<PAGE> 1
EXHIBIT 10.14
EXECUTION COPY
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[CHASE LOGO]
CREDIT AGREEMENT
dated as of
August 23, 2000
among
ARGO, L.L.C.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
FIRST UNION NATIONAL BANK,
as Syndication Agent
BANK ONE, NA,
as Documentation Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
2
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i
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I
<S> <C>
Definitions.............................................................1
SECTION 1.01. Defined Terms............................................1
SECTION 1.02. Classification of Loans and Borrowings..................23
SECTION 1.03. Terms Generally.........................................23
SECTION 1.04. Accounting Terms; GAAP..................................23
ARTICLE II
The Loans..............................................................24
SECTION 2.01. Construction Loans......................................24
SECTION 2.02. Loans and Borrowings....................................24
SECTION 2.03. Requests for Borrowings.................................25
SECTION 2.04. Funding of Borrowings...................................25
SECTION 2.05. Interest Elections......................................26
SECTION 2.06. Termination and Reduction of Construction Loan
Commitments...........................................27
SECTION 2.07. Conversion to Term Loans................................27
SECTION 2.08. Evidence of Debt........................................27
SECTION 2.09. Repayment of Loans......................................28
SECTION 2.10. Optional and Mandatory Prepayment of Loans..............28
SECTION 2.11. Fees....................................................29
SECTION 2.12. Interest................................................30
SECTION 2.13. Alternate Rate of Interest..............................30
SECTION 2.14. Increased Costs.........................................31
SECTION 2.15. Break Funding Payments..................................32
SECTION 2.16. Taxes...................................................32
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs..............................................33
SECTION 2.18. Mitigation Obligations; Replacement of Lenders..........34
SECTION 2.19. No Approval of Work.....................................35
SECTION 2.20. Project Control Account.................................35
SECTION 2.21. Debt Service Reserve Account............................37
SECTION 2.22. Debt Payment Account....................................38
ARTICLE III
Representations and Warranties.........................................38
SECTION 3.01. Organization; Powers....................................38
SECTION 3.02. Authorization; Enforceability...........................39
SECTION 3.03. Governmental Approvals; Material Permits; No
Conflicts.............................................39
SECTION 3.04. No Material Adverse Change; Material Obligations........40
SECTION 3.05. Properties..............................................40
</TABLE>
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ii
<TABLE>
<S> <C>
SECTION 3.06. Litigation and Environmental Matters....................40
SECTION 3.07. Compliance with Laws and Agreements.....................40
SECTION 3.08. Investment Company Act Status...........................41
SECTION 3.09. Public Utility Holding Company Act Status...............41
SECTION 3.10. Taxes...................................................41
SECTION 3.11. ERISA...................................................41
SECTION 3.12. Disclosure..............................................41
SECTION 3.13. Business of the Borrower................................42
SECTION 3.14. Subsidiaries............................................42
SECTION 3.15. Construction Contracts..................................42
ARTICLE IV
Conditions.............................................................42
SECTION 4.01. Effective Date..........................................42
SECTION 4.02. Each Credit Event.......................................45
SECTION 4.03. Conversion..............................................46
ARTICLE V
Affirmative Covenants..................................................47
SECTION 5.01. Financial Statements and Other Information..............47
SECTION 5.02. Notices of Material Events..............................49
SECTION 5.03. Existence; Conduct of Business..........................50
SECTION 5.04. Payment of Obligations..................................50
SECTION 5.05. Maintenance of Properties; Insurance....................50
SECTION 5.06. Books and Records; Inspection Rights....................53
SECTION 5.07. Compliance with Laws....................................53
SECTION 5.08. Use of Proceeds.........................................53
SECTION 5.09. Completion..............................................54
SECTION 5.10. Environmental Matters...................................54
SECTION 5.11. Maintain Title to Collateral............................54
SECTION 5.12. Further Assurance.......................................54
SECTION 5.13. Performance of Transaction Documents....................54
SECTION 5.14. Lien Releases...........................................55
SECTION 5.15. MMS Operator Approval...................................55
ARTICLE VI
Negative Covenants.....................................................55
SECTION 6.01. Indebtedness............................................55
SECTION 6.02. Liens...................................................55
SECTION 6.03. Fundamental Changes.....................................56
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions..........................................56
SECTION 6.05. Hedging Agreements......................................56
SECTION 6.06. Restricted Payments.....................................57
SECTION 6.07. Transactions with Affiliates............................57
</TABLE>
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<TABLE>
<S> <C>
SECTION 6.08. Restrictive Agreements..................................57
SECTION 6.09. Modification of the Approved Construction Budget........57
SECTION 6.10. Management Fees.........................................58
SECTION 6.11. Ownership; Legal Form...................................58
SECTION 6.12. Subsidiaries............................................58
SECTION 6.13. Design Changes..........................................58
SECTION 6.14. Compliance With ERISA...................................58
SECTION 6.15. Amendments..............................................58
SECTION 6.16. Variation Orders........................................58
SECTION 6.17. Construction Contracts..................................58
ARTICLE VII
Events of Default......................................................59
ARTICLE VIII
The Administrative Agent...............................................62
ARTICLE IX
Miscellaneous..........................................................63
SECTION 9.01. Notices.................................................63
SECTION 9.02. Waivers; Amendments.....................................64
SECTION 9.03. Expenses; Indemnity; Damage Waiver......................65
SECTION 9.04. Successors and Assigns..................................65
SECTION 9.05. Survival................................................67
SECTION 9.06. Counterparts; Integration; Effectiveness................68
SECTION 9.07. Severability............................................68
SECTION 9.08. Right of Setoff.........................................68
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process...............................................68
SECTION 9.10. WAIVER OF JURY TRIAL....................................69
SECTION 9.11. Headings................................................69
SECTION 9.12. Confidentiality.........................................69
SECTION 9.13. Interest Rate Limitation................................70
SECTION 9.14. Secured Affiliates......................................70
SECTION 9.15. Intercreditor Provisions................................70
SECTION 9.16. Limitation on Recourse of Lenders.......................71
</TABLE>
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iv
SCHEDULES:
Schedule 2.01 -- Construction Loan Commitments
Schedule 5.05 (b) -- Insurance
Schedule 6.08 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Akin Gump Strauss Hauer & Feld, L.L.P.
Exhibit B-2 -- Form of Opinion of Gregory W. Jones, Esq.
Exhibit B-3 -- Form of Opinion of Louisiana Counsel
Exhibit C -- Form of Independent Engineer's Certificate
Exhibit D-- Form of Note
Exhibit E -- Form of Withdrawal Request
Exhibit F -- Terms of Subordination
<PAGE> 6
1
CREDIT AGREEMENT dated as of August 23, 2000, among ARGO, L.L.C., the
LENDERS party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent,
FIRST UNION NATIONAL BANK, as Syndication Agent and BANK ONE, NA, as
Documentation Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Account Bank" means The Chase Manhattan Bank, in its capacity
as the provider of accounts hereunder.
"Additional Contract" means any contract or undertaking to
which the Borrower is a party relating to the Project, entered into after the
Effective Date.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agreement" means this Credit Agreement, as amended,
supplemented or modified from time to time.
"Alternate Base Rate" means, for any day, a rate per annum
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% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
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2
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Construction Loan Commitments represented by such
Lender's Construction Loan Commitment. If the Construction Loan Commitments have
terminated or expired, the Applicable Percentages shall be determined based upon
the Construction Loan Commitments most recently in effect, giving effect to any
assignments, or if the Construction Loans have Converted to Term Loans, each
Lender's Applicable Percentage shall be the percentage of total Term Loans
represented by such Lender's Term Loans.
"Applicable Rate" means, for any day, with respect to any ABR
Loan or Eurodollar Loan, as the case may be, the applicable per annum percentage
rate set forth below at the appropriate intersection in the table below, based
on whether Full Clawback Coverage has occurred and, after the occurrence of Full
Clawback Coverage, the Debt Coverage Ratio for the Rolling Period ending on the
last day of the most recent fiscal quarter with respect to which the
Administrative Agent has received the financial statements and other information
(the "Current Information") required to be delivered to the Administrative Agent
pursuant to Section 5.02 and the calculation showing the then Applicable Rate
(such calculation to be made by the Borrower as soon as practicable after the
end of each fiscal quarter, with written notice by the Borrower to the
Administrative Agent, as soon as practicable thereafter, whether the Applicable
Rate has changed or is to remain constant for the applicable period).
<TABLE>
<CAPTION>
ABR Eurodollar
Spread Spread
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<S> <C> <C>
Prior to Full Clawback Coverage 0.75% 1.75%
---- ----
Subsequent to Full Clawback Coverage if the Debt Coverage
Ratio is:
Less than or equal to 2.00:1.00 0.25% 1.25%
==== ====
Greater than 2.00:1.00 but less than or equal to 3.00:1.00 0.50% 1.50%
==== ====
Greater than 3.00:1.00 0.75% 1.75%
==== ====
</TABLE>
Each change in the Applicable Rate based on a change in the Current Information
shall become effective on the date on which Current Information is delivered to
the Lenders pursuant to Section 5.01 (but in any event not later than the 60th
day after the end of each of the first three quarterly periods of each fiscal
year or the 120th day after the end of each fiscal year, as the case may be) and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If, after the occurrence of Full Clawback Coverage, any Current
Information is not delivered within the time periods specified in Section 5.01,
then, until such Current Information is delivered, the Debt Coverage Ratio at
the end of the Rolling Period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 3.00 to 1.00.
"Approved Construction Budget" means the construction budget
prepared by the Borrower and approved by the Administrative Agent, the Lenders
and the Independent Engineer specifying the cost by category of all Project
Costs, as the same may be supplemented or amended from time to time with the
approval of the Administrative Agent.
"Argo Lenders" means the banks and other financial
institutions that are, from time to time, Lenders under this Agreement.
<PAGE> 8
3
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Assignment and Assumption Agreement" means the assignment and
assumption agreement dated as of the date hereof by and between Delos Offshore
Company, L.L.C., as assignor, and the Borrower, as assignee, relating to the
assignment to and assumption by the Borrower of the Platform Hull Construction
Contract, the Installation Agreement, the Topsides Construction Contract and the
Engineering Services Agreement.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Construction Loan Maturity
Date and the date of termination of the Construction Loan Commitments.
"Available Cash Flow" has the meaning set forth in Section
2.20(b)(ix).
"Base Case Model" means the financial model prepared in good
faith by Borrower, and approved by the Administrative Agent in consultation with
the Independent Engineer, setting out reasonably expected cash flow, operating
expenses, capital costs and debt service of the Project, in each case on a
consolidated basis.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Base Equity Contribution Amount" has the meaning set forth in
the LLC Agreement and shall be an amount equal to not less than $35,000,000.
"Borrower" means Argo, L.L.C., a Delaware limited liability
company and an indirect wholly-owned subsidiary of the Sponsor.
"Borrowing" means Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
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4
"Budgeted Costs" means the approved Project Costs set forth in
the Approved Construction Budget.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, the sum of the
aggregate amount of all expenditures of the Borrower and its Subsidiaries on a
consolidated basis (other than expenditures made with the proceeds of casualty
insurance) for fixed or capital assets made during such period that, in
accordance with GAAP, would be classified as capital expenditures.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means the failure of the Sponsor to own,
directly or indirectly, 100% of the legal and beneficial equity interest of the
Borrower.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Charges" has the meaning set forth in Section 9.13.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or Loans comprising such Borrowing, are
Construction Loans or Term Loans.
"Clawback Obligation" has the meaning given such term in the
Sponsor Agreement.
"Closing Date" means the date set forth in the first paragraph
of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means the property of the Borrower or any other
Person that is subject to a Lien created by any Security Document.
"Collateral Agent" means The Chase Manhattan Bank, in its
capacity as collateral agent for the Argo Lenders and the EPN Lenders.
<PAGE> 10
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"Combined Lender" means any Lender that is a member of the
Argo Lenders or the EPN Lenders.
"Combined Total Credit Percentage" means as to any Combined
Lender at any time, the percentage of the aggregate EPN Lender Indebtedness and
the aggregate principal amount of the Sponsor's Clawback Obligation owing to
such Combined Lender based on such Combined Lender's percentage share with
respect to each such obligation as established under this Agreement and the EPN
Credit Agreement.
"Commitment Fee" means 0.375% per annum from the Closing Date
to the Conversion Date of the unused portion of the Construction Loan
Commitments; provided that the Commitment Fee shall be 0.125% per annum from the
Closing Date until the earlier to occur of (a) the Initial Loan and (b) 90 days
after the Closing Date.
"Consolidated Cash Available for Debt Service" means, for any
Rolling Period, operating cash flow of the Borrower and its Subsidiaries, less
Consolidated Mandatory Capital Expenditures made by the Borrower and its
Subsidiaries, plus consolidated interest income received by the Borrower and its
Subsidiaries, in each case for such period.
"Consolidated Debt Service" means, without duplication, for
any Rolling Period, an amount equal to the aggregate of (a) principal and
interest due and payable on the Term Loans and any other Indebtedness of the
Borrower and its Subsidiaries after giving effect to any payments accrued or
made during such period under any Interest Rate Agreements, and (b) other fees
(if any) that may be payable to the Administrative Agent and the Lenders during
such period pursuant to this Agreement.
"Consolidated Debt Service Coverage Ratio" means for any
Rolling Period the ratio of (a) the Consolidated Cash Available for Debt Service
over (b) Consolidated Debt Service, in each case for such period. The
Consolidated Debt Service Coverage Ratio will be calculated using the Base Case
Model as adjusted to reflect actual results and reasonable projections of future
performance.
"Consolidated EBITDA" means, without duplication, as to the
Borrower and its Subsidiaries, for each Rolling Period, on a consolidated basis,
the amount equal to net income of the Borrower and its Subsidiaries less any
non-cash income and gains included in net income, plus, to the extent deducted
in determining net income, interest expense, depreciation, depletion and
impairment, amortization of leasehold and intangibles, other non-cash costs,
expenses, charges, write-offs and similar items and taxes; provided that gains
or losses on the disposition of assets not in the ordinary course of business
shall not be included in Consolidated EBITDA.
"Consolidated Mandatory Capital Expenditures" means capital
expenditures required to cause the Borrower, its Subsidiaries and the Project to
comply with applicable Governmental Requirements and to obtain and maintain all
Material Permits.
"Consolidated Projected Cash Available for Debt Service" means
Consolidated Cash Available for Debt Service determined on a pro forma basis for
the period from the date of the then most recent consolidated financial
statements of the Borrower and its Subsidiaries until the Final Maturity Date.
"Consolidated Projected Debt Service" means, without
duplication, for period from the date of the then most recent consolidated
financial statements of the Borrower and its Subsidiaries until the Final
Maturity Date, a pro forma amount equal to the aggregate of (a) principal and
interest (assuming that interest will continue to accrue throughout such period
at rates in effect on the date of determination) projected to be due and payable
on the Term Loans (excluding the principal payment on the Term Loans due on the
Final Maturity Date) and any other Permitted Indebtedness during such period,
after giving effect to any payments projected to be made during such period
under any Interest Rate Agreements and (b) other fees (if any) that are
projected to be payable to the Administrative Agent and the Lenders during such
period pursuant to this Agreement.
"Consolidated Projected Debt Service Coverage Ratio" means,
for the period from the date of the then most recent consolidated financial
statements of the Borrower and its Subsidiaries until the Final
<PAGE> 11
6
Maturity Date, a financial ratio calculated as the quotient of the Consolidated
Projected Cash Available for Debt Service over Consolidated Projected Debt
Service, in each case for such period.
"Construction Contractor" means each counterparty, other than
the Borrower, to each Construction Contract.
"Construction Contracts" means, collectively, the Platform
Hull Construction Contract, the Installation Agreement, the Topsides
Construction Contract, the Engineering Services Contract and the Pipeline
Installation Contract.
"Construction Equity Contribution Amount" has the meaning set
forth in the LLC Agreement and shall be equal to $8,000,000.
"Construction Loan" means a Loan made pursuant to Section
2.01.
"Construction Loan Commitment" means, with respect to each
Lender, the commitment of such Lender to make Construction Loans hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender's Construction Loans hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.06 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04. The initial amount of each Lender's Construction Loan Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Construction Loan Commitment, as applicable.
The initial aggregate amount of the Lenders' Construction Loan Commitments is
$95,000,000.
"Construction Loan Maturity Date" means the earlier of the
Date Certain and the date that is the three month anniversary of the
commencement of the Demand Charge Period (as such term is defined in the
Processing Agreement).
"Contract Schedules" means, collectively, each of the
milestone construction schedules for the applicable portion of the Work as set
forth in each of the applicable Construction Contracts.
"Contingent Equity Contribution Amount" has the meaning set
forth in the LLC Agreement and shall be equal to an amount not less than
$10,000,000.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
<PAGE> 12
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"Conversion" means the conversion of the outstanding
Construction Loans to Term Loans pursuant to the terms and conditions of
Sections 2.07 and 4.03. "Converted" has a meaning correlative thereto.
"Conversion Date" means the date on which the Conversion
occurs.
"Date Certain" means January 1, 2002, as the same may be
extended once only, for a period of up to 90 days upon the written request of
the Borrower delivered to the Administrative Agent and the Lenders at least 30
days, but not more than 60 days, prior to January 1, 2002, which request shall:
(a) certify that (i) an event of force majeure shall have
occurred and be continuing under any of the Construction Contracts
which will prevent Final Completion from occurring on or prior to the
Date Certain and (ii) no Default, other than a Default which has
occurred as a direct result of such event of force majeure, has
occurred and is continuing;
(b) designate the date, which date shall not be later than
March 31, 2002, to which the Date Certain is requested to be extended;
(c) be accompanied by written evidence satisfactory to the
Required Lenders (i) that sufficient extensions of termination dates,
if any, set forth in the Project Documents are in effect so that such
extension shall not result in the termination of any Project Document
and (ii) that such extension could not reasonably be expected to result
in a Material Adverse Effect;
(d) demonstrate to the satisfaction of the Required Lenders
that adequate provisions for funding exist to meet any and all Budgeted
Costs, known or anticipated Non-Budgeted Costs, operating expenses and
Consolidated Debt Service during the period of such extension; and
(e) demonstrate to the reasonable satisfaction of the Required
Lenders and the Independent Engineer that Final Completion can be
reasonably expected to occur during the period of such extension.
In the event that such request shall comply with the requirements set forth
above, the Date Certain shall be extended to the date set forth in the
Borrower's request; provided, that if at any time during the period of such
extension any of the conditions set forth above cease to be true, in the
reasonable opinion of the Required Lenders, upon delivery of written notice to
the Borrower by the Administrative Agent, such period of extension shall
terminate.
"Debt Coverage Ratio" means, for any Rolling Period, the ratio
of (a) all Indebtedness of the Borrower and its Subsidiaries (other than
Subordinated Indebtedness from the Sponsor) as of the last day of such Rolling
Period over (b) Consolidated EBITDA for such Rolling Period.
"Debt Payment Account" means an account for the deposit of
funds from the Project Control Account for the payment of fees, interest on the
Loans and principal of the Loans, together with Interest Rate Agreement
payments, to be maintained with and under the sole dominion and control of the
Administrative Agent.
<PAGE> 13
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"Debt Service Reserve Account" means an account for the
deposit of the Debt Service Reserve Amount to be maintained with and under the
sole dominion and control of the Administrative Agent.
"Debt Service Reserve Amount" means the amount, as of the date
of determination, equal to Consolidated Projected Debt Service for the six-month
period immediately following the date of the then most recent financial
statements of the Borrower.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Documentation Agent" means Bank One, NA.
"dollars" or "$" refers to lawful money of the United States
of America.
"Drawings and Specifications" means, collectively, the
"Drawings and Specifications" as such term is defined in the Platform Hull
Construction Contract, the "Specifications and Drawings" as set forth on Exhibit
E to the Topsides Construction Contract, and the "Drawings" and "Specifications"
as such terms are defined in the Pipeline Installation Contract, and comprising
the drawings and specifications for each component of the Platform and the
Project.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"El Paso Entities" means the Borrower, the Sponsor, the
Parent, El Paso Energy Corporation, El Paso Production GOM Inc., and any other
Affiliate of El Paso Energy Corporation that is a party to a Transaction
Document.
"Engineering Services Agreement" means the contractor services
agreement dated as of May 12, 1999, by and between Delos Offshore Company,
L.L.C. and Alliance Engineering Incorporated, and assigned to and assumed by the
Borrower pursuant to the Assignment and Assumption Agreement, together with any
amendments, modifications or supplements thereto, to the extent permitted
hereby.
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"EPN Credit Agreement" means that Fourth Amended and Restated
Credit Agreement among Leviathan Gas Pipeline Partners, L.P., now known as El
Paso Energy Partners, L.P., Leviathan
<PAGE> 14
9
Finance Corporation, the several lenders from time to time parties thereto,
Credit Lyonnais, as syndication agent, BankBoston, N.A., as documentation agent
and The Chase Manhattan Bank, as administrative agent, dated as of March 23,
1995, as amended and restated through June 30, 2000, together with any
amendments, modifications or supplements thereto.
"EPN Lenders" means banks and other financial institutions
that are, from time to time, parties to the EPN Credit Agreement.
"EPN Lender Indebtedness" means the obligations of the Sponsor
owing to the EPN Lenders pursuant to the EPN Credit Agreement and secured by the
EPN Security Documents.
"EPN Security Documents" means the Security Documents as
defined in the EPN Credit Agreement and the Subsidiaries Guarantee as defined in
the EPN Credit Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA, other than an event for which the 30-day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.2615.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning set forth in Article IX.
"Event of Loss" shall mean, with respect to the Project, (a)
the loss of all or any material portion of the Project due to destruction or
damage beyond repair; (b) the loss of use of all or any material portion of the
Project for a period reasonably expected to extend for at least six months for
any of the reasons referenced in clause (a); (c) the receipt of insurance
proceeds based upon an actual or constructive total loss of the Project; (d) the
receipt of insurance proceeds in excess of $1,000,000, except as otherwise
provided in Section 5.05(b); (e) the Taking of all or any portion of the Project
such that the then remaining portion cannot practically be utilized for the
purposes intended; (f) a Taking or requisition by a Governmental Authority for
use of the Project (in its entirety or a material portion as aforesaid) for a
stated period which shall exceed, or for an indefinite period which is
reasonably expected to exceed, six months; or (g) shutdown of the Project as a
result of any Governmental Requirement for a period exceeding six consecutive
months.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located
<PAGE> 15
10
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.18(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.16(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.16(a).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Final Completion" means the earliest date on which all of the
following conditions shall have been met:
(a) the Project is mechanically complete, and all material
works have been completed satisfactorily under the Construction
Contracts;
(b) the Project shall have successfully completed the
Performance Test;
(c) the Administrative Agent shall have received a report of
the Independent Engineer confirming the satisfactory completion and
commissioning of the Project, and passage of the Performance Test;
(d) the Demand Charge Period (as such term is defined in the
Processing Agreement) shall have commenced under the Processing
Agreement; and
(e) all Project Costs shall have been paid, except in the case
of punch list items and disputed amounts where sufficient funds,
including, without limitation, proceeds from Construction Loans, have
been escrowed to cover such remaining Project Costs.
"Final Maturity Date" means the earlier to occur of (a) the
fifth anniversary of the Conversion Date and (b) the seventh anniversary of the
Closing Date.
"Financing Documents" means this Agreement, the Notes (if
any), the Sponsor Agreement, the Security Documents, the Borrowing Requests and
the other documents and security instruments executed and delivered pursuant to
or in connection with the Loans.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
<PAGE> 16
11
"force majeure" means the causes, conditions, events or
circumstances which are beyond the reasonable control of the Person claiming
force majeure, and could not have been avoided or prevented by such Person's
reasonable and diligent foresight, planning and implementation. Such causes,
conditions, events and circumstances shall include, without limitation, acts of
God, war (declared or undeclared), insurrections, hostilities, strikes (other
than strikes by such Person's employees, which strikes shall be deemed not to be
a force majeure event), lockouts, riots, floods, fires, storms and conduct which
would violate any applicable material criminal laws of a Governmental Authority.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Full Clawback Coverage" means the condition achieved when the
Borrower has distributed at least $30,000,000 to the Parent as permitted
hereunder, which distributions are subject to the "Clawback" obligation of the
Sponsor as set forth in the Sponsor Agreement.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Approval" means any authorization, consent,
approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing, variance, claim, order, judgment, decree, publication, notice
to, declaration of or with or registration by or with any Governmental
Authority.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Governmental Requirement" means any Governmental Approval,
law, statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, certificate, license, or other direction or requirement
(including, but not limited to, any of the foregoing which relate to
Environmental Laws, energy regulations and occupational, safety and health
standards or controls) of any Governmental Authority.
"Gross Domestic Product Implicit Price Deflator" means the
index number specified from time to time in Table 7.13, line 1 entitled the
Gross Domestic Product, of the National Income and Products Accounts Selected
NIPA Tables of the Survey of Current Business issued by the U.S. Department of
Commerce Economic and Statistic Administration Bureau of Economic Analysis, or
if such index number ceases to be available or published, the Administrative
Agent and the Borrower shall mutually agree upon an alternative index.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or
<PAGE> 17
12
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantee and Collateral Agreement" means the Guarantee and
Collateral Agreement dated as of the Closing Date made by the Borrower in favor
of the Administrative Agent for the benefit of itself and the Lenders, together
with any amendments, modifications or supplements thereto.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(c) all obligations of such Person upon which interest charges
are customarily paid;
(d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such
Person;
(e) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business and for borrowed
money);
(f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the Indebtedness secured thereby has been
assumed;
(g) all Guarantees by such Person of Indebtedness of others;
(h) all Capital Lease Obligations in respect of which such
Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise
assures a creditor against loss;
(i) all obligations, contingent or otherwise, of such Person
as an account party in respect of letters of credit and letters of
guaranty; and
<PAGE> 18
13
(j) all obligations, contingent or otherwise, of such Person
in respect of bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Independent Engineer" means The ABS Group of Companies, Inc.
"Independent Insurance Consultant" means Marsh USA Inc.
"Information" has the meaning set forth in Section 9.12.
"Information Memorandum" means the Confidential Information
Memorandum dated June, 2000, relating to the Borrower and the Transactions.
"Initial Loan" means the first Construction Loan advanced to
the Borrower by the Lenders pursuant to the terms of Section 2.01.
"Installation Agreement" means the installation agreement
dated as of August 31, 1999, by and between Delos Offshore Company, L.L.C. and
MODEC International LLC relating to the installation of the component parts of
the Platform, as amended by that certain Amendment No. 1 to Installation
Agreement dated as of August 17, 2000, between Delos Offshore Company, L.L.C.
and MODEC International LLC, together with any amendments, modifications or
supplements thereto, to the extent permitted hereby, and which agreement has
been assigned to and assumed by the Borrower pursuant to the Assignment and
Assumption Agreement.
"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.05.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the first day of each March, June, September and December, and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Borrowing only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business
<PAGE> 19
14
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and, in the case of a Construction Borrowing, thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.
"Interest Rate Agreements" means any interest rate swap, cap,
collar or similar agreements between the borrower and a financial institution
for the transfer or mitigation of interest rate risks related to the Project.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing 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) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means any interest in any asset or property securing an
obligation owed to, or securing a claim by, a Person other than the owner of the
asset or property, whether such interest is based on common law, statute or
contract, and whether such obligation or claim is fixed or contingent, and
including, but not limited to the lien or security interest arising from any
mortgage, deed of trust, security agreement, pledge, hypothecation, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes.
The term "Lien" shall include reservations, exceptions, encroachments,
easements, encumbrances, rights of way, covenants, conditions, restrictions,
leases and other title exceptions affecting assets or property. For purposes of
this Agreement, the Borrower or any Subsidiary of the Borrower shall be deemed
to be the owner of any asset or property which it has acquired or holds subject
to a conditional sale agreement, financing lease or other arrangement pursuant
to which title to such asset or property has been retained by or vested in some
other Person for security purposes.
"LLC Agreement" means the Limited Liability Company Agreement
of the Borrower dated as of June 28, 2000, together with any amendments,
modifications or supplements thereto, to the extent permitted hereby.
"Loans" means the Construction Loans and the Term Loans.
"Material Adverse Effect" means any event, occurrence or
condition which has, or which reasonably could be expected to have, a material
and adverse effect on (a) the Project or on the business,
<PAGE> 20
15
assets, operations, financial condition or prospects of the Borrower and its
Subsidiaries, taken as a whole, (b) the Borrower's ability to perform any of its
obligations under any Transaction Documents, including this Agreement, (c) the
Sponsor's ability to perform its obligations under the Sponsor Agreement, (d)
the Parent's ability to perform its equity contribution obligations under the
LLC Agreement, (e) the validity or enforceability of any material term of any
Transaction Document, or (f) the validity or priority of, or the rights of or
benefits available to the Lenders under, this Agreement or any of the other
Financing Documents.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $1,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Material Permits" means all Governmental Approvals necessary
as of the date of determination for, and material to, the construction,
development, use, operation, ownership, or maintenance of the Project.
"Material Project Documents" means the following Project
Documents and substitutions thereof, in each case in form and substance and with
a counter-party reasonably satisfactory to the Administrative Agent and the
Lenders:
(a) the Processing Agreement;
(b) the performance guaranty agreement dated as of August 23,
2000, from El Paso Energy Corporation in favor of the Borrower
guaranteeing performance of El Paso Production GOM Inc. of its
obligations under the Processing Agreement;
(c) the Construction Contracts; and
(d) the LLC Agreement.
"Maximum Rate" has the meaning set forth in Section 9.13.
"Monthly Distribution Date" means the last day of each month
(or if such day is not a Business Day, the first Business Day immediately prior
thereto); provided that the Administrative Agent shall have received the
financial statements and calculations required by Section 5.01 in form and
substance satisfactory to the Administrative Agent at least 15 days prior to
such day.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 3(37) or Section 4001(a)(3) of ERISA.
"Non-Budgeted Costs" means all Operating Costs that are not
Qualified Budgeted Costs.
"Note" means any note requested by a Lender pursuant to
Section 2.08 substantially in the form of Exhibit D and evidencing the Loans
advanced by such Lender to the Borrower.
<PAGE> 21
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"Obligations" means (a) each and every obligation, covenant
and agreement of the Borrower now or hereafter existing contained in this
Agreement or any of the other Financing Documents to which the Borrower is a
party, whether for principal, interest, premium, fees, expenses or otherwise,
and any amendments or supplements thereto, extensions or renewals thereof or
replacements therefor, (b) all sums advanced in accordance with the Security
Documents to which the Borrower is a party by or on behalf of any Secured Party
to protect any of the Collateral purported to be covered thereby, (c) any
amounts paid by the Lenders for which indemnification is provided hereunder or
in any other Financing Document and (d) amounts paid by any Secured Party in
preservation of such Secured Party's rights or interests in the Collateral,
together with interest on such amounts from the date such amounts are paid until
reimbursement in full at the applicable interest rate and (e) all amounts owing
by the Borrower to the Administrative Agent, the Lenders or any Secured
Affiliate under any Interest Rate Agreement; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or unliquidated,
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and
including all Indebtedness of the Borrower under any instrument now or hereafter
evidencing or securing any of the foregoing.
"Operating Account" means an account designated by the
Borrower in a written notice given by the Borrower to the Administrative Agent
and the Account Bank from time to time, but not later than 11:00 a.m. New York
City time on a day that is two Business Days prior to the date any payment is
required to be made to such account hereunder.
"Operating Budget" means an annual operating budget prepared
by the Borrower and approved by the Administrative Agent in consultation with
the Independent Engineer, including projected Operating Costs and Capital
Expenditures. Any amendment to the Operating Budget proposed by the Borrower
shall require the approval of the Administrative Agent (in consultation with the
Independent Engineer).
"Operating Costs" means, for any period, the amounts expended
or owed by the Borrower for the operation and maintenance of the Project,
calculated in accordance with GAAP, including, without limitation, payments
under the Project Documents, property, sales, environmental, premiums for
insurance policies, business management and administrative service fees, capital
expenditures, general and administrative expenses, and all other fees and
expenses necessary for the continued operation and maintenance of the Project
and the conduct of business of the Borrower.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Parent" means Argo I, L.L.C., a Delaware limited liability
company, wholly owned by the Sponsor and, as of the Closing Date, the sole
member of the Borrower.
"Participant" has the meaning set forth in Section 9.04(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
<PAGE> 22
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"Performance Test" means the tests required pursuant to
Article 19 of the Installation Agreement necessary to determine that the
Platform is ready for use by the Borrower.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or
which are being contested in good faith by appropriate proceedings;
provided that adequate reserves with respect thereto are maintained on
the books of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens, imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 30 days or which are being contested in good faith
by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(c) Liens incurred (other than any inchoate Lien imposed by
ERISA) or pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and
other social security legislation, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
construction, operating and maintenance agreements, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money), and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements, in each case having ordinary
and customary terms;
(d) easements, rights-of-way, restrictions, servitudes,
permits, reservations, encroachments, exceptions, conditions, covenants
and other similar charges or encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value
of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;
(e) inchoate Liens arising under ERISA;
(f) any obligations or duties affecting any of the assets of
the Borrower or its Subsidiaries to any municipality or public
authority with respect to any franchise, grant, license or permit which
do not materially impair the use of such asset for the purposes for
which it is held;
(g) defects, irregularities and deficiencies in title of any
rights-of-way or other property of the Borrower or any Subsidiary of
the Borrower which in the aggregate do not materially and adversely
affect the business of the Borrower of any of its Subsidiaries, and
defects, irregularities and deficiencies in title to any property of
the Borrower and its Subsidiaries which defects, irregularities or
deficiencies have been cured by possession under applicable statutes of
limitation; and
(h) security interests arising by operation of law solely
under Article 2 of the Uniform Commercial Code to the extent and so
long as the "debtor" with respect to such security interests does not
have or does not lawfully obtain possession of the goods subject
thereto;
<PAGE> 23
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provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States of America (or by any agency thereof to
the extent such obligations are backed by the full faith and credit of
the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) marketable direct obligations issued by any state or
public instrumentality thereof maturing within one year from the date
of acquisition thereof, and at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's Ratings Group,
a division of McGraw- Hill Companies, Inc. (or any successor
statistical rating organization, "S&P"), or Moody's Investors Service,
Inc. (or any successor statistical rating organization, "Moody's");
(c) investments in commercial paper maturing no more than one
year from the date of creation thereof and, at the time of acquisition,
having the highest credit rating obtainable from S&P or from Moody's;
(d) investments in certificates of deposit or banker's
acceptances maturing within one year from the date of acquisition
thereof issued by (i) any Lender, (ii) any commercial bank organized
under the laws of the United States of America or any state thereof or
the District of Columbia having combined capital and surplus and
undivided profits of not less than $500,000,000 or (iii) any bank which
has a short-term commercial paper rating meeting the requirements of
clause (c) above (any such Lender or bank, a "Qualifying Lender");
(e) investments in eurodollar time deposits having a maturity
of less than one year purchased directly from any Lender (whether such
deposit is with such Lender or any other Lender hereunder) or issued by
any Qualifying Lender; and
(f) fully collateralized repurchase agreements and reverse
repurchase agreements with a term of not more than 14 days with any
Qualifying Lender relating to securities described in clause (a) above.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Pipeline Installation Contract" means the offshore pipeline
installation agreement dated as of August 17, 2000, by and between Argo, L.L.C.
and Allseas Construction Contractors, S.A., as company formed under the laws of
the Netherlands, relating to the construction and installation of the pipeline
gathering system of the Project, together with any amendments, modifications or
supplements thereto, to the extent permitted hereby.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
<PAGE> 24
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"Platform" means the Moses class tension leg platform
constructed in accordance with and pursuant to the terms and provisions of the
Platform Hull Construction Contract and the Topsides Construction Contract and
installed on behalf of the Borrower in Block 1003, of the Ewing Bank Area, Outer
Continental Shelf, Gulf of Mexico in accordance with and pursuant to the terms
and provisions of the Installation Agreement.
"Platform Hull Construction Contract" means the Fabrication
Agreement dated as of July 16, 1999, between Delos Offshore Company, L.L.C. and
MODEC International LLC, relating to the construction of the hull for the
Platform, as amended by that certain Amendment No. 1 to Fabrication Agreement
dated as of August 31, 1999, by and between Delos Offshore Company, L.L.C. and
MODEC International LLC, and as further amended by that certain Amendment No. 2
to Fabrication Agreement dated as of August 17, 2000, by and between Delos
Offshore Company, L.L.C. and MODEC International LLC, together with any
amendments, modifications or supplements thereto, to the extent permitted
hereby, and has been assigned to and assumed by the Borrower pursuant to the
Assignment and Assumption Agreement.
"Pledge Agreement" means the pledge agreement dated as of the
date hereof by the Parent pledging all of its equity interest in the Borrower to
the Administrative Agent for the benefit of itself and the Lenders, together
with any amendments, modifications or supplements thereto.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Prince Field Reserves" means all of the interest in the lands
in Blocks 958 (S/2), 959 (S/2), 1002 (E/2) and 1003, Ewing Bank Area, Outer
Continental Shelf, Gulf of Mexico.
"Processing Agreement" means that certain Processing Agreement
dated as of August 23, 2000, by and between Argo, L.L.C. and El Paso Production
GOM Inc., together with any amendments, modifications or supplements thereto, to
the extent permitted hereby.
"Project" means the construction, installation and operation
of the Platform with all of its associated deck and topside facilities, and
associated gas and oil gathering and transmission pipelines, for the processing
of oil, gas and water produced from the Prince Field Reserves.
"Project Account" means any of the Project Control Account,
the Debt Payment Account and the Debt Service Reserve Account.
"Project Control Account" has the meaning set forth in Section
2.20.
"Project Costs" means the aggregate amount of all costs and
expenses (without duplication) to (a) complete construction and attain Final
Completion of the Project (including, without limitation, development, design,
engineering, testing, start-up and initial operation until the Conversion Date)
in accordance with the Project Documents, (b) ensure that the Project will meet
all Governmental Requirements when construction is completed, (c) ensure all of
the Borrower's obligations under the Project Documents and (d) complete the
financing of the Project. Expenses shall include, without limitation, consulting
fees of the Independent Engineer and other consultants, legal fees and
disbursements, project development and
<PAGE> 25
20
construction management expenses and fees, interest and fees with respect to the
Construction Loans, fees and expenses associated with arranging and syndicating
the Loans.
"Project Documents" means all of the contracts relating to
ownership, design, development, construction, operation and maintenance of the
Project (as such contracts may be amended, modified, supplemented or replaced
from time to time) each in form and substance satisfactory to the Administrative
Agent and the Lenders, including but not limited to the Material Project
Documents.
"Project Revenues" means, for any period, all cash revenues or
income of the Borrower, including, without limitation, revenues received
pursuant to the Processing Agreement, interest and other income earned on
amounts in the Project Control Account, proceeds paid or credited to the
Borrower from any business interruption insurance policies, but excluding any
payments received under any Interest Rate Agreements.
"Qualified Operating Costs" means actual Operating Costs
incurred or payable by the Borrower that, when aggregated with all Operating
Costs incurred or payable by the Borrower during any calendar year up to the
relevant date of determination, do not exceed 110% of the projected Operating
Costs for such period set forth in the Operating Budget.
"Quarterly Date" means the last day of the third calendar
month of the first fiscal quarter immediately subsequent to the month in which
the Conversion Date occurs and, thereafter, the last day of each fiscal quarter,
and the Final Maturity Date.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time prior to the Conversion
Date, Lenders having unused Construction Loan Commitments representing at least
51% of the sum of the total unused Construction Loan Commitments at such time,
and, at any time after the Conversion Date, Lenders having at least 51% of the
outstanding Term Loans.
"Recovery Account" has the meaning set forth in Section
5.05(b)(vi).
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any equity
interest of the Borrower, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any equity interest of the Borrower or any option, warrant or other right to
acquire any such equity interest of the Borrower and any payment with respect to
Subordinated Indebtedness.
"Rolling Period" means any period of four consecutive fiscal
quarters; provided that for purposes of calculating the Consolidated Debt
Service Coverage Ratio subsequent to the Conversion Date, the term "Rolling
Period" shall mean the most recently ended fiscal quarter plus each full fiscal
quarter subsequent to Final Completion until four full fiscal quarters have
elapsed from the date of Final Completion.
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21
"Secured Affiliate" means any Affiliate of any Lender that has
entered into an Interest Rate Agreement with the Borrower or any of its
Subsidiaries with the obligations of the Borrower or such Subsidiary thereunder
being secured by one or more Security Documents.
"Secured Parties" means the Administrative Agent, the Lenders
and the Secured Affiliates.
"Security Documents" means the Guarantee and Collateral
Agreement, the Pledge Agreement, each consent executed by a Construction
Contractor relating to the assignment of its Construction Contract under the
Guarantee and Collateral Agreement and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower, any
Subsidiary of the Borrower or any other Person as security for the payment and
performance of the Obligations.
"Sponsor" means El Paso Energy Partners, L.P., a Delaware
limited partnership.
"Sponsor Agreement" means that certain Sponsor Agreement dated
as of the Closing Date by the Sponsor for the benefit of the Administrative
Agent and the Lenders containing the clawback obligation of the Sponsor with
respect to the final scheduled payment on the Term Loans.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities approximately equal to
three months, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Indebtedness" means Indebtedness of the Borrower
owing to the Sponsor or an Affiliate of the Sponsor and that is subordinated to
the Obligations as provided in the Terms of Subordination attached hereto as
Exhibit F.
"Subsidiary" means, as to any Person, a corporation,
partnership or other entity of which the shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Syndication Agent" means First Union National Bank.
"Taking" means the condemnation, confiscation or seizure of
title by any Governmental Authority of all or any portion of the Project.
<PAGE> 27
22
"Taxes" means any and all present or future taxes,
assessments, levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.
"Term Loans" means the Loans made to the Borrower on the
Conversion Date pursuant to the Conversion.
"Term Repayment Amount" means aggregate principal amount of
the Term Loans as of the Conversion Date, after giving effect to the Conversion,
less $30,000,000.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by 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 is not 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 is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Topside Construction Contract" means the Fabrication
Agreement dated as of May 19, 2000, by and between Delos Offshore Company,
L.L.C. and Omega Service Industries, Inc. relating to the deck, vent boom and
other topside facilities for the Platform, together with any amendments,
modifications or supplements thereto, to the extent permitted hereby, and which
contract has been assigned to and assumed by the Borrower pursuant to the
Assignment and Assumption Agreement.
"Total Project Cost" means the total of all Project Costs
incurred prior to the Conversion Date.
"Transaction Documents" means this Agreement, the Project
Documents, the Financing Documents and all other documents, agreements,
instruments and certificates in connection with the foregoing.
"Transaction Party" means a Person that is a party to a
Transaction Document.
"Transactions" means the execution, delivery and performance
by the Borrower of the Transaction Documents, borrowing of Loans, and the use of
the proceeds thereof.
"Type" when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate and the
Alternate Base Rate.
"Variation" means any variation to the Work, the scope of
Work, any contract schedule or other milestone schedule under the Construction
Contracts, or the Drawings and Specifications.
<PAGE> 28
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"Variation Order" means any "variation order" under the
Platform Hull Construction Contract and the Installation Agreement or any
"change order" under the Topsides Construction Contract and the Pipeline
Installation Contract or other request or order for any Variation.
"Welfare Plan" means any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by such entities in their sole discretion at any time without
any material liability.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Withdrawal Request" means in relation to a request for
withdrawal from the Project Control Account or the Debt Service Reserve Account,
a request substantially in the form of Exhibit E.
"Work" means with respect to the Project, collectively, the
"Work" as such term is defined in each of the Construction Contracts.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Construction Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Construction Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Construction Borrowing") or by
Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Construction Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, real or personal, including cash, securities,
accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Unless otherwise defined
or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
except as otherwise provided herein, applied on a basis consistent with the
financial statements delivered for the period ending and as of June 30, 2000.
<PAGE> 29
24
ARTICLE II
The Loans
SECTION 2.01. Construction Loans. (a) Subject to the terms and
conditions set forth herein, each Lender agrees to make Construction Loans to
the Borrower from time to time during the Availability Period in an aggregate
principal amount not to exceed the amount set forth next to such Lender's name
as its "Construction Loan Commitment" on Schedule 2.01. Any Construction Loan or
portion thereof which is prepaid cannot be reborrowed.
(b) The proceeds of Construction Loans shall be applied by the
Borrower exclusively to the payment of, or to reimburse the Borrower for the
payment of, actual Project Costs; provided, however, that if all the conditions
for Conversion have been satisfied and there remains unused Construction Loan
Commitments on the day immediately preceding the Conversion Date, the Borrower
may request Construction Loans in an amount equal to such unused Construction
Loan Commitments, which Construction Loans shall be advanced on the Conversion
Date immediately prior to Conversion and the Borrower may use the funds from
such Construction Loans to fund the Debt Service Reserve Amount. Additionally,
as permitted by and subject to the conditions of Section 6.06, the Borrower may
use funds from such Construction Loans, to the extent available after
satisfaction of all Project Costs, to make a one time distribution to Parent on
the Conversion Date.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be
made as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Construction Loan Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Construction Loan
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $5,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $100,000 and not less than $1,000,000; provided that
an ABR Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Construction Loan Commitments. Borrowings of more
than one Type and Class may be outstanding at the same time; provided that there
shall not at any time be more than a total of five Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Final Maturity Date.
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SECTION 2.03. Requests for Borrowings. To request a Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of the proposed Borrowing or (b)
in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
(iii) whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto, which shall
be a period contemplated by the definition of the term
"Interest Period";
(v) the location and number of the Project Control
Account into which the funds are to be disbursed; and
(vi) attached thereto information relating to the
Project Costs for which such Borrowing is requested.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to the Project Control Account.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case
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26
of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.05. Interest Elections. (a) Each Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such Borrowing and, in
the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.02 if the Borrower
were requesting Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being elected
with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which
case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant
to such Interest Election Request, which shall be a Business
Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto after
giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing
<PAGE> 32
27
is repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.
SECTION 2.06. Termination and Reduction of Construction Loan
Commitments. (a) Unless previously terminated, the Construction Loan Commitments
shall terminate on the earlier to occur of (i) the Conversion Date and (ii) the
Construction Loan Maturity Date, and the obligation of any Lender to Convert the
Construction Loans to Term Loans shall terminate at the close of business on
such earlier date with respect to any Construction Loans not so Converted.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Construction Loan Commitments; provided that (i) each reduction
of the Construction Loan Commitments shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower has
demonstrated to the satisfaction of the Required Lenders and the Independent
Engineer that sufficient committed funds (excluding the Contingent Equity
Contribution Amount) will be available to meet all Budgeted Costs and to achieve
Final Completion.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Construction Loan Commitments under
paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Construction Loan Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Construction Loan Commitments shall be
permanent. Each reduction of the Construction Loan Commitments shall be made
ratably among the Lenders in accordance with their respective Construction Loan
Commitments.
SECTION 2.07. Conversion to Term Loans. At the option of the
Borrower and subject to the satisfaction of the conditions precedent for a
Conversion set forth in Section 4.03, upon written notice delivered to the
Administrative Agent no earlier than 60 days and no later than 30 days prior to
the proposed Conversion Date, the aggregate principal amount of any Construction
Loans remaining outstanding immediately prior to the close of the Administrative
Agent's business on the Conversion Date shall automatically convert to Term
Loans maturing on the Final Maturity Date. Any Term Loans that are prepaid may
not be reborrowed.
SECTION 2.08. Evidence of Debt. Any Lender may request that
Loans made by it be evidenced by a promissory note. In such event, the Borrower
shall prepare, execute and deliver to such Lender a promissory note
substantially in the form of Exhibit D payable to the order of such Lender (or,
if requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
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notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Repayment of Loans. (a) The Borrower hereby
unconditionally promises to pay (i) on the Construction Loan Maturity Date to
the Administrative Agent for the account of each Lender the then unpaid
principal amount of each Construction Loan not Converted to Term Loans on such
date, (ii) to the Administrative Agent for the account of each Lender the
outstanding principal of the Term Loans equal to the Term Repayment Amount in
twenty equal quarterly installments commencing on the first Quarterly Date
following the Conversion Date and on each Quarterly Date thereafter and the then
unpaid principal amount of the Term Loans on the Final Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
SECTION 2.10. Optional and Mandatory Prepayment of Loans. (a)
The Borrower shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, subject to prior notice in accordance with
this Section. The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder not later than 11:00 a.m.,
New York City time, five Business Days before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that if a notice of prepayment is given in connection with a conditional notice
of termination of the Construction Loan Commitments as contemplated by Section
2.06, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.06. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Eurodollar Borrowing as provided in Section 2.02. Each prepayment
of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.12. The Borrower shall also submit with each prepayment
notice for a partial prepayment evidence satisfactory to the Administrative
Agent and the Independent Engineer that after giving effect to such partial
prepayment, there remains sufficient funds available to the Borrower under this
Agreement, the Construction Equity Contribution Amount and the Contingent Equity
Contribution Amount to complete the Project.
<PAGE> 34
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(b) If, after giving effect to any reduction or termination of
the Construction Loan Commitments, the aggregate principal amount of all Loans
then outstanding is in excess of aggregate Construction Loan Commitments, the
Borrower shall make a prepayment of Loans in an amount equal to such excess,
together with accrued interest thereon and any related costs (including funding
losses, if any, resulting from such prepayment being made other than on the last
day of an Interest Period with respect to any Eurodollar Loan as provided in
Section 2.15). Any such prepayment shall be payable in full on the date on which
the reduction or termination of the Construction Loan Commitments pursuant to
Section 2.06 becomes effective.
(c) If an Event of Loss with respect to the Project shall
occur, then the Borrower shall prepay an aggregate principal amount of the Loans
equal to the funds received as proceeds from such Event of Loss, together with
accrued interest thereon to the date of prepayment and any related costs
(including funding losses, if any, resulting from such prepayment being made
other than on the last day of an Interest Period with respect to any Eurodollar
Loan as provided in Section 2.15), on or before the 60th day following the date
of the determination of the occurrence of such Event of Loss or within 90 days
of the event giving rise to such determination, whichever period is shorter;
provided that, if the Borrower shall have given the Administrative Agent written
notice on or before the 60th day following the date of determination of the
occurrence of such Event of Loss or within 90 days of the event giving rise to
such determination, whichever period is shorter, stating that it believes the
Project could be repaired and/or restored and the conditions of 5.05(b) could be
satisfied, and that the Borrower is diligently working to obtain the necessary
information to meet the conditions of Subsection 5.05(b), the Borrower may defer
such prepayment of the Loans and compliance with the provisions of Subsection
5.05(b) for a period of up to 30 additional days. From the date of the
determination of the occurrence of such Event of Loss, the Borrower shall
provide to the Administrative Agent a monthly status report describing the
status of discussions with contractors and insurers or Governmental Authorities,
as the case may be (including information on cost and scheduling estimates). On
such date of prepayment, any funds constituting proceeds from such Event of Loss
shall (to the extent not already so applied) be applied in satisfaction (to the
extent of such proceeds) of such obligation to prepay the Loans.
(d) At any time the Borrower shall receive net proceeds from
any sale or disposition of any asset or property in excess of $1,000,000 in the
aggregate during any calendar year, 100% of such net proceeds shall be applied
on such date toward the prepayment of the Loans.
(e) At any time the Borrower shall receive liquidated damages
or other amounts owed by any Construction Contractor under any Construction
Contract as penalties for performance, 100% of such funds so received shall be
applied on such date toward the prepayment of the Loans.
(f) Following the Conversion Date, any prepayments made
pursuant to this Section 2.10, whether mandatory or optional, with respect to
the Loans, shall be applied in inverse order to the remaining scheduled
installment payments of principle on the Term Loans.
(g) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Lender of the
contents thereof and of such Lender's ratable share of such prepayment.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender the Commitment Fee, which
shall accrue on the daily amount of the unused
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Construction Loan Commitment of such Lender during the period from and including
the Closing Date to but excluding the date on which such Construction Loan
Commitment terminates. Accrued Commitment Fees shall be payable in arrears on
the first day of March, June, September and December of each year and on the
date on which the Construction Loan Commitments terminate, commencing on the
first such date to occur after the date hereof. All Commitment Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution, in
the case of Commitment Fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan, and at the maturity thereof;
provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
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(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately
and fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank
market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise), then the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section for any increased
costs or
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reductions incurred more than 90 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 90 day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any, Eurodollar Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default or an optional or mandatory prepayment), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.10(a) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount reasonably determined by such Lender
to be the excess, if any, of (i) the amount of interest which would have accrued
on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent,
each Lender within 10 days after written demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
<PAGE> 38
33
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York 10017. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant
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to and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required by
it to be made by it pursuant to Section 2.17(d), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender's obligations under such Section until all
such unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.14, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower 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 9.04), all its interests, rights and obligations under this Agreement
(other than any outstanding Competitive Loans 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 Borrower 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 Loans, 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 Borrower (in the
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case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, 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 Borrower to require
such assignment and delegation cease to apply.
SECTION 2.19. No Approval of Work. The making of any Loan
shall not be deemed an approval or acceptance by the Administrative Agent or the
Lenders of any work, labor, supplies, materials or equipment furnished or
supplied with respect to the Project.
SECTION 2.20. Project Control Account. (a) The Borrower shall
establish by the Closing Date and maintain at the Borrower's expense an
interest-bearing account (the "Project Control Account") under the
Administrative Agent's control with the Account Bank, and the Borrower shall
deposit or cause to be deposited in the Project Control Account: (i) all Project
Revenues to be received by the Borrower, (ii) all proceeds of Construction Loans
advanced to the Borrower hereunder, (iii) all proceeds of the Base Equity
Contribution Amount, (iv) all proceeds of the Construction Equity Contribution
Amount, (v) all proceeds of the Contingent Equity Contribution Amount, (vi) all
proceeds of any insurance award or award received in connection with any Taking,
(vii) all proceeds of any Interest Rate Agreements, (viii) all proceeds of any
Project Document that are not included in Project Revenues (including, without
limitation, any damages or liquidated damages in connection with any of the
Project Documents) and any guarantees, letters of credit or bonds supporting the
obligations of any Person party thereto other than the Borrower, (ix) all
amounts transferred from the Debt Service Reserve Account, (x) all cash on hand
of the Borrower on the Effective Date that represents the Base Equity
Contribution Amount, (xi) all proceeds of any Subordinated Indebtedness, and
(xii) any other amounts received by the Borrower. Notwithstanding the foregoing
provisions of this Section 2.20(a), all other sums identified expressly as
required to be deposited into the Debt Service Reserve Account in accordance
with the terms hereof shall be so deposited.
(b) Provided that no Default shall have occurred and be continuing, on
the date that the Initial Loan is funded, on the Conversion Date, with respect
to a one time permitted payment as contemplated by Sections 2.01 and 6.06, and
on each Monthly Distribution Date (or each Quarterly Date subsequent to the
Conversion Date with respect to subsections (vii) and (viii) below), the
Administrative Agent shall withdraw and transfer amounts from the Project
Control Account (insofar as sufficient funds are available therein) or retain in
a subaccount established therein and apply the same at the times, and the
amounts and in the following priorities:
(i) first, from time to time, as and when instructed in
writing by the Borrower and in accordance with the relevant Withdrawal
Request, withdraw the amount specified therein as the amount needed to
pay the aggregate amount of Budgeted Costs and Qualified Operating
Costs due and payable and permitted to be incurred under this
Agreement;
(ii) second, after making the withdrawals specified in
priority first above, if any, as and when instructed in writing by the
Borrower and in accordance with the relevant Withdrawal Request,
withdraw the amount specified therein as the amount needed to pay the
aggregate amount of Consolidated Mandatory Capital Expenditures due and
payable and permitted to be incurred under this Agreement;
(iii) third, after making the withdrawals specified in
priorities first and second above, if any, as and when instructed in
writing by the Borrower and in accordance with the relevant Withdrawal
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Request, on each Monthly Distribution Date, or if such funds are not
then available, the next succeeding Business Day following the day such
funds are available, withdraw and transfer to the Debt Payment Account
the amount specified in such instructions as needed to pay any fees,
costs and expenses payable by the Borrower under the Financing
Documents (together with any interest accrued but unpaid thereon) then
due and unpaid as of such Monthly Distribution Date;
(iv) fourth, after making the withdrawals specified in
priorities first through third above, if any, as and when instructed in
writing by the Borrower and in accordance with the relevant Withdrawal
Request, on each Monthly Distribution Date, or if such funds are not
then available, the next succeeding Business Day following the day such
funds are available, withdraw and transfer to the Debt Payment Account
an amount specified in such instructions as equal to the aggregate
amount of (A) interest due on any Loan, and (B) any scheduled payment
due from the Borrower to any Interest Rate Agreement counterparty under
any Interest Rate Agreement, in each case, as of such Monthly
Distribution Date;
(v) fifth, after making the withdrawals specified in
priorities first through fourth above, if any, as and when instructed
in writing by the Borrower and in accordance with the relevant
Withdrawal Request, on each Monthly Distribution Date, or if such funds
are not then available, the next succeeding Business Day following the
day such funds are available, withdraw and transfer to the Debt Payment
Account an amount specified in such instructions as equal to the amount
of (A) any principal due on any Loan and (B) any termination payment
due from the Borrower to any Interest Rate Agreement counterparty under
any Interest Rate Agreement, in each case, as of such Monthly
Distribution Date;
(vi) sixth, after making the withdrawals specified in
priorities first through fifth above, if any, as and when instructed in
writing by the Borrower and in accordance with the relevant Withdrawal
Request, on each Monthly Distribution Date, or if such funds are not
then available, the next succeeding Business Day following the day such
funds are available, withdraw and transfer to the Debt Payment Account
(A) the amount specified in such instructions as needed to pay any
fees, costs and expenses payable by the Borrower under the Financing
Documents (together with any interest accrued but unpaid thereon) that
will become or is scheduled to become due and payable before the next
Monthly Distribution Date, (B) an amount specified in such instructions
as equal to the aggregate amount of (w) interest due on any Loan, and
(x) any scheduled payment due from the Borrower to any Interest Rate
Agreement counterparty under any Interest Rate Agreement, in each case,
that is scheduled to become due and payable before the next Monthly
Distribution Date, and (C) an amount specified in such instructions as
equal to the amount of (y) any principal due on any Loan and (z) any
termination payment due from the Borrower to any Interest Rate
Agreement counterparty under any Interest Rate Agreement, in each case,
that is scheduled to become due and payable before the next Monthly
Distribution Date;
(vii) seventh, after making the withdrawals specified in
priorities first through sixth above, if any, from time to time, to the
extent that the sum of cash on deposit in the Debt Service Reserve
Account is less than the Debt Service Reserve Amount, withdraw and
transfer to the Debt Service Reserve Account, amounts (when combined
with the amounts then on deposit in the Debt Service Reserve Account)
needed to satisfy the Debt Service Reserve Amount;
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(viii) eighth, after making the withdrawals specified in
priorities first through seventh above, if any, from time to time, to
the extent that such payments are permitted by the terms of
subordination to which such Indebtedness is subject, payments of
principal and interest accrued and owing on Subordinated Indebtedness;
(ix) ninth, after making the withdrawals specified in
priorities first through eighth above, if any, as and when instructed
in writing by the Borrower and in accordance with the relevant
Withdrawal Request on each Quarterly Date after the Conversion Date to
the extent that the Borrower shall have certified to the Collateral
Agent in writing that all of the conditions set forth in clauses (i)
through (iv) of Section 6.06 will be satisfied immediately before and
immediately after giving effect to such withdrawal, withdraw and
transfer to each member of the Borrower an amount of cash specified in
such instructions as equal to the aggregate amount of cash on deposit
in the Project Control Account which is available for a Restricted
Payment after receipt of the foregoing certificate ("Available Cash
Flow"); and
(x) tenth, after making the withdrawals specified in
priorities first through ninth above, if any, as and when instructed in
writing by the Borrower and in accordance with the relevant Withdrawal
Request on each Quarterly Date after the Conversion Date, (which
certification shall have been confirmed in writing by the
Administrative Agent to the best of its knowledge to the Collateral
Agent), withdraw and transfer to the Operating Account an amount equal
to Available Cash Flow for application by the Borrower in its
discretion, subject to the terms hereof.
(c) Upon the Final Maturity, all amounts remaining in the
Project Control Account after the payment of all Obligations shall be disbursed
to the Borrower.
(d) Each Withdrawal Request delivered by the Borrower pursuant
to this Section 2.20 shall be delivered to the Administrative Agent and the
Account Bank not less than three Business Days prior to each Monthly
Distribution Date.
SECTION 2.21. Debt Service Reserve Account. (a) The
Administrative Agent shall, on or prior to the date of the Initial Loan,
establish and maintain at the Borrower's expense an interest-bearing account
(the "Debt Service Reserve Account") with the Account Bank. On or prior to the
Conversion Date, there shall be deposited to the Debt Service Reserve Account
(i) proceeds of any Construction Loan which are designated by the Borrower for
deposit to the Debt Service Reserve Account pursuant to Section 2.01(b), (ii)
proceeds of the Contingent Equity Contribution Amount designated by the Borrower
for application to the Debt Service Reserve Account; provided that (as to both
clauses (i) and (ii) above) all Project Costs have been paid or escrowed as of
the date of such application, and (iii) all amounts required to be so deposited
from the Project Control Account pursuant to Section 2.20(b)(vii).
(b) Provided that no Default shall have occurred and be
continuing, on any Monthly Distribution Date, in the event that (i) the
Consolidated Debt Service Coverage Ratio for the most recently ended Rolling
Period is equal to or greater than 1.30:1.00, (ii) the Consolidated Projected
Debt Service Ratio is equal to or greater than 1.30:1.00 and (iii) the cash
amount on deposit in the Debt Service Reserve Account exceeds the Debt Service
Reserve Amount as calculated on such day, then the Borrower shall be entitled to
make a Withdrawal Request for any such excess cash on deposit in the Debt
Service Reserve Account to be withdrawn and transferred to the Project Control
Account.
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38
(c) The Administrative Agent, may, at any time, request that
the Account Bank pay to it, on the date specified in such notice, from such sums
as are on deposit in the Debt Service Reserve Account, the amount stated in such
notice as being required to pay any Obligations due and payable but unpaid.
(d) Any amounts deposited in the Debt Service Reserve Account
may be invested at the instruction of the Borrower in Permitted Investments.
(e) Each Withdrawal Request delivered by the Borrower pursuant
to this Section 2.21 shall be delivered to the Administrative Agent and the
Account Bank not less than three Business Days prior to each Monthly
Distribution Date.
SECTION 2.22. Debt Payment Account. (a) The Administrative
Agent shall, on or prior to the date of the Initial Loan, establish and maintain
at the Borrower's expense an account (the "Debt Payment Account") with the
Account Bank.
(b) On each Monthly Distribution Date, there shall be
deposited to the Debt Payment Account all amounts required to be so deposited
from the Project Control Account pursuant to clauses (iii), (iv) , (v) and (vi)
of Section 2.20(b) above.
(c) Provided that no Event of Default shall have occurred and
be continuing, on each Interest Payment Date, on each date on which a payment of
principal on the Loans is due, on each date that a scheduled payment or a
termination payment with respect to any Interest Rate Agreement is due or on any
date on which Commitment Fees or other fees become due and payable, amounts in
the Debt Payment Account shall be automatically withdrawn and transferred to the
Administrative Agent, the Lenders or the relevant Interest Rate Agreement
counterparty, as the case may be, to be applied to the obligations as set forth
in clauses (iii), (iv), (v) and (vi) of Section 2.20(b) above in the order that
such amounts become due and in the order of priority established by Section
2.20(b).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to each Lender and the
Administrative Agent as follows (such representations and warranties being made
as of the Closing Date and, to the extent provided herein, on each subsequent
date on which such representations and warranties are made or deemed to be made
hereunder):
SECTION 3.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization or formation, has all requisite
power and authority to carry on its business as now conducted and, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
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39
SECTION 3.02. Authorization; Enforceability. (a) The
execution, delivery and performance by the Borrower of each Transaction Document
to which it is a party are within such party's limited liability company powers,
have been duly authorized by all necessary partnership or limited liability
company action and do not contravene any provision of the organizational
documents of such Person, any Governmental Requirement or contractual obligation
binding on or affecting such party or any of its properties or assets that could
reasonably be expected to have a Material Adverse Effect, and such execution,
delivery and performance do not and will not result in or require the creation
of any Lien upon or with respect to any of its properties, other than Permitted
Encumbrances and the other Liens created or permitted by the Financing
Documents, or result in the acceleration of any obligation under, or in a
condition or event that constitutes (or that, upon notice or lapse of time or
both, would constitute) an event of default under any contractual obligation of
such party. This Agreement has been, and each other Transaction Document to
which the Borrower will be a party when delivered hereunder will have been, duly
executed and delivered by the Borrower, the Parent or the Sponsor, as the case
may be. The Borrower and each of its Subsidiaries is in compliance with and not
in default under any and all Governmental Requirements, all terms and provisions
of all contractual obligations of such parties unless such noncompliance would
not reasonably expected to have a Material Adverse Effect.
(b) This Agreement and each other Transaction Document to
which the Borrower or each of its Subsidiaries is a party are legal, valid and
binding obligations of the Borrower or such Subsidiary enforceable against the
Borrower or such Subsidiary in accordance with their respective terms, subject
to the qualification that the enforcement of the rights and remedies herein and
therein is subject to (a) bankruptcy and other similar laws of general
application affecting rights and remedies of creditors and (b) the application
of general principles of equity (regardless of whether considered in a
proceeding in equity or at law). The Borrower has delivered to the
Administrative Agent and the Lenders true and compete copies of each executed
Transaction Document and, except as disclosed to the Administrative Agent and
the Lenders in writing, none of the Transaction Documents (other than this
Agreement) have been amended, modified or terminated. The Borrower has not given
or received any notice of default under any Transaction Document. Neither the
Borrower, any El Paso Entity nor, to the Borrower's knowledge, any other
Transaction Party is in default under any executed Transaction Document.
SECTION 3.03. Governmental Approvals; Material Permits; No
Conflicts. (a) All Governmental Approvals, including without limitation, all
Material Permits, that are required to be obtained or made by the Borrower or
any Subsidiary in connection with (a) the construction, development, use,
ownership and maintenance of the Project and (b) the Borrowings and granting of
Liens under, and the execution, delivery and performance by the Borrower of, the
then existing Transaction Documents, have been obtained and are in full force
and effect. No material change in the facts or circumstances reported or assumed
in the applications for the granting of such Material Permits exists (except
such change which could not result in any revocation of such Material Permits or
any fine, penalty or other action being taken against the Borrower or any
Subsidiary by any Governmental Authority), and there are not any proceedings
pending or, to the knowledge of the Borrower, threatened which would jeopardize
the validity of such Material Permits. The Borrower does not have any reason to
believe that it or any Subsidiary will be unable to obtain or maintain the
Material Permits in the ordinary course of business and at such time or times as
may be necessary to avoid any substantial delay in, or material impairment to,
the consummation and performance of the Transactions.
(b) All Governmental Approvals and other filings, recordings,
registrations and other actions have been made, obtained and taken in all
relevant jurisdictions that are necessary to create and perfect the Liens
provided for in the Security Documents, and the Administrative Agent, for the
benefit of the Secured
<PAGE> 45
40
Parties, will hold the Liens provided for in the Security Documents, and the
Security Documents shall constitute a valid, direct, continuing first priority
Lien on the Collateral, subject only to Permitted Encumbrances and other Liens
permitted by the Financing Documents.
(c) The execution, delivery and performance by the Borrower or
any of its Subsidiaries of the Financing Documents, including this Agreement,
and the Project Documents and the construction and operation of the Project do
not contravene or violate any provision of the organizational documents or by-
laws of the Borrower or such Subsidiary.
SECTION 3.04. No Material Adverse Change; Material
Obligations. Since the Closing Date, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and each of its Subsidiaries, taken as a whole, or
the Project. As of the Closing Date, the Borrower has not begun operations, has
no material assets other than the Construction Contracts and has not entered
into any material agreements or incurred any material obligations other than as
contemplated by this Agreement or the Project Documents.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has marketable title to the property material to its business, free
and clear of all Liens except for Permitted Encumbrances or Liens otherwise
permitted or contemplated by this Agreement or the other Financing Documents.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business or to the construction and
operation of the Project, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There
is no action, suit or proceeding by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries which (i) could
reasonably be expected to result in a Material Adverse Effect or (ii) challenges
the validity of this Agreement, any Note, any other Financing Document or the
Project Documents.
(b) The Borrower's and its Subsidiaries' conduct of operations
on their respective properties is in substantial compliance with all applicable
orders of any court or Governmental Authority and all applicable Environmental
Laws, except where the failure to comply with such orders or Environmental Laws
could not reasonably be expected to result in a Material Adverse Effect. Neither
the Borrower nor any of its Subsidiaries (i) has failed to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability in each case that could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all Governmental
Requirements applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
No Default has occurred and is continuing.
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41
SECTION 3.08. Investment Company Act Status. Neither the
Borrower nor any of its Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" that is incorporated in or organized
under the laws of the United State of America or any "State," as those terms are
defined in the Investment Company Act of 1940, as amended. The execution and
delivery by the Borrower and its Subsidiaries of this Agreement and the other
Financing Documents and their respective performance of the obligations provided
for therein, will not result in a violation of the Investment Company Act of
1940, as amended.
SECTION 3.09. Public Utility Holding Company Act Status.
Neither the Borrower nor any of its Subsidiaries is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company"or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 3.10. Taxes. Each of the Borrower and its Subsidiaries
has (a) timely filed or caused to be filed all Tax returns and reports required
to have been filed, and (b) paid or caused to be paid all Taxes levied upon it
or any of its property or income which are due and payable, including interest
and penalties, or has provided adequate reserves for the payment thereof if
required in accordance with GAAP for the payment thereof, except such interest
and penalties as are being contested in good faith by appropriate proceedings
and for which the Borrower or such Subsidiary has set aside on its books
adequate reserves for the payment thereof as required by GAAP.
SECTION 3.11. ERISA. No ERISA Reportable Event has occurred or
is reasonably expected to occur that, when taken together with all other such
ERISA Reportable Events for which liability is reasonably expected to occur,
could reasonably be expected to result in a Material Adverse Effect. Neither the
Borrower, any of its Subsidiaries, nor any ERISA Affiliate sponsors, maintains
or contributes to, or has at any time in the six-year period preceding the
Closing Date sponsored, maintained or contributed to, any Plan or any
Multiemployer Plan.
SECTION 3.12. Disclosure. (a) The Borrower has disclosed to
the Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject.
(b) Neither the Information Memorandum nor any of the other
statements, exhibits, documents, reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Financing Document or delivered hereunder or in any other
Transaction Document (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (other than omissions
that pertain to matters of a general economic nature); provided, however, it is
understood that, with respect to such Information Memorandum, statements,
exhibits, documents, reports, financial statements, certificates or other
information, any estimates or projections contained therein are based upon
information that was currently available and believed to be correct and upon
assumptions believed to be reasonable at the time and the Borrower does not
warrant that such estimates and projections will ultimately prove to have been
accurate. The representations and warranties made by the Borrower and the other
El Paso Entities in each Transaction Document are true and correct in all
material respects, and, to the best of the Borrower's knowledge, the
representations and warranties made by the Transaction Parties (other than the
Borrower and the other El Paso Entities) in each Transaction Document are true
and correct in all material respects. There is no fact known to the Borrower
<PAGE> 47
42
that has not been disclosed in writing to the Lenders that could be expected to
have a Material Adverse Effect.
SECTION 3.13. Business of the Borrower. (a) The sole business
of the Borrower is the ownership, development, construction, financing and
operation of the Project.
(b) All insurance required by Section 5.05 is in full force
and effect.
(c) No event of force majeure under any Transaction Document
has occurred and is occurring that could be expected to result in the
termination of any Transaction Document or to have a Material Adverse Effect.
Neither the business nor the property of the Borrower or any of its Subsidiaries
has been affected in a manner that has had or could reasonably be expected to
have a Material Adverse Effect as a result of any Taking.
(d) All easements, leaseholds, other property interests, all
utility and other services, means of transportation, facilities, other materials
and other rights that are necessary for the acquisition, development,
construction, installation and operation of the Project in accordance with all
Governmental Requirements and the Transaction Documents (including, without
limitation, gas, electrical, water and sewage services and facilities) have been
procured pursuant to Transaction Documents or are otherwise commercially
available to the Project and, to the extent appropriate, arrangements have been
made on commercially reasonable terms for such easements, interests, services,
means of transportation, facilities, materials and rights.
(e) None of the proceeds from the Borrowings will be used,
directly or indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation U or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
SECTION 3.14. Subsidiaries. As of the Closing Date, the
Borrower has no Subsidiaries.
SECTION 3.15. Construction Contracts. None of the Construction
Contractors has informed the Borrower of any, and to the best of the Borrower's
knowledge there is no, inconsistency between the Drawings and Specifications and
the actual construction of the Project which would constitute a Variation not
permitted by Section 6.16.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make the Initial Loan hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 9.02), in each case in a manner satisfactory to the Administrative
Agent and the Lenders:
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory
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to the Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of (i) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel
for the Borrower, substantially in the form of Exhibit B-1, (ii) Gregory W.
Jones, in-house counsel of the Sponsor, substantially in the form of Exhibit B-2
and (iii) Phelps Dunbar, LLP, Louisiana counsel for the Borrower, substantially
in the form of Exhibit B-3, each such opinion covering such matters relating to
the Borrower, the Sponsor, the Parent, this Agreement or the Transactions as the
Lenders shall reasonably request. The Borrower hereby requests each such counsel
to deliver its applicable opinion to the Administrative Agent and the Lenders.
(c) The Administrative Agent shall have received such
documents, including a certified copy of the LLC Agreement, certificates of
incumbency and other certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
the Borrower and each other El Paso Entity, the authorization of the
Transactions, the Transaction Documents to which such Person is a party and any
other legal matters relating to the Borrower, this Agreement or the
Transactions, all in form and substance satisfactory to the Administrative Agent
and its counsel.
(d) The Administrative Agent shall have received a certificate
in form satisfactory to the Administrative Agent, duly and properly executed by
a Financial Officer and dated as of the Effective Date, identifying the use of
all proceeds of the Initial Loan and each payee thereof (which certificate may
be part of the initial Borrowing Request).
(e) The Borrowing Request for the Initial Loan shall have been
timely delivered to the Administrative Agent and duly executed by a Financial
Officer of the Borrower.
(f) The Administrative Agent shall have received the Security
Documents, including financing statements, duly completed and executed in
sufficient number of counterparts and in proper form for recording, if
necessary.
(g) The Administrative Agent shall have received counterpart
originals of the following documents each in form and substance acceptable to
the Lenders duly executed by each of the parties thereto:
(i) the Financing Documents (other than the Security
Documents);
(ii) the Project Documents, certified as true and
correct by an officer of the Borrower;
(iii) the Assignment and Assumption Agreement;
(iv) copies of any amendment to the EPN Credit
Agreement or the EPN Security Documents relating to the
Transactions, certified as true and correct by an officer of
the Sponsor.
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(h) All costs, fees, expenses (including, without limitation,
legal fees and expenses and recording taxes and fees) and other compensation
contemplated by this Agreement payable to the Lenders and the Administrative
Agent through the Effective Date shall have been paid.
(i) The Administrative Agent and each Lender shall have
received each of the following:
(i) the Approved Construction Budget;
(ii) a report of the Independent Engineer customary
with respect to construction projects similar in nature and
scope to the Project and in form and substance satisfactory to
the Administrative Agent and the Lenders;
(iii) a report of the Independent Insurance
Consultant, which shall confirm that the Administrative Agent
has received evidence of the insurance coverage for the
Project showing compliance with Section 5.05, indicate that
such insurance and reinsurance are effective and provide
adequate coverage for the Project and cover such other matters
as any Lender may have reasonably requested;
(iv) a reserve report prepared by an independent
engineer regarding the Prince Field Reserves in form and
substance satisfactory to the Administrative Agent and the
Lenders; and
(v) a copy of the Base Case Model.
(j) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a Financial Officer of the
Borrower, confirming (i) compliance with the conditions set forth in Sections
4.02(a), (b) and (c), (ii) receipt by the Borrower of the Base Equity
Contribution Amount and (iii) the amount of the Construction Equity Contribution
Amount to be contributed by the Parent on or before the advance of the Initial
Loan and the receipt thereof.
(k) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
(l) The Administrative Agent shall have received satisfactory
evidence that the Sponsor owns directly or indirectly 100% of the legal and
beneficial equity interest of the Borrower.
(m) The Lenders and the Independent Insurance Consultant shall
have received certificates or other evidence of insurance coverage of the
Borrower evidencing that the Borrower and its Subsidiaries are covered by
insurance in accordance with terms and provisions hereof.
(n) The Administrative Agent shall have received the
appropriate UCC, Lien, tax and litigation searches reflecting no prior Liens and
no litigation.
(o) All property in which the Administrative Agent shall, at
such time, be entitled to have a Lien pursuant to this Agreement or any other
Financing Document shall have been physically delivered to the possession of the
Administrative Agent or any bailee accepted by the Administrative Agent to the
extent that such possession is necessary for the purpose of perfecting the
Administrative Agent's Lien in such Collateral.
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(p) The Administrative Agent shall have received satisfactory
evidence regarding the scope and materiality of any environmental risks
affecting the Project.
(q) The Administrative Agent and each Lender shall have
received such other documents or conditions precedent which either the
Administrative Agent or any Lender may reasonably have requested or required.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, November
23, 2000 (and, in the event such conditions are not so satisfied or waived, the
Construction Loan Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. At the time of the making by
each Lender of each Loan on the occasion of any Borrowing, including the Initial
Loan, (before as well as after giving effect to such Loan and to the proposed
use of the proceeds thereof):
(a) The representations and warranties of the Borrower and
each other El Paso Entity set forth in this Agreement and the other Financing
Documents shall be true and correct in all material respects on and as of the
date of such Borrowing (unless such representations and warranties are stated to
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date).
(b) No Default shall have occurred and be continuing.
(c) The Administrative Agent shall have received the
following:
(i) the appropriate Borrowing Request;
(ii) a certificate of the Borrower certifying that
the Project Costs to be paid or to be incurred through the
Conversion Date do not and are not expected to exceed the sum
of the amounts available under the Construction Loans and the
Base, Construction and Contingent Equity Contribution Amounts;
(iii) a certificate from the Independent Engineer, in
the Form attached hereto as Exhibit C, approving the amounts
set forth in the certificate of the Borrower described in
clause (ii) above and confirming that the Project is likely to
achieve Final Completion by the Date Certain;
(iv) a certificate of the Borrower setting forth the
amount of the Construction Equity Contribution Amount to be
contributed by the Parent on or before the date of such
Borrowing and confirming receipt thereof;
(v) a copy of each Material Permit required to have
been obtained by the date of such Borrowing and which has not
previously been delivered to the Administrative Agent; and
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(vi) such other documents as the Administrative
Agent, or any Lender through the Administrative Agent, or
counsel to the Administrative Agent, may reasonably request,
all in form and substance reasonably satisfactory to the
Administrative Agent.
Each Borrowing Request submitted by the Borrower, and the acceptance by the
Borrower of the proceeds of such Borrowing shall be deemed to constitute a
representation and warranty by the Borrower as of the date of the Loans
comprising such Borrowing that the conditions specified in Subsections 4.02(a)
and (b) have been satisfied.
SECTION 4.03. Conversion. The occurrence of the Conversion and
the obligation of the Lenders to Convert the Construction Loans outstanding on
the Conversion Date into Term Loans shall be subject to the following:
(a) The representations and warranties of the Borrower and
each other El Paso Entity set forth in this Agreement and the other Financing
Documents shall be true and correct in all material respects on and as of the
Conversion Date (unless such representations and warranties are stated to relate
to a specific earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date).
(b) At the time of and immediately after giving effect to the
Conversion no Default shall have occurred and be continuing.
(c) Final Completion shall have been achieved.
(d) The validity and priority of the Liens granted in favor of
the Lenders pursuant to the Security Documents or the EPN Security Documents are
not adversely affected and continue as of such date.
(e) The insurance required by Section 5.05, including business
interruption coverage, has been obtained and all premiums have been paid, as
verified by the Independent Insurance Consultant.
(f) The requisite funding of the Construction Equity
Contribution Amount and, as necessary, the Contingent Equity Contribution Amount
has taken place pursuant to the terms of the LLC Agreement as evidenced by a
certificate of the Borrower and the Parent confirming such contributions.
(g) The Operating Budget has been approved by the
Administrative Agent following a satisfactory review by the Independent
Engineer.
(h) All Material Permits are in full force and effect, and
copies thereof have been delivered to the Administrative Agent.
(i) All Material Project Documents are in full force and
effect and no default exists thereunder.
(j) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a Financial Officer of the
Borrower, confirming compliance with the conditions set forth above in this
Section 4.03.
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The Conversion of the Construction Loans to Term Loans shall be deemed to
constitute a representation and warranty by the Borrower on the date thereof as
to the matters specified in paragraphs (a) through (j) of this Section.
ARTICLE V
Affirmative Covenants
Until the Construction Loan Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full, the Borrower covenants and agrees with
the Lenders that:
SECTION 5.01. Financial Statements and Other Information. (a)
The Borrower will furnish to the Administrative Agent and each Lender:
(i) as soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, an
audited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such year and the related
consolidated statements of operations, members' equity and
cash flows of the Borrower and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and
accompanied by a report thereon of PricewaterhouseCoopers or
other independent public accountants of recognized national
standing (without a "going concern" or like qualification or
exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated
financial statements present fairly, in all material respects,
the financial condition of the Borrower and its Subsidiaries
as at the end of such fiscal year, and the results of
operations and cash flows for such fiscal year in accordance
with GAAP;
(ii) as soon as possible and in any event within 60
days after the end of each of the first three fiscal quarters
of each fiscal year of the Borrower, an unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as at the
end of such quarter and the related statements of operations,
members' equity and cash flows for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as
of the end of) the previous fiscal year, all in reasonable
detail and certified by a Financial Officer of the Borrower
that such financial statements fairly present, in all material
respects the financial condition of the Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the
results of operations for such fiscal quarter and the then
elapsed portion of the fiscal year of the Borrower, and cash
flows for such fiscal year-to-date, of the Borrower and its
Subsidiaries in accordance with GAAP, subject to normal,
year-end audit adjustments and the absence of footnotes;
(iii) concurrently with any delivery of financial
statements under clause (i) or (ii) above, a certificate of a
Financial Officer of the Borrower (A) certifying as to whether
a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or
proposed to be taken with respect thereto, and (B) stating
whether any
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change in GAAP or in the application thereof has occurred
since the Closing Date and, if any such change has occurred,
specifying the effect of such change on the financial
statements accompanying such certificate;
(iv) concurrently with any delivery of financial
statements under clause (i) above, a certificate of the
accounting firm that reported on such financial statements
stating whether they obtained knowledge during the course of
their examination of such financial statements of any Default
(which certificate may be limited to the extent required by
accounting rules or guidelines);
(v) as soon as possible and in any event within five
days after the occurrence of any Default, a certificate of a
Financial Officer setting forth details of such Default and
the action which the Borrower proposes to take with respect
thereto;
(vi) as soon as available and in any event within 30
days after the end of each month, commencing with the end of
the first month following the Effective Date, a construction
progress report regarding the status of the construction of
the Project, with a copy thereof delivered to the Independent
Engineer;
(vii) as soon as available and in any event at least
60 days prior to the beginning of each fiscal year of the
Borrower, (A) an Operating Budget setting forth the
Consolidated Debt Service, proposed Restricted Payments,
projected Operating Costs (including reasonable allowances for
contingencies), Consolidated Mandatory Capital Expenditures
and other permitted Capital Expenditures for the succeeding
fiscal year, in each case, subject to the prior written
consent of the Required Lenders (which consent shall not be
unreasonably withheld) before adoption by the Borrower,
provided that if an Operating Budget is not adopted and
approved prior to the first day of any calendar year, the
Borrower shall adhere to the Operating Costs portion of the
Operating Budget of the preceding calendar year (adjusted by
the preceding year's annual increase in the Gross Domestic
Product Implicit Price Deflator for the prior calendar year)
until such time as an Operating Budget is adopted and
approved, and (B) updated annual pro forma projections of the
Borrower for the period ending on the Final Maturity Date, in
each case in a form reasonably acceptable to the Required
Lenders, which shall set forth for each such year the
Borrower's statement of earnings and Consolidated Debt Service
Coverage Ratio, and shall note any changes in the assumptions
used in preparation of previous projections delivered
under this Agreement;
(viii) all material written communications relating
to any claims or proceedings with respect to any Governmental
Approval or amending, modifying or affecting any Governmental
Approval then required to be in effect;
(ix) written notice of the occurrence of any event
giving rise to a claim under any insurance policy in an amount
greater than $100,000 together with copies of any document
relating thereto, including copies of any such claim, in the
possession or control of the Borrower or any agent of the
Borrower;
(x) written notice of any Variation Order, which
changes the scope of the Work resulting in an increase or
decrease of Project Costs by an amount equal to or greater
than
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49
$500,000 individually, or in the aggregate, $2,000,000,
whether or not approval is required for such Variation Order
pursuant to Section 6.16;
(xi) promptly after preparation thereof, any and all
revisions to the Contract Schedules;
(xii) promptly after the Borrower's monthly meeting
with the Independent Engineer, if identified by the
Independent Engineer to be distributed to the Lenders, copies
of any and all notices, reports, demands, certificates or
other documents given or received under any Transaction
Document;
(xiii) all material Additional Contracts; and
(xiv) promptly following any request therefor, such
other information regarding the operations, business affairs
and financial condition of the Borrower or any Subsidiary, or
compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.
(b) The Borrower will provide the Independent Engineer access
to the Project, to the Borrower's records concerning the Project and to any
other information that the Administrative Agent may reasonably request in order
for the Independent Engineer to timely and accurately furnish to the
Administrative Agent in sufficient copies for each Lender, the following:
(i) the reports of the Independent Engineer required
pursuant to Sections 4.01(i)(ii) and 4.02(c)(iii);
(ii) from the Effective Date until the Conversion
Date, a quarterly report analyzing the effect of any variance
of the Project from the initial Drawings and Specifications
and the impact of any proposed or actual Variation Order or
Change Order on the Project and addressing such other matters
related thereto as the Administrative Agent may request; and
(iii) following the Conversion Date, an annual report
as to such matters relating to the Project as the Required
Lenders may reasonably request and such other reports as the
Required Lenders shall from time to time reasonably request in
light of the circumstances then prevailing.
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Borrower or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Reportable Event that, alone
or together with any other ERISA Reportable Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect; and
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50
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including (a) all
material Tax liabilities imposed upon it or upon its property, and (b) all
material claims (including, but not limited to, claims for labor, materials,
supplies or services) which might, if not paid, become a Lien upon its property,
unless, in each case, the validity or amount thereof is being contested in good
faith by appropriate proceedings and the Borrower or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP.
SECTION 5.05. Maintenance of Properties; Insurance. (a) The
Borrower will acquire, maintain and preserve, develop, operate and construct in
substantial conformity with all Transaction Documents, prudent engineering and
operating practices consistent with like facilities and in material conformity
with all Governmental Requirements, all elements of the Project which are used
or necessary in the conduct of its business in good working order and condition
(including without limitation, inventories, spare parts and system
redundancies), ordinary wear and tear excepted.
(b) The Borrower will, and will cause each of its Subsidiaries
to, maintain, or cause to be maintained, insurance covering the Borrower, the
Subsidiaries and their properties (including the Project) in effect at all times
in such amounts and covering such risks as is usually carried by companies
engaged in similar business and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general area in which the Borrower operates and as is reasonably requested
by the Required Lenders and the Independent Insurance Consultant, such insurance
coverage to include limits and coverage provisions sufficient to satisfy the
requirements set forth in the Transaction Documents, but in no event less than
the limits and coverages described in Schedule 5.05(b) hereto. In addition:
(i) Each policy for liability insurance shall provide
for all losses to be paid directly to the Person who shall
have incurred the damage or injury covered by such policy. If
any policy for liability insurance described in Schedule
5.05(b) is permitted to be written on a "claims made" basis,
such insurance policy shall have a retroactive date (as such
term is specified in such policy) no earlier than the Closing
Date. Each time any policy written on a "claims made" basis is
not renewed or the retroactive date of such policy is to be
changed, the Borrower shall obtain, or cause to be obtained,
for each such policy or policies the broadest basic and
supplemental extended reporting period coverage, or "tail",
reasonably
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51
available in the commercial instance market for each such
policy or policies, as determined in the sole reasonable
judgment of the Required Lenders and the Independent Insurance
Consultant, but in no event less than five years after the
expiration of such policy or policies.
(ii) Each policy for property damage insurance shall
provide for all amounts payable by the insurer with respect to
any property damage (except for property damage or losses of
less than $1,000,000 per occurrence, so long as the
Administrative Agent has not notified the payor under any such
insurance policy that a Default or an Event of Default has
occurred and is continuing) to be paid directly to the
Administrative Agent on behalf of the Lenders.
(iii) Each such policy shall (except as specifically
set forth below), in addition, (A) be maintained with
financially sound and responsible insurance carriers
authorized to do business in the States of Texas and Louisiana
Best rated A-, X or better by A.M. Best or Lloyds, or Lloyds
London Companies or such other carriers of recognized standing
deemed acceptable by the Required Lenders (or, if such ratings
shall cease to be published generally for the insurance
industry, meeting comparable financial requirements as may be
established by the Required Lenders for the purpose of
assuring that such insurer is financially capable of
performing its obligations under such policy), (B) with
respect to each policy for liability insurance only, name the
Borrower as a named insured and the Administrative Agent as an
additional insured thereunder (without any representation or
warranty by or obligation upon the Administrative Agent or any
of the Secured Parties), (C) with respect to each policy for
property insurance only, contain the agreement by the insurer
that any loss thereunder that would otherwise be payable to
the Administrative Agent will be so payable notwithstanding
any action, inaction or breach of representation or warranty
by the Borrower or any foreclosure of the Project or any
change in ownership of all or any portion of the Project, (D)
with respect to each policy for liability insurance only,
contain a severability of interests or cross liability clause,
(E) provide that there shall be no recourse against the
Administrative Agent or any of the Secured Parties for payment
of premiums or other amounts with respect thereto, (F) provide
that, as against the Borrower, the Administrative Agent and
the Secured Parties, there shall be no rights of subrogation,
set-off, counterclaim or any other deduction, (G) with respect
to each policy for liability insurance only, provide that such
insurance shall be primary, without right of contribution from
any other insurance which may be carried by the Administrative
Agent or any other Secured Party, (H) with respect to each
policy for property insurance only, provide that the Borrower
shall in no event be deemed to be a co-insurer in respect of
any covered claim or loss thereunder, (I) provide that at
least 30 days' prior written notice of reduction, cancellation
or lapse and at least 10 days' prior written notice of
non-payment of premium shall be given to the Administrative
Agent by the insurer and (J) provide that the Administrative
Agent may (but shall not be obligated to) cure any lapse or
breach by the Borrower during such 30 day period (or 10 day
period, in the case of non-payment).
(iv) The Borrower shall deliver to the Administrative
Agent cover notes; certificates of insurance, or equivalent
documentation satisfactory to the Administrative Agent in
sufficient copies for each Lender. In addition, annually on
each policy anniversary or more frequently as may be
reasonably requested by the Administrative Agent, the Borrower
shall furnish the Agent with approved certification of all
required insurance. Such certification
<PAGE> 57
52
shall be executed by each insurer or by an authorized
representative of each insurer where it is not practical for
such insurer to execute the certificate itself. Such
certification shall identify underwriters, the type of
insurance, the insurance limits and the policy term and shall
specifically list the special provisions enumerated for such
insurance required by this Section 5.05(b) and Schedule
5.05(b) hereto. Certification of transit insurance on property
shipped to or from the Project shall be provided by the
Borrower at least 30 days prior to the first shipment of such
property.
(v) In case of any loss exceeding the amount referred
to in paragraph (ii) above, involving damage to or loss of
property of the Borrower or any Subsidiary when paragraph (vi)
of this subsection (b) is not applicable, the Borrower will,
or will cause each of its Subsidiaries to, make or cause to be
made the necessary repairs to or replacements of such
property, and any proceeds of insurance held by the
Administrative Agent in respect of such loss shall be paid to
the Borrower or such Subsidiary at or prior to the time the
Borrower or such Subsidiary pays for the costs of such repairs
or replacements.
(vi) If (A) a Default or an Event of Default shall
have occurred and be continuing, (B) there shall have occurred
an actual or constructive total loss (as determined by the
relevant insurer(s)) of all of the Project or (C) there shall
have occurred any other loss in excess of $1,000,000 per
occurrence of any property of the Borrower or any Subsidiary,
all insurance payments in respect of such property shall be
paid to the Administrative Agent and deposited in a subaccount
of the Project Control Account with the Account Bank (the
"Recovery Account") and applied by the Administrative Agent as
specified in Section 2.10 or in this Section 5.05(b); provided
that notwithstanding the foregoing, so long as clauses (A) and
(B) hereof shall not apply, the Borrower shall be entitled to
receive from the Recovery Account insurance proceeds in
respect of any loss or series of related losses less than
$1,000,000 in the aggregate described in clause (C) hereof as
reimbursement for, or payment of, the costs of repair and
replacement of such property if, and only if, prior to
application by the Administrative Agent of such insurance
proceeds, the Borrower shall have provided the following to
the Required Lenders (in consultation with the Independent
Engineer) for their prior written approval (which approval
shall be in their sole but reasonable discretion) (I)
contracts for such repair or replacement demonstrating the
Borrower's ability to effect such repair or replacement at a
cost not greater than such insurance proceeds (or, if such
cost is greater, accompanied by an explanation of the source
of funds for such excess amounts satisfactory to the Required
Lenders), (II) cash-flow projections and other assurances
satisfactory to the Required Lenders providing for the
Borrower's ability to meet its obligations under the Financing
Documents during the period from such loss until and following
completion of such repair or replacement and (III) assurances
that all Project Documents and Governmental Approvals shall
remain in full force and effect during such period and
thereafter to the satisfaction of the Required Banks and that
the Borrower and the Project are in compliance with all
Governmental Requirements.
(vii) Concurrently with the furnishing of the
certification referred to in Section (iv) above and within 15
days following the renewal of any insurance policy, the
Borrower shall furnish the Administrative Agent with a report
of an independent broker, signed by an officer of the broker,
stating that all premiums then due have been paid and that, in
the opinion of such broker, the insurance then carried or to
be renewed is in accordance with the terms of this Section
5.05(b) and Schedule 5.05(b) hereto.
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53
(viii) No provision of this Section 5.05(b) and
Schedule 5.05(b) hereto or any provision of this Agreement or
any Transaction Document shall impose on the Administrative
Agent any duty or obligation to verify the existence or
adequacy of the insurance coverage maintained by the Borrower
or any Subsidiary, nor shall the Administrative Agent be
responsible for any representations or warranties made by or
on behalf of the Borrower or such Subsidiary to any insurance
company or underwriter.
(ix) The Borrower upon the reasonable request of the
Administrative Agent and the Independent Insurance Consultant
will, and shall cause each of its Subsidiaries to, amend the
amount and scope of coverage of any of the insurance policies
described in Schedule 5.05(b) hereto to cover such risks
which, in the reasonable judgment of the Administrative Agent
and the Independent Insurance Consultant, would render such
coverage materially inadequate.
SECTION 5.06. Books and Records; Inspection Rights. (a) The
Borrower will, and shall cause each of its Subsidiaries to, keep proper books of
record and account, in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities and assets,
and all costs and expenses in connection with the Project, in accordance with
GAAP.
(b) The Borrower will, and will cause each of its Subsidiaries
to, at any time and from time to time upon reasonable notice, but subject
nevertheless to the provisions of Section 9.12, permit the Administrative Agent,
each of the Lenders, the Independent Engineer and their respective agents and
representatives to examine and make copies of and abstracts from the records and
books of account of, and the properties of, the Borrower and its Subsidiaries
and to discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries and of the Project with the Borrower and its Subsidiaries and their
officers, accountants and engineers. The foregoing shall include, but not be
limited to, providing such access and information to the Independent Engineer as
may be required to enable the Independent Engineer to deliver its reports
required under Sections 4.02, 4.03 and 5.01.
SECTION 5.07. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, (a) comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property or the development, construction, maintenance, ownership, operation or
use of the Project, and will cause all persons using or occupying the Project,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect and (b) obtain and
maintain all Material Permits. The Borrower will, and will cause each of its
Subsidiaries to, immediately pay or cause to be paid when due all costs and
expenses incurred in such compliance, except to the extent that such compliance
is contested in good faith by the Borrower or such Subsidiary under
circumstances where none of the Collateral or the continued operation thereof,
or the Liens of the Administrative Agent thereon, will be endangered nor all or
any portion of the Project will be subject to loss or forfeiture.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will
be used only for such purposes set forth in Article II. No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board of Governors of the
Federal Reserve System, including Regulations U and X.
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54
SECTION 5.09. Completion. The Borrower will construct, and
endeavor to achieve Final Completion of, the Project with all due diligence, in
all material respects in accordance with prudent engineering and operating
practices consistent with the type of facilities comprising the Project, the
Drawings and Specifications, the Contract Schedules, the Processing Agreement,
this Agreement, the Approved Construction Budget and the Base Case Model.
SECTION 5.10. Environmental Matters. The Borrower will
establish and implement, and will cause each of its Subsidiaries to establish
and implement, such procedures as may be necessary to continuously determine and
assure that any failure of the following does not have a Material Adverse
Effect: (i) all property of the Borrower and its Subsidiaries, including the
Project, and the operations conducted thereon are in compliance with and do not
violate the requirements of any Environmental Laws, (ii) no oil or solid wastes
are disposed of or otherwise released on or to any property owned by the
Borrower or its Subsidiaries except in compliance with Environmental Laws, (iii)
no hazardous substance will be released on or to any such property in a quantity
equal to or exceeding that quantity which requires reporting pursuant to Section
103 of CERCLA, and (iv) no oil or hazardous substance is released on or to any
such property so as to pose an imminent and substantial endangerment to public
health or welfare or the environment.
SECTION 5.11. Maintain Title to Collateral. Subject to Section
6.03, the Borrower will, and will cause each of its Subsidiaries to, maintain
good and valid rights and title to the Collateral purported to be covered by the
Security Documents to which the Borrower or any of its Subsidiaries is a party.
SECTION 5.12. Further Assurance. Each of the Borrower and its
Subsidiaries will (a) promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that the Agent
may reasonably request in order to fully give effect to the interests and
properties purported to be covered by the Security Documents, including, without
limitation, executing and delivering a preferred ship mortgage in the event that
the Platform is or becomes documented pursuant to Chapter 121 of Title 46 of the
United States Code, and (b) promptly correct, or cause to be corrected, any
defect or error that may be discovered in any Financing Document or in the
execution, acknowledgment or recordation thereof and execute, acknowledge and
deliver, and record and re-record, file and re-file and register and re-
register, any and all such further acts, deeds, conveyances, mortgages, deeds of
trust, trust deeds, assignments, estoppel certificates, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Agent may reasonably require from time
to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Financing Document and (ii) to better assure, convey,
grant, assign, transfer, preserve, protect and confirm unto the Secured Parties
and the Administrative Agent the rights granted or now or hereafter intended to
be granted to the Secured Parties or the Administrative Agent under any
Financing Document or under any other instrument executed in connection with any
Financing Document or that the Borrower or any Subsidiary may be or become bound
to convey, mortgage or assign to the Secured Parties or the Administrative Agent
in order to carry out the intention or facilitate the performance of the
provisions of any Financing Document. The Borrower will, and will cause each of
its Subsidiaries to, furnish to the Administrative Agent evidence satisfactory
to it of every such recording, filing or registration.
SECTION 5.13. Performance of Transaction Documents. Each of
the Borrower and its Subsidiaries shall perform and observe all terms and
provisions of each Transaction Document to which it is a party, maintain such
Transaction Documents in full force and effect in accordance with their terms,
enforce such Transaction Documents in full force and effect in accordance with
their terms, enforce such Transaction Documents in accordance with their
respective terms and take all such action concerning enforcement as the
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55
Administrative Agent or any Secured Party may from time to time reasonably
request, and if an obligor under any Transaction Document (other than the
Borrower, a Subsidiary or a Secured Party) asserts in writing its belief that
such Transaction Document is not valid or binding upon such obligor, allow the
Administrative Agent or any Secured Party the right to participate in any
proceeding relating thereto.
SECTION 5.14. Lien Releases. Prior to the delivery of the
Delivery Protocol (as defined in the Installation Agreement), each of the
Borrower and its Subsidiaries shall deliver to the Administrative Agent final
releases of mechanics and materialmen's liens from, and certified by, each
Construction Contractor and from all other mechanics and materialmen in privity
with the Borrower or any Subsidiary in respect of the "punch list" items
referred to in the definition of Final Completion.
SECTION 5.15. MMS Operator Approval. Prior to the 90th day
after the Closing Date, the Borrower shall have obtained all approvals from the
U.S. Department of the Interior Mineral Management Service that are required to
permit the Borrower to act as operator with respect to the Prince Field Reserves
and as the Operator (as defined in the Processing Agreement).
ARTICLE VI
Negative Covenants
Until the Construction Loan Commitments have expired or
terminated and the principal of and interest on each Loan and all fees payable
hereunder have been paid in full, the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, and will
not permit any Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness of the Borrower to any Subsidiary and or any
Subsidiary to the Borrower or any other Subsidiary;
(c) Subordinated Indebtedness;
(d) Indebtedness existing in connection with Interest Rate
Agreements, provided that such Interest Rate Agreements are entered into by the
Borrower or its Subsidiaries in the ordinary course of business and for the
purpose of hedging against fluctuations in interest rates; and
(e) other unsecured Indebtedness in an aggregate principal
amount not exceeding $5,000,000 at any time outstanding.
SECTION 6.02. Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
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(a) Permitted Encumbrances; and
(b) Liens securing the Obligations.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not,
and will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or any substantial part of its assets, or all or
substantially all of the stock of any of its Subsidiaries (in each case, whether
now owned or hereafter acquired), or liquidate or dissolve, except that, if at
the time thereof and immediately after giving effect thereto no Default shall
have occurred and be continuing (i) any Subsidiary may merge into the Borrower
in a transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Borrower or to another Subsidiary and
(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and the Lenders determine that such liquidation or dissolution is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage in any business other than the development,
construction, financing and operation of the Project and businesses reasonably
related thereto.
(c) The Borrower will not, and will not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of all or any
substantial part of its assets, including without limitation, any portion of the
Project, except (i) sales pursuant to Transaction Documents, (ii) sales in the
ordinary course of business up to an aggregate of $100,000 per year if the same
have been replaced to the extent necessary for the continued operation of the
Project, (iii) sales of assets that are unnecessary, as reasonably determined by
the Independent Engineer, to the completion of the Project, and (iv) the
granting of rights of way and easements necessary in connection with the
operation of the Project.
(d) The Borrower will not, and will not permit any of its
Subsidiaries to, discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except Permitted Investments.
SECTION 6.05. Hedging Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities.
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SECTION 6.06. Restricted Payments. The Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except on the Conversion
Date and on any Quarterly Date following the Conversion Date from, and to the
extent of, Available Cash Flow and subject to the following conditions on the
date of such Restricted Payment, both before and after giving effect to such
Restricted Payment, (i) no Default has occurred and shall be continuing, (ii)
the Consolidated Debt Service Coverage Ratio for the most recently ended Rolling
Period is equal to or greater than 1.30:1.00, (iii) the Consolidated Projected
Debt Service Ratio is equal to or greater than 1.30:1.00, and (iv) the amounts
on deposit in the Debt Service Reserve Account equal or exceed the Debt Service
Reserve Amount; provided, however, that in the event that a claim pursuant to
Section 2(a) of the Sponsor Agreement is made by the Administrative Agent
against the Sponsor and such claim remains unremedied after a period of 10 days
following the delivery of written notice of such claim from the Administrative
Agent to the Sponsor or such claim is satisfied by a payment of cash or cash
equivalents from the Sponsor to the Administrative Agent, the Borrower shall not
make any Restricted Payments until the Construction Loan Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder or under the other Financing Documents shall have
been paid in full; provided, further, that the Borrower shall not make any
Restricted Payments during the 10 day period following delivery of such written
notice so long as the applicable claim remains unremedied.
SECTION 6.07. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) for agreements existing on the Effective Date, a
copy of each such agreement has been delivered to the Administrative Agent, or
replacements thereof on substantially the same terms, (b) for agreements
approved by the Required Lenders and on terms no less favorable to the Borrower
or such Subsidiary than if the transaction had been negotiated in good faith on
an arm's length basis with a non- Affiliate, (c) any Restricted Payment
permitted by Section 6.06, and (d) transactions expressly permitted by Section
6.03(a).
SECTION 6.08. Restrictive Agreements. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by this Agreement, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.08 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment thereof.
SECTION 6.09. Modification of the Approved Construction
Budget. Subject to Section 6.16, the Borrower will not adjust, modify or
re-allocate all or any portion of the Approved Construction Budget.
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SECTION 6.10. Management Fees. The Borrower will not pay any
management fee to any Person other than as expressly provided in this Agreement.
SECTION 6.11. Ownership; Legal Form. The Borrower will not
permit the transfer or sale of or change in the ownership interests of the
Borrower or change the legal form of the Borrower.
SECTION 6.12. Subsidiaries. The Borrower will not (a) form or
own any Subsidiaries, (b) become a general or limited partner in any partnership
or a joint venturer in any joint venture, (c) acquire any ownership or equity
interest in or make any capital contribution to any Person, (d) enter into any
profit sharing or royalty agreement or other similar arrangement whereby the
Borrower's income or profits are, or might be, shared with any other Person or
(e) enter into any management contract or similar arrangement whereby its
business or operations are managed by any other Person other than in each case
as expressly contemplated by the Transaction Documents.
SECTION 6.13. Design Changes. Except as permitted by Section
6.16, the Borrower will not make any material changes to the design of the
Project or deviate from the Drawings and Specifications, without the prior
written approval of the Administrative Agent and the Independent Engineer.
SECTION 6.14. Compliance With ERISA. The Borrower will not
establish or permit to exist, or participate in, any Plan, any Multiemployer
Plan or any Welfare Plan.
SECTION 6.15. Amendments. The Borrower will not cancel or
terminate, or consent to or otherwise permit the cancellation or termination of,
any Transaction Document, or amend or otherwise modify, or give any consent,
waiver or approval to any variation of or deviation from the material terms of,
any Transaction Document, or consent to or permit or accept any prepayment of
amounts to become due under or in connection with any Transaction Document,
except as expressly provided therein.
SECTION 6.16. Variation Orders. The Borrower will not direct
or consent to any Variation Order unless such Variation Order, individually or
together with all other Variation Orders could not reasonably be expected to:
(a) prevent Final Completion from occurring on or prior to the
Date Certain;
(b) result in (i) Non-Budgeted Cost in excess of (A) $500,000
for any Variation Order or (B) $2,500,000 for all such Variation Orders in the
aggregate or (ii) an increase in Budgeted Costs of more than (A) $500,000 for
any Variation Order or (B) $2,500,000 for all such Variation Orders in the
aggregate;
(c) materially, adversely affect the operation of the Project;
and
(d) cause the Approved Construction Budget line item entitled
"Contingency" to fall below the following amounts indicated for the following
periods: (i) $8,000,000 on or before October 31, 2000; (ii) $7,000,000 from
November 1, 2000 to January 31, 2001; (iii) $6,000,000 from February 1, 2001 to
April 30, 2001; (iv) $5,000,000 from May 1, 2001 to July 31, 2001; (v)
$4,000,000 from August 1, 2001 to October 31, 2001; and (vi) $3,000,000 from
November 1, 2001 to December 31, 2001.
SECTION 6.17. Construction Contracts. The Borrower will not
deliver any notice, completion certificate or acceptance certificate to any
Construction Contractor pursuant to the applicable
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Construction Contract with respect to the final acceptance by the Borrower of
the Platform, the pipelines or any other component of the Project unless the
applicable performance tests required by the Construction Contract have been
performed and the results of such performance tests are satisfactory to the
Independent Engineer.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee, or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or under any Hedging Agreement, when
and as the same shall become due and payable, and such failure shall continue
unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any amendment or modification hereof or waiver hereunder, or in any
report, certificate, financial statement or other document furnished pursuant to
or in connection with this Agreement or any amendment or modification hereof or
waiver hereunder, shall prove to have been incorrect when made or deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with respect
to the Borrower's existence), 5.05, 5.08 or 5.14 or in Article VI;
(e) the Borrower or the Sponsor shall fail to observe or
perform any covenant, condition or agreement contained (i) in this Agreement
(other than those specified in clause (a), (b) or (d) of this Article), and such
failure shall continue unremedied for a period of 10 Business Days after notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender), or (ii) in any other Financing Document and
such failure shall continue unremedied for a period of 10 Business Days after
notice thereof from the Administrative Agent to the Borrower (which notice will
be given at the request of any Lender);
(f) the Borrower, any Subsidiary or the Sponsor shall fail to
make any payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured
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Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any El Paso Entity or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any El Paso Entity or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;
provided, however, an Event of Default shall not exist under this subsection (h)
if the economic value of the Transaction Document(s) to which such El Paso
Entity (other than the Borrower, the Parent, the Sponsor, El Paso Energy
Corporation or El Paso Production GOM Inc.) is a party is less than $1,000,000
and such Transaction Document(s) is replaced by a contract with or assigned to a
third party satisfactory to the Required Lenders, with substantially the same
terms and conditions, within 30 days of the commencement of such involuntary
proceeding or such filing of an involuntary petition;
(i) any El Paso Entity shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing; provided, however, an Event of Default shall not exist under this
subsection (i) if the economic value of the Transaction Document(s) to which
such El Paso Entity (other than the Borrower, the Parent, the Sponsor, El Paso
Energy Corporation or El Paso Production GOM Inc.) is a party is less than
$1,000,000 and such Transaction Document(s) is replaced by a contract with or
assigned to a third party satisfactory to the Required Lenders, with
substantially the same terms and conditions, within 30 days of the commencement
of such voluntary proceeding or such filing of a voluntary petition;
(j) any El Paso Entity shall become unable, admit in writing
its inability, or fail generally, to pay its debts as they become due;
(k) one or more judgments that are not covered by insurance
for the payment of money in an aggregate amount in excess of $2,500,000 shall be
rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Reportable Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with all other ERISA
Reportable Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;
(m) a Change in Control shall occur;
(n) a "default" under the Processing Agreement, the EPN Credit
Agreement or the Sponsor
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Agreement shall occur and shall continue after the applicable grace period, if
any, specified therein;
(o) failure to achieve Final Completion or the failure to meet
all of the conditions set forth in Section 4.03 by the Date Certain;
(p) the Borrower shall at any time abandon the Project, or
prior to Final Completion, cease diligently constructing the Project;
(q) the termination of any Construction Contract (other than
termination in accordance with the terms of any such agreement after full
performance of the obligations by each party thereto);
(r) the Borrower, any of its Subsidiaries or the Project
becomes subject to an Environmental Liability that could reasonably be expected
to result in a Material Adverse Effect;
(s) the Security Documents, shall for any reason, except to
the extent permitted by the terms hereof or thereof, cease to create a valid and
perfected first priority Lien, subject to Permitted Encumbrances (to the extent
purported to be granted by such documents), in any portion of the Collateral;
(t) there shall occur an actual or constructive total loss of
the Project; or there shall occur a Taking of all or substantially all of the
Project; or
(u) any material provision of any material Transaction
Document shall for any reason other than the express terms thereof cease to be
valid and binding on any party thereto or the Borrower or any Transaction Party
which is a party to such Transaction Document shall so assert in writing;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Construction Loan Commitments, and thereupon the Construction Loan Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Construction Loan Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower.
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ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until written notice thereof is given
to the Administrative Agent by the Borrower or a Lender, and the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article V or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
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The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub- agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such 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 or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
Neither the Documentation Agent nor the Syndication Agent
shall have any duties or responsibilities hereunder in its capacity as such.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
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(a) if to the Borrower, to it care of El Paso Energy Partners
at P.O. Box 2511, Houston Texas 77252-2511 or 1001 Louisiana, Houston, Texas
77002, Attention of Keith Forman (Telecopy No. 713- 420-5477);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New
York, New York 10081, Attention of Tonya Mitchell (Telecopy No. (212) 552-5777),
with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York
10017, Attention of Steve Wood (Telecopy No. (212) 270-2519); and
(c) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by
the Administrative Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Construction Loan Commitment of
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any
Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Construction Loan Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner
that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder, (vi)
release all or substantially all of the Collateral pledged to secure the
Obligations pursuant to the Security Documents, or (vii) release or reduce the
obligations of the Sponsor under the Sponsor Agreement, without the written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent and the
consent of the Borrower is not required with respect to any amendment,
modification or waiver of the Sponsor Agreement.
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SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by
the Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent, the
Account Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, as the
case may be, such Lender's Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
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obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Construction Loan Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Borrower and the Administrative Agent must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Construction Loan Commitment, the amount of the Construction
Loan Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent, (iii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if a Default has occurred
and is continuing. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Construction
Loan Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this
<PAGE> 72
67
Section and any written consent to such assignment required by paragraph (b) of
this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Construction Loan
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative 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. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.17(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and so long as the Construction Loan Commitments have
not expired or terminated. The provisions of
<PAGE> 73
68
Sections 2.14, 2.15, 2.16 and 9.03 and Article X shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
and the Construction Loan Commitments or the termination of this Agreement or
any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates 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 obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all the obligations of the Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York (without regard to its conflict of
law principles other than Section 5-1401 of the General Obligations of Law).
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto 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.
Nothing in this Agreement shall affect any right
<PAGE> 74
69
that the Administrative Agent or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative
Agent and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as
<PAGE> 75
70
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 9.14. Secured Affiliates. For purposes of this
Agreement and all other Financing Documents (other than applicable Interest Rate
Agreements), if a Secured Affiliate of a Lender has entered into one or more
Interest Rate Agreements with the Borrower or any its Subsidiaries, then to the
extent that such Secured Affiliate has rights or obligations (or if the
affiliated Lender, rather than the Secured Affiliate, were the counter-party to
the applicable Interest Rate Agreement, such rights or obligations that such
Lender has) hereunder or under any other Financing Document (other than
applicable Interest Rate Agreements), such affiliated Lender shall be the agent
and attorney-in-fact for such Secured Affiliate with regard to any such rights
and obligations, or deemed rights and obligations, as if such Lender were the
counter-party to the applicable Interest Rate Agreement including, but not
limited to, the following: all distributions or payments in respect of
Collateral owing to such Secured Affiliate shall be distributed or paid to such
Lender, all representations, statements or disclaimers made herein or in any
Financing Document by or to such Lender shall be deemed to have been made by or
to such Secured Affiliate, all obligations incurred by such Lender that would
have been incurred by the Secured Affiliate if it were a party hereto
(including, but not limited to, obligations under Article VIII) shall be the
obligations of such Lender, and such Lender, as the agent and attorney-in-fact
of its Secured Affiliate, will make any and all payments owing to the
Administrative Agent with respect to such obligations or deemed obligations of
its Secured Affiliate. Each such Lender represents, warrants and covenants to
and with the Administrative Agent that such Lender has, or at all applicable
times will have, full power and authority to act as agent and attorney-in-fact
for its Secured Affiliates. Under no circumstance shall any Secured Affiliate
have any voting rights hereunder and the voting rights of any affiliated Lender
shall not be increased by virtue of the obligations owing to any such Secured
Affiliate.
SECTION 9.15. Intercreditor Provisions. As long as the
obligations of the Sponsor pursuant to the Sponsor Agreement are secured by the
collateral pledged or subject to a Lien created under the EPN Security
Documents, the Administrative Agent and the Lenders hereby agree as follows:
(a) The Administrative Agent and the Lenders hereby
acknowledge and agree that the appointment of The Chase Manhattan Bank as
"Collateral Agent" pursuant to the EPN Security Documents which documents also
include an appointment of The Chase Manhattan Bank as Collateral Agent for the
Argo Lenders and for the EPN Lenders. The Lenders hereby appoint The Chase
Manhattan Bank to act on their behalf as Collateral Agent. If at any time The
Chase Manhattan Bank resigns or is replaced as the Collateral Agent then the
"Required Lenders" as defined in the EPN Credit Agreement shall select a
<PAGE> 76
71
replacement "collateral agent" hereunder and for the EPN Security Documents in
accordance with the procedures provided in the EPN Credit Agreement for
replacement of the "Administrative Agent", subject to the approval of the
Sponsor as set forth therein. The Lenders also hereby authorize and appoint the
Administrative Agent to act as their agent with respect to the execution and
delivery of that certain Intercreditor Agreement dated as of June 30, 2000, by
and between the Administrative Agent and The Chase Manhattan Bank, acting in its
capacity as the Administrative Agent under the EPN Credit Agreement.
(b) Any collateral or security taken or received in respect of
any EPN Lender Indebtedness under the EPN Credit Agreement shall be for the pro
rata benefit of each of the Combined Lenders in accordance with such Lender's
Combined Total Credit Percentage. Irrespective of the order of recording of
deeds of trust, the EPN Security Documents or any financing statements or other
instruments, the Lenders agree that, as among the Argo Lenders and the EPN
Lenders, the scope and priority of the respective Liens in the EPN Collateral
and any distribution with respect to any amounts received pursuant to any
foreclosure of such Liens or any other amounts realized on the EPN Collateral
shall be pari passu as to the EPN Lender Indebtedness and the Sponsor's Clawback
Obligation. The arrangements contemplated by this Section shall apply
notwithstanding any Event of Default or any Acceleration under the EPN Credit
Agreement or demand under the Subsidiaries Guarantee (as defined in the EPN
Credit Agreement); the date of execution, delivery, attachment, perfection or
registration of any EPN Security Document (or lack of any thereof), the exercise
of any right of setoff; the priority of any EPN Security Document; the date of
advance of any funds; the date of creation, perfection or determination of any
charges or security interests; the date of appointment of any receiver or
receiver-manager or bankruptcy trustee or of taking any other enforcement
proceedings; the date of obtaining any judgment; the date of notification in
respect of any account receivable; any provision of applicable law or
requirement of any Governmental Authority; any defense, claim or any right not
provided under this Section or under the EPN Credit Agreement; or the terms of
any agreement between any Lender or the Sponsor under any other document or
instrument between or among such parties, whether or not a bankruptcy,
receivership or insolvency proceedings shall at any time have been commenced.
SECTION 9.16. Limitation on Recourse of Lenders. The
obligations created by this Agreement are obligations of the Borrower only, and
not of the Sponsor or any of the Subsidiaries of the Sponsor (except the
Borrower and its Subsidiaries). Each Lender agrees that except as otherwise
specifically provided for hereafter, in the event of a Default in the payment of
the Obligations by the Borrower or any of its Subsidiaries or any other Default
hereunder, such Lender's sole recourse shall be against the Borrower, the
Parent's equity interest in the Borrower, any Collateral, any other assets of
the Borrower and its Subsidiaries, and any obligations of the Sponsor or the
Parent as set forth in the Sponsor Agreement or the LLC Agreement, respectively,
or any other Financing Document to which such Person is now or hereafter a
party. Nothing in this Section 9.16 shall be construed so as to prevent the
Lenders or the Administrative Agent from commencing any action, suit or
proceeding with respect to the Borrower or causing legal papers to be served
upon the Parent or the Sponsor for purposes of obtaining jurisdiction over the
Borrower. Notwithstanding the foregoing limitation of liability, however, the
Lenders shall have recourse to and do not waive any rights to pursue the Sponsor
and any of its Subsidiaries in connection with:
(a) for their fraud, material misrepresentation, or gross
negligence in connection with this Agreement or any other
Financing Document;
(b) for willful actions of any such Person that hinder or
interfere with the Administrative Agent's or Lenders' rights
in Project or diminish the value thereof as set forth in the
Financing Documents or otherwise;
<PAGE> 77
72
(c) for any breaches of warranty of title;
(d) for the return of , or reimbursement for, (i) proceeds of
insurance covering any portion of the Project or any property
of the Borrower or (ii) proceeds of the sale or condemnation
of any portion of the Project or other property of the
Borrower, in either case, such proceeds that have been
distributed in violation of Section 6.06;
(e) for the return of, or reimbursement for, all personal property
taken from the Borrower by or on behalf of any such Person in
violation of Section 6.06;
(f) for all court costs and all attorney's fees incurred by the
Administrative Agent or the Lenders in enforcing the
obligations set forth in this Section 9.16 against any such
Person; and
(g) for use of the proceeds of any of the Loans in any manner
other than as permitted under Section 5.08.
[Signature Pages Begin on the Next Page]
<PAGE> 78
73
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
ARGO, L.L.C.,
By /s/ JAMES LYTAC
--------------------------------
Name: James Lytac
Title: President
[Signature Page to Credit Agreement - 1]
<PAGE> 79
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent,
By /s/ STEVEN WOOD
--------------------------------
Name: Steven Wood
Title: Vice President
[Signature Page to Credit Agreement - 2]
<PAGE> 80
FIRST UNION NATIONAL BANK,
individually and as Syndication Agent
By /s/ ROBERT R. WETTEROFF
--------------------------------
Name: Robert R. Wetteroff
Title: Senior Vice President
[Signature Page to Credit Agreement - 3]
<PAGE> 81
BANK ONE, NA, (Main Office Chicago),
individually and as Documentation
Agent
By /s/ KENNETH J. FATUR
--------------------------------
Name: Kenneth J. Fatur
Title: Vice President
[Signature Page to Credit Agreement - 4]
<PAGE> 82
THE BANK OF NOVA SCOTIA
By /s/ F.C.R. ASHBY
--------------------------------
Name: F.C.R. Ashby
Title: Senior Manager Loan
Operations
[Signature Page to Credit Agreement - 5]
<PAGE> 83
BANK OF SCOTLAND
By /s/ JOSEPH FRATUS
--------------------------------
Name: Joseph Fratus
Title: Vice President
[Signature Page to Credit Agreement - 6]
<PAGE> 84
FORTIS CAPITAL CORP.
By /s/ DARRELL W. HOLLEY
--------------------------------
Name: Darrell W. Holley
Title: Managing Director
By /s/ DEIRDRE SANBORN
--------------------------------
Name: Deirdre Sanborn
Title: Vice President
[Signature Page to Credit Agreement - 7]
<PAGE> 85
CREDIT AGRICOLE INDOSUEZ
By /s/ PATRICK COCQUERAL
--------------------------------
Name: Patrick Cocqueral
Title: FVP, Managing Director
By /s/ MICHAEL D. WILLIS
--------------------------------
Name: Michael D. Willis
Title: VP, Credit Analysis
[Signature Page to Credit Agreement - 8]
<PAGE> 86
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August
23, 2000 (as amended and in effect on the date hereof, the "Credit Agreement"),
among Argo, L.L.C., the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent for the Lenders. Terms defined in the Credit Agreement are
used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and
assigns, without recourse, to the Assignee named on the reverse hereof, and the
Assignee hereby purchases and assumes, without recourse, from the Assignor,
effective as of the Assignment Date set forth on the reverse hereof, the
interests set forth on the reverse hereof (the "Assigned Interest") in the
Assignor's rights and obligations under the Credit Agreement, including, without
limitation, the interests set forth on the reverse hereof in the Construction
Loan Commitment of the Assignor on the Assignment Date and Loans owing to the
Assignor which are outstanding on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.16(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The Assignee/Assignor] shall pay the fee payable
to the Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
<PAGE> 87
2
<TABLE>
<CAPTION>
Applicable Percentage
Assigned of Loans/
Construction Loan
Commitment (set forth, to at
least 8 decimals, as a
percentage of the Facility and
the aggregate Construction
Principal Amount Loan Commitments of all
Facility Assigned Lenders thereunder)
-------- -------- ------------------------------
<S> <C> <C>
Construction Loan $ %
Commitment Assigned:
Construction Loans:
Term Loans:
</TABLE>
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
---------------------------------
Name:
Title:
[Name of Assignee] , as Assignee
By:
---------------------------------
Name:
Title:
The undersigned hereby consent to the within assignment:(1)
Argo, L.L.C., The Chase Manhattan Bank,
as Administrative Agent,
By: By:
----------------------------- ----------------------------
Name: Name:
Title: Title:
------------
(1) Consents to be included to the extent required by Section 9.04(b)
of the Credit Agreement.
<PAGE> 88
1
EXHIBIT B-1
[FORM OF]
OPINION OF AKIN GUMP STRAUSS HAUER & FELD, L.L.P
August 23, 2000
The Chase Manhattan Bank,
as Administrative Agent for the Lenders
and the Lenders party to the Credit Agreement
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Ladies and Gentlemen:
We have acted as counsel for Argo L.L.C., a Delaware limited liability
company (the "Borrower"), and the other Borrower Parties (each herein defined)
in connection with the execution and negotiation of (i) the Credit Agreement,
dated as of even date herewith (the "Credit Agreement"), by and among the
Borrower, The Chase Manhattan Bank, as administrative agent for the Lenders (in
such capacity, the "Agent"), and the Lenders party thereto (the "Lenders"), (ii)
the Guarantee and Collateral Agreement, dated as of even date herewith (the
"Guarantee and Collateral Agreement"), by and among the Borrower, the Agent, and
the Lenders, (iii) the Pledge and Security Agreement (the "Pledge Agreement"),
dated as of even date herewith, by and between Argo I L.L.C. ("Argo I") and the
Agent, acting on behalf of the Lenders, and (iv) the Sponsor Agreement (the
"Sponsor Agreement"), dated as of even date herewith, by and between El Paso
Energy Partners, L.P. (the "Sponsor") and the Agent, acting on behalf of the
Lenders. This opinion ("Opinion") is delivered to you in connection with and
pursuant to Section 4.01(b)(i) of the Credit Agreement. Undefined capitalized
terms are defined in the Credit Agreement.
A. Documents Examined.
In preparing this opinion, we have examined:
(1) A copy of the Credit Agreement;
(2) A copy of the Guarantee and Collateral Agreement;
(3) A copy of the Pledge Agreement;
(4) A copy of the Sponsor Agreement;
(5) A copy of the Consent and Agreement dated as of August 23,
2000 by and among El Paso Production GOM Inc. ("El Paso
Production"), the Borrower and the Administrative Agent;
(6) A copy of the Consent and Agreement dated as of August 23,
2000 by and among MODEC International LLC, the Borrower and
the Administrative Agent;
<PAGE> 89
2
(7) A copy of the Consent and Agreement dated as of August 23,
2000 by and among Omega Services Industries, Inc., the
Borrower and the Administrative Agent;
(8) A copy of the Consent and Agreement dated as of August 23,
2000 by and among Allseas Construction Contractors, S.A., the
Borrower and the Administrative Agent;
(9) A copy of the Consent and Agreement dated as of August 23,
2000 by and among El Paso Energy Corporation ("EPEC"), the
Borrower and the Administrative Agent;
(10) A copy of the LLC Agreement;
(11) A copy of the Assignment and Assumption Agreement between
Delos Offshore Company, L.L.C. and the Borrower;
(12) A copy of the Processing Agreement;
(13) A copy of the Performance Guaranty from EPEC to the Borrower
guaranteeing the performance by El Paso Production under the
Processing Agreement;
(14) Copies of financing statements executed by certain of the
Borrower Parties for filing in the Offices of the Secretary of
State of Texas, Delaware and Louisiana (the "Financing
Statements");
(15) Certificate(s) of the Borrower, Argo I, and Argo II L.L.C.
("Argo II") (collectively, the Borrower and Argo I are the
"Borrower Parties"), dated as of even date herewith,
certifying (a) that the representations and warranties made by
each of the Borrower Parties contained in each Transaction
Document (herein defined) to which any Borrower Party is a
party and in each document and certificate or other writing
delivered pursuant thereto are true and correct and (b)
certain other matters;
(16) Certificate(s) of the Sponsor, dated as of even date herewith,
certifying (a) that the representations and warranties made by
the Sponsor contained in each Transaction Document to which it
is a party and in each document and certificate or other
writing delivered pursuant thereto are true and correct and
(b) certain other matters;
(17) Certificate(s) of El Paso Production, dated as of even date
herewith, certifying (a) as to incumbency and (b) certain
other matters;
(18) Certificate(s) of EPEC, dated as of even date herewith,
certifying (a) as to incumbency and (b) certain other matters;
(19) Certificate(s) of Delos, dated as of even date herewith,
certifying (a) as to incumbency and (b) certain other matters;
(20) Certificate(s) of Existence and Good Standing of the Borrower
from the Secretary of State of the State of Delaware dated
August 15, 2000;
<PAGE> 90
3
(21) Certificate of Existence and Good Standing of Argo I from the
Secretary of State of the State of Delaware dated August 15,
2000;
(22) Certificate of Existence and Good Standing of Argo II from the
Secretary of State of the State of Delaware dated August 15,
2000;
(23) Certificate of Existence and Good Standing of the Sponsor from
the Secretary of State of the State of Delaware dated August
15, 2000;
(24) Certificate of Registration as a foreign limited partnership
of the Sponsor certified August 18, 2000 by the Secretary of
State of the State of Texas;
(25) Certificate of Authority as a foreign limited liability
company of the Borrower certified August 21, 2000 by the
Secretary of State of the State of Texas;
(26) Certificate of Authority as a foreign limited liability
company of the Borrower certified August 16, 2000 by the
Secretary of State of the State of Louisiana;
(27) Certificate of Existence and Good Standing of Borrower
certified August 16, 2000 by the Secretary of State of the
State of Texas;
(28) Certificate of Existence and Good Standing of EPEC from the
Secretary of State of the State of Delaware dated August 21,
2000;
(29) Certificate of Authority as a foreign corporation of EPEC
certified August 17, 2000 by the Secretary of State of the
State of Texas;
(30) Certificate of Existence and Good Standing of EPEC certified
August 18, 2000 by the Secretary of State of the State of
Texas;
(31) Certificate of Existence and Good Standing of El Paso
Production from the Secretary of State of the State of
Delaware dated August 15, 2000; and
(32) Certificate of Existence and Good Standing of Delos from the
Secretary of State of the State of Delaware dated August 21,
2000.
The documents referred to in A.(1) through A.(3) are
referred to herein as the "Loan Documents" and, together with
the documents referred to in A.(4) through A.(13), the
"Transaction Documents." The Loan Documents, together with the
Sponsor Agreement, are the "Enforceability Documents." The
Borrower Parties, together with the Sponsor, are the "Opinion
Parties."
In rendering the opinions expressed below, we have
examined the originals or photostatic, certified or conformed
copies of all such agreements and certificates of public
officials and such other documents and records and such
matters of law as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed.
<PAGE> 91
4
B. Opinions. Based upon and subject to the comments, assumptions,
limitations, qualifications, and exceptions hereinafter set forth we
are of the opinion that:
(1) Each of the Borrower Parties is validly existing as a limited
liability company, in good standing under the laws of the
State of Delaware. Argo is duly qualified and is in good
standing as a foreign limited liability company in Texas. The
Sponsor is validly existing as a limited partnership, in good
standing under the laws of the State of Delaware and is
registered as a foreign limited partnership under the laws of
the State of Texas.
(2) Each Borrower Party has the limited liability company power
and authority to execute and deliver each Loan Document and
Financing Statement to which it is a party and to perform its
obligations under each such Loan Document. Each Loan Document
and Financing Statement has been duly authorized by all
necessary limited liability company action on the part of each
Borrower Party which is a party thereto. The Sponsor has the
limited partnership power and authority to execute, deliver
and perform its obligations under the Sponsor Agreement. The
Sponsor Agreement has been duly authorized by all necessary
limited partnership action.
(3) Each Loan Document has been duly executed and delivered by
each Borrower Party which is a party thereto, and the Sponsor
Agreement has been duly executed and delivered by the Sponsor.
(4) Each Enforceability Document constitutes the valid and binding
obligation of each Opinion Party which is a party thereto
enforceable against such Opinion Party in accordance with its
terms.
(5) To our knowledge, except as disclosed in the Loan Documents,
there is no action, suit or proceeding at law or in equity or
by or before any governmental or regulatory authority or
agency, now pending or threatened, against any Borrower Party
or the Sponsor (a) with respect to the Loan Documents or the
Sponsor Agreement or any of the transactions contemplated
thereby or (b) which, if adversely determined, would have a
material adverse effect on the Borrower Parties, taken as a
whole, or the Sponsor, as applicable.
(6) The execution, delivery and performance by each Opinion Party
of their respective obligations under each Loan Document and
the Sponsor Agreement do not and will not (i) contravene or
violate any Texas, New York or federal laws, (ii) to our
knowledge, result in a violation of any order, judgment,
decree, rule, injunction or permit applicable to or binding
upon such Opinion Party, as applicable, except such
contraventions or violations which would not have a material
adverse effect on any Opinion Party or (iii) breach or result
in a default under any agreement or instrument listed on
Exhibit "B" hereto.
(7) The Guarantee and Collateral Agreement and the Pledge
Agreement create a legal, valid and enforceable security
interest in favor of the Agent in the Borrower Parties' right,
title and interest in the collateral constituting accounts,
general intangibles, documents, instruments and chattel paper
(as such terms are defined in the Uniform Commercial Code (the
"UCC") in effect in the States of New York (the "New York
UCC") and Texas (the "Texas UCC") as security for the
obligations being secured thereby (to the extent such
<PAGE> 92
5
accounts, general intangibles, documents, instruments and
chattel paper include collateral security of a type to which
the Texas UCC or New York UCC are applicable) (the
"Collateral").
(8) The Texas and New York Financing Statements are in appropriate
form and, when filed with the Secretaries of State of Texas
and New York (which are the only offices under the Texas UCC
and the New York UCC, respectively, to perfect the security
interest in the Collateral for which perfection may be
accomplished by filing a financing statement (the "Filing
Collateral")), will result in the perfection of the security
interest in such Filing Collateral except as hereinafter set
forth:
(i) in the case of Collateral consisting of
instruments (as such term is defined in
Articles 8 and 9 of the Texas UCC and the
New York UCC) not constituting part of
chattel paper (as such term is defined in
Articles 8 and 9 of the Texas UCC and the
New York UCC), the Lenders' security
interest therein will not be perfected by
the filing of the Financing Statements but
will be perfected if possession thereof is
obtained and maintained in accordance with
the provisions of Article 9 of the Texas UCC
and the New York UCC;
(ii) in the case of Collateral consisting of
non-identifiable cash proceeds, continuation
of perfection of the security interest
therein is limited to the extent set forth
in Section 9.306 of the Texas UCC and 9-306
of the New York UCC;
(iii) in the case of Collateral in which a
security interest can be perfected by the
filing of appropriate financing statements,
Article 9 of the Texas UCC and the New York
UCC requires the filing of continuation
statements within the period of six months
prior to the expiration of five years from
the date of the original filing and the date
of filing of any continuation statement, to
maintain the effectiveness of the filings
referred to in this paragraph;
(iv) in the case of property which becomes
Collateral after the date hereof, Section
552 of the Federal Bankruptcy Code limits
the extent to which property acquired by a
debtor after commencement of a case under
the Federal Bankruptcy Code may be subject
to a security interest arising from a
security agreement entered into by the
debtor before the commencement of the case;
and
(v) we note that perfection of the Lenders'
security interest in "investment property"
(as defined in Section 9-115(1)(b) of the
New York UCC and in Section 9.115(a)(6) of
the Texas UCC) by filing pursuant to Section
9-115(4)(b) of the New York UCC and Section
9.302(a)(9) of the Texas UCC is inferior to
perfection by possession or "control" as
defined in Section 8-106 of the New York UCC
and Section 8.106 of the Texas UCC.
<PAGE> 93
6
(9) We call your attention to the fact that the perfection of the
above security interest will be terminated (i) as to any
Filing Collateral acquired by the Borrower Parties, more than
four months after the applicable Borrower Party changes its
name or identity so as to make the Financing Statements
seriously misleading, unless new appropriate financing
statements indicating the new name or identity of the
applicable Borrower Party are properly filed before the
expiration of such four months and (ii) as to any Filing
Collateral consisting of accounts and general intangibles
(other than any accounts and general intangibles described in
Section 9.103(e) of the Texas UCC), four months after a
Borrower Party changes the location of its chief executive
office to a new jurisdiction outside the State of Texas (or,
if earlier, when perfection under the laws of the State of
Texas would have ceased as set forth in Paragraph B.(8)(iii)),
unless such security interest is perfected in such new
jurisdiction before that termination. Continuation of
perfection in any proceeds which are part of the property now
or hereafter subject to a security interest or after- acquired
property may, if such proceeds or after-acquired property
consists of property of a type in which a perfected security
interest cannot be obtained by filing a financing statement,
require additional compliance with applicable provisions of
the Texas UCC, other than the filing of financing statements,
and we express no opinion as to the perfection and
effectiveness of any security interest in any proceeds from
the Filing Collateral initially subject to the security
interest in favor of the Lenders or after-acquired property to
the extent that the perfection or effectiveness depends on
such additional compliance.
(10) Except for any filings of the Financing Statements under the
Texas UCC and New York UCC described in Paragraph B.(8), no
approval, authorization or other action by, or filing with,
any Texas, New York and/or federal governmental authority
which has not been obtained, is required in connection with
the execution and delivery of the Loan Documents or the
Sponsor Agreement or the performance by the Borrower Parties
or the Sponsor of their obligations thereunder except for (i)
filings necessary to continue the perfection of liens, (ii)
filings, consents or approvals required under any securities
laws, rules or regulations for the exercise by the Agent of
its rights and remedies under the Guarantee and Collateral
Agreement or the Pledge Agreement (such as filing a
registration statement), or (iii) routine limited liability
company or partnership filings required to be made after the
date hereof to maintain good standing and to maintain or renew
licenses and permits or other routine business filings
required by each of the Opinion Parties, and, in the case of
the Sponsor, filings under the Securities Exchange Act of
1934, as amended.
(11) Possession in New York by the Agent for the benefit of the
Lenders of the instruments, chattel paper or certificated
securities (when securities are in "control" of the secured
party) constituting Collateral under the Guarantee and
Collateral Agreement or the Pledge Agreement will result in,
with respect to such instruments and chattel paper, perfection
of a first priority security interests, and, with respect to
such certificated securities, a security interest in the
pledged security free of adverse claims, assuming that the
Agent obtains possession in New York of such instruments,
chattel paper and certificated securities (and the secured
party maintains "control") in accordance with the provisions
of the New York UCC and assuming that the Lenders do not have
notice prior to or on the date of delivery of such Collateral
of an adverse claim (as defined in Section 8-102(a)(1) of the
New York UCC) or of circumstances described in Section 8-105
of the New York UCC and assuming
<PAGE> 94
7
continued possession (and "control" with respect to
securities) in New York thereof by the Agent except as
follows:
(i) such priority may be subject to claims or
liens in favor of the United States or any
agency or instrumentality thereof,
including, without limitation, liens for the
payment of federal, state or local taxes
which are given priority by operation of law
and liens under Title IV of ERISA;
(ii) such priority may be subject to security
interests in favor of other Persons that
exist pursuant to Section 9-304 of the New
York UCC, if within 21 days prior to the
date of delivery of any such instrument,
chattel paper or certificated security to
the Agent, the applicable Borrower Party
shall have signed in favor of any Person
other than the Lenders a security agreement
which contains a description of such
instrument, chattel paper or certificated
security and shall have received new value
therefor from such Person; and
(iii) we express no opinion as to the priority of
the security interests in such instrument or
chattel paper as against any lien creditor
(as such term is defined in the New York
UCC) to the extent that the security
interests therein purport to secure any
advances or other extensions of credit other
than obligations incurred pursuant to
existing commitments under the Loan
Documents.
(12) In a properly presented case, a Texas court, or a federal
court sitting in the State of Texas and applying Texas choice
of law principles, should uphold the choice of the laws (other
than the conflict of law rules) of the State of New York to
govern the Loan Documents.
(13) None of the Borrower Parties is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(14) None of the Borrower Parties is a "holding company," a
"subsidiary company," or an affiliate of a "subsidiary
company" or a "holding company" or a "public utility" in each
case as such term is defined in the Public Utility Holding
Company Act of 1935, as amended.
C. Comments, Assumptions, Limitations, Qualifications and Exceptions. The
foregoing opinions are subject to the following comments, assumptions,
limitations, qualifications, and exceptions:
(1) This law firm is a registered limited liability partnership
organized under the laws of the State of Texas. We have made
no investigation or review of any matters relating to the
Borrower other than as expressly listed above. Our opinions
herein are limited to the Included Laws (herein defined) and
we express no opinion herein as to any other laws. For
purposes of this opinion letter, the term "Included Laws"
means, to the extent they are normally (in our experience)
applicable to transactions of the type contemplated by the
Transaction Documents, (i) the laws, rules and regulations of
the States of Texas and New York and the federal laws, rules
and regulations of the United States of America and (ii) a
review of the Revised Limited Partnership Act and Limited
Liability Company Law of the State of
<PAGE> 95
8
Delaware; provided that such term specifically excludes laws,
statutes, judicial and administrative decisions, and the rules
and regulations (i) of any counties, cities, towns,
municipalities and special political subdivisions and any
agencies thereof, or (ii) relating to securities issues,
environmental issues, land use issues, taxes and intellectual
property rights.
(2) In rendering the opinions set forth above, we have assumed (a)
the genuineness of all signatures other than those of each
Opinion Party (or applicable representative), the authenticity
of all Transaction Documents submitted to us as originals, the
conformity to original Transaction Documents of all documents
submitted to us as certified or photostatic copies thereof,
and the authenticity of the originals of such certified or
photostatic copies; (b) the due authorization, execution, and
delivery of all agreements and Transaction Documents by all
parties thereto other than the Opinion Parties; (c) the legal
right and power of all parties other than the Opinion Parties
under all applicable laws and regulations to enter into,
execute and deliver all agreements and Transaction Documents;
(d) the requisite power and authority of all parties other
than the Opinion Parties to enter into the Transaction
Documents and other documents covered hereby and to consummate
the transactions contemplated thereby; (e) that the
Transaction Documents and other documents covered hereby
constitute valid and binding obligations of all parties other
than the Opinion Parties, enforceable against such parties, in
accordance with their respective terms; (f) that no fraud or
dishonesty exists with respect to any of the matters relevant
to our opinions; (g) the absence of any requirement of
consent, approval, or authorization by any Person or by any
governmental authority with respect to any Parties other than
the Opinion Parties which has not been obtained; (h) the
mental competency of all individuals executing the Transaction
Documents and other documents covered hereby; (i) the proceeds
of any loans were used in accordance with the terms thereof;
(j) with respect to Paragraph B.(11), the initial delivery of
all instruments, chattel paper or certificated securities
constituting Collateral will be made in New York; (k) there
exists only one copy of any chattel paper constituting
Collateral and (l) with respect to the certificated securities
described in Paragraph B.(11), the Guarantee and Collateral
Agreement and the Pledge Agreement have resulted in the
secured party (including any agent or bailee thereof) having
"control" as such term is defined in Sections 8-106 and
9-115(2)(e) of the New York UCC and corresponding provisions
of the Texas UCC, as applicable, and such certificates have
been duly endorsed in blank or in the name of the secured
party.
(3) The enforceability of the Enforceability Documents may be
limited by and subject to (a) applicable liquidation,
conservatorship, bankruptcy, insolvency, reorganization,
fraudulent transfer or conveyance, moratorium or other similar
laws affecting creditors' rights from time to time in effect;
(b) general principles of equity (regardless of whether
applied in a proceeding in equity or at law), including
commercial reasonableness and conscionability; (c) the power
of the courts to award damages in lieu of equitable remedies;
(d) the qualification that certain provisions of the
Enforceability Documents may not be enforceable in whole or in
part under the laws of the States of Texas or New York or the
United States, but the inclusion of such provisions does not
affect the validity of the security interests and liens
granted by the Guarantee and Collateral Agreement or the
Pledge Agreement, and the Guarantee and Collateral Agreement
and the Pledge Agreement contain adequate provisions for
enforcing payment of the obligations thereunder, and for the
practical realization of the rights and benefits afforded
thereby, except for the economic consequences of any judicial,
<PAGE> 96
9
administrative or other delay or procedure which may be
imposed by applicable federal and state law, rules,
regulations and court decisions and by constitutional
requirements in and of the States of Texas, New York and the
United States; and (e) the limitation that the right to
indemnification and contribution contained in the
Enforceability Documents may be limited by federal or state
laws or the policies underlying such laws.
(4) We express no opinion as to the enforceability of any
provisions contained in the Enforceability Documents
purporting to (i) allow the acceleration of the maturity of
any indebtedness, the institution of foreclosure proceedings
or the exercise of any other rights without notice to the
Opinion Parties, or any other signatory party thereto or bound
thereby, including the notice of intent to accelerate and
notice of such acceleration; (ii) provide for specific
performance; (iii) allow the Agent or any other secured party
to treat any portion of the applicable Collateral as if such
secured party owned it prior to foreclosure, including
exercising voting and consensual rights with regard to the
interests pledged pursuant to the Guarantee and Collateral
Agreement and the Pledge Agreement pledged to such secured
party prior to such secured party foreclosing on such pledged
interests; (iv) grant by any Opinion Party of an irrevocable
power of attorney or agency; (v) restrict access to legal or
equitable remedies (including, without limitation, proper
jurisdiction, venue and forum non-conveniens and the right to
claim or recover special, exemplary, indirect, punitive, or
consequential damages); (vi) covenant to take actions, the
taking of which are discretionary with or subject to the
approval of a third party or which are otherwise subject to a
contingency, the fulfillment of which is not within the
control of the party so covenanting (vii) relate to delay or
failure by any Lender or any other party to exercise any
right, remedy, or option under the Enforceability Documents
not operating as a waiver; (viii) establish evidentiary
standards; (ix) set off against any Opinion Party's accounts,
any amounts belonging to a third party or otherwise held in a
fiduciary capacity; (x) submit the parties to the jurisdiction
of the courts of New York property that is not located in the
State of New York; (xi) retain liability against any debtor
for a deficiency after foreclosures to the extent that such
foreclosures are not conducted in accordance with applicable
laws; (xii) provide that a specific number of days constitutes
reasonable notice under the New York UCC or Texas UCC; (xiii)
permit the Agent or any other party to sell, lease, or assign
any Collateral, or any other collateral for credit without
assuming any credit risk therefor or to retain cash proceeds
received upon the realization of any of the Collateral or any
other collateral as collateral for any obligation rather than
applying such cash proceeds to the obligations secured
thereby; (xiv) establish, as to third parties, nonculpability
for actions taken by a lienholder; (xv) preserve and maintain
the liability of an Opinion Party other than the Borrower
despite the fact that the guaranteed debt is unenforceable due
to illegality or the fact that the Lenders have voluntarily
released the primary obligor's liability on the guaranteed
debt or the fact that any Collateral securing the guaranteed
debt has been willfully, unreasonably, or unjustifiably
impaired; (xvi) prohibit oral amendments to a waiver of
provisions of such documents or limiting the effect of a
course of dealing between the parties thereto; (xvii) provide
for arbitration or other provisions concerning dispute
resolution, including but not limited to the waiver of right
to a jury trial; (xviii) relate to the recovery of liquidated
damages; (xix) provide for the disclaimer of warranties; and
(xx) authorize, in the Guarantee and Collateral Agreement, the
Agent with a power of attorney or agency to file or record
financing statements and other filing or recording documents
or instruments with respect to the Collateral subject to the
Guarantee and Collateral Agreement.
<PAGE> 97
10
(5) We have not examined title to any of the Collateral or any
other collateral and express no opinion as to title. We have
further assumed that (i) each applicable Borrower Party owns
or has rights in the Collateral, (ii) some or all of the
proceeds of the loans have been advanced to the Borrower,
(iii) the Agent, when and if acquired, will maintain
possession (and "control" with respect to securities) in New
York or Texas, as applicable, or other appropriate location of
all the items of the Collateral and any other collateral which
may be perfected only by the secured party's taking possession
thereof, including, without limitation, instruments, chattel
paper and securities and money, (iv) that all documents and
instruments constituting part of the Collateral are and will
be located in the States of New York and Texas for all periods
of time pertinent to our opinion, and (v) the counterparties
to the Transaction Documents have relied upon the
representations and warranties and certain agreements of the
other parties thereto in making the loans and other agreements
contained therein.
(6) We express no opinion as to:
(a) the priority of any security interest sought to be
created in any of the Collateral or any other
collateral other than the priority opinions expressed
in Paragraph B.(11);
(b) the validity or perfection of any security interest
sought to be created in any of the Collateral or any
other collateral consisting of items which are
subject to a certificate of title statute;
(c) the perfection of any security interest sought to be
created in any interest in or claim in or under any
policy of insurance (except as such may be proceeds);
(d) the validity or perfection of any security interest
sought to be created in deposit accounts or any
property interests which are excluded from the
coverage of Articles 8 or 9 of the Texas UCC, or any
accounts receivable to the extent that they are
subject to the Federal Assignment of Claims Act;
(e) the perfection of any security interest in any of the
Collateral or any other collateral which consists of
causes of action, choses in action, consumer goods,
equipment used in farming operations, farm products,
crops, timber, minerals and the like or accounts
resulting from the sale thereof, fixtures, letters of
credit, patents, servicemarks, copyrights or
trademarks; and
(f) the perfection of any security interest created by
the Borrower in any of its Collateral (such as
equipment or inventory in which the Borrower has
rights located in the State of Louisiana or on the
Outer Continental Shelf adjacent to the State of
Louisiana, to the extent deemed within the State of
Louisiana pursuant to federal and Louisiana law,
other than mobile goods of a type normally used in
more than one jurisdiction) in favor of the Agent.
(7) We wish to point out that Section 9-103 of the New York UCC
and Section 9.103 of the Texas UCC provides certain rules for
the perfection of security interests and the effect of
perfection or non-perfection of security interests in multiple
state transactions and will affect
<PAGE> 98
11
the enforceability of any choice of law provisions included in
the Guarantee and Collateral Agreement and the Pledge
Agreement as well as the perfection and the effect of
perfection or non-perfection of security interests created
thereunder. To the extent that the express choice of law
provisions of the Transaction Documents provide otherwise,
such provisions are unenforceable.
(8) In rendering the opinions set forth in Paragraphs B.(1), B.(5)
and B.(6), the scope of our review has been limited to a
review of those instruments and matters described in A.(4)
through A.(32) and Exhibit "B", as material to the parties
named therein. The phrase "to our knowledge" and similar
phrases or terms as used herein mean that in the course of our
review of instruments so certified no facts or circumstances
have come to the conscious awareness of attorneys regularly
practicing in the Houston office of this law firm that lead us
to believe otherwise than the particular opinion we are
expressing. Although we have not and cannot make an
independent evaluation as to the materiality of the effect of
any litigation, we have set forth on Exhibit "A" a list of all
litigation pending against the Borrower Parties, of which we
are aware for our review. We further advise you that we have
not undertaken any outside or additional investigation and,
accordingly, the statements and opinions expressed herein are
based solely upon information which is believed, but not
guaranteed, to be accurate and our statements and opinions are
subject to change or modification in the event there is
additional material information not known to us.
(9) We note that the Borrower Parties have represented and
warranted that their chief executive officers are located in
the State of Texas and, with your consent, we have assumed
that such is the case.
(10) In rendering our opinion in Paragraph B.(14), with your
consent we have relied without independent investigation upon
(a) the certificates listed in Paragraphs A.(15) and A.(16)
and (b) the opinion delivered to you, dated even date
herewith, of Gregory W. Jones of El Paso Energy Corporation
relating to such matters.
(11) With respect to the Enforceability Documents and our opinions
set forth in Section B insofar as they deal with
enforceability of the choice of New York law provisions in the
Enforceability Documents, we understand that the following
facts are true and complete: (a) payment will be made under
the Credit Agreement in New York; (b) the parties have elected
and agreed that the Transaction Documents will be governed by
the laws of the State of New York, except as expressly stated
therein; (c) each of the Agent's chief executive office and
principal office is in New York; and (d) the Agent and all or
substantially all of the Lenders maintain a representative
office in New York.
<PAGE> 99
12
(12) In addition to the foregoing qualifications, our opinions
expressed above are based on, and qualified by, the following
analysis of Texas law relating to the effectiveness of a
choice of law as between contracting parties:
The State of Texas has enacted Section 35.51 ("Section 35.51")
of the Texas Business and Commerce Code (the "TBCC"),
effective as of September 1, 1993. We have assumed the
constitutionality of Section 35.51. Based on the facts set
forth above in the Paragraph C.(11), we are of the opinion
that a court applying Texas conflict of law rules in a
properly presented and argued cause would find that the
transactions contemplated by the Enforceability Documents
constitute a "Qualified Transaction" as such term is defined
in Section 35.51(a)(2) (the "Transactions"). In addition, in
reliance upon such facts and the criteria set forth in Section
35.51(d), we are of the opinion that the Transactions bears a
"reasonable relation" to New York, which is the jurisdiction
whose law has been chosen to govern certain issues in the
Enforceability Documents. Accordingly, we believe that a court
applying Texas conflict of laws rules in a properly presented
and argued case would give effect to the express choice of law
provisions contained in the Enforceability Documents, other
than the conflicts of laws rules of such jurisdiction. The
ability of the parties to choose the applicable law pursuant
to Section 35.51(b) may be affected by the provisions of
Section 35.51(e). The applicability of Section 35.51(b) may be
affected by the provisions of Section 35.51(f)(4). Our
opinions in Paragraph B.(4) do not cover any matters excluded
from the applicability of Section 35.51(b) by the operation of
Section 35.51(f)(4). In that regard, Section 1.105(b) of the
TBCC provides that the applicable law with respect to certain
matters under the TBCC will be determined by rules set forth
in sections of the TBCC other than Section 35.51, and Section
35.51(f)(4) recognizes that such other sections control the
choice of law in such cases. Chapters 1.B through 1.H of the
Texas Credit Code and Subtitle A of Title 4 of the Texas
Finance Code, which statutes contain the applicable provisions
setting the usury rates that would govern the transactions
under the Enforceability Documents under Texas law if Texas
law were applicable to such transaction (collectively, the
"State Statute"), do not contain an express choice of law
provision, and, therefore, in a properly presented and argued
case, a Texas court would find that the State Statute is not a
statute of the type described in Section 35.51(f)(4). We are
unaware of any case holding that a particular statute is a
statute of the type described in Section 35.51(f)(4).
[Next Page is Signature Page]
<PAGE> 100
1
This letter and the matters addressed herein are as of the date hereof,
and we undertake no, and hereby disclaim any, obligation to advise you of any
change in any matter set forth herein occurring after the date hereof. This
letter is solely for your benefit and the benefit of any Eligible Transferees
and no other Persons shall be entitled to rely upon the opinions herein
expressed. This letter is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. Without our
prior written consent, this letter may not be quoted in whole or in part or
otherwise referred to in any Transaction Document and may not be furnished to
any other Person or entity.
Very truly yours,
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 101
1
Exhibit A
Litigation
None.
<PAGE> 102
2
Exhibit B
Platform Hull Construction Contract;
Installation Agreement;
Topside Construction Contract;
Engineering Services Agreement;
Pipeline Construction Contract; and
Processing Agreement.
<PAGE> 103
1
EXHIBIT B-2
[FORM OF]
OPINION OF GREGORY W. JONES, ESQ.
[El Paso Energy letterhead]
August 23, 2000
To each of the Lenders, the Administrative Agent and the Arranger
c/o The Chase Manhattan Bank,
As Administrative Agent for the Lenders
One Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(b) of the
Credit Agreement dated as of August 23, 2000, (the "Credit Agreement"), among
Argo, L.L.C., the banks and other financial institutions from time to time party
thereto, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities
Inc., as Arranger. Unless the context otherwise requires, all capitalized terms
used herein without definition shall have the meanings ascribed to them in the
Credit Agreement.
I have acted as counsel for Argo, L.L.C., Argo I, L.L.C., Argo II,
L.L.C., El Paso Energy Partners, L.P., El Paso Energy Corporation, El Paso
Production GOM Inc., and El Paso Field Services Company (each an "El Paso
Entity"). In rendering the opinions expressed below, I have examined the
originals or photostatic, certified or conformed copies of all such agreements,
certificates of public officials and such other documents and records of such
matters of law as I deem necessary or appropriate as a basis for the opinions
hereinafter expressed.
Based upon and subject to the comments, assumptions, limitations,
qualifications, and exceptions hereinafter set forth, I am of the opinion that:
No El Paso Entity is a "holding company" or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company," or a "public utility" within the meaning of the Public
Holding Utility Company Act of 1935, as amended.
I am admitted to practice in the States of Texas and Louisiana
(inactive status). I hold myself out as an expert in the laws of the States of
Texas and Louisiana and the federal laws of the United States, and I express no
opinion herein as to the laws of any jurisdiction other than the States of Texas
and Louisiana and the United States of America. The phrase "to my knowledge" as
used herein means that no facts or circumstances have come to my conscious
awareness that lead me to believe otherwise than the particular opinion I am
expressing.
This letter and the matters addressed herein are as of the date hereof,
and I undertake no, and hereby disclaim any, obligation to advise you of any
change in any matter set forth herein occurring after the date
<PAGE> 104
2
hereof. This letter is solely for your benefit and no other Person shall be
entitled to rely upon the opinions herein expressed. This letter is limited to
the matters stated herein and no opinion is implied or may be inferred beyond
the matters expressly stated. Without my prior written consent, this letter may
not be quoted in whole or in part or otherwise referred to any document and may
not be furnished to any other Person or entity.
Very truly yours,
Gregory W. Jones
<PAGE> 105
1
EXHIBIT B-3
[FORM OF]
OPINION OF PHELPS DUNBAR, LLP
August 23, 2000
The Chase Manhattan Bank, 16914-1
as Administrative Agent for the Lenders,
and the Lenders party to the Credit Agreement
One Chase Manhattan Plaza
New York, NY 10081
Re: El Paso Energy Partners, L.P./Argo, L.L.C. Credit Agreement
Ladies and Gentlemen:
We have acted as special Louisiana counsel to Argo, L.L.C., a Delaware
limited liability company ("Borrower"), for certain limited purposes in
connection with the Credit Agreement dated as of August 23, 2000 among Borrower,
the lenders party thereto (the "Lenders") and The Chase Manhattan Bank, as
administrative agent for the Lenders (in such capacity, the "Agent").
For purposes of this opinion letter, "State" means Louisiana.
Capitalized terms used herein without definition shall have the respective
meanings given them in the Credit Agreement.
In rendering the opinions set forth below, we have examined and have
relied upon copies of the following executed documents (collectively, the
"Credit Documents"):
(i) the Guarantee and Collateral Agreement dated as of August 23,
2000 (the "Security Agreement") by Borrower in favor of the
Agent;
(ii) one (1) Financing Statement by Borrower, as debtor, in favor
of the Agent, as secured party, intended to be recorded with
the uniform commercial code records of the Recorder of
Mortgages in Orleans Parish, Louisiana or the Clerk of Court
in any other parish (such records of the Recorder of Mortgages
or any such Clerk of Court being a "Filing Office") (the
"Financing Statement");
(iii) the Pledge and Security Agreement dated as of August 23, 2000
(the "Pledge Agreement") by Argo I, L.L.C., a Delaware limited
liability company ("Parent"), in favor of the Agent;
(iv) the Sponsor Agreement dated as of August 23, 2000 (the
"Sponsor Agreement") by El Paso Energy Partners, L.P., a
Delaware limited partnership ("Sponsor"; Borrower, Parent and
Sponsor are sometimes referred to as the "Loan Parties"), in
favor of the Agent; and
<PAGE> 106
2
(v) the Credit Agreement.
The documents at items (i), (iii), (iv) and (v) are sometimes referred to as the
"New York Credit Documents". The documents at items (i), (ii) and (iii) are
sometimes referred to as the "Collateral Documents".
We also have reviewed such other instruments, documents and agreements
and have made such other investigation as in our judgment we have deemed
necessary or applicable to enable us to render the opinions expressed below.
As to questions of fact material to the opinions rendered herein, we
have, when relevant facts were not independently established by us, relied upon
representations and recitals in the Collateral Documents.
In rendering the opinions expressed herein, we have assumed, without
independently verifying such assumptions, (a) the genuineness of all signatures
on all of the Credit Documents, (b) the authenticity of all Credit Documents
submitted to us as originals, (c) the conformity to originals of all Credit
Documents submitted to us as copies, (d) that each Loan Party is a limited
liability company, partnership or corporation duly organized, validly existing
and in good standing under the laws of its state of formation, (e) that each
Loan Party has the power and authority to execute, deliver and perform each of
the Credit Documents to which it is a party and that the Credit Documents have
been duly executed and delivered, (f) that the execution, delivery and
performance by each Loan Party of its Credit Documents will not violate any
state or federal law or regulation, (g) that each of the Credit Documents has
been duly authorized by all necessary limited liability company, member,
partnership, partner, corporate and shareholder action, as the case may be, for
each Loan Party, (h) that the execution, delivery and performance of the Credit
Documents by each Loan Party does not and will not conflict with or result in
any breach or violation of any of the terms or provisions of any of such Loan
Party's limited liability company, partnership or corporate documents or of any
judgment, agreement, document or instrument to which such Loan Party is a party
or by which it is bound, and (i) the due organization of each Lender and the
Agent, the due authorization, execution and delivery of the respective Credit
Documents by the Lenders and the Agent and that the Lenders and the Agent have
full power and authority to execute, deliver and perform their respective
obligations thereunder. We have further assumed that there are no documents or
agreements among the Agent, the Lenders, the Loan Parties and any other parties
to the Credit Documents (or any lesser combination of said parties) which alter
the provisions of any of the Credit Documents and which would have an effect on
the opinions expressed in this opinion letter. References in this paragraph to
the Loan Parties, to the extent they relate to Sponsor, also relate to its
corporate or limited liability company general partner, if any. We have made no
independent investigation of factual information contained in any of the Credit
Documents reviewed by us, and we have not made any examination of accounting or
financial matters, nor do we express any opinions with respect thereto.
We have not made any investigation and do not express an opinion as to
matters of title to, rights in or the description of properties covered by the
Collateral Documents, or (other than as set forth in paragraph 2 below) as to
the enforceability of the New York Credit Documents (including without
limitation the validity of the creation or liens, security interests and other
encumbrances thereunder) or as to the priority of liens, security interests and
other encumbrances affected by the Credit Documents. We have assumed that (A)
the Platform is not required to be documented as a vessel, and it will not be
documented as a vessel, under 46 U.S.C. ss.12102, (B) the security interests
granted by Borrower and Parent under the Security Agreement and the Pledge
Agreement are enforceable by the Agent, on behalf of itself and the Lenders,
against Borrower and Parent and have attached, in accordance with the laws of
the State of New York, which laws
<PAGE> 107
3
are stated to govern the Security Agreement and the Pledge Agreement, (C) the
Lenders have provided value to Borrower and Parent, and (D) the information on
the Financing Statement (including without limitation tax identification
numbers) is correct.
Based upon and subject to the foregoing and to the qualifications,
limitations, exceptions and assumptions set forth herein, we are of the opinion
that:
1. Upon the proper filing of the Financing Statement with a Filing
Office, the security interests created by Borrower under the Security Agreement
in its Collateral (as defined in the Security Agreement) (such as equipment and
inventory in which Borrower has rights located in the State or on the Outer
Continental Shelf adjacent to the State to the extent deemed within the State
pursuant to federal and Louisiana law, other than mobile goods of a type
normally used in more than one jurisdiction) which also is described in the
Financing Statement and in which a security interest may be perfected by the
filing of a financing statement in the State under the Louisiana Commercial Laws
-- Secured Transactions (Chapter 9 of the Uniform Commercial Code) (the "La.
UCC-Ch. 9") (the "Borrower Collateral"), will be perfected in favor of the
Agent.
2. Notwithstanding that the New York Credit Documents state that they
are to be governed by and construed in accordance with the laws of New York, if
the laws of the State were applicable to the New York Credit Documents, then the
New York Credit Documents would constitute the legal, valid and binding
obligations of each Loan Party, as the case may be, enforceable against them in
accordance with the respective terms thereof.
In addition to any exceptions, qualifications and assumptions noted
above, the foregoing opinions are subject to the following exceptions,
qualifications and assumptions:
(A) The opinions expressed herein are subject to (i) applicable
bankruptcy, insolvency, fraudulent conveyance, equitable subordination,
moratorium or similar laws affecting generally the enforcement of creditors'
rights; and (ii) general principles of equity including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing, which may
limit the validity of certain provisions and the availability of certain
remedies, such as self-help, injunctive relief and specific performance.
(B) The opinions expressed herein also are subject to the further
qualifications that certain of the remedial provisions of the New York Credit
Documents are or may be limited or unenforceable in whole or in part under
Louisiana law, although the inclusion of such provisions does not render the New
York Credit Documents invalid as a whole and such limitations do not in our
opinion, subject to the other exceptions and limitations set forth herein, make
the remedies provided for therein (taken as a whole) or pursuant to applicable
law inadequate for the realization of the benefits intended to be afforded
thereby, excluding the economic consequences of any procedural delay that may
result from such limitations.
(C) We express no opinion as to the validity, performance and
enforceability under Louisiana law of the following provisions in the New York
Credit Documents (and likewise, we express no opinion whether a court applying
Louisiana law would give effect to the choice of New York law as governing the
validity, performance and enforceability of the New York Credit Documents as to
the following provisions): (i) authorizations or availability of self-help and
non-judicial remedies and of executory process; (ii) requirements in the New
York Credit Documents that the provisions thereof may be amended or waived only
by an
<PAGE> 108
4
agreement in writing signed by all (or at least certain) parties thereto,
including provisions authorizing the delay or failure to exercise a right
without waiving such right; (iii) irrevocable appointments of a party as the
agent or attorney-in-fact of another party and any power of attorney attempted
to be granted to such party; (iv) provisions purporting to establish that funds
or other property will be held by a party in trust for another party; (v) waiver
of jury trial, consents to jurisdiction, venue and service, waivers of claims,
counterclaims, defenses or damages not now known or presently in existence, or
global waivers of rights and remedies afforded by law; (vi) provisions relating
to the severability of agreements; (vii) provisions purporting to establish
evidentiary standards or the reasonableness or conclusiveness of actions or
determinations; (viii) provisions which purport to waive any party's obligation
to use reasonable care in the custody and preservation of collateral in its
possession; (ix) provisions indemnifying a party against such party's own gross
negligence or willful misconduct; (x) any provision that purports to preclude
the right of a party to assert defenses with respect to its obligations or
covenants under any of the New York Credit Documents in pleadings in judicial
proceedings, provided that this exception does not imply that such defenses will
be successful or that waivers of rights by such parties not covered by other
exceptions in this opinion are unenforceable; (xi) provisions for the
continuation, reinstatement or revival of the New York Credit Documents or
portions thereof and obligations thereunder or the restoration of obligations or
liens thereunder after their termination, release or performance or after
judicial proceedings pertaining thereto are abandoned or determined adversely;
(xii) the ability to recover attorney's fees to the extent that a court should
determine that such attorney's fees are not reasonable in amount; (xiii) waivers
of the right of redemption or of certain provisions of the Louisiana Code of
Civil Procedure; (xiv) covenants, defaults and remedies therein (particularly
those committed to the sole discretion of the Agent or the Lenders) if a
Louisiana court (or other court applying Louisiana law) determines that such
enforcement would be unreasonable or not be undertaken in good faith under the
then existing circumstances; (xv) provisions in the Sponsor Agreement purporting
to continue the liability of Sponsor thereunder notwithstanding (a) any defenses
to the Obligations that Borrower could assert under the Credit Agreement or the
other obligations guaranteed by Sponsor thereunder that Borrower could assert
under each Project Document or that Parent could assert under the LLC Agreement,
except lack of capacity or discharge in bankruptcy of Borrower or Parent, as the
case may be, or (b) a modification or amendment of the Obligations or the other
obligations guaranteed thereunder or the Financing Documents, the Project
Documents or the LLC Agreement or an impairment of real security held for such
Obligations or other obligations guaranteed thereunder, in any material manner
and without the consent of Sponsor if Sponsor is prejudiced by such action;
(xvi) the effect of any failure to provide Sponsor with written notice of any
default under any Obligations or other obligations guaranteed under the Sponsor
Agreement that would require a payment thereunder and with an opportunity to
cure the default; (xvii) any waiver of or required delay in enforcing Sponsor's
rights of subrogation against Borrower or Parent; (xviii) requirements that a
party pay or be liable for a deficiency judgment if in contravention of the
Louisiana Deficiency Judgment Act; (xix) provisions which permit acceleration of
indebtedness without notice; and (xx) provisions allowing an Event of Default to
be declared if a Material Adverse Effect could reasonably be expected to occur
in respect of Environmental Liabilities.
(D) Without limiting the generality of the foregoing, we express no
opinion herein as to the enforceability of the New York Credit Documents under
New York law.
(E) We also express no opinion herein (i) as to the enforceability of
the Project Documents, the LLC Agreement or of the provisions in Sections 2 and
8 of the Security Agreement, and (ii) as to the perfection of security interests
granted under the Pledge Agreement and the effect of perfection and non-
perfection of security interests in the collateral subject to the Pledge
Agreement.
<PAGE> 109
5
(F) The account debtors of Borrower will not be bound by the
assignments of their accounts until notified of such assignments and may, until
so notified, pay or otherwise deal with Borrower.
(G) (1) We call your attention as to the Borrower Collateral to the
fact that (i) the continuation of perfection of security interests in proceeds
is limited to the extent set forth in Section 9-306 of the La. UCC-Ch. 9; and
(ii) a perfected security interest may become unperfected (a) if Borrower
Collateral located (or deemed located) in the State is removed from the State to
another state (or the Outer Continent Shelf adjacent to such other state) or if
Borrower's chief executive office is located in the State and hereafter is moved
from the State to another state, and in each case appropriate steps are not
taken in that other state, or (b) if the Financing Statement becomes seriously
misleading due to changes in the name, identity, taxpayer identification number
or limited liability company structure of Borrower, and (iv) a perfected
security interest in goods may be lost if the goods (a) are installed in or
affixed to, or become a part of a product or mass with, goods that are not items
of Borrower Collateral, or (b) become a fixture unless an appropriate fixture
filing is made as provided in the La. UCC-Ch. 9.
(2) In order to maintain the perfection of the security
interests perfected by the filing of the Financing Statement, it will be
necessary to file a continuation statement with respect thereto with the same
Filing Office where the Financing Statement was originally filed within the six
month period prior to the expiration of five years after the date of the filing
thereof and within each six month period prior to the expiration of each five
years thereafter.
(3) We call to your attention as to the Collateral
(hereinafter defined) to the fact that buyers and purchasers of such Collateral,
whether or not in the ordinary course of business, in certain circumstances
described in Sections 9-307, 9-308, and 9-309 of the La. UCC-Ch. 9 may acquire
such collateral free of the security interest therein.
(H) The opinions given above as to the perfection of security interests
under the Financing Statement in the Borrower Collateral do not apply to
property subject to perfection procedures other than the filing of a financing
statement pursuant to the La. UCC-Ch. 9. We express no opinion as to the laws of
any other state relating to the perfection or effect of perfection or
non-perfection of a security interest in any portions of the Borrower Collateral
subject to the laws of such other state. We express no opinion as to (i) the
perfection of security interests in condemnation awards (or causes of action
pertaining thereto) or insurance policies, premiums or proceeds (other than
insurance proceeds payable by reason of loss or damage to the Borrower
Collateral as provided in the La. UCC-Ch.9 Section 9-306); and (ii) the
effectiveness of the Security Agreement or the Pledge Agreement in creating, or
of the Financing Statement in perfecting, a lien in (a) any contract, license,
governmental permit or certificate or other property which by its terms cannot
be transferred (other than the creation of a lien in accounts or general
intangibles for money due or to become due) or in which a security interest
cannot be created under applicable law, (b) any Borrower Collateral or any
collateral covered by the Pledge Agreement in which Parent has rights and in
which a security interest may be granted under the La. UCC-Ch.9 (together with
the Borrower Collateral, collectively referred to as the "Collateral") of a type
as to which the federal laws of the United States have preempted the La. UCC-Ch.
9 (including without limitation trademarks and other intellectual property
rights), (c) any portion of the Collateral which is subject to a statute or
treaty of the United States which provides for a national or international
registration or certificate of title or which provides a place of filing
different from that specified in the La. UCC-Ch. 9, (d) any portion of the
Collateral to the extent that the definition or scope of application of the New
York Uniform Commercial Code with respect to such portion of such Collateral is
broader than
<PAGE> 110
6
the definition under or scope of application of the La. UCC-Ch. 9 with respect
to such portion of the Collateral, and (e) deposit accounts, judgments,
undescribed causes of actions and claims, bankruptcy claims or rights, farm
products, crops, minerals or accounts (including rents, royalties, and bonuses)
resulting from the sale of minerals, mineral or oil and gas leases, goods
located outside the State, consumer goods, motor vehicles or other goods covered
by a certificate of title, goods covered by a document of title, stocks and
other types of securities and dividends and other types of distributions.
(I) Federal and Louisiana law do not unequivocally establish that the
La. UCC-Ch. 9, and the filing of the Financing Statement, will be recognized as
effective to perfect security interests in Borrower Collateral located on,
arising from or relating to the Outer Continental Shelf because the La. UCC-Ch.
9 in nent provisions refers to the law of the jurisdiction where pertinent goods
or wellheads are located, and depending upon where the Borrower Collateral is
located it may or may not be considered under the Federal Outer Continental
Shelf Lands Act, 43 U.S.C. ss.1331, et seq., and related regulations (such act
and regulations being the "OCS Act") to be deemed to be located in the State.
However, in our experience, the filing procedures set forth herein represent
practices followed by careful parties in the industry. In the absence of
definitive jurisprudence, nonetheless, we cannot advise you that these actions
absolutely protect the rights of the Agent and the Lenders under the Security
Agreement and the Financing Statement with respect to Borrower Collateral
located on, arising from or relating to the Outer Continental Shelf.
(J) We express no opinion as to the creation by the Security Agreement
or the Pledge Agreement, or the perfection by the Financing Statement, of
assignments of or security interests in contracts with the United States, any
state of the United States, any foreign government or any agency or department
of any of the foregoing.
(K) The description of the Borrower Collateral contained in the
Financing Statement (and to the extent Louisiana law is relevant or applicable
thereto, the Security Agreement) includes the term "general intangibles" or
words to that effect. While this general description by itself may be sufficient
to include in such collateral the property interests which are intended, you
should be aware that this general description may be subject to dispute as to
whether a particular property interest is or is not included in the perfection
of the security interests, and the degree of specificity required for the
description of such property interests has not been established under Louisiana
jurisprudence following the enactment of the La. UCC-Ch.9, and jurisprudence in
other states which might serve as persuasive authority appears inconsistent as
to this matter. Also, we express no opinion as to the effectiveness of the
Financing Statement (and to the extent Louisiana law is relevant or applicable
thereto, the Security Agreement) in creating or perfecting a security interest
in all general intangibles as so described by consideration of those words only
(without regard to more specific descriptions contained therein).
(L) We express no opinion (i) with respect to compliance with any
applicable laws governing the use, development, operation or ownership of any of
the Collateral, including, without limitation, environmental laws, building
codes, zoning and other land use restrictions, occupational safety and health
laws and use and occupancy permits, and (ii) as to whether any Loan Party
possesses all of the permits, licenses, franchises and other rights necessary to
conduct its business as currently, or anticipated to be, conducted.
We are admitted to practice in the State of Louisiana. We express no
opinions as to matters under or involving laws of any jurisdictions (including
the federal laws of the United States of America) other than the State and, as
to federal law, the OCS Act.
<PAGE> 111
7
The opinions set forth above are rendered as of the date of this
letter, and we undertake no obligation, and hereby disclaim any obligation, to
update or supplement this opinion with respect to subsequent changes in the law
or the facts presently in effect that would alter the scope or substance of the
opinions herein expressed.
This letter expresses our legal opinion as to the foregoing matters
based upon our professional judgment at this time; it is not, however, to be
construed as a guaranty, nor is it a warranty that a court considering such
matters would not rule in a manner contrary to the opinions set forth above.
This opinion is solely for your benefit in connection with this transaction and
may be relied upon only by you and the Lenders (and your and their successors
and assigns and respective participants) and your counsel, Vinson & Elkins
L.L.P.; provided, that we express no opinion with respect to any issue arising
out of or related to the identity or status of any such assignee or participant.
This opinion is not to be otherwise used, relied upon circulated or quoted
without the express prior written consent of this firm, except that this opinion
may be circulated to your counsel and as shall be required by applicable law.
Very truly yours,
<PAGE> 112
1
EXHIBIT C
[FORM OF]
INDEPENDENT ENGINEER'S CERTIFICATE
ABS Group Inc., a New York corporation (the "Independent Engineer") has
been advised that ARGO L.L.C. (the "Company") is a party to a Credit Agreement,
dated as of August 23, 2000 (the "Credit Agreement"), among the Company, The
Chase Manhattan Bank, as Administrative Agent, and the lenders party thereto,
and further acknowledges that it has been appointed as an "Independent Engineer"
under the terms of ABS Group's Agreement with Chase Securities, Inc. Additional
capitalized terms used in this certificate and not defined herein shall have the
meanings given to such terms in the Credit Agreement. The Independent Engineer
hereby certifies to Chase Securities Inc.:
The Independent Engineer has reviewed the information set forth in the
certificate of the Borrower, which certificate is attached hereto as
Annex A, and hereby confirms that the Project Costs to be paid or to be
incurred through the Conversion Date do not and are not anticipated to
exceed the sum of the amounts available under the Construction Loans
and the Base, Construction and Contingent Equity Contribution Amounts.
The Independent Engineer hereby confirms that based upon the work
completed, the information and schedules provided by Company and
reviewed by Independent Engineer to date, provided there are no
unscheduled or unanticipated delays to the progress of the Project,
that it is reasonable to expect that the Project will achieve Final
Completion by the Date Certain.
IN WITNESS WHEREOF, the duly authorized representative of the
Independent Engineer has executed this certificate on this _______ day of
________, [200__].
INDEPENDENT ENGINEER:
ABS GROUP INC.
By:
-------------------------
Name:
Title:
No liability of any nature whatsoever shall attach to this certificate
and the statements contained herein. Independent Engineer has reviewed the
documents, information and certificates provided, directly or indirectly, by the
Company and its agents and this certificate should not be read in isolation but
should be reviewed in conjunction with such documents, information and
certificates.
<PAGE> 113
EXHIBIT D
[FORM OF]
NOTE
$__________ August 23, 2000
ARGO, L.L.C., a Delaware limited liability company (the "Borrower"),
for value received, promises and agrees to pay to [ ] (the "Lender"), or order,
at the Payment Office of THE CHASE MANHATTAN BANK (the "Administrative Agent"),
at 270 Park Avenue, 8th Floor, New York, New York 10017, the principal sum of
[___________________________________] DOLLARS ($___________________), or such
lesser amount as shall equal the aggregate principal amount of the Loans made by
the Lender hereunder to the Borrower under the Credit Agreement, as hereinafter
defined, in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement referred to below, and to pay interest on the unpaid principal
amount as provided in the Credit Agreement for such Loans made by the Lender to
the Borrower under the Credit Agreement, at such office, in like money and
funds, for the period commencing on the date of each such Loan until such Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
In addition to and cumulative of any payments required to be made
against this Note pursuant to the Credit Agreement, this Note, including all
principal and accrued interest then unpaid, shall be due and payable on the
Final Maturity Date. All payments shall be applied first to accrued interest and
the balance to principal, except as otherwise expressly provided in the Credit
Agreement. Prepayments on this Note shall be applied in the manner set forth in
the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement dated
as of August 23, 2000, by and among the Borrower, The Chase Manhattan Bank,
individually and as Administrative Agent; and the financial institutions parties
thereto (including the Lender) (such Credit Agreement, together with all
amendments or supplements thereto, being the "Credit Agreement"). This Note
evidences the Loans made by the Lender thereunder and shall be governed by the
Credit Agreement. Capitalized terms used but not defined in this Note and which
are defined in the Credit Agreement shall have the respective meanings herein as
are assigned in the Credit Agreement.
The Lender is hereby authorized by the Borrower to endorse on Schedule
A (or a continuation thereof) attached to this Note, the Type of each Loan, the
amount and date of each payment or prepayment of principal of each such Loan
received by the Lender and the Interest Periods and interest rates applicable to
each Loan, provided that any failure by the Lender to make any such endorsement
shall not affect the obligations of the Borrower under the Credit Agreement or
under this Note in respect of such Loan.
<PAGE> 114
Except only for any notices which are specifically required by the
Credit Agreement or the other Financing Documents, the Borrower and any and all
co-makers, endorsers, guarantors and sureties severally waive notice (including
but not limited to notice of intent to accelerate and notice of acceleration,
notice of protest and notice of dishonor), demand, presentment for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability, and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
Person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty or security at
any time existing or by any failure to perfect or maintain perfection of any
lien against or security interest in any such security or the partial or
complete enforceability of any guaranty or other surety obligation, in each case
in whole or in part, with or without notice and before or after maturity.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayment of Loans upon
the terms and conditions specified therein. Reference is made to the Credit
Agreement for all other pertinent purposes.
This Note is issued pursuant to and is entitled to the benefits of the
Credit Agreement and is secured by the Security Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK FROM TIME TO TIME IN EFFECT.
ARGO, L.L.C.
By:
----------------------------------
Name:
Title:
2
<PAGE> 115
SCHEDULE A
This Note evidences Loans made by the Lender under the within-described Credit
Agreement to the Borrower, in the principal amounts set forth below, which Loans
are of the Type, at the Interest Rate and for the Interest Periods and were made
on the dates set forth below, subject to the payments of principal set forth
below:
<TABLE>
<CAPTION>
Interest
Principal Period/ Date of Amount Balance
Amount of Interest Maturity Payment or Paid or Out-
Date Made Loan Type Rate Date Prepayment Prepaid Standing
--------- ----------- ---- --------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
--------- ----------- ---- --------- ---------- ---------- ------- --------
</TABLE>
3
<PAGE> 116
1
EXHIBIT E
[FORM OF]
WITHDRAWAL REQUEST
[Date]
To: The Chase Manhattan Bank,
as Administrative Agent and as Account Bank
From: Argo, L.L.C.
Re: Credit Agreement dated as of August 23, 2000
Ladies and Gentlemen:
We refer to the above-mentioned Credit Agreement (as amended from time
to time in accordance with the provisions thereof, the "Credit Agreement").
Terms used herein shall bear the same meaning as ascribed thereto in the Credit
Agreement. We hereby request that the sums requested in Annex A hereto (the
"Withdrawal") be paid from the Project Account(s) to the recipient or Project
Account (the "Recipient") on the date(s), specified therein. We hereby represent
and warrant that no Event of Default has occurred and is continuing and that we
are entitled, pursuant to the terms of the Credit Agreement and the other
Financing Documents, to request the Withdrawal in the manner, and in the amount,
set out in this Withdrawal Request.
Yours faithfully,
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 117
2
ANNEX A
[Exhibit A should specify amount sum requested, name of each Project Account
from which Withdrawal(s) will be made, the account details of the recipient of
the Withdrawal(s) or, where relevant, the Project Account to which such amounts
are to be credited and the date payment is to be made.]
<PAGE> 118
1
EXHIBIT F
[FORM OF]
SUBORDINATION PROVISIONS
1. No payment or prepayment shall be made by the Borrower or its
Subsidiaries on account of any principal, interest or premium, if any, (whether
at the option of the holder or otherwise) on any Indebtedness (the "Member
Indebtedness") permitted pursuant to Section 6.01(c) of the Credit Agreement
dated as of August 23, 2000, among Argo, L.L.C., The Chase Manhattan Bank,
individually and as Administrative Agent, and the other financial institutions
parties thereto (the "Credit Agreement"), if at the time of such payment,
prepayment, or immediately after giving effect thereto, there shall exist a
Default that has not been cured or waived, as defined in the Credit Agreement.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Credit Agreement;
2. In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization, or other similar proceedings in
connection therewith, relative to the Borrower or any of its Subsidiaries or to
its creditors, as such, or to its property, and in the event of any proceeding
for voluntary liquidation, dissolution, or other winding up of the Borrower,
whether or not involving insolvency or bankruptcy, then the holders of the
Obligations shall be entitled to receive payment in full of all principal,
interest and other sums owing in connection with the Obligations (including
interest thereon and costs and expenses accruing after the commencement of any
such proceedings) before the holders of the Member Indebtedness are entitled to
receive any payment on account of principal, interest or other sums owing in
connection with the Member Indebtedness, and to that end the holders of the
Obligations shall be entitled to receive distributions of any kind or character,
whether in cash or property or securities, which may be payable or deliverable
in an such proceedings in respect to the Member Indebtedness, except for
distributions in the form of securities which are subordinated and junior in
right of payment to the payment of the Obligations then outstanding;
3. In the event that the Member Indebtedness is declared due and
payable before its expressed maturity because of the occurrence of an event of
default (under circumstances when the provisions of the foregoing paragraphs (1)
or (2) are not applicable), the holders of the Obligations outstanding at the
time the Member Indebtedness becomes so due and payable because of such
occurrence of an event of default shall be entitled to receive payment in full
of all principal, interest and other sums outstanding in connection with the
Obligations before the holders of the Member Indebtedness are entitled to
receive any payment on account of the principal, interest or other sums owing in
connection with the Member Indebtedness;
4. Upon the occurrence and during the continuation of any of the events
described in paragraphs (1), (2) and (3), any such payment or distribution of
assets of the Borrower of any kind or character made during the continuation of
such event, whether in cash, property or securities, shall be received by the
holders of the Member Indebtedness before the Obligations are paid in full, or
provision made for such payment in accordance with the terms of the Obligations,
such payment or distribution shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of
<PAGE> 119
2
the Obligations for the pro rata distribution and application to the payment of
the Obligations remaining unpaid to the extent necessary to pay the Obligations
in full, including principal and interest thereon and other sum owing in
connection therewith, in accordance with its terms, after giving effect to any
concurrent payment or distribution to the holders of the Obligations;
5. No holder of the Obligations shall be prejudiced in its right to
enforce subordination of the Member Indebtedness by any act or failure to act on
the part of the Borrower; provided that the foregoing provisions are solely for
the purpose of defining the relative rights of the holders of the Obligations on
the one hand, and the holders of the Member Indebtedness, on the other hand, and
that nothing herein shall impair, as between the Borrower and the holders of the
Member Indebtedness, the obligation of the Borrower, which is unconditional and
absolute to pay the holders of the Member Indebtedness the principal and
premium, if any, thereof and interest thereon in accordance with the terms
hereof, and except as is provided below, nothing therein shall prevent the
holders of the Member Indebtedness from exercising all remedies otherwise
permitted by applicable law upon default, subject to the rights under paragraphs
(1), (2), (3) and (4) above of holders of the Obligations to receive cash,
property or securities otherwise payable to or deliverable with respect to the
Member Indebtedness to the holders of the Member Indebtedness. Notwithstanding
the foregoing, the holders of the Member Indebtedness hereby acknowledge that
their right to accelerate the Member Indebtedness, commence any suit, or any
other proceeding for collection or pursue any other remedy otherwise permitted
by applicable law or the instruments pursuant to which the Member Indebtedness
was issued is subject to the prior written approval of the holders of the
Obligations;
6. In the event of any receivership, insolvency, bankruptcy, assignment
for the benefit of creditor, reorganization or arrangement with creditors,
adjustment of debt, whether or not pursuant to bankruptcy laws, the sale of all
or substantially all of the assets, dissolution, liquidation, or any other
marshaling of the assets and liabilities of the Borrower, the holder of the
Member Indebtedness will at the request of any holder of the Obligations file
any claim, proof of claim, proof of interest or other instrument of similar
character necessary to enforce the obligations of the Borrower in respect of the
Member Indebtedness and will hold in trust for the holders of the Obligations
and pay over to the holders of the Obligations, in the form received (together
with any necessary endorsement), to be distributed and applied pro rata on the
Obligations, any and all monies, dividends or other assets received in any such
proceedings on account of the Member Indebtedness unless and until all of the
Obligations shall be paid in full. In the event that the holder of the Member
Indebtedness shall fail to take any such action requested by the holder of the
Obligations, any holder of the Obligations may, as attorney in fact for the
holder of the Member Indebtedness take such action on behalf of the holder of
the Member Indebtedness, and the holder of the Member Indebtedness hereby
appoints each of the holders of the Obligations as attorney-in-fact (with power
and authority to act alone) for the holder of the Member Indebtedness to demand,
sue for, collect and receive any and all such monies, dividends or other assets
and give acquittance therefor and to file any claim, proof of claim, proof of
interest or other interest of similar character and to take such other
proceedings in the name of the holders of the Obligations or in the name of the
holder of the Member Indebtedness as the holders of the Obligations may deem
necessary or advisable for the enforcement thereof; and the holder of the Member
Indebtedness will execute and deliver to the holders of the Obligations such
other and further powers of attorney or other instruments as any holder of the
Obligations may request in order to accomplish the foregoing.
<PAGE> 120
3
7. The holders of the Obligations shall have no duty or obligation to
the lender of the Member Indebtedness in any manner whatsoever and may, at any
time and from time to time in their sole discretion, without the consent of or
notice to the holder of the Member Indebtedness and without impairing or
releasing any rights of the holders of the Obligations or any of the obligations
of the holder of the Member Indebtedness hereunder, take any or all of the
following actions:
(i) change the amount, manner, place, terms of payment or interest
rate, change or extend the time of payment of, or renew or alter, any
of the Obligations, or amend or supplement or waive any of the terms of
any instrument or agreement now or hereafter executed pursuant to which
any of the Obligations is issued or incurred;
(ii) sell, exchange, release, surrender, relend, realize upon or
otherwise deal with in any manner and in any order, any property (or
the income, revenues, profits or proceeds therefrom) by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, any
Obligations;
(iii) release any person liable in any manner for the payment or
collection of the Obligations;
(iv) exercise or refrain from exercising any rights and remedies
against the Borrower or others or otherwise act or refrain from acting
or, for any reason fail to file, record or otherwise perfect any
security interest in or lien on any property of the Borrower or any
other person; and
(v) apply any sums received by the holders of the Obligations, by
whomsoever paid and however realized, to payment of the Obligations in
such manner as the holders of the Obligations, in their sole
discretion, may deem appropriate.
8. The holder of the Member Indebtedness agrees to execute any and all
other instruments, if any, deemed necessary by the holders of the Obligations to
subordinate the Member Indebtedness to the Obligations as provided herein.
No supplement, amendment, modification or other instrument in any way
amending or modifying the Member Indebtedness shall directly or indirectly amend
or modify the provisions of the Member Indebtedness relating to the
subordination of the Member Indebtedness to the Obligations in any manner which
might terminate or impair the subordination as herein provided. The provisions
hereof are for the benefit of and may be enforced (and waived, if expressly done
so in writing) by the Agent and each Lender.
<PAGE> 121
1
SCHEDULE 2.01
CONSTRUCTION LOAN COMMITMENTS
<TABLE>
<CAPTION>
LENDER COMMITMENT AMOUNT
------ -----------------
<S> <C>
The Chase Manhattan Bank $15,000,000.00
First Union National Bank $14,000,000.00
Bank One, NA $14,000,000.00
The Bank of Nova Scotia $14,000,000.00
Bank of Scotland $14,000,000.00
Fortis Capital Corp. $14,000,000.00
Credit Agricole Indosuez $10,000,000.00
</TABLE>
<PAGE> 122
1
SCHEDULE 5.05(b)
INSURANCE REQUIREMENTS
Borrower will maintain or cause to be maintained the following minimum insurance
during the term of the loan. Cover will be placed with carriers rated "A-, 9" or
better by A.M. Best, Lloyd's or Lloyd's of London Companies, or other carriers
or recognized standing deemed acceptable by the Lender. With the exception of
workers compensation insurance, Lender will be added as additional insured on
all policies (except workers compensation). With respect to physical damage
insurance, Lender shall be named as first loss payee. Insurance can be placed
through a Project specific policy or through a Sponsor corporate insurance
program, provided the terms and conditions of the Insurance Requirements are
fully met.
Physical Damage - Construction
From Closing throughout construction until the later of Final Completion or
placement of the operational property insurance as set forth below, Borrower
shall maintain or cause to be maintained all risk builders risk insurance
written on a replacement costs basis (no deduction for depreciation) in an
amount equal to full replacement value of the Project including any pipe laying
for which the Borrower may be responsible.
Such policy shall provide perils including but not limited to fire, lightning,
windstorm, hail, explosion, riot, civil commotion, aircraft, vehicles, smoke,
earthquake, flood, collapse, sinkhole, subsidence, testing and startup. Subject
to sublimits, the policy shall also include coverage for removal of wreckage and
debris removal (25% of insured values), standby charges, offshore cancellation
costs, use of hired vessels, increased cost of construction, terrorism and
strike, sue and labor expenses and extended maintenance cover for a period of
not less than one year. The policies required by this paragraph shall have a
deductible of not greater than $250,000 per loss.
Physical Damage - Operations
Effective on or before Final Completion, insurance covering all risks of
physical loss or physical damage to offshore and onshore property owned by the
Borrower or in which the Borrower has an interest or for which the Borrower has
a responsibility to insure. Such insurance shall be written in an amount not
less than the full replacement cost of those assets for which the Borrower is
responsible. Such cover shall include removal of wreckage and debris, use of
hired vessels, increased cost of construction, terrorism and strike, sue and
labor expenses, standby charges, subject to a sublimit of 25% of the insured
value of the asset(s). The policies required by this paragraph shall have a
deductible of not greater than $1,000,000 per loss.
Control of Well
On or prior to final completion, Control of Well Insurance including Unlimited
Extended Redrilling / Restoration (subject to policy limit), Seepage, Pollution,
Clean-up and Containment, Underground Blowout, Extra Expense, Evacuation
Expenses, Deliberate Well Firing, Making Wells Safe. The limit of insurance
shall be not less than $25,000,000 each accident or occurrence. The policies
required by this paragraph shall have a deductible of not greater than
$1,000,000 per loss.
<PAGE> 123
2
Liability
At Closing commercial general liability covering all legal and/or contractual
liabilities arising out of the Borrower's operations in connection with the
assets and associated pipelines and incorporating operations covered under the
Project Documents. Such cover shall include pollution liability (30 days
discovery / 90 days reporting) with respect to liability not covered under
Control of Well insurance. Unless insured under a separate policy, such
liability insurance shall include automobile liability and employers liability
(including maritime). Such liability shall be in an amount not less than
$100,000,000 any one accident occurrence and $100,000,000 in the aggregate
(products and completed operations). Insurance under this paragraph may be a
combination of primary and umbrella policies as long as the limits of liability
equal those required.
Charterers Liability
Charterers Liability, excluding demise or bareboat chartered vessels, with a
limit of liability not less than $50,000,000. Such cover shall be written on the
"LSW 980 London Charterers Liability form 1996" or equivalent cover.
Marine Cargo / Transit
Marine cargo transit insurance, sub-limited a limit equal to the greater of
US$10,000,000 (100%) or the replacement cost of the highest valued shipment any
one transit. Cover shall be written on the Institute Cargo Clauses A or
equivalent form.
Workers Compensation
Workers compensation (statutory benefits) and employers liability ($1,000,000
minimum limit). Subject to exposure, such cover shall include maritime
employer's liability.
Deductibles
Physical Damage - $250,000 any one accident during construction
$1,000,000 operations
Control of Well - $250,000 any one accident Liability - $250,000 Charterers
Liability - $250,000 Marine Cargo - $250,000 during construction
$1,000,000 operations
In the event of a claim involving more than one of line of cover, the deductible
applicable shall not exceed the single highest applicable deductible any one
accident or occurrence
GENERAL CONDITIONS
Borrower shall be responsible for meeting its Oil Spill Financial Responsibility
requirements under the Oil Pollution Act
<PAGE> 124
1
SCHEDULE 6.08
EXISTING RESTRICTIONS
None.
