrik Negara, the Indonesian government-owned electric
utility
PRP(s)................ Potentially responsible party(ies)
SEC................... Securities and Exchange Commission
SFAS.................. Statement of Financial Accounting Standards
TGP................... Tennessee Gas Pipeline Company, a wholly owned subsidiary of El Paso
Tennessee Pipeline Co.
TransAmerican......... TransAmerican Natural Gas Corporation
</TABLE>
i
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EL PASO ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating revenues................................... $1,615 $1,251 $4,530 $4,061
------ ------ ------ ------
Operating expenses
Cost of gas and other products..................... 1,244 877 3,372 2,946
Operation and maintenance.......................... 168 173 523 477
Depreciation, depletion, and amortization.......... 67 58 199 182
Taxes, other than income taxes..................... 24 23 70 72
------ ------ ------ ------
1,503 1,131 4,164 3,677
------ ------ ------ ------
Operating income..................................... 112 120 366 384
------ ------ ------ ------
Other (income) and expense
Interest and debt expense.......................... 69 58 194 178
Other -- net....................................... (47) (20) (105) (44)
------ ------ ------ ------
22 38 89 134
------ ------ ------ ------
Income before income taxes and minority interest..... 90 82 277 250
Income tax expense................................... 31 31 93 96
------ ------ ------ ------
Income before minority interest...................... 59 51 184 154
Minority interest
Preferred stock dividend requirement of
subsidiary...................................... 7 7 19 19
------ ------ ------ ------
Net income........................................... $ 52 $ 44 $ 165 $ 135
====== ====== ====== ======
Comprehensive income................................. $ 49 $ 41 $ 157 $ 131
====== ====== ====== ======
Basic earnings per common share...................... $ 0.45 $ 0.38 $ 1.42 $ 1.19
====== ====== ====== ======
Diluted earnings per common share.................... $ 0.43 $ 0.37 $ 1.36 $ 1.16
====== ====== ====== ======
Basic average common shares outstanding.............. 115.6 114.8 115.8 113.5
====== ====== ====== ======
Diluted average common shares outstanding............ 126.9 117.8 125.3 116.6
====== ====== ====== ======
Dividends declared per common share.................. $ 0.19 $ 0.18 $ 0.57 $ 0.55
====== ====== ====== ======
</TABLE>
The accompanying Notes are an integral part of these Condensed Consolidated
Financial Statements.
1
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EL PASO ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 DECEMBER 31,
(UNAUDITED) 1997
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<S> <C> <C>
Current assets
Cash and temporary investments............................ $ 68 $ 116
Accounts and notes receivable, net........................ 776 989
Inventories............................................... 46 68
Deferred income tax benefit............................... 68 168
Other..................................................... 325 288
------- ------
Total current assets.............................. 1,283 1,629
Property, plant, and equipment, net......................... 7,231 7,116
Investments in unconsolidated affiliates.................... 723 373
Intangibles, net of accumulated amortization of $25 and
$21....................................................... 556 117
Other....................................................... 293 297
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Total assets...................................... $10,086 $9,532
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.......................................... $ 746 $ 886
Short-term borrowings (including current maturities of
long-term debt)........................................ 924 885
Other..................................................... 756 693
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Total current liabilities......................... 2,426 2,464
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Long-term debt, less current maturities..................... 2,465 2,119
------- ------
Deferred income taxes....................................... 1,463 1,550
------- ------
Other....................................................... 991 1,075
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Commitments and contingencies (See Note 3)
Company-obligated mandatorily redeemable convertible
preferred securities of El Paso Energy Capital Trust I.... 325 --
------- ------
Minority interest
Preferred stock of subsidiary............................. 300 300
------- ------
Other minority interest................................... 66 65
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Stockholders' equity
Common stock, par value $3 per share; authorized
275,000,000 shares; issued 124,123,021 and 122,581,816
shares................................................. 372 368
Additional paid-in capital................................ 1,421 1,389
Retained earnings......................................... 423 327
Less: Accumulated other comprehensive income.............. 15 7
Treasury stock (at cost) 4,138,234 and 2,946,832
shares.......................................... 89 47
Deferred compensation............................... 62 71
------- ------
Total stockholders' equity........................ 2,050 1,959
------- ------
Total liabilities and stockholders' equity........ $10,086 $9,532
======= ======
</TABLE>
The accompanying Notes are an integral part of these Condensed Consolidated
Financial Statements.
2
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EL PASO ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
-----------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities
Net income................................................ $ 165 $ 135
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation, depletion, and amortization.............. 199 182
Deferred income taxes.................................. 79 215
Amortization of risk-sharing revenue................... (24) --
Other.................................................. (21) (2)
Working capital changes, net of the effects of
acquisitions........................................... 48 (109)
Other..................................................... (61) (13)
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Net cash provided by operating activities......... 385 408
------- -------
Cash flows from investing activities
Capital expenditures...................................... (246) (138)
Investment in joint ventures and equity investees......... (398) (196)
Acquisition of DeepTech................................... (343) --
Proceeds from disposal of property........................ 47 10
Other..................................................... 2 13
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Net cash used in investing activities............. (938) (311)
------- -------
Cash flows from financing activities
Net commercial paper proceeds............................. 278 113
Revolving credit borrowings............................... 260 --
Revolving credit repayments............................... (187) (1,200)
Long-term debt retirements................................ (71) (110)
Net proceeds from issuance of El Paso Energy Capital Trust
I preferred securities................................. 317 --
Net proceeds from issuance of long-term debt.............. -- 883
Net proceeds from equity offering......................... -- 152
Acquisition of treasury stock............................. (36) --
Dividends paid on common stock............................ (68) (56)
Other..................................................... 12 20
------- -------
Net cash provided by (used in) financing
activities....................................... 505 (198)
------- -------
Decrease in cash and temporary investments.................. (48) (101)
Cash and temporary investments
Beginning of period............................... 116 200
------- -------
End of period..................................... $ 68 $ 99
======= =======
</TABLE>
The accompanying Notes are an integral part of these Condensed Consolidated
Financial Statements.
3
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EL PASO ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The 1997 Annual Report on Form 10-K for the Company includes a summary of
significant accounting policies and other disclosures and should be read in
conjunction with this Form 10-Q. The condensed consolidated financial statements
at September 30, 1998, and for the quarters and nine months ended September 30,
1998, and 1997, are unaudited. The condensed consolidated balance sheet at
December 31, 1997, is derived from the audited financial statements at that
date. These financial statements do not include all disclosures required by
generally accepted accounting principles. In the opinion of management, all
material adjustments necessary to present fairly the results of operations for
such periods have been included. All such adjustments are of a normal recurring
nature. Results of operations for any interim period are not necessarily
indicative of the results of operations for the entire year due to the seasonal
nature of the Company's businesses. Financial statements for the previous
periods include certain reclassifications which were made to conform to the
current presentation. Such reclassifications have no effect on reported net
income or total stockholders' equity.
Holding Company Reorganization
Effective August 1, 1998, the Company reorganized into a holding company
form of organizational structure, whereby EPEC, a Delaware corporation, became
the holding company. The holding company organizational structure was effected
by a merger conducted pursuant to Section 251(g) of the Delaware General
Corporation Law (the "Merger"), which provides for the formation of a holding
company structure without a vote of the stockholders of EPNG. In the Merger, El
Paso Energy Merger Company ("Merger Sub"), a Delaware corporation and wholly
owned subsidiary of EPEC, merged with and into EPNG, with EPNG as the surviving
corporation. By virtue of the Merger, EPNG became a direct, wholly owned
subsidiary of EPEC, and all of EPNG's outstanding capital stock was converted,
on a share for share basis, into capital stock of EPEC. As a result of such
restructuring, each outstanding share of $3.00 par value common stock of EPNG
was converted into one share of $3.00 par value common stock of EPEC, and each
one-half outstanding preferred stock purchase right of EPNG was converted into
one preferred stock purchase right of EPEC common stock, with such right
representing the right to purchase one two-hundredth (subject to adjustment) of
a share of Series A Junior Participating Preferred Stock of EPEC. Because the
reorganization was with companies under common control, the shareholders' equity
and components thereof of EPNG became the basis for EPEC shareholders' equity.
EPEC assumed ownership of the Trust (as defined in Note 4) as well as EPNG's
obligations related to the Trust. See Note 4, Trust Preferred Securities for a
further discussion. Additionally, EPEC became the successor to EPNG's previous
shelf registration in the amount of $565 million. The ticker symbol used by EPEC
following the reorganization remains unchanged as "EPG."
Stock Split
On January 21, 1998, the Board approved a two-for-one stock split of EPNG's
common stock (the "Stock Split"), subject to stockholder approval of an
amendment to EPNG's Restated Certificate of Incorporation to increase the number
of authorized shares of EPNG's common stock to 275,000,000 shares (the
"Amendment"). EPNG's stockholders approved the Amendment on March 2, 1998. In
connection with the Amendment, the Board increased the number of shares of
EPNG's preferred stock designated as Series A Junior Participating Preferred
Stock to 1,375,000 shares. The Stock Split was effected in the form of a stock
dividend of an aggregate of 60,944,417 shares of EPNG's common stock, which was
paid on April 1, 1998, to stockholders of record on March 13, 1998. All common
shares and per common share amounts have been adjusted to give effect to the
Stock Split.
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After giving effect to the Stock Split in accordance with the adjustment
provisions of the Amended and Restated Shareholder Rights Agreement, dated as of
July 23, 1997, between EPNG and The First National Bank of Boston as Rights
Agent, the number of rights to purchase one one-hundredth of a share of the
Series A Preferred Stock associated with each share of common stock was adjusted
to become one-half of such right (see Holding Company Reorganization above, for
the impact of the holding company reorganization).
Comprehensive Income
In accordance with SFAS No. 130, Reporting Comprehensive Income, the
Company has displayed comprehensive income in the Condensed Consolidated
Statements of Income. The only component of comprehensive income is the
cumulative translation adjustment which results from differences in the
translation of foreign currencies. This amount is reflected as accumulated other
comprehensive income in the Condensed Consolidated Balance Sheets.
Disclosure of Year 2000 Issues and Consequences by Public Companies,
Investment Advisers, Investment Companies, and Municipal Securities Issuers
In August 1998, the SEC issued the Interpretive Release: Disclosure of Year
2000 Issues and Consequences by Public Companies, Investment Advisers,
Investment Companies, and Municipal Securities Issuers. The Company has
addressed the requirements of the release in its disclosure on Year 2000 in Note
3, Commitments and Contingencies.
2. SEGMENTS
The Company has elected to adopt the standards outlined in SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, effective
January 1, 1998. Accordingly, the Company has segregated its business activities
into five segments: El Paso Natural Gas segment, Tennessee Gas Pipeline segment,
El Paso Field Services segment, El Paso Energy Marketing segment, and El Paso
Energy International segment. These segments are strategic business units that
offer a variety of different energy products and services. They are managed
separately as each business requires different technology and marketing
strategies.
The El Paso Natural Gas segment, which includes the interstate pipeline
systems of EPNG and Mojave Pipeline Company, transports natural gas primarily to
the California market. The Tennessee Gas Pipeline segment, which includes the
interstate pipeline systems of TGP, Midwestern Gas Transmission Company, and
East Tennessee Natural Gas Company, transports natural gas to the northeast,
midwest, and mid-Atlantic sections of the U.S. including the states of
Tennessee, Virginia and Georgia as well as the New York City, Chicago, and
Boston metropolitan areas. The El Paso Field Services segment provides natural
gas gathering, products extraction, dehydration, purification, compression and
intrastate transmission services. The El Paso Energy Marketing segment markets
and trades natural gas, power, and petroleum products and participates in the
development and ownership of domestic power generation projects. The El Paso
Energy International segment develops and operates energy infrastructure
facilities worldwide.
The accounting policies of the individual segments are the same as those of
the Company, as a whole, as summarized in Note 1, Basis of Presentation. Certain
business segments' earnings are largely derived from the earnings of equity
investments. Accordingly, the Company evaluates segment performance based on
EBIT. To the extent practicable, results of operations for the nine months and
quarter ended September 30, 1997 have been reclassified to conform to the
current business segment presentation, although such results are not necessarily
indicative of the results which would have been achieved had the revised
business segment structure been in effect during that period.
5
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<TABLE>
<CAPTION>
SEGMENTS
AS OF OR FOR THE QUARTER ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------
EL PASO TENNESSEE EL PASO EL PASO EL PASO
NATURAL GAS FIELD ENERGY ENERGY
GAS PIPELINE SERVICES MARKETING INTERNATIONAL TOTAL
(IN MILLIONS) ------- --------- -------- --------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers........ $ 117 $ 171 $ 36 $1,275 $ 14 $1,613
Intersegment revenues................... 1 9 18 4 -- 32
Operating income (loss)................. 57 71 7 -- (10) 125
EBIT.................................... 58 81 12 -- 12 163
Segment assets.......................... 1,745 5,085 1,462 754 918 9,964
</TABLE>
<TABLE>
<CAPTION>
SEGMENTS
AS OF OR FOR THE QUARTER ENDED SEPTEMBER 30, 1997
-------------------------------------------------------------------
EL PASO TENNESSEE EL PASO EL PASO EL PASO
NATURAL GAS FIELD ENERGY ENERGY
GAS PIPELINE SERVICES MARKETING INTERNATIONAL TOTAL
(IN MILLIONS) ------- --------- -------- --------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers........ $ 130 $ 179 $ 90 $847 $ 5 $1,251
Intersegment revenues................... -- 7 1 5 -- 13
Operating income (loss)................. 64 68 12 1 (5) 140
EBIT.................................... 67 74 15 2 2 160
Segment assets.......................... 1,816 5,333 597 812 380 8,938
</TABLE>
<TABLE>
<CAPTION>
SEGMENTS
AS OF OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------
EL PASO TENNESSEE EL PASO EL PASO EL PASO
NATURAL GAS FIELD ENERGY ENERGY
GAS PIPELINE SERVICES MARKETING INTERNATIONAL TOTAL
(IN MILLIONS) ------- --------- -------- --------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers........ $ 355 $ 542 $ 145 $3,440 $ 43 $4,525
Intersegment revenues................... 2 28 41 13 -- 84
Operating income (loss)................. 165 230 41 (4) (22) 410
EBIT.................................... 167 252 53 -- 23 495
Segment assets.......................... 1,745 5,085 1,462 754 918 9,964
</TABLE>
<TABLE>
<CAPTION>
SEGMENTS
AS OF OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
-------------------------------------------------------------------
EL PASO TENNESSEE EL PASO EL PASO EL PASO
NATURAL GAS FIELD ENERGY ENERGY
GAS PIPELINE SERVICES MARKETING INTERNATIONAL TOTAL
(IN MILLIONS) ------- --------- -------- --------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers........ $ 384 $ 565 $291 $2,812 $ 5 $4,057
Intersegment revenues................... 1 25 12 19 -- 57
Operating income (loss)................. 195 219 50 (32) (14) 418
EBIT.................................... 200 229 56 (29) 5 461
Segment assets.......................... 1,816 5,333 597 812 380 8,938
</TABLE>
The reconciliations of EBIT to income before income taxes and minority
interest are presented below.
<TABLE>
<CAPTION>
NINE MONTHS
QUARTER ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- -------------
1998 1997 1998 1997
----- ----- ----- ----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Total EBIT for reportable segments................... $163 $160 $ 495 $461
Corporate expenses, net.............................. (4) (20) (24) (33)
Interest and debt expense............................ (69) (58) (194) (178)
---- ---- ----- ----
Income before income taxes and minority interest..... $ 90 $ 82 $ 277 $250
==== ==== ===== ====
</TABLE>
6
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3. COMMITMENTS AND CONTINGENCIES
Indonesian Economic Difficulties
The Company owns a 47.5 percent interest in a power generating plant in
Sengkang, South Sulawesi, Indonesia. Under the terms of the project's Power
Purchase Agreement, PLN purchases power from the Company in local currency
(Rupiah) indexed to the U.S. dollar at the date of payment. Due to the
devaluation of the Rupiah, the cost of power to PLN has significantly increased.
PLN is currently unable to pass this increase in cost on to its customers
without creating further political instability. PLN has requested financial aid
from the Minister of Finance to help ease the effects of the devaluation. PLN
has been paying the Company in Rupiah indexed to the U.S. dollar at the rate in
effect prior to the Rupiah devaluation, with a commitment to pay the balance
when financial aid is received. The difference between the current and prior
exchange rate has resulted in an outstanding balance due from PLN of $5.6
million at September 30, 1998. While the Company cannot predict the ultimate
outcome of Indonesia's financial difficulties, it believes PLN, with the backing
of the Minister of Finance, will honor the obligations on the Sengkang project
in full. The Company's investment in the Sengkang project was approximately $25
million at September 30, 1998. Additionally, the Company has provided specific
recourse guarantees of up to $6 million for loans from the project lenders.
Other project debt is nonrecourse. The Company has obtained political risk
insurance for the Sengkang project. The Company believes the current economic
difficulties in Indonesia will not have a material adverse effect on the
Company's financial position, results of operations, or cash flows.
Rates and Regulatory Matters
In July 1998, FERC issued a Notice of Proposed Rulemaking ("NOPR") in which
it seeks comments on a wide range of initiatives to change the manner in which
short-term transportation markets (contracts for less than one year) are
regulated. Among other things, the NOPR proposes the following: (i) removing the
price cap for the short-term capacity market; (ii) establishing procedures to
make pipeline and shipper-owned capacity comparable; (iii) the auction of all
available short-term pipeline capacity on a daily basis, for which the pipeline
is not able to set a reserve price above variable costs; (iv) changing policies
or pipeline penalties, nomination procedures and services; (v) increasing
pipeline reporting requirements; (vi) permitting the negotiation of terms and
conditions of service; and (vii) potentially modifying the procedures for
certificating new pipeline construction. Also in July 1998, FERC issued a Notice
of Inquiry ("NOI") seeking comments on FERC's policy for pricing long-term
capacity. Comments on the NOPR and NOI are due in January 1999, and it is
unclear when and what action, if any, FERC will take in connection with the NOPR
and NOI and the comments received in response to them.
TGP -- In February 1997, TGP filed with FERC a settlement of all issues
related to the recovery of its GSR and other transition costs and related
proceedings (the "GSR Stipulation and Agreement"). In April 1997, FERC approved
the settlement and TGP implemented the settlement on May 1, 1997. Under the
terms of the GSR Stipulation and Agreement, TGP is entitled to collect from
customers up to $770 million, of which approximately $735 million has been
collected as of September 30, 1998. TGP is entitled to recover additional
transition costs, up to the remaining $35 million, through a demand
transportation surcharge and an interruptible transportation surcharge. The
demand transportation surcharge portion is scheduled to be recovered over a
period extending through December 1998. There is no time limit for collection of
the interruptible transportation surcharge portion. The terms of the GSR
Stipulation and Agreement also provide for a rate case moratorium through
November 2000 (subject to certain limited exceptions) and an escalating rate
cap, indexed to inflation, through October 2005, for certain of TGP's customers.
Under the terms of the GSR Stipulation and Agreement, TGP will be required to
refund to customers amounts collected in excess of each customer's share of
transition costs.
In December 1994, TGP filed for a general rate increase with FERC and in
October 1996, FERC approved the settlement resolving that proceeding. The
settlement included a structural rate design change that results in a larger
portion of TGP's transportation revenues being dependent upon throughput. TGP
provided a reserve for these rate refunds as revenues were collected. One party,
a competitor of TGP, filed with the Court of Appeals a Petition for Review of
the FERC orders. In July 1998, the Court of Appeals
7
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issued a decision remanding the case to FERC to respond to the competitor's
argument that TGP's cost allocation methodology deterred the development of
market centers. In October 1998, FERC issued an order requesting comments be
filed in January 1999 on the issues raised in the Court of Appeals remand.
In July 1997, FERC issued an order on rehearing of its July 1996 order
addressing cost allocation and rate design issues of TGP's 1991 general rate
proceeding. All cost of service issues were previously resolved pursuant to a
settlement that was approved by FERC. In the July 1996 order, FERC remanded to
the presiding ALJ the issue of proper allocation of TGP's New England lateral
costs. In the July 1997 order on rehearing, FERC clarified, among other things,
that although the ultimate resolution as to the proper allocation of costs will
be applied retroactively to July 1, 1995, the cost of service settlement does
not allow TGP to recover from other customers amounts that TGP may ultimately be
required to refund. TGP, as well as several other customers, have filed with the
Court of Appeals a Petition for Review of the FERC orders. In December 1997, the
ALJ issued his decision on the proper allocation of the New England lateral
costs. The decision adopts a methodology that economically approximates TGP's
current methodology. In October 1998, FERC issued an order affirming the ALJ's
decision.
TGP has filed cashout reports for the period September 1993 through August
1997. TGP's filings showed a cumulative loss of approximately $8 million that
would be rolled forward to the next cashout period pursuant to its tariff. FERC
has requested additional information and justification from TGP as to its
cashout methodology and reports. TGP's cashout methodology and reports are
currently pending before FERC.
Substantially all of the revenues of TGP are generated under long-term gas
transmission contracts. Contracts representing approximately 70 percent of TGP's
firm transportation capacity will be expiring over the next three years,
principally in November 2000. Although TGP cannot predict how much capacity will
be resubscribed, a majority of the expiring contracts cover service to
northeastern markets, where there is currently little excess capacity. Several
projects, however, have been proposed to deliver incremental volumes to these
markets. Although TGP is actively pursuing the renegotiation, extension and/or
replacement of these contracts, there can be no assurance as to whether TGP will
be able to extend or replace these contracts (or a substantial portion thereof)
or that the terms of any renegotiated contracts will be as favorable to TGP as
the existing contracts.
EPNG -- In June 1995, EPNG filed with FERC for approval of new system rates
for mainline transportation to be effective January 1, 1996. In March 1996, EPNG
filed a comprehensive offer of settlement to resolve that proceeding as well as
issues surrounding certain contract reductions and expirations that were to
occur from January 1, 1996, through December 31, 1997. In April 1997, FERC
approved EPNG's settlement as filed and determined that only the contesting
party, Edison, should be severed for separate determination of the rate it
ultimately pays EPNG. Hearings to determine Edison's rates were completed in May
1998, and an initial decision was issued by the presiding ALJ in July 1998. The
decision is subject to review by FERC. EPNG and Edison have filed exceptions to
the decision. If the ALJ's decision is affirmed by FERC, EPNG believes that the
resulting rates to Edison would be such that no significant, if any, refunds in
excess of the amounts reserved would be required. Pending the final outcome,
Edison continues to pay the filed rates, subject to refund, and EPNG continues
to provide a reserve for such potential refunds. In July 1997, FERC issued an
order denying the requests for rehearing of the April 1997 order and the
settlement was implemented effective July 1, 1997. Edison filed with the Court
of Appeals a petition for review of FERC's April 1997 and July 1997 orders, in
which it challenges the propriety of FERC's approving the settlement over
Edison's objections to the settlement as a customer of Southern California Gas
Company. This matter has been briefed, oral arguments were held in October 1998,
and a decision is pending.
The rate settlement establishes, among other things, base rates through
December 31, 2005. Such rates escalate annually beginning in 1998. In addition,
the settlement provides for settling customers to (i) pay $295 million
(including interest) as a risk sharing obligation, which approximates 35 percent
of anticipated revenue shortfalls over an 8 year period, resulting from the
contract reductions and expirations referred to above, (ii) receive 35 percent
of additional revenues received by EPNG, above a threshold, for the same
eight-year period, and (iii) have the base rates increase or decrease if certain
changes in laws or regulations result in increased or decreased costs in excess
of $10 million a year. In accordance with the terms of the rate
8
<PAGE> 11
settlement, EPNG's refund obligation (including interest) was approximately $194
million. EPNG refunded $61 million to customers in August 1997 and, in
accordance with certain customers' elections, the remaining $133 million of
refund obligation was applied towards their $295 million risk sharing
obligation. Through September 30, 1998, an additional $91 million of the risk
sharing obligation was paid and the $71 million balance, including interest,
will be collected by the end of 2003. From 1996 through September 30, 1998, $58
million of the risk sharing obligation has been recognized as revenue. The
remaining unearned balance of risk sharing amounts totaling $237 million will be
recognized ratably through the year 2003.
The contract reductions and expirations referred to above resulted in
EPNG's having, as of September 30, 1998, approximately 1.6 Bcf/d (or 34 percent)
of its total capacity committed under contracts requiring the payment of less
than full tariff reservation rates. As of September 30, 1998, this capacity had
an annual value, at full tariff reservation rates, of approximately $172
million.
EPNG has substantially offset the effects of these reductions in firm
capacity commitments referred to above by implementing cost control programs and
by actively seeking new markets and pursuing attractive opportunities to
increase traditional market share. The new markets EPNG has targeted include
various natural gas users in California which were served indirectly through
Southern California Gas Company and Pacific Gas & Electric Company, as well as
new markets in northern Mexico and off the east end of its system. In addition
to other arrangements, in October 1997, EPNG entered into three contracts with
Dynegy for the sale of substantially all of its turned back firm capacity
available as of January 1, 1998, to California (approximately 1.3 Bcf) for a
two-year period beginning January 1, 1998, at rates negotiated pursuant to
EPNG's tariff provisions and FERC policies. EPNG anticipates realizing at least
$70 million in revenues (which will be subject to the revenue sharing provisions
of the rate settlement) under these contracts over the two-year period. The
contracts have a transport-or-pay provision requiring Dynegy to pay a minimum
charge equal to the reservation component of the contractual charge on at least
50 percent of the contracted volumes in each month in 1998 and on at least 72
percent of the contracted volumes each month in 1999. In December 1997, EPNG
filed to implement several negotiated rate contracts, including those with
Dynegy. In a protest to this filing made in January 1998, three shippers
(producers/marketers) requested FERC to require EPNG to eliminate certain
provisions from the Dynegy contracts, to publicly disclose and repost the
contracts for competitive bidding, and to suspend their effectiveness. In an
order issued in January 1998, FERC rejected several of the arguments made in the
protest and allowed the contracts to become effective as of January 1, 1998,
subject to refund, and to the outcome of a technical conference, which was held
in March 1998. In June 1998, FERC issued an order rejecting the protests to the
Dynegy contracts, but requiring EPNG to file with FERC modifications to the
contracts clarifying the credits under the reservation reduction mechanism and
the recall rights of certain capacity. In addition, capacity covered by the
Dynegy contracts which becomes available in the future must be separately
posted. Several parties have protested EPNG's compliance filing and/or requested
rehearing of FERC's June 1998 order. In June 1998, EPNG filed a letter agreement
in compliance with the June 1998 FERC order. In September 1998, FERC issued an
order accepting the letter agreement subject to EPNG making additional
modifications. The additional modifications to the letter agreement required
further clarification of credits available to Dynegy under the reservation
reduction mechanism and the recall rights of certain capacity. In October 1998,
EPNG filed with FERC a revised letter agreement and requested rehearing of the
September 1998 order.
Under FERC procedures, take-or-pay cost recovery filings may be challenged
by pipeline customers on prudence and certain other grounds. Certain parties
sought review in the Court of Appeals of FERC's determination in an October 1992
order that certain buy-down/buy-out costs were eligible for recovery. In January
1996, the Court of Appeals remanded the order to FERC with direction to clarify
the basis for its decision that the take-or-pay buy-down/buy-out costs were
eligible for recovery. In March 1997, following a technical conference and the
submission of statements of position and replies, FERC issued an order
determining that the costs related to all but one of EPNG's disputed contracts
were eligible for recovery. The costs ruled ineligible for recovery totaled
approximately $3 million, including interest, and were refunded to customers in
the second quarter of 1997. In October 1997, FERC issued an order denying the
challenging parties' request for rehearing of the March 1997 order in most
respects, but determined that the costs incurred pursuant to two additional EPNG
contracts were ineligible for recovery. These costs, including interest,
9
<PAGE> 12
totaled approximately $9 million, and were refunded to customers in February
1998. The challenging parties, which claim that EPNG should be required to
refund up to an additional $31 million, excluding interest, have filed a
petition for review of the FERC order in the Court of Appeals. The matter has
been briefed and arguments are scheduled for January 1999.
In an order issued in April 1997 in the proceeding involving the spin down
of EPNG's gathering facilities to EPFS, FERC found that EPNG acted appropriately
in not including its Chaco Compressor Station in the facilities to be
transferred to EPFS, and that the Chaco Station had been correctly
functionalized by EPNG as a transmission facility. Requests for rehearing of
this order were filed by Williams Field Services and GPM Corporation. In a
November 1997 order, FERC reversed its previous decision and found that the
Chaco Station is a gathering facility and should be transferred to EPFS. FERC
denied all requests for rehearing and reaffirmed that the Chaco Station is a
non-jurisdictional facility and should be transferred to EPFS. Further requests
for rehearing were also denied. EPNG and two other parties have filed petition
for review with the Court of Appeals. In accordance with the FERC orders, the
Chaco Station was transferred to EPFS in April 1998.
Separately, in November 1996, GPM Corporation filed a complaint, as
amended, with FERC alleging that EPNG's South Carlsbad compression facilities
were gathering facilities and were improperly functionalized by EPNG as
transmission facilities. In accordance with the FERC orders, the South Carlsbad
compressor facilities were transferred to EPFS in April 1998.
Management believes the ultimate resolution of the aforementioned rate and
regulatory matters, which are in various stages of finalization, will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
Environmental Matters
As of September 30, 1998, the Company had a reserve of approximately $264
million to cover environmental assessments and remediation activities discussed
below.
Since 1988, TGP has been engaged in an internal project to identify and
deal with the presence of PCBs and other substances of concern, including
substances on the EPA List of Hazardous Substances, at compressor stations and
other facilities operated by both its interstate and intrastate natural gas
pipeline systems. While conducting this project, TGP has been in frequent
contact with federal and state regulatory agencies, both through informal
negotiation and formal entry of consent orders, to assure that its efforts meet
regulatory requirements.
In May 1995, following negotiations with its customers, TGP filed with FERC
a separate Stipulation and Agreement (the "Environmental Stipulation") that
establishes a mechanism for recovering a substantial portion of the
environmental costs identified in the internal project. In November 1995, FERC
issued an order approving the Environmental Stipulation. Although one shipper
filed for rehearing, FERC denied rehearing of its order in February 1996. The
Environmental Stipulation was effective July 1, 1995. As of September 30, 1998,
a balance of $7 million remains to be collected under this stipulation.
The Company and certain of its subsidiaries have been designated, have
received notice that they may be designated, or have been asked for information
to determine whether they could be designated, as a PRP with respect to 31 sites
under the Comprehensive Environmental Response, Compensation and Liability Act
or state equivalents. The Company has sought to resolve its liability as a PRP
with respect to these sites through indemnification by third parties and/or
settlements which provide for payment of the Company's allocable share of
remediation costs. Since the clean-up costs are estimates and are subject to
revision as more information becomes available about the extent of remediation
required, and because in some cases the Company has asserted a defense to any
liability, the Company's estimate of its share of remediation costs could
change. Moreover, liability under the federal Superfund statute is joint and
several, meaning that the Company could be required to pay in excess of its pro
rata share of remediation costs. The Company's understanding of the financial
strength of other PRPs has been considered, where appropriate, in its
determination of its estimated liability as described herein. The Company
presently believes that the costs
10
<PAGE> 13
associated with the current status of such entities as PRPs at the sites
referenced above will not have a material adverse effect on the Company's
financial position, results of operations, or cash flows.
The Company has initiated proceedings against its historic liability
insurers seeking payment or reimbursement of costs and liabilities associated
with environmental matters. In these proceedings, the Company contends that
certain environmental costs and liabilities associated with various entities or
sites, including costs associated with former operating sites, must be paid or
reimbursed by certain of its historic insurers. The proceedings are in their
initial stages and, accordingly, it is not possible to predict the outcome.
It is possible that new information or future developments could require
the Company to reassess its potential exposure related to environmental matters.
The Company may incur significant costs and liabilities in order to comply with
existing environmental laws and regulations. It is also possible that other
developments, such as increasingly strict environmental laws, regulations and
enforcement policies thereunder, and claims for damages to property, employees,
other persons and the environment resulting from current or discontinued
operations, could result in substantial costs and liabilities in the future. As
such information becomes available, or developments occur, related accrual
amounts will be adjusted accordingly. While there are still uncertainties
relating to the ultimate costs which may be incurred, based upon the Company's
evaluation and experience to date, the Company believes the recorded reserve is
adequate.
Legal Proceedings
In November 1993, TransAmerican filed a complaint in a Texas state court,
TransAmerican Natural Gas Corporation v. El Paso Natural Gas Company, et al.,
alleging fraud, tortious interference with contractual relationships, negligent
misrepresentation, economic duress, civil conspiracy, and violation of state
antitrust laws arising from a settlement agreement entered into by EPNG,
TransAmerican, and others in 1990 to settle litigation then pending and other
potential claims. The complaint, as amended, seeks actual damages of $1.5
billion and exemplary damages of $6 billion. EPNG is defending the matter in the
State District Court of Dallas County, Texas. In April 1996, a former employee
of TransAmerican filed a related case in Harris County, Texas, Vickroy E. Stone
v. Godwin & Carlton, P.C., et al. (including EPNG), seeking indemnification and
other damages in unspecified amounts relating to litigation consulting work
allegedly performed for various entities, including EPNG, in cases involving
TransAmerican. EPNG filed a motion for summary judgment in the TransAmerican
case arguing that plaintiff's claims are barred by a prior release executed by
TransAmerican, by statutes of limitations, and by the final court judgment
ending the original litigation in 1990. Following a hearing in January 1998, the
court granted summary judgment in EPNG's favor on TransAmerican's claims based
on economic duress and negligent misrepresentation, but denied the motion as to
the remaining claims. In February 1998, EPNG filed a motion for summary judgment
in the Stone litigation arguing that all claims are baseless, barred by statutes
of limitations, subject to executed releases, or have been assigned to
TransAmerican. In June 1998, the court granted EPNG's motion in its entirety and
dismissed all the remaining claims in the Stone litigation. In August 1998, the
court denied Stone's motion for a new trial seeking reconsideration of that
ruling. Stone has appealed the court's ruling to the Texas Court of Appeals in
Houston, Texas. The TransAmerican trial is set to commence in September 1999.
Based on information available at this time, management believes that the claims
asserted against it in both cases have no factual or legal basis and that the
ultimate resolution of these matters will not have a material adverse effect on
the Company's financial position, results of operations, or cash flows.
On February 12, 1998, the United States and the State of Texas filed in a
United States District Court a Comprehensive Environmental Response,
Compensation and Liability Act cost recovery action, United States v. Atlantic
Richfield Co., et al., against fourteen companies including the following
affiliates of EPEC: TGP, EPTPC, EPEC Corporation, EPEC Polymers, Inc. and the
dissolved Petro-Tex Chemical Corporation, relating to the Sikes Disposal Pits
Superfund Site ("Sikes") located in Harris County, Texas. Sikes was an
unpermitted waste disposal site during the 1960s that accepted waste hauled from
numerous Houston Ship Channel industries. The suit alleges that the former
Tenneco Chemicals, Inc. and Petro-Tex Chemical Corporation arranged for disposal
of hazardous substances at Sikes. TGP, EPTPC, EPEC Corporation and EPEC
Polymers, Inc. are alleged to be derivatively liable as successors or as parent
corporations. The suit claims that the United States and the State of Texas have
expended over $125 million in remediating the site,
11
<PAGE> 14
and seeks to recover that amount plus interest. Other companies named as
defendants include Atlantic Richfield Company, Crown Central Petroleum
Corporation, Occidental Chemical Corporation, Exxon Corporation, Goodyear Tire &
Rubber Company, Rohm & Haas Company, Shell Oil Company and Vacuum Tanks, Inc.
These defendants have filed their answers and third-party complaints seeking
contribution from twelve other entities believed to be PRPs at Sikes. Although
factual investigation relating to Sikes is in very preliminary stages, the
Company believes that the amount of material, if any, disposed at Sikes from the
Tenneco Chemicals, Inc. or Petro-Tex Chemical Corporation facilities was small,
possibly de minimis. However, the government plaintiffs have alleged that the
defendants are each jointly and severally liable for the entire remediation
costs and have also sought a declaration of liability for future response costs
such as groundwater monitoring. While the outcome of this matter cannot be
predicted with certainty, management does not expect this matter to have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
TGP is a party in proceedings involving federal and state authorities
regarding the past use by TGP of a lubricant containing PCBs in its starting air
systems. TGP has executed a consent order with the EPA governing the remediation
of certain of its compressor stations and is working with the relevant states
regarding those remediation activities. TGP is also working with the
Pennsylvania and New York environmental agencies to specify the remediation
requirements at the Pennsylvania and New York stations. Remediation activities
in Pennsylvania are complete with the exception of some long-term groundwater
monitoring requirements. Remediation and characterization work at the compressor
stations under its consent order with the EPA and the jurisdiction of the New
York Department of Environmental Conservation is ongoing. Management believes
that the ultimate resolution of these matters will not have a material adverse
effect on the Company's financial position, results of operations, or cash
flows.
In Commonwealth of Kentucky, Natural Resources and Environmental Protection
Cabinet v. Tennessee Gas Pipeline Company (Franklin County Circuit Court, Docket
No. 88-C1-1531, November 16, 1988), the Kentucky environmental agency alleged
that TGP discharged pollutants into the waters of the state without a permit and
disposed of PCBs without a permit. The agency sought an injunction against
future discharges, sought an order to remediate or remove PCBs, and sought a
civil penalty. TGP has entered into agreed orders with the agency to resolve
many of the issues raised in the original allegations, has received water
discharge permits for its Kentucky stations from the agency, and continues to
work to resolve the remaining issues. The relevant Kentucky compressor stations
are scheduled to be characterized and remediated under the consent order with
the EPA. Management believes that the resolution of this issue will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
The Company is a named defendant in numerous lawsuits and a named party in
numerous governmental proceedings arising in the ordinary course of business.
While the outcome of such lawsuits or other proceedings against the Company
cannot be predicted with certainty, management currently does not expect these
matters to have a material adverse effect on the Company's financial position,
results of operations, or cash flows.
Year 2000
The Company has established an executive steering committee and a project
team to coordinate the five phases of its Year 2000 project to assure that the
Company's key automated systems and related processes will remain functional
through the year 2000. Those phases include: (i) awareness; (ii) assessment;
(iii) remediation; (iv) testing; and (v) implementation of the necessary
modifications. The key automated systems of the Company consist of (a)
internally developed computer applications, (b) hardware and equipment, (c)
embedded chip systems in property, plant and equipment, and (d) third-party
developed software. The Company has hired outside consultants (both domestic and
international) to supplement the Company's project team. In addition, the
Company is involved in several industry trade-groups to share insight on issues
facing the industry related to Year 2000.
The Company's awareness phase recognizes the importance of Year 2000 issues
and its potential impact to the Company. Through the executive steering
committee and project team, the Company has established a
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<PAGE> 15
company-wide awareness program which includes participation of senior management
in each core business area. Even though the awareness phase is substantially
completed, the Company will continually update awareness efforts throughout the
Year 2000 project.
The Company's assessment phase consists of conducting a company-wide
inventory of its key automated systems and related processes, analyzing and
assigning levels of criticality to those systems and processes, identifying and
prioritizing resource requirements, developing validation strategies and testing
plans, and evaluating business partner relationships. The portion of the
assessment phase related to internally developed computer applications is
substantially complete. The Company estimates that it has finished more than
half of the portion of the assessment to determine the nature and impact of the
Year 2000 date change for hardware and equipment, embedded chip systems, and
third-party-developed software. The assessment phase of the project, among other
things, involves efforts to obtain representations and assurances from third
parties, including third party vendors, that their hardware and equipment
products, embedded chip systems, and software products being used by or
impacting the Company are or will be modified to be Year 2000 compliant. To
date, the responses from such third parties are inconclusive. As a result, the
Company cannot predict the potential consequences if these or other third
parties or their products are not Year 2000 compliant. The Company is currently
evaluating the exposure associated with such business partner relationships.
The Company expects that the remediation phase, which involves converting,
modifying, replacing or eliminating selected key automated systems, will be
substantially completed by mid-1999. The Company's testing phase represents the
validation process for key automated systems. The Company is utilizing test
tools and written test procedures to document and validate, as necessary, its
unit, system, integration, and acceptance testing. The testing phase is also
anticipated to be substantially completed by mid-1999. While work has begun on
both the remediation and testing phases, the Company estimates that
approximately three-quarters of the work in these phases remain.
The Company's implementation phase involves placing the converted or
replaced key automated systems into operations. In some cases, the
implementation phase will consist of developing and executing contingency plans
needed to support business functions and processes that may be interrupted by
Year 2000 failures which are outside of the Company's control. Contingency plans
will also be developed to prepare for unforeseen failures of the Company's key
automated systems. The Company is in the early stages of the implementation
phase. This phase is expected to be substantially completed by mid-1999.
While the total cost of the Company's Year 2000 project is still being
evaluated, the Company estimates that the costs to be incurred in 1998, 1999,
and 2000 associated with assessing, remediating and testing internally developed
computer applications, hardware and equipment, embedded chip systems, and
third-party-developed software is between $17 million and $36 million. Of these
estimated costs, the Company expects between $4 million and $15 million to be
capitalized and the remainder to be expensed. As of September 30, 1998, the
Company has incurred expenses of approximately $3 million.
It is possible the Company may need to reassess its estimate of Year 2000
costs in the event the Company completes an acquisition of, or makes a material
investment in, substantial facilities or another business entity.
The Company's goal is to ensure that all of the critical systems and
processes which are under its direct control remain functional. However, certain
systems and processes may be interrelated with systems outside the control of
the Company, and therefore there can be no assurance that all implementations
will be successful. The Company's present analysis of its most reasonably likely
worst case scenario for Year 2000 disruptions include Year 2000 failures in the
telecommunications and electricity industries, as well as interruptions from
suppliers that might cause disruptions in the Company's operations, thus causing
temporary financial losses and an inability to deliver products and services to
customers. Accordingly, the Company's contingency plan may also consider any
significant failures related to the most reasonably likely worst case scenario,
as they may occur. The plan is expected to assess the risk of a significant
failure to critical processes performed by the Company. This assessment is
expected to also factor in the severity and duration of the impact of a
significant failure. From this analysis, the Year 2000 contingency plan will be
developed to mitigate those risks.
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<PAGE> 16
While most of the Company's domestic plants, pipelines and other facilities
are owned or controlled by the Company, or its wholly owned subsidiaries, nearly
all of the Company's international investments are in plant, pipeline and other
facilities owned in conjunction with unrelated third parties. In many cases, the
operators of such international facilities are not under the sole or direct
control of the Company. As a consequence, the Year 2000 programs instituted at
some of the international facilities may be materially different from the Year
2000 program implemented by the Company domestically, and the party responsible
for the results of such programs may not be under the direct or indirect control
of the Company. The persons responsible for instituting such international Year
2000 programs may not provide the same degree of communication, documentation
and coordination as the Company achieves in its domestic Year 2000 program.
Also, the regulatory and legal environment in which such international
facilities operate make analysis of the most reasonably likely worst case
scenario with respect to certain facilities difficult at this time. Many foreign
jurisdictions appear to be substantially behind the United States in formulating
a Year 2000 strategy with respect to infrastructure or the reporting
requirements of business entities. Accordingly, the Year 2000 risks posed by
international operations as a whole are different than those presented
domestically. The Company has formulated and instituted a program for
identifying such risks and preparing a response to such risks, but is not yet
able to articulate the most reasonably likely worst case scenario for each of
its international operations at this time.
Management does not expect the costs of the Company's Year 2000 project to
have a material adverse effect on the Company's financial position, results of
operations, or cash flows. Based on information available at this time, however,
the Company cannot conclude that any failure of the Company or third-party
entities to achieve Year 2000 compliance will not adversely effect the Company.
Specific factors which might affect the success of the Company's Year 2000
efforts and the occurrence of Year 2000 disruption or expense include failure of
the Company or its outside consultants to properly identify deficient systems,
the failure of the selected remedial action to adequately address the
deficiencies, failure of the Company's outside consultants to complete the
remediation in a timely manner (due to shortages of qualified labor or other
factors), unforeseen expenses related to the remediation of existing systems or
the transition to replacement systems, and the failure of third parties to
become compliant or to adequately notify the Company of potential noncompliance.
4. TRUST PREFERRED SECURITIES
In March 1998, El Paso Energy Capital Trust I (the "Trust"), issued 6.5
million of 4 3/4% trust convertible preferred securities (the "Trust Preferred
Securities") for $325 million ($317 million, net of issuance costs). In
addition, the Trust issued trust convertible common securities of approximately
$10 million to EPNG. The net proceeds were used by EPNG to pay down commercial
paper. The Trust exists for the sole purpose of issuing Trust Preferred
Securities and investing the proceeds in 4 3/4% convertible subordinated
debentures due 2028 (the "Trust Debentures") of EPNG, the Trust's sole asset.
EPNG executed a guarantee with regard to the Trust Preferred Securities. The
guarantee, when taken together with EPNG's obligations under the Trust
Debentures, the indenture pursuant to which the Trust Debentures were issued,
and the applicable trust document, provides a full and unconditional guarantee
of the Trust's obligations under the Trust Preferred Securities.
As a result of the holding company reorganization discussed in Note 1, EPEC
assumed ownership of the Trust, the obligations of the Trust Debentures, and the
guarantee of the Trust's obligations under the Trust Preferred Securities. The
results of the Trust are consolidated with those of the Company and, therefore,
the Trust Debentures are eliminated and the Trust Preferred Securities are
reflected as company-obligated mandatorily redeemable convertible preferred
securities of El Paso Energy Capital Trust I in the Condensed Consolidated
Balance Sheets. Distributions on the Trust Preferred Securities are included in
interest and debt expense in the Condensed Consolidated Statements of Income.
The Trust Preferred Securities are non-voting (except in limited
circumstances), pay quarterly distributions at an annual rate of 4 3/4%
commencing on June 30, 1998, carry a liquidation value of $50 per security plus
accrued and unpaid distributions and are convertible into the Company's common
shares at any time prior to the close of business on March 31, 2028, at the
option of the holder. The Trust Preferred
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<PAGE> 17
Securities are convertible into the Company's common stock at the rate of 1.2022
common shares for each Trust Preferred Security (equivalent to a conversion
price of $41.59 per common share), subject to adjustment in certain
circumstances.
5. FINANCING TRANSACTIONS
The Company had short-term borrowings, including current maturities of
long-term debt, at September 30, 1998 and December 31, 1997, as follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
(IN MILLIONS)
<S> <C> <C>
EPNG Revolving Credit Facility.............................. $200 $ 45
EPNG Revolving Credit Facility with TGP designated as
borrower.................................................. -- 417
Commercial paper............................................ 605 326
Other credit facilities..................................... 60 25
Current maturities of long-term debt........................ 59 72
---- ----
$924 $885
==== ====
</TABLE>
In March 1998, EPNG retired its outstanding 8 5/8% debentures due 2012 in
the amount of $17 million.
In August 1998, EPTPC retired its outstanding 10% debentures due August 1,
1998, in the amount of $38 million.
During the nine months ended September 30, 1998, the Company repurchased
995,600 common shares at a weighted average cost of $35.77 per share.
After issuing the Trust Debentures described in Note 4 above, EPEC has
approximately $565 million of capacity remaining under its shelf registrations
to issue public securities registered thereunder.
In August 1998, EPEC became a guarantor of EPNG's $750 million 5-year
revolving credit and competitive advance facility and $750 million 364-day
revolving credit and competitive advance facility (collectively, the "Revolving
Credit Facility"). In October 1998, the $750 million 364-day portion of the
Revolving Credit Facility was amended to extend the termination date to October
27, 1999. Further, in October 1998, the Revolving Credit Facility was amended to
permit TGP, a designated borrower, to issue commercial paper, provided, the
total amount of commercial paper outstanding at EPNG and TGP is equal to or less
than the unused capacity under the Revolving Credit Facility.
In September 1998, TGP filed a shelf registration permitting TGP to offer
up to $600 million (including $100 million carried forward from a prior shelf
registration) of debt securities. In October 1998, TGP issued $400 million ($391
million, net of issuance cost) aggregate principal amount of 7% debentures due
2028. Approximately $300 million of the proceeds were used to repay TGP's
short-term indebtedness under the Revolving Credit Facility and the remainder
was used by TGP for general corporate purposes. After this issuance, TGP has
$200 million of capacity remaining under its shelf registration. As a result of
this transaction, the $300 million EPNG Revolving Credit Facility with TGP
designed as borrower was reclassified to long-term debt in the September 30,
1998, Condensed Consolidated Balance Sheets.
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<PAGE> 18
6. ACQUISITIONS
In August 1998, the Company completed the acquisition of DeepTech
International Inc. ("DeepTech") by merging DeepTech with a subsidiary of EPEC.
DeepTech's assets included an ownership interest in Leviathan Gas Pipeline
Partners, L.P. The acquisition was accounted for as a purchase with a total
purchase price of approximately $450 million. The Company recorded $236 million
of goodwill in connection with the acquisition which will be amortized using the
straight-line method over a period of 40 years. The amount allocated to goodwill
is based on an estimate of the excess of the total purchase price over the fair
value of assets and liabilities at the acquisition date. The amounts may be
adjusted in the final purchase price allocation. Management does not expect the
ultimate resolution of the purchase price allocation to materially impact the
Company's financial position, results of operations, or cash flows. The
operating results of DeepTech are included in the Company's Condensed
Consolidated Statements of Income beginning on August 15, 1998. The components
of the purchase price are as follows:
<TABLE>
<S> <C>
Fair value of assets acquired............................... $ 345
Goodwill.................................................... 236
Liabilities assumed......................................... (131)
-----
Total purchase price.............................. 450
Cash acquired............................................... (29)
Affiliated receivable extinguished.......................... (76)
Common stock issued......................................... (2)
-----
Net cash consideration paid....................... $ 343
=====
</TABLE>
In accordance with the merger agreement, the Company has executed a
guarantee with regard to DeepTech's 12% Senior Notes due 2000 and 11% Senior
Subordinated Promissory Note due 2000.
7. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at September 30, 1998, and December 31,
1997, consisted of the following:
<TABLE>
<CAPTION>
1998 1997
------ ------
(IN MILLIONS)
<S> <C> <C>
Property, plant, and equipment, at cost..................... $6,353 $6,004
Less accumulated depreciation and depletion................. 1,608 1,395
------ ------
4,745 4,609
Additional acquisition cost assigned to utility plant, net
of accumulated amortization............................... 2,486 2,507
------ ------
Total property, plant, and equipment, net......... $7,231 $7,116
====== ======
</TABLE>
8. INVENTORIES
Inventories at September 30, 1998, and December 31, 1997, consisted of the
following:
<TABLE>
<CAPTION>
1998 1997
---- ----
(IN MILLIONS)
<S> <C> <C>
Materials and supplies...................................... $43 $42
Gas in storage.............................................. 3 26
--- ---
$46 $68
=== ===
</TABLE>
Materials and supplies and gas in storage are valued at the lower of cost
or market, with cost determined using the average cost method.
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<PAGE> 19
9. EARNINGS PER SHARE
Basic and diluted earnings per share amounts are presented below.
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
NET AVERAGE SHARES EARNINGS NET AVERAGE SHARES EARNINGS
INCOME OUTSTANDING PER SHARE INCOME OUTSTANDING PER SHARE
------ -------------- --------- ------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER COMMON
SHARE AMOUNTS)
Basic.............................. $52 115.6 $0.45 $44 114.8 $0.38
===== =====
Effect of dilutive securities:
Stock options.................... -- 2.4 -- 2.0
Trust Preferred Securities....... 3 7.8 -- --
Restricted stock................. -- 1.1 -- 1.0
--- ----- --- -----
Diluted............................ $55 126.9 $0.43 $44 117.8 $0.37
=== ===== ===== === ===== =====
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
NET AVERAGE SHARES EARNINGS NET AVERAGE SHARES EARNINGS
INCOME OUTSTANDING PER SHARE INCOME OUTSTANDING PER SHARE
------ -------------- --------- ------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER COMMON
SHARE AMOUNTS)
Basic.............................. $165 115.8 $1.42 $135 113.5 $1.19
===== =====
Effect of dilutive securities:
Stock options.................... -- 2.6 -- 2.0
Trust Preferred Securities....... 6 5.6 -- --
Restricted stock................. -- 1.3 -- 1.1
---- ----- ---- -----
Diluted............................ $171 125.3 $1.36 $135 116.6 $1.16
==== ===== ===== ==== ===== =====
</TABLE>
10. RECENT PRONOUNCEMENTS
Pensions and Other Postretirement Benefits Disclosures
In February 1998, SFAS No. 132, Employers' Disclosures about Pensions and
Other Postretirement Benefits, was issued by the Financial Accounting Standards
Board to standardize related disclosure requirements. SFAS No. 132 requires that
additional information be disclosed regarding changes in the benefit obligation
and fair values of plan assets, and eliminates certain disclosures no longer
considered useful, including general descriptions of the plans. Aggregation of
information about certain plans is also permitted. This statement does not
change the requirements for the measurement and recognition of obligations under
those plans. The standard is effective for fiscal years beginning after December
15, 1997. SFAS No. 132 is primarily a disclosure requirement, and accordingly,
will not have any effect on the Company's financial position, results of
operations, or cash flows.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. This statement provides guidance on
accounting for such costs, and also defines internal-use computer software. It
is effective for fiscal years beginning after December 15, 1998. The application
of this pronouncement will not have a material impact in the Company's financial
position, results of operations, or cash flows.
Reporting on the Costs of Start-Up Activities
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, Reporting on the Costs of Start-Up
Activities. The statement defines start-up activities and requires start-up and
organization costs to be expensed as incurred. In addition, it requires that any
such cost that exists on the
17
<PAGE> 20
balance sheet be expensed upon adoption of this pronouncement. It is effective
for fiscal years beginning after December 15, 1998. The Company is currently
evaluating the effects of this pronouncement.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, was issued by the Financial Accounting Standards Board to
establish accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 requires that an entity classify all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (i) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (ii) a hedge of the exposure to variable cash
flows of a forecasted transaction, or (iii) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The accounting for the
changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. The standard is effective for all
fiscal quarters beginning after June 15, 1999. The Company is currently
evaluating the effects of this pronouncement.
Disclosure relating to Euro Conversion
In July 1998, the SEC issued Staff Legal Bulletin No. 6 to provide guidance
for disclosure related to the Euro Conversion. The guidance primarily focuses on
disclosure in the Management's Discussion and Analysis of Financial Condition
and Results of Operations, as well as Description of Business. The Company
currently has no investments in the countries affected by the Euro Conversion.
18
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information contained in Item 2 updates, and should be read in
conjunction with, information set forth in Part II, Items 7, 7A, and 8, in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, in
addition to the interim consolidated financial statements and accompanying notes
presented in Item 1 of this Form 10-Q.
HOLDING COMPANY REORGANIZATION
Effective August 1, 1998, the Company reorganized into a holding company
form of organizational structure, whereby EPEC, a Delaware corporation, became
the holding company. See Item 1, Financial Statements, Note 1, Basis of
Presentation, Holding Company Reorganization, for further discussion of the
holding company reorganization. The change has no impact on the presentation
herein.
RESULTS OF OPERATIONS
GENERAL
Diluted earnings per share for the quarter ended September 30, 1998, rose
16 percent to $0.43 compared to $0.37 in the third quarter of 1997. Consolidated
EBIT for the third quarter increased to $159 million compared to $140 million in
the year ago period. For the first nine months of 1998, diluted earnings per
share increased 17 percent to $1.36 from $1.16 in 1997. Consolidated EBIT for
the nine months increased to $471 million compared to $428 million in 1997.
The Company has elected to adopt the standards outlined in SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, effective
January 1, 1998. Accordingly, the Company has segregated its business activities
into five segments: El Paso Natural Gas segment, Tennessee Gas Pipeline segment,
El Paso Field Services segment, El Paso Energy Marketing segment, and El Paso
Energy International segment. These segments are strategic business units that
offer a variety of different energy products and services. They are managed
separately as each business requires different technology and marketing
strategies. Certain business segments' earnings are largely derived from the
earnings of equity investments. Accordingly, the Company evaluates segment
performance based on EBIT. To the extent practicable, results of operations for
1997 have been reclassified to conform to the current business segment
presentation, although such results are not necessarily indicative of the
results which would have been achieved had the revised business segment
structure been in effect during that period. Operating revenues and expenses by
segment include intersegment sales and expenses which are eliminated in
consolidation. For a further discussion of the individual segments, See Note 2
of Item 1, Financial Statements.
19
<PAGE> 22
SEGMENT RESULTS
EARNINGS BEFORE INTEREST EXPENSE AND INCOME TAXES
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- --------------
1998 1997 1998 1997
----- ----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
El Paso Natural Gas......................................... $ 58 $ 67 $167 $200
Tennessee Gas Pipeline...................................... 81 74 252 229
---- ---- ---- ----
Regulated segments........................................ 139 141 419 429
---- ---- ---- ----
El Paso Field Services...................................... 12 15 53 56
El Paso Energy Marketing.................................... -- 2 -- (29)
El Paso Energy International................................ 12 2 23 5
---- ---- ---- ----
Non-regulated segments.................................... 24 19 76 32
---- ---- ---- ----
Corporate expenses, net..................................... (4) (20) (24) (33)
---- ---- ---- ----
Total EBIT................................................ $159 $140 $471 $428
==== ==== ==== ====
</TABLE>
Consolidated EBIT for the quarter and nine months ended September 30, 1998,
was $19 million higher and $43 million higher, respectively, than for the same
periods of 1997. Variances by segment are presented below.
EL PASO NATURAL GAS
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- --------------
1998 1997 1998 1997
---- ---- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Operating revenues................................. $118 $130 $ 357 $ 385
Operating expenses................................. (61) (67) (192) (190)
Other -- net....................................... 1 4 2 5
---- ---- ----- -----
EBIT............................................. $ 58 $ 67 $ 167 $ 200
==== ==== ===== =====
</TABLE>
Third Quarter 1998 Compared to Third Quarter 1997
Operating revenues for the quarter ended September 30, 1998, were $12
million lower than for the same period of 1997 primarily due to lower net
revenues resulting from the currently effective rate structure and the Pacific
Gas & Electric Company contract expiration which was effective December 31,
1997. The decrease was significantly offset by risk sharing revenue and revenue
from the sale of excess capacity to Dynegy. (See Item 1, Financial Statements,
Note 3, for a discussion of the Dynegy contracts).
Operating expenses for the quarter ended September 30, 1998, were $6
million lower than for the same period of 1997 primarily due to recovery of a
receivable previously deemed uncollectible, lower purchase gas costs, and
decreased depreciation expense.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Operating revenues for the nine months ended September 30, 1998, were $28
million lower than for the same period of 1997 primarily due to lower net
revenues resulting from the currently effective rate structure including the
Pacific Gas & Electric Company contract expiration which was effective December
31, 1997. The decrease was significantly offset by risk sharing revenue, other
non-traditional revenues including revenue from the sale of excess capacity to
Dynegy, and the favorable resolution of a contested rate matter. (See Item 1,
Financial Statements, Note 3, for a discussion of the Dynegy contracts).
20
<PAGE> 23
Operating expenses for the nine months ended September 30, 1998, were $2
million higher than for the same period of 1997 primarily due to increased
purchase gas costs mainly resulting from lower 1998 fuel recovery rates and an
increase in maintenance expenses offset by recovery of a receivable previously
deemed uncollectible.
TENNESSEE GAS PIPELINE
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- ---------------
1998 1997 1998 1997
----- ----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Operating revenues............................. $ 180 $ 186 $ 570 $ 590
Operating expenses............................. (109) (118) (340) (371)
Other -- net................................... 10 6 22 10
----- ----- ----- -----
EBIT......................................... $ 81 $ 74 $ 252 $ 229
===== ===== ===== =====
</TABLE>
Third Quarter 1998 Compared to Third Quarter 1997
Operating revenues for the quarter ended September 30, 1998, were $6
million lower than for the same period of 1997 primarily because of a downward
revision in the amount of recoverable interest on GSR costs, and lower
throughput resulting from milder temperatures in the northeastern and midwestern
markets.
Operating expenses for the quarter ended September 30, 1998, were $9
million lower than for the same period of 1997 primarily due to lower system
fuel usage associated with operating efficiencies attained during the period of
lower throughput.
Other -- net for the quarter ended September 30, 1998, was $4 million
higher than for the same period of 1997 primarily due to interest income on a
favorable sales and use tax settlement.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Operating revenues for the nine months ended September 30, 1998, were $20
million lower than for the same period of 1997 primarily because of lower
throughput resulting from warmer average temperatures in the northeastern and
midwestern markets and a downward revision in the amount of recoverable interest
on GSR costs.
Operating expenses for the nine months ended September 30, 1998, were $31
million lower than for the same period of 1997 primarily due to lower system
fuel usage associated with operating efficiencies attained during the period of
lower throughput.
Other -- net for the nine months ended September 30, 1998, was $12 million
higher than for the same period of 1997 due to interest income on a favorable
sales and use tax settlement and gains on the sale of assets.
21
<PAGE> 24
EL PASO FIELD SERVICES
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- ---------------
1998 1997 1998 1997
---- ---- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Gathering and treating margin.................... $ 35 $ 28 $ 111 $ 87
Processing margin................................ 10 10 36 42
Other margin..................................... (1) 2 2 5
---- ---- ----- -----
Total gross margin..................... 44 40 149 134
Operating expenses............................... (37) (28) (108) (84)
Other -- net..................................... 5 3 12 6
---- ---- ----- -----
EBIT........................................... $ 12 $ 15 $ 53 $ 56
==== ==== ===== =====
</TABLE>
Third Quarter 1998 Compared to Third Quarter 1997
Total gross margin (revenue less cost of sales) for the quarter ended
September 30, 1998, was $4 million higher than for the same period of 1997. The
increase in the gathering and treating margin was primarily from an increase in
gathering and treating volumes largely attributable to the acquisition in
December 1997 of Pacificorp's Gulf Coast gathering and processing subsidiaries
("TPC") and the January 1998 transfer of the Channel Industries Gas Company
("Channel") to El Paso Field Services segment from the El Paso Energy Marketing
segment.
Operating expenses for the quarter ended September 30, 1998, were $9
million higher than for the same period of 1997 primarily as a result of
additional expenses associated with TPC and Channel.
Other -- net for the quarter ended September 30, 1998, was $2 million
higher than for the same period of 1997 primarily as a result of additional
earnings from equity investments.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Total gross margin (revenue less cost of sales) for the nine months ended
September 30, 1998, was $15 million higher than for the same period of 1997. The
increase in the gathering and treating margin primarily resulted from an
increase in gathering and treating volumes largely attributable to the
acquisition of TPC in December 1997 and the January 1998 transfer of Channel to
El Paso Field Services segment from the El Paso Energy Marketing segment. The
decrease in the processing margin was largely attributable to lower liquids
prices during 1998 compared to the same period of 1997. Liquids prices directly
impact a substantial portion of EPFS's processing revenues. During 1998, liquids
prices have been at their lowest level since 1990, and the Company expects this
trend to continue for the remainder of the year. The Company attempts to
mitigate the impact of lower liquids prices by utilizing hedging strategies
where possible.
Operating expenses for the nine months ended September 30, 1998, were $24
million higher than for the same period of 1997 primarily as a result of
additional expenses associated with TPC and Channel.
Other -- net for the nine months ended September 30, 1998, was $6 million
higher than for the same period of 1997 reflecting higher earnings from equity
investments.
22
<PAGE> 25
EL PASO ENERGY MARKETING
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Natural gas margin................................. $13 $ 15 $ 11 $ 10
Power margin....................................... (4) (1) 15 (1)
Petroleum products margin.......................... -- 1 -- (1)
--- ---- ---- ----
Total gross margin....................... 9 15 26 8
Operating expenses................................. (9) (14) (30) (40)
Other -- net....................................... -- 1 4 3
--- ---- ---- ----
EBIT............................................. $-- $ 2 $ -- $(29)
=== ==== ==== ====
</TABLE>
Third Quarter 1998 Compared to Third Quarter 1997
Total gross margin (revenue less cost of sales) for the quarter ended
September 30, 1998 was $6 million lower than for the same period of 1997. The
decrease was primarily attributable to price volatility for energy commodities,
particularly power prices, resulting in decreases in the market value of energy
positions which are accounted for on a mark-to-market basis. Third quarter 1998
power prices returned to more normal levels after significant price increases in
the second quarter brought on by unexpected power shortages in the Midwest.
Operating expenses were $5 million lower than for the same period of 1997
primarily due to the restructuring of the marketing organization, including the
January 1998 transfer of Channel from El Paso Energy Marketing segment to the El
Paso Field Services segment.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Total gross margin (revenue less cost of sales) for the nine months ended
September 30, 1998, was $18 million higher than for the same period of 1997. The
increase in total gross margin was primarily due to increased power volumes
compared to 1997, income recognition from a long-term power contract closed
during the first quarter of 1998, and an overall increase in the market value of
open power contracts due to price volatility in June and July.
Operating expenses were $10 million lower than for the same period of 1997.
The decrease was attributable to the restructuring of the marketing
organization, including the January 1998 transfer of Channel from El Paso Energy
Marketing segment to the El Paso Field Services segment.
23
<PAGE> 26
EL PASO ENERGY INTERNATIONAL
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Operating revenues................................. $ 14 $ 5 $ 43 $ 5
Operating expenses................................. (24) (10) (65) (19)
Other -- net....................................... 22 7 45 19
---- ---- ---- ----
EBIT............................................. $ 12 $ 2 $ 23 $ 5
==== ==== ==== ====
</TABLE>
Third Quarter 1998 Compared to Third Quarter 1997
Operating revenues for the quarter ended September 30, 1998, were $9
million higher than for the same period of 1997 due to the consolidation for
financial reporting purposes of the Manaus Power project in May 1998 after
acquiring an additional ownership interest and an increase in revenue
attributable to the EMA Power project which the Company began reporting on a
consolidated basis in July 1997.
Operating expenses for the quarter ended September 30, 1998, were $14
million higher than for the same period of 1997 primarily due to the
consolidation of the Manaus Power project and higher project development costs
in the third quarter of 1998 reflecting an increase in project-related
activities.
Other -- net for the quarter ended September 30, 1998, was $15 million
higher than for the same period of 1997 primarily due to higher equity earnings,
increased development fees, and a gain on the sale of surplus power equipment.
The increases were partially offset by the recognition of a loss on an equity
swap agreement.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Operating revenues for the nine months ended September 30, 1998, were $38
million higher than for the same period of 1997 due to the consolidation for
financial reporting purposes of the Manaus Power project in May 1998 after
acquiring an additional ownership interest and an increase in revenue
attributable to the EMA Power project which the Company began reporting on a
consolidated basis in July 1997.
Operating expenses for the nine months ended September 30, 1998, were $46
million higher than for the same period of 1997 primarily due to costs related
to the EMA Power and Manaus Power projects and higher project development costs
in 1998 reflecting an increase in project-related activities.
Other -- net for the nine months ended September 30, 1998, was $26 million
higher than for the same period of 1997 primarily due to increased equity
earnings, a gain on the sale of surplus power equipment, higher development
fees, and the recognition of certain gains from project-related activities.
As El Paso Energy International's projects move from the developmental
stage to the operational stage, it is common to recognize one-time gains and
fees which may include management fees, development fees, financing fees, and
gains on the sell-down of partnership interests. The Company anticipates
additional one-time events may result in the recognition of income or expense in
the future.
CORPORATE EXPENSES, NET
Third Quarter 1998 Compared to Third Quarter 1997
Net corporate expenses for the quarter ended September 30, 1998, were $16
million lower than for the same period of 1997 primarily due to lower costs
associated with the Company's employee incentive plans and decreased benefits
costs, partially offset by administrative costs associated with the formation
and startup of El Paso Power Services, a power services organization formed in
the first quarter of 1998.
24
<PAGE> 27
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Net corporate expenses for the nine months ended September 30, 1998, were
$9 million lower than for the same period of 1997 primarily due to a gain on the
sale of assets, lower costs associated with the Company's employee incentive
plans, and decreased benefits costs, partially offset by administrative costs
associated with the formation and startup of El Paso Power Services, a power
group services organization formed in the first quarter of 1998.
INTEREST AND DEBT EXPENSE
Third Quarter 1998 Compared to Third Quarter 1997
Interest and debt expense for the quarter ended September 30, 1998, was $11
million higher than for the same period of 1997 primarily because of increased
borrowings to fund capital expenditures, acquisitions, and other investing
expenditures.
Nine Months Ended 1998 Compared to Nine Months Ended 1997
Interest and debt expense for the nine months ended September 30, 1998, was
$16 million higher than for the same period of 1997 primarily because of
increased borrowings to fund capital expenditures, acquisitions, and other
investing expenditures and a higher average effective interest rate during the
first half of 1998 resulting from the higher rates associated with the March
1997 issuance of TGP long-term debt of approximately $883 million. These
increases were partially offset by interest accruals on the 1997 rate refund to
EPNG's customers.
INCOME TAX EXPENSE
The effective tax rate for the quarter and nine months ended September 30,
1998, was lower than the rate for the same periods of 1997 primarily as a result
of increased consolidated foreign income subject to foreign tax rates different
than U.S. tax rates, increased equity income from unconsolidated foreign
affiliates recorded net of foreign income taxes for which no provision for U.S.
income tax is required, and lower state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
CASH FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $23 million lower for the
nine months ended September 30, 1998, compared to the same period of 1997. The
decrease was primarily attributable to working capital changes, a take-or-pay
refund paid to EPNG's customers in February 1998, lower GSR collections in 1998,
and prepayments of risk sharing revenues in 1997. The decrease was partially
offset by a higher net tax refund in 1998 and a rate refund paid to TGP's
customers in March 1997 and EPNG's customers in August 1997.
CASH FROM INVESTING ACTIVITIES
Net cash used in investing activities was $627 million higher for the nine
months ended September 30, 1998, compared to the same period of 1997. The
increase was primarily due to the August 1998 acquisition of DeepTech (see Item
1, Financial Statements, Note 6), as well as higher expenditures for joint
ventures, equity investments, and capital expenditures in the first nine months
of 1998, compared to the first nine months of 1997. Expenditures related to
joint ventures and equity investments were primarily attributable to the El Paso
Energy International segment. Internally generated funds, supplemented by other
financing activities, were used to fund these expenditures.
Future funding for capital expenditures, acquisitions, and other investing
expenditures is expected to be provided by internally generated funds,
commercial paper issuances, available capacity under existing credit facilities,
and/or the issuance of other long-term debt, trust securities, or equity.
25
<PAGE> 28
CASH FROM FINANCING ACTIVITIES
Net cash provided by financing activities was $505 million for the nine
months ended September 30, 1998, compared to net cash used in financing
activities of $198 million for the same period of 1997. In March 1998, the Trust
issued Trust Preferred Securities (see Item 1, Financial Statements, Note 4) for
net proceeds of $317 million which, supplemented by internally generated funds
and increases in short-term debt, were used to retire long-term debt, pay
dividends, acquire treasury stock, fund capital and equity investments, and for
other corporate purposes. Use of cash during the first nine months of 1997 was
due in large part to the Company's efforts to realign its debt and capital
structure following the EPTPC acquisition.
In March 1998, EPNG retired its outstanding 8 5/8% debentures due 2012 in
the amount of $17 million.
In August 1998, EPTPC retired its outstanding 10% debentures due August 1,
1998, in the amount of $38 million.
During the nine months ended September 30, 1998, the Company repurchased
995,600 common shares at a weighted average cost of $35.77 per share.
The following table reflects quarterly dividends declared and paid on
EPNG's common stock:
<TABLE>
<CAPTION>
AMOUNT PER
DECLARATION DATE COMMON SHARE PAYMENT DATE TOTAL AMOUNT
---------------- ------------ ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
October 22, 1997....................... $0.18250 January 2, 1998 $ 22
January 22, 1998....................... $0.19125 April 1, 1998 $ 23
April 22, 1998......................... $0.19125 July 1, 1998 $ 23
July 24, 1998.......................... $0.19125 October 1, 1998 $ 23
</TABLE>
In October 1998, the Board declared a quarterly dividend of $0.19125 per
share on EPEC's common stock, payable on January 4, 1999, to stockholders of
record on December 4, 1998. Also during the first nine months of 1998, quarterly
dividends totaling $19 million were paid on EPTPC's Series A Preferred Stock.
Future funding for long-term debt retirements, dividends, and other
financing expenditures are expected to be provided by internally generated
funds, commercial paper issuances, available capacity under existing credit
facilities, and/or the issuance of other long-term debt, trust securities, or
equity.
At September 30, 1998, the Company had approximately $1 billion available
under its revolving credit facilities. The availability of borrowings under the
Company's credit agreements is subject to certain specified conditions, which
management believes it currently meets.
After issuing the Trust Debentures described in Item 1, Financial
Statements, Note 4, EPEC has approximately $565 million of capacity remaining
under its shelf registrations to issue public securities registered thereunder.
In August 1998, EPEC became a guarantor of EPNG's Revolving Credit
Facility. In October 1998, the $750 million 364-day portion of the Revolving
Credit Facility was amended to extend the termination date to October 27, 1999.
Further, in October 1998, the Revolving Credit Facility was amended to permit
TGP, a designated borrower, to issue commercial paper, provided, the total
amount of commercial paper outstanding at EPNG and TGP is equal to or less than
the unused capacity under the Revolving Credit Facility.
In September 1998, TGP filed a shelf registration permitting TGP to offer
up to $600 million (including $100 million carried forward from a prior shelf
registration) of debt securities. In October 1998, TGP issued $400 million ($391
million, net of issuance cost) aggregate principal amount of 7% debentures due
2028. Approximately $300 million of the proceeds were used to repay TGP's
short-term indebtedness under the Revolving Credit Facility and the remainder
was used by TGP for general corporate purposes. After this issuance, TGP has
$200 million of capacity remaining under its shelf registration.
COMMITMENTS AND CONTINGENCIES
See Part I, Financial Information, Note 3, which is incorporated herein by
reference.
26
<PAGE> 29
OTHER
The Company intends to continue pursuing strategic acquisition and
investment opportunities. The timing, size, or success of any acquisition
effort, and the associated potential capital commitments, cannot be predicted.
The Company may fund future acquisitions and investments with internally
generated funds, available capacity under existing credit facilities, and/or the
issuance of other long-term debt or equity.
DEEPTECH ACQUISITION
In August 1998, the Company completed the acquisition of DeepTech which
included DeepTech's combined ownership interest in Leviathan Gas Pipeline
Partners, L.P. See Item 1, Financial Statements, Note 6, which is incorporated
herein by reference for further discussion of the acquisition.
ONGOING AND FUTURE INVESTMENT AND CAPITAL PROJECTS
Significant events impacting the Company's development projects are
discussed below.
Latin America
In April 1998, the Company purchased the remaining 50 percent interest in
the 250 MW power project in Manaus, Brazil from CAPEX, a publicly traded company
on the Argentine and Luxembourg stock exchanges. The contract for the power
project provides for delay damages to be paid to the power purchaser in the
event of a failure to meet the specified construction schedule, except for
delays caused by events of force majeure. The completion of the project has been
delayed beyond the originally scheduled completion dates provided in the
contract and such delays have resulted in a claim for delay damages from the
power purchaser. The Company is in discussions with the power purchaser
regarding such claim. In any event, the Company has a right to assert claims
against the construction contractor for such delay damages and does not believe
that any such damages will have a material adverse effect on the Company.
The Company has approximately a 50 percent interest in a consortium that
will construct and operate a natural gas compression plant and associated
facilities in Venezuela. Total cost of the project is estimated to be
approximately $400 million. Construction is expected to begin in the second
quarter of 1999, with initial operations commencing in the fourth quarter of
2000.
Portland
The Company increased its ownership interest in the Portland Natural Gas
Transmission ("Portland") system from 17.8 percent to approximately 19 percent
in April 1998. Portland is developing a 292-mile interstate natural gas pipeline
with a projected capacity of 178 million cubic feet per day extending from the
Canadian border near Pittsburg, New Hampshire to Dracut, Massachusetts. In April
1998, Portland secured $256 million in non-recourse project financing.
Construction started in June 1998 and targeted commencement of commercial
operations of the project is the first quarter of 1999.
STOCK SPLIT
On January 21, 1998, the Board approved the Stock Split, subject to
stockholder approval of the Amendment. The stockholders approved the Amendment
on March 2, 1998. The Stock Split was effected in the form of a stock dividend
of an aggregate of 60,944,417 shares of EPNG's common stock, which was paid on
April 1, 1998, to stockholders of record on March 13, 1998. See Item 1,
Financial Statements, Note 1, Stock Split, which is incorporated herein by
reference.
RECENT PRONOUNCEMENTS
See Item 1, Financial Statements, Note 10, which is incorporated herein by
reference.
27
<PAGE> 30
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Where any such forward-looking
statement includes a statement of the assumptions or bases underlying such
forward-looking statement, the Company cautions that, while such assumptions or
bases are believed to be reasonable and are made in good faith, assumed facts or
bases almost always vary from the actual results, and the differences between
assumed facts or bases and actual results can be material, depending upon the
circumstances. Where, in any forward-looking statement, the Company or its
management expresses an expectation or belief as to future results, such
expectation or belief is expressed in good faith and is believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished. The words
"believe," "expect," "estimate," "anticipate" and similar expressions may
identify forward-looking statements.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include increasing competition
within the Company's industry, the timing and extent of changes in commodity
prices for natural gas and power, uncertainties associated with acquisitions and
joint ventures, potential environmental liabilities, potential contingent
liabilities and tax liabilities related to the Company's acquisitions, including
EPTPC, political and economic risks associated with current and future
operations in foreign countries, conditions of the equity and other capital
markets during the periods covered by the forward-looking statements, and other
risks, uncertainties and factors, including the effect of the Year 2000 date
change, discussed more completely in the Company's other filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained in Item 3 updates, and should be read in
conjunction with, information set forth in Part II, Item 7A in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, in addition to
the interim consolidated financial statements and accompanying notes presented
in Items 1 and 2 of this Form 10-Q.
There are no material changes in market risks faced by the Company from
those reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
28
<PAGE> 31
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Item 1, Financial Statements, Note 3, which is incorporated herein by
reference.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
See Item 1, Financial Statements, Note 1, which is incorporated herein by
reference.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. OTHER INFORMATION
Stockholders considering submitting proposals for inclusion in the
Company's Proxy Statement to be issued in connection with the Company's 1999
Annual Meeting (the "Annual Meeting") are encouraged to submit proposals to the
Corporate Secretary by November 20, 1998. The Company will consider only
proposals meeting the requirements of applicable SEC rules. Further, in
accordance with the Company's By-laws, for a proposal to be considered at the
Annual Meeting, the Company must receive the stockholder's notice addressed to
the Corporate Secretary not earlier than 90 days nor later than 60 days prior to
the first anniversary of the preceding year's annual meeting; provided, however
that in the event that the date of the Annual Meeting is more than 30 days
before or more than 60 days after such anniversary date, notice must be received
by the Corporate Secretary not earlier than the 90th day prior to such Annual
Meeting and not later than the 60th day prior to such Annual Meeting, or if
later, the 10th day following the day on which public announcement of the date
of such meeting is first made. Any notices by stockholders to the Corporate
Secretary must be mailed to the principal executive offices of the Company.
29
<PAGE> 32
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Each exhibit identified below not designated by an asterisk is incorporated
by reference to a prior filing as indicated.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*3.B -- By-laws of the Registrant, as amended, dated October 21,
1998.
*10.A -- $750 million 364-Day Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New York
and certain other banks.
*10.B -- First Amendment to the $750 million 364-Day Revolving
Credit and Competitive Advance Facility dated as of
October 9, 1998, among EPNG, TGP, The Chase Manhattan
Bank, Citibank, N.A., Morgan Guaranty Trust Company of
New York, and certain other banks.
*10.C -- Guarantee, dated as of August 28, 1998, made by EPEC in
favor of The Chase Manhattan Bank, as Administrative
Agent for several banks and other financial institutions
from time to time parties to the $750 million 364-Day
Revolving Credit and Competitive Advance Facility dated
as of October 29, 1997, by and among EPNG, TGP, The Chase
Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and certain other banks.
*10.D -- $750 million 5-Year Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New
York, and certain other banks.
*10.E -- First Amendment to the $750 million 5-Year Revolving
Credit and Competitive Advance Facility dated as of
October 9, 1998, among EPNG, TGP, The Chase Manhattan
Bank, Citibank, N.A., Morgan Guaranty Trust Company of
New York, and certain other banks.
*10.F -- Guarantee, dated as of August 28, 1998, made by EPEC in
favor of The Chase Manhattan Bank, as Administrative
Agent for several banks and other financial institutions
from time to time parties to the $750 million 5-Year
Revolving Credit and Competitive Advance Facility dated
as of October 29, 1997, by and among EPNG, TGP, The Chase
Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and certain other banks.
*10.G -- 1995 Incentive Compensation Plan, Amended and Restated
effective as of August 1, 1998.
*10.H -- 1995 Compensation Plan for Non-Employee Directors,
Amended and Restated effective as of August 1, 1998.
*10.I -- Stock Option Plan for Non-Employee Directors, Amended and
Restated effective as of August 1, 1998.
*10.J -- 1995 Omnibus Compensation Plan, Amended and Restated
effective as of August 1, 1998.
*10.K -- Amendment No. 2 to the 1995 Omnibus Compensation Plan,
effective as of August 1, 1998.
*10.L -- Supplemental Benefits Plan, Amended and Restated
effective as of August 1, 1998.
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*10.M -- Senior Executive Survivor Benefit Plan, Amended and
Restated effective as of August 1, 1998.
*10.N -- Deferred Compensation Plan, Amended and Restated
effective as of August 1, 1998.
*10.O -- Key Executive Severance Protection Plan, Amended and
Restated effective as of August 1, 1998.
*10.P -- Director Charitable Award Plan, Amended and Restated
effective as of August 1, 1998.
*10.Q -- Strategic Stock Plan, Amended and Restated effective as
of August 1, 1998.
*10.R -- Employment Agreement dated July 31, 1992 between EPNG and
William A. Wise.
10.S -- Amendment to Employment Agreement dated January 29, 1996,
between EPNG and William A. Wise (incorporated by
reference to Exhibit 10.U.1 to the EPNG's Form 10-K
(Commission File No. 1-2700) for the fiscal year ended
December 31, 1995) filed with the SEC).
10.T -- Letter Agreement dated January 13, 1995 between EPNG and
William A. Wise (incorporated by reference to Exhibit
10.X to EPNG's Form 10-K (Commission File No. 1-2700) for
the fiscal year ended December 31, 1994 filed with the
SEC).
10.U -- Promissory Note dated May 30, 1997, made by William A.
Wise to El Paso Energy Corporation (incorporated by
reference to Exhibit 10.R to EPNG's Form 10-Q (Commission
File No. 1-2700) for the quarter ended March 31, 1998
filed with the SEC (the "EPNG First Quarter 10-Q"));
Amendment to Promissory Note dated November 20, 1997
(incorporated by reference to Exhibit 10.R to the EPNG
First Quarter 10-Q).
*10.V -- Letter Agreement dated February 22, 1991, between EPNG
and Britton White Jr.
*27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Indicates documents filed as part of this report.
Undertaking
The undersigned hereby undertakes, pursuant to Regulation S-K, Item
601(b), paragraph (4)(iii), to furnish to the Securities and Exchange
Commission upon request all constituent instruments defining the rights of
holders of long-term debt of EPEC and its consolidated subsidiaries not
filed herewith for the reason that the total amount of securities
authorized under any of such instruments does not exceed 10 percent of the
total consolidated assets of EPEC and its consolidated subsidiaries.
b. Reports on Form 8-K
On August 3, 1998, EPEC filed a report under Item 5 and Item 7 on Form
8-K with respect to the merger of EPNG with Merger Sub to create the
holding company structure described herein.
On August 25, 1998, EPEC filed a report under Item 5 and Item 7 on
Form 8-K with respect to the acquisition of DeepTech and DeepTech's
interest in Leviathan Gas Pipeline Partners, L.P. As a result of this
acquisition, EPEC owns 100 percent of the general partner of Leviathan Gas
Pipeline Partners, L.P. and thus holds a 27.3 percent overall interest in
the partnership.
31
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EL PASO ENERGY CORPORATION
Date: November 11, 1998 /s/ H. BRENT AUSTIN
------------------------------------
H. Brent Austin
Executive Vice President and
Chief Financial Officer
Date: November 11, 1998 /s/ JEFFREY I. BEASON
------------------------------------
Jeffrey I. Beason
Vice President and Controller
(Chief Accounting Officer)
32
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*3.B -- By-laws of the Registrant, as amended, dated October 21,
1998.
*10.A -- $750 million 364-Day Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New York
and certain other banks.
*10.B -- First Amendment to the $750 million 364-Day Revolving
Credit and Competitive Advance Facility dated as of
October 9, 1998, among EPNG, TGP, The Chase Manhattan
Bank, Citibank, N.A., Morgan Guaranty Trust Company of
New York, and certain other banks.
*10.C -- Guarantee, dated as of August 28, 1998, made by EPEC in
favor of The Chase Manhattan Bank, as Administrative
Agent for several banks and other financial institutions
from time to time parties to the $750 million 364-Day
Revolving Credit and Competitive Advance Facility dated
as of October 29, 1997, by and among EPNG, TGP, The Chase
Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and certain other banks.
*10.D -- $750 million 5-Year Revolving Credit and Competitive
Advance Facility Agreement dated as of October 29, 1997,
by and among EPNG, TGP, The Chase Manhattan Bank,
Citibank, N.A., Morgan Guaranty Trust Company of New
York, and certain other banks.
*10.E -- First Amendment to the $750 million 5-Year Revolving
Credit and Competitive Advance Facility dated as of
October 9, 1998, among EPNG, TGP, The Chase Manhattan
Bank, Citibank, N.A., Morgan Guaranty Trust Company of
New York, and certain other banks.
*10.F -- Guarantee, dated as of August 28, 1998, made by EPEC in
favor of The Chase Manhattan Bank, as Administrative
Agent for several banks and other financial institutions
from time to time parties to the $750 million 5-Year
Revolving Credit and Competitive Advance Facility dated
as of October 29, 1997, by and among EPNG, TGP, The Chase
Manhattan Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and certain other banks.
*10.G -- 1995 Incentive Compensation Plan, Amended and Restated
effective as of August 1, 1998.
*10.H -- 1995 Compensation Plan for Non-Employee Directors,
Amended and Restated effective as of August 1, 1998.
*10.I -- Stock Option Plan for Non-Employee Directors, Amended and
Restated effective as of August 1, 1998.
*10.J -- 1995 Omnibus Compensation Plan, Amended and Restated
effective as of August 1, 1998.
*10.K -- Amendment No. 2 to the 1995 Omnibus Compensation Plan,
effective as of August 1, 1998.
*10.L -- Supplemental Benefits Plan, Amended and Restated
effective as of August 1, 1998.
*10.M -- Senior Executive Survivor Benefit Plan, Amended and
Restated effective as of August 1, 1998.
*10.N -- Deferred Compensation Plan, Amended and Restated
effective as of August 1, 1998.
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*10.O -- Key Executive Severance Protection Plan, Amended and
Restated effective as of August 1, 1998.
*10.P -- Director Charitable Award Plan, Amended and Restated
effective as of August 1, 1998.
*10.Q -- Strategic Stock Plan, Amended and Restated effective as
of August 1, 1998.
*10.R -- Employment Agreement dated July 31, 1992 between EPNG and
William A. Wise.
10.S -- Amendment to Employment Agreement dated January 29, 1996,
between EPNG and William A. Wise (incorporated by
reference to Exhibit 10.U.1 to the EPNG's Form 10-K
(Commission File No. 1-2700) for the fiscal year ended
December 31, 1995) filed with the SEC).
10.T -- Letter Agreement dated January 13, 1995 between EPNG and
William A. Wise (incorporated by reference to Exhibit
10.X to EPNG's Form 10-K (Commission File No. 1-2700) for
the fiscal year ended December 31, 1994 filed with the
SEC).
10.U -- Promissory Note dated May 30, 1997, made by William A.
Wise to El Paso Energy Corporation (incorporated by
reference to Exhibit 10.R to EPNG's Form 10-Q (Commission
File No. 1-2700) for the quarter ended March 31, 1998
filed with the SEC (the "EPNG First Quarter 10-Q"));
Amendment to Promissory Note dated November 20, 1997
(incorporated by reference to Exhibit 10.R to the EPNG
First Quarter 10-Q).
*10.V -- Letter Agreement dated February 22, 1991, between EPNG
and Britton White Jr.
*27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Indicates documents filed as part of this report.
<PAGE> 1
EXHIBIT 3.B
BY-LAWS
OF
EL PASO ENERGY CORPORATION
As amended October 21, 1998
<PAGE> 2
BY-LAWS
OF
EL PASO ENERGY CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. OFFICES ....................................................... 1
Section 1 - Registered Office and Agent ............................ 1
Section 2 - Other Offices .......................................... 1
ARTICLE II. STOCKHOLDERS ................................................. 1
Section 1 - Annual Meetings ........................................ 1
Section 2 - Special Meetings ....................................... 1
Section 3 - Place of Meetings ...................................... 2
Section 4 - Notice of Meetings ..................................... 2
Section 5 - Fixing of Record Date for Determining Stockholders ..... 2
Section 6 - Quorum ................................................. 3
Section 7 - Organization ........................................... 3
Section 8 - Voting ................................................. 4
Section 9 - Inspectors ............................................. 5
Section 10 - List of Stockholders ................................... 5
Section 11 - Stockholder Proposals .................................. 5
ARTICLE III. BOARD OF DIRECTORS .......................................... 6
Section 1 - Number, Qualification and Term of Office ............... 6
Section 2 - Vacancies .............................................. 6
Section 3 - Nominations of Directors ............................... 7
Section 4 - Resignations ........................................... 8
Section 5 - Removals ............................................... 8
Section 6 - Place of Meetings; Books and Records ................... 8
Section 7 - Annual Meeting of the Board ............................ 8
Section 8 - Regular Meetings ....................................... 9
Section 9 - Special Meetings ....................................... 9
Section 10 - Quorum and Manner of Acting ............................ 9
Section 11 - Organization ........................................... 9
Section 12 - Consent of Directors in Lieu of Meeting ................ 10
Section 13 - Telephonic Meetings .................................... 10
Section 14 - Compensation ........................................... 10
Section 15 - Interested Directors ................................... 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV. COMMITTEES OF THE BOARD OF DIRECTORS ......................... 11
Section 1 - Executive Committee .................................... 11
Section 2 - Finance Committee ...................................... 11
Section 3 - Audit Committee ........................................ 11
Section 4 - Compensation Committee ................................. 12
Section 5 - Committee Chairman, Books and Records .................. 12
Section 6 - Alternates ............................................. 12
Section 7 - Other Committees ....................................... 12
Section 8 - Quorum and Manner of Acting ............................ 13
ARTICLE V. OFFICERS ...................................................... 13
Section 1 - Number ................................................. 13
Section 2 - Election ............................................... 13
Section 3 - Resignations ........................................... 13
Section 4 - Removals ............................................... 14
Section 5 - Vacancies .............................................. 14
Section 6 - Chairman of the Board .................................. 14
Section 7 - Chief Executive Officer ................................ 16
Section 8 - President .............................................. 16
Section 9 - Vice Chairman of the Board ............................. 16
Section 10 - Chief Operating Officer ................................ 17
Section 11 - Chief Financial Officer ................................ 17
Section 12 - Vice Presidents ........................................ 17
Section 13 - General Counsel ........................................ 18
Section 14 - Secretary .............................................. 18
Section 15 - Treasurer .............................................. 18
Section 16 - Controller ............................................. 19
Section 17 - Absence or Disability of Officers ...................... 19
ARTICLE VI. STOCK CERTIFICATES AND TRANSFER THEREOF ...................... 19
Section 1 - Stock Certificates ..................................... 19
Section 2 - Transfer of Stock ...................................... 19
Section 3 - Transfer Agents and Registrars ......................... 20
Section 4 - Additional Regulations ................................. 20
Section 5 - Lost, Stolen or Destroyed Certificates ................. 20
ARTICLE VII. DIVIDENDS, SURPLUS, ETC ..................................... 20
ARTICLE VIII. SEAL ....................................................... 20
ARTICLE IX. FISCAL YEAR .................................................. 21
ARTICLE X. INDEMNIFICATION ............................................... 21
Section 1 - Right to Indemnification ............................... 21
Section 2 - Right of Indemnitee to Bring Suit ...................... 22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 3 - Nonexclusivity of Rights ................................ 22
Section 4 - Insurance, Contracts and Funding ........................ 22
Section 5 - Wholly Owned Subsidiaries ............................... 23
Section 6 - Indemnification of Agents of the Corporation ............ 23
ARTICLE XI. CHECKS, DRAFTS, BANK ACCOUNTS, ETC. .......................... 23
Section 1 - Checks, Drafts, Etc.; Loans ............................. 23
Section 2 - Deposits ................................................ 23
ARTICLE XII. AMENDMENTS .................................................. 23
ARTICLE XIII. MISCELLANEOUS .............................................. 24
</TABLE>
iii
<PAGE> 5
BY-LAWS
OF
EL PASO ENERGY CORPORATION
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE AND AGENT
The registered office of the corporation is located at Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and the name of its registered agent at such address
is The Corporation Trust Company.
SECTION 2. OTHER OFFICES
The corporation may have offices at such other places both within and
without the State of Delaware as the Board of Directors (the "Board") may from
time to time determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS
A meeting of the stockholders for the purpose of electing Directors and
for the transaction of such other business as may properly be brought before the
meeting shall be held annually at 9:00 o'clock A.M. on the third Thursday of
April, or at such other time on such other date as shall be fixed by resolution
of the Board. If the day fixed for the annual meeting shall be a legal holiday
such meeting shall be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS
Special meetings of the stockholders for any purpose or purposes may be
called only by a majority of the Board, the Chairman of the Board, the Chief
Executive Officer, the President or the Vice Chairman of the Board.
<PAGE> 6
SECTION 3. PLACE OF MEETINGS
The annual meeting of the stockholders of the corporation shall be held
at the general offices of the corporation in the City of Houston, State of
Texas, or at such other place in the United States as may be stated in the
notice of the meeting. All other meetings of the stockholders shall be held at
such places within or without the State of Delaware as shall be stated in the
notice of the meeting.
SECTION 4. NOTICE OF MEETINGS
4.1 GIVING OF NOTICE. Except as otherwise provided by statute, written
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, notice shall be
given when deposited in the United States mails, postage prepaid, directed to
such stockholder at his address as it appears in the stock ledger of the
corporation. Each such notice shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called.
4.2 NOTICE OF ADJOURNED MEETINGS. When a meeting is adjourned to
another time and place, notice of the adjourned meeting need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
given. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
4.3 WAIVER OF NOTICE
4.3.1 Whenever any notice is required to be given to any stockholder
under the provisions of these By-laws, the Restated Certificate of Incorporation
or the general Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
4.3.2 The attendance of a stockholder at a meeting shall constitute a
waiver of notice of such meeting, except when a stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 5. FIXING OF RECORD DATE FOR DETERMINING STOCKHOLDERS
5.1 MEETINGS. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board, the record date
for determining stockholders shall be at the close of business on the day next
preceding the day on
2
<PAGE> 7
which notice is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at the meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
5.2 DIVIDENDS, DISTRIBUTIONS AND OTHER RIGHTS. For the purpose of
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to exercise
any rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board adopts the resolution relating thereto.
SECTION 6. QUORUM
A majority of the outstanding shares of stock of the corporation
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of the stockholders; provided that where a separate vote by
a class or classes or by a series of a class is required, a majority of the
outstanding shares of such class or classes or of such series of a class,
present in person or represented by proxy at the meeting, shall constitute a
quorum entitled to take action with respect to the vote on that matter. Shares
of stock will be counted toward a quorum if they are either (i) present in
person at the meeting or (ii) represented at the meeting by a valid proxy,
whether the instrument granting such proxy is marked as casting a vote or
abstaining, is left blank or does not empower such proxy to vote with respect to
some or all matters to be voted upon at the meeting. If less than a majority of
the outstanding shares entitled to vote are represented at a meeting, a majority
of the shares so represented may adjourn the meeting from time to time without
further notice. If a quorum is present or represented at a reconvened meeting
following such an adjournment, any business may be transacted that might have
been transacted at the meeting as originally called. The stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 7. ORGANIZATION
At each meeting of the stockholders, the Chairman of the Board, or in
his absence the Chief Executive Officer, the President or the Vice Chairman of
the Board, or if all of the said officers are absent, a person designated by the
Board, the Chairman of the Board, the Chief Executive Officer, the President or
the Vice Chairman of the Board, or in the absence of such designated person, a
person elected by the holders of a majority in number of shares of stock present
in person or represented by proxy and entitled to vote, shall act as chairman of
the meeting.
The Secretary, or in his absence or in the event he shall be presiding
over the meeting in accordance with the provisions of this Section, an Assistant
Secretary or, in the absence of the
3
<PAGE> 8
Secretary and all of the Assistant Secretaries, any person appointed by the
chairman of the meeting, shall act as secretary of the meeting.
SECTION 8. VOTING
8.1 GENERAL PROVISIONS. Unless otherwise provided in the Restated
Certificate of Incorporation or a resolution of the Board creating a series of
stock, at each meeting of the stockholders, each holder of any share of any
series or class of stock entitled to vote at such meeting shall be entitled to
one vote for each share of stock having voting power in respect of each matter
upon which a vote is to be taken, standing in his name on the stock ledger of
the corporation on the record date fixed as provided in these By-laws for
determining the stockholders entitled to vote at such meeting. In all matters
other than the election of Directors, if a quorum is present, the affirmative
vote of the majority of the shares present in person or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the vote of a greater number is required by these By-laws,
the Restated Certificate of Incorporation or the General Corporation Law of the
State of Delaware. In determining the number of votes cast for or against a
proposal, shares abstaining from voting on a matter (including elections) will
not be treated as a vote for or against the proposal. A non-vote by a broker
will be treated as if the broker never voted, but a non-vote by a stockholder
will be counted as a vote "for" the management's position. Where a separate vote
by a class or classes or by a series of a class is required, if a quorum is
present, the affirmative vote of the majority of shares of such class or classes
or series of a class present in person or represented by proxy at the meeting
shall be the act of such class or classes or series of a class. The provisions
of this Section will govern with respect to all votes of stockholders except as
otherwise provided for in these By-laws, the Restated Certificate of
Incorporation or the General Corporation Law of the State of Delaware.
8.2 VOTING FOR DIRECTORS. At each election of Directors the voting
shall be by written ballot. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of Directors.
8.3 SHARES HELD OR CONTROLLED BY THE CORPORATION. Shares of its own
capital stock belonging to the corporation, or to another corporation if a
majority of the shares entitled to vote in the election of Directors of such
other corporation is held by the corporation, shall neither be entitled to vote
nor counted for quorum purposes.
8.4 PROXIES. A stockholder may vote by a proxy which is in writing or
is transmitted electronically, including but not limited to, via telegram,
cablegram, internet, interactive voice response system, or other means of
electronic transmission executed or authorized by the stockholder or by his
attorney-in-fact. Any electronic transmission must set forth information from
which it can be determined by the Company or the Inspector that such electronic
transmission was authorized by the stockholder. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the corporation. A proxy shall
become invalid three years after the date of its execution,
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unless otherwise provided in the proxy. A proxy with respect to a specified
meeting shall entitle the holder thereof to vote at any reconvened meeting
following adjournment of such meeting but shall not be valid after the final
adjournment thereof.
SECTION 9. INSPECTORS
Prior to each meeting of stockholders, the Board shall appoint at least
one Inspector who is not a Director, candidate for Director or officer of the
corporation, who shall receive and determine the validity of proxies and the
qualifications of voters, and receive, inspect, count and report to the meeting
in writing the votes cast on all matters submitted to a vote at such meeting. In
case of failure of the Board to make such appointments or in case of failure of
any Inspector so appointed to act, the Chairman of the Board shall make such
appointment or fill such vacancies. Each Inspector, immediately before entering
upon his duties, shall subscribe to an oath or affirmation faithfully to execute
the duties of Inspector at such meeting with strict impartiality and according
to the best of his ability.
SECTION 10. LIST OF STOCKHOLDERS
The Secretary or other officer or agent having charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares of each class and series registered in the
name of each such stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. Such list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this section, or the books of the corporation, or to vote in person or by
proxy at any such meeting.
SECTION 11. STOCKHOLDER PROPOSALS
At an annual meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
properly brought before the annual meeting of stockholders (a) by, or at the
direction of, the Board or (b) by a stockholder of the corporation who complies
with the procedures set forth in this Section 11. For business or a proposal to
be properly brought before an annual meeting of stockholders by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a stockholder's notice must be
received by the Secretary at the principal executive offices of the corporation
not earlier than 90 days nor later than 60 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder to be timely must be
received by the Secretary not
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earlier than the 90th day prior to such annual meeting and not later than the
60th day prior to such annual meeting, or if later, the 10th day following the
day on which public announcement of the date of such meeting is first made. In
no event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as described
above.
A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before an annual meeting of
stockholders (i) a description, in 500 words or less, of the business desired to
be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholders known by such stockholder to be
supporting such proposal, (iii) the class and number of shares of the
corporation which are beneficially owned by such stockholder on the date of such
stockholder's notice and by any other stockholders known by such stockholder to
be supporting such proposal on the date of such stockholder's notice, (iv) a
description, in 500 words or less, of any interest of the stockholder in such
proposal, and (v) a representation that the stockholder is a holder of record of
stock of the corporation and intends to appear in person or by proxy at the
meeting to present the proposal specified in the notice. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at a
meeting of stockholders except in accordance with the procedures set forth in
this Section 11.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that the business was not properly brought before the
meeting in accordance with the procedures prescribed by this Section 11, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted. Notwithstanding
the foregoing, nothing in this Section 11 shall be interpreted or construed to
require the inclusion of information about any such proposal in any proxy
statement distributed by, at the direction of, or on behalf of, the Board.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE
The business, property and affairs of the corporation shall be managed
by a Board consisting of not less than one Director. The Board shall from time
to time by a vote of a majority of the Directors then in office fix the specific
number of Directors to constitute the Board. At each annual meeting of
stockholders a Board shall be elected by the stockholders for a term of one
year. Each Director shall serve until his successor is duly elected and shall
qualify.
SECTION 2. VACANCIES
Vacancies in the Board and newly created directorships resulting from
any increase in the authorized number of Directors may be filled by a vote of
the majority of the Directors then in
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office, although less than a quorum, or by a sole remaining Director, at any
regular or special meeting of the Board.
SECTION 3. NOMINATIONS OF DIRECTORS
Subject to the rights, if any, of the holders of any series of
preferred stock then outstanding, only persons nominated in accordance with the
procedures set forth in this Section 3 shall be eligible for election as
Directors. Nominations of persons for election to the Board may be made at an
annual meeting of stockholders or special meeting of stockholders called by the
Board for the purpose of electing Directors (i) by or at the direction of the
Board or (ii) by any stockholder of the corporation entitled to vote for the
election of Directors at such meeting who complies with the notice procedure set
forth in this Section 3. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the corporation. To be timely, a stockholder's notice must be
received by the Secretary at the principal executive offices of the corporation
not earlier than 90 days nor later than 60 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder to be timely must be
received by the Secretary not earlier than the 90th day prior to such annual
meeting and not later than the 60th day prior to such annual meeting, or if
later, the 10th day following the day on which public announcement of the date
of such meeting is first made. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above.
A stockholder's notice to the Secretary shall set forth (i) as to each
person whom the stockholder proposes to nominate for election or reelection as a
Director (a) the name, age, business address and residence address of such
person, (b) the principal occupation or employment of such person, (c) the class
and number of shares of the corporation which are beneficially owned by such
person on the date of such stockholder's notice and (d) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, or any successor statute thereto (the "Exchange Act") (including
without limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected); (ii) as to the
stockholder giving the notice (a) the name and address, as they appear on the
corporation's (or its agent's) books, of such stockholder and any other
stockholders known by such stockholder to be supporting such nominee(s), (b) the
class and number of shares of the corporation which are beneficially owned by
such stockholder on the date of such stockholder's notice and by any other
stockholders known by such stockholder to be supporting such nominee(s) on the
date of such stockholder's notice (c) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; and (iii) a description of all
arrangements or understandings between the stockholder and each nominee and
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder.
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No person shall be eligible for election as a Director of the
corporation unless nominated in accordance with the procedures set forth in this
Section 3. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
SECTION 4. RESIGNATIONS
Any Director may resign at any time upon written notice to the Board,
the Chairman of the Board, the Chief Executive Officer, the President, the Vice
Chairman of the Board or the Secretary of the corporation. Such resignation
shall take effect on the date of receipt of such notice or at any later time
specified therein; and the acceptance of such resignation, unless otherwise
required by the terms thereof, shall not be necessary to make it effective. When
one or more Directors shall resign effective at a future date, a majority of the
Directors then in office, including those who have resigned, shall have power to
fill such vacancy or vacancies to take effect when such resignation or
resignations shall become effective.
SECTION 5. REMOVALS
Any Director may be removed, with or without cause, at any special
meeting of the stockholders called for that purpose, by the affirmative vote of
the holders of a majority in number of shares of the corporation entitled to
vote for the election of such Director, and the vacancy in the Board caused by
any such removal may be filled by the stockholders at such a meeting.
SECTION 6. PLACE OF MEETINGS; BOOKS AND RECORDS
The Board may hold its meetings, and have an office or offices, at such
place or places within or without the State of Delaware as the Board from time
to time may determine.
The Board, subject to the provisions of applicable statutes, may
authorize the books and records of the corporation, and offices or agencies for
the issue, transfer and registration of the capital stock of the corporation, to
be kept at such place or places outside of the State of Delaware as, from time
to time, may be designated by the Board.
SECTION 7. ANNUAL MEETING OF THE BOARD
The first meeting of each newly elected Board, to be known as the
Annual Meeting of the Board, for the purpose of electing officers, designating
committees and the transaction of such other business as may come before the
Board, shall be held as soon as practicable after the adjournment of the annual
meeting of stockholders, and no notice of such meeting shall be necessary to the
newly elected Directors, provided a quorum shall be present. In the event such
meeting is not held due to the absence of a quorum, the meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board, or as shall be specified in a
written waiver signed by all of the newly elected Directors.
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SECTION 8. REGULAR MEETINGS
The Board shall provide for regular meetings of the Board at such times
and at such places as it deems desirable. Notice of regular meetings need not be
given.
SECTION 9. SPECIAL MEETINGS
Special meetings of the Board may be called by the Chairman of the
Board, the Chief Executive Officer, the President or the Vice Chairman of the
Board and shall be called by the Secretary on the written request of three
Directors on such notice as the person or persons calling the meeting shall deem
appropriate in the circumstances. Notice of each such special meeting shall be
mailed to each Director or delivered to him by telephone, telegraph or any other
means of electronic communication, in each case addressed to his residence or
usual place of business, or delivered to him in person or given to him orally.
The notice of meeting shall state the time and place of the meeting but need not
state the purpose thereof. Whenever any notice is required to be given to any
Director under the provisions of these By-laws, the Restated Certificate of
Incorporation or the General Corporation Law of the State of Delaware, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board or any committee
appointed by the Board need be specified in the waiver of notice of such
meeting. Attendance of a Director at any meeting shall constitute a waiver of
notice of such meeting except when a Director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened.
SECTION 10. QUORUM AND MANNER OF ACTING
Except as otherwise provided by statute, the Restated Certificate of
Incorporation, or these By-laws, the presence of a majority of the total number
of Directors shall constitute a quorum for the transaction of business at any
regular or special meeting of the Board, and the act of a majority of the
Directors present at any such meeting at which a quorum is present shall be the
act of the Board. In the absence of a quorum, a majority of the Directors
present may adjourn the meeting, from time to time, until a quorum is present.
Notice of any such adjourned meeting need not be given.
SECTION 11. ORGANIZATION
At every meeting of the Board, the Chairman of the Board or in his
absence the Chief Executive Officer, the President or the Vice Chairman of the
Board, or if all of the said officers are absent, a chairman chosen by a
majority of the Directors present shall act as chairman of the meeting. The
Secretary, or in his absence, an Assistant Secretary, or in the absence of the
Secretary and all the Assistant Secretaries, any person appointed by the
chairman of the meeting, shall act as secretary of the meeting.
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SECTION 12. CONSENT OF DIRECTORS IN LIEU OF MEETING
Unless otherwise restricted by the Restated Certificate of
Incorporation or by these By-laws, any action required or permitted to be taken
at any meeting of the Board, or any committee designated by the Board, may be
taken without a meeting if all members of the Board or committee consent thereto
in writing, and such written consent is filed with the minutes of the
proceedings of the Board or committee.
SECTION 13. TELEPHONIC MEETINGS
Members of the Board, or any committee designated by the Board, may
participate in any meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in such a
meeting shall constitute presence in person at such meeting.
SECTION 14. COMPENSATION
Each Director, who is not a full-time salaried officer of the
corporation or any of its wholly owned subsidiaries, when authorized by
resolution of the Board, may receive as a Director a stated salary or an annual
retainer, and any other benefits as the Board may determine, and in addition may
be allowed a fixed fee or reimbursement of his reasonable expenses for
attendance at each regular or special meeting of the Board or any committee
thereof.
SECTION 15. INTERESTED DIRECTORS
No contract or transaction between the corporation and one or more of
its Directors or officers, or between the corporation and any other corporation,
partnership, association or other organization in which one or more of its
Directors or officers are Directors or officers of this corporation, or have a
financial interest in such contract or transaction, shall be void or voidable
solely for this reason, or solely because the Director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested Directors, even though the disinterested Directors be less than a
quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the Board, a committee thereof or the stockholders.
Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.
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ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. EXECUTIVE COMMITTEE
The Board may, in its discretion, designate an Executive Committee,
consisting of such number of Directors as the Board may from time to time
determine. The committee shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers which may require it, but the committee shall have no power or authority
to amend the Restated Certificate of Incorporation (except that the committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board, fix the designations and any
of the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series). The committee shall have such
other powers as the Board may from time to time prescribe.
SECTION 2. FINANCE COMMITTEE
The Board may, in its discretion, designate a Finance Committee,
consisting of such number of Directors as the Board may from time to time
determine. The committee shall monitor, review, appraise and recommend to the
Board appropriate action with respect to the corporation's capital structure,
its source of funds and its financial position; review and recommend
appropriate delegations of authority to management on expenditures and other
financial commitments; review terms and conditions of financing plans; develop
and recommend dividend policies and recommend to the Board specific dividend
payments; and review the performance of the trustee of the corporation's pension
trust fund, and any proposed change in the investment policy of the trustee with
respect to such fund. The committee shall have such other duties, functions and
powers as the Board may from time to time prescribe.
SECTION 3. AUDIT COMMITTEE
The Board shall designate annually an Audit Committee consisting of not
less than two Directors as it may from time to time determine, none of whom
shall be officers or employees of the corporation. The committee shall review
with the independent accountants the corporation's financial statements, basic
accounting and financial policies and practices, adequacy of controls, standard
and special tests used in verifying the corporation's statements of account and
in determining the soundness of the corporation's financial condition, and the
committee shall report to the Board the results of such reviews; review the
policies and practices pertaining to publication of quarterly and annual
statements to assure consistency with audited results and the implementation of
policies and practices recommended by the independent accountants; ensure that
suitable independent audits are made of the operations and results of subsidiary
corporations
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and affiliates; and monitor compliance with the corporation's code of business
conduct. The committee shall have such other duties, functions and powers as the
Board may from time to time prescribe.
SECTION 4. COMPENSATION COMMITTEE
The Board shall designate annually a Compensation Committee consisting
of not less than two Directors as it may from time to time determine, none of
whom shall be officers or employees of the corporation. The committee shall
administer the corporation's executive compensation plans and programs. In
addition, the committee shall consider proposals with respect to the creation of
and changes to executive compensation plans and will review appropriate criteria
for establishing certain performance measures and determining annual corporate
and executive performance ratings under applicable corporation plans and
programs. The committee shall have such other duties, functions and powers as
the Board may from time to time prescribe.
SECTION 5. COMMITTEE CHAIRMAN, BOOKS AND RECORDS
Each committee shall elect a chairman to serve for such term as it may
determine, shall fix its own rules of procedure and shall meet at such times and
places and upon such call or notice as shall be provided by such rules. It shall
keep a record of its acts and proceedings, and all action of the committee shall
be reported to the Board at the next meeting of the Board.
SECTION 6. ALTERNATES
Alternate members of the committees prescribed by this Article IV may
be designated by the Board from among the Directors to serve as occasion may
require. Whenever a quorum cannot be secured for any meeting of any such
committee from among the regular members thereof and designated alternates, the
member or members of such committee present at such meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board to act at the meeting in the place of such
absent or disqualified member.
Alternative members of such committees shall receive a reimbursement
for expenses and compensation at the same rate as regular members of such
committees.
SECTION 7. OTHER COMMITTEES
The Board may designate such other committees, consisting of such
number of Directors as the Board may from time to time determine, and each such
committee shall serve for such term and shall have and may exercise, during
intervals between meetings of the Board, such duties, functions and powers as
the Board may from time to time prescribe.
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SECTION 8. QUORUM AND MANNER OF ACTING
At each meeting of any committee the presence of a majority of the
members of such committee, whether regular or alternate, shall be necessary to
constitute a quorum for the transaction of business, and if a quorum is present
the concurrence of a majority of those present shall be necessary for the taking
of any action; provided, however, that no action may be taken by the Executive
Committee or the Finance Committee when one or more officers of the corporation
are present as members at a meeting of either such committee unless such action
shall be concurred in by the vote of at least one member of such committee who
is not an officer of the corporation.
ARTICLE V
OFFICERS
SECTION 1. NUMBER
The officers of the corporation shall consist of such of the following
as the Board may from time to time elect or appoint, or as the Chairman of the
Board may from time to time appoint pursuant to Section 6 of this Article V: a
Chairman of the Board, a Chief Executive Officer, a President, a Vice Chairman
of the Board, a Chief Operating Officer, a Chief Financial Officer, a General
Counsel, a Secretary, a Treasurer, a Controller and one or more of the
following: Executive Vice President, Senior Vice President, Vice President,
Assistant Vice President, Associate or Assistant General Counsel, Assistant
Secretary, Assistant Treasurer, Assistant Controller and such other officers
with such titles and powers and/or duties as the Board or the Chairman of the
Board, as the case may be, shall from time to time determine. Officers of the
corporation may simultaneously serve as officers of subsidiaries or divisions
thereof. Any number of offices may be held by the same person.
SECTION 2. ELECTION
The officers of the corporation, except those who may be appointed by
the Chairman of the Board as provided in Section 6 of this Article V, shall be
elected or appointed as soon as practicable after the annual meeting of
stockholders in each year to hold office until the first meeting of the Board
after the annual meeting of stockholders next succeeding his election, or until
his successor is elected and qualified or until his earlier death, resignation
or removal.
SECTION 3. RESIGNATIONS
Any elected or appointed officer may resign at any time upon written
notice to the Chairman of the Board or the Secretary of the corporation. Such
resignation shall take effect upon the date of its receipt or at such later time
as may be specified therein, and unless otherwise required by the terms thereof,
no acceptance of such resignation shall be necessary to make it effective.
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SECTION 4. REMOVALS
Any elected or appointed officer may be removed, with or without cause,
by the Board at any regular or special meeting of the Board, and in the case of
an officer appointed pursuant to Section 6 of this Article V, may be so removed
by the Chairman of the Board. Any such removal shall be without prejudice to the
contractual rights of such officer, if any, with the corporation, but the
election or appointment of any officer shall not of itself create contractual
rights.
SECTION 5. VACANCIES
Any vacancy occurring in any office by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the Board at
any regular or special meeting or as otherwise provided in these By-laws.
SECTION 6. CHAIRMAN OF THE BOARD
The Chairman of the Board shall, when present, preside at all meetings
of the stockholders and the Board; have authority to call special meetings of
the stockholders and of the Board; have authority to sign and acknowledge in the
name and on behalf of the corporation all stock certificates, contracts or other
documents and instruments except where the signing thereof shall be expressly
delegated to some other officer or agent by the Board or required by law to be
otherwise signed or executed and, unless otherwise provided by law or by the
Board may authorize any officer, employee or agent of the corporation to sign,
execute and acknowledge in his place and stead all such documents and
instruments; he shall fix the compensation of officers of the corporation, other
than his own compensation, and the compensation of officers of its principal
operating subsidiaries reporting directly to him unless such authority is
otherwise reserved to the Board or a committee thereof; and he shall approve
proposed employee compensation and benefit plans of subsidiary companies not
involving the issuance or purchase of capital stock of the corporation. He shall
have the power to appoint and remove any Vice President, Controller, General
Counsel, Secretary or Treasurer of the corporation. He shall also have the power
to appoint and remove such associate or assistant officers of the corporation
with such titles and duties as he may from time to time deem necessary or
appropriate. He shall have such other powers and perform such other duties as
from time to time may be assigned to him by the Board or the Executive
Committee.
The Chairman of the Board is hereby authorized, without further
approval of the Finance Committee or the Board:
(a) To approve individual expenditures by the corporation of up to
$20 million each for individual expenditures in categories not
presented to the Board in the annual budget or plan, including
but not limited to individual expenditures pertaining to
operating expenses, purchases, leases, options to purchase or
lease assets, investments, business acquisitions, land
purchases, products or services acquisitions, bid or
performance bonds (provided however, that the authority to
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issue such a bond shall not be deemed to authorize the
activity covered thereby unless such activity would itself be
authorized hereunder), litigation settlements, charitable
donations and political contributions.
(b) To approve expenditures by the corporation for the amounts
(subject to subparagraph (c) below) presented to the Board in
the annual budget or plan, including but not limited to
individual expenditures pertaining to operating and capital
expenses, purchases, leases, options to purchase or lease
assets, investments, business acquisitions, land purchases,
products or services acquisitions, bid or performance bonds
(provided however, that the authority to issue such a bond
shall not be deemed to authorize the activity covered thereby
unless such activity would itself be authorized hereunder),
litigation settlements, charitable donations and political
contributions.
(c) To approve individual cost overruns of up to 10% of any
amounts approved by or presented to the Board.
(d) To enter into leases or extensions thereof and other
agreements with respect to the assets of the corporation,
including interests in minerals and real estate, for a term of
not more than 10 years or for an unlimited term if the
aggregate initial rentals, over the term of the lease,
including renewal options, do not exceed $20 million.
(e) To approve capital contributions to the corporation's
subsidiaries and to enter into performance and financial
guarantees for the benefit of the corporation's subsidiaries.
(f) To approve disposition of assets and interests in securities
of subsidiaries or related commitments, provided that the
aggregate market value of the assets being disposed of in any
one such transaction does not exceed $20 million.
(g) To approve increases in the capital budgets of the
corporation's operating subsidiaries provided such increases
in the aggregate do not exceed 10% of the corporation's
capital budget for the fiscal year.
(h) To approve in emergency situations commitments in excess of
the above-described limits provided they are in the interests
of the corporation.
The above delegation of authority does not authorize the corporation or its
subsidiaries to make a significant change in its business or to issue the
corporation's capital stock without the specific approval of the Board.
Notwithstanding the foregoing limitations, the Chairman of the Board shall have
such power and authority as is usual, customary and desirable to perform all the
duties of the office (including, but not limited to, the approval of payments or
arrangements made in connection with the corporation's debt, interest, tax,
contractual, and regulatory obligations) necessary to, and consistent with, the
businesses of the corporation and its subsidiaries. The Chairman of the Board
(and other officers of the corporation as delegated by the Chairman of the
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Board or as authorized in these By-laws) may delegate the foregoing
authorization to other officers, employees, and agents of the corporation by
either written authorization (including powers of attorney) or otherwise, unless
such authorization is expressly reserved for the Chairman of the Board or other
officer, as applicable.
SECTION 7. CHIEF EXECUTIVE OFFICER
The Chief Executive Officer shall assist the Chairman of the Board in
the performance of his duties and shall perform those duties assigned to him in
other provisions of the By-laws and such other duties as may from time to time
be assigned to him by the Board or the Chairman of the Board. In the absence or
disability of the Chairman of the Board, or at his request, the Chief Executive
Officer may preside at any meeting of the stockholders or of the Board and, in
such circumstances, may exercise any of the other powers or perform any of the
other duties of the Chairman of the Board. Subject to delegations by the
Chairman of the Board pursuant to Section 6 of this Article V, the Chief
Executive Officer may sign or execute, in the name of the corporation, all stock
certificates, deeds, mortgages, bonds, contracts or other documents and
instruments, except in cases where the signing or execution thereof shall be
required by law or shall have been expressly delegated by the Board or these
By-laws to some other officer or agent of the corporation.
SECTION 8. PRESIDENT
The President shall have general authority over the property, business
and affairs of the corporation, and over all subordinate officers, agents and
employees of the corporation, subject to the control and direction of the Board,
the Executive Committee, the Chairman of the Board and the Chief Executive
Officer, including the power to sign and acknowledge in the name and on behalf
of the corporation all stock certificates, deeds, mortgages, bonds, contracts or
other documents and instruments except when the signing thereof shall be
expressly delegated to some other officer or agent by the Board or required by
law to be otherwise signed or executed and, unless otherwise provided by law or
by the Board, may delegate to any officer, employee or agent of the corporation
authority to sign, execute and acknowledge in his place and stead all such
documents and instruments.
SECTION 9. VICE CHAIRMAN OF THE BOARD
The Vice Chairman of the Board shall assist the Chairman of the Board,
the Chief Executive Officer and the President, in the performance of their
duties and shall perform those duties assigned to him in other provisions of the
By-laws and such other duties as may from time to time be assigned to him by the
Board, the Chairman of the Board, the Chief Executive Officer or the President.
In the absence or disability of the Chairman of the Board, the Chief Executive
Officer or the President, or at the request of any of them, the Vice Chairman of
the Board may preside at any meeting of the stockholders or of the Board and, in
such circumstances, may exercise any of the other powers or perform any of the
other duties of the Chairman of the Board, the Chief Executive Officer or the
President. Subject to delegations by the Chairman of the Board pursuant to
Section 6 of this Article V, the Vice Chairman of the Board may sign or
16
<PAGE> 21
execute, in the name of the corporation, all stock certificates, deeds,
mortgages, bonds, contracts or other documents and instruments, except in cases
where the signing or execution thereof shall be required by law or shall have
been expressly delegated by the Board or these By-laws to some other officer or
agent of the corporation.
SECTION 10. CHIEF OPERATING OFFICER
The Chief Operating Officer shall have direct management responsibility
for the general business operations of the corporation, and he shall have such
powers and perform such duties as may be incident to the office of chief
operating officer of a corporation, those duties assigned to him by other
provisions of the By-laws, and such other duties as may from time to time be
assigned to him either directly or indirectly by the Board, the Chairman of the
Board, the Chief Executive Officer, the President or the Vice Chairman of the
Board. Subject to delegations by the Chairman of the Board pursuant to Section 6
of this Article V, the Chief Operating Officer may sign or execute, in the name
of the corporation, all stock certificates, deeds, mortgages, bonds, contracts
or other documents and instruments, except in cases where the signing or
execution thereof shall be required by law or shall have been expressly
delegated by the Board or these By-laws to some other officer or agent of the
corporation.
SECTION 11. CHIEF FINANCIAL OFFICER
The Chief Financial Officer shall have responsibility for development
and administration of the corporation's financial plans and all financial
arrangements, its cash deposits and short term investments, its accounting
policies and its federal and state tax returns. The Chief Financial Officer
shall also be responsible for the corporation's internal control procedures and
for its relationship with the financial community. The Chief Financial Officer
shall perform all the duties incident to the office of chief financial officer
of a corporation, those duties assigned to him by other provisions of these
By-laws and such other duties as may be assigned to him either directly or
indirectly by the Board, the Chairman of the Board, the Chief Executive Officer,
the President, the Vice Chairman of the Board or the Chief Operating Officer, or
as may be provided by law.
SECTION 12. VICE PRESIDENTS
Each Executive Vice President, Senior Vice President and Vice President
shall have such powers and perform such duties as may from time to time be
assigned to him, directly or indirectly, either generally or in specific
instances, by the Board, the Chairman of the Board, the Chief Executive Officer,
the President, the Vice Chairman of the Board or the Chief Operating Officer.
Subject to delegations by the Chairman of the Board pursuant to Section
6 of this Article V, each Executive Vice President, Senior Vice President and
Vice President shall perform all duties incident to the office of vice president
of a corporation and shall have authority to sign or execute, in the name of the
corporation, all stock certificates, deeds, mortgages, bonds, contracts or other
documents or instruments, except in cases where the signing or execution
17
<PAGE> 22
thereof shall have been expressly delegated by the Board or these By-laws to
some other officer or agent of the corporation.
SECTION 13. GENERAL COUNSEL
The General Counsel shall be the chief legal advisor of the corporation
and shall have responsibility for the management of the legal affairs and
litigation of the corporation and, in general, he shall perform the duties
incident to the office of general counsel of a corporation and such other duties
as may be assigned to him either directly or indirectly by the Board, the
Chairman of the Board, the Chief Executive Officer, the President or the Vice
Chairman of the Board, or as may be provided by law.
SECTION 14. SECRETARY
The Secretary shall keep the minutes of meetings of the stockholders
and of the Board in books provided for the purpose; he shall see that all
notices are duly given in accordance with the provisions of these By-laws or as
required by law; he shall be custodian of the records and of the corporate seal
or seals of the corporation; he shall see that the corporate seal is affixed to
all documents requiring same, the execution of which, on behalf of the
corporation, under its seal, is duly authorized, and when said seal is so
affixed he may attest same; and, in general, he shall perform all duties
incident to the office of the secretary of a corporation, and such other duties
as from time to time may be assigned to him directly or indirectly by the Board,
the Chairman of the Board, the Chief Executive Officer, the President, the Vice
Chairman of the Board or the General Counsel, or as may be provided by law. Any
Assistant Secretary may perform any of the duties or exercise any of the powers
of the Secretary at the request of, or in the absence or disability of, the
Secretary or otherwise as occasion may require in the administration of the
business and affairs of the corporation.
SECTION 15. TREASURER
The Treasurer shall have charge of and be responsible for all funds,
securities, receipts and disbursements of the corporation, and shall deposit, or
cause to be deposited, in the name of the corporation, all moneys or other
valuable effects in such banks, trust companies or other depositaries as shall,
from time to time, be selected by or under authority of the Board; if required
by the Board, he shall give a bond for the faithful discharge of his duties,
with such surety or sureties as the Board may determine; he shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the corporation; and, in general, he shall perform the duties incident to the
office of treasurer of a corporation and such other duties as may be assigned to
him directly or indirectly by the Board, the Chairman of the Board, the Chief
Executive Officer, the President, the Vice Chairman of the Board, the Chief
Operating Officer or the Chief Financial Officer, or as may be provided by law.
Any Assistant Treasurer may perform any of the duties or exercise any of the
powers of the Treasurer at the request of, or in the absence or disability of,
the Treasurer or otherwise as occasion may require in the administration of the
business and affairs of the corporation.
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SECTION 16. CONTROLLER
The Controller shall be the chief accounting officer of the
corporation. He shall keep full and accurate accounts of the assets,
liabilities, commitments, receipts, disbursements and other financial
transactions of the corporation; shall cause regular audits of the books and
records of account of the corporation and shall supervise the preparation of the
corporation's financial statements; and, in general, he shall perform the duties
incident to the office of controller of a corporation and such other duties as
may be assigned to him directly or indirectly by the Board, the Audit Committee,
the Chairman of the Board, the Chief Executive Officer, the President, the Vice
Chairman of the Board, the Chief Operating Officer or the Chief Financial
Officer, or as may be provided by law.
SECTION 17. ABSENCE OR DISABILITY OF OFFICERS
In the absence or disability of the Chairman of the Board, the Chief
Executive Officer, the President or the Vice Chairman of the Board, the Board or
a committee thereof may designate individuals to perform the duties of those
absent or disabled.
ARTICLE VI
STOCK CERTIFICATES AND TRANSFER THEREOF
SECTION 1. STOCK CERTIFICATES
Except as otherwise permitted by statute, the Restated Certificate of
Incorporation or resolution or resolutions of the Board, every holder of stock
in the corporation shall be entitled to have a certificate, signed by or in the
name of the corporation by the Chairman of the Board, the Chief Executive
Officer, the President, the Vice Chairman of the Board, the Chief Operating
Officer, the Chief Financial Officer or any Vice President and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares, and the class and series thereof,
owned by him in the corporation. Any and all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
The Board or the Chairman of the Board shall determine the form of stock
certificate of the corporation.
SECTION 2. TRANSFER OF STOCK
Transfer of shares of the capital stock of the corporation shall be
made only on the books (whether physically or electronically) of the corporation
by the holder thereof, or by his attorney duly authorized, and on surrender of
the certificate or certificates for such shares. A person in whose name shares
of stock stand on the books of the corporation shall be deemed the owner
19
<PAGE> 24
thereof as regards the corporation, and the corporation shall not, except as
expressly required by statute, be bound to recognize any equitable or other
claim to, or interest in, such shares on the part of any other person whether or
not it shall have express or other notice thereof.
SECTION 3. TRANSFER AGENTS AND REGISTRARS
The Board or the Chairman of the Board, as appropriate, may appoint
responsible banks or trust companies from time to time to act as transfer agents
and registrars of the stock of the corporation, as may be required by and in
accordance with applicable laws, rules and regulations. Except as otherwise
provided by the Board or the Chairman of the Board, as appropriate, in respect
of temporary certificates, no certificates for shares of capital stock of the
corporation shall be valid unless countersigned by a transfer agent and
registered by one of such registrars.
SECTION 4. ADDITIONAL REGULATIONS
The Board or the Chairman of the Board, as appropriate, may make such
additional rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of the capital stock of the
corporation.
SECTION 5. LOST, STOLEN OR DESTROYED CERTIFICATES
The Board or the Chairman of the Board may provide for the issuance of
new certificates of stock to replace certificates of stock lost, stolen or
destroyed, or alleged to be lost, stolen or destroyed, upon such terms and in
accordance with such procedures as the Board or the Chairman of the Board shall
deem proper and prescribe.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
Except as otherwise provided by statute or the Restated Certificate of
Incorporation, the Board may declare dividends upon the shares of its capital
stock either (1) out of its surplus, or (2) in case there shall be no surplus,
out of its net profits for the fiscal year, whenever, and in such amounts as, in
its opinion, the condition of the affairs of the corporation shall render it
advisable. Dividends may be paid in cash, in property, or in shares of the
capital stock of the corporation.
ARTICLE VIII
SEAL
The corporation may have a corporate seal which shall have inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware." The
20
<PAGE> 25
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January of each year, or on such other day as may be fixed from time to time by
the Board.
ARTICLE X
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a
party to or is involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he is or was a Director, officer or employee of the corporation or is
or was serving at the request of the corporation as a Director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a Director, officer, employee or agent
or in any other capacity while serving as such a Director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the full
extent authorized by the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation to
provide broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), or by other applicable law as then in
effect, against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
however, that except as provided in Section 2 of this Article with respect to
proceedings seeking to enforce rights to indemnification, the corporation shall
indemnify any such indemnitee seeking indemnification in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of the corporation. The
right to indemnification conferred in this Section shall be a contract right and
shall include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); further provided, however, that, if the General
Corporation Law of the State of Delaware requires, an advancement of expenses
21
<PAGE> 26
incurred by an indemnitee in his capacity as a Director, officer or employee
(and not in any other capacity in which service was or is rendered by such
indemnitee while a Director, officer or employee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the corporation of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined that such indemnitee is not entitled to be indemnified under this
Section 1, or otherwise.
SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT
If a claim under Section 1 of this Article is not paid in full by the
corporation within sixty days after a written claim has been received by the
corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, to the extent successful in whole or in part, the indemnitee
shall be amount entitled to be paid also the expense of prosecuting such suit.
The indemnitee shall be presumed to be entitled to indemnification under this
Article upon submission of a written claim (and, in an action brought to enforce
a claim for an advancement of expenses, where the required undertaking, if any
is required, has been tendered to the corporation), and thereafter the
corporation shall have the burden of proof to overcome the presumption that the
indemnitee is not so entitled. Neither the failure of the corporation (including
its Board, independent legal counsel, or its stockholders), to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
corporation (including its Board, independent legal counsel or its stockholders)
that the indemnitee is not entitled to indemnification, shall be a defense to
the suit or create a presumption that the indemnitee is not so entitled.
SECTION 3. NONEXCLUSIVITY OF RIGHTS
The rights to indemnification and to the advancement of expenses
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Restated Certificate of Incorporation, By-law, agreement, vote of stockholders
or disinterested Directors or otherwise.
SECTION 4. INSURANCE, CONTRACTS AND FUNDING
The corporation may maintain insurance, at its expense, to protect
itself and any Director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware. The corporation may
enter into contracts with any indemnitee in furtherance of the provisions of
this Article and may create a trust fund, grant a security interest or use other
means (including, without limitation, a letter of credit) to ensure the payment
of such amounts as may be necessary to effect indemnification as provided in
this Article.
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SECTION 5. WHOLLY OWNED SUBSIDIARIES
Any person who is or was serving as a Director of a wholly owned
subsidiary of the corporation shall be deemed, for purposes of this Article
only, to be a Director, officer or employee of the corporation entitled to
indemnification under this Article.
SECTION 6. INDEMNIFICATION OF AGENTS OF THE CORPORATION
The corporation may, by action of the Board from time to time, grant
rights to indemnification and advancement of expenses to agents of the
corporation with the same scope and effect as the provisions of this Article
with respect to the indemnification and advancement of expenses of Directors,
officers and employees of the corporation.
ARTICLE XI
CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. CHECKS, DRAFTS, ETC.; LOANS
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall, from time to time, be determined by resolution of the
Board. No loans shall be contracted on behalf of the corporation unless
authorized by the Board. Such authority may be general or confined to specific
circumstances.
SECTION 2. DEPOSITS
All funds of the corporation shall be deposited, from time to time, to
the credit of the corporation in such banks, trust companies or other
depositories as the Board may select, or as may be selected by any officer or
officers, agent or agents of the corporation to whom such power may, from time
to time, be delegated by the Board; and for the purpose of such deposit, the
Chairman of the Board, the Chief Executive Officer, the President, the Vice
Chairman of the Board, any Executive Vice President, any Senior Vice President,
any Vice President, the Treasurer or any Assistant Treasurer, or any other
officer or agent to whom such power may be delegated by the Board, may endorse,
assign and deliver checks, drafts and other order for the payment of money which
are payable to the order of the corporation.
ARTICLE XII
AMENDMENTS
These By-laws may be altered or repealed and new By-laws may be made
by the affirmative vote, at any meeting of the Board, of a majority of the
entire Board, subject to the
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rights of the stockholders of the corporation to amend or repeal By-laws made or
amended by the Board by the affirmative vote of the holders of record of a
majority in number of shares of the outstanding stock of the corporation present
or represented at any meeting of the stockholders and entitled to vote thereon,
provided that notice of the proposed action be included in the notice of such
meeting.
ARTICLE XIII
MISCELLANEOUS
All references and uses herein of the masculine pronouns "he" or "his"
shall have equal applicability to and shall also mean their feminine counterpart
pronouns, such as "she" or "her."
24
<PAGE> 1
EXHIBIT 10.A
================================================================================
EL PASO NATURAL GAS COMPANY
-------------------------------------
$750,000,000 364-DAY
REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
Dated as of October 29, 1997
-------------------------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent
and CAF Advance Agent
CITIBANK, N.A.,
as Documentation Agent
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Syndication Agent
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
<S> <C>
DEFINITIONS AND ACCOUNTING TERMS............................. 1
SECTION 1.1 Certain Defined Terms...................................... 1
SECTION 1.2 Computation of Time Periods................................ 18
SECTION 1.3 Accounting Terms........................................... 18
SECTION 1.4 References................................................. 18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES............................ 19
SECTION 2.1 The Revolving Credit Advances.............................. 19
SECTION 2.2 Making the Revolving Credit Advances....................... 19
SECTION 2.3 Evidence of Debt........................................... 21
SECTION 2.4 CAF Advances............................................... 21
SECTION 2.5 Procedure for CAF Advance Borrowings....................... 22
SECTION 2.6 CAF Advance Payments....................................... 25
SECTION 2.7 Evidence of Debt........................................... 26
SECTION 2.8 Fees....................................................... 26
SECTION 2.9 Reduction of the Commitments............................... 27
SECTION 2.10 Repayment of Advances..................................... 27
SECTION 2.11 Interest on Revolving Credit Advances..................... 27
SECTION 2.12 Additional Interest on Eurodollar Rate Advances........... 28
SECTION 2.13 Interest Rate Determination............................... 29
SECTION 2.14 Voluntary Conversion of Advances.......................... 31
SECTION 2.15 Optional and Mandatory Prepayments........................ 31
SECTION 2.16 Increased Costs........................................... 32
SECTION 2.17 Increased Capital......................................... 33
SECTION 2.18 Illegality................................................ 34
SECTION 2.19 Pro Rata Treatment, Payments and Computations............. 34
SECTION 2.20 Taxes..................................................... 36
SECTION 2.21 Sharing of Payments, Etc.................................. 38
SECTION 2.22 Use of Proceeds........................................... 39
SECTION 2.23 Extension of Stated Termination Date...................... 39
SECTION 2.24 Commitment Increases...................................... 41
SECTION 2.25 Replacement of Lenders.................................... 42
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING...................... 43
SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement.... 43
SECTION 3.2 Conditions Precedent to Initial Advances................... 44
SECTION 3.3 Conditions Precedent to Initial Advances
to Any Borrowing Subsidiary or Holding......................... 45
SECTION 3.4 Conditions Precedent to Each Borrowing..................... 46
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................... 46
SECTION 4.1 Representations and Warranties of the Borrowers............ 46
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE V
<S> <C>
COVENANTS OF THE BORROWERS................................... 50
SECTION 5.1 Affirmative Covenants...................................... 50
SECTION 5.2 Negative Covenants......................................... 51
SECTION 5.3 Reporting Requirements..................................... 55
SECTION 5.4 Restrictions on Material Subsidiaries...................... 58
ARTICLE VI
GUARANTEE.................................................... 58
SECTION 6.1 Guarantees................................................. 58
SECTION 6.2 No Subrogation............................................. 59
SECTION 6.3 Amendments, etc. with respect to the
Obligations; Waiver of Rights.................................. 59
SECTION 6.4 Guarantee Absolute and Unconditional....................... 60
SECTION 6.5 Reinstatement.............................................. 61
ARTICLE VII
EVENTS OF DEFAULT............................................ 62
SECTION 7.1 Event of Default........................................... 62
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT........... 65
SECTION 8.1 Authorization and Action................................... 65
SECTION 8.2 Administrative Agent's and CAF Advance
Agent's Reliance, Etc.......................................... 66
SECTION 8.3 Chase and Affiliates....................................... 67
SECTION 8.4 Lender Credit Decision..................................... 67
SECTION 8.5 Indemnification............................................ 67
SECTION 8.6 Successor Administrative Agent and CAF Advance Agent....... 68
ARTICLE IX
MISCELLANEOUS................................................ 68
SECTION 9.1 Amendments, Etc............................................ 68
SECTION 9.2 Notices, Etc............................................... 69
SECTION 9.3 No Waiver; Remedies........................................ 70
SECTION 9.4 Costs and Expenses; Indemnity.............................. 70
SECTION 9.5 Right of Set-Off........................................... 71
SECTION 9.6 Binding Effect............................................. 71
SECTION 9.7 Assignments and Participations............................. 72
SECTION 9.8 Confidentiality............................................ 75
SECTION 9.9 Consent to Jurisdiction.................................... 75
SECTION 9.10 GOVERNING LAW............................................. 76
SECTION 9.11 Rate of Interest.......................................... 76
SECTION 9.12 Execution in Counterparts................................. 77
</TABLE>
-ii-
<PAGE> 4
SCHEDULE
Schedule I Commitments, Addresses, Etc.
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of CAF Advance Request
Exhibit D Form of CAF Advance Offer
Exhibit E Form of CAF Advance Confirmation
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Opinion of [Associate] General Counsel
of the Company
Exhibit H Form of Opinion of New York Counsel to the
Company
Exhibit I Form of Process Agent Letter
Exhibit J Form of Joinder Agreement
Exhibit K Form of Opinion of [Associate] General Counsel of
the Company
Exhibit L Form of Opinion of New York Counsel to the Company
Exhibit M Form of Extension Request
Exhibit N Form of New Lender Supplement
Exhibit O Form of Commitment Increase Supplement
-iii-
<PAGE> 5
$750,000,000 364-DAY REVOLVING CREDIT AND COMPETITIVE ADVANCE
FACILITY AGREEMENT, dated as of October 29, 1997, among EL PASO NATURAL GAS
COMPANY, a Delaware corporation ("EPNGC"), TENNESSEE GAS PIPELINE COMPANY, a
Delaware corporation ("Tennessee"), the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders"), THE
CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent
(in such capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent") for the Lenders hereunder, CITIBANK, N.A., as
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as syndication agent (in
such capacity, the "Syndication Agent") for the Lenders.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 Certain Defined Terms. As used in
this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Administrative Agent" has the meaning assigned to such term
in the preamble hereof.
"Advance" means an advance by a Lender to any Borrower
pursuant to Article II, and refers to a Base Rate Advance, a Eurodollar
Rate Advance or a CAF Advance.
"Affiliate" means as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
The term "control" (including the terms "controlled by" or "under
common control with") means, with respect to any Person, the
possession, direct or indirect, of the power to vote 20% or more of the
securities having ordinary voting power for the election of directors
of such Person or to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting
securities or by contract or otherwise.
"Agreement" means this $750,000,000 364-Day Revolving Credit
and Competitive Advance Facility, as amended, supplemented or otherwise
modified from time to time.
"Alternate Program" means any program providing for the sale
or other disposition of trade or other receivables entered into by the
Company or a Principal Subsidiary (or for purposes of Section 5.2(a)
only, any Restricted Affiliate) which is in addition to or in
replacement of the
<PAGE> 6
2
program evidenced by either Receivables Purchase and Sale
Agreement(whether or not either Receivables Purchase and Sale
Agreement shall then be in effect), provided that such program is on
terms (a) substantially similar to either Receivables Purchase and
Sale Agreement (as modified to comply with FASB 125 or similar
policies or guidelines from time to time in effect) or (b) customary
for similar transactions as reasonably determined by the
Administrative Agent.
"Applicable LIBO Rate" means in respect of any CAF Advance
requested pursuant to a LIBO Rate CAF Advance Request, an interest rate
per annum equal to the rate which appears on Page 3750 of the Telerate
Service (or any successor or substitute page of such Service, or any
successor to or substitute for such service providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to Dollar deposits
in the London interbank market) as at approximately 11:00 A.M., London
time, two Business Days prior to the beginning of the period for which
such CAF Advance is to be outstanding as the rate for Dollar deposits
with a maturity comparable to such period.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit F.
"Base CD Rate" means the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate.
"Base Rate" means for any day, a rate per annum (adjusted to
the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, rounded
upwards to the next highest 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1/2 of 1% and (c) the Effective Federal Funds Rate in
effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the
Effective Federal Funds Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Effective Federal Funds Rate,
respectively.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.11(a)(i).
"Borrowers" means the collective reference to EPNGC, each
Borrowing Subsidiary and Holding once Holding executes and delivers a
Joinder Agreement; each, a "Borrower".
<PAGE> 7
3
"Borrowing" means a borrowing consisting of Advances of the
same Type made on the same day by the Lenders, it being understood that
there may be more than one Borrowing on a particular day.
"Borrowing Subsidiary" means Tennessee and each other domestic
Subsidiary of the Company which has been designated by the Company as a
"Borrowing Subsidiary" by written notice to the Administrative Agent,
which designation shall not have been revoked by written notice by the
Company to the Administrative Agent (provided, that no such designation
shall be revoked if either (a) any Default or Event of Default shall
have occurred and be continuing or (b) any Advance to such Borrowing
Subsidiary, or any interest accrued thereon, shall be outstanding);
collectively, the "Borrowing Subsidiaries". For avoidance of doubt, (i)
Tennessee may be undesignated as a Borrowing Subsidiary by written
notice to the Administrative Agent by the Company and (ii) EPNGC shall
always be a Borrower hereunder.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York, New York and, if the
applicable Business Day relates to any Eurodollar Rate Advances or LIBO
Rate CAF Advances, on which dealings are carried on in the London
interbank market.
"CAF Advance" means an Advance made pursuant to Sections 2.4
and 2.5.
"CAF Advance Agent" has the meaning assigned to such term in
the preamble hereof.
"CAF Advance Availability Period" means the period from and
including the Closing Date until the earlier of (a) the date which is 7
days prior to the Stated Termination Date and (b) the Termination Date.
"CAF Advance Confirmation" means each confirmation by the
applicable Borrower of its acceptance of CAF Advance Offers, which CAF
Advance Confirmation shall be substantially in the form of Exhibit E
and shall be delivered to the CAF Advance Agent by telecopy.
"CAF Advance Interest Payment Date" means as to each CAF
Advance, each interest payment date specified by the applicable
Borrower for such CAF Advance in the related CAF Advance Request.
"CAF Advance Lenders" means Lenders from time to time
designated by the Company, in consultation with the CAF Advance Agent,
as CAF Advance Lenders as provided in Section 2.4.
"CAF Advance Maturity Date" means as to any CAF Advance, the
date specified by the applicable Borrower
<PAGE> 8
4
pursuant to Section 2.5(d)(ii) in its acceptance of the related CAF
Advance Offer.
"CAF Advance Offer" means each offer by a CAF Advance Lender
to make CAF Advances pursuant to a CAF Advance Request, which CAF
Advance Offer shall contain the information specified in Exhibit D and
shall be delivered to the CAF Advance Agent by telephone, immediately
confirmed by telecopy.
"CAF Advance Request" means each request by the applicable
Borrower for CAF Advance Lenders to submit bids to make CAF Advances,
which request shall contain the information in respect of such
requested CAF Advances specified in Exhibit C and shall be delivered to
the CAF Advance Agent in writing, by telecopy, or by telephone,
immediately confirmed by telecopy.
"Capitalization" of any Person means the sum (without
duplication) of (a) consolidated Debt of such Person and its
consolidated Subsidiaries, plus (b) the aggregate amount of Guaranties
entered into by such Person and its consolidated Subsidiaries, plus (c)
the consolidated common and preferred stockholders' equity of such
Person and its consolidated Subsidiaries.
"C/D Assessment Rate" means for any day as applied to any Base
Rate Advance, the annual assessment rate determined by Chase to be
payable on such day to the Federal Deposit Insurance Corporation (the
"FDIC") for the FDIC's (or any successor's) insuring time deposits at
offices of Chase in the United States.
"C/D Reserve Percentage" means for any day as applied to any
Base Rate Advance, that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) (the "Board"), for
determining the then current reserve requirement for the Administrative
Agent in respect of new non-personal time deposits in Dollars having a
maturity of 30 days or more.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation.
"Closing Date" has the meaning assigned to such term in
Section 3.2.
"Commitment" means as to any Lender, the obligation of such
Lender to make Revolving Credit Advances to the Borrowers hereunder in
an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Lender's name on Schedule I (as such
Schedule I is amended from time to time pursuant to Section 9.7(c)), as
such amount may be reduced from time to time in accordance with the
provisions of this Agreement.
<PAGE> 9
5
"Commitment Expiration Date" has the meaning assigned to such
term in Section 2.23(a).
"Commitment Percentage" means as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall have
expired or terminated, the percentage which the aggregate principal
amount of such Lender's Advances then outstanding constitutes of the
aggregate principal amount of the Advances then outstanding).
"Commitment Increase Notice" has the meaning assigned to such
term in Section 2.24(a).
"Commitment Increase Supplement" has the meaning assigned to
such term in Section 2.24(c).
"Company" means (a) at all times prior to Holding becoming a
Borrower, EPNGC, and (b) thereafter, Holding.
"Contingent Guaranty" has the meaning assigned to such term in
the definition of the term "Guaranty" contained in this Section 1.1.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.13, 2.14 or 2.18.
"Debt" means, as to any Person, all Indebtedness of such
Person other than (a) any Project Financing of such Person, (b) in the
case of the Company or a Principal Subsidiary, any liabilities of the
Company or such Principal Subsidiary, as the case may be, under any
Alternate Program, or any document executed by the Company or such
Principal Subsidiary, as the case may be, in connection therewith and
(c) any obligations of the Company or a Principal Subsidiary with
respect to lease payments for the headquarters building of EPNGC
located in Houston, Texas; provided, however, that for purposes of
Article V, "Debt" shall not include up to an aggregate amount
(determined without duplication of amount) of $200,000,000 of (i) the
amount of optional payments in lieu of asset repurchase or other
payments to similar effect, including extension or renewal payments, on
off balance sheet leases and (ii) the amount of the purchase price for
optional acquisition of such asset (in either case, calculated at the
lower amount payable in respect of such asset under clause (i) or (ii)
above).
"Default" means any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
"Documentation Agent" has the meaning assigned to such term in
the preamble hereof.
<PAGE> 10
6
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Effective Date" means the date on which the conditions
precedent set forth in Section 3.1 have been satisfied (or compliance
therewith shall have been waived by the Lenders).
"Effective Federal Funds Rate" means, for any day, the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Eligible Assignee" means, with respect to any particular
assignment under Section 9.7, any bank or other financial institution
approved in writing by the Company expressly with respect to such
assignment and, except as to such an assignment by Chase so long as
Chase is the Administrative Agent hereunder, the Administrative Agent
as an Eligible Assignee for purposes of this Agreement, provided that
(i) neither the Administrative Agent's nor the Company's approval shall
be unreasonably withheld and (ii) neither the Administrative Agent's
nor the Company's approval shall be required if the assignee is another
Lender or an Affiliate of the assigning Lender.
"EPNGC" has the meaning assigned to such term in the preamble
hereof.
"EPTPC" means El Paso Tennessee Pipeline Co., a Delaware
corporation.
"EPTPC Facility" means the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996,
among EPTPC, the several financial institutions from time to time
parties thereto, and The Chase Manhattan Bank, as administrative agent
and CAF advance agent thereunder, as the same may be amended, modified
or supplemented from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued from time to time thereunder.
"ERISA Affiliate" means any Person who is a member of the
Company's controlled group within the meaning of Section 4001(a)(14)(A)
of ERISA.
<PAGE> 11
7
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum equal to the rate which appears on Page 3750 of
the Telerate Service (or on any successor or substitute page of such
service, or any successor to or substitute for such service providing
rate quotations comparable to those currently provided on such page of
such service, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable
to Dollar deposits in the London interbank market) as at approximately
11:00 A.M. (London, England time) two Business Days before the first
day of such Interest Period as the rate for Dollar deposits with a
maturity comparable to such Interest Period; provided that if such rate
is not available at such time for any reason, the Eurodollar Rate for
such Borrowing for such Interest Period shall be the interest rate per
annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars are
offered by the principal office of each of the Reference Lenders in
London, England, to prime banks in the London interbank market as at
approximately 11:00 A.M. (London, England time) two Business Days
before the first day of such Interest Period, in an approximate amount
of each such Reference Lender's share of the relevant Borrowing for the
applicable Interest Period. The Eurodollar Rate for the Interest Period
for each Eurodollar Rate Advance comprising part of the same Borrowing,
when being determined pursuant to the foregoing proviso clause, shall
be determined by the Administrative Agent on the basis of applicable
rates furnished to and received by the Administrative Agent from the
Reference Lenders two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.13.
"Eurodollar Rate Advance" means an Advance which bears
interest determined by reference to the Eurodollar Rate, as provided in
Section 2.11(a)(ii).
"Eurodollar Rate Margin" means for any day the rate per annum
set forth below opposite the applicable S&P Bond Rating and Moody's
Bond Rating in effect on such day:
<PAGE> 12
8
<TABLE>
<CAPTION>
Bond Rating Eurodollar
(S&P/Moody's) Level Rate Margin
------------- ----- -----------
<S> <C> <C>
A/A2 or higher I .145%
A-/A3 II .175%
BBB+/Baa1 III .205%
BBB/Baa2 IV .235%
BBB-/Baa3 V .300%
BB+/Ba1 or lower VI .500%;
</TABLE>
provided that if the ratings of such rating agencies do not fall within
the same Level, the Eurodollar Rate Margin applicable to such day will
be the lower Eurodollar Rate Margin and provided, further, that in the
event a rating is not available from a rating agency, such rating
agency will be deemed to have assigned its lowest rating.
"Eurodollar Reserve Percentage" for any Lender for any
Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period under regulations
issued from time to time by the Board of Governors of the Federal
Reserve System (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a
term equal to such Interest Period.
"Events of Default" has the meaning assigned to such term in
Section 7.1.
"Excluded Acquisition Debt" means (a) Debt, Guaranties or
reimbursement obligations of any corporation acquired by the Company or
any of its Subsidiaries and which Debt, Guaranties or reimbursement
obligations exist immediately prior to such acquisition (provided that
(i) such Debt, Guaranties or reimbursement obligations are not incurred
solely in anticipation of such acquisition and (ii) immediately prior
to such acquisition such corporation is not a Subsidiary of the
Company), (b) Debt, Guaranties or reimbursement obligations of EPTPC
and its Subsidiaries in existence on the date of the merger of EPTPC
with El Paso Merger Company or (c) Debt, Guaranties or reimbursement
obligations in respect of any asset acquired by the Company or any of
its Subsidiaries and which Debt, Guaranties or reimbursement
obligations exists immediately prior to such acquisition (provided that
(i) such Debt, Guaranties or reimbursement obligations are not incurred
solely in anticipation of such acquisition and (ii) immediately prior
to such acquisition such asset is not an asset of the Company or any of
its Subsidiaries).
<PAGE> 13
9
"Existing Facilities" means the collective reference to (a)
the $750,000,000 Revolving Credit and Competitive Advance Facility
Agreement and the $250,000,000 Revolving Credit and Competitive Advance
Facility Agreement, each dated November 4, 1996, among EPNGC, the
several financial institutions from time to time parties thereto and
Chase, as Administrative Agent and CAF Advance Agent and (b) the EPTPC
Facility.
"Exposure" means (a) with respect to an Objecting Lender at
any time, the aggregate outstanding principal amount of its Revolving
Credit Advances and (b) with respect to any other Lender at any time,
the maximum amount of the Commitment of such Lender.
"Extension Request" means each request by the Borrowers made
pursuant to Section 2.23 for the Lenders to extend the Stated
Termination Date, which shall contain the information in respect of
such extension specified in Exhibit M and shall be delivered to the
Administrative Agent in writing.
"Facility Fee Commencement Date" means the date hereof.
"FERC" means the Federal Energy Regulatory Commission, or any
agency or authority of the United States from time to time succeeding
to its function.
"Fixed Rate CAF Advance" means any CAF Advance made pursuant
to a Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance Request" means any CAF Advance Request
requesting the CAF Advance Lenders to offer to make CAF Advances at a
fixed rate (as opposed to a rate composed of the Applicable LIBO Rate
plus (or minus) a margin).
"Guaranty", "Guaranteed" and "Guaranteeing" each means any act
by which any Person assumes, guarantees, endorses or otherwise incurs
direct or contingent liability in connection with, or agrees to
purchase or otherwise acquire or otherwise assures a creditor against
loss in respect of, any Debt or Project Financing of any Person other
than the Company or any of its consolidated Subsidiaries (excluding (a)
any liability by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(b) any liability in connection with obligations of the Company, any of
its consolidated Subsidiaries or any Restricted Affiliate, including,
without limitation, obligations under any conditional sales agreement,
equipment trust financing or equipment lease and any liability of any
Restricted Affiliate in respect of obligations of EPNGC or its
consolidated Subsidiaries and (c) any such act in connection with a
Project Financing that either (i) guarantees performance of the
completion of the project which is financed by such Project Financing,
until such time, if any, that such guaranty becomes a guaranty of
payment of such Project Financing (other than a guaranty of
<PAGE> 14
10
payment of the type referred to in subclause (ii) below) or
(ii) is contingent upon, or the obligation to pay or perform under
which is contingent upon, the occurrence of any event other than or in
addition to the passage of time or any Project Financing becoming due
(any such act referred to in this clause (c) being a "Contingent
Guaranty"); provided, however, that for purposes of this definition
the liability of the Company or any of its Subsidiaries with respect
to any obligation as to which a third party or parties are jointly, or
jointly and severally, liable as a guarantor or otherwise as
contemplated hereby and have not defaulted on its or their portions
thereof, shall be only its pro rata portion of such obligation.
"Holding" means any domestic parent holding company of both
EPNGC and EPTPC which directly or indirectly owns 100% of the common
stock of EPNGC and 100% of the common stock of EPTPC; provided,
however, that immediately after Holding becomes EPNGC's and EPTPC's
parent holding company, not less than 80% of the shareholders of common
stock of Holding are the same shareholders of common stock of EPNGC
immediately prior to Holding becoming EPNGC's and EPTPC's parent
holding company.
"Holding Guarantee" has the meaning assigned to such term in
Section 5.1(g).
"Indebtedness" of any Person means, without duplication (a)
indebtedness of such Person for borrowed money, (b) obligations of such
Person (other than any portion of any trade payable obligation of such
Person which shall not have remained unpaid for 91 days or more from
the original due date of such portion) to pay the deferred purchase
price of property or services, and (c) obligations of such Person as
lessee under leases which shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital
leases, except that where such indebtedness or obligation of such
Person is made jointly, or jointly and severally, with any third party
or parties other than any consolidated Subsidiary of such Person, the
amount thereof for the purposes of this definition only shall be the
pro rata portion thereof payable by such Person, so long as such third
party or parties have not defaulted on its or their joint and several
portions thereof.
"Indemnified Party" means any or all of the Lenders, the
Administrative Agent and the CAF Advance Agent.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period beginning on the date
of such Advance or the date of the Conversion of any Advance into such
an Advance and ending on the last day of the period selected by the
applicable Borrower pursuant to the provisions below and, thereafter,
each subsequent period commencing on the last day of the
<PAGE> 15
11
immediately preceding Interest Period and ending on the last
day of the period selected by the applicable Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three or six months, or, subject to availability to each
Lender, nine or twelve months, in each case as the applicable Borrower
may, upon notice received by the Administrative Agent not later than
12:00 noon (New York City time) on the third Business Day prior to the
first day of such Interest Period with respect to Eurodollar Rate
Advances, select; provided, however, that:
(a) the duration of any Interest Period which
commences before the second anniversary of the Termination
Date and would otherwise end after the second anniversary of
the Termination Date shall end on the second anniversary of
the Termination Date;
(b) if the last day of such Interest Period
would otherwise occur on a day which is not a Business Day,
such last day shall be extended to the next succeeding
Business Day, except if such extension would cause such last
day to occur in a new calendar month, then such last day shall
occur on the next preceding Business Day;
(c) Interest Periods commencing on the same
date for Advances comprising the same Borrowing shall be of
the same duration; and
(d) with respect to Advances made by an
Objecting Lender, no Interest Period with respect to such
Advances shall end after the second anniversary of such
Objecting Lender's Commitment Expiration Date.
"Joinder Agreement" means a Joinder Agreement, substantially
in the form of Exhibit J hereto, duly executed and delivered by the
Company and the Borrowing Subsidiary party thereto or Holding, as the
case may be.
"Lenders" has the meaning assigned to such term in the
preamble hereof.
"LIBO Rate CAF Advance" means any CAF Advance made pursuant to
a LIBO Rate CAF Advance Request.
"LIBO Rate CAF Advance Request" means any CAF Advance Request
requesting the CAF Advance Lenders to offer to make CAF Advances at an
interest rate equal to the Applicable LIBO Rate plus (or minus) a
margin.
"Lien" means any lien, security interest or other charge or
encumbrance, or any assignment of the right to receive income, or any
other type of preferential arrangement, in each case to secure any
Indebtedness or any Guaranty of any Person.
<PAGE> 16
12
"Majority Lenders" means Lenders the Commitment Percentages of
which aggregate at least 51%, provided, that at any time after the
Commitment Expiration Date with respect to any Objecting Lender (but
prior to the termination of all the Commitments), "Majority Lenders"
shall mean Lenders whose Exposure aggregates at least 51% of the
aggregate Exposure of all the Lenders.
"Margin Stock" means "margin stock" as defined in Regulation U
of the Board of Governors of the Federal Reserve System, as in effect
from time to time.
"Material Adverse Effect" means a material adverse effect on
the financial condition or operations of the Company and its
consolidated Subsidiaries on a consolidated basis.
"Material Subsidiary" means any Subsidiary of Holding (other
than a Project Financing Subsidiary) that itself (on an unconsolidated,
stand-alone basis) owns in excess of 10% of the consolidated net
property, plant and equipment of Holding and its consolidated
Subsidiaries.
"Mojave" means Mojave Pipeline Company.
"Moody's Bond Rating" means, subject to Section 2.11(a)(ii),
(a) for any day prior to the Ratings Change Date, the rating of EPNGC's
senior long-term unsecured debt by Moody's Investors Service, Inc. in
effect at 11:00 A.M., New York City time, on such day and (b) for any
day that is on or after the Ratings Change Date, the rating of
Holding's senior long-term unsecured debt by Moody's Investors Service,
Inc. in effect at 11:00 A.M., New York City time, on such day.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions and in respect of which the Company or
an ERISA Affiliate has any liability (contingent or otherwise), such
plan being maintained pursuant to one or more collective bargaining
agreements.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which (a) is maintained for
employees of the Company or an ERISA Affiliate and at least one Person
other than the Company and its ERISA Affiliates or (b) was so
maintained and in respect of which the Company or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"Net Worth" means with respect to the Company, as of
<PAGE> 17
13
any date of determination, the sum of the preferred stock and
stockholders' equity of the Company as shown on the most recent
consolidated balance sheet of the Company delivered pursuant to
Section 5.3.
"New Lender" has the meaning assigned to such term in Section
2.24(b).
"New Lender Supplement" has the meaning assigned to such term
in Section 2.24(b).
"Note" has the meaning assigned to such term in Section
2.3(d).
"Notice of Borrowing" has the meaning specified in Section
2.2(a).
"Obligations" means the collective reference to the unpaid
principal of and interest on the Advances and the Notes and all other
financial liabilities of the Borrowers to the Administrative Agent,
the CAF Advance Agent and the Lenders (including, without limitation,
interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Advances and interest accruing at
the then applicable rate provided in this Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Borrower whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement or the
Notes, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent, the CAF Advance Agent or to
the Lenders that are required to be paid by any Borrower pursuant to
this Agreement).
"Objecting Lenders" has the meaning assigned to such term in
Section 2.23(a).
"Offered Increase Amount" has the meaning assigned to such
term in Section 2.24(a).
"Other Taxes" has the meaning assigned to such term in Section
2.20(b).
"Party" has the meaning assigned to such term in Section 9.8.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Claims" has the meaning assigned to such
<PAGE> 18
14
term in Section 9.9(a).
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a country
or any political subdivision thereof or any agency or instrumentality
of such country or subdivision.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City. The Prime Rate is not intended to be
the lowest rate of interest charged by Chase in connection with
extensions of credit to debtors.
"Principal Subsidiary" means, at any time, any Subsidiary of
the Company (other than a Project Financing Subsidiary) either (a)
having assets that are, or owning Subsidiaries with assets that
together with its assets are, at such time greater than or equal to 5%
of the consolidated assets of the Company and its consolidated
Subsidiaries at such time or (b) constituting a Borrowing Subsidiary.
"Process Agent" has the meaning specified in Section 9.9(a).
"Project Financing" means any Indebtedness incurred to finance
a project, other than any portion of such Indebtedness permitting or
providing for recourse against the Company or any of its Subsidiaries
(or for purposes of Section 5.2(a) only, any Restricted Affiliate)
other than (a) recourse to the stock or assets of the Project Financing
Subsidiary, if any, incurring or Guaranteeing such Indebtedness, and
(b) such recourse as exists under any Contingent Guaranty.
"Project Financing Subsidiary" means any Subsidiary of the
Company (or for purposes of Section 5.2(a) only, any Restricted
Affiliate) whose principal purpose is to incur Project Financing, or to
become a partner, member or other equity participant in a partnership,
limited liability company or other entity so created, and substantially
all the assets of which Subsidiary, partnership limited liability
company or other entity are limited to those assets being financed (or
to be financed) in whole or in part by a Project Financing.
"Ratings Change Date" means the earliest to occur of (a) the
date on which Holding becomes a Borrower hereunder and (b) the date on
which Holding becomes a "Borrower" under the $750,000,000 5-Year
Revolving Credit and Competitive Advance Facility Agreement, dated as
of the date hereof, among EPNGC, the lenders parties thereto and Chase,
as
<PAGE> 19
15
administrative agent and CAF advance agent.
"Re-Allocation Date" has the meaning assigned to such term in
Section 2.24(e).
"Receivables Purchase and Sale Agreement" means the collective
reference to (a) the Receivables Purchase and Sale Agreement dated as
of January 14, 1992 among EPNGC, CIESCO L.P., a New York limited
partnership, Corporate Asset Funding Company, a Delaware corporation
and Citicorp North America, Inc., as agent, as amended as of the date
hereof, and (b) the Amended and Restated Receivables Sale Agreement
dated as of December 31, 1996 among El Paso Energy Credit Corporation,
Asset Securitization Cooperative Corporation and Canadian Imperial Bank
of Commerce, as administrative agent, as such Agreement may be amended,
supplemented, restated or otherwise modified from time to time,
provided that no such amendment, supplement, restatement or
modification shall change the scope of such Agreement from that of a
receivables securitization transaction.
"Reference Lenders" means Chase, Morgan Guaranty Trust Company
of New York and Citibank, N.A..
"Register" has the meaning specified in Section 9.7(c).
"Required Lenders" means Lenders (a) which are not Objecting
Lenders with respect to any previous Extension Request and (b) which
have Commitment Percentages aggregating at least 66-2/3% of the
aggregate Commitment Percentages of such non-Objecting Lenders.
"Restricted Affiliate" means any Affiliate of EPNGC (other
than a Subsidiary of EPNGC) designated by EPNGC as a "Restricted
Affiliate" by written notice to the Administrative Agent; provided that
such Affiliate shall not become a Restricted Affiliate until such time
that (a) such Affiliate executes and delivers a guaranty (in form and
substance reasonably satisfactory to the Administrative Agent) (each a
"Restricted Affiliate Guaranty") in favor of the Administrative Agent,
for the ratable benefit of the Lenders, guaranteeing the prompt and
complete payment by each Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by
such Borrower and (b) the Administrative Agent receives legal opinions
from the General Counsel or Associate General Counsel of Holding and
from New York counsel to Holding reasonably acceptable to the
Administrative Agent, which legal opinions shall be in form and
substance satisfactory to the Administrative Agent; provided, further,
that after such time as such Affiliate becomes a Restricted Affiliate,
EPNGC may terminate the designation of such Affiliate as a Restricted
Affiliate by written notice to the Administrative Agent at which time
the aforementioned guaranty of such Affiliate shall also terminate.
<PAGE> 20
16
"Restricted Affiliate Guaranty" has the meaning assigned to
such term in the definition of Restricted Affiliate.
"Revolving Credit Advances" has the meaning assigned to such
term in Section 2.1.
"S&P Bond Rating" means, subject to Section 2.11(a)(ii), (a)
for any day prior to the Ratings Change Date, the rating of EPNGC's
senior long-term unsecured debt by Standard & Poor's Ratings Group in
effect at 11:00 A.M., New York City time, on such day and (b) for any
day that is on or after the Ratings Change Date, the rating of
Holding's senior long-term unsecured debt by Standard & Poor's Ratings
Group in effect at 11:00 A.M., New York City time, on such day.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Company or an ERISA Affiliate and no Person other than
the Company and its ERISA Affiliates or (b) was so maintained and in
respect of which the Company or an ERISA Affiliate could have liability
under Section 4069 of ERISA in the event such plan has been or were to
be terminated.
"Stated Termination Date" means October 28, 1988 or such later
date as shall be determined pursuant to the provisions of Section 2.23
with respect to non-Objecting Lenders.
"Subsidiary" means, as to any Person, any corporation of which
at least a majority of the outstanding stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall or
might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly beneficially owned or controlled
by such Person or one or more of its Subsidiaries or such Person and
one or more of the Subsidiaries of such Person.
"Syndication Agent" has the meaning assigned to such term in
the preamble hereof.
"Taxes" has the meaning assigned to such term in Section
2.20(a).
"Tennessee" has the meaning assigned to such term in the
preamble hereof, and its successors.
"Termination Date" means the earlier of (a) the Stated
Termination Date and (b) the date of termination in whole of the
Commitments pursuant to Section 2.9 or 7.1.
<PAGE> 21
17
"Termination Event" means (a) a "reportable event," as such
term is described in Section 4043 of ERISA (other than a "reportable
event" not subject to the provision for 30-day notice to the PBGC under
subsection .11, .12, .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.
2615), or an event described in Section 4062(e) of ERISA, or (b) the
withdrawal of the Company or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a "substantial
employer," as such term is defined in Section 4001(a)(2) of ERISA or
the incurrence of liability by the Company or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan,
or (c) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate a Plan by the
PBGC under Section 4042 of ERISA, or (e) the conditions set forth in
Section 302(f)(1)(A) and (B) of ERISA to the creation of a lien upon
property or rights to property of the Company or any ERISA Affiliate
for failure to make a required payment to a Plan are satisfied, or (f)
the adoption of an amendment to a Plan requiring the provision of
security to such Plan, pursuant to Section 307 of ERISA, or (g) the
occurrence of any other event or the existence of any other condition
which would reasonably be expected to result in the termination of, or
the appointment of a trustee to administer, any Plan under Section 4042
of ERISA.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate (adjusted to the basis of a year of 365 or 366
days, as the case may be) for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "Board") through the
public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it.
"Type" means (a) as to any Revolving Credit Advance, its
nature as a Base Rate Advance or a Eurodollar Rate Advance and (b) as
to any CAF Advance, its nature as a Fixed Rate CAF Advance or a LIBO
Rate CAF Advance.
"Withdrawal Liability" has the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.
<PAGE> 22
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SECTION I.2 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
SECTION I.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles either (a) consistent with those principles
applied in the preparation of the financial statements referred to in Section
4.1(e) or (b) not materially inconsistent with such principles (so that no
covenant contained in Section 5.1 or 5.2 would be calculated or construed in a
materially different manner or with materially different results than if such
covenant were calculated or construed in accordance with clause (a) of this
Section 1.3).
SECTION I.4 References. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION II.1 The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
revolving credit advances ("Revolving Credit Advances") to the Borrowers or any
one or more of them from time to time on any Business Day during the period from
the date hereof to and including the Termination Date in an aggregate amount not
to exceed at any time outstanding the amount of such Lender's Commitment;
provided that the aggregate amount of the Advances (other than Advances of
Objecting Lenders) outstanding shall not at any time exceed the aggregate amount
of the Commitments. Each Borrowing shall be in an aggregate amount of $5,000,000
in the case of a Borrowing comprised of Base Rate Advances and $20,000,000 in
the case of a Borrowing comprised of Eurodollar Rate Advances, or, in each case,
an integral multiple of $1,000,000 in excess thereof (or, in the case of a
Borrowing of Base Rate Advances, the aggregate unused Commitments, if less) and
shall consist of Revolving Credit Advances of the same Type made on the same day
by the Lenders ratably according to their respective Commitments. Within the
limits of each Lender's Commitment, any Borrower may make more than one
Borrowing on any Business Day and may borrow, repay pursuant to Section 2.10 or
prepay pursuant to Section 2.15, and reborrow under this Section 2.1.
SECTION II.2 Making the Revolving Credit Advances. (a) Each
Borrowing of Revolving Credit Advances shall be made on notice by the Company to
the Administrative Agent (a "Notice of
<PAGE> 23
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Borrowing") received by the Administrative Agent, (i) in the case of a proposed
Borrowing comprised of Base Rate Advances, not later than 10:00 A.M. (New York
City time) on the Business Day of such proposed Borrowing and (ii) in the case
of a proposed Borrowing comprised of Eurodollar Rate Advances, not later than
12:00 noon (New York City time) on the third Business Day prior to the date of
such proposed Borrowing. Each Notice of Borrowing shall be by telecopy or
telephone (and if by telephone, confirmed promptly by telecopier), in
substantially the form of Exhibit B, specifying therein the requested (A)
Borrower, (B) date of such Borrowing, (C) Type of Revolving Credit Advances
comprising such Borrowing, (D) aggregate amount of such Borrowing, and (E) in
the case of a Borrowing comprised of Eurodollar Rate Advances, the initial
Interest Period for each such Advance. Each Lender shall, before 1:00 P.M. (New
York City time) on the date of such Borrowing, make available to the
Administrative Agent at its address at 270 Park Avenue, New York, New York,
10017, Reference: El Paso Natural Gas Company, or at such other address
designated by notice from the Administrative Agent to the Lenders pursuant to
Section 9.2, in same day funds, such Lender's ratable portion of such Borrowing.
Immediately after the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the applicable Borrower
at Chase, 270 Park Avenue, New York, New York, 10017, Account No. 323291503,
Reference: El Paso Natural Gas Company, or at such other account of the
applicable Borrower maintained by the Administrative Agent (or any successor
Administrative Agent) designated by the applicable Borrower and agreed to by the
Administrative Agent (or such successor Administrative Agent), in same day
funds.
(b) Each Notice of Borrowing shall be irrevocable and binding
on the applicable Borrower. In the case of any Borrowing which the related
Notice of Borrowing specified is to be comprised of Eurodollar Rate Advances, if
such Advances are not made as a result of any failure to fulfill on or before
the date specified for such Borrowing the applicable conditions set forth in
Article III, the applicable Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of such failure,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing.
(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.2 and the Administrative Agent
may, in reliance upon such assumption, make available to the applicable Borrower
on such date a corresponding amount. If and to the extent such Lender
<PAGE> 24
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shall not have so made such ratable portion available to the Administrative
Agent, such Lender and the applicable Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the applicable Borrower until the date such amount is repaid to the
Administrative Agent, at the Effective Federal Funds Rate for such day. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Advance to the applicable
Borrower as part of such Borrowing for purposes of this Agreement.
(d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION II.3 Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of each Borrower to such Lender resulting from each Revolving
Credit Advance of such Lender to such Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time in respect of such Revolving Credit Advance.
(b) The Administrative Agent shall maintain the Register
pursuant to Section 9.7(c), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Revolving Credit Advance made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from each Borrower on account of such Revolving Credit Advance to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from each Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the Revolving
Credit Advances made to each such Borrower by such Lender in accordance with the
terms of this Agreement.
(d) Each Borrower agrees that, upon the request to the
Administrative Agent by any Lender, such Borrower will execute and deliver to
such Lender a promissory note of such Borrower evidencing the Revolving Credit
Advances of such Lender to such Borrower, substantially in the form of Exhibit A
with appropriate
<PAGE> 25
21
insertions as to date and principal amount (a "Note").
SECTION II.4 CAF Advances. Subject to the terms and conditions
of this Agreement, the Borrowers or any one or more of them may borrow CAF
Advances from time to time during the CAF Advance Availability Period on any
Business Day. The Company shall, in consultation with the CAF Advance Agent,
designate Lenders from time to time as CAF Advance Lenders by written notice to
the CAF Advance Agent. The CAF Advance Agent shall transmit each such notice of
designation promptly to each designated CAF Advance Lender. CAF Advances shall
be borrowed in amounts such that the aggregate amount of Advances outstanding at
any time shall not exceed the aggregate amount of the Commitments at such time.
Any CAF Advance Lender may make CAF Advances in amounts which, individually and
together with the aggregate amount of other Advances of such CAF Advance Lender,
exceed such CAF Advance Lender's Commitment, and such CAF Advance Lender's CAF
Advances shall not be deemed to utilize such CAF Advance Lender's Commitment.
Within the limits and on the conditions hereinafter set forth with respect to
CAF Advances, the Borrowers from time to time may borrow, repay and reborrow CAF
Advances.
SECTION II.5 Procedure for CAF Advance Borrowings. (a) A
Borrower, or the Company on behalf of a Borrower, shall request CAF Advances by
delivering a CAF Advance Request to the CAF Advance Agent, not later than 12:00
Noon (New York City time) four Business Days prior to the date of the proposed
Borrowing (in the case of a LIBO Rate CAF Advance Request), and not later than
10:00 A.M. (New York City time) one Business Day prior to the date of the
proposed Borrowing (in the case of a Fixed Rate CAF Advance Request). Each CAF
Advance Request may solicit bids for CAF Advances in an aggregate principal
amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and having not more than five alternative maturity dates. The maturity date for
each CAF Advance shall be not less than 7 days nor more than 360 days after the
date of the Borrowing therefor (and in any event shall be not later than the
Stated Termination Date); provided that each LIBO Rate CAF Advance shall mature
one, two, three or six months or, if available, nine [or twelve] months after
the date of the Borrowing therefor. The CAF Advance Agent shall notify each CAF
Advance Lender promptly by telecopy of the contents of each CAF Advance Request
received by the CAF Advance Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at the Applicable LIBO Rate plus
(or minus) a margin determined by such CAF Advance Lender in its sole discretion
for each such CAF Advance. Any such irrevocable offer shall be made by
delivering a CAF Advance Offer to the CAF Advance Agent, before 10:30 A.M. (New
York City time) on the day that is three Business Days before the date of the
proposed Borrowing, setting forth:
<PAGE> 26
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(i) the maximum amount of CAF Advances for each maturity date
and the aggregate maximum amount of CAF Advances for all maturity dates
which such CAF Advance Lender would be willing to make (which amounts
may, subject to Section 2.4, exceed such CAF Advance Lender's
Commitment); and
(ii) the margin above or below the Applicable LIBO Rate at
which such CAF Advance Lender is willing to make each such CAF Advance.
The CAF Advance Agent shall advise the Company and the applicable Borrower
before 11:00 A.M. (New York City time) on the date which is three Business Days
before the proposed date of the Borrowing of the contents of each such CAF
Advance Offer received by it. If the CAF Advance Agent, in its capacity as a CAF
Advance Lender, shall elect, in its sole discretion, to make any such CAF
Advance Offer, it shall advise the Company and the applicable Borrower of the
contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on the
date which is three Business Days before the proposed date of the Borrowing.
(c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at a rate of interest determined by
such CAF Advance Lender in its sole discretion for each such CAF Advance. Any
such irrevocable offer shall be made by delivering a CAF Advance Offer to the
CAF Advance Agent before 9:30 A.M. (New York City time) on the proposed date of
the Borrowing, setting forth:
(i) the maximum amount of CAF Advances for each maturity date,
and the aggregate maximum amount for all maturity dates, which such CAF
Advance Lender would be willing to make (which amounts may, subject to
Section 2.4, exceed such CAF Advance Lender's Commitment); and
(ii) the rate of interest at which such CAF Advance Lender is
willing to make each such CAF Advance.
The CAF Advance Agent shall advise the Company and the applicable Borrower
before 10:00 A.M. (New York City time) on the proposed date of the Borrowing of
the contents of each such CAF Advance Offer received by it. If the CAF Advance
Agent, in its capacity as a CAF Advance Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Company and
the applicable Borrower of the contents of its CAF Advance Offer before 9:15
A.M. (New York City time) on the proposed date of the Borrowing.
(d) Before 11:30 A.M. (New York City time) three Business Days
before the proposed date of the Borrowing (in the case of CAF Advances requested
by a LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time)
on the proposed date of the Borrowing (in the case of CAF Advances
<PAGE> 27
23
requested by a Fixed Rate CAF Advance Request), the Company, in its absolute
discretion, shall:
(i) cancel such CAF Advance Request by giving the CAF Advance
Agent telephone notice to that effect, or
(ii) by giving telephone notice to the CAF Advance Agent
(immediately confirmed by delivery to the CAF Advance Agent of a CAF
Advance Confirmation in writing or by telecopy) (A) subject to the
provisions of Section 2.5(e), accept one or more of the offers made by
any CAF Advance Lender or CAF Advance Lenders pursuant to Section
2.5(b) or Section 2.5(c), as the case may be, of the amount of CAF
Advances for each relevant maturity date and (B) reject any remaining
offers made by CAF Advance Lenders pursuant to Section 2.5(b) or
Section 2.5(c), as the case may be.
(e) The Company's acceptance of CAF Advances in response to
any CAF Advance Request shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each maturity date
specified by any CAF Advance Lender in its CAF Advance Offer shall not
exceed the maximum amount for such maturity date specified in such CAF
Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all
maturity dates specified by any CAF Advance Lender in its CAF Advance
Offer shall not exceed the aggregate maximum amount specified in such
CAF Advance Offer for all such maturity dates;
(iii) the Company may not accept offers for CAF Advances for
any maturity date in an aggregate principal amount in excess of the
maximum principal amount requested in the related CAF Advance Request;
and
(iv) if the Company accepts any of such offers, it must accept
offers based solely upon pricing for such relevant maturity date and
upon no other criteria whatsoever and if two or more CAF Advance
Lenders submit offers for any maturity date at identical pricing and
the Company accepts any of such offers but does not wish to (or by
reason of the limitations set forth in Section 2.4 or in Section
2.5(e)(iii), cannot) borrow the total amount offered by such CAF
Advance Lenders with such identical pricing, the Company shall accept
offers from all of such CAF Advance Lenders in amounts allocated among
them pro rata according to the amounts offered by such CAF Advance
Lenders (or as nearly pro rata as shall be practicable after giving
effect to the requirement that CAF Advances made by a CAF Advance
Lender on a date of the Borrowing for each relevant maturity date shall
be in a principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof; provided that if the number of CAF
Advance Lenders that submit offers for any maturity date at identical
pricing is such that, after the
<PAGE> 28
24
Company accepts such offers pro rata in accordance with the foregoing,
the CAF Advance to be made by such CAF Advance Lenders would be less
than $5,000,000 principal amount, the number of such CAF Advance
Lenders shall be reduced by the CAF Advance Agent by lot until the CAF
Advances to be made by such remaining CAF Advance Lenders would be in
a principal amount of $5,000,000 or an integral multiple of $1,000,000
in excess thereof).
(f) If the Company notifies the CAF Advance Agent that a CAF
Advance Request is cancelled pursuant to Section 2.5(d)(i), the CAF Advance
Agent shall give prompt telephone notice thereof to the CAF Advance Lenders.
(g) If the Company accepts pursuant to Section 2.5(d)(ii) one
or more of the offers made by any CAF Advance Lender or CAF Advance Lenders, the
CAF Advance Agent promptly shall notify each CAF Advance Lender which has made
such a CAF Advance Offer of (i) the aggregate amount of such CAF Advances to be
made on such Borrowing Date for each maturity date and (ii) the acceptance or
rejection of any offers to make such CAF Advances made by such CAF Advance
Lender. Before 1:00 P.M. (New York City time) on the date of the Borrowing
specified in the applicable CAF Advance Request, each CAF Advance Lender whose
CAF Advance Offer has been accepted shall make available to the Administrative
Agent at its office set forth in Section 9.2 the amount of CAF Advances to be
made by such CAF Advance Lender, in same day funds. The Administrative Agent
will make such funds available to the applicable Borrower as soon as practicable
on such date at the Administrative Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the CAF Advance Agent shall notify each
Lender of the aggregate amount of CAF Advances advanced on such Borrowing Date
and the respective maturity dates thereof.
(h) The failure of any CAF Advance Lender to make the CAF
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its CAF Advance on the date
of such Borrowing, but no CAF Lender shall be responsible for the failure of any
other CAF Advance Lender to make the CAF Advance to be made by such CAF Advance
Lender on the date of any Borrowing.
(i) A CAF Advance Request may request offers for CAF Advances
to be made on not more than one Borrowing Date and to mature on not more than
five CAF Advance Maturity Dates. No CAF Advance Request may be submitted earlier
than five Business Days after submission of any other CAF Advance Request.
SECTION II.6 CAF Advance Payments. (a) The applicable Borrower
shall repay to the Administrative Agent, for the account of each CAF Advance
Lender which has made a CAF Advance to it, on the applicable CAF Advance
Maturity Date the then unpaid principal amount of such CAF Advance. The
Borrowers shall not have the right to prepay any principal amount of any CAF
Advance.
<PAGE> 29
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(b) The applicable Borrower shall pay interest on the unpaid
principal amount of each CAF Advance to it from the date of the Borrowing to the
applicable CAF Advance Maturity Date at the rate of interest specified in the
CAF Advance Offer accepted by the applicable Borrower in connection with such
CAF Advance (calculated on the basis of a 360-day year for actual days elapsed),
payable on each applicable CAF Advance Interest Payment Date.
(c) If all or a portion of the principal amount of any CAF
Advance shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Lender under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 1% above the
rate which would otherwise be applicable pursuant to such CAF Advance until the
stated maturity date of such CAF Advance, and for each day thereafter at a rate
per annum which is 2% above the Base Rate, in each case until paid in full (as
well after as before judgment). Interest accruing pursuant to this paragraph (c)
shall be payable from time to time on demand.
SECTION II.7 Evidence of Debt. Each Lender shall maintain in
accordance with its usual practice appropriate records evidencing indebtedness
of each Borrower to such Lender resulting from each CAF Advance of such Lender
to such Borrower from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time in respect of such
CAF Advance. The Administrative Agent shall maintain the Register pursuant to
Section 9.7(c) and a record therein for each Lender, in which shall be recorded
(i) the amount of each CAF Advance made by such Lender to each Borrower, the CAF
Advance Maturity Date thereof, the interest rate applicable thereto and each CAF
Advance Interest Payment Date applicable thereto, and (ii) the amount of any sum
received by the Administrative Agent hereunder from a Borrower on account of
such CAF Advance. The entries made in the Register and the records of each
Lender maintained pursuant to this Section 2.7 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such record, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the CAF Advances
made by such Lender in accordance with the terms of this Agreement.
SECTION II.8 Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a facility fee for the
period from and including the Facility Fee Commencement Date until all Advances
have been paid in full and all Commitments have been terminated, computed at a
variable rate per annum on the average daily amount of the greater of (i) the
Commitment of such Lender and (ii) the outstanding principal amount of Revolving
Credit Advances of such Lender during the
<PAGE> 30
26
period for which payment is made, which rate will vary according to the S&P Bond
Rating and the Moody's Bond Rating as follows:
<TABLE>
<CAPTION>
Bond Rating Facility
(S&P/Moody's) Level Fee Rate
------------- ----- --------
<S> <C> <C>
A/A2 or higher I .04%
A-/A3 II .05%
BBB+/Baa1 III .07%
BBB/Baa2 IV .09%
BBB-/Baa3 V .10%
BB+/Ba1 or lower VI .15%;
</TABLE>
provided that if the ratings of such rating agencies do not fall within the same
Level, the rate applicable to such day will be the lower facility fee rate and
provided, further, that in the event a rating is not available from either
rating agency, such rating agency will be deemed to have assigned its lowest
rating. Such facility fees shall be payable quarterly in arrears on the last day
of each March, June, September and December and on the Termination Date or such
earlier date on which the Commitments shall terminate as provided herein, and,
if the Lender is an Objecting Lender, on the Commitment Expiration Date
applicable to such Lender and on the second anniversary of the Termination Date
(or if the Lender is an Objecting Lender, the second anniversary of the
Commitment Expiration Date applicable to such Lender) or such earlier date on
which the Advances are repaid in full, commencing on the first of such dates to
occur after the date hereof.
(b) The Company agrees to pay to Chase Securities Inc., the
Administrative Agent and the CAF Advance Agent the fees set forth in the letter,
dated October 6, 1997, from Chase Securities Inc. and Chase to EPNGC.
SECTION II.9 Reduction of the Commitments. The Company shall
have the right, upon at least three Business Days' notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $10,000,000 or any whole multiple of
$1,000,000 in excess thereof.
SECTION II.10 Repayment of Advances. The Borrowers shall repay
to each Lender on the second anniversary of the Termination Date the aggregate
principal amount of the Advances then owing to such Lender; provided that the
Revolving Credit Advances made by Objecting Lenders shall be repaid as provided
in Section 2.23.
SECTION II.11 Interest on Revolving Credit Advances. (a)
Ordinary Interest. The Borrowers shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Advance until such principal amount is due (whether at stated maturity, by
acceleration or otherwise), at the following rates:
<PAGE> 31
27
(i) Base Rate Advances. During such periods as such
Advance is a Base Rate Advance, a rate per annum equal at all times to
the Base Rate in effect from time to time, payable quarterly in arrears
on the last day of each March, June, September and December during such
periods and on the date such Base Rate Advance shall be Converted or
due (whether at stated maturity, by acceleration or otherwise).
(ii) Eurodollar Rate Advances. During such periods as
such Advance is a Eurodollar Rate Advance, at a rate per annum equal at
all times during each Interest Period for such Advance to the sum of
the Eurodollar Rate for such Interest Period plus the Eurodollar Rate
Margin (provided that notwithstanding the definitions of Moody's Bond
Rating and S&P Bond Rating, in the case of Eurodollar Rate Advances to
EPNGC and its Subsidiaries, whether before, on or after the Ratings
Change Date, the Eurodollar Rate Margin shall be based on the Moody's
Bond Rating and S&P Bond Rating of EPNGC, and, in the case of all other
Borrowers, shall be based on the Moody's Bond Rating and S&P Bond
Rating of Holding) in effect from time to time, payable on the last day
of each such Interest Period and, if any such Interest Period has a
duration of more than three months, on each day which occurs during
such Interest Period every three months from the first day of such
Interest Period, and on the date such Advance shall be Converted or due
(whether at stated maturity, by acceleration or otherwise).
(b) Default Interest. The applicable Borrower shall pay
interest on the unpaid principal amount of each Revolving Credit Advance to it
that is not paid when due (whether at stated maturity, by acceleration or
otherwise) from the date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal at all times (i) from such
due date to the last day of the then existing Interest Period in the case of
each Eurodollar Rate Advance, to 1% per annum above the interest rate per annum
required to be paid on such Advance immediately prior to the date on which such
amount became due, and (ii) from and after the last day of the then existing
Interest Period, and at all times in the case of any Base Rate Advance, to 1%
per annum above the Base Rate in effect from time to time.
SECTION II.12 Additional Interest on Eurodollar Rate Advances.
If any Lender shall determine in good faith that reserves under regulations of
the Board of Governors of the Federal Reserve System are required to be
maintained by it in respect of, or a portion of its costs of maintaining
reserves under such regulations is properly attributable to, one or more of its
Eurodollar Rate Advances, the applicable Borrower shall pay to such Lender
additional interest on the unpaid principal amount of each such Eurodollar Rate
Advance to it (other than any such additional interest accruing to a particular
Lender in respect of periods prior to the 30th day preceding the date
<PAGE> 32
28
notice of such interest is given by such Lender as provided in this Section
2.12), payable on the same day or days on which interest is payable on such
Advance, at an interest rate per annum equal at all times during each Interest
Period for such Advance to the excess of (i) the rate obtained by dividing the
Eurodollar Rate for such Interest Period by a percentage equal to 100% minus the
Eurodollar Reserve Percentage, if any, for such Lender for such Interest Period
over (ii) the Eurodollar Rate for such Interest Period. The amount of such
additional interest (if any) shall be determined by each Lender, and such Lender
shall furnish written notice of the amount of such additional interest to the
Company and the Administrative Agent, which notice shall be conclusive and
binding for all purposes, absent manifest error.
SECTION II.13 Interest Rate Determination. (a) Each Reference
Lender agrees to furnish to the Administrative Agent timely information for the
purpose of determining the Eurodollar Rate. If any one or more of the Reference
Lenders shall not furnish such timely information to the Administrative Agent
for the purpose of determining any such interest rate, the Administrative Agent
shall determine such interest rate on the basis of timely information furnished
by the remaining Reference Lenders.
(b) The Administrative Agent shall give prompt notice to the
Company and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.11(a)(i) or (ii), and the
applicable rate, if any, furnished by each Reference Lender for the purpose of
determining the applicable interest rate under Section 2.11(a)(ii).
(c) If fewer than two Reference Lenders furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,
(i) the Administrative Agent shall give the Company and
each Lender prompt notice thereof by telephone (confirmed in writing)
that the interest rate cannot be determined for such Eurodollar Rate
Advances,
(ii) each such Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance (or if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and
(iii) the obligations of the Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Administrative Agent shall notify the Company and the Lenders
that the circumstances causing such suspension no longer exist.
(d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders determine and give notice to the Administrative Agent that, as
a result of conditions in or
<PAGE> 33
29
generally affecting the London interbank eurodollar market, the rates of
interest determined on the basis of the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Majority Lenders
of making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Company and the Lenders, whereupon,
(i) each such Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and
(ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Company and the Lenders that the
circumstances causing such suspension no longer exist.
(e) If the applicable Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" in Section
1.1, the Administrative Agent will forthwith so notify the applicable Borrower
and the Lenders and such Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Advances.
(f) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Eurodollar Rate Advances shall automatically Convert into Base Rate Advances,
and on and after such date the right of the applicable Borrower to Convert such
Advances into Eurodollar Rate Advances shall terminate; provided, however, that
if and so long as each such Eurodollar Rate Advance shall have the same Interest
Period as Eurodollar Rate Advances comprising another Borrowing or other
Borrowings, and the aggregate unpaid principal amount of all such Eurodollar
Rate Advances shall equal or exceed $20,000,000, the applicable Borrower shall
have the right to continue all such Advances as, or to Convert all such Advances
into Eurodollar Rate Advances having the same Interest Period.
(g) If any Reference Lender shall for any reason no longer
have a Commitment or any Revolving Credit Advances, such Reference Lender shall
thereupon cease to be a Reference Lender, and if, as a result, there shall only
be one Reference Lender remaining, the Administrative Agent (after consultation
with the Company and the Lenders) shall, by notice to the Company and the
Lenders, designate another Lender as a Reference Lender so that there shall at
all times be at least two Reference Lenders.
SECTION II.14 Voluntary Conversion of Advances. Any Borrower
may on any Business Day, upon notice given to the Administrative Agent, not
later than 10:00 A.M. (New York City time) on the Business Day of the proposed
Conversion of
<PAGE> 34
30
Eurodollar Rate Advances to Base Rate Advances and not later than 12:00 noon
(New York City time) on the third Business Day prior to the date of the proposed
Conversion in the case of a Conversion of Base Rate Advances to Eurodollar Rate
Advances, and subject to the provisions of Sections 2.13, 2.16 and 2.18, Convert
all Advances of one Type comprising the same Borrowing into Advances of another
Type; provided, however, that any Conversion of any Eurodollar Rate Advances
into Base Rate Advances made on any day other than the last day of an Interest
Period for such Eurodollar Rate Advances shall be subject to the provisions of
Section 9.4(b); and provided, further, that no Revolving Credit Advance may be
converted into a Eurodollar Rate Advance after the date that is one month prior
to (a) in the case of a Revolving Credit Advance made by an Objecting Lender,
the second anniversary of such Objecting Lender's Commitment Expiration Date,
and (b) in the case of all Revolving Credit Advances, the second anniversary of
the Termination Date and provided, still further, that no Revolving Credit
Advance may be converted into a Eurodollar Rate Advance if an Event of Default
has occurred and is continuing. Each such notice of a Conversion shall, within
the restrictions specified above, specify (a) the date of such Conversion, (b)
the Advances to be Converted, and (c) if such Conversion is into Eurodollar Rate
Advances, the duration of the Interest Period for each such Advance.
SECTION II.15 Optional and Mandatory Prepayments. (a) Optional
Prepayments. Any Borrower may upon (i) in the case of Eurodollar Rate Advances,
at least two Business Days' notice and (ii) in the case of Base Rate Advances,
telephonic notice not later than 12:00 noon (New York City time) on the date of
prepayment, to the Administrative Agent which specifies the proposed date and
aggregate principal amount of the prepayment and the Type of Advances to be
prepaid, and if such notice is given such Borrower shall, prepay the outstanding
principal amounts of the Revolving Credit Advances comprising the same Borrowing
in whole or ratably in part, together with accrued interest to the date of such
prepayment on the amount prepaid; provided, however, that (A) each partial
prepayment shall be in an aggregate principal amount not less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof and (B) in the event of
any such prepayment of Eurodollar Rate Advances on any day other than the last
day of an Interest Period for such Eurodollar Rate Advances, such Borrower shall
be obligated to reimburse the Lenders in respect thereof pursuant to, and to the
extent required by, Section 9.4(b); provided, further, however, that such
Borrower will use its best efforts to give notice to the Administrative Agent of
the proposed prepayment of Base Rate Advances on the Business Day prior to the
date of such proposed prepayment.
(b) Mandatory Prepayments. If, at any time and from time to
time, the aggregate principal amount of Advances (other than Advances of
Objecting Lenders) then outstanding exceeds the Commitments of all the Lenders
after giving effect to any reduction of the Commitments pursuant to Section 2.9,
the Borrowers shall immediately prepay the Revolving Credit Advances
<PAGE> 35
31
of Lenders (other than Objecting Lenders) (to the extent there are such
outstanding Revolving Credit Advances) by an amount equal to such excess.
SECTION II.16 Increased Costs. (a) If, due to either (i) the
introduction after the date of this Agreement of or any change after the date of
this Agreement (including any change by way of imposition or increase of reserve
requirements or assessments other than those referred to in the definition of
"Eurodollar Reserve Percentage," "C/D Reserve Percentage" or "C/D Assessment
Rate" contained in Section 1.1) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request issued or made
after the date of this Agreement from or by any central bank or other
governmental authority (whether or not having the force of law), in each case
above other than those referred to in Section 2.17, there shall be any increase
in the cost to any Lender of agreeing to make, fund or maintain, or of making,
funding or maintaining, Eurodollar Rate Advances funded in the interbank
Eurodollar market, then the Borrowers shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to reimburse such Lender for all such increased costs (except those
costs incurred more than 60 days prior to the date of such demand; for the
purposes hereof any cost or expense allocable to a period prior to the
publication or effective date of such an introduction, change, guideline or
request shall be deemed to be incurred on the later of such publication or
effective date). Each Lender agrees to use its best efforts promptly to notify
the Company of any event referred to in clause (i) or (ii) above, provided that
the failure to give such notice shall not affect the rights of any Lender under
this Section 2.16(a) (except as otherwise expressly provided above in this
Section 2.16(a)). A certificate as to the amount of such increased cost,
submitted to the Company and the Administrative Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error. After one or
more Lenders have notified the Company of any increased costs pursuant to this
Section 2.16, the Company may specify by notice to the Administrative Agent and
the affected Lenders that, after the date of such notice whenever the election
of Eurodollar Rate Advances by the applicable Borrower for an Interest Period or
portion thereof would give rise to such increased costs, such election shall not
apply to the Revolving Credit Advances of such Lenders during such Interest
Period or portion thereof, and, in lieu thereof, such Revolving Credit Advances
shall during such Interest Period or portion thereof be Base Rate Advances. Each
Lender agrees to use its best efforts (including, without limitation, a
reasonable effort to change its lending office or to transfer its affected
Advances to an affiliate of such Lender) to avoid, or minimize the amount of,
any demand for payment from the Borrowers under this Section 2.16.
(b) In the event that any Lender shall change its lending
office and such change results (at the time of such change) in increased costs
to such Lender, the Borrowers shall
<PAGE> 36
32
not be liable to such Lender for such increased costs incurred by such Lender to
the extent, but only to the extent, that such increased costs shall exceed the
increased costs which such Lender would have incurred if the lending office of
such Lender had not been so changed, but, subject to subsection (a) above and to
Section 2.18, nothing herein shall require any Lender to change its lending
office for any reason.
SECTION II.17 Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of any law or
regulation or (b) compliance by any Lender with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and
such Lender determines that the amount of such capital is increased by or based
upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, within ten days after demand, and delivery to
the Company of the certificate referred to in the last sentence of this Section
2.17 by such Lender (with a copy of such demand to the Administrative Agent),
the applicable Borrowers shall pay to the Administrative Agent for the account
of such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender or such corporation in the light of
such circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder (except any such increase in capital incurred more than, or
compensation attributable to the period before, 90 days prior to the date of
such demand; for the purposes hereof any increase in capital allocable to, or
compensation attributable to, a period prior to the publication or effective
date of such an introduction, change, guideline or request shall be deemed to be
incurred on the later of such publication or effective date). Each Lender agrees
to use its best efforts promptly to notify the Company of any event referred to
in clause (a) or (b) above, provided that the failure to give such notice shall
not affect the rights of any Lender under this Section 2.17 (except as otherwise
expressly provided above in this Section 2.17). A certificate in reasonable
detail as to the basis for, and the amount of, such compensation submitted to
the Company by such Lender shall, in the absence of manifest error, be
conclusive and binding for all purposes.
SECTION II.18 Illegality. Notwithstanding any other provision
of this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority shall assert that it is unlawful, for any
Lender or its lending office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Company and the Administrative
Agent, suspend the right of the Borrowers to elect Eurodollar Rate Advances from
such Lender and, if necessary in the reasonable opinion of such Lender to comply
with such law or
<PAGE> 37
33
regulation, Convert all such Eurodollar Rate Advances of such Lender to Base
Rate Advances at the latest time permitted by the applicable law or regulation,
and such suspension and, if applicable, such Conversion shall continue until
such Lender notifies the Company and the Administrative Agent that the
circumstances making it unlawful for such Lender to perform such obligations no
longer exist (which such Lender shall promptly do when such circumstances no
longer exist). So long as the obligation of any Lender to make Eurodollar Rate
Advances has been suspended under this Section 2.18, all Notices of Borrowing
specifying Advances of such Type shall be deemed, as to such Lender, to be
requests for Base Rate Advances. Each Lender agrees to use its best efforts
(including, without limitation, a reasonable effort to change its lending office
or to transfer its affected Advances to an affiliate) to avoid any such
illegality.
SECTION II.19 Pro Rata Treatment, Payments and Computations.
(a) Each Borrowing by any Borrower in respect of Revolving Credit Advances
(subject to the provisions of Section 2.24(e)) shall be made pro rata according
to the respective Commitment Percentages of the Lenders. The Borrowers shall
make each payment hereunder (including, without limitation, under Section 2.6,
2.8, 2.10 or 2.11) and under the Notes, whether the amount so paid is owing to
any or all of the Lenders or to the Administrative Agent, not later than 12:00
noon (New York City time) without setoff, counterclaim, or any other deduction
whatsoever, on the day when due in Dollars to the Administrative Agent at its
address at 270 Park Avenue, New York, New York 10017, Reference: El Paso Natural
Gas Company, or at such other location designated by notice to the Company from
the Administrative Agent and agreed to by the Company, in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or facility fees ratably (other
than amounts payable pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20)
according to the respective amounts of such principal, interest or facility fees
then due and owing to the Lenders, and like funds relating to the payment of any
other amount payable to any Lender to such Lender, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.7(d), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Prime Rate and
of facility fees shall be made by the Administrative Agent on the basis of a
year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate, the Base CD Rate or the Effective Federal Funds
Rate shall be made by the Administrative Agent, and all computations of
<PAGE> 38
34
interest pursuant to Section 2.12 shall be made by each Lender with respect to
its own Advances, on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Administrative Agent (or, in the case of Section 2.12,
2.16, 2.17, 2.18 or 2.20, by each Lender with respect to its own Advances) of an
interest rate or an increased cost or increased capital or of illegality
hereunder shall be conclusive and binding for all purposes if made reasonably
and in good faith.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest; provided, however,
if such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(d) Unless the Administrative Agent shall have received notice
from the Company or any other applicable Borrower prior to the date on which any
payment is due to the Lenders hereunder that the applicable Borrower will not
make such payment in full, the Administrative Agent may assume that the
applicable Borrower has made such payment in full to the Administrative Agent on
such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the applicable Borrower shall
not have so made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent, at a rate equal to the Effective
Federal Funds Rate for such day.
SECTION II.20 Taxes. (a) Any and all payments by the Borrowers
hereunder or under the Notes to each Indemnified Party shall be made, in
accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed by the jurisdiction under the laws of which such
Indemnified Party is organized, domiciled, resident or doing business, or any
political subdivision thereof or by any jurisdiction in which such Indemnified
Party holds any interest in connection with this Agreement or any Note
(including, without limitation, in the case of each Lender, the jurisdiction of
such Lender's lending office) or any political subdivision thereof, other than
by any jurisdiction with which the Indemnified Party's connection arises solely
from having executed, delivered or performed obligations
<PAGE> 39
35
or received a payment under, or enforced, this Agreement or any Note (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Indemnified Party, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20) such Indemnified Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make or
cause to be made such deductions and (iii) such Borrower shall pay or cause to
be paid the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law, provided that the Borrowers shall
not be required to pay any additional amount (and shall be relieved of any
liability with respect thereto) pursuant to this subsection (a) to any
Indemnified Party that either (A) on the date such Lender became an Indemnified
Party hereunder, (I) was not entitled to submit a U.S. Internal Revenue Service
form 1001 (relating to such Indemnified Party, and entitling it to a complete
exemption from United States withholding taxes on all amounts to be received by
such Indemnified Party pursuant to this Agreement) and a U.S. Internal Revenue
Service form 4224 (relating to all amounts to be received by such Indemnified
Party pursuant to this Agreement) and (II) was not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) or (B)
has failed to submit any form or certificate that it was required to file or
provide pursuant to subsection (d) of this Section 2.20 and is entitled to file
or give, as applicable, under applicable law, provided, further, that should an
Indemnified Party become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrowers shall take such steps as such Indemnified
Party shall reasonably request to assist such Indemnified Party to recover such
Taxes, and provided, further, that each Indemnified Party, with respect to
itself, agrees to indemnify and hold harmless the Borrowers from any taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrowers as a result of the failure of any of the Borrowers to comply with
its obligations under clause (ii) or (iii) above in reliance on any form or
certificate provided to it by such Indemnified Party pursuant to this Section
2.20. If any Indemnified Party receives a net credit or refund in respect of
such Taxes or amounts so paid by the Borrowers, it shall promptly notify the
Company of such net credit or refund and shall promptly pay such net credit or
refund to the applicable Borrower, provided that the applicable Borrower agrees
to return such net credit or refund if the Indemnified Party to which such net
credit or refund is applicable is required to repay it.
(b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by such Borrower hereunder
or under the Notes or from the execution, delivery or performance of, or
otherwise with
<PAGE> 40
36
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) Each Borrower will indemnify each Indemnified Party and
the Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.20) paid by such Indemnified Party and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto except as a result of the gross negligence (which shall in any
event include the failure of such Indemnified Party to provide to the Borrowers
any form or certificate that it was required to provide pursuant to subsection
(d) below) or willful misconduct of such Indemnified Party, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This indemnification
shall be made within 30 days from the date such Indemnified Party makes written
demand therefor.
(d) On or prior to the date on which each Indemnified Party
organized under the laws of a jurisdiction outside the United States becomes an
Indemnified Party hereunder, such Indemnified Party shall provide the Company
with U.S. Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the U.S. Internal Revenue Service, certifying that
such Indemnified Party is fully exempt from United States withholding taxes with
respect to all payments to be made to such Indemnified Party hereunder, or other
documents satisfactory to the Company indicating that all payments to be made to
such Indemnified Party hereunder are fully exempt from such taxes. Thereafter
and from time to time (but only so long as such Indemnified Party remains
lawfully able to do so), each such Indemnified Party shall submit to the Company
such additional duly completed and signed copies of one or the other of such
Forms (or such successor Forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by any
Borrower to such Indemnified Party and (ii) required under then-current United
States law or regulations to avoid United States withholding taxes on payments
in respect of all amounts to be received by such Indemnified Party pursuant to
this Agreement or the Notes. Upon the request of any Borrower from time to time,
each Indemnified Party that is a United States person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the Company
a certificate to the effect that it is such a United States person. If any
Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Company any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Company of such fact.
(e) Any Indemnified Party claiming any additional amounts
payable pursuant to this Section 2.20 shall use its best
<PAGE> 41
37
efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its lending office if the making of
such a change would avoid the need for, or reduce the amount of, any such
additional amounts which may thereafter accrue and would not, in the reasonable
judgment of such Indemnified Party, be otherwise disadvantageous to such
Indemnified Party.
(f) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers and
each Indemnified Party contained in this Section 2.20 shall survive the payment
in full of principal and interest hereunder and under the Notes.
(g) Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by any Borrower under this
Section 2.20 shall not be payable under Section 2.16.
SECTION II.21 Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20) in excess of its
ratable share of payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (a) the amount of
such Lender's required repayment to (b) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.
SECTION II.22 Use of Proceeds. Proceeds of the Advances may be
used for general corporate purposes of the Borrowers and their respective
Subsidiaries, including, without limitation, for acquisitions and for payment of
commercial paper issued by the Borrowers and to refinance the loans under the
Existing Facilities.
SECTION II.23 Extension of Stated Termination Date. (a) Not
less than 45 days and not more than 60 days prior to the Stated Termination Date
then in effect, provided that no Event of Default shall have occurred and be
continuing, the Company may
<PAGE> 42
38
request an extension of such Stated Termination Date by submitting to the
Administrative Agent an Extension Request containing the information in respect
of such extension specified in Exhibit M, which the Administrative Agent shall
promptly furnish to each Lender. Each Lender shall, not less than 30 days and
not more than 60 days prior to the Stated Termination Date then in effect,
notify the Company and the Administrative Agent of its election to extend or not
extend the Stated Termination Date as requested in such Extension Request.
Notwithstanding any provision of this Agreement to the contrary, any notice by
any Lender of its willingness to extend the Stated Termination Date shall be
revocable by such Lender in its sole and absolute discretion at any time prior
to the date which is 30 days prior to the Stated Termination Date then in
effect. If the Required Lenders shall approve in writing the extension of the
Stated Termination Date requested in such Extension Request, the Stated
Termination Date shall automatically and without any further action by any
Person be extended for the period specified in such Extension Request; provided
that (i) each extension pursuant to this Section 2.23 shall be for a maximum of
364 days and (ii) the Commitment of any Lender that does not consent in writing,
or which revokes, in accordance with the provisions of this Section 2.23, its
consent to such extension not less than 30 days and not more than 60 days prior
to the Stated Termination Date then in effect and has not thereafter reinstated
its consent (an "Objecting Lender") shall, unless earlier terminated in
accordance with this Agreement, expire on the Stated Termination Date in effect
on the date of such Extension Request (such Stated Termination Date, if any,
referred to as the "Commitment Expiration Date" with respect to such Objecting
Lender). If, not less than 30 days and not more than 60 days prior to the Stated
Termination Date then in effect, the Required Lenders shall not approve in
writing the extension of the Stated Termination Date requested in an Extension
Request, the Stated Termination Date shall not be extended pursuant to such
Extension Request. The Administrative Agent shall promptly notify (y) the
Lenders and the Company of any extension of the Stated Termination Date pursuant
to this Section 2.23 and (z) the Company and the Lenders of any Lender which
becomes an Objecting Lender.
(b) Revolving Credit Advances owing to any Objecting Lender on
the Commitment Expiration Date with respect to such Lender shall be repaid in
full on or before the date that is two years after such Commitment Expiration
Date.
(c) The Borrowers shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Objecting Lenders in accordance with Section 2.15,
to prepay in full the Revolving Credit Advances of the Objecting Lenders,
together with accrued interest thereon, any amounts payable pursuant to Sections
2.11, 2.12, 2.16, 2.17, 2.18, 2.20 and 9.4(b) and any accrued and unpaid
facility fee or other amounts payable to the Objecting Lenders hereunder and/or,
upon giving not less than three Business Days' notice to the Objecting Lenders
and the Administrative Agent, to cancel the whole or part of the
<PAGE> 43
39
Commitments of the Objecting Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes an
Objecting Lender, the Borrower may, at its own expense and in its sole
discretion and prior to the then Stated Termination Date, require such Lender to
transfer or assign, in whole or in part, without recourse (in accordance with
Section 9.7), all or part of its interests, rights and obligations under this
Agreement to an Eligible Assignee (provided that the Borrower, with the full
cooperation of such Lender, can identify an Eligible Assignee that is ready,
willing and able to be an assignee with respect thereto) which shall assume such
assigned obligations (which assignee may be another Lender, if such assignee
Lender accepts such assignment); provided that (A) the assignee or the Borrower,
as the case may be, shall have paid to such Lender in immediately available
funds the principal of and interest accrued to the date of such payment on the
Advances made by it hereunder and all other amounts owed to it hereunder,
including, without limitation, any amounts owing pursuant to Section 9.4(b) and
any amounts that would be owing under said Section if such Advances were prepaid
on the date of such assignment, and (B) such assignment does not conflict with
any law, rule or regulation or order of any governmental authority. Any assignee
which becomes a Lender as a result of such an assignment made pursuant to this
paragraph (d) shall be deemed to have consented to the applicable Extension
Request and, therefore, shall not be an Objecting Lender.
SECTION II.24 Commitment Increases. (a) At any time after the
Closing Date, provided that no Event of Default shall have occurred and be
continuing, the Company may request an increase of the aggregate Commitments by
notice to the Administrative Agent in writing of the amount (the "Offered
Increase Amount") of such proposed increase (such notice, a "Commitment Increase
Notice"), provided that the first such increase shall be in an amount equal to
at least $93,750,000 and the second such increase shall be in an amount equal to
$187,500,000 less the amount of the first such increase. Any such Commitment
Increase Notice must offer each Lender the opportunity to subscribe for its pro
rata share of the increased Commitments. If any portion of the increased
Commitments is not subscribed for by the Lenders, the Company may, with the
consent of the Administrative Agent as to any Person that is not at such time a
Lender (which consent shall not be unreasonably withheld), offer to any existing
Lender or to one or more additional banks or financial institutions the
opportunity to participate in all or a portion of such unsubscribed portion of
the increased Commitments pursuant to paragraph (b) below.
(b) Any additional bank or financial institution that the
Company selects to offer participation in the increased Commitments, and that
elects to become a party to this Agreement and obtain a Commitment shall execute
a New Lender Supplement with the Company and the Administrative Agent,
substantially in the form of Exhibit N (a "New Lender Supplement"), whereupon
such bank or financial institution (a "New Lender") shall become a
<PAGE> 44
40
Lender for all purposes and to the same extent as if originally a party hereto
and shall be bound by and entitled to the benefits of this Agreement, and
Schedule I shall be deemed to be amended to add the name and Commitment of such
New Lender, provided that the Commitment of any such New Lender shall be in an
amount not less than $10,000,000.
(c) Any Lender that accepts an offer to it by the Company to
increase its Commitment pursuant to this Section 2.24 shall, in each case,
execute a Commitment Increase Supplement with the Company and the Administrative
Agent, substantially in the form of Exhibit O (a "Commitment Increase
Supplement"), whereupon such Lender shall be bound by and entitled to the
benefits of this Agreement with respect to the full amount of its Commitment as
so increased, and Schedule I shall be deemed to be amended to so increase the
Commitment of such Lender.
(d) The effectiveness of any New Lender Supplement or
Commitment Increase Supplement shall be contingent upon receipt by the
Administrative Agent of such corporate resolutions of the Borrowers and legal
opinions of counsel to the Borrowers as the Administrative Agent shall
reasonably request with respect thereto, in each case, in form and substance
satisfactory to the Administrative Agent.
(e) If any bank or financial institution becomes a New Lender
pursuant to Section 2.24(b) or any Lender's Commitment is increased pursuant to
Section 2.24(c), additional Revolving Credit Advances made on or after the
effectiveness thereof (the "Re-Allocation Date") shall be made pro rata based on
the Commitment Percentages in effect on and after such Re-Allocation Date
(except to the extent that any such pro rata borrowings would result in any
Lender making an aggregate principal amount of Revolving Credit Advances in
excess of its Commitment, in which case such excess amount will be allocated to,
and made by, such new Lender and/or Lenders with such increased Commitments to
the extent of, and pro rata based on, their respective Commitments), and
continuations of Eurodollar Rate Advances outstanding on such Re-Allocation Date
shall be effected by repayment of such Eurodollar Rate Advances on the last day
of the Interest Period applicable thereto and the making of new Eurodollar Rate
Advances pro rata based on such new Commitment Percentages. In the event that on
any such Re-Allocation Date there is an unpaid principal amount of Base Rate
Advances, the Borrower shall make prepayments thereof and borrowings of Base
Rate Advances so that, after giving effect thereto, the Base Rate Advances
outstanding are held pro rata based on such new Commitment Percentages. In the
event that on any such Re-Allocation Date there is an unpaid principal amount of
Eurodollar Rate Advances, such Eurodollar Rate Advances shall remain outstanding
with the respective holders thereof until the expiration of their respective
Interest Periods (unless the applicable Borrower elects to prepay any thereof in
accordance with the applicable provisions of this Agreement), and interest on
and repayments of such Eurodollar Rate Advances will be paid thereon to the
respective Lenders holding such Eurodollar Rate
<PAGE> 45
41
Advances pro rata based on the respective principal amounts thereof outstanding.
(f) Notwithstanding anything to the contrary in this Section
2.24, (i) in no event shall any transaction effected pursuant to this Section
2.24 cause the aggregate Commitments to exceed $937,500,000, (ii) no increase
pursuant to this Section 2.24 shall be effective without the consent of the
Required Lenders and (iii) no Lender shall have any obligation to increase its
Commitment unless it agrees to do so in its sole discretion.
(g) The Borrowers, at their own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Notes of any
Lender, if any, new Notes to the order of such Lender, if requested, in an
amount equal to the Commitment of such Lender after giving effect to any
increase in such Lender's Commitment.
SECTION II.25 Replacement of Lenders. If any Lender requests
compensation under Sections 2.12, 2.16 or 2.17 or if any Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.20, or if any Lender defaults in its
obligation to fund Advances hereunder, then the Company may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.7), all its interests, rights
and obligations under this Agreement (other than any outstanding CAF Advances
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Company shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Advances (other than CAF Advances), accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Sections 2.12 , 2.16 or 2.17 or
payments required to be made pursuant to Section 2.20, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Company to require such assignment and delegation cease to apply.
<PAGE> 46
42
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION III.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective (the "Effective Date") when (i)
it shall have been executed by EPNGC, Tennessee, the Administrative Agent, the
CAF Advance Agent, the Documentation Agent and the Syndication Agent and (ii)
the Administrative Agent and EPNGC either shall have been notified by each
Lender that such Lender has executed it or shall have received a counterpart of
this Agreement executed by such Lender. Anything in this Agreement to the
contrary notwithstanding, if all of the conditions to effectiveness of this
Agreement specified in this Section 3.1 shall not have been fulfilled on or
before December 31, 1997, (i) the Company shall on such date pay all accrued and
unpaid facility fees pursuant to Section 2.8 and (ii) this Agreement, and all of
the obligations of EPNGC, the Lenders, the Administrative Agent and the CAF
Advance Agent hereunder, shall be terminated on and as of 5:00 P.M. (New York
City time) on December 31, 1997; provided, however, that as soon as the
Administrative Agent determines that all of the conditions to effectiveness of
this Agreement specified in this Section 3.1 shall have been fulfilled on or
before December 31, 1997, the Administrative Agent shall furnish written notice
to EPNGC and the Lenders to the effect that it has so determined, and such
notice by the Administrative Agent shall constitute conclusive evidence that
this Agreement shall have become effective for all purposes. Notwithstanding the
foregoing, the obligations of the Company to pay fees pursuant to Section 2.8 as
well as all obligations of the Borrowers pursuant to Section 9.4 shall survive
the termination of this Agreement.
SECTION III.2 Conditions Precedent to Initial Advances. The
agreement of each Lender to make the initial Advances to be made by it to the
Borrowers hereunder is subject to (the date upon which all conditions listed in
Section 3.2(a) and 3.2(b) are satisfied, the "Closing Date") (a) the occurrence
of the Effective Date hereunder and (b) the receipt by the Administrative Agent
of the following in form and substance satisfactory to the Administrative Agent
and in sufficient copies for each Lender:
(i) Certified copies of the resolutions of the Board of
Directors of each of EPNGC and Tennessee approving the borrowings
contemplated hereby and authorizing the execution of this Agreement and
the Notes, and of all documents evidencing other necessary corporate
action of each of EPNGC and Tennessee and governmental approvals to
each of EPNGC and Tennessee, if any, with respect to this Agreement and
the Notes.
(ii) A certificate of the Secretary or an Assistant Secretary
of each of EPNGC and Tennessee certifying the names and true signatures
of the officers of each of EPNGC and Tennessee authorized to sign this
Agreement and the
<PAGE> 47
43
other documents to be delivered by it hereunder.
(iii) A favorable opinion of the General Counsel of EPNGC, or
the Associate General Counsel of EPNGC, in substantially the form of
Exhibit G.
(iv) A favorable opinion of Jones, Day, Reavis & Pogue, New
York counsel to EPNGC and Tennessee, in substantially the form of
Exhibit H.
(v) A letter from the Process Agent, in substantially the form
of Exhibit I, agreeing to act as Process Agent for each of EPNGC and
Tennessee and to forward forthwith all process received by it to EPNGC
and Tennessee, as applicable.
(vi) Evidence satisfactory to the Administrative Agent that
all advances, accrued interest and other fees and any other amounts
(except as provided under Section 9.12 of the $750,000,000 5-Year
Revolving Credit and Competitive Advance Facility Agreement, dated as
of the date hereof, among EPNGC, the lenders parties thereto and Chase,
as Administrative Agent and CAF Advance Agent) owing to the lenders and
the agents under the Existing Facilities shall have been, or
simultaneously with the initial Advances are being, paid in full, and
the commitments to make advances thereunder shall have been cancelled.
SECTION III.3 Conditions Precedent to Initial Advances to Any
Borrowing Subsidiary or Holding. The agreement of each Lender to make the
initial Advances to be made by it to any Borrowing Subsidiary (other than
Tennessee) or Holding is further subject to the Administrative Agent receiving
the following, in form and substance satisfactory to the Administrative Agent
and (except for the Notes) in sufficient copies for each Lender (provided that
no Subsidiary of Holding which is not a Subsidiary of EPNGC may become a
Borrower hereunder unless Holding is a Borrower hereunder):
(a) A Joinder Agreement executed and delivered by such
Borrowing Subsidiary or Holding, as the case may be, conforming to the
requirements hereof.
(b) Notes, dated the date such Borrowing Subsidiary or
Holding, as the case may be, executes and delivers its Joinder
Agreement, made by such Borrowing Subsidiary or Holding, as the case
may be, to the order of each Lender requesting a Note, respectively.
(c) A certificate of the Secretary or an Assistant Secretary
of such Borrowing Subsidiary or Holding, as the case may be, certifying
the names and true signature of the officers of such Borrowing
Subsidiary or Holding, as the case may be, authorized to sign the
Joinder Agreement and the other documents to be delivered by it
hereunder.
<PAGE> 48
44
(d) A favorable opinion of the General Counsel or Associate
General Counsel of the Company, given upon the express instructions of
the Company, in substantially the form of Exhibit K, and as to such
other matters as any Lender through the Administrative Agent may
reasonably request, with such assumptions, qualifications and
exceptions as the Administrative Agent may approve.
(e) A favorable opinion of Jones, Day, Reavis & Pogue or other
New York counsel to the Company reasonably satisfactory to the
Administrative Agent, in substantially the form of Exhibit L, and as to
such other matters as any Lender through the Administrative Agent may
reasonably request, with such assumptions, qualifications and
exceptions as the Administrative Agent may approve.
(f) A letter from the Process Agent, in substantially the form
of Exhibit I, agreeing to act as Process Agent for such Borrowing
Subsidiary or Holding, as the case may be, and to forward forthwith all
process received by it to such Borrowing Subsidiary or Holding, as the
case may be.
SECTION III.4 Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance (including the initial Advance, but
excluding any continuation or Conversion of an Advance) on the occasion of any
Borrowing shall be subject to the conditions precedent that on the date of such
Borrowing this Agreement shall have become effective pursuant to Section 3.1
and, before and immediately after giving effect to such Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the applicable Borrower or the Company on such
Borrower's behalf of the applicable Notice of Borrowing and the acceptance by
the applicable Borrower of the proceeds of such Borrowing shall constitute its
representation and warranty that on and as of the date of such Borrowing, before
and immediately after giving effect thereto and to the application of the
proceeds therefrom, the following statements are true and correct:
(i) each representation and warranty contained in Section 4.1
is correct in all material respects as though made on and as of such
date; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Event of Default or a
Default.
<PAGE> 49
45
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION IV.1 Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Each Principal Subsidiary and each Restricted Affiliate is duly
incorporated, validly existing and in good standing in the jurisdiction
of its incorporation. The Company, each Principal Subsidiary and each
Restricted Affiliate possess all corporate powers and all other
authorizations and licenses necessary to engage in its business and
operations as now conducted, the failure to obtain or maintain which
would have a Material Adverse Effect.
(b) The execution, delivery and performance by (i) each
Borrower of this Agreement, each Joinder Agreement, if any, to which it
is a party and its Notes (as applicable) and (ii) each Restricted
Affiliate of its Restricted Affiliate Guaranty are within such
Borrower's or Restricted Affiliate's, as the case may be, corporate
powers, have been duly authorized by all necessary corporate action,
and do not contravene (A) such Borrower's or Restricted Affiliate's, as
the case may be, charter or by-laws or (B) any law or any material
contractual restriction binding on or affecting such Borrower or
Restricted Affiliate, as the case may be.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by (i) such
Borrower of this Agreement, each Joinder Agreement, if any, to which it
is a party or its Notes (as applicable) or (ii) any Restricted
Affiliate of its Restricted Affiliate Guaranty, except filings
necessary to comply with laws, rules, regulations and orders required
in the ordinary course to comply with ongoing obligations of such
Borrower under Section 5.1(a) and (b).
(d) This Agreement constitutes, its Notes and each Joinder
Agreement, if any, to which it is a party (as applicable) when
delivered hereunder shall constitute and its Restricted Affiliate
Guaranty when delivered hereunder shall constitute, the legal, valid
and binding obligations of each Borrower or Restricted Affiliate, as
the case may be, enforceable against such Borrower or Restricted
Affiliate, as the case may be, in accordance with their respective
terms, except as may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
<PAGE> 50
46
(e) The consolidated balance sheet of EPNGC and its
consolidated Subsidiaries as at December 31, 1996, and the related
consolidated statements of income and cash flows of EPNGC and its
consolidated Subsidiaries for the fiscal year then ended, reported on
by Coopers & Lybrand LLP, independent public accountants, copies of
which have been furnished to the Administrative Agent and the Lenders
prior to the date hereof, fairly present the consolidated financial
condition of EPNGC and its consolidated Subsidiaries as at such date
and the consolidated results of the operations of EPNGC and its
consolidated Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since December 31, 1996, there has been no material
adverse change in such condition or operations. The unaudited
consolidated balance sheet of EPNGC and its consolidated Subsidiaries
as of June 30, 1997, and the related consolidated statements of income
and cash flows of EPNGC and its consolidated Subsidiaries for the six
months then ended, certified by the chief financial officer of EPNGC,
copies of which have been furnished to the Administrative Agent and the
Lenders prior to the date hereof, fairly present the consolidated
results of operations of EPNGC and its consolidated Subsidiaries for
the three months then ended, all in accordance with generally accepted
accounting principles consistently applied (except as approved by the
chief financial officer of EPNGC and as disclosed therein) and subject
to normal year-end audit adjustments.
(f) Each of the Company and its Subsidiaries is in compliance
with all laws, rules, regulations and orders of any governmental
authority applicable to it or its property except where the failure to
comply, individually or in the aggregate, would not in the reasonable
judgment of the Company be expected to result in a Material Adverse
Effect.
(g) There is no action, suit or proceeding pending, or to the
knowledge of any Borrower threatened, against or involving the Company,
any Principal Subsidiary or any Restricted Affiliate in any court, or
before any arbitrator of any kind, or before or by any governmental
body, which in the reasonable judgment of the Company (taking into
account the exhaustion of all appeals) would have a Material Adverse
Effect, or which purports to affect the legality, validity, binding
effect or enforceability of this Agreement or the Notes.
(h) The Company, each Principal Subsidiary and each Restricted
Affiliate have duly filed all tax returns required to be filed, and
have duly paid and discharged all taxes, assessments and governmental
charges upon it or against its properties now due and payable, the
failure to pay which would have a Material Adverse Effect, unless and
to the extent only that the same are being contested in good
<PAGE> 51
47
faith and by appropriate proceedings by the Company, the appropriate
Subsidiary or the appropriate Restricted Affiliate.
(i) The Company, each Principal Subsidiary and each Restricted
Affiliate have good title to their respective properties and assets,
free and clear of all mortgages, liens and encumbrances, except for
mortgages, liens and encumbrances (including covenants, restrictions,
rights, easements and minor irregularities in title) which do not
materially interfere with the business or operations of the Company,
such Subsidiary or such Restricted Affiliate as presently conducted or
which are permitted by Section 5.2(a), and except that no
representation or warranty is being made with respect to Margin Stock.
(j) No Termination Event has occurred or is reasonably
expected to occur with respect to any Plan which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default
under Section 7.1(g).
(k) Each Plan has complied with the applicable provisions of
ERISA and the Code where the failure to so comply would reasonably be
expected to result in an aggregate liability that would exceed 10% of
the Net Worth of the Company.
(l) The statement of assets and liabilities of each Plan and
the statements of changes in fund balance and in financial position, or
the statement of changes in net assets available for plan benefits, for
the most recent plan year for which an accountant's report with respect
to such Plan has been prepared, copies of which report have been
furnished to the Administrative Agent, fairly present the financial
condition of such Plan as at such date and the results of operations of
such Plan for the plan year ended on such date.
(m) Neither the Company nor any ERISA Affiliate has incurred,
or is reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan which, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
Withdrawal Liability (as of the date of determination), would exceed
10% of the Net Worth of the Company.
(n) Neither the Company nor any ERISA Affiliate has received
any notification that any Multiemployer Plan is in reorganization,
insolvent or has been terminated, within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization, insolvent or to be terminated within the meaning of
Title IV of ERISA the effect of which reorganization, insolvency or
termination would be the occurrence of an Event of Default under
Section 7.1(i).
<PAGE> 52
48
(o) The Borrowers are not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance will be used to extend credit to others (other
than to any Subsidiary of the Company) for the purpose of purchasing or
carrying Margin Stock.
(p) No Borrower is an "investment company" or a "company"
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(q) No Borrower is a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(r) The borrowings by the Borrowers under this Agreement and
the Notes and the applications of the proceeds thereof as provided
herein will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
All representations and warranties made by the Borrowers herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION V.1 Affirmative Covenants. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, each Borrower will, unless the
Majority Lenders shall otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. Preserve and
maintain, and, in the case of the Company, cause each Principal
Subsidiary and each Restricted Affiliate to preserve and maintain, its
corporate existence, rights (charter and statutory) and material
franchises, except as otherwise permitted by Section 5.2(d) or 5.2(e).
(b) Compliance with Laws, Etc. Comply, and, in the case of the
Company, cause each Principal Subsidiary and each Restricted Affiliate
to comply, in all material respects with all applicable laws, rules,
regulations and orders (including, without limitation, all
environmental laws and laws requiring payment of all taxes, assessments
and governmental charges imposed upon it or upon its property except to
the extent contested in good faith by appropriate proceedings) the
failure to comply with which would have a Material Adverse Effect.
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(c) Visitation Rights. At any reasonable time and from time to
time, permit the Administrative Agent or any of the Lenders or any
agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the
properties of, the Company, any of its Subsidiaries and any Restricted
Affiliate, and to discuss the affairs, finances and accounts of the
Company, any of its Subsidiaries and any Restricted Affiliate with any
of their officers and with their independent certified public
accountants.
(d) Books and Records. Keep, and, in the case of the Company,
cause each of its Subsidiaries and each Restricted Affiliate to keep,
proper books of record and account, in which full and correct entries
shall be made of all its respective financial transactions and the
assets and business of the Company, each of its Subsidiaries and each
Restricted Affiliate, as applicable, in accordance with generally
accepted accounting principles either (i) consistently applied or (ii)
applied in a changed manner provided such change shall have been
disclosed to the Administrative Agent and shall have been consented to
by the accountants which (as required by Section 5.3(b)) report on the
financial statements of the Company and its consolidated Subsidiaries
for the fiscal year in which such change shall have occurred.
(e) Maintenance of Properties, Etc. Maintain and preserve,
and, in the case of the Company, cause each Principal Subsidiary and
each Restricted Affiliate to maintain and preserve, all of its
properties which are used in the conduct of its business in good
working order and condition, ordinary wear and tear excepted, to the
extent that any failure to do so would have a Material Adverse Effect.
(f) Maintenance of Insurance. Maintain, and, in the case of
the Company, cause each Principal Subsidiary and each Restricted
Affiliate to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Company, such Subsidiary or such Restricted Affiliate operates.
(g) Holding. Once Holding is formed, cause (i) Holding to
execute and deliver a guaranty (in form and substance reasonably
satisfactory to the Administrative Agent) (the "Holding Guarantee") in
favor of the Administrative Agent, for the ratable benefit of the
Lenders, guaranteeing the prompt and complete payment by each Borrower
when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations owing by such Borrower and (ii) the delivery to the
Administrative Agent of legal opinions from the General Counsel or the
Associate
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General Counsel of Holding and from New York counsel to Holding
reasonably acceptable to the Administrative Agent, which legal
opinions shall be in form and substance reasonably satisfactory to the
Administrative Agent.
SECTION V.2 Negative Covenants. So long as any amount payable
by any Borrower hereunder or under any Note shall remain unpaid or any Lender
shall have any Commitment hereunder, each Borrower will not, unless the Majority
Lenders shall otherwise consent in writing:
(a) Liens, Etc. (i) Create, assume or suffer to exist, or, in
the case of the Company, permit any Principal Subsidiary to create,
assume or suffer to exist, any Liens upon or with respect to any of the
capital stock of any Principal Subsidiary, whether now owned or
hereafter acquired, or (ii) create or assume, or, in the case of the
Company, permit any Principal Subsidiary or any Restricted Affiliate to
create or assume, any Liens upon or with respect to any other assets
material to the consolidated operations of the Company and its
consolidated Subsidiaries taken as a whole securing the payment of
Indebtedness and Guaranties in an aggregate amount (determined without
duplication of amount (so that the amount of a Guarantee will be
excluded to the extent the Indebtedness Guaranteed thereby is included
in computing such aggregate amount)) exceeding $100,000,000; provided,
however, that this subsection (a) shall not apply to:
(A) Liens on the stock or assets of any Project
Financing Subsidiary or any Restricted Affiliate (or any
partnership, member or other equity interest in or assets of
any partnership, limited liability company or other entity of
which the Project Financing Subsidiary is a partner, member or
other equity participant) securing the payment of a Project
Financing and related obligations;
(B) Liens on assets acquired by the Company, any of
its Subsidiaries or any Restricted Affiliate after February
11, 1992 to the extent that such Liens existed at the time of
such acquisition and were not placed thereon by or with the
consent of the Company in contemplation of such acquisition;
(C) Liens created by any Alternate Program or any
document executed by any Borrower or any Restricted Affiliate
in connection therewith;
(D) Liens on Margin Stock; and
(E) Liens for taxes, assessments or governmental
charges or levies not yet overdue.
(b) Consolidated Debt and Guarantees to Capitalization.
(i) Permit the ratio of (A) the sum of (1)
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the aggregate amount of consolidated Debt of EPNGC and its consolidated
Subsidiaries and all Restricted Affiliates and their consolidated
Subsidiaries (without duplication of amount under this clause (A) and
determined as to all of the foregoing entities on a consolidated basis)
plus (2) the aggregate amount of consolidated Guaranties of EPNGC and
its consolidated Subsidiaries and all Restricted Affiliates and their
consolidated Subsidiaries (without duplication of amount under this
clause (A) and determined as to all of the foregoing entities on a
consolidated basis) to (B) Capitalization of EPNGC and all Restricted
Affiliates (without duplication and determined as to all of the
foregoing entities on a consolidated basis) to exceed .7 to 1; and (ii)
from and after the date that Holding becomes a Borrower hereunder,
permit the ratio of (A) the sum of (1) the aggregate amount of
consolidated Debt of Holding and its consolidated Subsidiaries plus (2)
the aggregate amount of consolidated Guaranties of Holding and its
consolidated Subsidiaries to (B) Capitalization of Holding to exceed .7
to 1.
(c) Debt, Etc. In the case of the Company, permit any of its
consolidated Subsidiaries to create or suffer to exist any Debt, any
Guaranty or any reimbursement obligation with respect to any letter of
credit (other than any Project Financing), if, immediately after giving
effect to such Debt, Guaranty or reimbursement obligation and the
receipt and application of any proceeds thereof or value received in
connection therewith, the aggregate amount (determined without
duplication of amount) of Debt, Guaranties and letter of credit
reimbursement obligations of the Company's consolidated Subsidiaries
(other than any Project Financing) determined on a consolidated basis
would exceed $300,000,000; provided, however, that the following Debt,
Guaranties or reimbursement obligations shall be excluded from the
application of, and calculation set forth in, this paragraph (c): (A)
Debt, Guaranties or reimbursement obligations incurred by (x) Mojave or
(y) so long as it is a Borrower, EPNGC, (B) Debt, Guaranties or
reimbursement obligations arising under (x) the EPTPC Facility and
permanently repaid in full on the Closing Date or (y) this Agreement or
the $750,000,000 5-Year Revolving Credit and Competitive Advance
Facility Agreement, dated as of the date hereof, among EPNGC, the
lenders parties thereto and Chase, as Administrative Agent and CAF
Advance Agent, (C) Debt, Guaranties or reimbursement obligations
incurred by El Paso Field Services Company up to an amount not to
exceed at any time outstanding the tangible net worth of El Paso Field
Services Company, provided that such Debt may be guaranteed by the
Company, (D) Excluded Acquisition Debt and (E) successive extensions,
refinancings or replacements (at the same Subsidiary or at any other
consolidated Subsidiary of the Company) of Debt, Guaranties or
reimbursement obligations (or commitments in respect thereof) referred
to in clauses (A), (B) and (D) above and in an amount not in excess of
the amounts so extended, refinanced or replaced
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(or the amount of commitments in respect thereof).
(d) Sale, Etc. of Assets. Sell, lease or otherwise transfer,
or, in the case of the Company, permit any Principal Subsidiary to
sell, lease or otherwise transfer, (in either case, whether in one
transaction or in a series of transactions) assets constituting a
material portion of the consolidated assets of the Company and its
Principal Subsidiaries taken as a whole, provided that provisions of
this subsection (d) shall not apply to:
(i) any sale of receivables and related rights
pursuant to any Alternate Program;
(ii) any Project Financing Subsidiary and the
assets thereof;
(iii) sales, leases or other transfers of assets
or capital stock of any Subsidiary of the Company other than
any Principal Subsidiary;
(iv) any sale of Margin Stock;
(v) any sale of up to 20% of the equity of El
Paso Field Services Company in an initial public offering of
such corporation's equity securities;
(vi) any sale, lease or other transfer to the
Company or any Principal Subsidiary, or to any corporation
which after giving effect to such transfer will become and be
either (A) a Principal Subsidiary in which the Company's
direct or indirect equity interest will be at least as great
as its direct or indirect equity interest in the transferor
immediately prior thereto or (B) a directly or indirectly
wholly-owned Principal Subsidiary;
(vii) any transfer permitted by Section 5.2(e);
and
(viii) any transfer to Holding or any of its
Subsidiaries of any stock or assets other than FERC regulated
assets (or stock or any other equity interest in an entity
owning FERC regulated assets) used in the mainline gas
transmission business; provided that (A) no Event of Default,
or event that with the giving of notice or lapse of time or
both would constitute an Event of Default, shall have occurred
and be continuing before and after giving effect to such
transfer and (B) no Borrower may be so transferred unless
Holding is also a Borrower.
(e) Mergers, Etc. Merge or consolidate with any person, or
permit any of its Principal Subsidiaries to merge or consolidate with
any Person, except that (i) any Principal Subsidiary may merge or
consolidate with (or
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53
liquidate into) any other Subsidiary (other than a Project Financing
Subsidiary, unless the successor corporation is not treated as a
Project Financing Subsidiary under this Agreement) or may merge or
consolidate with (or liquidate into) the Company, provided that (A) if
such Principal Subsidiary merges or consolidates with (or liquidates
into) the Company, the Company shall be the continuing or surviving
corporation and (B) if any such Principal Subsidiary merges or
consolidates with (or liquidates into) any other Subsidiary of the
Company, one of such Subsidiaries is the surviving corporation and, if
either such Subsidiary is not wholly-owned by the Company, such merger
or consolidation is on an arm's length basis, and (ii) the Company or
any Principal Subsidiary may merge or consolidate with any other
corporation (that is, in addition to the Company or any Principal
Subsidiary of the Company), provided that (A) if the Company merges or
consolidates with any such other corporation, the Company is the
surviving corporation, (B) if any Principal Subsidiary merges or
consolidates with any such other corporation, the surviving
corporation is a wholly-owned Principal Subsidiary of the Company, and
(C) if either the Company or any Principal Subsidiary merges or
consolidates with any such other corporation, after giving effect to
such merger or consolidation no Event of Default, and no event which
with lapse of time or the giving of notice, or both, would constitute
an Event of Default, shall have occurred and be continuing.
SECTION V.3 Reporting Requirements. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Company will furnish to each
Lender in such reasonable quantities as shall from time to time be requested by
such Lender:
(a) as soon as publicly available and in any event within 60
days after the end of each of the first three fiscal quarters of each
fiscal year of each of EPNGC and, following its formation, Holding, a
consolidated balance sheet of each of EPNGC and, following its
formation, Holding and its respective consolidated subsidiaries as of
the end of such quarter, and consolidated statements of income and cash
flows of each of EPNGC and, following its formation, Holding and its
respective consolidated subsidiaries each for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified (subject to normal year-end adjustments) as being
fairly stated in all material respects by the chief financial officer,
controller or treasurer of the Company and accompanied by a certificate
of such officer stating (i) whether or not such officer has knowledge
of the occurrence of any Event of Default which is continuing hereunder
or of any event not theretofore remedied which with notice or lapse of
time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts
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with respect thereto, (ii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Company is in
compliance with the requirements set forth in subsections (b) and (c)
of Section 5.2, and (iii) a listing of all Principal Subsidiaries and
consolidated Subsidiaries of the Company showing the extent of its
direct and indirect holdings of their stocks;
(b) as soon as publicly available and in any event within 120
days after the end of each fiscal year of each of EPNGC and, following
its formation, Holding, a copy of the annual report for such year for
each of EPNGC and, following its formation, Holding and its respective
consolidated Subsidiaries containing financial statements for such year
reported by nationally recognized independent public accountants
acceptable to the Lenders, accompanied by (i) a report signed by said
accountants stating that such financial statements have been prepared
in accordance with generally accepted accounting principles and (ii) a
letter from such accountants stating that in making the investigations
necessary for such report they obtained no knowledge, except as
specifically stated therein, of any Event of Default which is
continuing hereunder or of any event not theretofore remedied which
with notice or lapse of time or both would constitute such an Event of
Default;
(c) within 120 days after the close of each of the Company's
fiscal years, a certificate of the chief financial officer, controller
or treasurer of the Company stating (i) whether or not he has knowledge
of the occurrence of any Event of Default which is continuing hereunder
or of any event not theretofore remedied which with notice or lapse of
time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts with respect thereto, (ii) all
relevant facts in reasonable detail to evidence, and the computations
as to, whether or not the Company is in compliance with the
requirements set forth in subsections (b) and (c) of Section 5.2 and
(iii) a listing of all Principal Subsidiaries and consolidated
Subsidiaries of the Company showing the extent of its direct and
indirect holdings of their stocks;
(d) promptly after the sending or filing thereof, copies of
all publicly available reports which the Company, any Principal
Subsidiary or any Restricted Affiliate sends to any of its security
holders and copies of all publicly available reports and registration
statements which the Company, any Principal Subsidiary or any
Restricted Affiliate files with the Securities and Exchange Commission
or any national securities exchange other than registration statements
relating to employee benefit plans and to registrations of securities
for selling security holders;
(e) within 10 days after sending or filing thereof, a copy of
FERC Form No. 2: Annual Report of Major Natural Gas Companies, sent or
filed by the Company to or with the FERC
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with respect to each fiscal year of the Company;
(f) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies against or
involving the Company, any Principal Subsidiary or any Restricted
Affiliate, except any litigation or proceeding which in the reasonable
judgment of the Company (taking into account the exhaustion of all
appeals) is not likely to have a material adverse effect on the
consolidated financial condition of the Company and its consolidated
Subsidiaries taken as a whole;
(g) within three Business Days after an executive officer of
the Company obtains knowledge of the occurrence of any Event of Default
which is continuing or of any event not theretofore remedied which with
notice or lapse of time, or both, would constitute an Event of Default,
notice of such occurrence together with a detailed statement by a
responsible officer of the Company of the steps being taken by the
Company or the appropriate Subsidiary to cure the effect of such event;
(h) as soon as practicable and in any event (i) within 30 days
after the Company or any ERISA Affiliate knows or has reason to know
that any Termination Event described in clause (a) of the definition of
Termination Event with respect to any Plan has occurred and (ii) within
10 days after the Company or any ERISA Affiliate knows or has reason to
know that any other Termination Event has occurred, a statement of the
chief financial officer or treasurer of the Company describing such
Termination Event and the action, if any, which the Company or such
ERISA Affiliate proposes to take with respect thereto;
(i) promptly and in any event within two Business Days after
receipt thereof by the Company or any ERISA Affiliate, copies of each
notice received by the Company or any ERISA Affiliate from the PBGC
stating its intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(j) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan;
(k) promptly and in any event within five Business Days after
receipt thereof by the Company or any ERISA Affiliate from the sponsor
of a Multiemployer Plan, a copy of each notice received by the Company
or any ERISA Affiliate concerning (i) the imposition of Withdrawal
Liability by a Multiemployer Plan, (ii) the determination that a
Multiemployer Plan is, or is expected to be, in reorganization or
insolvent within the meaning of Title IV of ERISA, (iii) the
termination of a Multiemployer Plan
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within the meaning of Title IV of ERISA, or (iv) the amount of
liability incurred, or expected to be incurred, by the Company or any
ERISA Affiliate in connection with any event described in clause (i),
(ii) or (iii) above; and
(l) as soon as practicable but in any event within 60 days of
any notice of request therefor, such other information respecting the
financial condition and results of operations of the Company or any
Subsidiary of the Company as any Lender through the Administrative
Agent may from time to time reasonably request.
Each balance sheet and other financial statement furnished
pursuant to subsections (a) and (b) of this Section 5.3 shall contain
comparative financial information which conforms to the presentation required in
Form 10-Q and 10-K, as appropriate, under the Securities Exchange Act of 1934,
as amended.
SECTION V.4 Restrictions on Material Subsidiaries. Upon
Holding becoming a Borrower hereunder, Holding will not, and will not permit any
Material Subsidiary, to enter into any agreement or understanding pursuant to
which (a) any non-equity interest claim Holding may have against any Material
Subsidiary would be subordinate in any manner to the payment of any other
obligation of such Material Subsidiary (other than waivers or subordination of
subrogation, contribution or similar rights under Guaranties and similar
agreements) or (b) by its terms limits or restricts the ability of such Material
Subsidiary to make funds available to Holding (whether by dividend or other
distribution, by replacement of any inter-company advance or otherwise) if, in
any such case referred to in this Section 5.4, there is, at the time any such
agreement is entered into, a reasonable likelihood that all such agreements and
understandings, considered together, would materially and adversely affect the
ability of Holding to meet its obligations as they become due.
ARTICLE VI
GUARANTEES
SECTION VI.1 Guarantees. (a) Subject to the provisions of
Section 6.1(b), each Borrower hereby unconditionally and irrevocably guarantees
to the Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment by each other Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by such other
Borrower.
(b) Anything in this Article VI to the contrary
notwithstanding, the maximum liability of each Borrower (other than a Borrower
which is guaranteeing the Obligations of its Subsidiaries) under this Article VI
shall in no event exceed the amount which can be guaranteed by such Borrowing
Subsidiary under
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applicable federal and state laws relating to the insolvency of debtors.
(c) Each Borrower agrees that the Obligations owing by any
other Borrower may at any time and from time to time exceed the amount of the
liability of such other Borrower under this Article VI without impairing the
guarantee of such Borrower under this Article VI or affecting the rights and
remedies of the Administrative Agent or any Lender under this Article VI.
(d) No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Lender from
any Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Borrowers under this Article VI
which shall, notwithstanding any such payment or payments, continue until the
Obligations are paid in full and the Commitments are terminated.
(e) Each Borrower agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability under this Article VI, it will notify the
Administrative Agent in writing that such payment is made under this Article VI
for such purpose.
SECTION VI.2 No Subrogation. Notwithstanding any payment or
payments made by any Borrower under this Article VI or any set-off or
application of funds of such Borrower by the Administrative Agent or any Lender,
such Borrower shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against any other Borrower or against any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Obligations, nor shall such Borrower
seek or be entitled to seek any contribution or reimbursement from any other
Borrower in respect of payments made by such Borrower hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the other Borrowers
on account of the Obligations are paid in full and the Commitments are
terminated. If any amount shall be paid to any Borrower on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Borrower in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Borrower, and shall, forthwith upon receipt by such Borrower, be turned over to
the Administrative Agent in the exact form received by such Borrower (duly
indorsed by such Borrower to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.
SECTION VI.3 Amendments, etc. with respect to the
Obligations; Waiver of Rights. Each Borrower shall remain obligated under this
Article VI notwithstanding that, without any
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reservation of rights against such Borrower, and without notice to or further
assent by such Borrower, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the Obligations,
or the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, and this Agreement, any Notes and any
other documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Majority Lenders, as the case may be) may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against any Borrower, the Administrative Agent or any
Lender may, but shall be under no obligation to, make a similar demand on the
applicable Borrowing Subsidiaries or any other guarantor, and any failure by the
Administrative Agent or any Lender to make any such demand or to collect any
payments from the other Borrowers or any such other guarantor or any release of
the other Borrowers or such other guarantor shall not relieve such Borrower of
its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Administrative Agent or any Lender against such Borrower for the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
SECTION VI.4 Guarantee Absolute and Unconditional. Each
Borrower waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Agreement or acceptance of this
Agreement; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Agreement; and all dealings between any Borrower,
on the one hand, and the Administrative Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Agreement. Each Borrower waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
other Borrowers with respect to the Obligations. The guarantee contained in this
Article VI shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of this Agreement, any Note, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the
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Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Borrower against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of any Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Borrower for the Obligations,
or of the Borrowers under this Agreement, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any Borrower,
the Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against any other Borrower or
any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from other Borrowers or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any other Borrower or any such other Person or of any
such collateral security, guarantee or right of offset, shall not relieve any
Borrower of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against such Borrower. The guarantees
contained in this Article VI shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon each Borrower and
its successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of the Borrowers under this Agreement shall have been satisfied by
payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of this Agreement the Borrowers may be free
from any Obligations.
SECTION VI.5 Reinstatement. The provisions of this Article VI
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
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ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 Event of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Any Borrower shall fail to pay any installment of
principal of any of its Advances or Notes when due, or any interest on
any of its Advances or Notes or any other amount payable by it
hereunder within five Business Days after the same shall be due; or
(b) Any representation or warranty made or deemed made by any
Borrower herein or by any Borrower (or any of its officers) in
connection with this Agreement shall prove to have been incorrect in
any material respect when made or deemed made; or
(c) Any Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied
for 30 days after written notice thereof shall have been given to such
Borrower by the Administrative Agent or by any Lender with a copy to
the Administrative Agent; or
(d) The Company, any Principal Subsidiary or any Restricted
Affiliate shall fail to pay any Debt or Guaranty (excluding Debt
incurred pursuant hereto) of the Company, such Principal Subsidiary or
such Restricted Affiliate (as the case may be) in an aggregate
principal amount of $100,000,000 or more, or any installment of
principal thereof or interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Debt or Guaranty; or any other default under any agreement or
instrument relating to any such Debt, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such default or event
is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated
maturity thereof, as a result of either (i) any default under any
agreement or instrument relating to any such Debt or (ii) the
occurrence of any other event (other than an issuance, sale or other
disposition of stock or other assets, or an incurrence or issuance of
Indebtedness or other obligations, giving rise to a repayment or
prepayment obligation in respect of such Debt) the effect of which
would otherwise be to accelerate or to permit the
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acceleration of the maturity of such Debt; provided that,
notwithstanding any provision contained in this subsection (d) to the
contrary, to the extent that pursuant to the terms of any agreement or
instrument relating to any Debt or Guaranty referred to in this
subsection (d) (or in the case of any such Guaranty, relating to any
obligations Guaranteed thereby), any sale, pledge or disposal of
Margin Stock, or utilization of the proceeds of such sale, pledge or
disposal, would result in a breach of any covenant contained therein
or otherwise give rise to a default or event of default thereunder
and/or acceleration of the maturity of the Debt or obligations
extended pursuant thereto, or payment pursuant to any Guaranty, and as
a result of such terms or of such sale, pledge, disposal, utilization,
breach, default, event of default or acceleration or nonpayment under
such Guaranty, or the provisions thereof relating thereto, this
Agreement or any Advance hereunder would otherwise be subject to the
margin requirements or any other restriction under Regulation U issued
by the Board of Governors of the Federal Reserve System, then such
breach, default, event of default or acceleration, or nonpayment under
any Guaranty, shall not constitute a default or Event of Default under
this subsection (d); or
(e)(i) The Company, any Principal Subsidiary or any Restricted
Affiliate shall (A) generally not pay its debts as such debts become
due; or (B) admit in writing its inability to pay its debts generally;
or (C) make a general assignment for the benefit of creditors; or (ii)
any proceeding shall be instituted or consented to by the Company, any
Principal Subsidiary or any Restricted Affiliate seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or (iii) any such proceeding shall have been instituted
against the Company, any Principal Subsidiary or any Restricted
Affiliate and either such proceeding shall not be stayed or dismissed
for 60 consecutive days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or
other similar official for it or any substantial part of its property)
shall occur; or (iv) the Company, any Principal Subsidiary or any
Restricted Affiliate shall take any corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order of any court for the payment of
money in excess of $50,000,000 shall be rendered against the Company,
any Principal Subsidiary or any Restricted Affiliate and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order
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(other than any enforcement proceedings consisting of the mere
obtaining and filing of a judgment lien or obtaining of a garnishment
or similar order so long as no foreclosure, levy or similar process in
respect of such lien, or payment over in respect of such garnishment
or similar order, has commenced) or (ii) there shall be any period of
30 consecutive days during which a stay of execution or of enforcement
proceedings (other than those referred to in the parenthesis in clause
(i) above) in respect of such judgment or order, by reason of a
pending appeal, bonding or otherwise, shall not be in effect; or
(g) (i) Any Termination Event with respect to a Plan shall
have occurred and, 30 days after notice thereof shall have been given
to the Company by the Administrative Agent, such Termination Event
shall still exist; or (ii) the Company or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan; or (iii) the
Company or any ERISA Affiliate shall have been notified by the sponsor
of a Multiemployer Plan that such Multiemployer Plan is in
reorganization, or is insolvent or is being terminated, within the
meaning of Title IV of ERISA; or (iv) any Person shall engage in a
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan; and in each case in clauses (i)
through (iv) above, such event or condition, together with all other
such events or conditions, if any, would result in an aggregate
liability of the Company or any ERISA Affiliate that would exceed 10%
of the Net Worth of the Company.
(h) Upon completion of, and pursuant to, a transaction, or a
series of transactions (which may include prior acquisitions of capital
stock of EPNGC or Holding in the open market or otherwise), involving a
tender offer (i) a "person" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) other than EPNGC or Holding, a
Subsidiary of EPNGC or Holding or any employee benefit plan maintained
for employees of EPNGC or Holding and/or any of their respective
Subsidiaries or the trustee therefor, shall have acquired direct or
indirect ownership of and paid for in excess of 50% of the outstanding
capital stock of EPNGC or Holding entitled to vote in elections for
directors of EPNGC or Holding and (ii) at any time before the later of
(A) six months after the completion of such tender offer and (B) the
next annual meeting of the shareholders of EPNGC or Holding following
the completion of such tender offer more than half of the directors of
EPNGC or Holding consists of individuals who (1) were not directors
before the completion of such tender offer and (2) were not appointed,
elected or nominated by the Board of Directors in office prior to the
completion of such tender offer (other than any such appointment,
election or nomination required or agreed to in connection with, or as
a result of, the completion of such tender offer); or
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(i) Any event of default shall occur under any agreement or
instrument relating to or evidencing any Debt now or hereafter existing
of the Company or any Principal Subsidiary or Restricted Affiliate as
the result of any change of control of the Company; or
(j) Any of (i) the guarantees contained in Article VI, (ii)
the Restricted Affiliate Guarantees or (iii) the Holding Guarantee
shall cease, for any reason, to be in full force and effect or any
Borrower, any Restricted Affiliate or Holding shall so assert;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Company, (i)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the Advances and
the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances and the Notes,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers; provided, however, that
if an Event of Default under subsection (e) of this Section 7.1 (except under
clause (i)(A) thereof) shall occur, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Advances and the Notes,
all interest thereon and all other amounts payable under this Agreement shall
automatically become and be forthwith due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrowers.
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ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT
SECTION VIII.1 Authorization and Action. Each Lender hereby
appoints and authorizes the Administrative Agent and the CAF Advance Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent and the CAF Advance Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of this Agreement or collection of
the Notes), the Administrative Agent and the CAF Advance Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent and the CAF Advance Agent shall
not be required to take any action which exposes the Administrative Agent or the
CAF Advance Agent to personal liability or which is contrary to this Agreement
or applicable law. The Administrative Agent and the CAF Advance Agent agree to
give to each Lender prompt notice of each notice given to it by any Borrower
pursuant to the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the parties hereto hereby agree that
neither the Documentation Agent nor the Syndication Agent shall have any rights,
duties or responsibilities in its capacity as Documentation Agent or Syndication
Agent, as applicable, hereunder and neither the Documentation Agent nor the
Syndication Agent shall have the authority to take any action hereunder in its
capacity as such.
SECTION VIII.2 Administrative Agent's and CAF Advance Agent's
Reliance, Etc. None of the Administrative Agent, the CAF Advance Agent or any of
its respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent and the CAF Advance Agent: (i) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.7; (ii) may consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the
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performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrowers or to inspect the property (including the
books and records) of the Borrowers; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopier, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION VIII.3 Chase and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Chase shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent or the CAF
Advance Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Chase in its individual capacity. Chase and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any of its Subsidiaries and any Person who may do business with or own
securities of the Company or any of its Subsidiaries, all as if Chase were not
the Administrative Agent or the CAF Advance Agent and without any duty to
account therefor to the other Lenders.
SECTION VIII.4 Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the CAF Advance Agent or any other Lender and based on the
financial statements referred to in Section 4.1 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the CAF
Advance Agent or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
SECTION VIII.5 Indemnification. The Lenders agree to indemnify
the Administrative Agent and the CAF Advance Agent (to the extent not reimbursed
by the Borrowers), ratably according to the respective principal amounts of the
Advances then outstanding by each of them (or if no Advances are at the time
outstanding or if any Notes are held by Persons which are not Lenders, ratably
according to the respective amounts of their aggregate Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Agent or the CAF Advance Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Administrative Agent
or the CAF Advance Agent under this Agreement, provided that no Lender shall be
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liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's or the CAF Advance Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent and the CAF Advance Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Administrative Agent or the CAF Advance Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Administrative Agent or the CAF Advance Agent is not reimbursed
for such expenses by the Borrowers.
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SECTION VIII.6 Successor Administrative Agent and CAF Advance
Agent. The Administrative Agent and the CAF Advance Agent may resign at any time
by giving written notice thereof to the Lenders and the Company and may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or the CAF Advance Agent. If no successor
Administrative Agent or CAF Advance Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent's or the CAF Advance Agent giving of notice of
resignation or the Majority Lenders' removal of the retiring Administrative
Agent or CAF Advance Agent, then such retiring Administrative Agent or CAF
Advance Agent may, on behalf of the Lenders, appoint a successor Administrative
Agent or CAF Advance Agent, which shall be a Lender and a commercial bank
organized, or authorized to conduct a banking business, under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent or CAF Advance Agent hereunder by a successor
Administrative Agent or CAF Advance Agent, such successor Administrative Agent
or CAF Advance Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
CAF Advance Agent, and the retiring Administrative Agent or CAF Advance Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's or CAF Advance Agent's resignation or
removal hereunder as Administrative Agent or CAF Advance Agent, the provisions
of this Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent or CAF Advance Agent
under this Agreement.
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ARTICLE IX
MISCELLANEOUS
SECTION IX.1 Amendments, Etc. An amendment or waiver of any
provision of this Agreement or the Notes, or a consent to any departure by any
Borrower therefrom, shall be effective against the Lenders and all holders of
the Notes if, but only if, it shall be in writing and signed by the Majority
Lenders, and then such a waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, be effective to: (a) waive any of the conditions
specified in Article III, (b) increase or extend the Commitments of the Lenders
or subject the Lenders to any additional obligations, (c) reduce the principal
of, or interest on, any Advance or the Notes or any facility fees hereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, any
Advance or the Notes or any facility fees hereunder, (e) change the percentage
of the Commitments or of the aggregate unpaid principal amount of any Advance or
the Notes, or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Agreement, (f) amend this Section 9.1,
(g) amend, waive or consent to any departure of any provision in Article VI or
(h) except as provided below, release any Borrower or Holding or any Restricted
Affiliate from its guarantee in Article VI, the Holding Guarantee or any
Restricted Affiliate Guarantee, as the case may be; provided, further, that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent and the CAF Advance Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or duties of the
Administrative Agent or the CAF Advance Agent under this Agreement or any Note;
provided, still further, that the guarantee of a Borrower under Article VI and
of a Restricted Affiliate under its Restricted Affiliate Guarantee shall be
released automatically upon (i) the sale by the Company of such Borrower or
Restricted Affiliate, provided that such sale is permitted under this Agreement,
or (ii) such Borrower or Restricted Affiliate ceasing to be a Borrower or a
Restricted Affiliate hereunder.
SECTION IX.2 Notices, Etc. Except as otherwise provided in
Section 2.2(a), 2.5(d) or 2.15(b), all notices and other communications provided
for hereunder shall be in writing (including telecopier and other readable
communication) and mailed by certified mail, return receipt requested,
telecopied or otherwise transmitted or delivered, if to any Borrower, c/o the
Company at El Paso Energy Building, 1001 Louisiana Street, Houston, Texas 77002,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(713) 757-4975; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, 32nd floor, New
York, New York 10017, Attention: Peter Ling, Telecopier: (212) 383-0361; and if
to the CAF Advance Agent, at One Chase Manhattan Plaza, Third Floor, New York,
New York 10081, Attention: Sandra Miklave, Telecopier: (212) 552-5700,
Telephone: (212) 552-7953; or, as to each party and each Borrowing Subsidiary,
at such other address as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall,
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if so mailed, telecopied or otherwise transmitted, be effective when received,
if mailed, or when the appropriate answerback or other evidence of receipt is
given, if telecopied or otherwise transmitted, respectively. A notice received
by the Administrative Agent, the CAF Advance Agent or a Lender by telephone
pursuant to Section 2.2(a), 2.5(d) or 2.15(b) shall be effective if the
Administrative Agent or Lender believes in good faith that it was given by an
authorized representative of the applicable Borrower and acts pursuant thereto,
notwithstanding the absence of written confirmation or any contradictory
provision thereof.
SECTION IX.3 No Waiver; Remedies. No failure on the part of
any Lender, the Administrative Agent or the CAF Advance Agent to exercise, and
no delay in exercising, any right hereunder or under any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
or under any Note preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION IX.4 Costs and Expenses; Indemnity. (a) Each Borrower
agrees to pay on demand (to the extent not reimbursed by any other Borrower) (i)
all reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent in connection with the preparation, execution and delivery of this
Agreement, the Notes and the other documents to be delivered hereunder and the
fulfillment or attempted fulfillment of conditions precedent hereunder, (ii) all
reasonable costs and expenses incurred by the Administrative Agent and its
Affiliates in initially syndicating all or any portion of the Commitments
hereunder, including, without limitation, the related reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent or its
Affiliates, travel expenses, duplication and printing costs and courier and
postage fees, and excluding any syndication fees paid to other parties joining
the syndicate and (iii) all out-of-pocket costs and expenses, if any, incurred
by the Administrative Agent, the CAF Advance Agent and the Lenders in connection
with the enforcement (whether through negotiations, legal proceedings in
bankruptcy or insolvency proceedings, or otherwise) of this Agreement, the Notes
and the other documents to be delivered hereunder and thereunder, including the
reasonable fees and out-of-pocket expenses of counsel.
(b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or CAF Advance is made by any Borrower to or for the
account of a Lender on any day other than the last day of the Interest Period
for such Advance, as a result of a prepayment pursuant to Section 2.15 or a
Conversion pursuant to Section 2.13(f) or Section 2.14 or due to acceleration of
the maturity of the Advances and the Notes pursuant to Section 7.1 or due to any
other reason attributable to such Borrower, or if any Borrower shall fail to
make a borrowing of Eurodollar Rate Advances or CAF Advances after such Borrower
has given a notice requesting the same in accordance with the provisions of this
Agreement, such Borrower shall, upon demand by such Lender (with
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a copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, Conversion or failure to borrow, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.
(c) Each Borrower agrees to indemnify and hold harmless the
Administrative Agent, the CAF Advance Agent and each Lender (to the extent not
reimbursed by any other Borrower) from and against any and all claims, damages,
liabilities and expenses (including, without limitation, fees and disbursements
of counsel) which may be incurred by or asserted against the Administrative
Agent, the CAF Advance Agent or such Lender in connection with or arising out of
any investigation, litigation, or proceeding (whether or not the Administrative
Agent, the CAF Advance Agent or such Lender is party thereto) related to any
acquisition or proposed acquisition by the Company, or by any Subsidiary of the
Company, of all or any portion of the stock or substantially all the assets of
any Person or any use or proposed use of the Advances by any Borrower (excluding
any claims, damages, liabilities or expenses incurred by reason of the gross
negligence or willful misconduct of the party to be indemnified or its employees
or agents, or by reason of any use or disclosure of information relating to any
such acquisition or use or proposed use of the proceeds by the party to be
indemnified or its employees or agents).
SECTION IX.5 Right of Set-Off. Upon the declaration of the
Advances and the Notes as due and payable pursuant to the provisions of Section
7.1, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the applicable Borrower against any and all of the obligations of
such Borrower now or hereafter existing under this Agreement and the Notes of
such Borrower held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement or such Notes and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Company
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 9.5 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
SECTION IX.6 Binding Effect. This Agreement shall become
effective in accordance with the provisions of Section 3.1, and thereafter shall
be binding upon and inure to the benefit of the Borrowers, the Administrative
Agent, the CAF
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Advance Agent and each Lender and their respective successors and assigns,
except that no Borrower shall have the right to assign its rights or obligations
hereunder or any interest herein without the prior written consent of all of the
Lenders.
SECTION IX.7 Assignments and Participations. (a) Each Lender
may assign to one or more banks or other financial institutions all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Notes held by it); provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $15,000,000 (or, if less, the entire Commitment of the assigning
Lender) and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Notes subject to such assignment and a processing and recordation fee
of $2,500, and shall send to the Company an executed counterpart of such
Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance,
each Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of each Borrower or the performance or observance by each Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms
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that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, the CAF
Advance Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Administrative Agent and the CAF Advance
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent and the CAF
Advance Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
each Borrower, the Administrative Agent, the CAF Advance Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by any Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Upon the acceptance of any Assignment
and Acceptance for recordation in the Register, Schedule I hereto shall be
deemed to be amended to reflect the revised Commitments of the Lenders parties
to such Assignment and Acceptance as well as administrative information with
respect to any new Lender as such information is recorded in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and as assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit G hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company; within five Business Days after
its receipt of such notice and its receipt of an executed counterpart of such
Assignment and Acceptance, the Borrowers, at their own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Notes,
if any, new Notes to the order of such Eligible Assignee, if requested, in an
amount equal to the Commitment assumed by it pursuant to such Assignment and
<PAGE> 77
73
Acceptance and, if the assigning Lender has retained a Commitment hereunder, new
Notes, if requested, to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes, if any, shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, if any, shall be dated (A) in the case of Notes made by
EPNGC, the Closing Date and (B) in the case of Notes made by any other Borrower,
the date such other Borrower executes and delivers its Joinder Agreement, and
shall otherwise be in substantially the form of Exhibit A.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, and the Advances owing to it and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Notes for all purposes of this Agreement, (iv) the
Borrowers, the Administrative Agent, the CAF Advance Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, (v) such Lender shall
continue to be able to agree to any modification or amendment of this Agreement
or any waiver hereunder without the consent, approval or vote of any such
participant or group of participants, other than modifications, amendments and
waivers which (A) postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Advances or Notes or any
facility fees payable under this Agreement, or (B) increase the amount of such
Lender's Commitment in a manner which would have the effect of increasing the
amount of a participant's participation, or (C) reduce the interest rate payable
under this Agreement and such Lender's Notes, or (D) consent to the assignment
or the transfer by any Borrower of any of its rights and obligations under the
Agreement, and (vi) except as contemplated by the immediately preceding clause
(v), no participant shall be deemed to be or to have any of the rights or
obligations of a "Lender" hereunder.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of the Borrowers to preserve the confidentiality of any
confidential information relating to the Borrowers received by it from such
Lender in a manner consistent with Section 9.8.
(g) Anything in this Agreement to the contrary
<PAGE> 78
74
notwithstanding, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it) and the Notes issued to it hereunder in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System (or any successor regulation) and the applicable
operating circular of such Federal Reserve Bank.
SECTION IX.8 Confidentiality. Each Lender, the Administrative
Agent and the CAF Advance Agent (each, a "Party") agrees that it will use its
best efforts not to disclose, without the prior consent of the Company (other
than to its, or its Affiliate's, employees, auditors, accountants, counsel or
other representatives, whether existing at the date of this Agreement or any
subsequent time), any information with respect to the Borrowers which is
furnished pursuant to this Agreement, provided that any Party may disclose any
such information (i) as has become generally available to the public, (ii) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such party or to the Board of Governors of the Federal Reserve
System or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (iii) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation or regulatory proceeding, (iv) in order to comply with any
law, order, regulation or ruling applicable to such party, or (v) to any
prospective assignee or participant in connection with any contemplated
assignment of any rights or obligations hereunder, or any sale of any
participation therein, by such Party pursuant to Section 9.7, if such
prospective assignee or participant, as the case may be, executes an agreement
with the Company containing provisions substantially similar to those contained
in this Section 9.8; provided, however, that the Company acknowledges that the
Administrative Agent has disclosed and may continue to disclose such information
as the Administrative Agent in its sole discretion determines is appropriate to
the Lenders from time to time.
SECTION IX.9 Consent to Jurisdiction. (a) Each Borrower hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or
the holder of any Note in respect of, but only in respect of, any claims or
causes of action arising out of or relating to this Agreement or the Notes (such
claims and causes of action, collectively, being "Permitted Claims"), and each
Borrower hereby irrevocably agrees that all Permitted Claims may be heard and
determined in such New York State court or in such Federal court. Each Borrower
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any aforementioned court in respect of Permitted Claims. Each Borrower hereby
irrevocably appoints CT Corporation System (the "Process Agent"), with an office
on the date hereof at 1633
<PAGE> 79
75
Broadway, New York, New York 10019, as its agent to receive on behalf of such
Borrower and its property service of copies of the summons and complaint and any
other process which may be served by the Administrative Agent, any Lender or the
holder of any Note in any such action or proceeding in any aforementioned court
in respect of Permitted Claims. Such service may be made by delivering a copy of
such process to the Company by courier and by certified mail (return receipt
requested), fees and postage prepaid, both (i) in care of the Process Agent at
the Process Agent's above address and (ii) at the Company's address specified
pursuant to Section 9.2, and each Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. Each Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section 9.9 (i) shall affect the right of
any Lender, the holder of any Note or the Administrative Agent or the CAF
Advance Agent to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Lender, the holder of any Note or the
Administrative Agent or the CAF Advance Agent to bring any action or proceeding
against any Borrower or its property in the courts of other jurisdictions or
(ii) shall be deemed to be a general consent to jurisdiction in any particular
court or a general waiver of any defense or a consent to jurisdiction of the
courts expressly referred to in subsection (a) above in any action or proceeding
in respect of any claim or cause of action other than Permitted Claims.
SECTION IX.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION IX.11 Rate of Interest. It is the intention of the
parties hereto that each Lender shall each conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it, then, in that event,
notwithstanding anything to the contrary in this Agreement or in the Notes to
the order of such Lender, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to such Lender
that is contracted for, taken, reserved, charged or received by such Lender
hereunder, or under such Notes or otherwise, shall under no circumstances exceed
the maximum amount allowed by such applicable law, and any excess shall be
credited by such Lender on the principal amount of the sums owed to such Lender
(or, if all amounts owing to such Lender shall have been paid in full, refunded
by such Lender to the applicable Borrower); or (b) in the event that a
prepayment of any Advances owed to any Lender is required, then such
consideration that constitutes interest under law applicable to such Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for shall be cancelled automatically by such
Lender as
<PAGE> 80
76
of the date of such prepayment and, if theretofore paid, shall be credited by
such Lender on the principal amount of such prepayment obligation (or, if the
principal amount of such prepayment obligation shall have been paid in full,
refunded by such Lender to the applicable Borrower). To the extent that Article
5069-1.04 of the Texas Revised Civil Statutes is relevant to any Lender for the
purpose of determining the maximum amount of interest allowed by applicable law,
such Lender hereby elects to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect,
subject to such Lender's right subsequently to change such method in accordance
with applicable law. In no event, however, shall Article 5069, Chapter 15, of
the Texas Revised Civil Statutes apply to this Agreement or the Notes or the
transactions contemplated hereby.
SECTION IX.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery to the Administrative Agent of a counterpart executed by a
Lender shall constitute delivery of such counterpart to all of the Lenders. This
Agreement may be delivered by facsimile transmission of the relevant signature
pages hereof.
<PAGE> 81
77
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
EL PASO NATURAL GAS COMPANY
By: /s/ WAYNE B. ALLRED
-------------------------------------
Title: Vice President and Treasurer
TENNESSEE GAS PIPELINE COMPANY
By: /s/ WAYNE B. ALLRED
-------------------------------------
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF Advance
Agent and a Lender
By: /s/ PETER M. LING
-------------------------------------
Title: Vice President
CITIBANK, N.A., as Documentation
Agent and as a Lender
By: /s/ CHRISTOPHER LYONS
-------------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Syndication Agent
and as a Lender
By: /s/ JOHN KOWALCZUK
-------------------------------------
Title: Vice President
<PAGE> 82
78
ABN-AMRO BANK, N.V.
By: /s/ MICHAEL NEPVEUX
-------------------------------------
Title: Vice President
By: /s/ GORDON CHANG
-------------------------------------
Title: Vice President
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ KYLE LOUGHLIN
-------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ CLAIRE LIU
-------------------------------------
Title: Managing Director
BANKBOSTON, N.A.
By: /s/ MICHAEL KANE
-------------------------------------
Title: Managing Director
BANK OF MONTREAL IRELAND PLC
By: /s/ BARRY MONKS
-------------------------------------
Title: Financial Controller
THE BANK OF NEW YORK
By: /s/ RAYMOND J. PALMER
-------------------------------------
Title: Vice President
<PAGE> 83
79
THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. ASHBY
-------------------------------------
Title: Senior Manager, Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ MICHAEL MEISS
-------------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ MIKE SHRYOCK
-------------------------------------
Title: Vice President
BARCLAYS BANK PLC
By: /s/ RICHARD B. WILLIAMS
-------------------------------------
Title: Director
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ JOHN CARLSON
-------------------------------------
Title: Vice President
By: /s/ SYLVIA K. CHENG
-------------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ DEAN BALICE
-------------------------------------
Title: Senior Vice President
<PAGE> 84
80
CIBC INC.
By: /s/ ALEKSANDRA K. DYMANUS
------------------------------------
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PHILIPPE SOUSTRA
------------------------------------
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ SEIJI IMAI
------------------------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ STEPHAN A. WIEDEMANN
------------------------------------
Title: Director
By: /s/ SUSAN L. PEARSON
------------------------------------
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ LAWRENCE E. JONES
------------------------------------
Title: Vice President
By: /s/ MICHAEL E. TERRY
------------------------------------
Title: Assistant Vice President
<PAGE> 85
81
THE FUJI BANK, LIMITED-HOUSTON
AGENCY
By: /s/ NATE ELLIS
--------------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ KAZUTOSHI KUWAHARA
--------------------------------------
Title: Executive Vice President
KREDIETBANK N.V., GRAND CAYMAN
BRANCH
By: /s/ ROBERT SNAUFFER
--------------------------------------
Title: Vice President
By: /s/ TOD R. ANGUS
--------------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By: /s/ DOUGLAS A. WHIDDON
--------------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ E. MARC CUENOD, JR.
--------------------------------------
Title: First Vice President
<PAGE> 86
82
NATIONAL WESTMINSTER BANK PLC NEW
YORK BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------
Title: Manager and Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------
Title: Manager and Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ MARY LOUISE ALLEN
--------------------------------------
Title: Vice President
NORINCHUKIN BANK, NEW YORK BRANCH
By: /s/ TAKESHI AKIMOTO
--------------------------------------
Title: General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ THOMAS K. GRUNDMAN
--------------------------------------
Title:
ROYAL BANK OF CANADA
By: /s/ J. D. FROST
--------------------------------------
Title: Senior Manager
<PAGE> 87
83
THE SAKURA BANK, LIMITED - NEW YORK
BRANCH
By: /s/ YASUMASA KIKUCHI
--------------------------------------
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ RICHARD A. GOULD
--------------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ HARUMITSI SEKI
--------------------------------------
Title: General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ FREDERIC B. HAWLEY
--------------------------------------
Title: Manager
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ EVANS SWANN
--------------------------------------
Title: Managing Director
By: /s/ W. BENSON VANCE
--------------------------------------
Title: Assistant Vice President
THE YASUDA TRUST & BANKING, CO.,
LTD.
By: /s/ ROHN LAUDENSCHLAGER
--------------------------------------
Title: Senior Vice President
<PAGE> 88
SCHEDULE I
----------
COMMITMENTS, ADDRESSES, ETC.
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Chase Manhattan Bank $42,500,000
Global Oil & Gas
270 Park Avenue, 32nd Floor
New York, New York 10017
Attention: Peter Ling
Telephone: 212-270-4676
Telecopier: 212-270-3897
ABN AMRO Bank, N.V. $27,500,000
135 South LaSalle, Suite 625
Chicago, Illinois 60603
Attention: Loan Administration
Telephone: 312-904-8865
Telecopier: 312-904-6893
with a copy to:
ABN Amro Bank, N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Michael Nepview
Telephone: (713) 964-3316
Telecopier: (713) 621-5810
Australia and New Zealand Banking $12,500,000
Group Limited
1177 Avenue of the Americas
New York, New York 10036
Attention: Kyle Loughlin
Telephone: 212-801-9853
Telecopier: 212-801-9131
Bank of America NT & SA $27,500,000
231 South LaSalle
Chicago, Illinois 60697
Attention: Debbie Aguilar
Telephone: 312-828-3793
Telecopier: 312-974-9626
<PAGE> 89
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
with a copy to:
Bank of America NT & SA
333 Clay Street
Suite 4550
Houston, Texas 77000
Attention: Paula Veazey
Telephone: 713-651-4877
Telecopier: 713-651-4807
BankBoston, N.A. $12,500,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02110
Attention: Debora Williams
Telephone: 617-434-9623
Telecopier: 617-434-9820
Bank of Montreal Ireland Plc $12,500,000
4th Floor, Segrave House
19/20 Earlsfort Terrace
Dublin 2, Ireland
Attention: Eric Lindstrom
Telephone: 353-1-662-9300
Telecopier: 353-1-662-9301
with a copy to:
Bank of Montreal
Suite 4400
700 Louisiana Street
Houston, Texas 77002
Attention: Natasha Gilossop
Telephone: (713) 546-9752
Telecopier: (713) 223-4007
The Bank of New York $20,000,000
One Wall Street, 19th Floor
New York, New York 10286
Attention: Terri Foran
Telephone: 212-635-7921
Telecopier: 212-635-7923
<PAGE> 90
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Bank of Nova Scotia $20,000,000
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone: 404-877-1500
Telecopier: 404-888-8998
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Jamie Conn
Telephone: 713-752-0900
Telecopier: 713-752-2425
The Bank of Tokyo-Mitsubishi, Ltd. $27,500,000
1100 Louisiana, Suite 2800
Houston, Texas 77002-5216
Attention: J.M. McIntyre
Telephone: 713-655-3845
Telecopier: 713-655-3855
Banque Nationale de Paris,
Houston Agency $12,500,000
333 Clay Street, Suite 3400
Houston, Texas 77002
Attention: Mike Shryock
Telephone: 713-951-1224
Telecopier: 713-659-1414
Barclays Bank PLC $20,000,000
222 Broadway
New York, New York 10038
Attention: Sal Esposito
Telephone: 212-412-1516
Telecopier: 212-412-7585
Bayerische Vereinsbank AG,
Los Angeles Agency $12,500,000
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson/Jarunee
Hanpachern
Telephone: 213-629-1821
Telecopier: 213-622-6341
<PAGE> 91
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Caisse Nationale de Credit Agricole $12,500,000
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Karen Bergstrom
Telephone: 312-917-7420
Telecopier: 312-372-2628
CIBC Inc. $27,500,000
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $35,000,000
One Court Square
Long Island City, New York 11120
Attention: Leena Caligiure
Telephone: 718-248-5762
Telecopier: 718-248-4844/4845
Credit Lyonnais New York Branch $27,500,000
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
The Dai-Ichi Kangyo Bank, Ltd. $12,500,000
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Christine Dell'Aira
Telephone: 212-432-8841
Telecopier: 212-432-0194
Deutsche Bank AG New York and/or Cayman $27,500,000
Islands Branches
31 West 52nd Street
New York, New York 10019
Attention: Stephan A. Wiedemann
Telephone: 212-469-8663
Telecopier: 212-469-8212
Dresdner Bank AG, New York and Grand $12,500,000
Cayman Branches
75 Wall Street
New York, New York 10005
Attention: Mike Terry
Telephone: 212-429-2224
Telecopier: 212-429-2129
<PAGE> 92
5
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Fuji Bank Limited-Houston Agency $20,000,000
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Attention: Charles van Ravenswaay
Telephone: 713-650-7829
Telecopier: 713-759-0048
The Industrial Bank of Japan $12,500,000
Trust Company
Allen Three Center
333 Clay, Suite 4850
Houston, Texas 77002
Attention: W. Lynn Williford
Telephone: 713-651-9444
Telecopier: 713-651-9209
Kredietbank N.V., New York Branch $27,500,000
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma/
Loan Administration
Telephone: 212-541-0657
Telecopier: 212-956-5581
The Long-Term Credit Bank of Japan, Ltd. $12,500,000
165 Broadway
New York, New York 10006
Attention: Bob Pacifici
Telephone: 212-335-4801
Telecopier: 212-608-3452
with a copy to:
2200 Ross Avenue, Suite 4700 West
Dallas, Texas 75201
Attention: Doug Whiddon
Telephone: 214-969-5352
Telecopier: 214-969-5357
Mellon Bank, N.A. $20,000,000
Energy and Utilities, 44th Floor
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: A. Gary Chace
Telephone: 412-236-2785
Telecopier: 412-234-8888
<PAGE> 93
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Morgan Guaranty Trust Company of
New York $35,000,000
60 Wall Street
22nd Floor
New York, New York 10260
Attention: John Kowalczuk
Telephone: 212-648-7612
Telecopier: 212-648-5014
National Westminster Bank Plc $12,500,000
New York Branch
175 Water Street, 19th Floor
New York, New York 10038
Attention: Commercial Lending Unit
Telephone: 212-602-4180
Telecopier: 212-602-4118
NationsBank of Texas, N.A. $27,500,000
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch $20,000,000
245 Park Avenue, 29th Floor
New York, New York 10167
Attention: Tsuneo Tsukagaki
Telephone: 212-697-1717
Telecopier: 212-697-5754
PNC Bank, National Association $20,000,000
One PNC Bank Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Thomas K. Grundman
Telephone: 412-762-3025
Telecopier: 412-762-2571
Royal Bank of Canada $27,500,000
Financial Square
23rd Floor
New York, New York 10005-2531
Attention: Assistant Manager,
Loan Processing
Telephone: 212-428-6321
Telecopier: 212-428-2372
<PAGE> 94
7
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
with copies to:
Royal Bank of Canada
12450 Greenspoint Drive
Suite 1450
Houston, Texas 77060
Attention: Doug Frost
Telephone: 281-874-5664
Telecopier: 281-874-0081
The Sakura Bank, Limited -
New York Branch $12,500,000
277 Park Avenue, 45th Floor
New York, New York 10172
Attention: David Speir
Telephone: 212-756-6778
Telecopier: 212-888-7651
Societe General
Southwest Agency $20,000,000
Suite 4800
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Lia Grerra
Telephone: 214-979-2769
Telecopier: 214-754-0171
The Sumitomo Bank, Limited $20,000,000
277 Park Avenue
New York, New York 10172
Attention: Jessica Cueto
Telephone: 212-224-4132
Telecopier: 212-224-4537
with a copy to:
The Sumitomo Bank, Limited
700 Louisiana Street
Suite 1750
Houston, Texas 77002
Attention: Energy Group
Toronto Dominion (Texas), Inc. $27,500,000
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Frederic Hawley
Telephone: 713-653-8281
Telecopier: 713-951-9921
<PAGE> 95
8
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Union Bank of Switzerland,
Houston Agency $20,000,000
1100 Louisiana, Suite 4500
Houston, Texas 77002
Attention: Evans Swann
Telephone: 713-655-6500
Telecopier: 713-655-6555
The Yasuda Trust & Banking, Co., Ltd. $12,500,000
666 Fifth Avenue, Suite 801
New York, New York 10103
Attention: Andrew Orsen
Telephone: 212-373-5879
Telecopier: 212-373-5796
<PAGE> 96
EXHIBIT A
FORM OF
NOTE
$__________________ New York, New York
October 29, 1997
FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of (the "Lender") at the office of The Chase Manhattan Bank, located at
270 Park Avenue, New York, New York 10017, in lawful money of the United States
of America and in same day funds, on the second anniversary of the Termination
Date (or if the Lender is an Objecting Lender, the second anniversary of the
Commitment Expiration Date applicable to the Lender) the principal amount of (a)
DOLLARS ($ ), or, if less, (b) the aggregate unpaid principal amount of all
Revolving Credit Advances made by the Lender to the Borrower pursuant to
subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in the Credit Agreement.
The holder of this Note is authorized to, and prior to any transfer
hereof shall, endorse on the schedules attached hereto and made a part hereof or
on a continuation thereof which shall be attached hereto and made a part hereof
the date, Type and amount of each Revolving Credit Advance made pursuant to
subsection 2.1 of the Credit Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof, each conversion
of all or a portion thereof to another Type and, in the case of Eurodollar Rate
Advances, the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not affect
the obligations of the Borrower in respect of such Revolving Credit Advance.
This Note (a) is one of the Notes referred to in the $750,000,000
364-Day Revolving Credit and Competitive Advance Facility Agreement, dated as of
October 29, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among El Paso Natural Gas Company, Tennessee Gas
Pipeline Company, the Lender, the other banks and financial institutions from
time to time parties thereto, The Chase Manhattan Bank, as Administrative Agent
and CAF Advance Agent, Citibank, N.A., as Documentation Agent, and Morgan
Guaranty Trust
<PAGE> 97
A-2
Company of New York, as Syndication Agent (b) is subject to the provisions of
the Credit Agreement and (c) is subject to optional and mandatory prepayment in
whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind except those
expressly required under the Credit Agreement.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[BORROWER]
By __________________
Title:
<PAGE> 98
Schedule A to Note
ADVANCES, CONVERSIONS AND REPAYMENTS OF BASE RATE ADVANCES
<TABLE>
<CAPTION>
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
Amount of Base Rate
Amount Amount of Principal of Advances Converted to Unpaid Principal
Amount of Base Converted to Base Rate Advances Eurodollar Rate Balance of Base Rate Notation
Rate Advances Base Rate Advances Repaid Advances Advances Made By
Date
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
<S> <C> <C> <C> <C> <C> <C>
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
- ----------- ---------------- ---------------------- ------------------------ ---------------------- --------------------- --------
</TABLE>
<PAGE> 99
Schedule B to Note
ADVANCES, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR RATE ADVANCES
<TABLE>
<CAPTION>
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
Interest Period and Amount of Principal Amount of Eurodollar Unpaid Principal
Amount of Amount Converted Eurodollar Rate with of Eurodollar Rate Rate Advances Balance of Notation
Date Eurodollar Rate to Eurodollar Rate Respect Thereto Advances Repaid Converted to Base Eurodollar Rate Made By
Advances Advances Rate Advances Advances
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
- ---- --------------- -------------------- -------------------- ------------------- -------------------- ---------------- --------
</TABLE>
<PAGE> 1
EXHIBIT 10.B
FIRST AMENDMENT
FIRST AMENDMENT, dated as of October 9, 1998 (this
"Amendment"), to the $750,000,000 364-Day Revolving Credit and Competitive
Advance Facility Agreement, dated as of October 29, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among EL PASO NATURAL GAS COMPANY, a Delaware corporation ("EPNGC"), TENNESSEE
GAS PIPELINE COMPANY, a Delaware corporation ("Tennessee"), the several banks
and other financial institutions from time to time parties thereto (the
"Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent (in such capacity, the "Administrative Agent") and as CAF
Advance Agent (in such capacity, the "CAF Advance Agent") for the Lenders
thereunder, CITIBANK, N.A., as documentation agent (in such capacity, the
"Documentation Agent") for the Lenders, and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as syndication agent (in such capacity, the "Syndication Agent") for the
Lenders.
W I T N E S S E T H:
WHEREAS, EPNGC, Tennessee, the Administrative Agent, the CAF
Advance Agent, the Documentation Agent, the Syndication Agent and the Lenders
are parties to the Credit Agreement; and
WHEREAS, EPNGC and Tennessee have requested that, pursuant to
Section 9.1 of the Credit Agreement, the Lenders amend certain terms in the
Credit Agreement in the manner provided for herein and the Lenders are agreeable
to such request upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other valuable consideration, the receipt
of which is hereby acknowledged, EPNGC, Tennessee and the Lenders hereby agree
as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
2. Amendment to Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended by inserting the following new definition in correct
alphabetical order:
"5-Year Facility" has the meaning assigned to such term in
Section 5.2(c).
3. Amendment to Section 2.8. Section 2.8 of the Credit
Agreement is hereby amended by deleting in its entirety the table of Facility
Fee rates appearing in such Section and substituting in lieu thereof the
following table of Facility Fee rates:
<PAGE> 2
2
<TABLE>
<CAPTION>
"Bond Rating Facility
(S&P/Moody's) Level Fee Rate
------------- ----- --------
<S> <C> <C>
A/A2 or higher I .05%
A-/A3 II .06%
BBB+/Baa1 III .08%
BBB/Baa2 IV .10%
BBB-/Baa3 V .11%
BB+/Ba1 or lower VI .16%;"
</TABLE>
4. Amendment to Section 5.2(c). Section 5.2(c) of the Credit
Agreement is hereby amended by:
(i) Inserting the following phrase after the word
"hereof" in clause (B)(y): "(the `5-Year Facility')"
(ii) Deleting the word "and" from clause (D) and inserting
a comma in lieu thereof; and
(iii) Deleting the period at the end of clause (E) and
inserting the following text:
"and (F) Debt, Guarantees or reimbursement
obligations incurred by Tennessee pursuant to one or more
commercial paper programs allowing for the issuance by
Tennessee of items of commercial paper having maturity dates
not later than one year from the dates of their respective
issuance provided that such Debt, Guarantees or reimbursement
obligations of Tennessee shall be in an aggregate amount not
to exceed at any time the excess of (x) the sum of (1) the
aggregate amount of Commitments and (2) the aggregate amount
of Commitments as defined in the 5-Year Facility, over (y) the
sum of (1) the aggregate amount of Advances, (2) the aggregate
amount of Advances, as defined in and outstanding pursuant to,
the 5-Year Facility, and (3) the aggregate principal amount of
commercial paper outstanding from time to time that (I) is
issued by the Company and its Subsidiaries (other than
Tennessee) and (II) relies upon credit availability under
either this Agreement or the 5-Year Facility for commercial
paper liquidity purposes."
5. Amendment to Schedule I of the Credit Agreement. Schedule I
of the Credit Agreement is hereby amended by deleting such Schedule in its
entirety and substituting in lieu thereof Schedule I attached hereto.
<PAGE> 3
3
6. Agreement of Borrowers and Lenders. Notwithstanding the
provisions of Section 2.23 of the Credit Agreement, the Lenders hereby extend
the Stated Termination Date to October 27, 1999 as requested in the Extension
Request of the Company dated September 11, 1998.
7. Conditions to Effectiveness. This Amendment shall become
effective as of October 28, 1998 (the "Amendment Effective Date"), provided that
prior to such date the Administrative Agent shall have received counterparts
hereof duly executed by all the Lenders, EPNGC, Tennessee and Holding.
8. Representations. On and as of the date hereof, each
Borrower hereby confirms, reaffirms and restates that the representations and
warranties set forth in Section 4.1 of the Credit Agreement are true and correct
in all material respects, provided that the references to the Credit Agreement
therein shall be deemed to be references to the Credit Agreement after giving
effect to this Amendment.
9. Limited Consent. Except as expressly waived and amended
herein, the Credit Agreement shall continue to be and shall remain in full force
and effect. This Amendment shall not be deemed to be a waiver of, or consent to,
or a modification or amendment of, any other term or condition of the Credit
Agreement or to prejudice any other right or rights that the Lenders may now
have or may have in the future under or in connection with the Credit Agreement
or any of the instruments or agreements referred to therein, as the same may be
amended, supplemented or otherwise modified from to time.
10. Costs and Expenses. The Company agrees to pay or reimburse
the Administrative Agent for all its reasonable and customary out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation and
execution of this Amendment, and the consummation of the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of its counsel.
11. Counterparts; Execution by Facsimile. This Amendment may
be executed by one or more of the parties hereto in any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This Amendment may be delivered by, and
shall be effective as to the relevant party upon, facsimile transmission of the
relevant signature pages hereof.
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
13. Exiting Lenders. Each Lender which after the Amendment
Effective Date no longer holds a Commitment (an "Exiting Lender") is executing
this Amendment solely for the purpose of acknowledging that its Commitment will
terminate on the Amendment Effective Date upon repayment in full of all amounts
owing to it under the Credit Agreement on the
<PAGE> 4
4
Amendment Effective Date. The modifications to the Credit Agreement effected by
this Amendment are being approved by Lenders holding 100% of the Commitments
after giving effect to termination of the Commitments of the Exiting Lenders on
the Amendment Effective Date. On the Amendment Effective Date, the Borrowers
shall effect such borrowings and repayments among the Lenders (which need not be
pro rata among the Lenders) so that, after giving effect thereto, the respective
principal amount of Base Rate Advances and Eurodollar Rate Advances to the
Borrowers held by the Lenders shall be pro rata according to their respective
Commitment Percentages, as amended hereby. The Borrowers shall also repay, upon
the request and demand of any Exiting Lender, any CAF Advance to the Borrowers
held by such Exiting Lender. The Borrowers shall remain obligated to pay any
amounts due pursuant to subsection 9.4 of Credit Agreement in connection with
such prepayments.
14. Consent of El Paso Energy Corporation. El Paso Energy
Corporation, as guarantor under its Guarantee, dated as of August 28, 1998 (the
"Holding Guarantee"), in favor of the Administrative Agent, hereby (a) consents
to the transactions contemplated hereby and (b) acknowledges and agrees that the
guarantees contained in the Holding Guarantee are, and shall remain, in full
force and effect after giving effect to this Amendment and all prior
modifications to the Credit Agreement.
<PAGE> 5
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective duly authorized officers as of the
date first above written.
EL PASO NATURAL GAS COMPANY
By: /s/ H. BRENT AUSTIN
------------------------------------
Title: Executive Vice President
TENNESSEE GAS PIPELINE COMPANY
By: /s/ H. BRENT AUSTIN
------------------------------------
Title: Executive Vice President
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF Advance
Agent and a Lender
By: /s/ PETER M. LING
------------------------------------
Title: Vice President
CITIBANK, N.A.
By: /s/ DAVID B. GORTE
------------------------------------
Title: Attorney-in-fact
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ KATHRYN SAYKO-YANES
------------------------------------
Title: Vice President
<PAGE> 6
6
ABN-AMRO BANK, N.V.
By: /s/ MICHAEL W. NEPVEUX
------------------------------------
Title: Group Vice President
By: /s/ KEVIN P. COSTELLO
------------------------------------
Title: Vice President
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
By: /s/ PAMELA COUCH
------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By: /s/ CLAIRE LIV
------------------------------------
Title: Managing Director
BANKBOSTON, N.A.
By: /s/ MICHAEL KANE
------------------------------------
Title: Managing Director
BANK OF MONTREAL IRELAND PLC
By: /s/ ERIC T. LINDSTROM
------------------------------------
Title: General Manager
<PAGE> 7
7
THE BANK OF NEW YORK
By: /s/ RAYMOND J. PALMER
------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
------------------------------------
Title: Loan Operations
THE BANK OF TOKYO-MITSUBISHI,
LTD., as an Exiting Lender
By: /s/ MICHAEL G. MEISS
------------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ WARREN R. ROSS
------------------------------------
Title: Assistant Vice President
BARCLAYS BANK PLC, as an Exiting Lender
By: /s/ SALVATORE ESPOSITO
------------------------------------
Title: Director
<PAGE> 8
8
BAYERISCHE HYPO UND- VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ CHRISTIAN TAYLOR
------------------------------------
Title: Vice President and Manager
By: /s/ JOHN CARLSON
------------------------------------
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By: /s/ KATHERINE L. ABBOTT
------------------------------------
Title: First Vice President
By: /s/ DAVID BOUHL, F.V.P.
------------------------------------
Title: Head of Corporate Banking,
Chicago
CIBC INC.
By: /s/ ROBIN W. ELLIOTT
------------------------------------
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ PHILLIPPE SOUSTRA
------------------------------------
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK,
LIMITED, as an Exiting Lender
By: /s/ EVERETT M. HARNER
------------------------------------
Title: Vice President
<PAGE> 9
9
DEUTSCHE BANK AG NEW YORK
BRANCH AND/OR CAYMAN
ISLANDS BRANCH
By: /s/ STEPHAN A. WIEDEMANN
------------------------------------
Title: Director
By: /s/ SUSAN L. PEARSON
------------------------------------
Title: Director
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By: /s/ THOMAS LAKE
------------------------------------
Title: Vice President
By: /s/ ROBERT PREMINGER
------------------------------------
Title: Assistant Treasurer
THE FUJI BANK, LIMITED-NEW YORK BRANCH
By: /s/ RAYMOND VENTURA
------------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ MIKE OAKES
------------------------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED HOUSTON OFFICE
(Authorized Representative)
<PAGE> 10
10
KBC BANK N.V.
By: /s/ ROBERT SNAUFFER
------------------------------------
Title: First Vice President
By: /s/ RAYMOND F. MURRAY
------------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ SADAO MURAOKA
------------------------------------
Title: Head of Southwestern Region
MELLON BANK, N.A.
By: /s/ ROGER E. HOWARD
------------------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK PLC NEW
YORK BRANCH
By: /s/ PATRICIA J. DUNDEE
------------------------------------
Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ PATRICIA J. DUNDEE
------------------------------------
Title: Senior Vice President
<PAGE> 11
11
NATIONSBANK OF TEXAS, N.A.
By: /s/ MARY LOUISE ALLEN
------------------------------------
Title: Vice President
THE NORINCHUKIN BANK, NEW YORK
BRANCH
By: /s/ YOSHIRO NIIRO
------------------------------------
Title: General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ THOMAS K. GRUNDMAN
------------------------------------
Title: Senior Vice President
ROYAL BANK OF CANADA
By: /s/ J. D. FROST
------------------------------------
Title: Senior Manager
THE SAKURA BANK, LIMITED - NEW
YORK BRANCH, as an Exiting Lender
By: /s/ YASUMASA KIKUCHI
------------------------------------
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ RICHARD A. GOULD
------------------------------------
Title: Director
<PAGE> 12
12
THE SUMITOMO BANK, LIMITED
By: /s/ C. MICHAEL GARRIOO
--------------------------------------
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ LINDA G. LAVIN
--------------------------------------
Title: Managing Director
UBS AG (as sucessor by merger to
Union Bank of Switzerland, Houston
Agency), New York Branch
By: /s/ ERIC C. HANSON
--------------------------------------
Title: Assistant Director
By: /s/ LEO L. BAITZ
--------------------------------------
Title: Director
THE YASUDA TRUST & BANKING,
CO., LTD., as an Exiting Lender
By: /s/ JUNICHIRD KAWAMURA
--------------------------------------
Title: Vice President
PARIBAS
By: /s/ BART SCHOUEST
--------------------------------------
Title: Managing Director
By: /s/ BETSY JOCHER
--------------------------------------
Title: Assistant Vice President
Consent of Holding:
EL PASO ENERGY CORPORATION
By: /s/ H. BRENT AUSTIN
--------------------------------
Title: Executive Vice President
<PAGE> 13
SCHEDULE I
COMMITMENTS, ADDRESSES, ETC.
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Chase Manhattan Bank $51,000,000
Global Oil & Gas
270 Park Avenue, 32nd Floor
New York, New York 10017
Attention: Peter Ling
Telephone: 212-270-4676
Telecopier: 212-270-3897
ABN AMRO Bank, N.V. $32,500,000
135 South LaSalle, Suite 625
Chicago, Illinois 60603
Attention: Josephine Zozubrado
Telephone: 312-904-8865
Telecopier: 312-904-6893
with a copy to:
ABN Amro Bank, N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Michael Nepvieux
Telephone: (713) 964-3316
Telecopier: (713) 621-5810
Australia and New Zealand Banking $14,250,000
Group Limited
1177 Avenue of the Americas
New York, New York 10036
Attention: David Giacalone
Telephone: 212-801-9814
Telecopier: 212-556-4814
Bank of America National Trust $25,250,000
& Savings Association
3 Allen Center, Suite 4550
Houston, Texas 77002
Attention: Claire Liu
Telephone: 713-651-4855
Telecopier: 713-651-4841
</TABLE>
<PAGE> 14
2
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
with a copy to
Bank of America National Trust
& Savings Association
231 South LaSalle
Chicago, Illinois 60697
Attention: Debbie Aguilar
Telephone: 312-828-3793
Telecopier: 312-974-9626
BankBoston, N.A. $14,250,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02110
Attention: Debora Williams
Telephone: 617-434-9623
Telecopier: 617-434-9820
with a copy to:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attention: Michael Kane
Telephone: 617-434-5358
Telecopier: 617-434-3652
</TABLE>
<PAGE> 15
3
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Bank of Montreal Ireland Plc $12,500,000
4th Floor, Segrave House
19/20 Earlsfort Terrace
Dublin 2, Ireland
Attention: Eric Lindstrom
Telephone: 353-1-662-9300
Telecopier: 353-1-662-9301
with copies to:
Bank of Montreal
700 Louisiana Street, Suite 4400
Houston, Texas 77002
Attention: Natasha Gilossop
Telephone: 713-546-9752
Telecopier: 713-223-4007
and
Bank of Montreal
700 Louisiana Street, Suite 4400
Houston, Texas 77002
Attention: Cahal Carmody
Telephone: 713-546-9750
Telecopier: 713-223-4007
The Bank of New York $23,500,000
One Wall Street, 19th Floor
New York, New York 10286
Attention: Terri Foran
Telephone: 212-635-7921
Telecopier: 212-635-7923
</TABLE>
<PAGE> 16
4
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Bank of Nova Scotia $23,500,000
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone: 404-877-1500
Telecopier: 404-888-8998
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Jean-Paul Purdy
Telephone: 713-759-3433
Telecopier: 713-752-2425
Banque Nationale de Paris, $14,250,000
Houston Agency
333 Clay Street, Suite 3400
Houston, Texas 77002
Attention: Warren Ross
Telephone: 713-951-1224
Telecopier: 713-659-1414
Bayerische Hypo- und Vereinsbank AG, $12,500,000
Los Angeles Agency
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson
Telephone: 213-629-1821
Telecopier: 213-622-6341
Credit Agricole Indosuez $14,250,000
600 Travis Street, Suite 2340
Houston, Texas 77002
Attention: Brian Knezeak
Telephone: 713-223-7001
Telecopier: 713-223-7029
</TABLE>
<PAGE> 17
5
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
with a copy to:
Credit Agricole Indosuez
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Teresa Howard
Telephone: 312-917-7554
Telecopier: 312-372-2628
CIBC Inc. $27,500,000
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Katherine McGovern
Telephone: 770-319-4821
Telecopier: 770-319-4950
with a copy to:
CIBC Inc.
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $41,750,000
One Court Square
Long Island City, New York 11120
Attention: Charles Pecora
Telephone: 718-248-9490
Telecopier: 718-248-1138
with a copy to:
Citibank, N.A.
1200 Smith Street, Suite 2000
Houston, Texas 77002
Attention: Sumit Mathai
Telephone: 713-654-2868
Telecopier: 713-654-2938
</TABLE>
<PAGE> 18
6
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Credit Lyonnais New York Branch $32,500,000
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
With copy to:
Credit Lyonnais
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Richard Kaufman
Telephone: 713-753-0500
Telecopier: 713-751-0307
Deutsche Bank AG New York and/ $32,500,000
or Cayman Islands Branches
31 West 52nd Street
New York, New York 10019
Attention: Stephan A. Wiedemann
Telephone: 212-469-8663
Telecopier: 212-469-8212
Dresdner Bank AG, New York and Grand Cayman $14,250,000
Branches
75 Wall Street
New York, New York 10005
Attention: Mike Terry
Telephone: 212-429-2224
Telecopier: 212-429-2129
The Fuji Bank, Limited-New York Branch $20,000,000
Two World Trade Center, 79th floor
New York, New York 10048
Attention: Audry Tsunematsu
Telephone: 212-898-2046
Telecopier: 212-321-9407
The Industrial Bank of Japan $14,250,000
Trust Company
Allen Three Center
333 Clay, Suite 4850
Houston, Texas 77002
Attention: W. Lynn Williford
Telephone: 713-651-9444
Telecopier: 713-651-9209
</TABLE>
<PAGE> 19
7
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
KBC Bank N.V. $32,500,000
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma/
Loan Administration
Telephone: 212-541-0657
Telecopier: 212-956-5581
with a copy to:
KBC Bank N.V.
125 West 55th Street
New York, New York 10019
Attention: Christine Park
Telephone: 212-541-0731
Telecopier: 212-541-0784
The Long-Term Credit Bank of Japan, Ltd. $12,500,000
165 Broadway
New York, New York 10006
Attention: Bob Pacifici
Telephone: 212-335-4801
Telecopier: 212-608-3452
with a copy to:
2200 Ross Avenue, Suite 4700 West
Dallas, Texas 75201
Attention: Kent Wallace
Telephone: 214-969-5352
Telecopier: 214-969-5357
Mellon Bank, N.A. $23,500,000
Energy Services Group
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: Roger E. Howard
Telephone: 412-234-5606
Telecopier: 412-236-1840
</TABLE>
<PAGE> 20
8
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Morgan Guaranty Trust Company of $35,000,000
New York
60 Wall Street
22nd Floor
New York, New York 10260
Attention: Stacy Haimes
Telephone: 212-648-9316
Telecopier: 212-648-5014
National Westminster Bank Plc $12,500,000
New York Branch
175 Water Street, 19th Floor
New York, New York 10038
Attention: Commercial Lending Unit
Telephone: 212-602-4180
Telecopier: 212-602-4118
NationsBank of Texas, N.A. $25,250,000
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
The Norinchukin Bank, New York Branch $23,500,000
245 Park Avenue, 29th Floor
New York, New York 10167
Attention: Tsuneo Tsukasaki
Telephone: 212-697-1717
Telecopier: 212-697-5754
PNC Bank, National Association $23,500,000
One PNC Bank Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Thomas K. Grundman
Telephone: 412-762-3025
Telecopier: 412-762-2571
</TABLE>
<PAGE> 21
9
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Royal Bank of Canada $27,500,000
Financial Square
23rd Floor
New York, New York 10005-2531
Attention: Linda Swanston,
Loan Processing
Telephone: 212-428-6321
Telecopier: 212-428-2372
with a copy to:
Royal Bank of Canada
12450 Greenspoint Drive
Suite 1450
Houston, Texas 77060
Attention: Doug Frost
Telephone: 281-874-5664
Telecopier: 281-874-0081
Societe Generale, $23,500,000
Southwest Agency
Suite 4800
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Lia Grerra
Telephone: 214-979-2769
Telecopier: 214-754-0171
The Sumitomo Bank, Limited $20,000,000
277 Park Avenue
New York, New York 10172
Attention: Jessica Cueto
Telephone: 212-224-4132
Telecopier: 212-224-4537
with a copy to:
The Sumitomo Bank, Limited
700 Louisiana Street
Suite 1750
Houston, Texas 77002
Attention: John Song
Telephone: 713-238-8236
Telecopier: 713-259-0020
</TABLE>
<PAGE> 22
10
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Toronto Dominion (Texas), Inc. $32,500,000
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Sonja Jordan
Telephone: 713-653-8244
Telecopier: 713-951-9921
with a copy to:
Toronto Dominion
31 West 52nd Street
New York, New York 10019
Attention: Linda Lavin
Telephone: 212-827-7779
Telecopier: 212-262-1929
Union Bank of Switzerland, $23,500,000
New York Agency
299 Park Avenue
New York, New York 10171
Attention: Robert Casey
Telephone: 212-821-3329
Telecopier: 212-821-3914
Banque Paribas $14,250,000
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: John Roberts
Telephone: 713-659-4811
Telecopier: 713-659-6915
with a copy to:
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Evans-Hughes
Telephone: 713-659-4811
Telecopier: 713-659-5305
</TABLE>
<PAGE> 1
EXHIBIT 10.C
GUARANTEE
GUARANTEE, dated as of August 28, 1998, made by EL PASO ENERGY
CORPORATION, a Delaware corporation (the "Guarantor"), in favor of THE CHASE
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
Agent") for the several banks and other financial institutions (the "Lenders")
from time to time parties to the $750,000,000, 364-Day Revolving Credit and
Competitive Advance Facility Agreement, dated as of October 29, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among El Paso Natural Gas Company, Tennessee Gas Pipeline Company,
the Administrative Agent, the Lenders, The Chase Manhattan Bank, as CAF Advance
Agent, Citibank, N.A., as Documentation Agent, and Morgan Guaranty Trust
Company, as Syndication Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Advances to the Borrowers upon the terms and subject to
the conditions set forth therein, to be evidenced by the Notes issued by the
Borrowers under the Credit Agreement;
WHEREAS, the Guarantor has been established for the purpose of
holding, and currently holds, 100% of the common stock of EPNGC and EPTPC, and
it is to the advantage of Guarantor that the Lenders make Advances to the
Borrowers; and
WHEREAS, pursuant to Section 5.1(g) of the Credit Agreement,
the Borrowers have covenanted to cause the Guarantor, upon its formation, to
execute and deliver this Guarantee to the Administrative Agent for the ratable
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises contained
herein and of the commitments of the Lenders to make their respective Advances
to the Borrowers under the Credit Agreement, the Guarantor hereby agrees with
the Administrative Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement and the following terms shall have the following
meanings.
"Contractual Obligation" as to any Person, means any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or
<PAGE> 2
2
administrative functions of or pertaining to government.
"Obligations" means the collective reference to the unpaid
principal of and interest on the Advances and the Notes and all other financial
liabilities of the Borrowers to the Administrative Agent, the CAF Advance Agent
and the Lenders (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Advances and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Borrower whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement or the Notes, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent, the CAF Advance
Agent or to the Lenders that are required to be paid by any Borrower pursuant to
the terms of the Credit Agreement or this Agreement).
"Requirement of Law" as to any Person, means the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and Section and
paragraph references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable benefit of
the Lenders and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment by the Borrowers when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto any or all Borrowers may be free from any Obligations.
<PAGE> 3
3
(c) No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Lender from
any Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor hereunder, which
shall, notwithstanding any such payment or payments (other than payments made by
the Guarantor in respect of the Obligations or payments received or collected
from the Guarantor in respect of the Obligations), remain liable for the
Obligations until the Obligations are paid in full and the Commitments are
terminated.
(d) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability hereunder, it will notify the Administrative
Agent and such Lender in writing that such payment is made under this Guarantee
for such purpose.
3. Right of Set-off. Upon the occurrence and continuance of
any Event of Default, the Administrative Agent and each Lender is hereby
irrevocably authorized at any time and from time to time without notice to the
Guarantor, any such notice being expressly waived by the Guarantor, to set off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of the Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against or on account of the
obligations and liabilities of the Guarantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against the Guarantor, in any currency,
whether arising hereunder, or under the Credit Agreement, or any Note, as the
Administrative Agent or such Lender may elect, whether or not the Administrative
Agent or such Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent and each Lender shall notify the Guarantor promptly of any
such set-off and the application made by the Administrative Agent or such
Lender, as the case may be, of the proceeds thereof; provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each Lender under this
paragraph are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or such
Lender may have.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder, or any set-off or application of funds of the
Guarantor by the Administrative Agent or any Lender, the Guarantor shall not be
entitled to be subrogated to any of the rights of the Administrative Agent or
any Lender against the Borrowers or against any collateral security or guarantee
or right of offset held by the Administrative Agent or any Lender for the
payment of the Obligations, nor shall the Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrowers in respect of payments made
by the Guarantor
<PAGE> 4
4
hereunder, until all amounts owing to the Administrative Agent and the Lenders
by the Borrowers on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by the Guarantor in trust
for the Administrative Agent and the Lenders, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
the Administrative Agent in the exact form received by the Guarantor (duly
indorsed by the Guarantor to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.
5. Amendments, etc. with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor, and without notice to
or further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender, and any of the Obligations continued,
and the Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and the Credit Agreement,
any Notes and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the Majority Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any Lender for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on any Borrower or any other guarantor, and any failure by
the Administrative Agent or any Lender to make any such demand or to collect any
payments from any Borrower or any such other guarantor or any release of any
Borrower or such other guarantor shall not relieve the Guarantor of its
obligations or liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the Administrative
Agent or any Lender against the Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Guarantee or acceptance of this Guarantee; the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Borrowers or the Guarantor, on the one
hand, and the Administrative Agent and the Lenders, on the other, shall likewise
be conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any
<PAGE> 5
5
Borrower or the Guarantor with respect to the Obligations. This Guarantee shall
be construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, any Note, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any
Borrower against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Borrower or any other
Person or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to pursue such other rights or remedies or to collect any
payments from any Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Borrower or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve the Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Lender against the Guarantor. This Guarantee shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon the Guarantor and its successors and assigns thereof, and shall inure
to the benefit of the Administrative Agent and the Lenders, and their respective
successors, indorsees, transferees and assigns, until all the Obligations and
the obligations of the Guarantor under this Guarantee shall have been satisfied
by payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of the Credit Agreement any Borrower may be
free from any Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
8. Payments. The Guarantor hereby agrees that the Obligations
will be paid to the Administrative Agent without set-off or counterclaim in U.S.
Dollars at the office of the Administrative Agent located at 270 Park Avenue,
New York, New York 10017.
9. Representations and Warranties. The Guarantor represents
and warrants to the Administrative Agent and the Lenders that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good
<PAGE> 6
6
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority and the legal right to own and operate its
property, to lease the property it operates and to conduct the business in which
it is currently engaged;
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations under,
this Guarantee, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any Requirement of Law or Contractual
Obligation of the Guarantor and will not result in or require the creation or
imposition of any Lien on any of the properties or revenues of the Guarantor
pursuant to any Requirement of Law or Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor of
the Guarantor) is required in connection with the execution, delivery,
performance, validity or enforceability of this Guarantee; and
(f) there is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened, against or involving the Guarantor or
against any of its properties or revenues in any court or before any arbitrator
of any kind, or before any Governmental Authority, (1) with respect to this
Guarantee or any of the transactions contemplated hereby, or (2) which in the
reasonable judgment of the Guarantor (taking into account the exhaustion of all
appeals) has any reasonable likelihood of having a material adverse effect on
the financial condition or operations of the Guarantor and its consolidated
Subsidiaries on a consolidated basis.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on the date of
each borrowing by any Borrower under the Credit Agreement on and as of such date
of borrowing as though made hereunder on and as of such date.
10. Authority of Administrative Agent. The Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Guarantor, the Administrative Agent
shall be conclusively presumed to be acting as agent for the
<PAGE> 7
7
Lenders with full and valid authority so to act or refrain from acting, and the
Guarantor shall not be under any obligation, or entitlement, to make any inquiry
respecting such authority.
11. Notices. All notices, requests and demands to or upon the
Administrative Agent, any Lender or the Guarantor to be effective shall be in
writing (including telecopier and other readable communication) and mailed by
certified mail, return receipt requested, telecopied or otherwise transmitted or
delivered.
(a) if to the Administrative Agent or any Lender, at its
address or transmission number for notices provided in Section 9.2 of the Credit
Agreement; and
(b) if to the Guarantor, at its address or transmission number
for notices set forth under its signature below.
All such notices and communications shall, if so mailed,
telecopied or otherwise transmitted, be effective when received, if mailed, or
when the appropriate answerback or other evidence of receipt is given, if
telecopied or otherwise transmitted. The Administrative Agent, each Lender and
the Guarantor may change its address and transmission numbers for notices by
notice in the manner provided in this Section.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. Integration. This Guarantee represents the agreement of
the Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Administrative Agent or any Lender relative
to the subject matter hereof not reflected herein.
14. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantor and the Administrative Agent, provided that any provision of this
Guarantee may be waived by the Administrative Agent and the Lenders in a letter
or agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall by
any act (except by a written instrument pursuant to paragraph 0 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any
<PAGE> 8
8
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
15. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantor and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns.
17. Governing Law. PURSUANT TO SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
18. Consent to Jurisdiction. The Guarantor hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City and any appellate court from any thereof in any action or
proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or the
holder of any Note in respect of, but only in respect of, any claims or causes
of action arising out of or relating to this Guarantee (such claims and causes
of action, collectively, being "Permitted Claims"), and the Guarantor hereby
irrevocably agrees that all Permitted Claims may be heard and determined in such
New York State court or in such Federal court. The Guarantor hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any
aforementioned court in respect of Permitted Claims. The Guarantor hereby
irrevocably appoints CT Corporation System (the "Process Agent"), with an office
on the date hereof at 1633 Broadway, New York, New York 10019, as its agent to
receive on behalf of the Guarantor and its property service of copies of the
summons and complaint and any other process which may be served by the
Administrative Agent, any Lender or the holder of any Note in any such action or
proceeding in any aforementioned court in respect of Permitted Claims. Such
service may be made by delivering a copy of such process to the Guarantor by
courier and by certified mail (return receipt requested), fees and postage
prepaid, both (i) in care of the Process Agent at the Process Agent's above
address and (ii) at the Guarantor's address set forth under its signature below,
and the Guarantor hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. The Guarantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Guarantor hereby agrees to cause the Process Agent to deliver to the
Administrative Agent by the Closing Date a letter from the Process Agent
agreeing to act as Process Agent for the Guarantor.
<PAGE> 9
9
(b) Nothing in this Section 18 (i) shall affect the right of
any Lender, the holder of any Note or the Administrative Agent or the CAF
Advance Agent to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Lender, the holder of any Note or the
Administrative Agent or the CAF Advance Agent to bring any action or proceeding
against the Guarantor or its property in the courts of other jurisdictions or
(ii) shall be deemed to be a general consent to jurisdiction in any particular
court or a general waiver of any defense or a consent to jurisdiction of the
courts expressly referred to in subsection (a) above in any action or proceeding
in respect of any claim or cause of action other than Permitted Claims.
<PAGE> 10
10
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
EL PASO ENERGY CORPORATION
By: /s/ H. Brent Austin
------------------------------
Title: Executive Vice President
---------------------------
Address for Notices:
1001 Louisiana
Houston, Texas 77002
Tel: 713-420-3354
Fax: 713-420-4975
<PAGE> 1
EXHIBIT 10.D
================================================================================
EL PASO NATURAL GAS COMPANY
-------------------------------------
$750,000,000 5-YEAR
REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
DATED AS OF OCTOBER 29, 1997
-------------------------------------
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
AND CAF ADVANCE AGENT
CITIBANK, N.A.,
AS DOCUMENTATION AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
AS SYNDICATION AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS................... 1
SECTION 1.1 Certain Defined Terms......................................... 1
SECTION 1.2 Computation of Time Periods................................... 18
SECTION 1.3 Accounting Terms.............................................. 18
SECTION 1.4 References.................................................... 18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES................... 19
SECTION 2.1 The Revolving Credit Advances................................. 19
SECTION 2.2 Making the Revolving Credit Advances.......................... 19
SECTION 2.3 Evidence of Debt.............................................. 21
SECTION 2.4 CAF Advances.................................................. 21
SECTION 2.5 Procedure for CAF Advance Borrowings.......................... 22
SECTION 2.6 CAF Advance Payments.......................................... 25
SECTION 2.7 Evidence of Debt.............................................. 26
SECTION 2.8 Fees.......................................................... 26
SECTION 2.9 Reduction of the Commitments.................................. 27
SECTION 2.10 Repayment of Advances......................................... 27
SECTION 2.11 Interest on Revolving Credit Advances......................... 27
SECTION 2.12 Additional Interest on Eurodollar Rate Advances............... 28
SECTION 2.13 Interest Rate Determination................................... 29
SECTION 2.14 Voluntary Conversion of Advances.............................. 30
SECTION 2.15 Optional and Mandatory Prepayments............................ 31
SECTION 2.16 Increased Costs............................................... 32
SECTION 2.17 Increased Capital............................................. 33
SECTION 2.18 Illegality.................................................... 33
SECTION 2.19 Pro Rata Treatment, Payments and Computations................. 34
SECTION 2.20 Taxes......................................................... 35
SECTION 2.21 Sharing of Payments, Etc...................................... 38
SECTION 2.22 Use of Proceeds............................................... 39
SECTION 2.23 Extension of Stated Termination Date.......................... 39
SECTION 2.24 Commitment Increases.......................................... 40
SECTION 2.25 Replacement of Lenders........................................ 42
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING............... 43
SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement....... 43
SECTION 3.2 Conditions Precedent to Initial Advances...................... 43
SECTION 3.3 Conditions Precedent to Initial Advances to Any Borrowing
Subsidiary or Holding...................................... 44
SECTION 3.4 Conditions Precedent to Each Borrowing........................ 45
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................... 46
SECTION 4.1 Representations and Warranties of the Borrowers............... 46
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE V
COVENANTS OF THE BORROWERS......................... 49
SECTION 5.1 Affirmative Covenants......................................... 49
SECTION 5.2 Negative Covenants............................................ 51
SECTION 5.3 Reporting Requirements........................................ 54
SECTION 5.4 Restrictions on Material Subsidiaries......................... 57
ARTICLE VI
GUARANTEE............................... 58
SECTION 6.1 Guarantees.................................................... 58
SECTION 6.2 No Subrogation................................................ 59
SECTION 6.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights...................................................... 59
SECTION 6.4 Guarantee Absolute and Unconditional.......................... 60
SECTION 6.5 Reinstatement................................................. 61
ARTICLE VII
EVENTS OF DEFAULT............................ 61
SECTION 7.1 Event of Default.............................................. 61
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT............ 65
SECTION 8.1 Authorization and Action...................................... 65
SECTION 8.2 Administrative Agent's and CAF Advance Agent's Reliance,
Etc......................................................... 65
SECTION 8.3 Chase and Affiliates.......................................... 66
SECTION 8.4 Lender Credit Decision........................................ 66
SECTION 8.5 Indemnification............................................... 67
SECTION 8.6 Successor Administrative Agent and CAF Advance Agent.......... 67
ARTICLE IX
MISCELLANEOUS............................. 68
SECTION 9.1 Amendments, Etc............................................... 68
SECTION 9.2 Notices, Etc.................................................. 69
SECTION 9.3 No Waiver; Remedies........................................... 69
SECTION 9.4 Costs and Expenses; Indemnity................................. 69
SECTION 9.5 Right of Set-Off.............................................. 71
SECTION 9.6 Binding Effect................................................ 71
SECTION 9.7 Assignments and Participations................................ 71
SECTION 9.8 Confidentiality............................................... 74
SECTION 9.9 Consent to Jurisdiction....................................... 75
SECTION 9.10 GOVERNING LAW................................................. 76
SECTION 9.11 Rate of Interest.............................................. 76
SECTION 9.12 Effect on Outstanding CAF Advances............................ 76
SECTION 9.13 Execution in Counterparts..................................... 77
</TABLE>
SCHEDULE
Schedule I Commitments, Addresses, Etc.
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
-ii-
<PAGE> 4
Exhibit C Form of CAF Advance Request
Exhibit D Form of CAF Advance Offer
Exhibit E Form of CAF Advance Confirmation
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Opinion of [Associate] General Counsel
of the Company
Exhibit H Form of Opinion of New York Counsel to the
Company
Exhibit I Form of Process Agent Letter
Exhibit J Form of Joinder Agreement
Exhibit K Form of Opinion of [Associate] General Counsel of
the Company
Exhibit L Form of Opinion of New York Counsel to the Company
Exhibit M Form of Extension Request
Exhibit N Form of New Lender Supplement
Exhibit O Form of Commitment Increase Supplement
-iii-
<PAGE> 5
$750,000,000 5-YEAR REVOLVING CREDIT AND COMPETITIVE ADVANCE
FACILITY AGREEMENT, dated as of October 29, 1997, among EL PASO NATURAL GAS
COMPANY, a Delaware corporation ("EPNGC"), TENNESSEE GAS PIPELINE COMPANY, a
Delaware corporation ("Tennessee"), the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders"), THE
CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent
(in such capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent") for the Lenders hereunder, CITIBANK, N.A., as
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as syndication agent (in
such capacity, the "Syndication Agent") for the Lenders.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Administrative Agent" has the meaning assigned to such term
in the preamble hereof.
"Advance" means an advance by a Lender to any Borrower
pursuant to Article II, and refers to a Base Rate Advance, a Eurodollar
Rate Advance or a CAF Advance.
"Affiliate" means as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
The term "control" (including the terms "controlled by" or "under
common control with") means, with respect to any Person, the
possession, direct or indirect, of the power to vote 20% or more of the
securities having ordinary voting power for the election of directors
of such Person or to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting
securities or by contract or otherwise.
"Agreement" means this $750,000,000 5-Year Revolving Credit
and Competitive Advance Facility, as amended, supplemented or otherwise
modified from time to time.
"Alternate Program" means any program providing for the sale
or other disposition of trade or other receivables entered into by the
Company or a Principal Subsidiary (or for purposes of Section 5.2(a)
only, any Restricted Affiliate) which is in addition to or in
replacement of the
<PAGE> 6
2
program evidenced by either Receivables Purchase and Sale Agreement
(whether or not either Receivables Purchase and Sale Agreement shall
then be in effect), provided that such program is on terms (a)
substantially similar to either Receivables Purchase and Sale Agreement
(as modified to comply with FASB 125 or similar policies or guidelines
from time to time in effect) or (b) customary for similar transactions
as reasonably determined by the Administrative Agent.
"Applicable LIBO Rate" means in respect of any CAF Advance
requested pursuant to a LIBO Rate CAF Advance Request, an interest rate
per annum equal to the rate which appears on Page 3750 of the Telerate
Service (or any successor or substitute page of such Service, or any
successor to or substitute for such service providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to Dollar deposits
in the London interbank market) as at approximately 11:00 A.M., London
time, two Business Days prior to the beginning of the period for which
such CAF Advance is to be outstanding as the rate for Dollar deposits
with a maturity comparable to such period.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit F.
"Base CD Rate" means the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate.
"Base Rate" means for any day, a rate per annum (adjusted to
the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, rounded
upwards to the next highest 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1/2 of 1% and (c) the Effective Federal Funds Rate in
effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the
Effective Federal Funds Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Effective Federal Funds Rate,
respectively.
"Base Rate Advance" means an Advance which bears interest as
provided in Section 2.11(a)(i).
"Borrowers" means the collective reference to EPNGC, each
Borrowing Subsidiary and Holding once Holding executes and delivers a
Joinder Agreement; each, a "Borrower".
<PAGE> 7
3
"Borrowing" means a borrowing consisting of Advances of the
same Type made on the same day by the Lenders, it being understood that
there may be more than one Borrowing on a particular day.
"Borrowing Subsidiary" means Tennessee and each other domestic
Subsidiary of the Company which has been designated by the Company as a
"Borrowing Subsidiary" by written notice to the Administrative Agent,
which designation shall not have been revoked by written notice by the
Company to the Administrative Agent (provided, that no such designation
shall be revoked if either (a) any Default or Event of Default shall
have occurred and be continuing or (b) any Advance to such Borrowing
Subsidiary, or any interest accrued thereon, shall be outstanding);
collectively, the "Borrowing Subsidiaries". For avoidance of doubt, (i)
Tennessee may be undesignated as a Borrowing Subsidiary by written
notice to the Administrative Agent by the Company and (ii) EPNGC shall
always be a Borrower hereunder.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York, New York and, if the
applicable Business Day relates to any Eurodollar Rate Advances or LIBO
Rate CAF Advances, on which dealings are carried on in the London
interbank market.
"CAF Advance" means an Advance made pursuant to Sections 2.4
and 2.5.
"CAF Advance Agent" has the meaning assigned to such term in
the preamble hereof.
"CAF Advance Availability Period" means the period from and
including the Closing Date until the earlier of (a) the date which is 7
days prior to the Stated Termination Date and (b) the Termination Date.
"CAF Advance Confirmation" means each confirmation by the
applicable Borrower of its acceptance of CAF Advance Offers, which CAF
Advance Confirmation shall be substantially in the form of Exhibit E
and shall be delivered to the CAF Advance Agent by telecopy.
"CAF Advance Interest Payment Date" means as to each CAF
Advance, each interest payment date specified by the applicable
Borrower for such CAF Advance in the related CAF Advance Request.
"CAF Advance Lenders" means Lenders from time to time
designated by the Company, in consultation with the CAF Advance Agent,
as CAF Advance Lenders as provided in Section 2.4.
"CAF Advance Maturity Date" means as to any CAF Advance, the
date specified by the applicable Borrower
<PAGE> 8
4
pursuant to Section 2.5(d)(ii) in its acceptance of the related CAF
Advance Offer.
"CAF Advance Offer" means each offer by a CAF Advance Lender
to make CAF Advances pursuant to a CAF Advance Request, which CAF
Advance Offer shall contain the information specified in Exhibit D and
shall be delivered to the CAF Advance Agent by telephone, immediately
confirmed by telecopy.
"CAF Advance Request" means each request by the applicable
Borrower for CAF Advance Lenders to submit bids to make CAF Advances,
which request shall contain the information in respect of such
requested CAF Advances specified in Exhibit C and shall be delivered to
the CAF Advance Agent in writing, by telecopy, or by telephone,
immediately confirmed by telecopy.
"Capitalization" of any Person means the sum (without
duplication) of (a) consolidated Debt of such Person and its
consolidated Subsidiaries, plus (b) the aggregate amount of Guaranties
entered into by such Person and its consolidated Subsidiaries, plus (c)
the consolidated common and preferred stockholders' equity of such
Person and its consolidated Subsidiaries.
"C/D Assessment Rate" means for any day as applied to any Base
Rate Advance, the annual assessment rate determined by Chase to be
payable on such day to the Federal Deposit Insurance Corporation (the
"FDIC") for the FDIC's (or any successor's) insuring time deposits at
offices of Chase in the United States.
"C/D Reserve Percentage" means for any day as applied to any
Base Rate Advance, that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) (the "Board"), for
determining the then current reserve requirement for the Administrative
Agent in respect of new non-personal time deposits in Dollars having a
maturity of 30 days or more.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation.
"Closing Date" has the meaning assigned to such term in
Section 3.2.
"Commitment" means as to any Lender, the obligation of such
Lender to make Revolving Credit Advances to the Borrowers hereunder in
an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Lender's name on Schedule I (as such
Schedule I is amended from time to time pursuant to Section 9.7(c)), as
such amount may be reduced from time to time in accordance with the
provisions of this Agreement.
<PAGE> 9
5
"Commitment Expiration Date" has the meaning assigned to such
term in Section 2.23(a).
"Commitment Percentage" means as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall have
expired or terminated, the percentage which the aggregate principal
amount of such Lender's Advances then outstanding constitutes of the
aggregate principal amount of the Advances then outstanding).
"Commitment Increase Notice" has the meaning assigned to such
term in Section 2.24(a).
"Commitment Increase Supplement" has the meaning assigned to
such term in Section 2.24(c).
"Company" means (a) at all times prior to Holding becoming a
Borrower, EPNGC, and (b) thereafter, Holding.
"Contingent Guaranty" has the meaning assigned to such term in
the definition of the term "Guaranty" contained in this Section 1.1.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.13, 2.14 or 2.18.
"Debt" means, as to any Person, all Indebtedness of such
Person other than (a) any Project Financing of such Person, (b) in the
case of the Company or a Principal Subsidiary, any liabilities of the
Company or such Principal Subsidiary, as the case may be, under any
Alternate Program, or any document executed by the Company or such
Principal Subsidiary, as the case may be, in connection therewith and
(c) any obligations of the Company or a Principal Subsidiary with
respect to lease payments for the headquarters building of EPNGC
located in Houston, Texas; provided, however, that for purposes of
Article V, "Debt" shall not include up to an aggregate amount
(determined without duplication of amount) of $200,000,000 of (i) the
amount of optional payments in lieu of asset repurchase or other
payments to similar effect, including extension or renewal payments, on
off balance sheet leases and (ii) the amount of the purchase price for
optional acquisition of such asset (in either case, calculated at the
lower amount payable in respect of such asset under clause (i) or (ii)
above).
"Default" means any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
"Documentation Agent" has the meaning assigned to such term in
the preamble hereof.
<PAGE> 10
6
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Effective Date" means the date on which the conditions
precedent set forth in Section 3.1 have been satisfied (or compliance
therewith shall have been waived by the Lenders).
"Effective Federal Funds Rate" means, for any day, the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Eligible Assignee" means, with respect to any particular
assignment under Section 9.7, any bank or other financial institution
approved in writing by the Company expressly with respect to such
assignment and, except as to such an assignment by Chase so long as
Chase is the Administrative Agent hereunder, the Administrative Agent
as an Eligible Assignee for purposes of this Agreement, provided that
(i) neither the Administrative Agent's nor the Company's approval shall
be unreasonably withheld and (ii) neither the Administrative Agent's
nor the Company's approval shall be required if the assignee is another
Lender or an Affiliate of the assigning Lender.
"EPNGC" has the meaning assigned to such term in the preamble
hereof.
"EPTPC" means El Paso Tennessee Pipeline Co., a Delaware
corporation.
"EPTPC Facility" means the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996,
among EPTPC, the several financial institutions from time to time
parties thereto, and The Chase Manhattan Bank, as administrative agent
and CAF advance agent thereunder, as the same may be amended, modified
or supplemented from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued from time to time thereunder.
"ERISA Affiliate" means any Person who is a member of the
Company's controlled group within the meaning of Section 4001(a)(14)(A)
of ERISA.
<PAGE> 11
7
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum equal to the rate which appears on Page 3750 of
the Telerate Service (or on any successor or substitute page of such
service, or any successor to or substitute for such service providing
rate quotations comparable to those currently provided on such page of
such service, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable
to Dollar deposits in the London interbank market) as at approximately
11:00 A.M. (London, England time) two Business Days before the first
day of such Interest Period as the rate for Dollar deposits with a
maturity comparable to such Interest Period; provided that if such rate
is not available at such time for any reason, the Eurodollar Rate for
such Borrowing for such Interest Period shall be the interest rate per
annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars are
offered by the principal office of each of the Reference Lenders in
London, England, to prime banks in the London interbank market as at
approximately 11:00 A.M. (London, England time) two Business Days
before the first day of such Interest Period, in an approximate amount
of each such Reference Lender's share of the relevant Borrowing for the
applicable Interest Period. The Eurodollar Rate for the Interest Period
for each Eurodollar Rate Advance comprising part of the same Borrowing,
when being determined pursuant to the foregoing proviso clause, shall
be determined by the Administrative Agent on the basis of applicable
rates furnished to and received by the Administrative Agent from the
Reference Lenders two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.13.
"Eurodollar Rate Advance" means an Advance which bears
interest determined by reference to the Eurodollar Rate, as provided in
Section 2.11(a)(ii).
"Eurodollar Rate Margin" means for any day the rate per annum
set forth below opposite the applicable S&P Bond Rating and Moody's
Bond Rating in effect on such day:
<PAGE> 12
8
<TABLE>
<CAPTION>
Bond Rating Eurodollar
(S&P/Moody's) Level Rate Margin
------------- ----- -----------
<S> <C> <C>
A/A2 or higher I .125%
A-/A3 II .155%
BBB+/Baa1 III .185%
BBB/Baa2 IV .215%
BBB-/Baa3 V .275%
BB+/Ba1 or lower VI .450%;
</TABLE>
provided that if the ratings of such rating agencies do not fall within
the same Level, the Eurodollar Rate Margin applicable to such day will
be the lower Eurodollar Rate Margin and provided, further, that in the
event a rating is not available from a rating agency, such rating
agency will be deemed to have assigned its lowest rating.
"Eurodollar Reserve Percentage" for any Lender for any
Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period under regulations
issued from time to time by the Board of Governors of the Federal
Reserve System (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a
term equal to such Interest Period.
"Events of Default" has the meaning assigned to such term in
Section 7.1.
"Excluded Acquisition Debt" means (a) Debt, Guaranties or
reimbursement obligations of any corporation acquired by the Company or
any of its Subsidiaries and which Debt, Guaranties or reimbursement
obligations exist immediately prior to such acquisition (provided that
(i) such Debt, Guaranties or reimbursement obligations are not incurred
solely in anticipation of such acquisition and (ii) immediately prior
to such acquisition such corporation is not a Subsidiary of the
Company), (b) Debt, Guaranties or reimbursement obligations of EPTPC
and its Subsidiaries in existence on the date of the merger of EPTPC
with El Paso Merger Company or (c) Debt, Guaranties or reimbursement
obligations in respect of any asset acquired by the Company or any of
its Subsidiaries and which Debt, Guaranties or reimbursement
obligations exists immediately prior to such acquisition (provided that
(i) such Debt, Guaranties or reimbursement obligations are not incurred
solely in anticipation of such acquisition and (ii) immediately prior
to such acquisition such asset is not an asset of the Company or any of
its Subsidiaries).
<PAGE> 13
9
"Existing Facilities" means the collective reference to (a)
the $750,000,000 Revolving Credit and Competitive Advance Facility
Agreement and the $250,000,000 Revolving Credit and Competitive Advance
Facility Agreement, each dated November 4, 1996, among EPNGC, the
several financial institutions from time to time parties thereto and
Chase, as Administrative Agent and CAF Advance Agent and (b) the EPTPC
Facility.
"Exposure" means (a) with respect to an Objecting Lender at
any time, the aggregate outstanding principal amount of its Revolving
Credit Advances and (b) with respect to any other Lender at any time,
the maximum amount of the Commitment of such Lender.
"Extension Request" means each request by the Borrowers made
pursuant to Section 2.23 for the Lenders to extend the Stated
Termination Date, which shall contain the information in respect of
such extension specified in Exhibit M and shall be delivered to the
Administrative Agent in writing.
"Facility Fee Commencement Date" means the date hereof.
"FERC" means the Federal Energy Regulatory Commission, or any
agency or authority of the United States from time to time succeeding
to its function.
"Fixed Rate CAF Advance" means any CAF Advance made pursuant
to a Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance Request" means any CAF Advance Request
requesting the CAF Advance Lenders to offer to make CAF Advances at a
fixed rate (as opposed to a rate composed of the Applicable LIBO Rate
plus (or minus) a margin).
"Guaranty", "Guaranteed" and "Guaranteeing" each means any act
by which any Person assumes, guarantees, endorses or otherwise incurs
direct or contingent liability in connection with, or agrees to
purchase or otherwise acquire or otherwise assures a creditor against
loss in respect of, any Debt or Project Financing of any Person other
than the Company or any of its consolidated Subsidiaries (excluding (a)
any liability by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(b) any liability in connection with obligations of the Company, any of
its consolidated Subsidiaries or any Restricted Affiliate, including,
without limitation, obligations under any conditional sales agreement,
equipment trust financing or equipment lease and any liability of any
Restricted Affiliate in respect of obligations of EPNGC or its
consolidated Subsidiaries and (c) any such act in connection with a
Project Financing that either (i) guarantees performance of the
completion of the project which is financed by such Project Financing,
until such time, if any, that such guaranty becomes a guaranty of
payment of such Project Financing (other than a guaranty of
<PAGE> 14
10
payment of the type referred to in subclause (ii) below) or (ii) is
contingent upon, or the obligation to pay or perform under which is
contingent upon, the occurrence of any event other than or in addition
to the passage of time or any Project Financing becoming due (any such
act referred to in this clause (c) being a "Contingent Guaranty");
provided, however, that for purposes of this definition the liability
of the Company or any of its Subsidiaries with respect to any
obligation as to which a third party or parties are jointly, or jointly
and severally, liable as a guarantor or otherwise as contemplated
hereby and have not defaulted on its or their portions thereof, shall
be only its pro rata portion of such obligation.
"Holding" means any domestic parent holding company of both
EPNGC and EPTPC which directly or indirectly owns 100% of the common
stock of EPNGC and 100% of the common stock of EPTPC; provided,
however, that immediately after Holding becomes EPNGC's and EPTPC's
parent holding company, not less than 80% of the shareholders of common
stock of Holding are the same shareholders of common stock of EPNGC
immediately prior to Holding becoming EPNGC's and EPTPC's parent
holding company.
"Holding Guarantee" has the meaning assigned to such term in
Section 5.1(g).
"Indebtedness" of any Person means, without duplication (a)
indebtedness of such Person for borrowed money, (b) obligations of such
Person (other than any portion of any trade payable obligation of such
Person which shall not have remained unpaid for 91 days or more from
the original due date of such portion) to pay the deferred purchase
price of property or services, and (c) obligations of such Person as
lessee under leases which shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital
leases, except that where such indebtedness or obligation of such
Person is made jointly, or jointly and severally, with any third party
or parties other than any consolidated Subsidiary of such Person, the
amount thereof for the purposes of this definition only shall be the
pro rata portion thereof payable by such Person, so long as such third
party or parties have not defaulted on its or their joint and several
portions thereof.
"Indemnified Party" means any or all of the Lenders, the
Administrative Agent and the CAF Advance Agent.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period beginning on the date
of such Advance or the date of the Conversion of any Advance into such
an Advance and ending on the last day of the period selected by the
applicable Borrower pursuant to the provisions below and, thereafter,
each subsequent period commencing on the last day of the
<PAGE> 15
11
immediately preceding Interest Period and ending on the last day of the
period selected by the applicable Borrower pursuant to the provisions
below. The duration of each such Interest Period shall be one, two,
three or six months, or, subject to availability to each Lender, nine
or twelve months, in each case as the applicable Borrower may, upon
notice received by the Administrative Agent not later than 12:00 noon
(New York City time) on the third Business Day prior to the first day
of such Interest Period with respect to Eurodollar Rate Advances,
select; provided, however, that:
(a) the duration of any Interest Period which
commences before the Termination Date and would otherwise end
after the Termination Date shall end on the Termination Date;
(b) if the last day of such Interest Period
would otherwise occur on a day which is not a Business Day,
such last day shall be extended to the next succeeding
Business Day, except if such extension would cause such last
day to occur in a new calendar month, then such last day shall
occur on the next preceding Business Day;
(c) Interest Periods commencing on the same
date for Advances comprising the same Borrowing shall be of
the same duration; and
(d) with respect to Advances made by an
Objecting Lender, no Interest Period with respect to such
Advances shall end after such Objecting Lender's Commitment
Expiration Date.
"Joinder Agreement" means a Joinder Agreement, substantially
in the form of Exhibit J hereto, duly executed and delivered by the
Company and the Borrowing Subsidiary party thereto or Holding, as the
case may be.
"Lenders" has the meaning assigned to such term in the
preamble hereof.
"LIBO Rate CAF Advance" means any CAF Advance made pursuant to
a LIBO Rate CAF Advance Request.
"LIBO Rate CAF Advance Request" means any CAF Advance Request
requesting the CAF Advance Lenders to offer to make CAF Advances at an
interest rate equal to the Applicable LIBO Rate plus (or minus) a
margin.
"Lien" means any lien, security interest or other charge or
encumbrance, or any assignment of the right to receive income, or any
other type of preferential arrangement, in each case to secure any
Indebtedness or any Guaranty of any Person.
<PAGE> 16
12
"Majority Lenders" means Lenders the Commitment Percentages of
which aggregate at least 51%, provided, that at any time after the
Commitment Expiration Date with respect to any Objecting Lender (but
prior to the termination of all the Commitments), "Majority Lenders"
shall mean Lenders whose Exposure aggregates at least 51% of the
aggregate Exposure of all the Lenders.
"Margin Stock" means "margin stock" as defined in Regulation U
of the Board of Governors of the Federal Reserve System, as in effect
from time to time.
"Material Adverse Effect" means a material adverse effect on
the financial condition or operations of the Company and its
consolidated Subsidiaries on a consolidated basis.
"Material Subsidiary" means any Subsidiary of Holding (other
than a Project Financing Subsidiary) that itself (on an unconsolidated,
stand-alone basis) owns in excess of 10% of the consolidated net
property, plant and equipment of Holding and its consolidated
Subsidiaries.
"Mojave" means Mojave Pipeline Company.
"Moody's Bond Rating" means, subject to Section 2.11(a)(ii),
(a) for any day prior to the Ratings Change Date, the rating of EPNGC's
senior long-term unsecured debt by Moody's Investors Service, Inc. in
effect at 11:00 A.M., New York City time, on such day and (b) for any
day that is on or after the Ratings Change Date, the rating of
Holding's senior long-term unsecured debt by Moody's Investors Service,
Inc. in effect at 11:00 A.M., New York City time, on such day.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions and in respect of which the Company or
an ERISA Affiliate has any liability (contingent or otherwise), such
plan being maintained pursuant to one or more collective bargaining
agreements.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which (a) is maintained for
employees of the Company or an ERISA Affiliate and at least one Person
other than the Company and its ERISA Affiliates or (b) was so
maintained and in respect of which the Company or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"Net Worth" means with respect to the Company, as of any date
of determination, the sum of the preferred stock
<PAGE> 17
13
and stockholders' equity of the Company as shown on the most recent
consolidated balance sheet of the Company delivered pursuant to Section
5.3.
"New Lender" has the meaning assigned to such term in Section
2.24(b).
"New Lender Supplement" has the meaning assigned to such term
in Section 2.24(b).
"Note" has the meaning assigned to such term in Section
2.3(d).
"Notice of Borrowing" has the meaning specified in Section
2.2(a).
"Obligations" means the collective reference to the unpaid
principal of and interest on the Advances and the Notes and all other
financial liabilities of the Borrowers to the Administrative Agent, the
CAF Advance Agent and the Lenders (including, without limitation,
interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Advances and interest accruing at
the then applicable rate provided in this Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Borrower whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement or the
Notes, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent, the CAF Advance Agent or to the
Lenders that are required to be paid by any Borrower pursuant to this
Agreement).
"Objecting Lenders" has the meaning assigned to such term in
Section 2.23(a).
"Offered Increase Amount" has the meaning assigned to such
term in Section 2.24(a).
"Other Taxes" has the meaning assigned to such term in Section
2.20(b).
"Party" has the meaning assigned to such term in Section 9.8.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Claims" has the meaning assigned to such term in
Section 9.9(a).
<PAGE> 18
14
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a country
or any political subdivision thereof or any agency or instrumentality
of such country or subdivision.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City. The Prime Rate is not intended to be
the lowest rate of interest charged by Chase in connection with
extensions of credit to debtors.
"Principal Subsidiary" means, at any time, any Subsidiary of
the Company (other than a Project Financing Subsidiary) either (a)
having assets that are, or owning Subsidiaries with assets that
together with its assets are, at such time greater than or equal to 5%
of the consolidated assets of the Company and its consolidated
Subsidiaries at such time or (b) constituting a Borrowing Subsidiary.
"Process Agent" has the meaning specified in Section 9.9(a).
"Project Financing" means any Indebtedness incurred to finance
a project, other than any portion of such Indebtedness permitting or
providing for recourse against the Company or any of its Subsidiaries
(or for purposes of Section 5.2(a) only, any Restricted Affiliate)
other than (a) recourse to the stock or assets of the Project Financing
Subsidiary, if any, incurring or Guaranteeing such Indebtedness, and
(b) such recourse as exists under any Contingent Guaranty.
"Project Financing Subsidiary" means any Subsidiary of the
Company (or for purposes of Section 5.2(a) only, any Restricted
Affiliate) whose principal purpose is to incur Project Financing, or to
become a partner, member or other equity participant in a partnership,
limited liability company or other entity so created, and substantially
all the assets of which Subsidiary, partnership limited liability
company or other entity are limited to those assets being financed (or
to be financed) in whole or in part by a Project Financing.
"Ratings Change Date" means the earliest to occur of (a) the
date on which Holding becomes a Borrower hereunder and (b) the date on
which Holding becomes a "Borrower" under the $750,000,000 364-Day
Revolving Credit and Competitive Advance Facility Agreement, dated as
of the date hereof, among EPNGC, the lenders parties thereto and Chase,
as administrative agent and CAF advance agent.
<PAGE> 19
15
"Re-Allocation Date" has the meaning assigned to such term in
Section 2.24(e).
"Receivables Purchase and Sale Agreement" means the collective
reference to (a) the Receivables Purchase and Sale Agreement dated as
of January 14, 1992 among EPNGC, CIESCO L.P., a New York limited
partnership, Corporate Asset Funding Company, a Delaware corporation
and Citicorp North America, Inc., as agent, as amended as of the date
hereof, and (b) the Amended and Restated Receivables Sale Agreement
dated as of December 31, 1996 among El Paso Energy Credit Corporation,
Asset Securitization Cooperative Corporation and Canadian Imperial Bank
of Commerce, as administrative agent, as such Agreement may be amended,
supplemented, restated or otherwise modified from time to time,
provided that no such amendment, supplement, restatement or
modification shall change the scope of such Agreement from that of a
receivables securitization transaction.
"Reference Lenders" means Chase, Morgan Guaranty Trust Company
of New York and Citibank, N.A..
"Register" has the meaning specified in Section 9.7(c).
"Required Lenders" means Lenders (a) which are not Objecting
Lenders with respect to any previous Extension Request and (b) which
have Commitment Percentages aggregating at least 66-2/3% of the
aggregate Commitment Percentages of such non-Objecting Lenders.
"Restricted Affiliate" means any Affiliate of EPNGC (other
than a Subsidiary of EPNGC) designated by EPNGC as a "Restricted
Affiliate" by written notice to the Administrative Agent; provided that
such Affiliate shall not become a Restricted Affiliate until such time
that (a) such Affiliate executes and delivers a guaranty (in form and
substance reasonably satisfactory to the Administrative Agent) (each a
"Restricted Affiliate Guaranty") in favor of the Administrative Agent,
for the ratable benefit of the Lenders, guaranteeing the prompt and
complete payment by each Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by
such Borrower and (b) the Administrative Agent receives legal opinions
from the General Counsel or Associate General Counsel of Holding and
from New York counsel to Holding reasonably acceptable to the
Administrative Agent, which legal opinions shall be in form and
substance satisfactory to the Administrative Agent; provided, further,
that after such time as such Affiliate becomes a Restricted Affiliate,
EPNGC may terminate the designation of such Affiliate as a Restricted
Affiliate by written notice to the Administrative Agent at which time
the aforementioned guaranty of such Affiliate shall also terminate.
"Restricted Affiliate Guaranty" has the meaning
<PAGE> 20
16
assigned to such term in the definition of Restricted Affiliate.
"Revolving Credit Advances" has the meaning assigned to such
term in Section 2.1.
"S&P Bond Rating" means, subject to Section 2.11(a)(ii), (a)
for any day prior to the Ratings Change Date, the rating of EPNGC's
senior long-term unsecured debt by Standard & Poor's Ratings Group in
effect at 11:00 A.M., New York City time, on such day and (b) for any
day that is on or after the Ratings Change Date, the rating of
Holding's senior long-term unsecured debt by Standard & Poor's Ratings
Group in effect at 11:00 A.M., New York City time, on such day.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Company or an ERISA Affiliate and no Person other than
the Company and its ERISA Affiliates or (b) was so maintained and in
respect of which the Company or an ERISA Affiliate could have liability
under Section 4069 of ERISA in the event such plan has been or were to
be terminated.
"Stated Termination Date" means October 28, 2002 or such later
date as shall be determined pursuant to the provisions of Section 2.23
with respect to non-Objecting Lenders.
"Subsidiary" means, as to any Person, any corporation of which
at least a majority of the outstanding stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall or
might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly beneficially owned or controlled
by such Person or one or more of its Subsidiaries or such Person and
one or more of the Subsidiaries of such Person.
"Syndication Agent" has the meaning assigned to such term in
the preamble hereof.
"Taxes" has the meaning assigned to such term in Section
2.20(a).
"Tennessee" has the meaning assigned to such term in the
preamble hereof, and its successors.
"Termination Date" means the earlier of (a) the Stated
Termination Date and (b) the date of termination in whole of the
Commitments pursuant to Section 2.9 or 7.1.
"Termination Event" means (a) a "reportable event," as
<PAGE> 21
17
such term is described in Section 4043 of ERISA (other than a
"reportable event" not subject to the provision for 30-day notice to
the PBGC under subsection .11, .12, .13, .14, .16, .18, .19 or .20 of
PBGC Reg. ss. 2615), or an event described in Section 4062(e) of ERISA,
or (b) the withdrawal of the Company or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2)
of ERISA or the incurrence of liability by the Company or any ERISA
Affiliate under Section 4064 of ERISA upon the termination of a
Multiple Employer Plan, or (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination
under Section 4041 of ERISA, or (d) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or (e) the
conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of the Company
or any ERISA Affiliate for failure to make a required payment to a Plan
are satisfied, or (f) the adoption of an amendment to a Plan requiring
the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (g) the occurrence of any other event or the existence of any
other condition which would reasonably be expected to result in the
termination of, or the appointment of a trustee to administer, any Plan
under Section 4042 of ERISA.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate (adjusted to the basis of a year of 365 or 366
days, as the case may be) for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "Board") through the
public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it.
"Type" means (a) as to any Revolving Credit Advance, its
nature as a Base Rate Advance or a Eurodollar Rate Advance and (b) as
to any CAF Advance, its nature as a Fixed Rate CAF Advance or a LIBO
Rate CAF Advance.
"Withdrawal Liability" has the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.
SECTION I.2 Computation of Time Periods. Unless
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18
otherwise stated in this Agreement, in the computation of a period of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
SECTION I.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles either (a) consistent with those principles
applied in the preparation of the financial statements referred to in Section
4.1(e) or (b) not materially inconsistent with such principles (so that no
covenant contained in Section 5.1 or 5.2 would be calculated or construed in a
materially different manner or with materially different results than if such
covenant were calculated or construed in accordance with clause (a) of this
Section 1.3).
SECTION I.4 References. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION II.1 The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
revolving credit advances ("Revolving Credit Advances") to the Borrowers or any
one or more of them from time to time on any Business Day during the period from
the date hereof to and including the Termination Date in an aggregate amount not
to exceed at any time outstanding the amount of such Lender's Commitment;
provided that the aggregate amount of the Advances (other than Advances of
Objecting Lenders) outstanding shall not at any time exceed the aggregate amount
of the Commitments. Each Borrowing shall be in an aggregate amount of $5,000,000
in the case of a Borrowing comprised of Base Rate Advances and $20,000,000 in
the case of a Borrowing comprised of Eurodollar Rate Advances, or, in each case,
an integral multiple of $1,000,000 in excess thereof (or, in the case of a
Borrowing of Base Rate Advances, the aggregate unused Commitments, if less) and
shall consist of Revolving Credit Advances of the same Type made on the same day
by the Lenders ratably according to their respective Commitments. Within the
limits of each Lender's Commitment, any Borrower may make more than one
Borrowing on any Business Day and may borrow, repay pursuant to Section 2.10 or
prepay pursuant to Section 2.15, and reborrow under this Section 2.1.
SECTION II.2 Making the Revolving Credit Advances. (a) Each
Borrowing of Revolving Credit Advances shall be made on notice by the Company to
the Administrative Agent (a "Notice of Borrowing") received by the
Administrative Agent, (i) in the case
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of a proposed Borrowing comprised of Base Rate Advances, not later than 10:00
A.M. (New York City time) on the Business Day of such proposed Borrowing and
(ii) in the case of a proposed Borrowing comprised of Eurodollar Rate Advances,
not later than 12:00 noon (New York City time) on the third Business Day prior
to the date of such proposed Borrowing. Each Notice of Borrowing shall be by
telecopy or telephone (and if by telephone, confirmed promptly by telecopier),
in substantially the form of Exhibit B, specifying therein the requested (A)
Borrower, (B) date of such Borrowing, (C) Type of Revolving Credit Advances
comprising such Borrowing, (D) aggregate amount of such Borrowing, and (E) in
the case of a Borrowing comprised of Eurodollar Rate Advances, the initial
Interest Period for each such Advance. Each Lender shall, before 1:00 P.M. (New
York City time) on the date of such Borrowing, make available to the
Administrative Agent at its address at 270 Park Avenue, New York, New York,
10017, Reference: El Paso Natural Gas Company, or at such other address
designated by notice from the Administrative Agent to the Lenders pursuant to
Section 9.2, in same day funds, such Lender's ratable portion of such Borrowing.
Immediately after the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the applicable Borrower
at Chase, 270 Park Avenue, New York, New York, 10017, Account No. 323291503,
Reference: El Paso Natural Gas Company, or at such other account of the
applicable Borrower maintained by the Administrative Agent (or any successor
Administrative Agent) designated by the applicable Borrower and agreed to by the
Administrative Agent (or such successor Administrative Agent), in same day
funds.
(b) Each Notice of Borrowing shall be irrevocable and binding
on the applicable Borrower. In the case of any Borrowing which the related
Notice of Borrowing specified is to be comprised of Eurodollar Rate Advances, if
such Advances are not made as a result of any failure to fulfill on or before
the date specified for such Borrowing the applicable conditions set forth in
Article III, the applicable Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of such failure,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing.
(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.2 and the Administrative Agent
may, in reliance upon such assumption, make available to the applicable Borrower
on such date a corresponding amount. If and to the extent such Lender shall not
have so made such ratable portion available to the
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20
Administrative Agent, such Lender and the applicable Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the applicable Borrower until the date such amount is repaid to the
Administrative Agent, at the Effective Federal Funds Rate for such day. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Advance to the applicable
Borrower as part of such Borrowing for purposes of this Agreement.
(d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION II.3 Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of each Borrower to such Lender resulting from each Revolving
Credit Advance of such Lender to such Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time in respect of such Revolving Credit Advance.
(b) The Administrative Agent shall maintain the Register
pursuant to Section 9.7(c), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Revolving Credit Advance made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from each Borrower on account of such Revolving Credit Advance to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from each Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the Revolving
Credit Advances made to each such Borrower by such Lender in accordance with the
terms of this Agreement.
(d) Each Borrower agrees that, upon the request to the
Administrative Agent by any Lender, such Borrower will execute and deliver to
such Lender a promissory note of such Borrower evidencing the Revolving Credit
Advances of such Lender to such Borrower, substantially in the form of Exhibit A
with appropriate insertions as to date and principal amount (a "Note").
<PAGE> 25
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SECTION II.4 CAF Advances. Subject to the terms and conditions
of this Agreement, the Borrowers or any one or more of them may borrow CAF
Advances from time to time during the CAF Advance Availability Period on any
Business Day. The Company shall, in consultation with the CAF Advance Agent,
designate Lenders from time to time as CAF Advance Lenders by written notice to
the CAF Advance Agent. The CAF Advance Agent shall transmit each such notice of
designation promptly to each designated CAF Advance Lender. CAF Advances shall
be borrowed in amounts such that the aggregate amount of Advances outstanding at
any time shall not exceed the aggregate amount of the Commitments at such time.
Any CAF Advance Lender may make CAF Advances in amounts which, individually and
together with the aggregate amount of other Advances of such CAF Advance Lender,
exceed such CAF Advance Lender's Commitment, and such CAF Advance Lender's CAF
Advances shall not be deemed to utilize such CAF Advance Lender's Commitment.
Within the limits and on the conditions hereinafter set forth with respect to
CAF Advances, the Borrowers from time to time may borrow, repay and reborrow CAF
Advances.
SECTION II.5 Procedure for CAF Advance Borrowings. (a) A
Borrower, or the Company on behalf of a Borrower, shall request CAF Advances by
delivering a CAF Advance Request to the CAF Advance Agent, not later than 12:00
Noon (New York City time) four Business Days prior to the date of the proposed
Borrowing (in the case of a LIBO Rate CAF Advance Request), and not later than
10:00 A.M. (New York City time) one Business Day prior to the date of the
proposed Borrowing (in the case of a Fixed Rate CAF Advance Request). Each CAF
Advance Request may solicit bids for CAF Advances in an aggregate principal
amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and having not more than five alternative maturity dates. The maturity date for
each CAF Advance shall be not less than 7 days nor more than 360 days after the
date of the Borrowing therefor (and in any event shall be not later than the
Stated Termination Date); provided that each LIBO Rate CAF Advance shall mature
one, two, three or six months or, if available, nine [or twelve] months after
the date of the Borrowing therefor. The CAF Advance Agent shall notify each CAF
Advance Lender promptly by telecopy of the contents of each CAF Advance Request
received by the CAF Advance Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at the Applicable LIBO Rate plus
(or minus) a margin determined by such CAF Advance Lender in its sole discretion
for each such CAF Advance. Any such irrevocable offer shall be made by
delivering a CAF Advance Offer to the CAF Advance Agent, before 10:30 A.M. (New
York City time) on the day that is three Business Days before the date of the
proposed Borrowing, setting forth:
<PAGE> 26
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(i) the maximum amount of CAF Advances for each maturity date
and the aggregate maximum amount of CAF Advances for all maturity dates
which such CAF Advance Lender would be willing to make (which amounts
may, subject to Section 2.4, exceed such CAF Advance Lender's
Commitment); and
(ii) the margin above or below the Applicable LIBO Rate at
which such CAF Advance Lender is willing to make each such CAF Advance.
The CAF Advance Agent shall advise the Company and the applicable Borrower
before 11:00 A.M. (New York City time) on the date which is three Business Days
before the proposed date of the Borrowing of the contents of each such CAF
Advance Offer received by it. If the CAF Advance Agent, in its capacity as a CAF
Advance Lender, shall elect, in its sole discretion, to make any such CAF
Advance Offer, it shall advise the Company and the applicable Borrower of the
contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on the
date which is three Business Days before the proposed date of the Borrowing.
(c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the CAF Advance Agent of the contents of such CAF Advance
Request, each CAF Advance Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at a rate of interest determined by
such CAF Advance Lender in its sole discretion for each such CAF Advance. Any
such irrevocable offer shall be made by delivering a CAF Advance Offer to the
CAF Advance Agent before 9:30 A.M. (New York City time) on the proposed date of
the Borrowing, setting forth:
(i) the maximum amount of CAF Advances for each maturity date,
and the aggregate maximum amount for all maturity dates, which such CAF
Advance Lender would be willing to make (which amounts may, subject to
Section 2.4, exceed such CAF Advance Lender's Commitment); and
(ii) the rate of interest at which such CAF Advance Lender is
willing to make each such CAF Advance.
The CAF Advance Agent shall advise the Company and the applicable Borrower
before 10:00 A.M. (New York City time) on the proposed date of the Borrowing of
the contents of each such CAF Advance Offer received by it. If the CAF Advance
Agent, in its capacity as a CAF Advance Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Company and
the applicable Borrower of the contents of its CAF Advance Offer before 9:15
A.M. (New York City time) on the proposed date of the Borrowing.
(d) Before 11:30 A.M. (New York City time) three Business Days
before the proposed date of the Borrowing (in the case of CAF Advances requested
by a LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time)
on the proposed date of the Borrowing (in the case of CAF Advances requested by
a Fixed Rate CAF Advance Request), the Company, in its absolute discretion,
shall:
<PAGE> 27
23
(i) cancel such CAF Advance Request by giving the CAF Advance
Agent telephone notice to that effect, or
(ii) by giving telephone notice to the CAF Advance Agent
(immediately confirmed by delivery to the CAF Advance Agent of a CAF
Advance Confirmation in writing or by telecopy) (A) subject to the
provisions of Section 2.5(e), accept one or more of the offers made by
any CAF Advance Lender or CAF Advance Lenders pursuant to Section
2.5(b) or Section 2.5(c), as the case may be, of the amount of CAF
Advances for each relevant maturity date and (B) reject any remaining
offers made by CAF Advance Lenders pursuant to Section 2.5(b) or
Section 2.5(c), as the case may be.
(e) The Company's acceptance of CAF Advances in response to
any CAF Advance Request shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each maturity date
specified by any CAF Advance Lender in its CAF Advance Offer shall not
exceed the maximum amount for such maturity date specified in such CAF
Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all
maturity dates specified by any CAF Advance Lender in its CAF Advance
Offer shall not exceed the aggregate maximum amount specified in such
CAF Advance Offer for all such maturity dates;
(iii) the Company may not accept offers for CAF Advances for
any maturity date in an aggregate principal amount in excess of the
maximum principal amount requested in the related CAF Advance Request;
and
(iv) if the Company accepts any of such offers, it must accept
offers based solely upon pricing for such relevant maturity date and
upon no other criteria whatsoever and if two or more CAF Advance
Lenders submit offers for any maturity date at identical pricing and
the Company accepts any of such offers but does not wish to (or by
reason of the limitations set forth in Section 2.4 or in Section
2.5(e)(iii), cannot) borrow the total amount offered by such CAF
Advance Lenders with such identical pricing, the Company shall accept
offers from all of such CAF Advance Lenders in amounts allocated among
them pro rata according to the amounts offered by such CAF Advance
Lenders (or as nearly pro rata as shall be practicable after giving
effect to the requirement that CAF Advances made by a CAF Advance
Lender on a date of the Borrowing for each relevant maturity date shall
be in a principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof; provided that if the number of CAF
Advance Lenders that submit offers for any maturity date at identical
pricing is such that, after the Company accepts such offers pro rata in
accordance with the
<PAGE> 28
24
foregoing, the CAF Advance to be made by such CAF Advance Lenders would
be less than $5,000,000 principal amount, the number of such CAF
Advance Lenders shall be reduced by the CAF Advance Agent by lot until
the CAF Advances to be made by such remaining CAF Advance Lenders would
be in a principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof).
(f) If the Company notifies the CAF Advance Agent that a CAF
Advance Request is cancelled pursuant to Section 2.5(d)(i), the CAF Advance
Agent shall give prompt telephone notice thereof to the CAF Advance Lenders.
(g) If the Company accepts pursuant to Section 2.5(d)(ii) one
or more of the offers made by any CAF Advance Lender or CAF Advance Lenders, the
CAF Advance Agent promptly shall notify each CAF Advance Lender which has made
such a CAF Advance Offer of (i) the aggregate amount of such CAF Advances to be
made on such Borrowing Date for each maturity date and (ii) the acceptance or
rejection of any offers to make such CAF Advances made by such CAF Advance
Lender. Before 1:00 P.M. (New York City time) on the date of the Borrowing
specified in the applicable CAF Advance Request, each CAF Advance Lender whose
CAF Advance Offer has been accepted shall make available to the Administrative
Agent at its office set forth in Section 9.2 the amount of CAF Advances to be
made by such CAF Advance Lender, in same day funds. The Administrative Agent
will make such funds available to the applicable Borrower as soon as practicable
on such date at the Administrative Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the CAF Advance Agent shall notify each
Lender of the aggregate amount of CAF Advances advanced on such Borrowing Date
and the respective maturity dates thereof.
(h) The failure of any CAF Advance Lender to make the CAF
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its CAF Advance on the date
of such Borrowing, but no CAF Lender shall be responsible for the failure of any
other CAF Advance Lender to make the CAF Advance to be made by such CAF Advance
Lender on the date of any Borrowing.
(i) A CAF Advance Request may request offers for CAF Advances
to be made on not more than one Borrowing Date and to mature on not more than
five CAF Advance Maturity Dates. No CAF Advance Request may be submitted earlier
than five Business Days after submission of any other CAF Advance Request.
SECTION II.6 CAF Advance Payments. (a) The applicable Borrower
shall repay to the Administrative Agent, for the account of each CAF Advance
Lender which has made a CAF Advance to it, on the applicable CAF Advance
Maturity Date the then unpaid principal amount of such CAF Advance. The
Borrowers shall not have the right to prepay any principal amount of any CAF
Advance.
<PAGE> 29
25
(b) The applicable Borrower shall pay interest on the unpaid
principal amount of each CAF Advance to it from the date of the Borrowing to the
applicable CAF Advance Maturity Date at the rate of interest specified in the
CAF Advance Offer accepted by the applicable Borrower in connection with such
CAF Advance (calculated on the basis of a 360-day year for actual days elapsed),
payable on each applicable CAF Advance Interest Payment Date.
(c) If all or a portion of the principal amount of any CAF
Advance shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Lender under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 1% above the
rate which would otherwise be applicable pursuant to such CAF Advance until the
stated maturity date of such CAF Advance, and for each day thereafter at a rate
per annum which is 2% above the Base Rate, in each case until paid in full (as
well after as before judgment). Interest accruing pursuant to this paragraph (c)
shall be payable from time to time on demand.
SECTION II.7 Evidence of Debt. Each Lender shall maintain in
accordance with its usual practice appropriate records evidencing indebtedness
of each Borrower to such Lender resulting from each CAF Advance of such Lender
to such Borrower from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time in respect of such
CAF Advance. The Administrative Agent shall maintain the Register pursuant to
Section 9.7(c) and a record therein for each Lender, in which shall be recorded
(i) the amount of each CAF Advance made by such Lender to each Borrower, the CAF
Advance Maturity Date thereof, the interest rate applicable thereto and each CAF
Advance Interest Payment Date applicable thereto, and (ii) the amount of any sum
received by the Administrative Agent hereunder from a Borrower on account of
such CAF Advance. The entries made in the Register and the records of each
Lender maintained pursuant to this Section 2.7 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such record, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the CAF Advances
made by such Lender in accordance with the terms of this Agreement.
SECTION II.8 Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a facility fee for the
period from and including the Facility Fee Commencement Date until all Advances
have been paid in full and all Commitments have been terminated, computed at a
variable rate per annum on the average daily amount of the greater of (i) the
Commitment of such Lender and (ii) the outstanding principal amount of Revolving
Credit Advances of such Lender during the period for which payment is made,
which rate will vary according to the S&P Bond Rating and the Moody's Bond
Rating as follows:
<PAGE> 30
26
<TABLE>
<CAPTION>
Bond Rating Facility
(S&P/Moody's) Level Fee Rate
------------- ----- --------
<S> <C> <C>
A/A2 or higher I .060%
A-/A3 II .070%
BBB+/Baa1 III .090%
BBB/Baa2 IV .110%
BBB-/Baa3 V .125%
BB+/Ba1 or lower VI .200%;
</TABLE>
provided that if the ratings of such rating agencies do not fall within the same
Level, the rate applicable to such day will be the lower facility fee rate and
provided, further, that in the event a rating is not available from either
rating agency, such rating agency will be deemed to have assigned its lowest
rating. Such facility fees shall be payable quarterly in arrears on the last day
of each March, June, September and December and on the Termination Date or such
earlier date on which the Commitments shall terminate as provided herein, and,
if the Lender is an Objecting Lender, on the Commitment Expiration Date
applicable to such Lender or such earlier date on which the Advances are repaid
in full, commencing on the first of such dates to occur after the date hereof.
(b) The Company agrees to pay to Chase Securities Inc., the
Administrative Agent and the CAF Advance Agent the fees set forth in the letter,
dated October 6, 1997, from Chase Securities Inc. and Chase to EPNGC.
SECTION II.9 Reduction of the Commitments. The Company shall
have the right, upon at least three Business Days' notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $10,000,000 or any whole multiple of
$1,000,000 in excess thereof.
SECTION II.10 Repayment of Advances. The Borrowers shall repay
to each Lender on the Termination Date the aggregate principal amount of the
Advances then owing to such Lender; provided that the Revolving Credit Advances
made by Objecting Lenders shall be repaid as provided in Section 2.23.
SECTION II.11 Interest on Revolving Credit Advances. (a)
Ordinary Interest. The Borrowers shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Advance until such principal amount is due (whether at stated maturity, by
acceleration or otherwise), at the following rates:
(i) Base Rate Advances. During such periods as such
Advance is a Base Rate Advance, a rate per annum equal at all times to
the Base Rate in effect from time to time, payable quarterly in arrears
on the last day of each March,
<PAGE> 31
27
June, September and December during such periods and on the date such
Base Rate Advance shall be Converted or due (whether at stated
maturity, by acceleration or otherwise).
(ii) Eurodollar Rate Advances. During such periods as
such Advance is a Eurodollar Rate Advance, at a rate per annum equal at
all times during each Interest Period for such Advance to the sum of
the Eurodollar Rate for such Interest Period plus the Eurodollar Rate
Margin (provided that notwithstanding the definitions of Moody's Bond
Rating and S&P Bond Rating, in the case of Eurodollar Rate Advances to
EPNGC and its Subsidiaries, whether before, on or after the Ratings
Change Date, the Eurodollar Rate Margin shall be based on the Moody's
Bond Rating and S&P Bond Rating of EPNGC, and, in the case of all other
Borrowers, shall be based on the Moody's Bond Rating and S&P Bond
Rating of Holding) in effect from time to time, payable on the last day
of each such Interest Period and, if any such Interest Period has a
duration of more than three months, on each day which occurs during
such Interest Period every three months from the first day of such
Interest Period, and on the date such Advance shall be Converted or due
(whether at stated maturity, by acceleration or otherwise).
(b) Default Interest. The applicable Borrower shall pay
interest on the unpaid principal amount of each Revolving Credit Advance to it
that is not paid when due (whether at stated maturity, by acceleration or
otherwise) from the date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal at all times (i) from such
due date to the last day of the then existing Interest Period in the case of
each Eurodollar Rate Advance, to 1% per annum above the interest rate per annum
required to be paid on such Advance immediately prior to the date on which such
amount became due, and (ii) from and after the last day of the then existing
Interest Period, and at all times in the case of any Base Rate Advance, to 1%
per annum above the Base Rate in effect from time to time.
SECTION II.12 Additional Interest on Eurodollar Rate Advances.
If any Lender shall determine in good faith that reserves under regulations of
the Board of Governors of the Federal Reserve System are required to be
maintained by it in respect of, or a portion of its costs of maintaining
reserves under such regulations is properly attributable to, one or more of its
Eurodollar Rate Advances, the applicable Borrower shall pay to such Lender
additional interest on the unpaid principal amount of each such Eurodollar Rate
Advance to it (other than any such additional interest accruing to a particular
Lender in respect of periods prior to the 30th day preceding the date notice of
such interest is given by such Lender as provided in this Section 2.12), payable
on the same day or days on which interest is payable on such Advance, at an
interest rate per annum equal at all times during each Interest Period for such
Advance to the excess of (i) the rate obtained by dividing the
<PAGE> 32
28
Eurodollar Rate for such Interest Period by a percentage equal to 100% minus the
Eurodollar Reserve Percentage, if any, for such Lender for such Interest Period
over (ii) the Eurodollar Rate for such Interest Period. The amount of such
additional interest (if any) shall be determined by each Lender, and such Lender
shall furnish written notice of the amount of such additional interest to the
Company and the Administrative Agent, which notice shall be conclusive and
binding for all purposes, absent manifest error.
SECTION II.13 Interest Rate Determination. (a) Each Reference
Lender agrees to furnish to the Administrative Agent timely information for the
purpose of determining the Eurodollar Rate. If any one or more of the Reference
Lenders shall not furnish such timely information to the Administrative Agent
for the purpose of determining any such interest rate, the Administrative Agent
shall determine such interest rate on the basis of timely information furnished
by the remaining Reference Lenders.
(b) The Administrative Agent shall give prompt notice to the
Company and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.11(a)(i) or (ii), and the
applicable rate, if any, furnished by each Reference Lender for the purpose of
determining the applicable interest rate under Section 2.11(a)(ii).
(c) If fewer than two Reference Lenders furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,
(i) the Administrative Agent shall give the Company and
each Lender prompt notice thereof by telephone (confirmed in writing)
that the interest rate cannot be determined for such Eurodollar Rate
Advances,
(ii) each such Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance (or if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and
(iii) the obligations of the Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Administrative Agent shall notify the Company and the Lenders
that the circumstances causing such suspension no longer exist.
(d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders determine and give notice to the Administrative Agent that, as
a result of conditions in or generally affecting the London interbank eurodollar
market, the rates of interest determined on the basis of the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Majority Lenders of making, funding or maintaining their respective
Eurodollar Rate Advances for such
<PAGE> 33
29
Interest Period, the Administrative Agent shall forthwith so notify the Company
and the Lenders, whereupon,
(i) each such Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and
(ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Company and the Lenders that the
circumstances causing such suspension no longer exist.
(e) If the applicable Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" in Section
1.1, the Administrative Agent will forthwith so notify the applicable Borrower
and the Lenders and such Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Advances.
(f) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Eurodollar Rate Advances shall automatically Convert into Base Rate Advances,
and on and after such date the right of the applicable Borrower to Convert such
Advances into Eurodollar Rate Advances shall terminate; provided, however, that
if and so long as each such Eurodollar Rate Advance shall have the same Interest
Period as Eurodollar Rate Advances comprising another Borrowing or other
Borrowings, and the aggregate unpaid principal amount of all such Eurodollar
Rate Advances shall equal or exceed $20,000,000, the applicable Borrower shall
have the right to continue all such Advances as, or to Convert all such Advances
into Eurodollar Rate Advances having the same Interest Period.
(g) If any Reference Lender shall for any reason no longer
have a Commitment or any Revolving Credit Advances, such Reference Lender shall
thereupon cease to be a Reference Lender, and if, as a result, there shall only
be one Reference Lender remaining, the Administrative Agent (after consultation
with the Company and the Lenders) shall, by notice to the Company and the
Lenders, designate another Lender as a Reference Lender so that there shall at
all times be at least two Reference Lenders.
SECTION II.14 Voluntary Conversion of Advances. Any Borrower
may on any Business Day, upon notice given to the Administrative Agent, not
later than 10:00 A.M. (New York City time) on the Business Day of the proposed
Conversion of Eurodollar Rate Advances to Base Rate Advances and not later than
12:00 noon (New York City time) on the third Business Day prior to the date of
the proposed Conversion in the case of a Conversion of Base Rate Advances to
Eurodollar Rate Advances, and subject to the provisions of Sections 2.13, 2.16
and 2.18,
<PAGE> 34
30
Convert all Advances of one Type comprising the same Borrowing into Advances of
another Type; provided, however, that any Conversion of any Eurodollar Rate
Advances into Base Rate Advances made on any day other than the last day of an
Interest Period for such Eurodollar Rate Advances shall be subject to the
provisions of Section 9.4(b); and provided, further, that no Revolving Credit
Advance may be converted into a Eurodollar Rate Advance after the date that is
one month prior to (a) in the case of a Revolving Credit Advance made by an
Objecting Lender, such Objecting Lender's Commitment Expiration Date, and (b) in
the case of all Revolving Credit Advances, the Termination Date and provided,
still further, that no Revolving Credit Advance may be converted into a
Eurodollar Rate Advance if an Event of Default has occurred and is continuing.
Each such notice of a Conversion shall, within the restrictions specified above,
specify (a) the date of such Conversion, (b) the Advances to be Converted, and
(c) if such Conversion is into Eurodollar Rate Advances, the duration of the
Interest Period for each such Advance.
SECTION II.15 Optional and Mandatory Prepayments. (a) Optional
Prepayments. Any Borrower may upon (i) in the case of Eurodollar Rate Advances,
at least two Business Days' notice and (ii) in the case of Base Rate Advances,
telephonic notice not later than 12:00 noon (New York City time) on the date of
prepayment, to the Administrative Agent which specifies the proposed date and
aggregate principal amount of the prepayment and the Type of Advances to be
prepaid, and if such notice is given such Borrower shall, prepay the outstanding
principal amounts of the Revolving Credit Advances comprising the same Borrowing
in whole or ratably in part, together with accrued interest to the date of such
prepayment on the amount prepaid; provided, however, that (A) each partial
prepayment shall be in an aggregate principal amount not less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof and (B) in the event of
any such prepayment of Eurodollar Rate Advances on any day other than the last
day of an Interest Period for such Eurodollar Rate Advances, such Borrower shall
be obligated to reimburse the Lenders in respect thereof pursuant to, and to the
extent required by, Section 9.4(b); provided, further, however, that such
Borrower will use its best efforts to give notice to the Administrative Agent of
the proposed prepayment of Base Rate Advances on the Business Day prior to the
date of such proposed prepayment.
(b) Mandatory Prepayments. If, at any time and from time to
time, the aggregate principal amount of Advances (other than Advances of
Objecting Lenders) then outstanding exceeds the Commitments of all the Lenders
after giving effect to any reduction of the Commitments pursuant to Section 2.9,
the Borrowers shall immediately prepay the Revolving Credit Advances of Lenders
(other than Objecting Lenders) (to the extent there are such outstanding
Revolving Credit Advances) by an amount equal to such excess.
SECTION II.16 Increased Costs. (a) If, due to either (i) the
introduction after the date of this Agreement of or any
<PAGE> 35
31
change after the date of this Agreement (including any change by way of
imposition or increase of reserve requirements or assessments other than those
referred to in the definition of "Eurodollar Reserve Percentage," "C/D Reserve
Percentage" or "C/D Assessment Rate" contained in Section 1.1) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued or made after the date of this Agreement from or by
any central bank or other governmental authority (whether or not having the
force of law), in each case above other than those referred to in Section 2.17,
there shall be any increase in the cost to any Lender of agreeing to make, fund
or maintain, or of making, funding or maintaining, Eurodollar Rate Advances
funded in the interbank Eurodollar market, then the Borrowers shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to reimburse such Lender for all such
increased costs (except those costs incurred more than 60 days prior to the date
of such demand; for the purposes hereof any cost or expense allocable to a
period prior to the publication or effective date of such an introduction,
change, guideline or request shall be deemed to be incurred on the later of such
publication or effective date). Each Lender agrees to use its best efforts
promptly to notify the Company of any event referred to in clause (i) or (ii)
above, provided that the failure to give such notice shall not affect the rights
of any Lender under this Section 2.16(a) (except as otherwise expressly provided
above in this Section 2.16(a)). A certificate as to the amount of such increased
cost, submitted to the Company and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error. After
one or more Lenders have notified the Company of any increased costs pursuant to
this Section 2.16, the Company may specify by notice to the Administrative Agent
and the affected Lenders that, after the date of such notice whenever the
election of Eurodollar Rate Advances by the applicable Borrower for an Interest
Period or portion thereof would give rise to such increased costs, such election
shall not apply to the Revolving Credit Advances of such Lenders during such
Interest Period or portion thereof, and, in lieu thereof, such Revolving Credit
Advances shall during such Interest Period or portion thereof be Base Rate
Advances. Each Lender agrees to use its best efforts (including, without
limitation, a reasonable effort to change its lending office or to transfer its
affected Advances to an affiliate of such Lender) to avoid, or minimize the
amount of, any demand for payment from the Borrowers under this Section 2.16.
(b) In the event that any Lender shall change its lending
office and such change results (at the time of such change) in increased costs
to such Lender, the Borrowers shall not be liable to such Lender for such
increased costs incurred by such Lender to the extent, but only to the extent,
that such increased costs shall exceed the increased costs which such Lender
would have incurred if the lending office of such Lender had not been so
changed, but, subject to subsection (a) above and to Section 2.18, nothing
herein shall require any Lender to change its lending office for any reason.
<PAGE> 36
32
SECTION II.17 Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of any law or
regulation or (b) compliance by any Lender with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and
such Lender determines that the amount of such capital is increased by or based
upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, within ten days after demand, and delivery to
the Company of the certificate referred to in the last sentence of this Section
2.17 by such Lender (with a copy of such demand to the Administrative Agent),
the applicable Borrowers shall pay to the Administrative Agent for the account
of such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender or such corporation in the light of
such circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder (except any such increase in capital incurred more than, or
compensation attributable to the period before, 90 days prior to the date of
such demand; for the purposes hereof any increase in capital allocable to, or
compensation attributable to, a period prior to the publication or effective
date of such an introduction, change, guideline or request shall be deemed to be
incurred on the later of such publication or effective date). Each Lender agrees
to use its best efforts promptly to notify the Company of any event referred to
in clause (a) or (b) above, provided that the failure to give such notice shall
not affect the rights of any Lender under this Section 2.17 (except as otherwise
expressly provided above in this Section 2.17). A certificate in reasonable
detail as to the basis for, and the amount of, such compensation submitted to
the Company by such Lender shall, in the absence of manifest error, be
conclusive and binding for all purposes.
SECTION II.18 Illegality. Notwithstanding any other provision
of this Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any central
bank or other governmental authority shall assert that it is unlawful, for any
Lender or its lending office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain such Advances
hereunder, such Lender may, by notice to the Company and the Administrative
Agent, suspend the right of the Borrowers to elect Eurodollar Rate Advances from
such Lender and, if necessary in the reasonable opinion of such Lender to comply
with such law or regulation, Convert all such Eurodollar Rate Advances of such
Lender to Base Rate Advances at the latest time permitted by the applicable law
or regulation, and such suspension and, if applicable, such Conversion shall
continue until such Lender notifies the Company and the Administrative Agent
that the circumstances making it unlawful for such Lender to perform such
<PAGE> 37
33
obligations no longer exist (which such Lender shall promptly do when such
circumstances no longer exist). So long as the obligation of any Lender to make
Eurodollar Rate Advances has been suspended under this Section 2.18, all Notices
of Borrowing specifying Advances of such Type shall be deemed, as to such
Lender, to be requests for Base Rate Advances. Each Lender agrees to use its
best efforts (including, without limitation, a reasonable effort to change its
lending office or to transfer its affected Advances to an affiliate) to avoid
any such illegality.
SECTION II.19 Pro Rata Treatment, Payments and Computations.
(a) Each Borrowing by any Borrower in respect of Revolving Credit Advances
(subject to the provisions of Section 2.24(e)) shall be made pro rata according
to the respective Commitment Percentages of the Lenders. The Borrowers shall
make each payment hereunder (including, without limitation, under Section 2.6,
2.8, 2.10 or 2.11) and under the Notes, whether the amount so paid is owing to
any or all of the Lenders or to the Administrative Agent, not later than 12:00
noon (New York City time) without setoff, counterclaim, or any other deduction
whatsoever, on the day when due in Dollars to the Administrative Agent at its
address at 270 Park Avenue, New York, New York 10017, Reference: El Paso Natural
Gas Company, or at such other location designated by notice to the Company from
the Administrative Agent and agreed to by the Company, in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or facility fees ratably (other
than amounts payable pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20)
according to the respective amounts of such principal, interest or facility fees
then due and owing to the Lenders, and like funds relating to the payment of any
other amount payable to any Lender to such Lender, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.7(d), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Prime Rate and
of facility fees shall be made by the Administrative Agent on the basis of a
year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate, the Base CD Rate or the Effective Federal Funds
Rate shall be made by the Administrative Agent, and all computations of interest
pursuant to Section 2.12 shall be made by each Lender with respect to its own
Advances, on the basis of a year of 360 days, in each case for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable. Each determination by the
Administrative Agent (or, in the case of Section 2.12, 2.16,
<PAGE> 38
34
2.17, 2.18 or 2.20, by each Lender with respect to its own Advances) of an
interest rate or an increased cost or increased capital or of illegality
hereunder shall be conclusive and binding for all purposes if made reasonably
and in good faith.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest; provided, however,
if such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(d) Unless the Administrative Agent shall have received notice
from the Company or any other applicable Borrower prior to the date on which any
payment is due to the Lenders hereunder that the applicable Borrower will not
make such payment in full, the Administrative Agent may assume that the
applicable Borrower has made such payment in full to the Administrative Agent on
such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the applicable Borrower shall
not have so made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent, at a rate equal to the Effective
Federal Funds Rate for such day.
SECTION II.20 Taxes. (a) Any and all payments by the Borrowers
hereunder or under the Notes to each Indemnified Party shall be made, in
accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed by the jurisdiction under the laws of which such
Indemnified Party is organized, domiciled, resident or doing business, or any
political subdivision thereof or by any jurisdiction in which such Indemnified
Party holds any interest in connection with this Agreement or any Note
(including, without limitation, in the case of each Lender, the jurisdiction of
such Lender's lending office) or any political subdivision thereof, other than
by any jurisdiction with which the Indemnified Party's connection arises solely
from having executed, delivered or performed obligations or received a payment
under, or enforced, this Agreement or any Note (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Indemnified Party, (i) the sum payable
<PAGE> 39
35
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.20) such Indemnified Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make or cause to be made such deductions and (iii) such Borrower shall pay or
cause to be paid the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, provided that the Borrowers
shall not be required to pay any additional amount (and shall be relieved of any
liability with respect thereto) pursuant to this subsection (a) to any
Indemnified Party that either (A) on the date such Lender became an Indemnified
Party hereunder, (I) was not entitled to submit a U.S. Internal Revenue Service
form 1001 (relating to such Indemnified Party, and entitling it to a complete
exemption from United States withholding taxes on all amounts to be received by
such Indemnified Party pursuant to this Agreement) and a U.S. Internal Revenue
Service form 4224 (relating to all amounts to be received by such Indemnified
Party pursuant to this Agreement) and (II) was not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code) or (B)
has failed to submit any form or certificate that it was required to file or
provide pursuant to subsection (d) of this Section 2.20 and is entitled to file
or give, as applicable, under applicable law, provided, further, that should an
Indemnified Party become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrowers shall take such steps as such Indemnified
Party shall reasonably request to assist such Indemnified Party to recover such
Taxes, and provided, further, that each Indemnified Party, with respect to
itself, agrees to indemnify and hold harmless the Borrowers from any taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
the Borrowers as a result of the failure of any of the Borrowers to comply with
its obligations under clause (ii) or (iii) above in reliance on any form or
certificate provided to it by such Indemnified Party pursuant to this Section
2.20. If any Indemnified Party receives a net credit or refund in respect of
such Taxes or amounts so paid by the Borrowers, it shall promptly notify the
Company of such net credit or refund and shall promptly pay such net credit or
refund to the applicable Borrower, provided that the applicable Borrower agrees
to return such net credit or refund if the Indemnified Party to which such net
credit or refund is applicable is required to repay it.
(b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made by such Borrower hereunder
or under the Notes or from the execution, delivery or performance of, or
otherwise with respect to, this Agreement or the Notes (hereinafter referred to
as "Other Taxes").
(c) Each Borrower will indemnify each Indemnified Party and
the Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other
<PAGE> 40
36
Taxes imposed by any jurisdiction on amounts payable under this Section 2.20)
paid by such Indemnified Party and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto except as a result of
the gross negligence (which shall in any event include the failure of such
Indemnified Party to provide to the Borrowers any form or certificate that it
was required to provide pursuant to subsection (d) below) or willful misconduct
of such Indemnified Party, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Indemnified Party makes written demand therefor.
(d) On or prior to the date on which each Indemnified Party
organized under the laws of a jurisdiction outside the United States becomes an
Indemnified Party hereunder, such Indemnified Party shall provide the Company
with U.S. Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the U.S. Internal Revenue Service, certifying that
such Indemnified Party is fully exempt from United States withholding taxes with
respect to all payments to be made to such Indemnified Party hereunder, or other
documents satisfactory to the Company indicating that all payments to be made to
such Indemnified Party hereunder are fully exempt from such taxes. Thereafter
and from time to time (but only so long as such Indemnified Party remains
lawfully able to do so), each such Indemnified Party shall submit to the Company
such additional duly completed and signed copies of one or the other of such
Forms (or such successor Forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by any
Borrower to such Indemnified Party and (ii) required under then-current United
States law or regulations to avoid United States withholding taxes on payments
in respect of all amounts to be received by such Indemnified Party pursuant to
this Agreement or the Notes. Upon the request of any Borrower from time to time,
each Indemnified Party that is a United States person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code) shall submit to the Company
a certificate to the effect that it is such a United States person. If any
Indemnified Party determines, as a result of any change in applicable law,
regulation or treaty, or in any official application or interpretation thereof,
that it is unable to submit to the Company any form or certificate that such
Indemnified Party is obligated to submit pursuant to this subsection (d), or
that such Indemnified Party is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Party shall promptly notify
the Company of such fact.
(e) Any Indemnified Party claiming any additional amounts
payable pursuant to this Section 2.20 shall use its best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Indemnified
Party, be otherwise disadvantageous to such Indemnified Party.
<PAGE> 41
37
(f) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers and
each Indemnified Party contained in this Section 2.20 shall survive the payment
in full of principal and interest hereunder and under the Notes.
(g) Any other provision of this Agreement to the contrary
notwithstanding, any amounts which are payable by any Borrower under this
Section 2.20 shall not be payable under Section 2.16.
SECTION II.21 Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.12, 2.16, 2.17, 2.18 or 2.20) in excess of its
ratable share of payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (a) the amount of
such Lender's required repayment to (b) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.
SECTION II.22 Use of Proceeds. Proceeds of the Advances may be
used for general corporate purposes of the Borrowers and their respective
Subsidiaries, including, without limitation, for acquisitions and for payment of
commercial paper issued by the Borrowers and to refinance the loans under the
Existing Facilities.
SECTION II.23 Extension of Stated Termination Date. (a) Not
less than 45 days prior to the Stated Termination Date then in effect, provided
that no Event of Default shall have occurred and be continuing, the Company may
request an extension of such Stated Termination Date by submitting to the
Administrative Agent an Extension Request containing the information in respect
of such extension specified in Exhibit M, which the Administrative Agent shall
promptly furnish to each Lender. Each Lender shall, no later than 30 days after
receiving from the Administrative Agent the applicable Extension Request,
<PAGE> 42
38
notify the Company and the Administrative Agent of its election to extend or not
extend the Stated Termination Date as requested in such Extension Request. If
the Required Lenders shall approve in writing the extension of the Stated
Termination Date requested in such Extension Request, the Stated Termination
Date shall automatically and without any further action by any Person be
extended for the period specified in such Extension Request; provided that (i)
each extension pursuant to this Section 2.23 shall be for a maximum of one year,
(ii) the Commitment of any Lender that does not consent in writing within 30
days after receiving from the Administrative Agent the applicable Extension
Request (an "Objecting Lender") shall, unless earlier terminated in accordance
with this Agreement, expire on the Stated Termination Date in effect on the date
of such Extension Request (such Stated Termination Date, if any, referred to as
the "Commitment Expiration Date" with respect to such Objecting Lender) and
(iii) the Company may exercise no more than two extensions pursuant to this
Section 2.23, so that the Stated Termination Date shall not in any event extend
beyond seven years from the Closing Date. If, within 30 days after receiving
from the Administrative Agent the applicable Extension Request, the Required
Lenders shall not approve in writing the extension of the Stated Termination
Date requested in an Extension Request, the Stated Termination Date shall not be
extended pursuant to such Extension Request. The Administrative Agent shall
promptly notify (y) the Lenders and the Company of any extension of the Stated
Termination Date pursuant to this Section 2.23 and (z) the Company and the
Lenders of any Lender which becomes an Objecting Lender.
(b) Revolving Credit Advances owing to any Objecting Lender on
the Commitment Expiration Date with respect to such Lender shall be repaid in
full on or before the Commitment Expiration Date.
(c) The Borrowers shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Objecting Lenders in accordance with Section 2.15,
to prepay in full the Revolving Credit Advances of the Objecting Lenders,
together with accrued interest thereon, any amounts payable pursuant to Sections
2.11, 2.12, 2.16, 2.17, 2.18, 2.20 and 9.4(b) and any accrued and unpaid
facility fee or other amounts payable to the Objecting Lenders hereunder and/or,
upon giving not less than three Business Days' notice to the Objecting Lenders
and the Administrative Agent, to cancel the whole or part of the Commitments of
the Objecting Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes an
Objecting Lender, the Borrower may, at its own expense and in its sole
discretion and prior to the then Stated Termination Date, require such Lender to
transfer or assign, in whole or in part, without recourse (in accordance with
Section 9.7), all or part of its interests, rights and obligations under this
Agreement to an Eligible Assignee (provided that the Borrower, with the full
cooperation of such Lender, can identify
<PAGE> 43
39
an Eligible Assignee that is ready, willing and able to be an assignee with
respect thereto) which shall assume such assigned obligations (which assignee
may be another Lender, if such assignee Lender accepts such assignment);
provided that (A) the assignee or the Borrower, as the case may be, shall have
paid to such Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Advances made by it hereunder and all
other amounts owed to it hereunder, including, without limitation, any amounts
owing pursuant to Section 9.4(b) and any amounts that would be owing under said
Section if such Advances were prepaid on the date of such assignment, and (B)
such assignment does not conflict with any law, rule or regulation or order of
any governmental authority. Any assignee which becomes a Lender as a result of
such an assignment made pursuant to this paragraph (d) shall be deemed to have
consented to the applicable Extension Request and, therefore, shall not be an
Objecting Lender.
SECTION II.24 Commitment Increases. (a) At any time after the
Closing Date, provided that no Event of Default shall have occurred and be
continuing, the Company may request an increase of the aggregate Commitments by
notice to the Administrative Agent in writing of the amount (the "Offered
Increase Amount") of such proposed increase (such notice, a "Commitment Increase
Notice"), provided that the first such increase shall be in an amount equal to
at least $93,750,000 and the second such increase shall be in an amount equal to
$187,500,000 less the amount of the first such increase. Any such Commitment
Increase Notice must offer each Lender the opportunity to subscribe for its pro
rata share of the increased Commitments. If any portion of the increased
Commitments is not subscribed for by the Lenders, the Company may, with the
consent of the Administrative Agent as to any Person that is not at such time a
Lender (which consent shall not be unreasonably withheld), offer to any existing
Lender or to one or more additional banks or financial institutions the
opportunity to participate in all or a portion of such unsubscribed portion of
the increased Commitments pursuant to paragraph (b) below.
(b) Any additional bank or financial institution that the
Company selects to offer participation in the increased Commitments, and that
elects to become a party to this Agreement and obtain a Commitment shall execute
a New Lender Supplement with the Company and the Administrative Agent,
substantially in the form of Exhibit N (a "New Lender Supplement"), whereupon
such bank or financial institution (a "New Lender") shall become a Lender for
all purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement, and Schedule I shall be
deemed to be amended to add the name and Commitment of such New Lender, provided
that the Commitment of any such New Lender shall be in an amount not less than
$10,000,000.
(c) Any Lender that accepts an offer to it by the Company to
increase its Commitment pursuant to this Section 2.24 shall, in each case,
execute a Commitment Increase Supplement
<PAGE> 44
40
with the Company and the Administrative Agent, substantially in the form of
Exhibit O (a "Commitment Increase Supplement"), whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the full
amount of its Commitment as so increased, and Schedule I shall be deemed to be
amended to so increase the Commitment of such Lender.
(d) The effectiveness of any New Lender Supplement or
Commitment Increase Supplement shall be contingent upon receipt by the
Administrative Agent of such corporate resolutions of the Borrowers and legal
opinions of counsel to the Borrowers as the Administrative Agent shall
reasonably request with respect thereto, in each case, in form and substance
satisfactory to the Administrative Agent.
(e) If any bank or financial institution becomes a New Lender
pursuant to Section 2.24(b) or any Lender's Commitment is increased pursuant to
Section 2.24(c), additional Revolving Credit Advances made on or after the
effectiveness thereof (the "Re-Allocation Date") shall be made pro rata based on
the Commitment Percentages in effect on and after such Re-Allocation Date
(except to the extent that any such pro rata borrowings would result in any
Lender making an aggregate principal amount of Revolving Credit Advances in
excess of its Commitment, in which case such excess amount will be allocated to,
and made by, such new Lender and/or Lenders with such increased Commitments to
the extent of, and pro rata based on, their respective Commitments), and
continuations of Eurodollar Rate Advances outstanding on such Re-Allocation Date
shall be effected by repayment of such Eurodollar Rate Advances on the last day
of the Interest Period applicable thereto and the making of new Eurodollar Rate
Advances pro rata based on such new Commitment Percentages. In the event that on
any such Re-Allocation Date there is an unpaid principal amount of Base Rate
Advances, the Borrower shall make prepayments thereof and borrowings of Base
Rate Advances so that, after giving effect thereto, the Base Rate Advances
outstanding are held pro rata based on such new Commitment Percentages. In the
event that on any such Re-Allocation Date there is an unpaid principal amount of
Eurodollar Rate Advances, such Eurodollar Rate Advances shall remain outstanding
with the respective holders thereof until the expiration of their respective
Interest Periods (unless the applicable Borrower elects to prepay any thereof in
accordance with the applicable provisions of this Agreement), and interest on
and repayments of such Eurodollar Rate Advances will be paid thereon to the
respective Lenders holding such Eurodollar Rate Advances pro rata based on the
respective principal amounts thereof outstanding.
(f) Notwithstanding anything to the contrary in this Section
2.24, (i) in no event shall any transaction effected pursuant to this Section
2.24 cause the aggregate Commitments to exceed $937,500,000, (ii) no increase
pursuant to this Section 2.24 shall be effective without the consent of the
Required Lenders and (iii) no Lender shall have any obligation to increase its
Commitment unless it agrees to do so in its sole discretion.
<PAGE> 45
41
(g) The Borrowers, at their own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Notes of any
Lender, if any, new Notes to the order of such Lender, if requested, in an
amount equal to the Commitment of such Lender after giving effect to any
increase in such Lender's Commitment.
SECTION II.25 Replacement of Lenders. If any Lender requests
compensation under Sections 2.12, 2.16 or 2.17 or if any Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.20, or if any Lender defaults in its
obligation to fund Advances hereunder, then the Company may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.7), all its interests, rights
and obligations under this Agreement (other than any outstanding CAF Advances
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Company shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Advances (other than CAF Advances), accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Sections 2.12 , 2.16 or 2.17 or
payments required to be made pursuant to Section 2.20, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Company to require such assignment and delegation cease to apply.
<PAGE> 46
42
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION III.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective (the "Effective Date") when (i)
it shall have been executed by EPNGC, Tennessee, the Administrative Agent, the
CAF Advance Agent, the Documentation Agent and the Syndication Agent and (ii)
the Administrative Agent and EPNGC either shall have been notified by each
Lender that such Lender has executed it or shall have received a counterpart of
this Agreement executed by such Lender. Anything in this Agreement to the
contrary notwithstanding, if all of the conditions to effectiveness of this
Agreement specified in this Section 3.1 shall not have been fulfilled on or
before December 31, 1997, (i) the Company shall on such date pay all accrued and
unpaid facility fees pursuant to Section 2.8 and (ii) this Agreement, and all of
the obligations of EPNGC, the Lenders, the Administrative Agent and the CAF
Advance Agent hereunder, shall be terminated on and as of 5:00 P.M. (New York
City time) on December 31, 1997; provided, however, that as soon as the
Administrative Agent determines that all of the conditions to effectiveness of
this Agreement specified in this Section 3.1 shall have been fulfilled on or
before December 31, 1997, the Administrative Agent shall furnish written notice
to EPNGC and the Lenders to the effect that it has so determined, and such
notice by the Administrative Agent shall constitute conclusive evidence that
this Agreement shall have become effective for all purposes. Notwithstanding the
foregoing, the obligations of the Company to pay fees pursuant to Section 2.8 as
well as all obligations of the Borrowers pursuant to Section 9.4 shall survive
the termination of this Agreement.
SECTION III.2 Conditions Precedent to Initial Advances. The
agreement of each Lender to make the initial Advances to be made by it to the
Borrowers hereunder is subject to (the date upon which all conditions listed in
Section 3.2(a) and 3.2(b) are satisfied, the "Closing Date") (a) the occurrence
of the Effective Date hereunder and (b) the receipt by the Administrative Agent
of the following in form and substance satisfactory to the Administrative Agent
and in sufficient copies for each Lender:
(i) Certified copies of the resolutions of the Board of
Directors of each of EPNGC and Tennessee approving the borrowings
contemplated hereby and authorizing the execution of this Agreement and
the Notes, and of all documents evidencing other necessary corporate
action of each of EPNGC and Tennessee and governmental approvals to
each of EPNGC and Tennessee, if any, with respect to this Agreement and
the Notes.
(ii) A certificate of the Secretary or an Assistant Secretary
of each of EPNGC and Tennessee certifying the names and true signatures
of the officers of each of EPNGC and Tennessee authorized to sign this
Agreement and the other documents to be delivered by it hereunder.
<PAGE> 47
43
(iii) A favorable opinion of the General Counsel of EPNGC, or
the Associate General Counsel of EPNGC, in substantially the form of
Exhibit G.
(iv) A favorable opinion of Jones, Day, Reavis & Pogue, New
York counsel to EPNGC and Tennessee, in substantially the form of
Exhibit H.
(v) A letter from the Process Agent, in substantially the form
of Exhibit I, agreeing to act as Process Agent for each of EPNGC and
Tennessee and to forward forthwith all process received by it to EPNGC
and Tennessee, as applicable.
(vi) Evidence satisfactory to the Administrative Agent that
all advances, accrued interest and other fees and any other amounts
(except as provided under Section 9.12) owing to the lenders and the
agents under the Existing Facilities shall have been, or simultaneously
with the initial Advances are being, paid in full, and the commitments
to make advances thereunder shall have been cancelled.
SECTION III.3 Conditions Precedent to Initial Advances to Any
Borrowing Subsidiary or Holding. The agreement of each Lender to make the
initial Advances to be made by it to any Borrowing Subsidiary (other than
Tennessee) or Holding is further subject to the Administrative Agent receiving
the following, in form and substance satisfactory to the Administrative Agent
and (except for the Notes) in sufficient copies for each Lender (provided that
no Subsidiary of Holding which is not a Subsidiary of EPNGC may become a
Borrower hereunder unless Holding is a Borrower hereunder):
(a) A Joinder Agreement executed and delivered by such
Borrowing Subsidiary or Holding, as the case may be, conforming to the
requirements hereof.
(b) Notes, dated the date such Borrowing Subsidiary or
Holding, as the case may be, executes and delivers its Joinder
Agreement, made by such Borrowing Subsidiary or Holding, as the case
may be, to the order of each Lender requesting a Note, respectively.
(c) A certificate of the Secretary or an Assistant Secretary
of such Borrowing Subsidiary or Holding, as the case may be, certifying
the names and true signature of the officers of such Borrowing
Subsidiary or Holding, as the case may be, authorized to sign the
Joinder Agreement and the other documents to be delivered by it
hereunder.
(d) A favorable opinion of the General Counsel or Associate
General Counsel of the Company, given upon the express instructions of
the Company, in substantially the form of Exhibit K, and as to such
other matters as any
<PAGE> 48
44
Lender through the Administrative Agent may reasonably request, with
such assumptions, qualifications and exceptions as the Administrative
Agent may approve.
(e) A favorable opinion of Jones, Day, Reavis & Pogue or other
New York counsel to the Company reasonably satisfactory to the
Administrative Agent, in substantially the form of Exhibit L, and as to
such other matters as any Lender through the Administrative Agent may
reasonably request, with such assumptions, qualifications and
exceptions as the Administrative Agent may approve.
(f) A letter from the Process Agent, in substantially the form
of Exhibit I, agreeing to act as Process Agent for such Borrowing
Subsidiary or Holding, as the case may be, and to forward forthwith all
process received by it to such Borrowing Subsidiary or Holding, as the
case may be.
SECTION III.4 Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance (including the initial Advance, but
excluding any continuation or Conversion of an Advance) on the occasion of any
Borrowing shall be subject to the conditions precedent that on the date of such
Borrowing this Agreement shall have become effective pursuant to Section 3.1
and, before and immediately after giving effect to such Borrowing and to the
application of the proceeds therefrom, the following statements shall be true
and correct, and the giving by the applicable Borrower or the Company on such
Borrower's behalf of the applicable Notice of Borrowing and the acceptance by
the applicable Borrower of the proceeds of such Borrowing shall constitute its
representation and warranty that on and as of the date of such Borrowing, before
and immediately after giving effect thereto and to the application of the
proceeds therefrom, the following statements are true and correct:
(i) each representation and warranty contained in Section 4.1
is correct in all material respects as though made on and as of such
date; and
(ii) no event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Event of Default or a
Default.
<PAGE> 49
45
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION IV.1 Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Each Principal Subsidiary and each Restricted Affiliate is duly
incorporated, validly existing and in good standing in the jurisdiction
of its incorporation. The Company, each Principal Subsidiary and each
Restricted Affiliate possess all corporate powers and all other
authorizations and licenses necessary to engage in its business and
operations as now conducted, the failure to obtain or maintain which
would have a Material Adverse Effect.
(b) The execution, delivery and performance by (i) each
Borrower of this Agreement, each Joinder Agreement, if any, to which it
is a party and its Notes (as applicable) and (ii) each Restricted
Affiliate of its Restricted Affiliate Guaranty are within such
Borrower's or Restricted Affiliate's, as the case may be, corporate
powers, have been duly authorized by all necessary corporate action,
and do not contravene (A) such Borrower's or Restricted Affiliate's, as
the case may be, charter or by-laws or (B) any law or any material
contractual restriction binding on or affecting such Borrower or
Restricted Affiliate, as the case may be.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by (i) such
Borrower of this Agreement, each Joinder Agreement, if any, to which it
is a party or its Notes (as applicable) or (ii) any Restricted
Affiliate of its Restricted Affiliate Guaranty, except filings
necessary to comply with laws, rules, regulations and orders required
in the ordinary course to comply with ongoing obligations of such
Borrower under Section 5.1(a) and (b).
(d) This Agreement constitutes, its Notes and each Joinder
Agreement, if any, to which it is a party (as applicable) when
delivered hereunder shall constitute and its Restricted Affiliate
Guaranty when delivered hereunder shall constitute, the legal, valid
and binding obligations of each Borrower or Restricted Affiliate, as
the case may be, enforceable against such Borrower or Restricted
Affiliate, as the case may be, in accordance with their respective
terms, except as may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
<PAGE> 50
46
(e) The consolidated balance sheet of EPNGC and its
consolidated Subsidiaries as at December 31, 1996, and the related
consolidated statements of income and cash flows of EPNGC and its
consolidated Subsidiaries for the fiscal year then ended, reported on
by Coopers & Lybrand LLP, independent public accountants, copies of
which have been furnished to the Administrative Agent and the Lenders
prior to the date hereof, fairly present the consolidated financial
condition of EPNGC and its consolidated Subsidiaries as at such date
and the consolidated results of the operations of EPNGC and its
consolidated Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since December 31, 1996, there has been no material
adverse change in such condition or operations. The unaudited
consolidated balance sheet of EPNGC and its consolidated Subsidiaries
as of June 30, 1997, and the related consolidated statements of income
and cash flows of EPNGC and its consolidated Subsidiaries for the six
months then ended, certified by the chief financial officer of EPNGC,
copies of which have been furnished to the Administrative Agent and the
Lenders prior to the date hereof, fairly present the consolidated
results of operations of EPNGC and its consolidated Subsidiaries for
the three months then ended, all in accordance with generally accepted
accounting principles consistently applied (except as approved by the
chief financial officer of EPNGC and as disclosed therein) and subject
to normal year-end audit adjustments.
(f) Each of the Company and its Subsidiaries is in compliance
with all laws, rules, regulations and orders of any governmental
authority applicable to it or its property except where the failure to
comply, individually or in the aggregate, would not in the reasonable
judgment of the Company be expected to result in a Material Adverse
Effect.
(g) There is no action, suit or proceeding pending, or to the
knowledge of any Borrower threatened, against or involving the Company,
any Principal Subsidiary or any Restricted Affiliate in any court, or
before any arbitrator of any kind, or before or by any governmental
body, which in the reasonable judgment of the Company (taking into
account the exhaustion of all appeals) would have a Material Adverse
Effect, or which purports to affect the legality, validity, binding
effect or enforceability of this Agreement or the Notes.
(h) The Company, each Principal Subsidiary and each Restricted
Affiliate have duly filed all tax returns required to be filed, and
have duly paid and discharged all taxes, assessments and governmental
charges upon it or against its properties now due and payable, the
failure to pay which would have a Material Adverse Effect, unless and
to the extent only that the same are being contested in good
<PAGE> 51
47
faith and by appropriate proceedings by the Company, the appropriate
Subsidiary or the appropriate Restricted Affiliate.
(i) The Company, each Principal Subsidiary and each Restricted
Affiliate have good title to their respective properties and assets,
free and clear of all mortgages, liens and encumbrances, except for
mortgages, liens and encumbrances (including covenants, restrictions,
rights, easements and minor irregularities in title) which do not
materially interfere with the business or operations of the Company,
such Subsidiary or such Restricted Affiliate as presently conducted or
which are permitted by Section 5.2(a), and except that no
representation or warranty is being made with respect to Margin Stock.
(j) No Termination Event has occurred or is reasonably
expected to occur with respect to any Plan which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default
under Section 7.1(g).
(k) Each Plan has complied with the applicable provisions of
ERISA and the Code where the failure to so comply would reasonably be
expected to result in an aggregate liability that would exceed 10% of
the Net Worth of the Company.
(l) The statement of assets and liabilities of each Plan and
the statements of changes in fund balance and in financial position, or
the statement of changes in net assets available for plan benefits, for
the most recent plan year for which an accountant's report with respect
to such Plan has been prepared, copies of which report have been
furnished to the Administrative Agent, fairly present the financial
condition of such Plan as at such date and the results of operations of
such Plan for the plan year ended on such date.
(m) Neither the Company nor any ERISA Affiliate has incurred,
or is reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan which, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
Withdrawal Liability (as of the date of determination), would exceed
10% of the Net Worth of the Company.
(n) Neither the Company nor any ERISA Affiliate has received
any notification that any Multiemployer Plan is in reorganization,
insolvent or has been terminated, within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization, insolvent or to be terminated within the meaning of
Title IV of ERISA the effect of which reorganization, insolvency or
termination would be the occurrence of an Event of Default under
Section 7.1(i).
<PAGE> 52
48
(o) The Borrowers are not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance will be used to extend credit to others (other
than to any Subsidiary of the Company) for the purpose of purchasing or
carrying Margin Stock.
(p) No Borrower is an "investment company" or a "company"
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(q) No Borrower is a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(r) The borrowings by the Borrowers under this Agreement and
the Notes and the applications of the proceeds thereof as provided
herein will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
All representations and warranties made by the Borrowers herein or made in any
certificate delivered pursuant hereto shall survive the making of the Advances
and the execution and delivery to the Lenders of this Agreement and the Notes.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION V.1 Affirmative Covenants. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, each Borrower will, unless the
Majority Lenders shall otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. Preserve and
maintain, and, in the case of the Company, cause each Principal
Subsidiary and each Restricted Affiliate to preserve and maintain, its
corporate existence, rights (charter and statutory) and material
franchises, except as otherwise permitted by Section 5.2(d) or 5.2(e).
(b) Compliance with Laws, Etc. Comply, and, in the case of the
Company, cause each Principal Subsidiary and each Restricted Affiliate
to comply, in all material respects with all applicable laws, rules,
regulations and orders (including, without limitation, all
environmental laws and laws requiring payment of all taxes, assessments
and governmental charges imposed upon it or upon its property except to
the extent contested in good faith by appropriate proceedings) the
failure to comply with which would have a Material Adverse Effect.
<PAGE> 53
49
(c) Visitation Rights. At any reasonable time and from time to
time, permit the Administrative Agent or any of the Lenders or any
agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the
properties of, the Company, any of its Subsidiaries and any Restricted
Affiliate, and to discuss the affairs, finances and accounts of the
Company, any of its Subsidiaries and any Restricted Affiliate with any
of their officers and with their independent certified public
accountants.
(d) Books and Records. Keep, and, in the case of the Company,
cause each of its Subsidiaries and each Restricted Affiliate to keep,
proper books of record and account, in which full and correct entries
shall be made of all its respective financial transactions and the
assets and business of the Company, each of its Subsidiaries and each
Restricted Affiliate, as applicable, in accordance with generally
accepted accounting principles either (i) consistently applied or (ii)
applied in a changed manner provided such change shall have been
disclosed to the Administrative Agent and shall have been consented to
by the accountants which (as required by Section 5.3(b)) report on the
financial statements of the Company and its consolidated Subsidiaries
for the fiscal year in which such change shall have occurred.
(e) Maintenance of Properties, Etc. Maintain and preserve,
and, in the case of the Company, cause each Principal Subsidiary and
each Restricted Affiliate to maintain and preserve, all of its
properties which are used in the conduct of its business in good
working order and condition, ordinary wear and tear excepted, to the
extent that any failure to do so would have a Material Adverse Effect.
(f) Maintenance of Insurance. Maintain, and, in the case of
the Company, cause each Principal Subsidiary and each Restricted
Affiliate to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Company, such Subsidiary or such Restricted Affiliate operates.
(g) Holding. Once Holding is formed, cause (i) Holding to
execute and deliver a guaranty (in form and substance reasonably
satisfactory to the Administrative Agent) (the "Holding Guarantee") in
favor of the Administrative Agent, for the ratable benefit of the
Lenders, guaranteeing the prompt and complete payment by each Borrower
when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations owing by such Borrower and (ii) the delivery to the
Administrative Agent of legal opinions from the General Counsel or the
Associate
<PAGE> 54
50
General Counsel of Holding and from New York counsel to Holding
reasonably acceptable to the Administrative Agent, which legal opinions
shall be in form and substance reasonably satisfactory to the
Administrative Agent.
SECTION V.2 Negative Covenants. So long as any amount payable
by any Borrower hereunder or under any Note shall remain unpaid or any Lender
shall have any Commitment hereunder, each Borrower will not, unless the Majority
Lenders shall otherwise consent in writing:
(a) Liens, Etc. (i) Create, assume or suffer to exist, or, in
the case of the Company, permit any Principal Subsidiary to create,
assume or suffer to exist, any Liens upon or with respect to any of the
capital stock of any Principal Subsidiary, whether now owned or
hereafter acquired, or (ii) create or assume, or, in the case of the
Company, permit any Principal Subsidiary or any Restricted Affiliate to
create or assume, any Liens upon or with respect to any other assets
material to the consolidated operations of the Company and its
consolidated Subsidiaries taken as a whole securing the payment of
Indebtedness and Guaranties in an aggregate amount (determined without
duplication of amount (so that the amount of a Guarantee will be
excluded to the extent the Indebtedness Guaranteed thereby is included
in computing such aggregate amount)) exceeding $100,000,000; provided,
however, that this subsection (a) shall not apply to:
(A) Liens on the stock or assets of any Project
Financing Subsidiary or any Restricted Affiliate (or any
partnership, member or other equity interest in or assets of
any partnership, limited liability company or other entity of
which the Project Financing Subsidiary is a partner, member or
other equity participant) securing the payment of a Project
Financing and related obligations;
(B) Liens on assets acquired by the Company, any of
its Subsidiaries or any Restricted Affiliate after February
11, 1992 to the extent that such Liens existed at the time of
such acquisition and were not placed thereon by or with the
consent of the Company in contemplation of such acquisition;
(C) Liens created by any Alternate Program or any
document executed by any Borrower or any Restricted
Affiliate in connection therewith;
(D) Liens on Margin Stock; and
(E) Liens for taxes, assessments or governmental
charges or levies not yet overdue.
(b) Consolidated Debt and Guarantees to Capitalization. (i)
Permit the ratio of (A) the sum of (1)
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51
the aggregate amount of consolidated Debt of EPNGC and its consolidated
Subsidiaries and all Restricted Affiliates and their consolidated
Subsidiaries (without duplication of amount under this clause (A) and
determined as to all of the foregoing entities on a consolidated basis)
plus (2) the aggregate amount of consolidated Guaranties of EPNGC and
its consolidated Subsidiaries and all Restricted Affiliates and their
consolidated Subsidiaries (without duplication of amount under this
clause (A) and determined as to all of the foregoing entities on a
consolidated basis) to (B) Capitalization of EPNGC and all Restricted
Affiliates (without duplication and determined as to all of the
foregoing entities on a consolidated basis) to exceed .7 to 1; and (ii)
from and after the date that Holding becomes a Borrower hereunder,
permit the ratio of (A) the sum of (1) the aggregate amount of
consolidated Debt of Holding and its consolidated Subsidiaries plus (2)
the aggregate amount of consolidated Guaranties of Holding and its
consolidated Subsidiaries to (B) Capitalization of Holding to exceed .7
to 1.
(c) Debt, Etc. In the case of the Company, permit any of its
consolidated Subsidiaries to create or suffer to exist any Debt, any
Guaranty or any reimbursement obligation with respect to any letter of
credit (other than any Project Financing), if, immediately after giving
effect to such Debt, Guaranty or reimbursement obligation and the
receipt and application of any proceeds thereof or value received in
connection therewith, the aggregate amount (determined without
duplication of amount) of Debt, Guaranties and letter of credit
reimbursement obligations of the Company's consolidated Subsidiaries
(other than any Project Financing) determined on a consolidated basis
would exceed $300,000,000; provided, however, that the following Debt,
Guaranties or reimbursement obligations shall be excluded from the
application of, and calculation set forth in, this paragraph (c): (A)
Debt, Guaranties or reimbursement obligations incurred by (x) Mojave or
(y) so long as it is a Borrower, EPNGC, (B) Debt, Guaranties or
reimbursement obligations arising under (x) the EPTPC Facility and
permanently repaid in full on the Closing Date or (y) this Agreement or
the $750,000,000 364-Day Revolving Credit and Competitive Advance
Facility Agreement, dated as of the date hereof, among EPNGC, the
lenders parties thereto and Chase, as Administrative Agent and CAF
Advance Agent, (C) Debt, Guaranties or reimbursement obligations
incurred by El Paso Field Services Company up to an amount not to
exceed at any time outstanding the tangible net worth of El Paso Field
Services Company, provided that such Debt may be guaranteed by the
Company, (D) Excluded Acquisition Debt and (E) successive extensions,
refinancings or replacements (at the same Subsidiary or at any other
consolidated Subsidiary of the Company) of Debt, Guaranties or
reimbursement obligations (or commitments in respect thereof) referred
to in clauses (A), (B) and (D) above and in an amount not in excess of
the amounts so extended, refinanced or replaced (or the amount of
commitments in respect thereof).
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52
(d) Sale, Etc. of Assets. Sell, lease or otherwise transfer,
or, in the case of the Company, permit any Principal Subsidiary to
sell, lease or otherwise transfer, (in either case, whether in one
transaction or in a series of transactions) assets constituting a
material portion of the consolidated assets of the Company and its
Principal Subsidiaries taken as a whole, provided that provisions of
this subsection (d) shall not apply to:
(i) any sale of receivables and related rights
pursuant to any Alternate Program;
(ii) any Project Financing Subsidiary and the
assets thereof;
(iii) sales, leases or other transfers of assets
or capital stock of any Subsidiary of the Company other than
any Principal Subsidiary;
(iv) any sale of Margin Stock;
(v) any sale of up to 20% of the equity of El
Paso Field Services Company in an initial public offering of
such corporation's equity securities;
(vi) any sale, lease or other transfer to the
Company or any Principal Subsidiary, or to any corporation
which after giving effect to such transfer will become and be
either (A) a Principal Subsidiary in which the Company's
direct or indirect equity interest will be at least as great
as its direct or indirect equity interest in the transferor
immediately prior thereto or (B) a directly or indirectly
wholly-owned Principal Subsidiary;
(vii) any transfer permitted by Section 5.2(e);
and
(viii) any transfer to Holding or any of its
Subsidiaries of any stock or assets other than FERC regulated
assets (or stock or any other equity interest in an entity
owning FERC regulated assets) used in the mainline gas
transmission business; provided that (A) no Event of Default,
or event that with the giving of notice or lapse of time or
both would constitute an Event of Default, shall have occurred
and be continuing before and after giving effect to such
transfer and (B) no Borrower may be so transferred unless
Holding is also a Borrower.
(e) Mergers, Etc. Merge or consolidate with any person, or
permit any of its Principal Subsidiaries to merge or consolidate with
any Person, except that (i) any Principal Subsidiary may merge or
consolidate with (or
<PAGE> 57
53
liquidate into) any other Subsidiary (other than a Project Financing
Subsidiary, unless the successor corporation is not treated as a
Project Financing Subsidiary under this Agreement) or may merge or
consolidate with (or liquidate into) the Company, provided that (A) if
such Principal Subsidiary merges or consolidates with (or liquidates
into) the Company, the Company shall be the continuing or surviving
corporation and (B) if any such Principal Subsidiary merges or
consolidates with (or liquidates into) any other Subsidiary of the
Company, one of such Subsidiaries is the surviving corporation and, if
either such Subsidiary is not wholly-owned by the Company, such merger
or consolidation is on an arm's length basis, and (ii) the Company or
any Principal Subsidiary may merge or consolidate with any other
corporation (that is, in addition to the Company or any Principal
Subsidiary of the Company), provided that (A) if the Company merges or
consolidates with any such other corporation, the Company is the
surviving corporation, (B) if any Principal Subsidiary merges or
consolidates with any such other corporation, the surviving corporation
is a wholly-owned Principal Subsidiary of the Company, and (C) if
either the Company or any Principal Subsidiary merges or consolidates
with any such other corporation, after giving effect to such merger or
consolidation no Event of Default, and no event which with lapse of
time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing.
SECTION V.3 Reporting Requirements. So long as any amount
payable by any Borrower hereunder or under any Note shall remain unpaid or any
Lender shall have any Commitment hereunder, the Company will furnish to each
Lender in such reasonable quantities as shall from time to time be requested by
such Lender:
(a) as soon as publicly available and in any event within 60
days after the end of each of the first three fiscal quarters of each
fiscal year of each of EPNGC and, following its formation, Holding, a
consolidated balance sheet of each of EPNGC and, following its
formation, Holding and its respective consolidated subsidiaries as of
the end of such quarter, and consolidated statements of income and cash
flows of each of EPNGC and, following its formation, Holding and its
respective consolidated subsidiaries each for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified (subject to normal year-end adjustments) as being
fairly stated in all material respects by the chief financial officer,
controller or treasurer of the Company and accompanied by a certificate
of such officer stating (i) whether or not such officer has knowledge
of the occurrence of any Event of Default which is continuing hereunder
or of any event not theretofore remedied which with notice or lapse of
time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts
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with respect thereto, (ii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Company is in
compliance with the requirements set forth in subsections (b) and (c)
of Section 5.2, and (iii) a listing of all Principal Subsidiaries and
consolidated Subsidiaries of the Company showing the extent of its
direct and indirect holdings of their stocks;
(b) as soon as publicly available and in any event within 120
days after the end of each fiscal year of each of EPNGC and, following
its formation, Holding, a copy of the annual report for such year for
each of EPNGC and, following its formation, Holding and its respective
consolidated Subsidiaries containing financial statements for such year
reported by nationally recognized independent public accountants
acceptable to the Lenders, accompanied by (i) a report signed by said
accountants stating that such financial statements have been prepared
in accordance with generally accepted accounting principles and (ii) a
letter from such accountants stating that in making the investigations
necessary for such report they obtained no knowledge, except as
specifically stated therein, of any Event of Default which is
continuing hereunder or of any event not theretofore remedied which
with notice or lapse of time or both would constitute such an Event of
Default;
(c) within 120 days after the close of each of the Company's
fiscal years, a certificate of the chief financial officer, controller
or treasurer of the Company stating (i) whether or not he has knowledge
of the occurrence of any Event of Default which is continuing hereunder
or of any event not theretofore remedied which with notice or lapse of
time or both would constitute such an Event of Default and, if so,
stating in reasonable detail the facts with respect thereto, (ii) all
relevant facts in reasonable detail to evidence, and the computations
as to, whether or not the Company is in compliance with the
requirements set forth in subsections (b) and (c) of Section 5.2 and
(iii) a listing of all Principal Subsidiaries and consolidated
Subsidiaries of the Company showing the extent of its direct and
indirect holdings of their stocks;
(d) promptly after the sending or filing thereof, copies of
all publicly available reports which the Company, any Principal
Subsidiary or any Restricted Affiliate sends to any of its security
holders and copies of all publicly available reports and registration
statements which the Company, any Principal Subsidiary or any
Restricted Affiliate files with the Securities and Exchange Commission
or any national securities exchange other than registration statements
relating to employee benefit plans and to registrations of securities
for selling security holders;
(e) within 10 days after sending or filing thereof, a copy of
FERC Form No. 2: Annual Report of Major Natural Gas Companies, sent or
filed by the Company to or with the FERC
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with respect to each fiscal year of the Company;
(f) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies against or
involving the Company, any Principal Subsidiary or any Restricted
Affiliate, except any litigation or proceeding which in the reasonable
judgment of the Company (taking into account the exhaustion of all
appeals) is not likely to have a material adverse effect on the
consolidated financial condition of the Company and its consolidated
Subsidiaries taken as a whole;
(g) within three Business Days after an executive officer of
the Company obtains knowledge of the occurrence of any Event of Default
which is continuing or of any event not theretofore remedied which with
notice or lapse of time, or both, would constitute an Event of Default,
notice of such occurrence together with a detailed statement by a
responsible officer of the Company of the steps being taken by the
Company or the appropriate Subsidiary to cure the effect of such event;
(h) as soon as practicable and in any event (i) within 30 days
after the Company or any ERISA Affiliate knows or has reason to know
that any Termination Event described in clause (a) of the definition of
Termination Event with respect to any Plan has occurred and (ii) within
10 days after the Company or any ERISA Affiliate knows or has reason to
know that any other Termination Event has occurred, a statement of the
chief financial officer or treasurer of the Company describing such
Termination Event and the action, if any, which the Company or such
ERISA Affiliate proposes to take with respect thereto;
(i) promptly and in any event within two Business Days after
receipt thereof by the Company or any ERISA Affiliate, copies of each
notice received by the Company or any ERISA Affiliate from the PBGC
stating its intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(j) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan;
(k) promptly and in any event within five Business Days after
receipt thereof by the Company or any ERISA Affiliate from the sponsor
of a Multiemployer Plan, a copy of each notice received by the Company
or any ERISA Affiliate concerning (i) the imposition of Withdrawal
Liability by a Multiemployer Plan, (ii) the determination that a
Multiemployer Plan is, or is expected to be, in reorganization or
insolvent within the meaning of Title IV of ERISA, (iii) the
termination of a Multiemployer Plan
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56
within the meaning of Title IV of ERISA, or (iv) the amount of
liability incurred, or expected to be incurred, by the Company or any
ERISA Affiliate in connection with any event described in clause (i),
(ii) or (iii) above; and
(l) as soon as practicable but in any event within 60 days of
any notice of request therefor, such other information respecting the
financial condition and results of operations of the Company or any
Subsidiary of the Company as any Lender through the Administrative
Agent may from time to time reasonably request.
Each balance sheet and other financial statement furnished
pursuant to subsections (a) and (b) of this Section 5.3 shall contain
comparative financial information which conforms to the presentation required in
Form 10-Q and 10-K, as appropriate, under the Securities Exchange Act of 1934,
as amended.
SECTION V.4 Restrictions on Material Subsidiaries. Upon
Holding becoming a Borrower hereunder, Holding will not, and will not permit any
Material Subsidiary, to enter into any agreement or understanding pursuant to
which (a) any non-equity interest claim Holding may have against any Material
Subsidiary would be subordinate in any manner to the payment of any other
obligation of such Material Subsidiary (other than waivers or subordination of
subrogation, contribution or similar rights under Guaranties and similar
agreements) or (b) by its terms limits or restricts the ability of such Material
Subsidiary to make funds available to Holding (whether by dividend or other
distribution, by replacement of any inter-company advance or otherwise) if, in
any such case referred to in this Section 5.4, there is, at the time any such
agreement is entered into, a reasonable likelihood that all such agreements and
understandings, considered together, would materially and adversely affect the
ability of Holding to meet its obligations as they become due.
ARTICLE VI
GUARANTEES
SECTION VI.1 Guarantees. (a) Subject to the provisions of
Section 6.1(b), each Borrower hereby unconditionally and irrevocably guarantees
to the Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment by each other Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by such other
Borrower.
(b) Anything in this Article VI to the contrary
notwithstanding, the maximum liability of each Borrower (other than a Borrower
which is guaranteeing the Obligations of its Subsidiaries) under this Article VI
shall in no event exceed the amount which can be guaranteed by such Borrowing
Subsidiary under
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applicable federal and state laws relating to the insolvency of debtors.
(c) Each Borrower agrees that the Obligations owing by any
other Borrower may at any time and from time to time exceed the amount of the
liability of such other Borrower under this Article VI without impairing the
guarantee of such Borrower under this Article VI or affecting the rights and
remedies of the Administrative Agent or any Lender under this Article VI.
(d) No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Lender from
any Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Borrowers under this Article VI
which shall, notwithstanding any such payment or payments, continue until the
Obligations are paid in full and the Commitments are terminated.
(e) Each Borrower agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability under this Article VI, it will notify the
Administrative Agent in writing that such payment is made under this Article VI
for such purpose.
SECTION VI.2 No Subrogation. Notwithstanding any payment or
payments made by any Borrower under this Article VI or any set-off or
application of funds of such Borrower by the Administrative Agent or any Lender,
such Borrower shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against any other Borrower or against any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Obligations, nor shall such Borrower
seek or be entitled to seek any contribution or reimbursement from any other
Borrower in respect of payments made by such Borrower hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the other Borrowers
on account of the Obligations are paid in full and the Commitments are
terminated. If any amount shall be paid to any Borrower on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Borrower in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Borrower, and shall, forthwith upon receipt by such Borrower, be turned over to
the Administrative Agent in the exact form received by such Borrower (duly
indorsed by such Borrower to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.
SECTION VI.3 Amendments, etc. with respect to the Obligations;
Waiver of Rights. Each Borrower shall remain obligated under this Article VI
notwithstanding that, without any
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reservation of rights against such Borrower, and without notice to or further
assent by such Borrower, any demand for payment of any of the Obligations made
by the Administrative Agent or any Lender may be rescinded by the Administrative
Agent or such Lender, and any of the Obligations continued, and the Obligations,
or the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, and this Agreement, any Notes and any
other documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Majority Lenders, as the case may be) may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against any Borrower, the Administrative Agent or any
Lender may, but shall be under no obligation to, make a similar demand on the
applicable Borrowing Subsidiaries or any other guarantor, and any failure by the
Administrative Agent or any Lender to make any such demand or to collect any
payments from the other Borrowers or any such other guarantor or any release of
the other Borrowers or such other guarantor shall not relieve such Borrower of
its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Administrative Agent or any Lender against such Borrower for the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
SECTION VI.4 Guarantee Absolute and Unconditional. Each
Borrower waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Agreement or acceptance of this
Agreement; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Agreement; and all dealings between any Borrower,
on the one hand, and the Administrative Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Agreement. Each Borrower waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
other Borrowers with respect to the Obligations. The guarantee contained in this
Article VI shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of this Agreement, any Note, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the
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Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Borrower against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of any Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Borrower for the Obligations,
or of the Borrowers under this Agreement, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any Borrower,
the Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against any other Borrower or
any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from other Borrowers or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any other Borrower or any such other Person or of any
such collateral security, guarantee or right of offset, shall not relieve any
Borrower of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against such Borrower. The guarantees
contained in this Article VI shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon each Borrower and
its successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Lenders, and their respective successors,
indorsees, transferees and assigns, until all the Obligations and the
obligations of the Borrowers under this Agreement shall have been satisfied by
payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of this Agreement the Borrowers may be free
from any Obligations.
SECTION VI.5 Reinstatement. The provisions of this Article VI
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
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ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 Event of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Any Borrower shall fail to pay any installment of
principal of any of its Advances or Notes when due, or any interest on
any of its Advances or Notes or any other amount payable by it
hereunder within five Business Days after the same shall be due; or
(b) Any representation or warranty made or deemed made by any
Borrower herein or by any Borrower (or any of its officers) in
connection with this Agreement shall prove to have been incorrect in
any material respect when made or deemed made; or
(c) Any Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied
for 30 days after written notice thereof shall have been given to such
Borrower by the Administrative Agent or by any Lender with a copy to
the Administrative Agent; or
(d) The Company, any Principal Subsidiary or any Restricted
Affiliate shall fail to pay any Debt or Guaranty (excluding Debt
incurred pursuant hereto) of the Company, such Principal Subsidiary or
such Restricted Affiliate (as the case may be) in an aggregate
principal amount of $100,000,000 or more, or any installment of
principal thereof or interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to
such Debt or Guaranty; or any other default under any agreement or
instrument relating to any such Debt, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such default or event
is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated
maturity thereof, as a result of either (i) any default under any
agreement or instrument relating to any such Debt or (ii) the
occurrence of any other event (other than an issuance, sale or other
disposition of stock or other assets, or an incurrence or issuance of
Indebtedness or other obligations, giving rise to a repayment or
prepayment obligation in respect of such Debt) the effect of which
would otherwise be to accelerate or to permit the
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acceleration of the maturity of such Debt; provided that,
notwithstanding any provision contained in this subsection (d) to the
contrary, to the extent that pursuant to the terms of any agreement or
instrument relating to any Debt or Guaranty referred to in this
subsection (d) (or in the case of any such Guaranty, relating to any
obligations Guaranteed thereby), any sale, pledge or disposal of Margin
Stock, or utilization of the proceeds of such sale, pledge or disposal,
would result in a breach of any covenant contained therein or otherwise
give rise to a default or event of default thereunder and/or
acceleration of the maturity of the Debt or obligations extended
pursuant thereto, or payment pursuant to any Guaranty, and as a result
of such terms or of such sale, pledge, disposal, utilization, breach,
default, event of default or acceleration or nonpayment under such
Guaranty, or the provisions thereof relating thereto, this Agreement or
any Advance hereunder would otherwise be subject to the margin
requirements or any other restriction under Regulation U issued by the
Board of Governors of the Federal Reserve System, then such breach,
default, event of default or acceleration, or nonpayment under any
Guaranty, shall not constitute a default or Event of Default under this
subsection (d); or
(e)(i) The Company, any Principal Subsidiary or any Restricted
Affiliate shall (A) generally not pay its debts as such debts become
due; or (B) admit in writing its inability to pay its debts generally;
or (C) make a general assignment for the benefit of creditors; or (ii)
any proceeding shall be instituted or consented to by the Company, any
Principal Subsidiary or any Restricted Affiliate seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or (iii) any such proceeding shall have been instituted
against the Company, any Principal Subsidiary or any Restricted
Affiliate and either such proceeding shall not be stayed or dismissed
for 60 consecutive days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or
other similar official for it or any substantial part of its property)
shall occur; or (iv) the Company, any Principal Subsidiary or any
Restricted Affiliate shall take any corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order of any court for the payment of
money in excess of $50,000,000 shall be rendered against the Company,
any Principal Subsidiary or any Restricted Affiliate and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order
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(other than any enforcement proceedings consisting of the mere
obtaining and filing of a judgment lien or obtaining of a garnishment
or similar order so long as no foreclosure, levy or similar process in
respect of such lien, or payment over in respect of such garnishment or
similar order, has commenced) or (ii) there shall be any period of 30
consecutive days during which a stay of execution or of enforcement
proceedings (other than those referred to in the parenthesis in clause
(i) above) in respect of such judgment or order, by reason of a pending
appeal, bonding or otherwise, shall not be in effect; or
(g) (i) Any Termination Event with respect to a Plan shall
have occurred and, 30 days after notice thereof shall have been given
to the Company by the Administrative Agent, such Termination Event
shall still exist; or (ii) the Company or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan; or (iii) the
Company or any ERISA Affiliate shall have been notified by the sponsor
of a Multiemployer Plan that such Multiemployer Plan is in
reorganization, or is insolvent or is being terminated, within the
meaning of Title IV of ERISA; or (iv) any Person shall engage in a
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan; and in each case in clauses (i)
through (iv) above, such event or condition, together with all other
such events or conditions, if any, would result in an aggregate
liability of the Company or any ERISA Affiliate that would exceed 10%
of the Net Worth of the Company.
(h) Upon completion of, and pursuant to, a transaction, or a
series of transactions (which may include prior acquisitions of capital
stock of EPNGC or Holding in the open market or otherwise), involving a
tender offer (i) a "person" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) other than EPNGC or Holding, a
Subsidiary of EPNGC or Holding or any employee benefit plan maintained
for employees of EPNGC or Holding and/or any of their respective
Subsidiaries or the trustee therefor, shall have acquired direct or
indirect ownership of and paid for in excess of 50% of the outstanding
capital stock of EPNGC or Holding entitled to vote in elections for
directors of EPNGC or Holding and (ii) at any time before the later of
(A) six months after the completion of such tender offer and (B) the
next annual meeting of the shareholders of EPNGC or Holding following
the completion of such tender offer more than half of the directors of
EPNGC or Holding consists of individuals who (1) were not directors
before the completion of such tender offer and (2) were not appointed,
elected or nominated by the Board of Directors in office prior to the
completion of such tender offer (other than any such appointment,
election or nomination required or agreed to in connection with, or as
a result of, the completion of such tender offer); or
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(i) Any event of default shall occur under any agreement or
instrument relating to or evidencing any Debt now or hereafter existing
of the Company or any Principal Subsidiary or Restricted Affiliate as
the result of any change of control of the Company; or
(j) Any of (i) the guarantees contained in Article VI, (ii)
the Restricted Affiliate Guarantees or (iii) the Holding Guarantee
shall cease, for any reason, to be in full force and effect or any
Borrower, any Restricted Affiliate or Holding shall so assert;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Company, (i)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the Advances and
the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances and the Notes,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers; provided, however, that
if an Event of Default under subsection (e) of this Section 7.1 (except under
clause (i)(A) thereof) shall occur, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Advances and the Notes,
all interest thereon and all other amounts payable under this Agreement shall
automatically become and be forthwith due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrowers.
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ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT
SECTION VIII.1 Authorization and Action. Each Lender hereby
appoints and authorizes the Administrative Agent and the CAF Advance Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent and the CAF Advance Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of this Agreement or collection of
the Notes), the Administrative Agent and the CAF Advance Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent and the CAF Advance Agent shall
not be required to take any action which exposes the Administrative Agent or the
CAF Advance Agent to personal liability or which is contrary to this Agreement
or applicable law. The Administrative Agent and the CAF Advance Agent agree to
give to each Lender prompt notice of each notice given to it by any Borrower
pursuant to the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the parties hereto hereby agree that
neither the Documentation Agent nor the Syndication Agent shall have any rights,
duties or responsibilities in its capacity as Documentation Agent or Syndication
Agent, as applicable, hereunder and neither the Documentation Agent nor the
Syndication Agent shall have the authority to take any action hereunder in its
capacity as such.
SECTION VIII.2 Administrative Agent's and CAF Advance Agent's
Reliance, Etc. None of the Administrative Agent, the CAF Advance Agent or any of
its respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent and the CAF Advance Agent: (i) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and accepts
an Assignment and Acceptance entered into by the Lender which is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.7; (ii) may consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement; (iv) shall not have any
duty to ascertain or to inquire as to the
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performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrowers or to inspect the property (including the
books and records) of the Borrowers; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopier, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION VIII.3 Chase and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Chase shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Agent or the CAF
Advance Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Chase in its individual capacity. Chase and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any of its Subsidiaries and any Person who may do business with or own
securities of the Company or any of its Subsidiaries, all as if Chase were not
the Administrative Agent or the CAF Advance Agent and without any duty to
account therefor to the other Lenders.
SECTION VIII.4 Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the CAF Advance Agent or any other Lender and based on the
financial statements referred to in Section 4.1 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the CAF
Advance Agent or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
SECTION VIII.5 Indemnification. The Lenders agree to indemnify
the Administrative Agent and the CAF Advance Agent (to the extent not reimbursed
by the Borrowers), ratably according to the respective principal amounts of the
Advances then outstanding by each of them (or if no Advances are at the time
outstanding or if any Notes are held by Persons which are not Lenders, ratably
according to the respective amounts of their aggregate Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Agent or the CAF Advance Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Administrative Agent
or the CAF Advance Agent under this Agreement, provided that no Lender shall be
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liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's or the CAF Advance Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent and the CAF Advance Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Administrative Agent or the CAF Advance Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings, in bankruptcy or insolvency proceedings, or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Administrative Agent or the CAF Advance Agent is not reimbursed
for such expenses by the Borrowers.
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SECTION VIII.6 Successor Administrative Agent and CAF Advance
Agent. The Administrative Agent and the CAF Advance Agent may resign at any time
by giving written notice thereof to the Lenders and the Company and may be
removed at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or the CAF Advance Agent. If no successor
Administrative Agent or CAF Advance Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent's or the CAF Advance Agent giving of notice of
resignation or the Majority Lenders' removal of the retiring Administrative
Agent or CAF Advance Agent, then such retiring Administrative Agent or CAF
Advance Agent may, on behalf of the Lenders, appoint a successor Administrative
Agent or CAF Advance Agent, which shall be a Lender and a commercial bank
organized, or authorized to conduct a banking business, under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent or CAF Advance Agent hereunder by a successor
Administrative Agent or CAF Advance Agent, such successor Administrative Agent
or CAF Advance Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
CAF Advance Agent, and the retiring Administrative Agent or CAF Advance Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's or CAF Advance Agent's resignation or
removal hereunder as Administrative Agent or CAF Advance Agent, the provisions
of this Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent or CAF Advance Agent
under this Agreement.
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ARTICLE IX
MISCELLANEOUS
SECTION IX.1 Amendments, Etc. An amendment or waiver of any
provision of this Agreement or the Notes, or a consent to any departure by any
Borrower therefrom, shall be effective against the Lenders and all holders of
the Notes if, but only if, it shall be in writing and signed by the Majority
Lenders, and then such a waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, be effective to: (a) waive any of the conditions
specified in Article III, (b) increase or extend the Commitments of the Lenders
or subject the Lenders to any additional obligations, (c) reduce the principal
of, or interest on, any Advance or the Notes or any facility fees hereunder, (d)
postpone any date fixed for any payment of principal of, or interest on, any
Advance or the Notes or any facility fees hereunder, (e) change the percentage
of the Commitments or of the aggregate unpaid principal amount of any Advance or
the Notes, or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Agreement, (f) amend this Section 9.1,
(g) amend, waive or consent to any departure of any provision in Article VI or
(h) except as provided below, release any Borrower or Holding or any Restricted
Affiliate from its guarantee in Article VI, the Holding Guarantee or any
Restricted Affiliate Guarantee, as the case may be; provided, further, that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent and the CAF Advance Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or duties of the
Administrative Agent or the CAF Advance Agent under this Agreement or any Note;
provided, still further, that the guarantee of a Borrower under Article VI and
of a Restricted Affiliate under its Restricted Affiliate Guarantee shall be
released automatically upon (i) the sale by the Company of such Borrower or
Restricted Affiliate, provided that such sale is permitted under this Agreement,
or (ii) such Borrower or Restricted Affiliate ceasing to be a Borrower or a
Restricted Affiliate hereunder.
SECTION IX.2 Notices, Etc. Except as otherwise provided in
Section 2.2(a), 2.5(d) or 2.15(b), all notices and other communications provided
for hereunder shall be in writing (including telecopier and other readable
communication) and mailed by certified mail, return receipt requested,
telecopied or otherwise transmitted or delivered, if to any Borrower, c/o the
Company at El Paso Energy Building, 1001 Louisiana Street, Houston, Texas 77002,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(713) 757-4975; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, 32nd floor, New
York, New York 10017, Attention: Peter Ling, Telecopier: (212) 383-0361; and if
to the CAF Advance Agent, at One Chase Manhattan Plaza, Third Floor, New York,
New York 10081, Attention: Sandra Miklave, Telecopier: (212) 552-5700,
Telephone: (212) 552-7953; or, as to each party and each Borrowing Subsidiary,
at such other address as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall,
<PAGE> 73
69
if so mailed, telecopied or otherwise transmitted, be effective when received,
if mailed, or when the appropriate answerback or other evidence of receipt is
given, if telecopied or otherwise transmitted, respectively. A notice received
by the Administrative Agent, the CAF Advance Agent or a Lender by telephone
pursuant to Section 2.2(a), 2.5(d) or 2.15(b) shall be effective if the
Administrative Agent or Lender believes in good faith that it was given by an
authorized representative of the applicable Borrower and acts pursuant thereto,
notwithstanding the absence of written confirmation or any contradictory
provision thereof.
SECTION IX.3 No Waiver; Remedies. No failure on the part of
any Lender, the Administrative Agent or the CAF Advance Agent to exercise, and
no delay in exercising, any right hereunder or under any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
or under any Note preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION IX.4 Costs and Expenses; Indemnity. (a) Each Borrower
agrees to pay on demand (to the extent not reimbursed by any other Borrower) (i)
all reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent in connection with the preparation, execution and delivery of this
Agreement, the Notes and the other documents to be delivered hereunder and the
fulfillment or attempted fulfillment of conditions precedent hereunder, (ii) all
reasonable costs and expenses incurred by the Administrative Agent and its
Affiliates in initially syndicating all or any portion of the Commitments
hereunder, including, without limitation, the related reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent or its
Affiliates, travel expenses, duplication and printing costs and courier and
postage fees, and excluding any syndication fees paid to other parties joining
the syndicate and (iii) all out-of-pocket costs and expenses, if any, incurred
by the Administrative Agent, the CAF Advance Agent and the Lenders in connection
with the enforcement (whether through negotiations, legal proceedings in
bankruptcy or insolvency proceedings, or otherwise) of this Agreement, the Notes
and the other documents to be delivered hereunder and thereunder, including the
reasonable fees and out-of-pocket expenses of counsel.
(b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or CAF Advance is made by any Borrower to or for the
account of a Lender on any day other than the last day of the Interest Period
for such Advance, as a result of a prepayment pursuant to Section 2.15 or a
Conversion pursuant to Section 2.13(f) or Section 2.14 or due to acceleration of
the maturity of the Advances and the Notes pursuant to Section 7.1 or due to any
other reason attributable to such Borrower, or if any Borrower shall fail to
make a borrowing of Eurodollar Rate Advances or CAF Advances after such Borrower
has given a notice requesting the same in accordance with the provisions of this
Agreement, such Borrower shall, upon demand by such Lender (with
<PAGE> 74
70
a copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, Conversion or failure to borrow, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.
(c) Each Borrower agrees to indemnify and hold harmless the
Administrative Agent, the CAF Advance Agent and each Lender (to the extent not
reimbursed by any other Borrower) from and against any and all claims, damages,
liabilities and expenses (including, without limitation, fees and disbursements
of counsel) which may be incurred by or asserted against the Administrative
Agent, the CAF Advance Agent or such Lender in connection with or arising out of
any investigation, litigation, or proceeding (whether or not the Administrative
Agent, the CAF Advance Agent or such Lender is party thereto) related to any
acquisition or proposed acquisition by the Company, or by any Subsidiary of the
Company, of all or any portion of the stock or substantially all the assets of
any Person or any use or proposed use of the Advances by any Borrower (excluding
any claims, damages, liabilities or expenses incurred by reason of the gross
negligence or willful misconduct of the party to be indemnified or its employees
or agents, or by reason of any use or disclosure of information relating to any
such acquisition or use or proposed use of the proceeds by the party to be
indemnified or its employees or agents).
SECTION IX.5 Right of Set-Off. Upon the declaration of the
Advances and the Notes as due and payable pursuant to the provisions of Section
7.1, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the applicable Borrower against any and all of the obligations of
such Borrower now or hereafter existing under this Agreement and the Notes of
such Borrower held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement or such Notes and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Company
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 9.5 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
SECTION IX.6 Binding Effect. This Agreement shall become
effective in accordance with the provisions of Section 3.1, and thereafter shall
be binding upon and inure to the benefit of the Borrowers, the Administrative
Agent, the CAF
<PAGE> 75
71
Advance Agent and each Lender and their respective successors and assigns,
except that no Borrower shall have the right to assign its rights or obligations
hereunder or any interest herein without the prior written consent of all of the
Lenders.
SECTION IX.7 Assignments and Participations. (a) Each Lender
may assign to one or more banks or other financial institutions all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Notes held by it); provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $15,000,000 (or, if less, the entire Commitment of the assigning
Lender) and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Notes subject to such assignment and a processing and recordation fee
of $2,500, and shall send to the Company an executed counterpart of such
Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance,
each Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of each Borrower or the performance or observance by each Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms
<PAGE> 76
72
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, the CAF
Advance Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such
assignee appoints and authorizes the Administrative Agent and the CAF Advance
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent and the CAF
Advance Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
each Borrower, the Administrative Agent, the CAF Advance Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by any Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Upon the acceptance of any Assignment
and Acceptance for recordation in the Register, Schedule I hereto shall be
deemed to be amended to reflect the revised Commitments of the Lenders parties
to such Assignment and Acceptance as well as administrative information with
respect to any new Lender as such information is recorded in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and as assignee representing that it is an Eligible
Assignee, together with any Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit G hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company; within five Business Days after
its receipt of such notice and its receipt of an executed counterpart of such
Assignment and Acceptance, the Borrowers, at their own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Notes,
if any, new Notes to the order of such Eligible Assignee, if requested, in an
amount equal to the Commitment assumed by it pursuant to such Assignment and
<PAGE> 77
73
Acceptance and, if the assigning Lender has retained a Commitment hereunder, new
Notes, if requested, to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes, if any, shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, if any, shall be dated (A) in the case of Notes made by
EPNGC, the Closing Date and (B) in the case of Notes made by any other Borrower,
the date such other Borrower executes and delivers its Joinder Agreement, and
shall otherwise be in substantially the form of Exhibit A.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, and the Advances owing to it and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Notes for all purposes of this Agreement, (iv) the
Borrowers, the Administrative Agent, the CAF Advance Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, (v) such Lender shall
continue to be able to agree to any modification or amendment of this Agreement
or any waiver hereunder without the consent, approval or vote of any such
participant or group of participants, other than modifications, amendments and
waivers which (A) postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Advances or Notes or any
facility fees payable under this Agreement, or (B) increase the amount of such
Lender's Commitment in a manner which would have the effect of increasing the
amount of a participant's participation, or (C) reduce the interest rate payable
under this Agreement and such Lender's Notes, or (D) consent to the assignment
or the transfer by any Borrower of any of its rights and obligations under the
Agreement, and (vi) except as contemplated by the immediately preceding clause
(v), no participant shall be deemed to be or to have any of the rights or
obligations of a "Lender" hereunder.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of the Borrowers to preserve the confidentiality of any
confidential information relating to the Borrowers received by it from such
Lender in a manner consistent with Section 9.8.
<PAGE> 78
74
(g) Anything in this Agreement to the contrary
notwithstanding, any Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it) and the Notes issued to it hereunder in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System (or any successor regulation) and the applicable
operating circular of such Federal Reserve Bank.
SECTION IX.8 Confidentiality. Each Lender, the Administrative
Agent and the CAF Advance Agent (each, a "Party") agrees that it will use its
best efforts not to disclose, without the prior consent of the Company (other
than to its, or its Affiliate's, employees, auditors, accountants, counsel or
other representatives, whether existing at the date of this Agreement or any
subsequent time), any information with respect to the Borrowers which is
furnished pursuant to this Agreement, provided that any Party may disclose any
such information (i) as has become generally available to the public, (ii) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such party or to the Board of Governors of the Federal Reserve
System or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (iii) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation or regulatory proceeding, (iv) in order to comply with any
law, order, regulation or ruling applicable to such party, or (v) to any
prospective assignee or participant in connection with any contemplated
assignment of any rights or obligations hereunder, or any sale of any
participation therein, by such Party pursuant to Section 9.7, if such
prospective assignee or participant, as the case may be, executes an agreement
with the Company containing provisions substantially similar to those contained
in this Section 9.8; provided, however, that the Company acknowledges that the
Administrative Agent has disclosed and may continue to disclose such information
as the Administrative Agent in its sole discretion determines is appropriate to
the Lenders from time to time.
SECTION IX.9 Consent to Jurisdiction. (a) Each Borrower hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or
the holder of any Note in respect of, but only in respect of, any claims or
causes of action arising out of or relating to this Agreement or the Notes (such
claims and causes of action, collectively, being "Permitted Claims"), and each
Borrower hereby irrevocably agrees that all Permitted Claims may be heard and
determined in such New York State court or in such Federal court. Each Borrower
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any aforementioned court in respect of Permitted Claims. Each Borrower hereby
irrevocably appoints CT Corporation System (the "Process Agent"), with an office
on the date hereof at 1633
<PAGE> 79
75
Broadway, New York, New York 10019, as its agent to receive on behalf of such
Borrower and its property service of copies of the summons and complaint and any
other process which may be served by the Administrative Agent, any Lender or the
holder of any Note in any such action or proceeding in any aforementioned court
in respect of Permitted Claims. Such service may be made by delivering a copy of
such process to the Company by courier and by certified mail (return receipt
requested), fees and postage prepaid, both (i) in care of the Process Agent at
the Process Agent's above address and (ii) at the Company's address specified
pursuant to Section 9.2, and each Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf. Each Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Nothing in this Section 9.9 (i) shall affect the right of
any Lender, the holder of any Note or the Administrative Agent or the CAF
Advance Agent to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Lender, the holder of any Note or the
Administrative Agent or the CAF Advance Agent to bring any action or proceeding
against any Borrower or its property in the courts of other jurisdictions or
(ii) shall be deemed to be a general consent to jurisdiction in any particular
court or a general waiver of any defense or a consent to jurisdiction of the
courts expressly referred to in subsection (a) above in any action or proceeding
in respect of any claim or cause of action other than Permitted Claims.
SECTION IX.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION IX.11 Rate of Interest. It is the intention of the
parties hereto that each Lender shall each conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it, then, in that event,
notwithstanding anything to the contrary in this Agreement or in the Notes to
the order of such Lender, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under law applicable to such Lender
that is contracted for, taken, reserved, charged or received by such Lender
hereunder, or under such Notes or otherwise, shall under no circumstances exceed
the maximum amount allowed by such applicable law, and any excess shall be
credited by such Lender on the principal amount of the sums owed to such Lender
(or, if all amounts owing to such Lender shall have been paid in full, refunded
by such Lender to the applicable Borrower); or (b) in the event that a
prepayment of any Advances owed to any Lender is required, then such
consideration that constitutes interest under law applicable to such Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for shall be cancelled automatically by such
Lender as
<PAGE> 80
76
of the date of such prepayment and, if theretofore paid, shall be credited by
such Lender on the principal amount of such prepayment obligation (or, if the
principal amount of such prepayment obligation shall have been paid in full,
refunded by such Lender to the applicable Borrower). To the extent that Article
5069-1.04 of the Texas Revised Civil Statutes is relevant to any Lender for the
purpose of determining the maximum amount of interest allowed by applicable law,
such Lender hereby elects to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect,
subject to such Lender's right subsequently to change such method in accordance
with applicable law. In no event, however, shall Article 5069, Chapter 15, of
the Texas Revised Civil Statutes apply to this Agreement or the Notes or the
transactions contemplated hereby.
SECTION IX.12 Effect on Outstanding CAF Advances. The parties
hereto acknowledge and agree that upon the effectiveness of this Agreement all
"CAF Advances" under the Existing Facilities immediately before the
effectiveness of this Agreement will be converted to CAF Advances hereunder on
terms and conditions set forth in this Agreement.
SECTION IX.13 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery to the Administrative Agent of a counterpart executed by a
Lender shall constitute delivery of such counterpart to all of the Lenders. This
Agreement may be delivered by facsimile transmission of the relevant signature
pages hereof.
<PAGE> 81
77
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
EL PASO NATURAL GAS COMPANY
By: /s/ WAYNE B. ALLRED
--------------------------------------
Title: Vice President and Treasurer
TENNESSEE GAS PIPELINE COMPANY
By: /s/ WAYNE B. ALLRED
--------------------------------------
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF Advance
Agent and a Lender
By: /s/ PETER N. LING
--------------------------------------
Title: Vice President
CITIBANK, N.A., as Documentation
Agent and as a Lender
By: /s/ CHRISTOPHER LYONS
--------------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Syndication Agent
and as a Lender
By: /s/ JOHN KOWALCZUK
--------------------------------------
Title: Vice President
<PAGE> 82
78
ABN-AMRO BANK, N.V.
By: /s/ MICHAEL NEPVEUX
--------------------------------------
Title: Vice President
By: /s/ GORDON CHANG
--------------------------------------
Title: Vice President
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ KYLE LOUGHLIN
--------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ CLAIRA LIU
--------------------------------------
Title: Managing Director
BANKBOSTON, N.A.
By: /s/ MICHAEL KANE
--------------------------------------
Title: Managing Director
BANK OF MONTREAL IRELAND PLC
By: /s/ BARRY MONKS
--------------------------------------
Title: Financial Controller
THE BANK OF NEW YORK
By: /s/ RAYMOND J. PALMER
--------------------------------------
Title: Vice president
<PAGE> 83
79
THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. ASHBY
--------------------------------------
Title: Senior Manager, Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ MICHAEL MEISS
--------------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ MIKE SHRYOCK
--------------------------------------
Title: Vice President
BARCLAYS BANK PLC
By: /s/ RICHARD B. WILLIAMS
--------------------------------------
Title: Director
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ JOHN CARLSON
--------------------------------------
Title: Vice President
By: /s/ SYLVIA K. CHENG
--------------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ DEAN BALICE
--------------------------------------
Title: Senior Vice President
<PAGE> 84
80
CIBC INC.
By: /s/ ALEKSANDRA K. DYMANUS
--------------------------------------
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PHILIPPE SOUSTRA
--------------------------------------
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ SEIJI IMAI
--------------------------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ STEPHAN A. WIEDEMANN
--------------------------------------
Title: Director
By: /s/ SUSAN L. PEARSON
--------------------------------------
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ LAWRENCE E. JONES
--------------------------------------
Title: Vice President
By: /s/ MICHAEL E. TERRY
--------------------------------------
Title: Assistant Vice President
<PAGE> 85
81
THE FUJI BANK, LIMITED-HOUSTON
AGENCY
By: /s/ NATE ELLIS
--------------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ KAZUTOSHI KUWAHARA
--------------------------------------
Title: Executive Vice President
KREDIETBANK N.V., GRAND CAYMAN
BRANCH
By: /s/ ROBERT SNAUFFER
--------------------------------------
Title: Vice President
By: /s/ TOD R. ANGUS
--------------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By: /s/ DOUGLAS A. WHIDDON
--------------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ E. MARC CUENOD, JR.
--------------------------------------
Title: First Vice President
<PAGE> 86
82
NATIONAL WESTMINSTER BANK PLC NEW
YORK BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------
Title: Manager and Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------
Title: Manager and Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ MARY LOUISE ALLEN
--------------------------------------
Title: Vice President
NORINCHUKIN BANK, NEW YORK BRANCH
By: /s/ TAKESHI AKIMOTO
--------------------------------------
Title: General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ THOMAS K. GRUNDMAN
--------------------------------------
Title:
ROYAL BANK OF CANADA
By: /s/ J. D. FROST
--------------------------------------
Title: Senior Manager
<PAGE> 87
83
THE SAKURA BANK, LIMITED - NEW YORK
BRANCH
By: /s/ YASUMASA KIKUCHI
--------------------------------------
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ RICHARD A. GOULD
--------------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ HARUMITSI SEKI
--------------------------------------
Title: General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ FREDERIC B. HAWLEY
--------------------------------------
Title: Manager
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ EVANS SWANN
--------------------------------------
Title: Managing Director
By: /s/ W. BENSON VANCE
--------------------------------------
Title: Assistant Vice President
THE YASUDA TRUST & BANKING, CO.,
LTD.
By: /s/ ROHN LAUDENSCHLAGER
--------------------------------------
Title: Senior Vice President
<PAGE> 88
SCHEDULE I
----------
COMMITMENTS, ADDRESSES, ETC.
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Chase Manhattan Bank $42,500,000
Global Oil & Gas
270 Park Avenue, 32nd Floor
New York, New York 10017
Attention: Peter Ling
Telephone: 212-270-4676
Telecopier: 212-270-3897
ABN AMRO Bank, N.V. $27,500,000
135 South LaSalle, Suite 625
Chicago, Illinois 60603
Attention: Loan Administration
Telephone: 312-904-8865
Telecopier: 312-904-6893
with a copy to:
ABN Amro Bank, N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Michael Nepview
Telephone: (713) 964-3316
Telecopier: (713) 621-5810
Australia and New Zealand Banking $12,500,000
Group Limited
1177 Avenue of the Americas
New York, New York 10036
Attention: Kyle Loughlin
Telephone: 212-801-9853
Telecopier: 212-801-9131
Bank of America NT & SA $27,500,000
231 South LaSalle
Chicago, Illinois 60697
Attention: Debbie Aguilar
Telephone: 312-828-3793
Telecopier: 312-974-9626
<PAGE> 89
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
with a copy to:
Bank of America NT & SA
333 Clay Street
Suite 4550
Houston, Texas 77000
Attention: Paula Veazey
Telephone: 713-651-4877
Telecopier: 713-651-4807
BankBoston, N.A. $12,500,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02110
Attention: Debora Williams
Telephone: 617-434-9623
Telecopier: 617-434-9820
Bank of Montreal Ireland Plc $12,500,000
4th Floor, Segrave House
19/20 Earlsfort Terrace
Dublin 2, Ireland
Attention: Eric Lindstrom
Telephone: 353-1-662-9300
Telecopier: 353-1-662-9301
with a copy to:
Bank of Montreal
Suite 4400
700 Louisiana Street
Houston, Texas 77002
Attention: Natasha Gilossop
Telephone: (713) 546-9752
Telecopier: (713) 223-4007
The Bank of New York $20,000,000
One Wall Street, 19th Floor
New York, New York 10286
Attention: Terri Foran
Telephone: 212-635-7921
Telecopier: 212-635-7923
<PAGE> 90
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Bank of Nova Scotia $20,000,000
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone: 404-877-1500
Telecopier: 404-888-8998
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Jamie Conn
Telephone: 713-752-0900
Telecopier: 713-752-2425
The Bank of Tokyo-Mitsubishi, Ltd. $27,500,000
1100 Louisiana, Suite 2800
Houston, Texas 77002-5216
Attention: J.M. McIntyre
Telephone: 713-655-3845
Telecopier: 713-655-3855
Banque Nationale de Paris,
Houston Agency $12,500,000
333 Clay Street, Suite 3400
Houston, Texas 77002
Attention: Mike Shryock
Telephone: 713-951-1224
Telecopier: 713-659-1414
Barclays Bank PLC $20,000,000
222 Broadway
New York, New York 10038
Attention: Sal Esposito
Telephone: 212-412-1516
Telecopier: 212-412-7585
Bayerische Vereinsbank AG,
Los Angeles Agency $12,500,000
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson/Jarunee
Hanpachern
Telephone: 213-629-1821
Telecopier: 213-622-6341
<PAGE> 91
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Caisse Nationale de Credit Agricole $12,500,000
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Karen Bergstrom
Telephone: 312-917-7420
Telecopier: 312-372-2628
CIBC Inc. $27,500,000
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $35,000,000
One Court Square
Long Island City, New York 11120
Attention: Leena Caligiure
Telephone: 718-248-5762
Telecopier: 718-248-4844/4845
Credit Lyonnais New York Branch $27,500,000
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
The Dai-Ichi Kangyo Bank, Ltd. $12,500,000
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Christine Dell'Aira
Telephone: 212-432-8841
Telecopier: 212-432-0194
Deutsche Bank AG New York and/or Cayman $27,500,000
Islands Branches
31 West 52nd Street
New York, New York 10019
Attention: Stephan A. Wiedemann
Telephone: 212-469-8663
Telecopier: 212-469-8212
Dresdner Bank AG, New York and Grand $12,500,000
Cayman Branches
75 Wall Street
New York, New York 10005
Attention: Mike Terry
Telephone: 212-429-2224
Telecopier: 212-429-2129
<PAGE> 92
5
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
The Fuji Bank Limited-Houston Agency $20,000,000
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Attention: Charles van Ravenswaay
Telephone: 713-650-7829
Telecopier: 713-759-0048
The Industrial Bank of Japan $12,500,000
Trust Company
Allen Three Center
333 Clay, Suite 4850
Houston, Texas 77002
Attention: W. Lynn Williford
Telephone: 713-651-9444
Telecopier: 713-651-9209
Kredietbank N.V., New York Branch $27,500,000
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma/
Loan Administration
Telephone: 212-541-0657
Telecopier: 212-956-5581
The Long-Term Credit Bank of Japan, Ltd. $12,500,000
165 Broadway
New York, New York 10006
Attention: Bob Pacifici
Telephone: 212-335-4801
Telecopier: 212-608-3452
with a copy to:
2200 Ross Avenue, Suite 4700 West
Dallas, Texas 75201
Attention: Doug Whiddon
Telephone: 214-969-5352
Telecopier: 214-969-5357
Mellon Bank, N.A. $20,000,000
Energy and Utilities, 44th Floor
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: A. Gary Chace
Telephone: 412-236-2785
Telecopier: 412-234-8888
<PAGE> 93
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Morgan Guaranty Trust Company of
New York $35,000,000
60 Wall Street
22nd Floor
New York, New York 10260
Attention: John Kowalczuk
Telephone: 212-648-7612
Telecopier: 212-648-5014
National Westminster Bank Plc $12,500,000
New York Branch
175 Water Street, 19th Floor
New York, New York 10038
Attention: Commercial Lending Unit
Telephone: 212-602-4180
Telecopier: 212-602-4118
NationsBank of Texas, N.A. $27,500,000
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch $20,000,000
245 Park Avenue, 29th Floor
New York, New York 10167
Attention: Tsuneo Tsukagaki
Telephone: 212-697-1717
Telecopier: 212-697-5754
PNC Bank, National Association $20,000,000
One PNC Bank Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Thomas K. Grundman
Telephone: 412-762-3025
Telecopier: 412-762-2571
Royal Bank of Canada $27,500,000
Financial Square
23rd Floor
New York, New York 10005-2531
Attention: Assistant Manager,
Loan Processing
Telephone: 212-428-6321
Telecopier: 212-428-2372
<PAGE> 94
7
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
with copies to:
Royal Bank of Canada
12450 Greenspoint Drive
Suite 1450
Houston, Texas 77060
Attention: Doug Frost
Telephone: 281-874-5664
Telecopier: 281-874-0081
The Sakura Bank, Limited -
New York Branch $12,500,000
277 Park Avenue, 45th Floor
New York, New York 10172
Attention: David Speir
Telephone: 212-756-6778
Telecopier: 212-888-7651
Societe General
Southwest Agency $20,000,000
Suite 4800
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Lia Grerra
Telephone: 214-979-2769
Telecopier: 214-754-0171
The Sumitomo Bank, Limited $20,000,000
277 Park Avenue
New York, New York 10172
Attention: Jessica Cueto
Telephone: 212-224-4132
Telecopier: 212-224-4537
with a copy to:
The Sumitomo Bank, Limited
700 Louisiana Street
Suite 1750
Houston, Texas 77002
Attention: Energy Group
Toronto Dominion (Texas), Inc. $27,500,000
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Frederic Hawley
Telephone: 713-653-8281
Telecopier: 713-951-9921
<PAGE> 95
8
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
Union Bank of Switzerland,
Houston Agency $20,000,000
1100 Louisiana, Suite 4500
Houston, Texas 77002
Attention: Evans Swann
Telephone: 713-655-6500
Telecopier: 713-655-6555
The Yasuda Trust & Banking, Co., Ltd. $12,500,000
666 Fifth Avenue, Suite 801
New York, New York 10103
Attention: Andrew Orsen
Telephone: 212-373-5879
Telecopier: 212-373-5796
<PAGE> 96
EXHIBIT A
FORM OF
NOTE
$______________ New York, New York
October 29, 1997
FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of (the "Lender") at the office of The Chase Manhattan Bank,
located at 270 Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in same day funds, on the Termination Date (or if
the Lender is an Objecting Lender, the Commitment Expiration Date applicable to
the Lender) the principal amount of (a) DOLLARS ($ ), or, if less,
(b) the aggregate unpaid principal amount of all Revolving Credit Advances made
by the Lender to the Borrower pursuant to subsection 2.1 of the Credit
Agreement, as hereinafter defined. The Borrower further agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in the Credit
Agreement.
The holder of this Note is authorized to, and prior to any transfer
hereof shall, endorse on the schedules attached hereto and made a part hereof or
on a continuation thereof which shall be attached hereto and made a part hereof
the date, Type and amount of each Revolving Credit Advance made pursuant to
subsection 2.1 of the Credit Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof, each conversion
of all or a portion thereof to another Type and, in the case of Eurodollar Rate
Advances, the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not affect
the obligations of the Borrower in respect of such Revolving Credit Advance.
This Note (a) is one of the Notes referred to in the $750,000,000
5-Year Revolving Credit and Competitive Advance Facility Agreement, dated as of
October 29, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among El Paso Natural Gas Company, Tennessee Gas
Pipeline Company, the Lender, the other banks and financial institutions from
time to time parties thereto, The Chase Manhattan Bank, as Administrative Agent
and CAF Advance Agent, Citibank, N.A., as Documentation Agent, and Morgan
Guaranty Trust Company of New York, as Syndication Agent (b) is subject to the
<PAGE> 97
A-2
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind except those
expressly required under the Credit Agreement.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[BORROWER]
By____________________________________
Title:
<PAGE> 1
EXHIBIT 10.E
FIRST AMENDMENT
FIRST AMENDMENT, dated as of October 9, 1998 (this
"Amendment"), to the $750,000,000 5-Year Revolving Credit and Competitive
Advance Facility Agreement, dated as of October 29, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among EL PASO NATURAL GAS COMPANY, a Delaware corporation ("EPNGC"), TENNESSEE
GAS PIPELINE COMPANY, a Delaware corporation ("Tennessee"), the several banks
and other financial institutions from time to time parties thereto (the
"Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent (in such capacity, the "Administrative Agent") and as CAF
Advance Agent (in such capacity, the "CAF Advance Agent") for the Lenders
thereunder, CITIBANK, N.A., as documentation agent (in such capacity, the
"Documentation Agent") for the Lenders, and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as syndication agent (in such capacity, the "Syndication Agent") for the
Lenders.
W I T N E S S E T H:
WHEREAS, EPNGC, Tennessee, the Administrative Agent, the CAF
Advance Agent, the Documentation Agent, the Syndication Agent and the Lenders
are parties to the Credit Agreement; and
WHEREAS, EPNGC and Tennessee have requested that, pursuant to
Section 9.1 of the Credit Agreement, the Lenders amend certain terms in the
Credit Agreement in the manner provided for herein and the Lenders are agreeable
to such request upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other valuable consideration, the receipt
of which is hereby acknowledged, EPNGC, Tennessee and the Lenders hereby agree
as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
2. Amendment to Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended by inserting the following definition in correct
alphabetical order:
"364-Day Facility" has the meaning assigned to such term in
Section 5.2(c)."
3. Amendment to Section 5.2(c). Section 5.2(c) of the Credit
Agreement is hereby amended by:
(i) Inserting the following phrase after the word "hereof" in
clause (B)(y):
"(the `364-Day Facility')"
<PAGE> 2
2
(ii) Deleting the word "and" from clause (D) and inserting
a comma in lieu thereof; and
(iii) Deleting the period at the end of clause (E) and
inserting the following text:
"and (F) Debt, Guarantees or reimbursement
obligations incurred by Tennessee pursuant to one or more
commercial paper programs allowing for the issuance by
Tennessee of items of commercial paper having maturity dates
not later than one year from the dates of their respective
issuance provided that such Debt, Guarantees or reimbursement
obligations of Tennessee shall be in an aggregate amount not
to exceed at any time the excess of (x) the sum of (1) the
aggregate amount of Commitments and (2) the aggregate amount
of Commitments as defined in the 364-Day Facility, over (y)
the sum of (1) the aggregate amount of Advances, (2) the
aggregate amount of Advances, as defined in and outstanding
pursuant to, the 364-Day Facility, and (3) the aggregate
principal amount of commercial paper outstanding from time to
time that (I) is issued by the Company and its Subsidiaries
(other than Tennessee) and (II) relies upon credit
availability under either this Agreement or the 364-Day
Facility for commercial paper liquidity purposes."
4. Conditions to Effectiveness. This Amendment shall become
effective upon receipt by the Administrative Agent of counterparts hereof duly
executed by the Majority Lenders, EPNGC, Tennessee and Holding.
5. Representations. On and as of the date hereof, each
Borrower hereby confirms, reaffirms and restates that the representations and
warranties set forth in Section 4.1 of the Credit Agreement are true and correct
in all material respects, provided that the references to the Credit Agreement
therein shall be deemed to be references to the Credit Agreement after giving
effect to this Amendment.
6. Limited Consent. Except as expressly waived and amended
herein, the Credit Agreement shall continue to be and shall remain in full force
and effect. This Amendment shall not be deemed to be a waiver of, or consent to,
or a modification or amendment of, any other term or condition of the Credit
Agreement or to prejudice any other right or rights that the Lenders may now
have or may have in the future under or in connection with the Credit Agreement
or any of the instruments or agreements referred to therein, as the same may be
amended, supplemented or otherwise modified from to time.
7. Costs and Expenses. The Company agrees to pay or reimburse
the Administrative Agent for all its reasonable and customary out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation and
execution of this Amendment, and the consummation of the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of its counsel.
<PAGE> 3
3
8. Counterparts; Execution by Facsimile. This Amendment may be
executed by one or more of the parties hereto in any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. This Amendment may be delivered by, and
shall be effective as to the relevant party upon, facsimile transmission of the
relevant signature pages hereof.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. Consent of El Paso Energy Corporation. El Paso Energy
Corporation, as guarantor under its Guarantee, dated as of August 28, 1998 (the
"Holding Guarantee"), in favor of the Administrative Agent, hereby (a) consents
to the transactions contemplated hereby and (b) acknowledges and agrees that the
guarantees contained in the Holding Guarantee are, and shall remain, in full
force and effect after giving effect to this Amendment and all prior
modifications to the Credit Agreement.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective duly authorized
officers as of the date first above written.
EL PASO NATURAL GAS COMPANY
By: /s/ H. BRENT AUSTIN
-----------------------------------
Title: Executive Vice President
TENNESSEE GAS PIPELINE COMPANY
By: /s/ H. BRENT AUSTIN
-----------------------------------
Title: Executive Vice President
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF Advance
Agent and a Lender
By: /s/ PETER M. LING
-----------------------------------
Title: Vice President
CITIBANK, N.A.
By: /s/ DAVID B. GORTE
-----------------------------------
Title: Attorney-in-fact
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ KATHRYN SAYKO-YAWES
-----------------------------------
Title: Vice President
<PAGE> 5
5
ABN-AMRO BANK, N.V.
By: /s/ MICHAEL W. NEPVEUX
-----------------------------------
Title: Group Vice President
By: /s/ KEVIN P. COSTELLO
-----------------------------------
Title: Vice President
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
By: /s/ PAMELA COUCH
-----------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By: /s/ CLAIRE LIV
-----------------------------------
Title: Managing Director
BANKBOSTON, N.A.
By: /s/ MICHAEL KANE
-----------------------------------
Title: Managing Director
BANK OF MONTREAL IRELAND PLC
By: /s/ ERIC T. LINDSTROM
-----------------------------------
Title: General Manager
THE BANK OF NEW YORK
By: /s/ RAYMOND J. PALMER
-----------------------------------
Title: Vice President
<PAGE> 6
6
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
-----------------------------------
Title: Loan Operations
THE BANK OF TOKYO-MITSUBISHI,
LTD.
By: /s/ MICHAEL G. MEISS
-----------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ WARREN R. ROSS
-----------------------------------
Title: Assistant Vice President
BARCLAYS BANK PLC
By: /s/ SALVATORE ESPOSITO
-----------------------------------
Title: Director
BAYERISCHE HYPO UND-
VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ CHRISTIAN TAYLOR
-----------------------------------
Title: Vice President and Manager
By: /s/ JOHN CARLSON
-----------------------------------
Title: Vice President
<PAGE> 7
7
CREDIT AGRICOLE INDOSUEZ
By: /s/ KATHERINE L. ABBOTT
-----------------------------------
Title: First Vice President
By: /s/ DAVID BOUBL, F.V.P.
-----------------------------------
Title: Head of Corporate Banking,
Chicago
CIBC INC.
By: /s/ ROBIN W. ELLIOTT
-----------------------------------
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ PHILLIPPE SOUSTRA
-----------------------------------
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK,
LIMITED
By:
-----------------------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK
BRANCH AND/OR CAYMAN
ISLANDS BRANCH
By: /s/ STEPHAN A. WIEDEMANN
-----------------------------------
Title: Director
By: /s/ SUSAN L. PEARSON
-----------------------------------
Title: Director
<PAGE> 8
8
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By: /s/ THOMAS LAKE
-----------------------------------
Title: Vice President
By: /s/ ROBERT PREMINGER
-----------------------------------
Title: Assistant Treasurer
THE FUJI BANK, LIMITED-NEW YORK
BRANCH
By: /s/ RAYMOND VENTURA
-----------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ MIKE OAKES
-----------------------------------
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED HOUSTON OFFICE
(Authorized Representative)
KBC BANK N.V.
By: /s/ ROBERT SNAUFFER
-----------------------------------
Title: First Vice President
By: /s/ RAYMOND F. MURRAY
-----------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ SADAO MURAOKA
-----------------------------------
Title: Head of Southwestern Region
<PAGE> 9
9
MELLON BANK, N.A.
By: /s/ ROGER E. HOWARD
-----------------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ PATRICIA J. DUNDEE
-----------------------------------
Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ PATRICIA J. DUNDEE
-----------------------------------
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ MARY LOUISE ALLEN
-----------------------------------
Title: Vice President
THE NORINCHUKIN BANK, NEW
YORK BRANCH
By: /s/ YOSHIRE NIIRO
-----------------------------------
Title: General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ THOMAS K. GRUNDMAN
-----------------------------------
Title: Senior Vice President
<PAGE> 10
10
ROYAL BANK OF CANADA
By: /s/ J. D. FROST
-----------------------------------
Title: Senior Manager
THE SAKURA BANK, LIMITED - NEW
YORK BRANCH
By: /s/ YASUMASA KIKUCHI
-----------------------------------
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ RICHARD A. GOULD
-----------------------------------
Title: Director
THE SUMITOMO BANK, LIMITED
By: /s/ C. MICHAEL GARRIOO
-----------------------------------
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ LINDA G. LAVIN
-----------------------------------
Title: Managing Director
<PAGE> 11
11
UBS AG (as sucessor by merger to
Union Bank of Switzerland, Houston
Agency), New York Branch
By: /s/ ERIC C. HANSON
-----------------------------------
Title: Assistant Director
By: /s/ LEO L. BALTZ
-----------------------------------
Title: Director
THE YASUDA TRUST & BANKING, CO.,
LTD.
By: /s/ JUNICHIRD KAWAMURA
-----------------------------------
Title: Vice President
Consent of Holding:
EL PASO ENERGY CORPORATION
By: /s/ H. BRENT AUSTIN
-----------------------------------
Title: Executive Vice President
<PAGE> 1
EXHIBIT 10.F
GUARANTEE
GUARANTEE, dated as of August 28, 1998, made by EL PASO ENERGY
CORPORATION, a Delaware corporation (the "Guarantor"), in favor of THE CHASE
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
Agent") for the several banks and other financial institutions (the "Lenders")
from time to time parties to the $750,000,000, 5-Year Revolving Credit and
Competitive Advance Facility Agreement, dated as of October 29, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among El Paso Natural Gas Company, Tennessee Gas Pipeline Company,
the Administrative Agent, the Lenders, The Chase Manhattan Bank, as CAF Advance
Agent, Citibank, N.A., as Documentation Agent, and Morgan Guaranty Trust
Company, as Syndication Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Advances to the Borrowers upon the terms and subject
to the conditions set forth therein, to be evidenced by the Notes issued by the
Borrowers under the Credit Agreement;
WHEREAS, the Guarantor has been established for the purpose of
holding, and currently holds, 100% of the common stock of EPNGC and EPTPC, and
it is to the advantage of Guarantor that the Lenders make Advances to the
Borrowers; and
WHEREAS, pursuant to Section 5.1(g) of the Credit Agreement,
the Borrowers have covenanted to cause the Guarantor, upon its formation, to
execute and deliver this Guarantee to the Administrative Agent for the ratable
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises contained
herein and of the commitments of the Lenders to make their respective Advances
to the Borrowers under the Credit Agreement, the Guarantor hereby agrees with
the Administrative Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement and the following terms shall have the
following meanings.
"Contractual Obligation" as to any Person, means any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
<PAGE> 2
2
"Obligations" means the collective reference to the unpaid
principal of and interest on the Advances and the Notes and all other financial
liabilities of the Borrowers to the Administrative Agent, the CAF Advance Agent
and the Lenders (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Advances and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Borrower whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement or the
Notes, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the Administrative
Agent, the CAF Advance Agent or to the Lenders that are required to be paid by
any Borrower pursuant to the terms of the Credit Agreement or this Agreement).
"Requirement of Law" as to any Person, means the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and Section and
paragraph references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable benefit of
the Lenders and their respective successors, indorsees, transferees and
assigns, the prompt and complete payment by the Borrowers when due (whether at
the stated maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which
may be paid or incurred by the Administrative Agent or any Lender in enforcing,
or obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto any or all Borrowers may be free from any Obligations.
<PAGE> 3
3
(c) No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Lender from
any Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of the Guarantor hereunder,
which shall, notwithstanding any such payment or payments (other than payments
made by the Guarantor in respect of the Obligations or payments received or
collected from the Guarantor in respect of the Obligations), remain liable for
the Obligations until the Obligations are paid in full and the Commitments are
terminated.
(d) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability hereunder, it will notify the Administrative
Agent and such Lender in writing that such payment is made under this Guarantee
for such purpose.
3. Right of Set-off. Upon the occurrence and continuance of
any Event of Default, the Administrative Agent and each Lender is hereby
irrevocably authorized at any time and from time to time without notice to the
Guarantor, any such notice being expressly waived by the Guarantor, to set off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of the Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against or on account of the
obligations and liabilities of the Guarantor to the Administrative Agent or
such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against the Guarantor, in any currency,
whether arising hereunder, or under the Credit Agreement, or any Note, as the
Administrative Agent or such Lender may elect, whether or not the
Administrative Agent or such Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify the Guarantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender, as the case may be, of the proceeds thereof; provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Administrative Agent and each
Lender under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder, or any set-off or application of funds of the
Guarantor by the Administrative Agent or any Lender, the Guarantor shall not be
entitled to be subrogated to any of the rights of the Administrative Agent or
any Lender against the Borrowers or against any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Obligations, nor shall the Guarantor seek or be entitled to
seek any contribution or reimbursement from the Borrowers in respect of
payments made by the Guarantor
<PAGE> 4
4
hereunder, until all amounts owing to the Administrative Agent and the Lenders
by the Borrowers on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Guarantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned
over to the Administrative Agent in the exact form received by the Guarantor
(duly indorsed by the Guarantor to the Administrative Agent, if required), to
be applied against the Obligations, whether matured or unmatured, in such order
as the Administrative Agent may determine.
5. Amendments, etc. with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor, and without
notice to or further assent by the Guarantor, any demand for payment of any of
the Obligations made by the Administrative Agent or any Lender may be rescinded
by the Administrative Agent or such Lender, and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement, any Notes and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Majority Lenders, as the
case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or
any Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against the
Guarantor, the Administrative Agent or any Lender may, but shall be under no
obligation to, make a similar demand on any Borrower or any other guarantor,
and any failure by the Administrative Agent or any Lender to make any such
demand or to collect any payments from any Borrower or any such other guarantor
or any release of any Borrower or such other guarantor shall not relieve the
Guarantor of its obligations or liabilities hereunder, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
the Administrative Agent or any Lender against the Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon this Guarantee or acceptance of this Guarantee; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guarantee; and all dealings between the Borrowers or the
Guarantor, on the one hand, and the Administrative Agent and the Lenders, on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon any
<PAGE> 5
5
Borrower or the Guarantor with respect to the Obligations. This Guarantee
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity, regularity or enforceability of the
Credit Agreement, any Note, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any Lender, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any
Borrower against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or
to collect any payments from any Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
the Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Administrative Agent or any Lender against the Guarantor. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Guarantor and its successors and
assigns thereof, and shall inure to the benefit of the Administrative Agent and
the Lenders, and their respective successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of the Guarantor under
this Guarantee shall have been satisfied by payment in full and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement any Borrower may be free from any Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, any Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
8. Payments. The Guarantor hereby agrees that the
Obligations will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent located
at 270 Park Avenue, New York, New York 10017.
9. Representations and Warranties. The Guarantor represents
and warrants to the Administrative Agent and the Lenders that:
<PAGE> 6
6
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal right to
own and operate its property, to lease the property it operates and to conduct
the business in which it is currently engaged;
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations under,
this Guarantee, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any Requirement of Law or Contractual
Obligation of the Guarantor and will not result in or require the creation or
imposition of any Lien on any of the properties or revenues of the Guarantor
pursuant to any Requirement of Law or Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no consent of
any other Person (including, without limitation, any stockholder or creditor of
the Guarantor) is required in connection with the execution, delivery,
performance, validity or enforceability of this Guarantee; and
(f) there is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened, against or involving the Guarantor or
against any of its properties or revenues in any court or before any arbitrator
of any kind, or before any Governmental Authority, (1) with respect to this
Guarantee or any of the transactions contemplated hereby, or (2) which in the
reasonable judgment of the Guarantor (taking into account the exhaustion of all
appeals) has any reasonable likelihood of having a material adverse effect on
the financial condition or operations of the Guarantor and its consolidated
Subsidiaries on a consolidated basis.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on the date of
each borrowing by any Borrower under the Credit Agreement on and as of such
date of borrowing as though made hereunder on and as of such date.
10. Authority of Administrative Agent. The Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any
option, right, request, judgment or other right or remedy provided for herein
or resulting or arising out of this Guarantee shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Guarantor, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the
<PAGE> 7
7
Lenders with full and valid authority so to act or refrain from acting, and the
Guarantor shall not be under any obligation, or entitlement, to make any
inquiry respecting such authority.
11. Notices. All notices, requests and demands to or upon
the Administrative Agent, any Lender or the Guarantor to be effective shall be
in writing (including telecopier and other readable communication) and mailed
by certified mail, return receipt requested, telecopied or otherwise
transmitted or delivered.
(a) if to the Administrative Agent or any Lender, at its
address or transmission number for notices provided in Section 9.2 of the
Credit Agreement; and
(b) if to the Guarantor, at its address or transmission
number for notices set forth under its signature below.
All such notices and communications shall, if so mailed,
telecopied or otherwise transmitted, be effective when received, if mailed, or
when the appropriate answerback or other evidence of receipt is given, if
telecopied or otherwise transmitted. The Administrative Agent, each Lender and
the Guarantor may change its address and transmission numbers for notices by
notice in the manner provided in this Section.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. Integration. This Guarantee represents the agreement of
the Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Administrative Agent or any Lender relative
to the subject matter hereof not reflected herein.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantor and the Administrative Agent, provided that any provision of this
Guarantee may be waived by the Administrative Agent and the Lenders in a letter
or agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall by
any act (except by a written instrument pursuant to paragraph 14(a) hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent
or any
<PAGE> 8
8
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or
such Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
15. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
16. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantor and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns.
17. Governing Law. PURSUANT TO SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
18. Consent to Jurisdiction. The Guarantor hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or
the holder of any Note in respect of, but only in respect of, any claims or
causes of action arising out of or relating to this Guarantee (such claims and
causes of action, collectively, being "Permitted Claims"), and the Guarantor
hereby irrevocably agrees that all Permitted Claims may be heard and determined
in such New York State court or in such Federal court. The Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
aforementioned court in respect of Permitted Claims. The Guarantor hereby
irrevocably appoints CT Corporation System (the "Process Agent"), with an
office on the date hereof at 1633 Broadway, New York, New York 10019, as its
agent to receive on behalf of the Guarantor and its property service of copies
of the summons and complaint and any other process which may be served by the
Administrative Agent, any Lender or the holder of any Note in any such action
or proceeding in any aforementioned court in respect of Permitted Claims. Such
service may be made by delivering a copy of such process to the Guarantor by
courier and by certified mail (return receipt requested), fees and postage
prepaid, both (i) in care of the Process Agent at the Process Agent's above
address and (ii) at the Guarantor's address set forth under its signature
below, and the Guarantor hereby irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The Guarantor hereby agrees to cause the Process Agent to
deliver to the Administrative Agent by the Closing Date a letter from the
Process Agent agreeing to act as Process Agent for the Guarantor.
<PAGE> 9
9
(b) Nothing in this Section 18 (i) shall affect the right of
any Lender, the holder of any Note or the Administrative Agent or the CAF
Advance Agent to serve legal process in any other manner permitted by law or
affect any right otherwise existing of any Lender, the holder of any Note or
the Administrative Agent or the CAF Advance Agent to bring any action or
proceeding against the Guarantor or its property in the courts of other
jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction
in any particular court or a general waiver of any defense or a consent to
jurisdiction of the courts expressly referred to in subsection (a) above in any
action or proceeding in respect of any claim or cause of action other than
Permitted Claims.
<PAGE> 10
10
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
EL PASO ENERGY CORPORATION
By: /s/ H. BRENT AUSTIN
---------------------------------------
Title: Executive Vice President
-------------------------------------
Address for Notices:
1001 Louisiana
Houston, Texas 77002
Tel: 713-420-3354
Fax: 713-420-4975
<PAGE> 1
EXHIBIT 10.G
EL PASO ENERGY CORPORATION
1995 INCENTIVE COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Compliance With Rule 16b-3 and Section 162(m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3 SHARES AVAILABLE FOR THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Maximum Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Adjustment to Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4 PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5 PERFORMANCE GOALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.1 Performance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.2 Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6 INDIVIDUAL AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.1 Performance Goal Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.2 Maximum Award Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.3 Discretion to Reduce Awards; Participant's Performance . . . . . . . . . . . . . . . . . . . . . . . . 5
6.4 Stockholder Approval of Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.5 New Employee, Retirement, Death,
Disability, or Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7 PAYMENT OF INCENTIVE AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.1 Required Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.2 Restricted Stock Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.3 Deferred Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.4 Payment Upon Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 8 RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 9 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1 Issuance of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 No Right to Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.3 Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4 Nonassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.5 Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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El Paso Energy Corporation i Table of Contents
1995 Incentive Compensation Plan
<PAGE> 3
<TABLE>
<S> <C> <C>
9.6 Transfers and Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.7 Unfunded Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.9 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.10 Incapacity of Participant or Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.11 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.12 Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.13 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.14 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.15 Effective Date and Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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El Paso Energy Corporation ii Table of Contents
1995 Incentive Compensation Plan
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EL PASO ENERGY CORPORATION
1995 INCENTIVE COMPENSATION PLAN
SECTION 1 PURPOSES
1.1 PURPOSES
The purposes of the El Paso Energy Corporation 1995 Incentive
Compensation Plan (the "Plan") are to encourage outstanding performances by the
executives of El Paso Energy Corporation (the "Company") and its subsidiaries,
to attract and retain exceptional executives, and to provide a direct incentive
to the Participants (as defined in Section 4.1) to achieve the Company's
strategic and financial goals.
SECTION 2 ADMINISTRATION
2.1 ADMINISTRATION
With respect to awards made under the Plan to certain officers and
directors of the Company and its subsidiaries ("Section 16 Insiders") who are
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall be administered by the Compensation Committee
(the "Plan Administrator") of the Company's Board of Directors (the "Board"),
which shall be constituted at all times so as to meet the disinterested
administration requirements of Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act and the outside director requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), so long as any of the
Company's equity securities are registered pursuant to Section 12(b) or 12(g)
of the Exchange Act. The Plan Administrator shall prescribe, amend, and
rescind rules and procedures for establishing Performance Goals (as defined in
Section 5.2) pursuant to Section 162(m) of the Code. Subject to the Plan
Administrator, and as may be required by Rule 16b-3 and Section 162(m) of the
Code, the Plan shall be administered by a management committee (the "Management
Committee") consisting of the Chief Executive Officer and such other senior
officers as the Chief Executive Officer shall designate. The Management
Committee shall interpret the Plan, prescribe, amend, and rescind rules
relating to it, select eligible Participants, grant incentive awards, and take
all other actions necessary for its administration, which actions shall be
final and binding upon all Participants.
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2.2 COMPLIANCE WITH RULE 16B-3 AND SECTION 162(M)
The Company's intention is that, so long as any of the Company's
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, with respect to awards granted to or held by Section 16 Insiders,
the Plan shall comply in all respects with Rule 16b-3 promulgated under Section
16(b) of the Exchange Act. The Plan shall also be administered so as to comply
with Section 162(m) of the Code and regulations promulgated thereunder. If any
Plan provision is later found not to be in compliance with Rule 16b-3 of the
Exchange Act or Section 162(m) of the Code, that provision shall be deemed
modified as necessary to meet the requirements of Rule 16b-3 and Section 162(m)
of the Code. Notwithstanding anything in the Plan to the contrary, the Board,
in its absolute discretion, may bifurcate the Plan so as to restrict, limit, or
condition the applicability of any provision of the Plan to Participants who
are Section 16 Insiders without so restricting, limiting, or conditioning the
Plan with respect to other Participants.
SECTION 3 SHARES AVAILABLE FOR THE PLAN
3.1 MAXIMUM NUMBER OF SHARES
Subject to Section 3.2, the maximum number of shares of common stock
of the Company, $3 par value per share, (the "Common Stock") which may at any
time be awarded under the Plan is two million five hundred thousand (2,500,000)
shares of Common Stock, from shares held in the Company's treasury or out of
authorized but unissued shares of the Company, or partly out of each, as shall
be determined by the Management Committee, subject to, and reduced by (on a
post-split basis), the number of shares of Common Stock awarded prior to the
occurrence of a two-for-one stock split effected by the Company in the form of
a 100% stock dividend on April 1, 1998. "Restricted Stock" is any share of
Common Stock which is subject to the requirements of Section 8 and such other
restrictions as the Plan Administrator may deem appropriate. Any shares of
Restricted Stock outstanding under the Plan on April 1, 1998, shall be adjusted
on a two-for-one basis to reflect the stock dividend.
3.2 ADJUSTMENT TO NUMBER OF SHARES
In the event of recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board, upon recommendation of the
Plan Administrator, may make appropriate adjustments to the number of shares
authorized for the Plan and, with respect to outstanding Restricted Stock, the
Plan Administrator may make appropriate adjustments to the number of shares.
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SECTION 4 PARTICIPANTS
4.1 PARTICIPANTS
The Plan Administrator shall determine and designate the Section 16
Insiders and the Management Committee shall designate all other executives of
the Company and its subsidiaries who are eligible to receive awards under the
Plan (the "Participants"). Participants, in general, will be limited to those
executives who hold any of the following positions within the Company and, in
the case of Participants employed by Company subsidiaries, those executives
with positions equivalent thereto, but not necessarily with the same titles:
Chairman of the Board, President, Chief Executive Officer, Vice Chairman of the
Board (if any), Chief Operating Officer, any Executive Vice President, any
Senior Vice President, and any Vice President. Members of the Board of
Directors of the Company who are full-time executives of the Company shall be
eligible to participate in the Plan. Any Participant in the El Paso Natural
Gas Company Incentive Compensation Plan dated as of January 1, 1992 (the
"Predecessor Plan") on the day immediately preceding the effective date of this
Plan, who is an employee of the Company or its subsidiaries, shall be come a
Participant in this Plan on the effective date.
SECTION 5 PERFORMANCE GOALS
5.1 PERFORMANCE PERIOD
The term "Performance Period" as used in this Plan shall mean the
period of twelve consecutive months beginning on January 1 and ending on
December 31, or such other period as the Plan Administrator may determine.
5.2 PERFORMANCE GOALS
The Plan Administrator shall establish the performance goal or goals
("Performance Goal or Goals") for each Performance Period in writing prior to
the commencement of the applicable Performance Period, or at such other time as
permitted by applicable provisions of the Code and regulations thereunder, and
shall state the amount of award to be paid to each Participant, subject to
Section 6.3 below, upon attainment of the stated Performance Goals.
Each Performance Goal selected for a particular Performance Period
shall be a relative or absolute measure of any one or more of the following:
Operating Income
Pre-tax Profit
Earnings Per Share
Cash Flow
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Return on Capital
Return on Equity
Return on Net Assets
Net Income
Debt Reduction
Safety
Return on Investment
Revenues
Total Stockholder Return
The foregoing terms shall have the same meaning as used in the
Company's financial statements, or if the terms are not used in the Company's
financial statements, they shall have the meaning generally applied pursuant to
general accepted accounting principles, or as used in the industry, as
applicable. The Plan Administrator shall set the target level of performance
required for each Performance Goal selected for a particular Performance Period
in order to determine whether a Performance Goal has been attained. The Plan
Administrator may specify that a percentage (less than 100%) of awards may be
payable if a designated level of performance of a Performance Goal is attained
that is less than the target level of performance for such Performance Goal.
The Plan Administrator may select one or more Performance Goals for a
particular Performance Period. If the Plan Administrator selects more than one
Performance Goal for a particular Performance Period, the Plan Administrator
may determine to make awards upon attainment of any one or more of such
Performance Goals, provided that such Performance Goals are established in
accordance with this Section 5.2 and are stated as alternatives to one another.
5.3 PROCEDURES
Prior to the beginning of a particular Performance Period, or such
other date as the Code may allow, the Plan Administrator shall specify in
writing:
(a) the Participants who shall be eligible to receive an award for
a Performance Period,
(b) the Performance Goals for such Performance Period, and
(c) the maximum award amount payable to each Participant if the
Performance Goals are met.
Any Participant chosen to participate in the Plan for a given
Performance Period shall receive the maximum award amount if the designated
Performance Goals are achieved, subject to the discretion of the Plan
Administrator to reduce such award, as described in Section 6.3.
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SECTION 6 INDIVIDUAL AWARDS
6.1 PERFORMANCE GOAL CERTIFICATION
An award shall become payable to the extent provided herein in the
event that the Plan Administrator, or the Management Committee in the case of
Participants other than Section 16 Insiders, certifies in writing prior to
payment of the award that the Performance Goal or Goals selected for a
particular Performance Period has or have been attained. In no event will an
award be payable under this Plan if the threshold level of performance set for
each Performance Goal for the applicable Performance Period is not attained.
6.2 MAXIMUM AWARD PAYABLE
The maximum award payable under this Plan to any Participant for any
Performance Period shall be two million dollars ($2,000,000) in cash,
Restricted Stock, or a combination of cash and Restricted Stock.
6.3 DISCRETION TO REDUCE AWARDS; PARTICIPANT'S PERFORMANCE
The Plan Administrator, or the Management Committee in the case of
Participants other than Section 16 Insiders, in its sole and absolute
discretion, may reduce the amount of any award otherwise payable to a
Participant upon attainment of any Performance Goal for the applicable
Performance Period. A Participant's individual performance must be
satisfactory, regardless of the Company's performance and the attainment of
Performance Goals, before he or she may be granted an incentive award. In
evaluating a Participant's performance, the Plan Administrator and the
Management Committee, as applicable, shall consider the Performance Goals of
the Company and the Participant's responsibilities and accomplishments, and
such other factors as it deems appropriate.
6.4 STOCKHOLDER APPROVAL OF PERFORMANCE GOALS
Awards shall not be payable under this Plan unless the Plan
Administrator determines that the material terms of the Performance Goal(s)
under which an award is to be paid have been disclosed and subsequently
approved by the Company's stockholders in accordance with Section 162(m) of the
Code and applicable regulations thereunder.
6.5 NEW EMPLOYEE, RETIREMENT, DEATH, DISABILITY, OR TERMINATION OF EMPLOYMENT
To the extent consistent with the deductibility of awards under
Section 162(m) of the Code or regulations promulgated thereunder, the Plan
Administrator or the Management Committee, as applicable, may grant all or such
portion of an incentive award for the Performance Period as it deems advisable
to a Participant (or the Participant's Beneficiary (as defined in Section 9.8)
in the case of the Participant's death)
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who is first employed or who is promoted to a position eligible to become a
Participant under this Plan during the Performance Period, or whose employment
is terminated during the Performance Period because of the Participant's
retirement, death, permanent disability, resignation, or discharge, provided
that any of the Performance Goals are attained for the applicable Performance
Period.
SECTION 7 PAYMENT OF INCENTIVE AWARDS
7.1 REQUIRED PAYMENT
The Plan Administrator, or the Management Committee in the case of
Participants other than Section 16 Insiders, shall make a determination within
thirty (30) days after the Company's financial information is available for a
particular Performance Period (the "Award Date") whether the Performance Goals
for that Performance Period have been achieved and the amount of the award for
each Participant. In the absence of an election by the Participant pursuant to
Sections 7.2 or 7.3, the award shall be paid not later than the end of the
month following the month in which the Plan Administrator or Management
Committee determines the amount of the award and shall be paid as follows:
(a) Participants employed by the Company holding the position of
Chairman of the Board, President, Chief Executive Officer, Vice
Chairman of the Board, Chief Operating Officer, Executive Vice
President, or Senior Vice President and Participants employed by
Company subsidiaries with equivalent positions thereto, but not
necessarily the same titles, shall receive their incentive award as
follows:
(i) 50% (fifty percent) in cash and
(ii) 50% (fifty percent) in Restricted Stock.
(b) Participants employed by the Company holding the position of
Vice President and Participants employed by Company subsidiaries with
an equivalent position thereto, but not necessarily the same title,
shall receive their incentive award as follows:
(i) 75% (seventy-five percent) in cash and
(ii) 25% (twenty-five percent) in Restricted Stock.
(c) Because the Participant bears forfeiture, price fluctuation,
and other attendant risks during the Restriction Period (as defined in
Section 8.3) associated with the Restricted Stock awarded under this
Plan, Participants shall be awarded an additional amount of Restricted
Stock equal to the amount of Restricted Stock which a Participant is
awarded pursuant to Sections 7.1(a)(ii) or 7.1(b)(ii), as applicable.
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(d) Notwithstanding subsections (a) and (b) above, the Plan
Administrator or Management Committee, as appropriate, may determine
that a Participant must receive a greater amount of his or her award
in Restricted Stock, up to and including the entire award in
Restricted Stock. (For purposes of the Plan, such required shares
shall be treated as being awarded pursuant to Section 7.1(a)(ii) or
Section 7.1(b)(ii), as applicable.) In such event, a Participant shall
be entitled to the additional shares of Restricted Stock, awarded
pursuant to Section 7(c) above.
For purposes of this Plan, the value of awards payable in Restricted
Stock and the calculation of fair market value of Common Stock shall be the
mean between the highest and lowest quoted selling prices at which the Common
Stock is sold on the Award Date (or such other date in the case of calculating
fair market value for other purposes) as reported in the NYSE Composite
Transactions by The Wall Street Journal for such date or, if no Common Stock
was traded on such date, on the next preceding date on which the Common Stock
was so traded. The value of any fractional share shall be paid in cash.
7.2 RESTRICTED STOCK ELECTION
In lieu of receiving all or any portion of the cash in accordance with
Sections 7.1(a)(i) or 7.1(b)(i), a Participant may elect to receive additional
Restricted Stock with a value equal to the portion of the incentive award which
the Participant would otherwise have received in cash, but has elected to
receive in Restricted Stock ("Restricted Stock Election"). Participants must
make their Restricted Stock Election at such time and in such a manner as
prescribed by the Management Committee. If required by Rule 16b-3 promulgated
under Section 16(b) of the Exchange Act, any Restricted Stock Election made by
a Participant who is a Section 16 Insider shall be made at least six months
prior to the Award Date, or at such other time as is allowed by Section 16(b)
of the Exchange Act. Each Participant who makes the Restricted Stock Election
shall be entitled to the additional Restricted Stock granted pursuant to
Section 7.1(c) with respect to the amount of the Participant's Restricted Stock
Election. Except as provided in Section 8, all shares of Restricted Stock
awarded pursuant to the Restricted Stock Election are subject to the same terms
and conditions as the Restricted Stock a Participant receives pursuant to
Sections 7.1(a)(ii) or 7.1(b)(ii), as applicable.
7.3 DEFERRED PAYMENT
Each Participant may elect to have the payment of all or a portion of
any incentive award made pursuant to Sections 7.1(a)(i) or 7.1(b)(i), as
applicable, for the year deferred according to the terms and conditions of the
Company's Deferred Compensation Plan. The election shall be irrevocable and
shall be made at such time and in such a manner as prescribed by the Management
Committee. The election shall apply only to that year. If a Participant has
not made an election under this Section, any incentive award granted to the
Participant for that year shall be paid pursuant to Sections 7.1 or 7.2, as
applicable.
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7.4 PAYMENT UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Plan, in the event of a
Change in Control of the Company, the award attributable to the Performance
Period in which the Change in Control occurs shall become fully vested and
distributable, in cash, within 30 days after the date of the Change in
Control, as follows:
<TABLE>
<CAPTION>
Participants employed by the Company holding any
of the following positions and Participants employed
by Company subsidiaries with positions equivalent
Percentage of Annual Salary thereto, but not necessarily with the same titles:
- --------------------------- --------------------------------------------------
<S> <C>
100% of Annual Salary Chairman of the Board, President, Chief Executive
Officer, Vice Chairman of the Board, Chief
Operating Officer, or Executive Vice President
80% of Annual Salary Senior Vice President
60% of Annual Salary Vice President
</TABLE>
The term "Annual Salary" as used in this Plan shall mean a
Participant's annual base salary in effect on the date of a Change in
Control.
In the event a Change in Control occurs after the end of a Performance
Period, but before the Award Date, each Participant shall be entitled to
receive in cash, within 30 days after the date of the Change in Control, those
amounts set forth above in this Section 7.4 for such Performance Period. Such
amounts are in addition to the amount to which Participants shall be entitled
for the Performance Period in which a Change in Control is deemed to occur.
For purposes of this Plan a "Change in Control" shall be
deemed to occur:
(a) if any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the Company's then
outstanding securities;
(b) upon the first purchase of the Common Stock pursuant
to a tender or exchange offer (other than a tender or exchange offer
made by the Company);
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(c) upon the approval by the Company's stockholders of a
merger or consolidation, a sale, or disposition of all or
substantially all the Company's assets or a plan of liquidation or
dissolution of the Company; or
(d) if, during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless
the election or nomination for the election by the Company's
stockholders of each new director was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were
directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
if the Company either merges or consolidates with or into another company or
sells or disposes of all or substantially all of its assets to another company,
if such merger, consolidation, sale or disposition is in connection with a
corporate restructuring wherein the stockholders of the Company immediately
before such merger, consolidation, sale or disposition own, directly or
indirectly, immediately following such merger, consolidation, sale or
disposition at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
SECTION 8 RESTRICTED STOCK
8.1 Any share of Restricted Stock awarded pursuant to this Plan
shall be subject to the provisions of this Section 8, and to any additional
restrictions imposed by the Plan Administrator. Restricted Stock may be
awarded to Participants under this Plan in lieu of cash as provided in Section
7. Each award of Restricted Stock shall be evidenced by a written instrument
delivered by or on behalf of the Company containing provisions not inconsistent
with the Plan. The award of Restricted Stock shall entitle a Participant to
receive, on the date or dates designated by the Plan Administrator, the number
of shares of Common Stock awarded by the Plan Administrator. Each Participant
who receives a grant of Restricted Stock shall have all the rights of a
stockholder with respect to such shares (except as provided in the restrictions
on transferability), including the right to vote the shares and receive
dividends and other distributions. However, no Participant awarded Restricted
Stock shall have any right as a stockholder with respect to such shares prior
to the date of issuance to the Participant of a certificate or certificates for
such shares.
8.2 Notwithstanding Section 8.1, the Plan Administrator may
require, under such terms and conditions as it deems appropriate or desirable,
that the certificates for Restricted Stock delivered under the Plan may be held
in custody by a bank or other
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institution, or that the Company may itself hold such shares in custody until
the Restriction Period expires or until restrictions thereon otherwise lapse,
and may require, as a condition of any issuance of Restricted Stock that the
Participant shall have delivered a stock power endorsed in blank relating to
the shares of Restricted Stock.
8.3 During a period of years following the award of Restricted
Stock, as determined by the Plan Administrator, which shall in no event be less
than one (1) year (the "Restriction Period"), the Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered or
disposed of by the Participant, except as otherwise provided for in this Plan,
upon the Plan Administrator's waiver or modification of such restrictions in
the agreement evidencing the grant of Restricted Stock, or by resolution of the
Plan Administrator adopted at any time.
8.4 Except as provided in Sections 8.5 or 8.6, if a Participant
terminates employment with the Company for any reason before the expiration of
the Restriction Period, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant to the Company. In addition,
in the event of any attempt by the Participant to sell, exchange, transfer,
pledge, or otherwise dispose of shares of Restricted Stock in violation of the
terms of the Plan, such shares shall be forfeited to the Company.
8.5 The Restriction Period for any Participant shall be deemed to
end and all restrictions on shares of Restricted Stock awarded pursuant to
Sections 7.1(a)(ii), 7.1(b)(ii), and 7.2 (except for Restricted Stock awarded
pursuant to Section 7.1(c)) shall lapse upon the Participant's death,
retirement, Permanent Disability, or any other involuntary termination without
Cause. The Restriction Period shall be deemed to end and all restrictions on a
Participant's shares of Restricted Stock awarded pursuant to Section 7.1(c)
shall lapse on a pro rata basis measured in years between (i) the amount of
time which has elapsed between the Award Date and the Participant's death,
retirement, Permanent Disability, or any other involuntary termination without
Cause and (ii) the Restriction Period for such shares. All shares of
Restricted Stock for which the Restriction Period has not lapsed as described
above shall be forfeited to the Company. Notwithstanding the foregoing, the
Plan Administrator, or the Management Committee in the case of Participants
other than Section 16 Insiders, may determine that such Restriction Period
should not lapse or that the Restriction Period on additional shares of
Restricted Stock should lapse.
For the purposes of this Plan, a termination with "Cause" is a
termination evidenced by a resolution adopted in good faith by two-thirds (2/3)
of the Board of Directors that the Participant (i) willfully and continually
failed to substantially perform the Participant's duties with the Company
(other than a failure resulting from the Participant's incapacity due to
physical or mental illness) which failure continued for a period of at least
thirty (30) days after a written notice of demand for substantial performance
has been delivered to the Participant specifying the manner in which the
Participant has failed to substantially perform or (ii) willfully engaged in
conduct which
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is demonstrably and materially injurious to the Company, monetarily or
otherwise; provided, however, that no termination of the Participant's
employment shall be for Cause as set forth in clause (ii) above until (A) there
shall have been delivered to the Participant a copy of a written notice setting
forth that the Participant was guilty of the conduct set forth in clause (ii)
above and specifying the particulars thereof in detail and (B) the Participant
shall have been provided an opportunity to be heard by the Board of Directors
(with the assistance of the Participant's counsel if the Participant so
desires). No act, nor failure to act, on the Participant's part shall be
considered "willful" unless the Participant has acted, or failed to act, with an
absence of good faith and without a reasonable belief that the Participant's
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in the Plan to the contrary, no failure to
perform by the Participant after notice of termination is given by the
Participant shall constitute Cause.
8.6 The Restriction Period for any Participant shall be deemed to
end and all restrictions on shares of Restricted Stock shall lapse immediately
upon a Change in Control.
8.7 Subject to Section 8.2, a Participant entitled to receive
Restricted Stock under the Plan shall be issued a certificate for such shares.
Such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend reciting the terms, conditions, and restrictions, if
any, applicable to such shares and shall be subject to appropriate
stop-transfer orders. When the restrictions imposed by Section 8.3 expire or
otherwise lapse with respect to one (1) or more shares of Restricted Stock, the
Company shall deliver to the Participant (or the Participant's legal
representative, Beneficiary, or heir) one (1) share of unrestricted Common
Stock for each share of Restricted Stock. At that time, the agreement referred
to in Section 8.1, as it relates to such shares, shall be terminated.
SECTION 9 GENERAL PROVISIONS
9.1 ISSUANCE OF COMMON STOCK
The Company shall not be required to issue any certificate for shares
of Common Stock prior to:
(a) obtaining any approval or ruling from the Securities
and Exchange Commission, the Internal Revenue Service, or any other
governmental agency which the Company, in its sole discretion, deems
necessary or advisable;
(b) listing the shares on any stock exchange on which the
Common Stock may then be listed; or
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(c) completing any registration or other qualification of
such shares under any federal or state laws, rulings, or regulations
of any governmental body which the Company, in its sole discretion,
determines to be necessary or advisable.
All certificates for shares of Common Stock delivered under the Plan
shall also be subject to such stop- transfer orders and other restrictions as
the Plan Administrator may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which Common Stock is then listed, and any applicable federal or
state securities laws, and the Plan Administrator may cause a legend or legends
to be placed on any such certificates to make appropriate reference to such
restrictions. The foregoing provisions of this paragraph shall not be
effective if and to the extent that the shares of Common Stock delivered under
the Plan are covered by an effective and current registration statement under
the Securities Act of 1933, as amended, or if and so long as the Plan
Administrator determines that application of such provisions is no longer
required or desirable. In making such determination, the Plan Administrator
may rely upon an opinion of counsel for the Company.
9.2 NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan, or any awards of cash or Restricted Stock
pursuant to the Plan, shall be construed to confer upon any Participant any
right to continued employment with the Company or a subsidiary, nor interfere
in any way with the right of the Company or a subsidiary to terminate the
employment of such Participant at any time without assigning any reason
therefor.
9.3 OTHER BENEFITS
Incentive awards shall not be considered as part of a Participant's
salary or used for the calculation of any other pay, allowance, pension, or
other benefit unless otherwise permitted by other benefit plans provided by the
Company or its subsidiaries, or required by law or by contractual obligations
of the Company or its subsidiaries. Notwithstanding the preceding sentence,
the Restricted Stock awarded pursuant to Section 7.1(c) shall not be considered
as part of a Participant's salary or used for the calculation of any other pay,
allowance, pension, or other benefit unless required by contractual obligations
of the Company or its subsidiaries.
9.4 NONASSIGNMENT
The right of a Participant or Beneficiary to the payment of any
incentive awards under the Plan may not be assigned, transferred, pledged, or
encumbered, nor shall such right or other interests be subject to attachment,
garnishment, execution, or other legal process.
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9.5 LEAVES OF ABSENCE
Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company, or of its subsidiaries, as applicable, shall
not be deemed terminations or interruptions of employment, unless a Participant
commences a leave of absence from which he or she is not expected to return to
active employment with the Company or its subsidiaries.
9.6 TRANSFERS AND PROMOTIONS
In the event a Participant is transferred from the Company to a
subsidiary, or vice versa, or is promoted or given different responsibilities,
the Restricted Stock awarded to the Participant prior to such date shall not be
affected.
9.7 UNFUNDED OBLIGATION
The incentive awards to be paid to Participants pursuant to this Plan
are an unfunded obligation of the Company. The Management Committee, in its
sole discretion, may direct the Company to share with its subsidiaries the
costs of a portion of the incentive awards paid to Participants who are
executives of those companies. The Company is not required to segregate any
monies from its general funds, to create any trusts, or to make any special
deposits with respect to this obligation. Beneficial ownership of any
investments which the Company may make to fulfill this obligation shall at all
times remain in the Company. Any investments and the creation or maintenance
of any Participant account under the Company's Deferral Compensation Plan shall
not create or constitute a trust or a fiduciary relationship between the Plan
Administrator, the Management Committee or the Company and a Participant, or
otherwise create any vested interest in any Participant or his or her
Beneficiary or his or her creditors in any assets of the Company whatsoever.
The Participants shall have no claim against the Company for any changes in the
value of any assets which may be invested or reinvested by the Company with
respect to this Plan.
9.8 BENEFICIARY
The term "Beneficiary" shall mean the person or persons to whom
payments are to be paid pursuant to the terms of the Plan in the event of the
Participant's death. The designation shall be on a form provided by the
Management Committee, executed by the Participant and delivered to the
Management Committee. A Participant may change his or her beneficiary
designation at any time. A designation by a Participant under the Predecessor
Plan shall remain in effect under this Plan unless it is revoked or changed
under this Plan. If no Beneficiary is designated, the designation is
ineffective, or in the event the Beneficiary dies before the balance of a
Participant's account is paid, the balance shall be paid to the Participant's
spouse or, if there is no surviving spouse, to his
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1995 Incentive Compensation Plan
<PAGE> 17
or her lineal descendants, pro rata, or, if there is no surviving spouse or any
lineal descendant, to the Participant's estate.
9.9 PERMANENT DISABILITY
A Participant shall be deemed to have become "permanently disabled"
for purposes of this Plan if the Management Committee finds, upon the basis of
medical evidence satisfactory to it, that the Participant is totally disabled,
whether due to physical or mental condition, so as to be prevented from
engaging in further employment by the Company or any of its subsidiaries and
that such disability will be permanent and continuous during the remainder of
his or her life.
9.10 INCAPACITY OF PARTICIPANT OR BENEFICIARY
If the Management Committee finds that any Participant or Beneficiary
to whom a payment is payable under the Plan is unable to care for his or her
affairs because of illness or accident or is under a legal disability, any
payment due (unless a prior claim therefore shall have been made by a duly
appointed legal representative), at the discretion of the Management Committee,
may be paid to the spouse, child, parent, brother, or sister of such
Participant or Beneficiary or to any person whom the Management Committee has
determined has incurred expense for such Participant or Beneficiary. Any such
payment shall be a complete discharge of the obligations of the Company under
the provisions of the Plan.
9.11 WITHHOLDING TAXES
Appropriate provision shall be made for all taxes required to be
withheld in connection with the award or other taxable event with respect to
cash awards or Restricted Stock awards under the applicable laws or regulations
of any governmental authority, whether federal, state, or local and whether
domestic or foreign. Unless otherwise provided in the instrument awarding the
cash and Restricted Stock award, a Participant is permitted to deliver shares
of unrestricted Common Stock, to the extent permitted by applicable
regulations, for payment of withholding taxes on the payment of a cash award or
the vesting of Restricted Stock. At the election of the Plan Administrator or,
subject to approval of the Plan Administrator at its sole discretion, at the
election of a Participant, shares of Common Stock may be withheld from the
shares issuable to the Participant upon the vesting of the Restricted Stock to
satisfy tax withholding obligations. The fair market value of Common Stock as
delivered pursuant to this Section 9.11 shall be valued as of the day prior to
delivery, and shall be calculated in accordance with Section 7.1. The
withholding of shares of Common Stock to pay tax obligations in connection with
the vesting of Restricted Stock by a Section 16 Insider must be approved by the
Plan Administrator and must occur (i) pursuant to an irrevocable election made
six (6) months in advance of the transaction, (ii) during the period beginning
on the third business day following the date of release for publication of the
quarterly or annual
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1995 Incentive Compensation Plan
<PAGE> 18
summary statements of sales and earnings of the Company and ending on the
twelfth business day following such date, or (iii) otherwise in accordance with
the provisions of Rule 16b-3 and interpretations thereunder. In the event Rule
16b-3 is amended or interpreted to permit shares of Common Stock to be withheld
to pay tax obligations outside the periods described in clause (i) or (ii) of
the preceding sentence, or without Plan Administrator approval, the Plan
Administrator may determine that such provisions shall no longer apply to
Section 16 Insiders. Notwithstanding the foregoing, the Management Committee
shall determine, for Participants other than Section 16 Insiders, the
appropriate means of providing for the withholding of taxes.
Any Participant that makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior to the
Participant's (i) entering into a transaction under or with respect to the
Plan, (ii) designating or choosing the time of distributions under the Plan, or
(iii) disposing of any shares of Common Stock issued under the Plan.
9.12 TERMINATION AND AMENDMENT
The Board and the Plan Administrator may from time to time amend,
suspend, or terminate the Plan, in whole or in part, including, but not limited
to, any amendment necessary to insure that the Company may obtain any required
regulatory approvals, and if the Plan is suspended or terminated, the Plan
Administrator may reinstate any or all of its provisions. The Management
Committee may amend the Plan provided that it may not suspend or terminate the
Plan, substantially increase the administrative cost of the Plan or increase
the obligations of the Company, or expand the classification of employees who
are eligible to participate in the Plan. No amendment, suspension, or
termination may impair the right of a Participant or his or her designated
Beneficiary to receive the deferred compensation benefit accrued prior to the
effective date of such amendment, suspension, or termination.
9.13 STOCKHOLDER APPROVAL
Notwithstanding any other provision in this Plan, the Board, the Plan
Administrator, and the Management Committee may not amend the Plan without the
approval of the stockholders of the Company to: (a) materially increase the
number of shares that may be issued under the Plan; (b) materially modify the
requirements as to eligibility for participation in the Plan; (c) change the
Performance Goals; or (d) otherwise materially increase the benefits accruing
to the Participants under the Plan.
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1995 Incentive Compensation Plan
<PAGE> 19
9.14 APPLICABLE LAW
The Plan shall be construed and governed in accordance with the laws
of the State of Texas.
9.15 EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was originally adopted by the Board effective as of
January 13, 1995, and approved by the Company's stockholders on March 16, 1995.
The Board amended and restated the Plan effective as of August 1, 1998, in
connection with the reorganization of the Company into a holding company
structure whereby El Paso Energy Corporation became the publicly held company
and El Paso Natural Gas Company became a wholly owned subsidiary. This Plan was
assumed by El Paso Energy Corporation pursuant to an Assignment and Assumption
Agreement effective as of August 1, 1998, by and between El Paso Energy
Corporation and El Paso Natural Gas Company. Incentive awards of cash,
Restricted Stock, or both may be granted pursuant to the Plan from time to time
with the period commencing upon adoption of the Plan by the Board and ending ten
(10) years after approval of the Plan by the stockholders. Awards of Restricted
Stock granted under the Plan shall continue to be subject to the terms and
conditions of the Plan after the expiration date. To the extent required for
compliance with Rule 16b-3, shares of Common Stock underlying shares of
Restricted Stock granted subject to subsequent stockholder approval of the Plan
to Section 16 Insiders may not be sold until a date at least six (6) months
after the date such stockholder approval is obtained.
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1995 Incentive Compensation Plan
<PAGE> 20
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
----------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
-------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 17
1995 Incentive Compensation Plan
<PAGE> 1
EXHIBIT 10.H
EL PASO ENERGY CORPORATION
1995 COMPENSATION PLAN
FOR
NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSE...............................................................................1
1.1 Purpose...............................................................................1
SECTION 2 ADMINISTRATION........................................................................1
2.1 Management Committee..................................................................1
SECTION 3 PARTICIPATION.........................................................................1
3.1 Participants..........................................................................1
SECTION 4 DEFERRED COMPENSATION.................................................................2
4.1 Maximum Number of Shares..............................................................2
4.2 Adjustment to Number of Shares........................................................2
SECTION 5 COMPENSATION..........................................................................2
5.1 Amount of Compensation................................................................2
5.2 Compensation Election.................................................................2
5.3 Plan Year.............................................................................3
5.4 Plan Quarter..........................................................................3
SECTION 6 DEFERRED COMPENSATION.................................................................3
6.1 Deferred Cash.........................................................................3
6.2 Deferred Common Stock.................................................................3
6.3 Memorandum Deferred Account...........................................................4
6.4 Discretionary Investment by Company...................................................4
6.5 Payment of Deferred Cash..............................................................5
6.6 Payment of Deferred Common Stock......................................................5
6.7 Acceleration of Payment of Deferred Cash and
Deferred Common Stock...............................................................5
SECTION 7 RETIREMENT BENEFIT....................................................................6
7.1 Deferred Retirement Benefit Credit....................................................6
7.2 Deferred Retirement Income Plan Credit................................................7
7.3 Payment of Deferred Common Stock in the Event of Death................................7
SECTION 8 GENERAL PROVISIONS....................................................................7
8.1 Issuance of Common Stock..............................................................7
8.2 Unfunded Obligation...................................................................8
8.3 Beneficiary...........................................................................8
8.4 Permanent Disability..................................................................9
8.5 Incapacity of Participant or Beneficiary..............................................9
8.6 Nonassignment.........................................................................9
8.7 Termination and Amendment.............................................................9
8.8 Applicable Law.......................................................................10
8.9 Effective Date and Term of the Plan..................................................10
8.10 Compliance With Section 16(b) of the Exchange Act....................................10
</TABLE>
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El Paso Energy Corporation -i- Table of Contents
1995 Compensation Plan for Non-Employee Directors
<PAGE> 3
EL PASO ENERGY CORPORATION
1995 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSE
1.1 PURPOSE
The name of the Plan shall be the El Paso Energy Corporation 1995
Compensation Plan for Non-Employee Directors, Amended and Restated Effective as
of August 1, 1998 (the "Plan"). The purpose of the Plan is to provide a
compensation program for non-employee Directors of El Paso Energy Corporation
(the "Company"), that will attract and retain highly qualified individuals to
serve as members of the Company's Board of Directors (the "Board"). The Plan
permits non-employee Directors of the Company to receive their Compensation (as
defined below) in the form of cash, deferred cash, deferred shares of Company
common stock, par value $3 per share, ("Common Stock") or any combination of
the foregoing For purposes of the Plan, the term "Compensation" shall mean the
Participant's annual retainer and meeting fees, if any, for each regular or
special meeting and for any committee meetings attended.
SECTION 2 ADMINISTRATION
2.1 MANAGEMENT COMMITTEE
Subject to Section 8.7, the Plan shall be administered by a management
committee (the "Management Committee") consisting of the Chairman of the Board
of the Company and such other senior officers as the Chairman of the Board
shall designate. The Management Committee shall interpret the Plan, shall
prescribe, amend and rescind rules relating to it from time to time as it deems
proper and in the best interests of the Company, and shall take any other
action necessary for the administration of the Plan. Any decision or
interpretation adopted by the Management Committee shall be final and
conclusive and shall be binding upon all Participants.
SECTION 3 PARTICIPATION
3.1 PARTICIPANTS
Each person who is a non-employee Director of the Company on the
Effective Date (as defined below) of the Plan shall become a participant in the
Plan (a "Participant") on the Effective Date. Thereafter, each non-employee
Director of the Company shall become a Participant immediately upon election to
the Board.
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 4
SECTION 4 DEFERRED COMPENSATION
4.1 MAXIMUM NUMBER OF SHARES
Subject to Section 4.2, the maximum number of shares of Common Stock
which may at any time be awarded under the Plan is three hundred thousand
(300,000) shares of Common Stock. Awards may be from shares held in the
Company's treasury or issued out of authorized but unissued shares of the
Company, or partly out of each, as shall be determined by the Management
Committee, subject to, and reduced by (on a post-split basis), the number of
shares of Common Stock awarded prior to the occurrence of a two-for-one stock
split effected by the Company in the form of a 100% stock dividend on April 1,
1998.
4.2 ADJUSTMENT TO NUMBER OF SHARES
In the event of recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board, upon recommendation of the
Management Committee, may make appropriate adjustments to the number of shares
(i) authorized for the Plan, and (ii) allocated under the Common Stock Deferral
(as defined in Section 6.2).
SECTION 5 COMPENSATION
5.1 AMOUNT OF COMPENSATION
Each Director's Compensation shall be determined in accordance with
the Company's By-laws and shall be paid, unless deferred pursuant to Section 6,
in the Plan Year (as defined below) in which it is earned in four equal
quarterly installments with each installment being made on or about the last
day of the applicable Plan Quarter (as defined below) (the "Payment Date"),
unless otherwise determined by the Management Committee.
5.2 COMPENSATION ELECTION
Upon election to the Board and at the time of or prior to each annual
stockholders' meeting, or at such other time as may be determined by the
Management Committee for the purposes of complying with applicable law, each
Participant may elect to receive his or her Compensation for the following Plan
Year in the form of cash, deferred cash, deferred Common Stock or any
combination of the foregoing, by submitting a written notice to the Company in
the manner prescribed by the Management Committee. Any combination of the
alternatives may be elected, provided the aggregate of the alternatives elected
may not exceed one hundred percent (100%) of the Participant's Compensation,
except as provided in Section 6.2(a). Unless otherwise provided under the terms
of the
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 5
Compensation, if no election is received by the Company, the Participant shall
be deemed to have made an election to receive his or her Compensation in
undeferred cash. An election under this Section 5.2 shall be irrevocable and
shall apply to the Compensation earned during the Plan Year (as defined below)
for which the election is effective.
5.3 PLAN YEAR
The term "Plan Year" shall mean the period which begins on the day of
the Company's annual stockholders' meeting and terminates the day before the
succeeding annual stockholders' meeting.
5.4 PLAN QUARTER
The term "Plan Quarter" shall mean each calendar quarter except that
(i) the first Plan Quarter of any Plan Year which normally shall be a "short"
quarter beginning on the day of the annual stockholders' meeting and ending on
June 30, and (ii) the fourth Plan Quarter of any Plan Year normally shall be a
"long" quarter beginning on January 1 and ending on the day before the annual
stockholders' meeting.
SECTION 6 DEFERRED COMPENSATION
6.1 DEFERRED CASH
If a Participant elects pursuant to Section 5.2 to have all or a
specified percentage of his or her Compensation deferred in cash, such amount
(a "Cash Deferral") shall be recorded in a Memorandum Deferred Account (as
defined below) until the Participant ceases to be a Director. Compensation
deferred under the Company's Compensation Plan for Non-Employee Directors dated
as of January 1, 1992 shall be paid in accordance with the terms of that plan.
6.2 DEFERRED COMMON STOCK
(a) If a Participant elects pursuant to Section 5.2 to have all or a
specified percentage of his or her cash Compensation deferred in Common Stock,
an amount shall be recorded in a Memorandum Deferred Account, in the form of
shares of Common Stock, as determined in subsection (b) below, until the
Participant ceases to be a Director. The amount credited to the Participant's
Memorandum Deferred Account in such case (the "Common Stock Deferral") shall be
equal to the amount actually deferred plus a premium (the "Conversion
Premium"). The Conversion Premium shall be twenty-five percent (25%) of the
Compensation actually deferred.
(b) The number of shares of Common Stock credited to a Participant's
Memorandum Deferred Account shall equal the Common Stock Deferral divided by
the fair market value of the Common Stock on the applicable Payment Date. For
purposes of
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 6
this Plan, "fair market value" shall be the mean between the highest and lowest
quoted selling prices at which the Common Stock is sold on the applicable
Payment Date as reported in the NYSE Composite Transactions by The Wall Street
Journal on such date or, if no Common Stock was traded on date, on the next
preceding date on which Common Stock was so traded.
(c) Subject to Section 8.1, each Participant who elects deferred
Common Stock shall, once the shares of Common Stock have been credited to his
or her Memorandum Deferred Account, have the right to vote the shares and
receive dividends (or dividend equivalents) and other distributions on such
shares, subject to applicable laws. Any such dividends, dividend equivalents
and other distributions shall be deemed reinvested promptly in additional
shares of Common Stock and such additional shares shall be credited to the
Memorandum Deferred Account until the Memorandum Deferred Account is
distributed.
6.3 MEMORANDUM DEFERRED ACCOUNT
The Company shall establish a ledger account (the "Memorandum Deferred
Account") for each Participant for the purpose of recording the Company's
obligation to pay the Compensation as provided in Sections 6.5 and 6.6, and for
recording the Deferred Retirement Benefit Credit and Deferred Retirement Income
Plan Credit, described below.
(a) Except as provided in Section 6.4, interest shall accrue on all
Cash Deferrals to the date of distribution and shall be credited to the
Memorandum Deferred Account at the end of each calendar quarter or such other
periods as may be determined by the Management Committee, and shall be at the
same interest rate as the Company pays on amounts under the Company's Deferred
Compensation Plan.
(b) The Company shall promptly credit each Participant's Memorandum
Deferred Account with the number of share of Common Stock calculated in
accordance with Section 6.2(b) and (c).
6.4 DISCRETIONARY INVESTMENT BY COMPANY
The deferred amounts to be paid to the Participants are unfunded
obligations of the Company. The Management Committee may direct that an amount
equal to the deferred amount shall be invested by the Company as the Management
Committee, in its sole discretion, shall determine. The Management Committee
may in its sole discretion determine that all or some portion of an amount
equal to the Common Stock Deferrals and Cash Deferrals, and (where appropriate)
interest thereon, shall be paid into one or more grantor trusts to be
established by the Company of which it shall be the beneficiary, and to the
assets of which it shall become entitled as and to the extent that Participants
receive benefits under the Plan. The Management Committee may designate an
investment advisor to direct investments and reinvestments of the funds,
including investment of any grantor trusts hereunder.
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 7
6.5 PAYMENT OF DEFERRED CASH
When a Participant ceases to be a Director, the Company shall pay to
the Participant (or the Participant's beneficiary in the case of the
Participant's death) an amount equal to the deferred cash balance of his or her
Memorandum Deferred Account, plus interest (at a rate determined pursuant to
Section 6.3) on the outstanding deferred cash account balance to the date of
distribution and subject to approval of the Management Committee, as follows:
(a) a lump sum cash payment or
(b) in periodic installments over a period of years as
determined at the time the deferral election is made.
Payment of deferred cash shall commence or be made in the month following the
date on which a Participant ceases to be a Director.
6.6 PAYMENT OF DEFERRED COMMON STOCK
Except as otherwise provided in Section 7.3, when a Participant ceases
to be a Director, the Company shall distribute Common Stock to the Participant
(or the Participant's beneficiary in the case of the Participant's death) in an
amount equal to the number of whole shares of Common Stock in a Participant's
Memorandum Deferred Account. Any fractional shares of Common Stock held in the
Participant's account shall be paid to the Participant (or the Participant's
beneficiary in the case of the Participant's death) in a lump sum cash payment
based on the Common Stock's fair market value on the day preceding the date of
such payment.
Payment of deferred Common Stock shall be made in the month following
the date on which a Participant ceases to be a Director, or such later date as
may be necessary to comply with Section 16(b) of the Exchange Act and rules
promulgated thereunder.
6.7 ACCELERATION OF PAYMENT OF DEFERRED CASH AND DEFERRED COMMON STOCK
(a) The Management Committee, in its discretion, may accelerate the
payment of the unpaid balance of a Participant's Memorandum Deferred Account in
the event of the Participant's death or Permanent Disability, or upon its
determination that the Participant (or his or her Beneficiary in the case of
his or her death) has incurred a severe financial hardship. The Management
Committee in making its determination may consider such factors and require
such information as it deems appropriate.
(b) Amounts deferred shall be paid to a Participant (or his or her
Beneficiary in the case of his or her death) in the event of a Change in
Control within thirty (30) days after the date of the Change in Control, or at
such later time as may be required to enable the Director to avoid liability
under Section 16(b) of the Exchange Act. For purposes of
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El Paso Energy Corporation Page 5
1995 Compensation Plan for Non-Employee Directors
<PAGE> 8
this Plan a "Change in Control" shall be deemed to occur: (a) if any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding securities; (b) upon the first purchase of the Common Stock
pursuant to a tender or exchange offer (other than a tender or exchange offer
made by the Company); (c) upon the approval by the Company's stockholders of a
merger or consolidation, a sale, or disposition of all or substantially all the
Company's assets or a plan of liquidation or dissolution of the Company; or (d)
if, during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election or nomination for
the election by the Company's stockholders of each new Director was approved by
a vote of at least two-thirds (2/3) of the Directors then still in office who
were Directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of
all outstanding classes of securities of the company resulting from such merger
or consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
SECTION 7 RETIREMENT BENEFIT
7.1 DEFERRED RETIREMENT BENEFIT CREDIT
In addition to elective deferrals under Section 6.2(a), each
Participant's Memorandum Deferred Account shall be credited on each Payment
Date with an amount equal to one-fourth (1/4) of the annual Compensation (the
"Deferred Retirement Benefit Credit"). The Deferred Retirement Benefit Credit
shall be in the form of a Common Stock Deferral, but such credit shall not be
entitled to the Conversion Premium. Except for (a) the absence of the
Conversion Premium and (b) the payment of Deferred Common Stock in the event of
death prior the Participant ceasing to be a Director, as specified under
Section 6.6, the Retirement Benefit Credit shall be treated the same as all
other Common Stock Deferrals under this Plan.
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 9
7.2 DEFERRED RETIREMENT INCOME PLAN CREDIT
Each Participant who is a current member of the Board of Directors
when the El Paso Natural Gas Company Retirement Income Plan for Non-Employee
Directors, Amended and Restated Effective as of January 13, 1995 (the
"Retirement Income Plan") is terminated, shall have his or her retirement
benefit under the Retirement Income Plan credited as a Common Stock Deferral
(as set forth in Section 6.2, but such credit shall not be entitled to the
Conversion Premium) in a Memorandum Deferred Account (the "Deferred Retirement
Income Plan Credit"), and such Participant shall not be entitled to any other
benefit under the Retirement Income Plan. The number of shares of Common Stock
credit as the Deferred Retirement Income Plan Credit shall equal the value of
such retirement benefit (as determined by the Management Committee), divided by
the average of the fair market value (as determined by Section 6.2(b)) of the
Common Stock traded during the last twenty business days preceding, and
including, the date on which the Retirement Income Plan is terminated. Except
for (a) the absence of the Conversion Premium and (b) the payment of Deferred
Common Stock in the event of death prior the Participant ceasing to be a
Director, as specified under Section 6.6, the Deferred Retirement Income Plan
Credit shall be treated the same as all other Common Stock Deferrals under this
Plan.
7.3 PAYMENT OF DEFERRED COMMON STOCK IN THE EVENT OF DEATH
Notwithstanding any other provision of the Plan to the contrary, in
the event of a Participant's death while such Participant is still a Director
of the Company, such Participant's Beneficiary shall, with respect to amounts
accrued under Section 7.1 and 7.2, be entitled to receive only fifty percent
(50%) of the Deferred Common Stock (with any accrued shares as a result of
dividend reinvestment and other distributions attributable to such shares) in
the Participant's Memorandum Deferred Account which were credited as a result
of the Deferred Retirement Benefit Credit and the Deferred Retirement Income
Plan Credit.
SECTION 8 GENERAL PROVISIONS
8.1 ISSUANCE OF COMMON STOCK
The Company shall not be required to issue any certificate for shares
of Common Stock prior to:
(a) obtaining any approval or ruling from the Securities and
Exchange Commission, the Internal Revenue Service or any other
governmental agency which the Company, in its sole discretion, deems
necessary or advisable;
(b) listing the shares on any stock exchange on which the
Common Stock may then be listed; or
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El Paso Energy Corporation Page 7
1995 Compensation Plan for Non-Employee Directors
<PAGE> 10
(c) completing any registration or other qualification of
such shares under any federal or state laws, rulings or regulations of
any governmental body which the Company, in its sole discretion,
determines to be necessary or advisable.
All certificates for shares of Common Stock delivered under the Plan
also shall be subject to such stop transfer orders and other restrictions as
the Management Committee may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which Common Stock is then listed and any applicable federal or
state securities laws, and the Management Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions. The foregoing provisions of this paragraph shall not be
effective if and to the extent that the shares of Common Stock delivered under
the Plan are covered by an effective and current registration statement under
the Securities Act of 1933, as amended, or if and so long as the Management
Committee determines that application of such provisions is no longer required
or desirable. In making such determination, the Management Committee may rely
upon an opinion of counsel for the Company.
8.2 UNFUNDED OBLIGATION
Any deferred amount to be paid to Participants pursuant to the Plan is
an unfunded obligation of the Company. The Company is not required to segregate
any monies from its general funds, to create any trusts, or to make any special
deposits with respect to this obligation. Beneficial ownership of any
investments, including trust investments that the Company may make to fulfill
this obligation shall at all times remain in the Company. Any investments and
the creation or maintenance of any trust or memorandum accounts shall not
create or constitute a trust or a fiduciary relationship between the Management
Committee or the Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant's Beneficiary or the
Participant's creditors in any assets of the Company whatsoever. The
Participants shall have no claim against the Company for any changes in the
value of any assets that may be invested or reinvested by the Company with
respect to the Plan.
8.3 BENEFICIARY
The term "Beneficiary" shall mean the person or persons to whom
payments are to be paid pursuant to the terms of the Plan in the event of the
Participant's death. The designation shall be on a form provided by the
Management Committee, executed by the Participant, and delivered to the
Management Committee. A Participant may change his or her Beneficiary
designation at any time. A designation by a Participant under the El Paso
Natural Gas Company Compensation Plan for Non-Employee Directors dated January
1, 1992 shall remain in effect under this Plan unless it is revoked or changed
under this Plan. If no Beneficiary is designated, the designation is
ineffective, or in the
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El Paso Energy Corporation Page 8
1995 Compensation Plan for Non-Employee Directors
<PAGE> 11
event the Beneficiary dies before the balance of the Memorandum Deferred
Account is paid, the balance shall be paid to the Participant's spouse, or if
there is no surviving spouse, to his or her lineal descendants, pro rata, or if
there is no surviving spouse or lineal descendants, to the Participant's legal
representatives, the Participant's estate or the person or persons to whom the
deceased's rights under the Plan shall have passed by will or the laws of
descent and distribution (unless the Management Committee for a given year has
designated investment in an annuity, in which case the payment options selected
by the Participant with respect thereto shall govern).
8.4 PERMANENT DISABILITY
A Participant shall be deemed to have become disabled for purposes of
the Plan if the Management Committee finds, upon the basis of medical evidence
satisfactory to it, that the Participant is totally disabled, whether due to
physical or mental condition, so as to be prevented from engaging in further
service to the Company or any of its subsidiaries and that such disability will
be permanent and continuous during the remainder of the Participant's life.
8.5 INCAPACITY OF PARTICIPANT OR BENEFICIARY
If the Management Committee finds that any Participant or Beneficiary
to whom a payment is payable under the Plan is unable to care for his or her
affairs because of illness or accident or is under a legal disability, any
payment due (unless a prior claim therefor shall have been made by a duly
appointed legal representative), at the discretion of the Management Committee,
may be paid to the spouse, child, parent, brother or sister of such Participant
or Beneficiary or to any person whom the Management Committee has determined
has incurred expense for such Participant or Beneficiary. Any such payment
shall be a complete discharge of the obligations of the Company under the
provisions of the Plan.
8.6 NONASSIGNMENT
The right of a Participant or Beneficiary to the payment of any
amounts under the Plan may not be assigned, transferred, pledged or encumbered,
nor shall such right or other interests be subject to attachment, garnishment,
execution or other legal process.
8.7 TERMINATION AND AMENDMENT
The Board may from time to time amend, suspend or terminate the Plan,
in whole or in part, and if the Plan is suspended or terminated, the Board may
reinstate any or all of its provisions. No amendment, suspension or termination
may impair the right of a Participant or the Participant's designated
Beneficiary to receive benefits accrued prior to the effective date of such
amendment, suspension or termination. The Management Committee may amend the
Plan, without Board approval, to ensure that the Company may obtain any
regulatory approval or to accomplish any other reasonable purpose,
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El Paso Energy Corporation Page 9
1995 Compensation Plan for Non-Employee Directors
<PAGE> 12
provided that the Management Committee may not effect a change that would
materially increase the cost of the Plan to the Company. Notwithstanding the
foregoing, the Board and the Management Committee may not amend the Plan
without the approval of the stockholders of the Company to: (i) materially
increase the number of shares of Common Stock that may be issued under the
Plan, (ii) materially modify the eligibility for participation in the Plan, or
(iii) otherwise materially increase the benefits accruing to the Participants
under the Plan.
8.8 APPLICABLE LAW
The Plan shall be construed and governed in accordance with the laws
of the State of Texas.
8.9 EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was originally adopted by the Board effective as of
January 13, 1995, and approved by the Company's stockholders on March 16, 1995.
The Board amended and restated the Plan on December 2, 1997, to be effective for
the 1998-1999 Plan Year (the "Effective Date"), except Section 7, which is
effective January 1, 1998. The Board amended and restated the Plan effective as
of August 1, 1998, in connection with the reorganization of the Company into a
holding company structure whereby El Paso Energy Corporation became the publicly
held company and El Paso Natural Gas Company became a wholly owned subsidiary.
This Plan was assumed by El Paso Energy Corporation pursuant to an Assignment
and Assumption Agreement effective as of August 1, 1998, by and between El Paso
Energy Corporation and El Paso Natural Gas Company. The Plan shall terminate ten
(10) years after the approval of the Plan by the stockholders of the Company.
8.10 COMPLIANCE WITH SECTION 16(b) OF THE EXCHANGE ACT
The Company's intention is that, so long as any of the Company's
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, with respect to awards of Common Stock, the Plan shall comply in
all respects with any exemption pursuant to Section 16(b) promulgated under
Section 16 of the Exchange Act. If any Plan provision is later found not to be
in compliance with such exemptions available pursuant to Section 16(b) of the
Exchange Act, that provision shall be deemed modified as necessary to meet the
requirements of Section 16(b).
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1995 Compensation Plan for Non-Employee Directors
<PAGE> 13
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
--------------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
--------------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 11
1995 Compensation Plan for Non-Employee Directors
<PAGE> 1
EXHIBIT 10.I
EL PASO ENERGY CORPORATION
STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 SHARES SUBJECT TO THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3 ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4 PARTICIPATION IN THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 5 OPTION GRANTS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7 EFFECTIVE DATE AND DURATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 8 COMPLIANCE WITH SECTION 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 9 AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN . . . . . . . . . . . . . . . . . . . 6
</TABLE>
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El Paso Energy Corporation Table of Contents
Stock Option Plan For Non-Employee Directors
<PAGE> 3
EL PASO ENERGY CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSE
The purpose of the E1 Paso Energy Corporation Stock Option Plan for
Non-Employee Directors, Amended and Restated Effective as of August 1, 1998
(the "Plan") is to attract and retain the services of experienced and
knowledgeable non-employee Directors of E1 Paso Energy Corporation (the
"Company"), and to provide an incentive for such Directors to increase their
proprietary interests in the Company's long-term success and progress.
SECTION 2 SHARES SUBJECT TO THE PLAN
2.1 Subject to Section 2.2, the maximum number of shares of the
Company's common stock, $3 par value per share (the "Common Stock"), for which
options may be granted under the Plan is one hundred thousand (100,000) (the
"Shares"). The Shares shall be shares held in the Company's treasury or issued
out of the authorized but unissued shares of the Company, or partly out of
each, as shall be determined by the Plan Administrator.
2.2 In the event of a recapitalization, stock split, stock
dividend, exchange of shares, merger, reorganization, change in corporate
structure or shares of the Company or similar event, the Board of Directors of
the Company (the "Board"), may make appropriate adjustments in the number of
shares authorized for the Plan and, with respect to outstanding options, the
Plan Administrator may make appropriate adjustments in the number of shares and
the option price. In the event of any adjustment in the number of Shares
covered by any option, any fractional Shares resulting from such adjustment
shall be disregarded and each such option shall cover only the number of full
Shares resulting from such adjustment.
SECTION 3 ADMINISTRATION OF THE PLAN
Unless otherwise determined by the Board and subject to Section 9, the
Plan shall be administered by a management committee (the "Plan Administrator")
consisting of the Chairman of the Board of the Company and such other senior
officers as the Chairman of the Board shall designate. The Plan Administrator
shall interpret the Plan, shall prescribe, amend and rescind rules relating to
it from time to time as it deems proper and in the best interests of the
Company, and shall take any other action necessary for the administration of
the Plan.
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Stock Option Plan For Non-Employee Directors
<PAGE> 4
SECTION 4 PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not otherwise an
employee of the Company or any subsidiary corporation (a "Participant") shall
receive option grants as provided in the Plan.
SECTION 5 OPTION GRANTS AND TERMS
Each option granted to a Participant under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
5.1 OPTION GRANTS
A Participant shall automatically receive (a) a grant of stock options
to purchase three thousand (3,000) Shares when the Participant is initially
elected or appointed as a Director of the Company and (b) a grant of stock
options to purchase two thousand (2,000) Shares on each date the Participant is
reelected as a Director of the Company at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting"), beginning with the Annual Meeting in 1998.
Each option granted under the Plan shall be evidenced by a written
instrument delivered by or on behalf of the Plan Administrator containing
terms, provisions and conditions not inconsistent with the Plan.
5.2 VESTING OF OPTIONS
Each option granted to a Participant under the Plan shall be fully
vested and immediately exercisable upon grant.
5.3 OPTION PRICE
The option price for an option granted under the Plan shall be the
fair market value of the Shares covered by the option at the time the option is
granted. For purposes of the Plan, "fair market value" shall be the mean
between the highest and lowest quoted selling prices at which the Common Stock
was sold on such date as reported in the NYSE Composite Transactions by The
Wall Street Journal on such date or, if no Common Stock was traded on such
date, on the next preceding date on which Common Stock was so traded.
5.4 TIME AND MANNER OF EXERCISE OF OPTION
Each option may be exercised in whole or in part at any time and from
time to time; provided, however, that no fewer than one hundred (100) Shares
(or the remaining
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El Paso Energy Corporation Page 2
Stock Option Plan For Non-Employee Directors
<PAGE> 5
Shares then purchasable under the option, if less than one hundred (100)
Shares) may be purchased upon exercise of any option hereunder and that only
whole Shares will be issued pursuant to the exercise of any option.
The purchase price of shares purchased under options shall be paid in full
to the Company incident to the exercise of the option by delivery of
consideration equal to the product of the option price and the number of shares
purchased (the "Purchase Price"). Such consideration may be paid (i) in cash
or by check; (ii) in shares of Common Stock already owned by the Participant
for a sufficient time (generally six (6) months) to not result in an accounting
charge to the Company, or any combination of cash and Common Stock, with the
fair market value of such Common Stock valued as of the day prior to delivery;
or (iii) by delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds to pay the Purchase Price. The Plan
Administrator can specify that options granted or to be granted shall permit
additional techniques to pay the Purchase Price. A Participant shall have none
of the rights of a stockholder until the Shares of Common Stock are issued to
the Participant.
5.5 TERM OF OPTIONS
Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as follows:
(a) In the event that an optionee ceases to be a Director of the
Company for any reason other than the death of the optionee,
the options granted to such optionee shall expire unless
exercised by him or her within thirty-six (36) months after
the date such optionee ceases to be a Director of the Company.
(b) In the event of the death of an optionee, whether during the
optionee's service as a Director or during the thirty-six (36)
month period referred to in Section 5.5(a), the options
granted to such optionee shall be exercisable, and such
options shall expire unless exercised within twelve (12)
months after the date of the optionee's death, by the legal
representatives or the estate of such optionee, by any person
or persons whom the optionee shall have designated in writing
on forms prescribed by and filed with the Company or, if no
such designation has been made, by the person or persons to
whom the optionee's rights have passed by will or the laws of
descent and distribution.
5.6 TRANSFERABILITY
During an optionee's lifetime, an option may be exercised only by the
optionee. Options granted under the Plan and the rights and privileges
conferred thereby shall not
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El Paso Energy Corporation Page 3
Stock Option Plan For Non-Employee Directors
<PAGE> 6
be subject to execution, attachment or similar process and may not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than by will or the applicable laws of
descent and distribution except that, to the extent permitted by applicable law
and the Rules promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Plan Administrator may permit a
recipient of an option to designate in writing during the optionee's lifetime a
beneficiary to receive and exercise options in the event of the optionee's
death (as provided in Section 5.5(b)). Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan or of any
right or privilege conferred thereby, contrary to the provisions of the Plan,
or the sale or levy or any attachment or similar process upon the rights and
privileges conferred thereby, shall be null and void.
5.7 DEFERRAL ELECTION
A Participant may elect irrevocably at any time prior to exercising an
option granted under the Plan that issuance of Shares upon exercise of such
option shall be deferred until the Participant reaches a pre-specified age or
ceases to serve as a Director of the Company, as elected by the Participant.
After the exercise of any such option and prior to the issuance of any deferred
shares, the number of Shares issuable to the Participant shall be credited to a
memorandum deferred account and any dividends or other distributions paid on
the Common Stock shall be deemed reinvested in additional shares of Common
Stock until all credited Shares shall become issuable pursuant to the
Participant's election.
SECTION 6 GENERAL PROVISIONS
6.1 Neither the Plan, nor the granting of an option, nor any other
action taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that a Participant has a right
to continue as a Director for any period of time or at any particular rate of
compensation.
6.2 The Company shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan,
or record as a holder of record of Shares the name of the individual exercising
an option under the Plan, (a) without obtaining to the complete satisfaction of
the Plan Administrator the approval of all regulatory bodies deemed necessary
by the Plan Administrator, and (b) without complying, to the Plan
Administrator's complete satisfaction, with all rules and regulations under
federal, state or local law deemed applicable by the Plan Administrator.
6.3 All costs and expenses of the adoption and administration of
the Plan shall be borne by the Company.
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El Paso Energy Corporation Page 4
Stock Option Plan For Non-Employee Directors
<PAGE> 7
6.4 The Plan shall be construed and governed in accordance with
the laws of the State of Texas, except that it shall be construed and governed
in accordance with applicable federal law in the event that such federal law
preempts state law.
6.5 Appropriate provision shall be made for all taxes required to
be withheld in connection with the exercise or other taxable event with respect
to options under the applicable laws or regulations of any governmental
authority, whether federal, state or local and whether domestic or foreign.
By participating in the Plan, each Participant shall agree that he or
she is responsible for obtaining qualified tax advice prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan,
or (iii) disposing of any shares of Common Stock issued under the Plan.
SECTION 7 EFFECTIVE DATE AND DURATION OF THE PLAN
The original plan was dated as of January 1, 1992 and adopted by the
Company's Board and approved by the Company's sole stockholder on January 15,
1992. The amendment and restatement of this Plan effective as of January 1,
1998 was adopted by Board on December 2, 1997. The Board amended and restated
the Plan effective as of August 1, 1998, in connection with the reorganization
of the Company into a holding company structure whereby El Paso Energy
Corporation became the publicly held company and El Paso Natural Gas Company
became a wholly owned subsidiary. This Plan was assumed by El Paso Energy
Corporation pursuant to an Assignment and Assumption Agreement effective as of
August 1, 1998, by and between El Paso Energy Corporation and El Paso Natural
Gas Company. The Plan shall continue in effect until it is terminated by
action of the Board or the Company's stockholders, but such termination shall
not affect the then-outstanding terms of any options or the Company's
obligation to issue Shares under any then-exercised options as to which a
deferral election has been made under Section 5.7
SECTION 8 COMPLIANCE WITH SECTION 16
The Company's intention is that, so long as any of the Company's
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, with respect to awards granted to or held by Section 16 Insiders,
the Plan shall comply in all respects with Rule 16b-3 or any successor rule or
rule of similar application under Section 16 of the Exchange Act or rules
thereunder, and, if any Plan provision is later found not to be in compliance
with such exemption under Section 16, that provision shall be deemed modified
as necessary to meet the requirements of such applicable exemption.
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El Paso Energy Corporation Page 5
Stock Option Plan For Non-Employee Directors
<PAGE> 8
SECTION 9 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN
9.1 Subject to the Board and Section 9.2, the Plan Administrator
may from time to time make such amendments to the Plan as it may deem proper
and in the best interest of the Company, including, but not limited to, any
amendment necessary to ensure that the Company may obtain any regulatory
approval referred to in Section 6.2; provided, however, that unless the Plan
Administrator determines that such change does not materially impair the value
of the options, no change in any option theretofore granted may be made which
would impair the right of the Participant to acquire Shares or retain Shares
that the Participant may have acquired as a result of the Plan without the
consent of the Participant.
9.2 The Board may at any time suspend the operation of or
terminate the Plan with respect to any Shares which are not at that time
subject to any outstanding options.
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El Paso Energy Corporation Page 6
Stock Option Plan For Non-Employee Directors
<PAGE> 9
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
---------------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
-----------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 7
Stock Option Plan For Non-Employee Directors
<PAGE> 1
EXHIBIT 10.J
EL PASO ENERGY CORPORATION
1995 OMNIBUS COMPENSATION
PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSES..................................................................................1
SECTION 2 DEFINITIONS...............................................................................1
2.1 Adjusted Value............................................................................1
2.2 Beneficiary...............................................................................1
2.3 Board of Directors........................................................................1
2.4 Cause.....................................................................................1
2.5 Change in Control.........................................................................2
2.6 Code......................................................................................3
2.7 Common Stock..............................................................................3
2.8 Exchange Act..............................................................................3
2.9 Fair Market Value.........................................................................3
2.10 Good Reason...............................................................................4
2.11 Incentive Stock Option....................................................................5
2.12 Management Committee......................................................................5
2.13 Maximum Annual Employee Grant.............................................................5
2.14 Nonqualified Option.......................................................................5
2.15 Option Price..............................................................................5
2.16 Participant...............................................................................5
2.17 Performance Cycle.........................................................................5
2.18 Performance Goals.........................................................................5
2.19 Performance Peer Group....................................................................6
2.20 Performance Period........................................................................6
2.21 Performance Ranking Position..............................................................6
2.22 Performance Unit or Units.................................................................6
2.23 Permanent Disability or Permanently Disabled..............................................6
2.24 Plan Administrator........................................................................7
2.25 Restricted Stock..........................................................................7
2.26 Rule 16b-3................................................................................7
2.27 Section 16 Insider........................................................................7
2.28 Section 162(m)............................................................................7
2.29 Subsidiary................................................................................7
2.30 Total Shareholder Return..................................................................7
2.31 Valuation Date............................................................................8
SECTION 3 ADMINISTRATION........................................................................8
SECTION 4 ELIGIBILITY...........................................................................9
SECTION 5 SHARES AND UNITS AVAILABLE FOR THE PLAN...............................................9
</TABLE>
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El Paso Energy Corporation i Table of Contents
1995 Omnibus Compensation Plan
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 6 STOCK OPTIONS........................................................................10
SECTION 7 STOCK APPRECIATION RIGHTS............................................................16
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS....................................................18
SECTION 9 PERFORMANCE UNITS....................................................................19
9.1 Grants of Units......................................................................19
9.2 Notice to Participants...............................................................19
9.3 Vesting..............................................................................19
9.4 Valuation of Performance Units.......................................................20
9.5 Entitlement to Payment...............................................................21
9.6 Deferred Payment.....................................................................23
9.7 Acceleration of Payment Due to Change in Control.....................................23
9.8 Unfunded Obligation..................................................................24
9.9 Designation of Beneficiary...........................................................24
SECTION 10 RESTRICTED STOCK.....................................................................24
SECTION 11 REGULATORY APPROVALS AND LISTING.....................................................26
SECTION 12 EFFECTIVE DATE AND TERM OF PLAN......................................................27
SECTION 13 GENERAL PROVISIONS...................................................................28
SECTION 14 COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m)........................................29
SECTION 15 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN..........................................................................30
</TABLE>
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El Paso Energy Corporation ii Table of Contents
1995 Omnibus Compensation Plan
<PAGE> 4
EL PASO ENERGY CORPORATION
1995 OMNIBUS COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSES
The purposes of the El Paso Energy Corporation 1995 Omnibus
Compensation Plan (the "Plan") are to promote the interests of El Paso Energy
Corporation (the "Company") and its stockholders by strengthening its ability to
attract and retain officers and key management employees ("key management
employees" means those employees who hold the position of department director)
in the employ of the Company and its Subsidiaries (as defined below) by
furnishing suitable recognition of their ability and industry which contributed
materially to the success of the Company and to align the interests and efforts
of the Company's officers and key management employees to the long-term
interests of the Company's stockholders. The Plan provides for the grant of
stock options, limited stock appreciation rights, stock appreciation rights,
restricted stock and performance units in accordance with the terms and
conditions set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following terms when used
in the Plan shall have the meanings set forth in this Section 2:
2.1 ADJUSTED VALUE
The dollar amount value of Performance Units determined as of a
Valuation Date.
2.2 BENEFICIARY
The person or persons designated by the Participant pursuant to Section
6.4(f) or Section 9.9 of this Plan to whom payments are to be paid pursuant to
the terms of the Plan in the event of the Participant's death.
2.3 BOARD OF DIRECTORS
The Board of Directors of the Company.
2.4 CAUSE
The Company may terminate the Participant's employment for Cause. A
termination for Cause is a termination evidenced by a resolution adopted in good
faith by two-thirds (2/3) of the Board of Directors that the Participant (i)
willfully and continually failed to substantially perform the Participant's
duties with the Company (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which
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1995 Omnibus Compensation Plan
<PAGE> 5
failure continued for a period of at least thirty (30) days after a written
notice of demand for substantial performance has been delivered to the
Participant specifying the manner in which the Participant has failed to
substantially perform or (ii) willfully engaged in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise; provided,
however, that no termination of the Participant's employment shall be for Cause
as set forth in clause (ii) above until (A) there shall have been delivered to
the Participant a copy of a written notice setting forth that the Participant
was guilty of the conduct set forth in clause (ii) above and specifying the
particulars thereof in detail and (B) the Participant shall have been provided
an opportunity to be heard by the Board of Directors (with the assistance of the
Participant's counsel if the Participant so desires). No act, nor failure to
act, on the Participant's part shall be considered "willful" unless the
Participant has acted, or failed to act, with an absence of good faith and
without a reasonable belief that the Participant's action or failure to act was
in the best interest of the Company. Notwithstanding anything contained in the
Plan to the contrary, no failure to perform by the Participant after notice of
termination is given by the Participant shall constitute Cause.
2.5 CHANGE IN CONTROL
As used in the Plan, a Change in Control shall be deemed to occur (i)
if any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the first purchase of the
Common Stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company), (iii) upon the approval by the Company's
stockholders of a merger or consolidation, a sale or disposition of all or
substantially all of the Company's assets or a plan of liquidation or
dissolution of the Company, or (iv) if, during any period of two (2) consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof, unless
the election or nomination for the election by the Company's stockholders of
each new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period. Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
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1995 Omnibus Compensation Plan
<PAGE> 6
2.6 CODE
The Internal Revenue Code of 1986, as amended and in effect from time
to time, and the temporary or final regulations of the Secretary of the U.S.
Treasury adopted pursuant to the Code.
2.7 COMMON STOCK
The Common Stock of the Company, $3 par value per share, or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 5.
2.8 EXCHANGE ACT
The Securities Exchange Act of 1934, as amended.
2.9 FAIR MARKET VALUE
As applied to a specific date, Fair Market Value shall be deemed to be
the mean between the highest and lowest quoted selling prices at which Common
Stock is sold on such date as reported in the NYSE-Composite Transactions by The
Wall Street Journal on such date, or if no Common Stock was traded on such date,
on the next preceding day on which Common Stock was so traded. Notwithstanding
the foregoing, upon the exercise,
(a) during the thirty (30) day period following a Change in
Control, of a limited stock appreciation right or stock appreciation
right granted in connection with a Nonqualified Option more than six
(6) months prior to a Change in Control, or
(b) during the seven (7) month period following a Change in
Control, of a limited stock appreciation right or of a stock
appreciation right granted in connection with a Nonqualified Option
less than six (6) months prior to a Change in Control,
On or after a Change in Control, Fair Market Value on the date of
exercise shall be deemed to be the greater of (i) the highest price per
share of Common Stock as reported in the NYSE-Composite Transactions by
The Wall Street Journal during the sixty (60) day period ending on the
day preceding the date of exercise of the stock appreciation right or
limited stock appreciation right, as the case may be, and (ii) if the
Change in Control is one described in clause (ii) or (iii) of Section
2.5, the highest price per share paid for Common Stock in connection
with such Change in Control.
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1995 Omnibus Compensation Plan
<PAGE> 7
2.10 GOOD REASON
Good Reason shall mean the occurrence of any of the following events or
conditions:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Participant's reasonable judgment, represents a substantial reduction
of the status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Participant of any
duties or responsibilities which, in the Participant's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Participant from or failure to
reappoint or reelect the Participant to any of such positions, except
in connection with the termination of the Participant's employment for
Cause, for Permanent Disability or as a result of his or her death, or
by the Participant other than for Good Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Company's requiring the Participant (without the
consent of the Participant) to be based at any place outside a
thirty-five (35) mile radius of his or her place of employment prior to
a Change in Control, except for reasonably required travel on the
Company's business which is not materially greater than such travel
requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in effect any
material compensation or benefit plan in which the Participant was
participating at the time of the Change in Control, including, but not
limited to, the Plan, the El Paso Energy Corporation Pension Plan, the
El Paso Energy Corporation Supplemental Benefits Plan, the El Paso
Energy Corporation 1995 Incentive Compensation Plan, the El Paso Energy
Corporation Deferred Compensation Plan and the El Paso Energy
Corporation Retirement Savings Plan, with any amendments and
restatements of such plans made prior to such Change in Control; or
(ii) provide the Participant with compensation and benefits at least
equal (in terms of benefit levels and/or reward opportunities) to those
provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Change in Control (or as in effect
following the Change in Control, if greater);
(e) any material breach by the Company of any provision of the
Plan; or
(f) any purported termination of the Participant's employment
for Cause by the Company which does not otherwise comply with the terms
of the Plan.
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2.11 INCENTIVE STOCK OPTION
An option intended to meet the requirements of an Incentive Stock
Option as defined in Section 422 of the Code, as in effect at the time of grant
of such option, or any statutory provision that may hereafter replace such
Section.
2.12 MANAGEMENT COMMITTEE
A committee consisting of the Chief Executive Officer and such other
senior officers as the Chief Executive Officer shall designate.
2.13 MAXIMUM ANNUAL EMPLOYEE GRANT
The Maximum Annual Employee Grant set forth in Section 5.4.
2.14 NONQUALIFIED OPTION
An option which is not intended to meet the requirements of an
Incentive Stock Option as defined in Section 422 of the Code.
2.15 OPTION PRICE
The price per share of Common Stock at which each option is
exercisable.
2.16 PARTICIPANT
An eligible employee to whom an option, limited stock appreciation
right, stock appreciation right, Restricted Stock or Performance Unit is granted
under the Plan as set forth in Section 4.
2.17 PERFORMANCE CYCLE
That period commencing with January 1 of each year in which
the grant of a Performance Unit is made and ending on December 31 of the third
succeeding year, or such other time period as the Plan Administrator may
determine. The Plan Administrator, it its discretion, may initiate an
overlapping Performance Cycle that begins before an existing Performance Cycle
has ended.
2.18 PERFORMANCE GOALS
The Plan Administrator shall establish one or more performance goals
("Performance Goals") for each Performance Period in writing. Such Performance
Goals shall be set no later than the commencement of the applicable Performance
Period, or such later date as may be permitted with respect to
"performance-based" compensation under Section 162(m) of the Code.
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Each Performance Goal selected for a particular Performance Period
shall be a relative or absolute measure of any one or more of the following:
Total Shareholder Return, operating income, pre-tax profit, earnings per share,
cash flow, return on capital, return on equity, return on net assets, net
income, debt reduction, safety, return on investment or revenues. The foregoing
terms shall have the same meaning as used in the Company's financial statements,
or if the terms are not used in the Company's financial statements, they shall
have the meaning generally applied pursuant to general accepted accounting
principles, or as used in the industry, as applicable.
2.19 PERFORMANCE PEER GROUP
Those publicly held companies selected by the Plan Administrator prior
to the commencement of a Performance Period, or such later date provided by the
Code, to form a comparative performance group in applying Section 9.4.
2.20 PERFORMANCE PERIOD
That period of time during which Performance Goals are measured to
determine the vesting or granting of options, limited stock appreciation rights,
stock appreciation rights, Restricted Stock or Performance Units, as the Plan
Administrator may determine.
2.21 PERFORMANCE RANKING POSITION
The relative placement of the Company's Total Shareholder Return
measured against the Total Shareholder Return of the other companies in the
Performance Peer Group for which purposes rank shall be determined by quartile,
with a ranking in the first (1st) quartile (e.g., the Company's Total
Shareholder Return is equal to or greater than the Total Shareholder Return of
at least seventy-five percent (75%) of the Performance Peer Group) corresponding
to the highest quartile of Total Shareholder Return.
2.22 PERFORMANCE UNIT OR UNITS
Units of long-term incentive compensation granted to a Participant with
respect to a particular Performance Cycle.
2.23 PERMANENT DISABILITY OR PERMANENTLY DISABLED
A Participant shall be deemed to have become Permanently Disabled for
purposes of the Plan if the Chief Executive Officer of the Company shall find
upon the basis of medical evidence satisfactory to the Chief Executive Officer
that the Participant is totally disabled, whether due to physical or mental
condition, so as to be prevented from engaging in further employment by the
Company or any of its Subsidiaries, and that such disability will be permanent
and continuous during the remainder of the Participant's life; provided, that
with respect to Section 16 Insiders such determination shall be made by the Plan
Administrator.
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2.24 PLAN ADMINISTRATOR
The Board of Directors or the committee appointed and/or authorized
pursuant to Section 3 to administer the Plan.
2.25 RESTRICTED STOCK
Common Stock granted under the Plan that is subject to the requirements
of Section 10 and such other restrictions as the Plan Administrator deems
appropriate. References to Restricted Stock in this Plan shall include
Performance Restricted Stock (as defined in Section 5.2) unless the context
otherwise requires.
2.26 RULE 16b-3
Rule 16b-3 of the General Rules and Regulations under the Exchange Act.
2.27 SECTION 16 INSIDER
Any person who is selected by the Plan Administrator to receive
options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock and/or Performance Units pursuant to the Plan and who is
subject to the requirements of Section 16 of the Exchange Act, and the rules and
regulations promulgated thereunder.
2.28 SECTION 162(m)
Section 162(m) of the Code, and regulations promulgated thereunder.
2.29 SUBSIDIARY
An entity that is designated by the Plan Administrator as a subsidiary
for purposes of the Plan and that is a corporation (or other form of business
association that is treated as a corporation for tax purposes) of which shares
(or other ownership interests) having more than fifty percent (50%) of the
voting power are owned or controlled, directly or indirectly, by the Company so
as to qualify as a "subsidiary corporation" (within the meaning of Section
424(f) of the Code).
2.30 TOTAL SHAREHOLDER RETURN
The sum of (i) the appreciation or depreciation in the price of a share
of a company's common stock, and (ii) the dividends and other distributions paid
during the applicable Performance Cycle, expressed as a percentage basis of the
Fair Market Value of such share on the first day of the applicable Performance
Cycle, as calculated in a manner determined by the Plan Administrator.
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2.31 VALUATION DATE
The date for determining the Adjusted Value of vested Units that will
be paid or credited to the Participant or Beneficiary in accordance with Section
9.5 or 9.6. The Valuation Date shall occur on the last day of the applicable
Performance Cycle, or such other time as provided in this Plan, or as the Plan
Administrator may select. The Valuation Date for each Performance Cycle shall be
set forth in the grant of Performance Units and shall be established no later
than the date on which the Performance Goals for a particular Performance Cycle
are selected, except as otherwise specifically provided herein.
SECTION 3 ADMINISTRATION
3.1 The Plan shall be administered by the Board of Directors or, in the
event the Board of Directors shall appoint and/or authorize a committee to
administer the Plan, by such committee.
No member of the Board of Directors or the committee shall vote with
respect directly to the granting of options, limited stock appreciation rights,
stock appreciation rights, Restricted Stock and/or Performance Units hereunder
to himself or herself, as the case may be, and, if state corporate law does not
permit a committee to grant options, limited stock appreciation rights, stock
appreciation rights, Restricted Stock and Performance Units to directors, then
any option, limited stock appreciation right, stock appreciation right,
Restricted Stock or Performance Unit granted under the Plan to a director for
his or her services as such shall be approved by the full Board of Directors.
The members of any committee serving as Plan Administrator shall be
appointed by the Board of Directors for such term as the Board of Directors may
determine. The Board of Directors may from time to time remove members from, or
add members to, the committee. Vacancies on the committee, however caused, may
be filled by the Board of Directors.
With respect to grants made under the Plan to Section 16 Insiders, the
Plan Administrator shall be constituted at all times so as to meet the
disinterested administration requirements of Rule 16b-3 and the outside director
requirements of Section 162(m) so long as any of the Company's equity Securities
are registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
3.2 Except for the terms and conditions explicitly set forth in the
Plan, the Plan Administrator shall have sole authority to construe and interpret
the Plan, to establish, amend and rescind rules and regulations relating to the
Plan, to select persons eligible to participate in the Plan, to grant options,
limited stock appreciation rights, stock appreciation rights, Restricted Stock
and Performance Units thereunder, to administer the Plan, to make
recommendations to the Board of Directors, and to take all such steps and
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make all such determinations in connection with the Plan and the options,
limited stock appreciation rights, stock appreciation rights, Restricted Stock
and Performance Units granted thereunder as it may deem necessary or advisable,
which determination shall be final and binding upon all Participants, so long as
such interpretation and construction with respect to Incentive Stock Options
corresponds to any applicable requirements of Section 422 of the Code. The Plan
Administrator shall cause the Company at its expense to take any action related
to the Plan which may be necessary to comply with the provisions of any federal
or state law or any regulations issued thereunder.
3.3 Each member of any committee acting as Plan Administrator, while
serving as such, shall be considered to be acting in his or her capacity as a
director of the Company. Members of the Board of Directors and members of any
committee acting under the Plan shall be fully protected in relying in good
faith upon the advice of counsel and shall incur no liability except for gross
negligence or willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator to participate
in the Plan, an individual must be an officer or key management employee of the
Company, or of any Subsidiary, as of the date on which the Plan Administrator
grants to such individual an option, limited Stock appreciation right, stock
appreciation right, Restricted Stock or Performance Unit or a person who, in the
judgment of the Plan Administrator, holds a position of responsibility and is
able to contribute substantially to the Company's continued success. Members of
the Board of Directors of the Company who are full-time salaried officers shall
be eligible to participate. Members of the Board of Directors who are not
employees are not eligible to participate in this Plan.
SECTION 5 SHARES AND UNITS AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.5, the maximum number of shares that may be
issued upon settlement of Performance Units and for which options, limited stock
appreciation rights, stock appreciation rights and Restricted Stock may at any
time be granted under the Plan is six million (6,000,000) shares of Common
Stock, from shares held in the Company's treasury or out of authorized but
unissued shares of the Company, or partly out of each, as shall be determined by
the Board of Directors, subject to, and reduced by (on a post-split basis), the
number of shares of Common Stock awarded prior to the occurrence of a
two-for-one stock split effected by the Company in the form of a 100% stock
dividend on April 1, 1998. Any options, limited stock appreciation rights, stock
appreciation rights and shares of Restricted Stock outstanding under the Plan on
April 1, 1998, shall be adjusted on a two-for-one basis to reflect the stock
dividend.
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5.2 Notwithstanding the foregoing, and subject to Section 5.5, the
number of shares for which Restricted Stock may be granted pursuant to Section
10 of the Plan may not exceed one million (1,000,000) shares of Common Stock,
unless the granting or vesting of such Restricted Stock is in compliance with
the performance-based requirements of Section 162(m) (the "Performance
Restricted Stock"), subject to, and reduced by (on a post-split basis), the
number of shares of Common Stock awarded prior to the occurrence of a
two-for-one stock split effected by the Company in the form of a 100% stock
dividend on April 1, 1998. Any shares of Restricted Stock outstanding under the
Plan on April 1, 1998, shall be adjusted on a two-for-one basis to reflect the
stock dividend. The grant of Performance Restricted Stock is not limited by this
Section 5.2.
5.3 Subject to Section 5.5, the number of Performance Units which may
be granted under the Plan is set at three hundred thousand (300,000) Units.
Units that have been granted and are fully vested or that still may become fully
vested under the terms of the Plan shall reduce the number of outstanding Units
that are available for use in making future grants under the Plan.
5.4 The maximum number of shares, as calculated in accordance with the
provisions of Section 5.1, with respect to which awards under this Plan may be
granted to any eligible employee in any one year shall not exceed: (a) one
million (1,000,000) in the case of options (and related limited stock
appreciation rights or stock appreciation rights) or issued upon settlement of
Performance Units; and (b) one million (1,000,000) in the case of shares of
Restricted Stock (whether or not such Restricted Stock is Performance Restricted
Stock). With respect to Performance Units, the maximum Units granted to any
eligible employee shall not exceed seventy-five thousand (75,000) Performance
Units in any Performance Cycle. Each of the foregoing maximums shall be referred
to collectively as the "Maximum Annual Employee Grant."
5.5 In the event of a recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board of Directors, upon the
recommendation of the Plan Administrator, may make appropriate adjustments in
the number of shares authorized for the Plan, the Maximum Annual Employee Grant
and, with respect to outstanding options, limited stock appreciation rights,
stock appreciation rights, and Restricted Stock, the Plan Administrator may make
appropriate adjustments in the number of shares and the Option Price.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in such number, and at
such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective employees, their present and potential contributions to the success
of the Company, and such other factors as the Plan Administrator shall deem
relevant in accomplishing the purposes of the Plan. The
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granting of an option shall take place when the Plan Administrator by
resolution, written consent or other appropriate action determines to grant such
an option to a particular Participant at a particular price. Each option shall
be evidenced by a written instrument delivered by or on behalf of the Company
containing provisions not inconsistent with the Plan.
6.2 An option granted under the Plan may be either an Incentive Stock
Option or a Nonqualified Option.
6.3 Each provision of the Plan and each Incentive Stock Option granted
thereunder shall be construed so that each such option shall qualify as an
Incentive Stock Option, and any provision thereof that cannot be so construed
shall be disregarded, unless the Participant agrees otherwise. The total number
of shares which may be purchased upon the exercise of Incentive Stock Options
granted under the Plan shall not exceed the total specified in Section 5.1.
Incentive Stock Options, in addition to complying with the other provisions of
the Plan relating to options generally, shall be subject to the following
conditions:
(a) Ten Percent (10%) Stockholders
A Participant must not, immediately before an Incentive Stock
Option is granted, own stock representing more than ten percent (10%)
of the voting power or value of all classes of stock of the Company or
of a Subsidiary. This requirement is waived if (i) the Option Price of
the Incentive Stock Option to be granted is at least one hundred ten
percent (110%) of the Fair Market Value of the stock subject to the
option, determined at the time the option is granted, and (ii) the
option is not exercisable more than five (5) years from the date the
option is granted.
(b) Annual Limitation
To the extent that the aggregate Fair Market Value (determined
at the time of the grant of the option) of the stock with respect to
which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year exceeds One Hundred Thousand
Dollars ($100,000), such options shall be treated as Nonqualified
Options.
(c) Additional Terms
Any other terms and conditions which the Plan Administrator
determines, upon advice of counsel, must be imposed for the option to
be an Incentive Stock Option.
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6.4 Except as otherwise provided in Section 6.3, all Incentive Stock
Options and Nonqualified Options under the Plan shall be granted subject to the
following terms and conditions:
(a) Option Price
The Option Price shall be determined by the Plan
Administrator, but shall not be less than one hundred percent (100%) of
the Fair Market Value of the Common Stock on the date the option is
granted.
(b) Duration of Options
Options shall be exercisable at such time and under such
conditions as set forth in the option grant, but in no event shall any
Incentive Stock Option be exercisable subsequent to the day before the
tenth anniversary of the date on which the option is granted, nor shall
any other option be exercisable later than the tenth anniversary of the
date of its grant.
(c) Exercise of Options
Subject to Section 6.4(j), a Participant may not exercise an
option until the Participant has completed one (1) year of continuous
employment with the Company or any of its Subsidiaries from and
including the date on which the option is granted, or such longer
period as the Plan Administrator may determine in a particular case.
This requirement is waived in the event of death or Permanent
Disability of a Participant before such period of continuous employment
is completed and may be waived or modified in the agreement evidencing
the option or by resolution adopted at any time by the Plan
Administrator. Thereafter, shares of Common Stock covered by an option
may be purchased at one time or in such installments over the balance
of the option period as may be provided in the option grant. Any shares
not purchased on the applicable installment date may be purchased
thereafter at any time prior to the final expiration of the option. To
the extent that the right to purchase shares has accrued thereunder,
options may be exercised from time to time by written notice to the
Company setting forth the number of shares with respect to which the
option is being exercised.
(d) Payment
The purchase price of shares purchased under options shall be
paid in full to the Company upon the exercise of the option by delivery
of consideration equal to the product of the Option Price and the
number of shares purchased (the "Purchase Price"). Such consideration
may be either (i) in cash or (ii) at the discretion of the Plan
Administrator, in Common Stock already owned by the Participant for at
least six (6) months, or any combination of cash and Common
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Stock. The Fair Market Value of such Common Stock as delivered shall be
valued as of the day prior to delivery. The Plan Administrator can
determine at the time the option is granted that additional forms of
payment will be permitted. To the extent permitted by the Plan
Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws, regulations and state
corporate law), an option may also be exercised by delivery of a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount
of sale or loan proceeds to pay the Purchase Price. A Participant shall
have none of the rights of a stockholder until the shares of Common
Stock are issued to the Participant.
If specifically authorized in the option grant, a Participant
may elect to pay all or a portion of the Purchase Price by having
shares of Common Stock with a Fair Market Value equal to all or a
portion of the Purchase Price be withheld from the shares issuable to
the Participant upon the exercise of the option. The Fair Market Value
of such Common Stock as is withheld shall be determined as of the same
day as the exercise of the option. In the event an option grant to a
Section 16 Insider provides that the Purchase Price may be paid in
whole or in part by having shares with a Fair Market Value equal to all
or a portion of the Purchase Price withheld from the shares issuable to
the Participant upon the exercise of the option, the following
restrictions shall apply. To the extent required for compliance with
Rule 16b-3, the withholding of shares issuable upon the exercise of an
option to pay the Purchase Price by a Section 16 Insider must be
approved by the Plan Administrator and must be made (x) pursuant to an
irrevocable election made six (6) months in advance of the transaction,
(y) during the period beginning on the third business day following the
date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the
twelfth business day following such date, or (z) otherwise in
accordance with Rule 16b-3 and interpretations thereunder.
(e) Restrictions
The Plan Administrator shall determine and reflect in the
option grant, with respect to each option, the nature and extent of the
restrictions, if any, to be imposed on the shares of Common Stock which
may be purchased thereunder, including, but not limited to,
restrictions on the transferability of such shares acquired through the
exercise of such options for such periods as the Plan Administrator may
determine and, further, that in the event a Participant's employment by
the Company, or a Subsidiary, terminates during the period in which
such shares are nontransferable, the Participant shall be required to
sell such shares back to the Company at such prices as the Plan
Administrator may specify in the option.
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(f) Nontransferability of Options
During a Participant's lifetime, an option may be exercisable
only by the Participant. Options granted under the Plan and the rights
and privileges conferred thereby shall not be subject to execution,
attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by
applicable law and Rule 16b-3, the Plan Administrator may permit a
recipient of a Nonqualified Option to designate in writing during the
Participant's lifetime a Beneficiary to receive and exercise the
Participant's Nonqualified Options in the event of such Participant's
death (as provided in Section 6.4(i)). A designation by a Participant
under the Company's Omnibus Compensation Plan dated as of January 1,
1992 (the "Predecessor Plan") shall remain in effect under the Plan for
any options unless such designation is revoked or changed under the
Plan. If any Participant attempts to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under the Plan or of any
right or privilege conferred thereby, contrary to the provisions of the
Plan, or suffers the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, all affected options
held by such Participant shall be immediately forfeited.
(g) Purchase for Investment
The Plan Administrator shall have the right to require that
each Participant or other person who shall exercise an option under the
Plan, and each person into whose name shares of Common Stock shall be
issued pursuant to the exercise of an option, represent and agree that
any and all shares of Common Stock purchased pursuant to such option
are being purchased for investment only and not with a view to the
distribution or resale thereof and that such shares will not be sold
except in accordance with such restrictions or limitations as may be
set forth in the option. This Section 6.4(g) shall be inoperative
during any period of time when the Company has obtained all necessary
or advisable approvals from governmental agencies and has completed all
necessary or advisable registrations or other qualifications of shares
of Common Stock as to which options may from time to time be granted as
contemplated in Section 11.
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(h) Termination of Employment
Upon the termination of a Participant's employment for any
reason other than death or Permanent Disability, the Participant's
option shall be exercisable only to the extent that it was then
exercisable and, unless the term of the options expires sooner, such
options shall expire according to the following schedule; provided,
that the Plan Administrator may at any time determine in a particular
case that specific limitations and restrictions under the Plan shall
not apply:
(i) Retirement
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's retirement from the
Company or any Subsidiary.
(ii) Disability
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's Permanent Disability.
(iii) Termination
Subject to subparagraph (iv) below, the option shall
expire, unless exercised, thirty-six (36) months after a
Participant resigns or is terminated as an employee of the
Company or any of its Subsidiaries, unless the Chief Executive
Officer of the Company shall have determined in a specific
case that the option should expire sooner or should terminate
when the Participant's employment status ceases; provided,
however, that for Section 16 Insiders, such determination
shall be made by the Plan Administrator.
(iv) Termination Following a Change in Control
The option shall expire, unless exercised, thirty-six
(36) months after a Participant's termination of employment
(other than a termination by the Company for Cause or a
voluntary termination by the Participant other than for Good
Reason) following a Change in Control, provided that said
termination of employment occurs within two (2) years
following a Change in Control.
(v) All Other Terminations
Notwithstanding subparagraphs (iii) and (iv) above,
the option shall expire upon termination of employment for
Cause and any option intended to qualify as an Incentive Stock
Option shall expire, unless exercised, one year after the
Participant's termination of employment on
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account of disability (as defined in Section 22(e)(3) of the
Code) and shall expire three (3) months after the
Participant's termination of employment other than on account
of death, Permanent Disability or termination for Cause, or
following a Change in Control.
(i) Death of Participant
Upon the death of a Participant, whether during the
Participant's period of employment or during the thirty-six (36) month
period referred to in Sections 6.4(h)(i), (ii) and (iii), the option
shall expire, unless the original term of the option expires sooner,
twelve (12) months after the date of the Participant's death, unless
the option is exercised within such twelve (12) month period by the
Participant's Beneficiary, legal representatives, estate or the person
or persons to whom the deceased's option rights shall have passed by
will or the laws of descent and distribution; provided, that the Plan
Administrator shall determine in a particular case that specific
limitations and restrictions under the Plan shall not apply.
Notwithstanding any other Plan provisions pertaining to the times at
which options may be exercised, no option shall continue to be
exercisable, pursuant to Section 6.4(h) or this Section 6.4(i), at a
time that would violate the maximum duration of Section 6.4(b).
(j) Change in Control
Notwithstanding other Plan provisions pertaining to the times
at which options may be exercised, all outstanding options, to the
extent not then currently exercisable, shall become exercisable in full
upon the occurrence of a Change in Control. In no event, however, shall
any intended Incentive Stock Option, without notice to and consent of
the Participant, first become exercisable, pursuant to Section 6.4(c)
or this Section 6.4(j), if the result would be to cause such option,
when granted, not to be treated as an Incentive Stock Option (whether
by reason of the possible future violation of the annual limitation of
Section 6.3(b) or otherwise). In addition, no option (whether or not
intended to be an Incentive Stock Option) shall continue to be
exercisable, pursuant to Sections 6.4(h) and 6.4(i), at a time that
would violate the maximum duration of Section 6.4(b).
SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock appreciation rights to
Participants in connection with any option granted under the Plan, either at the
time of the grant of such option or at any time thereafter during the term of
the option. Such stock appreciation rights shall cover the same shares covered
by the options (or such lesser number of shares of Common Stock as the Plan
Administrator may determine) and shall, except as provided in Section 7.3, be
subject to the same terms and conditions as the
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related options and such further terms and conditions not inconsistent with the
Plan as shall from time to time be determined by the Plan Administrator.
7.2 Each stock appreciation right shall entitle the holder of the
related option to surrender to the Company unexercised the related option, or
any portion thereof, and to receive from the Company in exchange therefor an
amount equal to the excess of the Fair Market Value of one share of Common Stock
on the date the right is exercised over the Option Price per share times the
number of shares covered by the option, or portion thereof, which is
surrendered. Payment shall be made in shares of Common Stock valued at Fair
Market Value as of the date the right is exercised, or in cash, or partly in
shares and partly in cash, at the discretion of the Plan Administrator;
provided, however, that payment shall be made solely in cash with respect to a
stock appreciation right which is exercised within seven (7) months following a
Change in Control. Notwithstanding the foregoing and to the extent required by
Rule 16b-3, a payment, in whole or in part, of cash upon exercise of a stock
appreciation right by a Section 16 Insider may be made only if the Plan
Administrator approves such election to receive cash and the right is exercised
during the period beginning on the third business day following the date of
release for publication of the quarterly or annual summary statements of sales
and earnings of the Company and ending on the twelfth business day following
such date. Stock appreciation rights may be exercised from time to time upon
actual receipt by the Company of written notice stating the number of shares of
Common Stock with respect to which the stock appreciation right is being
exercised. The value of any fractional shares shall be paid in cash.
7.3 Stock appreciation rights are subject to the following
restrictions:
(a) Each stock appreciation right shall be exercisable at such
time or times as the option to which it relates shall be exercisable,
or at such other times as the Plan Administrator may determine;
provided, however, that such right shall not be exercisable until the
Participant shall have completed a six (6) month period of continuous
employment with the Company or any of its Subsidiaries immediately
following the date on which the stock appreciation right is granted. In
the event of death or Permanent Disability of a Participant during
employment but before the Participant has completed such period of
continuous employment, such stock appreciation right shall be
exercisable; but only within the period specified in the related
option. In the event of a Change in Control, the requirement that a
Participant shall have completed a six (6) month period of continuous
employment is waived with respect to a Participant who is employed by
the Company at the time of the Change in Control but who, within the
six (6) month period, voluntarily terminates employment for Good Reason
or is terminated by the Company other than for Cause. Notwithstanding
the foregoing, a stock appreciation right may not be exercised for cash
by a Section 16 Insider under any circumstances until the expiration of
the six (6) month period required under Rule 16b-3.
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<PAGE> 21
(b) Except in the event of a Change in Control, the Plan
Administrator in its sole discretion may approve or deny in whole or in
part a request to exercise a stock appreciation right. Denial or
approval of such request shall not require a subsequent request to be
similarly treated by the Plan Administrator.
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the extent that a stock appreciation right is
exercised, the related option shall be deemed to have been surrendered
unexercised and canceled.
(d) A holder of stock appreciation rights shall have none of
the rights of a stockholder until shares of Common Stock, if any, are
issued to such holder pursuant to such holder's exercise of such
rights.
(e) The acquisition of Common Stock pursuant to the exercise
of a stock appreciation right shall be subject to the same restrictions
as would apply to the acquisition of Common Stock acquired upon
acquisition of the related option, as set forth in Section 6.4.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock appreciation rights
to Participants in connection with any options granted under the Plan, either at
the time of the grant of such option or at any time thereafter during the term
of the option. Such limited stock appreciation rights shall cover the same
shares covered by the options (or such lesser number of shares of Common Stock
as the Plan Administrator may determine) and shall, except as provided in
Section 8.3, be subject to the same terms and conditions as the related options
and such further terms and conditions not inconsistent with the Plan as shall
from time to time be determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall entitle the holder of
the related option to surrender to the Company the unexercised portion of the
related option and to receive from the Company in exchange therefor an amount in
cash equal to the excess of the Fair Market Value of one (1) share of Common
Stock on the date the right is exercised over the Option Price per share times
the number of shares covered by the option, or portion thereof, which is
surrendered.
8.3 Limited stock appreciation rights are subject to the following
restrictions:
(a) Each limited stock appreciation right shall be exercisable
in full for a period of seven (7) months following the date of a Change
in Control regardless of whether the holder is employed by the Company
or any of its Subsidiaries on the date the right is exercised;
provided, however, that limited stock appreciation rights may not be
exercised under any circumstances until the expiration of the six (6)
month period required under Rule 16b-3. Limited stock appreciation
rights
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<PAGE> 22
shall be exercisable only to the same extent and subject to the same
conditions as the options related thereto are exercisable, as provided
in Section 6.4(j).
(b) The right of a Participant to exercise a limited stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the extent that a limited stock appreciation
right is exercised, the related option shall be deemed to have been
surrendered unexercised and canceled.
SECTION 9 PERFORMANCE UNITS
9.1 GRANTS OF UNITS
Subject to the Maximum Annual Employee Grant, Units may be granted to
Participants in such number as the Plan Administrator shall determine, taking
into account the duties of the respective Participants, their present and
potential contributions to the success of the Company or its Subsidiaries, their
compensation provided by other incentive plans, their salaries, and such other
factors as the Plan Administrator shall deem appropriate. Normally, Units will
be granted only at the beginning of each Performance Cycle except in cases where
a prorated grant may be made in mid-cycle to a newly eligible Participant or a
Participant whose job responsibilities have significantly changed during the
cycle.
9.2 NOTICE TO PARTICIPANTS
The Plan Administrator shall notify each Participant in writing of the
grant of Units to the Participant. Such notice shall set forth the Total
Shareholder Return requirements, vesting schedule and such other terms and
conditions applicable to such Units.
9.3 VESTING
(a) Vesting Schedule
The Plan Administrator shall adopt a vesting schedule for each
year of a Performance Cycle. Vesting of Units for each year may (i)
occur automatically after a Participant has completed the specified
period of continuous employment with the Company or any of its
Subsidiaries from the date of grant of such Units, (ii) be contingent
upon attaining certain levels of Total Shareholder Return for the year
in which the Units are eligible to vest, or (iii) occur at such other
times or subject to such other criteria as the Plan Administrator may
determine. The Plan Administrator may, in its discretion, alter the
vesting guidelines in the event of unusual circumstances provided that
to the extent applicable any such discretion shall be exercised in a
manner consistent with Section 162(m). Vesting of Units with respect to
Participants who begin participation or receive an additional grant
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<PAGE> 23
of Units during the Performance Cycle will be determined by the Plan
Administrator at the time of grant.
(b) Change in Control
Notwithstanding the foregoing vesting provisions, all unvested Units
shall become fully vested on a pro rata basis measured in the nearest whole year
between (i) the date of grant and (ii) the date of a Change in Control. In the
event of termination of the Participant's employment within two (2) years
following a Change in Control but subsequent to the Change in Control, for any
reason other than (i) the Participant's death, (ii) the Participant's Permanent
Disability, (iii) Cause, or (iv) by the Participant without Good Reason, all
unvested Units shall become fully vested on a pro rata basis measured in the
nearest whole year between (i) the date of a Change in Control and (ii) the
Participant's termination.
9.4 VALUATION OF PERFORMANCE UNITS
All Performance Units granted to Participants under the Plan shall be
valued as follows:
(a) Initial and Continuing Value
Each Performance Unit shall have an initial value of one
hundred dollars ($100) as of the date of the grant of Performance
Units. Except where the Adjusted Value of Performance Units is
determined as provided under Section 9.4(b), each Performance Unit
shall continue to have a dollar value of one hundred dollars ($100) on
each date subsequent to the date of grant of the Performance Unit.
(b) Adjusted Value
The determination of the Adjusted Value of Performance Units
for benefit payments under Sections 9.5(b)(i) and 9.5(b)(ii) as of any
relevant Valuation Date shall be made based on the Company's
Performance Ranking Position for the applicable Performance Cycle
compared to the Performance Ranking Position of the Performance Peer
Group, based on the following schedule:
<TABLE>
<CAPTION>
Company's Performance Adjusted
Ranking Position Value
--------------------- --------
<S> <C>
1st Quartile $150
2nd Quartile 100
3rd Quartile 50
4th Quartile 0
</TABLE>
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<PAGE> 24
9.5 ENTITLEMENT TO PAYMENT
(a) Performance Certification
The Plan Administrator shall certify in writing, prior to
payment of the Performance Units pursuant to this Section 9.5, the
Company's Performance Ranking Position. In no event will an award be
payable under this Section 9 if the Company's Performance Ranking
Position is in the fourth (4th) quartile.
(b) Eligibility for Benefit Payments
Benefit payments with respect to vested Performance Units
shall be paid under the following circumstances:
(i) Primary Benefit Payment
Upon the expiration of each Performance Cycle, all
uncanceled Performance Units granted with respect to such
Performance Cycle shall vest and benefit payments with respect
to such Performance Units shall become payable. A Participant
who has remained an employee continuously from the date of the
grant of the Performance Units for a Performance Cycle through
the last day of such Performance Cycle shall be eligible to
receive a benefit payment equal to the Adjusted Value, as
provided for in Section 9.4(b), of the Performance Units (the
"Primary Benefit") with respect to and as of the close of such
Performance Cycle. The Valuation Date for determining such
Adjusted Value shall be established by the Plan Administrator
at the time the Performance Units are granted. The amount of
any benefit payment payable with respect to Performance Units
shall be reduced by the amount of any interim benefit payments
made pursuant to Section 9.5(b)(ii) with respect to such
Performance Units. If the interim benefit payments exceed the
Primary Benefit, no payment shall be made.
(ii) Interim Benefit Payments
The Plan Administrator may in its sole discretion
provide for an interim benefit payment to be made to a
Participant with respect to Performance Units granted for any
particular Performance Cycle. The right to any interim benefit
payment shall be set forth in the grant of Performance Units
to a Participant and must establish the terms and conditions
of such interim benefit payment (including the Company's Total
Shareholder Return which must be attained during such
Performance Period). An interim benefit payment may be
provided for after the second year of a Performance Cycle. The
interim benefit payment shall be based upon the Adjusted Value
of the Performance Units, as provided for in
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<PAGE> 25
Section 9.4(b) for the period up to the date of the interim
payment valuation, and the amount of any such payment shall
not exceed fifty percent (50%) of such Adjusted Value for the
Performance Units which are vested at the end of the second
year; provided, however, that such interim payment will be
made only if the Company's Performance Ranking Position is in
the first (1st) or second (2nd) quartile. The Valuation Date
for determining such Adjusted Value shall be set forth in the
grant of Performance Units. The Performance Units which are
valued for the interim benefit payment shall also be valued in
accordance with Section 9.5(b)(i) or Section 9.7 if
applicable, to determine what, if any, additional value the
Participant may be entitled to. Interim benefit payments shall
be made to those Participants who have remained employees
continuously from the date of the grant of the applicable
Performance Units until the date of the interim benefit
payment relating to such Performance Units. The amount of any
benefit payment payable with respect to Performance Units
pursuant to Sections 9.5(b)(i) and 9.5(d) shall be reduced by
the amount of any interim benefit payment made pursuant to
this Section 9.5(b)(ii), but not below zero.
(c) Form of Payment
A Participant or a Participant's Beneficiary shall be entitled
to receive from the Company a benefit payment as provided pursuant to
Sections 9.5(b)(i) or 9.5(b)(ii), as applicable, equal to the product
of the Adjusted Value and the number of vested Units of a Participant.
Such payment shall be made as soon as practicable following the
applicable Valuation Date in accordance with this Section 9.5(c).
Except as provided in Sections 9.5(d) and 9.7, benefit
payments made to a Participant pursuant to this Section 9, shall be
made as follows:
(i) Participants employed by the Company holding the position
of Chairman of the Board, President or Chief Executive Officer
and Participants employed by Company Subsidiaries holding
equivalent positions, but not necessarily the same title,
shall receive their Performance Unit payout as follows:
(A) 50% (fifty percent) in cash and
(B) 50% (fifty percent) in Common Stock.
(ii) Participants employed by the Company holding the position
of Vice Chairman of the Board, Chief Operating Officer, or
Executive Vice President and Participants employed by Company
Subsidiaries holding equivalent positions, but not necessarily
the same title, shall receive their Performance Unit payout as
follows:
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1995 Omnibus Compensation Plan
<PAGE> 26
(A) 60% (sixty percent) in cash and
(B) 40% (forty percent) in Common Stock.
(iii) Participants employed by the Company holding the
position of Senior Vice President and Participants employed by
Company Subsidiaries holding equivalent positions, but not
necessarily the same title, shall receive their Performance
Unit payout as follows:
(A) 75% (seventy-five percent) in cash and
(B) 25% (twenty-five percent) in Common Stock.
(d) Retirement, Death, Disability or Termination of Employment
Participants (or their Beneficiaries in the case of their
deaths) who have retired, died, become Permanently Disabled, or who
have terminated their employment, prior to the end of a Performance
Cycle shall not be entitled to receive payment from the Company or its
Subsidiaries for any Units which were not vested as of the time such
Participants ceased active employment with the Company or its
Subsidiaries. Notwithstanding Section 9.5(c), such Participants (or
their Beneficiaries in the case of their deaths) will be entitled to
receive a cash payment for vested Units in accordance with Section
9.5(b)(i). No payments shall be made to such Participants (or
Beneficiaries) pursuant to Section 9.5(b)(ii).
9.6 DEFERRED PAYMENT
Prior to the time that Units first vest pursuant to Section 9.3, the
Participant may, subject to the consent of the Management Committee and in
accordance with procedures that the Management Committee has approved, elect to
have all or a portion (subject to a $1,000 minimum) of the lump-sum cash payment
payable pursuant to Section 9.5(c) with respect to such vested Units deferred
according to the terms and conditions of the Company's Deferred Compensation
Plan.
9.7 ACCELERATION OF PAYMENT DUE TO CHANGE IN CONTROL
Upon a Change in Control, the current Performance Cycle shall
immediately end and all vested Units (including Units that vest pursuant to
Section 9.3(b)) shall be paid in cash to Participants based on a value of one
hundred fifty dollars ($150) per Unit. This payment will be reduced to reflect
any interim benefit payments made in accordance with Section 9.5(b)(ii) and
shall be made (i) in a lump sum in cash that is in lieu of any otherwise
applicable form and time of payment under the Plan and (ii) within ten (10) days
after the Change in Control.
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<PAGE> 27
9.8 UNFUNDED OBLIGATION
Any amounts (deferred or otherwise) to be paid to Participants pursuant
to the Plan are unfunded obligations. Neither the Company nor any Subsidiary is
required to segregate any monies from its general funds, to create any trusts or
to make any special deposits with respect to this obligation. Beneficial
ownership of any investments, including trust investments which the Company may
make to fulfill this obligation, shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or any Participant
account shall not create or constitute a trust or a fiduciary relationship
between the Plan Administrator, the Management Committee, the Company or any
Subsidiary and a Participant, or otherwise create any vested or beneficial
interest in any Participant or the Participant's Beneficiary or the
Participant's creditors in any assets of the Company or its Subsidiaries
whatsoever. The Participants shall have no claim against the Company for any
changes in the value of any assets which may be invested or reinvested by the
Company with respect to the Plan.
9.9 DESIGNATION OF BENEFICIARY
The designation of a Beneficiary shall be on a form provided by the
Management Committee, executed by the Participant (with the consent of the
Participant's spouse, if required by the Management Committee for reasons of
community property or otherwise), and delivered to the Management Committee. A
Participant may change his or her Beneficiary designation at any time. A
designation by a Participant under the Predecessor Plan shall remain in effect
under the Plan for any Performance Units unless such designation is revoked or
changed under the Plan. If no Beneficiary is designated, if the designation is
ineffective, or if the Beneficiary dies before the balance of a Participant's
account is paid, the balance shall be paid to the Participant's spouse, or if
there is no surviving spouse, to the Participant's lineal descendants, pro rata,
or if there is no surviving spouse or any lineal descendant, to the
Participant's estate. Notwithstanding the foregoing, however, a Participant's
Beneficiary shall be determined under applicable state law if such state law
does not recognize Beneficiary designations under plans of this sort and is not
preempted by laws which recognize the provisions of this Section 9.9.
SECTION 10 RESTRICTED STOCK
10.1 Subject to Sections 5.2 and 5.4, Restricted Stock (including
Performance Restricted Stock) may be granted to Participants in such number and
at such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective Participants, their present and potential contributions to the
success of the Company, and such other factors as the Plan Administrator shall
deem relevant in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such Restricted
Stock to a particular Participant. Each grant shall be evidenced by a written
instrument delivered by
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1995 Omnibus Compensation Plan
<PAGE> 28
or on behalf of the Company containing provisions not inconsistent with the
Plan. The Participant receiving a grant of Restricted Stock shall be recorded as
a stockholder of the Company. Each Participant who receives a grant of
Restricted Stock shall have all the rights of a stockholder with respect to such
shares (except as provided in the restrictions on transferability), including
the right to vote the shares and receive dividends and other distributions;
provided, however, that no Participant awarded Restricted Stock shall have any
right as a stockholder with respect to any shares subject to the Participant's
Restricted Stock grant prior to the date of issuance to the Participant of a
certificate or certificates for such shares.
10.2 Notwithstanding any other provision to the contrary in this
Section 10, before Performance Restricted Stock can be granted or vested, as
applicable, the Plan Administrator shall:
(a) Determine the Performance Goals applicable to the particular
Performance Period; and
(b) Certify in writing that such Performance Goals for a particular
Performance Period have been attained.
10.3 A grant of Restricted Stock shall entitle a Participant to
receive, on the date or dates designated by the Plan Administrator, upon payment
to the Company of the par value of the Common Stock in a manner determined by
the Plan Administrator, the number of shares of Common Stock selected by the
Plan Administrator. The Plan Administrator may require, under such terms and
conditions as it deems appropriate or desirable, that the certificates for
Restricted Stock delivered under the Plan may be held in custody by a bank or
other institution, or that the Company may itself hold such shares in custody
until the Restriction Period (as defined in Section 10.4) expires or until
restrictions thereon otherwise lapse, and may require, as a condition of any
issuance of Restricted Stock that the Participant shall have delivered a stock
power endorsed in blank relating to the shares of Restricted Stock.
10.4 During a period of years following the date of grant, as
determined by the Plan Administrator, which shall in no event be less than one
(1) year (the "Restriction Period"), the Restricted Stock may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of by the recipient, except in the event of death or Permanent Disability, the
transfer to the Company as provided under the Plan or the Plan Administrator's
waiver or modification of such restrictions in the agreement evidencing the
grant of Restricted Stock, or by resolution of the Plan Administrator adopted at
any time.
10.5 Except as provided in Section 10.6 or 10.7, if a Participant
terminates employment with the Company for any reason before the expiration of
the Restriction Period, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant to the Company. In addition,
in the event of any attempt by the Participant to
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1995 Omnibus Compensation Plan
<PAGE> 29
sell, exchange, transfer, pledge or otherwise dispose of shares of Restricted
Stock in violation of the terms of the Plan, such shares shall be forfeited to
the Company.
10.6 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall lapse, upon the
Participant's death or Permanent Disability or any termination of employment
determined by the Plan Administrator to end the Restriction Period.
10.7 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall terminate immediately
upon a Change in Control.
10.8 When the restrictions imposed by Section 10.4 expire or otherwise
lapse with respect to one or more shares of Restricted Stock, the Company shall
deliver to the Participant (or the Participant's legal representative,
Beneficiary or heir) one (1) share of Common Stock for each share of Restricted
Stock. At that time, the agreement referred to in Section 10.1, as it relates to
such shares, shall be terminated.
10.9 Subject to Section 10.3 (and Section 10.2 in the case of
Performance Restricted Stock), a Participant entitled to receive Restricted
Stock under the Plan shall be issued a certificate for such shares. Such
certificate shall be registered in the name of the Participant, and shall bear
an appropriate legend reciting the terms, conditions and restrictions, if any,
applicable to such shares and shall be subject to appropriate stop-transfer
orders.
SECTION 11 REGULATORY APPROVALS AND LISTING
11.1 The Company shall not be required to issue any certificate for
shares of Common Stock upon the exercise of an option or a stock appreciation
right granted under the Plan, with respect to a grant of Restricted Stock or
Common Stock awarded as payment of vested Units prior to:
(a) obtaining any approval or ruling from the Securities and
Exchange Commission, the Internal Revenue Service or any other
governmental agency which the Company, in its sole discretion, shall
determine to be necessary or advisable;
(b) listing of such shares on any stock exchange on which the
Common Stock may then be listed; or
(c) completing any registration or other qualification of such
shares under any federal or state laws, rulings or regulations of any
governmental body which the Company, in its sole discretion, shall
determine to be necessary or advisable.
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1995 Omnibus Compensation Plan
<PAGE> 30
All certificates for shares of Common Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions as the
Plan Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which Common Stock is then listed and any applicable federal or State securities
laws, and the Plan Administrator may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions. The
foregoing provisions of this paragraph shall not be effective if and to the
extent that the shares of Common Stock delivered under the Plan are covered by
an effective and current registration statement under the Securities Act of
1933, as amended, or if and so long as the Plan Administrator determines that
application of such provisions as no longer required or desirable. In making
such determination, the Plan Administrator may rely upon an opinion of counsel
for the Company.
SECTION 12 EFFECTIVE DATE AND TERM OF PLAN
The Plan was originally adopted by the Board effective as of
January 13, 1995, and approved by the Company's stockholders on March 16, 1995.
The Board amended and restated the Plan effective as of August 1, 1998, in
connection with the reorganization of the Company into a holding company
structure whereby El Paso Energy Corporation became the publicly held company
and El Paso Natural Gas Company became a wholly owned subsidiary. This Plan was
assumed by El Paso Energy Corporation pursuant to an Assignment and Assumption
Agreement effective as of August 1, 1998, by and between El Paso Energy
Corporation and El Paso Natural Gas Company. Options, limited stock appreciation
rights, stock appreciation rights, Restricted Stock and Performance Units may be
granted pursuant to the Plan from time to time within the period commencing upon
adoption of the Plan by the Board of Directors and ending ten (10) years after
the earlier of such adoption and the approval of the Plan by the stockholders.
Options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock and Performance Units theretofore granted may extend beyond
that date and the terms and conditions of the Plan shall continue to apply
thereto and to shares of Common Stock acquired thereunder. To the extent
required for compliance with Rule 16b-3, shares of Common Stock underlying
options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock and Common Stock granted, subject to stockholder approval of
the Plan, to Section 16 Insiders may not be sold until a date at least six (6)
months after the date such stockholder approval is obtained, and stock
appreciation rights that are granted subject to stockholder approval of the Plan
to Section 16 Insiders may not be exercised for cash until a date at least six
(6) months after the date such stockholder approval is obtained.
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1995 Omnibus Compensation Plan
<PAGE> 31
SECTION 13 GENERAL PROVISIONS
13.1 Nothing contained in the Plan, or in any option, limited stock
appreciation right, stock appreciation right, Restricted Stock or Performance
Unit granted pursuant to the Plan, shall confer upon any employee any right with
respect to continuance of employment by the Company or a Subsidiary, nor
interfere in any way with the right of the Company or a Subsidiary to terminate
the employment of such employee at any time with or without assigning any reason
therefor.
13.2 Grants, vesting or payment of stock options, limited stock
appreciation rights, stock appreciation rights, Restricted Stock or Performance
Units shall not be considered as part of a Participant's salary or used for the
calculation of any other pay, allowance, pension or other benefit unless
otherwise permitted by other benefit plans provided by the Company or its
Subsidiaries, or required by law or by contractual obligations of the Company or
its Subsidiaries.
13.3 The right of a Participant or Beneficiary to the payment of any
compensation under the Plan may not be assigned, transferred, pledged or
encumbered, nor shall such right or other interests be subject to attachment,
garnishment, execution or other legal process.
13.4 Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company, or of its Subsidiaries, as applicable, shall
not be deemed terminations or interruptions of employment, unless a Participant
commences a leave of absence from which he or she is not expected to return to
active employment with the Company or its Subsidiaries. The foregoing
notwithstanding, with respect to Incentive Stock Options, employment shall not
be deemed to continue beyond the first ninety (90) days of such leave unless the
Participant's reemployment rights are guaranteed by statute or contract.
13.5 In the event a Participant is transferred from the Company to a
Subsidiary, or vice versa, or is promoted or given different responsibilities,
the stock options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock and Performance Units granted to the Participant prior to such
date shall not be affected.
13.6 The Plan shall be construed and governed in accordance with the
laws of the State of Texas, except that it shall be construed and governed in
accordance with applicable federal law in the event that such federal law
preempts state law.
13.7 Appropriate provision shall be made for all taxes required to be
withheld in connection with the exercise, grant or other taxable event with
respect to options, limited stock appreciation rights, stock appreciation
rights, Restricted Stock and Performance Units under the applicable laws or
regulations of any governmental authority, whether federal, state or local and
whether domestic or foreign. Unless otherwise provided in the grant, a
Participant is permitted to deliver shares of Common
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1995 Omnibus Compensation Plan
<PAGE> 32
Stock (including shares acquired pursuant to the exercise of an option or stock
appreciation right other than the option or stock appreciation right currently
being exercised, to the extent permitted by applicable regulations) for payment
of withholding taxes on the exercise of an option, stock appreciation right, or
limited stock appreciation right, upon the grant or vesting of Restricted Stock
or upon the payout of Performance Units. At the election of the Plan
Administrator or, subject to approval of the Plan Administrator at its sole
discretion, at the election of a Participant, shares of Common Stock may be
withheld from the shares issuable to the Participant upon the exercise of an
option or stock appreciation right, upon the vesting of the Restricted Stock or
upon the payout of Performance Units to satisfy tax withholding obligations. The
Fair Market Value of Common Stock as delivered pursuant to this Section 13.7
shall be valued as of the day prior to delivery, and shall be calculated in
accordance with Section 2.9. The withholding of shares of Common Stock to pay
tax obligations in connection with the exercise of an option or stock
appreciation right, the vesting of Restricted Stock or the payout of Performance
Units by a Section 16 Insider must be approved by the Plan Administrator and
must occur (i) pursuant to an irrevocable election made six (6) months in
advance of the transaction, (ii) during the period beginning on the third
business day following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Company and ending on the
twelfth business day following such date, or (iii) otherwise in accordance with
the provisions of Rule 16b-3 and interpretations thereunder. In the event Rule
16b-3 is amended or interpreted to permit shares of Common Stock to be withheld
to pay tax obligations outside the periods described in clause (i) or (ii) of
the preceding sentence, or without Plan Administrator approval, the Plan
Administrator may determine that such provisions shall no longer apply to
Section 16 Insiders.
Any Participant that makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan, or
(iii) disposing of any shares of Common Stock issued under the Plan.
SECTION 14 COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m)
The Company's intention is that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, with respect to awards granted to or held by Section 16 Insiders, the Plan
shall comply in all respects with Rule 16b-3 and Section 162(m) and, if any Plan
provision is later found not to be in compliance with Rule 16b-3 or Section
162(m), that provision shall be deemed modified as necessary to meet the
requirements of Rule 16b-3 and Section 162(m).
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El Paso Energy Corporation Page 29
1995 Omnibus Compensation Plan
<PAGE> 33
Notwithstanding the foregoing, and subject to Section 5.2, the Plan
Administrator may grant or vest Restricted Stock that may not be in compliance
with Section 162(m).
Notwithstanding anything in the Plan to the contrary, the Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
Section 16 Insiders without so restricting, limiting or conditioning the Plan
with respect to other Participants.
SECTION 15 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN
15.1 Subject to the Board of Directors and Section 15.2, the Plan
Administrator may from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company without further approval of
the stockholders of the Company, including, but not limited to, any amendment
necessary to ensure that the Company may obtain any regulatory approval referred
to in Section 11; provided, however, that no change in any option, limited stock
appreciation right, stock appreciation right, Restricted Stock or Performance
Unit theretofore granted may be made without the consent of the Participant
which would impair the right of the Participant to acquire or retain Common
Stock or cash that the Participant may have acquired as a result of the Plan.
15.2 To the extent required for compliance with applicable law or
regulation, including Rule 16b-3 and Section 162(m), the Plan Administrator and
the Board of Directors may not amend the Plan without the approval of the
stockholders of the Company to
(a) materially increase the number of shares, rights or Units
that may be issued under the Plan to Section 16 Insiders;
(b) with respect to Incentive Stock Options and any related
stock appreciation rights (whether limited or not), change the
description of the Participants or class of participants eligible for
participation in the Plan, or, with respect to all other grants under
the Plan, materially modify the requirements as to eligibility for
participation in the Plan to add a class of Section 16 Insiders; or
(c) otherwise materially increase the benefits accruing to the
Participants under the Plan.
15.3 Grants of Performance Restricted Stock and Performance Units shall
not be made under this Plan unless the material terms, as defined by Section
162(m), of the Performance Goal(s) under which an award is to be paid have been
disclosed and subsequently approved by the Company's stockholders in accordance
with Section 162(m).
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El Paso Energy Corporation Page 30
1995 Omnibus Compensation Plan
<PAGE> 34
15.4 The Board of Directors may at any time suspend the operation of or
terminate the Plan with respect to any shares of Common Stock, rights or
Performance Units which are not at that time subject to option, limited stock
appreciation right, stock appreciation right or grant of Restricted Stock, or
with respect to any Performance Units not yet granted under Section 9.
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El Paso Energy Corporation Page 31
1995 Omnibus Compensation Plan
<PAGE> 35
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ JOEL RICHARDS III
----------------------------
Title: Executive Vice President
ATTEST:
By /s/ DAVID L. SIDDALL
---------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 32
1995 Omnibus Compensation Plan
<PAGE> 1
EXHIBIT 10.K
AMENDMENT NO. 2 TO THE
OMNIBUS COMPENSATION PLAN
Pursuant to Sections 5.3 and 14.1 of the El Paso Natural Gas Company
Omnibus Compensation Plan, dated as of January 1, 1992 (the "Plan"), the Plan
is hereby amended as follows, effective August 1, 1998:
The name of the Plan is hereby be changed to "El Paso Energy
Corporation Omnibus Compensation Plan."
All references in the Plan to "El Paso Natural Gas Company" or the
"Company" shall mean "El Paso Energy Corporation."
Section 14.1 is hereby amended to add the following language at the end
of Section 14.1:
"The Board of Directors amended and restated the Plan effective as of
August 1, 1998, in connection with the reorganization of the Company
into a holding company structure whereby El Paso Energy Corporation
became the publicly held company and El Paso Natural Gas Company became
a wholly owned subsidiary. This Plan was assumed by El Paso Energy
Corporation pursuant to an Assignment and Assumption Agreement
effective as of August 1, 1998, by and between El Paso Energy
Corporation and El Paso Natural Gas Company."
IN WITNESS WHEREOF, the Company has caused this amendment to be duly
executed on this 1st day of August, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
---------------------------
Joel Richards III
Executive Vice President
ATTEST:
/s/ David L. Siddall
--------------------
Corporate Secretary
<PAGE> 1
EXHIBIT 10.L
EL PASO ENERGY CORPORATION
SUPPLEMENTAL BENEFITS PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.11 RSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4 PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5 BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Supplemental Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Supplemental RSP Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Other Supplemental Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Time and Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Determination of Supplemental Pension Benefit Payments . . . . . . . . . . . . . 7
SECTION 6 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Unfunded Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Discretionary Investment by Company . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Incapacity of Participant, Surviving Spouse or Beneficiary . . . . . . . . . . . 8
6.4 Nonassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 No Right to Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . 9
6.6 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.7 Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.8 ERISA Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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El Paso Energy Corporation - i - Table of Contents
Supplemental Benefits Plan
<PAGE> 3
EL PASO ENERGY CORPORATION
SUPPLEMENTAL BENEFITS PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSES
The purposes of the El Paso Energy Corporation Supplemental Benefits
Plan (the "Plan") are to attract and retain exceptional executives by providing
retirement or termination benefits to selected officers and key management
employees of outstanding competence. This Plan is effective January 15, 1992.
SECTION 2 DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 BENEFICIARY
"Beneficiary" means the individual(s) designated by a Participant to
receive benefits from this Plan in the event of his or her death. If no
designated Beneficiary survives the Participant, the Beneficiary shall be the
person or persons in the first of the following classes who survive the
Participant:
(a) spouse at date of death,
(b) descendants, per stirpes,
(c) parents,
(d) brothers and sisters,
(e) estate.
2.2 BOARD
"Board" means the Board of Directors of the Company.
2.3 CHANGE IN CONTROL
A "Change in Control" shall be deemed to occur:
(a) if any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") is or becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
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El Paso Energy Corporation Page 1
Supplemental Benefits Plan
<PAGE> 4
(b) upon the first purchase of the Company's Common Stock
pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company);
(c) upon the approval by the Company's stockholders of a
merger or consolidation, a sale or disposition of all or substantially
all of the Company's assets or a plan of liquidation or dissolution of
the Company; or
(d) if, during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company cease for any reason to constitute at
least a majority thereof, unless the election or nomination for the
election by the Company's stockholders of each new director was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of
all outstanding classes of securities of the company resulting from such merger
or consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
2.4 CODE
"Code" means the Internal Revenue Code of 1986, as amended.
2.5 COMPANY
"Company" means El Paso Energy Corporation, a Delaware corporation.
2.6 DEFERRED COMPENSATION PLANS
"Deferred Compensation Plans" means the El Paso Energy Corporation
Deferred Compensation Plan, 1995 Incentive Compensation Plan, 1995 Omnibus
Compensation Plan and other similar plans maintained by an Employer and such
additional deferred compensation plans as may be designated by the Company from
time to time.
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El Paso Energy Corporation Page 2
Supplemental Benefits Plan
<PAGE> 5
2.7 EMPLOYER
"Employer" means El Paso Energy Corporation, and its subsidiaries.
2.8 MANAGEMENT COMMITTEE
"Management Committee" means the committee appointed pursuant to
Section 3.1 to administer the Plan.
2.9 PARTICIPANT
"Participant" means each individual who participates in the Plan in
accordance with Section 4.
2.10 PENSION PLAN
"Pension Plan" means the El Paso Energy Corporation Pension Plan and
any pension plans maintained by an Employer.
2.11 RSP
"RSP" means the El Paso Energy Corporation Retirement Savings Plan.
2.12 SURVIVING SPOUSE
"Surviving Spouse" means the person to whom surviving spouse death
benefits are to be paid pursuant to the terms of the Pension Plan.
SECTION 3 ADMINISTRATION
3.1 MANAGEMENT COMMITTEE
This Plan shall be administered by the Management Committee consisting
of the Chief Executive Officer of the Company and such other senior officers of
the Company as he or she shall designate. Subject to approval by the Board,
the Management Committee shall interpret the Plan, prescribe, amend and rescind
rules relating to it, select eligible Participants, and take all other action
necessary for its administration, which actions shall be final and binding upon
all Participants.
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El Paso Energy Corporation Page 3
Supplemental Benefits Plan
<PAGE> 6
SECTION 4 PARTICIPANTS
4.1 PARTICIPANTS
The Management Committee shall determine and designate the officers
and key management employees of an Employer who are eligible to become
Participants and receive benefits under the Plan. Each Participant must be a
selected management or highly compensated employee, or entitled to qualified
plan benefits in excess of the Code Section 415 limitations on benefits. A
Participant who is not a selected management or highly compensated employee
shall be eligible only for the benefits described in Sections 5.1(a) and
5.2(a).
SECTION 5 BENEFITS
5.1 SUPPLEMENTAL PENSION BENEFITS
Upon termination of employment of a Participant, the Company shall pay
or cause to be paid to such Participant (or his or her Surviving Spouse in the
case of his or her death) supplemental pension benefits under this Plan which,
when combined with the amounts he or she is entitled to receive under the
Pension Plan shall be the actuarial equivalent of the retirement, or Surviving
Spouse death benefits, which would have been payable to the Participant or his
or her Surviving Spouse had the Pension Plan's benefit formula been applied:
(a) without regard to the limitations of Section 415 of
the Code (including, without limitation, the maximum benefit payable
under Section 415(b)(1), the actuarial reduction for early retirement
of Section 415(b)(2)(C), the reduction for limited service or
participation of Section 415(b)(5) and the combined limits of Section
415(e)),
(b) by including in the Participant's compensation during
the period for which the Pension Plan benefits are computed, to the
extent not already done so under the Pension Plan, any amount that has
not been taken into account due to the limitations of Section
401(a)(17) of the Code or due to a reduction of compensation that has
occurred pursuant to an election of the Participant under Section 125
or Section 401(k) of the Code or under the Deferred Compensation
Plans, and
(c) by taking into account any service granted to the
Participant and any benefit formula adjustments required by an
employment contract.
Supplemental pension benefits under this Section 5 shall be vested and
nonforfeitable to the same extent that the related benefits under the Pension
Plan are vested and nonforfeitable. Notwithstanding the preceding sentence, in
the event of a Change in Control, the supplemental pension benefits computed
under this Section 5.1 shall be fully vested and nonforfeitable immediately.
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El Paso Energy Corporation Page 4
Supplemental Benefits Plan
<PAGE> 7
5.2 SUPPLEMENTAL RSP BENEFITS
Upon termination of employment of a Participant, the Company shall pay
or cause to be paid to such Participant (or his or her Beneficiary in the case
of his or her death) supplemental RSP benefits calculated as described below.
The Company shall periodically determine the amount of any additional Employer
matching contributions that would have been credited to a Participant's account
under the RSP if his or her current election of Participant contributions had
been given effect and no adjustment of such contributions had occurred due to:
(a) The maximum dollar limit under Code Section
415(c)(1)(A) on RSP annual additions,
(b) the maximum limit under Code Section 401(a)(17) on
the compensation taken into account under the RSP,
(c) any further reductions in the compensation taken into
account under the RSP as a result of any deferrals of compensation
elected by the Participant pursuant to Section 125 or Section 401(k)
of the Code or under the Deferred Compensation Plans.
From time to time, as determined by the Management Committee, the
Company shall allocate amounts equal to such additional Employer matching
contributions to a ledger account (the "Memorandum Account") for the
Participant as of the time or times that such amounts would have been
contributed to the RSP if permitted thereunder. Interest will be credited to
the balance in each Participant's Memorandum Account on a semi-monthly basis or
at such other intervals as may be determined by the Management Committee. From
time to time the Management Committee shall determine the rate to be used in
crediting such interest and in so doing may take into account the earnings,
losses, appreciation or depreciation attributable to any discretionary
investment made pursuant to Section 6.2, and any other factors it deems
appropriate.
Supplemental RSP benefits under this Section 5.2 shall be vested and
nonforfeitable to the same extent that the related benefits under the RSP are
vested and nonforfeitable.
5.3 OTHER SUPPLEMENTAL BENEFITS
Upon the termination of employment of a Participant, the Company shall
pay or cause to be paid to such Participant (or his or her Beneficiary in the
case of his or her death) other supplemental benefits as determined by the
Board and contained in the Participant's employment contract or other agreement
with the Company. Other supplemental benefits under this Section 5.3 shall be
vested and nonforfeitable to the extent provided in the applicable employment
contract or agreement.
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El Paso Energy Corporation Page 5
Supplemental Benefits Plan
<PAGE> 8
5.4 TIME AND MANNER OF PAYMENT
The payment of any benefits shall be made as provided below. Such
payment or payments shall constitute a complete discharge of all obligations to
the Participant and his or her Surviving Spouse or Beneficiary under the Plan.
(a) Supplemental Pension Benefit Payments. The amount of
the payments under this subparagraph 5.4(a) shall be determined
pursuant to Section 5.5.
(i) The payment of any supplemental benefits
pursuant to Section 5.1 owed to a Participant (or his or her
Surviving Spouse) shall be made in a lump sum if such
Participant (A) terminates employment with the Employer prior
to attaining age 55, or (B) dies while employed with the
Employer. The payment shall be made as soon as practicable
after the Participant's termination of employment with the
Employer or death.
(ii) In the absence of a valid, irrevocable
election made by a Participant pursuant to the provisions
described in (iii) below, the payment of any supplemental
pension benefits pursuant to Section 5.1 owed to a Participant
who terminates employment with the Employer after attaining
age 55 shall be made in a lump sum as soon as practicable
after the Participant terminates employment with the Employer.
The amount of such payments shall be determined under Section
5.5 below.
(iii) In the case of a benefit payable under
Section 5.1, the Participant may irrevocably elect one of the
forms of payment described in (iv) below. Such election must
be made by the Participant before the later of (A) the date
the Participant attains age 53, or (B) 30 days after becoming
a Participant. For such election to become effective, the
Participant must remain in continuous active employment with
the Employer for at least two years or, in the case of an
election made pursuant to clause (B), such Participant must
remain in continuous active employment for a minimum of six
months following such election. In no event will an election
become effective if the Participant terminates employment with
the Employer prior to attaining age 55, or dies in service.
(iv) A Participant may elect only one of the
following forms of payment:
(A) A lump sum;
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El Paso Energy Corporation Page 6
Supplemental Benefits Plan
<PAGE> 9
(B) Monthly payments made over a
five-year period, notwithstanding the earlier
death of the Participant;
(C) Monthly payments made over a
ten-year period, notwithstanding the earlier
death of the Participant; or
(D) Monthly payments made over the
remaining life of the Participant.
In the case of option (A), payment will be made as soon as
practicable after the Participant's termination of employment with the
Employer. In the case of (B), (C) and (D), monthly payments will
commence as soon as practicable after the Participant's termination of
employment with the Employer.
(b) Supplemental RSP Benefit Payments. The payment of
any supplemental RSP benefits pursuant to Section 5.2 owed to a
Participant (or his or her Beneficiary) shall be made in a lump sum as
soon as practicable after the Participant's termination of employment
with the Employer and shall be in an amount equal to the Participant's
Memorandum Account balance at the time of such payment.
(c) Other Supplemental Benefit Payments. The payment of
any other supplemental benefits pursuant to an employment contract or
other agreement with the Company under Section 5.3 shall be made as
provided in such employment contract or other agreement.
5.5 DETERMINATION OF SUPPLEMENTAL PENSION BENEFIT PAYMENTS
The amount of a payment of supplemental pension benefits pursuant to
Section 5.1 to a Participant (or his or her Surviving Spouse in the event of
the Participant's termination of employment on account of death) shall be
determined by calculating the benefit according to the terms of the Pension
Plan as a single life annuity. If another form of payment is payable, the
amount under such form shall be actuarially equivalent to such single life
benefit using the 1984 Unisex Pension Mortality Table set forward one year and
the immediate PBGC interest rate in effect on January 1 of the year in which
the payment becomes distributable (or such other date during such year as the
Management Committee, in its sole discretion, may designate).
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El Paso Energy Corporation Page 7
Supplemental Benefits Plan
<PAGE> 10
SECTION 6 GENERAL PROVISIONS
6.1 UNFUNDED OBLIGATION
The supplemental benefits to be paid to Participants and/or their
Surviving Spouses and Beneficiaries pursuant to this Plan are unfunded
obligations of the Company, and shall, until actual payment, continue to be
part of the general funds of the Company. The Company is not required to
segregate any monies from its general funds, or to create any trusts, or to
make any special deposits with respect to these obligations. Beneficial
ownership of any investments, including trust investments, which the Company
may make to fulfill these obligations shall at all times remain in the Company.
Any investments and the creation or maintenance of any trust or memorandum
accounts shall not create or constitute a trust or a fiduciary relationship
between the Management Committee or the Employer and a Participant, or
otherwise create any vested or beneficial interest in any Participant or his or
her Surviving Spouse or Beneficiary or his or her creditors in any assets of
the Employer whatsoever. The Participants and their Surviving Spouses and
Beneficiaries shall have no claim against the Employer for any changes in the
value of any assets which may be invested or reinvested by the Company with
respect to this Plan.
6.2 DISCRETIONARY INVESTMENT BY COMPANY
The Management Committee, after consulting with the actuary employed
by the Company in conjunction with the Pension Plan, may from time to time
direct the investment by the Company of an amount sufficient to meet all or
such portion of the supplemental benefits to be paid under this Plan as the
Management Committee, in its sole discretion, shall determine. The Management
Committee may in its sole discretion determine that all or some portion of the
amount to be invested shall be paid into one or more grantor trusts to be
established by the Employer of which it shall be the Beneficiary, and to the
assets of which it shall become entitled as and to the extent that Participants
(or their Surviving Spouses or Beneficiaries in the case of their deaths)
receive benefits under this Plan. The Management Committee may designate an
investment advisor to direct investments and reinvestments of the funds,
including investments of any grantor trusts hereunder.
6.3 INCAPACITY OF PARTICIPANT, SURVIVING SPOUSE OR BENEFICIARY
If the Management Committee finds that any Participant, Surviving
Spouse or Beneficiary to whom a payment is payable under the Plan is unable to
care for his or her affairs because of illness or accident or is under a legal
disability, any payments due (unless a prior claim therefor shall have been
made by a duly appointed legal representative) at the discretion of the
Management Committee may be paid to the spouse, child, parent or brother or
sister of such Participant, Surviving Spouse or Beneficiary, or to any person
whom the Management Committee has determined has
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El Paso Energy Corporation Page 8
Supplemental Benefits Plan
<PAGE> 11
incurred expense for such Participant, Surviving Spouse or Beneficiary. Any
such payment shall be a complete discharge of the obligations of the Company
under the provisions of the Plan.
6.4 NONASSIGNMENT
The right of a Participant or his or her Surviving Spouse or
Beneficiary to the payment of any amounts under the Plan may not be assigned,
transferred, pledged or encumbered nor shall such right or other interests be
subject to attachment, garnishment, execution or other legal process.
6.5 NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan shall be construed to confer upon any Participant
any right to continued employment with the Company or a subsidiary nor
interfere in any way with the right of the Company or a subsidiary to terminate
the employment of such Participant at any time without assigning any reason
therefor.
6.6 WITHHOLDING TAXES
Provision shall be made for the withholding of taxes under the Federal
Insurance Contributions Act at the time of vesting of benefits under the Plan
and appropriate income taxes shall be withheld from payments made to
Participants pursuant to this Plan.
6.7 TERMINATION AND AMENDMENT
The Board may from time to time amend, suspend, or terminate the Plan,
in whole or in part, and if the Plan is suspended or terminated, the Board may
reinstate any or all of its provisions. The Management Committee may amend the
Plan provided that it may not suspend or terminate the Plan, substantially
increase the administrative cost of the Plan or increase the obligations of the
Company, or expand the classification of employees who are eligible to
participate in the Plan. No amendment, suspension or termination may, however,
impair the right of a Participant or his or her Surviving Spouse or Beneficiary
to receive the supplemental benefits accrued prior to the effective date of
such amendment, suspension or termination. The Board of Directors amended and
restated the Plan effective as of August 1, 1998, in connection with the
reorganization of the Company into a holding company structure whereby El Paso
Energy Corporation became the publicly held company and El Paso Natural Gas
Company became a wholly owned subsidiary. This Plan was assumed by El Paso
Energy Corporation pursuant to an Assignment and Assumption Agreement effective
as of August 1, 1998, by and between El Paso Energy Corporation and El Paso
Natural Gas Company.
If the Plan is terminated, Participants, Surviving Spouses and
Beneficiaries who have accrued benefits under the Plan as of the date of
termination will receive payment of such benefits at the times specified in the
Plan. Notwithstanding this or any other provision of the Plan to the contrary,
this Plan may not be terminated so long as the Pension Plan and/or RSP remain
in effect.
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El Paso Energy Corporation Page 9
Supplemental Benefits Plan
<PAGE> 12
6.8 ERISA EXEMPTION
The portion of this Plan providing benefits in excess of the
limitations of Section 415 of the Code is intended to qualify for exemption
from the Employee Retirement Income Security Act of 1974 ("ERISA") as an
unfunded excess benefit plan under Sections 3(36) and 4(b)(5) of ERISA. The
portion of this Plan providing benefits in excess of the limitation of Section
401(a)(17) of the Code and other supplemental benefits is intended to qualify
for exemption from Parts II, III and IV of ERISA as a plan maintained primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees under Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.
6.9 APPLICABLE LAW
The Plan shall be construed and governed in accordance with the laws
of the State Texas.
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El Paso Energy Corporation Page 10
Supplemental Benefits Plan
<PAGE> 13
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
-----------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
---------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 11
Supplemental Benefits Plan
<PAGE> 1
EXHIBIT 10.M
EL PASO ENERGY CORPORATION
SENIOR EXECUTIVE SURVIVOR
BENEFIT PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I NAME AND PURPOSE..................................................................................1
1.1 Name of the Plan..................................................................................1
1.2 Purpose...........................................................................................1
1.3 Scope of the Plan.................................................................................1
ARTICLE II ADMINISTRATION....................................................................................1
2.1 Administrator.....................................................................................1
2.2 The Administrator's Powers and Duties.............................................................1
ARTICLE III PARTICIPATION.....................................................................................2
3.1 Participation in the Plan.........................................................................2
ARTICLE IV SURVIVOR'S BENEFIT................................................................................3
4.1 Pre-Retirement Survivor's Benefit.................................................................3
4.2 Cash-Out of Retirement Survivor's Benefit.........................................................3
4.3 Annual Salary.....................................................................................3
4.4 No Duplicate Coverage.............................................................................3
ARTICLE V PAYMENT OF BENEFITS...............................................................................4
5.1 Payment of Survivor's Benefit.....................................................................4
5.2 Beneficiary.......................................................................................4
5.3 Proof of Death or Disability......................................................................4
5.4 Payment to Person Under a Disability..............................................................4
5.5 Duration of Coverage..............................................................................5
(a) Active Employment........................................................................5
(b) Disability...............................................................................5
(c) All Other Terminations...................................................................5
5.6 Payment by the Company............................................................................5
ARTICLE VI FUNDING THE PLAN..................................................................................5
6.1 Unfunded Obligation...............................................................................5
6.2. Individual Policies of Insurance..................................................................6
ARTICLE VII MISCELLANEOUS.....................................................................................6
7.1 Non-Assignability.................................................................................6
7.2 Claims Procedure..................................................................................6
7.3 Liability of Administrator........................................................................7
7.4 Adoption of Plan..................................................................................7
7.5 Amendments, Suspension or Termination.............................................................7
7.6 Applicable State Law..............................................................................7
7.7 No Guarantee of Employment........................................................................7
7.8 No Examination or Accounting......................................................................8
7.9 Other Terms and Conditions........................................................................8
7.10 Effective Date of Plan............................................................................8
</TABLE>
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El Paso Energy Corporation -i- Table of Contents
Senior Executive Survivor Benefit Plan
<PAGE> 3
EL PASO ENERGY CORPORATION
SENIOR EXECUTIVE SURVIVOR BENEFIT PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
ARTICLE I NAME AND PURPOSE
1.1 NAME OF THE PLAN
The name of the Plan is the "El Paso Energy Corporation Senior
Executive Survivor Benefit Plan."
1.2 PURPOSE
The purpose of the Plan is to provide survivor benefits for certain
senior executives of El Paso Energy Corporation (the "Company") and its
designated subsidiaries to secure the good will, loyalty and efficiency of the
covered executives, and to attract and retain in the employ of the Company
persons of outstanding competence.
1.3 SCOPE OF THE PLAN
The Plan is intended to be an unfunded or an insured welfare plan
maintained by the Company for the purpose of providing benefits for a select
group of management employees who are highly compensated, pursuant to Section
104(a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA) and
Labor Department regulation Section 2520.104-24 thereunder, or any statutory or
regulatory provisions that may hereafter replace such sections. No Participant
shall be required or permitted to make contributions to the Plan.
ARTICLE II ADMINISTRATION
2.1 ADMINISTRATOR
The Executive Vice President-Human Resources of the Company or the
officer holding a position of comparable responsibilities shall be the
administrator (the "Administrator") of the Plan.
2.2 THE ADMINISTRATOR'S POWERS AND DUTIES
The Administrator shall have such powers and duties as may be
necessary to discharge his functions hereunder including, but not limited to,
the following:
(a) to make such rules and regulations as may be required to
carry out the provisions of the Plan or to facilitate the operations
of the Plan;
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Senior Executive Survivor Benefit Plan
<PAGE> 4
(b) to construe and interpret the Plan, to decide all
questions of eligibility and to determine the amount, manner and time
of payment of any benefits hereunder;
(c) to make a determination as to the right of any person to
a benefit;
(d) to obtain from the Company and from Participants such
information as shall be necessary for the proper administration of the
Plan and, when appropriate, to furnish such information to other
persons entitled thereto;
(e) to purchase group term or individual policies of life
insurance covering the Participants to fund the obligation of the
Company pursuant to the terms of this Plan;
(f) to authorize one or more agents to make any payment on
behalf of the Company, to appoint agents and clerks, and to employ
such professional services, including legal, medical, accounting and
actuarial, as may be required in carrying out the provisions of the
Plan; and
(g) to keep all such books of account, records and other
data as may be necessary for the proper administration of the Plan.
All determinations and actions by the Administrator pursuant to the
terms of the Plan and any rules or regulations thereunder shall be binding upon
all Participants and their Beneficiaries.
ARTICLE III PARTICIPATION
3.1 PARTICIPATION IN THE PLAN
Executives of the Company and its subsidiaries who possess an employee
classification of level D or higher will be eligible to participate in the Plan
(the "Participants"). Generally, Participants will be the Chairman of the
Board, President and Chief Executive officer, the Vice Chairman and the Senior
Officers of the Company and certain of its operating subsidiaries reporting
directly to them who have the principal responsibility for the management,
direction and success of the Company as a whole or particular business unit
thereof. However, the Administrator may, at his discretion and solely for
purposes of determining eligibility to be a Participant, adjust an employee's
level classification to ensure that level classifications are determined in a
uniform manner among the Company and its subsidiaries. Any participant in the
Burlington Resources Inc. Senior Executive Survivor Benefit Plan ("BRI Plan")
on the day immediately preceding the effective date of this Plan, who is an
employee of the Company, shall become a Participant of this Plan on the
effective date and shall immediately cease participation in the BRI Plan.
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Senior Executive Survivor Benefit Plan
<PAGE> 5
ARTICLE IV SURVIVOR'S BENEFIT
4.1 PRE-RETIREMENT SURVIVOR'S BENEFIT
If a Participant dies while employed by the Company or a subsidiary,
the Company shall pay to the Participant's Beneficiary a monthly survivor's
benefit ("Survivor's Benefit") for 30 months. The monthly payment shall be
calculated as follows:
(a) the amount necessary to pay, after payment of Federal
income tax, (i) two and one-half times the Participant's Annual Salary
less (ii) the amount of any Cash-Out that the Participant previously
received (as described in Section 4.2), and less (iii) $50,000, which
may be paid as a group life insurance benefit;
(b) divided by thirty.
In calculating the amount by which the Survivor's Benefit will be increased to
adjust for Federal income tax, the highest applicable marginal rate for the
year in which the payments begin shall be assumed to apply, and the Beneficiary
shall be assumed to pay tax on the complete benefit in the year monthly
payments commence, rather than upon receipt of each monthly payment when such
amounts are actually taxable. If the amount so calculated is zero or less, no
payment shall be made to the Participant's Beneficiary under this Plan.
4.2 CASH-OUT OF RETIREMENT SURVIVOR'S BENEFIT
Each executive who was a participant on December 1, 1988, in the BRI
Plan has received the actuarial present value of the Retirement Survivor's
Benefit offered by the BRI Plan prior to December 1, 1988 (the "Cash-out"). No
further Retirement Survivor's Benefit shall be paid by this Plan.
4.3 ANNUAL SALARY
For purposes of this Plan, a Participant's Annual Salary shall mean
the annual salary being paid to him by the Company or subsidiary at the time of
his death, including amounts contributed by his employer on behalf of the
Participant to a deferred compensation plan, or any salary reduction plan
meeting the requirements of Section 401(k) of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder from time to time,
or any statutory provision that may hereafter replace such section, but
excluding payments to the Participant under any stock option, employee stock
ownership, bonus, performance share unit, or other incentive plans or extra,
vacation, or added compensation or benefits of any kind or nature.
4.4 NO DUPLICATE COVERAGE
Participants in this Plan shall not be eligible to receive life
insurance benefits under any group term life insurance policies (other than
travel and accident policies) which are purchased by the Company or its
subsidiaries to cover employees who are not eligible to participate in this
Plan.
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Senior Executive Survivor Benefit Plan
<PAGE> 6
ARTICLE V PAYMENT OF BENEFITS
5.1 PAYMENT OF SURVIVOR'S BENEFIT
The Survivor's Benefit shall be paid commencing on the first day of
the month following the Participant's death, or as soon thereafter as is
practicable, in thirty monthly installments. The unpaid balance of the
Survivor's Benefit shall not bear interest. The Administrator may, in his sole
discretion, arrange for a lump sum payment to the Participant's Beneficiary of
the unpaid balance of the Survivor's Benefit, commuted to a present value based
on a reasonable discount rate to be determined by the Administrator.
5.2 BENEFICIARY
The Beneficiary shall be the person or persons designated from time to
time by a Participant, upon a form made available by the Administrator for such
purpose or in such form satisfactory to the Administrator, to receive
distributions from this Plan in the event of the Participant's death. Any such
person or persons designated by the Participant under the BRI Plan shall be the
Beneficiary under this Plan until such designation is revoked or changed. In
the event that no such designation shall have been made or the person so
designated shall have predeceased the Participant or shall have died before the
Benefit has been fully paid, the remaining balance of such Benefit shall be
paid in equal shares to the first surviving class of the following classes of
preference beneficiaries: (a) the Participant's spouse, (b) the Participant's
surviving children, (c) the Participant's parents, (d) the Participant's
surviving brothers and sisters, or (e) the Participant's executor or
administrator. A Participant may at any time change his beneficiary designation
by filing prior to such Participant's death, written notice of such change with
the Administrator in the manner set forth in this Section 5.2.
5.3 PROOF OF DEATH OR DISABILITY
The Administrator may require proof of death or permanent disability
of a Participant and evidence of the right of a Beneficiary to receive a
Benefit of a deceased Participant.
5.4 PAYMENT TO PERSON UNDER A DISABILITY
If a Benefit is payable to a minor or incompetent or to a person
incapable of handling the disposition of his property, the Administrator may
pay such Benefit to the guardian, legal representative or person having the
care and custody of such Beneficiary. The Administrator may require proof of
incompetency, minority or guardianship as he may deem appropriate prior to
distribution of the Benefit. Such distribution shall completely discharge the
Administrator and the Company from all liability with respect to such Benefit.
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Senior Executive Survivor Benefit Plan
<PAGE> 7
5.5 DURATION OF COVERAGE
(a) Active Employment
A Participant shall remain eligible for the Benefit provided by
this Plan so long as he shall remain actively employed by the Company
or a subsidiary in an executive position comparable to those described
in Section 3.1. Leaves of absence for such periods and purposes
consented to by the Company or its subsidiaries, as applicable, shall
not be deemed termination of employment.
(b) Disability
A Participant who becomes permanently disabled while employed by
the Company or a subsidiary for purposes of this Plan shall be deemed
to remain in the active employment of his employer while under such
disability until such Participant retires under a pension plan
sponsored by the Company or a subsidiary or until he has attained age
sixty-five (65), whichever date is the first to occur. At such time
such disabled Participant shall be deemed to be a retired Participant
for purposes of this Plan and, therefore, no longer eligible for any
Survivors Benefit provided by this Plan. A Participant shall be
considered permanently disabled when he is eligible to receive
benefits under the El Paso Energy Corporation Long Term Disability
Income Plan or a plan providing comparable benefits which is sponsored
by his Employer.
(c) All Other Terminations
A Participant who resigns or whose employment with the Company or
any of its subsidiaries is terminated for reasons other than death or
permanent disability shall continue to be covered by the Plan for
thirty-one (31) days following the date of such termination.
5.6 PAYMENT BY THE COMPANY
All payments to Participants of the Plan, whether or not they
previously participated in the BRI Plan, shall be made by the Company.
ARTICLE VI FUNDING THE PLAN
6.1 UNFUNDED OBLIGATION
The Survivor's Benefits to be paid to the Beneficiaries of the
Participants pursuant to this Plan are an unfunded obligation of the Company.
Nothing herein contained shall require the Company to segregate any monies from
its general funds, to create any trust, to make any special deposits, or to
purchase any policies of insurance with respect to this obligation. Title to
and beneficial ownership of any policies of insurance purchased or funds
invested by the Company,
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El Paso Energy Corporation Page 5
Senior Executive Survivor Benefit Plan
<PAGE> 8
including the proceeds, income and profits therefrom, which the Company may
make to fulfill its obligations under this Plan shall at all times remain in
the Company.
6.2 INDIVIDUAL POLICIES OF INSURANCE
Notwithstanding the provisions of Section 6.1, the Company may fulfill
part or all of its obligation to provide Survivor's Benefits to the
Participants by purchasing individual "key man" policies of insurance on one or
more of the Participants. Such individual contracts and the proceeds therefrom
shall at all times remain the sole property of the Company and the Participants
whose lives are insured and their Beneficiaries shall have no ownership rights
in such policies or insurance.
ARTICLE VII MISCELLANEOUS
7.1 NON-ASSIGNABILITY OF BENEFITS
No benefit payable at any time under the Plan shall be subject in any
manner to alienation, sale, transfer, assignment, pledge, or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, pledge, or otherwise
encumber any such benefit, whether presently or thereafter payable, shall be
void. To the extent permitted by law, no benefits payable under the Plan shall
in any manner be subject to garnishment, attachment, execution, or other legal
process or be liable for, or subject to the debts or liability of any
Participant or Beneficiary.
7.2 CLAIMS PROCEDURE
Claims for benefits under the Plan shall be filed on forms supplied by
the Administrator to:
Administrator
El Paso Energy Corporation
Senior Executive Survivor Benefit Plan
Human Resources Department
El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002
or such other address as may be communicated in writing to the Participants by
or at the direction of the Administrator. If any claim for a benefit is wholly
or partially denied by the Administrator, the Administrator shall give written
notice to the claimant setting forth the specific reasons for the denial in a
manner calculated to be understood by the claimant. Any claimant whose request
for a benefit is denied in whole or in part may submit a written appeal to the
Administrator for a review of the denial. Within sixty (60) days after receipt
of such an appeal, the Administrator shall notify the claimant in writing of
his decision with respect to the appeal and the specific reasons for the
decision. The decision of the Administrator shall be final.
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Senior Executive Survivor Benefit Plan
<PAGE> 9
7.3 LIABILITY OF ADMINISTRATOR
In connection with any action or determination, the Administrator
shall be entitled to rely upon information furnished by the Company or its
subsidiaries. To the extent permitted by law, the Company shall indemnify the
Administrator against any liability or loss sustained by reasons of any act or
failure to act in his administrative capacity, if such act or failure to act
does not involve willful misconduct. Such indemnification of the Administrator
shall include attorneys' fees and other costs and expenses reasonably incurred
in defense of any action brought against the Administrator by reason of any
such act or failure to act.
7.4 ADOPTION OF PLAN
Any subsidiary which is an affiliate of the Company may be designated
by the Company as an Employer for purposes of this Plan. Any Employer may
withdraw from participation in the Plan at any time by filing with the
Administrator a written notice to that effect prior to the effective date of
withdrawal.
7.5 AMENDMENTS, SUSPENSION OR TERMINATION
The Compensation and Nominating Committee of the Board of Directors of the
Company or the Administrator shall have the right to amend, modify, suspend, or
terminate this Plan at any time. No such amendment, suspension or termination
shall adversely affect the right of a Beneficiary to receive a benefit pursuant
to the terms of the Plan as the result of the death of a Participant which
occurred prior to the date of such change. The Board of Directors amended and
restated the Plan effective as of August 1, 1998, in connection with the
reorganization of the Company into a holding company structure whereby El Paso
Energy Corporation became the publicly held company and El Paso Natural Gas
Company became a wholly owned subsidiary. This Plan was assumed by El Paso
Energy Corporation pursuant to an Assignment and Assumption Agreement effective
as of August 1, 1998, by and between El Paso Energy Corporation and El Paso
Natural Gas Company.
7.6 APPLICABLE STATE LAW
This Plan shall be construed in accordance with the laws of the State
of Texas.
7.7 NO GUARANTEE OF EMPLOYMENT
Nothing contained in this Plan shall be construed as a contract of
employment between a Company or a subsidiary and any Participant, or as a right
of any Participant to be continued in the employment of his Employer.
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Senior Executive Survivor Benefit Plan
<PAGE> 10
7.8 NO EXAMINATION OR ACCOUNTING
Neither this Plan nor any action taken thereunder shall be construed
as giving any persons the right to an accounting or to examine the books or
affairs of the Company.
7.9 OTHER TERMS AND CONDITIONS
The Company may impose such other lawful terms and conditions on an
employee's participation in this Plan as it shall deem desirable.
7.10 EFFECTIVE DATE OF PLAN
The Plan shall be effective as of January 1, 1992.
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Senior Executive Survivor Benefit Plan
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
---------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
-----------------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 9
Senior Executive Survivor Benefit Plan
<PAGE> 1
EXHIBIT 10.N
EL PASO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSE........................................................................................1
1.1 Purpose........................................................................................1
SECTION 2 ADMINISTRATION.................................................................................1
2.1 Management Committee...........................................................................1
SECTION 3 PARTICIPANTS...................................................................................1
3.1 Participants...................................................................................1
SECTION 4 DEFERRALS......................................................................................2
4.1 Eligible Compensation..........................................................................2
4.2 Deferred Payment of Base Salary................................................................2
4.3 Deferred Payment of Cash Incentive Awards......................................................2
4.4 Deferred Payment for Performance Units.........................................................3
4.5 Deferred Payment for Amounts Awarded Under Other Plans.........................................3
4.6 Memorandum Account.............................................................................3
4.7 Prior Deferrals................................................................................3
4.8 Payment of Deferred Eligible Compensation......................................................4
4.9 Acceleration of Payment of Deferred Eligible Compensation......................................4
SECTION 5 GENERAL PROVISIONS.............................................................................4
5.1 Unfunded Obligation............................................................................4
5.2 Discretionary Investment by Company............................................................5
5.3 Beneficiary....................................................................................5
5.4 Permanent Disability...........................................................................5
5.5 Incapacity of Participant or Beneficiary.......................................................5
5.6 Nonassignment..................................................................................6
5.7 No Right to Continued Employment...............................................................6
5.8 Withholding Taxes..............................................................................6
5.9 Termination and Amendment......................................................................6
5.10 Applicable Law.................................................................................6
</TABLE>
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El Paso Energy Corporation -i- Table of Contents
Deferred Compensation Plan
<PAGE> 3
EL PASO ENERGY CORPORATION
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSE
1.1 PURPOSE
The purpose of the El Paso Energy Corporation Deferred Compensation
Plan (the "Plan") is to permit the executives and certain key management
employees of El Paso Energy Corporation (the "Company") and its subsidiaries to
defer all or some part of their Eligible Compensation (as defined below) in
order for the Company to attract and retain exceptional personnel.
SECTION 2 ADMINISTRATION
2.1 MANAGEMENT COMMITTEE
The Plan shall be administered by a management committee (the
"Management Committee") consisting of the Chief Executive Officer and such other
senior officers as he or she shall designate. Subject to the Compensation
Committee (the "Compensation Committee") of the Company's Board of Directors
(the "Board"), the Management Committee shall interpret the Plan, prescribe,
amend and rescind rules relating to it, select eligible Participants, and take
all other actions necessary for its administration, which actions shall be final
and binding upon all Participants. No member of the Management Committee shall
vote on any matter that pertains solely to himself or herself.
SECTION 3 PARTICIPANTS
3.1 PARTICIPANTS
The Management Committee shall determine and designate the executives
and key management employees of the Company and its subsidiaries who are
eligible to defer Eligible Compensation under the Plan (the "Participants").
Members of the Board who are full-time executives of the Company shall be
eligible to participate in the Plan.
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Deferred Compensation Plan
<PAGE> 4
SECTION 4 DEFERRALS
4.1 ELIGIBLE COMPENSATION
For purposes of this Plan the term "Eligible Compensation" means the
following:
a. "Base Salary" is the Participant's base salary being paid for
the year or partial year, exclusive of bonuses or other forms
of cash incentive compensation for the year;
b. "Cash Incentive Award" is an annual incentive award made under
the Company's Incentive Compensation Plan or an annual cash
incentive award under a similar annual incentive plan
maintained by the Company or a subsidiary of the Company, as
applicable;
c. Payment for "Performance Units" which are granted pursuant to
the Company's Omnibus Compensation Plan or other similar
performance unit plan maintained by the Company or a
subsidiary of the Company, as applicable; and
d. Compensation otherwise payable pursuant to the terms of other
plans which the Company or its subsidiaries may from time to
time maintain.
4.2 DEFERRED PAYMENT OF BASE SALARY
Prior to January 1 of any year (or, with respect to individuals who
first become Participants during a year, on or before the date on which they
become Participants) each Participant may elect to have the payment of all or a
portion of his or her Base Salary for the year beginning January 1 (or, if
later, so much of the year as commences on the day following the date on which
the individual becomes a Participant) deferred until his or her retirement,
death, Permanent Disability (as defined below), resignation or termination of
employment with the Company and its subsidiaries, or until any other specified
time that is determined by the Management Committee. The minimum amount that may
be so deferred is $1,000. The election shall be irrevocable and shall be made on
a form prescribed by the Management Committee. The election shall apply only to
that calendar year or partial year. If a Participant has not made an election,
the Base Salary paid to him or her for that year shall be paid in accordance
with the Company's normal payroll practices.
4.3 DEFERRED PAYMENT OF CASH INCENTIVE AWARDS
Each Participant may, at such time as the Management Committee may
determine, in its sole discretion, elect to have the payment of all or a portion
of his or her Cash Incentive Award, if any, for the year deferred until the
Participant's retirement, death, Permanent Disability, resignation or
termination of employment with the Company and its subsidiaries, or until any
other specified time that is determined by the Management Committee. The minimum
amount that may be so deferred is $1,000. The election shall be irrevocable and
shall be made on a form
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El Paso Energy Corporation Page 2
Deferred Compensation Plan
<PAGE> 5
prescribed by the Management Committee. The election shall apply only to that
year. If a Participant has not made an election, any Cash Incentive Award
granted to the Participant for that year shall be paid pursuant to the terms of
the applicable annual incentive compensation plan under which the award was
made.
4.4 DEFERRED PAYMENT FOR PERFORMANCE UNITS
Each Participant may, prior to the vesting of Performance Units and in
a manner prescribed by the Management Committee, elect to have all or a portion
of the lump-sum cash payment payable pursuant to the terms of the applicable
omnibus compensation plan or other performance unit plan with respect to vested
Performance Units deferred until the Participant's retirement, death, Permanent
Disability, resignation or termination of employment with the Company and its
subsidiaries or until any other specified time that is determined by the
Management Committee. The minimum amount that may be so deferred is $1,000. The
election shall be irrevocable and shall be made on a form prescribed by the
Management Committee. The election shall apply only to the Performance Units
that may become vested with respect to that year. If a Participant has not made
an election, any cash payment for Performance Units shall be paid pursuant to
the applicable provisions of the plan under which the Performance Units were
granted.
4.5 DEFERRED PAYMENT FOR AMOUNTS AWARDED UNDER OTHER PLANS
Participants may be allowed to irrevocably elect to defer, in the sole
discretion of the Management Committee, amounts that would otherwise be
currently payable under any other plan maintained or which may be maintained by
the Company or its subsidiaries. Any such deferrals must be made pursuant to the
terms of such other plans.
4.6 MEMORANDUM ACCOUNT
The Company shall establish a ledger account (the "Memorandum
Account"), for each Participant who has elected to defer the payment of any part
of his or her Eligible Compensation, for the purpose of reflecting the Company's
obligation to pay the deferred amount as provided in Section 4.8. Interest shall
accrue on the deferred amount to the date of distribution, and shall be credited
to the Memorandum Account at the end of each calendar quarter or such other
periods as may be determined by the Management Committee. The Management
Committee shall determine the rate of interest periodically and in so doing may
take into account the earnings, losses, appreciation or depreciation
attributable to any discretionary investments made pursuant to Section 5.2.
4.7 PRIOR DEFERRALS
Compensation which was deferred by a Participant under the Company's
Incentive Compensation Plan or Omnibus Compensation Plan or a similar plan
maintained by the Company's former parent company shall be paid by the Company
pursuant to the terms of this Plan.
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Deferred Compensation Plan
<PAGE> 6
4.8 PAYMENT OF DEFERRED ELIGIBLE COMPENSATION
Upon the retirement, death, Permanent Disability, resignation,
designated payment date, or termination of employment of a Participant who has
elected to defer any portion of his or her Eligible Compensation for any year,
the Company shall pay to such Participant (or his or her Beneficiary in the case
of his or her death) an amount equal to the balance of his or her Memorandum
Account, plus interest (at a rate determined by the Management Committee
pursuant to Section 4.6) on the outstanding account balance to the date of
distribution and subject to approval of the Management Committee, as follows:
(a) a lump sum cash payment; or
(b) in periodic installments over a period of years to be
determined by the Management Committee in its sole discretion.
Payment of deferred amounts shall commence or be made in the month
following the Participant's retirement, death, Permanent Disability,
resignation, termination of employment or designated payment date.
4.9 ACCELERATION OF PAYMENT OF DEFERRED ELIGIBLE COMPENSATION
The Management Committee, in its sole discretion, may accelerate the
payment of the unpaid balance of a Participant's Memorandum Account in the event
of the Participant's retirement, death, Permanent Disability, resignation or
termination of employment, or upon its determination that the Participant (or
his or her Beneficiary in the case of his or her death) has incurred a severe
financial hardship. The Management Committee in making its determination may
consider such factors and require such information as it deems appropriate.
SECTION 5 GENERAL PROVISIONS
5.1 UNFUNDED OBLIGATION
The deferred amounts to be paid to Participants pursuant to this Plan
are unfunded obligations of the Company. The Company is not required to
segregate any monies from its general funds, to create any trusts, or to make
any special deposits with respect to this obligation. Beneficial ownership of
any investments, including trust investments, which the Company may make to
fulfill this obligation shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or memorandum accounts
shall not create or constitute a trust or a fiduciary relationship between the
Management Committee or the Company and a Participant, or otherwise create any
vested or beneficial interest in any Participant or his or her Beneficiary or
his or her creditors in any assets of the Company whatsoever. The Participants
shall have no claim against the Company for any changes in the value of any
assets which may be invested or reinvested by the Company with respect to this
Plan.
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Deferred Compensation Plan
<PAGE> 7
5.2 DISCRETIONARY INVESTMENT BY COMPANY
The Management Committee may direct that an amount equal to the
deferred amounts shall be invested by the Company as the Management Committee,
in its sole discretion, shall determine. The Management Committee may, in its
sole discretion, determine that all or some portion of an amount equal to the
deferred amounts shall be paid into one or more grantor trusts to be established
by the Company of which it shall be the beneficiary, and to the assets of which
it shall become entitled as and to the extent that Participants receive benefits
under this Plan. The Management Committee may designate an investment advisor to
direct investments and reinvestments of the funds, including investments of any
grantor trusts hereunder.
5.3 BENEFICIARY
The term "Beneficiary" shall mean the person or persons to whom
payments are to be made pursuant to the terms of the Plan in the event of the
Participant's death. The designation shall be on a form provided by the
Management Committee, executed by the Participant, and delivered to the
Committee. A Participant may change his Beneficiary designation at any time. A
designation by a Participant under the Burlington Resources Inc. Deferred
Compensation Plan shall remain in effect under this Plan unless it is revoked or
changed under this Plan. If no Beneficiary is designated, the designation is
ineffective, or in the event the Beneficiary dies before the balance of the
Memorandum Account is paid, the balance shall be paid to the Participant's
spouse or lineal descendants, to the Participant's estate (unless the Management
Committee for a given year has designated investment in an annuity, in which
case the payment options selected by the Participant with respect thereto shall
govern).
5.4 PERMANENT DISABILITY
A Participant shall be deemed to have become disabled for purposes of
this Plan if the Management Committee finds, upon the basis of medical evidence
satisfactory to it, that the Participant is totally disabled, whether due to
physical or mental condition, so as to be prevented from engaging in further
employment by the Company or any of its subsidiaries and that such disability
will be permanent and continuous during the remainder of his or her life.
5.5 INCAPACITY OF PARTICIPANT OR BENEFICIARY
If the Management Committee finds that any Participant or Beneficiary
to whom a payment is payable under the Plan is unable to care for his or her
affairs because of illness or accident or is under a legal disability, any
payment due (unless a prior claim therefore shall have been made by a duly
appointed legal representative) at the discretion of the Committee, may be paid
to the spouse, child, parent or brother or sister of such Participant or
Beneficiary or to any person whom the Committee has determined has incurred
expense for such Participant or Beneficiary. Any such payment shall be a
complete discharge of the obligations of the Company under the provisions of the
Plan.
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Deferred Compensation Plan
<PAGE> 8
5.6 NONASSIGNMENT
The right of a Participant or Beneficiary to the payment of any amounts
under the Plan may not be assigned, transferred, pledged or encumbered nor shall
such right or other interests be subject to attachment, garnishment, execution
or other legal process.
5.7 NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan shall be construed to confer upon any Participant
any right to continued employment with the Company or a subsidiary, nor
interfere in any way with the right of the Company or a subsidiary to terminate
the employment of such Participant at any time without assigning any reason
therefor.
5.8 WITHHOLDING TAXES
Provision shall be made for the withholding of taxes under the Federal
Insurance Contributions Act at the time of vesting of benefits under the Plan
and appropriate income taxes shall be withheld from payments made to
Participants pursuant to this Plan.
5.9 TERMINATION AND AMENDMENT
The Board or the Compensation Committee may from time to time amend,
suspend or terminate the Plan, in whole or in part, and if the Plan is suspended
or terminated, the Board or the Compensation Committee may reinstate any or all
of its provisions. The Management Committee may amend the Plan provided that it
may not suspend or terminate the Plan, substantially increase the administrative
cost of the Plan or the obligations of the Company, or expand the classification
of employees who are eligible to participate in the Plan. No amendment,
suspension or termination may impair the right of a participant or his
designated beneficiary to receive the deferred compensation benefit accrued
prior to the effective date of such amendment, suspension or termination. The
Board of Directors amended and restated the Plan effective as of August 1, 1998,
in connection with the reorganization of the Company into a holding company
structure whereby El Paso Energy Corporation became the publicly held company
and El Paso Natural Gas Company became a wholly owned subsidiary. This Plan was
assumed by El Paso Energy Corporation pursuant to an Assignment and Assumption
Agreement effective as of August 1, 1998, by and between El Paso Energy
Corporation and El Paso Natural Gas Company.
5.10 APPLICABLE LAW
The Plan shall be construed and governed in accordance with the laws of
the State of Texas.
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Deferred Compensation Plan
<PAGE> 9
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
---------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
---------------------------
Title: Corporate Secretary
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El Paso Energy Corporation Page 7
Deferred Compensation Plan
<PAGE> 1
EXHIBIT 10.0
EL PASO ENERGY CORPORATION
KEY EXECUTIVE SEVERANCE
PROTECTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 ESTABLISHMENT OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Benefits Protection Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Bonus Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Executive Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Permanent Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Duration of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4 SEVERANCE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Right to Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Amount of Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5 TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Written Notice Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6 ADDITIONAL PAYMENTS BY THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Gross-Up Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Determination By Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Notification Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7 SUCCESSORS TO COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.1 Successors and Sale of Operating Companies . . . . . . . . . . . . . . . . . . 11
(a) Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Sale of Operating Companies . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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El Paso Energy Corporation - i - Table of Contents
Key Executive Severance Protection Plan
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 8 AMENDMENT AND PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2 Form of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.3 Validity and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4 Governing Law; Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . 12
9.5 Payment to Benefits Protection Trust . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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El Paso Energy Corporation - ii - Table of Contents
Key Executive Severance Protection Plan
<PAGE> 4
EL PASO ENERGY CORPORATION
KEY EXECUTIVE SEVERANCE PROTECTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
WHEREAS, the Board of Directors of El Paso Energy Corporation
recognizes that the threat of an unsolicited takeover of the Company may occur
which can result in significant distractions of its key executive personnel
because of the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of its key
executive personnel in the event of a threat of a Change in Control of the
Company and to ensure their continued dedication and efforts in such event
without undue concern for their personal financial and employment security.
NOW, THEREFORE, in order to fulfill the above purposes, the following
plan has been developed and is hereby adopted.
SECTION 1 ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes a severance
compensation plan known as the El Paso Energy Corporation Key Executive
Severance Protection Plan (the "Plan") as set forth in this document.
SECTION 2 DEFINITIONS
As used herein the following words and phrases shall have the
following respective meanings unless the context clearly indicates otherwise.
2.1 BASE SALARY
The amount a Participant is entitled to receive as wages or salary on
an annualized basis, calculated immediately prior to a Change in Control.
2.2 BENEFITS PROTECTION TRUST
The El Paso Energy Corporation Benefits Protection Trust.
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Key Executive Severance Protection Plan
<PAGE> 5
2.3 BOARD
The Board of Directors of El Paso Energy Corporation.
2.4 BONUS AMOUNT
The term "Bonus Amount" shall mean an amount equal to the Executive
Employee's maximum bonus which becomes payable to the Executive Employee in the
event of a "change in control" under the Company's 1995 Incentive Compensation
Plan (or any other bonus plan or program then in effect) but excluding any
single or one time "spot" award, for the fiscal year in which a Change in
Control occurs had he or she continued in employment until the end of such
fiscal year, assuming all performance targets and goals (if applicable) had
been fully met by the Company and by the Executive Employee, as applicable, for
such year.
2.5 CAUSE
The Company may terminate the Executive Employee's employment for
"Cause." A termination for Cause is a termination evidenced by a resolution
adopted in good faith by two-thirds (2/3) of the Board that the Executive
Employee (i) willfully and continually failed to substantially perform his or
her duties with the Company (other than a failure resulting from the Executive
Employee's incapacity due to physical or mental illness) which failure
continued for a period of at least thirty (30) days after a written notice of
demand for substantial performance has been delivered to the Executive Employee
specifying the manner in which the Executive Employee has failed to
substantially perform, or (ii) willfully engaged in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of the Executive Employee's employment
shall be for Cause as set forth in clause (ii) above until (A) there shall have
been delivered to the Executive Employee a copy of a written notice setting
forth that the Executive Employee was guilty of the conduct set forth in clause
(ii) and specifying the particulars thereof in detail, and (B) the Executive
Employee shall have been provided an opportunity to be heard by the Board (with
the assistance of the Executive Employee's counsel if the Executive Employee so
desires). No act, nor failure to act, on the Executive Employee's part shall
be considered "willful" unless he or she has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his or her action or
failure to act was in the best interest of the Company. Notwithstanding
anything contained in this Plan to the contrary, no failure to perform by the
Executive Employee after Notice of Termination is given by the Executive
Employee shall constitute Cause.
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El Paso Energy Corporation Page 2
Key Executive Severance Protection Plan
<PAGE> 6
2.6 CHANGE IN CONTROL
A "Change in Control" shall be deemed to occur:
(a) if any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of El Paso Energy Corporation representing
twenty percent (20%) or more of the combined voting power of El Paso
Energy Corporation's then outstanding securities;
(b) upon the first purchase of El Paso Energy
Corporation's Common Stock pursuant to a tender or exchange offer
(other than a tender or exchange offer made by El Paso Energy
Corporation);
(c) upon the approval by El Paso Energy Corporation
stockholders of a merger or consolidation, a sale or disposition of
all or substantially all of El Paso Energy Corporation's assets or a
plan of liquidation or dissolution of El Paso Energy Corporation; or
(d) if, during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of El Paso Energy Corporation cease for any reason to
constitute at least a majority thereof, unless the election or
nomination for the election by El Paso Energy Corporation's
stockholders of each new director was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were
directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if El Paso Energy Corporation either merges or consolidates
with or into another company or sells or disposes of all or
substantially all of its assets to another company, if such merger,
consolidation, sale or disposition is in connection with a corporate
restructuring wherein the stockholders of El Paso Energy Corporation
immediately before such merger, consolidation, sale or disposition
own, directly or indirectly, immediately following such merger,
consolidation, sale or disposition at least eighty percent (80%) of
the combined voting power of all outstanding classes of securities of
El Paso Energy Corporation resulting from such merger or
consolidation, or to which El Paso Energy Corporation sells or
disposes of its assets, in substantially the same proportion as their
ownership in El Paso Energy Corporation immediately before such
merger, consolidation, sale or disposition.
2.7 COMPANY
El Paso Energy Corporation and the Operating Companies.
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Key Executive Severance Protection Plan
<PAGE> 7
2.8 EFFECTIVE DATE
The date the Plan is approved by the Board, or such other date as the
Board shall designate in its resolution approving the Plan, or any amendment or
restatement thereof.
2.9 EXECUTIVE EMPLOYEE
All employees of the Company employed in an Executive Salary Grade
Position.
2.10 GOOD REASON
"Good Reason" shall mean the occurrence of any of the following events
or conditions:
(a) a change in the Executive Employee's status, title,
position or responsibilities (including reporting responsibilities)
which, in the Executive Employee's reasonable judgment, represents a
substantial reduction of the status, title, position or
responsibilities as in effect immediately prior thereto; the
assignment to the Executive Employee of any duties or responsibilities
which, in the Executive Employee's reasonable judgment, are
inconsistent with such status, title, position or responsibilities; or
any removal of the Executive Employee from or failure to reappoint or
reelect him or her to any of such positions, except in connection with
the termination of his or her employment for Cause, Permanent
Disability, as a result of his or her death, or by the Executive
Employee other than for Good Reason;
(b) a reduction in the Executive Employee's annual base
salary;
(c) the requirement by the Company that the Executive
Employee (without the consent of the Executive Employee) to be based
at any place outside a thirty-five (35) mile radius of his or her
place of employment prior to a Change in Control, except for
reasonably required travel on the Company's business which is not
materially greater than such travel requirements prior to the Change
in Control;
(d) the failure by the Company to (i) continue in effect
any material compensation or benefit plan, program or practice in
which the Executive Employee was participating at the time of the
Change in Control, including, but not limited to, the Company's 1995
Omnibus Compensation Plan, the Pension Plan, the Supplemental Benefits
Plan, the 1995 Incentive Compensation Plan, the Deferred Compensation
Plan, and the Retirement Savings Plan, with any amendments and
restatements of such plans made prior to such Change in Control, or
(ii) provide the Executive Employee with compensation and benefits at
least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each employee benefit plan, program and
practice as in effect immediately prior to the Change in Control (or
as in effect following the Change in Control, if greater);
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El Paso Energy Corporation Page 4
Key Executive Severance Protection Plan
<PAGE> 8
(e) any material breach by the Company of any provision
of this Plan; or
(f) any purported termination of the Executive Employee's
employment for Cause by the Company which does not otherwise comply
with the terms of this Plan as in effect at the time of a Change in
Control.
2.11 NOTICE OF TERMINATION
"Notice of Termination" shall mean a notice which indicates the
specific provisions in this Plan relied upon as the basis for any termination
of employment and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive
Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of
Termination.
2.12 OPERATING COMPANIES
Subsidiary companies of the Company designated by the Company.
2.13 PARTICIPANT
An Executive Employee who meets the eligibility requirements of
Section 3.
2.14 PERMANENT DISABILITY
A Participant shall be deemed to have become permanently disabled for
purposes of this Plan if the Chief Executive Officer of the Company (or, in the
case of a determination with respect to the Chief Executive Officer, the Board)
finds, upon the basis of medical evidence satisfactory to him or her, that the
Participant is totally disabled, whether due to physical or mental condition,
so as to be prevented from engaging in further employment by the Company and
that such disability will be permanent and continuous during the remainder of
his or her life.
2.15 SEVERANCE BENEFIT
The benefit payable in accordance with Section 4 of the Plan.
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El Paso Energy Corporation Page 5
Key Executive Severance Protection Plan
<PAGE> 9
SECTION 3 ELIGIBILITY
3.1 PARTICIPATION
Each Executive Employee shall automatically be entitled to be a
Participant in the Plan as of the Effective Date, or his or her date of hire by
the Company, whichever occurs later.
3.2 DURATION OF PARTICIPATION
A Participant shall cease to be a Participant in the Plan if he or she
ceases to be an Executive Employee at any time prior to a Change in Control or,
if his or her employment is terminated following a Change in Control under
circumstances where he or she is not entitled to a Severance Benefit under the
terms of this Plan. A Participant entitled to payment of a Severance Benefit
shall remain a Participant in the Plan until the full amount of the Severance
Benefit has been paid to him or her.
SECTION 4 SEVERANCE BENEFITS
4.1 RIGHT TO SEVERANCE BENEFIT
(a) A Participant shall be entitled to receive from the
Company a Severance Benefit in the amount provided in Section 4.2 if
(i) a Change in Control has occurred and (ii) within two years
thereafter, the Participant's employment with the Company terminates
for any reason, except that notwithstanding the provisions of this
paragraph (a), no benefits under this Plan will be payable should the
Participant's termination of employment be (A) for Cause, (B) by
reason of Permanent Disability, (C) voluntarily initiated by the
Participant for other than Good Reason, or (D) by reason of the
Participant's death.
(b) Notwithstanding any other provision of the Plan, the
sale, divestiture or other disposition of an Operating Company (or
part thereof), shall not be deemed to be a termination of employment
of employees employed by such Operating Company, and such employees
shall not be entitled to benefits from the Company under this Plan as
a result of such sale, divestiture, or other disposition, or as a
result of any subsequent termination of employment, provided the
provisions of Section 7.1(b) have been satisfied.
4.2 AMOUNT OF SEVERANCE BENEFIT
If a Participant's employment is terminated in circumstances entitling
him or her to a Severance Benefit as provided in Section 4.1, such Participant
shall be entitled to the following benefits:
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Key Executive Severance Protection Plan
<PAGE> 10
(a) the Company shall pay to the Participant, as
severance pay and in lieu of any further salary for periods subsequent
to the Termination Date (as specified in Section 5.2), in a single
payment (without any discount for accelerated payment), an amount in
cash equal to three (3) times the sum of (A) the Participant's Base
Salary and (B) the Bonus Amount;
(b) for a period of eighteen (18) months subsequent to
the Participant's termination of employment, the Company shall at its
expense continue on behalf of the Participant and his or her
dependents and beneficiaries, the basic life insurance, flexible
spending account, medical and dental benefits which were being
provided to the Participant at the time of termination of employment.
The benefits provided in this Subsection 4.2(b) shall be no less
favorable to the Participant, in terms of amounts and deductibles and
costs to him or her, than the coverage provided the Participant under
the plans providing such benefits at the time Notice of Termination is
given. The Company's obligation hereunder to provide the foregoing
benefits shall terminate if the Participant obtains health benefits
coverage under a subsequent employer's benefit plans. The Company
also shall pay a lump sum equal to the amount of any additional income
tax payable by the Participant and attributable to the benefits
provided under this subparagraph (b) at the time such tax is imposed
upon the Participant;
(c) the Company shall pay a lump sum pension supplement
payable under the terms of the El Paso Energy Corporation Supplemental
Benefit Plan ("Supplemental Plan") equal to a pension calculated by
adding three years of additional credited pension service to the
Participant's existing credited pension service as of the termination
of the Participant's employment, and then by calculating the
Participant's pension in accordance with the formula provided in the
pension plan. A Participant who is entitled to a pension supplement
under any other agreement between such Participant and the Company may
elect, in writing, to receive the pension supplement provided under
this subparagraph (c) in lieu of, but not in addition to, such other
pension supplement as may be provided by such other agreement. In the
event that no election is made, the Participant shall forego his or
her right to receive the pension supplement provided under this
subparagraph;
(d) the Company shall transfer to the Participant, all
right, title or other ownership interest it may have in any
automobile, if any, then being provided by the Company for use by the
Participant;
(e) the Company shall transfer to the Participant, any
right, title or ownership in any club memberships provided by the
Company;
The amounts provided for in Section 4.2(a), (c), (d) and (e) shall be
paid or transferred within thirty (30) days after the Executive Employee's
termination of employment. The Participant shall not be required to mitigate
the amount of any
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El Paso Energy Corporation Page 7
Key Executive Severance Protection Plan
<PAGE> 11
payment provided for in this Plan by seeking other employment or otherwise and
no such payment shall be offset or reduced by the amount of any compensation or
benefits provided to the Executive Employee in any subsequent employment.
SECTION 5 TERMINATION OF EMPLOYMENT
5.1 WRITTEN NOTICE REQUIRED
Any purported termination of employment, either by the Company or by
the Participant, shall be communicated by written Notice of Termination to the
other.
5.2 TERMINATION DATE
In the case of the Participant's death, the Participant's Termination
Date shall be his her date of death. In all other cases, the Participant's
Termination Date shall be the date specified in the Notice of Termination
subject to the following:
(a) If the Participant's employment is terminated by the
Company for Cause or due to Permanent Disability, the date specified
in the Notice of Termination shall be at least thirty (30) days from
the date the Notice of Termination is given to the Participant,
provided that in the case of Permanent Disability the Participant
shall not have returned to the full-time performance of his or her
duties during such period of at least thirty (30) days; and
(b) If the Participant terminates his or her employment
for Good Reason, the date specified in the Notice of Termination shall
not be more than sixty (60) days from the date the Notice of
Termination is given to the Company.
SECTION 6 ADDITIONAL PAYMENTS BY THE COMPANY
6.1 GROSS-UP PAYMENT
In the event it shall be determined that any payment or distribution
of any type by the Company to or for the benefit of the Participant, whether
paid or payable or distributed or distributable pursuant to the terms of this
Plan or otherwise (the "Total Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are collectively
referred to as the "Excise Tax"), then the Participant shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Participant of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, the Participant retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
Payment of the Gross-Up Payment shall be made in accordance with Section 6.3.
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Key Executive Severance Protection Plan
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6.2 DETERMINATION BY ACCOUNTANT
All determinations required to be made under this Section 6, including
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the independent accounting firm retained by the Company on the
date of Change in Control (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Participant within 15
business days of the date of termination, if applicable, or such earlier time
as is requested by the Company. If the Accounting Firm determines that no
Excise Tax is payable by the Participant, it shall furnish the Participant with
an opinion that he or she has substantial authority not to report any Excise
Tax on his or her federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Company and the Participant. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 6.3 and the Participant thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant.
6.3 NOTIFICATION REQUIRED
The Participant shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Participant
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Participant
shall not pay such claim prior to the expiration of the thirty (30) day period
following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Participant in writing prior
to the expiration of such period that it desires to contest such claim, the
Participant shall:
(a) give the Company any information reasonably requested
by the Company relating to such claim,
(b) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
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(c) cooperate with the Company in good faith in order to
effectively contest such claim,
(d) permit the Company to participate in any proceedings
relating to such claim, provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Participant harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 6.3, the Company shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Participant to pay the tax claimed and sue for a refund, or contest
the claim in any permissible manner, and the Participant agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Participant to pay such claim and sue
for a refund, the Company shall advance the amount of such payment to
the Participant, on an interest-free basis and shall indemnify and
hold the Participant harmless, on an after-tax basis, from any Excise
Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Participant with respect to which
such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Participant shall be entitled to
settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
6.4 REPAYMENT
If, after the receipt by the Participant of an amount advanced by the
Company pursuant to Section 6.3, the Participant becomes entitled to receive
any refund with respect to such claim, the Participant shall (subject to the
Company's complying with the requirements of Section 6.3) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section 6.3, a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30)
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<PAGE> 14
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to
the extent thereof the amount of Gross-Up Payment required to be paid.
SECTION 7 SUCCESSORS TO COMPANY
7.1 SUCCESSORS AND SALE OF OPERATING COMPANIES
(a) Successors
This Plan shall bind any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, in the same manner
and to the same extent that the Company would be obligated under this
Plan if no succession had taken place. In the case of any transaction
in which a successor would not by the foregoing provision or by
operation of law be bound by this Plan, the Company shall require such
successor expressly and unconditionally to assume and agree to perform
the Company's obligations under this Plan, in the same manner and to
the same extent that the Company would be required to perform if no
such succession had taken place.
(b) Sale of Operating Companies
In the event that one or more Operating Companies (or part thereof)
are sold, divested, or otherwise disposed of by the Company subsequent
to a Change in Control, the Company shall require such purchaser or
acquirer, as a condition precedent to such purchase or acquisition, to
assume, and agree to perform the Company's obligations under the Plan,
in the same manner, and to the same extent that the Company would be
required to perform if no such acquisition or purchase had taken
place. In such circumstances, the purchaser or acquirer shall be
solely responsible for providing any benefits payable under this Plan
to such employees.
SECTION 8 AMENDMENT AND PLAN TERMINATION
8.1 AMENDMENT AND TERMINATION
This Plan may be terminated or amended in any respect by resolution
adopted by two-thirds (2/3) of the Board, provided, however, that no such
amendment or termination of the Plan may be made if such amendment or
termination would adversely affect any right of an Executive Employee who
became a Participant prior to the later of (a) the date of adoption of any such
amendment or termination, or (b) the effective date of any such amendment or
termination, and provided further, that the Plan no longer shall be subject
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<PAGE> 15
to amendment, change, substitution, deletion, revocation or termination in any
respect whatsoever following a Change in Control. The Board of Directors
amended and restated the Plan effective as of August 1, 1998, in connection
with the reorganization of the Company into a holding company structure whereby
El Paso Energy Corporation became the publicly held company and El Paso Natural
Gas Company became a wholly owned subsidiary. This Plan was assumed by El Paso
Energy Corporation pursuant to an Assignment and Assumption Agreement effective
as of August 1, 1998, by and between El Paso Energy Corporation and El Paso
Natural Gas Company.
8.2 FORM OF AMENDMENT
The form of any amendment or termination of the Plan shall be a
written instrument signed by a duly authorized officer or officers of the
Company, certifying that the amendment or termination has been approved by the
Board.
SECTION 9 MISCELLANEOUS
9.1 INDEMNIFICATION
If, after a Change in Control, a Participant institutes any legal
action in seeking to obtain or enforce, or is required to defend in any legal
action the validity or enforceability of, any right or benefit provided by this
Plan, the Company will pay for all actual legal fees and expenses as they are
incurred by such Participant.
9.2 EMPLOYMENT STATUS
This Plan does not constitute a contract of employment or impose on
the Company any obligation to retain the Participant as an Employee, to change
the status of the Participant's employment as an Executive Employee, or to
change any employment policies of the Company.
9.3 VALIDITY AND SEVERABILITY
The invalidity or unenforceability of any provision of the Plan shall
not affect the validity or enforceability of any other provision of the Plan,
which shall remain in full force and effect, and any prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.4 GOVERNING LAW; CHOICE OF FORUM
The validity, interpretation, construction and performance of the Plan
shall in all respects be governed by the laws of the State of Texas. A
Participant shall be entitled to enforce the provisions of this Plan in any
state or federal court located in the State of Texas, in addition to any other
appropriate forum.
9.5 PAYMENT TO BENEFITS PROTECTION TRUST
Notwithstanding any other provision of the Plan, the Company shall not
be required to make any payment to a Participant under the terms of this Plan
if such payment is otherwise made to the Participant by the Benefits Protection
Trust in accordance with the provisions of said Benefits Protection Trust.
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<PAGE> 16
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
------------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
---------------------------
Title: Corporate Secretary
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<PAGE> 1
EXHIBIT 10.P
EL PASO ENERGY CORPORATION
DIRECTOR CHARITABLE AWARD PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 ESTABLISHMENT, PURPOSE, AND DURATION . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Duration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Decisions Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4 ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Actual Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5 CHARITABLE AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Size of Charitable Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Designation of Donees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.3 Changes in Designations of Donees . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Security for Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.5 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.6 Payment of Charitable Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6 AMENDMENT, MODIFICATION, AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 6
SECTION 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.1 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.2 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.3 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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El Paso Energy Corporation -i- Table of Contents
Director Charitable Award Plan
<PAGE> 3
EL PASO ENERGY CORPORATION
DIRECTOR CHARITABLE AWARD PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN
El Paso Energy Corporation, a Delaware corporation (hereinafter
referred to as the "Company"), hereby establishes a charitable award program
for Directors (as defined below), to be known as the "El Paso Energy
Corporation Director Charitable Award Plan" (hereinafter referred to as the
"Plan"), as set forth in this document. The Plan provides for the contribution
by the Company of one million dollars ($1,000,000) on behalf of each Director,
to Charitable Organizations (as defined below)of each Director's choice subject
to the terms and provisions of this Plan.
The Board of Directors of the Company amended and restated effective
as of August 1, 1998. The term "Effective Date" shall mean January 15, 1992.
1.2 PURPOSE OF THE PLAN
The purpose of the Plan is to promote the mutual interest of the
Directors and the Company to support worthy Charitable Organizations, and to
enhance the positive image of the Company.
The Plan is further intended to acknowledge the service of the
Company's Directors, and to aid the Company in its ability to attract,
motivate, and retain the services of highly qualified Directors, upon whose
judgment, interest, and special effort the continued successful operation of
the Company largely is dependent.
1.3 DURATION OF THE PLAN
The Plan commenced on the Effective Date and shall remain in effect
until terminated by the Board of Directors.
SECTION 2 DEFINITIONS AND CONSTRUCTION
Whenever used in this Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized.
(a) "Board" or "Board of Directors" means the Board of Directors
of the Company.
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Director Charitable Award Plan
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(b) "Change in Control" of the Company shall be deemed to have
occurred if the conditions set forth in any one or more of the following
paragraphs shall have been satisfied:
(i) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) being or becoming the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act) directly or
indirectly, of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the then outstanding
securities of the Company,
(ii) the first purchase of the Company's Common Stock
pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company),
(iii) the approval by the Company's stockholders of a
merger or consolidation, a sale or disposition of all or substantially
all of the Company's assets or a plan of liquidation or dissolution of
the Company, or
(iv) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company ceasing for any reason to constitute at
least a majority thereof, unless the election or nomination for the
election by the Company's stockholders of each new director was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of
its assets to another company, if such merger, consolidation, sale or
disposition is in connection with a corporate restructuring wherein
the stockholders of the Company immediately before such merger,
consolidation, sale or disposition own, directly or indirectly,
immediately following such merger, consolidation, sale or disposition
at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such
merger or consolidation, or to which the Company sells or disposes of
its assets, in substantially the same proportion as their ownership in
the Company immediately before such merger, consolidation, sale or
disposition.
(c) "Charitable Award" means, individually or collectively, a
donation to be made to a Charitable Organization chosen by a Participant
pursuant to the terms of Section 5 herein.
(d) "Charitable Organization" means any public or private
charitable organization in the United States or its possessions which is a
corporation, trust,
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Director Charitable Award Plan
<PAGE> 5
community chest, fund, foundation, or association, provided contributions to
such entity are deductible under Section 170(c) of the Code.
(e) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute, and the Treasury Regulations promulgated thereunder.
(f) "Committee" means the management committee as specified in
Section 3 herein.
(g) "Company" means El Paso Energy Corporation, a Delaware
corporation, or any successor thereto as provided in Section 8.1 herein.
(h) "Director" means any individual who is a member of the Board
of Directors of the Company.
(i) "Effective Date" means the date on which the Plan became
effective, as designated by the Board of Directors pursuant to Section 1.1
herein.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(k) "Participant" means a Director of the Company who has been
notified of his or her eligibility to participate in this Plan, pursuant to
Section 4.2 herein.
(l) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act, and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(m) "Qualified Donee" means any Charitable Organization which has
not been denied status as a Qualified Donee by the Board of Directors, pursuant
to Section 5.2 herein.
SECTION 3 ADMINISTRATION
3.1 MANAGEMENT COMMITTEE
The Plan shall be administered by the Board of Directors and a
management committee (the "Committee") consisting of the Chief Executive
Officer and such other senior officers as he or she shall designate. The
Committee shall interpret the Plan, prescribe, amend, and rescind rules
relating to it, select eligible Participants, and take all other actions
necessary for its administration. No member of the Committee shall vote on any
matter that pertains solely to himself or herself.
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3.2 DECISIONS BINDING
All determinations and decisions made by the Board of Directors and/or
the Committee pursuant to the administration of this Plan shall be final,
conclusive, and binding on all parties, including the Company, its
stockholders, employees, Participants, and their estates and beneficiaries.
SECTION 4 ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY
Persons who are elected to serve on the Board of Directors on or after
the Effective Date shall be eligible to participate in this Plan on the second
anniversary of the date of their election to the Board; provided, however, that
such Directors must have continuously served on the Board throughout such
two-year period.
4.2 ACTUAL PARTICIPATION
Subject to the terms and conditions of this Plan, the Committee shall
notify each eligible Director of his or her eligibility to participate in this
Plan as soon as practicable following the date that each such Director first
becomes eligible for participation.
SECTION 5 CHARITABLE AWARDS
5.1 SIZE OF CHARITABLE AWARDS
Each Participant shall have the right to designate Qualified Donees to
which an aggregate of up to one million dollars ($1,000,000) shall be donated
by the Company on behalf of the Participant. Participants may designate up to
four Qualified Donees; provided, however, that the total funds which shall be
donated by the Company on behalf of any one Participant shall not exceed one
million dollars ($1,000,000).
5.2 DESIGNATION OF DONEES
Each Participant shall nominate Charitable Organizations to receive
Charitable Awards by providing formal notice of such nominations to the
Committee. Following the receipt of the nominations of organizations, the
Committee will approve the nomination or recommend to the Board that the
nomination be denied. In the event the Committee does not recommend to the
Board that the nomination be denied within six months of receipt of such
nomination, the nomination shall be deemed accepted by the Committee. Further,
if the Participant should die before the Committee, or the Board in the case of
denials, acts on the nominations, such nomination shall be deemed accepted
provided the nominee is a qualified Charitable Organization, as defined herein.
The Board of
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Director Charitable Award Plan
<PAGE> 7
Directors, by majority vote, shall have the authority to deny status as a
Qualified Donee to any organization nominated by a Participant. In the event
one or more organizations nominated by a Participant for status as a Qualified
Donee are denied such status by the Board of Directors, the Participant may
nominate additional organizations to receive a Charitable Award, subject to the
approval of the Committee (or the denial by the Board, as applicable). If a
Participant fails to designate a Qualified Donee, the Charitable Award to be
made on behalf of such Participant shall lapse.
All nominations of organizations to receive Charitable Awards shall be
made on a Charitable Award Nomination Form, which shall specify the following:
(i) the name of the nominated organization; (ii) the amount desired by the
Participant to be donated to the organization; (iii) the name under which the
donation is to be made; and (iv) any other terms and provisions deemed
necessary by the Board of Directors or the Committee. Each completed
Charitable Award Nomination Form shall be submitted to the Executive Vice
President, Human Resources and Administration.
5.3 CHANGES IN DESIGNATIONS OF DONEES
Participants may, at any time, nominate an alternative Charitable
Organization to receive a Charitable Award (subject to Committee approval, as
described in Section 5.2 herein). In addition, Participants may, at any time,
request a change in the amount of money to be donated to each such Qualified
Donee, or a change in the name under which the donation is to be made, subject
to approval (as described in Section 5.2 herein).
Changes in the designation of Qualified Donees or in any other terms
applicable to the Charitable Awards, shall be made on a Charitable Award
Nomination Form, which shall specify the new or additional organizations
nominated to receive a Charitable Award, the amount of money to be donated in
the name of the Participant to each Qualified Donee, and any other terms or
provisions deemed necessary by the Board of Directors or the Committee.
5.4 SECURITY FOR DONATIONS
The Company's obligations under this Plan may be unfunded and
unsecured promises to donate money in the future. No Qualified Donee shall
have the right to a donation solely by virtue of the designation of such
Qualified Donee by a Participant. Following the death of a Participant, the
rights of each Qualified Donee designated by the Participant shall be those of
a general unsecured creditor of the Company.
5.5 CHANGE IN CONTROL
Notwithstanding any other provision of this Plan, upon a Change in
Control of the Company, the commitment of the Company to donate the Charitable
Awards to the Qualified Donees shall become an irrevocable obligation.
Following a Change in Control, the Board of Directors may not amend, modify, or
terminate the Charitable
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Director Charitable Award Plan
<PAGE> 8
Awards of the Participants in a way which would decrease the value of the
donations. In addition, following a Change in Control, the Participants shall
retain the right to change the designations of their Qualified Donees, pursuant
to Section 5.3 herein, without Board or Committee review.
5.6 PAYMENT OF CHARITABLE AWARDS
As soon as practicable following the death of a Participant, the
Company shall donate the Charitable Awards to the Qualified Donees, in the
amounts requested by the Participant and approved by the Board of Directors or
Committee. Such payment shall be made in one lump sum. No contribution will
be made under this Plan to an otherwise Qualified Donee if the payment thereof
will result in the receipt of property or other direct economic benefits to the
Company or its subsidiaries or to the Participants or to the family members of
any Participant.
SECTION 6 AMENDMENT, MODIFICATION, AND TERMINATION
Except as set forth in Section 5.5, the Board may from time to time
amend, suspend, or terminate the Plan, in whole or in part, and if the Plan is
suspended or terminated, the Board may reinstate any or all of its provisions.
The Committee may amend the Plan provided that it may not suspend or terminate
the Plan or substantially increase the administrative cost of the Plan or the
obligations of the Company. The Board of Directors amended and restated the
Plan effective as of August 1, 1998, in connection with the reorganization of
the Company into a holding company structure whereby El Paso Energy Corporation
became the publicly held company and El Paso Natural Gas Company became a
wholly owned subsidiary. This Plan was assumed by El Paso Energy Corporation
pursuant to an Assignment and Assumption Agreement effective as of August 1,
1998, by and between El Paso Energy Corporation and El Paso Natural Gas
Company.
SECTION 7 INDEMNIFICATION
Each individual who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the Company against
and from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under this Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against
him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf.
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Director Charitable Award Plan
<PAGE> 9
The foregoing right in indemnification shall not be exclusive of any
other rights of indemnification to which such individuals may be entitled under
the Company's Restated Certificate of Incorporation or By-laws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
SECTION 8 MISCELLANEOUS
8.1 SUCCESSORS
All obligations of the Company under this Plan shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the Company.
8.2 NONTRANSFERABILITY
The right to nominate organizations to receive Charitable Awards under
this Plan shall be personal to Participants, and may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated.
8.3 GENDER AND NUMBER
Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the
singular, and the singular shall include the plural.
8.4 SEVERABILITY
In the event any provision of this Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of this Plan, and this Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
8.5 GOVERNING LAW
To the extent not preempted by Federal law, this Plan, and all
agreements hereunder, shall be construed in accordance with and governed by the
laws of the State of Texas.
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Director Charitable Award Plan
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
-----------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
-----------------------------
Title: Corporate Secretary
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Director Charitable Award Plan
<PAGE> 1
EXHIBIT 10.Q
EL PASO ENERGY CORPORATION
STRATEGIC STOCK PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 PURPOSES..............................................................................1
SECTION 2 DEFINITIONS...........................................................................1
2.1 Beneficiary...........................................................................1
2.2 Board of Directors....................................................................1
2.3 Cause.................................................................................1
2.4 Change in Control.....................................................................2
2.5 Code..................................................................................3
2.6 Common Stock..........................................................................3
2.7 Company...............................................................................3
2.8 Exchange Act..........................................................................3
2.9 Fair Market Value.....................................................................3
2.10 Good Reason...........................................................................4
2.11 Management Committee..................................................................4
2.12 Option................................................................................5
2.13 Option Price..........................................................................5
2.14 Participant...........................................................................5
2.15 Performance Goals.....................................................................5
2.16 Performance Period....................................................................5
2.17 Permanent Disability or Permanently Disabled..........................................5
2.18 Plan Administrator....................................................................6
2.19 Restricted Stock......................................................................6
2.20 Rule 16b-3............................................................................6
2.21 Section 16 Insider....................................................................6
2.22 Subsidiary............................................................................6
2.23 Total Shareholder Return..............................................................6
SECTION 3 ADMINISTRATION........................................................................6
SECTION 4 ELIGIBILITY...........................................................................7
SECTION 5 SHARES AVAILABLE FOR THE PLAN.........................................................7
SECTION 6 STOCK OPTIONS.........................................................................8
SECTION 7 STOCK APPRECIATION RIGHTS............................................................12
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS....................................................14
SECTION 9 RESTRICTED STOCK.....................................................................15
SECTION 10 REGULATORY APPROVALS AND LISTING.....................................................16
SECTION 11 EFFECTIVE DATE AND TERM OF PLAN......................................................17
SECTION 12 GENERAL PROVISIONS...................................................................17
SECTION 13 COMPLIANCE WITH RULE 16b-3...........................................................19
SECTION 14 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN.........................................................................20
</TABLE>
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El Paso Energy Corporation i Table of Contents
Strategic Stock Plan
<PAGE> 3
EL PASO ENERGY CORPORATION
STRATEGIC STOCK PLAN
AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 1, 1998
SECTION 1 PURPOSES
The purposes of the El Paso Energy Corporation Strategic Stock Plan
(the "Plan") are to promote the interests of the Company (as defined below) and
its stockholders by strengthening its ability to attract and retain officers and
key management employees in the employ of the Company and its Subsidiaries (as
defined below) by furnishing suitable recognition of their ability and industry
which contributes materially to the success of the Company in strategic
transactions and to align the interests and efforts of the Company's officers
and key management employees to the long-term interests of the Company's
stockholders. The Plan provides for the grant of stock options, limited stock
appreciation rights, stock appreciation rights and restricted stock in
accordance with the terms and conditions set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following terms when used
in the Plan shall have the meanings set forth in this Section 2:
2.1 BENEFICIARY
The person or persons designated by the Participant pursuant to Section
6.2(f) of this Plan to whom payments are to be paid pursuant to the terms of the
Plan in the event of the Participant's death.
2.2 BOARD OF DIRECTORS
The Board of Directors of the Company.
2.3 CAUSE
The Company may terminate the Participant's employment for Cause. A
termination for Cause is a termination evidenced by a resolution adopted in good
faith by the Management Committee (or by two-thirds (2/3) of the Board of
Directors in the case of a Management Committee member) that the Participant (i)
willfully and continually failed to substantially perform the Participant's
duties with the Company (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Participant specifying the
manner in which the Participant has failed to substantially perform or (ii)
willfully engaged in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise; provided, however, that no termination of
the Participant's employment shall
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Strategic Stock Plan
<PAGE> 4
be for Cause as set forth in clause (ii) above until (A) there shall have been
delivered to the Participant a copy of a written notice setting forth that the
Participant was guilty of the conduct set forth in clause (ii) above and
specifying the particulars thereof in detail and (B) the Participant shall have
been provided an opportunity to be heard by the Board of Directors (with the
assistance of the Participant's counsel if the Participant so desires). No act,
nor failure to act, on the Participant's part shall be considered "willful"
unless the Participant has acted, or failed to act, with an absence of good
faith and without a reasonable belief that the Participant's action or failure
to act was in the best interest of the Company. Notwithstanding anything
contained in the Plan to the contrary, no failure to perform by the Participant
after notice of termination is given by the Participant shall constitute Cause.
2.4 CHANGE IN CONTROL
As used in the Plan, a Change in Control shall be deemed to occur (i)
if any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the first purchase of the
Common Stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company), (iii) upon the approval by the Company's
stockholders of a merger or consolidation, a sale or disposition of all or
substantially all of the Company's assets or a plan of liquidation or
dissolution of the Company, or (iv) if, during any period of two (2) consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof, unless
the election or nomination for the election by the Company's stockholders of
each new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period. Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition. The acquisition and
merger of Tenneco Inc. shall not constitute a Change in Control under this Plan.
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2.5 CODE
The Internal Revenue Code of 1986, as amended and in effect from time
to time, and the temporary or final regulations of the Secretary of the U.S.
Treasury adopted pursuant to the Code.
2.6 COMMON STOCK
The Common Stock of the Company, $3 par value per share, or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 5.
2.7 COMPANY
El Paso Energy Corporation, a Delaware corporation.
2.8 EXCHANGE ACT
The Securities Exchange Act of 1934, as amended.
2.9 FAIR MARKET VALUE
As applied to a specific date, Fair Market Value shall be deemed to be
the mean between the highest and lowest quoted selling prices at which Common
Stock is sold on such date as reported in the NYSE-Composite Transactions by The
Wall Street Journal on such date, or if no Common Stock was traded on such date,
on the next preceding day on which Common Stock was so traded. Notwithstanding
the foregoing, upon the exercise,
(a) during the thirty (30) day period following a Change in
Control, of a limited stock appreciation right or stock appreciation
right granted in connection with an option more than six (6) months
prior to a Change in Control, or
(b) during the seven (7) month period following a Change in
Control, of a limited stock appreciation right or of a stock
appreciation right granted in connection with an option less than six
(6) months prior to a Change in Control,
On or after a Change in Control, Fair Market Value on the date of
exercise shall be deemed to be the greater of (i) the highest price per
share of Common Stock as reported in the NYSE-Composite Transactions by
The Wall Street Journal during the sixty (60) day period ending on the
day preceding the date of exercise of the stock appreciation right or
limited stock appreciation right, as the case may be, and (ii) if the
Change in Control is one described in clause (ii) or (iii) of Section
2.4, the highest price per share paid for Common Stock in connection
with such Change in Control.
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2.10 GOOD REASON
Good Reason shall mean the occurrence of any of the following events or
conditions, after a Change in Control:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Participant's reasonable judgment, represents a substantial reduction
of the status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Participant of any
duties or responsibilities which, in the Participant's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Participant from or failure to
reappoint or reelect the Participant to any of such positions, except
in connection with the termination of the Participant's employment for
Cause, for Permanent Disability or as a result of his or her death, or
by the Participant other than for Good Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Company's requiring the Participant (without the
consent of the Participant) to be based at any place outside a
thirty-five (35) mile radius of his or her place of employment prior to
a Change in Control, except for reasonably required travel on the
Company's business which is not materially greater than such travel
requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in effect any
material compensation or benefit plan in which the Participant was
participating at the time of the Change in Control or (ii) provide the
Participant with compensation and benefits at least equal (in terms of
benefit levels and/or reward opportunities) to those provided for under
each employee benefit plan, program and practice as in effect
immediately prior to the Change in Control (or as in effect following
the Change in Control, if greater);
(e) any material breach by the Company of any provision of the
Plan; or
(f) any purported termination of the Participant's employment
for Cause by the Company which does not otherwise comply with the terms
of the Plan.
2.11 MANAGEMENT COMMITTEE
A committee consisting of the Chief Executive Officer and such other
senior officers as the Chief Executive Officer shall designate. The Chief
Executive Officer may from time to time remove members from, or add members to,
the Management Committee.
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2.12 OPTION
An option which is not intended to meet the requirements of an
Incentive Stock Option as defined in Section 422 of the Code.
2.13 OPTION PRICE
The price per share of Common Stock at which each option is
exercisable.
2.14 PARTICIPANT
An eligible employee to whom an option, limited stock appreciation
right, stock appreciation right or Restricted Stock is granted under the Plan as
set forth in Section 4.
2.15 PERFORMANCE GOALS
The Plan Administrator shall establish one or more performance goals
("Performance Goals") for each Performance Period in writing. Each Performance
Goal selected for a particular Performance Period shall be a relative or
absolute measure of any one or more of the following (or such other measures as
the Plan Administrator may determine): Total Shareholder Return, operating
income, pre-tax profit, earnings per share, cash flow, return on capital, return
on equity, return on net assets, net income, debt reduction, safety, return on
investment or revenues. The foregoing terms shall have the same meaning as used
in the Company's financial statements, or if the terms are not used in the
Company's financial statements, they shall have the meaning generally applied
pursuant to general accepted accounting principles, or as used in the industry,
as applicable.
2.16 PERFORMANCE PERIOD
That period of time during which Performance Goals are measured to
determine the vesting or granting of options, limited stock appreciation rights,
stock appreciation rights or Restricted Stock, as the Plan Administrator may
determine.
2.17 PERMANENT DISABILITY OR PERMANENTLY DISABLED
A Participant shall be deemed to have become Permanently Disabled for
purposes of the Plan if the Plan Administrator shall find upon the basis of
medical evidence satisfactory to the Plan Administrator that the Participant is
totally disabled, whether due to physical or mental condition, so as to be
prevented from engaging in further employment by the Company or any of its
Subsidiaries, and that such disability will be permanent and continuous during
the remainder of the Participant's life; provided, that with respect to Section
16 Insiders such determination shall be made by the Board of Directors, or the
Compensation Committee thereof, if required.
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<PAGE> 8
2.18 PLAN ADMINISTRATOR
The Management Committee (or the Board of Directors or a committee
thereof in the case of Section 16 Insiders, if required), pursuant to Section 3,
shall administer the Plan.
2.19 RESTRICTED STOCK
Common Stock granted under the Plan that is subject to the requirements
of Section 9 and such other restrictions as the Plan Administrator deems
appropriate.
2.20 RULE 16B-3
Rule 16b-3 of the General Rules and Regulations under the Exchange Act.
2.21 SECTION 16 INSIDER
Any person who is selected by the Plan Administrator to receive
options, limited stock appreciation rights, stock appreciation rights and/or
Restricted Stock pursuant to the Plan and who is subject to the requirements of
Section 16 of the Exchange Act, and the rules and regulations promulgated
thereunder.
2.22 SUBSIDIARY
An entity that is designated by the Plan Administrator as a subsidiary
for purposes of the Plan and that is a corporation (or other form of business
association that is treated as a corporation for tax purposes) of which shares
(or other ownership interests) having more than fifty percent (50%) of the
voting power are owned or controlled, directly or indirectly, by the Company so
as to qualify as a "subsidiary corporation" (within the meaning of Section
424(f) of the Code).
2.23 TOTAL SHAREHOLDER RETURN
The sum of (i) the appreciation or depreciation in the price of a share
of a company's common stock, and (ii) the dividends and other distributions paid
and/or declared during the applicable Performance Period, expressed as a
percentage basis of the Fair Market Value of such share on the first day of the
applicable Performance Period, as calculated in a manner determined by the Plan
Administrator.
SECTION 3 ADMINISTRATION
3.1 The Plan shall be administered by the Management Committee, unless
the Board of Directors shall otherwise determine the administrator of the Plan.
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<PAGE> 9
3.2 Except for the terms and conditions explicitly set forth in the
Plan, the Plan Administrator shall have full authority to construe and interpret
the Plan, to establish, amend and rescind rules and regulations relating to the
Plan, to select persons eligible to participate in the Plan, to grant options,
limited stock appreciation rights, stock appreciation rights and Restricted
Stock thereunder, to administer the Plan, to make recommendations to the Board
of Directors, to take all such steps and make all such determinations in
connection with the Plan and the options, limited stock appreciation rights,
stock appreciation rights and Restricted Stock granted thereunder as it may deem
necessary or advisable, which determination shall be final and binding upon all
Participants. The Plan Administrator shall cause the Company at its expense to
take any action related to the Plan which may be required or necessary to comply
with the provisions of any federal or state law or any regulations issued
thereunder.
3.3 Each member of the Management Committee acting as Plan
Administrator, while serving as such, shall be considered to be acting in his or
her capacity as an officer of the Company. Members of the Management Committee
acting under the Plan shall be fully protected in relying in good faith upon the
advice of counsel and shall incur no liability except for gross negligence or
willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator to participate
in the Plan, an individual must be an officer or key management employee of the
Company, or of any Subsidiary, as of the date on which the Plan Administrator
grants to such individual an option, limited Stock appreciation right, stock
appreciation right or Restricted Stock or a person who, in the judgment of the
Plan Administrator, holds a position of responsibility and is able to contribute
substantially to the Company's continued success. Notwithstanding the foregoing,
the Plan Administrator may make a grant under this Plan to individuals who are
not officers or key management employees, provided that the effectiveness of
such grant shall be conditioned upon such individual becoming an officer or key
management employee of the Company or any Subsidiary. Members of the Board of
Directors of the Company who are full-time salaried officers shall be eligible
to participate. Members of the Board of Directors who are not employees are not
eligible to participate in this Plan.
SECTION 5 SHARES AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.2, the maximum number of shares that may be
issued for which options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock may at any time be granted under the Plan is two
million (2,000,000) shares of Common Stock, from shares held in the Company's
treasury or out of authorized but unissued shares of the Company, or partly out
of each, as shall be determined by the Plan Administrator, subject to, and
reduced by (on a post-split basis),
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Strategic Stock Plan
<PAGE> 10
the number of shares of Common Stock awarded prior to the occurrence of a
two-for-one stock split effected by the Company in the form of a 100% stock
dividend on April 1, 1998. Any options, limited stock appreciation rights, stock
appreciation rights and shares of Restricted Stock outstanding under the Plan on
April 1, 1998, shall be adjusted on a two-for-one basis to reflect the stock
dividend.
5.2 In the event of a recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board of Directors, upon the
recommendation of the Plan Administrator, may make appropriate adjustments in
the number of shares authorized for the Plan and, with respect to outstanding
options, limited stock appreciation rights, stock appreciation rights, and
Restricted Stock, the Plan Administrator may make appropriate adjustments in the
number of shares and the Option Price.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in such number, and at
such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective employees, their present and potential contributions to the success
of the Company, and such other factors as the Plan Administrator shall deem
relevant in accomplishing the purposes of the Plan. The granting of an option
shall take place when the Plan Administrator by resolution, written consent or
other appropriate action determines to grant such an option to a particular
Participant at a particular price. Each option shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan.
6.2 All options granted under the Plan shall be subject to the
following terms and conditions:
(a) Option Price
The Option Price shall be the Fair Market Value of the Common
Stock on the date the option is granted, unless otherwise determined by
the Plan Administrator.
(b) Duration of Options
Options shall be exercisable at such time and under such
conditions as set forth in the option grant, but in no event shall any
option be exercisable later than the tenth anniversary of the date of
its grant.
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(c) Exercise of Options
Subject to Section 6.2(j), a Participant may not exercise an
option until the Participant has completed one (1) year of continuous
employment with the Company or any of its Subsidiaries from and
including the date on which the option is granted, or such shorter or
longer period as the Plan Administrator may determine in a particular
case. This requirement is waived in the event of death or Permanent
Disability of a Participant before such period of continuous employment
is completed and may be waived or modified in the agreement evidencing
the option or by written notice to the Participant from the Plan
Administrator. Thereafter, shares of Common Stock covered by an option
may be purchased at one time or in such installments over the balance
of the option period as may be provided in the option grant. Any shares
not purchased on the applicable installment date may be purchased
thereafter at any time prior to the final expiration of the option. To
the extent that the right to purchase shares has accrued thereunder,
options may be exercised from time to time by written notice to the
Company setting forth the number of shares with respect to which the
option is being exercised.
(d) Payment
The purchase price of shares purchased under options shall be
paid in full to the Company upon the exercise of the option by delivery
of consideration equal to the product of the Option Price and the
number of shares purchased (the "Purchase Price"). Such consideration
may be either (i) in cash or (ii) at the discretion of the Plan
Administrator, in Common Stock already owned by the Participant for at
least six (6) months, or any combination of cash and Common Stock. The
Fair Market Value of such Common Stock as delivered shall be valued as
of the day prior to delivery. The Plan Administrator can determine at
the time the option is granted that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and
applicable laws and regulations (including, but not limited to, federal
tax and securities laws, regulations and state corporate law), an
option may also be exercised by delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds to
pay the Purchase Price. A Participant shall have none of the rights of
a stockholder until the shares of Common Stock are issued to the
Participant.
If specifically authorized in the option grant, a Participant
may elect to pay all or a portion of the Purchase Price by having
shares of Common Stock with a Fair Market Value equal to all or a
portion of the Purchase Price be withheld from the shares issuable to
the Participant upon the exercise of the option. The Fair Market Value
of such Common Stock as is withheld shall be determined as of the same
day as the exercise of the option. In the event an option grant to a
Section 16 Insider provides that the Purchase Price may be paid in
whole or in part by having shares with a Fair Market Value equal to all
or a portion of the Purchase
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Strategic Stock Plan
<PAGE> 12
Price withheld from the shares issuable to the Participant upon the
exercise of the option, the following restrictions shall apply. To the
extent required for compliance with Rule 16b-3, the withholding of
shares issuable upon the exercise of an option to pay the Purchase
Price by a Section 16 Insider must be approved by the Plan
Administrator and must be made (x) pursuant to an irrevocable election
made six (6) months in advance of the transaction, (y) during the
period beginning on the third business day following the date of
release for publication of the quarterly or annual summary statements
of sales and earnings of the Company and ending on the twelfth business
day following such date, or (z) otherwise in accordance with Rule 16b-3
and interpretations thereunder.
(e) Restrictions
The Plan Administrator shall determine and reflect in the
option grant, with respect to each option, the nature and extent of the
restrictions, if any, to be imposed on the shares of Common Stock which
may be purchased thereunder, including, but not limited to,
restrictions on the transferability of such shares acquired through the
exercise of such options for such periods as the Plan Administrator may
determine and, further, that in the event a Participant's employment by
the Company, or a Subsidiary, terminates during the period in which
such shares are nontransferable, the Participant shall be required to
sell such shares back to the Company at such prices as the Plan
Administrator may specify in the option.
(f ) Nontransferability of Options
During a Participant's lifetime, an option may be exercisable
only by the Participant. Options granted under the Plan and the rights
and privileges conferred thereby shall not be subject to execution,
attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by
applicable law and Rule 16b-3, the Plan Administrator may permit a
recipient of an option to designate in writing during the Participant's
lifetime a Beneficiary to receive and exercise the Participant's
options in the event of such Participant's death (as provided in
Section 6.2(i)). If any Participant attempts to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan
or of any right or privilege conferred thereby, contrary to the
provisions of the Plan, or suffers the sale or levy or any attachment
or similar process upon the rights and privileges conferred hereby, all
affected options held by such Participant shall be immediately
forfeited.
(g) Purchase for Investment
The Plan Administrator shall have the right to require that
each Participant or other person who shall exercise an option under the
Plan, and each person into
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Strategic Stock Plan
<PAGE> 13
whose name shares of Common Stock shall be issued pursuant to the
exercise of an option, represent and agree that any and all shares of
Common Stock purchased pursuant to such option are being purchased for
investment only and not with a view to the distribution or resale
thereof and that such shares will not be sold except in accordance with
such restrictions or limitations as may be set forth in the option.
This Section 6.2(g) shall be inoperative during any period of time when
the Company has obtained all necessary or advisable approvals from
governmental agencies and has completed all necessary or advisable
registrations or other qualifications of shares of Common Stock as to
which options may from time to time be granted.
(h) Termination of Employment
Upon the termination of a Participant's employment for any
reason other than death or Permanent Disability, the Participant's
option shall be exercisable only to the extent that it was then
exercisable and, unless the term of the options expires sooner, such
options shall expire according to the following schedule; provided,
that the Plan Administrator may at any time determine in a particular
case that specific limitations and restrictions under the Plan shall
not apply:
(i) Retirement
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's retirement from the
Company or any Subsidiary.
(ii) Disability
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's Permanent Disability.
(iii) Termination
Subject to subparagraph (iv) below, the option shall
expire, unless exercised, thirty-six (36) months after a
Participant resigns or is terminated as an employee of the
Company or any of its Subsidiaries, unless the Plan
Administrator shall have determined in a specific case that
the option should expire sooner or should terminate when the
Participant's employment status ceases.
(iv) Termination Following a Change in Control
The option shall expire, unless exercised, thirty-six
(36) months after a Participant's termination of employment
(other than a termination by the Company for Cause or a
voluntary termination by the Participant other than for Good
Reason) following a Change in Control, provided that
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Strategic Stock Plan
<PAGE> 14
said termination of employment occurs within two (2) years
following a Change in Control.
(v) All Other Terminations
Notwithstanding subparagraphs (iii) and (iv) above,
the option shall expire upon termination of employment for
Cause.
(i) Death of Participant
Upon the death of a Participant, whether during the
Participant's period of employment or during the thirty-six (36) month
period referred to in Sections 6.2(h)(i), (ii) and (iii), the option
shall expire, unless the original term of the option expires sooner,
twelve (12) months after the date of the Participant's death, unless
the option is exercised within such twelve (12) month period by the
Participant's Beneficiary, legal representatives, estate or the person
or persons to whom the deceased's option rights shall have passed by
will or the laws of descent and distribution; provided, that the Plan
Administrator shall determine in a particular case that specific
limitations and restrictions under the Plan shall not apply.
Notwithstanding any other Plan provisions pertaining to the times at
which options may be exercised, no option shall continue to be
exercisable, pursuant to Section 6.2(h) or this Section 6.2(i), at a
time that would violate the maximum duration of Section 6.2(b).
(j) Change in Control
Notwithstanding other Plan provisions pertaining to the times
at which options may be exercised, all outstanding options, to the
extent not then currently exercisable, shall become exercisable in full
upon the occurrence of a Change in Control. In addition, no option
shall continue to be exercisable at a time that would violate the
maximum duration of Section 6.2(b).
SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock appreciation rights to
Participants in connection with any option granted under the Plan, either at the
time of the grant of such option or at any time thereafter during the term of
the option. Such stock appreciation rights shall cover the same shares covered
by the options (or such lesser number of shares of Common Stock as the Plan
Administrator may determine) and shall, except as provided in Section 7.3, be
subject to the same terms and conditions as the related options and such further
terms and conditions not inconsistent with the Plan as shall from time to time
be determined by the Plan Administrator.
7.2 Each stock appreciation right shall entitle the holder of the
related option to surrender to the Company unexercised the related option, or
any portion thereof, and to
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<PAGE> 15
receive from the Company in exchange therefor an amount equal to the excess of
the Fair Market Value of one share of Common Stock on the date the right is
exercised over the Option Price per share times the number of shares covered by
the option, or portion thereof, which is surrendered. Payment shall be made in
shares of Common Stock valued at Fair Market Value as of the date the right is
exercised, or in cash, or partly in shares and partly in cash, at the discretion
of the Plan Administrator; provided, however, that payment shall be made solely
in cash with respect to a stock appreciation right which is exercised within
seven (7) months following a Change in Control. Notwithstanding the foregoing
and to the extent required by Rule 16b-3, a payment, in whole or in part, of
cash upon exercise of a stock appreciation right by a Section 16 Insider may be
made only if the Plan Administrator approves such election to receive cash and
the right is exercised during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date. Stock appreciation rights may be exercised
from time to time upon actual receipt by the Company of written notice stating
the number of shares of Common Stock with respect to which the stock
appreciation right is being exercised. The value of any fractional shares shall
be paid in cash.
7.3 Stock appreciation rights are subject to the following
restrictions:
(a) Each stock appreciation right shall be exercisable at such
time or times as the option to which it relates shall be exercisable,
or at such other times as the Plan Administrator may determine;
provided, however, that such right shall not be exercisable until the
Participant shall have completed a six (6) month period of continuous
employment with the Company or any of its Subsidiaries immediately
following the date on which the stock appreciation right is granted. In
the event of death or Permanent Disability of a Participant during
employment but before the Participant has completed such period of
continuous employment, such stock appreciation right shall be
exercisable; but only within the period specified in the related
option. In the event of a Change in Control, the requirement that a
Participant shall have completed a six (6) month period of continuous
employment is waived with respect to a Participant who is employed by
the Company at the time of the Change in Control but who, within the
six (6) month period, voluntarily terminates employment for Good Reason
or is terminated by the Company other than for Cause. Notwithstanding
the foregoing, a stock appreciation right may not be exercised for cash
by a Section 16 Insider under any circumstances until the expiration of
the six (6) month period required under Rule 16b-3.
(b) Except in the event of a Change in Control, the Plan
Administrator in its sole discretion may approve or deny in whole or in
part a request to exercise a stock appreciation right. Denial or
approval of such request shall not require a subsequent request to be
similarly treated by the Plan Administrator.
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<PAGE> 16
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the extent that a stock appreciation right is
exercised, the related option shall be deemed to have been surrendered
unexercised and canceled.
(d) A holder of stock appreciation rights shall have none of
the rights of a stockholder until shares of Common Stock, if any, are
issued to such holder pursuant to such holder's exercise of such
rights.
(e) The acquisition of Common Stock pursuant to the exercise
of a stock appreciation right shall be subject to the same restrictions
as would apply to the acquisition of Common Stock acquired upon
acquisition of the related option, as set forth in Section 6.2.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock appreciation rights
to Participants in connection with any options granted under the Plan, either at
the time of the grant of such option or at any time thereafter during the term
of the option. Such limited stock appreciation rights shall cover the same
shares covered by the options (or such lesser number of shares of Common Stock
as the Plan Administrator may determine) and shall, except as provided in
Section 8.3, be subject to the same terms and conditions as the related options
and such further terms and conditions not inconsistent with the Plan as shall
from time to time be determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall entitle the holder of
the related option to surrender to the Company the unexercised portion of the
related option and to receive from the Company in exchange therefor an amount in
cash equal to the excess of the Fair Market Value of one (1) share of Common
Stock on the date the right is exercised over the Option Price per share times
the number of shares covered by the option, or portion thereof, which is
surrendered.
8.3 Limited stock appreciation rights are subject to the following
restrictions:
(a) Each limited stock appreciation right shall be exercisable
in full for a period of seven (7) months following the date of a Change
in Control regardless of whether the holder is employed by the Company
or any of its Subsidiaries on the date the right is exercised;
provided, however, that limited stock appreciation rights may not be
exercised under any circumstances until the expiration of the six (6)
month period required under Rule 16b-3. Limited stock appreciation
rights shall be exercisable only to the same extent and subject to the
same conditions as the options related thereto are exercisable, as
provided in Section 6.2(j).
(b) The right of a Participant to exercise a limited stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the
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<PAGE> 17
extent that a limited stock appreciation right is exercised, the
related option shall be deemed to have been surrendered unexercised and
canceled.
SECTION 9 RESTRICTED STOCK
9.1 Restricted Stock may be granted to Participants in such number and
at such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective Participants, their present and potential contributions to the
success of the Company, and such other factors as the Plan Administrator shall
deem relevant in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such Restricted
Stock to a particular Participant. Each grant shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan. The Participant receiving a grant of Restricted
Stock shall be recorded as a stockholder of the Company. Each Participant who
receives a grant of Restricted Stock shall have all the rights of a stockholder
with respect to such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and receive dividends
and other distributions; provided, however, that no Participant awarded
Restricted Stock shall have any right as a stockholder with respect to any
shares subject to the Participant's Restricted Stock grant prior to the date of
issuance to the Participant of a certificate or certificates for such shares, or
before the effective date of any book entry form, as applicable.
9.2 A grant of Restricted Stock shall entitle a Participant to receive,
on the date or dates designated by the Plan Administrator, upon payment to the
Company of the par value of the Common Stock in a manner determined by the Plan
Administrator, the number of shares of Common Stock selected by the Plan
Administrator. The Plan Administrator may require, under such terms and
conditions as it deems appropriate or desirable, that the certificates for
Restricted Stock delivered under the Plan may be held in custody by a bank or
other institution, or that the Company may itself hold such shares in custody
until the Restriction Period (as defined in Section 9.3) expires or until
restrictions thereon otherwise lapse, and may require, as a condition of any
issuance of Restricted Stock that the Participant shall have delivered a stock
power endorsed in blank relating to the shares of Restricted Stock.
9.3 During a period of years following the date of grant, as determined
by the Plan Administrator, which shall in no event be less than one (1) year
and/or until the required Performance Goals are achieved, if applicable (the
"Restriction Period"), the Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered or disposed of by the
recipient, except in the event of death or Permanent Disability, the transfer to
the Company as provided under the Plan or the Plan Administrator's waiver or
modification of such restrictions in the agreement evidencing the grant of
Restricted Stock, or by resolution of the Plan Administrator adopted at any
time.
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<PAGE> 18
9.4 Except as provided in Section 9.5 or 9.6, or as determined by the
Plan Administrator, if a Participant terminates employment with the Company for
any reason before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participant to the Company. In addition, in the event of any attempt by the
Participant to sell, exchange, transfer, pledge or otherwise dispose of shares
of Restricted Stock in violation of the terms of the Plan, such shares shall be
forfeited to the Company.
9.5 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall lapse, upon the
Participant's death or Permanent Disability or any termination of employment
determined by the Plan Administrator to end the Restriction Period.
9.6 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall terminate immediately
upon a Change in Control.
9.7 When the restrictions imposed by Section 9.3 expire or otherwise
lapse with respect to one or more shares of Restricted Stock, the Company shall
deliver to the Participant (or the Participant's legal representative,
Beneficiary or heir) one (1) share of Common Stock for each share of Restricted
Stock. At that time, the agreement referred to in Section 9.1, as it relates to
such shares, shall be terminated.
9.8 Subject to Section 9.2, a Participant entitled to receive
Restricted Stock under the Plan shall be issued a certificate for such shares.
Such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend reciting the terms, conditions and restrictions, if
any, applicable to such shares and shall be subject to appropriate stop-transfer
orders.
SECTION 10 REGULATORY APPROVALS AND LISTING
10.1 The Company shall not be required to issue any certificate for
shares of Common Stock upon the exercise of an option or a stock appreciation
right granted under the Plan, with respect to a grant of Restricted Stock:
(a) obtaining any approval or ruling from the Securities and
Exchange Commission, the Internal Revenue Service or any other
governmental agency which the Company, in its sole discretion, shall
determine to be necessary or advisable;
(b) listing of such shares on any stock exchange on which the
Common Stock may then be listed; or
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Strategic Stock Plan
<PAGE> 19
(c) completing any registration or other qualification of such
shares under any federal or state laws, rulings or regulations of any
governmental body which the Company, in its sole discretion, shall
determine to be necessary or advisable.
All certificates for shares of Common Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions as the
Plan Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which Common Stock is then listed and any applicable federal or State securities
laws, and the Plan Administrator may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions. The
foregoing provisions of this paragraph shall not be effective if and to the
extent that the shares of Common Stock delivered under the Plan are covered by
an effective and current registration statement under the Securities Act of
1933, as amended, or if and so long as the Plan Administrator determines that
application of such provisions as no longer required or desirable. In making
such determination, the Plan Administrator may rely upon an opinion of counsel
for the Company.
SECTION 11 EFFECTIVE DATE AND TERM OF PLAN
The Plan was originally adopted by the Board of Directors effective as
of June 19, 1996. The Board amended and restated the Plan effective as of August
1, 1998, in connection with the reorganization of the Company into a holding
company structure whereby El Paso Energy Corporation became the publicly held
company and El Paso Natural Gas Company became a wholly owned subsidiary. This
Plan was assumed by El Paso Energy Corporation pursuant to an Assignment and
Assumption Agreement effective as of August 1, 1998, by and between El Paso
Energy Corporation and El Paso Natural Gas Company. Options, limited stock
appreciation rights, stock appreciation rights and Restricted Stock may be
granted pursuant to the Plan from time to time within the period commencing upon
adoption of the Plan by the Board of Directors and ending ten (10) years after
the of such adoption. Options, limited stock appreciation rights, stock
appreciation rights and Restricted Stock theretofore granted may extend beyond
that date and the terms and conditions of the Plan shall continue to apply
thereto and to shares of Common Stock acquired thereunder. To the extent
required for compliance with Rule 16b-3, shares of Common Stock underlying
options, limited stock appreciation rights, stock appreciation rights,
Restricted Stock and Common Stock granted to Section 16 Insiders may not be sold
until a date at least six (6) months after the date of such grant.
SECTION 12 GENERAL PROVISIONS
12.1 Nothing contained in the Plan, or in any option, limited stock
appreciation right, stock appreciation right or Restricted Stock granted
pursuant to the Plan, shall confer upon any employee any right with respect to
continuance of employment by the Company or a Subsidiary, nor interfere in any
way with the right of the Company or a
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Strategic Stock Plan
<PAGE> 20
Subsidiary to terminate the employment of such employee at any time with or
without assigning any reason therefor.
12.2 Grants, vesting or payment of stock options, limited stock
appreciation rights, stock appreciation rights or Restricted Stock shall not be
considered as part of a Participant's salary or used for the calculation of any
other pay, allowance, pension or other benefit unless otherwise permitted by
other benefit plans provided by the Company or its Subsidiaries, or required by
law or by contractual obligations of the Company or its Subsidiaries.
12.3 The right of a Participant or Beneficiary to the payment of any
compensation under the Plan may not be assigned, transferred, pledged or
encumbered, nor shall such right or other interests be subject to attachment,
garnishment, execution or other legal process.
12.4 Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company, or of its Subsidiaries, as applicable, shall
not be deemed terminations or interruptions of employment, unless a Participant
commences a leave of absence from which he or she is not expected to return to
active employment with the Company or its Subsidiaries.
12.5 In the event a Participant is transferred from the Company to a
Subsidiary, or vice versa, or is promoted or given different responsibilities,
the stock options, limited stock appreciation rights, stock appreciation rights
and Restricted Stock granted to the Participant prior to such date shall not be
affected. Notwithstanding the foregoing or any other provision in this Plan, in
the event a Participant becomes an officer or director of the Company subject to
Section 16(b) of the Exchange Act, the Plan Administrator may take any and all
action necessary to prevent any violation of Section 16(b), including, but not
limited to, accelerating the vesting of options, rights or Restricted Stock,
canceling any unvested options, rights or Restricted Stock and/or requiring the
Participant to exercise any and all vested options or rights at such times as
the Plan Administrator may determine.
12.6 The Plan shall be construed and governed in accordance with the
laws of the State of Texas, except that it shall be construed and governed in
accordance with applicable federal law in the event that such federal law
preempts state law.
12.7 Appropriate provision shall be made for all taxes required to be
withheld in connection with the exercise, grant or other taxable event with
respect to options, limited stock appreciation rights, stock appreciation rights
and Restricted Stock under the applicable laws or regulations of any
governmental authority, whether federal, state or local and whether domestic or
foreign. Unless otherwise provided in the grant, a Participant is permitted to
deliver shares of Common Stock (including shares acquired pursuant to the
exercise of an option or stock appreciation right other than the option or stock
appreciation right currently being exercised, to the extent permitted by
applicable regulations) for payment of withholding taxes on the exercise of an
option, stock
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<PAGE> 21
appreciation right, or limited stock appreciation right, upon the grant or
vesting of Restricted Stock. At the election of the Plan Administrator or,
subject to approval of the Plan Administrator at its sole discretion, at the
election of a Participant, shares of Common Stock may be withheld from the
shares issuable to the Participant upon the exercise of an option or stock
appreciation right or upon the vesting of the Restricted Stock to satisfy tax
withholding obligations. The Fair Market Value of Common Stock as delivered
pursuant to this Section 12.7 shall be valued as of the day prior to delivery,
and shall be calculated in accordance with Section 2.9. The withholding of
shares of Common Stock to pay tax obligations in connection with the exercise of
an option or stock appreciation right or the vesting of Restricted Stock by a
Section 16 Insider must be approved by the Plan Administrator and must occur (i)
pursuant to an irrevocable election made six (6) months in advance of the
transaction, (ii) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date, or (iii) otherwise in accordance with the
provisions of Rule 16b-3 and interpretations thereunder. In the event Section 16
of the Exchange Act and rules thereunder, including Rule 16b-3, is amended or
interpreted to permit shares of Common Stock to be withheld to pay tax
obligations outside the periods described in clause (i) or (ii) of the preceding
sentence, or without Plan Administrator approval, the Plan Administrator may
determine that such provisions shall no longer apply to Section 16 Insiders.
Any Participant that makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan, or
(iii) disposing of any shares of Common Stock issued under the Plan.
SECTION 13 COMPLIANCE WITH RULE 16B-3
The Company's intention is that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, with respect to awards granted to or held by Section 16 Insiders, the Plan
shall comply in all respects with Rule 16b-3, or with any other exemption
available pursuant to Section 16 of the Exchange Act or rules thereunder, and,
if any Plan provision is later found not to be in compliance with Rule 16b-3,
that provision shall be deemed modified as necessary to meet the requirements of
Rule 16b-3.
Notwithstanding anything in the Plan to the contrary, the Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of
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Strategic Stock Plan
<PAGE> 22
any provision of the Plan to Participants who are Section 16 Insiders without so
restricting, limiting or conditioning the Plan with respect to other
Participants.
SECTION 14 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN
14.1 Subject to the Board of Directors and Section 14.2, the Plan
Administrator may from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company, including, but not limited
to, any amendment necessary to ensure that the Company may obtain any regulatory
approval referred to in Section 10; provided, however, that no change in any
option, limited stock appreciation right, stock appreciation right or Restricted
Stock theretofore granted may be made without the consent of the Participant
which would impair the right of the Participant to acquire or retain Common
Stock or cash that the Participant may have acquired as a result of the Plan.
14.2 The Board of Directors may at any time suspend the operation of or
terminate the Plan with respect to any shares of Common Stock or rights which
are not at that time subject to option, limited stock appreciation right, stock
appreciation right or grant of Restricted Stock.
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Strategic Stock Plan
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IN WITNESS WHEREOF, the Company has caused the Plan to be amended and
restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards III
---------------------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
------------------------------
Title: Corporate Secretary
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Strategic Stock Plan
<PAGE> 1
EXHIBIT 10.R
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into the 31st day of July, 1992 (the "Effective
Date"), by and between EL PASO NATURAL GAS COMPANY, a Delaware corporation (the
"Company") and WILLIAM A. WISE of El Paso, Texas (the "Executive").
WHEREAS, the Company currently employs the Executive as President and
Chief Executive Officer, in connection with which the Executive also serves as
a member of the Board of Directors; and
WHEREAS, both the Company and the Executive (the "Parties") now desire to
set forth certain conditions of such employment during the "Term" as defined
below:
NOW THEREFORE; in consideration of the premises and mutual covenants
contained herein, and for other consideration mutually acknowledged, the
Parties agree as follows:
1. Term.
The Term shall commence on the Effective Date and shall continue
through July 31, 1995, provided that effective the first day of each calendar
month (commencing September 1, 1992), the Term shall automatically be extended
for one additional month (so as to establish a three year remaining Term),
unless prior thereto either Party shall have given written notice that the Term
shall not be so extended.
2. Position.
During the Term, the Executive shall serve as President and Chief
Executive Officer of the Company.
3. Compensation and Benefits.
(a) Except as provided in Section 3(b) below, the Executive's rights
to compensation and benefits shall be as determined under applicable plans,
programs or arrangements of the Company in effect from time to time, provided
that no material
<PAGE> 2
reduction in any compensation or benefits as in effect on the Effective Date
shall occur without the Executive's written consent.
(b) (i) The Executive's pension benefit under the Company's
Supplemental Benefits Plan as in effect on the Effective Date (the "SBP"), shall
be determined by taking into account under Section 4.1(1) of the SBP, the
following special adjustment: for each "Plan Year", as defined in the El Paso
Natural Gas Company Pension Plan as in effect on the Effective Date (the
"Pension Plan"), or partial Plan Year, occurring during the Term, the Executive
shall be deemed credited with two years of age and "Credited Service", as
defined in the Pension Plan, subject to Section 4, below. No additional years
of age or service shall be deemed credited once the Executive has been deemed
credited with 30 years of service.
(ii) To the extent the SBP benefit determined pursuant to the
adjustment described in Clause (i) above exceeds the Executive's benefit as
otherwise determined under the SBP (the "Basic SBP Benefit"), such excess (the
"SBP Excess Amount") shall be paid in a single lump-sum on the later of (A) the
earlier of the Executive's death or his attainment of age 56 (the "Payment
Date"), or as soon thereafter as any offset as provided below is determined, or
(B) the time for payment of the Basic SBP Benefit. Interest shall accrue on the
SBP Excess Amount from the date of termination of the Executive's employment to
the date of payment of the SBP Excess Amount, if later, at the rate applicable
to deferred compensation under the terms of the Company's Deferred Compensation
Plan as currently in effect. Such interest shall be paid at the time the SBP
Excess Amount is paid. The SBP Excess Amount shall be offset by the present
value of any benefit accrued by the Executive through the Payment Date, under
any defined benefit pension plan of any subsequent employer, such offset to be
independently determined as provided in Section 7
2
<PAGE> 3
below. Notwithstanding the above, if a Change in Control occurs at any time,
the SBP Excess Amount shall not be subject to offset under this Clause (ii),
and shall be paid on the later of (A) the date of the Change in Control, or (B)
at the date for payment of the Executive's Basic SBP Benefit.
(iii) The Executive's entire SBP benefit, including the SBP
Excess Amount, shall be subject to the provisions of the Company's Benefits
Protection Trust as a benefit payable under the SBP.
(c) No amendment of the SBP Shall reduce the Executives' SBP
entitlements under this Section 3(b).
4. Termination of Employment.
(a) As used herein, the terms "Cause", "Change in Control" and
"Good Reason" shall have the meanings provided in the Company's Key Executive
Severance Protection Plan (the "SPP") as in effect on the date hereof, except
that "Good Reason" shall also include (i) loss of the Executive's position as a
Director (or, if the Executive has become Chairman of the Board of Directors,
the subsequent loss of his position as Chairman) except as a result of a
termination of the Executive's employment for any of the reasons described in
Section 4(d) below, or (ii) any breach or attempted breach of this Agreement by
the Company.
(b) (i) The Company may terminate the Executive's employment at
any time, provided that if, during the Term, the Executive's employment is
terminated by the Company other than the Cause, or is terminated by the
Executive for Good Reason, the Executive shall receive the following through
the end of the Term:
(A) Salary, at the rate in effect on the date of termination of
employment.
3
<PAGE> 4
(B) Bonus, equal to fifty percent of the maximum bonus
opportunity as in effect on termination of employment, but not less
than fifty percent of annual salary, payable as otherwise provided in
the Company's annual bonus program as in effect on termination of
employment.
(C) Continued age and deemed Credited Service toward his pension
benefit as provided in Section 3(b), above provided that, if the Term
ends on other than the last day of a Plan Year, then, in applying the
benefit formula under the Pension Plan for purposes of determining
such benefit:
(x) in addition to receiving deemed Credited Service under
Section 3(b) for all completed Plan Years during the Term, the
Executive shall be deemed credited with up to two Years of
Credited Service under Section 1.12(c) of the Pension Plan with
respect to the partial Plan Year in which the Term ends (the
"Part Year"), the amount of such Service Credit to be determined
by multiplying all whole or partial calendar months of the Term
falling within the Part Year by 380, and dividing the number of
Hours of Service thus determined by 2,280, and
(y) the Executive shall be deemed credited with an
additional year of age for each three full calendar months of the
Term occurring during such Part Year.
(D) All other benefits as in effect on termination of
employment.
4
<PAGE> 5
In addition, the Company shall, if so requested, purchase the Executive's
residence under the terms of the Company's Domestic Relocation Program (the
"DRP") as in effect on the Effective Date, for a price equal to the greater of
"appraised value," as defined in the DRP, or the amount of the investment by
the Executive (and his spouse) therein (including the original equity
investment and the amount invested in improvements). To the extent the
Executive is subject to tax on any excess of the purchase price described above
over the appraised value (the "Excess"), the Company shall pay the Executive an
additional amount (the "Gross-up") such that, after payment of all income taxes
in respect of the Excess and the Gross-up, the Executive is in the same
position as if no income taxed were incurred on the Excess.
In addition, the Company shall offer to Executive the opportunity to
acquire by assignment his EPNG-owned automobile without cost, provided that
EPNG shall not be required to reimburse the Executive for any taxes, including
Federal income taxes, he must pay on account of, or because of such assignment.
(ii) The Executive shall have no obligation to seek or accept
subsequent employment. However, except as provided in Section 4(c) below, the
amounts provided in Clauses (A),(B), or (D), of Section 4(b)(i) above, shall be
reduced, but not below zero, by any corresponding amounts (i.e. salary, bonus
or benefits , not including defined pension plan benefits), received in
connection with any full-time employment with any other employer during the
Term. For this purpose, periodic payments for full-time services as an
independent contractor shall be considered as salary, any disproportionate
lump sum payments in connection with full-time services shall be treated as
bonus, amounts voluntarily deferred shall be taken into account as if paid
currently, and the value of any benefit which is not readily determinable shall
be independently determined as provided in Section 7 below.
5
<PAGE> 6
The Executive shall have an affirmative duty promptly to report any subsequent
employment, and any amounts earned in connection therewith.
(c) If a Change in Control occurs, and the Executive's Employment is
thereafter terminated during the Term as described in Section 4(b), above, his
rights shall be as set forth in such Section 4(b) provided that, any provisions
of Section 4(b) to the contrary notwithstanding, (i) the Executive shall be
entitled to no less than the full value of any benefits available to the
Executive under the SPP, (ii) his pension rights as provided in Section 3(b),
above shall not be reduced with respect to benefits under plans of subsequent
employers, and (iii) his rights under Clauses (A), (B), and (D) of Section
4(b)(i) shall not be reduced with respect to amounts received from subsequent
employment.
(d) If the Executive's employment is terminated during the Term on
account of death, involuntary termination for Cause or voluntary termination
other than for Good Reason, his right to salary shall terminate on the date
of termination of employment and his other rights shall be as determined under
the Company's applicable plans and programs, provided that he shall in all
events receive a pension benefit under the SBP as provided in Section 3(b)
above, but only as determined through the end of the full Plan Year Immediately
preceding his last day of employment.
(e) In the event the Company at any time gives written notice that
the Term in not to be extended, as provided in Section 1, above, then, in
addition to any other rights hereunder, the Executive may, during the period
commencing twelve months prior to the end of the Term and ending twelve months
following the end of the Term, request that the Company purchase his
residence. In such case, the Company shall purchase the Executive's residence
under the terms described in Section 4(c)(i) above.
6
<PAGE> 7
5. Non-Competition.
During the Term, whether or not the Executive is then employed by the
Company, the Executive shall not, directly or indirectly, acquire (other than
less than ten percent (10%) of the publicly traded shares or other publicly
traded interest of any corporation, partnership, trust or other business
organization), manage, control, participate in, consult with, render services
to, or in any manner engage in any business with any person, corporation,
partnership, trust, or other business organization which is
(a) a competitor of the Company in any business activity conducted
in the "Business Region," as defined below, that represented more than three
percent (3%) of the Company's consolidated operating income as determined in
the Company's then most recently completed fiscal year, or
(b) a customer or customers whose business transactions with the
Company in the Business Region gave rise, in the aggregate, to more than three
percent (3%) of the Company's consolidated gross revenues during its then most
recently completed fiscal year.
For this purpose, the "Business Region" means any State in the United
States of America in which Company, or any subsidiary, was materially engaged
in business at any time during the period of the Executive's active employment
by the Company during the Term.
The Executive acknowledges that monetary damages would not constitute an
adequate remedy for the Company in the event of a breach of this Section 5, and
he therefore agrees that the Company shall be entitled to injunctive or
equitable relief for the enforcement hereof. This Section 5 shall not,
however, apply subsequent to (i) a Change in Control, or (ii)
7
<PAGE> 8
the Exectutive's voluntary termination of employment other than for Good
Reason, if he shall have provided the Company with at least six months prior
written notice of such termination.
6. Relationship to SPP.
Nothwithstanding the provisions of Section 9.2 of the SPP all rights
of the Executive under the SPP are hereby incorporated herein by reference, and
made contractual rights of the Executive and obligations of the Company
hereunder, (including, without limitation, the provisions of Article VI of the
SPP, which shall apply to all of the Executive's compensation and benefits
provided hereunder) and, accordingly, no amendment or termination thereof shall
reduce or adversely affect the Executive's rights and benefits thereunder as
incorporated herein. Any amounts received by the Executive under the SPP shall
offset amounts of the same nature due hereunder. If the amount of such offset
is disputed, it shall be independently determined pursuant to Section 7,
below. Any lump sum amounts paid as cash compensation will offset any periodic
payments of the same nature in reverse chronological order. For this purpose,
amounts shall be treated as being of the same nature strictly as follows:
(a) The amount described in Section 4.2(a) of the SPP shall be
treated as of the same nature as both salary and bonus.
(b) Each of the specific benefits described in Section 4.2(b) of the
SPP shall be treated as of the same nature as, and shall be a
credit toward, only the specifically correlative benefit, e.g.,
"Basic Life Insurance" shall only offset life insurance coverage,
etc.
(c) Any amount received under Section 4.2(c) of the SPP shall be
treated as of the same nature as the pension provided in Section
3(b) hereof.
8
<PAGE> 9
(d) The transfer of automobile ownership described in Section
4.2(d) of the SPP and the amounts described in Article VI
shall not offset any amounts payable hereunder.
No provision of this Agreement shall limit any of the Executive's rights, or
reduce the value of any of the benefits due the Executive, under the SPP.
7. Independent Determinations.
Any independent determination of the comparative value of benefits,
as required in this Agreement, shall be made at the Company's expense by an
independent actuarial consulting firm of national reputation reasonably
acceptable to both Parties.
8. Arbitration and Enforcement.
The Parties agree that any controversy or claim arising out of or
relating to this Agreement, or the breach of any provision hereof, or the terms
or conditions of employment, including whether such controversy or claim is
arbitrable, will be settled by arbitrators in El Paso, in accordance with the
rules for commercial arbitration of the American Arbitration Association as in
effect at the time a demand for arbitration under the rules is made, and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The decision of the arbitrators, including
determination of the amount of any damages suffered, will be conclusive, final
and binding on both parties, their heirs, executors, administrators, successors
and assigns. The cost of arbitration and any other costs incurred by the
Executive in enforcing his rights hereunder (including without limitation
reasonable attorney's fees whether or not the Executive ultimately receives a
favorable award or judgment in such arbitration or other proceeding) shall be
borne by the Company. The Executive shall be entitled to submit written proof
reasonably satisfactory to the Company of the incurrence of such costs on a
monthly basis, and to receive
9
<PAGE> 10
reimbursement therefore within 30 days of such submission. Verified copies of
any statements submitted to the Executive shall constitute satisfactory written
proof for this purpose.
9. Assignability; Binding Nature.
This Agreement is binding upon, and will inure to the benefit of, the
Parties hereto and their respective successors, heirs, administrators,
executors and assigns. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive except that his
rights to compensation and benefits hereunder, which rights will remain subject
to the limitations of this Agreement, may be transferred by will or operation
of law. No rights or obligations of the Company under this Agreement may be
assigned or transferred except that such rights or obligations may be assigned
or transferred by operation of law in the event of a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law.
10. Amendments and Waivers.
This Agreement may not be modified or amended except by a writing
signed by both Parties.
11. Notices.
Any notice given hereunder will be in writing and will be deemed
given when delivered personally or by courier, or five days after being
mailed, certified or registered mail, duly addressed to the Party concerned at
the address indicated below or at such other
10
<PAGE> 11
address as such Party may subsequently provide, in accordance with the notice
and delivery provisions of this Section 11, such notice and delivery:
To the Company:
Senior Vice President
Human Resources and Administration
El Paso Natural Gas Company
P.O. Box 1492
El Paso, Texas 79978
With a copy to:
General Counsel
El Paso Natural Gas Company
P.O. Box 1492
El Paso, Texas 79978
To the Executive:
William A. Wise
5605 West Side Drive
El Paso, Texas 79932
12. References.
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive will be deemed,
where appropriate, to refer to his legal representative or, where appropriate,
to his beneficiary or beneficiaries.
13. Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future law, this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and the remaining portions hereof shall remain in full
force and effect.
11
<PAGE> 12
14. Governing Law.
This Agreement will be governed by and construed and interpreted in
accordance with the laws of the State of Texas without reference to the
principles of conflicts of law thereof.
15. Counterparts.
This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.
EL PASO NATURAL GAS COMPANY
By: /s/ RICHARD M. BRESSLER
-----------------------------
RICHARD M. BRESSLER, CHAIRMAN
OF THE BOARD
/s/ WILLIAM A. WISE
-----------------------------
WILLIAM A. WISE
<PAGE> 1
EXHIBIT 10.V
[EL PASO NATURAL GAS COMPANY LETTERHEAD]
February 22, 1991
Britton White, Jr., Esquire
Holland & Hart
P. O. Box 8749
Denver, CO 80201
Dear Brit:
Summarized below are two items that I have agreed to make available to you
for accepting employment with EPNG at this time.
Special One-Time Bonus
As an incentive to accept this position, I have authorized payment to you
of a one-time special bonus. This bonus, in the amount of $100,000, will be
paid to you after you officially start work for EPNG on March 1, 1991. If EPNG
and Burlington Resources complete a transaction resulting in a separation of
EPNG from Burlington Resources in a manner wherein you share any special equity,
stock option or other compensation associated with such transaction, then this
bonus payment will be considered an advance payment of your 1991 Incentive
Compensation Bonus and will be deducted, with interest, from payment of said
bonus.
Pension Benefit
When you start work at EPNG on March 1, 1991, you will be designated as a
participant under the Company's Pension Plan. If you are still employed by the
Company (or its successor) when you attain age sixty (60), the Company will pay
to you (or your surviving spouse) upon your retirement as an officer of the
company, deferred compensation in monthly installments which, when combined with
the amounts you (or your beneficiaries) are legally entitled to receive under
the Plan (after taking into account any actions or conditions, or waivers,
renunciation, or other binding agreements, termination or reducing rights to
such amounts), shall equal the retirement or surviving spouse pension benefits
which would have been payable to you or your spouse had you been a participant
in the plan for twenty (20) years and the normal retirement age were sixty (60).
Very truly yours,
/s/ BILL
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS.
</LEGEND>
<MULTIPLIER> 1,000,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 68
<SECURITIES> 0
<RECEIVABLES> 776
<ALLOWANCES> 0<F1>
<INVENTORY> 46
<CURRENT-ASSETS> 1,283
<PP&E> 7,231
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 10,086
<CURRENT-LIABILITIES> 2,426
<BONDS> 2,465
0
0
<COMMON> 372
<OTHER-SE> 1,678
<TOTAL-LIABILITY-AND-EQUITY> 10,086
<SALES> 0
<TOTAL-REVENUES> 4,530
<CGS> 0
<TOTAL-COSTS> 4,164
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 194
<INCOME-PRETAX> 277
<INCOME-TAX> 93
<INCOME-CONTINUING> 165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165<F2>
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.36
<FN>
<F1>Not separately identified in the consolidated financial statements or
accompanying notes thereto.
<F2>Represents basic earnings per share.
</FN>
</TABLE>
