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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
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 1-2700
EL PASO NATURAL GAS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 74-0608280
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
EL PASO ENERGY BUILDING
1001 LOUISIANA
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 757-2131
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $3 per
share............................... New York Stock Exchange
Preferred Stock Purchase Rights....... New York Stock Exchange
9.45% Notes due 1999.................. New York Stock Exchange
8 5/8% Debentures due 2012............ New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT.
Aggregate market value of the voting stock (which consists solely of shares
of common stock) held by non-affiliates of the registrant as of February 28,
1997, computed by reference to the closing sale price of the registrant's common
stock on the New York Stock Exchange on such date: $3,152,151,839.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Common Stock, par value $3 per share. Shares outstanding on February 28,
1997: 58,775,906
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: El Paso Natural Gas Company's definitive Proxy Statement for the
1997 Annual Meeting of Stockholders, to be filed not later than 120 days after
the end of the fiscal year covered by this report, is incorporated by reference
into Part III.
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EL PASO NATURAL GAS COMPANY
TABLE OF CONTENTS
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Glossary.............................................................. ii
PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 11
Item 3. Legal Proceedings........................................... 11
Item 4. Submission of Matters to a Vote of Security Holders......... 12
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 13
Item 6. Selected Financial Data..................................... 14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 15
Item 8. Financial Statements and Supplementary Data................. 28
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 59
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 59
Item 11. Executive Compensation...................................... 59
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 59
Item 13. Certain Relationships and Related Transactions.............. 59
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 59
Signatures.................................................. 64
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GLOSSARY
The following abbreviations, acronyms, or defined terms used in this Form
10-K are defined below:
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DEFINITIONS
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ALJ............................... Administrative Law Judge
Bcf............................... Billion cubic feet
Bcf/d............................. Billion cubic feet per day
Board............................. Board of directors of El Paso Natural Gas Company
CFE............................... Comision Federal de Electricidad, the Mexican government-owned
electric utility
Company........................... El Paso Natural Gas Company, now doing business as El Paso Energy
Corporation, and its subsidiaries, unless the context otherwise
requires
Cornerstone....................... Cornerstone Natural Gas, Inc., a wholly owned subsidiary of El Paso
Field Services Company
Court of Appeals.................. United States Court of Appeals for the District of Columbia Circuit
Dakota............................ Dakota Gasification Company
CPUC.............................. California Public Utilities Commission
Dth............................... Decatherm
East Tennessee.................... East Tennessee Natural Gas Company, a wholly owned subsidiary of
Tennessee Gas Pipeline Company
Edison............................ Southern California Edison Company
EPA............................... United States Environmental Protection Agency
EPEI.............................. El Paso Energy International Company, a wholly owned subsidiary of
El Paso Natural Gas Company
EPEM.............................. El Paso Energy Marketing Company (formerly Eastex Energy Inc.), a
wholly owned subsidiary of El Paso Natural Gas Company, unless the
context requires otherwise
EPFS.............................. El Paso Field Services Company, a wholly owned subsidiary of El
Paso Natural Gas Company
EPG............................... El Paso Natural Gas Company, unless the context otherwise requires
EPNC.............................. El Paso New Chaco Company, a wholly owned subsidiary of El Paso
Natural Gas Company
EPTPC............................. El Paso Tennessee Pipeline Co. (formerly Tenneco Inc.), an indirect
subsidiary of El Paso Natural Gas Company
FERC.............................. the Federal Energy Regulatory Commission
GSR............................... Gas supply realignment
Holding Company................... A new Delaware corporation, proposed to be formed to become the
holding company parent of the Company
IRS............................... Internal Revenue Service
Mgal/d............................ Thousand gallons per day
Midwestern........................ Midwestern Gas Transmission Company, a wholly owned indirect
subsidiary of Tennessee Gas Pipeline Company
MMcf/d............................ Million cubic feet per day
Mdth/d............................ Thousand decatherms per day
MPC............................... Mojave Pipeline Company, a wholly owned subsidiary of El Paso
Natural Gas Company
MW(s)............................. Megawatt(s)
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DEFINITIONS
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New Tenneco....................... Tenneco Inc., subsequent to the Merger and Distributions,
consisting of the automotive parts, packaging and administrative
services businesses
NGLs.............................. Natural gas liquids
Odd-Lot Holders................... Shareholders of El Paso Natural Gas Company owning beneficially
fewer than 100 shares of El Paso Natural Gas Company's common stock
Old Tenneco....................... Tenneco Inc. (renamed El Paso Tennessee Pipeline Co.), prior to its
acquisition by the Company
OPEB.............................. Other Postretirement Employee Benefits
OPIC.............................. Overseas Private Investment Corporation
OTC............................... Over-The-Counter
PASA.............................. Pipeline Authority of South Australia
PCB(s)............................ Polychlorinated biphenyl(s)
Pemex............................. Pemex Gas y Petroquimica Basica, a Mexican state-owned company
PG&E.............................. Pacific Gas & Electric Company
Plan.............................. Dividend Reinvestment and Common Stock Purchase Plan
Premier........................... Premier Gas Company, a wholly owned subsidiary of El Paso Energy
Marketing Company
Program........................... Continuous Odd-Lot Stock Sales Program
PRP(s)............................ Potentially Responsible Party(ies)
PSC............................... Public Service Company of Colorado
Reorganization.................... Proposed merger of El Paso Natural Gas Company with a direct
subsidiary of the Holding Company to reorganize the Company into a
holding company structure
RI/FS............................. Remedial Investigation/Feasibility Study
SAR(s)............................ Stock Appreciation Right(s)
SEC............................... Securities and Exchange Commission
SFAS.............................. Statement of Financial Accounting Standards
SoCal............................. Southern California Gas Company
Tcf............................... Trillion cubic feet
TEPCO............................. The El Paso Company, formerly the parent company of El Paso Natural
Gas Company
TDEC.............................. Tennessee Department of Environment and Conservation
TGP............................... Tennessee Gas Pipeline Company, a wholly owned subsidiary of El
Paso Tennessee Pipeline Co.
TGTC.............................. TransColorado Gas Transmission Company
TransAmerican..................... TransAmerican Natural Gas Corporation
TransTexas........................ TransTexas Gas Corporation
Transwestern...................... Transwestern Pipeline Company
</TABLE>
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PART I
ITEM 1. BUSINESS
GENERAL
EPG is a Delaware corporation incorporated in 1928. The Company's principal
operations include the interstate and intrastate transportation, gathering and
processing of natural gas; the marketing of natural gas, natural gas liquids,
electricity, crude oil and refined products; and the development and operation
of energy infrastructure facilities worldwide. The Company owns or has interests
in over 28,000 miles of interstate and intrastate pipeline and 7,900 miles of
gathering systems connecting the nation's principal natural gas supply regions
to the four largest gas consuming regions in the U.S., namely the Gulf Coast,
California, the Northeast and the Midwest. In recognition of changes in the
natural gas industry and the manner in which EPG manages its businesses, and in
order to facilitate a more detailed understanding of the various activities in
which it engages, EPG began doing business under the name El Paso Energy
Corporation (effective April 22, 1996) and has segregated its business
activities into three segments: (i) natural gas transmission; (ii) field and
merchant services; and (iii) corporate and other, which includes the Company's
international development activities. For information concerning the operating
revenues, operating income and identifiable assets attributable to each of these
segments, see Note 12 of Item 8, Financial Statements and Supplementary Data.
In December 1996, the Company completed the $4 billion acquisition of EPTPC
(the "Merger"), in a transaction accounted for as a purchase. The Merger was
effected in accordance with the Amended and Restated Agreement and Plan of
Merger dated as of June 19, 1996 (the "Merger Agreement"). In the Merger, Old
Tenneco changed its name to EPTPC. Prior to the Merger, Old Tenneco and its
subsidiaries effected various intercompany transfers and distributions which
restructured, divided and separated their businesses, assets and liabilities so
that all the assets, liabilities and operations related to their automotive
parts, packaging and administrative services businesses (collectively, the
"Industrial Business") and their shipbuilding business (the "Shipbuilding
Business") were spun-off to Old Tenneco's then existing common stockholders (the
"Distributions"). Following the Distributions, EPTPC's business consisted
principally of the interstate transportation of natural gas, as well as
unregulated business operations such as gas marketing, intrastate pipelines,
international pipelines and power generation, and domestic power generation.
This acquisition created the nation's first coast-to-coast natural gas pipeline
system and continued the Company's effort to expand its presence in
non-regulated portions of the energy industry. As a result of the Merger, EPG
indirectly owns 100 percent of the common equity and approximately 75 percent of
the combined equity value of EPTPC. The remaining 25 percent of the combined
equity of EPTPC is comprised of $296 million of preferred stock issued in a
public offering by Old Tenneco on November 18, 1996, which remains outstanding.
In June 1996, the Company acquired Cornerstone. Cornerstone consisted of
approximately 700 miles of gathering and transportation systems and seven
natural gas processing and treating facilities principally located in Texas and
Louisiana. The Company acquired Eastex Energy Inc. in September 1995 and Premier
in December 1995. Effective July 1996, the name Eastex Energy Inc. was changed
to, and its subsidiaries were merged into, EPEM. EPEM is a full service natural
gas merchant which conducts wholesale gas marketing and related services on a
national basis. For a further discussion of these acquisitions, see Note 2 of
Item 8, Financial Statements and Supplementary Data.
NATURAL GAS TRANSMISSION
The natural gas transmission segment is comprised of five interstate
pipeline systems: the TGP System, the EPG System, the Midwestern System, the
East Tennessee System, and the MPC System, collectively referred to as the
Interstate System. The Interstate System totals approximately 26,600 miles of
transmission pipeline.
The TGP System. The TGP System consists of approximately 14,800 miles of
pipeline with a design capacity of 5,460 MMcf/d. During 1996, TGP transported
natural gas representing 99 percent of its capacity. The TGP System serves the
northeast section of the U.S., including the New York City and Boston
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metropolitan areas. The multiple-line system begins in the gas-producing regions
of Texas and Louisiana, including the Gulf of Mexico.
The EPG System. The EPG System consists of approximately 9,900 miles of
pipeline with a design capacity of 4,744 MMcf/d. During 1996, EPG transported
natural gas representing approximately 74 percent of its capacity. California is
the single largest market served by the EPG System, which also serves markets in
Nevada, Arizona, New Mexico, Texas and northern Mexico. The EPG System is
connected to one of the most prolific supply basins in the nation, the San Juan
Basin of northern New Mexico and southern Colorado, and also accesses natural
gas supplies in the Permian and Anadarko Basins.
The Midwestern System. The Midwestern System consists of approximately 400
miles of pipeline with a design capacity of 800 MMcf/d. During 1996, Midwestern
transported natural gas representing approximately 82 percent of its capacity.
The Midwestern System extends from a connection with the TGP System at Portland,
Tennessee, to Chicago and principally serves the Chicago metropolitan area.
The East Tennessee System. The East Tennessee System consists of
approximately 1,100 miles of pipeline with a design capacity of 630 MMcf/d.
During 1996, East Tennessee transported natural gas representing approximately
56 percent of its capacity. The East Tennessee System serves the states of
Tennessee, Virginia and Georgia and connects with the TGP System in Springfield
and Lobelville, Tennessee.
The MPC System. The MPC System consists of approximately 450 miles of
pipeline with a design capacity of approximately 400 MMcf/d. During 1996, MPC
transported natural gas representing
approximately 75 percent of its capacity. The MPC System is connected with the
EPG System at Topock, Arizona and extends to customers in the vicinity of
Bakersfield, California.
Other. The Company has a one-third interest in TGTC, which was formed for
the purpose of constructing and operating a 292-mile pipeline with a design
capacity of approximately 300 MMcf/d, from northwestern Colorado to the San Juan
Basin. The Company also owns a 17.8 percent interest in Portland Natural Gas
Transmission System, L.P., which is developing a 224-mile pipeline with a
projected capacity of 178 MMcf/d running from the Canadian border near
Pittsburg, New Hampshire, to Dracut, Massachusetts.
REGULATORY ENVIRONMENT
The Interstate System is subject to the jurisdiction of FERC in accordance
with the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978.
Industry Restructuring. In the mid-1980s, FERC began a series of actions
which ultimately had the effect of substantially removing interstate pipelines
from the gas purchase and resale business and confining their role to
transportation of gas owned by others. In Order No. 436, issued in 1985, FERC
began this transition by requiring interstate pipelines to provide
non-discriminatory access to their facilities for all transporters of natural
gas. This requirement enabled consumers to purchase their own gas and have it
transported on the interstate pipeline system, rather than purchase gas from the
pipelines. The transition was completed with Order No. 636, issued in 1992, in
which FERC required all interstate pipelines to "unbundle" their sales and
transportation services so that the transportation services they provided to
third parties would be "comparable" to the transportation services accorded to
gas owned by the pipelines. FERC's stated purpose was to ensure that the
pipelines' monopoly over the transportation of natural gas did not distort the
gas producer sales market, which had by then been essentially deregulated.
One of the obstacles to this transition was the existence of long-term gas
purchase contracts between pipelines and producers which required the pipelines
to take or pay for a significant percentage of the gas which the producer was
capable of delivering. While FERC did not deal with this issue initially, it
eventually adopted rate recovery procedures which facilitated negotiations
between pipelines and producers to address take-or-pay issues. In Order No. 636,
FERC provided that pipelines could recover 100 percent of the costs prudently
incurred to terminate their gas purchase obligations. In July 1996, the Court of
Appeals issued its decision upholding, in large part, Order No. 636, and
remanded to FERC several issues for further explanation, including further
explanation of FERC's decision to allow pipelines to recover 100 percent of GSR
costs and FERC's requirement that pipelines allocate 10 percent of GSR costs to
interruptible
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transportation customers. In February 1997, FERC reaffirmed its decision to
allow pipelines to recover 100 percent of GSR costs. In addition, FERC modified
the requirement that pipelines allocate 10 percent of GSR costs to interruptible
customers to permit pipelines to propose an allocation of any percentage of such
costs to their interruptible customers. For a further discussion of GSR issues
related to TGP, see Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, Item 3, Legal Proceedings, and Note 6 of
Item 8, Financial Statements and Supplementary Data.
TGP. In December 1994, TGP filed for a general rate increase (the "1995
Rate Case"). In January 1995, FERC accepted the filing, suspended its
effectiveness for the maximum period of five months pursuant to normal
regulatory process, and set the matter for hearing. On July 1, 1995, TGP began
collecting rates, subject to refund, reflecting an $87 million increase in TGP's
annual revenue requirement. A Stipulation and Agreement (the "Stipulation") was
filed with an ALJ in this proceeding in April 1996. The Stipulation resolves the
rates that are the subject of the 1995 Rate Case, including a structural rate
design change that results in a larger proportion of TGP's transportation
revenues being dependent upon throughput. Under the Stipulation, TGP is required
to refund, upon final approval of the Stipulation, the difference between the
revenues collected under the July 1, 1995 motion rates and the revenues that
would have been collected pursuant to the rates underlying the Stipulation. In
October 1996, FERC approved the Stipulation with certain modifications and
clarifications which are not material. In January 1997, FERC issued an order
denying requests for rehearing of the October 1996 order. One party to the rate
proceeding, a competitor of TGP, filed with the Court of Appeals, in February
1997, a Petition for Review of the FERC orders approving the Stipulation.
For a discussion of recent FERC proceedings relating to the recovery by TGP
of certain environmental costs as a component of the rates charged by its
interstate pipeline operations, see Note 6 of Item 8, Financial Statements and
Supplementary Data.
EPG. In June 1995, EPG made a filing with FERC for approval of new system
rates for mainline transportation to be effective January 1, 1996. In July 1995,
FERC accepted and suspended EPG's filing to be effective January 1, 1996,
subject to refund and certain other conditions. FERC also set EPG's rates for
hearing.
In March 1996, EPG filed a comprehensive offer of settlement which, if
approved by FERC, would resolve issues related to the above-mentioned rate case
and issues surrounding certain contract reductions and expirations that occur
from January 1, 1996, through December 31, 1997. The settlement provides for,
among other things: (i) a long-term rate stability plan which establishes base
rates for a 10-year period from January 1, 1996, through December 31, 2005,
subject to annual escalation after 1997; (ii) payments over 8 years, or less, to
EPG by its customers totaling $255 million prior to interest, representing
approximately 35 percent of the revenues associated with the contract reductions
and expirations; (iii) the sharing between EPG (65 percent) and its customers
(35 percent) of revenues in excess of a threshold, as defined in the settlement;
and (iv) a mechanism to reflect in the base rate increases or decreases
resulting from laws or regulations which impact costs at a level in excess of
$10 million a year. The settlement provides that any party desiring not to be
bound by the settlement may have its rates determined pursuant to procedures
established by FERC. FERC staff, the regulatory agencies of California, Arizona,
and Nevada, the state of New Mexico, and customers representing 95 percent of
the firm throughput on EPG's mainline transmission system support EPG's
settlement.
In March 1996, Edison, a firm shipper on EPG's system, filed its own offer
of settlement. One party supported Edison's proposal, while several other
parties independently contested elements of EPG's settlement. In January 1997,
the Chief ALJ certified EPG's settlement to FERC and severed the contesting
parties. Edison requested reconsideration of the certification. Edison and other
contesting parties also provided notice of their intention to preserve their
rights to contest this matter, including through litigation. A decision by FERC
on both the certification and the merits of EPG's settlement is pending.
For a further discussion of regulatory matters related to TGP and EPG, see
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations and Note 6 of Item 8, Financial Statements and Supplementary Data.
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MARKETS AND COMPETITION
The Interstate System faces varying degrees of competition from alternative
energy sources, such as electricity, hydroelectric power, coal, and oil. The
potential consequences of the proposed restructuring of the electric power
industry are currently unclear. It may benefit the natural gas industry by
creating more demand for gas turbine generated electric power, or it may hamper
demand by allowing more effective use of surplus electric capacity through
increased wheeling as a result of open access. At this time, the Company is not
projecting a significant increase in gas demand as a result of such
restructuring.
The TGP System. Customers of TGP include natural gas producers, marketers
and end-users, as well as other gas transmission and distribution companies.
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 four years,
principally in the year 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 this
area. Although TGP intends to pursue 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. Accordingly, the Company presently is unable to
ascertain whether or not the expiration and renegotiation, extension and/or
replacement of these transportation contracts will have a materially adverse
effect on the Company's financial position or results of operations.
In a number of key markets, TGP faces competitive pressure from other major
pipeline systems, enabling local distribution companies and end-users to choose
a supplier or switch suppliers based on the short-term price of gas and the cost
of transportation. Competition between pipelines is particularly intense in
TGP's supply area, Louisiana and Texas. TGP also faces varying degrees of
competition from alternative energy sources, such as electricity, coal, and oil.
In some instances, TGP has had to discount its transportation rates in order to
maintain market share. The renegotiation of TGP's expiring contracts may be
impacted by the foregoing competitive factors.
The EPG System. EPG maintains a significant competitive position in the
California market by virtue of the fact that its pipeline is currently the
lowest-cost transporter of, and the principal means of moving, natural gas from
the San Juan Basin to the California border. EPG's current capacity to deliver
natural gas to California is approximately 3.3 Bcf/d, equivalent to
approximately 48 percent of the total interstate pipeline capacity serving that
state. In addition, gas shipped to California across the EPG System represented
about 33 percent of the natural gas consumed in the state in 1996.
Interstate pipeline capacity utilization to California is currently
approximately 63 percent and is not expected to reach 100 percent until sometime
in the next decade, assuming no new interstate pipeline construction. Currently,
EPG has firm transportation contracts covering 88 percent of its 3.3 Bcf/d of
capacity to California. By 1998, that figure will likely drop significantly,
perhaps to as low as 53 percent. EPG's largest contracts for interstate capacity
to California are with SoCal and PG&E, which have both exercised contractual
options to relinquish certain capacity rights. For a further discussion of the
SoCal and PG&E capacity relinquishments, see Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
EPG faces significant competition from three other
companies -- Transwestern, Kern River Gas Transmission Company and Pacific Gas
Transmission Company -- each of which transports natural gas to the California
market. The combined capacity of these three companies and EPG transporting
natural gas to the California market is approximately 6.9 Bcf/d. In 1996, the
demand for interstate pipeline capacity to California averaged 4.3 Bcf/d.
Competition generally occurs on the basis of the delivered cost of natural gas
into the SoCal and PG&E distribution systems.
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FIELD AND MERCHANT SERVICES
The field and merchant services segment provides natural gas gathering,
products extraction, treating, compression and intrastate transmission services.
In addition, the segment purchases, markets and trades natural gas, NGLs,
electricity, crude and refined products, and provides risk management services
associated with these commodities. This segment owns or has interests in
approximately 7,900 miles of gathering systems located in the country's most
prolific and active gas production areas, including the San Juan, Anadarko and
Permian Basins and East Texas, South Texas, Louisiana and the Gulf of Mexico. In
addition, this segment owns or has interests in approximately 1,500 miles of
intrastate transmission pipeline, which supply natural gas to the Interstate
System and support the Company's trading and marketing operations. The field and
merchant services segment also owns or has interests in 18 natural gas
processing and treating facilities. The Company's field services business is
conducted principally through EPFS, Cornerstone (acquired in June 1996), and the
field services activities of EPTPC (acquired in December 1996). The Company's
merchant services business is conducted principally through EPEM, El Paso Gas
Marketing Company, and the energy marketing activities of EPTPC. The merchant
services business has 14 sales offices throughout the U.S. and Canada with
headquarters in Houston, Texas.
FIELD SERVICES
EPFS, incorporated in June 1993, was formed for the purpose of owning,
operating, acquiring and constructing natural gas gathering, processing and
other related field facilities. Effective January 1, 1996, EPG transferred to
EPFS its non-certificated assets along with certain assets that were no longer
subject to FERC jurisdiction. These assets included major gathering systems in
the San Juan, Anadarko, and Permian Basins. From this initial asset base, EPFS
began to implement plans to increase gathering and processing volumes through a
strategy of project developments, acquisitions, and joint ventures.
Major project developments for EPFS include the construction of the largest
cryogenic liquids extraction plant (the "Chaco Plant") in the continental U.S.,
the construction of the Masters Creek liquids extraction plant and the
construction of the Hart Canyon compression project. The Chaco Plant, located in
San Juan County, New Mexico, was constructed at a cost of approximately $77
million and replaced a lean oil recovery plant previously operated by EPFS. The
Chaco Plant was designed to process 600 MMcf/d and extract 50,000 barrels of
NGLs per day. In May 1996, the Chaco Plant began processing natural gas, and by
September 1996 was experiencing recovery rates of over 90 percent for ethane and
99 percent for liquids heavier than ethane.
EPFS completed the construction of the Masters Creek cryogenic liquids
extraction plant in November 1996. This plant, located in Rapides Parish,
Louisiana, has the capacity to process 50 MMcf/d. EPFS completed the Hart Canyon
compression project in November 1995, which consisted of looping several
pipelines and adding three field compressor sites. The project added 7,675
horsepower of compression and allowed a certain portion of the system in the San
Juan Basin to experience lower operating pressures, which has resulted in a 21
percent increase in production or approximately 15 MMcf/d.
The field services assets of EPTPC, acquired in December 1996, include
approximately 1,500 miles of gathering and intrastate transportation systems and
four liquids extraction plants. These assets are principally located in the Gulf
Coast region of Texas.
Effective June 1996, EPFS acquired Cornerstone for approximately $94
million, exclusive of acquisition costs. This acquisition added approximately
700 miles of gathering and transportation systems and seven liquids extraction
and natural gas treating facilities. These assets are principally located in
Louisiana and East Texas.
In February 1996, EPFS acquired the Linc and Pandale gathering systems from
Tejas Power Corporation. These systems are located in West Texas and currently
gather approximately 45 MMcf/d.
In 1996, EPFS formed a joint venture with KN Energy in order to complete
the construction of the Coyote Gulch natural gas treating plant. The plant,
constructed at a cost of approximately $15 million, is
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located in La Plata County, Colorado, and has the capacity to treat 120 MMcf/d.
Initial treating began in December 1996.
The following table provides information at December 31, 1996 concerning
the natural gas gathering and transportation facilities, as well as natural gas
gathered for the years ended December 31:
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AVERAGE VOLUME
MILES GATHERING (MDTH/D)
OF CAPACITY --------------------------------
SYSTEM PIPELINE(1) (MMCF/D)(2) 1996 1995 1994
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San Juan Basin............................ 5,500 1,180 1,139 1,042 1,091
Permian Basin............................. 1,074 515 223 164 170
Anadarko Basin............................ 667 425 135 116 92
Louisiana/East Texas(3)................... 704 696 280 -- --
Gulf Coast Region(3)...................... 1,480 1,936 700 -- --
</TABLE>
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(1) Mileage amounts shown are approximate for the total system and have not been
reduced to reflect EPFS's net ownership interest.
(2) All capacity information reflects EPFS's net ownership and is subject to
increases or decreases depending on operating pressures and point of
delivery into or out of the system.
(3) Average daily volumes for Cornerstone, acquired in June 1996, and for the
field services activities of EPTPC, acquired in December 1996, are reflected
from the date of acquisition.
The following table provides information concerning the processing
facilities at December 31, 1996:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
INLET NGLS
INLET VOLUME PRODUCTION
CAPACITY (MDTH/D) (MGAL/D)
PLANT (MMCF/D)(1) 1996 1996
----- ----------- -------- ----------
<S> <C> <C> <C>
San Juan Basin(2).......................................... 600 557 1,315
Louisiana/East Texas(3).................................... 242 160 304
Gulf Coast Region(3)....................................... 91 63 107
</TABLE>
- ------------
(1) All capacity information reflects EPFS's net ownership.
(2) Average daily NGLs production since commencement of Chaco Plant operations
in May 1996.
(3) Average daily volumes and NGLs production for Cornerstone, acquired in June
1996, and for the field services activities of EPTPC, acquired in December
1996, are reflected from the date of acquisition.
EPFS focuses on providing its customers with wellhead-to-mainline field
services, including gathering, products extraction, dehydration, purification
and compression. EPFS, together with EPEM, is able to offer its customers fully
bundled gas services with a broad range of pricing options as well as financial
risk management products. EPFS also provides well-ties and can offer real-time
information services, including electronic wellhead gas flow measurement.
EPFS provides a variety of fee structures including fixed fee per
decatherm, floating fee per decatherm indexed to the applicable local area price
of gas, or percentage of products extracted. EPFS, through Cornerstone, may also
purchase gas at the wellhead and, if there is no local market, arrange
transportation on intrastate or interstate pipelines and resell the gas to local
distribution companies, utilities, commercial or industrial end-users, or other
natural gas marketing companies.
Competition
EPFS operates in a highly competitive environment that includes independent
gathering and processing companies, interstate and intrastate companies, gas
marketers, and oil and gas producers. EPFS competes for
6
<PAGE> 11
throughput primarily based on price, efficiency of facilities, gathering system
line pressures, availability of facilities near drilling activity, service, and
access to favorable downstream markets.
MERCHANT SERVICES
The Company, through its merchant services business, markets and trades
natural gas, NGLs, electricity, crude and refined products and has emerged as
one of North America's largest energy marketing and trading companies, ranking
among the top 10 companies in volume of gas marketed in 1996. In December 1996,
EPEM marketed physical and financial volumes of over 7,200 Mdth/d.
A broad range of energy products and services is provided, including supply
aggregation, transportation management and integrated price risk management.
EPEM maintains a diverse natural gas supplier and customer base serving
producers, utilities (including local distribution companies and power plants),
municipalities, and a variety of industrial and commercial end users. In 1996,
the Company served approximately 400 producer/suppliers, and approximately 700
sales customers in 26 states with transportation of gas supplies on 40
pipelines.
Set forth below are marketed physical and financial gas volumes for the
years ended December 31:
<TABLE>
<CAPTION>
1996(1) 1995 1994
------- -------- -----
(MDTH/D)
----------------------------
<S> <C> <C> <C>
Marketed Gas Volumes...................................... 6,320 773 355
</TABLE>
(1) Average daily volumes for the energy marketing activities of EPTPC, acquired
in December 1996, are reflected from the date of acquisition.
Demand for natural gas products and services has primarily resulted from
the deregulation effects of FERC Order No. 636, the commercialization of natural
gas, and the intense competition within the industry. Volatility in the physical
and financial gas markets has compounded the effects of these changes creating
greater service opportunities.
In the course of its business, the Company trades and develops a market in
natural gas in both the physical and financial markets, and purchases or sells
swaps and options in the OTC markets with major energy merchants. The Company
seeks to maintain a balanced portfolio of supply and demand contracts and
utilizes the New York Mercantile Exchange and OTC financial markets to hedge
against price and basis risk which may affect those obligations. To support
these activities, the Company employs centralized corporate risk management and
hedging strategies. In addition to these hedging activities, the Company also
engages in selective trading of these financial instruments. For additional
information regarding the use of financial instruments, see Note 5 of Item 8,
Financial Statements and Supplementary Data.
In 1996, a power marketing group was formed to capitalize on the
opportunities created from the deregulation of the electric industry. This group
will participate in wholesale power trading and offer products and services to
industrial and commercial end users of electricity. During 1996, the power
marketing group sold 3,555,000 MW hours of electricity, ranking it in the top 25
power marketers in the country. Additionally, during 1996, the Company began
marketing NGLs, crude and refined products.
Competition
The merchant services business' primary competitors include: (i) marketing
affiliates of major oil and gas producers; (ii) marketing affiliates of large
local distribution companies; (iii) marketing affiliates of other interstate and
intrastate pipelines; and (iv) independent energy marketers with varying scopes
of operations and financial resources. The Company competes on the basis of
price, access to production, imbalance management, and experience in the market
place.
7
<PAGE> 12
CORPORATE AND OTHER
The Company's corporate and other segment includes its international
development activities, as well as certain other corporate activities. The
international development activities are conducted principally through EPEI and
the international activities of EPTPC (acquired in December 1996).
INTERNATIONAL AND OTHER ENERGY-RELATED BUSINESS
EPEI was incorporated in June 1995 for the purpose of investing in energy
projects with an emphasis on projects involving the development of
infrastructure to gather, transport and use natural gas in northern Mexico and
Latin America. With the combination of EPTPC's international activities, the
focus of international project pursuit has expanded to encompass Australia,
Asia, Europe and other Latin American countries. Set forth below are brief
descriptions of the projects that are either operational or are in various
stages of development.
Samalayuca Project. The Company has a 30 percent interest in an
international consortium that is constructing a 700 MW combined cycle gas fired
power generation facility located in Samalayuca, Chihuahua, Mexico. Completion
of the plant is scheduled for 1999 whereupon CFE will operate the plant under a
20-year lease. Upon completion of the lease term, ownership will be transferred
to CFE. The Company's investment in this plant is expected to be approximately
$40 million.
Aguaytia Project. The Company is a member of a consortium that is
developing an integrated gas and power project near Pucallpa, in central Peru,
called the Aguaytia Energy Project. The Company's economic interest in the
project is approximately 24 percent and its equity investment is estimated to be
approximately $26 million, which will be funded over the two-year construction
period. The project consists of constructing a single cycle 155 MW power plant
and transmission lines and developing the gas supply to power the plant. The
plant is expected to commence operations during 1998. The consortium will sell
electricity, propane and natural gas to meet the growing demand for energy in
Peru. The project was initially proposed to be funded with 60 percent equity;
however, the consortium is negotiating a loan from the Inter-American
Development Bank which will reduce the equity requirements to approximately 40
percent. The Company has obtained full political risk insurance for its equity
investment from OPIC.
Australia Project. In 1995, a subsidiary of EPTPC was selected to
construct, own and operate a 470-mile natural gas pipeline in Queensland,
Australia. Construction of the pipeline was completed in December 1996 at a
total cost of $170 million. Additionally, in June 1995, EPTPC acquired the
natural gas pipeline assets of PASA, which includes a 488-mile pipeline, for
$225 million. In December 1996, the Company received approximately $400 million
through debt financing and the subsequent sale of 70 percent of its ownership
interest in these projects.
Indonesia Project. The Company has a 50 percent ownership interest in a
producing gas field (having reserves of approximately 500 Bcf) and a 47.5
percent ownership in a 135 MW power generating plant under construction in South
Sulawesi, Indonesia. The $225 million project has been financed with
approximately $179 million in debt. The electricity from the power generating
plant will be sold to the national electric utility pursuant to a long-term
contract. The Company has obtained political risk insurance for its equity
investment.
Pakistan Project. In February 1997, the Company acquired a 42 percent
interest in a 151 MW power generating plant to be constructed in Kabirwala,
Pakistan. The Company is obligated to invest approximately $18 million in the
project. Project financing in the amount of approximately $128 million closed in
early 1997 and construction has begun. Long-term fuel supply agreements and
electricity sales agreements with Pakistani national corporations have been
entered into by the project company and are guaranteed by the Pakistani
Government. The Company is seeking to obtain political risk insurance for its
equity investment.
Hungary Project. In September 1996, a subsidiary of EPTPC was selected to
acquire a 50 percent controlling interest in an operating 70 MW power plant
located in Danaujvaros, Hungary. The electricity generated at this plant is
consumed by Dunaferr, the largest steel mill in Hungary. Excess power is sold
pursuant to long-term contracts to the Hungarian national electric utility.
Subject to satisfaction of certain
8
<PAGE> 13
conditions, the acquisition is scheduled to be finalized in the first quarter of
1997. The assets will be acquired for approximately $25 million, and no
financing will be involved. The Company is seeking political risk insurance from
OPIC for its equity investment. The acquisition agreement requires the Company
to study and, if deemed economically feasible, to expand the electric generating
plant. The feasibility study is underway.
Other Projects. The Company has a 17.5 percent interest in a 240 MW power
plant in Springfield, Massachusetts, and a 50 percent interest in two additional
cogeneration projects in Florida which have a combined capacity of 220 MWs.
OTHER
As a result of the Merger, the Company holds certain limited assets and is
responsible for certain liabilities, which the Company estimates to be
approximately $600 million, of EPTPC's existing and discontinued operations and
businesses. In addition, the Company, through its corporate and other segment,
performs management, legal, financial, tax, consultative, administrative and
other services for the business segments of the Company.
During the first quarter of 1996, the Company adopted a program to reduce
operating costs through work force reductions and improved work processes and
adopted SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. As a result of the workforce reduction
program and the adoption of SFAS No. 121, the Company recorded a special charge
of $99 million
($47 million for employee separation costs and $52 million for asset
impairments) in the first quarter of 1996. For a further discussion, see Note 3
of Item 8, Financial Statements and Supplementary Data.
ENVIRONMENTAL
The Company is subject to extensive federal, state, and local laws and
regulations governing
environmental quality and pollution control. These laws and regulations require
the Company to remove or remedy the effect on the environment of the disposal or
release of specified substances at ongoing and former operating sites. As of
December 31, 1996, the Company had a reserve of approximately $215 million for
the following environmental contingencies which the Company anticipates
incurring through 2027: (i) expected
remediation costs and associated onsite, offsite and groundwater technical
studies of approximately $162 million; and (ii) other costs of approximately $53
million. For a further discussion of specific environmental matters, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Item 3, Legal Proceedings, and Note 6 of Item 8, Financial
Statements and Supplementary Data.
In addition, the Company estimates that its subsidiaries will make capital
expenditures for environmental matters of approximately $5 million in 1997 and
that capital expenditures for environmental matters will range from
approximately $45 million to $85 million in the aggregate for the years 1998
through 2007. These expenditures primarily relate to compliance with air
regulations and control of water discharges.
EMPLOYEES
The Company had approximately 4,300 full-time employees on December 31,
1996. The Company has no collective bargaining arrangements. Subsequent to the
Merger, EPTPC implemented a program to streamline operations and reduce
operating costs. Since December 31, 1996, EPTPC has reduced its workforce by 340
employees.
9
<PAGE> 14
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of EPG as of February 28, 1997, were as follows:
<TABLE>
<CAPTION>
OFFICER
NAME OFFICE SINCE AGE
---- ------ ------- ---
<S> <C> <C> <C>
William A. Wise.............. Chairman of the Board and Chief Executive 1983 51
Officer of EPG
Richard Owen Baish........... President of EPG 1987 50
H. Brent Austin.............. Executive Vice President and Chief Financial 1992 42
Officer of EPG
Joel Richards III............ Executive Vice President of EPG 1990 50
Britton White, Jr............ Executive Vice President and General Counsel 1991 53
of EPG
John D. Hushon............... President, EPEI 1996 51
Greg G. Jenkins.............. President, EPEM 1996 39
Robert G. Phillips........... President, El Paso Energy Resources Company 1995 42
Mark A. Searles.............. President, EPFS 1995 40
John W. Somerhalder II....... President, TGP 1990 41
</TABLE>
Mr. Wise has been Chairman of the Board of EPG since January 1994 and Chief
Executive Officer since January 1990. He was President of EPG from April 1989 to
April 1996. From March 1987 until April 1989, Mr. Wise was an Executive Vice
President of EPG. From January 1984 to February 1987, he was a Senior Vice
President of EPG. Mr. Wise is a member of the Board of Directors of Battle
Mountain Gold Company.
Mr. Baish has been President of EPG since April 1996. From September 1994
until April 1996, he was Executive Vice President of EPG and was Senior Vice
President from November 1990 to August 1994. He was General Counsel and
Corporate Secretary from November 1990 to December 1990 and Vice President and
Associate General Counsel from March 1987 to October 1990.
Mr. Austin has been Executive Vice President of EPG since May 1995. He has
been Chief Financial Officer of EPG since April 1992. He was Senior Vice
President of EPG from April 1992 to April 1995. He was Vice President, Planning
and Treasurer of BR from November 1990 to March 1992 and Assistant Vice
President, Planning of BR from January 1989 to October 1990.
Mr. Richards has been Executive Vice President of EPG since December 1996.
From January 1991 until December 1996, he was Senior Vice President of EPG. He
was Vice President from June 1990 to December 1990. He was Senior Vice
President, Finance and Human Resources of Meridian Minerals Company, a wholly
owned subsidiary of BR, from October 1988 to June 1990.
Mr. White has been Executive Vice President of EPG since December 1996 and
General Counsel of EPG since March 1991. He was Senior Vice President and
General Counsel of EPG from March 1991 until December 1996. From March 1991 to
April 1992, he was also Corporate Secretary of EPG. For more than five years
prior to that time, Mr. White was a partner in the law firm of Holland & Hart.
Mr. Hushon has been President of EPEI since April 1996. He was Senior Vice
President of EPEI from September 1995 to April 1996. For more than five years
prior to that time, Mr. Hushon was a senior partner in the law firm of Arent Fox
Kintner Plotkin & Kahn.
Mr. Jenkins has been President of EPEM since December 1996. He was Senior
Vice President and General Manager of Entergy Corp. from May 1996 to December
1996 and President and Chief Executive Officer of Hadson Gas Services Company
from December 1993 to January 1996. For more than five years prior to that time,
Mr. Jenkins was in various managerial positions with Santa Fe Energy Company.
Mr. Phillips has been President of El Paso Energy Resources Company since
December 1996. He was President of EPFS from April 1996 to December 1996 and was
a Senior Vice President of EPG from
10
<PAGE> 15
September 1995 to April 1996. For more than five years prior to that time, Mr.
Phillips was Chief Executive Officer of Eastex Energy Inc.
Mr. Searles has been President of EPFS since December 1996. He was
President of EPEM from September 1995 to December 1996. From March 1994 to
September 1995 Mr. Searles was President and Chief Operating Officer of Eastex
Energy Inc. For more than five years prior to that time, he held various
managerial positions with Enron Corp.
Mr. Somerhalder has been President of TGP since December 1996. He was
President of El Paso Energy Resources Company from April 1996 to December 1996
and Senior Vice President of EPG from August 1992 to April 1996. From January
1990 to July 1992, he was Vice President of EPG.
Executive officers hold offices until their successors are elected and
qualified, subject to their earlier removal.
ITEM 2. PROPERTIES
A description of the Company's properties is included in Item 1, Business
and is incorporated by reference herein.
The Company is of the opinion that it has generally satisfactory title to
the properties owned and used in its businesses, subject to the liens for
current taxes, liens incident to minor encumbrances, and easements and
restrictions that do not materially detract from the value of such property or
the interests therein or the use of such properties in its businesses. In
addition the Company's physical properties are adequate and suitable for the
conduct of its business in the future.
ITEM 3. 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, economic
duress, civil conspiracy, and violation of state antitrust laws arising from a
settlement agreement entered into by EPG, TransAmerican, and others in 1990 to
settle litigation then pending and other potential claims. The complaint, as
amended, seeks unspecified actual and exemplary damages. EPG 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 EPG), seeking
indemnification and other damages in unspecified amounts relating to litigation
consulting work allegedly performed for various entities, including EPG, in
cases involving TransAmerican. 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 materially adverse effect on the Company's financial position or
results of operations.
In July 1996, EPG and TGP were served with a complaint in the matter of
Jack J. Grynberg v. Alaska Pipeline Co., et al., filed in the U.S. District
Court for the District of Columbia. The plaintiff filed this action under the
False Claims Act against most interstate pipelines and others alleging that the
defendants mismeasured natural gas produced from federal and Indian lands, which
deprived the United States of royalties otherwise due it. Among other things,
the plaintiff seeks to recover, unspecified treble damages on behalf of the
United States. The plaintiff is also seeking to recover his finder's fee and
attorneys' fees. All defendants, most of whom are pursuing a combined defense,
have filed responsive motions. The plaintiff responded to those motions in
January 1997. Oral arguments are set for March 12, 1997. Both EPG and TGP
believe that there are valid jurisdictional and procedural defenses to the
plaintiff's complaint; however, even if the plaintiff is ultimately entitled to
pursue his claims, EPG and TGP believe that they have substantive defenses,
including that their measurement practices are consistent with industry practice
and all applicable standards, regulations, contracts, and tariffs and that EPG
and TGP should not be liable in any event. Based on information available at
this time, EPG and TGP do not believe that the ultimate resolution of this
matter will have a materially adverse effect on the Company's financial position
or results of operations.
11
<PAGE> 16
On August 1, 1995, the Texas Supreme Court affirmed a ruling of the Texas
Court of Appeals favorable to TGP involving a gas purchase contract and
indicated that it would remand the case to the trial court. On April 18, 1996,
however, the Texas Supreme Court withdrew its initial opinion and issued an
opinion reversing the Court of Appeals opinion. In June 1996, TGP filed a motion
for rehearing with the Texas Supreme Court which was denied in August 1996. In
December 1996, TGP entered into settlement agreements with each of the parties
to this gas purchase contract. As a result of these settlements, the gas
purchase contract is now terminated. TGP paid a total of $74 million to
terminate this contract. In addition, all related litigation was terminated.
During the course of this action, TGP either paid, or provided for the payment
of, amounts it believes were appropriate to cover the resolution of its contract
reformation litigation, including providing a bond in the amount of $206
million. On September 30, 1996, TGP paid approximately $193 million to the
producers and the producers agreed to release all but approximately $2 million
of the bonded amount. On November 1, 1996, a final order was issued which
assessed only $456,000 of the $2 million to TGP and TGP was released from the
remaining bond amount. TGP has filed with FERC to recover these payments from
its customers.
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 Pennsylvania and
New York environmental agencies to specify the remediation requirements at the
Pennsylvania and New York stations. Remediation activities in Pennsylvania are
essentially complete; in addition, pursuant to the Consent Order dated August 1,
1995, between TGP and the Pennsylvania Department of Environmental Protection,
TGP funded an environmentally beneficial project for $450,000 in April 1996 and
paid a $500,000 civil penalty in September 1996. 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 materially adverse effect on the Company's
financial position or results of operations.
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. Management believes that the resolution of
this issue will not have a materially adverse effect on the Company's financial
position or results of operations.
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 materially adverse effect on the Company's financial position
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
EPG held a special meeting of stockholders on December 9, 1996. The
proposal presented for a stockholders' vote was the approval of the issuance by
EPG of up to 23,894,862 shares of common stock in connection with the
transactions contemplated by the Merger Agreement, as such may be amended,
supplemented or modified from time to time.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------- -------- --------
<S> <C> <C> <C>
Issuance of common stock................................... 23,605,943 181,417 155,077
</TABLE>
There were no broker non-votes for the issuance of common stock.
12
<PAGE> 17
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
EPG's common stock is traded on the New York Stock Exchange. As of February
28, 1997, the approximate number of holders of record of common stock was
96,900. This does not include individual participants on whose behalf a clearing
agency, or its nominee, holds EPG's common stock.
The following table reflects the high and low sales prices for EPG's common
stock for the periods indicated based on the daily composite listing of stock
transactions for the New York Stock Exchange and cash dividends declared during
those periods.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------- ------- ---------
(PER SHARE)
<S> <C> <C> <C>
1996
First Quarter.......................................... $38.125 $28.625 $0.3475
Second Quarter......................................... $39.000 $34.250 $0.3475
Third Quarter.......................................... $45.875 $37.750 $0.3475
Fourth Quarter......................................... $53.250 $44.000 $0.3475
1995
First Quarter.......................................... $32.500 $28.000 $0.3300
Second Quarter......................................... $29.875 $26.875 $0.3300
Third Quarter.......................................... $29.500 $24.750 $0.3300
Fourth Quarter......................................... $31.625 $26.500 $0.3300
</TABLE>
In January 1997, the Board declared a quarterly dividend of $0.365 per
share on EPG's common stock, payable on April 1, 1997, to stockholders of record
on March 14, 1997. The declaration of future dividends will be dependent upon
business conditions, earnings, the cash requirements of EPG, and other relevant
factors.
In February 1997, the Company sold approximately 3 million shares of its
common stock. Proceeds of $152 million were received, net of issuance costs.
EPG has made available the Program, in which Odd-Lot Holders are offered a
convenient method of disposing of all their shares without incurring any
brokerage costs associated with the sale of an odd-lot. Only Odd-Lot Holders are
eligible to participate in the Program. The Program is strictly voluntary, and
no Odd-Lot Holder is obligated to sell pursuant to the Program. A brochure and
related materials describing the Program were sent to Odd-Lot Holders in
February 1994. The Program currently does not have a termination date, but EPG
may suspend the Program at any time. Inquiries regarding the Program should be
directed to The First National Bank of Boston.
EPG has made available the Plan, which provides all stockholders of record
a convenient and economical means of increasing their holdings in EPG's common
stock. A stockholder who owns shares of common stock in street name or broker
name and who wishes to participate in the Plan will need to have his or her
broker or nominee transfer the shares into the stockholder's name. The Plan is
strictly voluntary, and no stockholder of record is obligated to participate in
the Plan. A brochure and related materials describing the Plan were sent to
stockholders of record in November 1994. The Plan currently does not have a
termination date, but EPG may suspend the Plan at any time. Inquiries regarding
the Plan should be directed to The First National Bank of Boston.
13
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1996(A) 1995(A) 1994 1993(B) 1992
-------- -------- ------- -------- -------
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating Results Data:
Operating revenues................................. $3,010 $1,038 $ 870 $ 909 $ 803
Employee separation and asset impairment charge.... 99 -- -- -- --
Net income......................................... 38 85 90 92 76
Earnings per common share.......................... 1.06 2.47 2.45 2.46 2.12
Cash dividends declared per common share........... 1.39 1.32 1.21 1.10 0.75
Average common shares outstanding.................. 36 34 37 37 36
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1996(A) 1995(A) 1994 1993(B) 1992
------- ------- ------ ------- ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Financial Position Data:
Total assets....................................... $8,712 $2,535 $2,332 $2,270 $2,051
Long-term debt..................................... 2,215 772 779 796 637
Preferred stock of subsidiary...................... 296 -- -- -- --
Other minority interest............................ 39 -- -- -- --
Stockholders' equity............................... 1,638 712 710 708 669
</TABLE>
- ---------------
(a) Reflects the acquisition in September 1995 of Eastex Energy Inc., in
December 1995 of Premier, in June 1996 of Cornerstone, and in December 1996
of EPTPC.
(b) Reflects the consolidation in May 1993 of MPC.
14
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
In response to changes in the natural gas industry and the manner in which
the Company manages its businesses, the Company restructured its business
activities into three segments: (i) natural gas transmission, (ii) field and
merchant services, and (iii) corporate and other. To the extent practicable,
results of operations for 1995 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 the period. Due to the
inability to present 1994 results of operations by segment, the discussion for
the year ended December 31, 1995, compared to the year ended December 31, 1994,
is presented on a consolidated basis. Operating revenues by segment include
intersegment sales which are eliminated in consolidation.
YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995
NATURAL GAS TRANSMISSION
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------
1996 1995
---- ----
(IN MILLIONS)
<S> <C> <C>
Reservation Revenue......................................... $503 $505
Transportation Revenue...................................... 36 13
Other Revenue............................................... 30 22
---- ----
Operating Revenue......................................... 569 540
Operating Expenses.......................................... 346 337
---- ----
Operating Income.......................................... $223 $203
==== ====
</TABLE>
Operating revenue for the year ended December 31, 1996, was $29 million
higher than for the same period of 1995 primarily due to the acquisition of
EPTPC. This increase was partially offset by an accrual for regulatory issues
and a decrease in take or pay cost recoveries.
Operating expenses for the year ended December 31, 1996, were $9 million
higher than for the same period of 1995 primarily due to the acquisition of
EPTPC. This increase was partially offset by lower operation and maintenance
expenses resulting primarily from the Company's program to reduce operating
costs which was adopted in the first quarter of 1996. For a further discussion,
see Note 3 of Item 8, Financial Statements and Supplementary Data.
FIELD AND MERCHANT SERVICES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------
1996 1995
---- ----
(IN MILLIONS)
<S> <C> <C>
Processing Margin........................................... $ 53 $ 13
Gathering and Treating Margin............................... 80 81
Marketing Margin............................................ 47 --
---- ----
Gross Margin.............................................. 180 94
Operating Expenses.......................................... 123 93
---- ----
Operating Income.......................................... $ 57 $ 1
==== ====
</TABLE>
Gross margin and operating income increased $86 million and $56 million,
respectively. This was primarily a result of increased margins and earnings from
the gas processing and gas marketing businesses.
15
<PAGE> 20
The 1996 increase in marketing margin reflects the results of EPEM for the
entire year. The increase in processing margin was primarily caused by the
startup of operations at the Chaco Plant and the acquisition of Cornerstone. The
Chaco Plant began processing in May 1996 and was fully operational in September
1996. The Chaco Plant processed an average of 570 Mdth/d in the fourth quarter
and experienced recoveries of over 90 percent for ethane and 99 percent for
propane and heavier NGLs. The Cornerstone gas processing facilities were
acquired in June 1996 and have processed an average of 160 Mdth/d since then.
The gathering and processing operations benefited from an increase in both
natural gas and NGLs prices, particularly in the fourth quarter. Many of the
EPFS contracts are based on a percentage of products extracted or have fees
based on the price of natural gas. Product prices in the fourth quarter of 1996
were near historic highs and had a significant impact on earnings. The Company
does not anticipate that these price levels will be experienced in 1997.
The increase in operating expenses for 1996 was due primarily to the
acquisition of Cornerstone in June 1996 and EPEM in September 1995.
CORPORATE AND OTHER
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
----- ----
(IN MILLIONS)
<S> <C> <C>
Operating Revenues.......................................... $ 1 $ 8
Operating Expenses.......................................... 111 --
----- ----
Operating Income (Loss)................................... $(110) $ 8
===== ====
</TABLE>
Operating income for 1996 was $118 million lower than the prior year
primarily due to a $99 million employee separation and asset impairment charge
incurred in the first quarter of 1996. For a further discussion, see Note 3 of
Item 8, Financial Statements and Supplementary Data.
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
CONSOLIDATED
Operating revenues for the year ended December 31, 1995, were $168 million
higher than for the same period of 1994. The increase was primarily due to the
acquisition of Eastex Energy Inc. and net reserves reversals. Higher gathering
and processing rates and return on take-or-pay receivables also contributed to
the increase. Partially offsetting the increase in operating revenues were lower
gas sales volumes, gas sales and transportation rates, transportation, gathering
and processing volumes, and reservation revenue.
Operating expenses for the year ended December 31, 1995, were $178 million
higher than for the same period of 1994. The increase was primarily due to the
acquisition of Eastex Energy Inc., increases in operation and maintenance
expense, and depreciation expense. The increase in operation and maintenance
expenses was due primarily to higher stock related benefits, higher consultant
fees, and higher severance accruals. Offsetting the increase in operating
expenses were lower gas purchase volumes, lower average cost of gas, a 1994
litigation special charge, and net reserve reversals.
OTHER INCOME AND EXPENSE
YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995
Interest and debt expense for the year ended December 31, 1996, was $24
million higher than for the same period of 1995 due to the debt assumed in
connection with the acquisition of EPTPC and an increase in EPG's short-term and
long-term borrowings.
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<PAGE> 21
Allowance for funds used during construction was $1 million lower for the
year ended December 31, 1996 than for the same period of 1995 due primarily to a
decrease in the average balance of construction work in progress.
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
Interest and debt expense for the year ended December 31, 1995 was $7
million higher than for the same period of 1994 due to increased short-term
borrowings.
Allowance for funds used during construction was $1 million higher for the
year ended December 31, 1995 than for the same period of 1994 due primarily to
an increase in the average balance of construction work in progress.
LIQUIDITY AND CAPITAL RESOURCES
CASH FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $291 million for 1996,
compared with $203 million for the same period of 1995. The increase from the
previous year was primarily due to the collection of revenues subject to refund
(expected to be refunded in 1997), the net impact of acquisitions, the Amoco
Production Company litigation payment made in the first quarter of 1995, and
timing differences in other working capital accounts. This increase was
partially offset by gas contract settlement payments made by TGP in the fourth
quarter of 1996, lower take-or-pay cost recoveries, higher tax payments, and
higher severance payments.
Net cash provided by operating activities was $203 million for 1995,
compared with $253 million for the same period of 1994. The decrease from the
previous year was primarily due to lower net insurance reimbursements, the Amoco
Production Company litigation payment, the timing of insurance premium payments,
lower cash received on gas imbalance settlements, lower net tax refunds, higher
interest payments, and timing differences in other working capital
disbursements. The decrease was partially offset by 1994
take-or-pay refunds to customers, lower net tax payments, lower take-or-pay
payments, and timing differences in other working capital receipts.
CASH FROM INVESTING ACTIVITIES
Effective June 1996, the Company acquired Cornerstone. The purchase price
of approximately $94 million, exclusive of acquisition costs, was financed
through internally generated funds and short-term borrowings. Acquisition costs
of approximately $5 million have been capitalized. Effective December 1996, the
Company acquired EPTPC. The acquisition was accomplished by the issuance of
approximately 18.8 million shares of EPG common stock valued at approximately
$913 million, and the assumption of debt, preferred stock and other obligations
of approximately $3.2 billion. Acquisition costs of approximately $25 million
have been capitalized. For a further discussion of these acquisitions, see Note
2 of Item 8, Financial Statements and Supplementary Data.
In December 1996, the Company sold the exploration and production
investments of TGP and a 70 percent equity interest in its Australian pipeline.
For the year ended December 31, 1996, the net cash flow impact from the
monetization of these investments was approximately $179 million.
Total capital expenditures for 1996 were $119 million, a decrease of $47
million compared to 1995 expenditure levels of $166 million. The decrease
reflects the completion of the San Juan expansion project in 1995 and a lower
level of maintenance capital spending in 1996.
The Company's planned capital and investment expenditures for 1997 of $411
million are primarily for the maintenance of pipeline systems and other
facilities, expansion of international operations and unregulated operations,
and system enhancements.
Future funding for capital expenditures, acquisitions, and other investing
expenditures are expected to be provided by internally generated funds,
debt/equity issuances, and/or available credit facilities.
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<PAGE> 22
CASH FROM FINANCING ACTIVITIES
In June 1996, EPG retired Cornerstone long-term debt in the amount of $16
million. In January 1997, EPG's 6.90% Notes for $100 million matured and were
retired.
On November 5, 1996, EPG's shelf registration statement on Form S-3 filed
with the SEC covering an aggregate of $800 million of unsecured debt securities,
preferred stock, and common stock was declared effective (the "Shelf
Registration Statement"). On November 13, 1996, EPG closed the sale of $200
million aggregate principal amount of its 6 3/4% Notes due 2003 and the sale of
$200 million aggregate principal amount of its 7 1/2% Debentures due 2026.
Proceeds from the debt issuance were used to repay short-term borrowings and for
general corporate purposes.
In connection with the Merger, the Company assumed approximately $2.2
billion in floating rate debt representing the outstanding amount under a $3
billion 364-day revolving credit facility taken out by Old Tenneco with a group
of banks as the vehicle to finance its debt realignment prior to the Merger. At
December 31, 1996, approximately $1.6 billion in borrowings and $400 million in
unused loan commitments remained outstanding under this facility. Additionally,
approximately $255 million of fixed rate public debt remained after the Old
Tenneco debt realignment and was assumed in the Merger.
Immediately following the Merger, the Company commenced a debt reduction
effort aimed at decreasing the debt assumed in the Merger and the related
interest cost and maintaining investment grade ratings on all senior debt. By
year end 1996, the Company completed several significant steps in its planned
monetization of certain assets, including the sale of the exploration and
production investments of TGP and the sale of an equity interest in and the
refinancing of its Australian natural gas pipeline. These steps resulted in debt
reductions in excess of $600 million.
For the years ended December 31, 1996, 1995, and 1994, EPG paid
approximately $53 million, $45 million, and $43 million in common and preferred
stock dividends. In January 1997, the Board declared a quarterly dividend of
$0.365 per share on EPG's common stock, payable on April 1, 1997, to
stockholders of record on March 14, 1997.
Since November 1994, the Company has been authorized by the Board to
repurchase up to 5.5 million shares of its common stock. Shares repurchased are
held in EPG's treasury and are expected to be used in conjunction with EPG stock
compensation plans and for other corporate purposes. Pursuant to the
authorization, the Company has repurchased 4.7 million shares as of December 31,
1995. There were no common stock repurchases in 1996.
Future funding for long-term debt retirements, dividends, and other
financing expenditures are expected to be provided by internally generated
funds, debt/equity issuances, and/or available credit facilities.
LIQUIDITY
The Company relies on cash generated from internal operations supplemented
by its available credit facilities as its primary sources of liquidity. In
November, 1996, EPG closed on a new $750 million five-year revolving credit
agreement and a new $250 million 364-day renewable revolving credit agreement,
both of which became effective upon the acquisition of EPTPC. The $750 million
and the $250 million facilities replaced EPG's existing $400 million five-year
revolving credit agreement and $100 million 364-day revolving credit agreement
which were established in May 1996.
The availability of borrowings under the Company's credit agreements is
subject to certain specified conditions, which management believes it currently
meets. These conditions include compliance with the financial covenants and
ratios required by such agreements, absence of default under such agreements,
and continued accuracy of the representations and warranties contained in such
agreements (including the absence of any material adverse changes since the
specified dates).
In February 1997, EPG continued its debt reduction plan by issuing 3
million shares of common stock under the Shelf Registration Statement for
approximately $152 million, net of issuance costs. The proceeds of the stock
issuance were used to repay debt under the assumed Old Tenneco revolving credit
agreement. On February 28, 1997, TGP's shelf registration statement on Form S-3
filed with the SEC covering an aggregate
18
<PAGE> 23
of $1 billion of unsecured debt securities was declared effective. In March
1997, the Company plans to reduce the remaining outstanding debt under the Old
Tenneco revolving credit agreement by an additional $900 million with proceeds
from TGP's fixed rate debt offering.
EPG expects its debt to total capitalization ratio following the completion
of its debt reduction plan to be approximately 56 percent. Prior to the
acquisition of EPTPC, EPG's debt to total capitalization ratio was approximately
60 percent. All of the Company's senior debt has been given investment grade
ratings by Standard & Poors and Moody's.
COMMITMENTS AND CONTINGENCIES
Capital Commitments
At December 31, 1996, the Company had capital or investment commitments of
$85 million which are expected to be funded through cash provided by operations
and/or incremental borrowings. The Company's other planned capital and
investment projects are discretionary in nature, with no substantial capital
commitments made in advance of the actual expenditures.
Purchase Obligations
In connection with the financing commitments of certain joint ventures, the
Company has entered into unconditional purchase obligations for products and
services of $121 million ($94 million on a present value basis) at December 31,
1996. The Company's annual obligations under these agreements are $22 million
for the years 1997 and 1998, $21 million for the years 1999 and 2000, $11
million for the year 2001 and $24 million thereafter. In addition, in connection
with the Great Plains coal gasification project, TGP continues to have an
obligation to purchase 30 percent of the output of the plant's original design
capacity through July 2009. TGP has executed a settlement of this contract as a
part of its GSR negotiations as discussed below.
Guarantees
EPG has guaranteed various obligations of its subsidiaries, which
obligations are not expected to exceed $150 million. For further information,
see Note 6 of Item 8, Financial Statements and Supplementary Data.
Rates and Regulatory Matters
The Company is accruing a provision for various matters discussed below, as
well as other pending regulatory matters, and the balance of the provision at
December 31, 1996, was approximately $309 million, including interest.
TGP -- A phased proceeding was scheduled at FERC with respect to the
recovery of TGP's GSR costs. Testimony has been completed in connection with
Phase I of that proceeding relating to the eligibility of GSR cost recovery.
Phase II of the proceeding on the prudency of the costs to be recovered and on
certain contract specific eligibility issues has not yet been scheduled.
Although the Order No. 636 transition cost recovery mechanism provides for
complete recovery by pipelines of eligible and prudently incurred transition
costs, certain customers have challenged the prudence and eligibility of TGP's
GSR costs and TGP has engaged in settlement discussions with its customers
concerning the amount of such costs in response to FERC's public statements
encouraging such settlements.
On February 28, 1997, TGP filed with FERC a proposed settlement of all
issues related to the recovery by TGP of its GSR and other transition costs and
related proceedings (the "GSR Stipulation and Agreement"). Upon final approval
by FERC, this settlement will become effective retroactive to
January 1, 1997. The settlement is based upon the preliminary GSR understanding,
which called for sharing of transition costs, that EPG reached with TGP's
customers in October 1996 in anticipation of the Merger. The GSR Stipulation and
Agreement allows for TGP to recover up to $770 million in GSR and other
transition costs, including interest, of which approximately $531 million has
previously been recovered, subject to refund,
19
<PAGE> 24
pending resolution of the transition costs issues. Assuming FERC approves the
GSR Stipulation and Agreement, TGP will be entitled to recover additional
transition costs, up to the remaining $239 million, through a two-year demand
transportation surcharge and an interruptible transportation surcharge. The
terms of the GSR Stipulation and Agreement provide for a rate case moratorium
through November 2000 (subject to certain limited exceptions) and provide a rate
cap, indexed to inflation, through October 31, 2005, for certain of TGP's
customers. The purchase accounting adjustments reflected in the Company's
consolidated financial statements assume approval of the settlement with respect
to TGP's GSR and other transition costs in accordance with the terms of the GSR
Stipulation and Agreement.
Although parties to TGP's transition cost proceedings do not have to
declare their support or opposition to the GSR Stipulation and Agreement until
mid-March, management believes that all of TGP's customers will support or not
oppose the GSR Stipulation and Agreement.
In order to resolve litigation concerning purchases made by TGP of
synthetic gas produced from the Great Plains coal gasification plant, TGP, along
with three other pipelines, executed four separate settlement agreements with
Dakota and the Department of Energy and initiated four separate proceedings at
FERC seeking approval to implement the settlement agreements. Among other
things, the settlement required TGP to pay Dakota over a limited period a
premium over the spot price for Dakota's production and resolves the litigation
with Dakota. As of December 31, 1996, TGP had paid $87 million of this
obligation and has accrued its estimated remaining obligation through December
2003 of $55 million. FERC previously ruled that the costs related to the Great
Plains project are eligible for recovery through GSR and other special recovery
mechanisms and that the costs are eligible for recovery for the duration of the
term of the original gas purchase agreements. In October 1994, FERC consolidated
the four proceedings and set them for hearing before an ALJ. The hearing, which
concluded in July 1995, was limited to the issue of whether the settlement
agreements are prudent. The ALJ concluded, in his initial decision issued in
December 1995, that the settlement was not prudent. In December 1996, FERC
unanimously reversed that decision and upheld the settlements among the
pipelines, Department of Energy and Dakota. No parties filed for rehearing of
the FERC decision. TGP notified Dakota in December 1996 that it accepted the
settlement.
In December 1994, TGP filed for a general rate increase (the "1995 Rate
Case"). In January 1995, FERC accepted the filing, suspended its effectiveness
for the maximum period of five months pursuant to normal regulatory process, and
set the matter for hearing. On July 1, 1995, TGP began collecting rates, subject
to refund, reflecting an $87 million increase in TGP's annual revenue
requirement. A Stipulation was filed with an ALJ in this proceeding in April
1996. This Stipulation resolves the rates that are the subject of the 1995 Rate
Case, including a structural rate design change that results in a larger
proportion of TGP's transportation revenues being dependent upon throughput.
Under the Stipulation, TGP is required to refund, upon final approval of the
Stipulation, the difference between the revenues collected under the July 1,
1995 motion rates and the revenues that would have been collected pursuant to
rates underlying the Stipulation. In October 1996, FERC approved the Stipulation
with certain modifications and clarifications which are not material. In January
1997, FERC issued an order denying requests for rehearing of the October 1996
order. Refunds will be made in March 1997. The Company believes that these
refunds will not have a material impact on the Company's financial position or
results of operations. One party to the rate proceeding, a competitor of TGP,
filed with the Court of Appeals a Petition for Review of the FERC orders
approving the Stipulation.
EPG -- Effective January 1, 1996, SoCal exercised an option in its contract
to relinquish 300 MMcf/d of capacity. SoCal's demand quantity will remain at the
1,150 MMcf/d level for a primary term ending August 31, 2006. In addition, PG&E
has a contract for 1,140 MMcf/d of firm capacity rights on EPG's system with a
primary term ending December 31, 1997. In June 1995, PG&E notified EPG that it
intends to terminate the contract as of December 31, 1997. EPG's reservation
revenues from PG&E during 1996 were approximately $126 million. Known reductions
in existing firm capacity commitments total approximately 1,614 MMcf/d.
EPG is seeking to offset the effects of these reductions in existing firm
capacity commitments by actively seeking new markets, pursuing attractive
opportunities to increase traditional market share, and controlling costs. The
new markets EPG has targeted include various natural gas users in California
which are now served
20
<PAGE> 25
indirectly through SoCal and PG&E, as well as new markets off the east end of
its system. EPG's efforts to obtain new markets in California at full tariff
rates is adversely impacted by the current excess interstate pipeline capacity
to California, which is estimated to continue into the next decade.
In June 1995, EPG made a filing with FERC for approval of new system rates
for mainline transportation to be effective January 1, 1996. In July 1995, FERC
accepted and suspended EPG's filing to be effective January 1, 1996, subject to
refund and certain other conditions. FERC also set EPG's rates for hearing.
In March 1996, EPG filed a comprehensive offer of settlement which, if
approved by FERC, would resolve issues related to the above mentioned rate case
and issues surrounding certain contract reductions and expirations that occur
from January 1, 1996 through December 31, 1997. The settlement provides for,
among other things: (i) a long term rate stability plan which establishes base
rates, for a 10-year period from January 1, 1996, through December 31, 2005,
subject to annual escalation after 1997; (ii) payments, over 8 years, or less,
to EPG by its customers totaling $255 million prior to interest, representing
approximately 35 percent of the revenues associated with the contract reductions
and expirations; (iii) the sharing between EPG (65 percent) and its customers
(35 percent) of revenues in excess of a threshold, as defined in the settlement
and (iv) a mechanism to reflect in the base rate increases or decreases
resulting from laws or regulations which impact costs at a level in excess of
$10 million a year. The settlement provides that any party desiring not to be
bound by the settlement may have its rates determined pursuant to procedures
established by FERC. FERC staff, the regulatory agencies of California, Arizona,
and Nevada, the state of New Mexico, and customers representing 95 percent of
the firm throughput on EPG's mainline transmission system support EPG's
settlement.
In March 1996, Edison, a firm shipper on EPG's system, filed its own offer
of settlement. One party supported Edison's proposal, while several other
parties independently contested elements of EPG's settlement. In January 1997,
the Chief ALJ certified EPG's settlement to FERC and severed the contesting
parties. Edison requested reconsideration of the certification. Edison and the
other contesting parties also provided notice of their intention to preserve
their rights to contest EPG's settlement, including through litigation. A
decision by FERC on both the certification and the merits of EPG's settlement is
pending.
Under FERC procedures, take-or-pay cost recovery filings may be challenged
by pipeline customers on prudence and certain other grounds. Certain of EPG's
customers sought review in the Court of Appeals of FERC's determination in the
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 1996, FERC issued an
order to the effect that categories of costs which had been determined to be
eligible for recovery might in fact be ineligible for recovery and established a
technical conference which was held in May 1996. Management believes that the
costs at issue were eligible for recovery from EPG's customers pursuant to the
equitable sharing mechanism. If FERC should rule that the costs at issue were
not eligible for recovery, refunds by EPG of up to $42 million plus interest may
be required. A FERC decision is expected in 1997.
Management believes the ultimate resolution of the aforementioned rate and
regulatory matters, which are in various stages of finalization, will not have a
materially adverse effect on the Company's financial position and results of
operations. For a further discussion of regulatory matters, see Note 6 of Item
8, Financial Statements and Supplementary Data.
Future Projects
In April 1996, EPG filed with FERC for authorization to expand the Havasu
Crossover Line. The proposed expansion involves the construction of additional
compression on the Havasu Crossover Line at an estimated cost of approximately
$20 million. Expansion of the Havasu Line will permit an additional 180 MMcf/d
to move on the crossover line from the San Juan Basin in northern New Mexico to
points of delivery off EPG's southern system. EPG has executed transportation
service agreements to fully subscribe this expanded capacity on the crossover
line. In November 1996, FERC authorized EPG to construct and operate the
proposed facilities. In December 1996, EPG requested a rehearing or
clarification of FERC's November 1996 order relating to the accounting
classification of minor items of property, which request is currently pending.
The expansion is expected to be in service in the second quarter of 1997.
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<PAGE> 26
In March 1993, EPG filed an application with FERC to expand its system in
order to provide natural gas service to the proposed Samalayuca II Power Plant
in northern Mexico. EPG's proposed facilities, together with a proposed border
crossing facility south of Clint, Texas would connect EPG's facilities with
facilities in Mexico. In December 1993, PG&E, SoCal and the CPUC jointly filed a
motion with FERC seeking clarification or rehearing of the November 1993 order
approving the proposed border crossing facility, which motion is currently
pending.
In February 1997, EPG filed with FERC an amendment to its March 1993
Samalayuca expansion application to reflect, among other things, EPG's
participation in the consortium discussed below. The amendment submitted
agreements evidencing binding, long-term firm commitments for 100 percent of the
revised capacity (208 MMcf/d) of the expansion project at a capital cost of
approximately $15 million. It also provided for the elimination of the mainline
facilities and for incremental rather than rolled-in rate treatment for the
costs of the project. EPG is required under the bid specifications for the
project to have the project in service by late 1997, and believes that it will
receive FERC and other authorizations necessary to meet the specified in-service
date.
In November 1996, EPG became a member of a consortium which successfully
bid on a proposed pipeline system connecting EPG's existing system in west Texas
to Pemex's pipeline system in northern Mexico. The proposed pipeline system,
which consists of approximately 22 miles on the U.S. side of the border, a
downsized version of the Samalayuca II Power Plant project, and an additional 23
miles in Mexico, will have a capacity of 208 MMcf/d. Volumes transported through
the proposed pipeline will provide natural gas to the Samalayuca Power Plants
and markets in northern Mexico. The entire project is estimated to cost
approximately $33 million.
In 1995 EPG purchased a one-third interest in TGTC for approximately $4
million from PSC. EPG paid approximately $2 million in cash with the balance of
approximately $2 million being due upon commencement of operation of the second
phase of the pipeline project. In December 1996, TGTC placed in service its
Phase I facilities, which consists of approximately 25 miles of pipeline with a
capacity of 120 MMcf/d, extending from the outlet of the Coyote Gulch Treating
Plant in southern Colorado to the Blanco Hub area. KN Energy and EPG each own a
one-half interest in Phase I. The cost of Phase I was approximately $12 million
and was funded by obtaining project financing. Phase II consists of the
remainder of the project extending up to northwest Colorado and is estimated to
cost $200 million. In October 1996, FERC granted an extension of time through
September 30, 1998 to complete construction and place in service Phase II.
Construction on Phase II has not yet begun.
In September 1996, a subsidiary of EPTPC was selected to acquire a 50
percent controlling interest in an operating 70 MW power plant located in
Danaujvaros, Hungary. The electricity generated at this plant is consumed by
Dunaferr, the largest steel mill in Hungary. Excess power is sold pursuant to
long-term contracts to the Hungarian national electric utility. Subject to
satisfaction of certain conditions, the acquisition is scheduled to be finalized
in the first quarter of 1997. The assets will be acquired for approximately $25
million, and no financing will be involved. The Company is seeking political
risk insurance from OPIC for its equity investment. The acquisition agreement
requires the Company to study and, if deemed economically feasible, to expand
the electric generating plant. The feasibility study is underway.
In February 1997, the Company acquired a 42 percent interest in a 151 MW
power generating plant to be constructed in Kabirwala, Pakistan. The Company is
obligated to invest approximately $18 million in the project. Project financing
in the amount of approximately $128 million closed in early 1997 and
construction has begun. Long-term fuel supply agreements and electricity sales
agreements with Pakistani national corporations have been entered into by the
project company and are guaranteed by the Pakistani Government. The Company is
seeking political risk insurance for its equity investment.
Legal Proceedings
See Item 3, Legal Proceedings which is incorporated herein by reference.
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<PAGE> 27
ENVIRONMENTAL
The Company is subject to extensive federal, state, and local laws and
regulations governing environmental quality and pollution control. These laws
and regulations require the Company to remove or remedy the effect on the
environment of the disposal or release of specified substances at ongoing and
former operating sites. As of December 31, 1996, the Company had a reserve of
approximately $215 million for the following environmental contingencies which
the Company anticipates incurring through 2027: (i) expected remediation costs
and associated onsite, offsite and groundwater technical studies of
approximately $162 million; and (ii) other costs of approximately $53 million.
For a further discussion of specific environmental matters, see Item 3, Legal
Proceedings and Note 6 of Item 8, Financial Statements and Supplementary Data.
The Company and certain of its subsidiaries have been designated, have
received notice that they could 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 (CERCLA or Superfund) or state equivalents. The Company has sought
to resolve its liability as a PRP with respect to these Superfund sites through
indemnification by third parties and/or settlements which provide for payment of
the Company's allocable share of remediation costs. As of December 31, 1996, the
Company has estimated its share of the remediation costs at these sites to be
between $24 million and $62 million and has provided reserves that it believes
are adequate for such costs. Because the clean-up costs are estimates and are
subject to revision as more information becomes available about the extent of
remediation required, 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 associated with the current status of such
entities as PRPs at the Superfund sites referenced above will not have a
materially adverse effect on the financial position of the Company.
The Company estimates that its subsidiaries will make capital expenditures
for environmental matters of approximately $5 million in 1997 and that capital
expenditures for environmental matters will range from approximately $45 million
to $85 million in the aggregate for the years 1998 through 2007. These
expenditures primarily relate to compliance with air regulations and control of
water discharges.
OTHER
Employee Separation and Asset Impairment Charge
During the first quarter of 1996, the Company adopted a program to reduce
operating costs through work force reductions and improved work processes and
adopted SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. As a result of the workforce reduction
program and the adoption of SFAS No. 121, the Company recorded a special charge
of $99 million ($47 million for employee separation costs and $52 million for
asset impairments) in the first quarter of 1996. For a further discussion, see
Note 3 of Item 8, Financial Statements and Supplementary Data.
Financial Instruments
See Note 5 of Item 8, Financial Statements and Supplementary Data.
SFAS No. 71, Accounting for the Effects of Certain Types of Regulation
The Company's businesses that are subject to the regulations and accounting
requirements of FERC continue to meet the accounting requirements of SFAS No.
71. The Consolidated Balance Sheets of the Company contain assets and
liabilities related to operations which have been recorded pursuant to SFAS No.
71. If these accounting principles should no longer be applied, an amount would
be charged to earnings as an extraordinary item. At December 31, 1996, this
amount was estimated to be approximately $100 million,
23
<PAGE> 28
net of income taxes. Changes in the regulatory and economic environment may, at
some point in the future, create circumstances in which the application of
regulatory accounting principles is no longer appropriate. Any potential charge
would be non-cash and would have no direct effect on the ability to seek
recovery of the underlying deferred costs in future rate proceedings or on the
ability to collect the rates set thereby. For a further discussion of SFAS No.
71 issues, see Note 1 of Item 8, Financial Statements and Supplementary Data.
Effective January 1, 1996, EPG transferred certain gathering and processing
facilities to EPFS. FERC had determined that, upon the transfer to EPFS, the
facilities would be exempt from FERC jurisdiction. Accordingly, the provisions
of SFAS No. 71 do not apply to EPFS's transactions and balances effective
January 1, 1996. The discontinuance of the application of SFAS No. 71 to EPFS
did not have a material impact on the Company's financial position or results of
operations.
FERC Compliance Audits
TGP and EPG, as with all interstate pipelines, are subject to a FERC audit
review of their books and records. Both currently have open audits covering the
years 1991 through 1994 for TGP and 1991 through 1995 for EPG. FERC audit staff
is expected to issue both audit reports in early 1997.
Change in Corporate Structure
The Board has approved, subject to certain conditions, the adoption of a
holding company structure whereby the Company would become direct and indirect
subsidiaries of a Holding Company. Holders of shares of common stock of EPG
would become, by virtue of the Reorganization, holders on a share-for-share
basis, of shares of common stock of Holding Company with the result that Holding
Company would replace EPG as the publicly-held corporation, and all stockholders
of EPG immediately prior to the Reorganization would own the same number of
shares of Holding Company common stock immediately after the Reorganization as
the EPG common stock held immediately before the Reorganization. The change to a
holding company structure would be tax free for federal income tax purposes to
stockholders of EPG. The change to a holding company structure may be effected
without a vote of stockholders under applicable Delaware law.
The Reorganization is subject to the satisfaction of certain conditions,
including among other things: (i) approval of Holding Company common stock and
preferred stock purchase rights for trading on the New York Stock Exchange; (ii)
a favorable no-action ruling from the SEC concerning the absence of requirement
for registration under the Securities Act of 1933 of the Holding Company common
stock to be issued in the Reorganization and certain other securities law
issues; and (iii) a favorable private letter ruling from the IRS. The Company
believes, but there can be no assurance, that the conditions to forming the
holding company structure will be satisfied. It is possible that certain of the
terms of the structure described above may be modified or dispensed with and new
terms or structure may be adopted, in response to conditions imposed by the IRS
and/or SEC in their rulings or otherwise adopted by the Board in on-going
consideration of the holding company structure.
RECENT PRONOUNCEMENTS
The Company adopted SFAS No. 125, SFAS No. 127, and Statement of Position
No. 96-1 effective January 1, 1997. The Company believes that these
pronouncements will not have a material impact on the Company's financial
position or results of operations. In addition, SFAS No. 128 and SFAS No. 129
were issued in early March 1997 and the Company is currently evaluating the
effect of these pronouncements. For a further discussion of these
pronouncements, see Note 1 of Item 8, Financial Statements and Supplementary
Data.
The Company also adopted SFAS No. 123 effective January 1, 1997 and has
elected to continue to account for stock-based compensation plans under
Accounting Principles Board Opinion No. 25. For a further discussion, see Note 9
of Item 8, Financial Statements and Supplementary Data.
24
<PAGE> 29
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference 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.
Taking into account the foregoing, the following are identified as
important factors that could cause actual results to differ materially from
those expressed in any forward-looking statement made by, or on behalf of, the
Company:
HIGHLY COMPETITIVE INDUSTRY
The ability to maintain or increase current transmission, gathering,
processing, and sales volumes, or to remarket unsubscribed capacity, can be
subject to the impact of future weather conditions, including those that favor
hydroelectric generation or other alternative energy sources; price competition;
drilling activity and supply availability; and service competition, especially
due to excess pipeline capacity into California. Future profitability also may
be affected by the Company's ability to compete with the services offered by
other energy enterprises which may be larger, offer more services, and possess
greater resources. The ability of TGP to negotiate new contracts and to
renegotiate existing contracts (70 percent of which are expiring over the next
five years, principally in the year 2000) could be adversely affected by the
proposed construction of additional pipeline capacity in the Northeast U.S.,
reduced demand due to higher gas prices, the availability of alternative energy
sources, and other factors that are not within its control. For a further
discussion see Item 1, Business -- Natural Gas Transmission -- Markets and
Competition.
IMPACT OF NATURAL GAS AND NATURAL GAS LIQUIDS PRICES
The value of natural gas transmission services is based on an all-in cost,
including the cost of the natural gas. Therefore, the Company's ability to
compete with other transporters is impacted by natural gas prices in the supply
basins connected to its pipeline systems compared to prices in other gas
producing regions, especially Canada. Additionally, revenues generated by the
Company from its gathering and processing contracts are dependent upon volumes
and rates, both of which can be affected by the prices of natural gas and
natural gas liquids. Fluctuations in energy prices are caused by a number of
factors, including regional, domestic and international demand, availability and
adequacy of transportation facilities, energy legislation, federal or state
taxes, if any, on the sale or transportation of natural gas and natural gas
liquids and the price and abundance of supplies of alternative energy sources.
USE OF DERIVATIVE FINANCIAL INSTRUMENTS
In the ordinary course and conduct of its business, some of the Company's
non-regulated subsidiaries are engaged in the gathering, processing and
marketing of natural gas and other energy commodities and utilize futures and
option contracts traded on the New York Mercantile Exchange and OTC options and
price and basis swaps with other gas merchants and financial institutions. The
Company could incur financial losses in future periods as a result of volatility
in the market values of the underlying commodities.
ACQUISITIONS AND INVESTMENTS
Opportunities for growth through acquisitions and investments in joint
ventures, and future operating results and the success of acquisitions and joint
ventures within and outside the U.S. may be subject to
25
<PAGE> 30
the effects of, and changes in, U.S. and foreign trade and monetary
policies, laws and regulations, political and economic developments,
inflation rates, and the effects of taxes and operating conditions.
Activities in areas outside the U.S. also are subject to the risks inherent
in foreign operations, including loss of revenue, property and equipment as
a result of hazards such as expropriation, nationalization, war,
insurrection and other political risks, and the effects of currency
fluctuations and exchange controls. Such legal and regulatory delays and
other unforeseeable obstacles may be beyond the Company's control or
ability to manage.
PENDING REGULATORY PROCEEDINGS
EPG and TGP have entered into comprehensive settlements with their
respective customers that, if approved by FERC, would resolve many of the
contract expiration, transportation rate, gas supply realignment and other
transition issues in which they are involved. Whether FERC will approve
such settlements in the form filed or whether these regulatory proceedings
will be otherwise resolved in a manner satisfactory to the Company cannot
be predicted with certainty, and the business of the Company could be
adversely affected thereby. For a description of certain regulatory
proceedings involving the Company, see Item 1, Business -- Natural Gas
Transmission -- Regulatory Environment.
POTENTIAL ENVIRONMENTAL LIABILITIES
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. For additional information concerning the
Company's environmental matters, see Note 6 of Item 8, Financial Statements
and Supplementary Data.
OPERATING HAZARDS AND UNINSURED RISKS
While the Company maintains insurance against certain of the risks
normally associated with the transportation, gathering and processing of
natural gas, including explosions, pollution and fires, the occurrence of a
significant event that is not fully insured against could have a material
adverse effect on the Company.
POTENTIAL LIABILITIES RELATED TO THE MERGER
The amount of the actual and contingent liabilities of Old Tenneco,
which remained the liabilities of the Company after the Merger, could vary
materially from the amount estimated by the Company, which was based upon
assumptions which may prove to be inaccurate. If New Tenneco or Newport
News Shipbuilding Inc. were unable or unwilling to pay their respective
liabilities, a court could require the Company, under certain legal
theories which may or may not be applicable to the situation, to assume
responsibility for such obligations, which could have a material adverse
effect on the Company.
UNCERTAINTY SURROUNDING INTEGRATION OF OPERATIONS
The Company is engaged in a comprehensive review of the business and
operations of EPTPC and its subsidiaries and has begun to integrate such
operations to increase operating and administrative efficiency through
consolidation and reengineering of facilities, workforce reductions and
coordination of purchasing, sales and marketing activities. Management
anticipates that the complementary interstate and intrastate pipeline
operations and energy marketing activities of the combined company should
provide increased operating flexibility and access to additional customers
and markets, although the amount and timing of the realization of such
benefits will depend upon the Company's ability to integrate successfully
the businesses and operations of the companies, and the time period over
which such integration is effected.
26
<PAGE> 31
POTENTIAL FEDERAL INCOME TAX LIABILITIES
In connection with the Merger and Distributions, the IRS issued a private
letter ruling to Old Tenneco, in which the IRS ruled that for U.S. federal
income tax purposes (i) the Distributions would be tax-free to Old Tenneco and,
except to the extent cash was received in lieu of fractional shares, to its then
existing stockholders, (ii) the Merger would constitute a tax-free
reorganization, and (iii) that certain other transactions effected in connection
with the Merger and Distributions would be tax-free. If the Distributions were
not to qualify as tax-free distributions, then a corporate level federal income
tax would be assessed to the consolidated group of which Old Tenneco was the
common parent. This corporate level federal income tax would be payable by
EPTPC. Under certain limited circumstances, however, New Tenneco and Newport
News Shipbuilding Inc. have agreed to indemnify EPTPC for a defined portion of
such tax liabilities.
REFINANCING AND INTEREST RATE EXPOSURE RISKS
The business and operating results of the Company can be adversely affected
by factors such as the availability or cost of capital, changes in interest
rates, changes in the tax rates due to new tax laws, market perceptions of the
natural gas industry or the Company, or security ratings.
POTENTIAL FOR CHANGES IN ACCOUNTING STANDARDS
Authoritative generally accepted accounting principle or policy changes
from such standard setting bodies as the Financial Accounting Standards Board,
FERC, and the SEC may affect the Company's results of operations or financial
position.
27
<PAGE> 32
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EL PASO NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Operating revenues
Reservation........................... $ 500 $ 504 $ 506
Transportation........................ 34 23 41
Natural gas and liquids............... 2,309 403 226
Gathering and processing.............. 85 73 67
Other................................. 82 35 30
------ ------ ------
3,010 1,038 870
------ ------ ------
Operating expenses
Natural gas and liquids............... 2,259 402 234
Operation and maintenance............. 338 312 295
Depreciation, depletion, and
amortization....................... 101 72 65
Employee separation and asset
impairment charge.................. 99 -- --
Litigation special charge............. -- -- 15
Taxes, other than income taxes........ 43 40 39
------ ------ ------
2,840 826 648
------ ------ ------
Operating income........................ 170 212 222
------ ------ ------
Other (income) and expense
Interest and debt expense............. 110 86 79
Allowance for funds used during
construction....................... (1) (2) (1)
Other, net............................ (4) (5) (4)
------ ------ ------
105 79 74
------ ------ ------
Income before income taxes and minority
interest.............................. 65 133 148
Income taxes............................ 25 48 58
------ ------ ------
Income before minority interest......... 40 85 90
Minority interest....................... 2 -- --
------ ------ ------
Net income.............................. $ 38 $ 85 $ 90
====== ====== ======
Earnings per common share............... $ 1.06 $ 2.47 $ 2.45
====== ====== ======
Average common shares outstanding....... 36 34 37
====== ====== ======
</TABLE>
The accompanying Notes are an integral part of
these Consolidated Financial Statements.
28
<PAGE> 33
EL PASO NATURAL GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT COMMON SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Current assets
Cash and temporary investments........ $ 200 $ 39
Accounts and notes receivable, net.... 1,445 215
Inventories........................... 87 37
Deferred income tax benefit........... 141 23
Other................................. 92 55
------ ------
Total current assets.......... 1,965 369
------ ------
Property, plant, and equipment, net..... 5,938 1,977
Other................................... 809 189
------ ------
6,747 2,166
------ ------
Total assets.................. $8,712 $2,535
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
Trade.............................. $ 588 $ 201
Other.............................. 501 75
Short-term borrowings (including
current maturities of long-term
debt).............................. 841 285
Accrual for regulatory issues......... 309 --
Other................................. 473 82
------ ------
Total current liabilities..... 2,712 643
------ ------
Long-term debt, less current
maturities............................ 2,215 772
Deferred income taxes, less current
portion............................... 1,092 314
Postretirement benefits, less current
portion............................... 309 --
Other................................... 411 94
------ ------
4,027 1,180
------ ------
Minority interest
Preferred stock of subsidiary......... 296 --
------ ------
Other minority interest............... 39 --
------ ------
Commitments and contingencies (See Note
6.)
Stockholders' equity
Common stock, par value $3 per share;
authorized 100,000,000 shares;
issued 56,726,734 and 37,351,225
shares............................. 170 112
Additional paid-in capital............ 1,355 455
Retained earnings..................... 227 240
Less: Treasury stock of 1,451,922 and
3,127,077 shares................... 45 95
Deferred compensation........... 69 --
------ ------
Total stockholders' equity.... 1,638 712
------ ------
Total liabilities and
stockholders' equity....... $8,712 $2,535
====== ======
</TABLE>
The accompanying Notes are an integral part of
these Consolidated Financial Statements.
29
<PAGE> 34
EL PASO NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1995 1994
------- ----- -----
<S> <C> <C> <C>
Cash flows from operating activities
Net income............................ $ 38 $ 85 $ 90
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation, depletion, and
amortization..................... 101 72 65
Deferred income taxes.............. (5) 30 49
Net take-or-pay recoveries......... 10 36 32
Net employee separation and asset
impairment charge................ 76 -- --
Net costs recovered (recoverable)
through insurance................ -- (1) 23
Other working capital changes
Accounts and notes receivable.... (168) (11) 1
Inventories...................... (5) 1 (3)
Other current assets............. (26) (10) 5
Accrual for regulatory issues.... 142 -- (35)
Accounts payable................. 65 (10) 33
Accrued taxes, other than income
taxes......................... -- 2 4
Other current liabilities........ 49 2 (4)
Other................................. 14 7 (7)
------- ----- -----
Net cash provided by operating
activities.................. 291 203 253
------- ----- -----
Cash flows from investing activities
Capital expenditures.................. (119) (166) (173)
Long-term note receivable issued by
subsidiary......................... (26) -- --
Investment in equity securities....... (24) -- --
Proceeds from sale of assets.......... 10 3 7
Net cash flow impact of
acquisitions....................... (35) (23) --
Net cash flow impact from monetization
of investments..................... 179 -- --
Other................................. 10 (30) (23)
------- ----- -----
Net cash used in investing
activities.................. (5) (216) (189)
------- ----- -----
Cash flows from financing activities
Net commercial paper borrowings
(repayments)....................... (203) 96 105
Revolving credit borrowings........... 400 75 --
Revolving credit repayments........... (1,022) -- --
Long-term debt retirements............ (24) (16) (16)
Long-term debt issuance............... 396 -- --
Repayment of volumetric take-or-pay
receivable......................... -- (37) (44)
Acquisition of treasury stock......... -- (56) (44)
Dividends paid........................ (53) (45) (43)
Contribution from minority interest... 40 -- --
Proceeds from project financing....... 310 -- --
Other................................. 31 7 6
------- ----- -----
Net cash provided by (used in)
financing activities........ (125) 24 (36)
------- ----- -----
Increase in cash and temporary
investments........................... 161 11 28
Cash and temporary investments
Beginning of period................... 39 28 --
------- ----- -----
End of period......................... $ 200 $ 39 $ 28
======= ===== =====
</TABLE>
The accompanying Notes are an integral part of
these Consolidated Financial Statements.
30
<PAGE> 35
EL PASO NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK TOTAL
--------------- PAID-IN RETAINED --------------- DEFERRED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT COMPENSATION EQUITY
------ ------ ---------- -------- ------ ------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994......... 37 $112 $ 456 $157 (1) $(18) $ -- $ 707
Net income............ 90 90
Issuance of common
stock, net of
related costs....... --
Common stock dividend
($1.21 per share)... (44) (44)
Acquisition of
treasury stock...... (1) (44) (44)
Issuance of treasury
stock............... 2 2
Other................. (1) (1)
-- ---- ------ ---- -- ---- ---- ------
December 31, 1994....... 37 112 455 203 (2) (60) 710
Net income............ 85 85
Common stock dividend
($1.32 per share)... (45) (45)
Acquisition of
treasury stock...... (2) (57) (57)
Issuance of treasury
stock for
acquisition of
Eastex Energy
Inc................. (3) 1 21 18
Issuance of treasury
stock............... 1 1
-- ---- ------ ---- -- ---- ---- ------
December 31, 1995....... 37 112 455 240 (3) (95) 712
Net income............ 38 38
Common stock dividend
($1.39 per share)... (50) (50)
Issuance of common
stock for
acquisition of
EPTPC............... 19 56 857 913
Issuance of common
stock............... 1 2 19 21
Issuance of treasury
stock............... 23 (1) 2 50 72
Issuance and
amortization of
restricted stock,
net................. (69) (69)
Other................. 1 1
-- ---- ------ ---- -- ---- ---- ------
December 31, 1996....... 57 $170 $1,355 $227 (1) $(45) $(69) $1,638
== ==== ====== ==== == ==== ==== ======
</TABLE>
The accompanying Notes are an integral part of
these Consolidated Financial Statements.
31
<PAGE> 36
EL PASO NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The consolidated financial statements include the accounts of all
majority-owned subsidiaries of the Company after the elimination of all
significant intercompany accounts and transactions. Investments in 20 percent to
50 percent owned companies where the Company has the ability to exert
significant influence over operating and financial policies are accounted for by
the equity method. The financial statements for previous periods include certain
reclassifications that were made to conform to the current presentation. Such
reclassifications have no impact on reported net income or stockholders' equity.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities that exist at
the date of the financial statements. Actual results could differ from those
estimates.
Accounting for Regulated Operations
The Company's businesses that are subject to the regulations and accounting
requirements of FERC continue to meet the accounting requirements of SFAS No.
71, Accounting for the Effects of Certain Types of Regulation, which accounting
methods may differ from those used by non-regulated entities. Transactions that
have been recorded differently as a result of regulatory accounting requirements
include Order No. 636 transition costs to be recovered under a volumetric
surcharge; certain benefits costs and taxes expected to be included in future
rates; and costs to refinance debt. When the accounting method followed is
prescribed by or allowed by the regulatory authority for rate-making purposes,
such accounting conforms to the generally accepted accounting principle of
matching costs against the revenues to which they apply.
Changes in the regulatory and economic environment may, at some point in
the future, create circumstances in which the application of regulatory
accounting principles will no longer be appropriate. If these accounting
principles should no longer be applied, an amount would be charged to earnings
as an extraordinary item. At December 31, 1996, this amount was estimated to be
approximately $100 million, net of income taxes. Any potential charge would be
non-cash and would have no direct effect on the regulated companies' ability to
seek recovery of the underlying deferred costs in their future rate proceedings
or on their ability to collect the rates set thereby.
Cash and Temporary Investments
Short-term investments purchased with an original maturity of three months
or less are considered cash equivalents.
Allowance for Doubtful Accounts and Notes
The Company has established a provision for losses on accounts and notes
receivable, as well as gas imbalances due from shippers and operators, which may
become uncollectible. Collectibility is reviewed regularly, and the allowance
for bad debts is adjusted as necessary primarily under the specific
identification method. The balances of this provision at December 31, 1996 and
1995, were $60 million and $10 million, respectively.
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<PAGE> 37
Gas Imbalances
The Company values gas imbalances due to or due from shippers and operators
at the appropriate index price. The gas imbalances are settled in cash or made
up in-kind.
Inventories
Inventories, consisting of materials and supplies and gas in storage, are
valued at the lower of cost or market with cost determined using the average
cost method.
Property, Plant, and Equipment
Included in the Company's property, plant, and equipment is construction
work in progress of approximately $189 million and $74 million at December 31,
1996, and 1995, respectively. An allowance for both debt and equity funds used
during construction is included in the cost of the Company's property, plant,
and equipment.
Depreciation of the Company's regulated transmission facilities are
provided primarily using the composite method over the estimated useful lives of
the depreciable facilities. The rates for depreciation range from approximately
2 percent to 5 percent.
Depreciation of the Company's nonregulated properties is provided using the
straight line or composite method which, in the opinion of management, is
adequate to allocate the cost of properties over their estimated useful lives.
Additional acquisition cost assigned to utility plant represents the excess
of allocated purchase costs over historical costs that resulted from the 1983
acquisition of EPG's former parent, The El Paso Company, by Burlington Northern
Inc., the former parent of Burlington Resources Inc. and the December 1996
acquisition of EPTPC. These costs are being amortized on a straight-line basis
over the estimated useful life of the properties.
Costs of regulated properties that are not operating units, as defined by
FERC, which are retired, sold, or abandoned are charged or credited, net of
salvage, to accumulated depreciation and amortization. Gains or losses on sales
of operating units are credited or charged to income.
The Company evaluates impairment of its property, plant, and equipment in
accordance with SFAS No. 121.
Intangible Assets
Goodwill and other intangibles are being amortized using the straight-line
method over periods ranging from 5 years to 40 years. The net balances of
intangible assets at December 31, 1996 and 1995, were $116 million and $48
million, respectively.
The Company evaluates impairment of goodwill in accordance with SFAS No.
121.
Environmental Costs
Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments indicate that remedial
efforts are probable and the costs can be reasonably estimated. Estimates of the
liability are based upon currently available facts, existing technology and
presently enacted laws and regulations taking into consideration the likely
effects of inflation and other societal and economic factors. All available
evidence is considered including prior experience in remediation of contaminated
sites, other companies' clean-up experience and data released by the EPA or
other organizations. These estimated liabilities are subject to revision in
future periods based on actual costs or new circumstances. These liabilities are
included in the balance sheets at their undiscounted amounts. Recoveries
33
<PAGE> 38
are evaluated separately from the liability and, when recovery is assured, are
recorded and reported separately from the associated liability in the
consolidated financial statements as a regulatory asset.
Financial Instruments With Off-Balance-Sheet Risk
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to reduce its exposure to fluctuations in
interest rates and the price of certain energy and power commodities. These
financial instruments include interest rate swaps, price swap agreements,
futures, and options.
The Company engages in price risk management activities for both trading
and non-trading purposes. Activities for trading purposes, generally consisting
of services provided to the energy sector, are accounted for using the
mark-to-market method. Under such method, changes in the market value of
outstanding financial instruments are recognized as gains or losses in the
period of change. The market prices used to value these transactions reflect
management's best estimate considering various factors, including closing
exchange and over-the-counter quotations, time value and volatility factors
underlying the commitments. The values are adjusted to reflect the potential
impact of liquidating the Company's position in an orderly manner over a
reasonable period of time under present market conditions.
Activities for non-trading purposes consist of transactions entered into by
the Company to hedge the impact of market fluctuations on assets, liabilities,
production or other contractual commitments. Changes in the market value of
these transactions are deferred until the gains or losses on the hedged item are
recognized. See Note 5 for a further discussion of the Company's price risk
management activities.
Income Taxes
Income taxes are based on income reported for tax return purposes along
with a provision for deferred income taxes. Deferred income taxes are provided
to reflect the tax consequences in future years of differences between the
financial statement and tax bases of assets and liabilities at each year end.
Tax credits are accounted for under the flow-through method, which reduces the
provision for income taxes in the year the tax credits first become available.
Deferred tax assets are reduced by a valuation allowance when, based upon
management's estimates, it is more likely than not that a portion of the
deferred tax assets will not be realized in a future period. The estimates
utilized in the recognition of deferred tax assets are subject to revision in
future periods based on new facts or circumstances.
As a result of the Merger, EPTPC entered into a new tax sharing agreement
with Newport News Shipbuilding Inc., New Tenneco and EPG. This new tax sharing
agreement provides, among other things, for the allocation among the parties of
assets and tax liabilities arising prior to, as a result of, and subsequent to
the Distributions. Generally, EPTPC will be liable for taxes imposed on EPTPC.
In the case of federal income taxes imposed with respect to periods prior to the
consummation of the Distributions on the combined activities of EPTPC and other
members of its consolidated group prior to giving effect to the Distributions,
New Tenneco and Newport News Shipbuilding Inc. will be liable to EPTPC for
federal income taxes attributable to their activities, and each will be
allocated an agreed-upon share of estimated tax payments made by EPTPC for Old
Tenneco. Pursuant to the new tax sharing agreement, EPTPC will pay New Tenneco
for the tax benefits realized from the deduction of taxable losses generated by
a debt realignment in accordance with the Merger and such amount has been
accrued in the accompanying consolidated balance sheet.
Treasury Stock
Treasury stock is accounted for using the cost method and is shown as a
reduction to stockholders' equity in the consolidated balance sheets. Treasury
stock sold or issued is valued on a first-in first-out basis. Included in
treasury stock at December 31, 1996, and 1995, were 680,000 shares that were
reserved to secure benefits under certain of the Company's benefit plans.
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<PAGE> 39
Earnings Per Share
Earnings per share of common stock is based on the weighted average number
of shares of common stock outstanding during the year. The weighted average
shares of common stock outstanding for 1996, 1995, and 1994 were 36 million, 34
million, and 37 million, respectively.
Stock-Based Compensation
The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock compensation plans. The Company uses
fixed and variable plan accounting for fixed and variable compensation plans,
respectively. Accordingly, compensation expense is not recognized for stock
options unless the options were granted at a price lower than market on the
grant date.
Recent Pronouncements
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, which establishes new accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities.
The statement is effective for transactions occurring after December 31, 1996,
but in December 1996, the Financial Accounting Standards Board issued SFAS No.
127, Deferral of the Effective Date of Certain Provisions of FASB Statement No.
125, which defers the implementation of certain provisions of SFAS No. 125 until
January 1998. The new pronouncements are not expected to have a material impact
on the financial position or results of operations of the Company.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position No. 96-1, Environmental Remediation Liabilities,
which establishes new accounting and reporting standards for the recognition and
disclosure of environmental remediation liabilities. The provisions of the
statement are effective for fiscal years beginning after December 15, 1996. This
pronouncement is not expected to have a material impact on the financial
position or results of operations of the Company.
In early March 1997, SFAS No. 128, Earnings Per Share, and SFAS No. 129,
Disclosures of Information about Capital Structure, were issued. The Company is
currently evaluating the impact of these pronouncements.
2. ACQUISITIONS
On December 12, 1996, the Company completed the acquisition of EPTPC in a
transaction accounted for as a purchase. Accordingly, an allocation of the
purchase price has been assigned to the assets and liabilities acquired based
upon the estimated fair value of those assets and liabilities as of the
acquisition date. A substantial portion of the excess of the total purchase
price over historical carrying amounts of the net assets acquired has been
allocated to property, plant and equipment of EPTPC's interstate pipeline
systems. Such allocation is based on the Company's internal evaluation of such
assets. An independent appraisal of the fair value of the property acquired is
in process and is expected to be completed by mid-1997. Should the independent
appraisal not support such allocation, the excess of total purchase price over
fair value of net assets acquired will be reflected as goodwill. Management does
not expect that the final results of the independent appraisal and the ultimate
disposition of the purchase price allocation will materially impact future
operating results.
In the Merger, which was effected in accordance with the Merger Agreement,
Old Tenneco changed its name to EPTPC. Prior to the Merger, Old Tenneco and its
subsidiaries effected various intercompany transfers and distributions which
restructured, divided and separated their businesses, assets and liabilities so
that all the assets, liabilities and operations related to the Industrial
Business and the Shipbuilding Business were spun-off to Old Tenneco's then
existing common stockholders. The Distributions were effected on December 11,
1996 pursuant to the Distribution Agreement dated as of November 1, 1996.
Following the Distributions, the remaining operations of Old Tenneco consisted
primarily of those operations related to the
35
<PAGE> 40
transmission and marketing of natural gas. Results of operations of EPTPC are
included in the Company's Consolidated Statements of Income for the last 20 days
of 1996.
On October 30, 1996, the IRS issued a private letter ruling to Old Tenneco,
in which the IRS ruled that for U.S. federal income tax purposes (i) the
Distributions would be tax-free to Old Tenneco and, except to the extent cash is
received in lieu of fractional shares, to its then existing stockholders; (ii)
the Merger would constitute a tax-free reorganization; and (iii) certain other
transactions effected in connection with the Merger and Distributions would be
tax-free. If the Distributions were not to qualify as tax-free distributions
under a corporate level, federal income tax would be payable by the consolidated
group of which Old Tenneco was the common parent.
The consideration paid by EPG in the Merger consisted of:
- the retention after the Merger of approximately $2.6 billion of debt and
preferred stock obligations of Old Tenneco, subject to certain
adjustments (which consisted, in part, of (1) approximately $.2 billion
of public debt of Old Tenneco outstanding at the effective time of the
Merger, (2) $2.1 billion of debt of Old Tenneco outstanding at the
effective time of the Merger under a $3 billion Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (the
"Credit Facility"), among Old Tenneco, the banks and other financial
institutions party thereto and The Chase Manhattan Bank, as agent), and
(3) $300 million of Old Tenneco preferred stock);
- the issuance of 18.8 million shares of common stock of EPG valued at
approximately $913 million, based on a closing price per share of common
stock on the New York Stock Exchange of $48.625 on December 9, 1996, to
Old Tenneco's then existing common and preferred stockholders; and
- the retention of approximately $600 million of estimated assumed
liabilities related to certain discontinued businesses of Old Tenneco.
The number of shares of EPG's common stock issued in the Merger to
stockholders of Old Tenneco was determined pursuant to formulas set forth in the
Merger Agreement. In the Merger, (i) a holder of Old Tenneco's common stock
received .093 of a share of EPG's common stock for each share of Tenneco common
stock, (ii) a holder of Old Tenneco's $7.40 Cumulative Preferred Stock received
2.365 shares of EPG's common stock for each such share of $7.40 Cumulative
Preferred Stock, and (iii) a holder of Old Tenneco's $4.50 Cumulative Preferred
Stock received 2.365 shares of EPG's common stock for each such share of $4.50
Cumulative Preferred Stock.
At the time of the Merger, EPG indirectly owned 100 percent of the common
equity and approximately 75 percent of the combined equity value of EPTPC. The
remaining 25 percent of the combined equity of EPTPC is comprised of $296
million of preferred stock issued in a public offering by Old Tenneco on
November 18, 1996, which remains outstanding.
Assets acquired, liabilities assumed, and consideration received are as
follows:
<TABLE>
<S> <C>
Fair value of assets acquired............................... $ 6,080
Cash acquired............................................... (75)
Liabilities assumed......................................... (5,155)
Issuance of common stock.................................... (913)
-------
Net cash consideration received................... $ (63)
=======
</TABLE>
36
<PAGE> 41
The following unaudited pro forma information presents a summary of what
the consolidated results of operations would have been on a pro forma basis for
the years ended December 31, 1996 and 1995, assuming the acquisition had
occurred January 1, 1995:
<TABLE>
<CAPTION>
1996 1995
------ ------
(IN MILLIONS,
EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Operating revenue........................................... $5,281 $2,912
Net income.................................................. $ 183 $ 167
Earnings per common share................................... $ 3.22 $ 2.98
</TABLE>
In December 1996, subsequent to the Merger, TGP sold 70 percent of its
interests in two natural gas pipeline systems in Australia to CNGI Australia
Pty. Limited, a wholly owned indirect subsidiary of Consolidated Natural Gas
Company, and four Australian investors for approximately $400 million, inclusive
of related debt financing, and completed the sale of its oil and gas
exploration, production and financing unit, formerly known as Tenneco Ventures,
in a $105 million transaction. After consideration of the purchase price
allocation adjustments, there was no gain or loss recognized on these
transactions.
Effective June 1996, the Company acquired Cornerstone in a transaction
accounted for as a purchase. The purchase price of approximately $94 million,
exclusive of acquisition costs, was financed through internally generated funds
and short-term borrowings. Acquisition costs of approximately $5 million have
been capitalized. The cost of the acquisition has been allocated on the basis of
the estimated fair value of the assets acquired and the liabilities assumed,
resulting in goodwill of approximately $59 million which is being amortized over
40 years using the straight-line method. Results of operations of Cornerstone
are included in the Company's Consolidated Statements of Income for the period
June 1996 through December 1996.
Effective September 1995, the Company acquired Eastex Energy Inc., and in
December 1995, the Company acquired all of the issued and outstanding capital
stock of Premier. Effective July 1996, the name Eastex Energy Inc. was changed
to, and its subsidiaries were merged into, EPEM.
3. EMPLOYEE SEPARATION AND ASSET IMPAIRMENT CHARGE
During the first quarter of 1996, the Company adopted a program to reduce
operating costs through work force reductions and improved work processes and
adopted SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. As a result of the workforce reduction
program and the adoption of SFAS No. 121, the Company recorded a special charge
of $99 million ($47 million for employee separation costs and $52 million for
asset impairments) in the first quarter of 1996.
The employee separation charge included approximately $26 million for
expected severance-related costs and $21 million for pension costs related to
special termination benefits and work force reductions. The special charge for
pension-related costs will have no cash impact outside of the normal funding of
the Company's pension plan.
In accordance with SFAS No. 121, the Company determined the fair value of
certain assets based on discounted future cash flows. The resultant non-cash
charge for asset impairments included approximately $44 million for the
impairment of certain natural gas gathering, processing, and production
facilities and $8 million for the write-off of a regulatory asset established
upon the adoption of SFAS No. 112, Employers' Accounting for Postemployment
Benefits, but not recoverable through the Company's rate settlement filed with
FERC in March 1996.
37
<PAGE> 42
4. LONG-TERM DEBT AND OTHER FINANCING
Long-term debt outstanding at December 31, 1996 and 1995, consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
------ ------
(IN MILLIONS)
<S> <C> <C>
Long-term debt
EPG
Debentures due 2012 through 2026, average effective
interest rates of 8.15% in 1996 and 8.63% in 1995..... $ 475 $ 275
Notes due 1997 through 2003, average effective interest
rates of 7.39% in 1996 and 7.74% in 1995.............. 562 362
EPTPC
Credit Facility due 1999 average effective interest
rate 6.78%
in 1996.............................................. 1,600 --
Debentures due 1998 through 2025, average effective
interest rate 8.9% in 1996............................ 55 --
Notes due 1998 through 2005, average effective interest
rate 9.6% in 1996..................................... 90 --
TGP
Debentures due 2011, average effective interest rate
15.1% in 1996......................................... 73 --
EPECC
Senior notes due 1996 through 2001, average effective
interest rate 9.9% in 1996............................ 30 --
Subordinated notes due 1998 through 2001, average
effective interest rate 9.9% in 1996.................. 7 --
MPC
Project financing loan, due March 2007, average
effective interest rates of 8.9% in 1996 and 8.8% in
1995.................................................. 135 142
Other Subsidiaries
Notes due 1996 through 2014, average effective interest
rate 7.92% in 1996.................................... 12 --
------ ------
3,039 779
Less current maturities................................... 824 7
------ ------
Total long-term debt.............................. $2,215 $ 772
====== ======
</TABLE>
The following are aggregate maturities of long-term debt for the next 5
years and in total thereafter:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
1997........................................................ $ 824
1998........................................................ 56
1999........................................................ 564
2000........................................................ 20
2001........................................................ 54
Thereafter.................................................. 1,521
------
Total long-term debt, including current
maturities....................................... $3,039
======
</TABLE>
Other Financing Arrangements
In November 1996, EPG closed on a new $750 million five-year revolving
credit agreement and a new $250 million 364-day renewable revolving credit
agreement, both of which became effective upon the acquisition of EPTPC. The
$750 million and $250 million revolving credit agreements replaced EPG's
38
<PAGE> 43
$400 million five-year revolving credit agreement and $100 million 364-day
revolving credit agreement which were established in May 1996. Borrowings on
EPG's revolving credit facilities as of December 31, 1996 and 1995, were
approximately $17 million and $75 million, respectively. As of December 31,
1996, the Company had no commercial paper outstanding compared to $203 million
at December 31, 1995. The Company's weighted average interest rate on short-term
borrowings for 1996 was 5.7 percent compared to 6.0 percent in 1995.
In November 1996, Old Tenneco established with a group of banks a 364-day
$3 billion revolving credit and competitive advance facility (previously defined
as the "Credit Facility") with an initial termination date in November 1997.
Outstanding borrowings under the Credit Facility which are unpaid at the
termination date become due by the second anniversary following that date. At
December 31, 1996, approximately $1.6 billion in borrowings and $400 million in
unused loan commitments remained outstanding under the Credit Facility. In March
1997, TGP will issue $900 million of long-term debt, with maturities ranging
from 10 to 40 years. The proceeds of this borrowing will be used to pay down the
Credit Facility in the first quarter 1997. This refinanced amount is the basis
for classifying $900 million of that facility as long-term debt.
In June 1996, EPG retired Cornerstone long-term debt in the amount of $16
million. In January 1997, EPG's 6.90% Notes for $100 million matured and were
retired.
On November 5, 1996, EPG's Shelf Registration Statement was declared
effective. On November 13, 1996, EPG closed the sale of $200 million aggregate
principal amount of its 6 3/4% Notes due 2003 and the sale of $200 million
aggregate principal amount of its 7 1/2% Debentures due 2026. The 6 3/4% Notes
and the 7 1/2% Debentures were covered by the Shelf Registration Statement.
Proceeds from the debt issuance were used to repay short-term debt and for
general corporate purposes.
The Company must comply with various restrictive covenants contained in its
debt agreements which include, among others, maintaining a consolidated debt and
guarantees to capitalization ratio no greater than 70 percent. In addition, the
Company's subsidiaries on a consolidated basis (as defined in the agreements)
may not incur debt obligations which would exceed $150 million in the aggregate,
excluding acquisition debt, project financing, and certain refinancings. As of
December 31, 1996, EPG's consolidated debt and guarantees to capitalization
ratio was 60 percent and debt obligations of EPG subsidiaries in excess of
permitted debt did not exceed $150 million on a consolidated basis.
5. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is presented in accordance with the requirements of SFAS No. 107.
The estimated fair value amounts have been determined by the Company using
available market information and valuation methodologies.
As of December 31, 1996, and 1995, the carrying amounts of certain
financial instruments employed by the Company, including cash, cash equivalents,
short-term borrowings and investments, and trade receivables and payables are
representative of fair value because of the short-term maturity of these
instruments. The fair value of the long-term debt has been estimated based on
quoted market prices for the same or similar issues. The fair value of the
project financing is representative of the carrying amount due to the short-term
nature of the interest rates. The fair value of all derivative financial
instruments is the estimated amount at which management believes they could be
liquidated over a reasonable period of time, based on quoted market prices,
current market conditions, or other estimates obtained from third-party dealers.
39
<PAGE> 44
The following table reflects the carrying amount and estimated fair value
of the Company's financial instruments at December 31:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Balance sheet financial instruments:
Long-term debt, excluding project
financing................................. $2,904 $2,936 $637 $710
Project financing............................ 135 135 142 142
Other financial instruments:
Trading
Futures contracts......................... 25 25 -- (6)
Option contracts.......................... -- -- -- 7
Swap contracts............................ 14 14 -- 1
Non-Trading
Interest rate swap agreements............. -- 10 -- 15
Futures contracts......................... -- 2 -- 1
Option contracts.......................... -- -- -- (12)
Swap contracts............................ -- -- -- 23
</TABLE>
Trading Activities
The Company, through its merchant services business, offers price risk
management services to the energy sector. These services primarily relate to
commodities associated with the energy sector (natural gas, crude natural gas
liquids and electricity). The Company provides these services through a variety
of financial instruments including forward contracts involving cash settlements
or physical delivery of an energy commodity, swap contracts, which require
payments to (or receipt of payments from) counterparties based on the
differential between a fixed and variable price for the commodity, options and
other contractual arrangements.
The Company uses the mark-to-market method of accounting for transactions
which subject the Company to price risk in order to accurately portray its price
risk management and trading activities. Under this method, forwards, swaps,
options and other financial instruments with third parties are reflected at
estimated market value, with resulting unrealized gains and losses recorded in
other current assets in the Consolidated Balance Sheets. Terms regarding cash
settlements of these contracts vary with respect to the actual timing of cash
receipts and payments. The amounts shown in the Consolidated Balance Sheets
related to price risk management activities also include assets or liabilities
which arise as a result of the actual timing of settlements related to these
contracts. Current period changes in the assets and liabilities from price risk
management activities (resulting primarily from newly originated transactions,
restructurings and the impact of price movements) are recognized as net gains or
losses in operating income in the Consolidated Statements of Income. Net gains
recognized during 1996 were approximately $28 million.
The fair value of the financial instruments as of December 31, 1996, and
the average fair value of those instruments held during the year are set forth
below (amounts in millions):
<TABLE>
<CAPTION>
AVERAGE FAIR
VALUE FOR THE
ASSETS LIABILITIES YEAR ENDED 12/31/96(A)
------ ----------- ----------------------
<S> <C> <C> <C>
Futures contracts............................ 74 49 4
Option contracts............................. 10 10 (11)
Swap contracts............................... 86 72 7
</TABLE>
- ---------------
(a) Computed using the net asset balance at each month end.
40
<PAGE> 45
Notional Amounts and Terms
The notional amounts and terms of these financial instruments at December
31, 1996 are set forth below (volumes in trillions of British thermal units
equivalent):
<TABLE>
<CAPTION>
FIXED PRICE FIXED PRICE MAXIMUM
PAYER RECEIVER TERMS IN YEARS
----------- ----------- --------------
<S> <C> <C> <C>
Energy Commodities:
Natural gas........................... 914 873 5
NGLs, crude and refined products...... 58 77 1
Electricity........................... 1 1 1
</TABLE>
Notional amounts reflect the volume of transactions but do not represent
the amounts exchanged by the parties to the financial instruments. Accordingly,
notional amounts are an incomplete measure of the Company's exposure to market
or credit risks. The maximum terms in years detailed above are not indicative of
likely future cash flows as these positions may be offset in the markets at any
time based on the Company's risk management needs and liquidity of the commodity
market.
The volumetric weighted average maturity of the Company's entire portfolio
of price risk management activities as of December 31, 1996, was approximately
one year.
Market and Credit Risks
To provide solutions to energy problems nationwide, the Company serves a
diverse customer group that includes independent power producers, industrials,
gas and electric utilities, oil and gas producers, financial institutions and
other energy marketers. This broad customer mix generates a need for a variety
of financial structures, products and terms. This diversity requires the Company
to manage, on a portfolio basis, the resulting market risks inherent in these
transactions subject to parameters established by the Company's risk management
committee. Market risks are monitored by a risk control group operating
separately from the units that create or actively manage these risk exposures to
ensure compliance with the Company's stated risk management policies.
The Company measures and adjusts the risk in its portfolio in accordance
with mark-to-market and other risk management methodologies which utilize
forward price curves in the energy markets to estimate the size and probability
of future potential losses.
Credit risk relates to the risk of loss that the Company would incur as a
result of non-performance by counterparties pursuant to the terms of their
contractual obligations. The Company maintains credit policies with regard to
its counterparties to minimize overall credit risk. These policies require an
evaluation of potential counterparties' financial condition (including credit
rating), collateral requirements under certain circumstances and the use of
standardized agreements which allow for the netting of positive and negative
exposures associated with a single counterparty. Counterparties to the forwards,
futures and other contracts discussed above are generally investment grade
financial institutions. Counterparties with below investment grade ratings are
required to provide collateral to offset non-performance risk. Notional amounts
are used to express the volume of various derivative financial instruments, the
amounts potentially subject to credit risk, in the event of nonperformance by
the third parties, are substantially smaller.
Non-Trading Activities
EPEM also enters into forwards, swaps and other contracts to hedge the
impact of market fluctuations on assets, liabilities, production or other
contractual commitments. Changes in the market value of these transactions are
deferred until the gain or loss is recognized on the hedged item.
MPC has entered into interest rate swap agreements which effectively
converted $114.3 million of floating-rate debt to fixed-rate debt (see Note 4,
Long-Term Debt and Other Financing). MPC makes payments to counterparties at
fixed rates and in return receives payments at floating rates. The two swap
41
<PAGE> 46
agreements were entered into in March 1992 and have remaining terms of
approximately 3 years and 5 years, respectively.
In February 1995, EPNC entered into a 7.75-year lease agreement (see Note
6, Commitments and Contingencies). To moderate the exposure to interest rate
changes, EPNC entered into an interest rate swap arrangement effective July 31,
1995, whereby approximately 50 percent of the current lease financing was
converted from a London Interbank Offered Rate (LIBOR) based floating rate to a
5.9 percent fixed rate.
The effective dates and notional amounts subject to the swap arrangement
are as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
July 31, 1995 -- October 31, 1995........................... $13
October 31, 1995 -- April 30, 1996.......................... $25
April 30, 1996 -- December 31, 1997......................... $35
</TABLE>
The primary risks associated with interest rate swaps are the exposure to
movements in interest rates and the ability of the counterparties to meet the
terms of the contracts. Based on review and assessment of counterparty risk,
neither MPC nor EPNC anticipates non-performance by the other parties.
6. COMMITMENTS AND CONTINGENCIES
Rates and Regulatory Matters
The Company is accruing a provision for various matters discussed below, as
well as other pending regulatory matters, and the balance of the provision at
December 31, 1996, was approximately $309 million, including interest.
TGP -- In 1992, FERC issued Order No. 636 which restructured the natural
gas industry by requiring mandatory "unbundling" of pipeline sales and
transportation services. Numerous parties appealed to the Court of Appeals,
challenging the legality of Order No. 636 generally, as well as the legality of
specific provisions of Order No. 636. In July 1996, the Court of Appeals issued
its decision upholding, in large part, Order No. 636. and remanded to FERC
several issues for further explanation, including further explanation of FERC's
decision to allow pipelines to recover 100 percent of their GSR costs and FERC's
requirement that pipelines allocate 10 percent of GSR costs to interruptible
transportation customers. In February 1997, FERC reaffirmed its decision to
allow pipelines to recover 100 percent of GSR costs. In addition, FERC modified
the requirement that pipelines allocate 10 percent of GSR costs to interruptible
customers to permit pipelines to propose an allocation of any percentage of such
costs to their interruptible customers.
TGP implemented revisions to its tariff, which restructured its
transportation, storage and sales services to convert TGP from primarily a
merchant to primarily a transporter of gas as required by Order No. 636. As a
result of this restructuring, TGP's gas sales declined while certain obligations
to producers under long-term gas supply contracts continued, causing TGP to
incur significant restructuring transition costs. Pursuant to the provisions of
Order No. 636 allowing for the recovery of transition costs related to the
restructuring, TGP has made filings to recover the following transition costs:
(i) costs related to its Bastian Bay facilities; (ii) the "stranded" costs of
TGP's continuing contractual obligations to pay for capacity on other pipeline
systems ("TBO costs") (collectively referred to as "Transition Cost"); (iii) GSR
costs resulting from TGP's remaining gas purchase obligations; and (iv) the
remaining unrecovered balance of purchased gas ("PGA") costs. The filings
implementing TGP's recovery mechanisms for these transition costs were accepted
by FERC effective September 1, 1993, subject to refund and pending FERC review
and approval for eligibility and prudence.
TGP's filings to recover costs related to its Bastian Bay facilities have
been rejected by FERC based on the continued use of the gas production from the
field; however, FERC recognized the ability of TGP to file for the recovery of
any losses upon disposition of these assets. TGP has filed for appellate review
of FERC actions and is confident that the Bastian Bay costs will ultimately be
recovered; FERC has not contested the ultimate recoverability of these costs.
42
<PAGE> 47
TGP is recovering through a surcharge, subject to refund, TBO costs
formerly incurred to perform its sales function. FERC issued an order requiring
TGP to refund certain of these costs and refunds were made in May 1996. TGP is
appealing this decision and believes such appeal will likely be successful.
A phased proceeding was scheduled at FERC with respect to the recovery of
TGP's GSR costs. Testimony has been completed in connection with Phase I of that
proceeding relating to the eligibility of GSR cost recovery. Phase II of the
proceeding on the prudency of the costs to be recovered and on certain contract
specific eligibility issues has not yet been scheduled. Although the Order No.
636 transition cost recovery mechanism provides for complete recovery by
pipelines of eligible and prudently incurred transition costs, certain customers
have challenged the prudence and eligibility of TGP's GSR costs and TGP has
engaged in settlement discussions with its customers concerning the amount of
such costs in response to FERC's public statements encouraging such settlements.
On February 28, 1997, TGP filed with FERC a proposed settlement of all
issues related to the recovery by TGP of its GSR and other transition costs and
related proceedings, as discussed above. Upon final approval by FERC, this
settlement will become effective retroactive to January 1, 1997. The settlement
is based upon the preliminary GSR understanding, which called for sharing of
transition costs, that EPG reached with TGP's customers in October 1996 in
anticipation of the Merger. The GSR Stipulation and Agreement allows for TGP to
recover up to $770 million in GSR and other transition costs, including
interest, of which approximately $531 million has previously been recovered,
subject to refund, pending resolution of the transition costs issues. Assuming
FERC approves the GSR Stipulation and Agreement, TGP will be entitled to recover
additional transition costs, up to the remaining $239 million, through a
two-year demand transportation surcharge and an interruptible transportation
surcharge. The terms of the GSR Stipulation and Agreement provide for a rate
case moratorium through November 2000 (subject to certain limited exceptions)
and provide a rate cap, indexed to inflation, through October 31, 2005, for
certain of TGP's customers. The purchase accounting adjustments reflected in the
Company's consolidated financial statements assume approval of the settlement
with respect to TGP's GSR and other transition costs in accordance with the
terms of the GSR Stipulation and Agreement.
Although parties to TGP's Transition Cost proceedings do not have to
declare their support or opposition to the GSR Stipulation and Agreement until
mid-March, management believes that all of TGP's customers will support or not
oppose the GSR Stipulation and Agreement.
Following negotiations with its customers, TGP filed in July 1994 with FERC
a Stipulation and Agreement (the "PGA Stipulation"), which provides for the
recovery of PGA costs of approximately $100 million and the recovery of costs
associated with the transfer of storage gas inventory to new storage customers
in TGP's restructuring proceeding. The PGA Stipulation eliminates all challenges
to the PGA costs, but establishes a cap on the charges that may be imposed upon
former sales customers. In April 1995, FERC orders approving the PGA Stipulation
and resolving all outstanding issues became final. TGP implemented the terms of
the PGA Stipulation and made refunds in May 1995. The refunds had no material
effect on the Company's reported net income. The orders approving the PGA
Stipulation have been appealed to the Court of Appeals by certain customers. TGP
believes the FERC orders approving the PGA Stipulation will be upheld on appeal.
In order to resolve litigation concerning purchases made by TGP of
synthetic gas produced from the Great Plains coal gasification plant, TGP, along
with three other pipelines, executed four separate settlement agreements with
Dakota and the Department of Energy and initiated four separate proceedings at
FERC seeking approval to implement the settlement agreements. Among other
things, the settlement required TGP to pay Dakota over a limited period a
premium over the spot price for Dakota's production and resolves the litigation
with Dakota. As of December 31, 1996, TGP had paid $87 million of this
obligation and has accrued its estimated remaining obligation through December
2003 of $55 million. FERC previously ruled that the costs related to the Great
Plains project are eligible for recovery through GSR and other special recovery
mechanisms and that the costs are eligible for recovery for the duration of the
term of the original gas purchase agreements. In October 1994, FERC consolidated
the four proceedings and set them for hearing before an ALJ. The hearing, which
concluded in July 1995, was limited to the issue of whether the settlement
43
<PAGE> 48
agreements are prudent. The ALJ concluded, in his initial decision issued in
December 1995, that the settlement was not prudent. In December 1996, FERC
unanimously reversed that decision and upheld the settlements among the
pipelines, Department of Energy and Dakota. No parties filed for rehearing of
the FERC decision. TGP notified Dakota in December 1996, that it accepted the
settlement.
In December 1994, TGP filed the 1995 Rate Case. In January 1995, FERC
accepted the filing, suspended its effectiveness for the maximum period of five
months pursuant to normal regulatory process, and set the matter for hearing. On
July 1, 1995, TGP began collecting rates, subject to refund, reflecting an $87
million increase in TGP's annual revenue requirement. A Stipulation was filed
with an ALJ in this proceeding in April 1996. This Stipulation resolves the
rates that are the subject of the 1995 Rate Case, including a structural rate
design change that results in a larger proportion of TGP's transportation
revenues being dependent upon throughput. Under the Stipulation, TGP is required
to refund, upon final approval of the Stipulation, the difference between the
revenues collected under the July 1, 1995 motion rates and the revenues that
would have been collected pursuant to the rates underlying the Stipulation. In
October 1996, FERC approved the Stipulation with certain modifications and
clarifications which are not material. In January 1997, FERC issued an order
denying request for rehearing of the October 1996 order. Refunds will be made in
March 1997. The Company believes that these refunds will not have a material
impact on the Company's financial position or results of operations. One party
to the rate proceeding, a competitor of TGP, filed with the Court of Appeals a
Petition for Review of the FERC orders approving the Stipulation.
EPG -- In June 1995, EPG made a filing with FERC for approval of new system
rates for mainline transportation to be effective January 1, 1996. In July 1995,
FERC accepted and suspended EPG's filing to be effective January 1, 1996,
subject to refund and certain other conditions. FERC also set EPG's rates for
hearing.
In March 1996, EPG filed a comprehensive offer of settlement which, if
approved by FERC, would resolve issues related to the above mentioned rate case
and issues surrounding certain contract reductions and expirations that occur
from January 1, 1996 through December 31, 1997. The settlement provides for,
among other things: (i) a long term rate stability plan which establishes base
rates, for a 10-year period from January 1, 1996, through December 31, 2005,
subject to annual escalation after 1997; (ii) payments, over 8 years, or less,
to EPG by its customers totaling $255 million prior to interest, representing
approximately 35 percent of the revenues associated with the contract reductions
and expirations; (iii) the sharing between EPG (65 percent) and its customers
(35 percent) of revenues in excess of a threshold, as defined in the settlement;
and (iv) a mechanism to reflect in the base rate increases or decreases
resulting from laws or regulations which impact costs at a level in excess of
$10 million a year. The settlement provides that any party desiring not to be
bound by the settlement may have its rates determined pursuant to procedures
established by FERC. FERC staff, the regulatory agencies of California, Arizona,
and Nevada, the state of New Mexico, and customers representing 95 percent of
the firm throughput on EPG's mainline transmission system support EPG's
settlement.
In March 1996, Edison, a firm shipper on EPG's system, filed its own offer
of settlement. One party supported Edison's proposal, while several other
parties independently contested elements of EPG's settlement. In January 1997,
the Chief ALJ certified EPG's settlement to FERC and severed the contesting
parties. Edison requested reconsideration of the certification. Edison and other
contesting parties also provided notice of their intention to preserve their
rights to contest EPG's settlement, including through litigation. A decision by
FERC on both the certification and the merits of EGP's settlement is pending.
Under FERC procedures, take-or-pay cost recovery filings may be challenged
by pipeline customers on prudence and certain other grounds. Certain of EPG's
customers sought review in the Court of Appeals of FERC's determination in the
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 1996, FERC issued an
order to the effect that categories of costs which had been determined to be
eligible for recovery might in fact be ineligible for recovery and established a
technical conference which was held in May 1996. Management believes that the
costs at issue were eligible for recovery from EPG's customers pursuant
44
<PAGE> 49
to the equitable sharing mechanism. If FERC should rule that the costs at issue
were not eligible for recovery, refunds by EPG of up to $42 million plus
interest may be required. A FERC decision is expected in 1997.
Management believes the ultimate resolution of the aforementioned rate and
regulatory matters, which are in various stages of finalization, will not have a
materially adverse effect on the Company's financial position or results of
operations.
Environmental Matters
As of December 31, 1996, the Company had a reserve of approximately $215
million to cover environmental assessments and remediation activities as
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, in order to assure that its
efforts meet regulatory requirements.
Due to the current uncertainty regarding the further activity necessary for
TGP to address the presence of PCBs, substances on the EPA List of Hazardous
Substances and other substances of concern on its sites, including the
requirements for additional site characterization, the actual amount of such
substances at the sites, and the final, site-specific cleanup decisions to be
made with respect to cleanup levels and remediation technologies, the Company
cannot at this time accurately project what additional costs, if any, may arise
from future characterization and remediation activities. While there are still
many uncertainties relating to the ultimate costs which may be incurred, based
upon the Company's evaluation and experience to date, the Company believes that
the recorded estimate for the reserve is adequate.
Following negotiations with its customers, TGP in May 1995 filed with FERC
a separate Stipulation and Agreement (the "Environmental Stipulation") that
establishes a mechanism for recovering a substantial portion of the
environmental costs. 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. This shipper filed a Petition for
Review in April 1996 in the Court of Appeals; TGP believes the FERC order
approving the Environmental Stipulation will be upheld on appeal. The
Environmental Stipulation, which was effective July 1, 1995, had no material
effect on the Company's financial position or results of operations. As of
December 31, 1996, the balance of the regulatory asset was $49 million.
TGP has completed settlements with and has received payments from the
majority of its liability insurance policy carriers for remediation costs and
related claims. TGP believes that additional recoveries from the remaining
carriers in the pending litigation against such carriers are reasonably
possible. In addition, TGP has settled its pending litigation against and
received payment from the manufacturer of the PCB-containing lubricant
previously used in the starting air systems in a portion of TGP's pipeline. TGP
has reduced the amount it is seeking to recover under the Environmental
Stipulation by the amount it has received in these proceedings.
In January 1994, the State of Tennessee notified EPG that it was a liable
party under state environmental laws for cleanup costs associated with a site in
Elizabethton, Tennessee. The Tennessee Department of Environment and
Conservation named EPG and two other parties as PRPs. The State is also seeking
to notify other PRPs that have been identified. The City of Elizabethton is
unilaterally cleaning up the site in cooperation with and under the authority of
the Tennessee Department of Environment and Conservation. As of December 31,
1996, the City has not sought contribution or reimbursement from EPG.
The Company and certain of its subsidiaries have been designated, have
received notice that they could 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 (CERCLA or Superfund) or state equivalents. The Company has sought
to resolve its liability as a PRP with respect to these Superfund sites through
indemnification by third parties and/or settlements which provide for
45
<PAGE> 50
payment of the Company's allocable share of remediation costs. Because the
clean-up costs are estimates and are subject to revision as more information
becomes available about the extent of remediation required, 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
associated with the current status of such entities as PRPs at the Superfund
sites referenced above will not have a materially adverse effect on the
financial position of the Company.
In addition, the Company has identified a number of formerly owned or
leased sites, and certain other sites associated with its discontinued
operations, where environmental remediation may be acquired. The Company
presently believes that the costs to remediate these sites will not have a
materially adverse effect on its financial position or results of operations.
The Company has identified other sites where environmental remediation may
be required should there be a change in ownership, operations or applicable
regulations. These possibilities cannot be predicted or quantified at this time
and, accordingly, no provision has been recorded. However, provisions have been
made for all instances where it has been determined that the incurrence of any
material remedial expense is reasonably probable. The Company believes that the
provisions recorded for environmental exposures are adequate based on current
estimates.
Legal Proceedings
See Item 3, Legal Proceedings, which is incorporated herein by reference.
Operating Leases
The Company leases certain property, facilities and equipment under various
operating leases. In addition, in 1995, EPNC entered into an unconditional
"triple net" lease for the Chaco Plant, which is a cryogenic liquids extraction
plant completed in 1996. The lease term expires in 2002, at which time EPNC has
an option, and an obligation upon the occurrence of certain events, to purchase
the plant for a price sufficient to pay the amount of the $77 million
construction financing, plus interest and certain expenses. If EPNC does not
purchase the plant at the end of the lease term, it has an obligation to pay a
residual guaranty amount equal to approximately 87 percent of the amount
financed, plus interest. EPG unconditionally guaranteed all obligations of EPNC
under the lease.
Minimum annual rental commitments at December 31, 1996, were as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, OPERATING LEASES
- ------------------------------------------------------------ ----------------
(IN MILLIONS)
<S> <C>
1997..................................................... $ 19
1998..................................................... 18
1999..................................................... 18
2000..................................................... 18
2001..................................................... 17
Thereafter............................................... 75
------
Total............................................. $165
======
</TABLE>
Aggregate minimum payments have not been reduced by minimum sublease
rentals of approximately $13 million due in the future under noncancelable
subleases.
Rental expense for operating leases for 1996, 1995, and 1994 was $14
million, $9 million, and $9 million, respectively.
46
<PAGE> 51
Guarantees
In addition to its guaranty of EPNC's obligations under the Chaco Plant
lease, EPG has also unconditionally guaranteed all obligations of EPED Sam
Holdings Company, an indirect subsidiary of EPEI, which obligations are not
expected to exceed $51 million in connection with its share of the financing for
the Samalayuca II Power Plant project. In addition, EPG has unconditionally
guaranteed the obligations of certain subsidiaries, which are not expected to
exceed $18 million, in connection with the TransColorado Pipeline Phase I
project and the Coyote Gulch natural gas treating plant.
Capital Commitments
At December 31, 1996, the Company had capital or investment commitments of
$85 million which are expected to be funded through cash provided by operations
and/or incremental borrowings. The Company's other planned capital and
investment projects are discretionary in nature, with no substantial capital
commitments made in advance of the actual expenditures.
Purchase Obligations
In connection with the financing commitments of certain joint ventures, the
Company has entered into unconditional purchase obligations for products and
services of $121 million ($94 million on a present value basis) at December 31,
1996. The Company's annual obligations under these agreements are $22 million
for the years 1997 and 1998, $21 million for the years 1999 and 2000, $11
million for the year 2001 and $24 million thereafter. Payments under such
obligations, including additional purchases in excess of contractual
obligations, were $25 million, $26 million and $34 million for the years 1996,
1995 and 1994, respectively. In addition, in connection with the Great Plains
coal gasification project, TGP continues to have an obligation to purchase 30
percent of the output of the plant's original design capacity through July 2009.
TGP has executed a settlement of this contract as a part of its GSR
negotiations.
Management is not aware of other commitments or contingent liabilities
which would have a materially adverse effect on the Company's financial
condition or results of operations.
7. INCOME TAXES
The following table reflects the components of income tax expense for the
periods ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Current
Federal................................................... $23 $13 $15
State..................................................... 7 5 (6)
--- --- ---
30 18 9
--- --- ---
Deferred
Federal................................................... (4) 31 35
State..................................................... (1) (1) 14
--- --- ---
(5) 30 49
--- --- ---
Total tax expense................................. $25 $48 $58
=== === ===
</TABLE>
47
<PAGE> 52
The following table reflects the components of the net deferred tax
liabilities at December 31:
<TABLE>
<CAPTION>
1996 1995
------ ----
(IN MILLIONS)
<S> <C> <C>
Deferred tax liabilities
Property, plant, and equipment............................ $1,395 $290
Regulatory and other assets............................... 274 86
------ ----
Total deferred tax liability...................... 1,669 376
------ ----
Deferred tax assets
Accrual for regulatory issues............................. 76 --
Postretirement benefits................................... 124 1
Other liabilities......................................... 503 67
Other..................................................... 15 17
------ ----
Total deferred tax asset.......................... 718 85
------ ----
Net deferred tax liability.................................. $ 951 $291
====== ====
</TABLE>
Tax expense of the Company differs from the amount computed by applying the
statutory federal income tax rate to income before taxes. The following table
outlines the reasons for the differences for the periods ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Tax expense at the statutory federal rate of 35%............ $22 $47 $52
Increase (decrease)
State income tax, net of federal income tax benefit....... 4 2 5
Other..................................................... (1) (1) 1
--- --- ---
Income tax expense.......................................... $25 $48 $58
=== === ===
Effective tax rate.......................................... 39% 36% 39%
=== === ===
</TABLE>
As of December 31, 1996, approximately $5 million of alternative minimum
tax credits were available to offset future regular tax liabilities. These
alternative minimum tax credit carryovers have no expiration date. Additionally,
at December 31, 1996, approximately $1 million of general business credit and
$10 million of net operating loss carryovers were available to offset future tax
liabilities through the years 2001 and 2011, respectively. Usage of both
carryovers are subject to the limitations provided for under Section 382 of the
IRS Code as well as the separate return limitation year rules of IRS
regulations.
Deferred credits, in the Consolidated Balance Sheets, include excess
deferrals resulting from the reduction of the statutory federal tax rate from 46
to 34 percent on July 1, 1987. Regulatory assets in the Consolidated Balance
Sheets include expected future recoveries resulting from the increase of the
statutory federal rate from 34 to 35 percent on January 1, 1993. Such amounts
have been included in EPG's offer of settlement filed with FERC in March 1996.
EPG and EPTPC each file a separate consolidated federal income tax return
which includes the operations of their respective subsidiaries as they existed
at the time of the Merger. Deferred taxes corresponding to the allocation of the
purchase price to the assets and liabilities acquired, have been reflected in
the Consolidated Balance Sheet at December 31, 1996.
8. CAPITAL STOCK
Common Stock
In December 1996, 18.8 million shares of EPG common stock were issued in
connection with the acquisition of EPTPC. Such shares were valued at
approximately $913 million.
48
<PAGE> 53
In February 1997, approximately 3 million shares of common stock were
issued under the Shelf Registration Statement. Proceeds of $152 million, net of
issuance costs, were received and used to repay borrowings under the Credit
Facility.
Treasury Stock
From time to time, the Board has authorized the repurchase of EPG's
outstanding shares of common stock to be used in connection with EPG employee
stock-based compensation plans and for other corporate purposes. As of December
31, 1996, and 1995, EPG held 1,451,922 and 3,127,077 shares of treasury stock,
respectively. Included in the balance at December 31, 1996, were 680,000 shares
of treasury stock used to secure benefits under certain of the Company's benefit
plans. These shares are subject to certain restrictions.
Other
EPG has 25,000,000 shares of authorized preferred stock, par value $0.01
per share, none of which have been issued.
9. STOCK-BASED COMPENSATION
At December 31, 1996, the Company had eight stock-based compensation plans,
which are generally described below. The compensation expense for all eight
stock-based compensation plans recognized for 1996 and 1995 was $13 million and
$10 million, respectively. Had compensation cost for the Company's plans been
determined based on the estimated fair value at the grant dates for stock option
awards under those plans consistent with the method prescribed in SFAS No. 123,
the Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C> <C>
Net Income (in millions) As reported $ 38 $ 85
Pro forma $ 36 $ 83
Earnings Per Share As reported $1.06 $2.47
Pro forma $1.00 $2.41
</TABLE>
The costs of stock options granted in 1996 and 1995 were calculated using
the Black-Scholes option pricing model. The Black-Scholes methodology values the
right to exercise an option over its expected life, taking into consideration
stock price volatility, exercise price, market price at grant, expected dividend
yield and risk-free rate of return.
The following significant assumptions were used to estimate the fair value
of options granted in 1996 and 1995:
- Expected life -- A weighted-average expected life of three years was
assumed based on assigned vesting schedules and historical exercise
experience.
- Volatility -- Volatility of approximately 20 percent and 17 percent was
assumed for 1996 and 1995, respectively, based on historical monthly
stock price changes for the time period equal to the expected life
assumption prior to the grant date.
- Dividend yield -- The expected dividend yield was estimated at 3 percent
based on historical experience.
- Risk-free rate of return -- A risk-free rate of return of approximately 6
percent and 7 percent was assumed for 1996 and 1995, respectively, which
is equivalent to the rate available on zero-coupon U.S. government issues
with a remaining term equal to the expected life of the options.
Stock Options
Under EPG's employee stock option plans, options may be granted to officers
and key employees, typically at fair market value on the date of grant,
exercisable in whole or part by the optionee after completion
49
<PAGE> 54
of 1 to 5 years of continuous employment from the grant date. Options are also
granted to non-employee members of the Board at fair market value on the date of
grant and are exercisable immediately. Under the terms of certain plans, EPG may
grant SARs to certain holders of stock options. SARs are subject to the same
terms and conditions as the related stock options. The stock option holder who
has been granted tandem SARs can elect to exercise either an option or a SAR.
SARs entitle an option holder to receive a payment equal to the difference
between the option price and the fair market value of the common stock of EPG at
the date of exercise of the SAR. To the extent a SAR is exercised, the related
option is canceled, and to the extent an option is exercised, the related SAR is
canceled.
Activity in EPG's stock option plans for 1994, 1995, and 1996 was as
follows:
<TABLE>
<CAPTION>
EXERCISE PRICE
OPTIONS SARS PER SHARE
--------- ------ ----------------
<S> <C> <C> <C>
Balance, January 1, 1994........................ 1,349,736 70,154 $13.51 to $38.19
Granted....................................... 663,100 -- 36.88 to 39.56
Exercised..................................... 50,162 22,000 13.51 to 30.81
Canceled...................................... 29,983 -- 19.00 to 36.88
--------- ------
Balance, December 31, 1994...................... 1,932,691 48,154 $18.14 to $39.56
Granted....................................... 709,000 -- 28.88 to 30.88
Converted in connection with Eastex
acquisition................................ 40,025 -- 15.62
Exercised..................................... 38,761 -- 18.14 to 22.91
Canceled...................................... 39,000 -- 29.94
--------- ------
Balance, December 31, 1995...................... 2,603,955 48,154 $15.62 to $39.56
Granted....................................... 2,429,500 -- 31.38 to 45.88
Converted in connection with Cornerstone
acquisition................................ 37,323 -- 15.62
Exercised..................................... 631,298 22,885 18.14 to 36.88
Canceled...................................... 15,885 -- 19.00 to 28.88
--------- ------
Balance, December 31, 1996...................... 4,423,595 25,269 $15.62 to $45.88
========= ======
</TABLE>
Stock options shown as canceled in the table above may be a result of the
tandem SAR being exercised. SARs shown in the table above will be canceled when
the underlying stock options are exercised.
The weighted average fair value of options granted during 1996 and 1995 was
as follows:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Options granted at market price............................. $32.37 $29.85
Options granted below market price.......................... $36.25 $28.88
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ------------------------------
WEIGHTED AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$15.62 to $21.81 450,701 5.52 years $18.35 450,701 $18.35
25.69 to 38.19 3,786,894 8.37 32.56 1,524,394 32.94
39.56 to 45.88 186,000 9.87 45.61 5,000 39.56
--------- ---------
$15.62 to $45.88 4,423,595 8.14 $31.66 1,980,095 $29.64
========= =========
</TABLE>
Restricted Stock
Under the Company's various stock-based compensation plans, common stock of
the Company may be granted at no cost to certain key officers and employees.
These shares carry voting and dividend rights; however, sale or transfer of the
shares is restricted in accordance with the vesting procedures. These restricted
50
<PAGE> 55
stock awards will vest only if the Company achieves certain performance targets
over a specific period of time. The majority of shares outstanding as of
December 31, 1996, were approximately 70 percent vested. As of December 31,
1996, 1.6 million shares of restricted stock with a weighted average grant-date
fair value of $34.32 had been issued under the Company's various stock-based
compensation plans. The value of these shares is determined based on the fair
market value on the measurement date and is charged to compensation expense
ratably over the restriction period based on the number of shares earned over
the vesting period. Amortized to compensation expense for 1996 and 1995 was $6
million and $3 million, respectively. The unamortized balance at December 31,
1996, was $69 million and is recorded as a reduction to stockholder's equity.
Performance Units
Under the company's various stock-based compensation plans, employees and
officers of the Company are awarded performance units that are payable in cash
or stock at the end of the vesting period. The value of the performance units
may vary according to the plan under which they are granted, but is usually
based on the Company's stock price at the end of the vesting period or another
amount which is associated with performance units is charged ratably to
compensation expense over the vesting period with periodic adjustments to
account for the fluctuation in the market price of the Company's stock. Amounts
charged to compensation expense in 1996 and 1995 were $5 million and $7 million,
respectively.
The maximum number of shares for which stock options or restricted stock
awards may be granted under EPG's current stock-based compensation plans is
approximately 8 million shares of common stock
(which includes grants previously made), to be issued from shares held in EPG's
treasury, or out of authorized but unissued shares of EPG's common stock, or
partly out of each, as determined by the Board.
10. EMPLOYEE BENEFITS
Pensions
The Company maintains a defined benefit pension plan covering all employees
of the Company, except leased employees. Pension benefits are based on years of
credited service and final 5-year average compensation, and have maximum
limitations as defined in the pension plan.
During 1996, the Company offered early retirement window benefits to
employees with at least five years of service and at least 52 years old on
February 29, 1996. Under the early retirement window, benefits were determined
by adding three years to age and, if otherwise eligible for early retirement,
adding three years to credited service. Approximately 400 employees accepted the
offer and retired during 1996. The Company further reduced its workforce by
approximately 500 employees through an involuntary reduction-in-force. During
the first quarter of 1996, the Company recognized a $21 million charge for the
early retirement window and workforce reductions.
Effective January 1, 1997, the plan was amended to provide benefits
determined by a cash balance formula. Participants were credited with an initial
cash balance equivalent to accrued benefits on December 31, 1996. Participant
accounts are credited with a percentage of pay based on age and service, and
interest based on prevailing market yields on certain U.S. treasury obligations.
Participants receive the greater of cash balance benefits or prior plan benefits
accrued through December 31, 2001. EPTPC, Cornerstone and EPEM employees
commenced participation on January 1, 1997, with no account balance for prior
service.
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<PAGE> 56
The following table sets forth the components of net periodic pension cost
for the years ended December 31.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Service cost -- benefits earned during the period........... $ 7 $ 9 $ 9
Interest cost on projected benefit obligation............... 41 41 40
Actual (return) loss on plan assets......................... (65) (86) 5
Net amortization and deferral............................... 26 49 (40)
Curtailment and special termination benefits expense........ 21 -- --
---- ---- ----
Net periodic pension cost................................... $ 30 $ 13 $ 14
==== ==== ====
</TABLE>
The following table sets forth the qualified pension plan's funded status
and amounts recognized in the Company's Consolidated Balance Sheets at December
31:
<TABLE>
<CAPTION>
1996 1995
----- -----
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of benefit obligations
Vested benefits........................................... $483 $508
Nonvested benefits........................................ 1 1
---- ----
Accumulated benefit obligation.............................. 484 509
Additional amounts related to projected salary increases.... 21 78
---- ----
Projected benefit obligation for service rendered to date... 505 587
Plan assets at fair value, primarily listed stocks and
government securities..................................... 498 473
---- ----
Projected benefit obligation in excess of plan assets....... $ 7 $114
==== ====
Unrecognized net loss....................................... $ 4 $ 76
Unrecognized net transition obligation...................... 10 17
Unrecognized prior service cost............................. (40) --
Recognized pension liability................................ 33 21
---- ----
$ 7 $114
==== ====
</TABLE>
The accumulated vested benefit obligation is the actuarial present value of
the vested benefits to which the employee is currently entitled, but it is based
on the employee's expected date of termination.
The following table reflects the actuarial assumptions used in the
valuation of the projected benefit obligation at December 31:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Weighted average discount rate.............................. 7.75% 7.25%
Rate of increase in future compensation levels.............. 5.00% 5.00%
Weighted average expected long-term rate of return on plan
assets.................................................... 9.25% 9.25%
</TABLE>
Retirement Savings Plan
The Company maintains a defined contribution plan covering all employees of
the Company. During 1994, 1995, and the first six months of 1996, the Company
made matching contributions equal to a participant's basic contributions of up
to 6 percent where the participant has fewer than 10 years of employment with
the Company, or up to 8 percent where the participant has 10 or more years of
employment with the Company. In July 1996, the Company changed its matching
contribution to 75 percent of a participant's basic contributions of up to 6
percent, with the matching contribution being made in Company stock. Amounts
expensed under the plan were approximately $4 million, $8 million and $8 million
for the years ended December 31, 1996, 1995, and 1994, respectively.
52
<PAGE> 57
Postretirement Benefits, Other than Pensions
The Financial Accounting Standards Board issued SFAS No. 106, Employers'
Accounting for Post Retirement Benefits Other Than Pensions, which requires
companies to account for OPEB (principally retiree medical costs) on an accrual
basis versus the pay-as-you-go basis. The Company adopted SFAS No. 106 effective
January 1, 1993, and elected 20-year amortization of the transition obligation.
EPG provides a non-contributory defined benefit postretirement medical plan
that covers employees who retired on or before March 1, 1986, and limited
postretirement life insurance for employees who retire after January 1, 1985. As
such, EPG's obligation to accrue for OPEB is primarily limited to the fixed
population of retirees who retired on or before March 1, 1986. The medical plan
is pre-funded to the extent employer contributions are recoverable through
rates.
EPG began recovering through its rates the OPEB costs included in the
January 1993 settlement agreement. To the extent actual OPEB costs differ from
the amounts funded, a regulatory asset or liability is recorded.
As a result of the Merger, TGP assumed responsibility for certain benefits
for former employees of Old Tenneco and the postretirement health care plans for
employees of TGP were significantly changed. TGP will be responsible for
benefits for both TGP former employees and former employees of operations
previously disposed of by Old Tenneco. TGP employees who retire before July 1,
1997 will receive the same benefits as former employees. While TGP employees who
retire on or after July 1, 1997 will continue to receive $10,000 of
postretirement life insurance, they will not receive any employer subsidized
postretirement health care benefits. All of these benefits may be subject to
deductibles, co-payment provisions and other limitations. The Company has
reserved the right to change these benefits.
The majority of TGP's postretirement benefit plans are not funded. In June
1994, two trusts were established to fund postretirement benefits for certain
plan participants of TGP. The contributions are collected from customers in
FERC-approved rates.
The following table reflects the components of net periodic postretirement
benefit cost for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Interest cost on accumulated postretirement benefit
obligation................................................ $ 6 $ 7 $ 7
Actual (return) loss on plan assets......................... (4) (5) --
Net amortization and deferral............................... 9 10 7
--- --- ---
Net periodic postretirement benefit cost.................... $11 $12 $14
=== === ===
</TABLE>
The following table sets forth the funded status of the Company's
postretirement plans and amounts recognized in the Company's Consolidated
Balance Sheets at December 31:
<TABLE>
<CAPTION>
1996 1995
----- -----
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation............... $426 $ 91
Plan assets at fair value, primarily U.S. stocks and U.S.
bonds..................................................... 41 30
---- ----
Accumulated postretirement benefit obligation in excess of
plan assets............................................... $385 $ 61
==== ====
Unrecognized net gain....................................... $(40) $(23)
Unrecognized transition obligation.......................... 79 88
(Prepaid) accrued postretirement benefit cost............... 346 (4)
---- ----
$385 $ 61
==== ====
</TABLE>
53
<PAGE> 58
The accrued postretirement benefit cost for 1996 has been recorded based
upon certain actuarial estimates as described below. Those estimates are subject
to revision in future periods given new facts or circumstances.
Actuarial estimates for the Company's plans assumed a weighted average
annual rate of increase in the per capita costs of covered health care benefits
of 5.6 percent for 1997, gradually decreasing to 5.1 percent by the year 2003.
Increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated postretirement benefit obligation at
December 31, 1996, by approximately $10 million and increase the interest cost
component of net periodic postretirement benefit cost for 1996 by approximately
$0.5 million. A discount rate of 7.75 percent and 7.25 percent was used to
determine the accumulated postretirement benefit obligation at December 31,
1996, and 1995, respectively. The weighted average expected long-term rate of
return for 1996 was approximately 7.5 percent.
11. PREFERRED STOCK OF SUBSIDIARY
In November 1996, EPTPC issued in a public offering 6 million shares of
8 1/4% cumulative preferred stock with a par value of $50 per share for $296
million (net of issuance costs). The preferred stock is redeemable, at the
option of the Company, after December 31, 2001, at a redemption price equal to
$50 per share, plus dividends accrued and unpaid up to the date of redemption.
On December 31, 1996, dividends of approximately $3 million were paid on
the cumulative preferred stock, of which approximately $2 million is reflected
as minority interest on the income statement for the 20 days EPTPC is included
in the consolidated results of operations.
12. SEGMENT INFORMATION
To the extent practicable, the following information for 1995 has been
reclassified to conform to the current business segment presentation.
Information for 1994 has not been presented due to the inability to reclassify
the data to conform to current presentation.
<TABLE>
<CAPTION>
FOR YEARS ENDED NATURAL GAS FIELD & CORPORATE
DECEMBER 31 TRANSMISSION MERCHANT & OTHER ELIMINATIONS CONSOLIDATED
--------------- ------------ -------- --------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating Revenues
1996....................... $ 569 $2,448 $ 1 $ (8) $3,010
1995....................... 540 492 8 (2) 1,038
Operating Income (Loss)
1996....................... 223 57 (110) -- 170
1995....................... 203 1 8 -- 212
Depreciation, Depletion and
Amortization
1996....................... 70 30 1 -- 101
1995....................... 53 19 -- -- 72
Identifiable Assets
1996....................... 6,162 1,287 1,501 (238) 8,712
1995....................... 1,867 556 138 (26) 2,535
Capital Expenditures
1996....................... 55 64 -- -- 119
1995....................... 92 74 -- -- 166
</TABLE>
Operating revenues by segment include both sales to unaffiliated customers
and intersegment sales (which are accounted for principally at market prices and
eliminated in consolidation).
54
<PAGE> 59
13. INVENTORIES
Inventories consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
(IN MILLIONS)
<S> <C> <C>
Materials and supplies...................................... $29 $30
Gas in storage.............................................. 58 7
--- ---
Total $87 $37
=== ===
</TABLE>
14. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
------ ------
(IN MILLIONS)
<S> <C> <C>
Property, plant, and equipment, at cost..................... $8,937 $3,041
Less accumulated depreciation and depletion................. 4,726 1,158
------ ------
4,211 1,883
Additional acquisition cost assigned to utility plant, net
of accumulated amortization............................... 1,727 94
------ ------
Total property, plant, and equipment, net......... $5,938 $1,977
====== ======
</TABLE>
15. NATURE OF OPERATIONS AND SIGNIFICANT CUSTOMERS
The Company is principally engaged in the transportation, gathering and
processing, and marketing of natural gas. For the year ended December 31, 1996,
the Company's operating revenues were predominately derived from the marketing
and transportation of natural gas and other commodities. California was the
Company's principal market for the transportation of natural gas in 1996.
The Company had gross revenues equal to, or in excess of, 10 percent of
consolidated operating revenues from the following customers for the years ended
December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Southern California Gas Company........................... --(a) $176 $191
Pacific Gas & Electric Company............................ --(a) 128 155
</TABLE>
- ---------------
(a) Less than 10 percent of consolidated operating revenues.
16. SUPPLEMENTAL CASH FLOW INFORMATION
The following table contains supplemental cash flow information for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Interest.................................................... $85 $77 $71
Income taxes, net of refunds................................ 49 10 31
</TABLE>
See Note 2, Acquisitions, for a discussion of the non-cash investing
transaction related to certain acquisitions.
55
<PAGE> 60
17. SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information by quarter is summarized below. In the opinion of
management, all adjustments necessary for a fair presentation have been made.
<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
----------- ------------ ------- --------
(IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1996
Operating revenues................................ $1,072 $ 745 $ 587 $ 606
Operating income (loss)........................... 75 66 62 (33)
Net income (loss)................................. 24 25 24 (35)
Earnings (loss) per common share.................. 0.61 0.70 0.69 (1.01)
1995
Operating revenues................................ $ 409 $ 240 $ 185 $ 204
Operating income.................................. 51 53 53 55
Net income........................................ 23 20 20 22
Earnings per common share......................... 0.67 0.60 0.58 0.62
</TABLE>
56
<PAGE> 61
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
El Paso Natural Gas Company:
We have audited the consolidated financial statements and the financial
statement schedule of El Paso Natural Gas Company listed in Item 14(a) of this
Form 10-K. These financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of El Paso Natural
Gas Company as of December 31, 1996 and 1995, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
February 28, 1997
57
<PAGE> 62
SCHEDULE II
EL PASO NATURAL GAS COMPANY
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ------------------- ---------- ---------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1996
Allowance for bad debts.................. $ 10 $ 2 $ 51(a) $ 3 $ 60
Allowance for take-or-pay receivables.... 1 -- -- 1 --
1995
Allowance for bad debts.................. $ 15 $ 2 $ 2 $ 9(b) $ 10
Allowance for take-or-pay receivables.... 9 -- -- 8 1
1994
Allowance for bad debts.................. $ 9 $ 2 $ 4 $ -- $ 15
Allowance for take-or-pay receivables.... 19 -- -- 10 9
</TABLE>
- ---------------
(a) Primarily due to acquisition of EPTPC.
(b) Primarily accounts written off.
58
<PAGE> 63
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing under the caption "Proposal No. 1 -- Election of
Directors" in EPG's proxy statement for the 1997 Annual Meeting of Stockholders
is incorporated herein by reference. Information regarding executive officers of
the Company is presented in Item 1 of this Form 10-K under the caption
"Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under the caption "Executive Compensation" in EPG's
proxy statement for the 1997 Annual Meeting of Stockholders is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF A BENEFICIAL OWNER AND MANAGEMENT
Information appearing under the caption "Security Ownership of Beneficial
Owners and Management" in EPG's proxy statement for the 1997 Annual Meeting of
Stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
1. Financial statements.
The following consolidated financial statements of the Company are included
in Part II, Item 8 of this report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated statements of income...................... 28
Consolidated balance sheets............................ 29
Consolidated statements of cash flows.................. 30
Consolidated statements of stockholders' equity........ 31
Notes to consolidated financial statements............. 32
Report of independent accountants...................... 57
2. Financial statement schedules and supplementary information
required to be submitted.
Schedule II -- Valuation and qualifying accounts....... 58
Schedules other than that listed above are omitted
because they are not applicable
3. Exhibit list............................................. 61
</TABLE>
59
<PAGE> 64
(B) REPORTS ON FORM 8-K:
On October 22, 1996, EPG filed a report under Item 5 on Form 8-K, dated
October 22, 1996, as amended pursuant to a Form 8-K/A filed November 5, 1996,
with respect to the filing of Amendments No. 1 and No. 2, respectively, to the
Registration Statement on Form S-4 with the SEC.
On November 13, 1996, EPG filed a report under Item 5 on Form 8-K, dated
November 13, 1996, with respect to the issuance by the Company of $200,000,000
of 6 3/4% Notes due 2003 and $200,000,000 of 7 1/2% Debentures due 2026, under
an Indenture dated as of November 13, 1996, between EPG and The Chase Manhattan
Bank, as trustee.
On December 26, 1996, EPG filed a report under Items 2, 5 and 7 on Form
8-K, dated December 26, 1996, as amended pursuant to amendments on Form 8-K/A
filed January 21, 1997 and January 22, 1997, respectively, with respect to the
Company's acquisition of EPTPC. Financial statements of EPTPC were filed.
60
<PAGE> 65
EL PASO NATURAL GAS COMPANY
EXHIBIT LIST
DECEMBER 31, 1996
Each exhibit identified below is filed as a part of this report. Exhibits
not incorporated by reference to a prior filing are designated by an asterisk;
all exhibits not so designated are incorporated herein by reference to a prior
filing as indicated. Exhibits designated with a "+" constitute a management
contract or compensatory plan or arrangement required to be filed as an exhibit
to this report pursuant to Item 14(c) of Form 10-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2 -- Amended and Restated Merger Agreement dated as of June
19, 1996 among El Paso Natural Gas Company, El Paso
Merger Company and Tenneco Inc. (Exhibit 2.A to
Registration No. 333-10911).
3.A -- Restated Certificate of Incorporation of EPG dated
January 22, 1992. (Form 10-K, No. 1-2700, filed January
29, 1992); Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock
of EPG, dated July 7, 1992, (Form 10-K, No. 1-2700, filed
February 3, 1993).
3.B -- By-laws of EPG, as amended April 1, 1996. (Exhibit 3(ii)
to Registration Statement No. 10911).
4 -- Shareholder Rights Plan (Form 10-Q, No. 1-2700, filed
November 12, 1992).
10.A -- Transportation Service Agreement as Amended and Restated,
effective November 1, 1993, between EPG and Pacific Gas
and Electric Company. (Form 10-K, No. 1-2700, filed
January 26, 1995).
10.B -- Transportation Service Agreement as Amended and Restated,
effective July 16, 1993, between EPG and Southern
California Gas Company. (Form 10-K, No. 1-2700, filed
January 26, 1995).
10.C -- Transportation Service Agreement, dated August 9, 1991,
and effective September 1, 1991, between EPG and
Southwest Gas Corporation for service to Arizona;
Transportation Service Agreement, dated August 9, 1991,
and effective September 1, 1991, between EPG and
Southwest Gas Corporation for service to Nevada (Form
10-Q, No. 1-2700, filed November 14, 1991); Amendatory
Agreement and replacement of Exhibit B to Transportation
Service Agreement dated August 9, 1991, and effective May
8, 1992, between EPG and Southwest Gas Corporation for
service to Nevada. (Form 10-K, No. 1-2700, filed February
3, 1993). Exhibit B to the Transportation Service
Agreement dated August 9, 1991, and effective March 1,
1994, between EPG and Southwest Gas Corporation for
service to Arizona. (Form 10-K, No. 1-2700, filed January
26, 1995).
10.D -- Master Separation Agreement and documents related thereto
dated January 15, 1992, by and among Burlington Resources
Inc., EPG and Meridian Oil Holding Inc., including
Exhibits (Form 10-K, No. 1-2700, filed January 29, 1992).
*10.E -- $750 million Revolving Credit and Competitive Advance
Facility Agreement dated as of November 4, 1996 between
EPG, The Chase Manhattan Bank and certain other banks.
*10.F -- $3 billion Revolving Credit and Competitive Advance
Facility Agreement dated as of November 4, 1996 between
Tenneco (renamed El Paso Tennessee Pipeline Co.), The
Chase Manhattan Bank and certain other banks.
*10.G -- $250 million Revolving Credit and Competitive Advance
Facility Agreement dated as of November 4, 1996 between
EPG, The Chase Manhattan Bank and certain other banks.
+10.H -- Omnibus Compensation Plan dated as of January 1, 1992,
(Amendment No. 1 to Form S-2, No. 33-45369, filed
February 27, 1992).
</TABLE>
61
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+10.I -- 1995 Incentive Compensation Plan effective as of January
13, 1995 (Form S-8, No. 33-57553, filed February 2,
1995); Amendment No. 1 to EPG's 1995 Incentive
Compensation Plan, effective as of July 1, 1995 (Form
10-Q, No. 1-2700, filed July 21, 1995); Amendment No. 2
to the 1995 Incentive Compensation Plan effective January
1, 1996 (Exhibit 10.I.1 to EPG's Form 10-K for the fiscal
year ended December 31, 1995, File No. 1-2700).
+10.J -- 1995 Compensation Plan for Non-Employee Directors
effective as of January 13, 1995 (Form S-8, No. 33-57553,
filed February 2, 1995).
+10.K -- Stock Option Plan for Non-Employee Directors dated as of
January 1, 1992, (Amendment No. 1 to Form S-2, No.
33-45369, filed February 27, 1992).
+10.L -- 1995 Omnibus Compensation Plan effective as of January
13, 1995 (Form S-8, No. 33-57553, filed February 2,
1995); Amendment No. 1 to EPG's 1995 Omnibus Compensation
Plan, effective as of July 21, 1995 (Form 10-Q, No.
1-2700, filed July 21, 1995).
+10.M -- Supplemental Benefits Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995).
+10.N -- Senior Executive Survivor Benefit Plan effective January
1, 1992, (Amendment No. 1 to Form S-2, No. 33-45369,
filed February 27, 1992).
+10.O -- Deferred Compensation Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995).
+10.P -- Retirement Income Plan for Non-Employee Directors,
Amended and Restated Effective as of January 13, 1995
(Form 10-K, No. 1-2700, filed January 26, 1995).
+10.Q -- Key Executive Severance Protection Plan, Amended and
Restated Effective as of January 13, 1995 (Form 10-K, No.
1-2700, filed January 26, 1995).
+10.R -- Director Charitable Award Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995); Amendment No. 1 to the Director
Charitable Award Plan effective as of January 22, 1996
(Exhibit 10.R.1 to EPG's Form 10-K for the fiscal year
ended December 31, 1995, File No. 1-2700).
+10.S -- Employment Agreement dated July 31, 1992, between EPG and
William A. Wise (Form 10-K, No. 1-2700, filed February 3,
1993); Amendment to Employment Agreement dated January
29, 1996 between EPG and William A. Wise (Exhibit 10.T.1
to EPG's Form 10-K for the fiscal year ended December 31,
1995, File No. 1-2700).
+10.T -- Letter Agreement dated February 22, 1991, between EPG and
Britton White, Jr. (Form 10-K, No. 1-2700, filed February
3, 1993).
+10.U -- Letter Agreement dated January 13, 1995, between EPG and
William A. Wise (Form 10-K, No. 1-2700, filed January 26,
1995).
10.V -- Amended and Restated Limited Liability Company Agreement
of Aguaytia Energy, LLC entered into November 30, 1995,
by and among The Maple Gas Corporation del Peru Ltd, The
Maple Gas Corporation, P.I.D.C. Aguaytia, L.L.C., EPED
Aguaytia Company, IGC Aguaytia Partners, L.L.C., Scudder
Latin American Power I-P L.D.C., and PMDC Aguaytia, Ltd.
(Exhibit 10.G to EPG's Form 10-K for the fiscal year
ended December 31, 1995, File No. 1-2700).
*11 -- Computation of Earnings per Common Share.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of the Registrant.
*23 -- Consent of Experts.
*27 -- Financial Data Schedule.
</TABLE>
62
<PAGE> 67
UNDERTAKING.
The undersigned, El Paso Natural Gas Company, 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 El Paso Natural Gas Company 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 El Paso Natural Gas Company and its
consolidated subsidiaries.
63
<PAGE> 68
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, El Paso Natural Gas Company has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on the 7th
day of March 1997.
EL PASO NATURAL GAS COMPANY
Registrant
By /s/ WILLIAM A. WISE
------------------------------------
William A. Wise
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of El Paso
Natural Gas Company and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM A. WISE Chairman of the Board, Chief March 7, 1997
- ----------------------------------------------------- Executive Officer and
(William A. Wise) Director
/s/ RICHARD O. BAISH President March 7, 1997
- -----------------------------------------------------
(Richard O. Baish)
/s/ H. BRENT AUSTIN Executive Vice President and March 7, 1997
- ----------------------------------------------------- Chief Financial Officer
(H. Brent Austin)
/s/ JEFFREY I. BEASON Vice President, Controller, and March 7, 1997
- ----------------------------------------------------- Chief Accounting Officer
(Jeffrey I. Beason)
/s/ BYRON ALLUMBAUGH Director March 7, 1997
- -----------------------------------------------------
(Byron Allumbaugh)
/s/ EUGENIO GARZA LAGUERA Director March 7, 1997
- -----------------------------------------------------
(Eugenio Garza Lag(i)uera)
/s/ JAMES F. GIBBONS Director March 7, 1997
- -----------------------------------------------------
(James F. Gibbons)
/s/ BEN F. LOVE Director March 7, 1997
- -----------------------------------------------------
(Ben F. Love)
/s/ KENNETH L. SMALLEY Director March 7, 1997
- -----------------------------------------------------
(Kenneth L. Smalley)
/s/ MALCOLM WALLOP Director March 7, 1997
- -----------------------------------------------------
(Malcolm Wallop)
</TABLE>
64
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3(i) -- Restated Certificate of Incorporation of EPG dated
January 22, 1992. (Form 10-K, No. 1-2700, filed January
29, 1992); Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock
of EPG, dated July 7, 1992, (Form 10-K, No. 1-2700, filed
February 3, 1993).
3(ii) -- By-laws of EPG, as amended September 1, 1994. (Form 10-K,
No. 1-2700, filed January 26, 1995).
4.B.1 -- Indenture, dated as of March 1, 1987, between EPG and
Citibank, N.A., Trustee, with respect to EPG's 8 5/8%
Debentures due 2012 (Form S-3, No. 33-34284, filed April
20, 1990); Supplemental Indenture, dated December 24,
1991, (Form 10-K, No. 1-2700, filed January 29, 1992).
4.B.2 -- Indenture, dated as of August 1, 1987, between EPG and
Citibank, N.A., Trustee, with respect to EPG's 9.45%
Notes due 1999 (Form S-3, No. 33-34284, filed April 20,
1990); Supplemental Indenture, dated December 24, 1991,
(Form 10-K, No. 1-2700, filed January 29, 1992).
4.B.3 -- Indenture, dated as of January 1, 1992, between EPG and
Citibank, N.A., Trustee, with respect to EPG's 6.90%
Notes due 1997, 7 3/4% Notes due 2002 and 8 5/8%
Debentures due 2022 (Form 10-K, No. 1-2700, filed January
29, 1992).
4.C -- Shareholder Rights Plan (Form 10-Q, No. 1-2700, filed
November 12, 1992).
10.A -- Mojave Pipeline General Partnership Agreement by and
among El Paso Mojave Pipeline Co., HNG Mojave, Inc., and
Pacific Interstate Mojave Company, dated as of March 26,
1985, (Form 10-Q, No. 1-2700, filed May 15, 1985);
Amendment No. 1 to General Partnership Agreement dated as
of September 29, 1986, (Form 10-Q, No. 1-2700, filed May
13, 1988); Amendment No. 2 to General Partnership
Agreement dated as of September 30, 1991, (Form 10-Q, No.
1-2700, filed November 14, 1991).
10.B -- Lease, dated May 27, 1982, between EPG and First Capital
Kayser Center (Form 10-Q, No. 1-2700, filed November 14,
1991).
10.C -- Transportation Service Agreement as Amended and Restated,
effective November 1, 1993, between EPG and Pacific Gas
and Electric Company. (Form 10-K, No. 1-2700, filed
January 26, 1995).
10.D -- Transportation Service Agreement as Amended and Restated,
effective July 16, 1993, between EPG and Southern
California Gas Company. (Form 10-K, No. 1-2700, filed
January 26, 1995).
10.E -- Transportation Service Agreement, dated August 9, 1991,
and effective September 1, 1991, between EPG and
Southwest Gas Corporation for service to Arizona;
Transportation Service Agreement, dated August 9, 1991,
and effective September 1, 1991, between EPG and
Southwest Gas Corporation for service to Nevada (Form
10-Q, No. 1-2700, filed November 14, 1991); Amendatory
Agreement and replacement of Exhibit B to Transportation
Service Agreement dated August 9, 1991, and effective May
8, 1992, between EPG and Southwest Gas Corporation for
service to Nevada. (Form 10-K, No. 1-2700, filed February
3, 1993). Exhibit B to the Transportation Service
Agreement dated August 9, 1991, and effective March 1,
1994, between EPG and Southwest Gas Corporation for
service to Arizona. (Form 10-K, No. 1-2700, filed January
26, 1995).
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.F -- Credit Agreement among Mojave Pipeline Company and
Deutsche Bank AG, New York Branch, and Swiss Bank
Corporation, New York Branch, individually and as Agents,
and the Banks named therein, dated as of September 30,
1991, and the following documents related thereto:
Sponsor Performance Agreement among EPG and Deutsche Bank
AG, New York Branch, as Collateral Agent and Deutsche
Bank AG, New York Branch and Swiss Bank Corporation, New
York Branch, as Agents, dated as of September 30, 1991;
Partner Performance Agreement among El Paso Mojave
Pipeline Co. and Deutsche Bank AG, New York Branch, as
Collateral Agent and Deutsche Bank AG, New York Branch
and Swiss Bank Corporation, New York Branch, as Agents,
dated as of September 30, 1991; Pledge Agreement made by
El Paso Mojave Pipeline Co. with and to Deutsche Bank AG,
New York Branch (as Collateral Agent) for the Secured
Creditors, dated as of September 30, 1991; $90,000,000
Note dated September 30, 1991, executed by Mojave
Pipeline Company and payable to Deutsche Bank AG, New
York Branch; $90,000,000 Note dated September 30, 1991,
executed by Mojave Pipeline Company and payable to Swiss
Bank Corporation, New York Branch (Form 10-Q, No. 1-2700,
filed November 14, 1991); Syndication and replacement of
Notes with a $52,750,000 Note dated September 30, 1991,
executed by Mojave Pipeline Company and payable to Swiss
Bank Corporation, New York Branch; a $40,000,000 Note
dated September 30, 1991, executed by Mojave Pipeline
Company and payable to Deutsche Bank AG, New York Branch;
a $30,000,000 Note dated September 30, 1991, executed by
Mojave Pipeline Company and payable to Banque Indosuez; a
$20,000,000 Note dated September 30, 1991, executed by
Mojave Pipeline Company and payable to the Sumitomo Bank,
Limited, Houston Agency; a $20,000,000 Note dated
September 30, 1991, executed by Mojave Pipeline Company
and payable to the Bank of Nova Scotia; a $17,250,000
Note dated September 30, 1991, executed by Mojave
Pipeline Company and payable to Credit Lyonnais Cayman
Islands Branch (Form 10-K, No. 1-2700, filed January 29,
1992). First Amendment to Credit Agreement dated as
effective December 23, 1992, among Mojave Pipeline
Company and Deutsche Bank AG, New York Branch and Swiss
Bank Corporation, New York Branch; Amendment to Sponsor
and Partner Performance Agreements entered into effective
as of December 23, 1992; Syndication and replacement of
Note for $52,750,000 payable to Swiss Bank Corporation,
New York Branch and Note for $17,250,000 payable to
Credit Lyonnais Cayman Islands Branch with a $40,000,000
Note dated September 30, 1991, executed by Mojave
Pipeline Company and payable to Swiss Bank Corporation,
New York Branch; and a $30,000,000 Note dated September
30, 1991, executed by Mojave Pipeline Company and payable
to Credit Lyonnais Cayman Islands Branch, Second
Amendment to Credit Agreement dated as effective June 1,
1993, among Mojave Pipeline Company and Deutsche Bank AG,
New York Branch and Swiss Bank Corporation, New York
Branch; Amended and Restated Sponsor Performance
Agreement dated as effective June 1, 1993, among El Paso
Natural Gas Company and Deutsche Bank AG, New York Branch
and Swiss Bank Corporation, New York Branch; Amendment
and Ratification of Partner Documents dated as effective
June 1, 1993, among EPNG Mojave, Inc. and El Paso Mojave
Pipeline Co. and Deutsche Bank AG, New York Branch and
Swiss Bank Corporation, New York Branch (Form 10-Q, No.
1-2700, filed August 16, 1993). Replacement of
$30,000,000 Note dated September 30, 1991, executed by
Mojave Pipeline Company and payable to Banque Indosuez
with a $30,000,000 Note dated September 30, 1991,
executed by Mojave Pipeline Company and payable to Bank
of Scotland. (Form 10-Q, No. 1-2700, filed May 13, 1994).
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.G -- Master Separation Agreement and documents related thereto
dated January 15, 1992, by and among Burlington Resources
Inc., EPG and Meridian Oil Holding Inc., including
Exhibits (Form 10-K, No. 1-2700, filed January 29, 1992).
10.H -- Revolving Credit and Competitive Advance Facility
Agreement dated as of August 10, 1994 between EPG,
Chemical Bank and certain other banks (Form 10-Q, No.
1-2700, filed November 14, 1994).
+10.I -- Omnibus Compensation Plan dated as of January 1, 1992,
(Amendment No. 1 to Form S-2, No. 33-45369, filed
February 27, 1992).
+10.J -- 1995 Incentive Compensation Plan effective as of January
13, 1995 (Form S-8, No. 33-57553, filed February 2,
1995); Amendment No. 1 to EPG's 1995 Incentive
Compensation Plan, effective as of July 1, 1995 (Form
10-Q, No. 1-2700, filed July 21, 1995).
*+10.J.1 -- Amendment No. 2 to the 1995 Incentive Compensation Plan
effective January 1, 1996.
+10.K -- 1995 Compensation Plan for Non-Employee Directors
effective as of January 13, 1995 (Form S-8, No. 33-57553,
filed February 2, 1995).
+10.L -- Stock Option Plan for Non-Employee Directors dated as of
January 1, 1992, (Amendment No. 1 to Form S-2, No.
33-45369, filed February 27, 1992).
+10.M -- 1995 Omnibus Compensation Plan effective as of January
13, 1995 (Form S-8, No. 33-57553, filed February 2,
1995); Amendment No. 1 to EPG's 1995 Omnibus Compensation
Plan, effective as of July 21, 1995 (Form 10-Q, No.
1-2700, filed July 21, 1995).
+10.N -- Supplemental Benefits Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995).
+10.O -- Senior Executive Survivor Benefit Plan effective January
1, 1992, (Amendment No. 1 to Form S-2, No. 33-45369,
filed February 27, 1992).
+10.P -- Deferred Compensation Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995).
+10.Q -- Retirement Income Plan for Non-Employee Directors,
Amended and Restated Effective as of January 13, 1995
(Form 10-K, No. 1-2700, filed January 26, 1995).
+10.R -- Key Executive Severance Protection Plan, Amended and
Restated Effective as of January 13, 1995 (Form 10-K, No.
1-2700, filed January 26, 1995).
+10.S -- Director Charitable Award Plan, Amended and Restated
Effective as of January 13, 1995 (Form 10-K, No. 1-2700,
filed January 26, 1995).
*+10.S.1 -- Amendment No. 1 to the Director Charitable Award Plan
effective as of January 22, 1996.
10.T -- Receivables Purchase and Sale Agreement dated as of
January 14, 1992, between EPG, CIESCO L.P., Corporate
Asset Funding Company, Inc. and Citicorp North America,
Inc. (Form 10-K, No. 1-2700, filed February 3, 1993).
+10.U -- Employment Agreement dated July 31, 1992, between EPG and
William A. Wise (Form 10-K, No. 1-2700, filed February 3,
1993).
*+10.U.1 -- Amendment to Employment Agreement dated January 29, 1996
between EPG and William A. Wise.
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*10.V -- Amended and Restated Limited Liability Company Agreement
of Aguaytia Energy, LLC entered into November 30, 1995,
by and among The Maple Gas Corporation del Peru Ltd, The
Maple Gas Corporation, P.I.D.C. Aguaytia, L.L.C., EPED
Aguaytia Company, IGC Aguaytia Partners, L.L.C., Scudder
Latin American Power I-P L.D.C., and PMDC Aguaytia, Ltd.
+10.W -- Letter Agreement dated February 22, 1991, between EPG and
Britton White, Jr. (Form 10-K, No. 1-2700, filed February
3, 1993).
+10.X -- Letter Agreement dated January 13, 1995, between EPG and
William A. Wise (Form 10-K, No. 1-2700, filed January 26,
1995).
10.Y -- Participation and Credit Agreement dated as of February
9, 1995, among EPG, El Paso New Chaco Company, State
Street Bank and Trust Company, Chemical Bank, as Agent,
the Note Holders Signatories and the Certificate Holders
Signatories (without exhibits and schedules, except for
the schedule of defined terms), and the following
documents related thereto: Lease Agreement dated as of
February 9, 1995, between State Street Bank and Trust
Company and El Paso New Chaco Company, Support Agreement
between El Paso New Chaco Company and State Street Bank
and Trust Company dated as of February 9, 1995; Guaranty
Agreement by EPG in favor of Chemical Bank, as Agent, and
Each of the Participants as of February 9, 1995; Sponsor
Agreement by EPG in favor of State Street Bank and Trust
Company, as of February 9, 1995; Mortgage, Assignment,
Security Agreement and Financing Statement, executed
February 7, 1995, between State Street Bank and Trust
Company (Mortgagor) and Chemical Bank (Mortgagee);
Security Agreement among State Street Bank and Trust
Company and Chemical Bank, as Agent, dated February 9,
1995 (Form 10-Q, No. 1-2700, filed April 28, 1995).
*+10.Z -- Letter dated February 4, 1992 between EPG and Michael C.
Holland.
*11 -- Computation of Earnings per Common Share.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of the Registrant.
*23 -- Consent of Experts.
*27 -- Financial Data Schedule.
</TABLE>
Each exhibit identified on this Exhibit List is filed as a part of this
report. Exhibits not incorporated by reference to a prior filing are designated
by an asterisk; all exhibits not so designated are incorporated herein by
reference to a prior filing as indicated. Exhibits designated with a "+"
constitute a management contract or compensatory plan or arrangement required to
be filed as an exhibit to this report pursuant to Item 14(c) of Form 10-K.
<PAGE> 1
EXHIBIT 10.E
EL PASO NATURAL GAS COMPANY
-------------------------------------
$750,000,000
REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
DATED AS OF NOVEMBER 4, 1996
-------------------------------------
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
AND CAF ADVANCE AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS....................................... 1
SECTION 1.1 Certain Defined Terms..................................................................... 1
SECTION 1.2 Computation of Time Periods............................................................... 17
SECTION 1.3 Accounting Terms.......................................................................... 17
SECTION 1.4 References................................................................................ 17
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES...................................... 18
SECTION 2.1 The Revolving Credit Advances............................................................. 18
SECTION 2.2 Making the Revolving Credit Advances...................................................... 18
SECTION 2.3 Evidence of Debt.......................................................................... 20
SECTION 2.4 CAF Advances.............................................................................. 20
SECTION 2.5 Procedure for CAF Advance Borrowings...................................................... 21
SECTION 2.6 CAF Advance Payments...................................................................... 24
SECTION 2.7 Evidence of Debt.......................................................................... 25
SECTION 2.8 Fees...................................................................................... 25
SECTION 2.9 Reduction of the Commitments.............................................................. 26
SECTION 2.10 Repayment of Advances.................................................................... 26
SECTION 2.11 Interest on Revolving Credit Advances.................................................... 26
SECTION 2.12 Additional Interest on Eurodollar Rate Advances.......................................... 27
SECTION 2.13 Interest Rate Determination.............................................................. 28
SECTION 2.14 Voluntary Conversion of Advances......................................................... 29
SECTION 2.15 Optional and Mandatory Prepayments....................................................... 30
SECTION 2.16 Increased Costs.......................................................................... 30
SECTION 2.17 Increased Capital........................................................................ 32
SECTION 2.18 Illegality............................................................................... 32
SECTION 2.19 Payments and Computations................................................................ 33
SECTION 2.20 Taxes.................................................................................... 34
SECTION 2.21 Sharing of Payments, Etc................................................................. 37
SECTION 2.22 Use of Proceeds.......................................................................... 37
SECTION 2.23 Replacement of Lenders................................................................... 38
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING................................... 38
SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement................................... 38
SECTION 3.2 Conditions Precedent to Initial Advances.................................................. 39
SECTION 3.3 Conditions Precedent to Initial Advances to Any Borrowing Subsidiary or Holding........... 40
SECTION 3.4 Conditions Precedent to Each Borrowing.................................................... 41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................................ 41
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.1 Representations and Warranties of the Borrowers........................................... 41
ARTICLE V
COVENANTS OF THE BORROWERS.......................................... 45
SECTION 5.1 Affirmative Covenants..................................................................... 45
SECTION 5.2 Negative Covenants........................................................................ 47
SECTION 5.3 Reporting Requirements.................................................................... 51
SECTION 5.4 Restrictions on Material Subsidiaries..................................................... 54
ARTICLE VI
GUARANTEE.................................................. 54
SECTION 6.1 Guarantees................................................................................ 54
SECTION 6.2 No Subrogation............................................................................ 55
SECTION 6.3 Amendments, etc. with respect to the Obligations; Waiver of Rights........................ 55
SECTION 6.4 Guarantee Absolute and Unconditional...................................................... 56
SECTION 6.5 Reinstatement............................................................................. 57
ARTICLE VII
EVENTS OF DEFAULT.............................................. 57
SECTION 7.1 Event of Default.......................................................................... 57
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT.............................. 61
SECTION 8.1 Authorization and Action.................................................................. 61
SECTION 8.2 Administrative Agent's and CAF Advance Agent's Reliance, Etc.............................. 61
SECTION 8.3 Chase and Affiliates...................................................................... 62
SECTION 8.4 Lender Credit Decision.................................................................... 62
SECTION 8.5 Indemnification........................................................................... 63
SECTION 8.6 Successor Administrative Agent and CAF Advance Agent...................................... 63
ARTICLE IX
MISCELLANEOUS................................................ 64
SECTION 9.1 Amendments, Etc........................................................................... 64
SECTION 9.2 Notices, Etc.............................................................................. 65
SECTION 9.3 No Waiver; Remedies....................................................................... 65
SECTION 9.4 Costs and Expenses; Indemnity............................................................. 65
SECTION 9.5 Right of Set-Off.......................................................................... 67
SECTION 9.6 Binding Effect............................................................................ 67
SECTION 9.7 Assignments and Participations............................................................ 67
SECTION 9.8 Confidentiality........................................................................... 70
SECTION 9.9 Consent to Jurisdiction................................................................... 71
SECTION 9.10 GOVERNING LAW............................................................................ 72
SECTION 9.11 Rate of Interest......................................................................... 72
SECTION 9.12 Effect on Outstanding CAF Advances....................................................... 73
SECTION 9.13 Execution in Counterparts................................................................ 73
</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
-iii-
<PAGE> 5
$750,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY
AGREEMENT, dated as of November 4, 1996, among EL PASO NATURAL GAS COMPANY, a
Delaware corporation ("EPNGC"), 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.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 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 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 program evidenced by the Receivables Purchase and
Sale Agreement (whether or not the Receivables Purchase and Sale
Agreement shall then be in effect), provided that such program is on
terms (a) substantially similar to the Receivables Purchase and Sale
Agreement or (b) customary for
<PAGE> 6
2
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".
"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.
<PAGE> 7
3
"Borrowing Subsidiary" means each domestic Principal
Subsidiary of the Company which has been designated by the Company as a
"Borrowing Subsidiary" by written notice to the Administrative Agent;
collectively, the "Borrowing Subsidiaries".
"Burlington" means Burlington Resources Inc., a Delaware
corporation.
"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 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.
<PAGE> 8
4
"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.
"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
<PAGE> 9
5
aggregate principal amount of the Advances then outstanding).
"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 Tennessee
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 $200,000,000 of (i) the
amount of optional payments in lieu of asset repurchase or other
payments to similar effect, including extension or renewal payments, on
off balance sheet leases and (ii) the amount of the purchase price for
optional acquisition of such asset (in either case, calculated at the
lower amount payable in respect of such asset under clause (i) or (ii)
above).
"Debt Realignment Plan" means the debt realignment plan
described under the caption "Debt and Cash Realignment--Debt
Realignment" and "Unaudited Pro Forma Financial Information--Unaudited
Pro Forma Combined Financial Statements of El Paso and Tenneco Energy"
in the Joint Proxy Statement.
"Dollars" and "$" 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
<PAGE> 10
6
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.
"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.
"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
<PAGE> 11
7
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:
<TABLE>
<CAPTION>
Bond Rating Eurodollar
(S&P/Moody's) Level Rate Margin
------------- ----- -----------
<S> <C> <C>
A/A2 or higher I .175%
A-/A3 II .190%
BBB+/Baa1 III .200%
BBB/Baa2 IV .225%
BBB-/Baa3 V .350%
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
<PAGE> 12
8
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 Tennessee
and its Subsidiaries in existence on the date of the Merger and not
prohibited by the Tennessee Facility, or incurred at any time under the
Tennessee Facility 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).
"Existing Facilities" has the meaning assigned to such term in
Section 3.2.
"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
<PAGE> 13
9
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 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 Tennessee which directly or indirectly owns 100% of the
common stock of EPNGC and 100% of the common stock of Tennessee;
provided, however, that immediately after Holding becomes EPNGC's and
Tennessee'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
Tennessee'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
<PAGE> 14
10
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 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; and
(c) Interest Periods commencing on the same date for
Advances comprising the same Borrowing shall be of the same
duration.
"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.
"Joint Proxy Statement" means the Registration Statements on
Form S-4, each relating to the Transaction, initially filed by each of
EPNGC and Tennessee with the SEC on August 27, 1996, as amended through
the Effective Date.
<PAGE> 15
11
"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.
"Majority Lenders" means Lenders the Commitment Percentages of
which aggregate at least 51%.
"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.
"Merger" means the merger of Tennessee with a de novo
subsidiary of EPNGC following the Spin-offs pursuant to the terms of
the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of June 19, 1996, among EPNGC, El Paso Merger Company and
Tennessee, as amended, supplemented or otherwise modified through the
Effective Date.
"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
<PAGE> 16
12
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 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 Preferred Stock" means the voting junior preferred stock
to be issued by Tennessee in connection with the Debt Realignment Plan.
"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
<PAGE> 17
13
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).
"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).
"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) having assets
at such time greater than or equal to 5% of the consolidated assets of
the Company and its consolidated Subsidiaries at such time.
"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.
<PAGE> 18
14
"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, (b) the date on
which Holding becomes a "Borrower" under the $250,000,000 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, and (c) the date on which
Holding becomes a "Borrower" under the Tennessee Facility.
"Receivables Purchase and Sale Agreement" means 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 such Agreement may be amended,
supplemented, restated or otherwise modified from time to time which
amendment, supplement, restatement or modification will not extend the
purchase of receivables and other assets thereunder to receivables and
assets other than present and future gas purchase contract take-or-pay
buyout and buydown receivables, the collateral and other support
therefor and the collections therefrom.
"Reference Lenders" means Chase, Morgan Guaranty Trust Company
of New York and Union Bank of Switzerland.
"Register" has the meaning specified in Section 9.7(c).
"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
<PAGE> 19
15
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 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.
"Spin-offs" means the spin-off of Tennessee's shipbuilding,
packaging, automotive and administrative services units to its
shareholders immediately prior to the Merger as described in the Joint
Proxy Statement.
"Stated Termination Date" means November 3, 2001.
"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.
<PAGE> 20
16
"Taxes" has the meaning assigned to such term in Section
2.20(a).
"Tenneco Energy" means all energy businesses and operations
owned directly or indirectly by Tennessee and other operations of
Tennessee and its Subsidiaries other than those relating to Tennessee's
automotive, packaging, administrative services and shipbuilding
businesses.
"Tennessee" means Tenneco Inc., a Delaware corporation, which
is to be renamed El Paso Tennessee Pipeline Co. after the Merger, and
its successors.
"Tennessee Facility" means the $3,000,000,000 Revolving Credit
and Competitive Advance Facility Agreement, dated as of November 4,
1996, among Tennessee, 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.
"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 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.
Section 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
<PAGE> 21
17
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.
"Transaction" means the Merger, the Spin-offs, the Debt
Realignment Plan, and the issuance of the New Preferred Stock.
"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 1.2 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 1.3 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 1.4 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.
<PAGE> 22
18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1 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 2.2 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 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
<PAGE> 23
19
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 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.
<PAGE> 24
20
SECTION 2.3 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").
SECTION 2.4 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
<PAGE> 25
21
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 2.5 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:
(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
<PAGE> 26
22
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:
(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
<PAGE> 27
23
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 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),
<PAGE> 28
24
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 2.6 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.
(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.
<PAGE> 29
25
(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 2.7 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 2.8 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 .075%
A-/A3 II .085%
BBB+/Baa1 III .100%
BBB/Baa2 IV .125%
BBB-/Baa3 V .150%
BB+/Ba1 or lower VI .250%;
</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,
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 September 20, 1996, from Chase Securities Inc. and Chase to EPNGC.
SECTION 2.9 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 2.10 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.
SECTION 2.11 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, 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).
<PAGE> 31
27
(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 2.12 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 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
<PAGE> 32
28
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 2.13 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 2.14 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
<PAGE> 34
30
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 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 2.15 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 2.16 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
<PAGE> 35
31
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
<PAGE> 36
32
to Section 2.18, nothing herein shall require any Lender to change its lending
office for any reason.
SECTION 2.17 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 2.18 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
<PAGE> 37
33
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 2.19 Payments and Computations. (a) 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
<PAGE> 38
34
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 2.20 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
<PAGE> 39
35
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.
<PAGE> 41
37
(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.
(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 2.21 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 2.22 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.
<PAGE> 42
38
SECTION 2.23 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.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective (the "Effective Date") when (i)
it shall have been executed by EPNGC, the Administrative Agent and the CAF
Advance Agent, (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, and (iii) the
Administrative Agent shall have received notice from the "Administrative Agent"
under the Tennessee Facility that the "Effective Date" has occurred, or
substantially simultaneously therewith is occurring, under the Tennessee
Facility, and if any Lender is not also a party to the Tennessee Facility, such
Lender shall have received all documents delivered pursuant to Section 3.1 of
the Tennessee Facility, in each case above, unless waived by the Lenders in
accordance with this Agreement. Anything in this Agreement to the contrary
notwithstanding, if all of the conditions to effectiveness of
<PAGE> 43
39
this Agreement specified in this Section 3.1 shall not have been fulfilled on or
before December 31, 1996, (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, 1996; 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, 1996, the Administrative Agent shall furnish written notice
to EPNGC, the Lenders and the "Administrative Agent" under the Tennessee
Facility 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 3.2 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 the "Closing Date" under the Tennessee
Facility) 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 EPNGC 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 EPNGC and
governmental approvals to EPNGC, if any, with respect to this Agreement
and the Notes.
(ii) A certificate of the Secretary or an Assistant Secretary
of EPNGC certifying the names and true signatures of the officers of
EPNGC authorized to sign this Agreement and the 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 hereto.
(iv) A favorable opinion of Jones, Day, Reavis & Pogue, New
York counsel to EPNGC, in substantially the form of Exhibit H hereto.
(v) A letter from the Process Agent, in substantially the form
of Exhibit I hereto, agreeing to act as Process Agent for EPNGC and to
forward forthwith all process received by it to EPNGC.
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40
(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 $400,000,000 Revolving Credit and Competitive Advance
Facility Agreement and the $100,000,000 Revolving Credit and
Competitive Advance Facility Agreement, each dated as of May 31, 1996
(the "Existing Facilities"), among EPNGC, the several financial
institutions from time to time parties thereto, and Chase, as
Administrative Agent and CAF Advance Agent, shall have been paid in
full, and the commitments to make advances thereunder shall have been
cancelled.
SECTION 3.3 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 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 hereto, 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 hereto,
and as to such other matters as any Lender through the Administrative
Agent may
<PAGE> 45
41
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 hereto, 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 3.4 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 would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 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.
<PAGE> 46
42
(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.
(e) The consolidated balance sheet of EPNGC and its
consolidated Subsidiaries as at December 31, 1995, 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, 1995, there has been no material
adverse change in such condition or operations. The unaudited
consolidated balance sheet of EPNGC and its
<PAGE> 47
43
consolidated Subsidiaries as of June 30, 1996, 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) The unaudited pro forma combined balance sheet of EPNGC
and Tenneco Energy as at June 30, 1996 and the related unaudited pro
forma combined statements of income of EPNGC and Tenneco Energy for the
six-month period ended June 30, 1996 set forth in the Joint Proxy
Statement, copies of which have been delivered to the Lenders, were
prepared from financial statements referred to in Section 4.1(e), which
were prepared in accordance with generally accepted accounting
principles, are complete and correct in all material respects and have
been prepared on the basis described therein and show the combined
financial position and results of operations of EPNGC and Tennessee as
if the Transaction had occurred, in the case of the combined balance
sheet, on June 30, 1996, and in the case of combined statements of
income, as of January 1, 1995.
(g) 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.
(h) 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.
(i) 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
<PAGE> 48
44
to the extent only that the same are being contested in good faith and
by appropriate proceedings by the Company, the appropriate Subsidiary
or the appropriate Restricted Affiliate.
(j) 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.
(k) 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).
(l) 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.
(m) The statement of assets and liabilities of each Plan other
than, prior to the Merger, any Plan of Tennessee or any of its
Subsidiaries 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.
(n) 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.
(o) 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
<PAGE> 49
45
effect of which reorganization, insolvency or termination would be the
occurrence of an Event of Default under Section 7.1(i).
(p) 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.
(q) 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.
(r) 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.
(s) 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 5.1 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
<PAGE> 50
46
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.
(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
<PAGE> 51
47
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 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 5.2 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 (except as otherwise permitted under
clause (F) below) were not placed thereon by or with the
consent of the Company in contemplation of such acquisition;
<PAGE> 52
48
(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;
(E) Liens for taxes, assessments or governmental
charges or levies not yet overdue; and
(F) Liens on assets of Tennessee and its Subsidiaries
existing immediately prior to the Merger and not prohibited by
the Tennessee Facility.
(b) Consolidated Debt and Guarantees to Capitalization. (i)
Permit the ratio of (A) the sum of (1) 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 $150,000,000; 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
<PAGE> 53
49
obligations arising under this Agreement or the Tennessee Facility or
the $250,000,000 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).
(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 the San Juan Basin Gathering
System and related facilities in accordance with the
procedures set forth in the Master Separation Agreement dated
as of January 15, 1992 between EPNGC, Meridian Oil Holding
Inc., a Delaware corporation, and Burlington;
(ii) any sale of receivables and related rights
pursuant to any Alternate Program;
(iii) any Project Financing Subsidiary and the
assets thereof;
(iv) sales, leases or other transfers of assets
or capital stock of any Subsidiary of the Company other than
any Principal Subsidiary;
(v) any sale of Margin Stock;
(vi) 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;
(vii) 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
<PAGE> 54
50
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;
(viii) any transfer permitted by Section 5.2(e);
(ix) 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; and
(x) so long as the Tennessee Facility is in
effect, any sale, lease or other transfer of assets of
Tennessee and its Subsidiaries, provided that the commitments,
if any, outstanding under the Tennessee Facility are reduced
by an amount equal to the net cash proceeds thereof (after
provision for taxes, holdbacks, reserves and all costs and
expenses arising from, or attributable to, such transaction)
to the extent required under the Tennessee Facility.
(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 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
<PAGE> 55
51
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 5.3 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 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
<PAGE> 56
52
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 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,
<PAGE> 57
53
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 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
<PAGE> 58
54
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 5.4 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 6.1 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 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
<PAGE> 59
55
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 6.2 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 6.3 Amendments, etc. with respect to the Obligations;
Waiver of Rights. Each Borrower shall remain obligated under this Article VI
notwithstanding that, without any 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
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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 6.4 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 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
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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 6.5 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.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 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
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(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 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
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59
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 (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
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(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 Burlington, 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
(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
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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.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT
SECTION 8.1 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.
SECTION 8.2 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,
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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 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 8.3 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 8.4 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
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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 8.5 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
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.
SECTION 8.6 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,
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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.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 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
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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 9.2 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 1 Paul Kayser Center, 100 North Stanton Street, El Paso, Texas 79901,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(915) 541-5008; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, New York, New
York 10017, Attention: John Gehebe, Telecopier: (212) 270-4892; and if to the
CAF Advance Agent, at 140 East 45th Street, New York, New York 10017, Attention:
Terri Reilly, Telecopier: (212) 622- 0003, Telephone: (212) 622-8779; 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, 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 9.3 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 9.4 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
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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 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
<PAGE> 71
67
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 9.5 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 9.6 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 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 9.7 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
<PAGE> 72
68
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 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
<PAGE> 73
69
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
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
<PAGE> 74
70
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
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 9.8 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
<PAGE> 75
71
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 9.9 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 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.
<PAGE> 76
72
(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 9.10 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 9.11 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 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
<PAGE> 77
73
apply to this Agreement or the Notes or the transactions contemplated hereby.
SECTION 9.12 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 9.13 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> 78
74
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/ H. Brent Austin
--------------------------------
Title: Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF
Advance Agent and a Lender
By: /s/ Peter M. Ling
--------------------------------
Title: Vice President
ABN-AMRO BANK, N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc.
as agent
By: /s/ H. Gene Shiels
--------------------------------
Title: Vice President and Director
By: /s/ Michael N. Oakes
--------------------------------
Title: Vice President and Director
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ Kyle Loughlin
--------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Claire Liu
--------------------------------
<PAGE> 79
75
Title: Vice President
BANK OF MONTREAL
By: /s/ Natasha Glossop
--------------------------------
Title: Director, U.S. Corporate
Banking
THE BANK OF NEW YORK
By: /s/ Raymond J. Palmer
--------------------------------
Title: Vice President
By: /s/
--------------------------------
Title:
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
--------------------------------
Title: Sr. Team Leader - 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
<PAGE> 80
76
BARCLAYS BANK PLC
By: /s/ Paul C. Kavanagh
--------------------------------
Title: Director
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ Christine Taylor
--------------------------------
Title: Vice President & Manager
By: /s/ Sylvia Cheng
--------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ David Bouhl, F.V.P.
--------------------------------
Title: Head of Corporate Banking
Chicago
CIBC INC.
By: /s/ Gary C. Gaskill
--------------------------------
Title: Authorized Signatory
CITIBANK, N.A.
By: /s/ Chris Lyons
--------------------------------
Title: Vice President
<PAGE> 81
77
COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ A. Bremer
--------------------------------
Title: Senior Vice President
By: /s/ D. Suttles
--------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
--------------------------------
Title: Senior Vice President
CREDIT SUISSE
By: /s/ David J. Worthington
--------------------------------
Title: Member of Senior Management
By: /s/ Marilou Palenzuela
--------------------------------
Title: Member of Senior Management
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Mitsuaki Yamazaki
--------------------------------
Title: Vice President
<PAGE> 82
78
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Stephan A. Wiedemann
--------------------------------
Title: Vice President
By: /s/ Thomas A. Foley
--------------------------------
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH
By: /s/ Andrew P. Nesi
--------------------------------
Title: Vice President
By: /s/ Lawrence E. Jones
--------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Virginia Ryan
--------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Dixon Schultz
--------------------------------
Title: Vice President
THE FUJI BANK, LIMITED-HOUSTON
AGENCY
By: /s/ Yoshiaki Inoue
--------------------------------
Title: Vice President and Manager
<PAGE> 83
79
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ Kensaku Iwata
--------------------------------
Title: Senior 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/ Satoru Otsubu
--------------------------------
Title: Joint General Manager
MELLON BANK, N.A.
By: /s/ Marc Cuenod, Jr.
--------------------------------
Title: First Vice President
By: /s/
--------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ John Kowalczuk
--------------------------------
Title: Vice President
<PAGE> 84
80
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ Paul K. Carter
--------------------------------
Title: Manager & Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ Paul K. Carter
--------------------------------
Title: Manager & Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Patrick M. Delaney
--------------------------------
Title: Senior Vice President
NORINCHUKIN BANK, NEW YORK BRANCH
By: /s/ Ichiro Uchida
--------------------------------
Title: Joint General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Bob Erwin
--------------------------------
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ J.D. Frost
--------------------------------
Title: Senior Manager
<PAGE> 85
81
THE SAKURA BANK, LIMITED - NEW YORK
BRANCH
By: /s/ Yasumasa Kikuchi
--------------------------------
Title: Senior Vice President
THE SANWA BANK LIMITED DALLAS
AGENCY
By: /s/ Robert S. Smith
--------------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ Richard A. Gould
--------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED, HOUSTON
AGENCY
By: /s/ Harumitsu Seki
--------------------------------
Title: General Manager
THE TOKAI BANK, LIMITED, NEW YORK
BRANCH
By: /s/ Shinichi Kondo
--------------------------------
Title: Deputy General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Frederic Hawley
--------------------------------
Title: Vice President
<PAGE> 86
82
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ J. George Kubove
--------------------------------
Title: Assistant Vice President
By: /s/ Kelly Boots
--------------------------------
Title: Assistant Treasurer
THE YASUDA TRUST & BANKING, CO.,
LTD.
By: /s/ Rohn Laudenschlager
--------------------------------
Title: Senior Vice President
<PAGE> 87
SCHEDULE I
COMMITMENTS, ADDRESSES, ETC.
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Chase Manhattan Bank $31,875,000
One Chase Manhattan Plaza
New York, New York 10017
Attention: Peter Ling
Telephone: 212-532-1687
Telecopier: 212-270-4892
ABN AMRO Bank, N.V. Houston Agency $7,500,000
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: H. Gene Shiels
Telephone: 713-964-3326
Telecopier: 713-629-7533
Australia and New Zealand $7,500,000
Banking 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 Illinois $23,437,500
231 South LaSalle
Chicago, Illinois 60697
Attention: Gloria Turner
Telephone: 312-828-4575
Telecopier: 312-974-9626
Bank of Montreal $23,437,500
700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Jane Wiley
Telephone: 713-546-9744
Telecopier: 713-223-4007
The Bank of New York $23,437,500
One Wall Street, 19th Floor
New York, New York 10286
Attention: Nina Russo
Telephone: 212-635-7921
Telecopier: 212-635-7923
</TABLE>
<PAGE> 88
2
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Bank of Nova Scotia $23,437,500
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:
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. $23,437,500
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Michael Meiss
Telephone: 713-655-3815
Telecopier: 713-655-3855
Banque Nationale de Paris, $12,187,500
Houston Agency
333 Clay, Suite 3400
Houston, Texas 77002
Attention: Mike Shryock
Telephone: 713-951-1224
Telecopier: 713-659-1414
Barclays Bank PLC $23,437,500
222 Broadway
New York, New York 10038
Attention: Director -
Structured Finance
Telephone: 212-412-7570
Telecopier: 212-412-7511
Bayerische Vereinsbank AG, $7,500,000
Los Angeles Agency
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson,
Jarunee Hanpachern
Telephone: 213-629-1821
Telecopier: 213-622-6341
</TABLE>
<PAGE> 89
3
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Caisse Nationale de Credit Agricole $7,500,000
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Rosemary Brown
Telephone: 312-917-7420
Telecopier: 312-372-4421
Canadian Imperial Bank of Commerce $23,437,500
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $28,125,000
One Court Square
Long Island City, New York 11120
Attention: Leena Caligiure
Telephone: 718-248-5762
Telecopier: 718-248-4844/4845
Commerzbank Aktiengesellschaft, $23,437,500
Atlanta Agency
1230 Peachtree Street, N.E. Suite 3500
Atlanta, Georgia 30309
Attention: Dave Suttles/Paul Mahoney
Telephone: 404-888-6500
Telecopier: 404-888-6539
Credit Lyonnais New York Branch $23,437,500
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
Credit Suisse $23,437,500
633 West 5th Street, 64th Floor
Los Angeles, California 90017
Attention: Rita Asa
Telephone: 213-955-8284
Telecopier: 213-955-8245
The Dai-Ichi Kangyo Bank, Ltd. $12,187,500
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Tina Brucculeri
Telephone: 212-432-6643
Telecopier: 212-912-1879
</TABLE>
<PAGE> 90
4
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Deutsche Bank AG New York and/ $7,500,000
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 Branch $12,187,500
75 Wall Street
New York, New York 10005
Attention: Charles Lin
Telephone: 212-429-2608
Telecopier: 212-429-2129
First National Bank of Boston $7,500,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02106
Attention: Virginia Ryan
Telephone: 617-434-3606
Telecopier: 617-434-3652
The First National Bank of Chicago $23,437,500
One First National Plaza
0634, 1FNP, 10
Chicago, Illinois 60670
Attention: Yvette Thompkins
Telephone: 312-732-1395
Telecopier: 312-732-4840
The Fuji Bank, Limited-Houston Agency $23,437,500
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Attention: Charles vanRavenswaay
Telephone: 713-650-7829
Telecopier: 713-759-0048
The Industrial Bank of Japan $12,187,500
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> 91
5
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Kredietbank N.V., Grand Cayman Branch $12,187,500
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma
Telephone: 212-541-0657
Telecopier: 212-956-5580
or
Attention: Mayra Ramirez
Telephone: 212-541-0658
Telecopier: 212-956-5580
The Long-Term Credit Bank of Japan, Ltd. $23,437,500
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. $23,437,500
1100 Louisiana, Suite 3600
Houston, Texas 77002
Attention: Janet Jenkins
Telephone: 713-759-3040
Telecopier: 713-650-3409
Morgan Guaranty Trust Company of $23,437,500
New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Nancy K. Dunbar
Telephone: 302-634-4220
Telecopier: 302-634-1094
National Westminster Bank Plc $12,187,500
NatWest Markets
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
</TABLE>
<PAGE> 92
6
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Nationsbank of Texas, N.A. $23,437,500
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch $12,187,500
245 Park Avenue, 29th Floor
New York, New York
Attention: Shinichi Saitoh
Telephone: 212-949-7188
Telecopier: 212-697-5754
PNC Bank, National Association $23,437,500
One PNC Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222
Attention: Thomas K. Grundman/
Tina Lanuka
Telephone: 412-762-3025/412-762-4826
Telecopier: 412-762-2571/412-762-2571
Royal Bank of Canada $23,437,500
600 Wilshire Boulevard, Suite 800
Los Angeles, California 90017
Attention: Doug Frost
Telephone: 213-955-5310
Telecopier: 213-955-5350
The Sakura Bank, Limited - $12,187,500
New York Branch
277 Park Avenue, 45th Floor
New York, New York 11209
Attention: David Speir
Telephone: 212-756-6778
Telecopier: 212-888-7651
The Sanwa Bank Limited Dallas Agency $12,187,500
2200 Ross Avenue, Suite 4100W
Dallas, Texas 75201
Attention: Robert Smith
Telephone: 214-665-0222
Telecopier: 214-741-6535
Societe Generale $23,437,500
Trammell Crow Center
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Telephone: 214-979-2792
Telecopier: 214-754-0171
</TABLE>
<PAGE> 93
7
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Sumitomo Bank, Limited, $23,437,500
Houston Agency
700 Louisiana Street, Suite 1750
Houston, Texas 77002
Attention: Robert Quezada
Telephone: 713-238-8221
Telecopier: 713-238-8291
The Tokai Bank, Limited, New York Branch $7,500,000
Energy Finance Group
55 East 52nd Street
New York, New York 10055
Attention: Caralie Olsen
Telephone: 212-339-1163
Telecopier: 212-754-2170
Toronto Dominion (Texas), Inc. $23,437,500
909 Fannin Street, 17th Floor
Houston, Texas 77010
Attention: Lisa Allison
Telephone: 713-653-8244
Telecopier: 713-951-9921
Union Bank of Switzerland, $23,437,500
Houston Agency
1100 Louisiana, Suite 4500
Houston, Texas 77002
Attention: Evans Swann
Telephone: 713-655-6500
Telecopier: 713-655-6555
The Yasuda Trust & Banking, Co., Ltd. $12,187,500
666 Fifth Avenue, Suite 801
New York, New York 10103
Attention: Eric N. Pelletier
Telephone: 212-373-5734
Telecopier: 212-373-5796
</TABLE>
<PAGE> 94
EXHIBIT A
FORM OF NOTE
$_______________ New York, New York
________ ___, 1996
FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of __________________ (the "Lender") at the office of The Chase Manhattan
Bank, located at 270 Park Avenue, New York, New York 10017, in lawful money of
the United States of America and in same day funds, on the Termination Date the
principal amount of (a) __________________ DOLLARS ($___________), 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
Revolving Credit and Competitive Advance Facility Agreement, dated as of
November 4, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among El Paso Natural Gas Company, the Lender,
the other banks and financial institutions from time to time parties thereto and
The Chase Manhattan Bank, as Administrative Agent and CAF Advance 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.
<PAGE> 95
A-2
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> 96
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 Rate Converted to Base Rate Advances Eurodollar Rate Balance of Base Rate Notation
Date Advances Base Rate Advances Repaid Advances Advances Made By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 97
Schedule B to Note
ADVANCES, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR RATE ADVANCES
<TABLE>
<CAPTION>
Interest Amount of Amount of Unpaid Principal
Amount Amount of Period and Principal of Eurodollar Balance of
of Converted Eurodollar Rate Erodollar Rate Rate Advances Eurodollar
Eurodollar to Eurodollar With Respect Advances Converted to Base Rate of Notation
Date Rate Rate Thereto Repaid Rate Advances Advances Made by
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 98
EXHIBIT B
FORM OF
NOTICE OF BORROWING
The Chase Manhattan Bank, as Administrative Agent
for the Lenders parties
to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017 [Date]
Attention: El Paso Natural Gas Company
Ladies and Gentlemen:
The undersigned, EL PASO NATURAL GAS COMPANY, refers to the
$750,000,000 Revolving Credit and Competitive Advance Facility Agreement, dated
as of November 4, 1996 (the "Credit Agreement", the terms defined therein being
used herein as therein defined), among the undersigned, certain Lenders parties
thereto and The Chase Manhattan Bank, as Administrative Agent and CAF Advance
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.2 of the Credit Agreement that the undersigned hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.2(a) of the Credit Agreement:
(i) The Borrower for the Proposed Borrowing is
___________.
(ii) The Business Day of the Proposed Borrowing is
___________, 199_.
(iii) The Type of Advances comprising the Proposed
Borrowing is [Base Rate Advances] [Eurodollar Rate
Advances].
(iv) The aggregate amount of the Proposed Borrowing is
$_____________.
(v) The Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is [______ month[s]].
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and immediately after giving effect thereto and to the
application of the proceed therefrom:
<PAGE> 99
B-2
(A) 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
(B) no event has occurred and is continuing, or would result
from such Proposed Borrowing, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
Very truly yours,
EL PASO NATURAL GAS COMPANY
By_________________________
Title:
<PAGE> 100
EXHIBIT C
FORM OF
CAF ADVANCE REQUEST
__________, 199__
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $750,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
This is a [Fixed Rate] [LIBO Rate] CAF Advance Request*
pursuant to Section 2.5 of the Credit Agreement requesting quotes for the
following CAF Advances:
<TABLE>
<CAPTION>
Loan 1 Loan 2 Loan 3
<S> <C> <C> <C>
Aggregate Principal $__________ $__________ $_________
Amount
CAF Advance Date
Maturity Date
Interest Payment Dates
</TABLE>
Very truly yours,
[BORROWER]
By_______________________________________
Name:
Title:
- --------
* Pursuant to the Credit Agreement, a CAF Advance Request may be
transmitted in writing, by telecopy, or by telephone, immediately
confirmed by telecopy. In any case, a CAF Advance Request shall contain
the information specified in the second paragraph of this form.
<PAGE> 101
EXHIBIT D
FORM OF
CAF ADVANCE OFFER
_____________, 199_
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $750,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5 of the Credit Agreement, the
undersigned Lender offers to make CAF Advances thereunder in the following
amounts with the following maturity dates:
<TABLE>
<CAPTION>
<S> <C>
CAF Advance Date: Aggregate Maximum Amount: $_________
___________, 199_
Maturity Date 1: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
Maturity Date 2: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
Maturity Date 3: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
</TABLE>
Very truly yours,
[NAME OF CAF ADVANCE LENDER]
By______________________________________
Name:
Title:
Telephone No.:
Telecopy No.:
- --------
* Insert the interest rate offered for the specified CAF Advance. In the
case of LIBO Rate CAF Advances, insert a margin bid. In the case of
Fixed Rate CAF Advances, insert a fixed rate bid.
<PAGE> 102
EXHIBIT E
FORM OF
CAF ADVANCE CONFIRMATION
_________ __, 199_
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $750,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein, and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent(as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5(d) of the Credit Agreement, the
undersigned accepts and confirms the offers by the CAF Advance Lender(s) to make
CAF Advances to the undersigned on ______________, 199_ [date of CAF Advance
Borrowing] under Section 2.5(d) in the (respective) amount(s) set forth on the
attached list of CAF Advances offered.
Very truly yours,
[BORROWER]
By___________________________________________
Name:
Title:
[The Borrower must attach CAF Advance offer list prepared by the CAF Advance
Agent with accepted amount entered by the Borrower to the right of each CAF
Advance offer].
<PAGE> 103
EXHIBIT F
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 199_
Reference is made to the $750,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (as the
same may be amended or otherwise modified from time to time, the "Credit
Agreement") among EL PASO NATURAL GAS COMPANY, a Delaware corporation (the
"Company"), the Lenders (as defined in the Credit Agreement) and The Chase
Manhattan Bank, as Administrative Agent (the "Administrative Agent") and CAF
Advance Agent (the "CAF Advance Agent") for the Lenders. Terms defined in the
Credit Agreement are used herein with the same meaning.
_____________ (the "Assignor") and ____________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof which represents the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement,
including, without limitation, such interest in the Assignor's Commitment, the
Advances owing to the Assignor, and the Notes held by the Assignor. After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Advances owing to the Assignee will be as set forth in Section 2 of Schedule
1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) 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 the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes referred to in
paragraph 1 above and requests that the Administrative Agent exchange such Notes
for new Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and the
<PAGE> 104
F-2
Assignor in an amount equal to the Commitment retained by the Assignor under the
Credit Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.1 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor 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 the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent and CAF Advance Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent and CAF Advance Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) specifies as its address for notices the
address set forth beneath its name on the signature pages hereof [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement and the Notes or such other
documents as are necessary to indicate that all such payments are subject to
such rates at a rate reduced by an applicable tax treaty]*.
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent. The effective
date of this Assignment and Acceptance shall be the date of acceptance thereof
by the Administrative Agent, unless otherwise specified on Schedule 1 hereto
(the "Effective Date").
5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement.
- --------
* If the Assignee is organized under the laws of a jurisdiction outside
the United States.
<PAGE> 105
F-3
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
<PAGE> 106
Schedule 1
to
Assignment and Acceptance
Dated _________, 199_
<TABLE>
<S> <C>
Section 1.
Percentage Interest: ______%
Section 2.
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Note payable to the order of the Assignee Dated:
_______, 199_
Principal amount: $
Note payable to the order of the Assignor Dated:
_______, 199_
Principal amount: $
Section 3.
Effective Date*: ________, 199_
</TABLE>
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:____________________ By:_______________________
Title: Title:
Address for notices:
[Address]
Consented to:
EL PASO NATURAL GAS COMPANY THE CHASE MANHATTAN BANK, as
Administrative Agent
By:________________________ By:________________________
Title: Title:
- --------
* This date should be no earlier than the date of acceptance by the
Administrative Agent.
<PAGE> 107
2
Accepted this __ day
of __________, 199_
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:__________________________
Title:
<PAGE> 108
EXHIBIT G
FORM OF OPINION OF [ASSOCIATE] GENERAL COUNSEL OF THE COMPANY
___________ __, 1996
To Each of the Lenders, the Administrative Agent
and the CAF Advance Agent
Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Re: El Paso Natural Gas Company
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
3.2(b)(iii) of the $750,000,000 Revolving Credit and Competitive Advance
Facility Agreement, dated as of November 4, 1996 (the "Credit Agreement"), among
El Paso Natural Gas Company (the "Borrower"), the banks and other financial
institutions from time to time party thereto (each a "Lender," and together the
"Lenders"), and The Chase Manhattan Bank, as Administrative Agent (in such
capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent") for the Lenders. Unless the context otherwise
requires, all capitalized terms used herein without definition shall have the
meanings ascribed to them in the Credit Agreement.
I am [Associate] General Counsel of the Borrower, and I, or
attorneys over whom I exercise supervision, have acted as counsel for the
Borrower in connection with the preparation, execution and delivery of the
Credit Agreement. In that connection, I or such attorneys have examined:
(1) the Credit Agreement, executed by the parties thereto;
(2) the Notes, executed by the Borrower; and
(3) the other documents furnished by the Borrower pursuant to
Sections 3.1 and 3.2 of the Credit Agreement.
I, or attorneys over whom I exercise supervision, have also
examined the originals, or copies certified to our satisfaction, of the
agreements, instruments and other documents, and all of the orders, writs,
judgments, awards, injunctions and decrees, which affect or purport to affect
the Borrower's ability to perform the Borrower's obligations under the Credit
Agreement or the Notes (collectively referred to herein as the "Documents"). In
addition, I, or attorneys over whom I exercise
<PAGE> 109
G-2
supervision, have examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower, certificates of
public officials and of officers of the Borrower, and agreements, instruments
and other documents, as I have deemed necessary as a basis for the opinions
hereinafter expressed. In all such examinations, I, or attorneys over whom I
exercise supervision, have assumed the legal capacity of all natural persons
executing documents, the genuineness of all signatures on original or certified,
conformed or reproduction copies of documents of all parties (other than, with
respect to the Documents, the Borrower), the authenticity of original and
certified documents and the conformity to original or certified copies of all
copies submitted to such attorneys or me as conformed or reproduction copies. As
to various questions of fact relevant to the opinions expressed herein, I have
relied upon, and assume the accuracy of, representations and warranties
contained in the Credit Agreement and certificates and oral or written
statements and other information of or from public officials, officers and/or
representatives of the Borrower and others.
I have assumed that the parties to the Documents other than
the Borrower have the power to enter into and perform such documents and that
such documents have been duly authorized, executed and delivered by, and
constitute legal, valid and binding obligations of, such parties.
The opinions expressed below are limited to the federal laws
of the United States and, to the extent relevant hereto, the General Corporation
Law of the State of Delaware, as currently in effect. I assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if I become aware of any facts that might change the opinions expressed herein
after the date hereof.
Based on the foregoing and upon such investigation as we have
deemed necessary, and subject to the limitations, qualifications and assumptions
set forth herein, I am of the following opinion:
1. The Borrower (i) is a corporation duly incorporated and
existing in good standing under the laws of the State of Delaware, and
(ii) possesses all the 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.
2. The execution, delivery and performance by the Borrower of
the Documents are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action in respect of or by
the Borrower, and do not contravene (i) the Borrower's charter or
by-laws, each as amended to date, (ii) any federal law, rule or
regulation applicable to the Borrower (excluding provisions of federal
law expressly referred to in and covered by the
<PAGE> 110
G-3
opinion of Jones, Day, Reavis & Pogue delivered to you in connection
with the transactions contemplated hereby) or any provision of the
General Corporation Law or the State of Delaware applicable to the
Borrower, or (iii) any contractual restriction binding on or affecting
the Borrower. The Documents have been duly executed and delivered on
behalf of the Borrower.
3. No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for the due execution, delivery and performance by the Borrower of the
Documents, except those required in the ordinary course of business in
connection with the performance by the Borrower of its obligations
under certain covenants and warranties contained in the Documents.
4. To the best of my knowledge, there is no action, suit or
proceeding pending or overtly threatened against or involving the
Borrower or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Borrower and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of any Document.
These opinions are given as of the date hereof and are solely
for your benefit in connection with the transactions contemplated by the Credit
Agreement. These opinions may not be relied upon by you for any other purpose or
relied upon by any other person for any purpose without my prior written
consent.
Very truly yours,
<PAGE> 111
EXHIBIT H
FORM OF OPINION OF NEW YORK COUNSEL TO THE COMPANY
______ __, 1996
To Each of the Lenders, the Administrative Agent,
and the CAF Advance Agent Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Re: $750,000,000 Revolving Credit and Competitive Advance
Facility Agreement dated as of November 4, 1996
Dear Ladies and Gentlemen:
We have acted as special New York counsel for El Paso Natural
Gas Company, a Delaware corporation (the "Company"), in connection with the
$750,000,000 Revolving Credit and Competitive Advance Facility Agreement, dated
as of November 4, 1996 (the "Financing Agreement"), among the Company, the banks
and other financial institutions from time to time party thereto (each a
"Lender," and together the "Lenders") and The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent") and as CAF
Advance Agent (in such capacity, the "CAF Advance Agent") for the Lenders. This
opinion is delivered to you pursuant to Section 3.2(b)(iv) of the Financing
Agreement. Capitalized terms used herein and not otherwise defined have the
meanings assigned such terms in the Financing Agreement. With your permission,
all assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of the assumptions or items upon which we have
relied.
In connection with the opinions expressed herein, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of this opinion. We have examined, among other documents, the
following:
(a) An executed copy of the Financing Agreement; and
(b) An executed copy of each of the Notes.
The documents referred to in items (a) and (b) above are referred to herein
collectively as the "Documents."
<PAGE> 112
H-2
In all such examinations, we have assumed the legal capacity
of all natural persons executing documents, the genuineness of all signatures,
the authenticity of original and certified documents and the conformity to
original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the Documents and certificates and
oral or written statements and other information of or from representatives of
the Company and others and assume compliance on the part of all parties to the
Documents with their covenants and agreements contained therein. With respect to
the opinions expressed in paragraph (a) below, our opinions are limited (x) to
our actual knowledge, if any, of the Company's specially regulated business
activities and properties based solely upon an officer's certificate in respect
of such matters and without any independent investigation or verification on our
part and (y) to our review of only those laws and regulations that, in our
experience, are normally applicable to transactions of the type contemplated by
the Documents.
To the extent it may be relevant to the opinions expressed
herein, we have assumed that the parties to the Documents have the power to
enter into and perform such documents and to consummate the transactions
contemplated thereby and that such documents have been duly authorized, executed
and delivered by, and, except as set forth in paragraph (b) with respect to the
Company, constitute legal, valid and binding obligations of, such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
(a) The execution and delivery to the Administrative Agent, the CAF
Advance Agent and the Lenders by the Company of the Documents and the
performance by the Company of its obligations thereunder (i) do not require
under present law any filing or registration by the Company with, or approval or
consent to the Company of, any governmental agency or authority of the State of
New York that has not been made or obtained except those required in the
ordinary course of business in connection with the performance by the Company of
its obligations under certain covenants and warranties contained in the
Documents and (ii) do not violate any present law, or present regulation of any
governmental agency or authority, of the State of New York applicable to the
Company or its property.
(b) The Documents constitute legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms.
(c) The borrowings by the Company under the Financing Agreement and the
applications of the proceeds thereof as provided in the Financing Agreement will
not violate Regulation
<PAGE> 113
H-3
G, T, U or X of the Board of Governors of the Federal Reserve System.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to:
(i) the validity, binding effect or enforceability
(a) of any provision of the Documents relating to indemnification,
contribution or exculpation in connection with violations of any
securities laws or statutory duties or public policy, or in connection
with willful, reckless or criminal acts or gross negligence of the
indemnified or exculpated party or the party receiving contribution; or
(b) of any provision of any of the Documents relating to exculpation of
any party in connection with its own negligence that a court would
determine in the circumstances under applicable law to be unfair or
insufficiently explicit;
(ii) the validity, binding effect or enforceability
of (a) any purported waiver, release, variation, disclaimer, consent or
other agreement to similar effect (all of the foregoing, collectively,
a "Waiver") by the Company under the Documents to the extent limited by
provisions of applicable law (including judicial decisions), or to the
extent that such a Waiver applies to a right, claim, duty, defense or
ground for discharge otherwise existing or occurring as a matter of law
(including judicial decisions), except to the extent that such a Waiver
is effective under and is not prohibited by or void or invalid under
provisions of applicable law (including judicial decisions), (b) any
provision of any Document relating to choice of governing law to the
extent that the validity, binding effect or enforceability of any such
provision is to be determined by any court other than a court of the
State of New York or (c) any provision of any Document relating to
forum selection to the extent the forum is a federal court;
(iii) the enforceability of any provision in the
Documents specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied agreement
by trade practice or course of conduct has been created that modifies
any provision of the Documents;
(iv) the effect of any law of any jurisdiction other
than the State of New York wherein the Administrative Agent, the CAF
Advance Agent or any Lender may be located or wherein enforcement of
any document referred to above may be sought that limits the rates of
interest legally chargeable or collectible; and
<PAGE> 114
H-4
(v) any approval, consent or authorization of the Federal
Energy Regulatory Commission or any other United States federal agency
or authority needed in connection with the execution, delivery and
performance by the Company of the Documents, the consummation of the
transactions contemplated thereby and compliance with the terms and
conditions thereof.
(B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, voidable preference, moratorium
or similar laws, and related judicial doctrines, from time to time in effect
affecting creditors' rights and remedies generally, (ii) general principles of
equity (including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on the
availability of equitable remedies), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain other
provisions of the Documents may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America, but the inclusion of such provisions does not affect the
validity as against the Company of the Documents as a whole, and the Documents
contain adequate provisions for enforcing payment of the obligations governed
thereby, subject to the other qualifications contained in this letter.
(C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) limit the availability of a remedy under certain
circumstances when another remedy has been elected; and
(ii) may, where less than all of a contract may be
unenforceable, limit the enforceability of the balance of the contract
to circumstances in which the unenforceable portion is not an essential
part of the agreed exchange; and
(iii) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs.
(D) For the purposes of the opinion set forth in paragraph (c) above,
we have assumed that (i) none of the Administrative Agent, the CAF Advance Agent
or any of the Lenders has or will have the benefit of any agreement or
arrangement (excluding the Documents) pursuant to which any Advances are
directly or indirectly secured by Margin Stock, (ii) none of the Administrative
Agent, the CAF Advance Agent, any of the Lenders or any of their respective
affiliates has extended or will extend any other credit to the Company directly
or indirectly secured by Margin Stock and (iii) none of the Administrative
Agent, the CAF Advance Agent or any of the Lenders has relied or will rely upon
any Margin Stock as collateral in extending or maintaining any Advances pursuant
to the Financing Agreement.
<PAGE> 115
H-5
(E) For purposes of our opinions above insofar as they relate to the
Company, we have assumed that (i) the Company is a corporation validly existing
in good standing in its jurisdiction of incorporation, has all requisite power
and authority, and has obtained all requisite corporate, shareholder, third
party and governmental authorizations, consents and approvals, and made all
requisite filings and registrations, necessary to execute, deliver and perform
the Documents to which it is a party (except to the extent noted in paragraph
(a) above), and that such execution, delivery and performance will not violate
or conflict with any law, rule, regulation, order, decree, judgment, instrument
or agreement binding upon or applicable to the Company or its properties (except
to the extent noted in paragraph (a) above), and (ii) the Documents have been
duly executed and delivered by the Company.
The opinions expressed herein are limited to the federal laws
of the United States of America (in the case of the matters covered in paragraph
(c) above) and the laws of the State of New York, as currently in effect, except
that we express no opinion with respect to laws, rules or regulations of the
State of New York, or of any governmental agency or authority thereof,
applicable to companies engaged in the transmission or distribution of gas or
other petroleum products, or as to filings, registrations, approvals or consents
required under or by such laws, rules or regulations.
We express no opinion as to the compliance or noncompliance,
or the effect of the compliance or noncompliance, of each of the addressees with
any state or federal laws or regulations applicable to each of them by reason of
their status as or affiliation with a federally insured depository institution.
The opinions expressed herein are solely for the benefit of
the Administrative Agent, CAF Advance Agent and the Lenders and may not be
relied on in any manner or for any purpose by any other person or entity.
Very truly yours,
JONES, DAY, REAVIS & POGUE
By:_____________________________________
<PAGE> 116
EXHIBIT I
[Letterhead of Process Agent]
______________, 199_
To each of the Lenders parties
to the Credit Agreement (as
defined and referred to
below) and to The Chase Manhattan Bank
as Administrative Agent and
CAF Advance Agent for said Lenders
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
To El Paso Natural Gas Company
100 North Stanton
El Paso, Texas 79901
El Paso Natural Gas Company
Gentlemen:
Reference is made to that certain $750,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein being
used herein with the same meaning) among El Paso Natural Gas Company (the
"Company"), certain banks and other financial institutions from time to time
party thereto as Lenders thereunder (the "Lenders") and The Chase Manhattan
Bank, as Administrative Agent and CAF Advance Agent (in such capacities, the
"Administrative Agent" and the "CAF Advance Agent" for the Lenders).
Pursuant to Section 9.9(a) of the Credit Agreement ________________
(the "Borrower") has appointed the undersigned (with an office on the date
hereof at 1633 Broadway, New York, New York 10019) as Process Agent to receive
on behalf of the Borrower and its property service of copies of the summons and
complaint and any other process which may be served by the Administrative Agent,
the CAF Advance Agent, any Lender or the holder of any Note in any action or
proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or the
holder of any Note in any New York State or Federal court sitting in New York
City in respect of, but only in respect of, any claims or causes of action
arising out of or relating to the Credit Agreement and the Notes issued pursuant
thereto.
<PAGE> 117
I-2
The undersigned hereby accepts such appointment as Process Agent and
agrees with each of you that (i) the undersigned will not terminate the
undersigned's agency as such Process Agent prior to June 15, 2002 (and hereby
acknowledges that the undersigned has been paid in full by the Borrower for its
services as Process Agent through such date), (ii) the undersigned will maintain
an office in New York City through such date and will give the Administrative
Agent prompt notice of any change of address of the undersigned, (iii) the
undersigned will perform its duties as Process Agent in accordance with Section
9.9(a) of the Credit Agreement and (iv) the undersigned will forward forthwith
to the Borrower at its address specified below copies of any summons, complaint
and other process which the undersigned receives in connection with its
appointment as Process Agent.
This acceptance and agreement shall be binding upon the undersigned and
all successors of the undersigned.
Very truly yours,
CT CORPORATION SYSTEM
By:_______________________
Title:
Address of the Borrower:
[Address]
<PAGE> 118
EXHIBIT J
FORM OF
JOINDER AGREEMENT
Reference is made to the $750,000,000 Revolving Credit and CAF Advance
Facility Agreement, dated as of November 4, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms defined
therein being used herein as therein defined), among El Paso Natural Gas Company
(the "EPNGC"), certain banks and other financial institutions from time to time
party thereto and The Chase Manhattan Bank, as Administrative Agent and CAF
Advance Agent.
The undersigned hereby acknowledges that it has received and reviewed a
copy (in execution form) of the Credit Agreement, and agrees to:
(a) join the Credit Agreement as a Borrower party thereto;
(b) be bound by all covenants, agreements and
acknowledgements attributable to a Borrower in the Credit
Agreement and any Note to which it is a party; and
(c) perform all obligations required of it by the Credit
Agreement and any Note to which it is a party.
The undersigned hereby represents and warrants that the representations
and warranties with respect to it contained in, or made or deemed made by it in,
Article IV of the Credit Agreement are true and correct on the date hereof.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 119
J-2
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to
be duly executed and delivered in New York, New York by its proper and duly
authorized officer as of this day of , 199 .
[BORROWER]
By:________________________
Title:
ACKNOWLEDGED AND AGREED TO:
[EL PASO NATURAL GAS COMPANY]
[HOLDING]
By:_____________________________
Title:
<PAGE> 120
EXHIBIT K
FORM OF OPINION OF [ASSOCIATE]
GENERAL COUNSEL OF THE COMPANY
(a) [Each of the Company and the Borrowing
Subsidiary][Holding] (i) is a corporation duly incorporated and
existing in good standing under the laws of the jurisdiction of its
organization, and (ii) possesses all the 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 and delivery by [the Company and the
Borrowing Subsidiary][Holding] of the Joinder Agreement and by [the
Borrowing Subsidiary][Holding] of the Notes made by it and the
performance by [the Borrowing Subsidiary][Holding] of its obligations
as a "Borrower" under the Credit Agreement and the Notes made by it are
within such corporation's corporate powers and have been duly
authorized by all necessary corporate action in respect of or by [each
of the Company and the Borrowing Subsidiary (as applicable)][Holding],
and do not contravene (i) [the Company's or the Borrowing
Subsidiary's][Holding's] charter or by-laws, each as amended to date,
(ii) any federal law, rule or regulation applicable to [the Company or
the Borrowing Subsidiary][Holding] (excluding provisions of federal law
expressly referred to in and covered by the opinion of [New York
Counsel] delivered to you in connection with the transactions
contemplated hereby) or any provision of the General Corporation Law of
the State of Delaware applicable to such corporation, or (iii) any
contractual restriction binding on or affecting [the Company or the
Borrowing Subsidiary][Holding]. The Joinder Agreement has been duly
executed and delivered on behalf of [the Company and the Borrowing
Subsidiary][Holding] and the Notes made by [the Borrowing
Subsidiary][Holding] have been duly executed and delivered on behalf of
[the Borrowing Subsidiary][Holding].
(c) No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for (i) the due execution and delivery by [the Company or the Borrowing
Subsidiary][Holding] of the Joinder Agreement, (ii) the performance by
[the Borrowing Subsidiary][Holding] of its obligations as a "Borrower"
under the Credit Agreement or (iii) the execution, delivery and
performance by [the Borrowing Subsidiary][Holding] of the Notes made by
it, except those required in the ordinary course of business in
<PAGE> 121
K-2
connection with the performance by [the Company or the Borrowing
Subsidiary][Holding] of its obligations under certain covenants and
warranties contained in the Joinder Agreement, the Credit Agreement and
the Notes and those which have been obtained and are in full force and
effect.
(d) To the best of my best knowledge, there is no action, suit
or proceeding pending or overtly threatened against or involving the
Company or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Company and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of the Joinder Agreement, the Credit Agreement
or the Notes.
<PAGE> 122
EXHIBIT L
FORM OF OPINION OF NEW YORK
COUNSEL TO THE COMPANY
(a) The execution and delivery to the Administrative Agent, the CAF
Advance Agent and the Lenders by [the Company and the Borrowing
Subsidiary][Holding] of the Joinder Agreement and by [the Borrowing
Subsidiary][Holding] of the Notes made by it and the performance by [the
Borrowing Subsidiary][Holding] of its obligations as a "Borrower" under the
Credit Agreement and the Notes made by it (i) do not require under present law,
any filing or registration by [the Company or the Borrowing Subsidiary][Holding]
with, or approval or consent to [the Company or the Borrowing
Subsidiary][Holding] of, any governmental agency or authority of the State of
New York that has not been made or obtained, except those, if any, required in
the ordinary course of business in connection with the performance by [the
Company or the Borrowing Subsidiary][Holding] of its respective obligations
under certain covenants and warranties contained in the Joinder Agreement, the
Credit Agreement and the Notes and (ii) do not violate any present law, or
present regulation of any governmental agency or authority, of the State of New
York applicable to [the Company or the Borrowing Subsidiary][Holding] or its
property.
(b) The Joinder Agreement, the Credit Agreement and the Notes (as
applicable) constitute the legal, valid and binding obligations of [each of the
Company and the Borrowing Subsidiary][Holding] enforceable against [each of the
Company and the Borrowing Subsidiary][Holding] in accordance with their
respective terms.
(c) The borrowings by [the Borrowing Subsidiary][Holding] under the
Credit Agreement and the applications of the proceeds thereof as provided in the
Credit Agreement will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
<PAGE> 1
EXHIBIT 10.F
================================================================================
TENNECO INC.
(TO BE RENAMED EL PASO TENNESSEE PIPELINE CO.)
-------------------------------------
$3,000,000,000
REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
DATED AS OF NOVEMBER 4, 1996
-------------------------------------
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
AND CAF ADVANCE AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C> <C>
DEFINITIONS AND ACCOUNTING TERMS............................... 1
SECTION 1.1 Certain Defined Terms.......................................... 1
SECTION 1.2 Computation of Time Periods.................................... 17
SECTION 1.3 Accounting Terms............................................... 18
SECTION 1.4 References..................................................... 18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES.............................. 18
SECTION 2.1 The Revolving Credit Advances.................................. 18
SECTION 2.2 Making the Revolving Credit Advances........................... 18
SECTION 2.3 Evidence of Debt............................................... 20
SECTION 2.5 Procedure for CAF Advance Borrowings........................... 21
SECTION 2.6 CAF Advance Payments........................................... 24
SECTION 2.7 Evidence of Debt............................................... 24
SECTION 2.8 Fees........................................................... 25
SECTION 2.9 Reductions of the Commitments.................................. 25
SECTION 2.10 Repayment of Advances......................................... 26
SECTION 2.11 Interest on Revolving Credit Advances......................... 26
SECTION 2.12 Additional Interest on Eurodollar Rate Advances............... 27
SECTION 2.13 Interest Rate Determination................................... 27
SECTION 2.14 Voluntary Conversion of Advances.............................. 28
SECTION 2.15 Optional and Mandatory Prepayments............................ 29
SECTION 2.16 Increased Costs............................................... 30
SECTION 2.17 Increased Capital............................................. 31
SECTION 2.18 Illegality.................................................... 31
SECTION 2.19 Payments and Computations..................................... 32
SECTION 2.20 Taxes......................................................... 33
SECTION 2.21 Sharing of Payments, Etc...................................... 35
SECTION 2.22 Use of Proceeds............................................... 35
SECTION 2.23 Extension of Stated Termination Date.......................... 36
SECTION 2.24 Replacement of Lenders........................................ 37
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING........................ 37
SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement........ 37
SECTION 3.2 Conditions Precedent to Initial Advances....................... 38
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3.3 Conditions Precedent to Initial Advances to Any Borrowing
Subsidiary or Holding.............................................. 41
SECTION 3.4 Conditions Precedent to Each Borrowing......................... 41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................. 42
SECTION 4.1 Representations and Warranties of the Borrowers................ 42
ARTICLE V
COVENANTS OF THE BORROWERS..................................... 46
SECTION 5.1 Affirmative Covenants.......................................... 46
SECTION 5.2 Negative Covenants............................................. 48
SECTION 5.3 Reporting Requirements......................................... 51
SECTION 5.4 Restrictions on Material Subsidiaries.......................... 53
ARTICLE VI
GUARANTEE...................................................... 54
SECTION 6.1 Guarantees..................................................... 54
SECTION 6.2 No Subrogation................................................. 55
SECTION 6.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights............................................................. 55
SECTION 6.4 Guarantee Absolute and Unconditional........................... 56
SECTION 6.5 Reinstatement.................................................. 56
ARTICLE VII
EVENTS OF DEFAULT.............................................. 57
SECTION 7.1 Event of Default............................................... 57
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT... 60
SECTION 8.1 Authorization and Action....................................... 60
SECTION 8.2 Administrative Agent's and CAF Advance Agent's Reliance,
Etc................................................................ 60
SECTION 8.3 Chase and Affiliates........................................... 61
SECTION 8.4 Lender Credit Decision......................................... 61
SECTION 8.5 Indemnification................................................ 61
SECTION 8.6 Successor Administrative Agent and CAF Advance Agent........... 62
ARTICLE IX
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
MISCELLANEOUS.................................................. 63
SECTION 9.1 Amendments, Etc................................................ 63
SECTION 9.2 Notices, Etc................................................... 63
SECTION 9.3 No Waiver; Remedies............................................ 64
SECTION 9.4 Costs and Expenses; Indemnity.................................. 64
SECTION 9.5 Right of Set-Off............................................... 65
SECTION 9.6 Binding Effect................................................. 65
SECTION 9.7 Assignments and Participations................................. 65
SECTION 9.8 Confidentiality................................................ 68
SECTION 9.9 Consent to Jurisdiction........................................ 69
SECTION 9.10 GOVERNING LAW................................................. 69
SECTION 9.11 Rate of Interest.............................................. 69
SECTION 9.12 Execution in Counterparts..................................... 70
</TABLE>
-iii-
<PAGE> 5
SCHEDULES
Schedule I Commitments, Addresses, Etc.
Schedule II Outstanding Debt, Guaranties and Reimbursement Obligations
Schedule III Litigation
Schedule IV Subsidiaries
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 Process Agent Letter
Exhibit H Form of Joinder Agreement
Exhibit I Form of Extension Request
Exhibit J Form of Opinion of General Counsel of
Tennessee
Exhibit K Form of Opinion of New York Counsel to Tennessee and EPNGC
Exhibit L Form of Opinion of [Associate] General Counsel
EPNGC and/or Special Delaware Counsel for EPNGC
Exhibit M Form of Opinion of [Associate] General Counsel of
[Company][Holding]
Exhibit N Form of Opinion of New York Counsel of [Company] [Holding]
Exhibit O Form of Opinion of Counsel of [EPNGC] [Tennessee]
Exhibit P Form of EPNGC Guarantee
-iv-
<PAGE> 6
$3,000,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE
FACILITY AGREEMENT, dated as of November 4, 1996, among TENNECO INC., a Delaware
corporation (to be renamed El Paso Tennessee Pipeline Co.) ("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.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 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 $3,000,000,000 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), provided that such program is on terms
(a) substantially similar to the Receivables Purchase and Sale
Agreement 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
<PAGE> 7
2
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 Tennessee, each
Borrowing Subsidiary and, on or after the Merger, Holding once Holding
executes and delivers a Joinder Agreement; each, a "Borrower".
"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 each domestic Principal
Subsidiary of Tennessee which has been designated by the Company as a
"Borrowing Subsidiary" by written notice to the Administrative Agent;
collectively, the "Borrowing Subsidiaries".
"Burlington" means Burlington Resources Inc., a Delaware
corporation.
<PAGE> 8
3
"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 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
<PAGE> 9
4
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.
"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).
"Company" means (a) at all times prior to the Merger,
Tennessee, (b) at all times on or after the Merger and prior to Holding
becoming a Borrower, EPNGC and (c) upon Holding becoming a Borrower,
Holding.
"Contingent Guaranty" has the meaning assigned to such term in
the definition of the term "Guaranty" contained in this Section 1.1.
<PAGE> 10
5
"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.
"Corporate Restructuring Transactions" has the meaning
assigned to such term in the Merger Agreement.
"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, EPNGC or a Principal Subsidiary, any liabilities
of the Company, EPNGC or such Principal Subsidiary, as the case may be,
under any Alternate Program, or any document executed by the Company,
EPNGC 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 Tennessee 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 $200,000,000 of
(i) the amount of optional payments in lieu of asset repurchase or
other payments to similar effect, including extension or renewal
payments, on off balance sheet leases and (ii) the amount of the
purchase price for optional acquisition of such asset (in either case,
calculated at the lower amount payable in respect of such asset under
clause (i) or (ii) above).
"Debt Realignment Plan" means the debt realignment plan
described under the caption "Debt and Cash Realignment--Debt
Realignment" and "Unaudited Pro Forma Financial Information--Unaudited
Pro Forma Combined Financial Statements of El Paso and Tenneco Energy"
in the Joint Proxy Statement.
"Distribution Agreement" means the agreement to be executed
and delivered by Tennessee substantially in the form of Exhibit A to
the Merger Agreement.
"Dollars" and "$" 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
<PAGE> 11
6
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" shall mean El Paso Natural Gas Company, a Delaware
corporation.
"EPNGC Facilities" means, so long as it is in existence, the
$750,000,000 Revolving Credit and Competitive Advance Facility
Agreement and, so long as it is in existence, the $250,000,000
Revolving Credit and Competitive Advance Facility Agreement, each dated
as of November 4, 1996, among EPNGC, the lenders parties thereto and
Chase, as administrative agent and CAF advance agent, as the same may
be amended, modified or supplemented from time to time.
"EPNGC Guarantee" means the Guarantee to be executed and
delivered by EPNGC, substantially in the form of Exhibit P, 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 or Tennessee's controlled group within the meaning of Section
4001(a)(14)(A) of ERISA.
"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
<PAGE> 12
7
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:
<TABLE>
<CAPTION>
Bond Rating Eurodollar
(S&P/Moody's) Level Rate Margin
------------- ----- -----------
<S> <C> <C>
A/A2 or higher I .2000%
A-/A3 II .2150%
BBB+/Baa1 III .2200%
BBB/Baa2 IV .2500%
BBB-/Baa3 V .3750%
BB+/Ba1 or lower VI .5125%;
</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
<PAGE> 13
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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
Tennessee and its Subsidiaries listed on Schedule II 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).
"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 I 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).
<PAGE> 14
9
"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 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 Tennessee which directly or indirectly owns 100% of the
common stock of EPNGC and 100% of the common stock of Tennessee;
provided, however, that immediately after Holding becomes EPNGC's and
Tennessee'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
Tennessee's parent holding company.
"Holding Guarantee" has the meaning assigned to such term in
Section 5.1(h).
"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
<PAGE> 15
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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 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.
"IRS" means the Internal Revenue Service of the United States
of America.
"IRS Ruling Letter" means the IRS ruling letter and/or tax
opinions concerning the tax free nature of the Spin-offs and the
Merger.
<PAGE> 16
11
"Joinder Agreement" means a Joinder Agreement, substantially
in the form of Exhibit H hereto, duly executed and delivered by the
Company and the Borrowing Subsidiary party thereto or Holding, as the
case may be.
"Joint Proxy Statement" means the Registration Statements on
Form S-4, each relating to the Transaction, initially filed by each of
EPNGC and Tennessee with the SEC on August 27, 1996, as amended through
the Effective Date.
"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.
"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 an event, change or effect
that (a) is reasonably likely to be materially adverse to the financial
condition or operations of the Company and its consolidated
Subsidiaries taken as a whole and, until the Merger, Tennessee and its
consolidated Subsidiaries taken as a whole or (b) prevents Tennessee
from consummating the Debt Realignment Plan and the Spin-offs on or
prior to the Closing Date or the Merger within one Business Day after
the Closing Date.
"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.
"Merger" means the merger of Tennessee with a de novo
subsidiary of EPNGC following the Spin-offs pursuant to the terms of
the Merger Agreement.
<PAGE> 17
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"Merger Agreement" means the Agreement and Plan of Merger,
dated as of June 19, 1996, among EPNGC, El Paso Merger Company and
Tennessee, as amended, supplemented or otherwise modified through the
Effective Date.
"Mojave" means Mojave Pipeline Company.
"Moody's Bond Rating" means (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, Tennessee 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, Tennessee 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, Tennessee or an ERISA Affiliate and at least
one Person other than the Company, Tennessee and their respective ERISA
Affiliates or (b) was so maintained and in respect of which the
Company, Tennessee 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 Cash Proceeds" means, with respect to any transaction,
the net cash proceeds thereof (after provision for taxes, holdbacks,
reserves and all costs and expenses arising from, or attributable to,
such transaction).
"Net Worth" means with respect to the Company, as of 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 Preferred Stock" means the voting junior preferred stock
to be issued by Tennessee in connection with the Debt Realignment Plan.
"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).
<PAGE> 18
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"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).
"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).
"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) having assets
at such time greater than or equal to 5% of the consolidated assets of
the Company and its consolidated Subsidiaries at such time.
"Process Agent" has the meaning specified in Section 9.9(a).
<PAGE> 19
14
"Project Financing" means any Indebtedness incurred to finance
a project, other than any portion of such Indebtedness permitting or
providing for recourse against EPNGC (so long as Holding is not the
Company) or Holding (so long as Holding is the Company) or any of its
respective 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 EPNGC (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 earlier to occur of (a) the
date on which Holding becomes a Borrower hereunder and (b) the date on
which Holding becomes a "Borrower" under either of the EPNGC
Facilities.
"Receivables Purchase and Sale Agreement" means 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 such Agreement may be amended,
supplemented, restated or otherwise modified from time to time which
amendment, supplement, restatement or modification will not extend the
purchase of receivables and other assets thereunder to receivables and
assets other than present and future gas purchase contract take-or-pay
buyout and buydown receivables, the collateral and other support
therefor and the collections therefrom.
"Reference Lenders" means Chase, Morgan Guaranty Trust Company
of New York and Union Bank of Switzerland.
"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 Tennessee or
EPNGC (other than a Subsidiary of Tennessee or EPNGC) designated by the
Company 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
<PAGE> 20
15
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 Tennessee or EPNGC (as applicable) and from New York
counsel to Tennessee or EPNGC (as applicable) 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,
Tennessee or EPNGC (as applicable) 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 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 (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.
"SEC" means the Securities and Exchange Commission of the
United States of America.
"Significant Asset Sale" means any sale, lease or other
transfer by Tennessee or any of its Subsidiaries (in either case,
whether in one transaction or in a series of related transactions) of
assets where the aggregate Net Cash Proceeds of such transaction or
series of related transactions is $25,000,000 or more, except:
(a) any sale by Tennessee or any of its Subsidiaries
of receivables;
(b) any sale by Tennessee or any of its Subsidiaries
of inventory or obsolete or worn-out assets in the ordinary
course of business; or
(c) any sale by Tennessee or any of its Subsidiaries
prior to the Merger as contemplated by either the Debt
Realignment Plan or the Corporate Restructuring Transactions
(as defined in the Merger Agreement);
<PAGE> 21
16
provided, that the value of any asset shall be the greater of the book
value thereof or the aggregate consideration received in connection
with the disposition thereof.
"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, Tennessee 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, Tennessee or an ERISA
Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.
"Specified Debt" of any Person, means Debt of such Person
except:
(a) Excluded Acquisition Debt;
(b) Debt hereunder or under either of the EPNGC
Facilities;
(c) Debt owed to Holding or to EPNGC or any of its
respective Subsidiaries;
(d) Debt contemplated by either the Debt Realignment
Plan or the Corporate Restructuring Transactions;
(e) Debt incurred to finance the acquisition,
construction or improvement of any fixed or capital assets and
any Debt assumed in connection with the acquisition of any
such assets; and
(f) Debt incurred to refinance or replace any Debt
referred to in clauses (a) through (e) above and any
refinancings and replacements thereof.
"Spin-offs" means the spin-off of Tennessee's shipbuilding,
packaging, automotive and administrative services units to its
shareholders immediately prior to the Merger as described in the Joint
Proxy Statement.
"Stated Termination Date" means November 3, 1997 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.
<PAGE> 22
17
"Taxes" has the meaning assigned to such term in Section
2.20(a).
"Tenneco Energy" means all energy businesses and operations
owned directly or indirectly by Tennessee and other operations of
Tennessee and its Subsidiaries other than those relating to Tennessee's
automotive, packaging, administrative services and shipbuilding
businesses.
"Tennessee" has the meaning assigned to such term in the
preamble hereof.
"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 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.
Section 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
<PAGE> 23
18
the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Transaction" means the Merger, the Spin-offs, the Debt
Realignment Plan, and the issuance of the New Preferred Stock.
"Transaction Documentation" means the forms of material
agreements and other material documentation to be used by Tennessee and
EPNGC in connection with the Spin-offs, the Debt Realignment Plan and
the Merger (including, without limitation, the Merger Agreement) as
such agreements, filings and documentation are in effect on the
Effective Date.
"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 1.2 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 1.3 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 1.4 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 2.1 The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
revolving credit advances
<PAGE> 24
19
("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 2.2 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 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 Tennessee Pipeline Co., 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. 323-5-07093, Reference: El Paso Tennessee Pipeline Co., 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
<PAGE> 25
20
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 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 2.3 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
<PAGE> 26
21
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").
SECTION 2.4 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 2.5 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 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.
<PAGE> 27
22
(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:
(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
<PAGE> 28
23
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:
(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
<PAGE> 29
24
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 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.
<PAGE> 30
25
SECTION 2.6 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.
(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 2.7 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 2.8 Fees. (a) Tennessee 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
<PAGE> 31
26
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:
<TABLE>
<CAPTION>
Bond Rating Facility
(S&P/Moody's) Level Fee Rate
------------- ----- --------
<S> <C> <C>
A/A2 or higher I .0500%
A-/A3 II .0600%
BBB+/Baa1 III .0800%
BBB/Baa2 IV .1000%
BBB-/Baa3 V .1250%
BB+/Ba1 or lower VI .1875%;
</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, on the Termination Date or such
earlier date on which the Commitments shall terminate as provided herein, 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 September 20, 1996, from Chase Securities Inc. and Chase to Tennessee.
SECTION 2.9 Reductions of the Commitments. (a) Optional
Reductions. 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.
(b) Mandatory Reductions. The Commitments shall be
automatically ratably reduced (i) by an amount equal to 80% of the Net Cash
Proceeds received by Tennessee or any of its Subsidiaries from any Significant
Asset Sale and (ii) by an amount equal to the Net Cash Proceeds received by
Tennessee or any of its Subsidiaries from (A) the incurrence by any of them of
any Specified Debt or (B) the issuance by any of Tennessee or any of its
Subsidiaries (other than any issuance by Tennessee or any of its Subsidiaries to
EPNGC or Holding or any of their respective Subsidiaries) subsequent to the date
the Merger is consummated of any equity securities; such reduction shall occur
in each case on the date such Net Cash Proceeds are received by a Borrower or
its Subsidiaries.
<PAGE> 32
27
SECTION 2.10 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 2.11 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, 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 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 2.12 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,
<PAGE> 33
28
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 2.13 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 Interest Period, the Administrative Agent
shall forthwith so notify the Company and the Lenders, whereupon,
<PAGE> 34
29
(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 2.14 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, 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
<PAGE> 35
30
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 2.15 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; provided that, in
the case of such prepayments required to be made as a result of a reduction of
the Commitments pursuant to Section 2.9(b), each such prepayment shall be made
no later than 90 days after, in each case, the date on which the Commitments are
automatically reduced; and provided, further, that in the event of any
prepayment of Eurodollar Rate Advances pursuant to this Section 2.15(b) on any
day other than the last day of an Interest Period for such Eurodollar Rate
Advances, the Borrowers shall be obligated to reimburse the Lenders in respect
thereof pursuant to, and to the extent required by, Section 9.4(b); and
provided, still further, that no CAF Advances shall be required to be prepaid
pursuant to this Section 2.15(b).
<PAGE> 36
31
SECTION 2.16 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 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 2.17 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
<PAGE> 37
32
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 2.18 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
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 2.19 Payments and Computations. (a) The Borrowers
shall make each payment hereunder (including, without limitation, under Section
2.6, 2.8, 2.10 or 2.11)
<PAGE> 38
33
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 Tennessee Pipeline Co., 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, 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
<PAGE> 39
34
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 2.20 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 nonexcluded 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
<PAGE> 40
35
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 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
<PAGE> 41
36
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.
(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 2.21 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 2.22 Use of Proceeds. Proceeds of the Advances may be
used for general corporate purposes of the respective Borrowers, provided that
prior to the Merger, the proceeds of the Advances may only be used to purchase,
pay, prepay, redeem or defease
<PAGE> 42
37
indebtedness of Tennessee and its Subsidiaries in connection with the Debt
Realignment Plan and to pay fees, expenses and prepayment premiums incurred in
connection with the Debt Realignment Plan.
SECTION 2.23 Extension of Stated Termination Date. (a) Not
less than 60 days and not more than 90 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 I, 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 such Borrower 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 which does not
consent in writing, or which revokes its consent in accordance with the
provisions of this Section 2.23, to such extension not less than 30 days and not
more than 60 days prior to the Stated Termination Date then in effect (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 which 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 Lender 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 it hereunder and/or, upon giving not
less
<PAGE> 43
38
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.
SECTION 2.24 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.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.1 Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective when the following conditions
precedent shall be satisfied (provided that such conditions must be satisfied on
or before December 31, 1996) (the date upon which such conditions are satisfied,
or satisfaction thereof has been waived by the Lenders in accordance with this
Agreement, the "Effective Date"):
(a) the Administrative Agent and the CAF Advance Agent shall
have (i) executed this Agreement, (ii) received a counterpart of this
Agreement executed by each Lender, (iii) received this Agreement,
executed and delivered by a duly authorized officer of Tennessee and
each Subsidiary of Tennessee designated as Borrower as of the Effective
Date, and (iv) received the EPNGC Guarantee executed and delivered by a
duly authorized officer of EPNGC.
<PAGE> 44
39
(b) the Lenders shall have received the then-current forms of
the Transaction Documentation, the material terms and provisions of
which shall be reasonably satisfactory to the Lenders;
(c) the Administrative Agent shall have received from the
Company adequate information with respect to the legal and capital
structure of Tennessee, EPNGC and their Subsidiaries after giving
effect to the Spin-offs and the Merger (including, without limitation,
certificates of incorporation, by laws and other organizational
documents of the Company and EPNGC to be in effect after the Merger)
and such legal and capital structure shall be reasonably satisfactory
to the Lenders;
(d) the Lenders shall have received, at least five days prior
to the Effective Date, such historical audited consolidated or combined
financial statements for Tennessee, Tenneco Energy and EPNGC as are
contained or incorporated by reference in the Joint Proxy Statement;
and
(e) the Lenders shall have received such pro forma
consolidated or combined balance sheets of each of EPNGC, Tennessee and
Tenneco Energy as are contained or incorporated by reference in the
Joint Proxy Statement and such balance sheets shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change
in the financial condition of EPNGC, Tennessee and Tenneco Energy from
that reflected in the financial statements delivered to the Lenders
pursuant to paragraph (d) above (it being agreed that consummation of
the Transaction and the related financings (as described in the Joint
Proxy Statement and as contemplated under the Transaction
Documentation), the incurrence of Project Financings, Indebtedness
hereunder and Indebtedness under either of the EPNGC Facilities and
changes to reflect the Merger (as required under purchase accounting
rules in accordance with generally accepted accounting principles)
shall not be deemed to give rise to a material adverse change).
Each of the Administrative Agent, the CAF Advance Agent and each Lender
by its execution and delivery hereof confirms that the conditions specified in
paragraphs (b) through (e) above are satisfied as to it on and as of the date
hereof.
SECTION 3.2 Conditions Precedent to Initial Advances. The
agreement of each Lender to make the initial Advances to be made by it to the
Borrowers hereunder (the date upon which the initial Advances occur, the
"Closing Date") is subject to (a) the satisfaction of the following conditions
precedent:
(i) the Effective Date shall have occurred;
(ii) the Lenders, the Administrative Agent and Chase
Securities Inc. shall have received all fees and expenses required to
be paid by Tennessee in connection herewith on or before the Closing
Date;
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40
(iii) all material governmental and material third party
approvals (or arrangements reasonably satisfactory to the Lenders in
lieu of such approvals) necessary in connection with the Transaction
(including the Merger), this Agreement and the continuing operations of
Tennessee and its Subsidiaries as Subsidiaries of EPNGC shall have been
obtained and be in full force and effect in all material respects and
all applicable waiting periods shall have expired without any action
being taken or overtly threatened by any competent governmental
authority which would restrain, prevent or otherwise impose material
adverse conditions on the Transaction or the financing thereof;
(iv) except as set forth on Schedule III, no litigation,
injunction or restraining order shall be entered or overtly threatened
which in the reasonable opinion of the Lenders (taking into account the
exhaustion of all appeals) would reasonably be expected to have a
Material Adverse Effect;
(v) since the Effective Date there shall not have occurred
any change or development or event (other than those involving gas
supply realignment or related regulatory matters) that in the
reasonable opinion of the Lenders would reasonably be expected to have
a Material Adverse Effect; and
(vi) the terms and conditions of any Indebtedness of
Tennessee and its Subsidiaries which is to remain outstanding after the
Closing Date and be an obligation of Tennessee or any of its
Subsidiaries after the Closing Date (giving effect to the Debt
Realignment Plan, the Spin-offs and the Merger) shall not in the
aggregate be materially more costly or otherwise materially more
onerous on Tennessee than the terms and conditions of such Indebtedness
immediately prior to the consummation of the Debt Realignment Plan, the
Spin-offs and the Merger;
and (b) 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) a certificate from the President, Chief Financial
Officer or Treasurer of Tennessee certifying that, to the best of his
knowledge after due inquiry, (a) all material conditions to the Debt
Realignment Plan, the Spin-offs (other than the consummation of the
Debt Realignment Plan) and the Merger (other than consummation of the
Debt Realignment Plan and the Spin-offs) have been satisfied in
accordance with the terms of the Transaction Documentation, (b) the
Transaction is being closed substantially in accordance with the
Transaction Documentation and (c) no material amendment or
modification (including, without limitation, waivers) to a material
condition to the Merger has been made since the Effective Date without
the approval of the Lenders (which approval shall not be unreasonably
withheld);
(ii) a certificate from the President or Chief Financial
Officer or Treasurer of Tennessee certifying that Tennessee has
received the IRS Ruling Letter, and that the
<PAGE> 46
41
contents of the IRS Ruling Letter are consistent in all material
respects with Tennessee's request to the IRS for the IRS Ruling Letter
and the form of tax opinion attached as an exhibit to the Merger
Agreement;
(iii) evidence reasonably satisfactory to it that (A)
Tennessee's existing $1.6 billion credit facility, dated as of November
15, 1994, shall be terminated concurrently with the making of any
initial Advances and that all amounts owing thereunder have been
satisfied and (B) each of the EPNGC Facilities is in full force and
effect.
(iv) certified copies of the resolutions of the Board of
Directors of 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 Tennessee and
material governmental approvals to the Company, if any, with respect to
this Agreement and the Notes;
(v) a certificate of the Secretary or an Assistant
Secretary of Tennessee certifying the names and true signatures of the
officers of Tennessee authorized to sign this Agreement and the other
documents to be delivered by it hereunder;
(vi) a favorable opinion of the General Counsel of
Tennessee (or, alternatively, of Jenner & Block, counsel to Tennessee),
in substantially the form of Exhibit J;
(vii) a favorable opinion of Jones, Day, Reavis & Pogue, New
York counsel to Tennessee and EPNGC, in substantially the form of
Exhibit K;
(viii) certified copies of the resolutions of the Board of
Directors of EPNGC approving the EPNGC Guarantee and authorizing the
execution and delivery thereof, and the execution and delivery of all
documents evidencing other necessary corporate action of EPNGC and
governmental approvals to EPNGC, if any, with respect to the EPNGC
Guarantee;
(ix) a certificate of the Secretary or an Assistant
Secretary of EPNGC certifying the names and true signatures of the
officers of EPNGC authorized to sign the EPNGC Guarantee and the other
documents to be delivered by it thereunder;
(x) a favorable opinion of the General Counsel or
Associate General Counsel of EPNGC and/or special Delaware counsel for
EPNGC, in substantially the form of Exhibit L;
(xi) a letter from the Process Agent, in substantially the
form of Exhibit G, hereto, agreeing to act as Process Agent for the
Company and EPNGC and to forward forthwith all process received by it
to the Company.
<PAGE> 47
42
Anything in this Agreement to the contrary notwithstanding, if all of the
conditions to initial Advances specified in this Section 3.2 shall not have been
fulfilled on or before June 30, 1997, (i) Tennessee shall on such date pay all
accrued and unpaid fees pursuant to Section 2.8 and (ii) this Agreement, and all
of the obligations of the Borrowers, 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 June 30, 1997; provided, however, that as soon as the
Administrative Agent determines that all of the conditions to make initial
Advances under this Agreement specified in this Section 3.2 shall have been
fulfilled on or before June 30, 1997, the Administrative Agent shall furnish
written notice to Tennessee, EPNGC, the "Administrative Agent" under the EPNGC
Facilities and the Lenders to the effect that it has so determined, and such
notice by the Administrative Agent shall constitute conclusive evidence that the
conditions specified in this Section 3.2 have been fulfilled. Notwithstanding
the foregoing, the obligations of the Borrower to pay fees pursuant to Section
2.8 as well as all obligations pursuant to Section 9.4 shall survive the
termination of the Agreement.
SECTION 3.3 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 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:
(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 Tennessee or Holding, as the case may be, given upon
the express instructions of Tennessee or Holding, as the case may be,
in substantially the form of Exhibit M hereto, 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 N hereto,
and as to such other matters as any Lender
<PAGE> 48
43
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 G hereto, 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 3.4 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 would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) Each of the Company and each Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. 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 Borrower, 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.
<PAGE> 49
44
(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.
(e) The consolidated balance sheet of Tennessee and its
consolidated Subsidiaries as at December 31, 1995, and the related
consolidated statements of income and cash flows of Tennessee and its
consolidated Subsidiaries for the fiscal year then ended, reported on
by Arthur Andersen 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 Tennessee and its consolidated Subsidiaries as at such date and the
consolidated results of the operations of Tennessee 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, 1995, there has been no material
adverse change in such condition or operations. The unaudited
consolidated balance sheet of Tennessee and its consolidated
Subsidiaries as of June 30, 1996, and the related consolidated
statements of income and cash flows of Tennessee and its consolidated
Subsidiaries for the six months then ended, certified by the chief
financial officer of Tennessee, 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 Tennessee 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
<PAGE> 50
45
chief financial officer of Tennessee and as disclosed therein) and
subject to normal year-end audit adjustments. As of the date hereof,
none of Tennessee or its Subsidiaries has any material obligation of
the nature required by generally accepted accounting principles to be
reflected in financial statements, contingent or otherwise, which is
not reflected in such financial statements.
(f) The combined balance sheets of the business of Tenneco
Energy as of December 31, 1995 and 1994, and the related combined
statements of income, cash flows and changes in combined equity for
each of the three years in the period ended December 31, 1995 reported
on by Arthur Andersen 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 combined financial
position of the business of Tenneco Energy as of December 31, 1995 and
1994 and the results of its combined operations for each of the three
years in the period ended December 31, 1995 in accordance with
generally accepted accounting principles consistently applied, and
since December 31, 1995, there has been no material adverse change in
such condition or operations. As of the date hereof, none of Tennessee
or its Subsidiaries has any material obligation of the nature required
by generally accepted accounting principles to be reflected in
financial statements, contingent or otherwise, which is not reflected
in such financial statements.
(g) The unaudited pro forma combined balance sheet of EPNGC
and Tenneco Energy as at June 30, 1996 and the related unaudited pro
forma combined statements of income of EPNGC and Tenneco Energy for the
six-month period ended June 30, 1996 set forth in the Joint Proxy
Statement, copies of which have been delivered to the Lenders were
prepared from financial statements referred to in Section 4.1(f), which
were prepared in accordance with generally accepted accounting
principles, are complete and correct in all material respects and have
been prepared on the basis described therein and show the combined
financial position and results of operations of EPNGC and Tennessee as
if the Transaction had occurred, in the case of the combined balance
sheet, on June 30, 1996, and in the case of combined statements of
income, as of January 1, 1995.
(h) Annexed hereto as Schedule IV is a correct and complete
list as of the date hereof of all Subsidiaries of Tennessee that will
be part of Tenneco Energy after giving effect to the Transaction
showing, as to each such Subsidiary, its name, the jurisdiction of its
incorporation and the ownership of the capital stock of such
Subsidiary.
(i) Each of the Company, Tennessee and their respective
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 reasonably be expected to result in a Material Adverse
Effect.
<PAGE> 51
46
(j) 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) purports to affect the legality,
validity, binding effect or enforceability of this Agreement or the
Notes, or, except as set forth in Schedule III, would have a Material
Adverse Effect.
(k) The Company, Tennessee, 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
faith and by appropriate proceedings by the Company, Tennessee, the
appropriate Subsidiary or the appropriate Restricted Affiliate.
(l) The Company, Tennessee, 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, Tennessee, 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.
(m) 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).
(n) 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.
(o) 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, 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.
(p) None of the Company, Tennessee or 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
<PAGE> 52
47
Plans in connection with Withdrawal Liability (as of the date of
determination), would exceed 10% of the Net Worth of the Company.
(q) None of the Company, Tennessee or 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).
(r) 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 Tennessee) for the purpose of purchasing or
carrying Margin Stock.
(s) 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.
(t) 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.
(u) 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 5.1 Affirmative Covenants. Commencing with the Closing
Date, 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
<PAGE> 53
48
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.
(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) Consummation of Transaction. Take all such action as is
necessary so that (i) on the Closing Date, the Debt Realignment Plan
and the Spin-offs are consummated in accordance with the Transaction
Documentation without any material amendment or modification to the
material terms of the Merger Agreement being required except as
approved by the Lenders (which approval shall not be unreasonably
withheld) and (ii) within one Business Day after the Closing Date, the
Company shall effect the Merger and deliver to the Administrative Agent
a certificate from an officer of the Company certifying that the Debt
Realignment Plan, the Spin-offs and the Merger have been
<PAGE> 54
49
consummated in accordance with the material terms and conditions
contained in the Merger Agreement, the Distribution Agreement and
related documents and that the Merger Agreement and related documents
have not been amended, supplemented, waived or otherwise modified in
any material respect since the Effective Date without the approval of
the Lenders (which approval shall not be unreasonably withheld).
(g) 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.
(h) Holding. Once Holding is formed, cause (i) Holding to
execute and deliver a guaranty (in form and substance substantially
identical to the EPNGC Guarantee) (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 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.
(i) Merger. Cause the Administrative Agent to receive, with
sufficient copies for each Lender, legal opinions reasonably
satisfactory to the Administrative Agent of counsel of EPNGC and
Tennessee reasonably satisfactory to the Administrative Agent
containing opinions substantially in the form of Exhibit O, with
customary assumptions, qualifications and exceptions.
SECTION 5.2 Negative Covenants. Commencing with the Closing
Date and 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 Tennessee (so long as it is a Subsidiary of EPNGC or
Holding) or 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
<PAGE> 55
50
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 on and after the effectiveness of the Merger the ratio of (A)
the sum of (1) 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
<PAGE> 56
51
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
$150,000,000; 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 this Agreement or the EPNGC Facilities, (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).
(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 the San Juan Basin Gathering
System and related facilities in accordance with the
procedures set forth in the Master Separation Agreement dated
as of January 15, 1992 between EPNGC, Meridian Oil Holding
Inc., a Delaware corporation, and Burlington;
(ii) the Spin-Offs;
(iii) any sale of receivables and related rights
pursuant to any Alternate Program;
(iv) any Project Financing Subsidiary and the
assets thereof;
(v) sales, leases or other transfers of assets
or capital stock of any Subsidiary of the Company other than
any Principal Subsidiary;
(vi) any sale of Margin Stock;
(vii) 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;
<PAGE> 57
52
(viii) 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;
(ix) any transfer permitted by Section 5.2(e);
and
(x) 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) the Transactions (including the Merger) are
expressly permitted hereunder, (ii) any Principal Subsidiary may merge
or consolidate with (or 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
(iii) 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.
(f) Tennessee Indebtedness Pending the Merger. In the case of
Tennessee, create, assume or suffer to exist any Debt or any Guaranty
or any reimbursement
<PAGE> 58
53
obligation with respect to any letter of credit from the Closing Date
through the Merger except for Debt incurred pursuant to the Advances.
SECTION 5.3 Reporting Requirements. Commencing with the
Closing Date, 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,
Tennessee 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 Tennessee, EPNGC and, following its formation,
Holding, a consolidated balance sheet of each of Tennessee, 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 Tennessee, 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 Tennessee,
EPNGC and, following its formation, Holding, as the case may be, and
with respect to the Company accompanied by a certificate of such
officer of the Company 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 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 Tennessee, EPNGC and,
following its formation, Holding, a copy of the annual report for such
year for each of Tennessee, 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) with respect to the Company 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
<PAGE> 59
54
(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, EPNGC, 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, EPNGC, 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 or EPNGC to or with the FERC 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;
<PAGE> 60
55
(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 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 5.4 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
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GUARANTEES
SECTION 6.1 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 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 6.2 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
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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 6.3 Amendments, etc. with respect to the Obligations;
Waiver of Rights. Each Borrower shall remain obligated under this Article VI
notwithstanding that, without any 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 6.4 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
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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 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 6.5 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.
ARTICLE VII
EVENTS OF DEFAULT
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SECTION 7.1 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; provided that any failure to consummate the
Transaction in accordance with Section 5.1(f) shall be an immediate
Event of Default; or
(d) Tennessee, Holding (after the formation thereof), EPNGC,
any Principal Subsidiary or any Restricted Affiliate shall fail to pay
any Debt or Guaranty (excluding Debt incurred pursuant hereto) of
Tennessee, Holding, EPNGC, 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 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
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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) Tennessee, Holding (after the formation thereof),
EPNGC, 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 Tennessee, Holding (after the
formation thereof), EPNGC, 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 Tennessee, Holding (after the formation
thereof), EPNGC, 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) Tennessee, Holding (after the formation thereof),
EPNGC, 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 Tennessee,
Holding (after the formation thereof), EPNGC, any Principal Subsidiary
or any Restricted Affiliate and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order
(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
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(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 Tennessee, 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 Burlington,
Tennessee, EPNGC or Holding, a Subsidiary of Tennessee, EPNGC or
Holding or any employee benefit plan maintained for employees of
Tennessee, 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 Tennessee, EPNGC or Holding entitled to vote in elections for
directors of Tennessee, 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 Tennessee, EPNGC
or Holding following the completion of such tender offer more than half
of the directors of Tennessee, 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
(i) Any event of default shall occur under any agreement or
instrument relating to or evidencing any Debt now or hereafter existing
of Tennessee, Holding (after the formation thereof), EPNGC, any
Principal Subsidiary or any Restricted Affiliate as the result of any
change of control of Tennessee, Holding (after the formation thereof),
EPNGC, such Principal Subsidiary or such Restricted Affiliate; or
(j) Any of (i) the guarantees contained in Article VI, (ii)
the Restricted Affiliate Guarantees, (iii) the Holding Guarantee or
(iv) the EPNGC Guarantee shall cease, for any reason, to be in full
force and effect or any Borrower, any Restricted Affiliate, Holding or
EPNGC shall so assert;
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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.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT
SECTION 8.1 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.
SECTION 8.2 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
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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 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 8.3 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 8.4 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 8.5 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
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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
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.
SECTION 8.6 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 9.1 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, the 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 EPNGC or any
Restricted Affiliate from its guarantee in Article VI, the Holding Guarantee or
the EPNGC 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 9.2 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 1 Paul Kayser Center, 100 North Stanton Street, El Paso, Texas 79901,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(915) 541-5008; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, New York, New
York 10017, Attention: John Gehebe, Telecopier: (212) 270-4892; and if to the
CAF Advance Agent, at 140 East 45th Street, New York, New York 10017, Attention:
Terri Reilly, Telecopier: (212) 622-0003, Telephone: (212) 622-8779; or, as to
each party and each Borrowing Subsidiary, at such other address as
<PAGE> 71
66
shall be designated by such party in a written notice to the other parties. 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, 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 9.3 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 9.4 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 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
<PAGE> 72
67
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 9.5 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 9.6 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 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 9.7 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
<PAGE> 73
68
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 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
<PAGE> 74
69
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
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
Tennessee, 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
<PAGE> 75
70
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
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 9.8 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
<PAGE> 76
71
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 9.9 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 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 9.10 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
<PAGE> 77
72
SECTION 9.11 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 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 9.12 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> 78
73
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.
TENNECO INC.
By: /s/ Karen Osar
---------------------------------
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
ABN-AMRO BANK, N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc.
as agent
By: /s/ H. Gene Shiels
---------------------------------
Title: President and Director
By: /s/ Michael N. Oakes
---------------------------------
Title: Vice President and Director
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ Kyle Loughlin
---------------------------------
Title: Vice President
<PAGE> 79
74
BANK OF AMERICA ILLINOIS
By: /s/ Claire Liu
--------------------------------
Title: Vice President
BANK OF MONTREAL
By: /s/ Natasha Glossop
--------------------------------
Title: Director, U.S. Corporate
Banking
THE BANK OF NEW YORK
By: /s/ Raymond J. Palmer
--------------------------------
Title: Vice President
By: /s/
--------------------------------
Title:
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
--------------------------------
Title: Sr. Team Leader - Loan
Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Michael Meiss
--------------------------------
<PAGE> 80
75
Title: Vice President
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ Mike Shryock
-------------------------------
Title: Vice President
BARCLAYS BANK PLC
By: /s/ Paul C. Kavanagh
-------------------------------
Title: Director
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ Christine Taylor
-------------------------------
Title: Vice President & Manager
By: /s/ Sylvia Cheng
-------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ David Bouhl, F.V.P.
-------------------------------
Title: Head of Corporate Banking
Chicago
<PAGE> 81
76
CIBC INC.
By: /s/ Gary C. Gaskill
---------------------------------
Title: Authorized Signatory
CITIBANK, N.A.
By: /s/ Chris Lyons
---------------------------------
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ A. Bremer
---------------------------------
Title: Senior Vice President
By: /s/ D. Suttles
---------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
---------------------------------
Title: Senior Vice President
<PAGE> 82
77
CREDIT SUISSE
By: /s/ David J. Worthington
---------------------------------
Title: Member of Senior Management
By: /s/ Marilou Palenzuela
---------------------------------
Title: Member of Senior Management
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Mitsuaki Yamazaki
---------------------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Stephan A. Wiedemann
---------------------------------
Title: Vice President
By: /s/ Thomas A. Foley
---------------------------------
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH
By: /s/ Andrew P. Nesi
---------------------------------
Title: Vice President
By: /s/ Lawrence E. Jones
--------------------------------
Title: Vice President
<PAGE> 83
78
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Virginia Ryan
---------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Dixon Schultz
---------------------------------
Title: Vice President
THE FUJI BANK, LIMITED-HOUSTON
Agency
By: /s/ Yoshiaki Inoue
---------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ Kensaku Iwata
---------------------------------
Title: Senior Vice President
KREDIETBANK N.V., GRAND CAYMAN
BRANCH
By: /s/ Robert Snauffer
---------------------------------
Title: Vice President
By: /s/ Tod R. Angus
---------------------------------
<PAGE> 84
79
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By: /s/ Satoru Otsubu
---------------------------------
Title: Joint General Manager
MELLON BANK, N.A.
By: /s/ Marc Cuenod, Jr.
---------------------------------
Title: First Vice President
By: /s/
---------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ John Kowalczuk
---------------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ Paul K. Carter
---------------------------------
Title: Manager & Vice President
<PAGE> 85
80
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ Paul K. Carter
---------------------------------
Title: Manager & Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Patrick M. Delaney
---------------------------------
Title: Senior Vice President
NORINCHUKIN BANK, NEW YORK BRANCH
By: /s/ Ichiro Uchida
---------------------------------
Title: Joint General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Bob Erwin
---------------------------------
Title: Vice President
<PAGE> 86
81
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
THE SANWA BANK LIMITED DALLAS
AGENCY
By: /s/ Robert S. Smith
---------------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ Richard A. Gould
---------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED,
HOUSTON AGENCY
By: /s/ Harumitsu Seki
---------------------------------
Title: General Manager
<PAGE> 87
82
THE TOKAI BANK, LIMITED, NEW YORK
BRANCH
By: /s/ Shinichi Kondo
---------------------------------
Title: Deputy General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Frederic Hawley
---------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ J. George Kubove
---------------------------------
Title: Assistant Vice President
By: /s/ Kelly Boots
---------------------------------
Title: Assistant Treasurer
THE YASUDA TRUST & BANKING, CO., LTD.
By: /s/ Rohn Laudenschlager
---------------------------------
Title: Senior Vice President
<PAGE> 88
83
<PAGE> 89
SCHEDULE I
COMMITMENTS, ADDRESSES, ETC.
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Chase Manhattan Bank $127,500,000
One Chase Manhattan Plaza
New York, New York 10017
Attention: Peter Ling
Telephone: 212-532-1687
Telecopier: 212-270-4892
ABN AMRO Bank, N.V. $ 30,000,000
Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: H. Gene Shiels
Telephone: 713-964-3326
Telecopier: 713-629-7533
Australia and New Zealand $ 30,000,000
Banking 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 Illinois $ 93,750,000
231 South LaSalle
Chicago, Illinois 60697
Attention: Gloria Turner
Telephone: 312-828-4575
Telecopier: 312-974-9626
Bank of Montreal $ 93,750,000
700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Jane Wiley
Telephone: 713-546-9744
Telecopier: 713-223-4007
</TABLE>
<PAGE> 90
2
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Bank of New York $ 93,750,000
One Wall Street, 19th Floor
New York, New York 10286
Attention: Nina Russo
Telephone: 212-635-7921
Telecopier: 212-635-7923
The Bank of Nova Scotia $ 93,750,000
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:
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. $ 93,750,000
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Michael Meiss
Telephone: 713-655-3815
Telecopier: 713-655-3855
Banque Nationale de Paris, $ 48,750,000
Houston Agency
333 Clay, Suite 3400
Houston, Texas 77002
Attention: Mike Shryock
Telephone: 713-951-1224
Telecopier: 713-659-1414
</TABLE>
<PAGE> 91
3
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Barclays Bank PLC $ 93,750,000
222 Broadway
New York, New York 10038
Attention: Director -
Structured Finance
Telephone: 212-412-7570
Telecopier: 212-412-7511
Bayerische Vereinsbank AG, $ 30,000,000
Los Angeles Agency
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson,
Jarunee Hanpachern
Telephone: 213-629-1821
Telecopier: 213-622-6341
Caisse Nationale de Credit Agricole $ 30,000,000
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Rosemary Brown
Telephone: 312-917-7420
Telecopier: 312-372-4421
CIBC Inc. $ 93,750,000
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $112,500,000
One Court Square
Long Island City, New York 11120
Attention: Leena Caligiure
Telephone: 718-248-5762
Telecopier: 718-248-4844/4845
</TABLE>
<PAGE> 92
4
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Commerzbank Aktiengesellschaft, $ 93,750,000
Atlanta Agency
1230 Peachtree Street,
N.E. Suite 3500
Atlanta, Georgia 30309
Attention: Dave Suttles
Paul Mahoney
Telephone: 404-888-6500
Telecopier: 404-888-6539
Credit Lyonnais New York Branch $ 93,750,000
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
Credit Suisse $ 93,750,000
633 West 5th Street, 64th Floor
Los Angeles, California 90017
Attention: Rita Asa
Telephone: 213-955-8284
Telecopier: 213-955-8245
The Dai-Ichi Kangyo Bank, Ltd. $ 48,750,000
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Tina Brucculeri
Telephone: 212-432-6643
Telecopier: 212-912-1879
Deutsche Bank AG New York and/ $ 30,000,000
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 Branch $ 48,750,000
75 Wall Street
New York, New York 10005
Attention: Charles Lin
Telephone: 212-429-2608
Telecopier: 212-429-2129
</TABLE>
<PAGE> 93
5
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
First National Bank of Boston $ 30,000,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02106
Attention: Virginia Ryan
Telephone: 617-434-3606
Telecopier: 617-434-3652
The First National Bank of Chicago $ 93,750,000
One First National Plaza
0634, 1FNP, 10
Chicago, Illinois 60670
Attention: Yvette Thompkins
Telephone: 312-732-1395
Telecopier: 312-732-4840
The Fuji Bank, Limited-Houston Agency $ 93,750,000
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Attention: Charles vanRavenswaay
Telephone: 713-650-7829
Telecopier: 713-759-0048
The Industrial Bank of $ 48,750,000
Japan 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., Grand Cayman Branch $ 48,750,000
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma
Telephone: 212-541-0657
Telecopier: 212-956-5580
or
Attention: Mayra Ramirez
Telephone: 212-541-0658
Telecopier: 212-956-5580
</TABLE>
<PAGE> 94
6
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Long-Term Credit $ 93,750,000
Bank of Japan, Ltd.
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. $ 93,750,000
1100 Louisiana, Suite 3600
Houston, Texas 77002
Attention: Janet Jenkins
Telephone: 713-759-3040
Telecopier: 713-650-3409
Morgan Guaranty Trust $ 93,750,000
Company of New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Nancy K. Dunbar
Telephone: 302-634-4220
Telecopier: 302-634-1094
National Westminster Bank Plc $ 48,750,000
NatWest Markets
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
</TABLE>
<PAGE> 95
7
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
NationsBank of Texas, N.A. $ 93,750,000
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch $ 48,750,000
245 Park Avenue, 29th Floor
New York, New York
Attention: Shinichi Saitoh
Telephone: 212-949-7188
Telecopier: 212-697-5754
PNC Bank, National Association $ 93,750,000
One PNC Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222
Attention: Thomas K. Grundman/Tina Lanuka
Telephone: 412-762-3025/412-762-4826
Telecopier: 412-762-2571/412-762-2571
Royal Bank of Canada $ 93,750,000
600 Wilshire Boulevard, Suite 800
Los Angeles, California 90017
Attention: Doug Frost
Telephone: 213-955-5310
Telecopier: 213-955-5350
The Sakura Bank, Limited - $ 48,750,000
New York Branch
277 Park Avenue, 45th Floor
New York, New York 11209
Attention: David Speir
Telephone: 212-756-6778
Telecopier: 212-888-7651
The Sanwa Bank Limited $ 48,750,000
Dallas Agency
2200 Ross Avenue, Suite 4100W
Dallas, Texas 75201
Attention: Robert Smith
Telephone: 214-665-0222
Telecopier: 214-741-6535
</TABLE>
<PAGE> 96
8
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Societe Generale $ 93,750,000
Trammell Crow Center
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Telephone: 214-979-2792
Telecopier: 214-754-0171
The Sumitomo Bank, Limited, $ 93,750,000
Houston Agency
700 Louisiana Street, Suite 1750
Houston, Texas 77002
Attention: Robert Quezada
Telephone: 713-238-8221
Telecopier: 713-238-8291
The Tokai Bank, Limited, $ 30,000,000
New York Branch
Energy Finance Group
55 East 52nd Street
New York, New York 10055
Attention: Caralie Olsen
Telephone: 212-339-1163
Telecopier: 212-754-2170
Toronto Dominion (Texas), Inc. $ 93,750,000
909 Fannin Street, 17th Floor
Houston, Texas 77010
Attention: Lisa Allison
Telephone: 713-653-8244
Telecopier: 713-951-9921
Union Bank of Switzerland, $ 93,750,000
Houston Agency
1100 Louisiana, Suite 4500
Houston, Texas 77002
Attention: Evans Swann
Telephone: 713-655-6500
Telecopier: 713-655-6555
</TABLE>
<PAGE> 97
9
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Yasuda Trust & Banking, $ 48,750,000
Co., Ltd.
666 Fifth Avenue, Suite 801
New York, New York 10103
Attention: Eric N. Pelletier
Telephone: 212-373-5734
Telecopier: 212-373-5796
</TABLE>
<PAGE> 98
SCHEDULE II
OUTSTANDING DEBT, GUARANTIES AND REIMBURSEMENT OBLIGATIONS
The following Debt will be Excluded Acquisition Debt:
1. The following securities of Tennessee to the extent that such
securities are not tendered pursuant to the exchange offer by New Tenneco Inc.
as described in the Prospectus and Consent Solicitation of New Tenneco Inc., a
copy of which has been previously delivered to the Administrative Agent:
6 1/2% Notes due 2005
7 1/4% Debentures due 2025
7 7/8% Notes due 2002
8% Notes due 1999
9% Debentures due 2012
9 7/8% Notes due 2001
10% Debentures due 2008
2. The following securities of Tennessee, Tennessee Gas Pipeline
Company ("TGPL") and Tenneco Credit Corporation ("TCC") to the extent that such
securities are not tendered pursuant to the tender offer by Tennessee as
described in the Offer to Purchase and Consent Solicitation of Tennessee, a copy
of which has been previously delivered to the Administrative Agent:
Tennessee
10% Notes due 1998
103/8% Notes due 2000
TGPL
6% Debentures due 2011
TCC
95/8% Notes due 2001
91/8% Notes due 1997
Medium Term Notes, Series C:
9.480% due January 28, 2002
<PAGE> 99
2
Subordinated Medium Term Notes, Series B:
9.470% due September 21, 1998
9.720% due September 15, 2001
9.720% due September 25, 2001
9.990% due August 19, 1998
10.000% due August 19, 1998
10.000% due December 13, 2001
10.050% due August 17, 1998
3. Capital lease obligations of TGPL, East Tennessee Natural Gas
Company, Midwestern Gas Transmission Company and Channel Industries Gas Company,
which at June 30, 1996 were recorded at $4,622,751.
4. The guaranties and reimbursement obligations listed on Appendix A
hereto and such other guaranties that may be entered into in the ordinary course
of business of Tennessee and its subsidiaries since June 30, 1996 and prior to
the Closing Date. (Pursuant to the Distribution Agreement to be entered into by
Tennessee, New Tenneco Inc. and Newport News Shipbuilding Inc., New Tenneco Inc.
and Newport News Shipbuilding Inc. have agreed to used commercially reasonable
efforts to cause Tennessee and any of the Energy Subsidiaries to be released
from the guaranties of liabilities allocated to New Tenneco Inc. and its
subsidiaries or Newport News Shipbuilding Inc. and its subsidiaries under the
Distribution Agreement.)
5. $5.1 million of Debt owed by Orange Acquisition, Inc.
6. Such other Debt existing on the Closing Date that, together with the
foregoing Debt (other than the asterisked items on Appendix A hereto) and the
Advances under this Agreement, does not exceed the Base Amount, as defined in
the Debt and Cash Allocation Agreement to be entered into by Tennessee, Newport
News Shipbuilding Inc. and New Tenneco Inc., which shall be in substantially the
form previously provided to the Administrative Agent.
<PAGE> 100
SCHEDULE III
LITIGATION
Reference is made to the matters described in the Joint Proxy Statement
under the captions "Information Concerning the Energy Business to be
Merged--Interstate Pipeline Operations--Federal Regulation" and "--Environmental
Proceedings."
<PAGE> 101
SCHEDULE IV
SUBSIDIARIES
TENNECO ENERGY
POST SPIN-OFF
<TABLE>
<CAPTION>
<S> <C>
Tenneco Inc. (Delaware)
Tennessee Gas Pipeline Company (Delaware)............................................................... 100 %
Altamont Service Corporation (Delaware)............................................................. 100
Altamont Gas Transmission Canada Limited (Canada).............................................. 100
(Altamont Service Corporation is the registered holder of all of the
issued and outstanding shares of Altamont Gas Transmission Canada
Limited, as Trustee for Altamont Gas Transmission Company, a Joint
Venture)
Eastern Insurance Company Limited (Bermuda)......................................................... 100
East Tennessee Natural Gas Company (Tennessee)...................................................... 100
Tenneco East Natural Gas L.P. (Delaware Limited Partnership)................................... 1
(East Tennessee Natural Gas Company, as General Partner, owns 1%;
and Tenneco East Corporation, as Limited Partner, owns 99%.)
Energy TRACS, Inc. (Delaware)........................................................................ 100
Kern County Land Company (Delaware).................................................................. 100
Tenneco Equipment Corporation (Delaware)........................................................ 100
Marlin Drilling Co., Inc. (Delaware)
Bluefin Supply Company (Delaware)....................................................... 100
Marlin do Brasil Perfuacoes Maritimas Ltda. (Brazil) (in dissolution)................... 0.16
(Bluefin Supply Company owns 0.16%; and Marlin Drilling Co.,
Inc. owns 99.84%)
Marlin do Brasil Perfuacoes Maritimas Ltda. (Brazil) (in dissolution).................. 99.84
(Marlin Drilling Co., Inc. owns 99.84%; and Bluefin Supply
Company owns 0.16%)
Tenneco Equipment Holding I Company (Delaware)............................................. 100
Tenneco Equipment Holding II Company (Delaware)............................................ 100
Tenneco Equipment Holding III Company (Delaware)........................................... 100
Tenneco Equipment Holding V Company (North Dakota)..................................... 100
Tenneco Equipment Holding IV Company (Wisconsin)........................................... 100
Tenneco Equipment Holding VI Company (Illinois)............................................ 100
Tenneco West, Inc. (Delaware).................................................................. 100
Kern County Land Company, Inc. (California)................................................ 100
Land Ventures, Inc. (Delaware)...................................................................... 100
Midwestern Gas Marketing Company (Delaware)......................................................... 100
Mont Belvieu Land Company (Delaware)................................................................ 100
</TABLE>
<PAGE> 102
2
<TABLE>
<CAPTION>
<S> <C>
Subsidiaries of Tenneco Inc.
Subsidiaries of Tennessee Gas Pipeline Company
New Tenn Company (Delaware)......................................................................... 100
(New Tenn Company and New Tennessee Gas Pipeline are in the process of
being merged into Tennessee Gas Pipeline Company.)
New Tennessee Gas Pipeline Company (Delaware)....................................................... 100
(New Tenn Company and New Tennessee Gas Pipeline are in the process of
being merged into Tennessee Gas Pipeline Company.)
S.K. Petroleum Company (Delaware)................................................................... 100
Sandbar Petroleum Company (Delaware)................................................................ 100
Tennchase Inc. (Texas).............................................................................. 100
Tenneco Alaska, Inc. (Alaska)....................................................................... 100
Tenneco-Altamont Corporation (Delaware)............................................................. 100
Altamont Gas Transmission Company (Delaware Joint Venture)..................................... 53.34
(Tenneco-Altamont Corporation owns 531/3%; Amoco Altamont
Company, an unaffiliated company, owns 331/3%; and Entech
Altamont, Inc., an unaffiliated company, owns 131/3%.)
Tenneco Argentina Corporation (Delaware)............................................................ 100
Tenneco Baja California Corporation (Delaware)...................................................... 100
Tenneco Communications Corporation (Delaware)....................................................... 100
Tenneco Corporation (Delaware)...................................................................... 100
(Tennessee Gas Pipeline Company owns 100% of the Common Stock;
Tenneco Credit Corporation, Tenneco Equipment Corporation and
Tenneco International Inc., in the aggregate own 100% of the Second
Preferred Stock
Channel Industries Gas Company (Delaware)...................................................... 100
Tenneco Energy Marketing Company (Kentucky)................................................ 100
Creole Gas Pipeline Corporation (Louisiana)............................................ 100
Entrade Pipeline Company (Kentucky).................................................... 100
Channel Gas Marketing Company (Delaware)................................................... 100
Tenneco Gas Processing Company (Delaware).................................................. 100
Tenneco Offshore Gathering Company (Delaware).............................................. 100
</TABLE>
<PAGE> 103
3
<TABLE>
<CAPTION>
<S> <C>
Subsidiaries of Tenneco Inc.
Subsidiaries of Tennessee Gas Pipeline Company
Subsidiaries of Tenneco Corporation
Midwestern Gas Transmission Company (Delaware)................................................. 100
Tenneco Midwest Natural Gas L.P. (Delaware Limited Partnership)............................ 1
(Midwestern Gas Transmission Company, as General Partner, owns
1%; and Tenneco Midwest Corporation, as Limited Partner owns
99%.)
Entrade Engine Company (Kentucky).......................................................... 100
New Midwestern Inc. (Delaware)............................................................. 100
Petro-Tex Chemical Corporation (Delaware) (in dissolution)................................. 100
(Certificate of Dissolution was filed in Delaware on
January 18, 1995, Final dissolution date will be January
18, 1998, subject to settlement of any other outstanding
business.)
SWL Security Corp. (Texas)................................................................. 100
TGP Corporation (Delaware)................................................................. 100
Tenneco Independent Power I Company (Delaware)............................................. 100
Tenneco Independent Power II Company (Delaware)............................................ 100
Tenneco Insurance Ventures (Delaware)...................................................... 100
Tenneco Minerals Company - California (Delaware)........................................... 100
Tenneco Minerals Company - Nevada (Delaware)............................................... 100
Tenneco OCS Company, Inc. (Delaware)....................................................... 100
Tenneco Oil Company (Delaware)............................................................. 100
Tenneco Polymers, Inc. (Delaware).......................................................... 100
Tenneco Eastern Realty, Inc. (New Jersey).................................................. 100
Tenneco Power Generation Company (Delaware)................................................ 100
Orange Acquisition, Inc. (Delaware).................................................... 100
</TABLE>
<PAGE> 104
4
<TABLE>
<CAPTION>
<S> <C>
Subsidiaries of Tenneco Inc.
Subsidiaries of Tennessee Gas Pipeline Company
Subsidiaries of Tenneco Corporation
Subsidiaries of Midwestern Gas Transmission Company
Subsidiaries of Tenneco Power Generation Company
Tenneco Ethanol Company (Delaware)..................................................... 100
Tenneco Ethanol Services Company (Delaware)............................................ 100
West Campus Cogeneration Company (Delaware)............................................ 100
Tennessee Overthrust Gas Company (Delaware)................................................ 100
Tenneco Credit Corporation (Delaware)............................................................... 100
TenFac Corporation (Delaware).................................................................. 100
Tenneco Deepwater Gathering Company (Delaware)...................................................... 100
Tenneco Delta XII Gas Co., Inc. (Delaware).......................................................... 100
Tenneco East Corporation (Delaware)................................................................. 100
Tenneco East Natural Gas L.P. (Delaware Limited Partnership)................................... 99
(Tenneco East Corporation, as Limited Partner, owns 99%; and East
Tennessee Natural Gas Company, as General Partner, owns 1%.)
Tenneco Energy Europe Inc. (Delaware)............................................................... 100
Tenneco Energy Hungary Inc. (Delaware)......................................................... 99
Tenneco Energy Ltd. (Canada)........................................................................ 100
Tenneco Energy Services Company (Delaware).......................................................... 100
Tenneco Energy AIRCO Inc. (Delaware)........................................................... 100
Tenneco Energy OGS Inc. (Delaware)............................................................. 100
Tenneco Energy TEPSCO Inc. (Delaware).......................................................... 100
Tenneco Energy Inc. (Delaware)...................................................................... 100
Tenneco EIS Company (Delaware)................................................................. 100
Tenneco EIS Canada Ltd. (Alberta).......................................................... 100
Tenneco Gas Transportation Company (Delaware).................................................. 100
Tenneco Gas Canada, Ltd. (Ontario).................................................................. 100
</TABLE>
<PAGE> 105
5
<TABLE>
<CAPTION>
<S> <C>
Subsidiaries of Tenneco Inc.
Subsidiaries of Tennessee Gas Pipeline Company
Tenneco Gas International Inc. (Delaware)........................................................... 100
Tenneco Energy China Inc. (Delaware)........................................................... 100
Tenneco Gas Brazil Corporation (Delaware)...................................................... 100
Tenneco Gas International Servicos do Brasil Ltda (Brazil)................................. 100
Tenneco Gas Chile Corporation (Delaware)....................................................... 100
Tenneco Energy International (East Asia/Pacific) Inc. (Delaware)............................... 100
Tenneco Gas Services (Chile) Corporation (Delaware)............................................ 100
Tenneco Gas Transportes S.A. (Chile)....................................................... 100
Tenneco Gas Latin America Inc. (Delaware)...................................................... 100
Tenneco Gas Louisiana Inc. (Delaware)........................................................................ 100
Martin Exploration Company (Delaware).......................................................... 100
Tenneco Gas Production Corporation (Delaware)....................................................... 100
Tenneco Gas Properties Inc. (Delaware)....................................................................... 100
Tenneco Gas Services, Inc. (Delaware)............................................................... 100
Tenneco Gas Supply Corporation (Delaware)........................................................... 100
Tenneco Gas Australia Inc. (Delaware)............................................................... 100
Tenneco Holdings Pty. Ltd. (Australia)......................................................... 100
Tenneco Energy Australia Pty. Limited (Australia).......................................... 100
Tenneco Energy Queensland Pty. Limited (Australia)..................................... 100
Tenneco Energy South Australia Pty. Limited (Australia)................................ 100
Tenneco Energy Operations and Maintenance Pty. Ltd. (Australia)............................ 100
Tenneco Sulawesi Gas Pty. Ltd. (Australia)................................................. 100
Tenneco International Inc. (Delaware)............................................................... 100
Tenneco Nederland B.V. (Netherlands)......................................................................... 100
Tenneco Offshore Netherlands Company (Delaware)................................................ 100
Tenneco Liquids Corporation (Delaware).............................................................. 100
Subsidiaries of Tenneco Inc.
Subsidiaries of Tennessee Gas Pipeline Company
Tenneco Marketing Services Company (Delaware)....................................................... 100
Tenneco MLP Inc. (Delaware)......................................................................... 100
Tenneco MTBE, Inc. (Delaware)....................................................................... 100
Tenneco Midwest Corporation (Delaware).............................................................. 100
Tenneco Midwest Natural Gas L.P. (Delaware Limited Partnership)................................ 99
(Tenneco Midwest Corporation, as Limited Partner, owns 99%; and
Midwestern Gas Transmission Company, as General Partner, owns 1%.)
Tenneco Pittsfield Corporation (Delaware)........................................................... 100
Tenneco Portland Corporation (Delaware)............................................................. 100
Tenneco Realty, Inc. (Delaware)..................................................................... 100
Tenneco SNG Inc. (Delaware)......................................................................... 100
Tenneco Trinidad LNG, Inc. (Delaware)............................................................... 100
Tenneco Ventures Bolivia Corporation (Delaware)..................................................... 100
Tenneco Ventures Corporation (Delaware)............................................................. 100
</TABLE>
<PAGE> 106
6
<TABLE>
<CAPTION>
<S> <C>
Tenneco Ventures Poland Corporation (Delaware)...................................................... 100
Tenneco Western Market Center Corporation (Delaware)................................................ 100
Tenneco Western Market Center Service Corporation (Delaware)........................................ 100
TennEcon Services, Inc. (Delaware).................................................................. 100
Tenneco Energy Technology Consulting Services Inc. (Delaware).................................. 100
Tennessee Gas Transmission Company (Delaware)................................................................ 100
Tennessee Storage Company (Delaware)................................................................ 100
Tennessee Trailblazer Gas Company (Delaware)........................................................ 100
Ten Ten Parking Garage Inc. (Delaware)............................................................. 100
The Fontanelle Corporation (Louisiana)....................................................................... 100
The F and E Oyster Partnership (Louisiana Partnership)......................................... 64
(The Fontanelle Corporation owns 64% as General Partner; and
Expedite Oyster, Inc., an unaffiliated company, owns 36% as
General Partner.)
The LaChute Corporation (Louisiana)................................................................. 100
</TABLE>
|
<PAGE> 107
EXHIBIT A
FORM OF
NOTE
$___________ New York, New York
________ ___, 199_
FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of ______________ (the "Lender") at the office of The Chase Manhattan
Bank, located at 270 Park Avenue, New York, New York 10017, in lawful money of
the United States of America and in same day funds, on the second anniversary of
the Termination Date (or if the Lender is an Objecting Lender, the second
anniversary of the Commitment Expiration Date applicable to the Lender) the
principal amount of (a) __________ DOLLARS ($___________), 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 $3,000,000,000
Revolving Credit and Competitive Advance Facility Agreement, dated as of
November 4, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Tenneco Inc. (to be renamed El Paso
Tennessee Pipeline Company), the Lender, the other banks and financial
institutions from time to time parties thereto and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance 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.
<PAGE> 108
A-2
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> 109
Schedule A to Note
ADVANCES, CONVERSIONS AND REPAYMENTS OF BASE RATE ADVANCES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Amount of Principal of Amount of Base Rate
Amount of Base Rate Converted to Base Rate Advances Advances Converted to Unpaid Principal Balance
Date Advances Base Rate Advances Repaid Eurodollar Rate Advances of Base Rate Advances Notation Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 110
Schedule B to Note
ADVANCES, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR RATE ADVANCES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar
Amount of Amount Converted Interest Period and Amount of Principal of Rate Advances Unpaid Principal
Eurodollar Rate to Eurodollar Rate Eurodollar Rate with Eurodollar Rate Converted to Base Balance of Eurodollar Notation
Date Advances Advances Respect Thereto Advances Repaid Rate Advances Rate Advances Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 111
EXHIBIT B
FORM OF
NOTICE OF BORROWING
The Chase Manhattan Bank, as Administrative Agent
for the Lenders parties
to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017 [Date]
Attention: Tennessee Pipeline Company
Ladies and Gentlemen:
The undersigned, Tenneco Inc., (to be renamed El Paso Tennessee
Pipeline Company), refers to the $3,000,000,000 Revolving Credit and Competitive
Advance Facility Agreement, dated as of November 4, 1996 (the "Credit
Agreement", the terms defined therein being used herein as therein defined),
among the undersigned, certain Lenders parties thereto and The Chase Manhattan
Bank, as Administrative Agent and CAF Advance Agent for said Lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.2 of the Credit Agreement
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 2.2(a) of the Credit
Agreement:
(i) The Borrower for the Proposed Borrowing is ______________.
(ii) The Business Day of the Proposed Borrowing is ___________,
199_.
(iii) The Type of Advances comprising the Proposed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
(iv) The aggregate amount of the Proposed Borrowing is $__________.
(v) The Interest Period for each Eurodollar Rate Advance made as
part of the Proposed Borrowing is [______ month[s]].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Borrowing,
before and immediately after giving effect thereto and to the application of the
proceed therefrom:
<PAGE> 112
B-2
(A) 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
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
Very truly yours,
TENNECO INC.
By_________________________
Title:
<PAGE> 113
EXHIBIT C
FORM OF
CAF ADVANCE REQUEST
__________, 199__
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among
Tenneco Inc., the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
This is a [Fixed Rate] [LIBO Rate] CAF Advance Request pursuant to
Section 2.5 of the Credit Agreement requesting quotes for the following CAF
Advances:
<TABLE>
<CAPTION>
================================================================================
Loan 1 Loan 2 Loan 3
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Principal Amount $__________ $__________ $_________
- --------------------------------------------------------------------------------
CAF Advance Date
- --------------------------------------------------------------------------------
Maturity Date
- --------------------------------------------------------------------------------
Interest Payment Dates
================================================================================
</TABLE>
Very truly yours,
[BORROWER]
By__________________________
Name:
Title:
* Pursuant to the Credit Agreement, a CAF Advance Request may be
transmitted in writing, by telecopy, or by telephone, immediately
confirmed by telecopy. In any case, a CAF Advance Request shall contain
the information specified in the second paragraph of this form.
<PAGE> 114
EXHIBIT D
FORM OF
CAF ADVANCE OFFER
________, 199__
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among
Tenneco Inc., the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5 of the Credit Agreement, the undersigned
Lender offers to make CAF Advances thereunder in the following amounts with the
following maturity dates:
<TABLE>
<CAPTION>
=============================================================================================
<S> <C>
CAF Advance Date: __________, 199__ Aggregate Maximum Amount: $_________
=============================================================================================
Maturity Date 1: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
=============================================================================================
Maturity Date 2: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
=============================================================================================
Maturity Date 3: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
=============================================================================================
</TABLE>
Insert the interest rate offered for the specified CAF Advance. In the case of
LIBO Rate CAF Advances, insert a margin bid. In the case of Fixed Rate CAF
Advances, insert a fixed rate bid.
<PAGE> 115
D-2
Very truly yours,
[NAME OF CAF ADVANCE LENDER]
By______________________________
Name:
Title:
Telephone No.:
Telecopy No.:
<PAGE> 116
EXHIBIT E
FORM OF
CAF ADVANCE CONFIRMATION
_________ __, 199_
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among
Tenneco Inc., the Lenders named therein, and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent(as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5(d) of the Credit Agreement, the
undersigned accepts and confirms the offers by the CAF Advance Lender(s) to make
CAF Advances to the undersigned on , 199 [date of CAF Advance Borrowing] under
Section 2.5(d) in the (respective) amount(s) set forth on the attached list of
CAF Advances offered.
Very truly yours,
[BORROWER]
By_____________________________
Name:
Title:
[The Borrower must attach CAF Advance offer list prepared by the CAF Advance
Agent with accepted amount entered by the Borrower to the right of each CAF
Advance offer].
<PAGE> 117
EXHIBIT F
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 199_
Reference is made to the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (as the
same may be amended or otherwise modified from time to time, the "Credit
Agreement") among Tenneco Inc. (to be renamed El Paso Tennessee Pipeline Co.), a
Delaware corporation (the "Company"), the Lenders (as defined in the Credit
Agreement) and The Chase Manhattan Bank, as Administrative Agent (the
"Administrative Agent") and CAF Advance Agent (the "CAF Advance Agent") for the
Lenders. Terms defined in the Credit Agreement are used herein with the same
meaning.
_____________ (the "Assignor") and ____________ (the "Assignee") agree
as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
all of the Assignor's rights and obligations under the Credit Agreement as of
the date hereof which represents the percentage interest specified on Schedule 1
of all outstanding rights and obligations under the Credit Agreement, including,
without limitation, such interest in the Assignor's Commitment, the Advances
owing to the Assignor, and the Notes, if any, held by the Assignor. After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Advances owing to the Assignee will be as set forth in Section 2 of Schedule
1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) 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 the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Notes, if any, referred to in paragraph 1 above and
requests that the Administrative Agent exchange such Notes for new Notes payable
to the order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto or new Notes payable to the order of the Assignee in an
amount equal to the Commitment assumed by the Assignee pursuant hereto and the
Assignor in an amount equal to the Commitment retained by the Assignor under the
Credit Agreement, respectively, as specified on Schedule 1 hereto.
<PAGE> 118
F-2
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor 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 the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent and CAF Advance Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent and CAF Advance Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) specifies as its address for notices the
address set forth beneath its name on the signature pages hereof [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement and the Notes or such other
documents as are necessary to indicate that all such payments are subject to
such rates at a rate reduced by an applicable tax treaty]*.
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent. The effective date of this
Assignment and Acceptance shall be the date of acceptance thereof by the
Administrative Agent, unless otherwise specified on Schedule 1 hereto (the
"Effective Date").
5. Upon such acceptance and recording by the Administrative Agent, as
of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative Agent, from
and after the Effective Date, the Administrative Agent shall make all payments
under the Credit Agreement and the Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Notes for periods prior to the Effective Date directly between
themselves.
- --------
* If the Assignee is organized under the laws of a jurisdiction outside
the United States.
<PAGE> 119
F-3
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
<PAGE> 120
Schedule 1
to
Assignment and Acceptance
Dated _________, 199_
Section 1.
Percentage Interest: ______%
Section 2.
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Note payable to the order of the Assignee
Dated: _______, 199_
Principal amount: $___________
Note payable to the order of the Assignor
Dated: _______, 199_
Principal amount: $___________
Section 3.
Effective Date*: ________, 199_
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:____________________ By:____________________
Title: Title:
Address for notices:
[Address]
- --------
* This date should be no earlier than the date of acceptance by the
Administrative Agent.
<PAGE> 121
2
Consented to:
[COMPANY] THE CHASE MANHATTAN BANK, as
Administrative Agent
By:_____________________________ By:________________________________
Title: Title:
Accepted this __ day
of __________, 199_
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:_______________________________
Title:
<PAGE> 122
EXHIBIT G
[Letterhead of Process Agent]
______________, 199_
To each of the Lenders parties
to the Credit Agreement (as
defined and referred to
below) and to The Chase Manhattan Bank
as Administrative Agent and
CAF Advance Agent for said Lenders
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
To Tenneco Inc. (to be renamed El Paso
Tennessee Pipeline Company)
100 North Stanton
El Paso, Texas 79901
Gentlemen:
Reference is made to that certain $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein being
used herein with the same meaning) among Tenneco Inc. (to be renamed El Paso
Tennessee Pipeline Co.) (the "Company"), certain banks and other financial
institutions from time to time party thereto as Lenders thereunder (the
"Lenders") and The Chase Manhattan Bank, as Administrative Agent and CAF Advance
Agent (in such capacities, the "Administrative Agent" and the "CAF Advance
Agent" for the Lenders).
Pursuant to Section 9.9(a) of the Credit Agreement, (the "Borrower")
has appointed the undersigned (with an office on the date hereof at 1633
Broadway, New York, New York 10019) as Process Agent to receive on behalf of the
Borrower and its property service of copies of the summons and complaint and any
other process which may be served by the Administrative Agent, the CAF Advance
Agent, any Lender or the holder of any Note in any action or proceeding by the
Administrative Agent, the CAF Advance Agent, any Lender
<PAGE> 123
G-2
or the holder of any Note in any New York State or Federal court sitting in New
York City in respect of, but only in respect of, any claims or causes of action
arising out of or relating to the Credit Agreement and the Notes issued pursuant
thereto.
The undersigned hereby accepts such appointment as Process Agent and
agrees with each of you that (i) the undersigned will not terminate the
undersigned's agency as such Process Agent prior to June 15, 2002 (and hereby
acknowledges that the undersigned has been paid in full by the Borrower for its
services as Process Agent through such date), (ii) the undersigned will maintain
an office in New York City through such date and will give the Administrative
Agent prompt notice of any change of address of the undersigned, (iii) the
undersigned will perform its duties as Process Agent in accordance with Section
9.9(a) of the Credit Agreement and (iv) the undersigned will forward forthwith
to the Borrower at its address specified below copies of any summons, complaint
and other process which the undersigned receives in connection with its
appointment as Process Agent.
This acceptance and agreement shall be binding upon the undersigned and
all successors of the undersigned.
Very truly yours,
CT CORPORATION SYSTEM
By:_______________________
Title:
Address of the Borrower:
[Address]
<PAGE> 124
EXHIBIT H
FORM OF
JOINDER AGREEMENT
Reference is made to the $3,000,000,000 Revolving Credit and
CAF Advance Facility Agreement, dated as of November 4, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined), among Tenneco Inc.
(to be renamed El Paso Tennessee Gas Pipeline Company), certain banks and other
financial institutions from time to time party thereto and The Chase Manhattan
Bank, as Administrative Agent and CAF Advance Agent.
The undersigned hereby acknowledges that it has received and
reviewed a copy (in execution form) of the Credit Agreement, and agrees to:
(a) join the Credit Agreement as a Borrower party thereto;
(b) be bound by all covenants, agreements and acknowledgements
attributable to a Borrower in the Credit Agreement and any
Note to which it is a party; and
(c) perform all obligations required of it by the Credit Agreement
and any Note to which it is a party.
The undersigned hereby represents and warrants that the
representations and warranties with respect to it contained in, or made or
deemed made by it in, Article IV of the Credit Agreement are true and correct on
the date hereof.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 125
H-2
IN WITNESS WHEREOF, the undersigned has caused this Joinder
Agreement to be duly executed and delivered in New York, New York by its proper
and duly authorized officer as of this day of , 199 .
[BORROWER]
By:________________________
Title:
ACKNOWLEDGED AND AGREED TO:
TENNECO INC.
[HOLDING]
By:_____________________________
Title:
<PAGE> 126
EXHIBIT I
[FORM OF EXTENSION REQUEST]
[Date]
The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Attention:______________
Gentlemen:
Reference is made to the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
This is an Extension Request pursuant to Section 2.23 of the
Credit Agreement requesting an extension of the Stated Termination Date to
[INSERT REQUESTED TERMINATION DATE]. Please transmit a copy of this Extension
Request to each of the Lenders.
TENNECO INC.
By____________________________
Title:
<PAGE> 127
EXHIBIT J-1
FORM OF OPINION OF GENERAL COUNSEL OF TENNESSEE
___________, 1996
To Each of the Lenders, the Administrative Agent
and the CAF Advance Agent
Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Re: Tenneco Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
3.2(b)(vi) of the $3,000,000,000 Revolving Credit and Competitive Advance
Facility Agreement, dated as of November 4, 1996 (the "Credit Agreement"), among
Tenneco Inc. (the "Borrower"), the banks and other financial institutions from
time to time party thereto (each a "Lender," and together the "Lenders"), and
The Chase Manhattan Bank, as Administrative Agent (in such capacity, the
"Administrative Agent") and as CAF Advance Agent (in such capacity, the "CAF
Advance Agent") for the Lenders. Unless the context otherwise requires, all
capitalized terms used herein without definition shall have the meanings
ascribed to them in the Credit Agreement.
As General Counsel of the Borrower, I have acted as counsel
for the Borrower in connection with the Credit Agreement. I am familiar with the
Certificate of Incorporation and all amendments thereto, and the by-laws of the
Borrower. I am also familiar with the corporate proceedings of the Borrower
relative to the authorization of the Credit Agreement, the Notes and the Merger
Agreement (collectively, the "Documents") and I, or attorneys over whom I
exercise supervision, have examined such statutes, records, instruments and
documents, and have made such other investigation, as I, or said attorneys, have
deemed necessary for the purposes of this opinion.
The opinions expressed below are limited to the federal laws
of the United States, the laws of the State of Illinois and, to the extent
relevant hereto, the General Corporation Law of the State of Delaware, as
currently in effect. In addition, with respect to the opinion expressed in
paragraph 5 below, I have assumed that the laws of the State of Delaware (other
than the General Corporation Law of the State of Delaware) are identical to the
laws of the State of Illinois. I assume no obligation to supplement this opinion
if any
<PAGE> 128
J-2
applicable laws change after the date hereof or if I become aware of any facts
that might change the opinions expressed herein after the date hereof.
Based on the foregoing and subject to the limitations,
qualifications and assumptions set forth herein, I am of the following opinion:
1. The Borrower (i) is a corporation duly incorporated and existing in good
standing under the laws of the State of Delaware, (ii) is duly qualified as a
foreign corporation to transaction business in each jurisdiction where the
failure to be so qualified would materially adversely affect its financial
condition or its ability to perform its obligations under the Documents, and
(iii) possesses all the corporate powers necessary to engage in its business and
operations as now conducted.
2. The execution, delivery and performance by the Borrower of
the Documents are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action in respect of or by
the Borrower, and do not contravene (i) the Borrower's Certificate of
Incorporation or by-laws, each as amended to date, (ii) any federal
law, rule or regulation applicable to the Borrower or any provision of
the General Corporation Law of the State of Delaware applicable to the
Borrower, or (iii) to my knowledge, except with respect to contracts
where consent has already been obtained, any material contractual
restriction binding on or affecting the Borrower. The Documents have
been duly executed and delivered on behalf of the Borrower.
3. No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for the due execution, delivery and performance by the Borrower of the
Documents, except those required in the ordinary course of business in
connection with the performance by the Borrower of its obligations
under certain covenants and warranties contained in the Documents and
those which have been obtained and are in full force and effect.
4. To my knowledge, there is no action, suit or proceeding
pending or overtly threatened against or involving the Borrower or any
of its Subsidiaries which, in my reasonable judgment (taking into
account the exhaustion of all appeals), purports to affect the
legality, validity, binding effect or enforceability of any Document,
or, except as set forth in Schedule III to the Credit Agreement, would
have a material adverse effect upon the consolidated financial
condition of the Borrower and its consolidated subsidiaries taken as a
whole.
5. The Merger Agreement constitutes the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
My opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws from
time to time in effect
<PAGE> 129
J-3
affecting creditors' rights generally, (ii) general principles of equity
(including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain
provisions of the Merger Agreement may be unenforceable in whole or in part
under applicable laws (including judicial decisions), but the inclusion of such
provisions does not affect the validity of the Merger Agreement as a whole.
These opinions are given as of the date hereof and are solely
for your benefit in connection with the transactions contemplated by the Credit
Agreement. These opinions may not be relied upon by you for any other purpose or
relied upon by any other person for any purpose without my prior written
consent.
Very truly yours,
<PAGE> 130
EXHIBIT K
FORM OF OPINION OF NEW YORK COUNSEL TO TENNESSEE AND EPNGC
______ __, 1996
To Each of the Lenders, the Administrative Agent,
and the CAF Advance Agent Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Re: $3,000,000,000 Revolving Credit and Competitive Advance Facility
Agreement dated as of November 4, 1996
Dear Ladies and Gentlemen:
We have acted as special New York counsel for Tenneco Inc., a
Delaware corporation (the "Company"), and for El Paso Natural Gas Company, a
Delaware corporation (the "Guarantor"), in connection with the $3,000,000,000
Revolving Credit and Competitive Advance Facility Agreement, dated as of
November 4, 1996 (the "Financing Agreement"), among the Company, the banks and
other financial institutions from time to time party thereto (each a "Lender,"
and together the "Lenders") and The Chase Manhattan Bank, as Administrative
Agent (in such capacity, the "Administrative Agent") and as CAF Advance Agent
(in such capacity, the "CAF Advance Agent") for the Lenders. This opinion is
delivered to you pursuant to Section 3.2(b)(vii) of the Financing Agreement.
Capitalized terms used herein and not otherwise defined have the meanings
assigned such terms in the Financing Agreement. With your permission, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of the assumptions or items upon which we have
relied.
In connection with the opinions expressed herein, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of this opinion. We have examined, among other documents, the
following:
(a) An executed copy of the Financing Agreement;
(b) An executed copy of each of the Notes; and
(c) An executed copy of the EPNGC Guarantee.
<PAGE> 131
K-2
The documents referred to in items (a) and (b) above are referred to herein
collectively as the "Financing Documents" and the documents referred to in items
(a), (b) and (c) above are referred to herein collectively as the "Documents."
In all such examinations, we have assumed the legal capacity
of all natural persons executing documents, the genuineness of all signatures,
the authenticity of original and certified documents and the conformity to
original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the Documents and certificates and
oral or written statements and other information of or from representatives of
the Company, the Guarantor and others and assume compliance on the part of all
parties to the Documents with their covenants and agreements contained therein.
With respect to the opinions expressed in paragraph (a) below, our opinions are
limited (x) to our actual knowledge, if any, of the Company's and the
Guarantor's specially regulated business activities and properties based solely
upon an officer's certificate in respect of such matters and without any
independent investigation or verification on our part and (y) to our review of
only those laws and regulations that, in our experience, are normally applicable
to transactions of the type contemplated by the Documents.
To the extent it may be relevant to the opinions expressed
herein, we have assumed that the parties to the Documents have the power to
enter into and perform such documents and to consummate the transactions
contemplated thereby and that such documents have been duly authorized, executed
and delivered by, and, except as set forth in paragraph (b) with respect to the
Company and the Guarantor, constitute legal, valid and binding obligations of,
such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
(a) The execution and delivery to the Administrative Agent, the CAF
Advance Agent and the Lenders by the Company or the Guarantor, as the case may
be, of the Documents to which it is a party and the performance by the Company
or the Guarantor, as the case may be, of its obligations thereunder (i) do not
require under present law any filing or registration by the Company or the
Guarantor, as the case may be, with, or approval or consent to the Company or
the Guarantor, as the case may be, of, any governmental agency or authority of
the State of New York that has not been made or obtained except those required
in the ordinary course of business in connection with the performance by the
Company or the Guarantor, as the case may be, of its obligations under certain
covenants and warranties contained in the Documents to which it is a party and
(ii) do not violate any present law, or present regulation of any governmental
agency or authority, of the State of New York applicable to the Company or the
Guarantor, as the case may be, or its property.
(b) The Financing Documents constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms. The EPNGC
<PAGE> 132
K-3
Guarantee constitutes the legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its terms.
(c) The borrowings by the Company under the Financing Agreement
and the applications of the proceeds thereof as provided in the Financing
Agreement will not violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to:
(i) the validity, binding effect or enforceability
(a) of any provision of the Documents relating to indemnification,
contribution or exculpation in connection with violations of any
securities laws or statutory duties or public policy, or in connection
with willful, reckless or criminal acts or gross negligence of the
indemnified or exculpated party or the party receiving contribution; or
(b) of any provision of any of the Documents relating to exculpation of
any party in connection with its own negligence that a court would
determine in the circumstances under applicable law to be unfair or
insufficiently explicit;
(ii) the validity, binding effect or enforceability
of (a) (x) any purported waiver, release, variation, disclaimer,
consent or other agreement to similar effect (all of the foregoing,
collectively, a "Waiver") by the Company or the Guarantor under the
Documents to the extent limited by provisions of applicable law
(including judicial decisions), or to the extent that such a Waiver
applies to a right, claim, duty, defense or ground for discharge
otherwise existing or occurring as a matter of law (including judicial
decisions), except to the extent that such a Waiver is effective under
and is not prohibited by or void or invalid under provisions of
applicable law (including judicial decisions) or (y) any Waiver in the
EPNGC Guarantee insofar as it relates to causes or circumstances that
would operate as a discharge or release of, or defense available to,
the Guarantor thereunder as a matter of law (including judicial
decisions), except to the extent that such a Waiver is effective under
and is not prohibited by or void or invalid under applicable law
(including judicial decisions) or (b) any provision of any Document
relating to choice of governing law to the extent that the validity,
binding effect or enforceability of any such provision is to be
determined by any court other than a court of the State of New York or
(c) any provision of any Document relating to forum selection to the
extent the forum is a federal court;
(iii) the enforceability of any provision in the
Documents specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied agreement
by trade practice or course of conduct has been created that modifies
any provision of the Documents;
<PAGE> 133
K-4
(iv) the effect of any law of any jurisdiction other
than the State of New York wherein the Administrative Agent, the CAF
Advance Agent or any Lender may be located or wherein enforcement of
any document referred to above may be sought that limits the rates of
interest legally chargeable or collectible;
(v) any approval, consent or authorization of the
Federal Energy Regulatory Commission or any other United States federal
agency or authority needed in connection with the execution, delivery
and performance by the Company or the Guarantor of the Documents, the
consummation of the transactions contemplated thereby and compliance
with the terms and conditions thereof; and
(vi) the enforceability of any provision in the
Documents providing for the performance by the Guarantor of any of the
Company's nonmonetary obligations under the Documents.
(B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, voidable preference, moratorium
or similar laws, and related judicial doctrines, from time to time in effect
affecting creditors' rights and remedies generally, (ii) general principles of
equity (including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on the
availability of equitable remedies), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain other
provisions of the Documents may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America, but the inclusion of such provisions does not affect the
validity as against the Company or the Guarantor, as the case may be, of the
Documents as a whole, and the Documents contain adequate provisions for
enforcing payment of the obligations governed thereby, subject to the other
qualifications contained in this letter.
(C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) limit the availability of a remedy under certain
circumstances when another remedy has been elected; and
(ii) may, where less than all of a contract may be
unenforceable, limit the enforceability of the balance of the contract
to circumstances in which the unenforceable portion is not an essential
part of the agreed exchange; and
(iii) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs; and
(iv) may, in the absence of a waiver or consent, discharge a
guarantor to the extent that guaranteed debt is materially modified.
<PAGE> 134
k-5
(D) For the purposes of the opinion set forth in paragraph (c) above,
we have assumed that (i) none of the Administrative Agent, the CAF Advance Agent
or any of the Lenders has or will have the benefit of any agreement or
arrangement (excluding the Documents) pursuant to which any Advances are
directly or indirectly secured by Margin Stock, (ii) none of the Administrative
Agent, the CAF Advance Agent, any of the Lenders or any of their respective
affiliates has extended or will extend any other credit to the Company directly
or indirectly secured by Margin Stock and (iii) none of the Administrative
Agent, the CAF Advance Agent or any of the Lenders has relied or will rely upon
any Margin Stock as collateral in extending or maintaining any Advances pursuant
to the Financing Agreement.
(E) For purposes of our opinions above insofar as they relate to the
Company and the Guarantor, we have assumed that (i) each of the Company and the
Guarantor is a corporation validly existing in good standing in its jurisdiction
of incorporation, has all requisite power and authority, and has obtained all
requisite corporate, shareholder, third party and governmental authorizations,
consents and approvals, and made all requisite filings and registrations,
necessary to execute, deliver and perform the Documents to which it is a party
(except to the extent noted in paragraph (a) above), and that such execution,
delivery and performance will not violate or conflict with any law, rule,
regulation, order, decree, judgment, instrument or agreement binding upon or
applicable to the Company or the Guarantor, as the case may be, or its
properties (except to the extent noted in paragraph (a) above), and (ii) the
Documents have been duly executed and delivered by the Company and the
Guarantor, as the case may be.
(F) Provisions in a guarantee that provide that the guarantor's
liability thereunder shall not be affected by actions or failures to act on the
part of the recipient of the guarantee or by amendments or waivers of provisions
of documents governing the guaranteed obligations might not be enforceable under
circumstances in which such actions, failures to act, amendments or waivers so
radically change the essential nature of the terms and conditions of the
guaranteed obligations that, in effect, a new contract has arisen between such
recipient and the primary obligor on whose behalf the guarantee was issued.
The opinions expressed herein are limited to the federal laws of
the United States of America (in the case of the matters covered in paragraph
(c) above) and the laws of the State of New York, as currently in effect, except
that we express no opinion with respect to laws, rules or regulations of the
State of New York, or of any governmental agency or authority thereof,
applicable to companies engaged in the transmission or distribution of gas or
other petroleum products, or as to filings, registrations, approvals or consents
required under or by such laws, rules or regulations.
We express no opinion as to the compliance or noncompliance, or the
effect of the compliance or noncompliance, of each of the addressees with any
state or federal laws or regulations applicable to each of them by reason of
their status as or affiliation with a federally insured depository institution.
<PAGE> 135
K-6
The opinions expressed herein are solely for the benefit of
the Administrative Agent, CAF Advance Agent and the Lenders and may not be
relied on in any manner or for any purpose by any other person or entity.
Very truly yours,
JONES, DAY, REAVIS & POGUE
By:______________________________
<PAGE> 136
EXHIBIT L
FORM OF OPINION OF [ASSOCIATE] GENERAL COUNSEL OF EPNGC AND/OR
SPECIAL DELAWARE COUNSEL FOR EPNGC
___________ __, 1996
To Each of the Lenders, the Administrative Agent
and the CAF Advance Agent
Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Re: El Paso Natural Gas Company
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.1(b)(x)
of the $3,000,000,000 Revolving Credit and Competitive Advance Facility
Agreement, dated as of November 4, 1996 (the "Credit Agreement"), among Tenneco
Inc. (the "Borrower"), the banks and other financial institutions from time to
time party thereto (each a "Lender," and together the "Lenders"), and The Chase
Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative
Agent") and as CAF Advance Agent (in such capacity, the "CAF Advance Agent") for
the Lenders. Unless the context otherwise requires, all capitalized terms used
herein without definition shall have the meanings ascribed to them in the Credit
Agreement.
I am [Associate] General Counsel of El Paso Natural Gas
Company (the "Guarantor"), and I, or attorneys over whom I exercise supervision,
have acted as counsel for the Guarantor in connection with the preparation,
execution and delivery of the EPNGC Guarantee. In that connection, I or such
attorneys have examined:
(1) the EPNGC Guarantee;
(2) the Credit Agreement, executed by the parties
thereto;
(3) the Notes, executed by the Borrower; and
(4) the other documents furnished by the Borrower
pursuant to Sections 3.1 and 3.2 of the Credit
Agreement.
<PAGE> 137
L-2
I, or attorneys over whom I exercise supervision, have also
examined the originals, or copies certified to our satisfaction, of the
agreements, instruments and other documents, and all of the orders, writs,
judgments, awards, injunctions and decrees, which affect or purport to affect
the Guarantor's ability to perform the Guarantor's obligations under the EPNGC
Guarantee. In addition, I, or attorneys over whom I exercise supervision, have
examined the originals, or copies certified to our satisfaction, of such other
corporate records of the Guarantor, certificates of public officials and of
officers of the Guarantor, and agreements, instruments and other documents, as I
have deemed necessary as a basis for the opinions hereinafter expressed. In all
such examinations, I, or attorneys over whom I exercise supervision, have
assumed the legal capacity of all natural persons executing documents, the
genuineness of all signatures on original or certified, conformed or
reproduction copies of documents of all parties (other than, with respect to the
EPNGC Guarantee, the Guarantor), the authenticity of original and certified
documents and the conformity to original or certified copies of all copies
submitted to such attorneys or me as conformed or reproduction copies. As to
various questions of fact relevant to the opinions expressed herein, I have
relied upon, and assume the accuracy of, representations and warranties
contained in the EPNGC Guarantee and certificates and oral or written statements
and other information of or from public officials, officers and/or
representatives of the Guarantor and others.
I have assumed that the parties to the Documents other than
the Guarantor have the power to enter into and perform each such Document and
that such Documents have been duly authorized, executed and delivered by, and
constitute legal, valid and binding obligations of, such parties.
The opinions expressed below are limited to the federal laws
of the United States, the laws of the State of Texas and, to the extent relevant
hereto, the General Corporation Law of the State of Delaware, as currently in
effect. I assume no obligation to supplement this opinion if any applicable laws
change after the date hereof or if I become aware of any facts that might change
the opinions expressed herein after the date hereof.
Based on the foregoing and upon such investigation as we have
deemed necessary, and subject to the limitations, qualifications and assumptions
set forth herein, I am of the following opinion:
1. The Guarantor (i) is a corporation duly incorporated and
existing in good standing under the laws of the State of Delaware, and
(ii) possesses all the 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.
2. The execution, delivery and performance by the Guarantor of
the EPNGC Guarantee and the Merger Agreement are within the Guarantor's
corporate powers and have been duly authorized by all necessary
corporate action in respect of or by the Guarantor, and do not
contravene (i) the Guarantor's charter or by-laws, each as
<PAGE> 138
amended to date, (ii) any federal law, rule or regulation applicable to
the Guarantor (excluding provisions of federal law expressly referred
to in and covered by the opinion of Jones, Day, Reavis & Pogue
delivered to you in connection with the transactions contemplated
hereby) or any provision of the General Corporation Law of the State of
Delaware applicable to the Guarantor, or (iii) any contractual
restriction binding on or affecting the Guarantor. The EPNGC Guarantee
and the Merger Agreement have been duly executed and delivered on
behalf of the Guarantor.
3. No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for the due execution, delivery and performance by the Guarantor of the
EPNGC Guarantee and the Merger Agreement, except those required in the
ordinary course of business in connection with the performance by the
Guarantor of its obligations under certain covenants and warranties
contained in the EPNGC Guarantee or the Merger Agreement and those
which have been obtained and are in full force and effect.
4. To the best of my knowledge, there is no action, suit or
proceeding pending or overtly threatened against or involving the
Guarantor or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Guarantor and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of the EPNGC Guarantee or the Merger
Agreement.
5. The Merger Agreement constitutes the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
These opinions are given as of the date hereof and are solely
for your benefit in connection with the transactions contemplated by the Credit
Agreement. These opinions may not be relied upon by you for any other purpose or
relied upon by any other person for any purpose without my prior written
consent.
Very truly yours,
- --------
* To be given by special Delaware counsel for EPNGC.
<PAGE> 139
EXHIBIT M
FORM OF OPINION OF [ASSOCIATE]
GENERAL COUNSEL OF [COMPANY][HOLDING]
(a) [Each of the Company and the Borrowing
Subsidiary][Holding] (i) is a corporation duly incorporated and
existing in good standing under the laws of the jurisdiction of its
organization, and (ii) possesses all the 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 and delivery by [the Company and the
Borrowing Subsidiary][Holding] of the Joinder Agreement and by [the
Borrowing Subsidiary][Holding] of the Notes made by it and the
performance by [the Borrowing Subsidiary][Holding] of its obligations
as a "Borrower" under the Credit Agreement and the Notes made by it are
within such corporation's corporate powers and have been duly
authorized by all necessary corporate action in respect of or by [each
of the Company and the Borrowing Subsidiary (as applicable)][Holding],
and do not contravene (i) [the Company's or the Borrowing
Subsidiary's][Holding's] charter or by-laws, each as amended to date,
(ii) any federal law, rule or regulation applicable to [the Company or
the Borrowing Subsidiary][Holding] (excluding provisions of federal law
expressly referred to in and covered by the opinion of [New York
Counsel] delivered to you in connection with the transactions
contemplated hereby) or any provision of the General Corporation Law of
the State of Delaware applicable to such corporation, or (iii) any
contractual restriction binding on or affecting [the Company or the
Borrowing Subsidiary][Holding]. The Joinder Agreement has been duly
executed and delivered on behalf of [the Company and the Borrowing
Subsidiary][Holding] and the Notes made by [the Borrowing
Subsidiary][Holding] have been duly executed and delivered on behalf of
[the Borrowing Subsidiary][Holding].
(c) No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for (i) the due execution and delivery by [the Company or the Borrowing
Subsidiary][Holding] of the Joinder Agreement, (ii) the performance by
[the Borrowing Subsidiary][Holding] of its obligations as a "Borrower"
under the Credit Agreement or (iii) the execution, delivery and
performance by [the Borrowing Subsidiary][Holding] of the Notes made by
it, except those required in the ordinary course of business in
connection with the performance by [the Company or the Borrowing
Subsidiary][Holding] of its obligations under certain covenants and
warranties contained in the Joinder Agreement, the Credit Agreement and
the Notes and those which have been obtained and are in full force and
effect.
<PAGE> 140
M-2
(d) To the best of my best knowledge, there is no action, suit
or proceeding pending or overtly threatened against or involving the
Company or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Company and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of the Joinder Agreement, the Credit Agreement
or the Notes.
<PAGE> 141
EXHIBIT N
FORM OF OPINION OF NEW YORK
COUNSEL OF [COMPANY] [HOLDING]
(a) The execution and delivery to the Administrative Agent,
the CAF Advance Agent and the Lenders by [the Company and the Borrowing
Subsidiary][Holding] of the Joinder Agreement and by [the Borrowing
Subsidiary][Holding] of the Notes made by it and the performance by
[the Borrowing Subsidiary][Holding] of its obligations as a "Borrower"
under the Credit Agreement and the Notes made by it (i) do not require
under present law, any filing or registration by [the Company or the
Borrowing Subsidiary][Holding] with, or approval or consent to [the
Company or the Borrowing Subsidiary][Holding] of, any governmental
agency or authority of the State of New York that has not been made or
obtained, except those, if any, required in the ordinary course of
business in connection with the performance by [the Company or the
Borrowing Subsidiary][Holding] of its respective obligations under
certain covenants and warranties contained in the Joinder Agreement,
the Credit Agreement and the Notes and (ii) do not violate any present
law, or present regulation of any governmental agency or authority, of
the State of New York applicable to [the Company or the Borrowing
Subsidiary][Holding] or its property.
(b) The Joinder Agreement, the Credit Agreement and the Notes
(as applicable) constitute the legal, valid and binding obligations of
[each of the Company and the Borrowing Subsidiary][Holding] enforceable
against [each of the Company and the Borrowing Subsidiary][Holding] in
accordance with their respective terms.
(c) The borrowings by [the Borrowing Subsidiary][Holding]
under the Credit Agreement and the applications of the proceeds thereof
as provided in the Credit Agreement will not violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System.
<PAGE> 142
EXHIBIT O
FORM OF OPINION OF COUNSEL OF [EPNGC][TENNESSEE]
1. The Certificate of Merger has been duly executed and
delivered by [Tennessee][El Paso Merger Company].
2. The Merger has become effective under the General
Corporation Law of the State of Delaware.
<PAGE> 143
EXHIBIT P
FORM OF
EPNGC GUARANTEE
EPNGC GUARANTEE, dated as of November 4, 1996 (this
"Guarantee"), made by El Paso Natural Gas Company, a Delaware corporation (the
"Guarantor"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in
such capacity, the "Administrative Agent") for the lenders (the "Lenders")
parties to the Revolving Credit and Competitive Advance Facility Agreement,
dated as of November 4, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among Tenneco Inc. (to be renamed El
Paso Tennessee Pipeline Co.) ("Tennessee"), the Lenders and The Chase Manhattan
Bank, as Administrative Agent and CAF Advance 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;
WHEREAS, it is a condition to the effectiveness of the Credit
Agreement that the Guarantor shall have executed and delivered this Guarantee to
the Administrative Agent for the ratable benefit of the Lenders; and
WHEREAS, following the Merger, the Guarantor will be the
parent of Tennessee and it Subsidiaries, and it is to the advantage of the
Guarantor that the Lenders make the Advances to the Borrowers;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce 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.
<PAGE> 144
P-2
"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.
"Obligations" means the collective reference to the unpaid
principal of and interest on the Advances and all other obligations and
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 the Borrowers 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, or any other document made, delivered or given 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 the
Borrowers 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) Subject to Section 19, 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 and performance 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
<PAGE> 145
P-3
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 the Borrowers
may be free from any Obligations.
(c) No payment or payments made by the Borrowers or any other
Person or received or collected by the Administrative Agent or any Lender from
the Borrowers 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, continue 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 in its individual capacity, 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.
<PAGE> 146
P-4
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 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 the Guarantor seek or be entitled to seek
any contribution or reimbursement from any Borrowers in respect of payments made
by the Guarantor 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 the Borrowers 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.
<PAGE> 147
P-5
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 the Borrowers 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 or 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 the Borrowers against the Administrative
Agent or any Lender, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Borrowers or the Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Borrowers 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 the Borrowers 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 the Borrowers 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
<PAGE> 148
P-6
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 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 other than this Guarantee;
(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 or performance by the Guarantor of, or the
validity or enforceability against the Guarantor 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 in any court, or before any arbitrator of any kind, or before
or by any Governmental Authority, (i) with respect to this Guarantee or
any of the transactions contemplated hereby or (ii) 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
<PAGE> 149
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 the Borrower under the Credit Agreement on and as of such date
of borrowing as though made hereunder on and as of such date.
10. Covenants. The Guarantor hereby (a) acknowledges that upon
and from consummation of the Merger and until Holding becomes a Borrower (the
"Applicable Period"), the Guarantor shall be deemed the "Company" under the
Credit Agreement and (b) covenants and agrees with the Administrative Agent and
the Lenders that, upon consummation of the Merger and until the Obligations are
paid in full and the Commitments are terminated, the Guarantor shall comply with
all provisions of the Credit Agreement applicable to the "Company" thereunder
during the Applicable Period as though it were a party to the Credit Agreement.
11. 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 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.
12. 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:
(i) if to the Administrative Agent or any Lender, at its
address or transmission number for notices provided in subsection 9.2
of the Credit Agreement; and
(ii) 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, respectively. The
<PAGE> 150
P-8
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.
13. 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.
14. 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.
15. 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 15(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 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.
16. 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.
17. 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.
<PAGE> 151
18. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. Effectiveness. Notwithstanding any provision contained in
this Guarantee, this Guarantee will not become effective until the Merger has
been consummated.
20. Consent to Jurisdiction. (a) 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.
(b) Nothing in this Section 20 (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> 152
P-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 NATURAL GAS COMPANY
By________________________________
Title:
Address for Notices:
1 Paul Kayser Center
100 North Stanton Street
El Paso, Texas 79901
Attention: Executive Vice President and Chief
Financial Officer
Telecopier: (615) 541-5008
<PAGE> 1
EXHIBIT 10.G
===============================================================================
EL PASO NATURAL GAS COMPANY
-------------------------------------
$250,000,000
REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
DATED AS OF NOVEMBER 4, 1996
-------------------------------------
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
AND CAF ADVANCE AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
<TABLE>
<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..................... 18
SECTION 2.1 The Revolving Credit Advances......................... 18
SECTION 2.2 Making the Revolving Credit Advances.................. 19
SECTION 2.3 Evidence of Debt...................................... 20
SECTION 2.4 CAF Advances.......................................... 21
SECTION 2.5 Procedure for CAF Advance Borrowings.................. 21
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.......................... 28
SECTION 2.14 Voluntary Conversion of Advances..................... 30
SECTION 2.15 Optional and Mandatory Prepayments................... 31
SECTION 2.16 Increased Costs...................................... 31
SECTION 2.17 Increased Capital.................................... 32
SECTION 2.18 Illegality........................................... 33
SECTION 2.19 Payments and Computations............................ 34
SECTION 2.20 Taxes................................................ 35
SECTION 2.21 Sharing of Payments, Etc............................. 38
SECTION 2.22 Use of Proceeds...................................... 38
SECTION 2.24 Replacement of Lenders............................... 40
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING............... 40
SECTION 3.1 Conditions Precedent to Effectiveness of
this Agreement........................................ 40
SECTION 3.2 Conditions Precedent to Initial Advances.............. 41
SECTION 3.3 Conditions Precedent to Initial Advances
to Any Borrowing Subsidiary or Holding................ 42
SECTION 3.4 Conditions Precedent to Each Borrowing................ 43
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................ 43
</TABLE>
-i-
<PAGE> 3
Page
----
<TABLE>
<S> <C>
SECTION 4.1 Representations and Warranties of the
Borrowers............................................. 43
ARTICLE V
COVENANTS OF THE BORROWERS............................ 47
SECTION 5.1 Affirmative Covenants................................. 47
SECTION 5.2 Negative Covenants.................................... 49
SECTION 5.3 Reporting Requirements................................ 53
SECTION 5.4 Restrictions on Material Subsidiaries................. 56
ARTICLE VI
GUARANTEE............................................. 56
SECTION 6.1 Guarantees............................................ 56
SECTION 6.2 No Subrogation........................................ 57
SECTION 6.3 Amendments, etc. with respect to the
Obligations; Waiver of Rights......................... 57
SECTION 6.4 Guarantee Absolute and Unconditional.................. 58
SECTION 6.5 Reinstatement......................................... 59
ARTICLE VII
EVENTS OF DEFAULT..................................... 59
SECTION 7.1 Event of Default...................................... 59
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT.... 63
SECTION 8.1 Authorization and Action.............................. 63
SECTION 8.2 Administrative Agent's and CAF Advance
Agent's Reliance, Etc................................. 64
SECTION 8.3 Chase and Affiliates.................................. 64
SECTION 8.4 Lender Credit Decision................................ 65
SECTION 8.5 Indemnification....................................... 65
SECTION 8.6 Successor Administrative Agent and CAF
Advance Agent......................................... 65
ARTICLE IX
MISCELLANEOUS......................................... 66
SECTION 9.1 Amendments, Etc....................................... 66
SECTION 9.2 Notices, Etc.......................................... 67
SECTION 9.3 No Waiver; Remedies................................... 67
SECTION 9.4 Costs and Expenses; Indemnity......................... 68
SECTION 9.5 Right of Set-Off...................................... 69
SECTION 9.6 Binding Effect........................................ 69
SECTION 9.7 Assignments and Participations........................ 69
SECTION 9.8 Confidentiality....................................... 72
SECTION 9.9 Consent to Jurisdiction............................... 73
SECTION 9.10 GOVERNING LAW........................................ 74
SECTION 9.11 Rate of Interest..................................... 74
SECTION 9.12 Execution in Counterparts............................ 75
</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
-iii-
<PAGE> 5
$250,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY
AGREEMENT, dated as of November 4, 1996, among EL PASO NATURAL GAS COMPANY, a
Delaware corporation ("EPNGC"), 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.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 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 $250,000,000 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 program evidenced
by the Receivables Purchase and Sale Agreement (whether or not the
Receivables Purchase and Sale Agreement shall then be in effect), provided
that such program is on terms (a) substantially similar to the Receivables
Purchase and Sale Agreement or (b) customary for
<PAGE> 6
2
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".
"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.
<PAGE> 7
3
"Borrowing Subsidiary" means each domestic Principal Subsidiary of the
Company which has been designated by the Company as a "Borrowing Subsidiary"
by written notice to the Administrative Agent; collectively, the "Borrowing
Subsidiaries".
"Burlington" means Burlington Resources Inc., a Delaware corporation.
"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 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.
<PAGE> 8
4
"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.
"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
<PAGE> 9
5
percentage which the aggregate principal amount of such Lender's Advances
then outstanding constitutes of the aggregate principal amount of the
Advances then outstanding).
"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
Tennessee 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 $200,000,000 of (i) the amount of optional
payments in lieu of asset repurchase or other payments to similar effect,
including extension or renewal payments, on off balance sheet leases and (ii)
the amount of the purchase price for optional acquisition of such asset (in
either case, calculated at the lower amount payable in respect of such asset
under clause (i) or (ii) above).
"Debt Realignment Plan" means the debt realignment plan described under
the caption "Debt and Cash Realignment--Debt Realignment" and "Unaudited Pro
Forma Financial Information--Unaudited Pro Forma Combined Financial
Statements of El Paso and Tenneco Energy" in the Joint Proxy Statement.
"Dollars" and "$" 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
<PAGE> 10
6
(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.
"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.
"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
<PAGE> 11
7
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:
<TABLE>
<CAPTION>
Bond Rating Eurodollar
(S&P/Moody's) Level Rate Margin
---------------- ----- -----------
<S> <C> <C>
A/A2 or higher I .2000%
A-/A3 II .2150%
BBB+/Baa1 III .2200%
BBB/Baa2 IV .2500%
BBB-/Baa3 V .3750%
BB+/Ba1 or lower VI .5125%;
</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
<PAGE> 12
8
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 Tennessee and its Subsidiaries in
existence on the date of the Merger and not prohibited by the Tennessee
Facility, or incurred at any time under the Tennessee Facility 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).
"Existing Facilities" has the meaning assigned to such term in Section
3.2.
"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.
<PAGE> 13
9
"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 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
Tennessee which directly or indirectly owns 100% of the common stock of EPNGC
and 100% of the common stock of Tennessee; provided, however, that
immediately after Holding becomes EPNGC's and Tennessee'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 Tennessee's parent holding company.
"Holding Guarantee" has the meaning assigned to such term in Section
5.1(g).
<PAGE> 14
10
"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 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;
<PAGE> 15
11
(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.
"Joint Proxy Statement" means the Registration Statements on Form S-4,
each relating to the Transaction, initially filed by each of EPNGC and
Tennessee with the SEC on August 27, 1996, as amended through the Effective
Date.
"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.
"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.
<PAGE> 16
12
"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.
"Merger" means the merger of Tennessee with a de novo subsidiary of
EPNGC following the Spin-offs pursuant to the terms of the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
June 19, 1996, among EPNGC, El Paso Merger Company and Tennessee, as amended,
supplemented or otherwise modified through the Effective Date.
"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 and stockholders' equity of the
Company as shown on the most recent consolidated balance sheet of the Company
delivered pursuant to Section 5.3.
<PAGE> 17
13
"New Preferred Stock" means the voting junior preferred stock to be
issued by Tennessee in connection with the Debt Realignment Plan.
"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).
"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).
"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.
<PAGE> 18
14
"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) having assets at such
time greater than or equal to 5% of the consolidated assets of the Company
and its consolidated Subsidiaries at such time.
"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, (b) the date on which Holding
becomes a "Borrower" under the $750,000,000 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, and (c) the date on which Holding becomes a "Borrower" under the
Tennessee Facility.
"Receivables Purchase and Sale Agreement" means 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
<PAGE> 19
15
corporation and Citicorp North America, Inc., as agent, as such Agreement may
be amended, supplemented, restated or otherwise modified from time to time
which amendment, supplement, restatement or modification will not extend the
purchase of receivables and other assets thereunder to receivables and assets
other than present and future gas purchase contract take-or-pay buyout and
buydown receivables, the collateral and other support therefor and the
collections therefrom.
"Reference Lenders" means Chase, Morgan Guaranty Trust Company of New
York and Union Bank of Switzerland.
"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 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
<PAGE> 20
16
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.
"Spin-offs" means the spin-off of Tennessee's shipbuilding, packaging,
automotive and administrative services units to its shareholders immediately
prior to the Merger as described in the Joint Proxy Statement.
"Stated Termination Date" means November 3, 1997 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.
"Taxes" has the meaning assigned to such term in Section 2.20(a).
"Tenneco Energy" means all energy businesses and operations owned
directly or indirectly by Tennessee and other operations of Tennessee and its
Subsidiaries other than those relating to Tennessee's automotive, packaging,
administrative services and shipbuilding businesses.
"Tennessee" means Tenneco Inc., a Delaware corporation, which is to be
renamed El Paso Tennessee Pipeline Co. after the Merger, and its successors.
"Tennessee Facility" means the $3,000,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as
<PAGE> 21
17
of November 4, 1996, among Tennessee, 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.
"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 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. Section 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
<PAGE> 22
18
preceding Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by
it.
"Transaction" means the Merger, the Spin-offs, the Debt Realignment
Plan, and the issuance of the New Preferred Stock.
"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 1.2 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 1.3 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 1.4 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 2.1 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
<PAGE> 23
19
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 2.2 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 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
<PAGE> 24
20
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 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 2.3 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
<PAGE> 25
21
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").
SECTION 2.4 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 2.5 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
<PAGE> 26
22
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 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:
(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
<PAGE> 27
23
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:
(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;
<PAGE> 28
24
(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 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
<PAGE> 29
25
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 2.6 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.
(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.
<PAGE> 30
26
SECTION 2.7 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 2.8 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:
<TABLE>
<CAPTION>
Bond Rating Facility
(S&P/Moody's) Level Fee Rate
----------------- ----- --------
<S> <C> <C>
A/A2 or higher I .050%
A-/A3 II .060%
BBB+/Baa1 III .080%
BBB/Baa2 IV .100%
BBB-/Baa3 V .125%
BB+/Ba1 or lower VI .1875%;
</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, on the Termination Date or such
earlier date on which the Commitments
<PAGE> 31
27
shall terminate as provided herein, 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 September 20, 1996, from Chase Securities Inc. and Chase to EPNGC.
SECTION 2.9 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 2.10 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 2.11 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, 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
<PAGE> 32
28
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 2.12 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 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 2.13 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
<PAGE> 33
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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 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.
<PAGE> 34
30
(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 2.14 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, 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
<PAGE> 35
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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 2.15 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 2.16 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
<PAGE> 36
32
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.
SECTION 2.17 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
<PAGE> 37
33
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 2.18 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 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
<PAGE> 38
34
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 2.19 Payments and Computations. (a) 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, 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.
<PAGE> 39
35
(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 2.20 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 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
<PAGE> 40
36
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 Taxes imposed by any jurisdiction on
amounts payable under this
<PAGE> 41
37
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
<PAGE> 42
38
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 2.21 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 2.22 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 2.23 Extension of Stated Termination Date. (a) Not less than 60
days and not more than 90 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
<PAGE> 43
39
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 such Borrower 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 which does not consent in writing, or which revokes its
consent in accordance with the provisions of this Section 2.23, to such
extension not less than 30 days and not more than 60 days prior to the Stated
Termination Date then in effect (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 which 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 Lender 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 it 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.
<PAGE> 44
40
SECTION 2.24 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.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.1 Conditions Precedent to Effectiveness of this Agreement.
This Agreement shall become effective (the "Effective Date") when (i) it shall
have been executed by EPNGC, the Administrative Agent and the CAF Advance Agent,
(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, and (iii) the Administrative Agent shall
have received notice from the "Administrative Agent" under the Tennessee
Facility that the "Effective Date" has occurred, or substantially simultaneously
therewith is occurring, under the Tennessee Facility, and if any Lender is not
also a party to the Tennessee Facility, such Lender shall have received all
documents delivered pursuant to Section 3.1 of the Tennessee Facility, in each
case above, unless waived by the Lenders in accordance with this Agreement.
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
<PAGE> 45
41
fulfilled on or before December 31, 1996, (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, 1996; 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, 1996, the Administrative Agent shall furnish
written notice to EPNGC, the Lenders and the "Administrative Agent" under the
Tennessee Facility 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 3.2 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 the "Closing Date" under the Tennessee Facility)
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
EPNGC 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 EPNGC and governmental approvals to
EPNGC, if any, with respect to this Agreement and the Notes.
(ii) A certificate of the Secretary or an Assistant Secretary of
EPNGC certifying the names and true signatures of the officers of EPNGC
authorized to sign this Agreement and the 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
hereto.
(iv) A favorable opinion of Jones, Day, Reavis & Pogue, New York
counsel to EPNGC, in substantially the form of Exhibit H hereto.
(v) A letter from the Process Agent, in substantially the form of
Exhibit I hereto, agreeing to act as Process Agent for EPNGC and to forward
forthwith all process received by it to EPNGC.
<PAGE> 46
42
(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 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 $400,000,000
Revolving Credit and Competitive Advance Facility Agreement and the
$100,000,000 Revolving Credit and Competitive Advance Facility Agreement,
each dated as of May 31, 1996 (the "Existing Facilities"), among EPNGC, the
several financial institutions from time to time parties thereto, and Chase,
as Administrative Agent and CAF Advance Agent, shall have been paid in full,
and the commitments to make advances thereunder shall have been cancelled.
SECTION 3.3 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 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 hereto, 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.
<PAGE> 47
43
(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 hereto, 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 hereto, 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 3.4 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 would constitute an
Event of Default but for the requirement that notice be given or time elapse
or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 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
<PAGE> 48
44
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.
(e) The consolidated balance sheet of EPNGC and its consolidated
Subsidiaries as at December 31, 1995, 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
<PAGE> 49
45
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, 1995, 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, 1996, 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) The unaudited pro forma combined balance sheet of EPNGC and Tenneco
Energy as at June 30, 1996 and the related unaudited pro forma combined
statements of income of EPNGC and Tenneco Energy for the six-month period
ended June 30, 1996 set forth in the Joint Proxy Statement, copies of which
have been delivered to the Lenders, were prepared from financial statements
referred to in Section 4.1(e), which were prepared in accordance with
generally accepted accounting principles, are complete and correct in all
material respects and have been prepared on the basis described therein and
show the combined financial position and results of operations of EPNGC and
Tennessee as if the Transaction had occurred, in the case of the combined
balance sheet, on June 30, 1996, and in the case of combined statements of
income, as of January 1, 1995.
(g) 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.
(h) 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.
<PAGE> 50
46
(i) 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 faith and by appropriate proceedings by the
Company, the appropriate Subsidiary or the appropriate Restricted Affiliate.
(j) 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.
(k) 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).
(l) 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.
(m) The statement of assets and liabilities of each Plan other than,
prior to the Merger, any Plan of Tennessee or any of its Subsidiaries 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.
(n) 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.
<PAGE> 51
47
(o) 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).
(p) 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.
(q) 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.
(r) 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.
(s) 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 5.1 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).
<PAGE> 52
48
(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.
(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
<PAGE> 53
49
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 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 5.2 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
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50
at the time of such acquisition and (except as otherwise permitted
under clause (F) below) 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;
(E) Liens for taxes, assessments or governmental charges or
levies not yet overdue; and
(F) Liens on assets of Tennessee and its Subsidiaries existing
immediately prior to the Merger and not prohibited by the Tennessee
Facility.
(b) Consolidated Debt and Guarantees to Capitalization. (i) Permit the
ratio of (A) the sum of (1) 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 $150,000,000; provided, however, that the following Debt,
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51
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
this Agreement or the Tennessee Facility or the $750,000,000 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).
(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 the San Juan Basin Gathering System and related
facilities in accordance with the procedures set forth in the Master
Separation Agreement dated as of January 15, 1992 between EPNGC,
Meridian Oil Holding Inc., a Delaware corporation, and Burlington;
(ii) any sale of receivables and related rights pursuant to any
Alternate Program;
(iii) any Project Financing Subsidiary and the assets thereof;
(iv) sales, leases or other transfers of assets or capital stock
of any Subsidiary of the Company other than any Principal Subsidiary;
(v) any sale of Margin Stock;
(vi) 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;
<PAGE> 56
52
(vii) 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;
(viii) any transfer permitted by Section 5.2(e);
(ix) 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; and
(x) so long as the Tennessee Facility is in effect, any sale,
lease or other transfer of assets of Tennessee and its Subsidiaries,
provided that the commitments, if any, outstanding under the Tennessee
Facility are reduced by an amount equal to the net cash proceeds
thereof (after provision for taxes, holdbacks, reserves and all costs
and expenses arising from, or attributable to, such transaction) to the
extent required under the Tennessee Facility.
(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 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),
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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 5.3 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 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
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54
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 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;
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55
(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 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
<PAGE> 60
56
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 5.4 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 6.1 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
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
<PAGE> 61
57
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 6.2 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 6.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights. Each Borrower shall remain obligated under this Article VI
notwithstanding that, without any 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
<PAGE> 62
58
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 6.4 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 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
<PAGE> 63
59
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 6.5 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.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 Event of Default. If any of the following events ("Events
of Default") shall occur and be continuing:
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(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 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
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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 (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
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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 Burlington, 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
(i) Any event of default shall occur under any agreement or instrument
relating to or evidencing any Debt
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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.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE CAF ADVANCE AGENT
SECTION 8.1 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
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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.
SECTION 8.2 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 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 8.3 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.
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SECTION 8.4 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 8.5 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
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.
SECTION 8.6 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
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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.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 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
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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 9.2 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 1 Paul Kayser Center, 100 North Stanton Street, El Paso, Texas 79901,
Attention: Executive Vice President and Chief Financial Officer, Telecopier:
(915) 541-5008; if to any Lender, at its address set forth under its name on
Schedule I; if to the Administrative Agent, at 270 Park Avenue, New York, New
York 10017, Attention: John Gehebe, Telecopier: (212) 270-4892; and if to the
CAF Advance Agent, at 140 East 45th Street, New York, New York 10017, Attention:
Terri Reilly, Telecopier: (212) 622- 0003, Telephone: (212) 622-8779; 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, 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 9.3 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.
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SECTION 9.4 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 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
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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 9.5 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 9.6 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 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 9.7 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
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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 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
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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
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
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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 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 9.8 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
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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 9.9 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 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
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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 9.10 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 9.11 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 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
<PAGE> 79
75
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 9.12 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> 80
76
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/ H. Brent Austin
-------------------------------------
Title: Executive Vice President and
Chief Financial Offier
THE CHASE MANHATTAN BANK, as
Administrative Agent, CAF
Advance Agent and a Lender
By: /s/ Peter M. Ling
-------------------------------------
Title: Vice President
ABN-AMRO BANK, N.V. HOUSTON AGENCY
By: ABN AMRO North America, Inc.
as agent
By: /s/ H. Gene Shiels
-------------------------------------
Title: Vice President and Director
By: /s/ Michael N. Oakes
-------------------------------------
Title: Vice President and Director
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
By: /s/ Kyle Loughlin
-------------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Claire Liu
-------------------------------------
<PAGE> 81
77
Title: Vice President
BANK OF MONTREAL
By: /s/ Natasha Glossop
-------------------------------------
Title: Director, U.S. Corporate
Banking
THE BANK OF NEW YORK
By: /s/ Raymond J. Palmer
-------------------------------------
Title: Vice President
By: /s/
-------------------------------------
Title:
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
-------------------------------------
Title: Sr. Team Leader - 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
<PAGE> 82
78
BARCLAYS BANK PLC
By: /s/ Paul C. Kavanagh
-------------------------------------
Title: Director
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By: /s/ Christine Taylor
-------------------------------------
Title: Vice President & Manager
By: /s/ Sylvia Cheng
-------------------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ David Bouhl, F.V.P.
-------------------------------------
Title: Head of Corporate Banking
Chicago
CIBC INC.
By: /s/ Gary C. Gaskill
-------------------------------------
Title: Authorized Signatory
CITIBANK, N.A.
By: /s/ Chris Lyons
-------------------------------------
Title: Vice President
<PAGE> 83
79
COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ A. Bremer
-------------------------------------
Title: Senior Vice President
By: /s/ D. Suttles
-------------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
-------------------------------------
Title: Senior Vice President
CREDIT SUISSE
By: /s/ David J. Worthington
-------------------------------------
Title: Member of Senior Management
By: /s/ Marilou Palenzuela
-------------------------------------
Title: Member of Senior Management
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Mitsuaki Yamazaki
-------------------------------------
Title: Vice President
<PAGE> 84
80
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Stephan A. Wiedemann
-------------------------------------
Title: Vice President
By: /s/ Thomas A. Foley
-------------------------------------
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH
By: /s/ Andrew P. Nesi
-------------------------------------
Title: Vice President
By: /s/ Lawrence E. Jones
-------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Virginia Ryan
-------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Dixon Schultz
-------------------------------------
Title: Vice President
THE FUJI BANK, LIMITED-HOUSTON
AGENCY
By: /s/ Yoshiaki Inoue
-------------------------------------
Title: Vice President and Manager
<PAGE> 85
81
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ Kensaku Iwata
-------------------------------------
Title: Senior 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/ Satoru Otsubu
-------------------------------------
Title: Joint General Manager
MELLON BANK, N.A.
By: /s/ Marc Cuenod, Jr.
-------------------------------------
Title: First Vice President
By: /s/
-------------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ John Kowalczuk
-------------------------------------
Title: Vice President
<PAGE> 86
82
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ Paul K. Carter
-------------------------------------
Title: Manager & Vice President
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ Paul K. Carter
-------------------------------------
Title: Manager & Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Patrick M. Delaney
-------------------------------------
Title: Senior Vice President
NORINCHUKIN BANK, NEW YORK BRANCH
By: /s/ Ichiro Uchida
-------------------------------------
Title: Joint General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Bob Erwin
-------------------------------------
Title: Vice President
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
THE SANWA BANK LIMITED DALLAS
AGENCY
By: /s/ Robert S. Smith
-------------------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ Richard A. Gould
-------------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED, HOUSTON
AGENCY
By: /s/ Harumitsu Seki
-------------------------------------
Title: General Manager
THE TOKAI BANK, LIMITED, NEW YORK
BRANCH
By: /s/ Shinichi Kondo
-------------------------------------
Title: Deputy General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Frederic Hawley
-------------------------------------
Title: Vice President
<PAGE> 88
84
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ J. George Kubove
-------------------------------------
Title: Assistant Vice President
By: /s/ Kelly Boots
-------------------------------------
Title: Assistant Treasurer
THE YASUDA TRUST & BANKING, CO.,
LTD.
By: /s/ Rohn Laudenschlager
-------------------------------------
Title: Senior Vice President
<PAGE> 89
SCHEDULE I
COMMITMENTS, ADDRESSES, ETC.
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Chase Manhattan Bank $10,625,000
One Chase Manhattan Plaza
New York, New York 10017
Attention: Peter Ling
Telephone: 212-532-1687
Telecopier: 212-270-4892
ABN AMRO Bank, N.V. Houston Agency $ 2,500,000
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: H. Gene Shiels
Telephone: 713-964-3326
Telecopier: 713-629-7533
Australia and New Zealand $ 2,500,000
Banking 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 Illinois $ 7,812,500
231 South LaSalle
Chicago, Illinois 60697
Attention: Gloria Turner
Telephone: 312-828-4575
Telecopier: 312-974-9626
Bank of Montreal $ 7,812,500
700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Jane Wiley
Telephone: 713-546-9744
Telecopier: 713-223-4007
The Bank of New York $ 7,812,500
One Wall Street, 19th Floor
New York, New York 10286
Attention: Nina Russo
Telephone: 212-635-7921
Telecopier: 212-635-7923
</TABLE>
<PAGE> 90
2
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Bank of Nova Scotia $7,812,500
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:
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. $7,812,500
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Michael Meiss
Telephone: 713-655-3815
Telecopier: 713-655-3855
Banque Nationale de Paris, $4,062,500
Houston Agency
333 Clay, Suite 3400
Houston, Texas 77002
Attention: Mike Shryock
Telephone: 713-951-1224
Telecopier: 713-659-1414
Barclays Bank PLC $7,812,500
222 Broadway
New York, New York 10038
Attention: Director -
Structured Finance
Telephone: 212-412-7570
Telecopier: 212-412-7511
Bayerische Vereinsbank AG, $2,500,000
Los Angeles Agency
800 Wilshire Blvd., Suite 1600
Los Angeles, California 90017
Attention: John Carlson,
Jarunee Hanpachern
Telephone: 213-629-1821
Telecopier: 213-622-6341
</TABLE>
<PAGE> 91
3
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Caisse Nationale de Credit Agricole $2,500,000
55 East Monroe Street, Suite 4700
Chicago, Illinois 60303
Attention: Rosemary Brown
Telephone: 312-917-7420
Telecopier: 312-372-4421
Canadian Imperial Bank of Commerce $7,812,500
909 Fannin Street, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telephone: 713-655-5226
Telecopier: 713-650-3727
Citibank, N.A. $9,375,000
One Court Square
Long Island City, New York 11120
Attention: Leena Caligiure
Telephone: 718-248-5762
Telecopier: 718-248-4844/4845
Commerzbank Aktiengesellschaft, $7,812,500
Atlanta Agency
1230 Peachtree Street, N.E. Suite 3500
Atlanta, Georgia 30309
Attention: Dave Suttles/Paul Mahoney
Telephone: 404-888-6500
Telecopier: 404-888-6539
Credit Lyonnais New York Branch $7,812,500
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Telephone: 713-753-8723
Telecopier: 713-751-0307
Credit Suisse $7,812,500
633 West 5th Street, 64th Floor
Los Angeles, California 90017
Attention: Rita Asa
Telephone: 213-955-8284
Telecopier: 213-955-8245
The Dai-Ichi Kangyo Bank, Ltd. $4,062,500
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Tina Brucculeri
Telephone: 212-432-6643
Telecopier: 212-912-1879
</TABLE>
<PAGE> 92
4
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Deutsche Bank AG New York and/ $2,500,000
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 Branch $4,062,500
75 Wall Street
New York, New York 10005
Attention: Charles Lin
Telephone: 212-429-2608
Telecopier: 212-429-2129
First National Bank of Boston $2,500,000
100 Federal Street
Mailstop 01-08-02
Boston, Massachusetts 02106
Attention: Virginia Ryan
Telephone: 617-434-3606
Telecopier: 617-434-3652
The First National Bank of Chicago $7,812,500
One First National Plaza
0634, 1FNP, 10
Chicago, Illinois 60670
Attention: Yvette Thompkins
Telephone: 312-732-1395
Telecopier: 312-732-4840
The Fuji Bank, Limited-Houston Agency $7,812,500
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Attention: Charles vanRavenswaay
Telephone: 713-650-7829
Telecopier: 713-759-0048
The Industrial Bank of Japan $4,062,500
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> 93
5
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Kredietbank N.V., Grand Cayman Branch $4,062,500
125 West 55th Street
New York, New York 10019
Attention: Lynda Resuma
Telephone: 212-541-0657
Telecopier: 212-956-5580
or
Attention: Mayra Ramirez
Telephone: 212-541-0658
Telecopier: 212-956-5580
The Long-Term Credit Bank of Japan, Ltd. $7,812,500
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. $7,812,500
1100 Louisiana, Suite 3600
Houston, Texas 77002
Attention: Janet Jenkins
Telephone: 713-759-3040
Telecopier: 713-650-3409
Morgan Guaranty Trust Company of $7,812,500
New York
c/o J.P. Morgan Services, Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Nancy K. Dunbar
Telephone: 302-634-4220
Telecopier: 302-634-1094
National Westminster Bank Plc $4,062,500
NatWest Markets
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
</TABLE>
<PAGE> 94
6
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
Nationsbank of Texas, N.A. $7,812,500
700 Louisiana, 8th Floor
Houston, Texas 77002
Attention: Patrick M. Delaney
Telephone: 713-247-7373
Telecopier: 713-247-6568
Norinchukin Bank, New York Branch $4,062,500
245 Park Avenue, 29th Floor
New York, New York
Attention: Shinichi Saitoh
Telephone: 212-949-7188
Telecopier: 212-697-5754
PNC Bank, National Association $7,812,500
One PNC Plaza
249 Fifth Avenue, 3rd Floor
Pittsburgh, Pennsylvania 15222
Attention: Thomas K. Grundman/
Tina Lanuka
Telephone: 412-762-3025/412-762-4826
Telecopier: 412-762-2571/412-762-2571
Royal Bank of Canada $7,812,500
600 Wilshire Boulevard, Suite 800
Los Angeles, California 90017
Attention: Doug Frost
Telephone: 213-955-5310
Telecopier: 213-955-5350
The Sakura Bank, Limited - $4,062,500
New York Branch
277 Park Avenue, 45th Floor
New York, New York 11209
Attention: David Speir
Telephone: 212-756-6778
Telecopier: 212-888-7651
The Sanwa Bank Limited Dallas Agency $4,062,500
2200 Ross Avenue, Suite 4100W
Dallas, Texas 75201
Attention: Robert Smith
Telephone: 214-665-0222
Telecopier: 214-741-6535
Societe Generale $7,812,500
Trammell Crow Center
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Telephone: 214-979-2792
Telecopier: 214-754-0171
</TABLE>
<PAGE> 95
7
<TABLE>
<CAPTION>
Name and Address of Lender Amount of Commitment
- -------------------------- --------------------
<S> <C>
The Sumitomo Bank, Limited, $7,812,500
Houston Agency
700 Louisiana Street, Suite 1750
Houston, Texas 77002
Attention: Robert Quezada
Telephone: 713-238-8221
Telecopier: 713-238-8291
The Tokai Bank, Limited, New York Branch $2,500,000
Energy Finance Group
55 East 52nd Street
New York, New York 10055
Attention: Caralie Olsen
Telephone: 212-339-1163
Telecopier: 212-754-2170
Toronto Dominion (Texas), Inc. $7,812,500
909 Fannin Street, 17th Floor
Houston, Texas 77010
Attention: Lisa Allison
Telephone: 713-653-8244
Telecopier: 713-951-9921
Union Bank of Switzerland, $7,812,500
Houston Agency
1100 Louisiana, Suite 4500
Houston, Texas 77002
Attention: Evans Swann
Telephone: 713-655-6500
Telecopier: 713-655-6555
The Yasuda Trust & Banking, Co., Ltd. $4,062,500
666 Fifth Avenue, Suite 801
New York, New York 10103
Attention: Eric N. Pelletier
Telephone: 212-373-5734
Telecopier: 212-373-5796
</TABLE>
<PAGE> 96
EXHIBIT A
FORM OF NOTE
$______________ New York, New York
________ ___, 1996
FOR VALUE RECEIVED, the undersigned, ___________________, a ________
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of ________________________ (the "Lender") at the office of The Chase
Manhattan Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in same day funds, on the second
anniversary of the Termination Date (or if the Lender is an Objecting Lender,
the second anniversary of the Commitment Expiration Date applicable to the
Lender) the principal amount of (a) __________________ DOLLARS ($__________ ),
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 $250,000,000
Revolving Credit and Competitive Advance Facility Agreement, dated as of
November 4, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among El Paso Natural Gas Company, the Lender,
the other banks and financial institutions from time to time parties thereto and
The Chase Manhattan Bank, as Administrative Agent and CAF Advance Agent, (b) is
subject to the provisions of the Credit Agreement
<PAGE> 97
A-2
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 Rate Converted to Base Rate Advances Eurodollar Rate Balance of Base Rate Notation
Date Advances Base Rate Advances Repaid Advances Advances Made By
- -----------------------------------------------------------------------------------------------------------------------------------
<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>
- -----------------------------------------------------------------------------------------------
Amount of Amount Converted Interest Period and Amount of Principal of
Eurodollar Rate to Eurodollar Rate Eurodollar Rate with Eurodollar Rate
Date Advances Advances Respect Thereto Advances Repaid
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------
Amount of Eurodollar
Rate Advances Unpaid Principal
Converted to Base Balance of Eurodollar Notation
Date Rate Advances Rate Advances Made By
<S> <C> <C> <C>
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
<PAGE> 100
EXHIBIT B
FORM OF
NOTICE OF BORROWING
The Chase Manhattan Bank, as Administrative Agent
for the Lenders parties
to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017 [Date]
Attention: El Paso Natural Gas Company
Ladies and Gentlemen:
The undersigned, EL PASO NATURAL GAS COMPANY, refers to the
$250,000,000 Revolving Credit and Competitive Advance Facility Agreement, dated
as of November 4, 1996 (the "Credit Agreement", the terms defined therein being
used herein as therein defined), among the undersigned, certain Lenders parties
thereto and The Chase Manhattan Bank, as Administrative Agent and CAF Advance
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.2 of the Credit Agreement that the undersigned hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.2(a) of the Credit Agreement:
(i) The Borrower for the Proposed Borrowing is
______________ .
(ii) The Business Day of the Proposed Borrowing is
___________, 199_.
(iii) The Type of Advances comprising the Proposed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
(iv) The aggregate amount of the Proposed Borrowing is
$____________.
(v) The Interest Period for each Eurodollar Rate Advance made
as part of the Proposed Borrowing is [______ month[s]].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing,
before and immediately after giving effect thereto and to the application of the
proceed therefrom:
<PAGE> 101
B-2
(A) 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
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing, which constitutes an Event of Default or would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both.
Very truly yours,
EL PASO NATURAL GAS COMPANY
By_________________________
Title:
<PAGE> 102
EXHIBIT C
FORM OF
CAF ADVANCE REQUEST
__________, 199__
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
This is a [Fixed Rate] [LIBO Rate] CAF Advance Request* pursuant
to Section 2.5 of the Credit Agreement requesting quotes for the following CAF
Advances:
<TABLE>
<CAPTION>
================================================================================
Loan 1 Loan 2 Loan 3
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Principal $ $ $
Amount
- --------------------------------------------------------------------------------
CAF Advance Date
- --------------------------------------------------------------------------------
Maturity Date
- --------------------------------------------------------------------------------
Interest Payment Dates
================================================================================
</TABLE>
Very truly yours,
[BORROWER]
By_____________________________
Name:
Title:
__________________
* Pursuant to the Credit Agreement, a CAF Advance Request may be transmitted in
writing, by telecopy, or by telephone, immediately confirmed by telecopy. In
any case, a CAF Advance Request shall contain the information specified in the
second paragraph of this form.
<PAGE> 103
EXHIBIT D
FORM OF
CAF ADVANCE OFFER
_____________, 199__
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5 of the Credit Agreement, the
undersigned Lender offers to make CAF Advances thereunder in the following
amounts with the following maturity dates:
<TABLE>
<S> <C>
===============================================================================
CAF Advance Date: _________ Aggregate Maximum Amount: $_________
_, 199__
===============================================================================
Maturity Date 1: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
===============================================================================
Maturity Date 2: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
===============================================================================
Maturity Date 3: Maximum Amount: $__________
__________, 199__ $________ offered at _______*
$________ offered at _______*
===============================================================================
</TABLE>
Very truly yours,
[NAME OF CAF ADVANCE LENDER]
By_____________________________
Name:
Title:
Telephone No.:
Telecopy No.:
___________________
* Insert the interest rate offered for the specified CAF Advance. In the case of
LIBO Rate CAF Advances, insert a margin bid. In the case of Fixed Rate CAF
Advances, insert a fixed rate bid.
<PAGE> 104
EXHIBIT E
FORM OF
CAF ADVANCE CONFIRMATION
_________ __, 199_
The Chase Manhattan Bank, as CAF Advance Agent
270 Park Avenue
New York, New York 10017
Reference is made to the $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein, and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent(as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
In accordance with Section 2.5(d) of the Credit Agreement, the
undersigned accepts and confirms the offers by the CAF Advance Lender(s) to make
CAF Advances to the undersigned on __________, 199_ [date of CAF Advance
Borrowing] under Section 2.5(d) in the (respective) amount(s) set forth on the
attached list of CAF Advances offered.
Very truly yours,
[BORROWER]
By_____________________________
Name:
Title:
[The Borrower must attach CAF Advance offer list prepared by the CAF Advance
Agent with accepted amount entered by the Borrower to the right of each CAF
Advance offer].
<PAGE> 105
EXHIBIT F
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 199__
Reference is made to the $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (as the
same may be amended or otherwise modified from time to time, the "Credit
Agreement") among EL PASO NATURAL GAS COMPANY, a Delaware corporation (the
"Company"), the Lenders (as defined in the Credit Agreement) and The Chase
Manhattan Bank, as Administrative Agent (the "Administrative Agent") and CAF
Advance Agent (the "CAF Advance Agent") for the Lenders. Terms defined in the
Credit Agreement are used herein with the same meaning.
_____________ (the "Assignor") and ____________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof which represents the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement,
including, without limitation, such interest in the Assignor's Commitment, the
Advances owing to the Assignor, and the Notes held by the Assignor. After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Advances owing to the Assignee will be as set forth in Section 2 of Schedule
1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) 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 the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Notes referred to in
paragraph 1 above and requests that the Administrative Agent exchange such Notes
for new Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and the
<PAGE> 106
F-2
Assignor in an amount equal to the Commitment retained by the Assignor under the
Credit Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.1 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor 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 the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent and CAF Advance Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent and CAF Advance Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) specifies as its address for notices the
address set forth beneath its name on the signature pages hereof [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement and the Notes or such other
documents as are necessary to indicate that all such payments are subject to
such rates at a rate reduced by an applicable tax treaty]*.
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent. The effective
date of this Assignment and Acceptance shall be the date of acceptance thereof
by the Administrative Agent, unless otherwise specified on Schedule 1 hereto
(the "Effective Date").
5. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement.
- --------
* If the Assignee is organized under the laws of a
jurisdiction outside the United States.
<PAGE> 107
F-3
6. Upon such acceptance and recording by the Administrative
Agent, from and after the Effective Date, the Administrative Agent shall make
all payments under the Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
<PAGE> 108
Schedule 1
to
Assignment and Acceptance
Dated _________, 199_
Section 1.
Percentage Interest: ______%
Section 2.
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Note payable to the order of the Assignee
Dated: _______, 199_
Principal amount: $____________
Note payable to the order of the Assignor
Dated: _______, 199_
Principal amount: $____________
Section 3.
Effective Date*: ________, 199_
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:____________________ By:____________________
Title: Title:
Address for notices:
[Address]
Consented to:
EL PASO NATURAL GAS COMPANY THE CHASE MANHATTAN BANK, as
Administrative Agent
By:________________________ By:_____________________
Title: Title:
- --------
* This date should be no earlier than the date of acceptance
by the Administrative Agent.
<PAGE> 109
2
Accepted this __ day
of __________, 199_
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:__________________________
Title:
<PAGE> 110
EXHIBIT G
FORM OF OPINION OF [ASSOCIATE] GENERAL COUNSEL OF THE COMPANY
___________ __, 1996
To Each of the Lenders, the Administrative Agent
and the CAF Advance Agent
Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Re: El Paso Natural Gas Company
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
3.2(b)(iii) of the $250,000,000 Revolving Credit and Competitive Advance
Facility Agreement, dated as of November 4, 1996 (the "Credit Agreement"), among
El Paso Natural Gas Company (the "Borrower"), the banks and other financial
institutions from time to time party thereto (each a "Lender," and together the
"Lenders"), and The Chase Manhattan Bank, as Administrative Agent (in such
capacity, the "Administrative Agent") and as CAF Advance Agent (in such
capacity, the "CAF Advance Agent") for the Lenders. Unless the context otherwise
requires, all capitalized terms used herein without definition shall have the
meanings ascribed to them in the Credit Agreement.
I am [Associate] General Counsel of the Borrower, and I, or
attorneys over whom I exercise supervision, have acted as counsel for the
Borrower in connection with the preparation, execution and delivery of the
Credit Agreement. In that connection, I or such attorneys have examined:
(1) the Credit Agreement, executed by the parties
thereto;
(2) the Notes, executed by the Borrower; and
(3) the other documents furnished by the Borrower pursuant to
Sections 3.1 and 3.2 of the Credit Agreement.
I, or attorneys over whom I exercise supervision, have also
examined the originals, or copies certified to our satisfaction, of the
agreements, instruments and other documents, and all of the orders, writs,
judgments, awards, injunctions and decrees, which affect or purport to affect
the Borrower's ability to perform the Borrower's obligations under the Credit
Agreement or the Notes (collectively referred to herein as the "Documents"). In
addition, I, or attorneys over whom I exercise
<PAGE> 111
G-2
supervision, have examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower, certificates of
public officials and of officers of the Borrower, and agreements, instruments
and other documents, as I have deemed necessary as a basis for the opinions
hereinafter expressed. In all such examinations, I, or attorneys over whom I
exercise supervision, have assumed the legal capacity of all natural persons
executing documents, the genuineness of all signatures on original or certified,
conformed or reproduction copies of documents of all parties (other than, with
respect to the Documents, the Borrower), the authenticity of original and
certified documents and the conformity to original or certified copies of all
copies submitted to such attorneys or me as conformed or reproduction copies. As
to various questions of fact relevant to the opinions expressed herein, I have
relied upon, and assume the accuracy of, representations and warranties
contained in the Credit Agreement and certificates and oral or written
statements and other information of or from public officials, officers and/or
representatives of the Borrower and others.
I have assumed that the parties to the Documents other than
the Borrower have the power to enter into and perform such documents and that
such documents have been duly authorized, executed and delivered by, and
constitute legal, valid and binding obligations of, such parties.
The opinions expressed below are limited to the federal laws
of the United States and, to the extent relevant hereto, the General Corporation
Law of the State of Delaware, as currently in effect. I assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if I become aware of any facts that might change the opinions expressed herein
after the date hereof.
Based on the foregoing and upon such investigation as we have
deemed necessary, and subject to the limitations, qualifications and assumptions
set forth herein, I am of the following opinion:
1. The Borrower (i) is a corporation duly incorporated and
existing in good standing under the laws of the State of Delaware, and
(ii) possesses all the 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.
2. The execution, delivery and performance by the Borrower of
the Documents are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action in respect of or by
the Borrower, and do not contravene (i) the Borrower's charter or
by-laws, each as amended to date, (ii) any federal law, rule or
regulation applicable to the Borrower (excluding provisions of federal
law expressly referred to in and covered by the
<PAGE> 112
G-3
opinion of Jones, Day, Reavis & Pogue delivered to you in connection
with the transactions contemplated hereby) or any provision of the
General Corporation Law or the State of Delaware applicable to the
Borrower, or (iii) any contractual restriction binding on or affecting
the Borrower. The Documents have been duly executed and delivered on
behalf of the Borrower.
3. No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for the due execution, delivery and performance by the Borrower of the
Documents, except those required in the ordinary course of business in
connection with the performance by the Borrower of its obligations
under certain covenants and warranties contained in the Documents.
4. To the best of my knowledge, there is no action, suit or
proceeding pending or overtly threatened against or involving the
Borrower or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Borrower and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of any Document.
These opinions are given as of the date hereof and are solely
for your benefit in connection with the transactions contemplated by the Credit
Agreement. These opinions may not be relied upon by you for any other purpose or
relied upon by any other person for any purpose without my prior written
consent.
Very truly yours,
<PAGE> 113
EXHIBIT H
FORM OF OPINION OF NEW YORK COUNSEL TO THE COMPANY
______ __, 1996
To Each of the Lenders, the Administrative Agent,
and the CAF Advance Agent Referred to Below
c/o The Chase Manhattan Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Re: $250,000,000 Revolving Credit and Competitive Advance Facility
Agreement dated as of November 4, 1996
Dear Ladies and Gentlemen:
We have acted as special New York counsel for El Paso Natural
Gas Company, a Delaware corporation (the "Company"), in connection with the
$250,000,000 Revolving Credit and Competitive Advance Facility Agreement, dated
as of November 4, 1996 (the "Financing Agreement"), among the Company, the banks
and other financial institutions from time to time party thereto (each a
"Lender," and together the "Lenders") and The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent") and as CAF
Advance Agent (in such capacity, the "CAF Advance Agent") for the Lenders. This
opinion is delivered to you pursuant to Section 3.2(b)(iv) of the Financing
Agreement. Capitalized terms used herein and not otherwise defined have the
meanings assigned such terms in the Financing Agreement. With your permission,
all assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of the assumptions or items upon which we have
relied.
In connection with the opinions expressed herein, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of this opinion. We have examined, among other documents, the
following:
(a) An executed copy of the Financing
Agreement; and
(b) An executed copy of each of the Notes.
The documents referred to in items (a) and (b) above are
referred to herein collectively as the "Documents."
<PAGE> 114
H-2
In all such examinations, we have assumed the legal capacity
of all natural persons executing documents, the genuineness of all signatures,
the authenticity of original and certified documents and the conformity to
original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of,
representations and warranties contained in the Documents and certificates and
oral or written statements and other information of or from representatives of
the Company and others and assume compliance on the part of all parties to the
Documents with their covenants and agreements contained therein. With respect to
the opinions expressed in paragraph (a) below, our opinions are limited (x) to
our actual knowledge, if any, of the Company's specially regulated business
activities and properties based solely upon an officer's certificate in respect
of such matters and without any independent investigation or verification on our
part and (y) to our review of only those laws and regulations that, in our
experience, are normally applicable to transactions of the type contemplated by
the Documents.
To the extent it may be relevant to the opinions expressed
herein, we have assumed that the parties to the Documents have the power to
enter into and perform such documents and to consummate the transactions
contemplated thereby and that such documents have been duly authorized, executed
and delivered by, and, except as set forth in paragraph (b) with respect to the
Company, constitute legal, valid and binding obligations of, such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
(a) The execution and delivery to the Administrative Agent, the CAF
Advance Agent and the Lenders by the Company of the Documents and the
performance by the Company of its obligations thereunder (i) do not require
under present law any filing or registration by the Company with, or approval or
consent to the Company of, any governmental agency or authority of the State of
New York that has not been made or obtained except those required in the
ordinary course of business in connection with the performance by the Company of
its obligations under certain covenants and warranties contained in the
Documents and (ii) do not violate any present law, or present regulation of any
governmental agency or authority, of the State of New York applicable to the
Company or its property.
(b) The Documents constitute legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms.
(c) The borrowings by the Company under the Financing Agreement and the
applications of the proceeds thereof as provided in the Financing Agreement will
not violate Regulation
<PAGE> 115
H-3
G, T, U or X of the Board of Governors of the Federal Reserve System.
The opinions set forth above are subject to the following
qualifications:
(A) We express no opinion as to:
(i) the validity, binding effect or enforceability (a) of any
provision of the Documents relating to indemnification, contribution or
exculpation in connection with violations of any securities laws or
statutory duties or public policy, or in connection with willful,
reckless or criminal acts or gross negligence of the indemnified or
exculpated party or the party receiving contribution; or (b) of any
provision of any of the Documents relating to exculpation of any party
in connection with its own negligence that a court would determine in
the circumstances under applicable law to be unfair or insufficiently
explicit;
(ii) the validity, binding effect or enforceability of (a) any
purported waiver, release, variation, disclaimer, consent or other
agreement to similar effect (all of the foregoing, collectively, a
"Waiver") by the Company under the Documents to the extent limited by
provisions of applicable law (including judicial decisions), or to the
extent that such a Waiver applies to a right, claim, duty, defense or
ground for discharge otherwise existing or occurring as a matter of law
(including judicial decisions), except to the extent that such a Waiver
is effective under and is not prohibited by or void or invalid under
provisions of applicable law (including judicial decisions), (b) any
provision of any Document relating to choice of governing law to the
extent that the validity, binding effect or enforceability of any such
provision is to be determined by any court other than a court of the
State of New York or (c) any provision of any Document relating to
forum selection to the extent the forum is a federal court;
(iii) the enforceability of any provision in the Documents
specifying that provisions thereof may be waived only in writing, to
the extent that an oral agreement or an implied agreement by trade
practice or course of conduct has been created that modifies any
provision of the Documents;
(iv) the effect of any law of any jurisdiction other than the
State of New York wherein the Administrative Agent, the CAF Advance
Agent or any Lender may be located or wherein enforcement of any
document referred to above may be sought that limits the rates of
interest legally chargeable or collectible; and
<PAGE> 116
H-4
(v) any approval, consent or authorization of the
Federal Energy Regulatory Commission or any other United States federal
agency or authority needed in connection with the execution, delivery
and performance by the Company of the Documents, the consummation of
the transactions contemplated thereby and compliance with the terms and
conditions thereof.
(B) Our opinions above are subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, voidable preference, moratorium
or similar laws, and related judicial doctrines, from time to time in effect
affecting creditors' rights and remedies generally, (ii) general principles of
equity (including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on the
availability of equitable remedies), whether such principles are considered in a
proceeding at law or in equity and (iii) the qualification that certain other
provisions of the Documents may be unenforceable in whole or in part under the
laws (including judicial decisions) of the State of New York or the United
States of America, but the inclusion of such provisions does not affect the
validity as against the Company of the Documents as a whole, and the Documents
contain adequate provisions for enforcing payment of the obligations governed
thereby, subject to the other qualifications contained in this letter.
(C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) limit the availability of a remedy under certain
circumstances when another remedy has been elected; and
(ii) may, where less than all of a contract may be
unenforceable, limit the enforceability of the balance of the contract
to circumstances in which the unenforceable portion is not an essential
part of the agreed exchange; and
(iii) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs.
(D) For the purposes of the opinion set forth in paragraph (c) above,
we have assumed that (i) none of the Administrative Agent, the CAF Advance Agent
or any of the Lenders has or will have the benefit of any agreement or
arrangement (excluding the Documents) pursuant to which any Advances are
directly or indirectly secured by Margin Stock, (ii) none of the Administrative
Agent, the CAF Advance Agent, any of the Lenders or any of their respective
affiliates has extended or will extend any other credit to the Company directly
or indirectly secured by Margin Stock and (iii) none of the Administrative
Agent, the CAF Advance Agent or any of the Lenders has relied or will rely upon
any Margin Stock as collateral in extending or maintaining any Advances pursuant
to the Financing Agreement.
<PAGE> 117
H-5
(E) For purposes of our opinions above insofar as they relate to the
Company, we have assumed that (i) the Company is a corporation validly existing
in good standing in its jurisdiction of incorporation, has all requisite power
and authority, and has obtained all requisite corporate, shareholder, third
party and governmental authorizations, consents and approvals, and made all
requisite filings and registrations, necessary to execute, deliver and perform
the Documents to which it is a party (except to the extent noted in paragraph
(a) above), and that such execution, delivery and performance will not violate
or conflict with any law, rule, regulation, order, decree, judgment, instrument
or agreement binding upon or applicable to the Company or its properties (except
to the extent noted in paragraph (a) above), and (ii) the Documents have been
duly executed and delivered by the Company.
The opinions expressed herein are limited to the federal laws
of the United States of America (in the case of the matters covered in paragraph
(c) above) and the laws of the State of New York, as currently in effect, except
that we express no opinion with respect to laws, rules or regulations of the
State of New York, or of any governmental agency or authority thereof,
applicable to companies engaged in the transmission or distribution of gas or
other petroleum products, or as to filings, registrations, approvals or consents
required under or by such laws, rules or regulations.
We express no opinion as to the compliance or noncompliance,
or the effect of the compliance or noncompliance, of each of the addressees with
any state or federal laws or regulations applicable to each of them by reason of
their status as or affiliation with a federally insured depository institution.
The opinions expressed herein are solely for the benefit of
the Administrative Agent, CAF Advance Agent and the Lenders and may not be
relied on in any manner or for any purpose by any other person or entity.
Very truly yours,
JONES, DAY, REAVIS & POGUE
By:________________________
<PAGE> 118
EXHIBIT I
[Letterhead of Process Agent]
______________, 199__
To each of the Lenders parties
to the Credit Agreement (as
defined and referred to
below) and to The Chase Manhattan Bank
as Administrative Agent and
CAF Advance Agent for said Lenders
c/o The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
To El Paso Natural Gas Company
100 North Stanton
El Paso, Texas 79901
El Paso Natural Gas Company
---------------------------
Gentlemen:
Reference is made to that certain $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein being
used herein with the same meaning) among El Paso Natural Gas Company (the
"Company"), certain banks and other financial institutions from time to time
party thereto as Lenders thereunder (the "Lenders") and The Chase Manhattan
Bank, as Administrative Agent and CAF Advance Agent (in such capacities, the
"Administrative Agent" and the "CAF Advance Agent" for the Lenders).
Pursuant to Section 9.9(a) of the Credit Agreement ___________________
(the "Borrower") has appointed the undersigned (with an office on the date
hereof at 1633 Broadway, New York, New York 10019) as Process Agent to receive
on behalf of the Borrower and its property service of copies of the summons and
complaint and any other process which may be served by the Administrative Agent,
the CAF Advance Agent, any Lender or the holder of any Note in any action or
proceeding by the Administrative Agent, the CAF Advance Agent, any Lender or the
holder of any Note in any New York State or Federal court sitting in New York
City in respect of, but only in respect of, any claims or causes of action
arising out of or relating to the Credit Agreement and the Notes issued pursuant
thereto.
<PAGE> 119
I-2
The undersigned hereby accepts such appointment as Process Agent and
agrees with each of you that (i) the undersigned will not terminate the
undersigned's agency as such Process Agent prior to June 15, 2002 (and hereby
acknowledges that the undersigned has been paid in full by the Borrower for its
services as Process Agent through such date), (ii) the undersigned will maintain
an office in New York City through such date and will give the Administrative
Agent prompt notice of any change of address of the undersigned, (iii) the
undersigned will perform its duties as Process Agent in accordance with Section
9.9(a) of the Credit Agreement and (iv) the undersigned will forward forthwith
to the Borrower at its address specified below copies of any summons, complaint
and other process which the undersigned receives in connection with its
appointment as Process Agent.
This acceptance and agreement shall be binding upon the undersigned and
all successors of the undersigned.
Very truly yours,
CT CORPORATION SYSTEM
By:_______________________
Title:
Address of the Borrower:
[Address]
<PAGE> 120
EXHIBIT J
FORM OF
JOINDER AGREEMENT
Reference is made to the $250,000,000 Revolving Credit and CAF Advance
Facility Agreement, dated as of November 4, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms defined
therein being used herein as therein defined), among El Paso Natural Gas Company
(the "EPNGC"), certain banks and other financial institutions from time to time
party thereto and The Chase Manhattan Bank, as Administrative Agent and CAF
Advance Agent.
The undersigned hereby acknowledges that it has received and reviewed a
copy (in execution form) of the Credit Agreement, and agrees to:
(a) join the Credit Agreement as a Borrower party thereto;
(b) be bound by all covenants, agreements and acknowledgements
attributable to a Borrower in the Credit Agreement and any
Note to which it is a party; and
(c) perform all obligations required of it by the Credit Agreement
and any Note to which it is a party.
The undersigned hereby represents and warrants that the representations
and warranties with respect to it contained in, or made or deemed made by it in,
Article IV of the Credit Agreement are true and correct on the date hereof.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 121
J-2
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to
be duly executed and delivered in New York, New York by its proper and duly
authorized officer as of this _________ day of __________, 199__.
[BORROWER]
By:_______________________
Title:
ACKNOWLEDGED AND AGREED TO:
[EL PASO NATURAL GAS COMPANY]
[HOLDING]
By:________________________
Title:
<PAGE> 122
EXHIBIT K
FORM OF OPINION OF [ASSOCIATE]
GENERAL COUNSEL OF THE COMPANY
(a) [Each of the Company and the Borrowing
Subsidiary][Holding] (i) is a corporation duly incorporated and
existing in good standing under the laws of the jurisdiction of its
organization, and (ii) possesses all the 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 and delivery by [the Company and the
Borrowing Subsidiary][Holding] of the Joinder Agreement and by [the
Borrowing Subsidiary][Holding] of the Notes made by it and the
performance by [the Borrowing Subsidiary][Holding] of its obligations
as a "Borrower" under the Credit Agreement and the Notes made by it are
within such corporation's corporate powers and have been duly
authorized by all necessary corporate action in respect of or by [each
of the Company and the Borrowing Subsidiary (as applicable)][Holding],
and do not contravene (i) [the Company's or the Borrowing
Subsidiary's][Holding's] charter or by-laws, each as amended to date,
(ii) any federal law, rule or regulation applicable to [the Company or
the Borrowing Subsidiary][Holding] (excluding provisions of federal law
expressly referred to in and covered by the opinion of [New York
Counsel] delivered to you in connection with the transactions
contemplated hereby) or any provision of the General Corporation Law of
the State of Delaware applicable to such corporation, or (iii) any
contractual restriction binding on or affecting [the Company or the
Borrowing Subsidiary][Holding]. The Joinder Agreement has been duly
executed and delivered on behalf of [the Company and the Borrowing
Subsidiary][Holding] and the Notes made by [the Borrowing
Subsidiary][Holding] have been duly executed and delivered on behalf of
[the Borrowing Subsidiary][Holding].
(c) No authorization or approval or other action by, and no
notice to or filing with, any federal governmental authority or
regulatory body (including, without limitation, the FERC) is required
for (i) the due execution and delivery by [the Company or the Borrowing
Subsidiary][Holding] of the Joinder Agreement, (ii) the performance by
[the Borrowing Subsidiary][Holding] of its obligations as a "Borrower"
under the Credit Agreement or (iii) the execution, delivery and
performance by [the Borrowing Subsidiary][Holding] of the Notes made by
it, except those required in the ordinary course of business in
<PAGE> 123
K-2
connection with the performance by [the Company or the Borrowing
Subsidiary][Holding] of its obligations under certain covenants and
warranties contained in the Joinder Agreement, the Credit Agreement and
the Notes and those which have been obtained and are in full force and
effect.
(d) To the best of my best knowledge, there is no action, suit
or proceeding pending or overtly threatened against or involving the
Company or any of the Principal Subsidiaries which, in my reasonable
judgment (taking into account the exhaustion of all appeals), would
have a material adverse effect upon the consolidated financial
condition of the Company and its consolidated Subsidiaries taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of the Joinder Agreement, the Credit Agreement
or the Notes.
<PAGE> 124
EXHIBIT L
FORM OF OPINION OF NEW YORK
COUNSEL TO THE COMPANY
(a) The execution and delivery to the Administrative Agent,
the CAF Advance Agent and the Lenders by [the Company and the Borrowing
Subsidiary][Holding] of the Joinder Agreement and by [the Borrowing
Subsidiary][Holding] of the Notes made by it and the performance by
[the Borrowing Subsidiary][Holding] of its obligations as a "Borrower"
under the Credit Agreement and the Notes made by it (i) do not require
under present law, any filing or registration by [the Company or the
Borrowing Subsidiary][Holding] with, or approval or consent to [the
Company or the Borrowing Subsidiary][Holding] of, any governmental
agency or authority of the State of New York that has not been made or
obtained, except those, if any, required in the ordinary course of
business in connection with the performance by [the Company or the
Borrowing Subsidiary][Holding] of its respective obligations under
certain covenants and warranties contained in the Joinder Agreement,
the Credit Agreement and the Notes and (ii) do not violate any present
law, or present regulation of any governmental agency or authority, of
the State of New York applicable to [the Company or the Borrowing
Subsidiary][Holding] or its property.
(b) The Joinder Agreement, the Credit Agreement and the Notes
(as applicable) constitute the legal, valid and binding obligations of
[each of the Company and the Borrowing Subsidiary][Holding] enforceable
against [each of the Company and the Borrowing Subsidiary][Holding] in
accordance with their respective terms.
(c) The borrowings by [the Borrowing Subsidiary][Holding]
under the Credit Agreement and the applications of the proceeds thereof
as provided in the Credit Agreement will not violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System.
<PAGE> 125
EXHIBIT M
[FORM OF EXTENSION REQUEST]
[Date]
The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Attention: ____________________________
Gentlemen:
Reference is made to the $250,000,000 Revolving Credit and
Competitive Advance Facility Agreement, dated as of November 4, 1996, among the
undersigned, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and CAF Advance Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
This is an Extension Request pursuant to Section 2.23 of the
Credit Agreement requesting an extension of the Stated Termination Date to
[INSERT REQUESTED TERMINATION DATE]. Please transmit a copy of this Extension
Request to each of the Lenders.
EL PASO NATURAL GAS COMPANY
By _________________________
Title:
<PAGE> 1
EXHIBIT 11
EL PASO NATURAL GAS COMPANY
EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Income available for common stock dividends................. $38,211,000 $85,363,000
Primary average common shares outstanding................... 36,701,878 34,495,676
Primary earnings per share.................................. $ 1.0411 $ 2.4746
Fully diluted average common shares outstanding............. 37,120,972 34,733,823
Fully diluted earnings per common share..................... $ 1.0294 $ 2.4576
</TABLE>
<PAGE> 1
EXHIBIT 12
EL PASO NATURAL GAS COMPANY
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994 1993 1992
----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Earnings
Income from continuing operations................ $ 38 $ 85 $ 90 $ 92 $ 76
Income taxes..................................... 25 48 58 59 47
Minority interest................................ 2 0 0 0 0
----- ----- ----- ----- -----
Income from continuing operations before income
taxes and minority interest................... 65 133 148 151 123
Interest and debt expense........................ 100 85 76 71 68
Interest component of rent....................... 5 3 3 3 3
----- ----- ----- ----- -----
Total earnings available for fixed charges.... $ 170 $ 221 $ 227 $ 225 $ 194
===== ===== ===== ===== =====
Fixed charges(a)
Interest and debt expense........................ 100 85 76 71 68
Interest components of rent...................... 5 3 3 3 3
----- ----- ----- ----- -----
Fixed charges excluding preferred stock dividend
requirement................................... 105 88 79 74 71
Preferred stock dividend requirements............ 2 0 0 0 0
----- ----- ----- ----- -----
Total fixed charges.............................. $ 107 $ 88 $ 79 $ 74 $ 71
===== ===== ===== ===== =====
Ratio of Earnings to Fixed Charges(b).............. 1.59 2.51 2.87 3.04 2.73
</TABLE>
- ---------------
(a) Fixed charges consist of interest, exclusive of interest on rate refunds,
plus interest capitalized, and a portio of operating lease rent expense
deemed to be representative of interest. Also, fixed charges is adjusted by
the actual amount of any preferred stock dividend requirements of
majority-owned subsidiaries.
(b) The ratio of earnings to combined fixed charges and preferred and preference
stock dividend requirements for the periods presented would be the same as
the ratio of earnings to fixed charges since EPG has no outstanding
preferred stock or preference stock and, therefore, no dividend
requirements.
<PAGE> 1
EXHIBIT 21
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (Delaware)
El Paso Development Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100 %
Ex-Mission Ranches, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Energy Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Tennessee Pipeline Co. (Delaware) . . . . . . . . . . . . . . . . . . . . 100
(El Paso Energy Corporation owns 100% of the issued and outstanding . . . . .
Common Stock 100% of the Preferred Stock is owned by nonaffiliates.)
Tennessee Gas Pipeline Company (Delaware) . . . . . . . . . . . . . . . . . . 100
Altamont Service Corporation (Delaware) . . . . . . . . . . . . . . . . . 100
Altamont Gas Transmission Canada Limited (Canada) . . . . . . . . . . 100
Border Gas Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 37.5
East Tennessee Natural Gas Company (Tennessee) . . . . . . . . . . . . . . 100
EPEC East Natural Gas L.P. (Delaware L.P.) . . . . . . . . . . . . . 1
Eastern Insurance Company Limited (Bermuda) . . . . . . . . . . . . . . . 100
El Paso Energy Credit Corporation (Delaware) . . . . . . . . . . . . . . . 100
EPEC Fac Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
El Paso Energy Holdings Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
EPEC EIS Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC EIS Canada Ltd. (Alberta) . . . . . . . . . . . . . . . . . 100
EPEC Gas Transportation Company (Delaware) . . . . . . . . . . . . . 100
Energy TRACS, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Alaska, Inc. (Alaska) . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC-Altamont Corporation (Delaware) . . . . . . . . . . . . . . . . . . . 100
Altamont Gas Transmission Company (Delaware Joint Venture) . . . . . 53.34
EPEC Argentina Corporation (Delaware) . . . . . . . . . . . . . . . . . . 100
EPEC Baja California Corporation (Delaware) . . . . . . . . . . . . . . . 100
EPEC Canada Ltd. (Canada) . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Communications Corporation (Delaware) . . . . . . . . . . . . . . . . 100
EPEC Chase Inc. (Texas) . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Channel Industries Gas Company (Delaware) . . . . . . . . . . . . . . 100
Channel Gas Marketing Company (Delaware) . . . . . . . . . . . . 100
The Oasis Company (Delaware) . . . . . . . . . . . . . . . . . 30
Deepsea Ventures, Inc. (Delaware) . . . . . . . . . . . . . . . . 25
EPEC Cogeneration Company (Delaware) . . . . . . . . . . . . . . 100
EPEC Ethanol Company (Delaware) . . . . . . . . . . . . . . . 100
EPEC Ethanol Services Company (Delaware) . . . . . . . . . . . 100
EPEC Hungary Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
EPIC Energy Hungary B.V. (Netherlands) . . . . . . . . . . . . 100
Orange Acquisition, Inc. (Delaware) . . . . . . . . . . . . . 100
Orange Cogeneration Limited Partnership (Delaware L.P.) . 49.5
Orange Cogeneration GP II, Inc. (Delaware) . . . . . . . . . . 50
Orange Cogeneration G.P., Inc. (Delaware) . . . . . . . . 100
Polk Power GP II, Inc. (Delaware) . . . . . . . . . . . . . . 50
Polk Power GP, Inc. (Delaware) . . . . . . . . . . . . . . 100
Polk Power Partners, L.P. (Delaware L.P.) . . . . . . . 1
West Campus Cogeneration Company (Delaware) . . . . . . . . . 100
</TABLE>
1
<PAGE> 2
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (continued)
El Paso Energy Corporation (continued)
El Paso Tennessee Pipeline Co. (continued)
Tennessee Gas Pipeline Company (continued)
EPEC Corporation (continued)
Channel Industries Gas Company (continued)
EPEC Gas Processing Company (Delaware) . . . . . . . . . . . . . 100 %
EPEC Independent Power I Company (Delaware) . . . . . . . . . . 100
MASSPOWER (Massachusetts General Partnership) . . . . . . . . 17
EPEC Independent Power II Company (Delaware) . . . . . . . . . . 100
EPEC Insurance Ventures Inc. (Delaware) . . . . . . . . . . . . 100
EPEC Offshore Gathering Company (Delaware) . . . . . . . . . . . 100
EPEM Marketing Company (Kentucky) . . . . . . . . . . . . . . . 100
Creole Gas Pipeline Corporation (Louisiana) . . . . . . . . . 100
Entrade Pipeline Company (Kentucky) . . . . . . . . . . . . 100
Tennessee Gas Marketing Company (Delaware) . . . . . . . . . . . 100
Midwestern Gas Transmission Company (Delaware) . . . . . . . . . . . 100
Entrade Engine Company (Kentucky) . . . . . . . . . . . . . . . 100
EPEC Midwest Natural Gas L.P. (Delaware L.P.) . . . . . . . . . 99
EPEC Minerals Company - California (Delaware) . . . . . . . . . 100
EPEC Minerals Company - Nevada (Delaware) . . . . . . . . . . . 100
EPEC OCS Company, Inc. (Delaware) . . . . . . . . . . . . . . . 100
EPEC Oil Company (Delaware) . . . . . . . . . . . . . . . . . . 100
EPEC Polymers, Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
EPEC Eastern Realty, Inc. (New Jersey). . . . . . . . . . . . 100
New Midwestern Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
SWL Security Corp. (Texas) . . . . . . . . . . . . . . . . . . 100
Tennessee Overthrust Gas Company (Delaware) . . . . . . . . . . 100
Overthrust Pipeline Company (Delaware Partnership) . . . . . 18
TGP Corporation (Delaware) . . . . . . . . . . . . . . . . . . 100
EPEC Deepwater Gathering Company (Delaware) . . . . . . . . . . . . . . . 100
EPEC Delta XII Gas Co., Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
EPEC East Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . 100
EPEC East Natural Gas L.P. (Delaware L.P.) . . . . . . . . . . . . 99
EPEC Econ Services, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . 100
EPEC Technology Consulting Services Inc. (Delaware) . . . . . . . . 100
EPEC Europe Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Gas Australia Inc. (Delaware). . . . . . . . . . . . . . . . . . . . 100
Epic Energy Pty. Ltd. (Australia) . . . . . . . . . . . . . . . . . 30
Epic Energy Australia Pty. Limited (Australia) . . . . . . . . . . 99.9
Epic Energy Queensland Pty. Limited (Australia) . . . . . . . . . 99.8
Epic Energy South Australia Pty. Limited (Australia) . . . . . . . 99.98
</TABLE>
2
<PAGE> 3
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (continued)
El Paso Energy Corporation (continued)
El Paso Tennessee Pipeline Co. (continued)
Tennessee Gas Pipeline Company (continued)
EPEC Gas Australia Inc.(continued)
Epic Energy Pty. Ltd. (continued)
Epic Energy Northern Territory Pty. Limited (Australia). . . . . . . 100 %
Epic Energy Operations and Maintenance Pty. Ltd. (Australia) . . . . 99.9
Epic Energy Western Australia Pty. Limited (Australia) . . . . . . . 100
Galtee Limited (Cayman Islands) . . . . . . . . . . . . . . . . . . . . . 100
Ventures Holdings Pty. Ltd. (Australia) . . . . . . . . . . . . . . . 100
EPIC Sulawesi Gas Pty. Ltd. (Australia) . . . . . . . . . . . . . 100
Energy Equity EPIC (Sengkang) Pty. Ltd. (Australia) . . . . . 50
Sulawesi Energy Pty Ltd. (Australia) . . . . . . . . . . . . . . . 50
PT Energi Sengkang (Indonesia) . . . . . . . . . . . . . . . . 95
EPEC Gas Canada, Ltd. (Ontario) . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Gas International Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . 100
El Paso Energia Mexico S.A. de C.V. (Mexico). . . . . . . . . . . . . . . 0.1
EPEC China Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Gas Brazil Corporation (Delaware) . . . . . . . . . . . . . . . . . 100
EPIC Gas International Servicos do Brasil Ltda (Brazil) . . . . . . . 100
EPEC Gas Chile Corporation (Delaware) . . . . . . . . . . . . . . . . . . 100
Gas de Chile S.A. (Chile) . . . . . . . . . . . . . . . . . . . . . . 45
Gasoduco Transandino S.A. (Chile) . . . . . . . . . . . . . . . . . . 50
EPEC Gas Latin America Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
El Paso Energia Mexico, S.A. de C.V. (Mexico). . . . . . . . . . . . 99.9
Pasotronica, S.A. de C.V. (Mexico). . . . . . . . . . . . . . . . 50
EPEC Gas Services (Chile) Corporation (Delaware) . . . . . . . . . . . . 100
EPIC Gas Transportes S.A. (Chile) . . . . . . . . . . . . . . . . . 99.9
EPEC International (East Asia/Pacific) Inc. (Delaware) . . . . . . . . . 100
EPEC Gas Louisiana Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
Martin Exploration Company (Delaware) . . . . . . . . . . . . . . . . . . 100
EPEC Gas Properties Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC Gas Services, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Gas Supply Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . 100
EPEC International Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Nederland B.V. (Netherlands) . . . . . . . . . . . . . . . . . . . . 100
EPEC Offshore Netherlands Company (Delaware) . . . . . . . . . . . . . . 100
EPEC Liquids Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC Midwest Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC Midwest Natural Gas L.P. (Delaware L.P.) . . . . . . . . . . . . . . 99
EPEC MLP Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Polk Power Partners, L.P. (Delaware L.P.) . . . . . . . . . . . . . . . . 45.75
</TABLE>
3
<PAGE> 4
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (continued)
El Paso Energy Corporation (continued)
El Paso Tennessee Pipeline Co. (continued)
Tennessee Gas Pipeline Company (continued)
EPEC MTBE, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . . 100 %
EPEC Pittsfield Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . 100
EPEC Portland Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC Realty, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Services Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC AIRCO Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC OGS Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC TEPSCO Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Tellepsen Pipeline Services Company (Texas Partnership) . . . . . . . 49
GreyStar Corporation (Texas) . . . . . . . . . . . . . . . . . . . . . . 50
EPEC SNG Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Texas Acquisition Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . 100
EPEC Trinidad LNG, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
EPEC Ventures Bolivia Corporation (Delaware) . . . . . . . . . . . . . . . . . 100
EPEC Ventures Poland Corporation (Delaware) . . . . . . . . . . . . . . . . . 100
Wielkopulska Energia S.A. (Poland) . . . . . . . . . . . . . . . . . . . 50
EPEC Western Market Center Corporation (Delaware) . . . . . . . . . . . . . . 100
The Western Market Center Joint Venture (Wyoming Joint Venture) . . . . . 50
EPEC Western Market Center Service Corporation (Delaware) . . . . . . . . . . 100
EPEM Marketing Services Company (Delaware) . . . . . . . . . . . . . . . . . . 100
Green Canyon Gathering Company (Delaware) . . . . . . . . . . . . . . . . . . 100
Kern County Land Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
EPEC Equipment Corporation (Delaware) . . . . . . . . . . . . . . . . . . 100
EPEC Equipment Holding I Company (Delaware) . . . . . . . . . . . . . 100
EPEC Equipment Holding II Company (Delaware) . . . . . . . . . . . . 100
EPEC Equipment Holding III Company (Delaware) . . . . . . . . . . . . 100
EPEC Equipment Holding V Company (North Dakota) . . . . . . . . . 100
EPEC Equipment Holding IV Company (Wisconsin) . . . . . . . . . . . . 100
EPEC Equipment Holding VI Company (Illinois) . . . . . . . . . . . . 100
Marlin Drilling Co., Inc. (Delaware) . . . . . . . . . . . . . . . . 100
Marlin do Brasil Perfuacoes Maritimas Ltda. (Brazil) . . . . . . . 99.84
Bluefin Supply Company (Delaware) . . . . . . . . . . . . . . . . 100
Marlin do Brasil Perfuacoes Maritimas Ltda. (Brazil) . . . . . 0.16
EPEC West, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Kern River Corporation (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
Land Ventures, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
Midwestern Gas Marketing Company (Delaware) . . . . . . . . . . . . . . . . . 100
Mont Belvieu Land Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
4
<PAGE> 5
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (continued)
El Paso Energy Corporation (continued)
El Paso Tennessee Pipeline Co. (continued)
Tennessee Gas Pipeline Company (continued)
Sandbar Petroleum Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
S.K. Petroleum Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . 100
Tennessee Gas Transmission Company (Delaware) . . . . . . . . . . . . . . . . 100
Tennessee Storage Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
Tennessee Trailblazer Gas Company (Delaware) . . . . . . . . . . . . . . . . . 100
The Fontanelle Corporation (Louisiana) . . . . . . . . . . . . . . . . . . . . 100
The F and E Oyster Partnership (Louisiana Partnership) . . . . . . . . . 64
The LaChute Corporation (Louisiana) . . . . . . . . . . . . . . . . . . . . . 100
Travis Place Parking Garage Inc. (Delaware) . . . . . . . . . . . . . . . . . 100
El Paso Energy Foundation (Texas) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Energy International Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
El Paso Mauritius Power Limited (Mauritius) . . . . . . . . . . . . . . . . . . . . . 100
El Paso Pakistan Power (Private) Limited (Pakistan) . . . . . . . . . . . . . . . 100
El Paso Kabirwala Power Ltd. (Cayman Islands) . . . . . . . . . . . . . . . . 100
EPED Holding Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPIC Samalayuca A, L.L.C. (Delaware Limited Liability Company) . . . . . . . . . . 15
EPIC Samalayuca B, L.L.C. (Delaware Limited Liability Company) . . . . . . . . . . 15
EPED A Company (Cayman Islands) . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPED Aguaytia Company (Cayman Islands) . . . . . . . . . . . . . . . . . . . . 99
EPIC Yucatan Pipeline Company (Cayman Islands) . . . . . . . . . . . . . . . . 99
EPED B Company (Cayman Islands) . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPED Aguaytia Company (Cayman Islands) . . . . . . . . . . . . . . . . . . . . 1
EPIC Yucatan Pipeline Company (Cayman Islands) . . . . . . . . . . . . . . . . 1
EPED Ecuador Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100
EPED SAM Holdings Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPIC Samalayuca A, L.L.C. (Delaware Limited Liability Company) . . . . . . . . 85
Samalayuca Holding Partnership (Delaware General Partnership) . . . . . . 25
Compania Samalayuca II, S.A. de C.V. (Mexico) . . . . . . . . . . . . 80
EPIC Samalayuca B, L.L.C. (Delaware Limited Liability Company) . . . . . . . . 85
Compania Samalayuca II, S.A. de C.V. (Mexico) . . . . . . . . . . . . . . 80
SAM II Equity Funding, L.L.C. (Delaware Limited Liability Company) . . . . . . 60
El Paso Energy Marketing Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Eastex Gas Storage and Exchange, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . 100
EPEM Canada Inc. (Canada) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Energy Resources Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Energy Service Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Field Services Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
Cornerstone Natural Gas, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Cornerstone Gas Gathering Company (Delaware) . . . . . . . . . . . . . . . . . . . 100
Cornerstone Gas Processing, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . 100
Tembec Company (Texas Joint Venture) . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
5
<PAGE> 6
EL PASO NATURAL GAS COMPANY
SUBSIDIARIES AND AFFILIATES
AS OF FEBRUARY 1, 1997
<TABLE>
<S> <C>
El Paso Natural Gas Company (continued)
El Paso Field Services Company (continued)
Cornerstone Natural Gas, Inc. (continued)
Cornerstone Gas Resources, Inc. (Delaware) . . . . . . . . . . . . . . . . . . . . 100 %
Cornerstone Pipeline Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
Cornerstone/Merit Joint Venture (Texas Joint Venture) . . . . . . . . . . . . 60
Metroplex Pipeline Company L.L.C. (Texas LLC) . . . . . . . . . . . . . . 50
Valley Pipeline L.L.C. (Texas LLC) . . . . . . . . . . . . . . . . . . . 50
Mountain Creek Joint Venture (Texas Joint Venture) . . . . . . . . . . . . . . 50
Oletha Partners (Texas Partnership) . . . . . . . . . . . . . . . . . . . . . 50
Oletha Pipeline Corporation (Texas) . . . . . . . . . . . . . . . . . . . . . 100
Oletha Pipeline I, Ltd. (Texas Limited Partnership) . . . . . . . . . . . 2
Oletha Pipeline II, Ltd. (Texas Limited Partnership) . . . . . . . . . . 2
Oletha Pipeline I, Ltd. (Texas Limited Partnership) . . . . . . . . . . . . . 98
Oletha Pipeline II, Ltd. (Texas Limited Partnership) . . . . . . . . . . . . . 98
Dubach Gas Company (Texas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Endevco Producing Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
Garvin County Pipeline (Texas Joint Venture) . . . . . . . . . . . . . . . . . . . 33.33
Pentex Pipeline Company (Texas) . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Intrastate Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Fuel Development Company (Delaware) . . . . . . . . . . . . . . . . . . . . . 100
El Paso Gas Marketing Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Gas Transportation Company (Delaware) . . . . . . . . . . . . . . . . . . . . 100
El Paso Mexico Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso Mojave Pipeline Co.(Delaware) . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso New Chaco Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . . . 100
El Paso TransColorado Company (Delaware) . . . . . . . . . . . . . . . . . . . . . . . 100
EPNG Mojave, Inc. (Texas) . . . . . . . . . . . . . . . . . . . . . . . . . 100
Mt. Franklin Insurance Ltd. (Bermuda) . . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
6
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the three registration
statements of El Paso Natural Gas Company (the "Company") on Form S-3
(333-14617, 33-55153, and 33-44327 and the four registration statements of the
Company on Form S-8 (33-49956, 33-46519, 33-57553, and 33-51851) of our report
dated February 28, 1997, on our audits of the consolidated financial statements
and the financial statement schedule of the Company as of December 31, 1996 and
1995, and for the years ended December 31, 1996, 1995 and 1994, which report is
included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
March 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) 1996 10K.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 200
<SECURITIES> 0
<RECEIVABLES> 1,445
<ALLOWANCES> 0<F1>
<INVENTORY> 87
<CURRENT-ASSETS> 1,965
<PP&E> 5,938
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 8,712
<CURRENT-LIABILITIES> 2,712
<BONDS> 2,215
<COMMON> 170
0
0
<OTHER-SE> 1,468
<TOTAL-LIABILITY-AND-EQUITY> 8,712
<SALES> 0
<TOTAL-REVENUES> 3,010
<CGS> 0
<TOTAL-COSTS> 2,840
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110
<INCOME-PRETAX> 65
<INCOME-TAX> 25
<INCOME-CONTINUING> 38
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 0
<FN>
<F1>NOT SEPARATELY IDENTIFIED IN THE CONSOLIDATED FINANCIAL STATEMENTS OR
ACCOMPANYING NOTES THERETO.
</FN>
</TABLE>
