SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER: 1-7864
TRITON ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
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TEXAS 75-1151855
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
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6688 N. CENTRAL EXPRESSWAY, SUITE 1400, DALLAS, TEXAS 75206
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (214)691-5200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES-X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of Shares
Title of Each Class of Common Stock Outstanding at September 30, 1994
Common Stock, par value $1.00 per share 35,502,755
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
TRITON ENERGY CORPORATION
/s/ Peter Rugg
Peter Rugg
Senior Vice President and Chief Financial Officer
Date: February 24, 1995
Exhibit 15.1
January 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Triton Energy Corporation has included our report dated
January 10, 1995 (issued pursuant to the provisions of Statement of Auditing
Standards No. 71) in the Registration Statements on Form S-8 (Nos. 2-80978,
33-4042, 33-27203, 33-29498, 33-46968 and 33-51691) and in the Registration
Statements on Form S-3 (Nos. 33-11920, 33-15793, 33-17614, 33-21984, 33-23058,
33-25634, 33-31319, 33-45847, 33-69230, 33-55347 and 33-46292). We are also
aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
PRICE WATERHOUSE LLP
Dallas, Texas
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<ARTICLE> 5
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NOVEMBER 30,
1994 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 11007
<SECURITIES> 39155
<RECEIVABLES> 17146
<ALLOWANCES> 0
<INVENTORY> 2795
<CURRENT-ASSETS> 74829
<PP&E> 878907
<DEPRECIATION> 492282
<TOTAL-ASSETS> 611534
<CURRENT-LIABILITIES> 30938
<BONDS> 0
<COMMON> 35575
0
17978
<OTHER-SE> 191735
<TOTAL-LIABILITY-AND-EQUITY> 611534
<SALES> 22938
<TOTAL-REVENUES> 22938
<CGS> 15027
<TOTAL-COSTS> 15027
<OTHER-EXPENSES> 6611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6234
<INCOME-PRETAX> (15435)
<INCOME-TAX> 3838
<INCOME-CONTINUING> (19273)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19273)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> (0.56)
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OLEODUCTO CENTRAL AGREEMENT
dated as of December 14, 1994
among
OLEODUCTO CENTRAL S.A.
EMPRESA COLOMBIANA DE PETROLEOS-ECOPETROL
BP COLOMBIA PIPELINES LIMITED
TOTAL PIPELINE COLOMBIE S.A.
TRITON PIPELINE COLOMBIA, INC.
IPL ENTERPRISES (COLOMBIA) INC.
and
TCPL INTERNATIONAL INVESTMENTS INC.
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TABLE OF CONTENTS
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Section Page
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
1.1. Definitions 2
1.2. Interpretation 15
ARTICLE TWO
FORMATION OF THE JSC
2.1. Initial Capitalization of the JSC 16
2.2. Initial Shareholding Interests 17
2.3. Purpose; Limitation on Activity of the JSC 17
2.4. By-Laws 17
2.5. Voting Trust Agreement 17
2.6. Dividend Trust Agreement 17
2.7. Relationship of Parties 17
2.8. Dealings by the JSC with the Parties 18
2.9. Other Business Opportunities 18
2.10. Mutual Collaboration 18
2.11. Changes as Arrangements are Developed 18
ARTICLE THREE
OPERATIONS OF THE JSC
3.1. Operator; Access 19
3.2. Services 19
3.3. Annual Operating Budgets and Plans; Construction Budgets;
Post-Completion Capital Budgets; Reports 19
3.4. Approval of the Annual Operating Budget and Capital Budget 21
3.5. Project Construction Management 22
ARTICLE FOUR
BOARD OF DIRECTORS; OFFICERS; PROCEEDINGS
4.1. Board of Directors 22
4.2. Officers 23
4.3. Language of Proceedings 23
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Section Page
ARTICLE FIVE
FINANCING OF OLEODUCTO CENTRAL
5.1. Financing Plan; Financing Committee 23
5.2. Senior Debt 26
5.3. Several Commitments of Shareholders to Make Equity Contributions 32
5.4. Returns to Shareholders 34
5.5. Return of Equity Contributions 37
5.6. Other Distributions 39
5.7. Right of Set Off 40
ARTICLE SIX
CAPITAL INVESTMENT AND SOLE RISK PROPOSALS
6.1. Capital Investment Proposals 41
6.2. Sole Risk Proposals 41
6.3. Participation of Other Shareholders 42
6.4. Implementation and Indemnity 42
6.5. Ownership of Sole Risk Facilities; Financing 43
6.6 Data and Information 43
6.7. Tariffs 43
6.8. Decommissioning; Indemnity 44
ARTICLE SEVEN
TARIFF PRINCIPLES
7.1. Tariff Principles 44
7.2. Transportation Agreements 45
7.3. Advance Tariff Agreements and Transportation Notes Agreements 45
7.4. Third Party Transportation Agreements 45
ARTICLE EIGHT
FINANCIAL AND ACCOUNTING MATTERS
8.1. Books and Records; Fiscal Year 45
8.2. Right of Inspection of Books 45
8.3. Accounting Principles 46
8.4. Auditors 46
8.5. Accounting and Contract Award Procedures 46
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Section Page
ARTICLE NINE
PRE-COMPLETION DATE RIGHT TO PURCHASE
9.1. Reorganization Party 46
9.2. Right of Unrelated Shareholder to Purchase 47
9.3. Indemnification by Reorganization Party 47
9.4. Inapplicability After Completion Date 48
ARTICLE TEN
PERMITTED TRANSFERS
10.1. Permitted Transfers 48
10.2. Transfer in Connection with Assignment of Undivided Interest in
Association Contracts 48
10.3. Transfers to Persons in Petroleum and Natural Gas Industry 49
10.4. Transfers to Affiliates 50
10.5. Transfers to Other Shareholders 51
10.6 Public Offering of Shares 52
10.7. Transfers by Parent Holding Companies 52
10.8. Transfer of Shares by IPL Enterprises and TCPL International to
Ecopetrol 53
10.9. Transfer of Shares by TCPL International to TCPL Bermuda 53
10.10. Political Events Agreement 53
10.11. Transfer by Withdrawing Shareholders 53
10.12. Novation 53
10.13. Transfers Subject to Voting Trust Agreement and Dividend
Trust Agreement 53
10.14. Successors in Business Combinations 54
ARTICLE ELEVEN
CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS
11.1. Scope of Obligation of Confidentiality 54
11.2. Return of Confidential Information 55
11.3. Consultation as to Announcements 56
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Section Page
ARTICLE TWELVE
TERM
12.1. Term 56
12.2. Termination Events 56
12.3. Termination 57
12.4. Political Events Agreement 61
12.5. RMOU 61
ARTICLE THIRTEEN
NEGOTIATIONS; ARBITRATION; SUBMISSION TO JURISDICTION
13.1. Negotiations; Arbitration 61
ARTICLE FOURTEEN
GENERAL
14.1. Notices. 63
14.2. Entire Agreement 64
14.3. Taxes and Expenses 65
14.4. Representations and Warranties 65
14.5. Nature of Obligations 66
14.6. Amendments 66
14.7. No Third Party Beneficiaries 66
14.8. Severability 66
14.9. No Assignment 66
14.10. Appointment of Valuation Expert 66
14.11. Conduct 66
14.12. Governing Law 66
14.13. Performance Outside Colombia 67
14.14. Commercial Obligations 67
14.15. Waiver of Immunity 67
14.16. Enforcement of Certain Rights 67
14.17. Audit Rights. 67
14.18. Limitation on Rights 68
14.19. Approvals 68
14.20. Headings; Table of Contents 68
14.21. Counterparts 68
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SCHEDULES
A.1. By-Laws
A.2. Certified English Translation of By-Laws
B. Form of Voting Trust Agreement
C. Form of Dividend Trust Agreement
D. Operating Principles
E. Access Principles
F. Preliminary Financing Plan
G. Form of Subscription Agreement
H. Form of Performance Guarantee Agreement
I. Example of ROE Variance with Project Cost Variance
J. Political Events Agreement
K. Tariff Principles
L. Share Transfer Agreement
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<PAGE>
OLEODUCTO CENTRAL AGREEMENT
AGREEMENT, dated as of December 14, 1994, among:
OLEODUCTO CENTRAL S.A., a sociedad anonima existing under the laws
of Colombia;
EMPRESA COLOMBIANA DE PETROLEOS-ECOPETROL, an Empresa Industrial y
Comercial del Estado existing under the laws of Colombia and wholly owned by
Colombia;
BP COLOMBIA PIPELINES LIMITED, a company existing under the laws of
England and Wales;
TOTAL PIPELINE COLOMBIE S.A., a societe anonyme existing under the
laws of France;
TRITON PIPELINE COLOMBIA, INC., a corporation existing under the
laws of the Cayman Islands;
IPL ENTERPRISES (COLOMBIA) INC., a corporation existing under the
laws of the Cayman Islands; and
TCPL INTERNATIONAL INVESTMENTS INC., a corporation existing under
the laws of Alberta, Canada.
RECITALS
WHEREAS:
A. The Initial Shippers (as hereinafter defined) or their
respective Affiliates (as hereinafter defined) own interests in the
Association Contracts (as hereinafter defined) relating to the Cusiana and
Cupiagua oil fields located within the jurisdiction of the Department of
Casanare, Colombia (the Fields);
B. The Shareholders (as hereinafter defined) intend to
invest in existing and new pipeline transportation systems from the Fields to
the Port of Covenas, Colombia and upgrading the facilities at the Port of
Covenas to create a pipeline system comprised of four Segments (as hereinafter
defined) for the transportation of Petroleum (as hereinafter defined)
approximately 800 kilometres in length, including related pumping, storage and
loading facilities (such systems, port facilities, segments and other
facilities as the JSC may own or operate in whole or in part from time to time,
together with any additional related facilities, referred to herein as the
"Oleoducto Central");
<PAGE>
C. Pursuant to the terms of a Revised Memorandum of
Understanding dated as of July 15, 1994, as amended to date (the "RMOU") and
made among the Initial Shippers and TransCanada PipeLines Colombia Limited and
IPL Energy (Colombia) Limited, the parties thereto agreed to form Oleoducto
Central S.A., a sociedad anonima
existing under the laws of Colombia (the JSC), to acquire, develop, construct,
own and operate the Oleoducto Central;
D. IPL Enterprises (Colombia) Inc. and TCPL
International Investments Inc. (together with any of their respective
successors and assigns or the successor and assign to both of them or one of
them if the other is no longer a Shareholder, the "Canadian Group") are
Shareholders and will, or will cause their Affiliates to, provide or
contribute pipeline operating services in connection with the development,
construction and operation of the Oleoducto Central;
E. The Shareholders have formed the JSC by public deed no.
4747 of December 14, 1994 granted before notary public no. 38 of Santafe de
Bogota; and
F. The Shareholders wish to specify the terms and
conditions of their respective investments and participation in the JSC and
the financing and operation of the Oleoducto Central.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the Parties agree as
follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise
requires, the following words and phrases shall have the meanings indicated
below:
"Access Agreements" means the agreements to be entered into by the JSC
and third parties relating to the grant to the JSC by such third parties of
access to certain facilities to be used in connection with the Oleoducto
Central, in each case as the same may thereafter be amended from time to time
in accordance with the terms thereof.
"Access Principles" means the Access Principles attached as Schedule E
hereto.
"Accrued Returns" has the meaning assigned to it in Section 5.4(i).
"Actual Project Cost" has the meaning assigned to it in Section
5.4(c)(ii).
"Adjusted Paid-In Equity" has the meaning assigned to it in Section
5.4(c)(v).
<PAGE>
"Advance Tariff Agreements" means the Advance Tariff Agreements to be
entered into between the JSC and, unless otherwise agreed by the Parties, each
Initial Shipper or an Affiliate thereof (in each case with a credit equal to
or superior than the credit of such Initial Shipper and acceptable to each of
the Parties) as the same may be amended from time to time in accordance with
the terms thereof.
"Advance Tariff Payments" has the meaning assigned to it in the Advance
Tariff Agreements.
"Affiliate" of a Person means a Person (a) which is a Subsidiary of that
Person, (b) of which that Person is a Subsidiary, or (c) which is a Subsidiary
of a Person of which that Person is a Subsidiary.
"Agreed Project Cost" has the meaning assigned to it in Section
5.4(c)(iii).
"Aggregate Subscription Obligation" means the product of 30% and the
Project Cost.
"Annual Equity Amortization Amount" has the meaning assigned to it in
Section 5.5(d).
"Annual Operating Budget" has the meaning assigned to it in Section
3.3(a).
"Annual Revenue Requirement" has the meaning assigned to it in the Tariff
Principles.
"Association Contracts" means the two contratos de asociacin between
Ecopetrol and Triton Colombia dated 11th June, 1982 (relating to Santiago de
las Atalayas-1) and 5th May, 1988 (relating to Tauramena) and the contrato de
asociacin between Ecopetrol and TOTAL Exploratie dated December 3, 1990
(relating to Rio Chitamena), in each case as the same have and may be amended
from time to time in accordance with the terms thereof.
"Available Cash" on any date means the aggregate amount, determined on a
consolidated basis from the JSC's books and records as of such date, of:
(a) all cash on hand and marketable securities then held by the
JSC including, without limitation, any funds then held in (or paid by the
Trustee from) any accounts of or under the control of the Trustee to which the
JSC has unrestricted access and all other monies then on deposit with banks
for the account of the JSC and its Subsidiaries; and
(b) all undrawn amounts then available to the JSC under then
existing loan agreements or securities issuance facilities; excluding,
however, the aggregate amount of all undrawn overdraft facilities with banks
available to the JSC and any of its Subsidiaries repayable on demand;
less the sum of:
<PAGE>
(i) the aggregate amount of all overdrafts with banks payable on
demand then drawn by the JSC and its Subsidiaries; and
(ii) any cash held for working capital and capital
expenditure purposes approved in an Annual Operating Budget and Capital
Budget, respectively, by the Board of Directors.
"Benchmark Interest Expense" has the meaning assigned to it in the Tariff
Principles.
"Board of Directors" has the meaning assigned to it in the By-Laws.
"BP Pipelines" means BP Colombia Pipelines Limited, a company existing
under the laws of England and Wales.
"BPEC" means BP Exploration Company (Colombia) Limited, a company
existing under the laws of England and Wales.
"Business Day" means a day in which commercial banks in Santafe de Bogota
and, only with respect to days in which a payment is to be made, London,
England; Paris, France; Dallas, Texas; Calgary, Alberta; and The City of New
York, New York are permitted to be open for domestic and international
business.
"By-Laws" means the by-laws of the JSC included in public deed no. ___ of
December __, 1994 granted before notary public no. 38 of Santafe de Bogota, a
copy of which is attached as Schedule A.1 hereto, as the same may be amended
from time to time in accordance with the terms thereof. A certified English
translation of the By-Laws is attached as Schedule A.2 hereto.
"Canadian Group" has the meaning assigned to it in Recital D above.
"Capital Budget" has the meaning assigned to it in Section 3.3(c).
"Capital Investment Proposal" has the meaning assigned to it in Section
6.1(a).
"Cash Paid-In Equity" has the meaning assigned to it in Section 5.4(g).
"Collateral" with respect to each Senior Lender Group means
(a) the assignment by the JSC of its rights (i) to receive tariff
payments for Petroleum transported and Tariff Advances under the
Transportation Agreement, (ii) to receive payments for Transportation Notes
and other payments under the Transportation Notes Agreement, (iii) to receive
Advance Tariff Payments and other payments under the Advance Tariff Agreement,
(iv) to cause payments for Equity Contributions under the
<PAGE>
Subscription Agreement or, with respect to Subordinated Notes, payments
therefor under a subscription agreement substantially in the form of the
Subscription Agreement, to be made to the JSC, in each case, to the extent,
but only to the extent, that a Shareholder party thereto has failed to make an
Equity Contribution after receipt of a Notice of Call (as defined in the
Subscription Agreement) therefor, and (v) to receive payments by any guarantor
of any obligations under the agreements referred to in clause (i), (ii) or
(iii) above, or caused to be made to the JSC under the agreement referred to
in clause (iv) above, in each case entered into by a member of the same
Initial Shipper Group or a financial institution nominated thereby;
(b) the granting by the JSC of a security interest in the trust accounts
into which all payments (i) by the members (or, in the case of the
Transportation Notes Agreement, a financial institution nominated thereby) of
the same Initial Shipper Group under its Transportation Agreement,
Transportation Notes Agreement and Advance Tariff Agreement, (ii) by any
guarantor of any obligations under the agreements referred to in clause (i),
and (iii) of certain revenues from Third Party Tariffs or Overutilizer
Tariffs, are to be paid; and
(c) any arrangements as may be agreed between the JSC and the relevant
member of the same Initial Shipper Group in accordance with Section 5.2(d);
in each case for the benefit of such Senior Lender Group.
"Colombia" means the Republic of Colombia.
"Colombian Taxes" means the sum of all taxes, including, without
limitation, all charges, levies, imposts, income taxes, remittance taxes,
excise taxes or other levies on Distributions in or from Colombia imposed by
any taxation or similar regulatory authority in Colombia on the JSC or on the
recipient of any such Distributions.
"Common Security Trust Agreement" means the common security trust
agreement or common security trust agreements to be entered into by the JSC,
the providers of Senior Debt named therein and a trustee or trustees or
security agent or agents acting on behalf of such providers, setting forth the
obligations of the JSC to such providers, in each case as the same may be
amended from time to time in accordance with the terms thereof.
"Completion Date" means the date after all four Segments of the Oleoducto
Central have been commissioned for purposes of transporting shipments of
Petroleum on which the five millionth barrel of Petroleum is shipped through
the Oleoducto Central from the Cusiana access point to the Port of Covenas
delivery point, all as certified in a resolution adopted by the Board of
Directors.
"Confidential Information" has the meaning assigned to it in Section
11.1.
<PAGE>
"Corresponding Portion" has the meaning assigned to it in Section
10.2(a).
"Distribution" shall mean any distribution by the JSC by means of any
dividend payment, whether in cash, shares, other equity interests or
otherwise, any payment or application of any of its assets to purchase, redeem
or otherwise retire Shares or equity interests held by a Shareholder, any
distribution by way of reduction of capital, split-up (escicion) and
liquidation or otherwise in respect of any of the Shares or equity interests
held by such Shareholder or any interest or other payment in respect of, or
any repayment, repurchase or redemption of, Subordinated Notes held by or on
behalf of a Shareholder.
"Dividend Commencement Date" has the meaning set forth in Section 5.4(b).
"Dividend Trust Agreement" means the Dividend Trust Agreement to be
entered into among each of the Shareholders, the trustee named therein and the
JSC, substantially in the form attached as Schedule C hereto, with such
changes as the parties thereto may agree, in each case as the same may be
amended from time to time in accordance with the terms thereof; provided that
if, despite the use of Ecopetrol's best efforts, it is not legally feasible
for Ecopetrol to enter into the Dividend Trust Agreement on or prior to
February 28, 1995, the term "Dividend Trust Agreement" shall mean the Dividend
Trust Agreement and such other escrow or similar provisional arrangement
acceptable to the other Parties that Ecopetrol may enter in into that fulfills
the same purposes as the Dividend Trust Agreement until such time as Ecopetrol
may enter into the Dividend Trust Agreement.
"$" or "dollars" means United States dollars.
"Ecopetrol" means Empresa Colombiana de Petroleos-Ecopetrol, an Empresa
Industrial y Comercial del Estado existing under the laws of Colombia and
wholly owned by Colombia.
"Equity Amortization" has the meaning assigned to it in Section 5.5(c).
"Equity Amortization Deferral Test" has the meaning assigned to it in
Section 5.5(b)(iii).
"Equity Contribution" means the acquisition of (i) Shares or other shares
of capital stock of the JSC in exchange for cash pursuant to Subscription
Agreements and (ii) if the Parties unanimously agree, Subordinated Notes in
exchange for cash pursuant to subscription agreements substantially in the
form of the Subscription Agreements, in each case in accordance with the
provisions of Section 5.3.
"Equity Percentage" has the meaning assigned to it in Section 5.4(c)(iv).
"Fair Market Value" of any Shares or any other asset valued pursuant to
any provision of this Agreement means the fair market value of such Shares or
asset as agreed to by the Shareholders or, in the event that the Shareholders
are unable to agree, as determined by a Valuation Expert.
<PAGE>
"Fields" has the meaning assigned to it in Recital A above.
"Financing Agreements" means the agreements and guarantees, including,
without limitation, the Transportation Notes Agreements, the Advance Tariff
Agreements, the Senior Debt Agreements, the Subscription Agreements, the
Performance Guarantee Agreements, the Common Security Trust Agreement, the
Dividend Trust Agreement, the Political Events Agreement and other related
agreements to which the JSC is or shall become a party or beneficiary and
which are entered into in connection with the Financing Plan, in each case as
such agreements and guarantees may be amended from time to time in accordance
with the terms thereof.
"Financing Committee" has the meaning assigned to it in Section 5.1.
"Financing Plan" has the meaning assigned to it in Section 5.1.
"Funding Resolution" means a resolution of the Board of Directors calling
for Shareholders to make Equity Contributions.
"Initial Shipper Bridge Loan" has the meaning assigned to it in Section
5.2(h).
"Initial Shipper Group" means an Initial Shipper and its Affiliates that
include (a) a Shareholder, (b) a party to a Transportation Agreement, (c) a
party to a Transportation Notes Agreement, (d) a party to the Advance Tariff
Agreement, and (e) any guarantor of any obligations under any such agreements
and in each case each of their respective successors and assigns.
"Initial Shipper Group's Collateral" with respect to any Initial Shipper
Group means the Collateral assigned by the JSC to a Senior Lender Group that
consists of rights which the JSC has against members of such Initial Shipper
Group to the JSC and proceeds in trust accounts with respect thereto.
"Initial Shippers" means, unless otherwise agreed by the Parties,
Ecopetrol, BPEC, TOTAL Exploratie and Triton Colombia and each of their
respective successors and assigns.
"Initial Shipper Tariff" has the meaning assigned to it in the Tariff
Principles.
"Internationally Recognized Statistical Rating Agency" means Standard &
Poor's Corporation, Moody's Investors Service, Duff & Phelps and each of the
respective successors and assigns to substantially all of their respective
businesses whose business is primarily the rating of debt and other securities
of corporate and other issuers.
"IPL Energy" means IPL Energy Inc., a corporation existing under the
federal laws of Canada.
<PAGE>
"IPL Enterprises" means IPL Enterprises (Colombia) Inc., a corporation
existing under the laws of the Cayman Islands.
"JOA" means the Joint Operating Agreement for the Santiago de las
Atalayas-1, Tauramena and Rio Chitamena Association Contract Areas by and
among BPEC, TOTAL Exploratie and Triton Colombia, dated as of March 29, 1994,
as the same may be amended from time to time in accordance with the terms
thereof.
"JSC" has the meaning assigned to it in Recital C above.
"MME" means the Colombian Ministry of Mines and Energy and any
successor ministry thereto.
"Non-Cash Items" has the meaning assigned to it in the Tariff Principles.
"Notice of Continuance" has the meaning assigned to it in Section
12.3(a).
"Officers' Certificate" of a Party means a certificate signed by the
Chairman of the Board, the President, a Vice President or a Director, and by a
Director, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of such Party.
"Oleoducto Central" has the meaning assigned to it in Recital B above.
"Oleoducto Central Operations Agreement" means the agreement to be
entered into between the JSC and the Canadian Group or an Affiliate of each
member thereof or their joint nominee as invisible partner of the JSC in a
cuentas en participacion, an operating agreement or a management and
consulting services agreement, as the same may be amended from time to time in
accordance with the terms thereof.
"Operating and Maintenance Costs" means the cash operating costs which
are attributed to the JSC or are incurred by the JSC including, but not
limited to, all payments to the Operator under the Oleoducto Central
Operations Agreement (other than the Subordinated Fee), general and
administration expenses, operating expenses, maintenance expenses, salaries,
bonuses and any other employee costs, occupancy costs, rentals under operating
leases, energy costs, security costs, supplies used in its operation, payments
to accountants and auditors, consultants, and other outside advisors,
insurance, currency exchange and banking fees and expenses, any capital
expenditures required to maintain the then current objectives for the JSC's
operations as established in the Annual Operating Budget or any emergency
capital expenditures incurred to repair the Oleoducto Central as authorized by
the President, and all other miscellaneous expenses (net of miscellaneous
income) that appear in the JSC's annual audited income statement.
"Operating Principles" means the Operating Principles attached as
Schedule D hereto.
<PAGE>
"Operator" means the Canadian Group or an Affiliate of each member
thereof or their joint nominee as invisible partner of the JSC in a cuentas en
participacion, operator or management or other consultant to the JSC acting
through its operations division under the Oleoducto Central Operations
Agreement or a successor agreement and any respective successors and permitted
assigns.
"Overutilizer Tariff" has the meaning assigned to it in the Tariff
Principles.
"Parent Holding Company" has the meaning assigned to it in Section 10.1.
"Parties" means the JSC, Ecopetrol, BP Pipelines, TOTAL Pipeline, Triton
Pipeline, IPL Enterprises and TCPL International and their respective
successors and permitted assigns.
"PCMT Manager" has the meaning assigned to it in Section 3.5(a).
"Performance Guarantee Agreements" means the Performance Guarantee
Agreements executed and delivered for the benefit of the JSC by each of BP
International Limited, TOTAL S.A., Triton Energy Corporation, IPL Energy and
TransCanada PipeLines, each substantially in the form attached as Schedule H
hereto, in each case as the same may be amended from time to time in
accordance with the terms thereof.
"Person" means any individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Petroleum" means crude oil, other liquid hydrocarbons produced at the
wellhead, and the liquid hydrocarbons which are recovered or extracted from
gas.
"Political Events Agreement" means the Political Events Agreement entered
into between the JSC and each of the Shareholders in the form attached as
Schedule J hereto, as the same may be amended from time to time in accordance
with the terms thereof.
"Purchasing Shareholder" has the meaning assigned to it in Section
10.5(a).
"Pre-Completion Accrued Returns" has the meaning assigned to it in
Section 5.4(h).
"Preliminary Financing Plan" means the Preliminary Financing Plan
attached as Schedule F hereto.
"Project Agreements" means this Agreement, the RMOU, the Voting Trust
Agreement, the Promesas de Compraventa, the Financing Agreements, the
Oleoducto Central Operations Agreement, the Transportation Agreements and the
Access Agreements.
<PAGE>
"Project Cost" means the total cost of constructing and developing the
Oleoducto Central, estimated to be $2.03 billion as of the date of this
Agreement, including, without limitation, equipment procurement, construction
and financing costs.
"Promesas de Compraventa" means the Promesas de Compraventa to be entered
into between (a) the JSC and Ecopetrol, and (b) the JSC and the parties to the
Association Contracts, as the same may be amended from time to time in
accordance with the terms thereof.
"Proportionate Share" has the meaning assigned to it in the Tariff
Principles.
"Ps" or "pesos" means Colombian pesos.
"Recoverable Costs" has the meaning assigned to it in Section
12.3(a)(iii).
"Reference Bank" means Morgan Guaranty Trust Company of New York and
any successors and assigns to substantially all of its banking business.
"Reorganization Party" has the meaning assigned to it in Section 9.1.
"RMOU" has the meaning assigned to it in Recital C above.
"Segment" has the meaning assigned to it in the Tariff Principles.
"Senior Debt" means the loans, bonds, notes and other forms of limited
recourse indebtedness of the JSC, including, without limitation, any loans
contemplated in Section 5.1(d)(i), Section 5.2(g) and Section 5.3(c), in each
case which are not subordinated to any other liability of the JSC (except as
provided by any applicable law) and are evidenced by or issued under Senior
Debt Agreements.
"Senior Debt Agreements" means the individual loan agreements, indentures
and fiscal agency agreements to be entered into between the JSC and the
respective senior lenders named therein or trustees or fiscal agents therefor,
as the case may be, with respect to the loans, bonds, notes and other forms of
limited recourse indebtedness of the JSC which are not subordinated to any
other liability of the JSC (except as permitted by applicable law) to be
provided from time to time to the JSC by such senior lenders, as such
agreements and indentures may be amended and supplemented in accordance with
the terms thereof or replaced from time to time.
"Senior Debt Shortfall" has the meaning assigned to it in Section 5.2(d).
"Senior Debt Tranche" has the meaning assigned to it in Section
5.2(b)(i).
"Senior Lender Group" has the meaning assigned to it in Section
5.2(b)(i).
"Senior Officers" has the meaning assigned to it in Section 13.1.
<PAGE>
"Share Transfer Agreement" means the Share Transfer Agreement entered
into between IPL Enterprises and TCPL International, on the one hand, and
Ecopetrol, on the other, in the form attached as Schedule L hereto, as the
same may be amended from time to time in accordance with the terms thereof.
"Shareholder Bridge Loan" has the meaning assigned to it in Section
5.2(i).
"Shareholders" means Ecopetrol, BP Pipelines, TOTAL Pipeline, Triton
Pipeline, IPL Enterprises, TCPL International and their respective successors
and permitted assigns.
"Shareholding Interest" of any Person means the percentage equal to the
number of Shares held by such Person divided by the total number of Shares
outstanding from time to time.
"Shares" means the shares of common stock, par value Ps 100,000 each, of
the JSC, each with no preference among themselves with respect to dividends,
voting rights or rights upon liquidation of the JSC.
"Sole Risk Facilities" has the meaning set forth in Section 6.2.
"Sole Risk Party" has the meaning assigned to it in Section 6.2(a).
"Sole Risk Parties" has the meaning assigned to it in Section
6.4(b).
"Sole Risk Proposal" has the meaning assigned to it in Section
6.2(a).
"Sole Risk Throughput Basis" has the meaning set forth in Section 6.7.
"Specified Court" has the meaning assigned to it in Section 13.1(e).
"Subordinated Fee" has the meaning assigned to it in the Tariff
Principles.
"Subordinated Notes" means subordinated notes executed and delivered by
the JSC in such form as may be approved by the Board of Directors in
accordance with the By-Laws and applicable law.
"Subscription Agreements" means the Subscription Agreements entered into
between the JSC and each of the Shareholders, each substantially in the form
attached as Schedule G hereto, in each case as the same may be amended from
time to time in accordance with the terms thereof.
"Subsidiary" of a Person means (i) a corporation more than 50% of the
outstanding voting shares of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person, or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least
<PAGE>
a majority ownership and power to direct the policies, management and affairs
thereof.
"Target Project Cost" has the meaning assigned to it in Section
5.4(c)(i).
"Tariff Advances" has the meaning assigned to it in the Transportation
Agreements.
"Tariff Principles" means the principles established for the calculation
of tariffs for use of the Oleoducto Central attached as Schedule K hereto.
"TCPL (Bermuda)" means TCPL (Bermuda) Ltd., a corporation existing under
the laws of Bermuda.
"TCPL International" means TCPL International Investments Inc., a
corporation existing under the laws of Alberta, Canada.
"Third Party Tariff" has the meaning assigned to it in the Tariff
Principles.
"Third Party Transportation Agreements" means the transportation
agreements to be entered into by the JSC and third parties for the
transportation by such third parties of Petroleum through any Segment of the
Oleoducto Central.
"Throughput Capacity" has the meaning assigned to it in the Tariff
Principles.
"Throughput Nominations" has the meaning assigned to it in the Tariff
Principles.
"TOTAL Exploratie" means TOTAL Exploratie en Produktie MIJ B.V., a
corporation existing under the laws of The Netherlands.
"TOTAL Pipeline" means TOTAL Pipeline Colombie S.A., a societe anonyme
existing under the laws of France.
"TransCanada Pipelines" means TransCanada PipeLines Limited, a
corporation existing under the federal laws of Canada.
"Transportation Agreements" means the Transportation Agreements to be
entered into by the JSC and each of the Initial Shippers for the
transportation by such Initial Shippers of Petroleum through the Oleoducto
Central, as the same may be amended from time to time in accordance with the
terms thereof.
"Transportation Agreement Step-Up" has the meaning assigned to it in
Section 5.2(f).
"Transportation Note" has the meaning assigned to it in the
Transportation Notes Agreement.
<PAGE>
"Transportation Notes Agreements" means the Transportation Notes
Agreements to be entered into between the JSC and (a) certain of the Initial
Shippers or (b) Affiliates thereof or financial institutions nominated
thereby, in each case with a credit equal to or superior than the credit of
such Initial Shipper, as the same may be amended from time to time in
accordance with the terms thereof.
"Triton Colombia" means Triton Colombia, Inc., a corporation existing
under the laws of the State of Delaware, United States of America.
"Triton Pipeline" means Triton Pipeline Colombia, Inc., a corporation
existing under the laws of the Cayman Islands.
"Trustee" means the trustee or trustees or security agent or agents named
in the Common Security Trust Agreement acting on behalf of the providers of
Senior Debt, with respect to, among other matters, the Collateral.
"UNCITRAL Arbitration Rules" means the Arbitration Rules adopted by the
United Nations Commission on International Trade Law and recommended for use
by the General Assembly of the United Nations.
"Valuation Expert" means an internationally recognized independent
investment banking or other advisory firm with experience in the valuation of
petroleum pipeline operating companies.
"Voting Shares" means shares which ordinarily have voting power for the
election of directors (or persons performing similar functions), whether at
all times or only so long as no senior class of shares has such voting power
by reason of any contingency.
"Voting Trust Agreement" means the Voting Trust Agreement to be entered
into among all of the Shareholders (except Ecopetrol), the trustee named
therein and the JSC, substantially in the form attached as Schedule B hereto,
with such changes as the parties thereto may agree, in each case as the same
may be amended from time to time in accordance with the terms thereof.
"Withdrawing Shareholder" has the meaning assigned to it in Section
12.2(c).
"Working Capital Advances" has the meaning assigned to it in the Tariff
Principles.
Section 1.2. Interpretation. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
(b) words importing gender include all genders;
<PAGE>
(c) any reference to an "Article" or a "Section" refers to an Article
or a Section, as the case may be, of this Agreement;
(d) the Schedules hereto (other than Schedules D, E, F and K) do not
form part of this Agreement;
(e) all references to this Agreement and the words "herein",
"hereof","hereto" and "hereunder" and other words of similar import refer to
this Agreement (but not including any Schedules hereto (other than Schedules
D, E, F and K)) as a whole and not to any particular Article, Section or
other subdivision; and
(f) all references herein to "generally accepted accounting principles"
shall mean Accounting Principles Generally Accepted in Colombia as in effect
from time to time.
ARTICLE TWO
FORMATION OF THE JSC
Section 2.1. Initial Capitalization of the JSC. The JSC's
initial capitalization will consist of 20,000 authorized Shares, of which
10,000 subscribed, partly paid Shares have been issued to the Shareholders.
The partly-paid Shares have been partly paid as to half of their subscribed
capital and the balance will be paid by the respective Shareholders within 12
months of the date hereof in accordance with the By-Laws and applicable law.
Section 2.2. Initial Shareholding Interests. For purposes of
this Agreement, after giving effect to the initial capitalization of the JSC,
the initial Shareholding Interest of each Shareholder in the JSC is:
<TABLE>
<CAPTION>
<S> <C>
Initial
Shareholder Shareholding Interest
Ecopetrol 25.0%
BP Pipelines 15.2%
TOTAL Pipeline 15.2%
Triton Pipeline 9.6%
IPL Enterprises 17.5%
TCPL International 17.5%
</TABLE>
<PAGE>
The Shareholding Interest of each Shareholder is subject to adjustment from
time to time in accordance with the terms hereof and the By-Laws.
Section 2.3. Purpose; Limitation on Activity of the JSC. The
Shareholders have incorporated the JSC for the sole purpose of acquiring,
developing, constructing, financing, completing, owning and operating the
Oleoducto Central. The activities of the JSC shall be limited to the
activities set forth in this Agreement, the other Project Agreements and the
By-Laws.
Section 2.4. By-Laws. Each Shareholder agrees not to take,
and to prevent the Directors nominated by it from taking, any action contrary
to the By-Laws or to the provisions of this Agreement.
Section 2.5. Voting Trust Agreement. Each of the Shareholders
(except Ecopetrol) agrees to enter into the Voting Trust Agreement on or prior
to February 28, 1995 providing for the transfer of the voting rights attaching
to its Shares to the voting trustee named therein, to transfer to such voting
trustee pursuant thereto any voting rights to Shares it may acquire in the
future, and to comply with the terms thereof.
Section 2.6. Dividend Trust Agreement. Each of the
Shareholders agrees to enter into the Dividend Trust Agreement on or prior to
February 28, 1995 and to comply with the terms thereof.
Section 2.7. Relationship of Parties. Nothing herein shall be
construed to create a general partnership between or among the Shareholders
and the JSC. Except as expressly authorized by this Agreement, the other
Project Agreements or the By-Laws, nothing herein or therein shall be
construed to authorize any Party to act as the agent of any other Party, nor
to permit any Party to act on behalf of or bind any other Party or to give any
Party the authority to act for or to assume or incur any obligations or
liabilities on behalf of any other Party.
Section 2.8. Dealings by the JSC with the Parties. Except as
otherwise contemplated herein and in the other Project Agreements, all
transactions between the JSC and any of the other Parties or their Affiliates
shall be on terms and conditions no less favorable to the JSC than those that
would be applicable in comparable transactions between independent parties
acting at arm's length.
Section 2.9. Other Business Opportunities. Except as
expressly provided in this Agreement, the other Project Agreements and the
By-Laws, each of the Parties and each of their respective Affiliates shall
have the right independently to engage in and receive full benefits from any
business activities, whether or not in competition with the activities and
operations of the JSC or the Oleoducto Central, without first consulting any
of the other Parties. No Party shall have any obligation to any of the other
Parties or the JSC with respect to any investment in or acquisition,
construction or development of any other pipeline transportation facilities or
extensions thereof in Colombia or elsewhere, other than as required or
contemplated by this Agreement, the other Project Agreements or applicable
law.
<PAGE>
Section 2.10. Mutual Collaboration. The Parties recognize
that circumstances may arise which were not foreseen at the date of this
Agreement and which will have a significant effect upon the JSC, the Oleoducto
Central or upon a Party in respect of the JSC or the Oleoducto Central. The
Parties agree to consult in the spirit of mutual collaboration in an attempt
to resolve any problems arising from such unforeseen circumstances. The
Parties expressly acknowledge that this Section only obligates the Parties to
consult in good faith.
Section 2.11. Changes as Arrangements are Developed. The Parties
recognize that development of arrangements for the financing and of other
elements of the Oleoducto Central may make changes in the project structure or
in the Project Agreements or otherwise in respect of the Oleoducto Central
necessary or desirable and that as of the date hereof certain of the Project
Agreements to which they are to be parties have not yet been negotiated,
executed and delivered. The Parties agree to consult in good faith to effect
any such changes which they may agree upon and to negotiate in good faith with
respect to those Project Agreements which have not yet been negotiated,
executed and delivered. The Parties expressly acknowledge that this Section
only obligates the Parties to consult and negotiate in good faith.
ARTICLE THREE
OPERATIONS OF THE JSC
Section 3.1. Operator; Access. The JSC and the Operator shall
enter into the Oleoducto Central Operations Agreement in connection with the
operation of the Oleoducto Central which will, among other matters, give
effect to the Operating Principles. The JSC shall enter into Access
Agreements which will, among other matters, give effect to the Access
Principles.
Section 3.2. Services. Each of the Shareholders may provide
to the JSC such services as the Operator or the JSC may from time to time
reasonably request on such terms as may be mutually agreed. At the reasonable
request of the Operator or the JSC, each of the Shareholders shall consider
making available its or its Affiliates' employees to provide services to the
JSC but shall be under no obligation to make available such employees.
Section 3.3. Annual Operating Budgets and Plans; Construction
Budgets; Post-Completion Capital Budgets; Reports. (a) The JSC shall instruct
the Operator to prepare and provide to the JSC for approval by the Board of
Directors an operating budget (including the then required level of
maintenance capital expenditures) and operating plan ("Annual Operating Budget")
for the next fiscal year. The proposed Annual Operating Budget shall be
provided to the Board of Directors not later than 60 days prior to the
beginning of the fiscal year of the JSC beginning January 1 to which it
relates and shall include, without limitation, the following:
(i) an estimate of proposed maintenance capital expenditures,
indicating the item or type of expenditure, the necessity therefor
and the time of such expenditure;
<PAGE>
(ii) an estimate of the Annual Revenue Requirement and other cash
receipts to be received and the operating costs to be incurred, and
the basis on which such estimates were prepared, including the
Throughput Nominations of the Initial Shippers and any third parties; and
(iii) such further detail as the Board of Directors may request.
No line in the Annual Operating Budget shall exceed 10% of the total Annual
Operating Budget, unless otherwise agreed by the Board of Directors.
(b) Prior to the Completion Date, the JSC shall instruct the
PCMT Manager to prepare and provide to the JSC for approval of the Board of
Directors an annual construction budget for the next fiscal year. Such
construction budget shall be provided to the Board of Directors not later than
60 days prior to the beginning of the fiscal year of the JSC to which it
relates and shall include, without limitation, an estimate of proposed
construction expenditures, indicating the item or type of expenditures, the
purpose thereof and the timing of such expenditures and such further detail as
the Board of Directors may request.
(c) Following the Completion Date, the JSC shall instruct the
Operator to prepare and provide to the JSC for approval of the Board of
Directors an annual capital expenditure budget for non-maintenance capital
expenditures ("Capital Budget") for the next fiscal year. The proposed Capital
Budget shall be provided to the Board of Directors not later than 60 days
prior to the beginning of the fiscal year of the JSC to which it relates and
shall include, without limitation, an estimate of proposed non-maintenance
capital expenditures, indicating the item or type of expenditures, the purpose
thereof and the timing of such expenditures, plus a budget for the operating
costs related to such capital expenditures and such further detail as the
Board of Directors may request.
(d) The JSC shall instruct the Operator to prepare and provide to
the JSC for approval of the Board of Directors not later than 60 days prior to
the beginning of the fiscal year of the JSC to which it relates:
(i) an estimate of the requirements for funds and the estimated timing
of such requirements for such year; and
(ii) an estimate of working capital requirements for such year.
(e) The JSC shall instruct the Operator to prepare and provide
such other forecasts and estimates covering shorter or longer periods or
particular projects as the Board of Directors may direct. Such other annual
forecasts and estimates shall be provided to the Board of Directors not later
than 30 days prior to the fiscal year to which they relate.
(f) Prior to the Completion Date not later than 15 days after the
end of each calendar month (other than a calendar month that is the final
calendar month in a fiscal quarter), the JSC shall instruct the PCMT Manager
to furnish to the Board of Directors a summary of construction activities
relating to each Segment of the Oleoducto Central
<PAGE>
conducted during such month, including for each such Segment, prior to its
completion, a comparison of expenditures to budget and actual construction
timetable to that projected for the period in such detail as may be requested
from time to time by the Board of Directors or reasonably by any Shareholder,
together with a summary of routine monthly reports prepared by the PCMT
Manager for its own use.
(g) As soon as practicable but not later than 30 days after the
end of each fiscal quarter, the JSC shall instruct the PCMT Manager and/or the
Operator to furnish to the Board of Directors and Shareholders (i) a summary
of construction or operations, as the case may be, of the Oleoducto Central
conducted during such quarter, together with a profit and loss account,
statement of source and application of funds and balance sheets showing actual
expenditure to date against the applicable Capital Budget and Annual Operating
Budget, and latest estimates to the Completion Date or fiscal year end, as the
case may be, and (ii) prior to the Completion Date, construction reports
showing physical progress to date against the Capital Budget and latest
estimates to the Completion Date, as well as such other pertinent financial or
other information as may be requested from time to time by the Board of
Directors or reasonably by any Shareholder.
(h) The JSC shall make, or shall cause to be made, a prompt
report to the Board of Directors and Shareholders of (i) any unexpected
occurrence which will, or is likely to, materially affect the construction or
operation of the Oleoducto Central or the JSC; (ii) any actual or anticipated
aggregate expenditures by the JSC during a period that exceed the aggregate
budget expenditures for such periods by 5% in the aggregate or more than 10%
for any particular item; and (iii) any anticipated deviations from the
estimates set forth in the Annual Operating Budget or Capital Budget of the
amounts and timing of funds that will be required with respect to the agreed
expenditures.
Section 3.4. Approval of the Annual Operating Budget and
Capital Budget.
(a) In accordance with the By-Laws, the Annual Operating Budget shall be
approved by at least four of the six members of the Board of Directors.
Should the Board of Directors propose to make any amendments, alterations,
deletions or insertions to the proposed Annual Operating Budget, such
amendment, alteration or deletion will require the vote of at least four of
the six members of the Board of Directors.
(b) Even if the Annual Operating Budget has been approved, the
Board of Directors may, by a vote of at least four of the six directors, amend
the Annual Operating Budget.
(c) The Shareholders recognize that rejection or amendment of the
Annual Operating Budget pursuant to subsection (a) or (b) above may require
adjustments in the incentive compensation performance criteria relating to the
Operator incentives provided for in the Operating Principles and to be
reflected in the Oleoducto Central Operations Agreement to the extent that
performance criteria were agreed prior to any such rejection or amendment.
(d) The Capital Budget, in accordance with the By-Laws, shall
require the unanimous approval of the Board of Directors.
<PAGE>
Section 3.5. Project Construction Management. The JSC shall
be responsible for construction activities. To enable the JSC to carry out
such activities, it will enter into:
(a) a technical services and management agreement with BPEC pursuant to
which BPEC will provide the services of Ed Truett or another of its employees
acceptable to the Parties (approximately 50% of the individual's time) to act
as manager of the project construction management team (the "PCMT Manager") of
the JSC responsible for construction activities, together with appropriate
technical support; and
(b) a technical services and management agreement with the Canadian
Group or an Affiliate or Affiliates of the members thereof or any joint
nominee thereof pursuant to which the Canadian Group will provide the services
of Wayne Sartore or another of its employees acceptable to the Parties,
together with technical support, plus such other assistance as the JSC may
decide can usefully be provided or cause to be provided by the Canadian Group.
In addition, the JSC shall enter into such contracts (including, without
limitation, supply, employment, service and engineering contracts) as are
necessary to perform construction, testing, start-up and other associated
operations necessary for the entering into service of each Segment. These
contracts will include the transportation element of the current contract
between BPEC and Brown & Root, Inc. or an Affiliate thereof, which will be
assigned by BPEC to the JSC, as well as any contract for the supply of pipe.
ARTICLE FOUR
BOARD OF DIRECTORS; OFFICERS; PROCEEDINGS
Section 4.1. Board of Directors. The Board of Directors shall
have the responsibilities set forth in the By-Laws. The Board of Directors
will consist of six members. Directors will be elected as provided in the
By-Laws and, except for the director to be nominated by Ecopetrol, pursuant to
the provisions of the Voting Trust Agreement. The initial members of the
Board of Directors and their alternates are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Director First and Second Alternates
Ecopetrol Ismael Arenas Mauricio Vega, Gabriel Reyes
BP Pipelines Nicholas P. Connolly David de Gruyter, Harry Koppel
TOTAL Pipeline Jacques de Boisseson Yves Cerf-Mayer, Jean Guilbert
Triton Pipeline
A.E. Turner Bernard Gros-Dubois, Don M. Drinkard, Jr.
IPL Enterprises Benny J. Phillips Donald M. Wishart, Wayne M. Sartore
TCPL International Michael Durnin Robert M. Jensen, Arthur J. Epp
</TABLE>
<PAGE>
Section 4.2. Officers. The Board of Directors shall appoint
the officers of the JSC in accordance with the By-Laws.
Section 4.3. Language of Proceedings. The proceedings of the Board
of Directors and Shareholders of the JSC shall be conducted in the Spanish
language. At the request of any member of the Board of Directors or any
Shareholder holding at least 9% of the outstanding Shares, as the case may be,
the JSC shall provide for a simultaneous translation of such proceedings into
English. The formal minutes of meetings of the Board of Directors and
Shareholders shall be maintained in the Spanish language and an English
version shall be made available to all directors and Shareholders. In the
event of any conflict between the Spanish version of such minutes and the
English version, the Spanish version will control.
ARTICLE FIVE
FINANCING OF OLEODUCTO CENTRAL
Section 5.1. Financing Plan; Financing Committee. (a)(i)
Unless otherwise agreed by the Shareholders, the plan for the sources and
amounts of financing for the acquisition, construction and development of the
Oleoducto Central, including capitalized interest (as the same may be amended
from time to time in accordance with the terms hereof, the "Financing Plan"), is
currently expected to be based on the following proportions of debt and
equity:
<TABLE>
<CAPTION>
<S> <C> <C>
Source Amount Percent
(Nominal U.S.
Dollars in Millions)
Senior Debt $ 1,421 70%
Equity Contributions and Pre-Completion
Accrued Returns
Return 609 30%
Total $ 2,030 100%
</TABLE>
The current indicative terms of the Financing Plan are set forth in Schedule
F.
(ii) The Shareholders agree that the capitalization of the JSC
shall consist of approximately 70% Senior Debt and approximately 30% Equity
Contributions and Pre-Completion Accrued Returns when the financing of the
Oleoducto Central is completed. The Shareholders agree that as nearly as
possible such Senior Debt and Equity Contributions should be funded in
accordance with the uses of funds set forth in the Financing Plan as amended
from time to time. Prior to completion of such funding, the Parties shall
cooperate in order to maintain the JSC's capitalization as close as possible
to 70% Senior
<PAGE>
Debt and 30% Equity Contributions and Pre-Completion Accrued Returns, but
recognize that during the construction of the Oleoducto Central (i) until the
first borrowing of Senior Debt by the JSC, the capitalization of the JSC will
be 100% Equity Contributions and Pre-Completion Accrued Returns and (ii) the
timing of borrowings of Senior Debt by the JSC will cause the capitalization
of the JSC to vary. The Shareholders agree that unless the JSC has been
successful in achieving a percentage of Senior Debt equal to at least 60% of
its then existing capitalization by the later of one year from execution and
delivery of the Project Agreements and April 1, 1996 (unless construction of
the Oleoducto Central has been delayed in which case such date shall be
extended by a corresponding amount of time), a Special Committee of
Shareholders or of the Board of Directors shall be established to review and
modify the Financing Plan in a manner acceptable to Shareholders holding at
least 90.41% of the outstanding Shares. In this regard consideration shall be
given to requesting Initial Shippers to provide loans in order to increase the
proportionate share of the JSC's capitalization represented by Senior Debt.
Such loans shall be deemed to be Senior Debt.
(b) The Board of Directors may establish a financing committee (the
"Financing Committee"), which shall be composed of one member representing each
Shareholder or an Affiliate thereof, together with the officer of the JSC
responsible for finance, and shall report to the Board of Directors. The
Financing Committee shall have the following responsibilities:
(i) to update the Financing Plan at least quarterly based on actual to
date Project Cost and to review and update Project Cost forecasts as provided
by the PCMT Manager;
(ii) to revise the forecast funding requirements of the JSC for the
subsequent four quarters on a quarterly basis;
(iii) to coordinate the funding of Senior Debt by the JSC to ensure that
the JSC obtains Senior Debt and Equity Contributions on a timely basis in
accordance with the then current Financing Plan; and
(iv) to provide the Shareholders with a schedule of specific projected
Senior Debt and Equity Contribution funding requirements (including the date
or dates such funding is required and the amounts thereof) at least 105 days
in advance of the date any such funding is expected to be required.
The Committee's decisions shall be in the form of recommendations to the Board
of Directors.
(c) Each Initial Shipper agrees to notify the JSC and the Financing
Committee of its intention to assist the JSC in arranging Senior Debt at least
90 days in advance thereof and to provide them on a quarterly basis with a
non-binding estimate of funding sources for the subsequent four quarters.
Without the consent of Ecopetrol, each of BP Pipelines and TOTAL Pipeline
severally agrees that neither it nor any Affiliate will arrange for any Senior
Debt of the JSC with respect to the Senior Debt Tranche (as defined below)
attributable to it to be raised in the public or private markets for
securities transactions.
<PAGE>
(d) If, by December 31, 1995, the Shareholders determine that it is
not possible to achieve a capitalization of the JSC on the basis of the then
current Financing Plan, the Shareholders will decide by holders of at least
90.41% of the outstanding Shares that each Shareholder or any of its
Affiliates will either:
(i) support the JSC in arranging debt by either arranging loans provided
by such Shareholder or an Affiliate on a several basis, or supporting the
making of such loans by third parties, so that the capitalization of the JSC
then consists of 70% Senior Debt and 30% Equity Contributions and
Pre-Completion Accrued Returns; or
(ii) increase its Equity Contributions pro rata to its Shareholding
Interest so that the resulting capitalization of the JSC consists of
approximately 60% Senior Debt and 40% Equity Contributions and Pre-Completion
Accrued Returns. Such Equity Contributions shall consist of the purchase of
Shares for cash or, if the Parties otherwise unanimously agree, the purchase
of either a combination of Shares and Subordinated Notes for cash or
Subordinated Notes for cash, but only if the projected annual return on such
Equity Contributions calculated in accordance with Section 5.4(b) is at least
13.5% after payment of all Colombian Taxes.
(e) In the event that the Financing Plan as amended from time to
time reflects an estimated Project Cost that exceeds by more than $50 million,
the original estimated Project Cost set forth in the Financing Plan in
Schedule F to this Agreement as originally signed then the JSC shall convene
an emergency meeting of the Board of Directors as soon as practicable after
the release of such amended Financing Plan to discuss methods of funding such
increase in cost.
Section 5.2. Senior Debt. (a) The Shareholders agree that
the JSC shall borrow Senior Debt from a combination of export credit agencies,
suppliers' financing, commercial banks, public and private capital markets,
and Shareholders and their Affiliates. The Shareholders recognize that the
precise allocation of the JSC's borrowings of Senior Debt among such sources
will depend upon a number of factors, including, without limitation, capital
market conditions, the availability, terms and conditions of financing
provided or supported by export credit agencies, and the availability of
financing provided or arranged by Shareholders and their Affiliates. The
Shareholders agree that the Financing Plan will be designed so as not to
jeopardize the existing and future financing raised and to be raised by the
Initial Shippers with respect to the exploration, development and production
of the Fields. Each Shareholder also agrees to cause its Affiliate that is an
Initial Shipper to design any future financing for such exploration,
development and production in such a manner as to not materially jeopardize
the Financing Plan.
(b)(i) The JSC shall be the borrower of all Senior Debt included in
the Financing Plan. The Senior Debt, including the loans contemplated in
Sections 5.1(d)(i), shall be borrowed by the JSC in four tranches of Senior
Debt (each, a "Senior Debt Tranche") provided by four separate groups of
Senior Lenders (each, a "Senior Lender Group"). Each Senior Debt Tranche
shall be separately secured by Collateral consisting of obligations of a
single Initial Shipper Group.
<PAGE>
(ii) All Senior Debt shall rank pari passu with respect to the
Collateral securing Senior Debt within a particular Senior Debt Tranche. The
Parties agree that each Senior Lender Group will have no recourse to any
assets or rights of the JSC other than the Collateral separately supporting
the related Senior Debt Tranche. The JSC agrees not to assign its rights in
any agreements or grant any security interests in any of its assets in favor
of any Senior Lender Group other than the Collateral separately supporting the
related Senior Debt Tranche which shall be used solely to support such
Tranche. The Parties agree to structure the Senior Debt so that the rights
and remedies of each Senior Lender Group will be entirely separate and the
exercise of rights and remedies by one Senior Lender Group against the
Collateral separately supporting the related Senior Debt Tranche will not
entitle any other Senior Lender Group to exercise any rights and remedies
against its Collateral or the Collateral of any other Senior Lender Group or
against any other assets or rights of the JSC.
(iii) The Parties agree that the common terms and conditions
applicable to all Senior Debt and Senior Lender Groups and within each Senior
Debt Tranche shall be included in the Common Security Trust Agreement, and
that all provisions specific to an individual borrowing or issuance of Senior
Debt under a particular Senior Debt shall be included in the Senior Debt
Agreement with respect to such borrowing or issuance.
(c)(i) The JSC agrees with each Shareholder to use reasonable
commercial efforts to obtain Senior Debt from Senior Lender Groups in such
amounts and at such times as set forth in the then current Financing Plan.
Senior Debt provided by a Senior Lender Group shall have (i) an annual
interest rate or interest rate formula at the time of borrowing of not more
than 600 basis points above the U.S. Treasury note of comparable maturity,
(ii) a term to maturity of not less than seven years nor more than 15 years,
(iii)a principal repayment profile starting not later than six months after
the Completion Date and which is, for any six month period for each Senior
Debt Tranche of an Initial Shipper Group, at least equal to its Proportionate
Share of Non-Cash Items included in tariffs projected to be received by the
JSC in such period as determined in accordance with the Tariff Principles,
(iv) such terms and conditions (insofar as such terms apply to the JSC) as set
forth in the Common Security Trust Agreement, and (v) such additional terms
and conditions to be set forth in the Senior Debt Agreement with respect
thereto as may be agreed by the person that has been nominated for election as
director by the Shareholder whose Subscription Agreement is to be assigned by
the JSC for the benefit of such Senior Lender Group and to whom authority to
negotiate such Senior Debt Agreement is delegated by the Board of Directors in
accordance with the By-Laws and this Agreement, provided that such additional
terms are not in conflict with this Agreement, the Common Security Trust
Agreement and all other Financing Agreements entered into by the JSC, the
Shareholders, the Initial Shippers and their Affiliates, and do not jeopardize
in any material respect future financings of the JSC. If there is a dispute
as to whether the proviso to the preceding sentence has been breached, the
Board of Directors of the JSC shall determine whether any such conflict or
jeopardy exists. In addition, any such additional term, or change in the term
of any Financing Agreement, which materially adversely affects the 13.5%
annual return to the Canadian Group set forth in Section 5.4(b) shall require
the consent of the Canadian Group.
<PAGE>
(ii) All fees incurred on or prior to the date of the first
drawdown in connection with obtaining finance from a Senior Lender Group
(including, without limitation, commitment fees, upfront fees, advisory fees,
underwriting fees, administration fees, insurance premiums, exposure fees,
management fees, and facilities fees) shall be for the account of the JSC.
Such fees may be charged by an Affiliate of an Initial Shipper Group
Shareholder and may approximate the similar fees that may be charged in
respect of any other Senior Debt Tranche provided by third parties.
(iii) The JSC agrees, and each Shareholder that is a member of an
Initial Shipper Group agrees to cause each of the other members of its Initial
Shipper Group to agree, to use its best efforts to assist the JSC in obtaining
Senior Debt as nearly as possible in accordance with the uses of funds
identified in the "Use of Funds" table in the then current Financing Plan so
that borrowings of Senior Debt by the JSC will be made on a pro rata basis
from each Senior Lender Group. In the event that such pro rata borrowings are
not possible due to capital market conditions or other factors and the JSC
raises Senior Debt under the Senior Debt Tranche secured by the Collateral of
a particular Initial Shipper Group prior to the time that such Senior Debt is
required in accordance with such table, then (A) for the period of six months
following the first date on which additional interest expense in respect of
such Senior Debt is accrued by the JSC, the JSC shall bear the cost of the
additional after tax amount of interest expense on that amount of Senior Debt
which is scheduled to be drawn to meet the requirement for funding identified
in the Financing Plan, during that six month period, and the Shareholder which
is a member of such Initial Shipper Group shall pay to the JSC the total
amount of the after tax interest expense (net of interest income earned by the
JSC) above such amount, and (B) for the period after such initial six months
the relevant Shareholder shall pay to the JSC the total amount of after tax
interest expense (net of such interest income) on such Senior Debt.
(iv) If the JSC raises Senior Debt prior to the time that such
Senior Debt is required by the Use of Funds table in the then current
Financing Plan then each of the Shareholders which are not members of the
Initial Shipper Group whose Collateral has supported such Senior Debt may
require the JSC to raise or arrange on behalf of the JSC, Senior Debt
supported by the Collateral of the Initial Shipper Group of which it is a
member in order to preserve the pro rata basis for the raising of Senior Debt.
In this event the terms of this Section 5.2(c) concerning the liability of
the JSC and such Shareholder for any additional interest expense incurred by
the JSC shall apply.
(v) Subject to the Financing Agreements, any drawings of Senior
Debt which is raised prior to the time it is required under the Use of Funds
table in the then current Financing Plan shall be placed by the JSC in United
States Treasury bills or, at the option of the relevant Shareholder, in
short-term (less than 90 days) debt securities, commercial paper or treasury
deposits of its ultimate parent company which are rated A or better by
Standard & Poor's Corporation or the equivalent thereof by another
Internationally Recognized Statistical Rating Agency.
(d) In the event that the JSC, despite the use of its best efforts,
is unable to obtain commitments (formal or informal) for all or any portion of
the Senior Debt Tranche of an Initial Shipper Group, the JSC shall first
advise the Shareholder of such Initial Shipper
<PAGE>
Group and each other Shareholder of the difficulties it is having and if such
difficulties continue, may thereafter (but not prior to the expiration of 30
days from such first advice), deliver to such Shareholder and each other
Shareholder a notice which shall specify the amount of such Senior Debt that
the JSC has been unable to obtain (the "Senior Debt Shortfall") and the date on
which such Senior Debt is required to be provided and disbursed to the JSC in
accordance with the then current Financing Plan. Such notice of Senior Debt
Shortfall must be provided by the JSC at least 45 days prior to such date.
The JSC and such Shareholder shall then meet and in good faith discuss
alternative bases on which such Senior Debt may be obtained, including,
without limitation but subject to Section 5.2(c), changes or additions to the
agreements being assigned for the benefit of the proposed provider of such
Senior Debt.
(e) If such Senior Debt is not so disbursed to the JSC on or prior
to the date specified in the Senior Debt Shortfall notice, except as otherwise
provided in the Political Events Agreement, then (i) or (ii) shall apply:
(i) if (x) the total amount of Senior Debt supported by such Initial
Shipper Group's Collateral that has been disbursed to the JSC as of such date
is less than 85% of the aggregate Senior Debt Tranche to be supported by such
Initial Shipper Group's Collateral in the then current Financing Plan or (y)
the sum of such Senior Debt disbursed to the JSC plus Equity Contributions
made by such Initial Shipper Group as of such date is less than 85% of the
aggregate Senior Debt to be supported by such Initial Shipper Group's
Collateral plus Equity Contributions to be made by such Initial Shipper Group
in such Financing Plan, the JSC shall apply the Transportation Agreement
Step-Up (as defined below) to the Initial Shipper in such Initial Shipper
Group and the applicable percentage shall be 250%.
(ii) if (x) the total amount of Senior Debt supported by such Initial
Shipper Group's Collateral that has been disbursed to the JSC as of such date
is greater than 85% of the aggregate Senior Debt Tranche to be supported by
such Initial Shipper Group's Collateral in the then current Financing Plan and
(y) the sum of such Senior Debt supported by such Initial Shipper Group's
Collateral disbursed to the JSC plus the Equity Contributions made by such
Initial Shipper Group as of such date is greater than 85% of the aggregate
Senior Debt to be supported by such Initial Shipper Group's Collateral plus
Equity Contributions to be made by such Initial Shipper Group in such
Financing Plan, then the JSC shall apply the Transportation Agreement Step-Up
to the Initial Shipper of such Initial Shipper's Group and the applicable
percentage shall be 150%, provided that the 150% tariff increase shall apply
only to such Initial Shipper's pro rata share of all Petroleum in excess of
185,000 barrels per day shipped by such Initial Shipper or on its behalf.
(f) The "Transportation Agreement Step-Up" shall mean the right of
the JSC in the Transportation Agreement with an Initial Shipper
<PAGE>
(i) to increase the tariff applicable to Petroleum shipped by such
Initial Shipper or on its behalf by a specified percentage of the tariff
originally applicable under such Transportation Agreement for the shipment of
Petroleum (or to exercise any alternative right provided in the Transportation
Agreement or which may otherwise be available to it and which will achieve
substantially the same economic result), for a period beginning, in the case
of Senior Debt, on the date specified in the notice of Senior Debt Shortfall,
and in the case of an Equity Contribution shortfall, on the date specified in
the call for the Equity Contribution, and ending one year after the date the
Senior Debt Shortfall actually was remedied (whether by Initial Shipper Bridge
Loan or by obtaining Senior Debt from a third party which may be an existing
provider of Senior Debt), in each case solely supported by Collateral other
than any other Initial Shipper Group's Collateral or any assets of the JSC) or
the Equity Contribution is made, and
(ii) for the remaining term of such Transportation Agreement, to apply
the highest of the tariff originally applicable in such Transportation
Agreement, the Third Party Tariff and the Overutilizer Tariff to that
proportion of capacity of each Segment for which such Initial Shipper was
entitled to pay the tariff originally specified in such Transportation
Agreement represented by the percentage amount that, in the case of a Senior
Debt Shortfall, is equal to the amount of the Senior Debt Shortfall divided by
the aggregate amount of Senior Debt in the Senior Debt Tranche related to the
Initial Shipper under such Transportation Agreement and the maximum amount of
Equity Contributions set forth in the Subscription Agreement of the related
Shareholder, in each case as shown in the then current Financing Plan, and, in
the case of a failure to make an Equity Contribution, is the amount of such
Equity Contribution divided by the same denominator.
The incremental tariffs payable by such Initial Shipper included in the sum of
(i) plus (ii) above which are above those tariffs otherwise payable, shall
accrue, after Colombian Taxes, to the party that provides funding for such
Senior Debt Shortfall or Equity Contribution shortfall, and otherwise shall
accrue to the JSC.
(g) In order to fund a Senior Debt Shortfall with respect to Senior
Debt to be supported by a given Initial Shipper Group's Collateral, the JSC
may request that the relevant Shareholder procure that its related Initial
Shipper provide a commitment to provide an Initial Shipper Bridge Loan on or
prior to the date specified in the notice of Senior Debt Shortfall. If such
commitment is not obtained in 15 days or if the Initial Shipper Bridge Loan is
not provided on the date the Senior Debt Shortfall is due, then the JSC may
request a Shareholder Bridge Loan (as defined below) provided that if the
Initial Shipper Bridge Loan is provided on or prior to the date specified in
the notice of Senior Debt Shortfall, and meets the full amount of such
Shortfall, the JSC shall accept the Initial Shipper Bridge Loan in lieu of any
Shareholder Bridge Loan. In any case, the JSC shall continue to try to raise
the Senior Debt Shortfall.
<PAGE>
(h) "Initial Shipper Bridge Loan" shall mean a bridge loan from an
Initial Shipper or an Affiliate of such Initial Shipper or a financial
institution on its behalf. In such case, the Initial Shipper Bridge Loan
shall accrue interest at an annual rate equivalent to the annual interest rate
implied by the Benchmark Interest Expense, and shall mature not earlier than
the then average life of the outstanding Senior Debt Tranche of such Initial
Shipper. If not replaced after 30 days, such Initial Shipper Bridge Loan
shall convert to a loan at the applicable rate implied by the Benchmark
Interest Expense and such Initial Shipper Bridge Loan shall be part of the
Senior Debt Tranche supported by such Initial Shipper Group's Collateral,
provided that any changes which are necessary to comply with the terms of the
Common Security Trust Agreement are made in accordance with the terms thereof.
(i) "Shareholder Bridge Loan" shall mean a bridge loan provided by
one or more Shareholders or their Affiliates or one or more financial
institutions on their behalf, at their option, which are not in default for
failing to make an Equity Contribution or are not a member of an Initial
Shipper Group with a Senior Debt Shortfall. Such Shareholder Bridge Loan
shall bear interest at the rate specified in paragraph (h) above. If such loan
is not repaid within 90 days with the proceeds of a loan secured by the
Collateral supported by the Initial Shipper Group whose Shareholder is
associated with the Senior Debt Shortfall or, if the Shareholder Bridge Loan
has been provided to meet a failure to make an Equity Contribution by a member
of an Initial Shipper Group, then the JSC shall exercise its rights under the
Transportation Agreement with the Initial Shipper in such Shareholder's
Initial Shipper Group to increase the tariff applicable to Petroleum shipped
by such Initial Shipper or on its behalf by 250% of the tariff otherwise
applicable for shipment of Petroleum in the event subsection 5.2(e)(i) or
5.3(b)(i) is applicable and 150% of such amount if subsection 5.2(e)(ii) or
5.3(b)(ii) is applicable, in each case for a period beginning, in the case of
a Senior Debt Shortfall, on the date specified in the notice of Senior Debt
Shortfall, and, in the case of a call for an Equity Contribution, on the date
specified in the notice of call for such Equity Contribution, and ending two
years following the repayment of such Shareholder Bridge Loan. The
incremental tariffs payable by such Initial Shipper above those otherwise
payable shall accrue, after taxes, to the Shareholder that provides or
procures the provision of the Shareholder Bridge Loan.
(j)If such Senior Debt Shortfall continues for 20 days following the date
of such notice of Senior Debt Shortfall, an emergency meeting of the Board of
Directors shall be convened on a date at least five days prior to the date
specified in the notice of Senior Debt Shortfall to determine a method of
funding such Senior Debt Shortfall. Such meeting need not be held if the
Senior Debt Shortfall is funded.
Section 5.3. Several Commitments of Shareholders to Make Equity
Contributions
(a) Each Shareholder agrees to enter into a Subscription Agreement with the
JSC providing for the making of Equity Contributions in proportion to such
Shareholder's respective Shareholding Interest, upon the call of the JSC and
in conformity with annual Capital Budgets and Funding Resolutions, as such
funding requirements are updated by the Financing Committee in the Financing
Plan and to comply with the terms hereof. The JSC agrees that any call made
by it for the making of Equity Contributions by a Shareholder shall only be
made simultaneously with a call to all Shareholders and that the proceeds from
any Equity Contribution or payment under any Performance Guarantee Agreement
shall be
<PAGE>
used for capital expenditures to be incurred in connection with the
construction of the Oleoducto Central.
(b) If a Shareholder fails to make an Equity Contribution on a
timely basis, and such failure continues for 15 Business Days, then, except as
otherwise provided in the Political Events Agreement, (i), (ii) or (iii) shall
apply:
(i) if such defaulting Shareholder is an Initial Shipper or Affiliate of
an Initial Shipper and if (x) the total amount of Senior Debt supported by
such Initial Shipper Group's Collateral and disbursed to the JSC as of such
date is less than 85% of the aggregate Senior Debt Tranche to be supported by
such Initial Shipper Group's Collateral in the then current Financing Plan or
(y) the sum of Senior Debt supported by such Initial Shipper Group's
Collateral and disbursed to the JSC plus Equity Contributions made by such
Initial Shipper Group as of such date is less than 85% of the aggregate Senior
Debt to be supported by such Initial Shipper Group's Collateral plus Equity
Contributions to be made by such Initial Shipper Group in such Financing Plan,
the JSC shall apply the Transportation Agreement Step-Up to the Initial
Shipper in such Initial Shipper Group and the applicable percentage shall be
250%;
(ii) if such defaulting Shareholder is an Initial Shipper or an
Affiliate of an Initial Shipper and if (x) the total amount of Senior Debt
supported by such Initial Shipper Group's Collateral and disbursed to the JSC
as of such date is greater than 85% of the aggregate Senior Debt Tranche to be
supported by such Initial Shipper Group's Collateral in the then current
Financing Plan and (y) the sum of Senior Debt supported by such Initial
Shipper Group's Collateral and disbursed to the JSC plus Equity Contributions
by such Initial Shipper Group made as of such date is greater than 85% of the
aggregate Senior Debt to be supported by such Initial Shipper Group's
Collateral plus Equity Contributions to be made by such Initial Shipper Group
in such Financing Plan, the JSC shall apply the Transportation Agreement
Step-Up to the Initial Shipper in such Initial Shipper Group and the
applicable percentage shall be 150%, provided that the increased tariff shall
only apply to the Initial Shipper's pro rata share of all Petroleum in excess
of 185,000 barrels per day shipped by such Initial Shipper or on its behalf;
or
(iii) if such defaulting Shareholder is IPL Enterprises or TCPL
International or any successor or assign thereto, the JSC shall exercise its
right to cancel partially or entirely payment of operating, incentive and
other fees payable under the Oleoducto Central Operations Agreement at the
direction of the Initial Shippers for a period of up to five years, and if
such default continues for more than 90 days the JSC shall have the right to
terminate such Oleoducto Central Operations Agreement without compensation to
(and without prejudice to its accrued rights against) the Operator (in each
case except to the extent provided in the Political Events Agreement).
<PAGE>
(c) In order to avoid a failure by a Shareholder to make any Equity
Contribution, if the JSC has any reasonable grounds to believe that such
Shareholder may not be able to make such Equity Contribution, the JSC may, 45
days before an Equity Contribution is due, request a commitment to make a
Shareholder Bridge Loan on the date of the Equity Contribution. If no
Shareholder Bridge Loan Commitment is made or if such Bridge Loan is not made,
or if such Bridge Loans do not cover the shortfall in Equity Contributions,
the JSC may request that other Shareholders, at their option, fund such Equity
Contributions in return for Shares. If more than one non-defaulting
Shareholder chooses, at its option, to participate in such Equity Contribution
then such Shares shall be sold pro rata to each such non-defaulting
Shareholder choosing to participate or otherwise as they may mutually agree.
In such a case, such default shall not be deemed to be cured.
(d) If the JSC continues to believe for any reason that a
Shareholder may not be able to make an Equity Contribution on time, an
emergency meeting of the Board of Directors shall be convened on a date at
least five days prior to the date specified in the notice of call for an
Equity Contribution to determine a method of funding such anticipated
shortfall. Such meeting need not be held if the Equity Contribution shortfall
is funded.
(e) In the event there is a Senior Debt Shortfall or a shortfall in
Equity Contributions for purposes of Section 5.2(e) or 5.3(b), as the case may
be, any Accrued Return accumulated for the benefit of the non-funding
Shareholder or any of its successors or assigns after occurrence of such
Senior Debt Shortfall or shortfall in Equity Contributions, as the case may
be, will accumulate for the benefit of and ultimately be paid to the parties
which have provided funding under Section 5.2(g) or 5.3(c) until the failure
is cured, all in accordance with the terms of the Dividend Trust Agreement;
provided that, in case of suspension of the non-funding Shareholder's Purchase
Obligation and application to it of the OCA Remedies under the Political
Events Agreement (as those terms are defined therein), any Accrued Returns
accrued prior to such suspension will accumulate for the benefit of the
non-funding Shareholder or any of its successors or assigns and any dividends
accumulated thereafter will accumulate for the benefit of and ultimately be
paid to, in the first instance, the other Shareholders which have provided
funding pursuant to the Political Events Agreement and thereafter to any other
party which has provided funding under Section 5.2(g) or 5.3(c).
Section 5.4. Returns to Shareholders (a) Subject to the
requirements of any Financing Agreements, all the cash generated by the JSC
from operating and investing activities shall be applied in the following
order in any year:
(i) to pay Operating and Maintenance Costs and Colombian Taxes incurred
during such year;
(ii) to pay interest incurred and scheduled principal payments on Senior
Debt during such year;
(iii) to pay interest and principal on any loans made pursuant to
Section 5.1(d)(i), Initial Shipper Bridge Loans and Shareholder Bridge Loans
made pursuant to Section 5.2(g) or 5.3(c), if any;
<PAGE>
(iv) to pay interest incurred on, and Tariff guarantee fees with respect
to, Tariff Advances and Transportation Notes;
(v) to repay Tariff Advances and Transportation Notes;
(vi) to pay semi-annual cash dividends or distributions to or for the
account of the Shareholders in accordance with paragraph (b) below, including
the Subordinated Fee, and to pay interest on Subordinated Notes referred to in
Section 5.1(d)(ii) issued in substitution for Shares;
(vii) to distribute annual Equity Amortization Amounts in accordance
with Section 5.5 and to pay principal of Subordinated Notes referred to in
Section 5.1(d)(ii) issued in substitution for equity (but not including any
Equity Amortization); and
(viii) to the extent of any remaining Available Cash, to repay Advance
Tariff Payments, and make other Distributions in accordance with Section 5.6;
(ix) to retire or repurchase any remaining outstanding Shares.
(b) The Parties agree that subject to Section 5.4(a), the
requirements of any Financing Agreements and applicable Colombian law, the JSC
shall (i) prior to the date which is the earlier of the Completion Date and
December 31, 1998 (the "Dividend Commencement Date"), accumulate and
capitalize in each year a 13.5% annual return (net of all Colombian Taxes), on
the aggregate Cash Paid-In Equity and Pre-Completion Accrued Returns (as
defined herein and denominated in dollars) and (ii) subsequent to the Dividend
Commencement Date pay a 13.5% annual return net of all Colombian Taxes on the
Adjusted Paid-In Equity (defined in Section 5.4(c) and denominated in
dollars). Such return shall be calculated monthly and paid semi-annually
following the Dividend Commencement Date. Such payment shall accrue any
Accrued Return accruing after the Dividend Commencement Date. Such return
shall be paid by the JSC to or for the account of the Shareholders in
accordance with their Shareholding Interests in the form of Distributions (but
not including any Equity Amortization), in each case in conformity with Annual
Operating Budgets or as the Board of Directors and the Shareholders may
otherwise determine from time to time.
(c) For purposes of sub-section (b) above," Adjusted Paid-In Equity"
shall mean an amount determined as follows, regardless of the Cash Paid-In
Equity of the JSC:
(i) As of June 1, 1996 the "Target Project Cost" shall be unanimously
determined by the Shareholders. Target Project Cost shall include only direct
costs of the Oleoducto Central that are or may be properly capitalized on the
books of the JSC, including the estimated direct cost to complete the
Oleoducto Central through the expected Completion Date in the form of a Class
I estimate provided by Brown & Root, Inc. or an Affiliate thereof or, if
different, the principal contractor at the time (including all direct historic
and projected costs, e.g., engineering, material and construction),
<PAGE>
(ii) Within 120 days after the end of the month in which the actual
Completion Date occurs, the Shareholders shall determine the actual direct
completion cost of the Oleoducto Central as of such month end on the same
basis as set forth in clause (i) above ("Actual Project Cost").
(iii) Within 30 days after the determination of the Actual Project Cost,
the Shareholders shall compute the "Agreed Project Cost." The Agreed Project
Cost shall be the Target Project Cost increased by any amounts arising from
material and equipment defects, construction (workmanship) deficiencies and
capital costs with respect to any facility arising after the facility has been
commissioned, and increased or decreased, as the case may be, by changes in
scope of work, provided that if the Agreed Project Cost as so determined is
within $50 million of the Actual Project Cost, then the Agreed Project Cost
shall be the Actual Project Cost adjusted in any case for such cost variance
up to $50 million.
(iv) Within the time period specified in clause (iii) above, the
Shareholders shall also determine the percentage which the sum of Cash Paid-In
Equity and Pre-Completion Accrued Returns shall represent of the total
capitalization of the JSC which shall consist of the aggregate of
indebtedness, Cash Paid-In Equity and Pre-Completion Accrued Returns of the
JSC as of the end of the month in which the
Completion Date occurs (the "Equity Percentage"). Should the Parties fail to
agree on the Equity Percentage, the Equity Percentage shall be the actual
percentage on such date as determined by the JSC's independent auditors.
(v) "Adjusted Paid-In Equity" shall be a dollar amount equal to the sum
of (x) Cash Paid-In Equity and Pre-Completion Accrued Returns and (y) the
product of (a) the Equity Percentage and (b) the difference between the Agreed
Project Cost and the Actual Project Cost e.g.,
Adjusted Paid-In Equity = Cash Paid-In Equity + Pre-Completion Accrued Returns
+ (Equity Percentage X (Agreed Project Cost - Actual Project Cost)).
(d) An example of the calculation of the Agreed Project Cost is
attached to this Agreement as Schedule I.
(e) Following the determination of the Adjusted Paid-In Equity,
such annual return to Shareholders shall be calculated and paid on the basis
of Adjusted Paid-In Equity as calculated above or, if applicable, Adjusted
Paid-In Equity decreased to reflect amortization of the Cash Paid-In Equity
and Pre-Completion Retained Returns are amortized in accordance with Section
5.5.
(f) The Tariff Principles shall reflect, and the tariffs payable by
Initial Shippers shall be calculated to provide, the annual return on equity
set forth in paragraph (b) above based on Adjusted Paid-In Equity determined
as set forth in clause (v) of paragraph (c) above, subject to paragraph (e).
(g) " Cash Paid-In Equity" shall mean a dollar amount equal to the
aggregate of all cash payments made in exchange for (i) Shares or other
capital stock of the JSC pursuant
<PAGE>
to the Subscription Agreements and (ii) Subordinated Notes pursuant to
subscription agreements substantially in the form of the Subscription
Agreements.
(h) " Pre-Completion Accrued Returns" shall mean a dollar amount equal
to a 13.5% annual return (net of all Colombian taxes) accumulated, capitalized
and compounded by the JSC in each year prior to the Completion Date. Such
returns shall be calculated on the aggregate of prior balances of Cash Paid-In
Equity and Accrued Returns.
(i) "Accrued Returns" shall mean that amount of the annual return
referred to in paragraph (b) above which has not been paid and is accumulated,
capitalized and compounded.
(j) The right of a Shareholder to receive Distributions from the
JSC shall not constitute Collateral supporting any Senior Debt Tranche. Any
reduction in amounts available for Distributions due to a failure to make a
payment or a material default of a member of an Initial Shipper Group or its
successor or assign under any of the Financing Agreements or the related
Transportation Agreement shall, notwithstanding such reduction, not affect the
entitlement of Shareholders which are not members of a defaulting Initial
Shipper Group to receive, through the operation of the Dividend Trust
Agreement, their respective Shareholding Interest of the amount which, but for
the default, would have been available for Distributions. The Dividend Trust
Agreement shall provide that any Shareholder which is a member of an Initial
Shipper Group which, through the default of any of its members has caused a
reduction in the amount available for Distributions, shall only be entitled to
retain the balance remaining of any Distributions after each of the other
Shareholders has received its respective Shareholding Interest of the amount
which, but for such default, would have been available as Distributions. The
Dividend Trust Agreement will further provide that Distributions receivable by
the Shareholders which are part of the defaulting Initial Shipper Group in
subsequent periods will be redistributed pro rata to Shareholders which are
not part of the defaulting Initial Shipper Group so as to make up any
remaining shortfall in the Distributions which such Shareholders would, but
for such default, have been entitled to receive in the previous periods. The
Dividend Trust Agreement shall give effect to the principles set forth in this
paragraph (j).
Section 5.5. Return of Equity Contributions. (a) The JSC
agrees to use all reasonable measures available to it under Colombian law to
effect the Equity Amortization under arrangements satisfactory to the
Shareholders associated with the Initial Shipper Groups, provided that there
is no obligation on the part of any Initial Shipper to produce Petroleum and
ship it if such Initial Shipper believes it would be uneconomic for it to do
so.
(b) Subject to paragraph (a) and the applicable Colombian law, the
equity capital of the JSC will be repaid pro rata to the JSC's shareholders by
making Distributions as follows:
(i) Subject to clause (ii) below and to the requirements of Colombian
law, no later than the last dividend date in respect of 2003 and no later than
such date in respect of each of the following nine years, the JSC shall make a
Distribution equal to the Annual Equity Amortization Amount; and
<PAGE>
(ii) The obligation to distribute an Annual Equity Amortization Amount
in any year shall be suspended if the Equity Amortization Deferral Test for
that year is satisfied, provided such distributions may not be suspended in
respect of 2012 or any year thereafter, and provided further that such
distributions shall not be suspended in any year in or after which the
Oleoducto Central Operations Agreement is not extended by its terms.
(iii) The "Equity Amortization Deferral Test shall be satisfied as to
any Equity Amortization Period if cumulative BITCF (as defined below) is
positive for a period commencing at the beginning of such Equity Amortization
Period and ending with the third calendar year after such Equity Amortization
Period and during which annual BITCF may be negative for no more than two
calendar years, provided that the second such year of negative annual BITCF is
followed by at least one year in which annual BITCF is positive. The
determination of whether BITCF meets the above standard is satisfied shall be
made as follows:
Such determination for any year shall incorporate both physical and economic
performance factors relating to Cusiana/Cupiagua reservoirs and any other
reservoirs dedicated to the Oleoducto Central. The physical performance of
the reservoirs shall be based on an annual estimate of remaining economically
recoverable reserves dedicated to the Oleoducto Central. This estimate shall
be proposed by the JSC to the Board of Directors utilizing internationally
recognized reservoir techniques. If the Board of Directors fails to agree to
the estimate unanimously, the Board of Directors will engage an
internationally recognized reservoir consulting firm to make a recommendation
on physical performance of the reservoirs to the JSC. The information to be
presented to the Board of Directors shall include all currently available
reservoir information such as geophysical, geological, production, pressures,
fluid properties and historical performance trends. The information shall
also include estimates of proved, probable and possible production forecasts,
risk weighted as appropriate. The Equity Amortization Deferral Test for any
year shall include all fields from which liquid hydrocarbons are reasonably
forecast as determined by the Board of Directors, to be transported via the
Oleoducto Central.
Based on this projection of future field(s) deliverability, an economic
(model) projection shall be developed using United States Securities and
Exchange Commission guidelines and operating expense and oil price scenarios
approved by the Board of Directors. From the foregoing, an estimate of future
annual before income tax cash flow ("BITCF") is to be derived for
Cusiana/Cupiagua and any additional reservoirs. Such annual BITCF shall be
the total revenue to be derived from the field's sale of all liquid
hydrocarbons transported via the Oleoducto Central minus all actual or
forecast expenses required to deliver these liquids to Covenas and related
taxes, including but not limited to the following:
the tariff charged by the JSC,
all related field operating expenses, including but not limited to
crude oil lifting and processing costs, water/gas reinjection costs,
overhead charges, and any other expenses related to the operation of the
field,
<PAGE>
any special levies such as war tax,
any contractual uses of cash such as interest on and principal
repayment of outstanding (field) debt, and
any presumptive/social taxes or other corporate burdens.
(iv) Payments of Annual Amortization Amounts shall be made annually.
(c) The term "Equity Amortization" refers to the process of
repaying equity described in paragraph (b) above.
(d) "Annual Equity Amortization Amount" means 10% of the Cash
Paid-In Equity and Pre-Completion Accrued Returns at the end of the year
preceding the first year in which Equity Amortization occurs, provided that in
the tenth and last year of Equity Amortization, the equivalent of 20,000
shares of the JSC's original capitalization shall be left outstanding.
(e) "Equity Amortization Period" shall mean a period of 10 years
less the number of years as to which Equity Amortization Payments have been
made.
Section 5.6. Other Distributions. (a) As of the last day of
each calendar quarter, and for each succeeding calendar quarter, after all the
payments required by clauses (i) through (viii) of Section 5.4(a) have been
made in respect of such quarter, the JSC shall determine the amount, if any,
of Available Cash which it is unable for legal reasons to pay as a dividend
(the "Cash Trap Amount"). During the subsequent quarter, the JSC shall
determine the interest earned on the Cash Trap Amount and record such interest
in a separate account. Such interest and any interest earned thereon is the
"Cash Trap Interest".
(b) Any Shareholder which is a member of an Initial Shipper Group
may direct the JSC to invest that portion of the Cash Trap Amount equal to
such Shareholder's Proportionate Share in commercial paper, short term notes
(not exceeding 90 days maturity) or treasury deposits of its ultimate parent
company so long as such securities are rated A or better by Standard & Poor's
Corporation or the equivalent thereof by another Internationally Recognized
Statistical Rating Agency.
(c) After the repayment in full by the JSC of Senior Debt, Tariff
Advances, Transportation Notes and Advance Tariff Payments, and upon the
determination by the Board of Directors that the JSC has Available Cash, but
is unable for legal reasons to pay dividends, the JSC may, based on the
financial statements of the JSC at the end of the prior semi-annual period, to
the extent that it has Available Cash after making the payments required by
clauses (i) through (viii) of Section 5.4(a), pay out of such Available Cash
to each Shareholder which is a member of an Initial Shipper Group, (i) up to
such Shareholder's Proportionate Share of the sum in dollars of the Cash
Paid-In Equity and the Pre-Completion Accrued Returns less any Annual Equity
Amortization Amount previously paid plus the legal reserve required by the
Colombian Commercial Code (Reserva Legal) expressed in pesos, (ii) such
Shareholder's Proportionate Share of an amount equal to the Cash Trap Interest
taking into account the investment instructions given by such
<PAGE>
Shareholder in accordance with subsection (b) above, and (iii) to the extent
of the balance of such excess Available Cash, the amount of such excess
multiplied by the fraction obtained by dividing the sum of (A) the cumulative
barrels of Petroleum shipped through the Oleoducto Central by the Initial
Shipper in the Initial Shipper Group of such Shareholder since January 1, 1996
and (B) the such Shareholder's Proportionate Share of third party barrels
shipped during the same period, by total cumulative barrels shipped through
the Oleoducto Central during such period. Such payment shall be by means of
any Distributions legally permissible under Colombian law, including the
capitalization of inflation adjustment reserves followed by Distributions to
Shareholders.
Section 5.7. Right of Set Off. The Parties agree that the JSC
shall have the right, in its sole discretion, to set off against sums due by
it under any loan, note or credit for Advance Tariff Payments, Tariff Advances
or Transportation Notes held by a Shareholder the unpaid amount of any Equity
Contribution with respect to which such Shareholder is in default.
Section 5.8. Senior Debt and Equity Contribution Shortfalls. In
recognition of the serious consequences of any Senior Debt Shortfalls or
failures by a Shareholder to make Equity Contributions to the ability of the
JSC to construct and develop the Oleoducto Central and the difficulty of
ascertaining the damages that would result from such consequences, the
Shareholders recognize and acknowledge that the rights of the JSC under
Sections 5.2(e) and 5.3(b) are reasonable. Furthermore, each Shareholder that
is a member of an Initial Shipper Group agrees to cause its associated Initial
Shipper to comply with its obligations under its Transportation Agreement,
including, without limitation, the obligations referred to in Section 5.2(e)
and Section 5.3(b).
ARTICLE SIX
CAPITAL INVESTMENT AND SOLE RISK PROPOSALS
Section 6.1. Capital Investment Proposals. (a) Any
Shareholder or Shareholders may require the JSC to submit, at the expense of
the proposing Shareholders, a proposal (a Capital Investment Proposal) to the
Board of Directors to add facilities to or modify any existing facilities at
any Segment of the Oleoducto Central for the purpose of expanding capacity or
otherwise improving service. A Capital Investment Proposal shall be submitted
to the Board of Directors only if the JSC, acting through the Operator,
certifies that such Capital Investment Proposal complies with all safety,
environmental and engineering standards of the JSC then in effect. The Capital
Investment Proposal shall be submitted together with all relevant details of
the proposed additional facilities or modifications to or in the existing
facilities, the estimated cost thereof, the schedule for their construction
and entry into service and an estimate of the associated operational and
maintenance costs expected to be incurred during the lifetime of such
facilities.
<PAGE>
(b) The Board of Directors shall consider the Capital Investment
Proposal and may cause the JSC to adopt such Capital Investment Proposal by a
unanimous vote of the Board of Directors in accordance with the By-Laws as an
amendment to the then current Capital Budget and by a vote of four of the six
members of the Board of Directors in accordance with the By-Laws as an
amendment to the then current Annual Operating Budget. The JSC shall notify
the Shareholder of the Board of Directors' decision within 60 days of the date
on which the Capital Investment Proposal was submitted.
Section 6.2. Sole Risk Proposals. (a) If the Board of
Directors does not approve a Capital Investment Proposal submitted for its
consideration by a Shareholder pursuant to Section 6.1, such Shareholder (the
"Sole Risk Party") may require the JSC to resubmit such Capital Investment
Proposal, as it may be amended by the Shareholder, as a sole risk proposal (a
"Sole Risk Proposal"). The Sole Risk Proposal shall be submitted together with
all relevant details of the proposed additional facilities or modifications to
or in the existing facilities, the estimated cost thereof, the schedule for
their construction and entry into service and an estimate of the associated
operational and maintenance costs expected to be incurred during the lifetime
of the proposed facilities or modifications to existing facilities (the "Sole
Risk Facilities"). A Sole Risk Proposal shall be submitted to the Board of
Directors only if the JSC, acting through the Operator, certifies that such
Sole Risk Proposal complies with all safety, environmental and engineering
standards of the JSC then in effect. The Board of Directors shall consider
the Sole Risk Proposal and may, subject to its compliance with the criteria
established in Sections 6.4 through 6.8, approve the implementation of the
Sole Risk Proposal by a vote of four of the six members of the Board of
Directors in accordance with the By-Laws. The members of the Board of
Directors shall (and, if the matter is subsequently referred to a General
Meeting of Shareholders, the Shareholders shall) vote to approve the
implementation of the Sole Risk Proposal (subject to compliance with the
criteria referred to above) unless such implementation would prejudice the
rights of any Shareholder or its Affiliate under the Project Agreements. The
JSC shall notify the Sole Risk Party in
writing of the Board of Directors' decision within 60 days of the date on
which the Sole Risk Proposal was submitted.
(b) If the Board of Directors does not approve a Sole Risk
Proposal, the JSC shall state in writing in reasonable detail the reasons why
the JSC did not approve such Sole Risk Proposal.
(c) If the Board of Directors does not approve a Sole Risk
Proposal, the Sole Risk Party may require the JSC to submit an amended Sole
Risk Proposal provided that such Sole Risk Party follows the procedures
applicable to Sole Risk Proposals set forth in paragraph (a) above.
Section 6.3. Participation of Other Shareholders. If a Sole
Risk Proposal is approved in accordance with Section 6.2, then the Sole Risk
Party shall, if it wishes to implement the Sole Risk Proposal, issue a written
notice to the other Shareholders and the JSC of its intention to proceed.
Such notice shall contain the Sole Risk Proposal together with all the
relevant details referred to in Section 6.2. Any Shareholder may within 45
days of its receipt of such notice give written notice to the Sole Risk Party
and the JSC of its decision whether or not to participate in the Sole Risk
Proposal and if it decides to so
<PAGE>
participate it shall have the right to do so in such proportion as it and the
Sole Risk Party may agree.
Section 6.4. Implementation and Indemnity. (a) The Operator
shall carry out the construction operations in connection with any Sole Risk
Proposal which has been accepted unless the Board of Directors unanimously
agrees to permit the Sole Risk Party to carry out such construction
operations.
(b) The Shareholder or Shareholders participating in the Sole Risk
Proposal with the Sole Risk Party (together, the Sole Risk Parties), pro rata
to their interests in the Sole Risk Facilities, shall jointly and severally
indemnify the JSC, the Operator and the Initial Shippers that are not
Affiliates of Sole Risk Parties and hold them harmless against all losses,
claims, damages and liabilities in respect thereof arising prior to the end of
commissioning of the Sole Risk Facilities (but not consequential losses, other
than loss of or delay in receipt of revenue due to interruption in the
operation of the Oleoducto Central or any part thereof) after the JSC, the
Sole Risk Party and the Initial Shippers that are not Affiliates of the Sole
Risk Parties have made all reasonable efforts to avoid or mitigate such losses
or delays during the implementation of a Sole Risk Proposal.
(c) The JSC, in consultation with the Sole Risk Parties, shall
arrange for insurance coverage during the period of construction and entry
into service for the Sole Risk Facilities on terms reasonably satisfactory to
the Board of Directors.
(d) All costs and expenses attributed by the JSC and the Operator
as having been incurred by it in the implementation of a Sole Risk Proposal
shall be agreed with and for the account of the Sole Risk Parties.
Section 6.5. Ownership of Sole Risk Facilities; Financing. (a)
All materials and facilities used or constructed for the implementation of a
Sole Risk Proposal shall be the property of the Sole Risk Parties. The Sole
Risk Parties shall arrange the financing necessary for the implementation of
the Sole Risk Proposal and shall be liable for all payments or repayments due
in respect thereof.
(b) The JSC will make available to the Sole Risk Parties (or their
Affiliates) the Sole Risk Facilities and/or the additional throughput capacity
arising therefrom. The Sole Risk Parties (or their Affiliates) shall ensure
that the Throughput Capacity in the affected Segment or part thereof (other
than that created by other Sole Risk Facilities) and all relevant unutilized
facilities shall be used before any Sole Risk Facilities or throughput
capacity created by the Sole Risk Facilities are used.
Section 6.6. Data and Information. All data and information
obtained or arising in respect of a Sole Risk Proposal or amended Sole Risk
proposal shall be made available to the JSC, provided that the JSC shall not
be the owner thereof.
Section 6.7. Tariffs. (a) The tariffs charged by the JSC on
each barrel using, or deemed to use, the Sole Risk Facilities shall be
calculated so as to be sufficient to cover:
<PAGE>
(i) all fixed Operating and Maintenance Costs other than those included
in (ii) below attributed by the JSC to the Sole Risk Capacity;
(ii) the proportion of the total overhead and fixed Operating and
Maintenance Costs of the JSC other than those in (i) above, Operator
incentives and applicable Colombian Taxes (other than taxes attributable to
the profits earned by the JSC in order to pay Distributions and the
Subordinated Fee) equal to the amount calculated by dividing the total number
of barrels using the Sole Risk Facilities by the aggregate of all barrels
using (or deemed to use) the Oleoducto Central and the Sole Risk Facilities
(the "Sole Risk Throughput Basis"); and
(iii) the variable Operating and Maintenance Costs other than those
included in (ii) above which the JSC and the Sole Risk Parties agree, or,
failing agreement, the JSC determines, to charge either (A) on the Sole Risk
Throughput Basis, or (B) on the basis of the cost increment to the JSC
associated with the Sole Risk Facilities and the additional throughput
capacity created by them.
The tariff shall include a fixed component based on barrels nominated for
shipment arising from the items referred to in clause (i) above and that part
of clause (ii) above that may be agreed upon by the JSC and the Sole Risk
Parties which shall be payable by the Sole Risk Parties regardless of volumes
of Petroleum actually shipped.
(b) The JSC shall be entitled to review (on one occasion only) the
basis of charging tariffs under clause (iii) of paragraph (a) above five years
after the coming into service of the Sole Risk Facilities and may either
confirm such basis or change it to the other basis referred to therein.
Section 6.8. Decommissioning; Indemnity. (a) The Sole Risk Parties
may on reasonable notice in writing require the JSC to decommission and/or
remove any Sole Risk Facilities owned by the Sole Risk Parties. The JSC shall
consent to the request for the decommissioning and/or removal of the Sole Risk
Facilities (or part thereof) provided that the JSC, acting through the
Operator, certifies that such decommissioning and/or removal will not
prejudice the safety or integrity of the Oleoducto Central.
(b) Any cost incurred in such decommissioning and removal shall
be for the account of and be borne by the Sole Risk Parties, and the Sole Risk
Parties, pro rata to their interest in the Sole Risk Facilities, shall jointly
and severally indemnify the JSC, the Operator and the Initial Shippers which
are not Affiliates of the Sole Risk Parties on demand and hold them harmless
against all losses, claims, damages and liabilities in respect thereof arising
during the period of decommissioning and/or removal (but not consequential
losses, other than loss of or delay in receipt of revenue due to interruption
in the operations of the Oleoducto Central or any part thereof) after the JSC,
the Sole Risk Parties and the Initial Shippers that are not Affiliates of the
Sole Risk Parties have made all reasonable efforts to avoid or mitigate such
losses or delays during the decommissioning and/or removal of the Sole Risk
Facilities.
<PAGE>
ARTICLE SEVEN
TARIFF PRINCIPLES
Section 7.1. Tariff Principles. The Parties hereby adopt the
Tariff Principles for purposes of establishing the tariffs applicable to the
transportation of Petroleum through the Oleoducto Central by Initial Shippers,
Overutilizers and Third Parties. The Parties agree that the tariffs for
transportation of Petroleum on the Oleoducto Central shall conform to the
Tariff Principles, as they may be amended from time to time, recognizing that
tariffs applicable to Third Parties must be approved by the MME. The Tariff
Principles may only be amended with the approval of each of the Parties.
Section 7.2. Transportation Agreements. The JSC agrees to,
and each Shareholder that is a member of an Initial Shipper Group agrees to
cause its related Initial Shipper to, enter into Transportation Agreements
that will, among other matters, give effect to the Tariff Principles.
Section 7.3. Advance Tariff Agreements and Transportation
Notes Agreements. The JSC agrees to, and each Shareholder that is a member of
an Initial Shipper Group agrees to cause its related Initial Shipper to, or to
cause an Affiliate or financial institution acceptable to each other
Shareholder to, enter into Advance Tariff Agreements (to the extent the
provisions thereof are not contemplated in Transportation Agreements or
Transportation Notes Agreements) and Transportation Notes Agreements that,
among other matters, give effect to the Tariff Principles, in each case with
such performance guarantees thereof as may be required by the JSC and each
Shareholder.
Section 7.4. Third Party Transportation Agreements. The JSC
agrees to enter into Third Party Transportation Agreements that give effect to
the Tariff Principles.
ARTICLE EIGHT
FINANCIAL AND ACCOUNTING MATTERS
Section 8.1. Books and Records; Fiscal Year. The JSC shall,
to the extent permitted by law, keep its accounts and financial and cost
records in such currency, if any, as may be required by the provisions of this
Agreement and in dollars. The JSC shall provide each Shareholder with a copy
of any tax return reasonably in advance of the filing thereof. The JSC shall
provide each Shareholder with copies of its audited financial statements
within three months following the end of its fiscal year ended December 31 and
the six month period ended June 30.
Section 8.2. Right of Inspection of Books. The JSC shall keep
full, complete and accurate books of account, records and information with
respect to its affairs and the same shall be maintained at the principal
office of the JSC. Entries shall be made in
<PAGE>
such books of account and records of all such matters, transactions and things
as are usually written and entered in books of account and records kept by
persons engaged in businesses similar to the business of the JSC or required
by applicable law. Each Shareholder shall have the right, acting reasonably
and in coordination with the JSC's auditors and accounting personnel and, to
the extent practicable, other Shareholders, to audit, examine, and make copies
of or extracts from the books of account and records of the JSC at all
reasonable times during usual business hours. Such right may be exercised
through any agent or employee of such Shareholder designated in writing by it
or by an independent certified accountant designated in writing by such
Shareholder. Each Shareholder shall bear all expenses incurred in any
examination made for such Shareholder's account.
Section 8.3. Accounting Principles. Unless otherwise agreed
by the Shareholders, the accounts and records of the JSC shall be maintained
in accordance with generally accepted accounting principles in Colombia (and,
to the extent not inconsistent therewith, in accordance with generally
accepted accounting principles in the United States), shall be on an accrual
basis with working capital separately identified and shall otherwise be
adequate to provide the information necessary for the filing of tax returns by
the JSC and each Shareholder.
Section 8.4. Auditors. The auditors of the JSC shall be an
internationally recognized auditing firm nominated by the Board of Directors
and approved by the Shareholders from time to time in accordance with the
By-Laws and applicable law. Initially such firm shall be Ernst & Young for an
interim period and thereafter shall be such a firm appointed by the
Shareholders in accordance with a competitive bidding process to be agreed
upon among the Shareholders. All audit reports and reports to management on
internal controls and procedures prepared by such auditing firm shall be made
available to the Board of Directors and each Shareholder.
Section 8.5. Accounting and Contract Award Procedures The
Parties agree that within 90 days of the date hereof the President of the JSC
shall be responsible for presenting to the Board of Directors for its approval
a set of accounting and contract award procedures and delegation of
authorities for the construction and operation activities of the JSC in the
form previously approved by the Initial Shippers and Canadian Group. Such
procedures shall be substantially consistent with the procedures set forth in
Annex G of the RMOU. Prior to the date the Board of Directors adopts the
procedures, the President shall be responsible for ensuring that accounting
and contract award procedures followed by the JSC are substantially consistent
with the procedures contained in Annex G of the RMOU and consistent with
generally accepted accounting principles.
ARTICLE NINE
PRE-COMPLETION DATE RIGHT TO PURCHASE
Section 9.1. Reorganization Party. Prior to the Completion
Date, unless the Parties otherwise agree, a Shareholder (and any related
guarantor under a Performance Guarantee Agreement) shall be a Reorganization
Party in the event that any of the following events occurs:
<PAGE>
(a) an order is made by a court of competent jurisdiction, or a
resolution is passed, for the dissolution or judicial administration of the
Shareholder or any related guarantor under a Performance Guarantee Agreement;
or
(b) a manager, receiver, administrator, trustee or other similar
officer is appointed in respect of any assets which include either (i) the
Shares held by the Shareholder or (ii) shares of the Shareholder or of any
related guarantor under its Performance Guarantee Agreement; or
(c)such Shareholder or any related guarantor of such Shareholder's
obligations under its Performance Guarantee Agreement convenes a meeting of
its creditors generally and makes or proposes any arrangement or composition
with, or any assignment for the benefit of, its creditors generally.
Section 9.2. Right of Unrelated Shareholder to Purchase (a)
If a Reorganization Party does not cease to be a Reorganization Party within
180 days after becoming a Reorganization Party, the other Shareholders shall,
unless Ecopetrol is the Reorganization Party, subject to applicable law, have
the right, but not the obligation, to purchase or procure the purchase of all,
but not less than all, of the Shares held by the Reorganization Party or its
related Shareholder. If Ecopetrol is the Reorganization Party the other
Parties shall only have the right, but not the obligation, to purchase all,
but not less than all, of Ecopetrol's Shares if prior thereto Ecopetrol has
complied with all laws applicable to it with respect to the sale by it of such
Shares.
(b) Such purchase right shall be exercised by one or more of
the other Shareholders by delivering a notice to the Reorganization
Shareholder at any time within a period of 60 days after the expiry of the
180-day period referred to in paragraph (a) above. The Shareholder or
Shareholders exercising such right shall purchase such Shares pro rata based
on the proportion that their respective Shareholding Interests bear to the
Shareholding Interest of the Reorganization Party unless the Reorganization
Party is otherwise advised by all of such other Shareholders. The price
payable by such Shareholder or Shareholders to the Reorganization Party (or
its related Shareholder) shall be the Fair Market Value of the Reorganization
Party's (or its related Shareholder's) Shares. The sale of the Reorganization
Party's Shares shall be completed within 14 days of the date on which the Fair
Market Value is determined or, if later, when governmental and other required
third party approvals or consents are obtained.
Section 9.3. Indemnification by Reorganization Party. The
Reorganization Party shall indemnify and hold harmless the other
non-defaulting Parties against any loss, liability, damage or claim (or action
in respect thereof) (including, but not limited to, legal fees and expenses)
suffered or incurred:
(a) as a result of the occurrence of the events listed in
Section 9.1; or
(b) in connection with the enforcement, preservation or
protection of any rights against the Reorganization Party under this
Agreement;
<PAGE>
provided, however, that in no event shall the Reorganization Party be
obligated to indemnify the other Parties for loss of anticipated profits or
other consequential damages.
Section 9.4. Inapplicability After Completion Date. This
Article Nine shall terminate and have no effect after the Completion Date.
ARTICLE TEN
PERMITTED TRANSFERS
Section 10.1. Permitted Transfers. Except to the extent
otherwise provided in this Article Ten, no Shareholder shall transfer any
Shares to any other Person without the unanimous written approval of each
other Shareholder. For purposes of this Article Ten, a transfer of all or any
Voting Shares of a Shareholder or of any Parent Holding Company of a
Shareholder shall be subject to the same restrictions on transfer as apply to
the transfer of Shares hereunder. "Parent Holding Company" means, with respect
to any Shareholder, any Person that, directly or indirectly through any
Subsidiary, owns, as its sole material asset, Voting Shares that enable it, in
the absence of contingencies, to elect a majority of the board of directors
(or persons performing similar functions) of such Shareholder.
Section 10.2. Transfer in Connection with Assignment of
Undivided Interest in Association Contracts . Notwithstanding Section 10.1,
subsequent to the date on which the aggregate amount of Senior Debt expected
to be provided by the Senior Lender Group for whose benefit the Collateral
related to such Shareholder's Initial Shipper Group has been assigned by the
JSC and Equity Contributions have been funded, any Shareholder (other than
Ecopetrol) which is a member of an Initial Shipper Group shall have the right
to transfer all or any portion of its Shares if such transfer is made in
connection with the simultaneous assignment of all or a Corresponding Portion
of the undivided interest held by such Shareholder or its affiliated Initial
Shipper in the Association Contracts to a party that agrees in writing to be
bound by all of the provisions of this Agreement and of the Project Agreements
to which the transferor Shareholder or its Affiliate is a party (in which case
such transferee shall be considered to be a "Shareholder" under this Agreement).
For purposes of this Section 10.2," Corresponding Portion" of the undivided
interest in the Association Contracts means the portion, expressed as a
percentage, equal to the number of Shares being transferred divided by the
aggregate number of Shares held by such Shareholder immediately prior to such
transfer. Nothing contained herein shall constitute a derogation or waiver of
any rights of the parties to the JOA or the Association Contracts.
Section 10.3. Transfers to Persons in Petroleum and Natural
Gas Industry.
(a) Notwithstanding Section 10.1, and subject to paragraph (b) below, any
Shareholder (subject, in the case of transfers by IPL Enterprises or TCPL
International, to Section 10.8 and receipt of the written consent of
Ecopetrol), shall have the right to transfer Shares if the transfer is made:
<PAGE>
(i) prior to the date on which the aggregate amount of Senior Debt to be
provided by the Senior Lender Group for whose benefit the Collateral related
to such Shareholder's Initial Shipper Group has been assigned by the JSC, and
Equity Contributions have been funded, to a Person (other than an individual)
(A) whose primary purpose or business is the exploration for, and the
development and operation of, Petroleum or natural gas fields and the lifting
and sale of Petroleum or natural gas or the development and operation of
pipelines for the transportation of Petroleum or natural gas,
(B) that agrees in writing to be bound by all of the provisions of this
Agreement and the Subscription Agreement with respect to such Shares and
(C) who has, or causes a Performance Guarantee Agreement to be entered
into by a Person that has, a minimum net tangible book value of $500 million
(or the equivalent thereof) and a long-term senior unsecured debt rating
assigned to it of not less than (x) "A" by Standard & Poor's Corporation or
its equivalent by another Internationally Recognized Statistical Rating Agency
or (y) "BBB" by Standard & Poor's Corporation or its equivalent by another
Internationally Recognized Statistical Rating Agency if 85% or more of the
aggregate amount of Senior Debt expected to be provided by the Senior Lender
Group for whose benefit the Collateral related to such Shareholder's Initial
Shipper Group has been assigned by the JSC and of Equity Contributions
(including at least 85% of the amount of the Senior Debt) has been funded; or
(ii) subsequent to the date on which the aggregate amount of Senior Debt
expected to be provided by the Senior Lender Group for whose benefit the
Collateral related to such Shareholder's Initial Shipper Group has been
assigned by the JSC and Equity Contributions have been funded, to a Person
(other than an individual)
(A) that agrees in writing to be bound by all of the provisions of this
Agreement and the Subscription Agreement with respect to such Shares, and
(B) has, or causes a Performance Guarantee Agreement to be entered into
by a Person that has, a long-term senior unsecured debt rating assigned to it
not lower than "BBB-" by Standard & Poor's Corporation or its equivalent by
another Internationally Recognized Statistical Rating Agency.
(b) A Shareholder making a transfer under Section 10.3 shall sell
Shares representing a Shareholding Interest of not less than 5% in any single
transaction to any single transferee, provided that (i) if such Shareholder
then has a Shareholding Interest of less than 5% immediately prior to such
sale, such Shareholder shall be permitted hereunder to sell all, and not less
than all, of its Shares and (ii) the transferring Shareholder shall receive
the written approval of a majority of the Shareholders (other than such
Shareholder), which approval shall be granted unless in the reasonable view of
such Shareholders the criteria set forth in Section 10.3(a)(i) and (ii) have
not been met.
<PAGE>
(c) A Shareholder proposing to transfer Shares pursuant to Section
10.3(a)(i) or (ii) shall deliver to each other Shareholder written notice of
the proposed transfer, including the identity of the proposed transferee and
the date upon which such transfer is proposed to be made, which shall be not
earlier than 30 days from the date of such notice. Upon receipt of such
notice the Shareholders shall consult in good faith in order to approve or
disapprove such transfer pursuant to paragraph (b).
Section 10.4. Transfers to Affiliates. Notwithstanding
Section 10.1, any Shareholder shall have the right to transfer Shares if the
proposed transferee is an Affiliate of such Shareholder, ovided that any
guarantee of such Shareholder's obligations under its Subscription Agreement
shall remain in effect and, only if all of such Shares are transferred to such
transferee, such transferee agrees in writing to be bound by all provisions of
this Agreement and to enter into a Subscription Agreement (in which case such
transferee shall be considered to be the "Shareholder" under this Agreement). If
the transferring Shareholder's obligations hereunder and under its
Subscription Agreement are guaranteed, such guarantee shall be extended to
cover such transferee's obligations under its Subscription Agreement,
otherwise the transferring Shareholder shall guarantee unconditionally the
performance of such transferee's obligations under this Agreement, the
Subscription Agreement, the Voting Trust Agreement and the Dividend Trust
Agreement.
Section 10.5. Transfers to Other Shareholders. Notwithstanding
Section 10.1, any Shareholder (subject, in the case of transfers by IPL
Enterprises or TCPL International, to Section 10.8 and receipt of the written
consent of Ecopetrol) may transfer Shares to one or more other Shareholders
subject to applicable law and subject to the following conditions:
(a) If a Shareholder proposes to transfer, assign or otherwise
dispose of any portion of its Shares to another Shareholder or an Affiliate
thereof which is not an Affiliate of such Shareholder, and has received a bona
fide offer that it is willing to accept, then the transferring Shareholder
shall cause the Shareholder transferee or its Affiliate to agree (and each
Shareholder hereby agrees) to give notice to the other Shareholders of the
proposed transfer and of the terms and conditions of such offer, including the
consideration offered and the date upon which the sale is proposed to be made,
which shall not be earlier than 75 days nor later than 120 days from the date
of such notice, and offering such Shares to such other Shareholders on the
terms and conditions of the offer of such proposed Shareholder transferee.
Thereafter, the other Shareholders, or any of them, including the Shareholder
transferee (together, the" Purchasing Shareholders"), shall have the right, by
notice to the transferring Shareholder and the Shareholder transferee within
90 days after receipt of such notice of the proposed transfer, to elect to
acquire all (but not a portion) of such Shares for the consideration offered
(or, if the Purchasing Shareholders so elect, the cash equivalent thereof) and
in accordance with the other terms and conditions of such offer. Shares so
offered shall be purchased by the Purchasing Shareholders pro rata in the
proportion that their respective Shareholding Interests bear to the total
number of Shares being offered unless the transferring Shareholder is
otherwise advised by all of the Purchasing Shareholders prior to the effective
date of the transfer of the Shares, in which
<PAGE>
case the Shares shall be acquired by the Purchasing Shareholders as so advised
by them, and shall be transferred and delivered by the transferring
Shareholder directly to such Purchasing Shareholders pursuant to the terms and
conditions of the original offer. If no Shareholder other than the
Shareholder transferee elects to acquire the Shares, the transferring
Shareholder and the Shareholder transferee may proceed to complete the
transfer between them in accordance with the original offer not later than 120
days after the notice of the proposed sale given to the other Shareholders.
If the transfer is not completed by that date, the provisions of this Section
10.5 shall again apply and no sale or transfer may be made in reliance upon
this Section 10.5 without again complying with its provisions.
Notwithstanding the foregoing, no Shareholder may acquire any Shares under
this Section 10.5 unless it has caused its Subscription Agreement and any
Performance Guarantee Agreement of its obligations thereunder to be amended to
increase the dollar amount limitations thereof by an amount in the same
proportion to the previous amount as the aggregate number of Shares purchased
pursuant to this Section 10.5 bears to the aggregate number of Shares
previously held by such Shareholder. For purposes of this Section 10.5,
unless the Shareholders otherwise agree, the price payable by any Shareholder
shall be payable in dollars.
(b) If any governmental approval or authorization is required to
permit the purchase of Shares by any Purchasing Shareholder under paragraph
(a), the 120-day period shall be extended for such period as is necessary to
secure such approval, provided that the transferring and Purchasing
Shareholders diligently pursue such approvals.
Section 10.6. Public Offering of Shares. (a) Prior to the
funding of the aggregate amount of Senior Debt and Equity Contributions, no
Shareholder shall offer any of its Shares by means of a public offering or
otherwise obligate the JSC to (nor shall the JSC take any action that would
cause it) to become a public "reporting issuer" within the meaning of any
securities law without the prior approval of Shareholders holding at least
90.41% of the outstanding Shares, which approval may, in the sole discretion
of such Shareholders, be conditioned upon, among other matters, amendments to
this Agreement and the By-Laws reasonably satisfactory to each of such
Shareholders.
(b) Notwithstanding clause (a) above, if requested by the
Government of Colombia to allow the public offering of Shares held by
Ecopetrol, each Shareholder agrees to grant its approval under paragraph (a)
of this Section 10.6 and to use its reasonable efforts to cause the JSC to
take, and the JSC agrees to take, all reasonable action necessary to effect
the public offering of such Shares, provided that (i) Ecopetrol shall
cooperate with the JSC in order to make amendments to this Agreement and the
By-Laws reasonably satisfactory to each of the Shareholders and (ii)
notwithstanding anything to the contrary herein, Ecopetrol shall continue to
have all the duties, obligations and liabilities of a Shareholder hereunder
and under its Subscription Agreement in respect of such Shares and that for
purposes of calculating its Proportionate Share or its Shareholding Interest
for the determination of its duties, obligations and liabilities hereunder and
under its Subscription Agreement and Advance Tariff Agreement, such Shares
shall be deemed to be held by Ecopetrol.
<PAGE>
Section 10.7. Transfers by Parent Holding Companies. (a) If
any Parent Holding Company of a Shareholder shall attempt to circumvent the
restrictions on transfer set forth in this Article Ten through any transfer of
Shares held by such Shareholder or otherwise, each other Shareholder shall
have the right, at its option, to purchase the Shares of each such
Shareholder, pro rata to its Shareholding Interest, for a cash purchase price
equal to the Fair Market Value of such Shares, payable in dollars within 30
days of written notice of such election.
(b) Each Shareholder shall give written notice to the Board of
Directors of any transaction that involves a change of control of any parent
company of the Shareholder, including the ultimate parent company of the
Shareholder, substantially contemporaneously with any public announcement of
any such transaction.
Section 10.8. Transfer of Shares by IPL Enterprises and TCPL
International to Ecopetrol. The Parties acknowledge that IPL Enterprises
and TCPL International have agreed to sell their shares to Ecopetrol in
accordance with the terms of, and subject to the conditions contained in, the
Share Transfer Agreement. Section 10.1 shall not apply to any transfers
referred to in this Section.
Section 10.9. Transfer of Shares by TCPL International to TCPL
Bermuda.
Notwithstanding Section 10.1, TCPL International shall have the right to
transfer all, but not less than all, of its Shares to TCPL Bermuda, provided
that TCPL Bermuda signs a counterpart of this Agreement, a counterpart of TCPL
International's Subscription Agreement and a counterpart of the Political
Events Agreement whereupon TCPL Bermuda shall assume all rights and
obligations of TCPL International as a Shareholder hereunder and under such
Subscription Agreement and Political Events Agreement. Upon execution and
delivery of such counterpart by TCPL Bermuda,
(a) TCPL International shall be released of all obligations hereunder
other than its obligations under Section 11.1 and Section 11.2 and shall be
released from all obligations under its Subscription Agreement in accordance
with the terms thereof; and
(b) TCPL Bermuda shall thereafter be considered a Shareholder and a
Party for all purposes hereunder.
Section 10.10. Political Events Agreement. Notwithstanding
Section 10.1, transfers of Shares may be made between Shareholders in
accordance with the terms of the Political Events Agreement.
Section 10.11. Transfer by Withdrawing Shareholders.
Notwithstanding Section 10.1, transfers of Shares may be made between
Shareholders in accordance with Section 12.3.
<PAGE>
Section 10.12. Novation. Subject to Section 10.4, if a transfer is
effected by a Shareholder of all or a portion of its Shares in conformity with
the preceding provisions of this Article, the transferring Shareholder shall
be relieved of all or such portion of its obligations under this Agreement and
its Subscription Agreement transferred to and assumed by the transferee.
Section 10.13. Transfers Subject to Voting Trust Agreement and
Dividend Trust Agreement. Except as otherwise provided in the Voting Trust
Agreement and the Dividend Trust Agreement, any transferee of Shares (and
unless otherwise agreed by the Parties, other than pursuant to Section 10.6)
shall hold such Shares subject to the provisions contained in the Voting Trust
Agreement and the Dividend Trust Agreement, in each case as if it were a
member of the Initial Shipper Group from which it acquired such Shares,
respectively, and each Shareholder shall, as a condition to any transfer of
its Shares, require that such transferee agree in writing for the benefit of
the other Shareholders party thereto to comply with the terms of such
agreements as if it were a party thereto.
Section 10.14. Successors in Business Combinations. If a
Shareholder shall assign to any Person all or substantially all the assets of
such Shareholder by acquisition, amalgamation, merger or other business
combination, such Shareholder shall require such Person to agree in writing to
be bound by all of the provisions of this Agreement as a successor to such
Shareholder.
ARTICLE ELEVEN
CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS
Section 11.1. Scope of Obligation of Confidentiality. Each Party
shall use its best efforts to ensure that all information disclosed to it
concerning the Oleoducto Central, the assets and business of the JSC and the
assets and business of each of the other Parties and not otherwise generally
available ("Confidential Information") shall be kept confidential and shall,
unless otherwise required by law or official request issued by a court of
competent jurisdiction or by a judicial, administrative, legislative,
regulatory or self-regulatory authority, including any stock exchange or
similar regulatory authority, or, unless required by the reasonable good faith
judgment of the disclosing Party as a response to any environmental or other
emergency that may have a significant adverse effect upon the JSC, not be
revealed without the consent of all Parties other than to:
(a) the directors, officers, employees and representatives of
the JSC, the Parties and Affiliates of the Parties;
(b) a financial advisor, prospective managers of an underwriting
syndicate, legal counsel, consultant, contractor or subcontractor that has a
legitimate business need to be informed and has signed an agreement to protect
the Confidential Information from further disclosure to the same extent as the
Parties are obligated under this Section 11.1 and naming the JSC as a third
party beneficiary thereof;
<PAGE>
(c) any third party to whom the disclosing Party or its
Affiliate contemplates a transfer of all or any part of its Shareholding
Interest in accordance with the terms hereof who has signed a confidentiality
agreement satisfactory to the JSC; or
(d) a governmental agency or to the public which the disclosing
Party or its Affiliate believes in good faith is required by applicable laws
or regulations or the rules of any stock exchange or similar regulatory
authority.
Information shall not be deemed Confidential Information, and the
provisions of this Section 11.1 shall not apply, if the information (i) is
already in the possession of any Party, provided that such information is not
known by such Party to be subject to another obligation of secrecy, (ii) is or
becomes available in the public domain other than as a result of disclosure by
any of the Parties, their associates or employees in contravention of this
Section 11.1, or (iii) is not acquired by any of the Parties from the JSC or
any of the other Parties or persons known by any of the Parties to be in
breach of a confidentiality agreement with or other obligation of secrecy to
the JSC or any of the other Parties.
The disclosing Party shall give notice to each of the other Parties
as soon as practicable after the making of any disclosure made as a response
to any environmental or other emergency or as permitted by Section 11.1(d).
As to any disclosure pursuant to Section 11.1(a) or (b), only such
Confidential Information as such third party shall have a legitimate business
need to know shall be disclosed and, in the case of disclosure to a third
party permitted by Section 11.1(a), the Party disclosing such information
shall cause such party to protect the Confidential Information from further
disclosure to the same extent as the Parties are obligated under this Section
11.1 and, in the case of disclosure to a third party permitted by Section
11.1(b) or 11.1(c), the Party disclosing such information shall cause such
third party to first agree in writing to so protect the Confidential
Information.
Section 11.2. Return of Confidential Information. Upon any
Party demanding the return of Confidential Information relating to it by
notice in writing to another Party, the other Party shall, and shall cause its
representatives to,
(a) return all documents containing Confidential Information
that have been provided by the Shareholder demanding the return of
Confidential Information (or on its behalf); and
(b) destroy any copies of such documents and any document or
other record reproducing, containing or made from or with reference to the
Confidential Information,
except, in each case, for any submissions to or filings with judicial,
administrative, legislative or regulatory authorities. Such return or
destruction shall take place as soon as practicable after the receipt of such
notice, provided, however, that this Section shall not apply to the JSC to the
extent it reasonably believes it has such Confidential Information for
purposes of the Oleoducto Central.
<PAGE>
Section Consultation as to Announcements. No public announcement
or press release concerning the business of the JSC, including the Oleoducto
Central, shall be made by any Party or the JSC without prior consultation with
the JSC and each of the other Parties. This provision shall not prohibit any
public announcement or press release required to be made by the laws,
regulations or policies of any federal, provincial or state governmental
agency or similar agency or any stock exchange or similar regulatory authority
or if required by the reasonable good faith judgment of the disclosing Party
as a response to any environmental or other emergency that may have a
significant adverse effect upon the JSC, provided that the Party making such
announcement shall, to the extent practicable, consult with the other Parties
concerning the timing and content of such announcement before such
announcement is made and shall give a copy thereof to each of the other
Shareholders at the same time, or as soon as reasonably practicable after, the
making of such announcement.
ARTICLE TWELVE
TERM
Section 12.1. Term. This Agreement shall become effective
when executed and delivered by all the Parties and, subject to Section 12.2,
shall continue to be in effect so long as the JSC continues to be in existence
in accordance with the By-Laws.
Section 12.2. Termination Events. Subject to Section 12.3(a)
below, this Agreement shall terminate
(a) at such time as no Shareholder which is also an Initial Shipper
or an Affiliate thereof has a Shareholding Interest greater than 5%;
(b) at such time as the Shareholders may otherwise unanimously
agree; or
(c) at 5:00 p.m., local time, Santafe de Bogota, Colombia, on March
31, 1995, if (i) the JSC shall have received from any Shareholder on or prior
to March 15, 1995 a certified copy of a resolution adopted by the board of
directors or equivalent decision making body, or an authorized committee
thereof, of The British Petroleum Company p.l.c., Ecopetrol, TOTAL S.A.,
Triton Energy Corporation, IPL Energy or TransCanada PipeLines to the effect
that such board, body or committee has resolved to, or to cause its subsidiary
Shareholder to, withdraw from the Oleoducto Central project and to terminate
this Agreement, and has not received prior to 5:00 p.m. local time, Santafe de
Bogota, Colombia on March 31, 1995 either (A) a notice of withdrawal of such
resolution or (B) a Notice of Continuance from a non-Withdrawing Shareholder
referred to in Section 12.3(a).
As soon as practicable after adopting a resolution pursuant to
paragraph (c), the ultimate parent company having resolved to cause the
termination of this Agreement or its affiliated Party shall deliver to the JSC
with copies to all other Parties written notice of such resolution. Promptly
after receipt of such notice, the Parties shall meet in good faith and
endeavor to agree mutually acceptable terms on which to continue with the
Oleoducto
<PAGE>
Central. A Shareholder properly delivering such notice is hereinafter
referred to as a "Withdrawing Shareholder."
Section 12.3. Termination. (a) The non-Withdrawing
Shareholders shall be entitled to elect to continue with the Oleoducto
Central. The non-Withdrawing Shareholder or Shareholders shall evidence this
decision by delivering to the JSC, prior to 5:00 p.m. local time, Santafe de
Bogota, Colombia, on March 31, 1995, a notice to this effect (the "Notice of
Continuance"), with a copy to the Withdrawing Shareholder. Any
non-Withdrawing Shareholder which does not sign the Notice of Continuance
shall be deemed to be a Withdrawing Shareholder. In the event a Notice of
Continuance is delivered, either (i) or (ii) below will apply.
(i)(A) If the Withdrawing Shareholder is an Initial Shipper, the
non-Withdrawing Shareholders, pro rata to their remaining Shareholding
Interests in the JSC, shall purchase, and the Withdrawing Shareholder shall
sell, all the Withdrawing Shareholder's equity in the JSC. Such purchase
shall be made at a price equal to the lesser of (x) 75% of the book value of
the Withdrawing Shareholder's equity in the JSC, and (y) such book value less
$2,000,000 provided that for this purpose book value shall never be less than
zero. Such book value shall be determined on the basis of the books of the
JSC at the month end prior to the delivery of the Notice of Continuance.
(B) If Ecopetrol is a Withdrawing Shareholder and its equity in the JSC
is sold in whole or in part to a third party because of the requirement of
Colombian law relating to the transfer of shares held by it, Ecopetrol shall
remain liable under its Subscription Agreement in proportion to the portion of
Ecopetrol's Shareholding Interest so sold to a third party.
(ii)(A) If the Withdrawing Shareholders are either IPL Enterprises
and/or TCPL International, the non-Withdrawing Shareholders, pro rata to their
remaining Shareholding Interests in the JSC, shall purchase, and the
Withdrawing Shareholder or Shareholders shall sell, all of its or their equity
in the JSC.
(B) If the reason for the withdrawal of one or both of the Canadian
Group Withdrawing Shareholders is that, after negotiating in good faith, the
JSC and the Operator were unable to reach agreement on terms of the Oleoducto
Central Operations Agreement and the Transportation Agreements containing
commercially reasonable terms consistent with the Operating Principles, the
Tariff Principles and internationally accepted standards for similar
agreements, then the price to be paid for the equity in the JSC held by the
Withdrawing Shareholder or Shareholders shall be equal to its share of
Recoverable Costs, provided, however, that if the reason such agreement was
not reached was primarily due to the failure of the Operator and the Canadian
Group to negotiate in good faith, then the price to be paid for the equity in
the JSC held by the Withdrawing Shareholder or Shareholders shall be equal to
its or their share of the Recoverable Costs, less $3,000,000.
(C) If the withdrawal of one or both of Canadian Group Withdrawing
Shareholders occurs primarily for any other reason, the price to be paid for
the
<PAGE>
equity in the JSC held by the Withdrawing Shareholder or Shareholders shall be
five pesos.
(D) Should the Shareholders fail to agree on either the reason for the
withdrawal or whether the Operator and Canadian Group failed to negotiate in
good faith, those issues shall be determined as follows and the purchase price
paid accordingly. If within the 15 Business Day period specified for payment
in sub-section (iv) below the Shareholders have not been able to agree whether
the proviso to paragraph (B) above applies, they or any of them shall notify
the President of the American Petroleum Institute of the impasse. Within 20
Business Days thereafter he shall appoint an umpire to decide whether or not
the proviso applies. The umpire shall be an individual of established
reputation with knowledge of the oil production and pipeline industries. The
umpire in making his decision shall consult with the principal independent
advisors to the Shareholders. The umpire shall render his decision within 60
Business Days and such decision shall be solely whether or not the proviso
applies. The outcome of such decision shall be communicated by him in writing
to each of the Shareholders. Payment for the Withdrawing Shareholder's equity
interest in the JSC shall be made in accordance with such decision within five
Business Days thereafter. Any such decision shall be conclusive as to, and
binding on, all Parties. The Withdrawing Shareholder or Shareholders and the
remaining Shareholders as a group shall each be responsible for one half of
the fees and expenses of the umpire, and, jointly and severally, shall
indemnify and hold harmless such individual against all expenses, claims,
losses and liabilities (including legal fees and expenses and any expenses of
such independent advisors) however incurred arising out of or in connection
with the performance of the services described in this paragraph.
(iii) If the Notice of Continuance is not delivered, Section 12.3(b)
shall apply, and in addition, when the JSC has been dissolved and liquidated
and its assets fully distributed, if the Canadian Group has not received out
of that distribution its Recoverable Costs, then the Withdrawing Shareholder
or Shareholders, pro rata to their remaining Shareholding Interests in the
JSC, shall pay the difference to the Canadian Group in dollars promptly after
such distribution. Each Shareholder agrees that if it may be liable for such
a payment, no distribution shall be made to it in connection with the
dissolution and liquidation of the JSC under Section 12.3(b) unless such
Shareholder has made the payment (if any) required under this sub-section, and
if such payment is not made, any distribution to which such Shareholder is
entitled under this paragraph shall be paid over to the Canadian Group. The
payment over to the Canadian Group of the Withdrawing Shareholder's
distribution shall only extinguish the liability of the Withdrawing
Shareholder under this paragraph if it is equal to or greater than such
liability. "Recoverable Costs" shall mean an amount equal to (A) the Cash
Paid-In Equity of the Canadian Group to the JSC without interest, and (B) the
reasonable unreimbursed costs incurred by the Canadian Group in mobilizing to
become Operator and in de-mobilizing to disband its role as Operator as a
result of the dissolution and liquidation of the JSC, unless the Canadian
Group continues as operator of the Oleoducto Central after the dissolution and
liquidation of the JSC.
<PAGE>
(iv) Any purchase and sale pursuant to this Section 12.3(a) shall occur
within 15 Business Days following such delivery. The purchase price shall be
payable outside Colombia in dollars on the basis of the peso/dollar exchange
rate quoted by the Reference Bank in New York at the close of business on the
Business Day preceding the date of transfer. Simultaneously with the purchase
and sale the non-Withdrawing Shareholders shall, unless they otherwise agree,
assume, according to their pro rata share of the purchase, the Withdrawing
Shareholder's rights and obligations under its Subscription Agreement arising
after March 31, 1995, any related Performance Guarantee Agreement shall be
terminated, and any non-Withdrawing Shareholder whose Subscription Agreement
is the subject of a Performance Guarantee Agreement shall procure that such
Performance Guarantee Agreement be expanded to cover the Subscription
Agreement obligations assumed by it.
(v) Upon any transfer of equity referred to in this Section 12.3(a),
this Agreement shall terminate as to the Withdrawing Shareholder, except that
its obligations under Sections 11.1 and 11.2 shall survive and the Withdrawing
Shareholder shall remain liable for any liabilities incurred by it under this
Agreement prior to 5:00 p.m. local time, Santafe de Bogota, Colombia on March
31, 1995. Thereafter a Withdrawing Shareholder shall have no liability or
responsibility for procuring, or as the result of any failure to procure, any
Senior Debt.
(vi) Each Initial Shipper hereby covenants that, if it is a Withdrawing
Shareholder and the non-Withdrawing Shareholders elect to deliver the Notice
of Continuance, it shall ship or cause to be shipped all its Petroleum from
the Fields by means of the Oleoducto Central, provided that it shall have no
obligation to pay a tariff for such shipments exceeding the higher of the
Third Party Tariff and the Initial Shipper Tariff in effect from time to time.
(vii) Any shares of the JSC transferred pursuant to this Section 12.3(a)
shall continue to be subject to the Dividend Trust Agreement and, if
transferred to a Shareholder other than Ecopetrol, the Voting Trust Agreement.
(viii) The Parties agree that there will be no calls for Equity
Contributions made for payment on any day in the period from March 15 through
March 31, 1995 (including such dates).
(b) In the event of termination of this Agreement in accordance
with paragraph (c) of Section 12.2, (i) the JSC shall be dissolved in
accordance with the By-Laws; (ii) the JSC shall promptly cancel all
commitments it has made (taking all reasonable steps to minimize any costs,
liabilities and penalties associated with such action); (iii) the JSC shall
dispose of its assets on the best commercial terms reasonably achievable,
provided that each Shareholder shall have the right to acquire assets sold or
otherwise transferred by it to the JSC prior to any such disposal, provided
further that any sale of assets to a Shareholder from which such assets were
purchased shall be at a price not less
<PAGE>
than the sale price to the JSC; (iv) the JSC shall be liquidated in accordance
with the By-Laws and applicable law; and (v) any costs and penalties
associated with the actions outlined in (i) through (iv) above which the JSC
is unable to satisfy from its own assets shall be borne by the Shareholders in
proportion to their respective Shareholding Interests.
(c) In the event of termination of this Agreement in accordance
with paragraph (a) or (b) of Section 12.2 or Section 12.4, this Agreement
shall thereafter have no effect, and no Party shall have any liability to the
other Parties in respect hereof, except that (a) the obligations of the
Parties in Sections 11.1 and 11.2 shall survive for a period of three years
from the date of termination with respect to any Party and/or its Affiliates
which sells or otherwise disposes of all or any part of its Shareholding
Interest, (b) the rights of the Shareholders under Section 8.2 shall survive
for a period of six years from the date of termination and (c) nothing herein
contained shall relieve any Party from liability for any breach of any
representation, warranty or agreement hereunder occurring prior to such
termination.
(d) In the event of termination of this Agreement in accordance
with paragraph (c) of Section 12.2, this Agreement shall thereafter have no
effect except that this Section 12.3 shall survive.
(e) In the event of termination of this Agreement pursuant to
Section 12.2 or Section 12.4, no Party shall under any circumstances be liable
to the other Parties for loss of anticipated profits from the transactions
contemplated by this Agreement or for other consequential damages (including,
without limitation, loss or deferment of production from the Fields or
throughput rights in the Oleoducto Central) arising out of the termination of
this Agreement.
Section 12.4. Political Events Agreement. This Agreement
shall terminate as to any Shareholder as specified in the Political Events
Agreement.
Section 12.5. RMOU. The Parties acknowledge that the parties
to the RMOU have, pursuant to a letter agreement of even date herewith,
terminated the RMOU in accordance with the terms thereof.
ARTICLE THIRTEEN
NEGOTIATIONS; ARBITRATION; SUBMISSION TO JURISDICTION
Section 13.1. Negotiations; Arbitration. (a) In the event of
any dispute, controversy or claim arising out of or relating to this
Agreement, or the performance, breach, termination, or invalidity hereof, such
dispute, controversy or claim, shall be the subject of an attempt at an
amicable solution, for which purpose any Party shall give notice to the other
Parties, giving a concise description of the matter in question and the
position of such Party in respect thereof and proposing a meeting among the
chief executive officers, executive managing directors or their designees (the
"Senior Officers") of the ultimate parent companies of the Shareholders in The
City of New York (or such other place as they may agree) with the purpose of
resolving the dispute, controversy or claim.
<PAGE>
(b) In the event such a meeting is called, the meeting shall
take place within 10 days of its being requested. Unless the Parties
otherwise agree, if such meeting does not take place within such 10 days or if
within 10 days after such meeting the Senior Officers have not resolved such
matter, then the matter shall be settled by arbitration in accordance with the
UNCITRAL Arbitration Rules in effect on the date hereof. The arbitration
shall be the sole and exclusive forum for resolution of the dispute,
controversy or claim, and the award shall be final and binding. Judgment
thereon may be entered by any court having jurisdiction. The number of
arbitrators shall be three, each of whom shall be disinterested in the
dispute, controversy or claim and shall have no connection with any Party.
Should the services of an appointing authority be necessary, the appointing
authority shall be the American Arbitration Association. In the event that
more than two Parties are involved in the dispute, controversy or claim, all
such Parties shall have 30 days to agree among themselves as to the
appointment of the three arbitrators. If, after such 30-day period, the
Parties have not agreed on such appointment, the appointing authority shall
select all three arbitrators. The Parties and the appointing authority may
appoint from among the nationals of any country, whether or not a Party is a
national of that country. The place of arbitration shall be The City of New
York, New York. The arbitration shall be conducted in the English language
and any foreign-language documents presented at such arbitration shall be
accompanied by an English translation thereof. The arbitrators shall apply
the laws of the State of New York without regard to the principles of
conflicts of laws.
(c) In the event that there is an existing arbitration pursuant
to paragraph (b), and that the same or a similar dispute, controversy or claim
should arise between Parties other than the Parties to the existing
arbitration, the American Arbitration Association shall have the power to
allow the other Parties to be joined in the existing arbitration with their
express consent, and to make a single final award determining all disputes,
controversies or claims among them.
(d) Any matter expressed in this Agreement to be a matter for
review, collaboration, consultation, consent, decision or agreement by the
Parties or any of them shall not, in the event of failure of decision or
agreement, constitute a dispute or difference to be referred to or settled by
arbitration proceedings.
(e) Each of the Parties hereby submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York (the "Specified Court") in any action, suit or proceeding with respect
to the enforcement of the arbitration provisions of this Agreement and the
non-exclusive jurisdiction of such court with respect to the enforcement of
any award thereunder. Each Party irrevocably appoints the agent for service
specified opposite its name in Section 14.1 as its authorized agent in the
Borough of Manhattan in The City of New York upon which process may be served
in any related proceeding, and agrees that service of process upon such agent,
and written notice of said service to such Party, by the person serving the
same to the address provided in Section 14.1, shall be deemed in every respect
effective service of process upon such Party in any such action, suit or
proceeding. Each Party further agrees to take any and all action as may be
necessary to maintain such designation and appointment of such agent in full
force and effect for the duration of this Agreement.
<PAGE>
ARTICLE FOURTEEN
GENERAL
Section 14.1. Notices. All notices, requests, demands,
directions and other communications hereunder shall be in writing and shall be
given by personal delivery, by certified or registered mail, or by electronic
means of communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Party Copy To Agent for
Service
OLEODUCTO CENTRAL S.A. N/A CT CORPORATION
World Trade Center Bogota SYSTEM
Calle 100 N. 8A-55 1633 Broadway
Santafe de Bogota, D.C. -Colombia New York, New York 10019
Telefax: 571-218-3933 Telefax: (212) 247-2882
Attention: President
EMPRESA COLOMBIANA DE N/A CONSULATE GENERAL OF
PETROLEOS-ECOPETROL COLOMBIA
Carrera 13 No. 36-24 10 East 46th Street
Santafe de Bogota, D.C. -Colombia New York, New York 10017
Telefax: (571) 287-0041 Telefax: (212) 972-1725
Attention: Juan Maria Rendon
BP COLOMBIA PIPELINES BP EXPLORATION CT CORPORATION
LIMITED COMPANY SYSTEM
c/o BP EXPLORATION (COLOMBIA) LIMITED 1633 Broadway
(COLOMBIA) LIMITED Carrera 9A No. 99-02 New York, New York 10019
Carrera 9A No. 99-02 Post Office Box 59824 Telefax: (212) 247-2882
Post Office Box 59824 Santafe de Bogota, D.C. Colombia
Santafe de Bogota, D.C.-Colombia Telefax: (571) 222-8619
Telefax: (571) 618-2895 Attention: Legal Manager
Attention: Nicholas P. Connolly
TOTAL PIPELINE TOTAL EXPLORATIE EN PROSKAUER, ROSE,
COLOMBIE S.A. PRODUKTIE MIJ B.V. GOETZ & MENDELSOHN
Tour TOTAL Calle 72 No. 10-03 1585 Broadway
TEP/AME Piso 8 New York, New York 10036
24, Cours Michelet Apartado aereo 251375 Telefax: (212) 969-2900
Cedex 47,92069 Paris, France Santafe de Bogota, D.C. -Colombia Attention: Ronald Papa, Esq.
Telefax: (33 1) 4135 6530 Telefax: (571) 235-8453
Attention: Jean-Claude Soligny Attention: Jacques de Boisseson
TRITON PIPELINE TRITON COLOMBIA, INC. CT CORPORATION
COLOMBIA, INC. Carrera 9A No. 99-02 SYSTEM
c/o TRITON ENERGY Oficina 407 1633 Broadway
CORPORATION Santafe de Bogota, D.C.- Colombia New York, New York 10019
6688 North Central Expressway Telefax: (571) 618-2553 Telefax: (212) 247-2882
Suite 1400 Attention: Ivan Fajardo
Dallas, Texas 75206
Telefax: (214) 692-7487
Attention: Thomas G. Finck and
A.E. Turner
Party Copy To Agent for
Service
IPL ENTERPRISES IPL INTERNATIONAL INC. CT CORPORATION
(COLOMBIA) INC. Suite 1100 SYSTEM
c/o IPL ENERGY INC. 363 North 1633 Broadway
31st Floor Bow Valley Square 2 Sam Houston Parkway East New York, New York 10019
205 - 5th Avenue S.W. Houston, Texas 77060 Telefax: (212) 247-2882
Calgary, Alberta, Canada T29 2V7 Telefax: (713) 820-9310
Telefax: (403) 231-3920 Attention: Benny J. Phillips
Attention: Donald M. Wishart
TCPL INTERNATIONAL TRANSCANADA PIPELINES FRIED, FRANK, HARRIS,
INVESTMENTS INC. LIMITED SHRIVER & JACOBSON
c/o FRIED, FRANK, HARRIS, TransCanada PipeLines Tower 1 New York Plaza
SHRIVER & JACOBSON 111 Fifth Avenue S.W. New York, New York 10004
1 New York Plaza P.O. Box 1000, Station M Telefax: (212) 747-1526
New York, New York 10004 Calgary, Alberta, Canada T2P 4K5 Attention: Ken Blackman
Telefax: (212) 747-1526 Telefax: (403) 267-2668
Attention: Ken Blackman Attention: Michael Durnin and
Robert M. Jensen
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any Party to the others. Any notice, demand,
request, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The Party giving any notice, demand, request, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 14.2. Entire Agreement. This Agreement, together with
the By-Laws and Project Agreements, constitutes the entire agreement among the
Parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties, and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein. No amendment,
supplement, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions (whether or not similar) nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
Section 14.3. Taxes and Expenses. (a) Each Party
shall be solely responsible for the payment of all taxes imposed on it,
whether by taxing authorities within Colombia or elsewhere, in connection with
the holding of its Shares.
<PAGE>
(b) Common expenses of the Parties in connection with the
execution of this Agreement and the incorporation of the JSC, including fees
and disbursements of financial advisors to the JSC, shall be borne by the
Parties hereto (other than the JSC) in proportion to their respective
Shareholding Interest. Each Party shall bear the costs and expenses incurred
by it in connection with the execution and performance of this Agreement and
the incorporation of the JSC.
Section 14.4. Representations and Warranties. Each Party
represents and warrants to the others that:
(a) it is a corporation duly incorporated and organized under
the laws of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and
perform its obligations under this Agreement and this Agreement and the
Project Agreements to which it is a party, when executed and delivered by such
Party, constitute valid and legally binding agreements of such Party;
(c) the execution and delivery of, and the performance by it of
its obligations under, this Agreement and the Project Agreements to which it
is a party will not result in a breach of or constitute a default under:
(i) any provision of its corporate charter or articles of
incorporation or its by-laws;
(ii) any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder and
under the Project Agreements to which it is a party; or
(iii) any order, judgment or decree of any court or
governmental agency to which it is a party or by which it is bound.
Section 14.5. Nature of Obligations (a) The obligations
of each Party created by this Agreement, and in particular the obligations of
the Shareholders to make Equity Contributions under the Subscription
Agreements, shall be the several obligations of that Party. Nothing herein
shall be deemed or construed to make any Party a surety or a guarantor of the
JSC or of another Party or liable to meet any obligation of the JSC or of
another Party.
(b) The obligations of each Party hereunder shall run to the
benefit of each other Party, and each Party shall have the right to enforce
the obligations of any Party hereunder.
(c) This Agreement is intended solely to govern the rights and
obligations of the Shareholders as shareholders of the JSC.
<PAGE>
Section 14.6. Amendments. This Agreement may not be amended or
modified except with the written consent of the Parties.
Section 14.7. No Third Party Beneficiaries. Except as herein
otherwise expressly provided to the contrary, this Agreement shall inure to
the benefit of and be binding upon the Parties and their respective successors
and assigns, and no other Person shall have any right hereunder.
Section 14.8 Severability. If, for any reason, any
provision of this Agreement is unenforceable, the remaining provisions hereof
shall nevertheless be carried into effect. Any provision of this Agreement
that is unenforceable in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 14.9. No Assignment. Except as expressly provided
herein, no Party may assign all or any portion of its rights or obligations
hereunder.
Section 14.10. Appointment of Valuation Expert. Except as
otherwise specifically provided herein, any Valuation Expert required
hereunder shall be appointed by a majority of the Shareholders or, in case the
Shareholders are unable to agree, such a firm appointed by a majority of other
such firms, each appointed by one of the Shareholders.
Section 14.11. Conduct. Each of the Parties acknowledges that
it is aware of the provisions of the United States Foreign Corrupt Practices
Act of 1977, as amended, and will take no action nor make any payment in
violation of, nor cause any Party or its subsidiaries or Affiliates to be
charged with any violation of, such Act.
Section 14.12. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 14.13. Performance Outside Colombia. The Parties
acknowledge and agree that their activities hereunder will be performed
substantially outside Colombia.
Section 14.14. Commercial Obligations. Each Party
acknowledges and agrees that its rights and obligations hereunder are of a
commercial and not governmental nature.
Section 14.15. Waiver of Immunity. (a) Each Party irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement or any award thereunder brought in the Specified
Court and further irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such
proceeding in the Specified Court.
<PAGE>
(b) To the extent that a Party or any of its revenues, assets or
properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement or any award
thereunder at any time brought against such Party or any of its revenues,
assets or properties, to any sovereign or other immunity from suit, from
jurisdiction, from attachment prior to judgment, from attachment in aid of
execution of judgment, from execution of a judgment or from any other legal or
judicial process or remedy, and to the extent that in any jurisdiction there
shall be attributed such an immunity, such Party irrevocably agrees not to
claim and irrevocably waives such immunity to the fullest extent permitted by
the laws of such jurisdiction (including, without limitation, the Foreign
Sovereign Immunities Act 1976 of the United States), except, in the case of
Ecopetrol, as provided under Article 684 of the Codigo de Procedimiento Civil
of Colombia.
Section 14.16. Enforcement of Certain Rights. The JSC agrees
to diligently enforce its rights against the parties to the Promesas de
Compraventa, the Transportation Agreements, the Transportation Notes
Agreements, the Advance Tariff Agreements, the Subscription Agreements, the
Performance Guarantee Agreements and, in each case, any guarantees of
obligations thereunder, and not to waive or terminate any rights against any
party thereto except with the approval of the Parties.
Section 14.17. Audit Rights. Each of the Shareholders agree that
the JSC has the right to conduct a limited audit of each Shareholder in order
to verify that any amounts paid to such Shareholder in respect of Colombian
Taxes were in respect of Colombian Taxes actually incurred by such
Shareholder. Such audits shall be conducted on at least 15 Business Days
notice during normal business hours by an independent accounting firm selected
by the JSC (who may be the JSC's auditor). The JSC may undertake any such
audit on any one Shareholder no more than annually.
Section 14.18. Limitation on Rights. No assignee or
transferee of any Shareholder shall have any rights hereunder if such assignee
or transferee holds less than 5% of the outstanding Shares.
Section 14.19. Approvals. Each of the Parties agrees to use
its reasonable commercial efforts to secure all governmental and related
approvals necessary in order to give full effect to this Agreement and the
transactions contemplated herein and in the Schedules hereto.
Section 14.20. Headings; Table of Contents. The headings and
table of contents contained herein are for convenience of reference only and
do not constitute a part of this Agreement.
Section 14.21. Counterparts. This Agreement may be executed
in seven or more counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Parties have hereunto caused this Agreement
to be executed and delivered by their respective proper officers thereunto
duly authorized as of the date first above written.
OLEODUCTO CENTRAL S.A.
/s/ Gustavo Suarez
By: Gustavo Suarez
Title: President
EMPRESA COLOMBIANA DE
PETROLEOSECOPETROL
/s/ Juan Maria Rendon
By: Juan Maria Rendon
Title: President
BP COLOMBIA PIPELINES LIMITED
/s/ Nicholas P. Connolly
By: Nicholas P. Connolly
Title: General Manager, Commercial - Latin
America
TOTAL PIPELINE COLOMBIE S.A.
/s/ Jacques de Boisseson
By: Jacques de Boisseson
Title: General Manager
TRITON PIPELINE COLOMBIA, INC.
/s/ Bernard Gros Dubois
By: Bernard Gros Dubois
Title: Vice President of Planning
<PAGE>
IPL ENTERPRISES (COLOMBIA) INC.
/s/ Benny J. Phillips
By: Benny J. Phillips
Title: Senior Vice President, Development
/s/ Darby J. Wade
By: Darby J. Wade
Title: Senior Legal Counsel
TCPL INTERNATIONAL INVESTMENTS
INC.
/s/ Daryll G. Waddingham
By: Daryll G. Waddingham
Title: Director, Project Structuring &
Finance
<PAGE>
TCPL (BERMUDA) LTD., a corporation existing under the laws of Bermuda, hereby
acknowledges the assignment, delegation and transfer to it and assumption by
it of all of the rights and obligations of TCPL International Investments Inc.
pursuant to Section 10.9 as a Shareholder hereunder as if it were a Party
hereto as of the date first above written and has caused this Agreement to be
executed and delivered by its duly authorized officer as of ,
1995.
TCPL (BERMUDA) LTD.
By:
Title:
<PAGE>
SCHEDULE A.1
TO OLEODUCTO CENTRAL AGREEMENT
BY-LAWS
This schedule in the original document contained the by-laws in Spanish.
These by-laws in Spanish are not being submitted.
<PAGE>
SCHEDULE A.2
TO OLEODUCTO CENTRAL AGREEMENT
CERTIFIED ENGLISH TRANSLATION OF BY-LAWS
BY-LAWS OF
OLEODUCTO CENTRAL S.A.
December 14, 1994
TABLE OF CONTENTS
[For convenience of reference only --
not included in Spanish original]
<TABLE>
<CAPTION>
<S> <C> <C>
Page
CHAPTER ONE
NAME, NATURE, NATIONALITY, DOMICILE, PURPOSE AND
DURATION OF THE COMPANY
ARTICLE 1. Name and Nature 1
ARTICLE 2. Domicile 1
ARTICLE 3. Corporate Purpose 1
ARTICLE 4. Duration 2
CHAPTER TWO
CORPORATE CAPITAL
ARTICLE 5. Authorized Capital 2
ARTICLE 6. Subscribed and Paid-in Capital 2
ARTICLE 7. Authorized but Unissued Shares 4
CHAPTER THREE
SHARES AND SHAREHOLDERS
ARTICLE 8. Registered Form 4
ARTICLE 9. Share Certificates 4
ARTICLE 10. Transfer of the Shares 5
ARTICLE 11. Stolen, Lost and Damaged Share Certificates 5
ARTICLE 12. Issuance and Transfer Costs 5
ARTICLE 13. Notices 5
ARTICLE 14. Pledges of Shares 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Page
ARTICLE 15. Judicial Proceedings 6
ARTICLE 16. Creation of a Certain Class of Shares 6
ARTICLE 17. Rights of the Shareholders 6
ARTICLE 18. Share Register 7
CHAPTER FOUR
DIRECTION, ADMINISTRATION AND REPRESENTATION
ARTICLE 19. General Meetings of Shareholders, Board of Directors and
President 7
CHAPTER FIVE
GENERAL MEETINGS OF SHAREHOLDERS
ARTICLE 20. Composition 7
ARTICLE 21. Powers of Attorney 8
ARTICLE 22. Representation of Shareholders 8
ARTICLE 23. Prohibited Representatives 8
ARTICLE 24. General Meetings of Shareholders 8
ARTICLE 25. Extraordinary Meetings 9
ARTICLE 26. Place of Meetings 9
ARTICLE 27. Notice 9
ARTICLE 28. Quorum; Majority Voting 9
ARTICLE 29. Reconstitution After Loss of Quorum 9
ARTICLE 30. President and Secretary of Meeting 10
ARTICLE 31. Minutes 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Page
ARTICLE 32. Voting Rules 10
ARTICLE 33. Supermajority Votes 11
ARTICLE 34. Responsibilities of the General Meeting of Shareholders Responsibilities of the General Meeting of Shareholders 11
ARTICLE 35. Other Responsibilities of the General Meeting of
Shareholders 12
CHAPTER SIX
BOARD OF DIRECTORS
ARTICLE 36. Composition 13
ARTICLE 37. President 13
ARTICLE 38. Meetings 13
ARTICLE 39. Internal Rules 13
ARTICLE 40. Permanent Vacancies 14
ARTICLE 41. Responsibilities 14
ARTICLE 42. Unanimous Decisions 15
ARTICLE 43. Other Decisions 16
CHAPTER SEVEN
PRESIDENT
ARTICLE 44. Appointment 17
ARTICLE 45. Responsibilities 18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Page
CHAPTER EIGHT
SECRETARY
ARTICLE 46. Appointment 20
ARTICLE 47. Responsibilities 20
CHAPTER NINE
FISCAL SUPERVISOR
ARTICLE 48. Appointment 20
ARTICLE 49. Qualifications 21
ARTICLE 50. Responsibilities 21
ARTICLE 51. Opinions and Reports 22
ARTICLE 52. Liability 22
ARTICLE 53. Participation at Meetings 22
CHAPTER TEN
BALANCE SHEETS, RESERVES AND DIVIDENDS
ARTICLE 54. Fiscal Year 22
ARTICLE 55. Other Statements 22
ARTICLE 56. Prior Requirements for the Distribution of Profits 22
ARTICLE 57. Distribution of Profits 23
ARTICLE 58. Timing for the Payment of Dividends 24
ARTICLE 59. Non-Payment of Interest on Dividends Not Promptly
Claimed 24
CHAPTER ELEVEN
AMENDMENTS TO BY-LAWS
ARTICLE 60. 24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> Page
CHAPTER TWELVE
DISSOLUTION AND LIQUIDATION OF THE COMPANY
ARTICLE 61. Dissolution 24
ARTICLE 62. Mandatory Dissolution 25
ARTICLE 63. Notice 25
ARTICLE 64. Appointment to Liquidate 25
ARTICLE 65. Rules for the Liquidation and Division of the
Corporate Capital 25
ARTICLE 66. Powers of Liquidator 26
CHAPTER THIRTEEN
ARBITRATION
ARTICLE 67. Arbitration 27
CHAPTER FOURTEEN
MISCELLANEOUS
ARTICLE 68. Duties of Officers 27
</TABLE>
<PAGE>
CHAPTER ONE
NAME, NATURE, NATIONALITY, DOMICILE, PURPOSE AND DURATION
OF THE COMPANY
ARTICLE 1. Name and Nature. The name of the sociedad anonima is
OLEODUCTO CENTRAL S.A. and it is a sociedad anonima incorporated under the
laws of Colombia (the "Company"). It is a second class, mixed-economy company
of the national level, assigned to the Ministry of Mines and Energy and
governed by the rules for commercial sociedades anonimas.
ARTICLE 2. Domicile. The domicile of the Company is the City of Santafe
de Bogota. The Company may establish branches or agencies elsewhere in
Colombia or abroad, as provided for by the Board of Directors of the Company
in accordance with applicable law.
ARTICLE 3. Corporate Purpose. The purpose of the Company is to design,
construct, develop, operate and own a public use pipeline system and related
facilities including, without limitation, port facilities, running from the
Municipality of Tauramena, Department of Casanare, to the Port of Covenas,
located in the jurisdiction of the Municipality of Tolu, Department of Sucre.
In furtherance of its corporate purpose, the Company shall conduct
technical-economic feasibility studies, prepare such studies and designs, and
determine such technical specifications for the pipeline, its terminal and the
pumping and storage stations to carry out its construction and operation. The
foregoing actions may be performed directly by the Company or by contracting
with third parties.
In addition, the Company may purchase or sell real estate or personal
property, shares and all other kinds of securities; borrow money; issue bonds,
notes, commercial paper and other evidences of indebtedness; mortgage and
pledge its real estate and personal property and carry out all credit
operations enabling it to obtain the financing or other assets necessary for
the development of the Company; establish branches and incorporate
subsidiaries and affiliated companies for the establishment and operation of
enterprises for the performance of any activity comprised within the Company's
corporate purpose and hold interests as a participant, associate or
shareholder, founder or otherwise, in other companies of a similar or
complementary corporate purpose; make contributions in cash, in kind or in
services to affiliated companies, dispose of its interests, rights or shares
therein, merge therewith or acquire them; register patents, trade names,
trademarks and other industrial property rights and acquire or grant
concessions for the exploitation thereof; enter into all types of banking
transactions; draw, accept and discount bills of exchange, checks, promissory
notes, drafts and all kinds of negotiable securities and other documents;
enter into and perform consulting and research contracts; execute, deliver and
perform operating agreements, construction contracts, leases, mandates,
commissions and sales agency, petroleum transportation, supply and insurance
contracts; execute, deliver and perform cuentas en participacion contracts;
and, in general, execute, deliver and perform all acts and contracts related
to the purpose of the Company and all those whose object is to exercise the
rights and fulfill the obligations legally or contractually arising from the
existence and activities carried out by the Company.
<PAGE>
ARTICLE 4. Duration. The Company shall have a duration of 99 years from
the date hereof. Nevertheless, by decision at a General Meeting of
Shareholders of the Company, the duration of the Company may be extended
before its expiration, or its dissolution may be ordered before its
expiration, in each case in accordance with these By-Laws and applicable law.
CHAPTER TWO
CORPORATE CAPITAL
ARTICLE 5. Authorized Capital. The authorized capital of the Company
shall be Colombian Ps.2,000,000,000 consisting of 20,000 ordinary shares, par
value Ps.100,000 each, having the characteristics set forth in these By-Laws
("shares").
The authorized capital of the Company may be increased or decreased from time
to time by amending these By-Laws in accordance with these By-Laws and
applicable law and with the pertinent authorizations required at the time of
increasing or decreasing the capital, provided, however, that in no event
shall the number of outstanding shares be evenly divisible by six.
Any shares of the Company's capital owned by public entities shall be
represented by shares designated Class A, and the private capital of the
Company's capital shall be designated Class B.
ARTICLE 6. Subscribed and Paid-in Capital. The initial subscribed
capital as at the date of incorporation of the Company is Colombian
Ps.1,000,000,000 consisting of 10,000 shares, as set forth below:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INITIAL
NUMBER AGGREGATE
SHAREHOLDING
SHAREHOLDER OF SHARES PAR VALUE INTEREST
Empresa Colombiana de
Petroleos-Ecopetrol
(Ecopetrol) 2,500 Ps.250,000,000 25%
BP Colombia Pipelines
Limited 1,520 Ps.152,000,000 15.2%
TOTAL Pipeline
Colombie S.A. 1,520 Ps.152,000,000 15.2%
Triton Pipeline
Colombia, Inc. 960 Ps.96,000,000 9.6%
IPL Enterprises
(Colombia) Inc. 1,750 Ps.175,000,000 17.5%
TCPL International
Investments Inc. 1,750 Ps.175,000,000 17.5%
Total 10,000 Ps.1,000,000,000 100%
</TABLE>
The paid-in capital as of the date of incorporation of the Company is
Colombian Ps.500,000,000 represented by shares held as follows:
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER AMOUNT PAID IN
Ecopetrol Ps.125,000,000
BP Colombia Pipelines Limited Ps.76,000,000
TOTAL Pipeline Colombie S.A. Ps.76,000,000
Triton Pipeline Colombia, Inc. Ps.48,000,000
IPL Enterprises (Colombia) Inc. Ps.87,500,000
TCPL International Investments Inc. Ps.87,500,000
Total Ps.500,000,000
</TABLE>
The balance shall be paid by the shareholders on the date determined by the
Board of Directors within one year of the date of incorporation of the
Company.
In the case of default in the payment of any subscribed shares, Article 397
and related provisions of the Commercial Code shall apply. So long as the
value of any shares has not
<PAGE>
been fully paid, only provisional share certificates shall be issued to the
subscribers therefor.
ARTICLE 7. Authorized but Unissued Shares. Authorized but unissued
shares and shares subsequently issued by the Company due to an increase in the
Company's authorized capital shall be placed as determined by the Board of
Directors, which shall be responsible for approving the pertinent share
subscription resolutions in accordance with these By-Laws and applicable law.
The shareholders shall have a preferential right to subscribe for any new
share issue in the amount of shares proportional to that held by them at the
date of approval of the share issue by the Board of Directors.
CHAPTER THREE
SHARES AND SHAREHOLDERS
ARTICLE 8. Registered Form. The shares of the Company shall be ordinary
shares in nominative (registered) form.
ARTICLE 9. Share Certificates. The shares shall be evidenced by
certificates which shall be numbered sequentially in different series for
public entities (Class A) and private shareholders (Class B), shall bear the
signatures of the President and the Secretary of the Company, and shall
indicate:
A. The name of the Company, its principal domicile, the Notarial Office,
and the number and date of the deed of incorporation.
B. The number of shares represented by each certificate, their class and
whether their transferability is limited by any preferential rights and the
conditions to exercise such rights.
C. The full legal name of the person to whom they are issued.
In no event will certificates be issued for a fraction of a share.
By virtue of the shares' fully registered form, the Company shall recognize as
a shareholder of the Company only the person who is registered as such in the
share register book maintained by the Company for that purpose (the Share
Register). No alienation or transfer of shares, liens or restrictions,
attachment or adjudication shall be effective with respect to the Company or
any third party, except by virtue of its registration in the Share Register,
which the Company may not refuse, except by order of a competent authority or
in compliance with any restrictions applicable to the transfer of such shares.
<PAGE>
ARTICLE 10. Transfer of the Shares. The shares are negotiable in
accordance with applicable law. For the transfer of the shares to be effective
with respect to the Company and third parties, such transfer must be
registered in the Share Register pursuant to written transfer instructions
from the transferor or under the formality of endorsement of the respective
share certificate. In sales pursuant to court order or other judicial
adjudication, the registration of transfer shall be made upon presentment of
the original or certified copy of the pertinent legal documents containing the
order of whomever is legally responsible therefor. As established in Decree
_____ of December __, 1994, Ecopetrol will not exercise the preferential
rights contemplated in Article 10 of Decree 130 of 1976.
In connection with any transfer of shares, the prior cancellation of the
certificates issued to the transferor will be required.
ARTICLE 11. Stolen, Lost and Damaged Share Certificates. In the event a
share certificate is stolen, the Company shall replace it, issuing a duplicate
to the holder of the shares evidenced thereby as registered in the Share
Register, upon presenting
evidence of such theft satisfactory to the Secretary, presenting a copy of the
notice of loss provided to the relevant legal authorities. When a Shareholder
requests a duplicate share certificate to replace a lost one, the Shareholder
shall present such bond as may be requested by the President. A shareholder
who has lost its certificate for any reason shall be responsible to the
Company for any damage or liability suffered by the Company in connection with
the loss of the original share certificate or the issuance of the replacement
therefor. Should the lost share certificate be found, the holder of the shares
previously evidenced thereby shall return the replacement therefor to the
Company, which shall then be destroyed by the Secretary by providing evidence
thereof. In the event of damage to a share certificate, the Company will
issue a replacement therefor, povided that the shareholder delivers the
original certificates to the Company.
ARTICLE 12. Issuance and Transfer Costs. The respective shareholder
shall bear the costs and taxes incident to the transfer of shares and the
issuance of certificates, which expenses shall be born in equal part by the
transferor and transferee, absent agreement otherwise.
ARTICLE 13. Notices. Each shareholder must provide its registered address to
the Secretary of the Company.
ARTICLE 14. Pledges of Shares. In the case of shares pledged to a third
party, such pledge shall not confer on the third party any rights pertaining
to shareholders, except as otherwise expressly provided by the terms of a
written agreement registered in the Share Register.
ARTICLE 15. Judicial Proceedings. The transfer of shares, the ownership
of which is in litigation, shall require authorization from the competent
judicial authority in the forum in which such litigation is pending. In the
case of shares to which a judicial lien has attached, the authorization of the
secured party will also be required. In the event of litigation or judicial
lien regarding the ownership of any shares issued by the Company, the Company
shall abstain from registering any transfer thereof beginning the date on
which it
<PAGE>
has been notified by the competent authority in which such litigation or
judicial lien is pending.
ARTICLE 16. Creation of a Certain Class of Shares. Subject to
compliance with applicable law and these By-Laws, General Meeting of
Shareholders may, at any time, create new classes of shares (including
preference shares, industry shares or other shares with economic rights
preferential to those of the shares). For an issuance of preference shares,
the determination of the respective preferences and the pertinent subscription
resolutions must be approved by a General Meeting of Shareholders upon the
favorable vote of a plural number of shareholders representing not less than
90.41% of the subscribed shares and under the condition that the subscription
resolutions stipulate the preferential right in favor of all shareholders, in
order that the latter may subscribe them proportionately to the number of
shares held by each of them on the date of the offer.
ARTICLE 17. Rights of the Shareholders. The shares confer on each
holder thereof the following rights:
A. To participate in deliberations at General Meetings of Shareholders and to
vote thereat, with one vote per share, with as many votes as the number of
shares held. The restrictions on voting contained in Article 428 of the
Commercial Code do not apply to the shares.
B. To receive dividends in proportion to its ownership of shares of the
Company in accordance with the end of the accounting period balance sheets,
the By-Laws and applicable law.
C. To inspect freely, either personally or through representatives, the books
and records of the Company at any time, and, in any case, during the 15
business day period preceding the General Meeting of Shareholders whereat the
end of the accounting period balance sheets are examined.
D. To receive a share of the corporate assets at the time of liquidation of
the Company pro rata to its holding of shares of the Company and after the
Company's external liabilities have been paid or provided for in accordance
with the decision of the General Meeting of Shareholders.
ARTICLE 18. Share Register. The Company shall keep a Share Register
registered at the Chamber of Commerce in Santafe de Bogota, indicating the
names of its shareholders, the provisional certificates, the final
certificates, the number of shares and their series corresponding to each
shareholder, the certificate with its respective registration number and date,
any transfers, pledges, usufructs and other liens or ownership limitations,
attachments or judicial claims, in each case applicable to the shares, as well
as any other act subject to inscription pursuant to applicable law.
<PAGE>
CHAPTER FOUR
DIRECTION, ADMINISTRATION AND REPRESENTATION
ARTICLE 19. General Meetings of Shareholders, Board of Directors and
President
For its direction, administration and legal representation, the Company
consists of the following bodies:
A. General Meetings of Shareholders; B. Board of Directors; and C. President.
The direction and administration of the Company is the responsibility, first,
of the shareholders acting at a General Meeting thereof and, second, of the
Board of Directors as delegate of the General Meeting of Shareholders. The
legal representation of the Company shall be the responsibility of the
President subject to such policies as may be established by the Board of
Directors and subject to the provisions of these By-Laws and applicable law.
The Board of Directors shall be responsible for any matters not specifically
assigned to the General Meeting of Shareholders or the President by these
By-Laws or applicable law.
Each of the aforementioned bodies has the power and authority conferred on it
by these By-Laws, which it shall exercise in accordance with the provisions
herein set forth and in compliance with applicable law.
CHAPTER FIVE
GENERAL MEETINGS OF SHAREHOLDERS
ARTICLE 20. Composition. General Meetings of Shareholders consist of a
meeting of the shareholders registered in the Share Register, either in person
or represented by their proxies or legal representatives and convening the
quorum under the circumstances provided for in these By-Laws and in compliance
with applicable law.
ARTICLE 21. Powers of Attorney. Powers of attorney to represent a
shareholder at any General Meeting of Shareholders shall be granted in
writing, indicating the name of the attorney-in-fact, any person to whom the
latter may substitute such powers, and the date of the meeting for which they
are granted. Powers of attorney may be granted by facsimile transmission.
Except as required by laws applicable to public entities, representation may
only be granted to a natural person unless it is granted pursuant to a negocio
fiduciario. Except upon express stipulation to the contrary by the grantor of
the power of attorney, the power granted for a specific General Meeting of
Shareholders shall authorize the attorney-in-fact to represent the principal
at any successive meetings which are a consequence or continuation thereof,
either due to the initial lack of a quorum or to an adjournment of
deliberations.
Any power of attorney granted under a Public Deed or other legally accepted
document may by its terms be made applicable for two or more General Meetings
of Shareholders.
<PAGE>
ARTICLE 22. Representation of Shareholders. Each shareholder, whether a
natural person or legal entity, individual or group of any kind, may only
appoint one individual to represent it at any General Meeting of Shareholders,
regardless of the number of shares it holds. The representative or
attorney-in-fact of more than one natural person or legal entity may vote in
each case according to the separate instructions of each natural person or
legal entity represented.
ARTICLE 23. Prohibited Representatives. Except as required by mandatory
provisions of applicable law, officers and employees of the Company may
neither represent any shares other than their own shares at meetings of
shareholders, nor substitute the powers conferred on them, nor vote their
shares in connection with the approval of the year-end balance sheet or the
liquidation accounts.
ARTICLE 24. General Meetings of Shareholders. The General Meetings of
Shareholders shall be held semiannually, no later than March 31 and September
30, for the purpose of examining the position of the Company, studying the
accounts and balance sheets of the Company for the latest accounting period,
deciding on any declaration of dividends and adopting any other resolutions
it may see fit to fulfill the corporate purpose of the Company.
The date of the meeting shall be fixed by the Board of Directors and shall be
called by the President. If the meeting is not called, the shareholders shall
meet on their own right on the first working day of April or October at ten
o'clock in the morning (10:00 a.m.) at the principal office of the Company in
Santafe de Bogota. The quorum at such meeting shall consist of a plurality of
shareholders, regardless of the number of shares represented thereby.
Decisions at any such meeting must be adopted by the majorities required by
these By-Laws and applicable law.
ARTICLE 25. Extraordinary Meetings. Extraordinary Meetings of
Shareholders may be called upon the occurrence of an unforeseen or urgent
event by the Board of Directors, the President, the Fiscal Supervisor or the
Superintendency of Corporations, either on their own initiative or upon
request of one or more shareholders holding at least 9% of the outstanding
shares.
At any extraordinary meeting, the shareholders may address only those subjects
specified in the agenda included in the notice thereof, unless otherwise
decided by holders of all of the shares represented at the meeting and
representing at least 90.41% of the shares outstanding and after having
completed the business set forth in the agenda.
ARTICLE 26. Place of Meetings. All meetings of shareholders shall take
place at the principal office of the Company in Santafe de Bogota, on the date
and at the time set forth in the notice. Notwithstanding the foregoing,
shareholders may meet without prior notice and elsewhere when all of the
outstanding shares are represented at such meeting.
<PAGE>
ARTICLE 27. Notice. Notice shall be sent by means of a written
communication to each one of the shareholders at its registered address as
recorded by the Secretary. For the meetings in which end of accounting period
balance sheets are to be examined, notice shall be given at least 15 business
days in advance. In other cases, 10 days' advance notice shall suffice. The
day of the notice and the day of the meeting shall not be counted. Any notice
calling an extraordinary meeting shall necessarily indicate the subjects to be
addressed at such meeting.
ARTICLE 28. Quorum; Majority Voting. Unless otherwise specified herein,
meetings of shareholders shall deliberate with a plurality of persons
representing shareholders holding at least 55% of the outstanding shares.
Decisions shall be made with a favorable vote by shareholders holding at least
55% of the outstanding shares, unless otherwise required by these By-Laws or
applicable law.
ARTICLE 29. Reconstitution After Loss of Quorum. If the meeting is
called but not held due to lack of a quorum, a new meeting shall be summoned
at which a quorum shall consist of a plurality of shareholders, regardless of
the number of shares represented thereby. Notwithstanding anything to the
contrary contained herein, decisions at such meeting may, subject to
applicable law, be taken by holders of a majority of the shares represented at
such meeting. The new meeting shall be held no less than 10 no more than 30
days from the date fixed for the original meeting.
ARTICLE 30. Chairman and Secretary of Meeting. The meeting of
shareholders must be chaired by the President and, in his absence, by one of
the principal members of the Board of Directors, in order of designation and,
in the absence of the latter, by the person appointed at the meeting by a
majority of the votes corresponding to the shares represented thereat. The
Secretary of the meeting shall be the Secretary of the Company and, in his
absence, the person appointed secretary of the meeting by the Chairman.
ARTICLE 31. Minutes. The proceedings of meetings of shareholders shall
be recorded in a Minute Book registered in the Chamber of Commerce in the City
of Santafe de Bogota. The minutes shall be signed by the Chairman and by the
Secretary who have acted therein, or, in their place, by the Fiscal Supervisor
and by the plural committee appointed at the meeting to give its approval,
after studying the minutes of such meeting, within 10 business days after the
date of such meeting, if not approved at such meeting.
The committee members shall record their approval or their objections at the
end of the minutes of each meeting.
ARTICLE 32. Voting Rules. The following voting rules shall apply to
elections of directors and the passing of resolutions by shareholders:
A. Unless otherwise decided at the meeting or when the electoral quotient
legal system is to be applied, votes shall be taken by voice or by a show of
hands. Unless otherwise determined at the meeting, written votes shall be
secret and the Secretary shall deliver to each shareholder or representative
thereof a ballot authorized with his signature indicating the number of shares
represented by such shareholder or representative thereof at the meeting.
<PAGE>
B. For the election of the Board of Directors, and of committees or bodies
thereof, the electoral quotient system shall be applied, unless the election
is by unanimous vote of the shares represented at the meeting. For purposes
of determining the quotient, the quotient shall be rounded down to one decimal
place.
C. The election of alternate directors shall be made simultaneously with that
of directors, unless the meeting provides that it be made separately. At no
election, whether single or plural, shall persons who have been elected as
directors be elected as alternate directors.
D. In the event of a tie in voting for any election of directors, the
election shall be decided by the toss of a coin.
E. The Company may not vote its own shares.
ARTICLE 33. Supermajority Votes. The following decisions require the
favorable vote of shareholders holding at least 90.41% of the outstanding
Shares:
A. Any amendment to the By-Laws, other than an amendment to increase the
authorized capital or decrease the subscribed capital of the Company or any
amendment undertaken to give effect to decisions taken pursuant to Article 35
hereof.
B. The dissolution, winding-up or liquidation or other distribution of assets
of the Company other than by a purchase or sale.
C. The declaration by the Company of any dividends in shares or stock.
D. The appointment of the Company's Fiscal Supervisor and his alternate (the
Shareholders may delegate to a firm of auditors the decision to choose the
individual Fiscal Supervisor and his or her alternate).
E. The issuance of shares other than ordinary shares.
F. Any decision to list any class of the Company's shares on any stock
exchange or to register any such class with the Registro Nacional de Valores
in Colombia or any other securities regulatory authority, national or foreign.
G. The acquisition of interests in existing companies or the incorporation of
companies, affiliates, or subsidiaries for the development of activities or
businesses for any purpose, and contributions in cash, in kind or in services
thereto, the liquidation of such companies, and the transfer of any ownership
interests, rights or shares thereof.
H. The valuation of contributions in kind for equity.
I. To decide what, if any, reserves the Company should establish in addition
to the legal reserve or any increase in the legal reserve above the legal
minimum.
J. Any decision relating to any of the matters referred to in, or to override
a decision of the Board of Directors, except with respect to matters
previously engaged in with third parties,
<PAGE>
or by a delegate thereof taken pursuant to, Article 42 of the By-Laws or to
revoke any delegation of authority given to the Board of Directors.
ARTICLE 34. Responsibilities of the General Meeting of Shareholders. In
addition to the responsibilities set forth in Article 33 above, the following
shall be responsibilities of the General Meeting of Shareholders, which shall
be adopted by the favorable vote of holders of at least 55% of the outstanding
shares:
A. To order actions against the Board of Directors, President, officers, or
Fiscal Supervisor.
B. To remove the Fiscal Supervisor and his or her alternate at any time.
C. To fix the remuneration of the members of the Board of Directors and the
Fiscal Supervisor.
D. To examine, approve or disapprove the end of the accounting period balance
sheets and the accounts which must be submitted by the Board of Directors
every six months or when required by the General Meeting of Shareholders. If
the balance sheets or accounts are not approved, the General Meeting of
Shareholders shall designate a committee of three members, which shall examine
the balance sheets and accounts and shall submit a detailed report in writing
at a special meeting called for such purpose by the General Meeting of
Shareholders, the date and time of which shall be fixed at such General
Meeting of Shareholders.
E. To declare cash dividends in accordance with the balance sheets approved
in accordance with these By-Laws and applicable law.
F. In the event of the dissolution of the Company, to designate one or more
liquidators and their alternates, to remove them, to fix their remuneration,
to give them orders and instructions for liquidation and to approve their
accounts.
G. To delegate to the Board of Directors such functions as it deems
appropriate and which are not assigned by law exclusively to the General
Meeting of Shareholders and to provide the Board of Directors with the
necessary authorizations.
H. To adopt, in general, all measures necessary for compliance with these
By-Laws or in the interests of the Company.
I. All other decisions stipulated by these By-Laws or applicable law to be
adopted by the majorities contained herein or by law.
J. Any decision relating to any of the matters referred to in, or to override
a decision of the Board of Directors, except with respect to matters
previously engaged in with third parties, or by a delegate thereof taken
pursuant to, Article 43 of the By-Laws.
<PAGE>
ARTICLE 35. Other Responsibilities of the General Meeting of
Shareholders. The following matters shall require the minimum favorable vote
of shareholders required by applicable law, unless the following matters are
undertaken for any purpose other than to distribute an amount of cash to
shareholders at a time when the Company would not be permitted under
applicable law to declare a dividend in such amount, in which case the
following matters shall require the favorable vote of holders of at least
90.41% of the outstanding shares:
A. Any consolidation, merger or sale of all or substantially all of the
assets of the Company, any transformation of the Company into another entity
or the split-up (escicion) of the Company.
B. Any increase in authorized capital or reduction in subscribed capital of
the Company or any repurchase by the Company of its shares.
CHAPTER SIX
BOARD OF DIRECTORS
ARTICLE 36. Composition. The Board of Directors shall be composed of
six principal members, each one with two personal alternates, first and
second, elected by the General Meeting of Shareholders. The alternates shall,
in numerical order, replace the principal member during his or her absolute or
temporary absence.
The term of the members elected as principals and alternate members of the
Board of Directors shall be two years without prejudice to their re-election
or free removal by any General Meeting of Shareholders.
The Board of Directors shall designate from among its principal members a
Chairman. The Chairman shall chair the meetings of the Board of Directors and
authorize with his signature the minutes thereof.
ARTICLE 37. President. The President shall attend the meetings of the
Board of Directors and shall have the right to speak but not to vote thereat
unless he is a member of the Board of Directors
ARTICLE 38. Meetings. The Board of Directors shall meet ordinarily at
least once a month until December 31, 1997 and quarterly thereafter and
extraordinarily when called by the President, by one of its members acting as
principals or by the Fiscal Supervisor. Meetings of the Board of Directors
shall be held at the offices of the Company in the City of Santafe de Bogota,
but upon a decision of the Board of Directors itself, meetings may be held at
any other place inside or outside Colombia.
ARTICLE 39. Internal Rules. The operation of the Board of Directors
shall be governed by the following rules:
A. It shall deliberate and decide validly with the presence and the votes of
four of its members, except as otherwise required by these By-Laws or
applicable law.
<PAGE>
B. Notice of meetings shall be given at least 10 days in advance, but with
the consent of all members, with principals or acting alternates, the Board of
Directors may deliberate validly and adopt decisions without sending out prior
notice. The notice must set forth the subjects that will be addressed at the
respective meeting and each director may add additional or change items to be
discussed at such meeting in an additional notice provided to each director at
least five days prior to the meeting. No changes may be made to the agenda
for such meetings without the unanimous consent of the directors.
C. Minutes of each meeting shall be prepared and shall be recorded in a
Minute Book registered in the Chamber of Commerce in the City of Santafe de
Bogota and these shall contain evidence of the date, time and place of the
meeting, the names of the persons in attendance, indicating whether they are
principals or alternates, the matters dealt with, the resolutions adopted and
the number of votesissued in favor, against or abstained in connection with
such resolutions, the appointments made and the date and time of adjournment.
D. The minutes shall be signed by the Chairman of the respective meeting and
by the Secretary.
ARTICLE 40. Permanent Vacancies. When a quorum is impossible to achieve
due to the absolute absence of members of the Board of Directors and it is
more than one month before the next Annual General Meeting of Shareholders,
the President shall call an Extraordinary Meeting of Shareholders to elect
directors to fill the existing vacancies for a new two year term.
ARTICLE 41. Responsibilities. The Board of Directors shall have the
following responsibilities:
A. To comply with these By-Laws and decisions of the General Meeting of
Shareholders and to ensure that these By-Laws and such decisions are complied
with.
B. To examine, when it so deems appropriate, the books, documents,
installations, camps, deposits, warehouses and funds of the Company.
C. To serve as a consulting and advisory body to the President.
D. To request from the President, the Fiscal Supervisor and other employees of
the Company the reports required for the knowledge and good progress of the
corporate business, and to examine, either personally or through committees
appointed from among its members, the books, accounts, correspondence and
other documents of the Company.
ARTICLE 42. Unanimous Decisions. The following decisions require the
unanimous approval of the Board of Directors:
A. To designate the President and two alternates and the Secretary, for
periods of two years, and to determine their remuneration.
<PAGE>
B. To establish any program of capital expenditures (other than capital
expenditures required to maintain the then current objectives of the Company's
operations approved in an annual operating budget).
C. To authorize the President to execute all acts, contracts and agreements
in amounts exceeding the equivalent in pesos of U.S.$10 million at the Market
Representative Rate or the rate that replaces it, other than those for which
expenditure has been included in the Company's annual operating budget
approved by the Board of Directors.
D. To authorize the President to enter into agreements for the benefit of the
Company's creditors (concordat).
E. To determine the tariff and transportation principles applicable to the
pipeline.
F. To approve any contract that may be made between the Company and its
shareholders or affiliates of the shareholders in an amount that exceeds the
equivalent in pesos of U.S.$100,000 at the Market Representative Rate or the
rate that replaces it.
G. To decide to increase or decrease the design capacity of (i) the Cusiana
to El Porvenir segment of the pipeline from 500,000 barrels per day, (ii) the
El Porvenir to Vasconia segment of the pipeline from 556,000 barrels per day,
(iii) the Vasconia to Covenas segment of the pipeline from 290,000 barrels per
day, and (iv) the Covenas terminal segment of the pipeline from 500,000
barrels per day.
H. To enter into any acquisition or sale or other disposition of assets or
properties by the Company or any series of such transactions involving an
amount greater than the equivalent in pesos of U.S.$10 million at the Market
Representative Rate or the rate that replaces it, other than any acquisition
for which expenditure has been included in the Company's annual operating
budget approved by the Board of Directors.
I. To enter into any pledge, lease or other encumbrance of assets or
properties of the Company in each case involving an amount greater than the
equivalent in pesos of U.S.$1 million at the Market Representative Rate or the
rate that replaces it.
J. To enter into any transaction for the borrowing of money being either
indebtedness with a maturity greater than one year or indebtedness in a
principal amount at the Market Representative Rate or the rate that replaces
it in excess of the equivalent in pesos of U.S.$10 million.
K. To delegate to a committee of the Board of Directors, to one director, to
the President or any other officer of the Company or to any third party, when
it deems appropriate, for specific cases or for a limited period of time, one
or several of its functions, provided that, by their nature, these may be
delegated and their delegation is not otherwise prohibited by these By-Laws or
applicable law.
ARTICLE 43. Other Decisions. The following decisions shall require the
favorable vote of four members of the Board of Directors:
<PAGE>
A. To approve the annual operating budgets of the Company, including any
capital expenditures required to maintain the then current objectives of the
Company's operations.
B. To authorize the President to execute all acts, contracts and agreements
in amounts exceeding the equivalent in pesos of U.S.$10 million at the Market
Representative Rate or the rate that replaces it for which expenditure has
been included in an annual operating budget of the Company in each case
approved by the Board of Directors.
C. To create such positions as it deems appropriate for the operation of the
Company, and to fix the remuneration and duties associated therewith, except
for those whose designation or removal is the responsibility of the General
Meeting of Shareholders.
D. To submit, jointly with the President, to the General Meeting of
Shareholders the reports, accounts, balance sheets, inventories, proposed
distributions of profits and other documents referred to in Article 446 of the
Commercial Code.
E. Upon the occurrence of an unforeseen or urgent event to summon a General
Meeting of Shareholders or Extraordinary Meetings of Shareholders, whenever
required or requested by a number of shareholders representing not less than
9% of the outstanding shares.
F. To decide on the establishment or closing of branches or agencies within
or outside the corporate domicile.
G. To regulate the handling of Company funds to determine the proper
allocation of available funds and to decide on changes in their investment, as
well as to determine the timing of disbursements for the execution of approved
budgets.
H. To issue the internal regulations of the Company.
I. To propose to the General Meeting of Shareholders increases of capital, to
authorize the issuance of subordinated notes to shareholders and to approve
the placement regulation of shares and subordinated notes.
J. To authorize the officers or representatives of the Company, giving them
relevant instructions, to enter into or reject collective labor agreements or
contracts and to constitute courts of arbitration and to designate
conciliators and arbitrators in cases of collective labor conflicts. To
authorize bonuses, benefits or other compensation for Company personnel.
K. To authorize any delegation of functions which the President might wish to
make.
L. To name and to remove the operator of the pipeline.
M. To approve the policies pertaining to relations with government and public
entities.
N. To appoint and remove the senior officers of the Company (other than the
President).
<PAGE>
CHAPTER SEVEN
PRESIDENT
ARTICLE 44. Appointment. Subject to the requirements of these By-Laws
and applicable law, the administration of the Company and its legal and other
representation shall be the responsibility of the President appointed by the
Board of Directors for a period of two years or until his or her replacement
is appointed. The President may be indefinitely re-elected or freely removed
by the Board of Directors at any time.
The President shall have two alternates who shall replace him or her during
his or her absolute or temporary absences.
ARTICLE 45. Responsibilities. Subject to such policies as may from time
to time be established by the Board of Directors, the following are the
responsibilities of the President:
A. To represent the Company as a juridical person.
B. To carry out the decisions or orders of the General Meeting of
Shareholders and Extraordinary Meetings of Shareholders and the Board of
Directors.
C. To designate and remove the employees of the Company, except those whose
designation is a function of the General Meeting of Shareholders or the Board
of Directors.
D. To ensure that the employees of the Company perform their duties in a
satisfactory manner.
E. To constitute the attorneys of the Company to act in accordance with his
instructions and to represent the Company before any authorities, officers or
entities.
F. To supervise the collection and investment of Company funds and to see
that all assets pertaining to it and those received in custody or on deposit
are maintained with appropriate safeguards.
G. To execute the acts and enter into the contracts intended to carry out the
corporate purposes of the Company, previously submitting to the Board of
Directors those matters in which it must participate as stipulated in these
By-Laws or applicable law, and those the amount of which exceeds the
equivalent in pesos of U.S.$10 million at the Market Representative Rate or
the rate that replaces it provided that any such act or contract the amount of
which exceeds the equivalent in pesos of U.S.$5 million at the Market
Representative Rate or the rate that replaces it but is less than the
equivalent in pesos of U.S.$10 million at the Market Representative Rate or
the rate that replaces it are executed by both the President and another
officer of the Company designated by the Board of Directors whose name is
registered for such purpose at the Chamber of Commerce in Bogota.
<PAGE>
H. To summon and to chair General Meetings of Shareholders and Extraordinary
Meetings of Shareholders or the Board of Directors in the manner provided for
in these By-Laws or the law and seek their advice and opinion on important
matters.
I. To prepare and submit to the approval of the Board of Directors the
health, safety and working condition regulations of the Company.
J. To present, in conjunction with the Board of Directors, to the General
Meeting of Shareholders, for its approval or disapproval, the documents
referred to in Article 446 of the Commercial Code.
K. To carry out duties expressly delegated by the General Meeting of
Shareholders or the Board of Directors in the terms of the delegation given.
L. To organize properly the computation, accounting and payment of salaries
and legal and other benefits.
M. To ensure proper and prompt payment of all tax obligations of the Company.
N. To ensure that the Company properly carries on its purpose and objectives.
O. To ensure that the books of minutes of the General Meeting of Shareholders
and the Board of Directors, the Share Register and all others stipulated by
law and the Board of Directors, are kept under his or her care and
responsibility.
P. To report to the Board of Directors regarding all matters for which he or
she is responsible.
Q. To submit such financial information to the Board of Directors as may be
requested from time to time by the Board of Directors.
R. To delegate with the prior approval of the Board of Directors certain
functions pertaining to his or her office and within the limits established in
these By-Laws.
S. To take all necessary and reasonable action to promptly respond to all
nonroutine occurrences that may have a significant adverse effect upon the JSC
and to report as soon as possible all such occurrences and all action taken in
response thereto to the Board of Directors and to make follow-up reports from
time to time on such occurrences and actions.
T. To carry out such other duties as may be assigned to him or her by the
General Meeting of Shareholders or any Extraordinary Meeting of Shareholders
or the Board of Directors, as well as those corresponding to him or her in
accordance with applicable law or the nature of his or her office.
<PAGE>
CHAPTER EIGHT
SECRETARY
ARTICLE 46. Appointment. The Company shall have a Secretary for a term
of two years, who shall be freely designated and removed by the Board of
Directors, and who shall in turn be the Secretary to the General Meeting of
Shareholders, the Board of Directors and the Company.
ARTICLE 47. Responsibilities. The following are the responsibilities of
the Secretary:
A. To keep, in accordance with applicable law, the minutes of the General
Meeting of Shareholders and the Board of Directors, and to authorize with his
or her signature copies thereof.
B. To be in charge of all matters related to the issuance of share
certificates, notation of acts or documents in the Share Register and to
countersign the share certificates.
C. To send out notices for meetings of the Board of Directors and any General
Meeting of Shareholders.
D. To organize the files of the Company and to ensure the custody and
preservation of the books, documents, vouchers and other items entrusted to
him or her.
E. To maintain in order and up-to-date, fulfilling all applicable legal
requirements, the registration of trademarks, patents, insurance policies,
public deeds and other documents related to the ownership or possession of
assets or rights of the Company.
F. Any other duties of a special nature which are conferred on him or her by
the General Meeting of Shareholders, the Board of Directors or the President.
CHAPTER NINE
FISCAL SUPERVISOR
ARTICLE 48. Appointment. The Company shall have a Fiscal Supervisor and an
alternate, who shall be appointed by the General Meeting of Shareholders in
accordance with these By-Laws and applicable law for two-year periods but may
be indefinitely re-elected or removed by the General Meeting of Shareholders
at any time. The alternate shall replace the principal in all cases of
absolute or temporary absence.
ARTICLE 49. Qualifications. The Fiscal Supervisor and his or her
alternate shall be Public Accountants and shall be subject to the
disqualifications, prohibitions, incompatibilities and liabilities established
by applicable law. Therefore, they may not be shareholders or be employed in
any other position within the Company or be related within
<PAGE>
the fourth degree of consanguinity or second of affinity or first of civil
kinship to the President or to any member of the Board of Directors. The
Fiscal Supervisor is prohibited from entering, either directly or through a
third party, into contracts of any nature with the Company.
ARTICLE 50. Responsibilities. The following are the responsibilities of the
Fiscal Supervisor:
A. To see that the operations entered into or carried out on behalf of the
Company are in accordance with the provisions of these By-Laws, the decisions
of the General Meeting of Shareholders and of the Board of Directors.
B. To render prompt written account to the General Meeting of Shareholders,
the Board of Directors or the President, as the case may be, of any
irregularities which occur in the operations of the Company or in the
development of its business.
C. To cooperate with government agencies which inspect and supervise the
Company and to provide them with relevant reports.
D. To ensure that the accounts of the Company and the minutes of the General
Meeting of Shareholders and of the Board of Directors are regularly kept, and
that correspondence of the Company and vouchers of the accounts are preserved,
rendering instructions necessary to achieve such ends.
E. To inspect regularly the assets of the Company and to see that measures
for the preservation and security of such assets and of those held by the
Company in custody or on deposit for any reason are taken promptly.
F. To give the instructions, perform the inspections and request the reports
which may be necessary to establish control of the corporate assets.
G. To authorize with his or her signature any balance sheet prepared with his
or her corresponding certificate or report.
H. To summon the shareholders to Extraordinary Meetings of Shareholders when
he or she so deems it appropriate.
I. To carry out the remaining duties required by applicable law or these
By-Laws and those which, being compatible with the above, are entrusted to him
or her by the General Meeting of Shareholders.
ARTICLE 51. Opinions and Reports. The opinion or report of the Fiscal
Supervisor in connection with the issuance of the balance sheets of the
Company shall contain at least what is required by Article 208 of the
Commercial Code and the report of the Fiscal Supervisor to the General Meeting
of Shareholders shall contain the items required by Article 209 of the
Commercial Code.
<PAGE>
ARTICLE 52. Liability. The Fiscal Supervisor shall be responsible for
any damages he or she may cause the Company, its associates or third parties
due to his or her negligence or willful misconduct in the performance of his
or her duties.
ARTICLE 53. Participation at Meetings. When called, the Fiscal
Supervisor shall be entitled to participate in deliberations of the General
Meeting of Shareholders and meetings of the Board of Directors, although
without the right to vote. He or she shall, likewise, have the right to
inspect at any time the accounting books, the books of minutes, the
correspondence, the account vouchers and all other assets of the Company.
CHAPTER TEN
BALANCE SHEETS, RESERVES AND DIVIDENDS
ARTICLE 54. Fiscal Year. On December 31 and June 30 of each year, the
Company shall close its accounts in order to produce the balance sheet, the
profit and loss statement corresponding to the annual and six month period,
respectively, ended as of that date and the itemized inventory of all assets
and liabilities of the Company in conformity with applicable law and
accounting standards. The balance sheet, the profit and loss statement and the
itemized inventory shall be submitted to the consideration of each General
Meeting of Shareholders in its ordinary session, together with reports,
projects and other documents required by these By-Laws and in accordance with
applicable law.
ARTICLE 55. Other Statements. At the times determined by the Board of
Directors, trial or special balance sheets shall be prepared as well as other
financial statements ordered by the Board of Directors to meet its needs.
ARTICLE 56. Prior Requirements for the Distribution of Profits. There shall
be no distribution of profits except on the basis of the December 31 balance
sheet approved by the General Meeting of Shareholders at its meeting to
approve the annual financial statements for the fiscal year then ended and on
the basis of the June 30 balance sheet at its meeting to approve the financial
statements for the six month period then ended.
Profits not be distributed unless and until losses from previous accounting
periods affecting capital have been paid, it being understood that losses
affect the capital when as a result thereof the net worth of the Company is
reduced to less than the subscribed capital.
ARTICLE 57. Distribution of Profits. The profits of each accounting period,
established in accordance with the balance sheet approved by each General
Meeting of Shareholders, after deducting applicable taxes, shall be
distributed by it in accordance with the following regulations and legal
provisions:
<PAGE>
A. 10% of net profits after taxes shall be attributed to the legal reserve
until it reaches at least 50% of the subscribed capital. After this reserve
limit has been reached, each General Meeting of Shareholders may, at its
discretion, continue to increase the legal reserve, but should such reserve
decrease below 50% of the subscribed capital, it shall be necessary to
appropriate up to 10% of the net profits until the reserve again reaches the
limit prescribed by law.
B. Once the appropriation for the legal reserve has been made, the
appropriations for any other reserves which, upon fulfillment of the legal
requirements, are agreed on by the General Meeting of Shareholders in
accordance with Section 33 on its own initiative or upon the recommendation of
the Board of Directors shall be made. These reserves shall have a clear and
specific allocation, shall be mandatory for the accounting period in which
they are established and their change or subsequent distribution may only be
authorized by a General Meeting of Shareholders.
C. Should there be any losses which have not been set off and which affect the
capital of the Company, net profits shall be applied first to setting off such
losses before any appropriation for legal, voluntary or occasional reserves.
D. Any remaining net profits, after making appropriations for the legal
reserve and for other reserves, shall be paid as dividends to the
shareholders, pro rata to the portion of the par value of their shares.
E. The General Meeting of Shareholders may decide, with the vote of at least
90.41% of the outstanding shares, that there be no distribution of profits by
way of dividends in the respective accounting period, even if the sum of all
the reserves exceeds all of the subscribed capital, or decide that less than
50% or 70% of the net profits be distributed, for those cases contemplated in
Articles 155 and 454 of the Commercial Code.
ARTICLE 58. Timing for the Payment of Dividends. Except as otherwise
decided by a General Meeting of Shareholders pursuant to Article 34, the
payment of dividends to the shareholders shall be made within one month of the
date on which they are declared and they shall be set off against any amounts
owed by such shareholders to the Company. It shall be the responsibility of
each General Meeting of Shareholders to fix the time of payment of dividends
and to regulate them, particularly as regards the method and place of payment
to facilitate the timely receipt of dividends by shareholders.
ARTICLE 59. Non-Payment of Interest on Dividends Not Promptly Claimed.
The Company shall not pay interest on any dividends not promptly claimed which
shall remain with the cashier of the Company, in deposit and available to the
order of their owners.
<PAGE>
CHAPTER ELEVEN
AMENDMENTS TO BY-LAWS
ARTICLE 60. Decisions regarding amendments to the By-Laws shall be
approved in a single debate, which shall take place during a General Meeting
of Shareholders or an Extraordinary Meeting of Shareholders. Any amendments,
once approved by the meeting through the favorable vote of a plurality of
shareholders representing at least 90.41% of the outstanding shares (other
than those related to increases or decreases in authorized capital or the
matters referred to in Article 35 to the extent provided therein), shall be
made in a Public Deed by the President of the Company and shall be registered
with the Chamber of Commerce. Unless otherwise provided, the approval of an
amendment by a meeting of shareholders imposes on the President the obligation
to carry out the legal formalities for its solemnization without requiring any
other authorizations.
CHAPTER TWELVE
DISSOLUTION AND LIQUIDATION OF THE COMPANY
ARTICLE 61. Dissolution. The Company shall be dissolved upon the
grounds determined by the law generally for commercial corporations, upon the
special grounds established by commercial law for stock companies,
extraordinarily, at any time by decision of the General Meeting of
Shareholders, approved and formalized as provided for in these By-Laws for
amendment thereto or, without any action of the Board of Directors or the
General Meeting of Shareholders, April 3, 1995 if the Company shall have
received from any shareholder on or prior to March 15, 1995 a certified copy
of a resolution adopted by the board of directors or equivalent decision
making body, or an authorized committee thereof, of any of Empresa Colombiana
de Petroleos-Ecopetrol, The British Petroleum Company p.l.c., TOTAL S.A.,
Triton Energy Corporation, IPL Energy Inc. or TransCanada PipeLines Limited to
the effect that such board or body or committee has resolved to end such
shareholder's (or, in the case of Ecopetrol, Ecopetrol's) participation in the
Oleoducto Central S.A. and has not received prior to 5:00 p.m., local time,
Santafe de Bogota, Colombia on March 31, 1995 either (A) a notice of
withdrawal of such resolution or (B) a certificate from one or more of the
other shareholders of their intention to continue with the Oleoducto Central
S.A.
ARTICLE 62. Mandatory Dissolution. When losses occur which reduce the
net worth of the Company to less than 50% of the subscribed capital, the
Company shall not be dissolved ipso facto, since the General Meeting of
Shareholders may take or order the steps required for the re-establishment of
net worth above 50% of the subscribed capital within six months following the
date of the balance sheet wherein the mentioned losses appear as incurred.
Should these steps not be taken within the indicated period, the General
Meeting of Shareholders shall declare the dissolution of the Company in order
to proceed to its liquidation.
ARTICLE 63. Notice. In the event of dissolution of the Company, for
whatever reason, its state of liquidation, once dissolved, shall be
communicated by means of a notice to be published in one or several newspapers
regularly circulating in the corporate domicile
<PAGE>
of the Company for three or more consecutive business days, and to be posted
in visible places of the offices where the Company has established branches.
ARTICLE 64. Appointment to Liquidate. Once the Company has been
dissolved for any reason, the calculation and division of the corporate
capital shall be made in accordance with the legal provisions, by a special
liquidator, who shall be appointed by the General Meeting of Shareholders,
without prejudice to its right to designate liquidators and determine, in such
case, whether they are to act jointly or severally. The General Meeting of
Shareholders shall appoint an alternate for each liquidator. Unless and until
the designation of the liquidator and alternate is made, whoever holds the
office of President of the Company at the time it goes into liquidation, shall
act as such, and his or her alternates shall be the alternates to the
President, first and second, in their order.
ARTICLE 65. Rules for the Liquidation and Division of the Corporate
Capital. The liquidation of the Company and the division of its corporate
capital shall be carried out in accordance with the commercial laws and the
applicable provision of the Civil Code, observing the following rules:
A. The General Meeting of Shareholders shall be summoned and shall meet at
the times, in the manner and upon the terms provided for the ordinary
meetings, and extraordinarily whenever called by the liquidator, the Fiscal
Supervisor, the Superintendency of Companies, or when requested by a plural
number of shareholders representing not less than 9% of the subscribed shares.
At such meetings, it shall perform all functions compatible with the process
of liquidation, and in particular, those of appointing, changing and freely
removing the liquidator or liquidators and their alternates, requesting them
to render accounts, determining the assets which are to be distributed in
kind, and establishing priorities for the realization of assets, manner and
terms of realization, agreeing with the liquidators upon the price of their
services and adopting other determinations which may be in order pursuant to
applicable law or these By-Laws.
B. The General Meeting of Shareholders may determine which assets are to be
distributed in kind, fix the values of such assets or the manner of
determining them, establish the form of adjudication and authorize the
liquidator to make the required distributions, observing applicable legal
requirements. The General Meeting of Shareholders shall be empowered to
authorize the adjudication of assets pro indiviso by groups of shareholders,
order sales of assets through auctions among the shareholders themselves, or
admit outside bidders, and decide on the use of other forms considered
appropriate.
C. For the approval of periodic accounts rendered by the liquidator or of the
occasional accounts required from him, as well as to authorize the
adjudication of the assets in kind, authorize payments in kind, grant special
facilities to debtors of the Company and carry out other transactions which
may be necessary or appropriate to facilitate or conclude the liquidation, the
favorable vote of 55% of the outstanding shares shall be required.
D. For the approval of the final liquidation accounts and of the memorandum
of distribution, the favorable vote of 55% of the outstanding shares shall be
required.
<PAGE>
E. Upon completion of the Company's liquidation, the liquidators shall
request the appropriate approval from the Superintendency of Corporations.
ARTICLE 66. Powers of Liquidator. The liquidator shall have the powers
conferred on him or her by applicable law, which may be extended by the
General Meeting of Shareholders, and his or her actions shall conform at all
times to the applicable law and to the instructions he receives from the
General Meeting of Shareholders.
CHAPTER THIRTEEN
ARBITRATION
ARTICLE 67. Arbitration. Any controversy or dispute among the
shareholders or between the shareholders and the Company in connection with
corporate activities, rights of the shareholders, profit participation,
liquidation of the Company or other matters arising from the existence of the
Company that cannot be resolved directly by the parties, unless applicable law
requires such controversy or dispute to be resolved by judicial proceedings,
they shall be settled by a Court of Arbitration designated by the Board of
Directors of the Chamber of Commerce of Santafe de Bogota by drawing lots
among the arbitrators appearing in the list kept by the Center of Mercantile
Arbitration and Conciliation of said Chamber. The Court thus designated shall
abide by the provisions of the Code of Civil Procedure and the Commercial Code
in accordance with the following rules: (A) the Court shall consist of three
arbitrators, who must be Colombian citizens and lawyers; (B) the internal
organization of the Court shall be subject to the rules established to such
end by the Center of Mercantile Arbitration and Conciliation of the Chamber of
Commerce of Santafe de Bogota; (C) the decision of the Court shall be in law;
and (D) the Court shall meet in Santafe de Bogota, at the Center of Mercantile
Arbitration and Conciliation of the Chamber of Commerce of such city.
CHAPTER FOURTEEN
MISCELLANEOUS
ARTICLE 68. Duties of Officers. It is the duty of every officer of the
Company to perform the duties of his or her job, even if his or her term has
expired, until his or her replacement takes office.
Note to English version: As used in these By-Laws, "business day" means a day
in which commercial banks in Santafe de Bogota are permitted by law to be open
for domestic and international business.
Transitory Provisions. Until the first General Meeting of Shareholders is
held, the following will be members of the Board of Directors:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Principal 1st Alternate 2nd Alternate
1.Ismael E. Arenas Mauricio Vegs Gabriel Reyes
2.Nick Connolly David de Gruyter Harry Koppel
3.A.E. Turner Bernard Gros deBois Don M. Drinkard
4.Benny Philips Wayne M. Sartore Donald Wishart
5.Jacques de Boisseson Ives Cerf Mayer Jean A.P. Guilbert
6.Michael Durnin Robert M. Jensen Arthur J. Epp
</TABLE>
Until the first General Meeting of Shareholders is held, Gustavo Suarez
Camacho will act as President of the Company, Wayne Sartore as first alternate
and Fernando Gutierrez as second alternate.
Until the first General Meeting of Shareholders is held, Ernst & Young Ltd.
will exercise the role of the Company's accountants, which firm has in turn
designated Virgilio Baquero B. as principal fiscal supervisor and Alfonso
Coronado R. as alternate fiscal supervisor.
<PAGE>
SCHEDULE B TO
OLEODUCTO CENTRAL AGREEMENT
FORM OF VOTING TRUST AGREEMENT
dated as of the day of , 1995
among
OLEODUCTO CENTRAL S.A.
BP COLOMBIA PIPELINES LIMITED
TOTAL PIPELINE COLOMBIE S.A.
TRITON PIPELINE COLOMBIA, INC.
IPL ENTERPRISES (COLOMBIA) INC.
TCPL (BERMUDA) LTD.
and
[INSERT NAME OF VOTING TRUSTEE]
as Voting Trustee
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section Page
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
1.1. Definitions 2
1.2. Interpretation 3
ARTICLE TWO
VOTING TRUST (ENCARGO FIDUCIARIO)
2.1. Transfer of Voting Rights to the Voting Trustee 3
2.2. Sharholder Party Instructions Irrevocable 4
2.3. Relationship with By-Laws 4
ARTICLE THREE
VOTING OF THE SHARES
3.1. Exercise of Voting Rights 4
3.2. Effect of Voting Default 6
3.3. Voting Default 7
ARTICLE FOUR
THE VOTING TRUSTEE
4.1. Appointment of Voting Trustee 7
4.2. Delivery of Documentation 8
4.3. Attorney-in-Fact 8
4.4. Reliance 8
4.5. Books and Records 9
4.6. Liability 9
4.7. Consulting With Counsel, etc. 9
4.8. Duties 9
4.9. Resignation, Replacement and Successor Voting Trustee10
4.10. Indemnity 10
4.11. Compensation 11
4.12. Certificates 11
4.13. Stamp and Other Similar Taxes 11
4.14. Exculpatory Provisions 11
4.15. Merger of the Trustee 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section Page
4.16. Treatment of Shareholder Parties by Voting Trustee 12
4.17. Confidentiality 12
4.18. Miscellaneous 13
ARTICLE FIVE
TERM
5.1. Term 13
5.2. Effectiveness 13
ARTICLE SIX
GENERAL
6.1. Notices 14
6.2. Entire Agreement 15
6.3. Representations and Warranties 16
6.4. Assignments 16
6.5. Amendments 17
6.6. No Third Party Beneficiaries 17
6.7. Severability 17
6.8. Governing Law 17
6.9. Arbitration 17
6.10. Waiver of Immunity 17
6.11. Headings; Table of Contents 18
6.12. Counterparts 18
</TABLE>
<PAGE>
VOTING TRUST AGREEMENT
AGREEMENT, dated as of the day of , 1995, among:
OLEODUCTO CENTRAL S.A., a sociedad anonima existing under the laws
of Colombia (the "JSC");
BP COLOMBIA PIPELINES LIMITED, a corporation existing under the laws
of England and Wales;
TOTAL PIPELINE COLOMBIE S.A., a corporation existing under the laws
of France;
TRITON PIPELINE COLOMBIA, INC., a corporation existing under the
laws of the Cayman Islands;
IPL ENTERPRISES (COLOMBIA) INC., a corporation existing under the
laws of the Cayman Islands; and
TCPL (BERMUDA) LTD., a corporation existing under the laws of
Bermuda; and
[INSERT NAME OF VOTING TRUSTEE], a trust company existing under the
laws of Colombia, as voting trustee (the "Voting Trustee").
RECITALS
WHEREAS:
A. The Shareholders have formed the JSC by public deed no. 4747
of December 14, 1994 granted before notary public no. 38 of Santafe de Bogota;
B. The Shareholders have entered into the Oleoducto Central
Agreement (the Oleoducto Central Agreement), dated as of December 14, 1994,
among the JSC and the Shareholders, specifying certain terms and conditions of
their respective investments and participation in the JSC, the Oleoducto
Central and the financing and operation thereof;
C. The JSC, the Shareholder Parties and Ecopetrol are entering
into a Dividend Trust Agreement in order to specify certain additional terms
and conditions of their respective investments in the JSC;
D. The Shareholder Parties wish to specify certain terms and
conditions of exercise of their respective voting rights as shareholders of
the JSC; and
<PAGE>
E. The Shareholder Parties deem it to be in each of their best
interests and in the best interest of the JSC that this Agreement be made.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the Parties agree as
follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise
requires, the following words and phrases shall have the meanings indicated
below:
"Confidential Information" shall have the meaning assigned to it in
Section 4.17.
"Nominating Shareholder Party" shall mean each of BP Colombia
Pipelines Limited, TOTAL Pipeline Colombie, S.A., Triton Pipeline Colombia,
Inc., IPL Enterprises (Colombia) Inc., TCPL (Bermuda) Ltd. and its successors
to and permitted assigns of (a) of all its respective Shares or (b) of a
portion of its respective Shares, if such successor and assign has been
designated the Nominating Shareholder Party in replacement of its respective
predecessor and assignor by joint notice of the former and the latter to the
JSC and each other Nominating Shareholder Party.
"Parties" shall mean BP Colombia Pipelines Limited, TOTAL Pipeline
Colombie S.A., Triton Pipeline Colombia, Inc., IPL Enterprises (Colombia)
Inc., TCPL (Bermuda) Ltd. and the Voting Trustee and their respective
successors and permitted assigns.
"Shareholder Party" shall mean any Party to this Agreement that is
(a) a Shareholder or (b) a holder of Shares of the JSC who has delivered the
notice (or deemed notice) described in Section 6.4(c).
"Voting Default" shall have the meaning assigned to it in Section
3.3.
"Voting List" shall have the meaning assigned to it in Section 3.1.
"Voting Rights" shall mean all rights and powers of every nature
related to the voting of the Shares and/or the execution of consents in
respect thereof in person or by proxy, including, without limitation, the
right to vote for election of directors and in favor of or in opposition to
any resolution or proposed action of any character whatsoever which may be
presented in any and all meetings of the general meeting of shareholders and
any other meetings of shareholders of the JSC called or held for any purpose
and in any and all proceedings, whether at a meeting of shareholders or
otherwise, requiring the consents of shareholders of the JSC or when such
consents are given in lieu of such meetings.
<PAGE>
All defined terms used and not defined herein shall have the meanings assigned
to them in the Oleoducto Central Agreement.
Section 1.2. Interpretation. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
(b) words importing gender include all genders;
(c) any reference to an Article or a Section refers to an Article or
a Section, as the case may be, of this Agreement;
(d) all references to this Agreement and the words "herein",
" hereof","hereto" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or
other subdivision; and
(e) all references herein to "accounting principles" shall mean
accounting principles generally accepted in Colombia as in effect from time to
time.
ARTICLE TWO
VOTING TRUST (ENCARGO FIDUCIARIO)
Section 2.1. Transfer of Voting Rights to the Voting Trustee.
Each Shareholder Party hereby transfers and assigns all Voting Rights
attaching to all (but not a portion of) the Shares held by it from time to
time to the Voting Trustee to be held in trust (encargo fiduciario) and be
voted by the Voting Trustee according to the terms of this Agreement. Until
the termination of this Agreement, and subject to the terms hereof, the Voting
Trustee or its successor in the trust (encargo fiduciario) shall possess and
shall be entitled to exercise all Voting Rights in respect of such Shares, it
being expressly stipulated that, except as otherwise provided in this
Agreement, no Shareholder Party shall have any right to exercise the Voting
Rights or take part in or consent to or in any way control or limit any
corporate or shareholders' action of the JSC in respect of any Shares held by
it, provided that it may attend such meetings.
Section 2.2. Shareholder Party Instructions Irrevocable. Each
Shareholder Party hereby irrevocably instructs and authorizes the Voting
Trustee to hold the Voting Rights with respect to such Shareholder Party's
Shares in trust (encargo fiduciario) and to exercise such Voting Rights only
as provided in this Agreement and all instructions given and all authority
conferred under this Agreement is given and conferred subject to the interests
of the Voting Trustee and the other Shareholder Parties as beneficiaries
hereof; and, in consideration of those interests and for the purpose of
completing the transactions contemplated by this Agreement, all instructions
given and all authority conferred by this Section 2.2 shall be deemed coupled
with an interest and be irrevocable and not subject to
<PAGE>
termination by such Shareholder Party or by operation of law, whether by the
death or incapacity of such Shareholder Party (if such Shareholder Party is an
individual) or by the death or incapacity of any executor or trustee (if such
Shareholder Party is an estate or trust) or the termination of such estate or
trust or by the dissolution of such Shareholder Party (if such Shareholder
Party is a partnership or corporation), or by the occurrence of any other
event.
Section 2.3. Relationship with By-Laws. This Agreement does not
in any way change or amend the approval requirements required for certain
corporate or shareholder actions of the JSC as set forth in By-Laws and under
applicable law.
ARTICLE THREE
VOTING OF THE SHARES
Section 3.1. Exercise of Voting Rights. Subject to Section
3.2, the Voting Trustee shall exercise the Voting Rights attaching to the
Shares of each Shareholder Party in accordance with the direction of such
Shareholder Party in all instances; provided, however, that the Voting
Trustee, unless otherwise unanimously instructed by all Shareholder Parties,
shall exercise the Voting Rights attaching to all Shares held by it in trust
(encargo fiduciario):
(a) So that one nominee of each Nominating Shareholder Party will at all
times be a member of the Board of Directors provided that such Nominating
Shareholder Party continues to be a Shareholder Party at the time of such
election. Five Business Days prior to any election of directors, each
Nominating Shareholder Party shall deliver to the Voting Trustee the name of
its nominee (and two alternates thereof):
(i) For each election of directors of the JSC, the Voting Trustee on
behalf of all of the Nominating Shareholder Parties shall submit to the JSC a
single list (the "Voting List") for purposes of that election containing (A)
in the event of an election of the whole Board of Directors, the name of one
nominee (and two alternates thereof) of each NominatingShareholder Party or
(B) in the event of an election of less than the whole Board of Directors, the
name of one nominee (and two alternates thereof) of each Nominating
Shareholder Party whose nominee does not continue to be a Director of the JSC.
(ii) In each case of (A) and (B) of clause (i) above, if all Nominating
Shareholder Parties have designated their respective nominees (and
alternates), or one or more Nominating Shareholder Parties have failed to
designate their respective nominees (and alternates), and as of the fourth
Business Day prior to an election, the number of nominees in the Voting List
is less than the number of directors to be elected at such election, the
Voting
<PAGE>
Trustee shall notify the Nominating Shareholder Parties who shall consult in
good faith to issue joint instructions to the Voting Trustee for the
designation of mutually agreeable nominees (and alternates) to fill the
vacancies in the Voting List. If no agreement is reached prior to the second
Business Day prior to such election, the nominees (and alternates) to fill the
vacancies in the Voting List shall be designated by joint instructions of
Nominating Shareholder Parties holding a majority of the Shares held by all
Shareholder Parties. If no instructions have been received by the Trustee by
the end of the last Business Day prior to the election, nominees (and
alternates) to fill the vacancies on the Voting List shall be designated upon
instructions of any Nominating Shareholder Party and, if more than one, the
Nominating Shareholder Party holding the larger number of Shares and, in case
of a tie, the Nominating Shareholder Party that delivered its instructions
first.
(iii) The priority order of nominees in the Voting List shall be set in
the declining order of the Shareholding Interest of the Nominating Shareholder
Party designating each nominee, provided that the nominee of a Nominating
Shareholder Party with respect to which a Voting Default is continuing will be
placed in order of priority after the nominees of all other non-defaulting
Nominating Shareholder Parties and, in the case of a continuing Voting Default
with respect to more than one Nominating Shareholder Parties, their respective
nominees will be placed in the order of priority among them that is the
declining order of the Shareholding Interest of such Nominating Shareholder
Parties provided, further, that a nominee nominated pursuant to clause (ii) of
this paragraph (a) shall in all instances occupy the last place in the order
of priority in the Voting List and, if more than one, in the declining order
of majority by which they were designated and, in case of a tie, the higher in
priority among them shall be the one designated first.
(b) In favor of all Funding Resolutions in accordance with the Financing
Plan and all authorized capital increases pursuant to the Capital Budget and a
Funding Resolution, in each case, approved by the Board of Directors, as
certified thereby;
(c) In favor of all Distributions pursuant to Section 5.4(b) of the
Oleoducto Central Agreement;
(d) In favor of all capital reductions, liquidations or split-ups
(esciciones) or other corporate action of the JSC required to achieve Equity
Amortization pursuant to Section 5.5 of the Oleoducto Central Agreement and
all capital increases followed by capital reductions, liquidations or
split-ups escicines (but not to a level lower than Cash Paid-In Equity) for
purposes of making any Distributions pursuant to Section 5.6 thereof, in each
case, as certified by three Shareholder Parties hereto;
(e) In favor of the incurrence of Senior Debt by the JSC in accordance
with the Financing Plan and Section 5.2(c) of the Oleoducto Central Agreement
as certified by the President and one member of the Board of Directors;
<PAGE>
(f) Against the making of any Distribution by the JSC in respect of the
three-year period ending December 31, 1997; and
(g) So as to ensure that no resolution of the Shareholders which does
not fall within the category of resolutions for which a 90.41% affirmative
vote is required pursuant to Article 33 of the By-laws shall be blocked by any
single Shareholder Party.
The Voting Trustee shall in all matters act at a meeting. The Voting Trustee
may exercise Voting Rights of Shares of the JSC in person or by such person as
it shall select as its proxy.
Section 3.2. Effect of Voting Default. Upon occurrence of a
Voting Default, the JSC shall immediately notify the Voting Trustee and until
such time that the JSC shall have notified the Voting Trustee that such Voting
Default has been cured or otherwise remedied, the Shares of the defaulting
Shareholder Party will be represented by the Voting Trustee, and included for
purposes of determining whether or not a quorum is present, at any meeting of
shareholders of the JSC or any other proceeding and, subject to Section 3.1,
the Voting Trustee will exercise the Voting Rights attaching to such Shares in
proportion to instructions given for votes to be cast by non-defaulting
Shareholder Parties without regard to any direction of the defaulting
Shareholder Party.
Section 3.3. Voting Default. Voting Default shall exist with
respect to a Shareholder Party if:
(a) There is continuing an event of default or default under the Common
Security Trust Agreement with respect to the Senior Debt Tranche secured by
Collateral provided by such Shareholder Party or members of its Initial
Shipper Group after receipt by the JSC of a notice of default in the form
provided under the Common Security Trust Agreement;
(b) Such Shareholder Party has failed to meet any of its payment
obligations under its Subscription Agreement or any of its duties and
obligations under this Agreement or the Dividend Trust Agreement or has
transferred Shares in violation of Article Ten of the Oleoducto Central
Agreement;
(c) Such Shareholder Party or any Affiliate of such Shareholder Party
has failed to meet any of its payment or material shipping obligations under
its Transportation Agreement, Transportation Notes Agreement, Advance Tariff
Agreement or any guarantee of obligations thereunder or under the Subscription
Agreement of such Shareholder Party; or
(d) the JSC has failed to obtain all or any portion of the Senior Debt
Tranche related to such Shareholder Party's Initial Shipper Group, has
provided such Shareholder Party with a notice of Senior Debt Shortfall
pursuant to Section 5.2(d) of the Oleoducto Central Agreement and Senior Debt
to cover such Senior Debt Shortfall has not been provided by the date
determined in such notice.
<PAGE>
ARTICLE FOUR
THE VOTING TRUSTEE
Section 4.1. Appointment of Voting Trustee. _________________,
acting through its corporate trust office, [insert address], is hereby
appointed by the Shareholder Parties as Voting Trustee hereunder and the
Voting Trustee hereby accepts the trust created by this Agreement upon the
terms and conditions hereof. Except as otherwise provided herein, the Voting
Trustee shall have no authority to act hereunder on behalf of a Shareholder
Party or the JSC without specific instructions of such Shareholder Party or
the JSC, as the case may be.
Section 4.2. Delivery of Documentation. Executed counterparts of
the Oleoducto Central Agreement referred to herein have been delivered to the
Voting Trustee and the Voting Trustee acknowledges receipt thereof. The JSC
and each Shareholder Party agree to deliver to the Voting Trustee any
instrument amending or modifying any agreement previously delivered to the
Voting Trustee. Amendments or modifications of the aforementioned agreements
shall not affect the duties and obligations of the Voting Trustee hereunder
unless (a) the Voting Trustee has knowledge of such amendment or modification,
and (b) with respect to any amendment or modification which, in theopinion
of the Voting Trustee, enlarges the Voting Trustee's duties, obligations,
or responsibilities, the Voting Trustee has not objected in writing thereto
within 10 Business Days of receiving notice thereof.
Section 4.3. Attorney-in-Fact. (a) The Voting Trustee or any
officer or agent thereof, with full power of substitution, is hereby appointed
the attorney-in-fact of each Shareholder Party for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instruments which the Voting Trustee may deem necessary or advisable to
accomplish the purposes hereof without notice to or assent by any of the
foregoing, to the extent permitted by applicable law, which appointment as
attorney-in-fact is coupled with an interest and irrevocable.
(b) Each Shareholder Party agrees to execute and deliver to the
Voting Trustee, and register in every public registry in Colombia in which
such registration is necessary, a notarized Colombian public deed appointing
the Voting Trustee and any officer or agent thereof, with full power of
substitution, its attorney-in-fact for purposes of exercising the rights and
remedies of such Shareholder Party hereunder and taking all action in Colombia
on behalf of such Shareholder Party that the Voting Trustee is authorized to
take pursuant to this Agreement and Colombia law in furtherance thereof.
Section 4.4. Reliance. The Voting Trustee shall be entitled to act
upon any notice, certificate, instrument, demand, request, direction,
instruction, waiver, receipt, consent or other document or communication
furnished hereunder which it in good faith believes to be genuine, and it
shall be entitled to rely upon the due execution, validity and
<PAGE>
effectiveness and the truth and acceptability of any provisions contained
therein. The Voting Trustee shall not have any responsibility to make any
investigation into the facts or matters stated in any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent
or other document or communication furnished to it hereunder. The JSC and each
Shareholder Party shall deliver to the Voting Trustee a list duly executed by
an officer thereof duly authorized thereunto of authorized signatories of any
notice, certificate, instrument, demand, request, direction, instruction,
waiver, receipt, consent or other document or communication furnished to the
Voting Trustee hereunder, and the Voting Trustee shall be entitled to rely on
such list until a new list is furnished by the JSC or such Shareholder Party,
as the case may be, to the Voting Trustee.
Section 4.5. Books and Records. The Voting Trustee shall maintain
all such books and records as may be necessary properly to record all
transactions carried out by it under this Agreement and as required by
Colombian law. The Voting Trustee shall permit the Shareholder Parties and
the JSC and their authorized representatives to examine such books and
records; provided that any such examination shall occur upon reasonable notice
and during normal business hours. Upon request by the JSC or any Shareholder
Party, the Voting Trustee shall at any time provide such parties with any
other information such parties may reasonably request regarding the
transactions contemplated in this Agreement. Upon removal or resignation of
the Voting Trustee, the Voting Trustee shall deliver all such books and
records to the successor voting trustee, or, in the event of termination of
this Agreement, to the JSC.
Section 4.6. Liability. The Voting Trustee shall not be liable for
any error of judgment or for any act done or omitted to be done by it in good
faith or for any mistake of fact or law, or for anything which it may do or
refrain from doing, except for its own negligence or willful misconduct. A
Shareholder Party or the JSC shall in no event be liable for any act done or
omitted to be done by the Voting Trustee or by any of its officers or
employees.
Section 4.7. Consultation With Counsel, etc. The Voting
Trustee may consult with, and obtain advice from, legal counsel, accountants
and other experts, in connection with the performance of its duties hereunder
and it shall incur no liability and shall be fully protected in acting in good
faith in accordance with the written opinion and advice of such counsel,
accountants and other experts. The Voting Trustee shall not be responsible for
the negligence or misconduct of any counsel, accountants and other experts
selected by it without negligence or willful misconduct on its part.
Section 4.8. Duties. The Voting Trustee shall have no duties other
than those specifically set forth or provided for in this Agreement and no
implied covenants or obligations of the Voting Trustee shall be read into this
Agreement or any related agreement to which the Voting Trustee is a party. The
Voting Trustee shall have no obligation to familiarize itself with and shall
have no responsibility with respect to any other agreement or document
relating to the transactions contemplated by this Agreement nor any obligation
to inquire whether any notice, certificate, instrument, demand, request,
direction,
<PAGE>
instruction, waiver, receipt, consent, document, communication, statement or
calculation is in conformity with the terms of any such other agreement,
except those irregularities or errors manifestly apparent on the face of such
document or to the actual knowledge of the Voting Trustee. If, however, any
communication received by the Voting Trustee appears manifestly erroneous or
irregular the Voting Trustee shall be under a duty to make prompt inquiry to
the Person originating such communication in order to determine whether a
clerical error or inadvertent mistake has occurred.
Section 4.9. Resignation, Replacement and Successor Voting Trustee.
The Voting Trustee at any time may resign as Voting Trustee hereunder upon
giving not less than six months' notice in writing to the JSC and each
Shareholder Party. The Voting Trustee may be removed as Voting Trustee
hereunder by an instrument in writing by the JSC and each Shareholder Party
with respect to which there is continuing no Voting Default. Upon resignation
of the Voting Trustee, a successor voting trustee shall be designated by the
JSC and each Shareholder Party with respect to which there is continuing no
Voting Default. No resignation or removal of the Voting Trustee and no
designation of a successor voting trustee shall be effective until (a) the
successor voting trustee has accepted its designation, (b) all indemnities,
compensation and expenses required by Sections 4.10, 4.11 and 4.13 shall have
been paid or provided for and (c) the Voting Trustee shall have executed and
delivered to the successor trustee a notarized Colombian public deed
delegating its rights and responsibilities hereunder to the successor trustee.
If no designation of a successor voting trustee shall have been made and
accepted within 60 days after the date fixed for such resignation or removal a
successor voting trustee shall be designated by the JSC and Shareholder
Parties holding a majority of the Shares subject to this trust (encargo
fiduciario). Any successor voting trustee designated pursuant to this Section
4.9 shall be a Person eligible to act as Voting Trustee hereunder in
accordance with applicable law. Any successor voting trustee shall evidence
its acceptance of the trust (encargo fiduciario) hereunder by executing and
delivering to the JSC, each Shareholder Party and the Voting Trustee an
instrument accepting this trust (encargo fiduciario) and its designation as
Voting Trustee hereunder, and thereupon such successor voting trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder with like effect
as if originally named as Voting Trustee herein, and such predecessor shall
have no further obligation or liability thereunder except for liability with
respect to its acts or omissions prior to such succession pursuant to Section
4.6; nevertheless, on the request of any party hereto or such successor voting
trustee, the Voting Trustee ceasing to act shall execute and deliver
instruments transferring to such successor voting trustee all rights and
powers of the Voting Trustee so ceasing to act.
Section 4.10. Indemnity. (a) Each Shareholder Party agrees to
indemnify the Voting Trustee for, and to hold it harmless against, any loss,
liability, claim, judgment, settlement, compromise, obligation, damage,
penalty, cost, expense or disbursement of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, unless arising from the negligence or
willful misconduct of the Voting Trustee or any agents that are seeking
indemnification, including the costs and expenses of defending itself against
any claim of liability in the premises.
<PAGE>
(b) In any suit, proceeding or action brought by the Voting Trustee
with respect to, or to enforce any provisions of this Agreement, each
Shareholder Party severally, in proportion to the number of Shares held by
such Shareholder Party to the number of Shares held by all Shareholder
Parties, will save, indemnify and keep the Voting Trustee harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligee
thereunder, arising out of a breach by the JSC or any Shareholder Party of any
of its obligations hereunder or thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
obligee or its successors from the JSC or such Shareholder Party, and all such
obligations of the JSC shall be and remain enforceable against and only
against the JSC or such Shareholder Party and shall not be enforceable against
the Voting Trustee or any Shareholder.
(c) The agreements in this Section 4.10 shall survive the
termination of the other provisions of this Agreement.
Section 4.11. Compensation. The Voting Trustee shall be entitled
to reasonable compensation (which shall not be limited by any provision of law
in regard to compensation of a trustee of an express trust) as may be agreed
from time to time between the JSC and the Voting Trustee for all services
rendered under this Agreement, and such compensation, together with
reimbursement of the Voting Trustee for its advances, disbursements and
expenses in connection with the performance of the trust provided for herein
(including the reasonable fees and expenses of its agents and of counsel,
accountants and other experts referred to in Section 4.7), shall be paid by
the JSC promptly upon demand from the Voting Trustee from time to time as
services are rendered and expenses are incurred. The Shareholder Parties shall
have no liability for any fees, expenses or disbursements of the Voting
Trustee.
Section 4.12. Certificates. Whenever in the administration of the
trust created by this Agreement the Voting Trustee shall deem it necessary or
desirable that a matter be proved or established in connection with taking or
omitting any action by the Voting Trustee hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or willful misconduct on the part of the Voting Trustee,
be deemed to be conclusively proved or established by a certificate of the JSC
delivered to the Voting Trustee.
Section 4.13. Stamp and Other Similar Taxes. The JSC agrees to
indemnify and hold harmless the Voting Trustee from, and shall reimburse the
Voting Trustee for, any present or future claim for liability for any stamp or
other similar tax and any penalties or interest with respect thereto, which
may be assessed, levied or collected by any jurisdiction in connection with
this Agreement or the trust created hereunder. The obligations of the JSC
under this Section 4.13 shall survive the termination of the other provisions
of this Agreement.
<PAGE>
Section 4.14. Exculpatory Provisions. The Voting Trustee makes no
representations as to the value or condition of the trust created hereunder or
any part thereof or as to the validity, execution (except by itself),
enforceability, legality or sufficiency of this Agreement, and the Voting
Trustee shall incur no liability or responsibility in respect of any such
matters.
Section 4.15. Merger of the Trustee. Any corporation into which
the Voting Trustee shall be merged, or with which it shall be consolidated, or
any corporation resulting from any merger or consolidation to which the Voting
Trustee shall be a party, shall be the Voting Trustee under this Agreement
without the execution or filing of any paper or any further act on the part of
the parties hereto .
Section 4.16. Treatment of Shareholder Parties by Voting Trustee.
(a) The Trustee may treat the Shareholder Parties as the holders of the
Shares and as the absolute owners thereof for all purposes hereunder unless
the Voting Trustee shall receive notice to the contrary.
(b) Any Person which shall be designated as the duly authorized
representative of one or more of Shareholder Parties to act as such in
connection with any matters pertaining to this Agreement shall present to the
Voting Trustee such documents, including, without limitation, opinions of
counsel, as the Voting Trustee may reasonably request, in order to demonstrate
to the Voting Trustee the authority of such Person to act as the
representative of such Shareholder Party.
(c) The JSC shall treat the Voting Trustee as the holder of all
Voting Rights attaching to the Shares held by the Shareholder Parties for all
purposes hereunder.
Section 4.17. Confidentiality. The Voting Trustee shall assure
that all information disclosed to it concerning the Oleoducto Central, the
assets and business of the JSC and the assets and business of each of the
Shareholder Parties and not otherwise generally available ("Confidential
Information") shall be kept confidential and shall, unless otherwise required
by law or official request issued by a court of competent jurisdiction or by a
judicial, administrative, legislative, regulatory or self-regulatory authority
with legal authority to make such request not be revealed without the consent
of the JSC and all Shareholder Parties other than to the directors, officers
and representatives of the JSC, the Shareholder Parties and Affiliates of the
Shareholder Parties. Upon the JSC or any Shareholder Party demanding the
return of Confidential Information relating to it by notice in writing to the
Voting Trustee shall, and shall cause its representatives to, return all
documents containing Confidential Information that have been provided by the
Shareholder Party demanding the return of Confidential Information (or on its
behalf) and destroy any copies of such documents and any document or other
record reproducing, containing or made from or with reference to the
Confidential Information, except, in each case, for any submissions to or
filings with judicial, administrative, legislative or regulatory authorities.
Such return or destruction shall take place as soon as practicable after the
receipt of such notice. The agreements in this Section 4.17 shall survive the
termination of the other provisions of this Agreement.
<PAGE>
Section 4.18. Miscellaneous. (a) The Voting Trustee shall have
the right at any time to seek instructions concerning the administration of
this trust from any court of competent jurisdiction. In the event of any
disagreement between the other parties to this Agreement resulting in adverse
claims being made in connection with the execution of the trust held by the
Voting Trustee and the terms of this Agreement do not unambiguously mandate
the action the Voting Trustee is to take in connection with the Voting Rights
under the circumstances then existing, or the Voting Trustee is in doubt as to
what action it is required to take, the Voting Trustee shall be entitled to
refrain from taking any action until directed otherwise in writing by the
Parties hereto entitled to give such direction or by a court of competent
jurisdiction.
(b) The Voting Trustee makes no representations as to, and shall
have no responsibility for, the correctness of any statement contained in, or
the validity or sufficiency of, this Agreement or any documents or instruments
referred to herein.
(c) The Voting Trustee shall not be disqualified by his office from
dealing or contracting with the JSC or any Shareholder Party either as vendor,
purchaser, depositary, lender, borrower, correspondent bank or otherwise.
ARTICLE FIVE
TERM
Section 5.1. Term. This Agreement shall continue in full force and
effect so long as the JSC continues to be in existence in accordance with the
By-laws and shall terminate upon termination of the Oleoducto Central
Agreement unless earlier terminated by written agreement of the Parties or as
required by law. Each Party's obligations incurred or accrued hereunder prior
to termination shall survive any termination of this Agreement.
Section 5.2. Effectiveness. This Agreement shall have no effect or
validity unless and until the Oleoducto Central Agreement shall have become
effective.
ARTICLE SIX
GENERAL
Section 6.1. Notices. All notices, requests, demands, directions
and other communications hereunder shall be in writing and shall be given by
personal delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Party Copy To
OLEODUCTO CENTRAL S.A. N/A
World Trade Center Bogota
Calle 100 N. 8A-55
Santafe de Bogota, D.C. -Colombia
Telefax: 571-218-3933
Attention: President
BP COLOMBIA PIPELINES BP EXPLORATION
LIMITED (COLOMBIA) LIMITED
c/o BP EXPLORATION Carrera 9A No. 99-02
(COLOMBIA) LIMITED Post Office Box 59824
Carrera 9A No. 99-02 Santafe de Bogota, D.C. Colombia
Post Office Box 59824 Telefax: (571) 618-2895
Santafe de Bogota, D.C. -Colombia Attention: Legal Manager
Telefax: (571) 618-2895
Attention: Nicholas P. Connolly
TOTAL PIPELINE TOTAL EXPLORATIE EN PROSKAUER, ROSE
COLOMBIE S.A. PRODUKTIE MIJ B.V. GOETZ & MENDELSOHN
Tour TOTAL Calle 72 No. 10-03 1585 Broadway
TEP/AME Piso 8 New York, New York 10036
24, Cours Michelet Apartado aereo 251375 Telefax: (212) 969-2900
Cedex 47,92069 Paris, France Santafe de Bogota, D.C. -Colombia Attention: Ronald Papa, Esq.
Telefax: (33 1) 4135 6530 Telefax: (571) 235-8453
Attention: Jean-Claude Soligny Attention: Jacques de Boisseson
TRITON PIPELINE TRITON COLOMBIA, INC.
COLOMBIA, INC. Carrera 9A No. 99-02
c/o TRITON ENERGY Oficina 407
CORPORATION Santafe de Bogota, D.C.- Colombia
6688 North Central Expressway Telefas: (571) 618-2553
Suite 1400 Attention: Ivan Fajardo
Dallas, Texas 75206
Telefax: (214) 692-7487
Attention: Thomas G. Finck and
A.E. Turner
IPL ENTERPRISES IPL INTERNATIONAL INC.
(COLOMBIA) INC. Suite 1100
c/o IPL ENERGY INC. 363 North
31st Floor Bow Valley Square 2 Sam Houston Parkway East
205 - 5th Avenue S.W. Houston, Texas 77060
Calgary, Alberta, Canada T29 2V7 Telefax: (713) 820-9310
Telefax: (403) 231-3920 Attention: Benny J. Phillips
Attention: Donald M. Wishart
TCPL (BERMUDA) LTD. FRIED, FRANK, HARRIS,
C/O TRANSCANADA SHRIVER & JACOBSON
PIPELINES LIMITED 1 New York Plaza
TransCanada PipeLines Tower New York, New York 10004
111 Fifth Avenue S.W. Telefax: (212) 747-1526
P.O. Box 1000, Station M Attention: Ken Blackman
Calgary, Alberta, Canada T2P 4K5
Telefax: (403) 267-2668
Attention: Michael Durnin
</TABLE>
If to the Voting Trustee: [Insert name and address]
to such other address, individual or facsimile telephone number as may be
designated by notice given by any Party to the other. Any notice, request,
demand, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The Party giving any notice, request, demand, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 6.2. Entire Agreement. This Agreement constitutes the
entire Agreement between the Parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein and therein. No amendment, supplement, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions (whether or not similar)
nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
Section 6.3. Representations and Warranties. Each Party represents
and warrants to the other that:
(a) it is a corporation duly incorporated and organized under the laws
of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and perform
its obligations under this Agreement, and this Agreement, when executed and
delivered by such Party, constitutes a valid and legally binding agreement of
such Party;
(c) the execution and delivery of, and the performance by it of its
obligations under this Agreement will not result in a breach of or constitute
a default under:
<PAGE>
(i) any provision of its charter or articles of incorporation or
its by-laws;
(ii) any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder;
(iii) any statute, rule, regulation or order, judgment or decree
of any governmental agency or court having jurisdiction over it or by which it
is bound; and
(d) neither it nor any of its property has any immunity from
jurisdiction of any court or from set-off or any legal process.
Section 6.4. Assignments. (a) The JSC may not assign this
Agreement or any of its rights hereunder to or in any person not a party
hereto except with the prior written consent of each Shareholder Party.
(b) A Shareholder Party may not assign this Agreement or any of its
Voting Rights or its rights hereunder to or in any person not a party hereto
except in connection with a transfer of its Shares permitted pursuant to
Article Ten of the Oleoducto Central Agreement.
(c) A Shareholder Party which has transferred any of its Shares to
another Person or assigned to another Person any right to acquire Shares shall
procure that such Person shall become a Shareholder Party hereto with respect
to such Shares by providing written notice to the Voting Trustee, which shall
then notify all other Parties hereto. Upon receipt of such notice by the
Voting Trustee, such holder shall have all the rights, benefits, obligations
and duties hereunder of a Shareholder Party hereto. A notice or application by
a holder of Shares to be registered as a shareholder of the JSC in the Share
Register maintained by the JSC shall be deemed to also be a notice to the JSC
pursuant to this paragraph (c) of Section 6.4.
Section 6.5. Amendments. This Agreement may not be amended or
modified except with the written consent of the Parties and any permitted
assignees.
Section 6.6. No Third Party Beneficiaries. Except as herein
otherwise expressly provided to the contrary, this Agreement shall inure to
the benefit of and be binding upon the Parties and their respective successors
and permitted assignees, and no other Person shall have any rights hereunder.
Section6.7. Severability. If, for any reason, any provision of
this Agreement is unenforceable, the remaining provisions hereof shall
nevertheless be carried into effect.
Section 6.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE REPUBLIC OF COLOMBIA WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
<PAGE>
Section 6.9. Arbitration. Any controversy, claim or dispute among
the Parties in connection with corporate activities, rights of the
shareholders, profit participation, liquidation of the Company or other
matters arising out of or relating to this Agreement or the performance,
breach, termination or invalidity hereof, unless not in the disposal of the
Parties, shall be settled by a Court of Arbitration designated by the Board of
Directors of the Chamber of Commerce of Santafe de Bogota by drawing lots
among the arbitrators appearing in the list kept by the Center of Mercantile
Arbitration and Conciliation of said Chamber. The Court thus designated shall
abide by the provisions of the Code of Civil Procedure and the Commercial Code
in accordance with the following rules: (A) the Court shall consist of three
arbitrators; (B) the internal organization of the Court shall be subject to
the rules established to such end by the Center of Mercantile Arbitration and
Conciliation of the Chamber of Commerce of Santafe de Bogota; (C) the decision
of the Court shall be in law; and (D) the Court shall meet in Santafe de
Bogota, at the Center of Mercantile Arbitration and Conciliation of the
Chamber of Commerce of such city.
Section 6.10. Waiver of Immunity. (a) Each Party irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement brought in the Specified Court and further
irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such proceeding in
the Specified Court.
(b) To the extent that a Party or any of its revenues, assets or
properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement at any time
brought against such Party or any of its revenues, assets or properties, to
any sovereign or other immunity from suit, from jurisdiction, from attachment
prior to judgment, from attachment in aid of execution of judgment, from
execution of a judgment or from any other legal or judicial process or remedy,
and to the extent that in any jurisdiction there shall be attributed such an
immunity, such Party irrevocably agrees not to claim and irrevocably waives
such immunity to the fullest extent permitted by the laws of such jurisdiction
(including, without limitation, the Foreign Sovereign Immunities Act 1976 of
the United States).
Section 6.11. Headings; Table of Contents. The headings and table
of contents contained herein are for convenience of reference only and do not
constitute a part of this Agreement.
Section 6.12. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Parties have hereunto caused this agreement
to be executed and delivered by their proper officers thereunto duly
authorized as of the date first above written.
OLEODUCTO CENTRAL S.A.
By:
Title:
BP COLOMBIA PIPELINES LIMITED
By:
Title:
TOTAL PIPELINE COLOMBIE S.A.
By:
Title:
TRITON PIPELINE COLOMBIA, INC.
By:
Title:
<PAGE>
IPL ENTERPRISES (COLOMBIA) INC.
By:
Title:
By:
Title:
TCPL (BERMUDA) LTD.
By:
Title:
By:
Title:
[NAME OF VOTING TRUSTEE]
As Voting Trustee
By:
Title:
<PAGE>
SCHEDULE C
TO OLEODUCTO CENTRAL AGREEMENT
FORM OF DIVIDEND TRUST AGREEMENT
dated as of the day of , 1995
among
OLEODUCTO CENTRAL S.A.
[EMPRESA COLOMBIANA DE PETROLEOSECOPETROL]
BP COLOMBIA PIPELINES LIMITED
TOTAL PIPELINE COLOMBIE S.A.
TRITON PIPELINE COLOMBIA, INC.
IPL ENTERPRISES (COLOMBIA) INC.
TCPL (BERMUDA) LTD.
and
[INSERT NAME OF DIVIDEND TRUSTEE]
as Dividend Trustee
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section Page
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
1.1. Definitions 2
1.2. Interpretation 4
ARTICLE TWO
DIVIDEND ACCOUNTS
2.1. Creation of Dividend Accounts 5
2.2. Creation of Dividend Subaccounts 5
2.3. Investment of Funds in the Dividend Accounts 6
ARTICLE THREE
PAYMENTS AND WITHDRAWALS
3.1. Payment into Dividend Accounts 6
3.2. Effect of Payment into Dividend Account 6
3.3. Shareholder Instructions for Payments in Dividend Account 6
3.4. Withdrawals from Dividend Account 6
3.5. Restricted Payments 7
3.6. Restricted Period 8
ARTICLE FOUR
THE DIVIDEND TRUSTEE
4.1. Appointment of Dividend Trustee 9
4.2. Delivery of Documentation 9
4.3 Attorney-in-Fact 9
4.4. Reliance 10
4.6. Liability 11
4.7. Consultation With Counsel, etc. 11
4.8. Duties 11
4.9. Resignation, Replacement and Successor Dividend Trustee 12
4.10. Indemnity 13
4.11. Compensation 13
4.12. Certificates 13
4.13. Stamp and Other Similar Taxes 14
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section Page
4.14. Exculpatory Provisions 14
4.15. Merger of the Trustee 14
4.16. Treatment of Shareholders by Dividend Trustee 14
4.17. Confidentiality 14
4.18. Miscellaneous 15
ARTICLE FIVE
TERM
5.1. Term 16
5.2. Effectiveness 16
ARTICLE SIX
GENERAL
6.1. Notices
6.2. Entire Agreement 18
6.3. Representations and Warranties 19
6.4. Assignments 19
6.5. Nature of Obligations 20
6.6. Amendments 20
6.7. No Third Party Beneficiaries 20
6.8. Severability 21
6.9. Governing Law 21
6.10. Commercial Obligations 21
6.11. Arbitration 21
6.12. Submission to Jurisdiction; Consent to Service 21
6.13. Waiver of Immunity 22
6.14. Headings; Table of Contents 22
6.15. Counterparts 23
ANNEX-A Form of Dividend Subaccount Bank Agreement
</TABLE>
<PAGE>
DIVIDEND TRUST AGREEMENT
AGREEMENT, dated as of the day of _____________, 1995, among:
OLEODUCTO CENTRAL S.A., a sociedad anonima existing under the laws
of Colombia (JSC);
[EMPRESA COLOMBIANA DE PETROLEOS - ECOPETROL, an Empresa Industrial
y Comercial del Estado existing under the laws of Colombia and wholly owned by
Colombia;]
BP COLOMBIA PIPELINES LIMITED, a corporation existing under the laws
of England and Wales;
TOTAL PIPELINE COLOMBIE S.A., a corporation existing under the laws
of France;
TRITON PIPELINE COLOMBIA, INC., a corporation existing under the
laws of the Cayman Islands;
IPL ENTERPRISES (COLOMBIA) INC., a corporation existing under the
laws of the Cayman Islands; and
TCPL (BERMUDA) LTD., a corporation existing under the laws of
Bermuda;
[INSERT NAME OF DIVIDEND TRUSTEE], a bank and trust company existing
under the laws of ________________, as dividend trustee (the Dividend
Trustee).
RECITALS
WHEREAS:
A. Shareholders have formed the JSC by public deed no. 4747 of
December 14, 1994 granted before notary public no. 38 of Santafe de Bogota;
B. The Shareholders have entered into the Oleoducto Central
Agreement (as amended from time to time, the Oleoducto Central Agreement),
dated as of December 14, 1994, among the JSC and the Shareholders (as defined
therein) specifying certain terms and conditions of their respective
investments and participation in the JSC, the Oleoducto Central and the
financing thereof and the operation of the Oleoducto Central;
<PAGE>
C. The JSC and the Shareholder Parties (other than Ecopetrol)
are concurrently entering into the Voting Trust Agreement specifying certain
terms and conditions of exercise of their respective voting rights as
shareholders of the JSC;
D. The Shareholder Parties wish to specify certain additional
terms and conditions of their respective investments and participation in the
JSC; and
E. The JSC and the Shareholder Parties acknowledge that the JSC
proposes to incur and secure Senior Debt on a limited recourse basis under
separate Senior Debt Tranches to finance in part the Oleoducto Central and
that it may enter into Common Security Trust Agreement(s) (the Common Security
Trust Agreement) with Senior Lenders or agents therefor and a trustee therefor
to secure each Senior Debt Tranche separately with certain of its rights under
each of its Transportation Agreements, Transportation Notes Agreements,
Advance Tariff Agreements and Subscription Agreements with the Shareholders
(or their respective Affiliates), as the case may be.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the Parties agree as
follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise
requires, the following words and phrases shall have the meanings indicated
below:
"Authorized Investments" shall mean one or more of the following:
(a) obligations maturing or capable of redemption by the holder not more
than 12 months after the date of acquisition and issued or guaranteed by (i)
any government, governmental agency or multilateral intergovernmental
organization similar obligations of which have a rating of not less than AA-
from Standard & Poor's Corporation or equivalent from an Internationally
Recognized Statistical Rating Agency and (ii) in an amount not to exceed the
equivalent of $500,000 at any one time;
(b) demand deposits, time deposits, certificates of deposit or other
obligations (including acceptances) maturing or capable of redemption by the
holder not more
<PAGE>
than 12 months after the date of investment or acquisition which are issued,
accepted or guaranteed by (i) the bank that is then serving as Dividend
Trustee, or (ii) a bank having a rating of not less than A- from Standard &
Poor's Corporation or equivalent from an Internationally Recognized
Statistical Ratings Agency provided that, except for the bank that is then
serving as Dividend Trustee, deposits in or investments with any one such bank
shall not at one time exceed $500,000 or the equivalent in other currencies;
(c) commercial paper, corporate promissory notes or other obligations
maturing or capable of redemption by the holder not more than 12 months after
the date of acquisition which (i) have, or are supported by an unconditional
guarantee from a corporation similar obligations of which have, a rating of at
least AA- from Standard & Poor's Corporation or equivalent from an
Internationally Recognized Statistical Rating Agency, or (ii) are obligations
which are supported by an unconditional guarantee or letter of credit from any
bank referred to in clause (b); or
(d) authorized investments as permitted under the Common Security Trust
Agreement.
All amounts contained in this definition are subject to adjustment based on
the Consumer Price Index for All Urban Consumers (not seasonally adjusted) or
any other successor index or comparable measure which may be substituted
therefor, published by the United States Department of Commerce, Bureau of
Labor Statistics.
"Collateral" shall have the meaning assigned to it in the Common
Security Trust Agreement.
"Common Security Trust Agreement" shall have the meaning assigned to
it in the Recitals hereto.
"Confidential Information" shall have the meaning assigned to it in
Section 4.17.
"Dividend Account" shall have the meaning assigned to it in Section
2.1.
"Dividend Subaccount" shall have the meaning assigned to it in
Section 2.2.
"Dividend Subaccount Bank" shall have the meaning assigned to it in
Section 2.2.
"Excess Payment" shall mean any Distribution pursuant to Section 5.6
of the Oleoducto Central Agreement.
"Onshore Dividend Subaccount" shall have the meaning assigned to it
in Section 2.2.
"Parties" shall mean the JSC, [Ecopetrol], BP Pipelines, TOTAL
Pipeline, Triton Pipeline, IPL Enterprises, TCPL (Bermuda) Ltd., the Dividend
Trustee and their respective successors and permitted assigns.
<PAGE>
"Restricted Account" shall have the meaning assigned to it in
Section 3.4.
"Restricted Payment" shall have the meaning assigned to it in
Section 3.5.
"Restricted Period" shall have the meaning assigned to it in Section
3.6.
"Restriction Notice" shall have the meaning assigned to it in
Section 3.5.
"Shareholder Party" shall mean any Party to this Agreement that is a
Shareholder.
All defined terms used and not defined herein shall have the meanings assigned
to them in the Oleoducto Central Agreement.
Section 1.2. Interpretation. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
(b) words importing gender include all genders;
(c) any reference to an "Article" or a "Section" refers to an
Article or a Section, as the case may be, of this Agreement; and
(d) all references to this Agreement and the words herein, hereof,
hereto and hereunder and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision.
ARTICLE TWO
DIVIDEND ACCOUNTS
Section 2.1. Creation of Dividend Accounts. Subject to
Section 6.4(c), the "Dividend Trustee" shall establish and maintain segregated
accounts in Dollars or other non-Colombian currency in the name of the
Dividend Trustee at [offshore], one for the benefit of each Shareholder Party
(each, a "Dividend Account"). For each Dividend Account the Dividend Trustee
shall establish and maintain Dividend Subaccounts pursuant to Section2.2.
Unless otherwise specified in this Agreement, all references to any Dividend
Account shall include references to all related Dividend Subaccounts thereof
and such Dividend Subaccounts shall be subject to the same restrictions and
limitations and entitled to the same rights as the Dividend Account to which
they relate. All moneys held in a Dividend Account shall be trust funds held
by the Dividend Trustee for the purpose of making payments therefrom in
accordance with this Agreement. The Dividend Trustee and the JSC shall comply
with all applicable law in connection with any payments and transfers of funds
hereunder.
<PAGE>
Section 2.2. Creation of Dividend Subaccounts (a)Each Dividend
Account may include accounts maintained outside of Colombia and, in the case
of Ecopetrol, shall include an account maintained in Colombia in the name of
the Dividend Trustee (each, a "Dividend Subaccount" and the Dividend Subaccount
maintained in Colombia for Ecopetrol, the "Onshore Dividend Subaccount") at
commercial, merchant or investment banks of international standing designated
from time to time by the related Shareholder Party as provided in this Section
(which may include the bank which at the time is acting as Dividend Trustee)
("Dividend Subaccount Banks"). Each Dividend Subaccount shall be designated as
such, and shall be segregated from any other Dividend Subaccount at the same
Dividend Subaccount Bank.
(b) The related Shareholder Party shall give each Shareholder
Party, the JSC and the Dividend Trustee at least 15 days' prior notice of its
intention to designate a Dividend Subaccount Bank. No bank (other than the
bank which at the time is acting as Dividend Trustee) shall become or continue
to be a Dividend Subaccount Bank if the JSC shall have notified the related
Shareholder Party and other Shareholder Parties that in its reasonable
judgment it has concluded that such bank is not appropriate to serve as a
Dividend Subaccount Bank.
(c) Each bank designated by the related Shareholder
Party as a Dividend Subaccount Bank shall, as a condition to being a Dividend
Subaccount Bank for purposes of this Agreement, enter into an agreement with
the Dividend Trustee substantially to the effect set forth in Annex A, with
such changes thereto of form, but not of substance, as the Dividend Trustee
shall approve. Each Dividend Subaccount Bank shall deliver a signed copy of
such agreement to the JSC and each Shareholder Party.
Section 2.3. Investment of Funds in the Dividend Accounts.
Pending application thereof pursuant to Section 3.4, funds in the Dividend
Account maintained by the Dividend Trustee for the benefit of a Shareholder
Party shall be invested into Authorized Investments as directed by the JSC.
ARTICLE THREE
PAYMENTS AND WITHDRAWALS
Section 3.1. Payment into Dividend Accounts. The JSC may from time
to time make Distributions to the Dividend Trustee, which Distributions shall
be deposited in dollars by or on behalf of the JSC simultaneously into the
respective Dividend Accounts established by the Dividend Trustee for the
benefit of each Shareholder Party, except that in the case of Ecopetrol such
Distributions shall be deposited in pesos into the Onshore Dividend
Subaccount. Each Distribution shall be identified by the JSC as to the party
entitled to the payment, the amount thereof, and if applicable, as an Excess
Payment.
Section 3.2. Effect of Payment into Dividend Account. Any
Distribution made by the JSC to such Dividend Account shall discharge the
JSC's obligation to such Shareholder Party in respect of such Distribution as
fully as if such payment were made directly to such Shareholder Party
otherwise entitled to receive it.
<PAGE>
Section 3.3. Shareholder Instructions for Payments in Dividend
Account. Each Shareholder Party hereby irrevocably instructs and authorizes
the JSC to make Distributions only as provided in this Agreement and all
instructions given and all authority conferred under this Agreement is given
and conferred subject to the interests of the Dividend Trustee, the JSC and
the other Shareholder Parties as beneficiaries hereof; and, in consideration
of those interests and for the purpose of completing the transactions
contemplated by this Agreement all instructions given and all authority
conferred by this Section 3.3 shall be deemed coupled with an interest and be
irrevocable and not subject to termination by such Shareholder Party or by
operation of law, whether by the death or incapacity of such Shareholder Party
(if such Shareholder Party is an individual) or by the death or incapacity of
any executor or trustee (if such Shareholder Party is an estate or trust) or
the termination of such estate or trust or by the dissolution of such
Shareholder Party (if such Shareholder Party is a partnership or corporation),
or by the occurrence of any other event.
Section 3.4. Withdrawals from Dividend Account. Upon receipt,
funds in the Dividend Account of a Shareholder Party shall be automatically
withdrawn by the Dividend Trustee and transferred to such Shareholder Party
unless the Dividend Trustee shall have received, prior to the receipt of such
Distribution, a Restriction Notice (as defined below) in respect of such
Shareholder Party's Dividend Account (the Restricted Account) pursuant:
(a) to paragraph (a), (b), (c) or, subject to paragraph (b) of this Section
3.4., (d) of Section 3.5 in which case such funds, to the extent described in
Section 3.6(c), shall be withdrawn by the Dividend Trustee and deposited into
the Dividend Accounts maintained for the benefit of the other Shareholder
Parties inproportion to their respective Shareholding Interests, provided that
no such deposit shall be made into a Restricted Account of any such
Shareholder Party;
(b) to clause (d) of Section 3.5, in which case such funds shall be
withdrawn and deposited by the Dividend Trustee into the Dividend Accounts
maintained for the benefit of the Shareholder Parties, if any, who have
provided Shareholder Bridge Loans pursuant to Section 5.2(j), or 5.3(c), as
the case may be, of the Oleoducto Central Agreement, in each case as certified
by the JSC, in the same proportion as such Shareholder Bridge Loans provided
by them; or
(c) to clause (e) of Section 3.5 in which case such Excess Payments will
automatically be withdrawn by the Dividend Trustee from the Dividend Account
maintained for the benefit of IPL Enterprises and TCPL (Bermuda) and deposited
into the Dividend Accounts maintained for the benefit of the Shareholder
Parties that are members of Initial Shipper Groups in the proportion set forth
in clause (b) of Section 5.6 of the Oleoducto Central Agreement provided that
no such deposit shall be made into a Restricted Account of any such
Shareholder Party.
<PAGE>
All Distributions not automatically transferred to a Shareholder Party as
provided in the preceding clauses shall be converted immediately into dollars
by the Dividend Trustee if not so converted by the JSC at the best rate then
offered by the Dividend Trustee for such conversion [and, in the case of
Ecopetrol, pending application pursuant to this Section 3.4, shall be
transferred by the Dividend Trustee into an offshore Dividend Subaccount of
the Dividend Account maintained for the benefit of Ecopetrol].
Section 3.5. Restricted Payments. A payment into the Dividend
Account maintained for the benefit of a Shareholder Party shall be a
Restricted Payment only if the JSC shall have delivered a notice (a
"Restriction Notice") to the Dividend Trustee to the effect that:
(a) there is at or prior to the time of such payment, and
immediately following the making of such payment would be, continuing an event
of default or default under the Common Security Trust Agreement with respect
to the Senior Debt Tranche secured by Collateral provided by such Shareholder
Party's Initial Shipper Group;
(b) there has occurred at or prior to the time of such payment,
and immediately following the making of such payment would be, continuing a
failure of any Affiliate of such Shareholder Party to meet any payment
obligations or material shipping obligations under its Transportation
Agreement, Transportation Notes Agreement or Advance Tariff Agreement or any
guarantee of obligations thereunder;
(c) there has occurred at or prior to the time of such payment a
violation by such Shareholder Party of Article Two of the Voting Trust
Agreement or a transfer of Shares by such Shareholder Party in violation of
the provisions of Article Ten thereof;
(d) there is at or prior to the time of such payment, and immediately
following the making of such payment would be, continuing a failure by such
Shareholder Party to meet any of its payment obligations under its
Subscription Agreement or by any Affiliate of such Shareholder Party to meet
any payment obligations under a guarantee of obligations under such
Subscription Agreement, or such Shareholder Party is at or prior to the time
of such payment, and immediately following the making of such payment would
be, subject to the remedies under Section 5.2(e) or 5.3(b) of the Oleoducto
Central Agreement; or
(e) with respect to IPL Enterprises or TCPL (Bermuda) only, such payment
constitutes an Excess Payment.
[COORDINATE WITH TREATMENT OF DISTRIBUTIONS
UNDER THE POLITICAL EVENTS AGREEMENT]
[CONSIDER DISTRIBUTIONS IN RESPECT OF TARIFF
CREDITS PURSUANT TO TARIFF PRINCIPLES]
<PAGE>
Section 3.6. Restricted Period. Upon the occurrence of any of
the events set forth in paragraphs (a) through (e) above with respect to a
Shareholder Party, the JSC shall deliver to the Dividend Trustee a Restriction
Notice with respect to such Shareholder Party's Dividend Account, which shall
remain in effect until its withdrawal by the JSC (the Restricted Period). The
JSC shall only withdraw a Restriction Notice:
(a) in the case of an event described in Section 3.5(a) which is
not an event described in Section 3.5(b) or (d) (in which case paragraphs (b)
and (c) below shall apply), upon the termination of such event;
(b) in the case of an event described in Section 3.5(d) and only if
other Shareholder Parties have provided Shareholder Bridge Loans pursuant to
Section 5.2(j) or 5.3(c) of the Oleoducto Central Agreement, as the case may
be, after a year and such additional period as is necessary for the aggregate
Distributions paid into the Restricted Account and applied as set forth in
Section 3.4(b) during such additional period to equal the Shareholding
Interest of the Shareholder Party for the benefit of which such Restricted
Account is maintained, of any increase in Pre-Completion Retained Returns or
Accrued Returns accumulated during the continuance of such event has passed
following the termination of such event; or
(c) in the case of an event described in Section 3.5(b) or 3.5(d)
(other than as set forth in paragraph (b) of this Section 3.6), for such
period of time and to the extent that is necessary for the aggregate
Distributions paid into the Restricted Account and applied as set forth in
Section 3.4(a) to equal the amount of Distributions that the Shareholder
Parties for the benefit of which are maintained Dividend Accounts that are not
Restricted Accounts failed to receive during the continuation of such event as
a result thereof.
[CONSIDER EFFECT ON PRE-COMPLETION RETAINED
RETURNS AND ACCRUED RETURNS]
ARTICLE FOUR
THE DIVIDEND TRUSTEE
Section 4.1. Appointment of Dividend Trustee. _________________,
acting through its corporate trust office, [insert location of office], is
hereby appointed by each of the Shareholder Parties as Dividend Trustee
hereunder and the Dividend Trustee hereby accepts the trust created by this
Agreement upon the terms and conditions hereof.
Section 4.2. Delivery of Documentation. Executed counterparts of
the Oleoducto Central Agreement referred to herein have been delivered to the
Dividend Trustee and the Dividend Trustee acknowledges receipt thereof. The
JSC and each Shareholder Party agree to deliver to the Dividend Trustee any
instrument amending or
<PAGE>
modifying any agreement previously delivered to the Dividend Trustee.
Amendments or modifications of the aforementioned agreements shall not affect
the duties and obligations of the Dividend Trustee hereunder unless (a) the
Dividend Trustee has knowledge of such amendment or modification, and (b) with
respect to any amendment or modification which, in the opinion of the Dividend
Trustee, enlarge the Dividend Trustee's duties, obligations, or
responsibility, the Dividend Trustee has not objected in writing thereto
within ten Business Days of receiving notice thereof.
Section 4.3. Attorney-in-Fact. (a) The Dividend Trustee or any
officer or agent thereof, with full power of substitution, is hereby appointed
the attorney-in-fact of the JSC and each Shareholder Party for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments which the Dividend Trustee may deem necessary or
advisable to accomplish the purposes hereof without notice to or assent by any
of the foregoing, to the extent permitted by applicable law, which appointment
as attorney-in-fact is coupled with an interest and irrevocable.
(b) The JSC and each Shareholder Party agrees to execute and
deliver to the Dividend Trustee, and register in every public registry in
Colombia in which such registration is necessary, a notarized Colombian public
deed appointing the DividendTrustee and any officer or agent thereof, with
full power of substitution, its attorney-in-fact for purposes of exercising
the rights and remedies of the JSC or such Shareholder Party, as the case may
be, hereunder and taking all action in Colombia on behalf of such Shareholder
Party that the Dividend Trustee is authorized to take pursuant to this
Agreement.
Section 4.4. Reliance. The Dividend Trustee shall be entitled to
act upon any notice, certificate, instrument, demand, request, direction,
instruction, waiver, receipt, consent or other document or communication
furnished hereunder which it in good faith believes to be genuine, and it
shall be entitled to rely upon the due execution, validity and effectiveness,
and the truth and acceptability of any provisions contained therein. The
Dividend Trustee shall not have any responsibility to make any investigation
into the facts or matters stated in any notice, certificate, instrument,
demand, request, direction, instruction, waiver, receipt, consent or other
document or communication furnished to it hereunder. The JSC and each
Shareholder Party shall deliver to the Dividend Trustee a list duly executed
by an officer thereof duly authorized thereunto of authorized signatories of
any notice, certificate, instrument, demand, request, direction, instruction,
waiver, receipt, consent or other document or communication furnished to the
Dividend Trustee hereunder, and the Dividend Trustee shall be entitled to rely
on such list until a new list is furnished by the JSC or such Shareholder
Party, as the case may be, to the Dividend Trustee.
Section 4.5. Books and Accounts. (a) The Dividend Trustee shall
maintain all such accounts, books and records as may be necessary properly to
record all transactions carried out by us under this Agreement. The Dividend
Trustee shall permit the Shareholder Parties and the JSC and their authorized
representatives to examine such accounts, books and records; provided that any
such examination shall occur upon reasonable notice and during normal business
hours. Upon request by the JSC or any Shareholder Party, the Dividend Trustee
shall at any time provide such parties with any other information such Parties
may reasonably request regarding the transactions contemplated in this
Agreement. Upon removal or resignation of the Dividend Trustee, the Dividend
Trustee shall deliver all
<PAGE>
such books and records to the successor dividend trustee, or, in the event of
termination of this Agreement, to the JSC.
(b) On or before the fifth Business Day in New York of each
calendar month for so long as such Dividend Account are open, the Dividend
Trustee shall deliver to the JSC and the related Shareholder Party a statement
indicating the amount of funds and other assets on deposit in the Dividend
Account and the nature of any investments thereof as of the end of the
preceding calendar month and identifying all deposits to and payments from the
Dividend Account during such calendar month, including the date on which made.
Upon request by the JSC or the Shareholder Party for the benefit of which a
Dividend Account is maintained, the Dividend Trustee shall at any other time
inform such parties of deposits, investments, payments, balances and any other
information such parties may reasonably request regarding the Dividend
Account.
Section 4.6. Liability. The Dividend Trustee shall not be liable
for any error of judgment or for any act done or omitted to be done by it in
good faith or for any mistake of fact or law, or for anything which it may do
or refrain from doing, except for its own gross negligence or willful
misconduct. A Shareholder Party or the JSC shall in no event be liable for any
act done or omitted to be done by the Dividend Trustee or by any of its
officers or employees.
Section 4.7. Consultation With Counsel, etc. The Dividend Trustee
may consult with, and obtain advice from, legal counsel, accountants and other
experts, in connection with the performance of its duties hereunder and it
shall incur no liability and shall be fully protected in acting in good faith
in accordance with the opinion and advice of such counsel, accountants and
other experts. The Dividend Trustee shall not be responsible for the
negligence or misconduct of any counsel, accountants and other experts
selected by it without negligence or willful misconduct on its part.
Section 4.8. Duties. The Dividend Trustee shall have no duties
other than those specifically set forth or provided for in this Agreement and
no implied covenants or obligations of the Dividend Trustee shall be read into
this Agreement or any related agreement to which the Dividend Trustee is a
party. The Dividend Trustee shall have no obligation to familiarize itself
with and shall have no responsibility with respect to any other agreement or
document relating to the transactions contemplated by this Agreement nor any
obligation to inquire whether any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent, document,
communication, statement or calculation is in conformity with the terms of any
such other agreement, except those irregularities or errors manifestly
apparent on the face of such document or to the actual knowledge of the
Dividend Trustee. If, however, any remittance or communication received by the
Dividend Trustee appears manifestly erroneous or irregular the Dividend
Trustee shall be under a duty to make prompt inquiry to the Person originating
such remittance or communication in order to determine whether a clerical
error or inadvertent mistake has occurred. The Dividend Trustee shall at all
times take such care in dealing with the Dividend Accounts as would a prudent
man in dealing with his own property. The Dividend Trustee shall, upon
<PAGE>
receipt of a Restriction Notice, exercise the rights and powers vested in it
by this Agreement which it is directed by the JSC to exercise and the Dividend
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the JSC absent gross
negligence or willful misconduct.
Section 4.9. Resignation, Replacement and Successor Dividend
Trustee. The Dividend Trustee at any time may resign as Dividend Trustee
hereunder upon giving not less than three months' notice in writing to the JSC
and each Shareholder Party. The Dividend Trustee may be removed as Dividend
Trustee hereunder by an instrument in writing by the JSC and each Shareholder
Party with respect to the Dividend Account of which there is no outstanding
Restriction Notice. Upon resignation of the Dividend Trustee, a successor
dividend trustee shall be designated by the JSC and each Shareholder Party
with respect to which there is no outstanding Restriction Notice. No
resignation or removal of the Dividend Trustee and no appointment of a
successor dividend trustee shall be effective until (a) the successor dividend
trustee has accepted its designation, (b) all indemnities, compensation and
expenses required by Sections 4.10, 4.11 and 4.13 shall have been paid or
provided for and (c) the Dividend Trustee shall have executed and delivered to
the successor trustee a notarized Colombian public deed delegating its rights
and responsibilities hereunder and under the Security Documents to the
successor trustee. If no designation of a successor dividend trustee shall
have been made and accepted within 60 days after the date fixed for such
resignation or removal a successor dividend trustee shall be designated by the
JSC and Shareholder Parties holding a majority of the Shares subject to this
Agreement and if no successor dividend trustee shall have been so designated
and shall have accepted such designation within an additional 30 days after
the date fixed for such resignation or such removal, the Dividend Trustee may
petition any court of competent jurisdiction for the designation of a
successor dividend trustee. Such court may thereupon, after such notice, if
any, as it may prescribe, designate a successor dividend trustee. Any
successor dividend trustee appointed pursuant to this Section 4.9 shall be a
bank or trust company organized under the laws of [________] having its
principal corporate trust office in [insert office location] and a combined
capital surplus of at least $200,000,000. Any successor dividend trustee
shall evidence its acceptance of the trust hereunder by executing and
delivering to the JSC, each Shareholder Party and the Dividend Trustee an
instrument accepting this trust and its designation as Dividend Trustee
hereunder, and thereupon such successor dividend trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
duties and obligations of its predecessor hereunder with like effect as if
originally named as Dividend Trustee herein, and such predecessor shall have
no further obligation or liability thereunder except for liability with
respect to its acts or omissions prior to such succession pursuant to Section
4.6; nevertheless, on the request of any party hereto or such successor
dividend trustee, the Dividend Trustee ceasing to act shall execute and
deliver instruments transferring to such successor dividend trustee all rights
and powers of the Dividend Trustee so ceasing to act, including any such
instruments necessary to transfer the Dividend Account maintained for the
benefit of each Shareholder Party to such successor dividend trustee, and
shall deliver to such successor dividend trustee all property held by it in
trust hereunder.
<PAGE>
Section 4.10. Indemnity. (a) The JSC agrees to indemnify the
Dividend Trustee for, and to hold it harmless against, any loss, liability,
claim, judgment, settlement, compromise, obligation, damage, penalty, cost,
expense or disbursement of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, unless forming part of the compensation agreed pursuant to Section
4.11 or arising from the gross negligence or willful misconduct of such of
the Dividend Trustee or the agents that are seeking indemnification, including
the costs and expenses of defending itself against any claim of liability in
the premises.
(b) In any suit, proceeding or action brought by the Dividend
Trustee with respect to, or to enforce any provisions of this Agreement, the
JSC will save, indemnify and keep the Dividend Trustee harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligee
thereunder, arising out of a breach by the JSC of any of its obligations
hereunder or thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligee or its successors
from the JSC, and all such obligations of the JSC shall be and remain
enforceable against and only against the JSC and shall not be enforceable
against the Dividend Trustee or any Shareholder.
(c) The agreements in this Section 4.10 shall survive the
termination of the other provisions of this Agreement.
Section 4.11. Compensation. The Dividend Trustee shall be entitled
to reasonable compensation (which shall not be limited by any provision of law
in regard to compensation of a trustee of an express trust) as may be agreed
from time to time between the JSC and the Dividend Trustee for all services
rendered under this Agreement, and such compensation, together with
reimbursement of the Dividend Trustee for its advances, disbursements and
expenses in connection with the performance of the trust provided for herein
(including the reasonable fees and expenses of its agents and of counsel,
accountants and other experts referred to in Section 4.7), shall be paid by
the JSC promptly upon demand from the Dividend Trustee from time to time as
services are rendered and expenses are incurred. The Shareholders shall have
no liability for any fees, expenses or disbursements of the Dividend Trustee.
Section 4.12. Certificates. Whenever in the administration of the
trusts of this Agreement the Dividend Trustee shall deem it necessary or
desirable that a matter be proved or established in connection with taking or
omitting any action by the Dividend Trustee hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in
the absence of negligence or willful misconduct on the part of the Dividend
Trustee, be deemed to be conclusively proved or established by a certificate
of the JSC delivered to the Dividend Trustee.
<PAGE>
Section 4.13. Stamp and Other Similar Taxes. The JSC agrees to
indemnify and hold harmless the Dividend Trustee from, and shall reimburse the
Dividend Trustee for, any present or future claim for liability for any stamp
or other similar tax and any penalties or interest with respect thereto, which
may be assessed, levied or collected by any jurisdiction in connection with
this Agreement or the trusts created hereunder. The obligations of the JSC
under this Section 4.13 shall survive the termination of the other provisions
of this Agreement.
Section 4.14. Exculpatory Provisions. The Dividend Trustee makes
no representations as to the value or condition of the trusts created
hereunder or any part
thereof, or as to the title of the JSC or any Shareholder Parties thereto or
as to the validity, execution (except by itself), enforceability, legality or
sufficiency of this Agreement, and the Dividend Trustee shall incur no
liability or responsibility in respect of any such matters.
Section 4.15. Merger of the Trustee. Any corporation into which
the Dividend Trustee shall be merged, or with which it shall be consolidated,
or any corporation resulting from any merger or consolidation to which the
Dividend Trustee shall be a party, shall be the Dividend Trustee under this
Agreement without the execution or filing of any paper or any further act on
the part of the parties hereto.
Section 4.16. Treatment of Shareholders by Dividend Trustee. (a)
The Trustee may treat the Shareholder Parties as the holders of the Shares and
as the absolute owners thereof for all purposes hereunder unless the Dividend
Trustee shall receive notice to the contrary.
(b) Any Person which shall be designated as the duly authorized
representative of one or more of a Shareholder Party to act as such in
connection with any matters pertaining to this Agreement shall present to the
Dividend Trustee such documents, including, without limitation, opinions of
counsel, as the Dividend Trustee may reasonably request, in order to
demonstrate to the Dividend Trustee the authority of such Person to act as the
representative of such Shareholder Party.
Section 4.17. Confidentiality. The Dividend Trustee shall assure
that all information disclosed to it concerning the Oleoducto Central, the
assets and business of the JSC and the assets and business of each of the
other Shareholder Parties and not otherwise generally available (Confidential
Information) shall be kept confidential and shall, unless otherwise required
by law or official request issued by a court of competent jurisdiction or by a
judicial, administrative, legislative, regulatory or self-regulatory authority
not be revealed without the consent of the JSC and all Shareholder Parties
other than to the directors, officers and representatives of the JSC, the
Shareholder Parties and Affiliates of the Shareholder Parties. Upon the JSC
or any Shareholder Party demanding the return of Confidential Information
relating to it by notice in writing the Dividend Trustee shall, and shall
cause its representatives to, return all documents containing Confidential
Information that have been provided by the JSC or Shareholder Party demanding
the return of Confidential Information (or on its behalf) and destroy any
copies of such documents and any document or other record reproducing,
containing or made from or with reference to the Confidential Information,
except, in each case, for any submissions to or filings with judicial,
administrative, legislative or regulatory authorities. Such return or
destruction shall
<PAGE>
take place as soon as practicable after the receipt of such notice. The
agreements in this Section 4.17 shall survive the termination of the other
provisions of this Agreement.
Section 4.18. Miscellaneous. (a) The Dividend Trustee shall have
the right at any time to seek instructions concerning the administration of
this trust from any court of competent jurisdiction. In the event of any
disagreement between the other parties to this Agreement resulting in adverse
claims being made in connection with property held by the Dividend Trustee and
the terms of this Agreement do not unambiguously mandate the action the
Dividend Trustee is to take in connection with such property under the
circumstance then existing, or the Dividend Trustee is in doubt as to what
action it is required to take, the Dividend Trustee shall be entitled to
refrain from taking any action until directed otherwise in writing by the
Parties hereto entitled to give such direction or by a court of competent
jurisdiction.
(b) None of the provisions of this Agreement shall be construed to
require the Dividend Trustee to expend or risk its own funds or otherwise to
incur any personal financial liability in the performance of any of its duties
hereunder or thereunder if it shall have reasonable grounds for belief that
repayment of such funds or indemnity against such risk or liability is not
reasonably assured to it.
(c) The Dividend Trustee makes no representations as to, and shall
have no responsibility for, the correctness of any statement contained in, or
the validity or sufficiency of, this Agreement or any documents or instruments
referred to herein, or as to or for the validity or collectibility of any
obligation contemplated hereby or thereby. The Dividend Trustee shall not be
accountable for the use or application by any Person of disbursements properly
made by the Dividend Trustee in conformity with the provisions of this
Agreement.
(d) The Dividend Trustee (or any parent, subsidiary or associated
person) may accept deposits from, lend money to, and generally engage in any
business with, the JSC, any Shareholder Party, the Subaccount Banks or any of
their Affiliates, without affecting the validity of the trusts created hereby
or the right to enforce any right to payment hereunder as freely as if it were
not the Dividend Trustee hereunder. The Dividend Trustee shall notify the JSC
and each Shareholder Party at any time it believes it has any interest
conflicting with its obligations hereunder. The Trustee hereby waives any
right of banker's lien, set-off or counterclaim in respect of any assets
contained in the Dividend Accounts maintained for the benefit of a Shareholder
Party or otherwise that are held by the Dividend Trustee as dividend trustee
hereunder.
(e) The Trustee shall not be personally liable for debts contracted
or liabilities or damages incurred in the management or operations of the
trust hereunder, except for those contracted or incurred as a result of its
gross negligence or willful misconduct.
<PAGE>
ARTICLE FIVE
TERM
Section 5.1. Term. This Agreement shall continue in full force and
effect so long as the JSC continues to be in existence in accordance with the
By-laws and shall terminate upon termination of the Oleoducto Central
Agreement unless earlier terminated by written agreement of the Parties. Each
Party's obligations incurred or accrued hereunder prior to termination shall
survive any termination of this Agreement.
Section 5.2. Effectiveness. This Agreement shall have no effect or
validity unless and until the Oleoducto Central Agreement shall have become
effective.
ARTICLE SIX
GENERAL
Section 6.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be given by personal
delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Party Copy To Agent for
Service
OLEODUCTO CENTRAL S.A. N/A CT CORPORATION
World Trade Center Bogota SYSTEM
Calle 100 N. 8A-55 1633 Broadway
Santafe de Bogota, D.C. -Colombia New York, New York 10019
Telefax: 571-218-3933 Telefax: (212) 247-2882
Attention: President
EMPRESA COLOMBIANA DE N/A CONSULATE GENERAL OF
PETROLEOSECOPETROL COLOMBIA
Carrera 13 No. 36-24 10 East 46th Street
Santafe de Bogota, D.C. -Colombia New York, New York 10017
Telefax: (571) 287-0041 Telefax: (212) 972-1725
Attention: Juan Maria Rendon
BP COLOMBIA PIPELINES BP EXPLORATION CT CORPORATION
LIMITED COMPANY SYSTEM
c/o BP EXPLORATION (COLOMBIA) LIMITED 1633 Broadway
(COLOMBIA) LIMITED Carrera 9A No. 99-02 New York, New York 10019
Carrera 9A No. 99-02 Post Office Box 59824 Telefax: (212) 247-2882
Post Office Box 59824 Santafe de Bogota, D.C. Colombia
Santafe de Bogota, D.C. -Colombia Telefax: (571) 618-2895
Telefax: (571) 618-2895 Attention: Legal Manager
Attention: Nicholas P. Connolly
TOTAL PIPELINE TOTAL EXPLORATIE EN PROSKAUER, ROSE,
COLOMBIE S.A. PRODUKTIE MIJ B.V. GOETZ & MENDELSOHN
Tour TOTAL Calle 72 No. 10-03 1585 Broadway
TEP/AME Piso 8 New York, New York 10036
24, Cours Michelet Apartado aereo 251375 Telefax: (212) 969-2900
Cedex 47,92069 Paris, France Santafe de Bogota, D.C. -Colombia Attention: Ronald Papa, Esq.
Telefax: (33 1) 4135 6530 Telefax: (571) 235-8453
Attention: Jean-Claude Soligny Attention: Jacques de Boisseson
TRITON PIPELINE TRITON COLOMBIA, INC. CT CORPORATION
COLOMBIA, INC. Carrera 9A No. 99-02 SYSTEM
c/o TRITON ENERGY Oficina 407 1633 Broadway
CORPORATION Santafe de Bogota, D.C.- Colombia New York, New York 10019
6688 North Central Expressway Telefas: (571) 618-2553 Telefax: (212) 247-2882
Suite 1400 Attention: Ivan Fajardo
Dallas, Texas 75206
Telefax: (214) 692-7487
Attention: Thomas G. Finck and
A.E. Turner
IPL ENTERPRISES IPL INTERNATIONAL INC. CT CORPORATION
(COLOMBIA) INC. Suite 1100 SYSTEM
c/o IPL ENERGY INC. 363 North 1633 Broadway
31st Floor Bow Valley Square 2 Sam Houston Parkway East New York, New York 10019
205 - 5th Avenue S.W. Houston, Texas 77060 Telefax: (212) 247-2882
Calgary, Alberta, Canada T29 2V7 Telefax: (713) 820-9310
Telefax: (403) 231-3920 Attention: Benny J. Phillips
Attention: Donald M. Wishart
TCPL (BERMUDA) LTD. N/A FRIED, FRANK, HARRIS,
c/o TransCanada PipeLines SHRIVER & JACOBSON
Limited 1 New York Plaza
TransCanada PipeLines Tower New York, New York 10004
111 Fifth Avenue S.W. Telefax: (212) 747-1526
P.O. Box 1000, Station M Attention: Ken Blackman
Calgary, Alberta, Canada T2P 4K5
Telefax: (403) 267-2668
Attention: Dave Russell
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any Party to the other. Any notice, request,
demand, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The Party giving any notice, request, demand, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
<PAGE>
Section 6.2. Entire Agreement. This Agreement, together with the
Oleoducto Central Agreement, constitutes the entire Agreement between the
Parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties, and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein. No amendment,
supplement, waiver or termination of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions (whether or not similar) nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
Section 6.3. Representations and Warranties. Each Party represents
and warrants to the other that:
(a) it is a corporation duly incorporated and organized under the laws
of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and perform
its obligations under this Agreement, and this Agreement, when executed and
delivered by such Party, constitutes a valid and legally binding agreement of
such Party;
(c) the execution and delivery of, and the performance by it of its
obligations under this Agreement will not result in a breach of or constitute
a default under:
(i) any provision of its charter or articles of
incorporation or its by-laws;
(ii) any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder;
(iii) any statute, rule, regulation or order, judgment or
decree of any governmental agency or court having jurisdiction over it or by
which it is bound; and
(d) neither it nor any of its property has any immunity from
jurisdiction of any court or from set-off or any legal process.
Section 6.4. Assignments. (a) The JSC may not assign this
Agreement or any of its rights or proceeds hereunder, or create enforceable
third party rights herein, to or in any person not a party hereto except with
the prior written consent of each Shareholder Party. If each Shareholder
Party consents, it agrees to execute and deliver all consents and documents
reasonably necessary to effect such assignment and to create a valid and
perfected interest herein. The claims and rights of each such Permitted
Assignee shall rank pari passu with the claims and rights of all permitted
assignees irrespective of the time or times at which prior, concurrent or
subsequent assignments under this Section 6.4 are made or perfected. Subject
to compliance with the terms of any such assignment, any such Permitted
Assignee shall have the rights of the JSC and may enforce such rights
hereunder as if such Permitted Assignee were a party hereto.
<PAGE>
(b) A Shareholder Party may not assign this Agreement or any of its
rights or proceeds hereunder or its interest in the Dividend Account
maintained for its benefit by the Dividend Trustee, or create enforceable
third party rights herein or therein, to or in any person not a party hereto
except in connection with a transfer of Shares permitted pursuant to Article
Ten of the Oleoducto Central Agreement. A Shareholder Party which has
transferred any of its Shares to another Person or assigned to another Person
any right to acquire Shares shall procure that such Person shall become a
Shareholder Party hereto with respect to such Shares by providing written
notice to the Dividend Trustee, which shall then notify all other Parties
hereto. Upon receipt of such notice by the Dividend Trustee, such holder
shall have all the rights, benefits, obligations and duties hereunder of a
Shareholder Party hereto. A notice or application by a holder of Shares to be
registered as a shareholder of the JSC in the Share Register maintained by the
JSC shall be deemed to also be a notice to the JSC pursuant to this paragraph
(c) of Section 6.4.
(c) In the event of a transfer or assignment pursuant to paragraph
(b) above by a Shareholder Party during the Restricted Period with respect to
the Restricted Account, the Restricted Period shall continue with respect to
such account and funds therein shall be applied accordingly. Notwithstanding
Section 2.1, no Dividend Account shall be established by the Dividend Trustee
for the benefit of any such transferee or assignee of such Shareholder Party
prior to the termination of the Restricted Period and the Restricted Account
shall be deemed to be maintained by the Dividend Trustee also for the benefit
of any such transferee or assignee.
Section 6.5. Nature of Obligations. Subject to the terms of this
Agreement, the obligations under this Agreement shall be unconditional and
absolute and shall not be deferred, excused, released, discharged, or in any
way affected by: (i) any right of set off, counterclaim, or defense by reason
of any claims against the JSC arising under this Agreement or on any other
account whatsoever, (ii) any insolvency, bankruptcy, receivership,
reorganization, dissolution, or liquidation of the JSC or any Shareholder
Party, (iii) any sale or other transfer by any of the Shareholders (among
themselves or otherwise) of any of the JSC's capital stock, or (iv) any
change, waiver, extension, indulgence, or other action or omission in respect
of any of the JSC's obligations in each case, whether or not the Parties shall
have had any notice or knowledge of any of the foregoing.
Section 6.6. Amendments. This Agreement may not be amended or
modified except with the written consent of the Parties and any permitted
assignees.
Section 6.7. No Third Party Beneficiaries. Except as herein
otherwise expressly provided to the contrary, this Agreement shall inure to
the benefit of and be binding upon the Parties and their respective successors
and permitted assignees, and no other Person shall have any rights hereunder.
Section 6.8. Severability. If, for any reason, any provision of
this Agreement is unenforceable, the remaining provisions hereof shall
nevertheless be carried into effect.
<PAGE>
Section 6.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 6.10. Commercial Obligations. The Parties acknowledge and
agree that their rights and obligations hereunder are commercial and not
governmental in nature.
Section 6.11. Arbitration. Any dispute, controversy or claim
arising out of or relating to this Agreement, or the performance, breach,
termination, or invalidity hereof, shall be settled by arbitration in
accordance with the UNCITRAL Arbitration Rules in effect on the date hereof.
The arbitration shall be the sole and exclusive forum for resolution of the
dispute, controversy or claim, and the award shall be final and binding.
Judgment thereon may be entered by any court having jurisdiction. The number
of arbitrators shall be three, each of whom shall be disinterested in the
dispute, controversy or claim, and shall have no connection with any party.
Should the services of an appointing authority be necessary, the appointing
authority shall be the American Arbitration Association. The Parties and the
appointing authority may appoint from among the nationals of any country,
whether or not a party is a national of that country. The place of arbitration
shall be The City of New York, New York. The arbitration shall be conducted
in the English language and any foreign-language documents presented at such
arbitration shall be accompanied by an English translation thereof. The
arbitrators shall apply the law of New York without regard to the principles
of conflicts of laws.
Section 6.12. Submission to Jurisdiction; Consent to Service. Each
of the Parties hereto hereby submits to the exclusive jurisdiction of the
United States District Court for the Southern District of New York (the
"Specified Court") with respect to the enforcement of the arbitration
provisions of this Agreement and the non-exclusive jurisdiction of such courts
with respect to the enforcement of any award thereunder. Each of the parties
hereto irrevocably appoints the person opposite its name in Section 6.1 as its
authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any related suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to such
party, by the person serving the same to the address provided in Section 6.1,
shall be deemed in every respect effective service of process upon such party
in any such suit or proceeding. Each of the Parties hereto further agrees to
take any and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for the duration of this
Agreement.
The obligation of a Party in respect of any sum due from it to the
other party hereunder expressed in United States dollars, notwithstanding any
judgment in a currency other than United States dollars, shall not be
discharged until the first Business Day following receipt by such Party of any
sum adjudged to be so due in such other currency on which (and only to the
extent that) such Party may in accordance with normal banking procedures
purchase United States dollars with such other currency; if the United States
dollars so purchased are less than the sum originally due to such Party
hereunder, the other party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Party against such dollar
shortfall. If the United States dollars so purchased are greater than the sum
originally due to such party hereunder, such Party agrees to pay to the
<PAGE>
other Party an amount equal to the excess of the dollars so purchased over the
sum originally due to such Party hereunder.
Section 6.13. Waiver of Immunity. (a) The Purchaser irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement brought in the Specified Court and further
irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such proceeding in
the Specified Court.
(b) To the extent that the Purchaser or any of its revenues, assets
or properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement at any time
brought against the Purchaser or any of its revenues, assets or properties, to
any sovereign or other immunity from suit, from jurisdiction, from attachment
prior to judgment, from attachment in aid of execution of judgment, from
execution of a judgment or from any other legal or judicial process or remedy,
and to the extent that in any jurisdiction there shall be attributed such an
immunity, the Purchaser irrevocably agrees not to claim and irrevocably waives
such immunity to the fullest extent permitted by the laws of such jurisdiction
(including, without limitation, the Foreign Sovereign Immunities Act 1976 of
the United States), except, in the case of Ecopetrol, as provided under
Article 684 of the Codigo de Procedimiento Civil of Colombia.
Section 6.14. Headings; Table of Contents. The headings and table
of contents contained herein are for convenience of reference only and do not
constitute a part of this Agreement.
Section 6.15. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have hereunto caused this agreement
to be executed and delivered by their proper officers thereunto duly
authorized as of the date first above written.
OLEODUCTO CENTRAL S.A.
By:
Title:
[EMPRESA COLOMBIANA DE PETROLEOS
ECOPETROL
By:
Title:
BP COLOMBIA PIPELINES LIMITED
By:
Title:
TOTAL PIPELINE COLOMBIE S.A.
By:
Title:
TRITON PIPELINE COLOMBIA, INC.
By:
Title:
IPL ENTERPRISES (COLOMBIA) INC.
By:
Title:
<PAGE>
By:
Title:
TCPL (BERMUDA) LTD.
By:
Title:
[NAME OF DIVIDEND TRUSTEE]
AS DIVIDEND TRUSTEE
By:
Title:
<PAGE>
ANNEX A
to Dividend Trust Agreement
FORM OF DIVIDEND SUBACCOUNT BANK AGREEMENT
[date]
[Dividend Trustee]
[Address]
Attention:
Gentlemen:
This is to confirm our agreement with you as follows:
1. The Dividend Subaccount; No Set-Offs. We have today opened a
segregated account in your name, no. _______ (the "Dividend Subaccount"). We
acknowledge that all funds or other assets in such account are trust funds
held by you under the Dividend Trust Agreement, dated as of _____________,
1994, among Oleoducto Central S.A. (the JSC) and the other parties thereto,
which trust funds we will hold as your custodian. Accordingly, we will not
have, and hereby waive, any right of banker's lien, set-off or counterclaim in
respect of any funds or other assets in the Dividend Subaccount or any Special
Account (as defined below).
[2. Consent to Assignment. We acknowledge and consent to the
assignment of such interest or rights (if any) as the JSC may have in or with
respect to the Dividend Trust Subaccount or any Special Account.]
3. Investments. (a) We agree to remit all funds and other assets
held in or for the Dividend Subaccount or any Special Account to you or any
person designated by you upon receipt of your instructions following receipt
of any funds or assets for deposit to the Dividend Subaccount or any Special
Account.
(b) We shall have no liability with respect to investments
(including purchases or conversions of foreign exchange) of moneys held in or
for the Dividend Subaccount or any Special Account (or any losses resulting
therefrom) made at your direction. Investments which we make with Dividend
Subaccount or Special Account balances will be held by us in your name.
(c) If, in addition to the Dividend Subaccount, we have opened
other accounts in your name and we receive funds from you or the JSC or for
your, the JSC's or a Shareholder Party's account that are not identified as
funds for deposit in the
<PAGE>
Dividend Subaccount or any such other account, and as to which we have
received no instructions from you, we shall deposit such funds to a segregated
account established by us in your name at such time and for such purpose
("Special Account") and promptly thereafter we shall request that you instruct
us as to the deposit or other disposition of such funds.
4. Books and Accounts. (a) We shall maintain all such accounts,
books and records as may be necessary properly to record all transactions
carried out by us under this Agreement. We shall permit you, the Shareholder
Parties and the JSC and their authorized representatives to examine such
accounts, books and records; provided that any such examination shall occur
upon reasonable notice and during normal business hours.
(b) On or before the fifth banking day in [New York] of each
calendar month for so long as such Dividend Subaccount and any Special Account
are open, we shall deliver to you a statement indicating the amount of funds
and other assets on deposit in the Dividend Subaccount and such Special
Account and the nature of any investments thereof as of the end of the
preceding calendar month and identifying all deposits to and payments from the
Dividend Subaccount and such Special Account during such calendar month,
including the date on which made. Upon your request, we will at any other
time inform you of deposits, investments, payments, balances and any other
information you may request (and that is reasonably available to us) regarding
the Dividend Subaccount and any Special Account.
5. Communications. Any instruction to be given hereunder to us for
the withdrawal and transfer of moneys in the Dividend Subaccount or any
Special Account may be given by you in writing, by telephone, by tested telex,
facsimile or other form of electronic transmission, and in any manner that we
may reasonably accept (subject to normal and customary verification
requirements), in each case from persons designated for such purpose by you,
and under procedures established from time to time by you and us. Any
initiation of a wire transfer of funds in the Dividend Subaccount or any
Special Account effected through computerized facilities offered to you by us
shall be deemed to be the giving to us of a direction or instruction to make
such transfer. All directions, notices and instructions given to us that are
not in writing or by electronic funds transfer shall be confirmed in writing.
6. Duties of Subaccount Bank. (a) We shall be entitled to act
upon any notice, request, direction, waiver, receipt or other document which
in good faith we believe to be genuine, and we shall be entitled to rely upon
the due execution, validity and effectiveness, and the truth and acceptability
of any provisions contained therein. We shall not have any responsibility to
make any investigation into the facts or matters stated in any notice,
certificate, instrument, demand, request or other communications furnished to
us hereunder.
(b) We shall not be liable for any error of judgment or for any act
done or omitted by us in good faith or for any mistake of fact or law, or for
anything which we may do or refrain from doing, except for our own negligence
or willful misconduct.
(c) We may consult with, and obtain advice from, legal counsel,
accountants and other experts, in connection with the performance of our
duties hereunder and we shall incur no liability and shall be fully protected
in acting in good faith in accordance with the written opinion and written
advice of such counsel, accountants and other experts. We shall
<PAGE>
not be responsible for the negligence or misconduct of any counsel,
accountants and other experts selected by us without negligence or willful
misconduct.
(d) We shall have no duties other than those specifically set forth
or provided for in this Agreement and no implied covenants or obligations on
our part shall be read into this Agreement. We shall have no obligation to
familiarize ourselves with and shall have no responsibility with respect to
any other agreement relating to the transactions contemplated by this
Agreement nor any obligation to inquire whether any notice, instruction,
statement or calculation is in conformity with the terms of any such other
agreement, except those irregularities or errors manifestly apparent on the
face of such document or to our actual knowledge. If, however, any remittance
or communication received by us appears manifestly erroneous or irregular we
shall be under a duty to make prompt inquiry to the person originating such
remittance or communication in order to determine whether a clerical error or
inadvertent mistake has occurred. We shall at all times take such care in
dealing with the Subaccount and any Special Account as would a prudent man in
dealing with his own property.
7. Expenses. We acknowledge that you shall have no responsibility
for any fees or expenses incurred by us in connection with this Agreement.
Any arrangements for the payment of such fees and expenses shall be made
directly between us and the JSC.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
9. Definitions. Terms used but not defined herein have the meaning
assigned to them in the Dividend Trust Agreement.
[NAME OF DIVIDEND SUBACCOUNT BANK]
By
<PAGE>
SCHEDULE D TO
OLEODUCTO CENTRAL AGREEMENT
OPERATING PRINCIPLES
1.0 INTRODUCTION
The Parties agree that the Oleoducto Central Operations Agreement will
establish the contractual relationship between the JSC and the Operator, and
that such agreement shall give effect to the operating principles set forth
below. The rights and obligations of the Canadian Group as Operator are
separate from the rights and obligations of the Canadian Group as
Shareholders.
2.0 OPERATING FEES
The JSC shall pay the Operator all Operating and Maintenance Costs including:
(a) a fee of $2.5 million U.S. annually for the years 1996 and following
("Operating Fee") and (b) the incentives as described below.
3.0 INCENTIVES
The Parties agree that incentives shall be those which would reward the
Operator's achievements against mutually agreed targets and the Annual
Operating Budget, recognize exceptional performance and also share in further
JSC cost savings or cost avoidance. The targets and budget shall be set
annually, keeping in mind such things as; the Canadian Group's stature as a
world class operator, the assets being operated, the operating environment and
other pipeline operations both in Colombia and world wide. The Operator will
apply North American technology and management techniques to achieve these
levels of performance. The operating incentive shall be recognized in two
categories:
Quality Incentives - which are two fold: Base and "Stretch" Incentives; and
Profit Sharing
The Operator incentives from the Quality Incentive programs start in 1998 and
shall, together with the Operating Fee, the Subordinated Fee and the agreed
return on equity determined in accordance with Section 5.4(b) of the Oleoducto
Central Agreement, be capped to yield a maximum 16% ROE after tax return in
1998 and 1999 and 17% ROE after tax return in 2000 and thereafter on Canadian
Group Adjusted Paid-In Equity, irrespective of any invested capital arising
from the acquisition of another shareholder's interest or funding another
shareholder's interest. For the purposes of determining the Base Incentive
only, the Operating Fee will be calculated on an after tax basis, and will be
calculated as an annual return net of all Colombian Taxes on the Adjusted
Paid-In Equity. The Profit Sharing program would not be capped nor included
in the Quality Incentive program.
<PAGE>
4.0 QUALITY INCENTIVES
These incentives are related to the evaluation of the technical performance of
the Operator and its ability to deliver this performance under an agreed
budget. Performance shall be expressed among the major areas of interest to
the Initial Shippers, for example:
1) Technical Integrity;
2) Safety/Environment/Security/Emergency Response;
3) Operating Performance; and
4) Initial Shippers satisfaction as seen by the Initial Shippers after
discussions with the Operator.
Relevant measures for these mutual targets will be established by the Initial
Shippers and will include, but will not be limited to audits, benchmarks,
statistics and technical evaluations.
4.A BASE INCENTIVES
The base incentive shall recognize the achievement of the mutually agreed
targets and budget. The founding principle of the base incentive is that the
Initial Shippers must provide the important performance factors and the
relative weighting of each of these factors for any operating year. The
anticipated process for establishing the annual base incentive shall be as
follows:
1) Annually, the Initial Shippers shall provide to the Operator the key
factors and the relative weighting of each factor.
2) The Operator and Initial Shippers shall determine preliminary
measurable achievement targets.
3) The Operator shall budget to reflect the factors and targets.
4) The Operator and Initial Shippers shall determine mutually the final
factors, weighting targets and budget prior to the start of the
operational year.
Considering the present evaluation of the project costs, the expected
incremental ROE would be 1.3% ROE.
4.B "STRETCH" INCENTIVE
The additional incentive will recognize exceptional performance by the
Operator considering an overall package of performance factors which shall
include incentives and disincentives. These performance factors could include
high performance stretch targets in the same areas identified under the base
incentive or could be additional and different operational factors. The full
achievement of these factors under this stretch incentive could
<PAGE>
reach a maximum of 1% ROE. Even after the application of the disincentives
the "stretch" incentives cannot be less than zero.
4.C EXAMPLES OF BASE AND "STRETCH" INCENTIVES
For the concept of sliding scale operating incentives to be successful, the
factors and relative weighting must be identified at a time just prior to the
operational target year to reflect the business needs and priorities at that
time. Recognizing this premise, the following table is provided as a broad
list of examples to illustrate the two forms of incentives for a hypothetical
target year when the expected incremental base incentive is 1.5% ROE:
<TABLE>
<CAPTION>
<S> <C> <C>
INCENTIVES
FACTOR BASE "STRETCH"
Safety, Security and Environmental 0 to 0.4
Operating Performance/Costs 0 to 0.4 other items 0 to +Z
Maintenance Capital Costs 0 to 0.2 --
Emergency Response -- some items -X to +Y
Technical Integrity -- other items 0 to +Z
Service Capacity 0 to 0.3 --
Petroleum Quality 0 to 0.2 --
Shipper Satisfaction -- --
TOTAL 1.5% -0.5% TO + 1.5%
</TABLE>
The specific measurement criteria for each operational factor would be
established and finalized at the approval of the budget.
The cumulative reward under the Stretch Incentive shall range from a minimum
of 0% to a maximum of 1% ROE even though the proposed scale is exceeded on the
upside and on the downside.
5.0 PROFIT SHARING
Should the benefits to the Initial Shippers resulting from the actions of the
Operator be greater than reasonably envisaged at the time that annual targets
are set, a profit sharing principle will be implemented. Profit sharing will
recognize any identified initiatives by the Operator, and agreed by the
Initial Shippers, which could include one-time "bright ideas" which result in
identified savings in:
(a lower operating expenses;
<PAGE>
(b) reduced normalized operating expenses (taking into account annual
shipping volume differential, inflation, and exceptional one-time operating
expense items) compared to an agreed rolling average (e.g. 3 years); and
(c) capital expenditure reductions or avoidance.
A formula in the spirit of the following formula would be used for profit
sharing. Such formula will be reset by Initial Shippers after discussions
with the Operator from time to time.
PROPOSED OPERATOR SHARING EXAMPLE
35% on the first $2.5M
20% on the next $1.25M
10% on any amounts over $3.75M
6.0 FORM OF PAYMENT
All of the operating fees and incentives shall be Operating and Maintenance
Costs paid to the Canadian Group as Operator. The U.S. $2.5 million operating
fee will be paid on a pre tax basis. The base and additional incentives will
be paid to yield the return after all Colombian Taxes referenced above while
any profit sharing would be paid on a pre-tax basis.
7.0 OPERATING PARAMETERS
The JSC shall appoint the Canadian Group as operator for the operations phase
of the JSC, either under the terms of a pipeline operating agreement made
between the JSC and the Canadian Group or under some other arrangement. The
pipeline operating agreement or other arrangement shall contain those terms
commonly found in agreements or arrangements of a similar nature which inter
alia will provide the Canadian Group with the autonomy and accountability
necessary to ensure that the system is operated in an efficient, safe and
environmentally sound manner. More specifically the Canadian Group as
operator will be responsible for:
(a) Budgets
preparation of annual capital and operating budgets for approval of the
JSC;
authority to execute the approved budgets;
preparation of accounting information and maintenance of accounting
books;
authority for emergency expenditures for unapproved budget items;
<PAGE>
(b) Operations of the Project
developing and implementing materials and operations performance
standards and all related quality control program;
developing and ensuring implementation of operations and maintenance
procedures, including safety and environmental standards (subject to the
participation of the Initial Shippers as referred to below);
responsibility for oil movements and scheduling;
responsibility for equipment and right-of-way maintenance;
oil accounting and tariff management.
(c) Human Resources (within the Board of Directors approved budgets and
manpower plans)
organization structure and number of staff for operations entity, but the
Senior Manager and direct reports will be nominated by the Operator to the
Board of Directors for its approval;
developing and specifying qualifications for staff positions and training
standards of operations entity;
hiring and terminating staff of operations entity.
In addition to these terms commonly found in agreements or arrangements of a
similar nature, the pipeline operating agreement shall provide for:
optimization of Colombian content;
the sub-contracting to Ecopetrol of certain day-to-day operations.
The Parties agree the pipeline will be constructed, operated and maintained in
accordance with applicable regulations, codes and standards and that
expenditures necessary to meet these standards will be approved as required.
Standards for environmental compliance, emergency and spill response (both
onshore and offshore) and spill clean-up procedures shall be established
jointly by the Initial Shippers and the Canadian Group. The Initial Shippers
shall have powers to ensure that the Canadian Group as operator complies with
such standards and procedures.
It is intended that the Canadian Group's appointment as operator will be for
an initial term of 15 years commencing in 1995, with options to extend this
term by not more than two additional five year periods plus such additional
periods required to cover Equity Amortization of the Canadian Group's
investment. Each such option shall be deemed to have been exercised unless
the Initial Shippers, acting by a decision of three of four Initial
<PAGE>
Shippers, decide not to exercise it and give the Canadian Group one year's
notice of their decision.
If the Initial Shippers fail to exercise any such option, the Canadian Group
shall be entitled to their reasonable demobilization costs and Equity
Amortization will commence on the expiry of the term of the operatorship.
The Canadian Group shall be entitled to resign as operator on at least one
year's notice.
Notwithstanding the foregoing, the Initial Shippers shall be entitled (but not
obligated) to terminate the Canadian Group's appointment as operator at any
time if any of the following conditions is satisfied:
(i) insolvency (to be defined in the Oleoducto Central Operations
Agreement) of the operating company or either ultimate parent of the Canadian
Group;
(ii) gross negligence or wilful misconduct of the Canadian Group with
respect to the Oleoducto Central Operations Agreement or other arrangement as
referred to above, determined in the reasonable judgment of the Initial
Shippers;
(iii) non-performance or a materially sub-standard performance by the
Canadian Group, determined in the sole discretion of the Initial Shippers,
which is not remedied within a reasonable time of the Initial Shippers giving
notice to the Canadian Group requiring it to be remedied.
Termination of the Canadian Group's appointment as Operator pursuant to either
of the preceding paragraphs will not entitle the Canadian Group to any
reimbursement of demobilization costs or indemnity, nor will such termination
alter any schedule for Equity Amortization of the Canadian Group's investment
that may be in effect.
The Parties acknowledge Colombian content as a key element of the JSC and
intend that as many management positions as possible should be filled by
Colombian nationals, whilst recognizing the need for certain positions to be
filled by secondees of the Canadian Group. Colombian content also refers to
maximizing the JSC's use of Colombian contractor and suppliers.
8.0 ARBITRATION
In the event that any of the incentives become matters of dispute, the
arbitration provisions of the Oleoducto Central Agreement shall be applicable.
9.0 INSURANCE
The JSC will take out appropriate insurance insofar as such insurance is
available on reasonable terms. The costs (premiums and deductibles) of this
insurance will be considered as an operating expense and will be recovered
through the tariff. The events and circumstances covered by such insurance
shall include but not be limited to acts of God,
<PAGE>
accidents, sabotage, civil disturbance, terrorism, curtailment of utilities
and, insofar as insurance is available, curtailment of supplies of materials
and services. Such events and circumstances shall not include shortage of
labor, strike, lockout, picketing or other industrial disturbances or
disputes.
10.0 FACILITIES
The Parties intend that the Canadian Group will operate:
1. Cusiana Pump Station - including pumps, meters, and tanks
2. Cusiana to El Porvenir Segment - first the 20" pipeline and then
beginning mid-year 1997 the new 30" pipeline
3. El Porvenir - operate the pump station under subcontract to Ecopetrol
including the pumps, meters and tanks
4. Miraflores - operate pump station under subcontract to Ecopetrol
5 .El Porvenir to Vasconia Segment - operate the pipeline, initially the
30" pipeline between La Belleza and Vasconia and the pig trap in La Belleza,
but eventually the additional 30" pipeline between El Porvenir and La Belleza
which will be constructed under the JSC
6. Vasconia II - operate both ODC and JSC assets in Vasconia II. This
operation may be conducted directly by the Canadian Group by subcontract to
Ecopetrol
7. ODC Pipeline - operate the pipeline between Vasconia and Caucasia
including the pump station in Caucasia and the ODC terminal facilities at
Covenas (tank farm)
8. ODC Loop - operate the 30" pipeline between Vasconia and Covenas
including new JSC terminal facilities
9. Covenas - negotiate with Cravo Norte to operate all Covenas facilities
except the existing DOL terminal facilities
Realizing that not all of these assets are or will be JSC assets, the Parties
agreed to provide active support in negotiating with ODC and Cravo Norte
suitable terms and conditions under which the JSC and Canadian Group will
assume operational responsibility in order to ensure maximum efficiency and
like operational and environmental exposures.
11.0 It is the intention of the Parties that the incentives and operating
fees attributed to the Canadian Group shall be paid by the JSC, and, to the
extent possible, will be shared with the owners of the other facilities
operated by the Canadian Group.
<PAGE>
SCHEDULE E TO
OLEODUCTO CENTRAL AGREEMENT
ACCESS PRINCIPLES
The JSC will enter into access agreements with the following entities for the
assets which do not belong to the JSC, but which must be used in whole or in
part by the JSC to transport Petroleum through the Oleoducto Central by on or
before December 31, 1995.
<TABLE>
<CAPTION>
<S> <C>
ENTITY ASSETS
SDLA, Tauramena, and Rio Central Processing Facility land and
Chitamena Associations infrastructure which support the
Cusiana #1 Pump Station and tank farm
Ecopetrol El Porvenir Pump Station and tank farm
Ecopetrol Miraflores Pump Station
ODC Vasconia Pump Station and tank farm
ODC Caucasia Pump Station
ODC Pipeline from Vasconia to Caucasia
ODC Covenas Terminal Facilities and tank farm
Cravo Norte Association Covenas Terminal and Offshore (TLU) facilities
</TABLE>
Each of the Parties agree to provide active support in negotiating such access
agreements with ODC and Cravo Norte.
SCHEDULE F TO
OLEODUCTO CENTRAL AGREEMENT
PRELIMINARY FINANCING PLAN
FOLLOWS ON NEXT TWO PAGES
Fund by Part
Senior Debt 70.0% ASSUMPTIONS: (1)Interest on Bonds 13.5%
Equity 30.0% (2)Interest on ECA Debt 13.5%
(3)All Interest capitalised
Sources & Uses of Funds During Construction (Nominal US $ millions)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Project Quarter 1 2 3 4 5 6 7
Description
(CURRENT INDICATIVE TERMS OF 1994
FINANCING PLAN)
Uses of Funds
Cash Capital Expenditures 1375 0 0 0 0 117 118 119
Less Excess Proceeds from Previous Bond Is 0 0 0 0 0 0 0 0
Purchase of Phase I Assets 320 0 0 0 80 0 0 240
Coupons Payable on Series 1 Bonds 65 0 0 0 0 0 0 0
Coupons Payable on Series 2 Bonds 49 0 0 0 0 0 0 0
Coupons Payable on Series 3 Bonds 29 0 0 0 0 0 0 0
Coupons Payable on Series 4 Bonds 0 0 0 0 0 0 0 0
"Coupons" Payable on Shareholder Loan I 48 0 0 0 0 0 0 0
Interest During Construction+Upfront Fee-E 98 0 0 0 0 0 0 0
Interest Payable on Shareholder Loan II 20 0 0 0 0 0 0 0
Coupon During Construction-Sub Debt 0 0 0 0 0 0 0 0
Subtotal Uses of Funds 2004 0 0 0 80 117 118 359
Accrued Return on Equity during
Contruction 131 0 0 0 0 0 0 0
Total Uses of Funds 2135 0 0 0 80 117 118 359
Cumulative Subtotal Uses of Funds
Sources of Funds
Cash for Tariffs 210 0 0 0 0 0 0 0
Capital Markets
Bond Series 1 200 0 0 0 0 0 200 0
Bond Series 1 150 0 0 0 0 0 150 0
Bond Series 3 220 0 0 0 0 0 0 0
Bond Series 4 0 0 0 0 0 0 0 0
Shareholders' Loan I 213 0 0 0 0 0 101 0
Commercial Banks
ECA-Guaranteed Debt
470 0 0 0 0 0 0 0
Shareholder Loan II 95 0 0 0 0 0 0 0
Sponsors' Funds:
Subordinated Debt 0 0 0 0 0 0 0 0
Equity Inc. Retained Earnings 578 0 0 0 80 117 0 144
Total Sources of Funds 2136 0 0 0 80 117 451 144
Cumulative Subtotal sources of Funds 0 0 0 80 197 649 793
Check: (Overfunding) Underfunding (0) 0 0 0 0 333 (215)
cum (0) (0) 0 0 0 333 118
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Project Quarter 8 9 10 11 12 13 14 15 16
Description
(CURRENT INDICATIVE TERMS OF
FINANCING PLAN) 1995 1996
Uses of Funds
Cash Capital Expenditures 120 181 182 183 185 42 42 42 43
Less Excess Proceeds from Previous Bond Is 0 0 0 0 0 0 0 0 0
Purchase of Phase I Assets 0 0 0 0 0 0 0 0 0
Coupons Payable on Series 1 Bonds 13 0 13 0 13 0 13 0 13
Coupons Payable on Series 2 Bonds 10 0 10 0 10 0 10 0 10
Coupons Payable on Series 3 Bonds 0 0 0 0 0 14 0 14 0
Coupons Payable on Series 4 Bonds 0 0 0 0 0 0 0 0 0
"Coupons" Payable on Shareholder Loan I 7 0 7 0 7 7 7 7 7
Interest During Construction+Upfront Fee-E 16 3 8 11 11 12 12 13 13
Interest Payable on Shareholder Loan II 3 1 1 2 2 2 2 3 3
Coupon During Construction-Sub Debt 0 0 0 0 0 0 0 0 0
Subtotal Uses of Funds 170 185 219 196 228 78 86 79 89
Accrued Return on Equity during
Contruction 25 0 0 0 42 0 0 0 65
Total Uses of Funds 194 185 219 196 270 78 86 79 154
Cumulative Subtotal Uses of Funds
Sources of Funds
Cash for Tariffs 0 36 0 0 0 174 0 0 0
Capital Markets
Bond Series 1 0 0 0 0 0 0 0 0 0
Bond Series 1 0 0 0 0 0 0 0 0 0
Bond Series 3 0 0 0 220 0 0 0 0 0
Bond Series 4 0 0 0 0 0 0 0 0 0
Shareholders' Loan I 0 0 0 111 0 0 0 0 0
Commercial Banks
ECA-Guaranteed Debt
105 93 133 11 26 12 12 26 53
Shareholder Loan II 21 19 27 2 5 2 2 5 11
Sponsors' Funds:
Subordinated Debt 0 0 0 0 0 0 0 0 0
Equity Inc. Retained Earnings 50 25 36 0 46 0 0 4 76
Total Sources of Funds 176 173 196 344 77 188 14 35 140
Cumulative Subtotal sources of Funds 968 1142 1337 1681 1758 1946 1961 1996 2136
Check: (Overfunding) Underfunding (19) (11) (24) 148 (193) 111 (72) (44) (13)
cum 99 88 64 212 19 130 58 14 1
</TABLE>
Project Capitalization Amounts (US $ m) % Capitalization
Senior Debt 1348 70.0%
Cash Paid-In Equity 447 23.2%
Pre-Completion Accrued Returns 131 6.8%
Total Project Capitalization 1926 100.0%
<TABLE>
<CAPTION>
<S> <C> <C>
OLEODUCTO CENTRAL
Dec 12 1995
EOUITY SUBSCRIPTION & PERFORMANCE GUARANTEE
CAPEX - DEC'94 US $ 1270
INFLATION 105
ASSETS 320
INTEREST 195
1890
COST OVERRUN @ 10% 140
NOMINAL CAPEX $1375M
TOTAL 2030
TOTAL PROJECT COST 2030
SENIOR DEBT @ 70% 1421
EQUITY @ 30% 609
SHARE TOTAL
ECP 507.5 0.25
TOTAL 308.56 0.152
BP 308.56 0.152
TRITON 194.88 0.096
TCPL 355.25 0.175
IPL 355.25 0.175
2030
PREFORMANCE GUARANTEE NUMBERS
30% 30% ROUNDED
ECP 152.25 152.3
TOTAL 92.57 92.6
BP 92.57 92.6
TRITON 58.46 58.5
TCPL 106.58 106.5
IPL 106.58 106.5
TOTAL 609.00 609
Note A: THE SHAREHOLDERS AGREEMENT REQUIRES SHAREHOLDERS TO EITHER:
1. SUPPORT THE JSC BY PROVIDING DEBT AND EQUITY TO ACHIEVE 70% DEBT AND 30%
EQUITY OR, 2. INCREASE EQUITY PRORATA TO 40% EQUITY, 60% DEBT.
B. Finance Plan shows capitalised interest at $263mm. Reduced here as partners expect to expense
interest on productive assets.
C. rounded figures used in the performance guarantees
D. The Finance Plan of the Shareholders agreement indicates total capitalisation of $1926mm
including accrued returns but excluding cash from tariffs.
</TABLE>
SCHEDULE G
TO OLEODUCTO CENTRAL AGREEMENT
FORM OF SUBSCRIPTION AGREEMENT
AGREEMENT, dated as of December 14, 1994 between OLEODUCTO CENTRAL
S.A., a sociedad anonima organized under the laws of Colombia (the "JSC"), and
[INSERT NAME OF SHAREHOLDER] (the "Purchaser").
RECITALS
WHEREAS:
A. The Purchaser is a Shareholder of the JSC, and the JSC and the
Purchaser are parties to the Oleoducto Central Agreement (the "Oleoducto
Central Agreement"), dated as of December 14, 1994, among the JSC, the
Purchaser and the other Shareholders parties thereto; and
B. The Purchaser has agreed pursuant to the Oleoducto Central
Agreement to enter into an agreement with the JSC to acquire from time to time
upon the call of the JSC, which shall be simultaneous with a call to all other
Shareholders, and subject to certain other conditions set forth herein, Shares
(as hereinafter defined) in exchange for cash and in proportion to the
Purchaser's Initial Shareholding Interest (as hereinafter defined).
NOW THEREFORE, for good and valuable consideration the sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise requires, the
following words and phrases shall have the meanings indicated below:
"Call" has the meaning assigned to it in Section 2.1.
"Initial Shareholding Interest" of any Person means the percentage equal
to the number of Shares held by such Person divided by the total number of
Shares outstanding as of the date hereof.
"Notice of Exercise of Call" has the meaning assigned to it in Section
2.1.
"Permitted Assignee" means a person to whom the JSC or the Purchaser, as
the case may be, has assigned or transferred rights or obligations under this
Agreement in accordance with Section 5.3.
<PAGE>
"Political Events Agreement" means an agreement entered into among the
parties to the Oleoducto Central Agreement, providing definitions and
procedures relating to certain political events, as the same may be amended
from time to time in accordance with the terms thereof.
"Shares" means the shares of capital stock of the JSC, par value Ps.
100,000 each, each with no preference among themselves with respect to
dividends, voting rights or rights upon liquidation of the JSC.
"Time of Delivery" has the meaning assigned to it in Section 2.1 hereof.
All defined terms used and not defined herein have the meanings assigned to
them in the Oleoducto Central Agreement.
Section 1.2. Interpretation. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
(b) words importing gender include all genders;
(c) any reference to an "Article" or "Section" refers to an Article
or a Section, as the case may be, of this Agreement; and
(d) all references to this Agreement and the words "herein",
"hereof", "hereto" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
COMMITMENT
Section 2.1. Commitment to Purchase Shares. On the terms and subject to
the conditions hereinafter set forth, the Purchaser agrees from time to time
to acquire Shares upon the call (each, a "Call") of the JSC to be exercised by
a notice of exercise (each, a "Notice of Exercise of Call"), in each case in
exchange for cash, in the number, at the purchase price per Share and on the
date and at the time (each, a "Time of Delivery") set forth in the Notice of
Exercise of Call; provided, however, that, in each case, (a) the Call shall be
made in accordance with the procedures established for such purpose in the
By-Laws of the JSC and applicable laws and in conformity with a Capital Budget
and a Funding Resolution of the JSC and shall be made simultaneously to the
Purchaser and all
<PAGE>
other purchasers under other Subscription Agreements, as soon as practicable
after all necessary governmental and shareholder approvals for the issue have
been obtained,(b) the Notice of Exercise of Call shall be substantially in the
form of the Notice of Exercise of Call attached as Annex I hereto and shall be
transmitted simultaneously to all purchasers under other Subscription
Agreements, (c) the number of Shares to be purchased by the Purchaser at such
Time of Delivery and the aggregate purchase price therefor [For Ecopetrol -,
subject to Section 10.6 and clause (a)(i)(B) of Section 12.3 of the Oleoducto
Central Agreement,] shall be in the same proportion to the aggregate amount of
Shares being sold by the JSC pursuant to such Call and the aggregate price
therefor as the Purchaser's Initial Shareholding Interest, and (d) the
purchase price per Share to be sold at each Time of Delivery, the Time of
Delivery and all other terms of purchase shall be identical for all
Shareholders, and (e) the Time of Delivery shall be not less than 15 Business
Days after the date of delivery of the Notice of Exercise of Call. The JSC
agrees to make Calls to the Purchaser to acquire Shares in exchange for cash
only in compliance with paragraphs (a) through (e) above.
Section 2.2. Sale of the Shares. At each Time of Delivery, the JSC
shall issue, sell, transfer, convey, assign and deliver to the Purchaser, and
the Purchaser will acquire from the JSC, all right, title and interest in and
to the Shares being purchased by the Purchaser at Time of Delivery at the
purchase price per Share set forth in the Notice of Exercise of Call. Upon
payment of the aggregate purchase price therefor as provided herein and in
such Notice of Exercise of Call, the Purchaser shall have no further
obligations thereunder.
Section 2.3. Payment and Delivery. The certificate(s) representing the
Shares purchased by the Purchaser hereunder at each Time of Delivery shall be
delivered by or on behalf of the JSC to the Purchaser's designated
representative in the place set forth in the Notice of Exercise of Call
against payment in full by the Purchaser of the purchase price as set forth in
the Notice of Exercise of Call.
Section 2.4. Conditions to Purchase. The obligations of the Purchaser
hereunder to purchase the Shares to be delivered at each Time of Delivery
shall be subject to the conditions that (i) the representations and warranties
of the JSC in Section 2.6 are, at and as of the date of such Time of Delivery,
true and correct, and (ii) that the aggregate purchase price of all Shares
purchased by Purchaser pursuant to Calls of the JSC hereunder shall not exceed
the lower of (A) U.S.$_______ million and (B) the Company's Initial
Shareholding Interest of the Aggregate Subscription Obligation (or, in each
case, the equivalent thereof in Colombian pesos determined by reference to
exchange rates between dollars and pesos in effect on each Time of Delivery
hereunder based on such rates available to the JSC as reasonably determined by
the JSC), less, in each case, all amounts (similarly determined) paid by the
Purchaser pursuant hereto. It is acknowledged that such Shares are subject to
the terms of the Oleoducto Central Agreement [not applicable to Ecopetrol -,
the Voting Trust Agreement] and the Dividend Trust Agreement.
Section 2.5. Mutual Representations and Warranties. Each party
represents and warrants to the other for its benefit that:
<PAGE>
(a) it is a corporation duly incorporated and organized under the laws
of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and perform
its obligations under this Agreement and this Agreement, when executed and
delivered by such party, constitutes the valid and legally binding agreement
of such party; and
(c) the execution and delivery of, and the performance by it of its
obligations under, this Agreement will not result in a breach of or constitute
a default under:
(i) any provision of its charter or articles of incorporation or
its by-laws;
(ii) any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder; and
(iii) any order, judgment or decree of any court or governmental
agency to which it is a party or by which it is bound.
Section 2.6. Additional Representations and Warranties of JSC. The JSC
represents and warrants to the Purchaser for its benefit and for the benefit
of its Permitted Assignees that the Shares to be issued and sold by the JSC
hereunder and under the related Notice of Exercise of Call at each Time of
Delivery will have been duly and validly authorized and, when issued and
delivered against payment in full therefor as provided herein and in such
Notice of Exercise of Call, will be fully paid and non-assessable.
Section 2.7. Fees and Expenses. All fees and expenses incurred by or on
behalf of each party hereto in connection with the negotiation and execution
of this Agreement and the transfer of the Shares to be sold hereunder at each
Time of Delivery shall be borne by such party.
Section 2.8. Taxes. The JSC shall be solely responsible for the payment
of all taxes imposed on it, whether by taxing authorities within Colombia or
elsewhere, arising from or in connection with the transactions contemplated
hereby.
ARTICLE THREE
POLITICAL EVENTS
Section 3.1. Political Events. The obligations of the Purchaser under
this Agreement to purchase Shares are subject to the terms of the Political
Events Agreement.
<PAGE>
ARTICLE FOUR
TERM; EFFECTIVENESS
Section 4.1 Term. This Agreement shall continue in force and effect so
long as the JSC continues to be in existence in accordance with the By-laws
and shall terminate at the earliest of (i) the termination of the Oleoducto
Central Agreement, (ii) December 31, 2001, (iii) with respect to a Withdrawing
Shareholder, at 5:00 p.m. (local time in Santafe de Bogota) on March 31, 1995,
(iv) as provided in the Political Events Agreement and (v) a unanimous
decision of the Board of Directors of the JSC not to continue with the
Oleoducto Central, provided, however, that any rights and obligations existing
prior to termination shall survive termination of this Agreement.
Section 4.2 Effectiveness. This Agreement shall have no effect or
validity unless and until the Oleoducto Central Agreement and the Political
Events Agreement have become effective, and the JSC has entered into
Subscription Agreements in substantially identical form to this Agreement with
the other Shareholders, supported, in each case (other than with respect to
Ecopetrol) by performance guarantee agreements substantially in the form
attached as Schedule H to the Oleoducto Central Agreement.
ARTICLE FIVE
GENERAL
Section 5.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be given by personal
delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Agent
for Service
If to the JSC: OLEODUCTO CENTRAL S.A. CT CORPORATION SYSTEM
World Trade Center Bogota 1633 Broadway
Calle 100 N. 8A-55 New York, New York 10019
Santafe de Bogota, D.C. - Colombia Telefax: (212) 247-2882
Telefax: 571-218-3933
Attention: President
If to the Purchaser: [INSERT NAME AND ADDRESS]
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any party to the other. Any notice, request,
demand, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The party giving any notice, request, demand, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 5.2. Amendments and Waivers. The JSC will enter into other
Subscription Agreements on substantially identical terms with the other
Shareholders, and the Purchaser shall have no obligations with respect to any
other such Subscription Agreement. No amendment, supplement, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
Section 5.3. Assignments. (a) The JSC may not assign this Agreement or
any of its rights hereunder, or create enforceable third party rights herein,
to or in any person not a party hereto (or an Affiliate of a party hereto)
except that the JSC may assign to any person, in each case with the prior
written consent of the Purchaser, all or any part of the JSC's rights
hereunder for the purposes of constituting Collateral for the benefit of the
Senior Lender Group which has or is to have the benefit of the Collateral
assigned to it by the JSC of certain rights of the JSC under agreement between
the JSC and other members of the same Initial Shipper Group of which the
Purchaser is a member. If the Purchaser consents, it agrees to execute and
deliver all consents and documents reasonably necessary to effect such
assignment and to create a valid and perfected security interest herein. The
claims and rights of each such Permitted Assignee shall rank pari passu with
the claims and rights of all Permitted Assignees irrespective of the time or
times at which prior, concurrent or subsequent assignments under this Section
5.3 are made or perfected. Subject to compliance with the terms of any such
assignment, any such Permitted Assignee shall have the benefit of the
representations and warranties of the Purchaser and may enforce the
obligations of the Purchaser hereunder as if such Permitted Assignee were a
party hereto.
(b) The Purchaser shall assign its rights and obligations hereunder in
connection with a transfer of Shares to a Person that is a permitted
transferee thereof pursuant to Article Ten of the Oleoducto Central Agreement.
Upon the unconditional assumption of the Purchaser's rights and obligations
hereunder by an assignee of the Purchaser pursuant to this Section 5.3(b), and
subject to any limitations in any assignment agreement, the Purchaser shall be
released and discharged from all of its obligations hereunder, except
obligations which shall have been incurred prior to such assignment and
assumption.
Section 5.4. Nature of Obligations (a) Subject to the terms of
this Agreement, the obligations of the Purchaser under this Agreement to
purchase Shares shall be unconditional and absolute and, shall not be
deferred, excused, released, discharged, or in any way affected by (i) any
right of set off, counterclaim, or defense by reason of any claims against the
JSC arising under this Agreement or on any other account whatsoever, (ii) any
sale or other transfer by any of the Shareholders (among themselves or
otherwise)
<PAGE>
of any of the Shares, or the failure by any other Shareholder to perform its
obligations under its Subscription Agreement, or (iii) any change, waiver,
extension, indulgence, or other action or omission in respect of any of the
JSC's obligations, in each case whether or not the parties hereto shall have
had any notice or knowledge of any of the foregoing.
(b) The obligations of the Purchaser created by this Agreement,
and in particular the obligation to acquire Shares in exchange for cash
pursuant to Calls, are several, not joint and several with any other party.
Nothing herein shall be deemed or construed to make the Purchaser a surety or
a guarantor of the JSC or of any other Shareholder or liable to meet any
obligation of the JSC or of any other Shareholder.
Section 5.5. Amendments. This Agreement may not be amended or modified
except with the written consent of the parties hereto and any Permitted
Assignees.
Section 5.6. No Third Party Beneficiaries. Except as otherwise
expressly provided herein to the contrary, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and Permitted Assignees, and no other Person shall have any rights
hereunder.
Section 5.7. Severability. If, for any reason, any provision of this
Agreement is unenforceable, the remaining provisions hereof shall nevertheless
be carried into effect.
Section 5.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK [FOR ECOPETROL
- - COLOMBIA] WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS."
Section 5.9. Performance Outside Colombia. The Parties acknowledge and
agree that their activities hereunder will be performed substantially outside
Colombia.
Section 5.10. Commercial Obligations. Each Party acknowledges and
agrees that its rights and obligations hereunder are commercial and not
governmental in nature.
Section 5.11. Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement, or the performance, breach, termination, or
invalidity hereof, shall be settled by arbitration in accordance with the
UNCITRAL Arbitration Rules in effect as of the date hereof. The arbitration
shall be the sole and exclusive forum for resolution of the dispute,
controversy or claim, and the award shall be final and binding. Judgment
thereon may be entered by any court having jurisdiction. The number of
arbitrators shall be three, each of whom shall be disinterested in the
dispute, controversy or claim, and shall have no connection with any party.
Should the services of an appointing authority be necessary, the appointing
authority shall be the American Arbitration Association. The parties and the
appointing authority may appoint from among the nationals of any country,
whether or not a party is a national of that country. The place of arbitration
shall be The City of New York, New York. The arbitration shall be conducted
in the English language and any foreign-language documents presented at such
arbitration shall be accompanied by an English translation thereof. The
arbitrators shall apply the law of the State of New York without regard to the
principles of conflicts of laws. [Not to be inserted in Ecopetrol Agreement.]
<PAGE>
Section 5.12. Submission to Jurisdiction; Consent to Service. Each of
the parties hereto hereby submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York (the "Specified
Court") with respect to the enforcement of the arbitration provisions of this
Agreement and the non-exclusive jurisdiction of such court with respect to the
enforcement of any award thereunder. Each of the parties hereto irrevocably
appoints the agent for service specified opposite its name in Section 5.1 as
its authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any related suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to such
party, by the person serving the same to the address provided in Section 5.1,
shall be deemed in every respect effective service of process upon such party
in any such suit or proceeding. Each of the parties hereto further agrees to
take any and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for the duration of this
Agreement.
The obligation of a party in respect of any sum due from it to the other
party hereunder expressed in United States dollars, notwithstanding any
judgment in a currency other than United States dollars, shall not be
discharged until the first Business Day following receipt by such party of any
sum adjudged to be so due in such other currency on which (and only to the
extent that) such party may in accordance with normal banking procedures
purchase United States dollars with such other currency; if the United States
dollars so purchased are less than the sum originally due to such party
hereunder, the other party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party against such dollar
shortfall. If the United States dollars so purchased are greater than the sum
originally due to such party hereunder, such party agrees to pay to the other
party an amount equal to the excess of the dollars so purchased over the sum
originally due to such party hereunder. [Not to be inserted in Ecopetrol
Agreement.]
Section 5.13. Waiver of Immunity. (a) The Purchaser irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement brought in the Specified Court and further
irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such proceeding in
the Specified Court.
(b) To the extent that the Purchaser or any of its revenues, assets
or properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement at any time
brought against the Purchaser or any of its revenues, assets or properties, to
any sovereign or other immunity from suit, from jurisdiction, from attachment
prior to judgment, from attachment in aid of execution of judgment, from
execution of a judgment or from any other legal or judicial process or remedy,
and to the extent that in any jurisdiction there shall be attributed such an
immunity, the Purchaser irrevocably agrees not to claim and irrevocably waives
such immunity to the fullest extent permitted by the laws of such jurisdiction
(including, without limitation, the Foreign Sovereign Immunities Act 1976 of
the United States) [if Ecopetrol, insert- , except as provided under Article
684 of the Codigo de Procedimiento Civil of Colombia].
<PAGE>
Section 5.14. Headings. The headings contained herein are for
convenience of reference only and do not constitute a part of this Agreement.
Section 5.15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
OLEODUCTO CENTRAL S.A.
By:
Title:
[NAME OF PURCHASER]
By:
Title:
<PAGE>
ANNEX I
TO SUBSCRIPTION AGREEMENT
[Date, not less than 15
Business Days prior to
requested purchase date]
NOTICE OF EXERCISE OF CALL
TO: Empresa Colombiana de Petroleos - Ecopetrol
BP Colombia Pipelines Limited
TOTAL Pipeline Colombie S.A.
Triton Pipeline Colombia, Inc.
IPL Enterprises (Colombia) Inc.
TCPL International Investments Inc.
[Permitted Assignees]
FROM: Oleoducto Central S.A. (the "JSC")
RE:Notice of Exercise of Call Pursuant to Section 2.1 of the Subscription
Agreement with each of the addressees ("Purchasers"), each dated as of December
12, 1994 (each, a "Subscription Agreement")
The JSC hereby requires [the purchase on __________, ____ of the
number of Shares of the JSC] set forth opposite your name in the table below
by each of you severally against payment of the aggregate purchase price
indicated in such table. Payment will be made in [same] [next] day funds by
[official or certified bank check or checks] [wire transfer to the account
indicated opposite your name in the table below].
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
[Name of Bank
Purchaser Number of Price Per Aggregate and Account
Shares Share Purchase Number
Price
Empresa Colombiana de
Petroleos - Ecopetrol
BP Colombia Pipelines Limited
TOTAL Pipeline Colombie S.A.
Triton Pipeline Colombia, Inc.
IPL Enterprises (Colombia) Inc.
TCPL International Investments Inc.
[Any Permitted Assignees]
Total
</TABLE>
The JSC hereby represents and warrants to each Purchaser that, as of
the date hereof:
1. The requested payment date is a Business Day.
2. The Call exercised hereby is in conformity with a Capital
Budget and Funding Resolution of the JSC;
3. The number of Shares to be purchased by each Purchaser at the
Time of Delivery pursuant hereto and the Subscription Agreement to which such
Purchaser is a party and the aggregate purchase price therefor is in
proportion to such Purchaser's Initial Shareholding Interest;
4. The terms of purchase hereunder and under such Purchaser's
Subscription Agreement are identical for all Purchasers; and
5. The representations and warranties of the JSC in such
Purchaser's Subscription Agreement are true and correct.
All defined terms used herein and not defined herein shall have the
meanings assigned to them in the Subscription Agreement with each Purchaser.
<PAGE>
OLEODUCTO CENTRAL S.A.
By:
Title:
<PAGE>
SCHEDULE H
TO OLEODUCTO CENTRAL AGREEMENT
FORM OF PERFORMANCE GUARANTEE AGREEMENT
AGREEMENT, dated as of December 14, 1994, made by [name of
Guarantor] (the "Guarantor") in favor of OLEODUCTO CENTRAL S.A., a sociedad
anonima existing under the laws of Colombia (the "JSC").
RECITALS
WHEREAS:
A. [Name of party whose obligations are being guaranteed] (the
"Company") and the JSC are parties to a Subscription Agreement, dated as of
December 14, 1994 (as amended from time to time, the "Subscription
Agreement"), entered into pursuant to the Oleoducto Central Agreement, dated
as of the same date (as amended from time to time, the "Oleoducto Central
Agreement");
B. The Company is an Affiliate of the Guarantor; and
C. As an inducement to the JSC to enter into the Subscription
Agreement, the Guarantor has agreed to enter into this Performance Guarantee
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the Guarantor and
the JSC agree as follows:
Section 1. Definitions. All capitalized terms used and not defined
herein have the meanings assigned to them in the Subscription Agreement.
Section 2. Representations and Warranties. The Guarantor
represents and warrants to the JSC that:
(a) it is a corporation duly incorporated and organized under the
laws of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and
perform its obligations under this Agreement, and this Agreement constitutes
the valid and legally binding agreement of the Guarantor;
(c) the execution and delivery of, and the performance by the Guarantor
of its obligations under, this Agreement will not result in a breach of or
constitute a default under:
<PAGE>
(i) any provision of its corporate charter or articles of
incorporation or its by-laws;
(ii) any agreement or instrument to which it is a party and which is
material to the performance of its obligations hereunder; or
(iii) any order, judgment or decree of any court or governmental agency
to which it is a party or by which it is bound; and
(d) all of the outstanding capital stock of the Company (except for any
directors' qualifying shares) is directly or indirectly beneficially owned by
the Guarantor [not applicable to Triton and TOTAL -- or by the same ultimate
parent entity of the Company and the Guarantor], free and clear of all liens,
encumbrances, equities and claims.
Section 3. Performance Guarantee. Subject to the provisions
contained herein, the Guarantor hereby irrevocably and unconditionally
guarantees to the JSC the full and punctual performance of all of the
Company's obligations (the "Guaranteed Obligations") under the Subscription
Agreement. In the event that the Company shall default in the full and timely
performance of any of the Guaranteed Obligations for any reason, the Guarantor
hereby agrees to perform, or to cause to be performed, any such Guaranteed
Obligations fully and timely in accordance with the terms of the Subscription
Agreement.
Section 4. Unconditional Obligations of Guarantor. The Guarantor
hereby agrees that its obligations hereunder are in the nature of a continuing
performance guarantee and shall remain valid and in full force irrespective of
any circumstances which might otherwise constitute a legal or equitable
discharge of a guarantor, including the absence of any action to enforce the
Subscription Agreement or any judgment against the Company; provided that it
is hereby acknowledged and agreed that (a) the Guarantor shall not be
obligated under this Agreement to make any payment in respect of any amounts
that would not be due under the Subscription Agreement were it to be a party
to the Subscription Agreement in the place and stead of the Company, (b) the
benefit of any waiver or indulgence granted to, or any compromise with, the
Company shall extend to the Guarantor and (c) in no event shall the Guarantor
be obligated to make payments hereunder exceeding in the aggregate the lower
of (i) U.S.$____ million and (ii) the Company's Shareholding Interest of the
Aggregate Subscription Obligation (or, in each case, the equivalent thereof in
Colombian pesos determined with respect to each payment hereunder by reference
to exchange rates between dollars and pesos in effect at the time of such
payment based on such rates available to the JSC as reasonably determined by
the JSC), less in each case all amounts (similarly determined) paid by the
Company pursuant to the Guaranteed Obligations.
Section 5. No Waiver. No failure on the part of the JSC to
exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or particular exercise
by the JSC of any right, remedy or power hereunder preclude any other or
future exercise of any other right, remedy or power.
<PAGE>
Section 6. Subrogation. The Guarantor shall be subrogated to all
rights of the JSC against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Agreement; provided, however,
that the Guarantor shall not be entitled to enforce, or to receive any
payments arising out of or based upon, such right of subrogation until all of
the Guaranteed Obligations under the Subscription Agreement shall have been
performed in full, all the Senior Debt referred to in the Oleoducto Central
Agreement provided by the Senior Lender Group for whose benefit the
Subscription Agreement may be assigned by the JSC has been repaid and all
other obligations of the Company owed to the JSC have been discharged in full.
Section 7. Effectiveness. This Agreement shall have no effect or
validity unless and until the Subscription Agreement shall have become
effective and performance guarantee agreements in substantially identical form
to this Agreement with Affiliates of the other Shareholders (except Ecopetrol)
shall have become effective.
Section 8. Termination. This Agreement shall terminate on the
earlier of (a) the complete performance or termination of all Guaranteed
Obligations of the Company under the Subscription Agreement and (b) July 1,
2002.
Section 9. Successors. This Agreement may only be assigned by the
JSC in connection with an assignment of the Subscription Agreement to a
permitted assignee under Section 5.3 thereof. The obligations of the
Guarantor hereunder shall be binding upon the Guarantor and its successors and
assigns and shall inure to the benefit of and be enforceable by the JSC and
any of its successors and assigns.
Section 10. Release. (a) The Guarantor shall not be released and
discharged from any of its obligations hereunder except to the extent that, in
connection with the simultaneous transfer of all or any part of the Shares
held by the Company to a Person that is a permitted transferee thereof
pursuant to Article Ten of the Oleoducto Central Agreement, such permitted
transferee assumes or undertakes the related obligations under the
Subscription Agreement or such obligations are guaranteed under a performance
guarantee agreement in substantially identical form to this Agreement as
provided therein.
(b) Notwithstanding the foregoing, the Guarantor shall not be
released or discharged from obligations which shall have been incurred prior
to the release and discharge referred to in paragraph (a) of this Section 10.
Section 11. Notices. All notices, requests, demands, directions
and other communications hereunder shall be in writing and shall be given by
personal delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Agent for Service
If to the JSC: OLEODUCTO CENTRAL S.A. CT CORPORATION SYSTEM
World Trade Center Bogota 1633 Broadway
Calle 100 N. 8A-55 New York, New York 10019
Santafe de Bogota, D.C. - Colombia Telefax: (212) 247-2882
Telefax: 571-218-3933
Attention: President
If to the Guarantor: [INSERT NAME AND ADDRESS]
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any party to the other. Any notice, request,
demand, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The party giving any notice, request, demand, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 12. Severability. If, for any reason, any provision of
this Agreement is unenforceable, the remaining provisions hereof shall
nevertheless be carried into effect.
Section 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 14. Submission to Jurisdiction; Consent to Service. The
Guarantor hereby submits to the non-exclusive jurisdiction of the Federal and
State courts in the Borough of Manhattan in The City of New York in any
action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby (a "Related Proceeding"). The Guarantor
irrevocably appoints the agent for service designated opposite its name in
Section 11 hereof as its authorized agent in the Borough of Manhattan in The
City of New York upon which process may be served in any such action, suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Guarantor, by the person serving the same to the
address provided in Section 11, shall be deemed in every respect effective
service of process upon such party in any such suit or proceeding. The
Guarantor further agrees to take any and all action as may be
<PAGE>
necessary to maintain such designation and appointment of such agent in full
force and effect for the duration of this Agreement.
The obligation of the Guarantor in respect of any sum due from it to
the JSC expressed in United States dollars, notwithstanding any judgment in a
currency other than United States dollars, shall not be discharged until the
first Business Day following receipt by the JSC of any sum adjudged to be so
due in such other currency on which (and only to the extent that) the JSC may
in accordance with normal banking procedures purchase United States dollars
with such other currency. If the United States dollars so purchased are less
than the sum originally due to the JSC hereunder, the Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
JSC against such dollar shortfall. If the United States dollars so purchased
are greater than the sum originally due to the JSC hereunder, the JSC agrees
to pay to the Guarantor an amount equal to the excess of the dollars so
purchased over the sum originally due to the JSC hereunder.
Section 15. Headings. The headings contained herein are for
convenience of reference only and do not constitute a part of this Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be
executed and delivered by its proper officer or officers thereunto duly
authorized as of the date first above written.
[INSERT NAME OF GUARANTOR]
By:
Title:
<PAGE>
OLEODUCTO CENTRAL, S.A., a corporation existing under the laws of Colombia
hereby acknowledges and accepts this Agreement and has caused this Agreement
to be executed and delivered by its proper officer or officers thereunto duly
authorized as of December 14, 1994.
OLEODUCTO CENTRAL S.A.
By:
Title:
<PAGE>
SCHEDULE I
TO OLEODUCTO CENTRAL AGREEMENT
EXAMPLE OF ROE VARIANCE WITH PROJECT COST VARIANCE
(Section 5.4(c))
EXAMPLE OF CALCULATION
(millions of $)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Estimate as of Agreed
Estimate Target Project Capitalization for
Dec. 31, Cost Date As of Project Equity Return
Capitalization & Returns 1994 June 1, 1996* Completion Purposes
Equity Contributions (30%) $ 609 $ 579 $ 669 ++ $ 609 **
Senior Debt (70%) 1,421 1,351 1,561 1,421
Total Cost 2,030 1,930 2,230 2,030
ROE 13.5% 13.5% --- 13.5%
$ 82 $ 78 --- $ 82 m
Effective ROE 13.5% 13.5% --- 12.3%
Actual Project
Project Costs Estimate Target Cost As of
(Phase 2 Capex) Dec. 31, Project Cost* Project Agreed Project
($1995, constant) 1994 June 1, 1996 Completion Cost
$ 1,375 $ 1,275 + $ 1,575 $ 1,375
</TABLE>
Project Cost Variance $300
Permitted Adjustments:
Adjustments for Non-Controllable Factors $ 50
Allowed Variance within Target +
Completion Cost $ 50
Total $100
Non-Permitted Adjustments $200
* (Post Class I Estimate)
** Adjusted Paid-In Equity = (Cash Paid-In-Equity + Pre-Completion Accrued
Returns) + Equity
Percentage* (Agreed Project Cost - Actual Project Cost) = 669 + [30%*
(1375-1575)] = 609
+ $50M allowance (plus and minus) in target completion range.
++ Cash Paid In Equity and Pre-Completion Accrued Returns.
<PAGE>
SCHEDULE J TO
OLEODUCTO CENTRAL AGREEMENT
POLITICAL EVENTS AGREEMENT
dated as of the 14th day of December, 1994
among
OLEODUCTO CENTRAL S.A.
EMPRESA COLOMBIANA DE PETROLEOS-ECOPETROL
BP COLOMBIA PIPELINES LIMITED
TOTAL PIPELINE COLOMBIE S.A.
TRITON PIPELINE COLOMBIA, INC.
IPL ENTERPRISES (COLOMBIA) INC.
and
TCPL INTERNATIONAL INVESTMENTS INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
Section
Page
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
1.1. Definitions 2
1.2. Interpretation 5
ARTICLE TWO
JOINT DECLARATION OF POLITICAL EVENT
2.1. Joint Declaration 5
2.2. Suspension of Purchase Obligations and of OCA Remedies 6
2.3. Termination of Purchase Obligations and of OCA Remedies 6
2.4. Reinstatement 6
2.5. Canadian Group 7
ARTICLE THREE
UNILATERAL DECLARATION OF POLITICAL EVENT
3.1. Unilateral Declaration 8
3.2. Suspension of Purchase Obligation and of Application of OCA Remedies 8
3.3. Other Consequences of Unilateral Declaration of Political Event 8
3.4. Termination of Purchase Obligations and of Application of OCA Remedies 10
3.5. Reinstatement 11
ARTICLE FOUR
DECLARATION OF POLITICAL EVENT BY CANADIAN GROUP
4.1. Declaration by Canadian Group 13
4.2. Suspension of Purchase Obligations 13
4.3. Other Consequences of Declaration of Political Event by Canadian Group 13
4.4. Termination of Purchase Obligations 14
4.5. Reinstatement 15
ARTICLE FIVE
RESTRICTIONS ON RIGHTS TO DECLARE POLITICAL EVENTS
5.1. Restrictions on Rights to Declare Political Events 17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
Section
Page
ARTICLE SIX
ARBITRATION; SUBMISSION TO JURISDICTION
6.1. Arbitration 18
6.2. Submission to Jurisdiction 19
ARTICLE SEVEN
TERM
7.1. Effectiveness; Termination 20
ARTICLE EIGHT
GENERAL
8.1. Notices 20
8.2. Representations and Warranties 22
8.3. Nature of Obligations 23
8.4. Amendments 23
8.5. No Third Party Beneficiaries 23
8.6. Severability 23
8.7. No Assignment 23
8.8. Conduct 23
8.9. Governing Law 24
8.10. Commercial Obligations 24
8.11. Waiver of Immunity 24
8.12. Headings; Table of Contents 24
8.13. Counterparts 24
SCHEDULES
J-A. Form of Escrow Agreement
J-B. Political Event Performance Guarantee Agreement
</TABLE>
<PAGE>
POLITICAL EVENTS AGREEMENT
AGREEMENT, dated as of the 14th day of December, 1994, among:
OLEODUCTO CENTRAL S.A., a sociedad anonima existing under the laws
of Colombia;
EMPRESA COLOMBIANA DE PETROLEOS - ECOPETROL, an Empresa Industrial y
Comercial del Estado existing under the laws of Colombia and wholly owned by
Colombia;
BP COLOMBIA PIPELINES LIMITED, a corporation existing under the laws
of England and Wales;
TOTAL PIPELINE COLOMBIE S.A., a corporation existing under the laws
of France;
TRITON PIPELINE COLOMBIA, INC., a corporation existing under the
laws of the Cayman Islands;
IPL ENTERPRISES (COLOMBIA) INC., a corporation existing under the
laws of the Cayman Islands; and
TCPL INTERNATIONAL INVESTMENTS INC., a corporation existing under
the laws of Alberta, Canada.
RECITALS
WHEREAS:
A. The Shareholders have formed the JSC by public deed no.
of December 14, 1994 granted before notary public no. 38 of Santafe de Bogota;
B. The Shareholders have entered into the Oleoducto Central
Agreement (as amended from time to time, the Oleoducto Central Agreement),
dated as of December 14, 1994, among the JSC and the Shareholders (as defined
therein) specifying certain terms and conditions of their respective
investments and participation in the JSC, the Oleoducto Central and the
financing and operation thereof.
<PAGE>
C. The Oleoducto Central Agreement contemplates that the
financing of the Oleoducto Central will be comprised of approximately 30%
Equity Contributions and approximately 70% Senior Debt raised by the JSC and
provided by four separate Senior Lender Groups. Under Sections 5.2(e) and
5.3(b)(i) and (ii) of the Oleoducto Central Agreement, except to the extent
otherwise provided in this Agreement, a failure by a Shareholder to make
timely Equity Contributions or the existence of a Senior Debt Shortfall with
respect to the Initial Shipper Group of which a Shareholder is a member could
result in certain adverse consequences, including an increase in the tariff
payable by the Initial Shipper in such Initial Shipper Group for Petroleum
shipped by or on its behalf under its Transportation Agreement (Sections
5.2(e) and 5.3(b)(i) and (ii) being referred to herein as the "OCA Remedies").
D. The parties wish to provide in this Agreement the terms and
conditions under which, upon the occurrence of certain Political Events, one
or more Shareholders may suspend (subject to reinstatement) or terminate its
obligations to make Equity Contributions on a timely basis, including to
purchase Shares under its Subscription Agreement (the "Purchase Obligations")
and the application to it and its Affiliates of the OCA Remedies.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the parties agree as
follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise requires,
the following words and phrases shall have the meanings indicated below:
"Colombia" means the Republic of Colombia.
"Convertibility or Transfer Restrictions" means that for a period of
at least 120 continuous days with respect to any Distribution of the JSC, the
JSC is unable legally to convert Colombian currency held by it to make any
such payment denominated in currencies other than Colombian currency, or to
transfer outside of Colombia amounts it holds in currencies other than
Colombian currency to make when due any such payment denominated in currencies
other than Colombian currency for the purpose of making any such payment.
"Escrow Account" has the meaning assigned to it in Section 3.3(a).
"Escrow Agent" has the meaning assigned to it in Section 3.3(a).
"Escrow Agreement" has the meaning assigned to it in Section 3.3(a).
<PAGE>
"Expropriatory Action" means any action or series of actions taken,
authorized, ratified or acquiesced in by Colombia or a governing authority
which is in de facto control of part of Colombia for the appropriation,
confiscation, expropriation or nationalization (by intervention, condemnation
or other form of taking), whether with or without compensation and whether
under color of law or otherwise (including through confiscatory taxation or
imposition of confiscatory charges) of any of the following:
(a) an equity interest in the JSC, and/or loans to or debt securities
issued by the JSC, in each case held by a Shareholder (other than Ecopetrol)
or any of its Affiliates or another Person on its behalf, as the case may be,
if such action or series of actions, together with similar prior actions or
series of actions, if any, result in the appropriation, confiscation,
expropriation or nationalization of such interests, loans or securities in
excess of 50% of the equity interest in the JSC, or loans to and debt
securities issued by the JSC, taken as a whole, held by such party and its
Affiliates and other Persons on its behalf before the taking of such action or
series of actions;
(b) the rights of the Initial Shipper affiliated with a Shareholder
(other than Ecopetrol) or any of its Affiliates, as the case may be, under the
Association Contract(s) through which it participates in the Fields and its
direct or indirect interest in the Fields or the Petroleum produced therefrom
if such action or series of actions, together with similar prior actions or
series of actions, if any, result in the appropriation, confiscation,
expropriation or nationalization of the rights under such Association
Contract(s) and the interest in the Fields or the Petroleum produced therefrom
of such party (or any of its Affiliates, as the case may be) in excess of 50%
of the aggregate rights under such Association Contract(s) and interests in
the Fields or such Petroleum held by it and its Affiliates before the taking
of such action or series of actions; or
(c) ownership or control of the Oleoducto Central, or any substantial
portion thereof, held by the JSC, the effect of which is to deprive the JSC of
the ability to ship for export (or to receive tariffs in respect thereof)
through the Oleoducto Central a volume of Petroleum equal to not less than 50%
of the Throughput Capacity of any Segment.
"OCA Remedies" has the meaning assigned to it in Recital C.
"Political Event" means (a) Expropriatory Action, (b) Political
Violence or (c) Convertibility or Transfer Restrictions.
"Political Event Performance Guarantee Agreement" has the meaning
assigned to it in Section 3.3(b).
<PAGE>
"Political Violence" means war (declared or undeclared), civil war,
revolution, insurrection, civil strife, terrorism or sabotage or any other
violent act undertaken with the intent of achieving a political objective
(other than acts undertaken primarily to achieve labor or student objectives)
in Colombia which (in any such case) directly and proximately causes:
(a) cessation of substantially all construction or operation of the
Oleoducto Central or any part thereof necessary for the transport, storage or
export of Petroleum for a period of at least 70 continuous days and renders it
patently unreasonable (considering all relevant circumstances, including
without limitation the risk that such events will continue or that other
Political Events will occur), or impossible without unreasonable risk of
physical harm to JSC or Operator workers, to resume significant construction
or operation activities at the Oleoducto Central or any part thereof necessary
for the transport, storage or export of Petroleum;
(b) cessation of substantially all development or operation of the
Fields for a period of at least 70 continuous days and renders it patently
unreasonable (considering all relevant circumstances, including without
limitation the risk that such events will continue or that other Political
Events will occur), or impossible without unreasonable risk of physical harm
to workers at the Fields, to resume significant development or operation
activities at the Fields;
(c) damage to or the destruction of the Oleoducto Central to such
extent that it would be unreasonable or uneconomical (considering all relevant
circumstances, including without limitation the extent to which there is
insurance coverage and the risk that such events will continue or that other
Political Events will occur) for the JSC to proceed to construct or repair or
to continue to operate the Oleoducto Central; or
(d) damage to or the destruction of the Fields or other property
necessary for the production or transport of petroleum in and from the Fields
to such extent that it would be unreasonable or uneconomical (considering all
relevant circumstances, including the extent to which there is insurance
coverage and the risk that such events will continue or that other Political
Events will occur) to proceed to develop or repair or to continue to operate
the Fields.
"Purchase Obligations" has the meaning assigned to it in Recital D.
"Specified Court" has the meaning assigned to it in Section 6.2.
All defined terms used and not defined herein shall have the meanings assigned
to them in the Oleoducto Central Agreement.
Section 1.2. Interpretation. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
<PAGE>
(b) words importing gender include all genders;
(c) any reference to an "Article" or a "Section" refers to an Article
or a Section, as the case may be, of this Agreement; and
(d) all references to this Agreement and the words "herein",
"hereof", "hereto" and "hereunder" and other words of similar import refer
to this Agreement (but not including any Schedules hereto) as a whole and
not to any particular Article, Section or other subdivision.
ARTICLE TWO
JOINT DECLARATION OF POLITICAL EVENT
Section 2.1. Joint Declaration. A declaration of a Political
Event shall be effective only upon the receipt by the JSC of a certificate
signed by each Shareholder that is a member of an Initial Shipper Group (other
than Ecopetrol and any Shareholder that is precluded under Section 5.1 from
declaring a Political Event) to the effect that such Political Event has
occurred and is continuing as of the date of such certificate; provided that,
in case of clauses (b) and (d) of the definition of Political Violence,
execution by a Shareholder that is not also an Affiliate of an Initial Shipper
shall not be required. Such certificate shall set forth in reasonable detail
(a) the events, conditions, circumstances or occurrences that constitute the
Political Event, (b) the type of Political Event that has occurred and is
continuing, (c) the date as of which such Political Event has occurred and (d)
a statement to the effect that the restrictions under Section 5.1 on the right
to declare a Political Event do not apply. Any one of the Shareholders not
executing such certificate shall have the right to object to the declaration
of a Political Event under this Section by calling for arbitration under
Section 6.1 within 60 days of the effectiveness of the Political Event
declaration. The declaration of the Political Event shall remain effective
pending resolution of the arbitration proceeding. This Article Two shall not
apply to declarations of Political Events under Section 3.1 or Section 4.1.
Section 2.2. Suspension of Purchase Obligations and of OCA
Remedies. Upon a joint declaration in accordance with Section 2.1, the
Purchase Obligations of all Shareholders and the application to such
Shareholders of the OCA Remedies shall be suspended.
Section 2.3. Termination of Purchase Obligations and of OCA
Remedies. (a) The Purchase Obligation of a Shareholder and the application
to it of the OCA Remedies shall terminate if a suspension under Section 2.2
continues for 365 days without reinstatement; provided that, if an arbitration
proceeding is commenced, and the arbitrators rule against the Shareholders
which executed the certificate under Section 2.1, such 365-day period shall be
extended by the number of days that expire between the date on which the
corresponding notice demanding arbitration is delivered by a Shareholder not
delivering a notice under Section 2.1 and the arbitrators issue their ruling.
<PAGE>
(b) In case of termination under clause (a), the Subscription
Agreement of the terminated Shareholder shall terminate (subject to survival
of certain provisions as provided therein) and the Performance Guarantee
Agreement of any Affiliate shall terminate (other than to the extent of
survival of certain provisions of the corresponding Subscription Agreement)
and (b) the terminated Shareholder shall cease to be a party to the Oleoducto
Central Agreement (subject to survival of certain provisions as provided
therein).
Section 2.4. Reinstatement. Reinstatement for purposes of
this Article Two shall occur upon the occurrence, prior to termination, of any
of the following events:
(a) Any Shareholder objects to the joint declaration of Political Event,
commences arbitration proceedings within 60 days of the effectiveness of the
Political Event declaration and the arbitrators rule that the Political Event
claimed in the certificate delivered under Section 2.1 did not occur or was
not continuing as of the date of the certificate, or that the restrictions in
Section 5.1 applied;
(b) One or more of the Shareholders which executed the certificate under
Section 2.1 delivers a certificate to the JSC, with copies to the other
Shareholders, to the effect that the Political Event that gave rise to the
suspension has ceased (provided that the other Shareholders which executed the
certificate under Section 2.1 can object to, and within 60 days of the
delivery of the cessation certificate commence arbitration on, the claim that
the Political Event has ceased, in which case the reinstatement certificate
will be effective as to the objecting Shareholders only if arbitrators rule
that the Political Event had ceased as of the date of the reinstatement
certificate); or
(c) Any Shareholder which executed the certificate pursuant to Section
2.1 fails to deliver a reinstatement certificate under clause (b) upon demand
of another Shareholder, the other Shareholders commence arbitration within 60
days of demanding that the suspending Shareholders deliver a reinstatement
certificate on the ground that the Political Event has ceased, and the
arbitrators rule that the Political Event that gave rise to the suspension had
ceased as of the time of the demand for a reinstatement certificate.
The Purchase Obligations of reinstated Shareholders will apply immediately
upon reinstatement as if no suspension had occurred. The OCA Remedies will
apply retroactively to failures to make Equity Contributions or to Senior Debt
Shortfalls during the suspension period if and to the extent that prior to
reinstatement other Shareholders have not purchased Shares in lieu of the
reinstated Shareholder and the JSC otherwise has not covered the Senior Debt
Shortfall created during the suspension and within 15 days following
reinstatement the shortfall in Equity Contributions or the Senior Debt
Shortfall, as the case may be, continue; provided that in case of retroactive
application the Transportation Agreement Step-Up shall continue to apply only
until the date the Equity Contribution shortfall or Senior Debt Shortfall, as
the case may be, is made up, rather than (as is contemplated in the definition
of the Transportation Agreement Step-up set forth in the Oleoducto Central
Agreement) for one year after such date.
<PAGE>
Section 2.5. Canadian Group. In the event of suspension under
this Article of the Purchase Obligations of the members of the Canadian Group,
the application to them of the remedies under Section 5.3(b)(iii) of the
Oleoducto Central Agreement shall continue, although during the suspending
period the JSC shall not exercise its right to terminate the Oleoducto Central
Operations Agreement. Following the earlier of termination or reinstatement,
there will be no restriction on the JSC's right to exercise all remedies under
such Section 5.3(b)(iii) during and for the periods indicated therein;
provided that, in the case of reinstatement, the JSC shall be obliged to (a)
cease to exercise the right to cancel partially or entirely payment of
operating, incentive and other fees payable under the Oleoducto Central
Operations Agreement and (b) not exercise its right to terminate the Oleoducto
Central Operations Agreement, in each case as a result of Equity Contributions
not made by the reinstated Shareholder during the suspension period, if (but
only if) within 15 days of reinstatement the reinstated Shareholder makes up
in full any Equity Contributions it failed to make during the suspending
period which were not otherwise made up by other Shareholders during such
period.
ARTICLE THREE
UNILATERAL DECLARATION OF POLITICAL EVENT
Section 3.1. Unilateral Declaration. If an event of the type
identified in clause (a) or (b) of the definition of Expropriatory Action
occurs and is continuing (other than as a result of the imposition of
confiscatory taxation or imposition of confiscatory charges), any Shareholder
as to which such Expropriatory Action relates that is a member of an Initial
Shipper Group (other than Ecopetrol and any Shareholder that is precluded
under Section 5.1 from declaring a Political Event) shall have the right to
declare a Political Event by delivering a certificate to the JSC, with a copy
to each other Shareholder, to the effect that such Expropriatory Action has
occurred and is continuing as of the date of such certificate. Such
certificate shall set forth in reasonable detail (a) the events, conditions,
circumstances or occurrences that constitute the Expropriatory Action, (b) the
date as of which such Expropriatory Action has occurred and (c) a statement to
the effect that the restrictions under Section 5.1 on the right to declare a
Political Event do not apply to it. The JSC and any one of the Shareholders
not delivering certificates shall have the right to object to the declaration
of a Political Event under this Section by calling for arbitration pursuant to
Section 6.1 within 60 days of receipt of the certificate declaring the
Political Event. The declaration of the Political Event shall remain
effective pending resolution of the arbitration proceeding. Although joint
action is not required under this Section, more than one Shareholder can
declare a Political Event hereunder at the same time.
Section 3.2. Suspension of Purchase Obligation and of
Application of OCA Remedies. Upon a declaration in accordance with Section
3.1, the Purchase Obligation of the suspending Shareholder and the application
to it of the OCA Remedies shall be suspended.
<PAGE>
Section 3.3. Other Consequences of Unilateral Declaration of
Political Event. (a) Escrow Account. Upon a declaration in accordance with
Section 3.1, the suspending Shareholder shall execute an escrow agreement
substantially in the form set forth in Schedule A (the "Escrow Agreement"),
with the New York office of a commercial bank selected by the declaring
Shareholder organized under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least
U.S.$500,000,000 (the "Escrow Agent") providing for the establishment of a
segregated bank account in New York (the "Escrow Account"). So long as such
Shareholder's Purchase Obligation remains suspended, it shall deposit in the
Escrow Account an amount equal to not less than 50% of the Equity
Contributions that it would have been obliged to make to the JSC but for the
suspension of its Purchase Obligation under Section 3.1. Such deposits shall
be made within the time periods during which the Equity Contributions would
have to be made but for the suspension. The failure to enter into the Escrow
Agreement or to make a timely deposit under this clause shall result in
reinstatement under Section 3.5. Funds held in the Escrow Account shall be
invested and distributed as provided in the Escrow Agreement. Instructions on
distributions shall be delivered to the Escrow Agent by the JSC in accordance
with Section 3.5(d) or by the terminated Shareholder in accordance with
Section 3.4(b)(iv), and shall not be delivered by any other party hereto.
This clause shall not apply at any time during which the suspending
Shareholder's Purchase Obligation also is suspended by application of Section
2.2.
(b) Performance Guarantee. Upon a declaration in accordance with
Section 3.1, the suspending Shareholder shall deliver to the JSC and each
other Shareholder a performance guarantee agreement substantially in the form
set forth in Schedule B (the "Political Event Performance Guarantee
Agreement"), executed by the party which is then guarantor under the
Performance Guarantee Agreement that relates to its Subscription Agreement,
pursuant to which such guarantor will guarantee the obligations of the
suspending Shareholder under this Agreement. The parties acknowledge that the
Political Event Performance Guarantee Agreement will contain an expiration
date and maximum coverage limitations. The suspending Shareholder shall
deliver to the JSC a substitute Political Event Performance Guarantee
Agreement prior to the earlier of (i) six months prior to the expiration date
of the Political Event Performance Guarantee Agreement then in effect and (ii)
the date on which the sum of aggregate accrued contingent liabilities and
actual payments under the Political Event Performance Guarantee Agreement then
in effect equal 85% of the maximum coverage limitation therein. The failure
to deliver the executed Political Event Performance Guarantee Agreement or a
substitute therefor as provided in the preceding sentence shall result in
reinstatement under Section 3.5.
(c) Other Shareholders' Option to Fund. So long as a Shareholder's
Purchase Obligation is suspended under Section 3.2, each of the other
Shareholders (other than a Shareholder the Purchase Obligations of which shall
then be suspended or terminated under this Agreement) shall have the right,
but not the obligation, on its own behalf or, if more than one Shareholder so
elects, jointly with such other Shareholder(s), pro rata to their Shareholding
Interests, to make Equity Contributions not made by the suspended Shareholder.
To the extent one or more Shareholders exercise this option, the suspended
<PAGE>
Shareholder shall pay to each such Shareholder a percentage of the amount of
the Equity Contributions made by such Shareholder in lieu of the suspended
Shareholder, which percentage shall be calculated (based on the actual number
of days elapsed between the date an Equity Contribution is made in lieu of the
suspending Shareholder and the date the obligation to pay this amount
terminates) at a rate per annum equal to the Benchmark Interest Expense, such
amount being payable in arrears on the first Business Day of each calendar
month until the first calendar month that follows termination pursuant to
Section 3.5 or reinstatement pursuant to Section 3.5 (for purposes of this
clause, the "payment amounts" and the "payment period"); provided that, in
case the funding Shareholder shall receive any Distribution as a result of the
application of the proviso in Section 5.3(e) of the Oleoducto Central
Agreement at any time during the payment period, the amount of the
Distribution received shall be credited against future payment amounts payable
by the non-funding Shareholder; and provided further that after termination of
the payment period, the funding Shareholder shall reimburse the non-funding
Shareholder (subject, if applicable, to set-off against the put purchase price
payable to the funding Shareholder under Section 3.5(e) hereof) for any
payment amounts received and not previously credited against Distributions
that have not been previously credited against payment amounts. This clause
shall not apply at any time during which the suspending Shareholder's Purchase
Obligation also is suspended by application of Section 2.2.
Section 3.4. Termination of Purchase Obligations and of
Application of OCA Remedies. (a) The Purchase Obligation of a declaring
Shareholder and the application to it of OCA Remedies shall terminate if a
suspension under Section 3.2 continues for 365 days without reinstatement;
provided that, if an arbitration proceeding is commenced, and the arbitrators
rule against the suspending Shareholder, such 365-day period shall be extended
by the number of days that expire between the date on which the corresponding
notice of arbitration is delivered and the arbitrators issue their ruling.
(b) In case of a termination under clause (a):
(i) the Subscription Agreement of the terminated Shareholder
shall terminate (subject to survival of certain provisions in the Subscription
Agreement as provided therein);
(ii) the Performance Guarantee Agreement of any Affiliate of the
terminated Shareholder shall terminate (other than to the extent of survival
of certain provisions of the corresponding Subscription Agreement);
(iii) the terminated Shareholder shall cease to be a party to the
Oleoducto Central Agreement (subject to survival of certain provisions as
provided therein);
(iv) the terminated Shareholder shall have the right to deliver an
instruction under Section 4 of the Escrow Agreement to the Escrow Agent, with
a copy to the JSC and the other Shareholders, instructing the Escrow Agent to
deliver to the terminated Shareholder all funds on deposit in the Escrow
Account;
<PAGE>
(v) the JSC shall exercise the right it has in the Transportation
Agreement of the Initial Shipper that is a member of such terminated
Shareholder's Initial Shipper Group to apply as to future shipments of
Petroleum by such Initial Shipper or on its behalf a tariff that is the higher
of the Initial Shipper Tariff and the Third Party Shipper Tariff applicable
from time to time; provided that the JSC shall not exercise such right to the
proportion of the Petroleum shipped by or on behalf of such Initial Shipper
that is equal to the proportion that the Equity Contributions made by the
terminated Shareholder prior to the suspension and termination of its
obligations under this Article bears to the total Equity Contributions that
would have been required from the terminated Shareholder prior to Completion
(but for suspension and termination under this Agreement) in the most recent
Financing Plan adopted by the Board of Directors of the JSC. This clause
shall cease to apply if and when the obligations of the Shareholders to make
Equity Contributions are terminated pursuant to Section 2.4.
Section 3.5. Reinstatement. (a) Reinstatement Events.
Reinstatement for purposes of this Article Three shall occur upon the
occurrence, prior to termination, of any of the following events:
(i) the JSC or any other Shareholder objects to the unilateral
declaration of Political Event, commences arbitration proceedings within 60
days of receipt of the certificate declaring the Political Event, and the
arbitrators rule that the Political Event claimed in the certificate delivered
under Section 3.1 did not occur or was not continuing as of the date of the
certificate, or that the restrictions in Section 5.1 applied;
(ii) the suspended Shareholder delivers a reinstatement certificate
to the JSC to the effect that the Political Event that gave rise to the
suspension has ceased;
(iii) the suspended Shareholder fails to deliver a reinstatement
certificate under (ii) above upon demand of the JSC or any other Shareholder
on the grounds that the Political Event has ceased, the objecting party
commences arbitration within 60 days of demanding that the suspended
Shareholder deliver a reinstatement certificate, and the arbitrators rule that
the Political Event that gave rise to the suspension had ceased as of the time
of the demand for a reinstatement certificate;
(iv) the suspended Shareholder fails to enter into or maintain in
effect the Escrow Agreement or fails to make on a timely basis the deposits
into the Escrow Account contemplated by Section 3.3(a); or
(v) the suspended Shareholder fails to deliver to the JSC and each
other Shareholder or to maintain in effect the executed Political Event
Performance Guarantee Agreement (whether because of expiration, limitations on
coverage resulting from accrued contingent obligations or actual payments, or
otherwise).
(b) Purchase Obligation. Upon reinstatement the Purchase
Obligation of the reinstated Shareholder will apply immediately as if no
suspension had occurred.
<PAGE>
(c) OCA Remedies. Upon reinstatement, the OCA Remedies will apply
retroactively to the reinstated Shareholder as if such suspension had never
occurred to failures to meet Purchase Obligations or Senior Debt Shortfalls
during the suspension period if and to the extent that prior to reinstatement
other Shareholders have not made Equity Contributions in lieu of the
reinstated Shareholder and the JSC otherwise has not covered the Senior Debt
Shortfall created during the suspension and within 15 days following
reinstatement the shortfall in Equity Contributions or the Senior Debt
Shortfall, as the case may be, continues; provided that in case of retroactive
application the Transportation Agreement Step-Up shall continue to apply only
until the date the Equity Contribution or Senior Debt Shortfall, as the case
may be, is made up, rather than (as is contemplated in the definition of the
Transportation Agreement Step-up) for one year after such date.
(d) Escrow Account. Within ten Business Days after the earlier of
the date on which each Shareholder having a put right under clause (e) shall
have exercised and the expiration of the 30-day period referred to in such
clause, the JSC shall deliver an instruction under Section 4 of the Escrow
Agreement, with a copy to each Shareholder, instructing the Escrow Agent to
deliver promptly, but in any case within two Business Days of delivery of the
instruction, all funds on deposit in the Escrow Account to the following
Persons in the following order of priority:
(i) to the extent put rights are exercised, to the sellers (as
defined in clause (e)) in or towards satisfaction of the purchase price
payable by the purchaser under such clause pro rata among the sellers based on
the number of Shares being sold;
(ii) to the JSC in satisfaction of any outstanding Purchase
Obligation of the reinstated Shareholder not met by other Shareholders during
the suspension period; and
(iii) the balance, if any, to the reinstated Shareholder.
(e) Put Right. Upon reinstatement under clause (a), each
Shareholder (for purposes of this clause, the "seller") which shall have
exercised the option pursuant to Section 3.3(c) to make Equity Contributions
in lieu of the suspending Shareholder shall have the right to require the
reinstated Shareholder (for purposes of this clause, the "purchaser") to
purchase all or a portion of the Shares and other securities or instruments
(together, for purposes of this clause, the "Put Securities") issued to the
seller or on its behalf by the JSC in connection with such Equity
Contributions by giving the purchaser notice no later than 30 days following
the date on which reinstatement occurs, specifying the number of Put
Securities to be purchased. The purchase price per Put Security shall equal
the sum of (i) the amount of the Equity Contributions made for such Put
Security and (ii) an amount calculated (based on the actual number of days
elapsed between the date such Put Security was purchased in lieu of the
purchaser and the last day of the calendar month preceding the date on which
the seller notifies the purchase that it is exercising the put right) at a
rate of 13.5% per annum of the amount in (i), less any Distribution received
in respect
<PAGE>
of such Put Security as of such calculation date. The closing on the purchase
shall occur on the later of (A) ten Business Days after the date the seller
notifies the purchaser that it is exercising its put right and (B) the first
Business Day following the receipt of any necessary governmental approvals.
Clause (d) contemplates that funds in the Escrow Account will be applied in
the first instance to pay to each seller, pro rata based on the aggregate
purchase price payable to such seller, such purchase price.
ARTICLE FOUR
DECLARATION OF POLITICAL EVENT BY CANADIAN GROUP
Section 4.1. Declaration by Canadian Group. If an event of
the type identified in clause (a) of the definition of Expropriatory Action
occurs and is continuing (other than as a result of the imposition of
confiscatory taxation or imposition of confiscatory charges), the members of
the Canadian Group, acting jointly, shall have the right (unless precluded
under Section 5.1) to declare a Political Event by delivering to the JSC a
certificate executed by both of them, with a copy to each other Shareholder,
to the effect that such Expropriatory Action has occurred and is continuing as
of the date of such certificate. Such certificate shall set forth in
reasonable detail (a) the events, conditions, circumstances or occurrences
that constitute the Expropriatory Action, (b) the date as of which such
Expropriatory Action has occurred and (c) a statement to the effect that the
restrictions under Section 5.1 on the right to declare a Political Event do
not apply to it. The JSC or any of the Shareholders not delivering
certificates shall have the right to object to the declaration of a Political
Event by calling for arbitration within 60 days of receipt of the certificate
declaring the Political Event. The declaration of the Political Event shall
remain effective pending resolution of the arbitration proceeding.
Section 4.2. Suspension of Purchase Obligations. Upon a
declaration in accordance with Section 4.1, the Purchase Obligations of the
members of the Canadian Group shall be suspended. In the event of suspension
of the Purchase Obligations, the application to them of the remedies under
Section 5.3(b)(iii) of the Oleoducto Central Agreement shall continue,
although during the suspension period the JSC shall not exercise its right to
terminate the Oleoducto Central Operations Agreement.
Section 4.3. Other Consequences of Declaration of Political
Event by Canadian Group. (a) Escrow Account. Upon a declaration in accordance
with Section 4.1, each member of the Canadian Group shall execute an Escrow
Agreement with an Escrow Agent selected by it providing for the establishment
of an Escrow Account. So long as such Shareholders' Purchase Obligation
remains suspended, it shall deposit in the Escrow Account an amount equal to
not less than 50% of the Equity Contributions that it would have been obliged
to make to the JSC but for the suspension of its Purchase Obligations. Such
deposits shall be made within the time periods during which the Equity
Contributions would have to be made but for the suspension. The failure to
enter into the Escrow
<PAGE>
Agreement or to make a timely deposit under this clause shall result in
reinstatement under Section 4.5. Funds held in the Escrow Account shall be
invested and withdrawn as provided in the Escrow Agreement. Instructions on
distributions shall be delivered to the Escrow Agent only by the JSC in
accordance with Section 3.5(d) or by the terminated Shareholder in accordance
with Section 4.4(b)(iv) and shall not be delivered by any other party hereto.
This clause (c) shall not apply at any time during which the Purchase
Obligations of such Shareholders also are suspended by application of Section
2.2.
(b) Performance Guarantee. Upon a declaration in accordance with
Section 4.1, each of the members of the Canadian Group shall deliver to the
JSC and each other Shareholder a Political Event Performance Guarantee
Agreement executed by the party which is then guarantor under the Performance
Guarantee Agreement that relates to its Subscription Agreements, pursuant to
which such guarantor will guarantee the obligations of such Shareholder under
this Agreement. The parties acknowledge that the Political Event Performance
Guarantee Agreement will contain an expiration date and maximum coverage
limitations. The suspending Shareholder shall deliver to the JSC a substitute
Political Event Performance Guarantee Agreement prior to the earlier of (i)
six months prior to the expiration date of the Political Event Performance
Guarantee Agreement then in effect and (ii) the date on which the sum of
aggregate accrued contingent liabilities and actual payments under the
Political Event Performance Guarantee Agreement then in effect equal 85% of
the maximum coverage limitation therein. The failure to deliver executed a
Political Event Performance Guarantee Agreement or a substitute therefor as
provided in the preceding sentence shall result in reinstatement under Section
4.5.
(c) Other Shareholders' Option to Fund. So long as the Purchase
Obligations of the members of the Canadian Group is suspended under Section
4.2, each of the other Shareholders (other than a Shareholder the Purchase
Obligations of which shall then be suspended or terminated under this
Agreement) shall have the right, but not the obligation, on its own behalf or,
if more than one Shareholder so elects, jointly with such other
Shareholder(s), pro rata to their Shareholding Interests, to make Equity
Contributions not made by the suspended Shareholder. To the extent one or
more Shareholders exercise this option, the suspended Shareholder shall pay to
each such Shareholder, a percentage of the amount of the Equity Contributions
made by such Shareholder in lieu of the suspended Shareholders, which
percentage shall be calculated (based on the actual number of days elapsed
between the date an Equity Contribution is made in lieu of the suspended
Shareholders and the date the obligation to pay this amount terminates) at a
rate per annum equal to the Benchmark Interest Expense such amounts being
payable in arrears on the first Business Day of each calendar month until such
amounts shall cease to be paid commencing on the first calendar month that
follows termination pursuant to Section 4.4 or reinstatement pursuant to
Section 4.5 (for purposes of this clause, the "payment amounts" and the
"payment period"); provided that, in case the funding Shareholder shall
receive any Distribution as a result of the application of the proviso in
Section 5.3(e) of the Oleoducto Central Agreement at any time during the
payment period, the amount of the Distribution received shall be credited
against future payment amounts payable by the non-funding
<PAGE>
Shareholder; and provided further that after termination of the payment
period, the funding Shareholder shall reimburse the non-funding Shareholder
(subject, if applicable, to set-off against the put purchase price payable to
the funding Shareholder under Section 3.5(e) hereof) for any payment amounts
received and not previously credited against Distributions that have not been
previously credited against payment amounts. This clause shall not apply at
any time during which the Purchase Obligations of the members of the Canadian
Group also are suspended by application of Section 2.2.
Section 4.4. Termination of Purchase Obligations. (a) The
Purchase Obligation of a member of the Canadian Group shall terminate if a
suspension under Section 4.2 continues for 365 days without reinstatement
pursuant to Section 4.5; provided that, if an arbitration proceeding is
commenced, and the arbitrators rule against the members of the Canadian Group,
such 365-day period shall be extended by the number of days that expire
between the date on which the corresponding notice of arbitration is delivered
and the arbitrators issue their ruling.
(b) In case of a termination under clause (a):
(i) the Subscription Agreements of the terminated Shareholder
shall terminate (subject to survival of certain provisions in the Subscription
Agreement as provided therein) and there shall be no restriction on the JSC's
right to exercise all remedies under Section 5.3(b)(iii) of the Oleoducto
Central Agreement during and for the periods indicated therein.
(ii) the Performance Guarantee Agreement of any Affiliate of the
terminated Shareholder shall terminate (other than to the extent survival of
certain provisions of the corresponding Subscription Agreement);
(iii) the terminated Shareholder shall cease to be a party to the
Oleoducto Central Agreement (subject to survival of certain provisions as
provided therein); and
(iv) the terminated Shareholder shall have the right to deliver an
instruction under Section 4 of the Escrow Agreement to the Escrow Agent, with
a copy to the JSC and the other Shareholders, instructing the Escrow Agent to
deliver to the terminated Shareholder all funds on deposit in the Escrow
Account.
Section 4.5. Reinstatement. (a) Reinstatement Events.
Reinstatement for purposes of this Article Four shall occur upon the
occurrence, prior to termination under Section 4.4, of any of the following
events:
(i) the JSC or any other Shareholder objects to the declaration of
Political Event by the members of the Canadian Group, commences arbitration
proceedings within 60 days of receipt of the certificate declaring the Event
of Default, and the arbitrators rule that the Political Event claimed in the
Section 4.1 certificates did not occur or was not continuing as of the date of
the certificate delivered under Section 4.1, or that the restrictions in
Section 5.1 applied;
<PAGE>
(ii) either member of the Canadian Group delivers to the JSC a
certificate executed by it to the effect that the Political Event that gave
rise to the suspension has ceased (provided that the other member of the
Canadian Group can object to, and within 60 days of the delivery of the
cessation certificate commence arbitration on, the claim that the Political
Event has ceased, in which case the reinstatement certificate will be
effective as to the objecting Shareholder only if arbitrators rule that the
Political Event had ceased as of the date of the reinstatement certificate);
(iii) the members of the Canadian Group fail to deliver a
reinstatement certificate under (ii) above upon demand of the JSC or any other
Shareholder on the grounds that the Political Event has ceased, the objecting
party commences within 60 days of demanding that the members of the Canadian
Group deliver a reinstatement certificate, and the arbitrators rule that the
Political Event that gave rise to the suspension had ceased as of the time of
the demand for a reinstatement certificate;
(iv) as to either member of the Canadian Group, such Shareholder
fails to enter into or maintain in effect the Escrow Agreement or fails to
make on a timely basis the deposits into the Escrow Account contemplated by
Section 4.3(a); or
(v) as to either member of the Canadian Group, such Shareholder
fails to deliver to the JSC and each other Shareholder or to maintain in
effect the executed Political Event Performance Guarantee (whether because of
expiration, limitations on coverage resulting from accrued contingent
obligations or actual payments, or otherwise).
(b) Purchase Obligations; Application of Section 5.3(b)(iii). Upon
reinstatement under clause (a), the Purchase Obligations of the members of the
Canadian Group will apply immediately as if no suspension had occurred.
Following reinstatement, there will be no restriction on the JSC's right to
exercise all remedies under Section 5.3(b)(iii) during and for the periods
indicated therein; provided that the JSC shall be obliged to (i) cease to
exercise the right to cancel partially or entirely payment of operating,
incentive and other fees payable under the Oleoducto Central Operations
Agreement and (ii) not exercise its right to terminate the Oleoducto Central
Operations Agreement, in each case as a result of Equity Contributions not
made by the reinstated Shareholder during the suspension period, if (but only
if) within 15 days of reinstatement the reinstated Shareholder makes up in
full any Equity Contributions it failed to make during the suspension period
which were not otherwise made up by other Shareholders during such period.
(c) Escrow Account. Within ten Business Days after the earlier of
the date on which each Shareholder having a put right under clause (d) shall
have exercised it and the expiration of the 30-day period referred to in such
clause, the JSC shall deliver an instruction under Section 4 of the Escrow
Agreement, with a copy to each Shareholder, instructing the Escrow Agent to
deliver promptly, but in any case within two Business Days of delivery of the
instruction, all funds on deposit in the Escrow Account to the following
Persons in the following order of priority:
<PAGE>
(i) to the extent put rights are exercised, to the sellers in or
towards satisfaction of the purchase price payable by the purchaser under such
clause pro rata among the sellers based on the number of Shares being sold;
(ii) to the JSC in satisfaction of any outstanding Purchase
Obligation of the reinstated Shareholder to purchase Shares not purchased by
other Shareholders during the suspension period; and
(iii) the balance, if any, to the reinstated Shareholder.
(d) Put Right. Upon reinstatement under clause (a), each
Shareholder (for purposes of this clause, the "seller") which shall have
exercised the option pursuant to Section 4.3(c) to make Equity Contributions
in lieu of a Shareholder which is a member of the Canadian Group shall have
the right to require the reinstated Shareholder (for purposes of this clause,
the "purchaser") to purchase all or a portion of the Shares and other
securities or instruments (together, for purposes of this clause, the "Put
Securities") issued to the seller or on its behalf by the JSC in connection
with such Equity Contributions by giving the purchaser notice no later than 30
days following the date on which reinstatement occurs, specifying the number
of Put Securities to be purchased. The purchase price per Put Security shall
equal the sum of (i) the amount of the Equity Contribution made for such Put
Security and (ii) an amount calculated (based on the actual number of days
elapsed between the date such Put Security was purchased in lieu of the
purchaser and the last day of the calendar month preceding the date on which
the seller notifies the purchaser that it is exercising the put right) at a
rate of 13.5% per annum of the amount in (i), less any Distribution received
in respect of such Put Security as of such calculation date. The closing on
the purchase shall occur on the later of (A) ten Business Days after the date
the seller notifies the purchaser that it is exercising its put right under
this clause and (B) the first Business Day following the receipt of any
necessary governmental approvals. Clause (c) contemplates that funds in the
Escrow Account will be applied in the first instance to pay to each seller,
pro rata based on the aggregate purchase price payable to such seller, such
purchase price.
ARTICLE FIVE
RESTRICTIONS ON RIGHTS TO DECLARE POLITICAL EVENTS
Section 5.1. Restrictions on Rights to Declare Political
Events. Notwithstanding any other provision of this Agreement, no Shareholder
shall have a right to declare a Political Event pursuant to Section 2.1, 3.1
or 4.1 if:
(a) the failure of such party (or any of its Affiliates, as the case may
be) or, in the case of Section 2.1, the JSC to comply in any material respects
with its respective obligations under (i) any binding agreement freely made
between any of them and Colombia or a governing authority which is in de facto
control of part of Colombia or (ii) any law, statute, decree, writ or order of
Colombia or any governmental authority thereof binding on it (other than such
law, statute, decree, writ or order, the adoption or application of which to
the Oleoducto Central would
<PAGE>
constitute Expropriatory Action) is the principal, direct and proximate cause
of such Political Event;
(b) the events, conditions or occurrences which constitute such
Political Event have been voluntarily agreed to (which for this purpose shall
not include coerced agreement), or have been voluntarily arranged or
deliberately instigated, by such party (or any of its Affiliates, as the case
may be) or, in the case of Section 2.1, the JSC;
(c) such party (or any of its Affiliates, as the case may be) or, in the
case of Section 2.1, the JSC has failed to take reasonable precautions or
pursue reasonable alternative measures available to it to prevent, or to
mitigate the effects of, the occurrence or continuation of such Political
Event; provided, however, that neither such party (nor any of its Affiliates)
nor, in the case of Section 2.1, the JSC shall be required by this clause (c)
to accept, acquiesce in or agree to any modification of any right, make any
payment or concession it is not legally obligated to make or enter into any
settlement, compromise or agreement with any governmental authority, labor
union or other person that it is not legally obligated to enter into; or
(d) in the case of Expropriatory Action, such party (or any of its
Affiliates, as the case may be) or, in the case of Section 2.1, the JSC has
failed to commence judicial, administrative or other proceedings reasonably
available under Colombian law against the expropriating authority for the
purpose of reversing or mitigating the effects of the Expropriatory Action.
ARTICLE SIX
ARBITRATION; SUBMISSION TO JURISDICTION
Section 6.1. Arbitration. Any dispute under this Agreement
shall be settled by arbitration in accordance with the UNCITRAL Arbitration
Rules in effect on the date hereof. The arbitration shall be the sole and
exclusive forum for resolution of the dispute, controversy or claim, and the
award shall be final and binding. Judgment thereon may be entered by any
court having jurisdiction. The number of arbitrators shallbe three, each of
whom shall be disinterested in the dispute, controversy or claim and shall
have no connection with any party. Should the services of an appointing
authority be necessary, the appointing authority shall be the American
Arbitration Association. In the event that more than two parties are involved
in the dispute, controversy or claim, all such parties shall have 30 days to
agree among themselves as to the appointment of the three arbitrators. If,
after such 30-day period, the parties have not agreed on such appointment, the
appointing authority shall select all three arbitrators. The parties and the
appointing authority may appoint from among the nationals of any country,
whether or not a party is a national of that country. The place of arbitration
shall be The City of New York, New York. The arbitration shall be conducted
in the English language and any foreign-language documents presented at such
arbitration shall be accompanied by an English translation thereof. The
arbitrators shall apply the law (except for conflicts of law rules) of the
State of New York.
<PAGE>
(a) In the event that there is an existing arbitration pursuant
to paragraph (b), and that the same or a similar disagreement, dispute,
controversy or claim should arise between parties other than the parties to
the existing arbitration, the American Arbitration Association shall have the
power to allow the other parties to be joined in the existing arbitration with
their express consent, which is hereby granted, and to make a single final
award determining all disputes, controversies or claims among them.
(b) Any matter expressed in this Agreement to be a matter for
review, collaboration, consultation, consent, decision or agreement by the
parties or any of them shall not, in the event of failure of decision or
agreement, constitute a dispute or difference to be referred to or settled by
arbitration proceedings.
Section 6.2. Submission to Jurisdiction. Each of the parties
hereby submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York (the Specified Court) in any suit
or proceeding with respect to the enforcement of the arbitration provisions of
this Agreement and the non-exclusive jurisdiction of such court with respect
to the enforcement of any award thereunder. Each party irrevocably appoints
the agent for service specified opposite its name in Section 8.1 as its
authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any related proceeding, and agrees that service
of process upon such agent, and written notice of said service to such party,
by the person serving the same to the address provided in Section 8.1, shall
be deemed in every respect effective service of process upon such party in any
such suit or proceeding. Each party further agrees to take any and all action
as may be necessary to maintain such designation and appointment of such agent
in full force and effect for the duration of this Agreement.
ARTICLE SEVEN
TERM
Section 7.1 Effectiveness; Termination. As to any party
hereto, this Agreement shall become effective on the earlier of the date the
Oleoducto Central Agreement becomes effective and the date on which a
Subscription Agreement to which it is a party becomes effective and shall
terminate upon the later of the date the Oleoducto Central Agreement
terminates and the date on which a Subscription Agreement to which it is a
party terminates; provided that Sections 3.4(b)(iv) and (v) and Section
4.4(b)(iv) shall survive termination.
<PAGE>
ARTICLE EIGHT
GENERAL
Section 8.1. Notices. All notices, requests, demands,
directions and other communications hereunder shall be in writing and shall be
given by personal delivery, by certified or registered mail, or by electronic
means of communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Party Copy To Agent for
Service
OLEODUCTO CENTRAL S.A. N/A CT CORPORATION
World Trade Center Bogota SYSTEM
Calle 100 N. 8A-55 1633 Broadway
Santafe de Bogota, D.C. -Colombia New York, New York 10019
Telefax: 571-218-3933 Telefax: (212) 247-2882
Attention: President
EMPRESA COLOMBIANA DE N/A CONSULATE GENERAL OF
PETROLEOSECOPETROL COLOMBIA
Carrera 13 No. 36-24 10 East 46th Street
Santafe de Bogota, D.C. -Colombia New York, New York 10017
Telefax: (571) 287-0041 Telefax: (212) 972-1725
Attention: Juan Maria Rendon
BP COLOMBIA PIPELINES BP EXPLORATION CT CORPORATION
LIMITED COMPANY SYSTEM
c/o BP EXPLORATION (COLOMBIA) LIMITED 1633 Broadway
(COLOMBIA) LIMITED Carrera 9A No. 99-02 New York, New York 10019
Carrera 9A No. 99-02 Post Office Box 59824 Telefax: (212) 247-2882
Post Office Box 59824 Santafe de Bogota, D.C. Colombia
Santafe de Bogota, D.C. -Colombia Telefax: (571) 222-8619
Telefax: (571) 618-2895 Attention: Legal Manager
Attention: Nicholas P. Connolly
TOTAL PIPELINE TOTAL EXPLORATIE EN PROSKAUER, ROSE,
COLOMBIE S.A. PRODUKTIE MIJ B.V. GOETZ & MENDELSOHN
Tour TOTAL Calle 72 No. 10-03 1585 Broadway
TEP/AME Piso 8 New York, New York 10036
24, Cours Michelet Apartado aereo 251375 Telefax: (212) 969-2900
Cedex 47,92069 Paris, France Santafe de Bogota, D.C. -Colombia Attention: Ronald Papa, Esq.
Telefax: (33 1) 4135 6530 Telefax: (571) 235-8453
Attention: Jean-Claude Soligny Attention: Jacques de Boisseson
TRITON PIPELINE TRITON COLOMBIA, INC. CT CORPORATION
COLOMBIA, INC. Carrera 9A No. 99-02 SYSTEM
c/o TRITON ENERGY Oficina 407 1633 Broadway
CORPORATION Santafe de Bogota, D.C.- Colombia New York, New York 10019
6688 North Central Expressway Telefas: (571) 618-2553 Telefax: (212) 247-2882
Suite 1400 Attention: Ivan Fajardo
Dallas, Texas 75206
Telefax: (214) 692-7487
Attention: Thomas G. Finck and A.E. Turner
IPL ENTERPRISES IPL INTERNATIONAL INC. CT CORPORATION
(COLOMBIA) INC. Suite 1100 SYSTEM
c/o IPL ENERGY INC. 363 North 1633 Broadway
31st Floor Bow Valley Square 2 Sam Houston Parkway East New York, New York 10019
205 - 5th Avenue S.W. Houston, Texas 77060 Telefax: (212) 247-2882
Calgary, Alberta, Canada T29 2V7 Telefax: (713) 820-9310
Telefax: (403) 231-3920 Attention: Benny J. Phillips
Attention: Donald M. Wishart
TCPL INTERNATIONAL TRANSCANADA PIPELINES FRIED, FRANK, HARRIS,
INVESTMENTS INC. LIMITED SHRIVER & JACOBSON
c/o FRIED, FRANK, HARRIS, TransCanada PipeLines Tower 1 New York Plaza
SHRIVER & JACOBSON 111 Fifth Avenue S.W. New York, New York 10004
1 New York Plaza P.O. Box 1000, Station M Telefax: (212) 747-1526
New York, New York 10004 Calgary, Alberta, Canada T2P 4K5 Attention: Ken Blackman
Telefax: (212) 747-1526 Telefax: (403) 267-2668
Attention: Ken Blackman Attention: Michael Durnin and
Robert M. Jensen
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any party to the others. Any notice, demand,
request, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The party givingany notice, demand, request, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 8.2. Representations and Warranties. Each party
represents and warrants to the others that:
(a) it is a corporation duly incorporated and organized under
the laws of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and
perform its obligations under this Agreement and this Agreement to which it is
a party, when executed and delivered by such party, constitute valid and
legally binding agreements of such party;
(c) the execution and delivery of, and the performance by it of
its obligations under, this Agreement to which it is a party will not result
in a breach of or constitute a default under:
(i) any provision of its corporate charter or articles of
incorporation or its by-laws;
(ii)any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder to
which it is a party; or
<PAGE>
(iii) any order, judgment or decree of any court or
governmental agency to which it is a party or by which it is bound.
Section 8.3. Nature of Obligations (a) The obligations
of each party created by this Agreement shall be the several obligations of
that party. Nothing herein shall be deemed or construed to make any party a
surety or a guarantor of the JSC or of another party or liable to meet any
obligation of the JSC or of another party.
(b)The obligations of each party hereunder shall run to the benefit
of each other party, and each party shall have the right to enforce the
obligations of any party hereunder.
Section 8.4. Amendments. This Agreement may not be amended or
modified except with the written consent of each of the parties. The parties
acknowledge that they may from time to time (a) consider amending this
Agreement to meet the needs of the JSC and (b) enter into one or more separate
agreements to provide for the suspension or termination of obligations under
certain other Project Agreements to which they or their Affiliates may be
party, including the Transportation Agreements, the Transportation Notes
Agreements and the Advance Tariff Agreements.
Section 8.5. No Third Party Beneficiaries. Except as herein
otherwise expressly provided to the contrary, this Agreement shall inure to
the benefit of and be binding upon the parties and their respective successors
and assigns, and no other Person shall have any right hereunder.
Section 8.6. Severability. If, for any reason, any provision
of this Agreement is unenforceable, the remaining provisions hereof shall
nevertheless be carried into effect. Any provision of this Agreement that is
unenforceable in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
Section 8.7. No Assignment. Except as expressly provided
herein and except for an assignment by TCPL International to TCPL Bermuda in
accordance with Section 10.9 of the Oleoducto Central Agreement, no party may
assign all or any portion of its rights or obligations hereunder.
Section 8.8. Conduct. Each of the parties acknowledge that it
is aware of the provisions of the United States Foreign Corrupt Practices Act
of 1977, as amended, and will take no action nor make any payment in violation
of, nor cause any party or its subsidiaries or affiliates, to be charged with
violation of, such Act.
Section 8.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 8.10. Commercial Obligations. Each party acknowledges
and agrees that its rights and obligations hereunder are of a commercial and
not governmental in nature.
<PAGE>
Section 8.11. Waiver of Immunity. (a) Each party irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement or any award thereunder brought in the Specified
Court and further irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of any such
proceeding in the Specified Court.
(b) To the extent that a party or any of its revenues, assets or
properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement or any award
thereunder at any time brought against such party or any of its revenues,
assets or properties, to any sovereign or other immunity from suit, from
jurisdiction, from attachment prior to judgment, from attachment in aid of
execution of judgment, from execution of a judgment or from any other legal or
judicial process or remedy, and to the extent that in any jurisdiction there
shall be attributed such an immunity, such party irrevocably agrees not to
claim and irrevocably waives such immunity to the fullest extent permitted by
the laws of such jurisdiction (including, without limitation, the Foreign
Sovereign Immunities Act 1976 of the United States), except, in the case of
Ecopetrol, as provided under Article 684 of the Codigo de Procedimiento Civil
of Colombia.
Section 8.12. Headings; Table of Contents. The headings and
table of contents contained herein are for convenience of reference only and
do not constitute a part of this Agreement.
Section 8.13. Counterparts. This Agreement may be executed in
seven or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement
to be executed and delivered by their respective proper officers thereunto
duly authorized as of the date first above written.
OLEODUCTO CENTRAL S.A.
By:
Title:
EMPRESA COLOMBIANA DE
PETROLEOS-ECOPETROL
By:
Title:
<PAGE>
BP COLOMBIA PIPELINES LIMITED
By:
Title:
TOTAL PIPELINE COLOMBIE S.A.
By:
Title:
TRITON PIPELINE COLOMBIA, INC.
By:
Title:
IPL ENTERPRISES (COLOMBIA) INC.
By:
Title:
TCPL INTERNATIONAL INVESTMENTS INC.
By:
Title:
<PAGE>
SCHEDULE A TO
POLITICAL EVENTS AGREEMENT
ESCROW AGREEMENT
AGREEMENT, dated as of _________, among OLEODUCTO CENTRAL S.A., a
sociedad anonima organized under the laws of Colombia (the "JSC"), ________, a
_________ (the "Escrowing Party" and, together with the JSC, the Parties) and
_______________, a ____________________________, as Escrow Agent (and together
with the Parties, the "Signatories").
1. Appointment of Escrow Agent. __________, acting through
its corporate trust office, ________________, New York, New York, United
States of America, is hereby appointed as escrow agent hereunder (the "Escrow
Agent") upon the terms and conditions hereof.
2. Escrow Account. The Escrow Agent today has opened in
its name at _________ in New York, New York a segregated escrow account,
account no. _______ (the "Escrow Account"). Escrowing Party or its affiliates
may from time to time deposit funds into the Escrow Account. All moneys held
in the Escrow Account shall be escrow funds held by the Escrow Agent under
this Agreement. The Escrow Agent shall have no duty to solicit funds.
3. Unless the JSC and the Escrowing Party otherwise jointly
notify the Escrow Agent, funds held in the Escrow Account shall be invested by
the Escrow Agent in interest-bearing securities of, or guaranteed by, the
United States Government with maturities of 90 days or less, with amounts too
small to be feasibly so invested to be invested as directed by the Escrowing
Party. All interest and other income earned on the principal amount of the
deposits in the Escrow Account shall be reinvested in accordance with this
clause promptly (and in any case within one banking day in New York) upon
receipt thereof. For purposes of this Agreement, Banking Day shall mean a day
on which commercial banks in The City of New York are authorized by law to be
open for the transaction of business.
4. Distribution from the Escrow Account. Except as
otherwise expressly provided in this Section 4, the Escrow Agent shall not
distribute any funds on deposit in the Escrow Account. The Escrow Agent shall
make distributions of all funds in the Escrow Account only as follows:
(a) at the time and to the persons indicated in an instruction
received from the JSC, provided that the instruction certifies that the JSC is
delivering the instruction in accordance with Section 3.5(d) or 4.5(c) of the
Political Events Agreement; or
<PAGE>
(b) at the time and to the person indicated in an instruction received
from the Escrowing Party (accompanied by a certification from the Escrowing
Party to the effect that it is delivering the instruction in accordance with
[INSERT IF ESCROWING PARTY IS ENTERING INTO ESCROW AGREEMENT UNDER SECTION
3.3(a) OF POLITICAL EVENTS AGREEMENT -- Section 3.4(b)(iv)][INSERT IF
ESCROWING PARTY IS ENTERING INTO ESCROW AGREEMENT UNDER SECTION 4.3(a) OF
POLITICAL EVENTS AGREEMENT --Section 4.4(b)(iv)]), provided that no
distribution shall be made unless and until one of the followign two
conditions is satisfied: (A) 30 Business Days after the Escrow Agent delivers
a copy of the instruction to the JSC expire without the JSC notifying the
Escrow Agent that it objects to the instruction delivered by the Escrowing
Party or (B) the JSC notifies the Escrow Agent within such 30-day period that
it objects to the instruction notice but thereafter notifies the Escrow Agent
that it is withdrawing the objection. In no event shall the Escrow Agent be
obligated to distribute any amount in excess of the funds in the Escrow
Account at the time the distribution is made.
5. Books and Accounts. (a) The Escrow Agent shall maintain
all such accounts, books and records as may be necessary properly to record
all transactions carried out by it under this Agreement. The Escrow Agent
shall permit the Parties and their authorized representatives to examine such
accounts, books and records; provided that any such examination shall occur
upon reasonable notice and during normal business hours.
(b) On or before the tenth Banking Day of each calendar month,
the Escrow Agent shall send to the Parties a statement indicating the amount
of funds on deposit in the Escrow Account and the nature of any investments
thereof as of the end of the preceding calendar month and identifying all
deposits to and payments from the Escrow Account during such calendar month,
including the date on which made. Upon the request and at the expense of the
Escrowing Party or the JSC, the Escrow Agent shall inform the Escrowing Party
and the JSC of deposits, investments, payments, balances and any other
information they may request (and that is reasonably available to the Escrow
Agent) regarding the Escrow Account,
6. Communications. Any instruction to be given hereunder to the
Escrow Agent for the investment or withdrawal of funds or investment in the
Escrow Account or any other communication required or permitted to be given
hereunder to the Escrow Agent may be given by Escrowing Party or the JSC, as
the case may be, in writing, by facsimile or other form of electronic
transmission, and in any manner that the Escrow Agent may reasonably accept,
to or at the address for the Escrow Agent set out in Appendix A hereto or to
such other address as may be furnished for the purpose by the Escrow Agent.
Any notice or other communication required or permitted to be given to the
Escrowing Party or the JSC hereunder may be given, in writing, by facsimile or
other form of electronic transmission, and in any manner that the Escrowing
Party or the JSC may reasonably accept, to or at the address set out for each
of the Escrowing Party and the JSC in Appendix A hereto or to such other
address as may be furnished by the Escrowing Party or the JSC, as the case may
be.
<PAGE>
7. Duties of Escrow Agent. (a) The Escrow Agent shall not
be liable for any error of judgment or for any act done or omitted by it in
good faith or for any mistake of fact or law, or for anything which it may do
or refrain from doing, except for the Escrow Agent's own gross negligence or
willful misconduct.
(b) The Escrow Agent may consult with, and obtain advice from,
legal counsel, accountants and other experts, in connection with the
performance of its good faith in accordance with the written opinion and
written advice of such counsel, negligence or misconduct of any counsel,
accountants and other experts selected by it without gross negligence or
willful misconduct.
(c) The Escrow Agent shall have no duties other than those
specifically set forth or provided for in this Agreement and no implied
covenants or obligations of the Escrow Agent shall be read into this
Agreement. The Escrow Agent shall have no obligation to familiarize itself
with and shall have no responsibility with respect to any obligation to
inquire whether any notice, instruction, statement or calculation is in
conformity with the terms of any such other agreement, except those
irregularities or errors manifestly apparent on the face of such document or
to its actual knowledge. The Escrow Agent shall at all times take such care
in dealing with the Escrow Account as would a prudent man in dealing with his
own property.
8. No Set-offs. The Escrow Agent shall not have, and hereby
waives, any right to banker's lien, set-off or counterclaim in respect of
funds or investments in the Escrow Account.
9. Expenses; Indemnification. (a) The Escrowing Party
shall pay directly and not out of the Escrow Account the fees of the Escrow
Agent for the services rendered pursuant or relating to this Escrow Agreement
chargeable in accordance with the Escrow Agent's usual rate of compensation.
The JSC shall have no obligation to pay the Escrow Agent any fees.
(b) The Escrowing Party agrees to indemnify the Escrow Agent and
hold it harmless against any and all losses, liabilities and expenses
(including reasonable attorney's fees and expenses) incurred by it arising out
of or in connection with the performance of its duties hereunder except those
resulting from its own willful misconduct or gross negligence. The foregoing
indemnities shall also extent to each and every employee and agent of the
Escrow Agent and shall remain in full force and effect regardless of any
investigation made by or on behalf of the Escrow Agent or its employees and
agents, and survive the resignation of the Escrow Agent and thetermination of
this Agreement. The JSC shall have no indemnification obligation to the
Escrow Agent.
<PAGE>
10. Resignation; Removal. (a) The Escrow Agent at any
time may resign as escrow agent under this Agreement upon given not less than
60 days' notice in writing to the Parties, provided that such resignation
shall not be effective until a replacement Escrow Agent reasonably
satisfactory to the Parties shall have been appointed. The Parties may remove
the Escrow Agent as escrow agent under this Agreement for any reason, with or
without cause, upon given the Escrow Agent and the other party hereto 60 days'
notice thereof; provided that such removal shall not be effective until a
replacement Escrow Agent satisfactory to the Parties shall have been
appointed.
(b) If no successor Escrow Agent shall have been appointed and
shall have accepted such appointment within such 60-day period, then the
retiring Escrow Agent may on behalf of the Parties, appoint a successor Escrow
Agent which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least U.S.$500,000,000. If a successor escrow agent shall not
have been appointed and accepted such appointment within such 60-day period,
the retiring Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor Escrow Agent.
11. Miscellaneous. (a) The Escrow Agent shall have the
right at any time to seek instructions concerning the administration of the
Escrow Account from any court of competent jurisdiction. In the event of any
disagreement between the Parties resulting in adverse claims being made
against or with respect to any cash, monies, funds or investments held by the
Escrow Agent hereunder and the terms of this Agreement do not unambiguously
mandate the action that the Escrow Agent is to take or not take in connection
therewith under the circumstances then existing, or the Escrow Agent is in
doubt as to what action it is required to take or not take, the Escrow Agent
shall not be entitled to refrain from taking any action until directed
otherwise in writing by a request signed jointly by the Parties or by order of
a court of competent jurisdiction.
(b) None of the provisions of this Agreement shall be construed
to require the Escrow Agent to expend or risk its own funds or otherwise to
incur any personal financial liability in the performance of any of its duties
hereunder if it shall have reasonable grounds for belief that repayment of
such funds or indemnity against such risk or liability is not reasonably
assured to it. The Escrow Agent shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request or
direction of the Escrowing Party or the JSC, unless the Escrow Agent shall
have been offered security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction (including interest thereon from the
time incurred until reimbursed).
<PAGE>
(c) The Escrow Agent makes no representations as to, and
shall have no responsibility for, the correctness of any statement contained
in, or the validity or sufficiency of, this Agreement, or the sufficiency or
effectiveness of any security afforded hereby or thereby or as to or for the
validity or collectibility of any obligation contemplated hereby or thereby.
The Escrow Agent shall not be accountable for the use or application by any
person of distributions properly made by the Escrow Agent in conformity with
the provisions of this Agreement.
(d) The Escrow Agent shall not be personally liable for
debts contracted or liabilities or damages incurred in the management or
operations of the Escrow Account hereunder, except for those contracted or
incurred as a result of its gross negligence or willful misconduct.
(e) Escrowing Party shall provide the Escrow Agent with its
Tax Identification Number (TIN) as assigned by the Internal Revenue Service.
All interest or other income earned under the Escrow Agreement shall be
allocated and paid to Escrowing Party as provided herein and reported by
Escrowing Party to the Internal Revenue Service as having been so allocated
and paid.
12. Termination. When all funds in the Escrow Account have
been distributed pursuant to Section 4, the Escrow Agent shall promptly
deliver written notice of that fact to the Parties. On the 10th Business Day
following delivery of such notice, this Agreement shall terminate.
In the event of the termination of this Agreement pursuant to this
Section 12, this Agreement shall thereafter become void and have no effect,
and no Signatory hereto shall have any liability to any other Signatory hereto
in respect thereof, except that nothing in this Section shall relieve any
Signatory from liability for any breach of this Agreement prior to
termination. No Signatory shall in any event be liable to any other Signatory
for loss of anticipated profits from the transactions contemplated by this
Agreement or for any other consequential damages arising out of the
termination of this Agreement.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
By:
By:
<PAGE>
By:
<PAGE>
APPENDIX A
TO THE
ESCROW AGREEMENT
Addresses
<PAGE>
SCHEDULE B TO
POLITICAL EVENTS AGREEMENT
POLITICAL EVENT PERFORMANCE GUARANTEE AGREEMENT
AGREEMENT, dated as of ___________, made by __________________, a
corporation existing under the laws of ___________ (the "Guarantor") in favor
of OLEODUCTO CENTRAL S.A., a sociedad anonima existing under the laws of
Colombia (the "JSC") and [names of other shareholders] to the extent such
other parties are Shareholders (the "Funding Shareholders") which are
exercising the option to fund under Section [3.3(c)][4.3(c)] of the Political
Events Agreement referred to below.
RECITALS
WHEREAS:
A. _______________, a ___________ corporation organized under the
laws of ___________ (the "Company"), the JSC and the Funding Shareholders are
parties to a Political Events Agreement, dated as of December 14, 1994 (as
amended from time to time, the "Political Events Agreement"), entered into
pursuant to the Oleoducto Central Agreement, dated as of the same date (as
amended from time to time, the "Oleoducto Central Agreement");
B. The Company is an Affiliate of the Guarantor; and
C. As an inducement to the JSC and the Funding Shareholders to
enter into the Political Events Agreement, the Guarantor has agreed to enter
into this Political Events Performance Guarantee Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the Guarantor, the
JSC and the Funding Shareholders agree as follows:
Section 1. Definitions. All capitalized terms used and not defined
herein have the meanings assigned to them in the Political Events Agreement.
Section 2. Representations and Warranties. The Guarantor
represents and warrants to the JSC and the Funding Shareholders that:
(a) it is a corporation duly incorporated and organized under the
laws of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and
perform its obligations under this Agreement, and this Agreement constitutes
the valid and legally binding agreement of the Guarantor;
<PAGE>
(c) the execution and delivery of, and the performance by the Guarantor
of its obligations under, this Agreement will not result in a breach of or
constitute a default under:
(i) any provision of its corporate charter or articles of
incorporation or its by-laws;
(ii) any agreement or instrument to which it is a party and which is
material to the performance of its obligations hereunder; or
(iii) any order, judgment or decree of any court or governmental agency
to which it is a party or by which it is bound; and
(d) all of the outstanding capital stock of the Company (except for
any directors' qualifying shares) is directly or indirectly beneficially owned
by the Guarantor, free and clear of all liens, encumbrances, equities and
claims.
Section 3. Performance Guarantee. Subject to the provisions
contained herein, the Guarantor hereby irrevocably and unconditionally
guarantees to the JSC and the Funding Shareholders the full and punctual
performance of all of the Company's obligations (the "Guaranteed Obligations")
under the Political Events Agreement. In the event that the Company shall
default in the full and timely performance of any of the Guaranteed
Obligations for any reason, the Guarantor hereby agrees to perform, or to
cause to be performed, any such Guaranteed Obligations fully and timely in
accordance with the terms of the Political Events Agreement.
Section 4. Unconditional Obligations of Guarantor. The Guarantor
hereby agrees that its obligations hereunder are in the nature of a continuing
performance guarantee and shall remain valid and in full force irrespective of
any circumstances which might otherwise constitute a legal or equitable
discharge of a guarantor, including the absence of any action to enforce the
Political Events Agreement or any judgment against the Company; provided that
it is hereby acknowledged and agreed that (a) the Guarantor shall not be
obligated under this Agreement to make any payment in respect of any amounts
that would not be due under the Political Events Agreement were it to be a
party to the Political Events Agreement in the place and stead of the Company,
(b) the benefit of any waiver or indulgence granted to, or any compromise
with, the Company shall extend to the Guarantor and (c) in no event shall the
Guarantor be obligated to make payments hereunder exceeding in the aggregate
[INSERT 200% OF REMAINING EQUITY CONTRIBUTION OF SUSPENDED PARTY UNDER LATEST
FINANCING PLAN AT THE TIME THIS AGREEMENT IS EXECUTED AND DELIVERED.]
Section 5. No Waiver. No failure on the part of the JSC or any
Funding Shareholder to exercise, and no delay in exercising, any right, remedy
or power hereunder shall operate as a waiver thereof, nor shall any single or
particular exercise by the JSC or any Funding Shareholder of any right, remedy
or power hereunder preclude any other or future exercise of any other right,
remedy or power.
<PAGE>
Section 6. Subrogation. The Guarantor shall be subrogated to all
rights of the JSC and the Funding Shareholders against the Company in respect
of any amounts paid by the Guarantor pursuant to the provisions of this
Agreement; provided, however, that the Guarantor shall not be entitled to
enforce, or to receive any payments arising out of or based upon, such right
of subrogation until all of the Guaranteed Obligations under the Political
Events Agreement shall have been performed in full, all the Senior Debt
referred to in the Oleoducto Central Agreement provided by the Senior Lender
Group for whose benefit the Political Events Agreement to which the Company is
party may be assigned by the JSC has been repaid and all other obligations of
the Company owed to the JSC and the Funding Shareholders have been discharged
in full.
Section 7. Effectiveness. This Agreement shall become effective
upon the execution hereof by all the Parties hereto.
Section 8. Termination. This Agreement shall terminate on the
earlier of (a) the complete performance or termination of all Guaranteed
Obligations of the Company under the Political Events Agreement and (b)
[INSERT DATE FIVE YEARS AFTER DATE OF EXECUTION].
Section 9. Successors. The obligations of the Guarantor hereunder
shall be binding upon the Guarantor and its successors and assigns and shall
inure to the benefit of and be enforceable by the JSC and the Funding
Shareholders and their respective successors and assigns.
Section 10. Release. (a) The Guarantor shall not be released and
discharged from any of its obligations hereunder except to the extent that, in
connection with the simultaneous direct or indirect transfer of all or any
part of the Shares held by the Company to a Person that is a permitted
transferee thereof pursuant to Article Ten of the Oleoducto Central Agreement,
such permitted transferee assumes or undertakes the related obligations under
the Political Events Agreement or such obligations are guaranteed under a
performance guarantee agreement in substantially identical form to this
Agreement.
(b) Notwithstanding the foregoing, the Guarantor shall not be
released or discharged from obligations which shall have been incurred prior
to the release and discharge referred to in paragraph (a) of this Section 10.
<PAGE>
Section 11. Notices. All notices, requests, demands, directions
and other communications hereunder shall be in writing and shall be given by
personal delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Agent
for Service
If to the JSC: OLEODUCTO CENTRAL S.A. CT CORPORATION SYSTEM
World Trade Center Bogota 1633 Broadway
Calle 100 N. 8A-55 New York, New York 10019
Santafe de Bogota, D.C. - Colombia Telefax: (212) 247-2882
Telefax: 571-218-3933
Attention: President
If to the Guarantor: [INSERT NAME AND ADDRESS]
If to the Funding Shareholders:
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any party to the other. Any notice, request,
demand, direction or other
communication given by personal delivery shall be conclusively deemed to have
been given on the day of actual delivery thereof and, if given by certified or
registered mail, on the fifth Business Day following the deposit thereof in
the mail and, if given by electronic communication, on the day of transmittal
thereof if given during the normal business hours of the recipient and on the
Business Day during which such normal business hours next occur if not given
during such hours on any day. The party giving any notice, request, demand,
direction or other communication by electronic communication shall send the
original thereof by personal delivery or by first class mail.
<PAGE>
Section 12. Severability. If, for any reason, any provision of
this Agreement is unenforceable, the remaining provisions hereof shall
nevertheless be carried into effect.
Section 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 14. Submission to Jurisdiction; Consent to Service. The
Guarantor hereby submits to the non-exclusive jurisdiction of the Federal and
State courts in the Borough of Manhattan in The City of New York (the
Specified Court) in any action, suit or proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby (a "Related
Proceeding"). The Guarantor irrevocably appoints the agent for service
designated opposite its name in Section 11 hereof as its authorized agent in
the Borough of Manhattan in The City of New York upon which process may be
served in any such action, suit or proceeding, and agrees that service of
process upon such agent, and written notice of said service to the Guarantor,
by the person serving the same to the address provided in Section 11, shall be
deemed in every respect effective service of process upon such party in any
such suit or proceeding. The Guarantor further agrees to take any and all
action as may be necessary to maintain such designation and appointment of
such agent in full force and effect for the duration of this Agreement.
The obligation of the Guarantor in respect of any sum due from it to
the JSC expressed in United States dollars, notwithstanding any judgment in a
currency other than United States dollars, shall not be discharged until the
first Business Day following receipt by the JSC of any sum adjudged to be so
due in such other currency on which (and only to the extent that) the JSC may
in accordance with normal banking procedures purchase United States dollars
with such other currency. If the United States dollars so purchased are less
than the sum originally due to the JSC or the Funding Shareholders hereunder,
the Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the JSC against such dollar shortfall. If the United
States dollars so purchased are greater than the sum originally due to the JSC
or the Funding Shareholders hereunder, the JSC or the Funding Shareholders, as
the case may be, agree to pay to the Guarantor an amount equal to the excess
of the dollars so purchased over the sum originally due hereunder to the JSC
or the Funding Shareholders, as the case may be.
Section 15. Headings. The headings contained herein are for
convenience of reference only and do not constitute a part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be
executed and delivered by its proper officer or officers thereunto duly
authorized as of the date first above written.
[NAME OF GUARANTOR]
By:
Title:
<PAGE>
SCHEDULE K
TO OLEODUCTO CENTRAL AGREEMENT
TARIFF PRINCIPLES
THE OLEODUCTO CENTRAL
Segments. The Oleoducto Central shall consist of four segments:
the Cusiana-El Porvenir segment, the El Porvenir-Vasconia (Central Llanos)
segment, the Vasconia-Covenas (the ODC loop) segment and the delivery
facilities at the Covenas Terminal (each, a "Segment").
Capacity. For purposes of determining the Proportionate Shares of
Throughput Capacity assigned to the Initial Shippers and determining the
tariffs applicable to the different types of shippers, the Throughput Capacity
of each Segment (the "Throughput Capacity") shall be the initial average
annual throughput capacity of such Segment. After giving effect to a service
factor of 85%, the initial average annual throughput capacity (the "Initial
Average Annual Throughput Capacity") of each Segment is set forth below:
<TABLE>
<CAPTION>
<S> <C>
Initial Average Annual
Throughput Capacity
Segment (Average Annual barrels/day)
Cusiana-El Porvenir 500,000
El Porvenir-Vasconia 556,000
Vasconia-Covenas 290,000
Covenas Terminal 500,000
</TABLE>
The Throughput Capacity of any Segment shall never be less than the Initial
Average Annual Throughput capacity thereof (i) unless otherwise agreed by all
of the Initial Shippers or (ii) due to events outside the control of the JSC,
in which case such Throughput Capacity shall be the actual volume of Petroleum
shipped through such Segment for tariff purposes. The Throughput Capacity of
any Segment shall never be less than the actual volume of Petroleum shipped
through such Segment. The Throughput Capacity of each Segment shall be used
to determine available capacity for tariff purposes for transportation of
Petroleum through such Segment.
Capacity for purposes of determining actual operating capacities,
operating fees, incentive fees and other payments to the Operator shall be
determined in accordance with the Operating Principles.
<PAGE>
INITIAL SHIPPERS
In accordance with the terms of the Transportation Agreements, each
of the Initial Shippers (i) shall reserve and dedicate to the performance of
its obligations thereunder all of its Petroleum production resulting from its
interest in the Association Contracts relating to the Fields and (ii) shall
have transportation rights to use its Proportionate Share of the Throughput
Capacity of each Segment of the Oleoducto Central. The Proportionate Shares
of each Initial Shipper are set forth below:
Ecopetrol 60%
BPEC 15.2%
TOTAL Exploratie 15.2%
Triton Colombia 9.6%
COMMITMENT OF PRODUCTION FROM FIELDS
For purposes of calculating tariffs, all barrels of Petroleum
produced by each Initial Shipper from the Fields shall be shipped, or deemed
to be shipped up to its Proportionate Share of Throughput Capacity, by such
Initial Shipper from the Cusiana access point to the Port of Covenas delivery
point, regardless of whether production is directed elsewhere. A deemed
barrel for an Initial Shipper in any segment is a barrel produced by such
Initial Shipper from the Fields but not nominated for shipment in such
segment. A barrel deemed to be shipped may be substituted with Petroleum
owned by such Initial Shipper or an Affiliate thereof but produced at other
fields, but the tariff applicable thereto shall be adjusted to reflect any
difference in the quality of such Petroleum as described under "Calculation
and Payment of Tariffs Quality Adjustments." The JSC shall enter into an
agreement with the Operator of the Fields whereby the Operator will provide
the JSC with monthly reports of actual production from the Fields.
ADVANCE TARIFF AGREEMENTS
To the extent that the Advance Tariff Agreement provisions are not
contemplated in a Transportation Agreement or Transportation Notes Agreement
with respect to a member of an Initial Shipper Group, such member agrees to
enter into, or to cause an Affiliate thereof or financial institution
acceptable to the unrelated Shareholders to enter into, an Advance Tariff
Agreement with the JSC.
ANNUAL REVENUE REQUIREMENT
The tariffs applicable to each Segment of the Oleoducto Central
shall be calculated in advance based on the estimated annual revenue
requirement of the JSC with respect to such Segment, as determined in each
Annual Operating Budget approved by the Board of Directors, and the capital
cost thereof as adjusted from time to time in accordance herewith (the "Annual
Revenue Requirement"). The Annual Revenue Requirement for each Segment shall
be adjusted monthly by the Operator pursuant to authority delegated by the
<PAGE>
Board of Directors to reflect differences between costs estimated in the
Annual Revenue Requirement for such Segment and actual costs incurred by the
JSC, exchange rates, actual volumes of Petroleum shipped through such Segment,
and changes in forecasts for future periods. The Operator will provide a
quarterly (or more frequently as appropriate) revised forecast for the entire
fiscal year to the Board of Directors reflecting actual results on a
year-to-date basis with revised projections for the remainder of such year.
The Board of Directors shall decide whether to adopt or amend this revised
forecast. If approved, tariffs for the remainder of the year will be revised
accordingly. Except as otherwise provided herein, the Annual Revenue
Requirement for any Segment in any year shall be the estimated sum of
(1) the JSC's Operating and Maintenance Costs (excluding all Colombian
Taxes),
(2) accounting depreciation of the JSC's fixed assets using the
straight-line method and (for both tax and financial accounting purposes) a
15-year useful life,
(3) the Benchmark Interest Expense (as hereinafter defined),
(4) foreign currency translation costs related to non-peso denominated
items,
(5) all Colombian Taxes,
(6) the amount necessary to establish the legal reserve of the JSC in
accordance with Colombian law,
(7) the annual return to be paid to Shareholders (including any interest
paid on Subordinated Notes) in accordance with Section 5.4(b) of the Oleoducto
Central Agreement and the Subordinated Fee payable to the Operator, and
(8) inflation adjustments on non-monetary items,
in each case with respect to such Segment for such year. Items 2, 6 and 8
constitute the "Non-Cash Items" of the tariff. The JSC shall allocate all
costs directly attributable to a Segment to such Segment. Indirect costs not
specifically attributable to any Segment shall be allocated to each Segment
pro rata to its capital cost. The capital cost of each Segment, which shall
be determined by unanimous agreement of the Parties at the time the Parties
determine the Actual Project Cost, shall be comprised of the direct costs
(acquisition or construction) and indirect costs incurred by the JSC during
the period up to commissioning of such Segment. The Annual Revenue
Requirement shall only be allocated to Segments that have been put in service,
and have not been removed for the purposes of tariffs by agreement of all
Initial Shippers. Unless the context otherwise requires, references to
"Annual Revenue Requirement" shall mean the sum of the Annual Revenue
Requirements for each Segment.
<PAGE>
The Annual Revenue Requirement for each Segment shall be fully
recovered from all barrels of Petroleum shipped or deemed to be shipped
through such Segment. In the event that no barrels of Petroleum are shipped
or deemed to be shipped, each shipper will be obligated to pay minimum tariffs
as set forth below in accordance with the Transportation Agreements,
Transportation Notes Agreements and Advance Tariff Agreements.
On December 31 and June 30 of each year, the JSC shall make an
adjustment to the Annual Revenue Requirement and tariffs to take into account
a conservative forecast of the peso/dollar exchange rate on the expected date
of any dividend or distribution payment with respect to the six months then
ended. If, however, the peso/dollar exchange rate on the actual dividend or
distribution payment date is such that the dividend or distribution is higher
or lower than the return to Shareholders contemplated by Section 5.4(b) of the
Oleoducto Central Agreement, tariffs shall be adjusted in the subsequent six
month period so that the dividends or distributions with respect to the
subsequent period may be decreased or increased and the aggregate return for
the period beginning on the date of the first Equity Contribution to such
dividend or distribution date made equal to the return to Shareholders
contemplated by Section 5.4(b) of the Oleoducto Central Agreement.
BENCHMARK INTEREST EXPENSE
The Initial Shipper Tariff for each barrel of oil actually shipped
in a Segment shall be the same for each Initial Shipper. The Overutilizer
Tariff for each barrel of oil actually shipped in a Segment shall also be the
same for each Initial Shipper. In order to provide for the different interest
rate and principal repayment schedules that will apply (i) to the Senior Debt
with respect to which the right to receive tariff payments under the
Transportation Agreement of each Initial Shipper shall be assigned by the JSC
(with respect to such Initial Shipper, the "Related Senior Debt") and (ii) to
the Transportation Notes (with respect to such Initial Shipper, the "Related
Transportation Notes"), the interest expense used in the estimation of the
Annual Revenue Requirement shall be calculated applying the Benchmark Interest
Rate (as hereinafter defined) on all outstanding Senior Debt and outstanding
Transportation Notes (the "Benchmark Interest Expense"). The Benchmark
Interest Rate will be the highest of the weighted average interest rate on
Related Senior Debt of all Initial Shippers. The weighted average Interest
Rate for each Initial Shipper shall be the ratio of (a) the total interest
expense on the Related Senior Debt and (b) the total outstanding amount of
such Related Senior Debt. The Benchmark Interest Rate shall be computed every
time the JSC raises new amounts of Senior Debt (excluding Transportation
Notes) and will not be updated after all Senior Debt has been raised. Before
any Senior Debt has been raised the Benchmark Interest Rate shall be U.S.
Treasury Notes + 200 basis points based on a maturity of 10 years. For each
Initial Shipper, the difference between the Benchmark Interest Expense charged
in the tariffs on such Senior Debt and Transportation Notes and the actual
interest expense paid on the Related Senior Debt and Related Transportation
Notes of an Initial Shipper shall be fully credited by the JSC as a discount
to be applied to the tariffs paid by such Initial Shipper, to be paid in cash,
as a guarantee fee or by any other method approved by the JSC as directed by
the Senior Lender Group that provided such Senior Debt or to the purchaser of
Transportation Notes for the purpose of paying the guarantor thereof, in each
case as directed by the member of the Initial Shipper Group that is the
Initial Shipper.
<PAGE>
TARIFFS DURING ASSET TRANSFER PERIOD
From January 1, 1995 until such date as the completion of the sale
by Ecopetrol to the JSC of all assets has occurred in accordance with the
Promesas de Compraventa, all shippers transporting Petroleum using such assets
shall pay the tariff established by the Colombian Ministry of Mines and Energy
(the "MME") to Ecopetrol as operator of such assets. Ecopetrol shall in turn
pay to the JSC a monthly fraction of such tariffs, net of operating and
maintenance costs, equal to (x) the sum of the total value of the assets sold
to the JSC and the advances to Ecopetrol by the JSC under the Promesas de
Compraventa divided by (y) the total value of the assets on which such tariffs
are being levied and such tariff shall not be less than the result of applying
the approved MME rate of return on investment on the sum of the value of
assets sold to the JSC and the advances. Following completion of such sale,
the JSC shall charge and collect tariffs on the assets sold to it (including,
without limitation, the Central Llanos 30" pipeline) calculated in accordance
with these Tariff Principles.
After completion of the Promesas de Compraventa, the JSC shall pay
lease rentals or tariffs, on assets owned by Ecopetrol and other Initial
Shippers which will be used by the JSC temporarily during construction,
including but not limited to the Central Llanos 20" pipeline and the Cusiana
El Porvenir 20" pipeline. Tariff or rental costs shall be agreed between the
JSC and the owners of the assets prior to the completion of the Promesas de
Venta. Tariffs charged to the JSC by the owners of the Central Llanos 20"
pipeline shall be the tariff approved by the MME multiplied by a fraction
equal to the value of such assets divided by the value of the assets on which
such tariff is levied. The tariff for the Cusiana-El Porvenir 20" pipeline
shall be agreed between the owners thereof and the JSC. These costs will be
included in the Annual Revenue Requirement for the corresponding Segment.
There will also be a tariff applicable to the assets to be sold to
the JSC covered by the Association Contracts, i.e. Cusiana Pumps and Drivers,
but only after the date ownership of such assets is transferred to the JSC.
The tariff applicable will be calculated in accordance with these Tariff
Principles. Prior to that date, any costs related to such assets shall be for
the account of the Parties to the Association Contracts.
CALCULATION AND PAYMENT OF TARIFFS
The tariffs applicable to the transportation of Petroleum through
each Segment of the Oleoducto Central shall be estimated and posted monthly in
advance by the JSC on a per barrel of Petroleum basis based on the Annual
Revenue Requirement and the aggregate monthly nominations for such Segments.
Tariffs shall be expressed in dollars or, if the JSC so requests, the
equivalent of all or any portion thereof in pesos. Tariffs may be paid in
either cash or, at the election of the JSC, in oil which has been delivered to
the Port of Covenas terminal, all in accordance with the procedures to be set
forth in the Transportation Agreements. Such estimated tariffs shall be
payable monthly in arrears and shall be billed at the end of each month. The
final reconciling bill for tariffs due from any
<PAGE>
shipper at the end of each six month period shall include an appropriate share
of any costs incurred during that period but not included in the initial
Annual Revenue Requirement and shall also specify the amount, if any, of any
required Working Capital Advance (as defined below). Interest shall be
charged by the JSC to any defaulting shipper on overdue tariffs (i)
denominated in pesos at an interest rate equal to the highest default interest
rate permitted by law and (ii) denominated in dollars at the annual interest
rate implied by the Benchmark Interest Expense plus 5% per annum. In
addition, the other default provisions under the Transportation Agreement
shall apply.
Initial Shipper Tariff. Initial Shippers who ship Petroleum through
a Segment in a volume equal to or less than their Proportionate Share of
Throughput Capacity of such Segment determined monthly shall pay the tariff
per barrel applicable to Initial Shippers (the "Initial Shipper Tariff"). The
Initial Shipper Tariff for any Segment for any period is the sum of:
(1) the Annual Revenue Requirement for such Segment in such period, net
of the variable operating costs to be defined in the Transportation Agreements
directly associated with shipping one barrel of Petroleum through such Segment
multiplied by the actual number of barrels of Petroleum shipped through such
Segment in such period (the "Variable Operating Costs"), divided by the sum of
all barrels of Petroleum nominated for shipment plus all barrels of Petroleum
deemed to be shipped through such Segment in such period by Initial Shippers
(including barrels of Petroleum shipped at the Overutilizer Tariff) and by
Third Parties. These costs shall be paid on all barrels nominated or deemed
to be shipped; and
(2) the Variable Operating Costs for such Segment divided by the sum of
all barrels of Petroleum nominated for shipment (excluding any barrels deemed
to be shipped) through such Segment in such period. These costs shall be paid
on all barrels of Petroleum nominated for shipment.
Overutilizer Tariff. The tariff paid by an Initial Shipper with
respect to a volume of Petroleum shipped in a Segment in excess of its
Proportionate Share of Throughput Capacity of such Segment (the "Overutilizer
Tariff") shall be set at a premium to the Initial Shipper Tariff for such
Segment. The total premium shall be equal to the increase in the Annual
Revenue Requirement necessary to increase the JSC's annual return calculated
in accordance with Section 5.4(b) of the Oleoducto Central Agreement by one
percentage point after payment of all Colombian Taxes, provided, however, that
the Overutilizer Tariff shall (i) never be higher than the Third Party Tariff
for such Segment, or (ii) lower than the Initial Shipper Tariff for such
Segment. The total premium shall be allocated to each Segment pro rata to its
capital cost. The quarterly overutilizer premium per barrel of Petroleum for
such Segment shall be the total premiums divided by the sum of all barrels
nominated for shipment and deemed to be shipped through the Segment by Initial
Shippers. All barrels of Petroleum with respect to the shipment of which the
Overutilizer Tariff is paid shall pay on a quarterly basis an overutilizer
premium, per barrel of
<PAGE>
Petroleum, in addition to the Initial Shipper Tariff, as calculated above.
The sum of all such payments shall constitute the quarterly overutilizer
premium payment. Premiums to the Initial Shipper Tariff included in the
Overutilizer Tariff paid with respect to throughput in any Segment shall be
credited by the JSC against tariffs paid by each Initial Shipper for use of
such Segment during such period pro rata to such Initial Shipper's
Proportionate Share of Throughput Capacity of such Segment made effectively
available for shipments of barrels of Petroleum with respect to which the
Overutilizer Tariff was paid.
Third Party Tariff. The tariff paid by Third Parties (the "Third
Party Tariff") must be approved by the MME. The Shareholders agree to seek
approval from the MME to establish the Third Party Tariff at a premium to the
Initial Shipper Tariff equal to the increase in the Initial Shipper Tariff
necessary to increase the JSC's annual return on equity as calculated in
accordance with Section 5.4(b) of the Oleoducto Central Agreement by two
percentage points after payment of all Colombian Taxes (the "Third Party
Premiums") and performing the calculation analogous to that for overutilizer
premiums in respect of all barrels of Petroleum shipped, including barrels of
Petroleum nominated by Initial Shippers and Third Parties (not including
barrels deemed to be shipped). The Third Party Premium shall be designated as
the difference between the Third Party Tariff and the Initial Shipper Tariff
as calculated above.
During the construction of the Oleoducto Central and until December
31, 1997, Third Party Tariff revenues, if any, net of Third Party Premiums
revenue, and net of implied revenues derived from barrels of Petroleum shipped
by Third Parties at the Initial Shipper Tariff (i.e. the nominated number of
barrels shipped by Third Parties multiplied by the Initial Shipper Tariff (the
"Implied Third Party Revenues")), for each Segment during any period shall be
credited by the JSC against tariffs paid by each Initial Shipper during such
period pro rata to each Initial Shipper's actual throughput; and Third Party
Premiums revenue, if any, shall be credited to Initial Shippers according to
the proportion of their Proportionate Share of Throughput Capacity made
available to third parties. After such date Third Party Tariff revenues, if
any, including Third Party Premiums revenue, shall be credited to Initial
Shippers according to their Proportionate Shares. The Implied Third Party
Revenues shall be credited to the Initial Shippers pro rata to throughput
nominations to avoid double counting of barrels shipped by Third Parties.
The Shareholders agree that if (i) the Third Party Tariff is less
than the Third Party Tariff as proposed above and under applicable Colombian
law tariffs higher than the MME Third Party Tariff cannot be collected, or
(ii) as a result of any change in Colombian laws generally, the JSC has
insufficient earnings to provide the returns to Shareholders provided for in
Section 5.4(b) of the Oleoducto Central Agreement, the Initial Shippers shall
take all reasonable commercial measures available under Colombian law to
effect changes to these Tariff Principles or make any other economic changes
necessary (including the imposition of charges or fees on the Oleoducto
Central) to achieve the returns to shareholders provided for in Section 5.4(b)
of the Oleoducto Central Agreement without in any respect prejudicing the
economic interests of the Initial Shippers and Shareholders as they are
contemplated in these Tariff Principles and the Oleoducto Central Agreement.
<PAGE>
Quality Adjustments. If Petroleum from an Initial Shipper produced
from the Fields and to be shipped or deemed to be shipped in one or more
Segments by an Initial Shipper is actually substituted by Petroleum owned by
such Initial Shipper or an Affiliate thereof but produced at other fields, or
if any shipper transports Petroleum produced from fields other than the
Fields, the tariffs for such substituted or other Petroleum, as the case may
be, shall be adjusted to reflect the different cost of transporting such
substituted or other Petroleum due to the physical differences between
Petroleum produced from the Fields and such substituted or other Petroleum
based on standard industry quality adjustments administered by the Operator.
Excess Credits. To the extent premiums or revenues to be credited
to the payment of tariffs by an Initial Shipper in any period exceed the
tariffs to be paid by such Initial Shipper in such period, such excess shall
be applied by the JSC to tariffs to be paid by such Initial Shipper in the
following period or periods or paid in cash by the JSC to such Initial Shipper
or paid as a dividend to the Shareholder that is a member of the related
Initial Shipper Group as long as it does not affect the economic interest of
any other Initial Shipper Group or any other Shareholder.
MINIMUM TARIFFS UNDER TRANSPORTATION AGREEMENTS
Under its Transportation Agreement or, in the case of an Initial
Shipper, its Advance Tariff Agreement or Transportation Notes Agreement, as
the case may be, in any period when no Petroleum is being shipped in a
Segment, each shipper shall be obligated to pay minimum tariffs to the JSC
according to its average nominated and deemed volumes shipped in such Segment
during the previous six months of production or such other time period as may
be agreed. Such minimum payments in such period shall be calculated based on
its pro rata share, based on such throughput, of Operating and Maintenance
Costs subject to the Oleoducto Central Operations Agreement.
WORKING CAPITAL ADVANCES UNDER TRANSPORTATION AGREEMENTS
Under its Transportation Agreement, each shipper shall be severally
obligated pro rata to its throughput nomination to provide the JSC at the
beginning of any fiscal year with a cash advance (a "Working Capital Advance")
designed to provide the JSC with adequate working capital for such year.
Working Capital Advances shall be included in each Annual Operating Budget
approved by the Board of Directors and shall be a specified percentage of
Operating and Maintenance Costs included in the Annual Revenue Requirement.
Working Capital Advances shall not bear interest and shall be repaid by the
JSC at the end of such year from Available Cash. If at the end of any year
Available Cash is not sufficient to repay Working Capital Advances, the final
tariff adjustment for such year shall be increased in order to generate
sufficient Available Cash to repay such Working Capital Advances.
<PAGE>
TARIFF ADVANCES AND TRANSPORTATION NOTES
To the extent that an Initial Shipper's Proportionate Share of the
JSC's Non-Cash Items in any period is less than the amount of the JSC's
principal repayment of such Initial Shipper Group's Related Senior Debt in
such period, such Initial Shipper, pursuant to its Transportation Agreement,
or an Affiliate or a financial institution acting on its behalf, pursuant to
its Transportation Notes Agreement with the JSC, shall severally provide the
JSC with such amount in cash advances ("Tariff Advances") or purchase
subordinated notes of the JSC (such Tariff Advances and notes together
referred to herein as "Transportation Notes") in order to permit the JSC to
make such repayment. Unless unanimously agreed by the Initial Shippers,
Transportation Notes shall bear interest at the Benchmark Interest Rate and
shall have an ascertainable maturity beyond the maturity of the Related Senior
Debt and before the full depreciation of the JSC's assets. The JSC shall
repay Transportation Notes in cash to the related Initial Shipper, if and when
the JSC has Available Cash and subject to its policy expressed in Section
5.4(a) of the Oleoducto Central Agreement and the requirements of the
Financing, in any period when such Initial Shipper's Proportionate Share of
the JSC's Non-Cash Items exceeds its Proportionate Share of any principal
amount of its Related Senior Debt due in such period.
ANNUAL SUBORDINATED FEE PAYABLE TO OPERATOR
The Annual Revenue Requirement shall include an amount designed to
generate a subordinated fee (the "Subordinated Fee") payable to the Operator.
The Subordinated Fee shall be calculated annually and paid semi-annually as,
if and when the JSC pays cash dividends to the Shareholders. Payment by the
JSC of the Subordinated Fee shall be subject to the same restrictions
applicable to the receipt of cash dividends by the Canadian Group as provided
in the Dividend Trust Agreement.
The Subordinated Fee shall be calculated annually in an amount equal
to a specified percentage multiplied by the Canadian Group's Shareholding
Interest of (i) prior to the Dividend Commencement Date, the sum of Cash
Paid-In Equity and Pre-Completion Accrued Returns and thereafter (ii) the
Adjusted Paid-In Equity, in each case determined in accordance with Section
5.4(b) of the Oleoducto Central Agreement. The specified percentage in any
year is subject to a maximum of 0.60% and a minimum of 0.40% provided that in
any year the specified percentage shall, when added to the specified
percentage of each of the previous years in which the Subordinated Fee was
paid by the JSC and divided by the number of such years, not exceed 0.50%.
The specified percentage shall be determined based on the average
daily volume of Petroleum actually shipped through the El Porvenir-Vasconia
(Central Llanos) Segment in any year compared with the annual average daily
volume of throughput forecast to be shipped in such year according to Annex I
attached hereto (the "Forecast"). The Forecast shall not be revised. The
average daily throughput volume in such Forecast includes significant Third
Party and overutilizer volumes whose tariff revenues are projected to cover
wholly or in part the Subordinated Fee. As long as the actual average daily
volume of Petroleum shipped through such Segment is between 90% and 120% of
the average daily volume set forth in the Forecast for such year, the
specified percentage earned shall be 0.50% per annum. When the actual average
daily volume shipped in such Segment in any year is less than 90% of the
average daily volume set forth in the Forecast for such
<PAGE>
year, the specified percentage earned shall be 0.40%. When the actual average
daily volume shipped in such Segment in any year is greater than 120% of the
average daily volume set forth in the Forecast for such Segment for such year,
the specified percentage earned shall be 0.60%. In determining the actual
average daily volume of Petroleum shipped, adjustments shall be made to
reflect certain force majeure events to be unanimously agreed by the
Shareholders.
The Subordinated Fee shall be paid semi-annually in arrears at the
same time as, if and when the JSC pays its first cash dividends in any fiscal
year in an amount using a deemed specified percentage equal to 0.25%. The
second installment of the Subordinated Fee shall be payable as, if and when
the JSC pays its second cash dividend with respect to such fiscal year in an
amount such that the Subordinated Fee in any one year shall not exceed the
limitations set forth in the second preceding paragraph.
Annual Revenue Requirements shall incorporate the Subordinated Fee
based on a specified percentage of 0.50%. Tariffs shall be adjusted upward or
downward should the specified percentage be 0.60% or 0.40%, respectively.
The JSC shall pay the Subordinated Fee together with such additional
amounts as may be necessary so that the actual amount of dividends paid by the
Operator to its shareholders in respect of such Subordinated Fee shall be
equal to the amount of the Subordinated Fee before deduction for or on account
of any Colombian Taxes to be paid by the Operator in respect of such
dividends. The JSC shall have the right toreasonably inspect the books and
records of the Operator in order to ensure that such taxes have actually been
paid by the Operator.
NOMINATION PROCEDURES
Standard Nomination Procedures shall be agreed among the
Shareholders and included in the Transportation Agreements. The Standard
Nomination Procedures shall implement the following principles:
1. Ensure orderly operations at all times.
2. Encourage accurate production estimates to be used for billing
tariffs and planning operations.
3. Allow for small errors in production scheduling without having a
punitive impact, except in cases of abuse (e.g. producing repeatedly more than
the quantity originally nominated).
4. In all respect be consistent with Colombian law and standard industry
practice.
For purposes of the tariff calculations described herein,
"Nominations" shall refer to planned shipments stated by the Initial Shippers
and Third Parties in advance of the period in which their production is to be
shipped, and shall equally refer to the actual quantity of production received
for shipment after such period, as required by context and usage.
<PAGE>
TRANSPORTATION PRIORITIES
When nomination requests are greater than the available capacity in
any Segment, the following priority rights, except as otherwise required by
applicable law (e.g. royalty barrels, which shall be transported using
Ecopetrol's Proportionate Share), shall apply:
1. Production from the Fields in accordance with requests from
Initial Shippers and pro rata to their interests in the Fields.
2. Production of Initial Shippers from fields (other than the Fields)
wholly or partly owned by Initial Shippers, pro rata to requests from such
Initial Shippers.
3. Production by Third Parties, pro rata to requests from such Third
Parties, giving priority to production delivered upstream in the Oleoducto
Central, subject to override by the Operator with the unanimous approval of
the Initial Shippers.
Each Initial Shipper shall for the purpose of transporting Petroleum
use the Oleoducto Central assets owned and operated by the JSC in priority to
all alternatives to transport Petroleum on any route joining any of the
Segments, provided that there is available Capacity in the Oleoducto Central
and that such use does not adversely affect such Initial Shipper.
EXISTING TRANSPORTATION ON EL PORVENIR-VASCONIA (CENTRAL LLANOS) SEGMENT
The capacity of the El Porvenir-Vasconia (Central Llanos) Segment
allows for the transportation of Petroleum from fields other than the Fields.
In accordance with the agreement of the Initial Shippers under the Association
Contracts, until December 31, 1997 the El Porvenir-Vasconia (Central Llanos
Segment) shall give priority to the shipment of an aggregate of 100,000
barrels of Petroleum from fields other than the Fields. Notwithstanding the
definition of Throughput Capacity, Ecopetrol shall be entitled to ship its
share of production at the Initial Shipper Tariff up to its Proportionate
Share of Throughput Capacity of such Segment (for example, average daily
volume of 33,600 barrels of Petroleum in 1998) and shall be required to pay
the Overutilizer Tariff for any Petroleum shipped in excess thereof (for
example, average daily volume of 11,200 barrels of Petroleum in 1998). The
daily transportation by third parties of the remaining expected average daily
production of 11,200 in 1998 barrels of Petroleum shall be made at the Third
Party Tariff. After December 31, 1997, the provisions of all of the
provisions of these Tariff Principles shall apply to such Segment.
SOLE RISK PROVISIONS
The tariffs shall be adjusted appropriately to give effect to the
provisions contained in Article Six of the Oleoducto Central Agreement insofar
as they relate to the calculation of tariffs.
<PAGE>
POLITICAL EVENTS AGREEMENT
The obligations of each Initial Shipper under its Transportation
Agreements and of each member of an Initial Shipper Group under its
Transportation Notes Agreement shall be subject to any rights exercisable by
it under the Political Events Agreement.
SEVERAL NATURE OF OBLIGATIONS
The obligations of each Initial Shipper under its Transportation
Agreement and of each member of an Initial Shipper Group under its
Transportation Notes Agreement shall be entirely several.
DEFAULT TARIFFS
The Initial Shippers agree that the Transportation Agreements will
provide for increases in tariffs in accordance with the provisions described
in Article Five of the Oleoducto Central Agreement.
<PAGE>
ANNEX I
TO TARIFF PRINCIPLES
Volumes on El Porvenir-Vasconia Segment
<TABLE>
<CAPTION>
<S> <C>
FORECAST THROUGHPUT
YEAR (Barrels/Day)
1995 219,000
1996 249,000
1997 368,000
1998 556,000
1999 542,000
2000 530,000
2001 489,000
2002 445,000
2003 407,000
2004 360,000
2005 308,000
2006 265,000
2007 229,000
2008 200,000
2009 176,000
2010 157,000
2011 138,000
2012 124,000
2013 112,000
2014 99,000
2015 91,000
2016 82,000
2017 74,000
2018 66,000
2019 61,000
2020 57,000
</TABLE>
After 2020 the throughput shall decline annually at a rate of 8%.
<PAGE>
SCHEDULE L TO
OLEODUCTO CENTRAL AGREEMENT
FORM OF SHARE TRANSFER AGREEMENT
AGREEMENT, dated as of December 14, 1994 between IPL ENTERPRISES
(COLOMBIA) INC., a corporation existing under the laws of the Cayman Islands,
and TCPL INTERNATIONAL INVESTMENTS INC., a corporation existing under the laws
of Alberta, Canada (each, a "Seller"), on the one hand, and EMPRESA COLOMBIANA
DE PETROLEOSECOPETROL, an Empresa Industrial y Comercial del Estado existing
under the laws of Colombia (the "Purchaser"), on the other.
RECITALS
WHEREAS:
A. The Purchaser and each Seller is a Shareholder of Oleoducto
Central S.A., a corporation existing under the laws of Colombia (the "JSC"), and
the Purchaser and each Seller are parties to the Oleoducto Central Agreement
(the "Oleoducto Central Agreement"), dated as of December 14, 1994, among the
JSC, the Purchaser, the Sellers, BP Pipelines (Colombia) Limited, TOTAL
Pipeline Colombia S.A. and Triton Pipeline Colombia, Inc.;
B. The Purchaser desires to enter into an agreement with each
Seller to acquire at such Purchaser's election, and subject to certain other
conditions set forth herein, Shares (as hereinafter defined) in exchange for
cash and in proportion to such Seller's Shareholding Interest (as hereinafter
defined); and
C. Each Seller desires to sell such Shares to the Purchaser at such
Purchaser's election.
NOW THEREFORE, for good and valuable consideration the sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. Unless the context otherwise requires, the
following words and phrases shall have the meanings indicated below:
"Bankruptcy Call" shall mean a Call permitted by clause (d) of the
definition of Determination Date.
<PAGE>
"Bankruptcy Event" shall mean the event set forth in clause (d) of the
definition of Determination Date.
"Determination Date" shall mean, at the election of the Purchaser (a)
July 1 of the year immediately following the last day of the Equity
Amortization Period, (b) if the Equity Amortization Period has not ended by
December 31, 2021, then July 1, 2022, (c) if the Equity Amortization Period
has not commenced prior to December 31, 2011 and Annual Equity Amortization
Amounts have not been paid in respect of all years in the 5-year period ending
December 31, 2016, then July 1, 2017, or (d) as to either Seller any day after
the filing of a voluntary proceeding, and after the 30th day after the filing
of an involuntary (not withdrawn) proceeding, in insolvency, bankruptcy,
receivership, reorganization, dissolution or liquidation of such Seller.
"JSC" has the meaning assigned to it in the recitals above.
"Notice of Exercise" has the meaning assigned to it in Section 2.1.
"Original Shares" means Shares held by a Seller that have been purchased
by such Seller directly from the JSC.
"Permitted Assignee" means a permitted assignee of a Seller pursuant to
Section 4.3 or the Purchaser, as the case may be.
"Purchase Price" means, with respect to the Shares to be sold by each
Seller at the Time of Delivery, an amount (net of Colombian taxes applicable
to the sale of the Shares under this Agreement, including capital gains taxes,
if any) denominated in dollars equal to such Seller's Shareholding Interest of
the difference of (a) the sum of the Cash Paid-In Equity, Pre-Completion
Accrued Returns and Accrued Returns arising from periods when Oleoducto
Central operations were interrupted after which full operations were resumed
and during periods when cash dividends were restricted by virtue of legal
and/or accounting constraints of the JSC, less (b) such Seller's Shareholding
Interest of the cumulative Annual Equity Amortization Amounts paid prior to
the Determination Date. All amounts used for purposes of the calculation of
the Purchase Price shall be determined pursuant to the financial statements of
the JSC maintained in dollars and in accordance with Section 8.3 of the
Oleoducto Central Agreement of the six-month accounting period immediately
preceding the Determination Date.
"Shares" means Shares as defined in the Oleoducto Central Agreement or
other shares or instruments representing capital stock of the JSC.
"Time of Delivery" has the meaning assigned to it in Section 2.1 hereof.
All defined terms used and not defined herein have the meanings assigned to
them in the Oleoducto Central Agreement.
Section 1.2. Interpretation. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
<PAGE>
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and
vice-versa;
(b) words importing gender include all genders;
(c) any reference to an "Article" or "Section" refers to an Article
or a Section, as the case may be, of this Agreement; and
(d) all references to this Agreement and the words herein, hereof,
hereto and hereunder and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision.
ARTICLE TWO
OPTION TO ACQUIRE SHARES
Section 2.1. Option to Acquire Shares. On the terms and subject to the
conditions hereinafter set forth the Purchaser shall have the right, but not
the obligation, to acquire in exchange for cash all (but not a portion of) the
Shares held by each Seller upon the Purchaser's call ("Call") to be exercised on
or within 60 days immediately following the Determination Date by a notice of
exercise (Notice of Exercise) at the Purchase Price and on the Time of
Delivery set forth in the Notice of Exercise; provided, however, that a Notice
of Exercise to one Seller shall not be effective unless and until a Notice of
Exercise to the other Seller shall have been delivered within the 60-day
period referred to above (except a Bankruptcy Call which shall be made only as
to the Seller affected by the Bankruptcy Event), and that (except for a
Bankruptcy Call) all other terms of purchase shall be identical for each
Seller. The Time of Delivery shall be not less than 10 Business Days and not
more than the later of (a) 30 Business Days and (b) the first Business Day
following the attaining of any governmental approvals, in each case from the
date of the effectiveness of the Notice of Exercise.
Section 2.2. Sale of the Shares. At the Time of Delivery, each Seller
shall sell, transfer, convey, assign and deliver to the Purchaser, and the
Purchaser shall acquire from each Seller, all right, title and interest in and
to the Shares being purchased by the Purchaser at the Time of Delivery and any
Distributions (including Annual EquityAmortization Amounts) paid or payable on
or after the Determination Date at the Purchase Price set forth in the Notice
of Exercise. Upon payment of the Purchase Price in respect of the Shares
being sold by such Seller as provided herein and in such Notice of Exercise,
the Purchaser shall have no further obligations hereunder.
Section 2.3. Payment and Delivery. The certificate(s) representing the
Shares purchased by the Purchaser hereunder at the Time of Delivery shall be
delivered by or on behalf of each Seller to the Purchaser's designated
representative in the place set forth in the Notice of Exercise against
payment in full by the Purchaser of the purchase price as set forth in the
Notice of Exercise to the account specified by Seller.
<PAGE>
Section 2.4. Condition to Purchase. The purchase hereunder at the Time
of Delivery shall be subject, in the Purchaser's sole discretion, to the
condition that the representations and warranties of the Sellers in Section
2.6 are, at and as of such Time of Delivery, true and correct.
Section 2.5. Mutual Representations and Warranties. Each party
represents and warrants to the other for its benefit that:
(a) it is a corporation duly incorporated and organized under the laws
of its jurisdiction of incorporation;
(b) it has the requisite power and authority to enter into and perform
its obligations under this Agreement and this Agreement, when executed and
delivered by such party, constitutes the valid and legally binding agreement
of such party; and
(c) the execution and delivery of, and the performance by it of its
obligations under, this Agreement will not result in a breach of or constitute
a default under:
(i) any provision of its charter or articles of incorporation or
its by-laws;
(ii) any agreement or instrument to which it is a party and
which is material to the performance by it of its obligations hereunder; and
(iii) any order, judgment or decree of any court or governmental
agency to which it is a party or by which it is bound.
Section 2.6. Additional Representation and Warranty of Sellers. At the
Time of Delivery, each Seller shall represent and warrant to the Purchaser for
its benefit and for the benefit of its Permitted Assignees that the Shares to
be sold by such Seller hereunder and under the related Notice of Exercise at the
Time of Delivery shall be owned by such Seller free and clear of all liens,
equities or claims.
Section 2.7. Fees and Expenses. All fees and expenses incurred by or on
behalf of each party hereto in connection with the negotiation and execution
of this Agreement and the transfer of the Shares to be sold hereunder at the
Time of Delivery shall be borne by such party.
Section 2.8. Taxes. Each party shall be solely responsible for the
payment of all taxes imposed on it, whether by taxing authorities within
Colombia or elsewhere, arising from or in connection with the transactions
contemplated hereby.
Section 2.9. Covenant to Hold Shares. Each Seller covenants that it
will hold its Shares at all times free and clear of all liens, pledges,
charges and encumbrances and it will not sell, transfer or otherwise dispose
of any Shares owned by it, except that this Section 2.9 shall not prevent
transfers of Shares in accordance with Article Ten of the Oleoducto Central
Agreement so long as any transferee shall assume (without releasing such
Seller of
<PAGE>
its obligations hereunder, unless the transferee is TCPL (Bermuda) Ltd.), all
of the rights and obligations of a Seller hereunder, which assumption shall be
evidenced by its execution of a counterpart hereof.
ARTICLE THREE
COMMENCEMENT; EFFECTIVENESS
Section 3.1 Commencement. This Agreement shall become effective at the
time the Oleoducto Central Agreement becomes effective.
ARTICLE FOUR
GENERAL
Section 4.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be given by personal
delivery, by certified or registered mail, or by electronic means of
communications addressed to the recipient as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Copy To Agent for
If to the Sellers: Service
IPL ENTERPRISES CT CORPORATION
(COLOMBIA) INC. SYSTEM
c/o IPL ENERGY INC. 1633 Broadway
31st Floor Bow Valley Square 2 New York, New York 10019
205 - 5th Avenue S.W. Telefax: (212) 247-2882
Calgary, Alberta, Canada T29 2V7
Telefax: (403) 231-3920
Attention: Benny J. Phillips
TCPL INTERNATIONAL TRANSCANADA PIPELINES FRIED, FRANK, HARRIS,
INVESTMENTS INC. LIMITED SHRIVER & JACOBSON
c/o TRANSCANADA TransCanada PipeLines Tower 1 New York Plaza
PIPELINES LIMITED 111 Fifth Avenue S.W. New York, New York 10004
TransCanada PipeLines Tower P.O. Box 1000, Station M Telefax: (212) 747-1526
111 Fifth Avenue S.W. Calgary, Alberta, Canada T2P 4K5 Attention: Ken Blackman
P.O. Box 1000, Station M Telefax: (403) 267-2668
Calgary, Alberta, Canada T2P 4K5 Attention: Michael Durnin
Telefax: (403) 267-2668
Attention: Michael Durnin
TCPL (BERMUDA) LTD. TRANSCANADA PIPELINES FRIED, FRANK, HARRIS,
c/o FRIED, FRANK, HARRIS, LIMITED SHRIVER & JACOBSON
SHRIVER & JACOBSON TransCanada PipeLines Tower 1 New York Plaza
1 New York Plaza 111 Fifth Avenue S.W. New York, New York 10004
New York, New York 10004 P.O. Box 1000, Station M Telefax: (212) 747-1526
Telefax: (212) 747-1526 Calgary, Alberta, Canada T2P 4K5 Attention: Ken Blackman
Attention: Ken Blackman Telefax: (403) 267-2668
Attention: Michael Durnin
If to the Purchaser:
EMPRESA COLOMBIANA DE CONSULATE GENERAL OF
PETROLEOS - ECOPETROL COLOMBIA
Carrera 13 No. 36-24 10 East 46th Street
Santafe de Bogota, D.C. - Colombia New York, New York 10017
Telefax: (571) 287-0041 Telefax: (212) 972-1725
AttentionL Juan Maria Rendon
</TABLE>
or to such other address, individual or facsimile telephone number as may be
designated by notice given by any party to the other. Any notice, request,
demand, direction or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by certified or registered mail, on the fifth Business Day
following the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the normal
business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.
The party giving any notice, request, demand, direction or other communication
by electronic communication shall send the original thereof by personal
delivery or by first class mail.
Section 4.2. Entire Agreement. This Agreement constitutes the entire
Agreement between the parties hereto pertaining to the sale of Shares by each
Seller to the Purchaser and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties hereto,
and there are no warranties, representations or other agreements between the
parties hereto in connection with the purchase and sale of Shares except as
specifically set forth herein. No amendment, supplement, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
Section 4.3. Assignments. Neither of the Sellers may assign this
Agreement nor any of its rights, proceeds or obligations hereunder, or create
enforceable third party rights herein, to or in any person not a party hereto
other than to a transferee of Shares to the extent such transferee is
permitted under Section 2.9 or to any other person as to which Purchaser
consents in writing (provided that such other person shall assume, without
releasing such Seller of its obligations hereunder) all of the obligations of
such Seller hereunder, which assumption shall be evidenced by its execution of
a counterpart hereof.
<PAGE>
Section 4.4. Nature of Obligations (a) The obligations of each
Seller under this Agreement to sell Shares shall be unconditional and absolute
and shall not be deferred, excused, released, discharged, or in any way
affected by (i) any right of set off, counterclaim, or defense by reason of
any claims against the Purchaser arising under this Agreement or on any other
account whatsoever, (ii) any sale or other transfer by the Purchaser of any
Shares, or (iii) any change, waiver, extension, indulgence, or other action or
omission in respect of any of the Purchaser's obligations, in each case
whether or not the parties hereto shall have had any notice or knowledge of
any of the foregoing.
(b) The obligations of each Seller created by this Agreement,
and in particular the obligation to sell Shares in exchange for cash upon
exercise of the Call, are several, not joint and several with any other party.
Section 4.5. Amendments. This Agreement may not be amended or modified
except with the written consent of the parties hereto and any Permitted
Assignees.
Section 4.6. No Third Party Beneficiaries. Except as otherwise
expressly provided herein to the contrary, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and Permitted Assignees, and no other Person shall have any rights
hereunder.
Section 4.7. Severability. If, for any reason, any provision of this
Agreement is unenforceable, the remaining provisions hereof shall nevertheless
be carried into effect.
Section 4.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 4.9. Performance Outside Colombia. The parties acknowledge and
agree that their activities hereunder shall be performed substantially outside
Colombia.
Section 4.10. Commercial Obligations. Each party acknowledges and
agrees that its rights and obligations hereunder are of a commercial and not a
governmental nature.
Section 4.11. Arbitration. Any dispute, controversy or claim arising
out of or relating to this Agreement, or the performance, breach, termination,
or invalidity hereof, shall be settled by arbitration in accordance with the
UNCITRAL Arbitration Rules in effect as of the date hereof. The arbitration
shall be the sole and exclusive forum for resolution of the dispute,
controversy or claim, and the award shall be final and binding. Judgment
thereon may be entered by any court having jurisdiction. The number of
arbitrators shall be three, each of whom shall be disinterested in the
dispute, controversy or claim, and shall have no connection with any party.
Should the services of an appointing authority be necessary, the appointing
authority shall be the American Arbitration Association. The
<PAGE>
parties and the appointing authority may appoint from among the nationals of
any country, whether or not a party is a national of that country. The place
of arbitration shall be The City of New York, New York. The arbitration shall
be conducted in the English language and any foreign-language documents
presented at such arbitration shall be accompanied by an English translation
thereof. The arbitrators shall apply the law (except for conflicts of law
rules) of the State of New York without regard to the principles of conflicts
of laws.
Section 4.12. Submission to Jurisdiction; Consent to Service. Each of
the parties hereto hereby submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York (the "Specified
Court") with respect to the enforcement of the arbitration provisions of this
Agreement and the non-exclusive jurisdiction of such court with respect to the
enforcement of any award thereunder. Each of the parties hereto irrevocably
appoints the agent for service specified opposite its name in Section 4.1 as
its authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any related action, suit or proceeding, and
agrees that service of process upon such agent, and written notice of said
service to such party, by the person serving the same to the address provided
in Section 4.1, shall be deemed in every respect effective service of process
upon such party in any such action, suit or proceeding. Each of the parties
hereto further agrees to take any and all action as may be necessary to
maintain such designation and appointment of such agent in full force and
effect for the duration of this Agreement.
The obligation of a party in respect of any sum due from it to the other
party hereunder expressed in United States dollars, notwithstanding any
judgment in a currency other than United States dollars, shall not be
discharged until the first Business Day following receipt by such party of any
sum adjudged to be so due in such other currency on which (and only to the
extent that) such party may in accordance with normal banking procedures
purchase United States dollars with such other currency; if the United States
dollars so purchased are less than the sum originally due to such party
hereunder, the other party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party against such dollar
shortfall. If the United States dollars so purchased are greater than the sum
originally due to such party hereunder, such party agrees to pay to the other
party an amount equal to the excess of the dollars so purchased over the sum
originally due to such party hereunder.
Section 4.13. Waiver of Immunity. (a) Each party hereto irrevocably
consents to and waives any objection which it may now or hereafter have to the
laying of venue of any proceeding relating to enforcement of the arbitration
provisions of this Agreement brought in the Specified Court and further
irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such proceeding in
the Specified Court.
(b) To the extent that a party hereto or any of its revenues, assets or
properties shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions of this Agreement at any time
brought against such party or any of its revenues,
<PAGE>
assets or properties, to any sovereign or other immunity from suit, from
jurisdiction, from attachment prior to judgment, from attachment in aid of
execution of judgment, from execution of a judgment or from any other legal or
judicial process or remedy, and to the extent that in any jurisdiction there
shall be attributed such an immunity, such party irrevocably agrees not to
claim and irrevocably waives such immunity to the fullest extent permitted by
the laws of such jurisdiction (including, without limitation, the Foreign
Sovereign Immunities Act 1976 of the United States) except, with respect to
the Purchaser, as provided under Article 684 of the Codigo de Procedimiento
Civil of Colombia.
Section 4.14. Headings. The headings contained herein are for
convenience of reference only and do not constitute a part of this Agreement.
Section 4.15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
IPL ENTERPRISES (COLOMBIA) INC.
By:
Title:
TCPL INTERNATIONAL INVESTMENTS INC.
By:
Title:
EMPRESA COLOMBIANA DE PETROLEOS
ECOPETROL
By:
Title:
<PAGE>
TCPL (BERMUDA) LTD., a corporation existing under the laws of Bermuda, hereby
acknowledges the assignment, delegation and transfer to it and assumption by
it of all of the rights and obligations of TCPL International Investments Inc.
as a Seller hereunder as if it were a party hereto as of the date first above
written and has caused this Agreement to be executed and delivered by its duly
authorized officers as of , 1994.
TCPL (BERMUDA) LTD.
By:
Title:
