AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 2003.
REGISTRATION NOS. 333- ,
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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EL PASO ENERGY PARTNERS, L.P.
EL PASO ENERGY PARTNERS FINANCE CORPORATION
(Exact name of Registrant as Specified in its Charter)
DELAWARE 1311 76-0396023
DELAWARE 1311 76-0605880
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
PEGGY A. HEEG, ESQ.
EL PASO BUILDING
4 GREENWAY PLAZA 1001 LOUISIANA STREET, 30TH FLOOR
HOUSTON, TX 77046 HOUSTON, TX 77002
(832) 676-2600 (713) 420-2600
(Name, Address, Including Zip Code, and
(Address, including Zip Code, and Telephone Telephone
Number, Including Area Code, of Registrant's Number, Including Area Code, of Agent For
Principal Executive Offices) Service)
COPY TO:
J. VINCENT KENDRICK
AKIN GUMP STRAUSS HAUER & FELD LLP
1900 PENNZOIL PLACE, SOUTH TOWER
711 LOUISIANA STREET
HOUSTON, TX 77002
(713) 220-5800
(713) 236-0822 (FAX)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED (1) REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
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10 5/8% Series B Senior Subordinated
Notes due 2012............................... 200,000,000 98% $200,000,000 $16,180
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Guarantees of 10 5/8% Series B Senior
Subordinated Notes due 2012(2)............... (3)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) Each of the subsidiaries of El Paso Energy Partners, L.P. that is listed on
the Table of Additional Registrant Guarantors on the following page has
guaranteed the notes being registered pursuant hereto.
(3) No separate consideration will be received for the Guarantees and,
therefore, no additional registration fee is required.
EACH REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL SUCH REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANT GUARANTORS
STATE OR OTHER I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION IDENTIFICATION
EXACT NAME OF REGISTRANT GUARANTOR(1) OR ORGANIZATION NUMBER
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Chaco Liquids Plant Trust................................... Massachusetts N/A
Crystal Holding, L.L.C. .................................... Delaware 76-0396023
El Paso Energy Intrastate, L.P. ............................ Delaware N/A
El Paso Energy Partners Oil Transport, L.L.C. .............. Delaware 76-0396023
El Paso Energy Partners Operating Company, L.L.C. .......... Delaware 76-0396023
El Paso Energy Warwink I Company, L.P. ..................... Delaware N/A
El Paso Energy Warwink II Company, L.P. .................... Delaware N/A
El Paso Offshore Gathering & Transmission, L.P. ............ Delaware N/A
El Paso South Texas, L.P. .................................. Delaware 04-3714142
EPGT Texas Pipeline, L.P. .................................. Delaware N/A
EPN Alabama Intrastate, L.L.C. ............................. Delaware 76-0396023
EPN Field Services, L.L.C. ................................. Delaware 76-0396023
EPN Gathering and Treating Company, L.P. ................... Delaware N/A
EPN Gathering and Treating GP Holding, L.L.C. .............. Delaware 76-0396023
EPN GP Holding, L.L.C. ..................................... Delaware 76-0396023
EPN GP Holding I, L.L.C. ................................... Delaware 76-0396023
EPN Gulf Coast, L.P. ....................................... Delaware N/A
EPN Holding Company, L.P. .................................. Delaware N/A
EPN Holding Company I, L.P. ................................ Delaware N/A
EPN NGL Storage, L.L.C. .................................... Delaware 76-0396023
EPN Pipeline GP Holding, L.L.C. ............................ Delaware 76-0396023
First Reserve Gas, L.L.C. .................................. Delaware 76-0396023
Flextrend Development Company, L.L.C. ...................... Delaware 76-0396023
Hattiesburg Gas Storage Company............................. Delaware 76-0396023
Hattiesburg Industrial Gas Sales, L.L.C. ................... Delaware 76-0396023
High Island Offshore System, L.L.C. ........................ Delaware 76-0396023
Manta Ray Gathering Company, L.L.C. ........................ Delaware 76-0396023
Petal Gas Storage, L.L.C. .................................. Delaware 76-0396023
Poseidon Pipeline Company, L.L.C. .......................... Delaware 76-0396023
Warwink Gathering and Treating Company...................... Texas N/A
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(1) The address for each Registrant Guarantor is 4 Greenway Plaza, Houston,
Texas, 77046.
WE MAY NOT EXCHANGE THESE NOTES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE NOTES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE NOTES, IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED FEBRUARY 28, 2003
[EL PASO PARTNERS LOGO]
$200,000,000
EL PASO ENERGY PARTNERS, L.P.
EL PASO ENERGY PARTNERS FINANCE CORPORATION
Offer to Exchange
10 5/8% Series B Senior Subordinated Notes due 2012
for any and all outstanding 10 5/8% Series A
Senior Subordinated Notes due 2012
CUSIP: 28368QAE9 and U5325MAC9
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This prospectus, the accompanying letter of transmittal and notice of
guaranteed delivery relate to our proposed exchange offer. We are offering to
exchange up to $200,000,000 aggregate principal amount of new 10 5/8% Series B
senior subordinated notes due 2012, which we call the Series B notes, which will
be freely transferable, for any and all outstanding 10 5/8% Series A senior
subordinated notes due 2012, which we call the Series A notes, issued in a
private offering on November 27, 2002, and which have certain transfer
restrictions.
In this prospectus we sometimes refer to the Series A notes and the Series
B notes collectively as the notes.
- The terms of the Series B notes are substantially identical to the terms
of the Series A notes, except that the Series B notes will be freely
transferable and issued free of any covenants regarding exchange and
registration rights.
- All Series A notes that are validly tendered and not validly withdrawn
will be exchanged.
- Tenders of Series A notes may be withdrawn at any time prior to
expiration of the exchange offer.
- We will not receive any proceeds from the exchange offer.
- The exchange of Series A notes for Series B notes will not be a taxable
event for United States federal income tax purposes.
- Holders of Series A notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
- Series A notes not exchanged in the exchange offer will remain
outstanding and be entitled to the benefits of the Indenture, but, except
under certain circumstances, will have no further exchange or
registration rights under the registration rights agreement discussed in
this prospectus.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus,
the accompanying letter of transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
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The date of this prospectus is , 2003.
TABLE OF CONTENTS
Summary................................. 1
The exchange offer...................... 5
Ratio of earnings to fixed charges...... 8
Risk factors............................ 9
Our indebtedness could adversely
restrict our ability to operate,
affect our financial condition and
prevent us from fulfilling our
obligations under our debt
securities............................ 9
We may not be able to fully execute our
growth strategy if we encounter tight
capital markets or increased
competition for qualified assets...... 10
Our growth strategy may adversely affect
our results of operations if we do not
successfully integrate the businesses
that we acquire or if we substantially
increase our indebtedness and
contingent liabilities to make
acquisitions.......................... 11
Our actual acquisition, construction and
development costs could exceed our
forecast, and our cash flow from
construction and development projects
may not be immediate.................. 11
FERC regulation and a changing
regulatory environment could affect
our cash flow......................... 12
Environmental costs and liabilities and
changing environmental regulation
could affect our cash flow............ 13
A natural disaster, catastrophe or other
interruption event involving us could
result in severe personal injury,
property damage and environmental
damage, which could curtail our
operations and otherwise adversely
affect our assets and cash flow....... 13
The future performance of our energy
infrastructure operations, and thus
our ability to satisfy our debt
requirements, depends on successful
exploration and development of
additional oil and natural gas
reserves by others.................... 13
Our natural gas storage businesses
depend on neighboring pipelines to
transport natural gas................. 14
We will face competition from third
parties to gather, transport, process,
fractionate, store or otherwise handle
oil, natural gas and other petroleum
products.............................. 14
Fluctuations in energy commodity prices
could adversely affect our business... 14
Pipelines and platforms -- Price
decreases could have an adverse effect
on the discovery and development of
replacement reserves and on the
results of operations of our San Juan
natural gas gathering system and our
Chaco plant........................... 15
Natural gas storage -- Natural gas price
stability could have an adverse effect
on revenues and cash flow from our
storage assets........................ 15
Processing and fractionation -- The
processing and fractionation
businesses are cyclical and are
dependent in part upon the spreads
between prices for natural gas, NGLs
and petroleum products................ 15
Oil and natural gas production -- Price
and volume volatility is substantially
out of our control and could have an
adverse effect on revenues and cash
flow from our producing oil and
natural gas properties................ 16
Fluctuations in interest rates could
adversely affect our business......... 16
Our use of derivative financial
instruments could result in financial
losses................................ 16
Our fractionation facilities are
dedicated to a single customer, the
loss of which could adversely affect
us.................................... 16
We will be adversely affected if we
cannot negotiate an extension or a
replacement on commercially reasonable
terms of approximately 900 miles of
rights-of-way underlying the San Juan
gathering system...................... 17
We will be adversely affected if we
cannot negotiate an extension or
replacement on commercially reasonable
terms of three material contracts
which account for approximately 71
percent of the volume attributable to
the San Juan gathering system during
the nine months ended September 30,
2002, and which expire between 2006
and 2008.............................. 17
Arthur Andersen LLP, the public
accountants that audited the 2000
financial statements of our joint
venture Poseidon Oil Pipeline Company
L.L.C., has been convicted of a
felony, which may adversely affect the
ability of Arthur Andersen LLP to
satisfy any claims that may arise out
of Arthur Andersen LLP's audit of
Poseidon's financial statements. In
addition, Arthur Andersen LLP has not
consented to the use of their opinion
in this filing. Because of this
absence of consent, your ability to
ever claim against Arthur Andersen LLP
may be limited........................ 17
The market value of your Series A notes
may be lower if you do not exchange
your Series A notes or fail to
properly tender your Series A notes
for exchange.......................... 18
An active trading market for the notes
may not develop....................... 18
i
Federal and state statutes would allow courts,
under specific circumstances, to subordinate
further or void the notes and the related
guarantees and require holders of notes to
return payments received from us............... 19
We may not be able to satisfy our obligation to
repurchase notes upon a change of control...... 20
The rights of holders of the notes to receive
payments will be unsecured and contractually
subordinated to most of our existing
indebtedness and, possibly, any additional
indebtedness we incur. Further, the guarantees
of the notes will be junior to all the
guarantors' existing indebtedness and possibly
to all their future borrowings................. 20
The notes will be effectively subordinated to
indebtedness and liabilities of our
subsidiaries that are not guarantors........... 20
El Paso Corporation and its subsidiaries have
conflicts of interest with us and, accordingly,
you............................................ 21
Cash reserves, expenditures and other matters
within the discretion of our general partner
may affect distributions to unitholders and
reserves for debt service...................... 22
Our partnership agreement purports to limit our
general partner's fiduciary duties and certain
other obligations relating to us............... 22
Because we depend upon El Paso Corporation and
its affiliates for employees to manage our
business and affairs, a decrease in the
availability of employees from El Paso
Corporation and its affiliates could adversely
affect us...................................... 23
The interruption of distributions to us from our
subsidiaries and joint ventures may affect our
ability to make payments on our debt
securities..................................... 23
We cannot cause our joint ventures to take or not
to take certain actions unless some or all of
the joint venture participants agree........... 23
We do not have the same flexibility as other
types of organizations to accumulate cash and
equity to protect against illiquidity in the
future......................................... 24
Changes of control of our general partner may
adversely affect you........................... 24
We have not received a ruling or assurances from
the IRS on many matters affecting us........... 24
Our tax treatment depends on our partnership
status and if the IRS treats us as a
corporation for tax purposes, it would
adversely affect our ability to make payments
on our debt securities......................... 25
The exchange offer............................... 26
Use of proceeds.................................. 38
Description of notes............................. 38
United States federal income and estate tax
considerations................................. 85
Certain ERISA considerations..................... 88
Plan of distribution............................. 90
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports and other information with the
SEC under the Securities Exchange Act of 1934. You may read and copy any
reports, statements or other information filed by us at the SEC's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our filings with the SEC are also available to the public
from commercial document retrieval services and at the SEC's web site at
http://www.sec.gov.
We "incorporate by reference" information into this prospectus, which means
that we disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information contained directly in this prospectus, and the
information we file later with the SEC will automatically supercede this
information. The documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than
information furnished under Item 9 of any Current Report on Form 8-K or Form
8-K/A either listed below or filed in the future that is not deemed filed under
the Securities Exchange Act of 1934 and, therefore, is not incorporated by
ii
reference in this prospectus, are incorporated by reference into this prospectus
and contain important information about us and our financial condition.
- Annual Report on Form 10-K for the year ended December 31, 2001, as
amended on January 2, 2003 on Form 10-K/A;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002;
June 30, 2002; and September 30, 2002 and
- Current Reports on Form 8-K filed April 15, 2002; April 22, 2002; April
24, 2002; April 29, 2002; June 5, 2002; July 15, 2002 (as amended on July
19, 2002 on Form 8-K/A and January 2, 2003 on Form 8-K/A); July 24, 2002;
July 31, 2002; August 12, 2002; September 5, 2002; October 8, 2002;
October 10, 2002; October 18, 2002; November 18, 2002; December 2, 2002;
and December 12, 2002, as amended on December 26, 2002, on Form 8-K/A.
You may request a copy of any document incorporated by reference in this
prospectus and any exhibit specifically incorporated by reference in those
documents, at no cost, by writing or telephoning us at the following address or
phone number:
El Paso Energy Partners, L.P.
4 Greenway Plaza
Houston, Texas 77046
(832) 676-5332
Attention: Investor Relations
The information contained in this prospectus was obtained from us and other
sources believed by us to be reliable. This prospectus also incorporates
important business and financial information about us that is not included in or
delivered with this prospectus.
You should rely only on the information contained in this prospectus or any
supplement and any information incorporated by reference in this prospectus or
any supplement. We have not authorized anyone to provide you with any
information that is different. If you receive any unauthorized information, you
must not rely on it. You should disregard anything we said in an earlier
document that is inconsistent with what is included in or incorporated by
reference in this prospectus.
You should not assume that the information in this prospectus or any
supplement is current as of any date other than the date on the front page of
this prospectus. This prospectus is not an offer to sell nor is it seeking an
offer to buy these securities in any state or jurisdiction where the offer or
sale is not permitted.
We include cross references in this prospectus to captions in these
materials where you can find further related discussions. The above table of
contents tells you where to find these captions.
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FORWARD-LOOKING STATEMENTS
This prospectus and the documents we have incorporated by reference contain
or incorporate by reference forward-looking statements. Where any
forward-looking statement includes a statement of the assumptions or bases
underlying the forward-looking statement, we caution that, while we believe
these assumptions or bases to be reasonable and made in good faith, assumed
facts or bases almost always vary from the actual results, and the differences
between assumed facts or bases and actual results can be material, depending
upon the circumstances. Where, in any forward-looking statement, we express an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis. We cannot
assure you, however, that the statement of expectation or belief will result or
be achieved or accomplished. These statements relate to analyses and other
information which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements also relate to our future
prospects, developments and business strategies. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "believe," "could," "estimate," "expect," "intend,"
iii
"may," "plan," "predict," "project," "will," and similar terms and phrases,
including references to assumptions. These statements are contained in the
sections entitled "Summary," "Risk factors," and other sections of this
prospectus and the documents we have incorporated by reference. These
forward-looking statements involve risks and uncertainties that may cause our
actual future activities and results of operations to be materially different
from those suggested or described in this prospectus and the documents we have
incorporated by reference. These risks include the risks that are identified in:
- the "Risk factors" section of this prospectus;
- the section entitled "Risk Factors and Cautionary Statement" included in
our Annual Report on Form 10-K as amended on January 2, 2003 on Form
10-K/A for the year ended December 31, 2001; and
- the other documents incorporated by reference.
These risks may also be specifically described in our Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and Form 8-K/A and other documents filed
with the Securities and Exchange Commission. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information or otherwise. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our actual results
may vary materially from those expected, estimated or projected.
iv
SUMMARY
This summary information is to help you understand the notes. It likely
does not contain all the information that is important to you. You should
carefully read this prospectus and the documents incorporated by reference to
understand fully the terms of the notes, as well as other considerations that
are important to you in making your investment decision. You should pay special
attention to the "Risk factors" section beginning on page 9 of this prospectus,
as well as the section entitled "Risk Factors and Cautionary Statement" included
in our Annual Report on Form 10-K for the year ended December 31, 2001, as
amended on January 2, 2003, on Form 10-K/A, and the risk factors contained in
the other documents incorporated by reference herein, to determine whether an
investment in the notes is appropriate for you. For purposes of this prospectus,
unless the context otherwise indicates, when we refer to "us," "we," "our," or
"ours," we are describing El Paso Energy Partners, L.P., together with its
subsidiaries, including El Paso Energy Partners Finance Corporation.
THE COMPANY
El Paso Energy Partners, L.P. (NYSE:EPN) is one of the largest
publicly-traded master limited partnerships, or MLPs, in terms of market
capitalization. Formed in 1993, we manage a balanced, diversified portfolio of
interests and assets relating to the midstream energy sector, which involves
transporting, gathering, separating, handling, processing, fractionating and
storing natural gas, oil and natural gas liquids, or NGLs. Our interests and
assets include:
- offshore oil and natural gas pipelines, platforms, processing facilities
and other energy infrastructure in the Gulf of Mexico, primarily offshore
Louisiana and Texas;
- onshore natural gas pipelines and processing facilities in Alabama,
Colorado, Mississippi, New Mexico and Texas;
- onshore NGL pipelines and fractionation facilities in Texas; and
- onshore natural gas and NGL storage facilities in Louisiana, Mississippi
and Texas.
Since 1998, we have diversified our asset base, stabilized our cash flow
and decreased our financial leverage as a percentage of total capital. We have
accomplished this through a series of acquisitions and development projects, as
well as four public common unit offerings.
The exchange offer is intended to satisfy our obligations under the
registration rights agreement, and we will not receive any cash proceeds from
the issuance of the Series B notes offered by this prospectus. For further
details, please read "Use of proceeds."
OUR OBJECTIVE AND STRATEGY
Our objective is to operate as a growth-oriented MLP with a focus on
increasing cash flow, earnings and return to our unitholders by becoming one of
the industry's leading providers of midstream energy services. Our strategy is
to maintain and grow a diversified, balanced base of strategically located and
efficiently operated midstream energy assets with stable and long-term cash
flows. With the completion of the San Juan asset acquisition, we are one of the
largest natural gas gatherers, based on miles of pipeline, in the prolific
natural gas supply regions offshore in the Gulf of Mexico and onshore in Texas
and the San Juan Basin, which envelops the four contiguous corners of Arizona,
Colorado, New Mexico and Utah.
These regions, especially the deeper water regions of the Gulf of Mexico,
one of the United States' fastest growing natural gas producing regions, offer
us significant infrastructure growth potential through the acquisition and
construction of pipelines, platforms, processing and storage facilities and
other infrastructure.
Our strategy entails continually enhancing the quality of our cash flow by
emphasizing operations and services for which the fees are not traditionally
linked to commodity prices, including gathering, transportation and storage;
mitigating commodity price risks by using contractual arrangements, including
fixed-fee contracts and hedging and tolling arrangements; sharing capital costs
and risks through joint
1
ventures/strategic alliances; and de-emphasizing our oil and natural gas
production business by not acquiring additional properties. Our offshore
gathering and transportation arrangements tend to have longer terms, which often
last for the productive life of the producing property, and our onshore
gathering, transportation, processing and fractionating agreements tend to have
multiple-year terms.
We intend to execute our business strategy by:
- purchasing and constructing onshore pipelines; gathering systems;
storage, processing and fractionation facilities; and other midstream
assets to provide a broad range of more stable, fee-based services to
producers, marketers and users of energy products;
- expanding our existing offshore asset base, supported by the dedication
of new discoveries and long-term commitments, to capitalize on the
accelerated growth of oil and natural gas supplies from the deeper water
regions of the Gulf of Mexico;
- operating at a low cost by achieving economies of scale in select regions
through reinvesting in and expanding our organic growth opportunities, as
well as by acquiring new assets;
- sharing capital costs and risks through joint ventures/strategic
alliances, principally with partners with substantial financial resources
and strategic interests, assets and operations in the Gulf of Mexico,
especially in the deeper water, Flextrend and subsalt regions; and
- continuing to strengthen our solid balance sheet by financing our growth,
on average, with 50 percent equity so as to provide the financial
flexibility to fund future opportunities.
OUR GENERAL PARTNER
El Paso Energy Partners Company, a Delaware corporation, is our sole
general partner. Our general partner has substantially no assets or operations
other than those related to its interest in us and our operations. El Paso
Corporation, through subsidiaries, owns 100 percent of our general partner. In
addition, through its subsidiaries, El Paso Corporation owns approximately 26.5
percent, or 11,674,245, of our common units, all 10,937,500 of our newly issued
Series C units, and our one percent general partner interest. El Paso
Corporation (through subsidiaries) also owns all 125,392 of our outstanding
Series B preference units. As of September 30, 2002, the liquidation value of
the Series B preference units was approximately $154 million.
El Paso Corporation has in the past publicly announced its intention to use
us as its primary vehicle for growth and development of its midstream energy
business. However, El Paso Corporation is neither contractually nor legally
bound to use us as its primary vehicle for growth and development of midstream
energy assets, and may reconsider its relationship with us at any time, without
notice.
Our relationship with El Paso Corporation has contributed significantly to
our past growth, and we have important ongoing contractual arrangements with El
Paso Corporation and some of its subsidiaries. However, we are a stand-alone
operating company with significant assets and operations. Our assets, operations
and financial condition are separate and independent from those of El Paso
Corporation. Our credit facilities and other financing arrangements do not
contain cross default provisions or other triggers tied to El Paso Corporation's
financial condition or credit ratings. Nonetheless, due to our relationship with
El Paso Corporation, adverse developments concerning El Paso Corporation could
adversely affect us, even if we have not suffered any similar developments. The
outstanding senior unsecured indebtedness of El Paso Corporation has been
downgraded to below investment grade, currently rated Caa1 by Moody's and B by
Standard & Poor's. These downgrades are a result, at least in part, of the
outlook for the consolidated business of El Paso Corporation and its need for
liquidity. In the event that El Paso Corporation's liquidity needs are not
satisfied, El Paso Corporation could be forced to seek protection from its
creditors in bankruptcy. We are taking various steps to partially mitigate the
risk associated with our ongoing contractual arrangements with El Paso
Corporation, such as reducing our reliance on El Paso Corporation and its
subsidiaries as customers, requesting credit assurances from El Paso Corporation
entities which remain as customers and developing contingency plans if El Paso
Corporation is unable to continue to provide the services it currently provides
to us. In addition, if El Paso Corporation chooses to sell a significant portion
of our common units that it owns
2
into the trading market, the market price of our common units could be adversely
affected. For a more detailed discussion of our contracts and arrangement with
El Paso Corporation and its subsidiaries, see the risk factors included in this
prospectus and included in the documents incorporated by reference in this
prospectus.
RECENT DEVELOPMENTS
COMPLETED ACQUISITIONS
In accordance with our business strategy, we have entered into transactions
that have further diversified and grown our midstream asset base and expanded
our sources of cash flow over the past several months.
SAN JUAN ASSETS ACQUISITION
In November 2002, we acquired a package of midstream energy assets,
referred to as the San Juan assets, from subsidiaries of El Paso Corporation for
$782 million, $766 million after adjustments for capital expenditures and
working capital. The San Juan assets include:
- substantially all of El Paso Corporation's natural gas gathering,
processing and treating assets in the San Juan Basin of New
Mexico -- specifically, its 5,300-mile San Juan Basin gathering system,
including the associated compression, processing and treating facilities
and contracts, and the remaining interest in the Chaco cryogenic natural
gas processing plant not already owned by us;
- a 35-mile, 20-inch natural gas pipeline and a 16-mile, 12-inch oil
pipeline originating on the Chevron/ BHP "Typhoon" platform in the Green
Canyon area of the Gulf of Mexico. The 35-mile natural gas pipeline
extends to ANR Patterson System in Eugene Island Block 371 and the
16-mile oil pipeline extends to a platform in Green Canyon Block 19 with
onshore access through various oil pipelines; and
- over 640 miles of NGL pipelines and a related fractionation facility in
South Texas.
EPN HOLDING ASSETS
In April 2002, EPN Holding Company, L.P., our wholly-owned subsidiary,
acquired from subsidiaries of El Paso Corporation midstream energy assets
located in New Mexico and Texas for net consideration of $735 million. The
acquired assets, which are referred to as the EPN Holding assets, include:
- interests in four intrastate natural gas gathering systems, including the
EPGT Texas intrastate pipeline system, one of the largest intrastate
pipeline systems in Texas based on miles of pipe;
- a non-operating interest in a natural gas processing and treating
facility; and
- a leased interest in a natural gas storage facility.
PROJECTS RECENTLY COMPLETED AND UNDER DEVELOPMENT
We also expect to continue to experience organic growth in 2003 and beyond
by constructing and operating strategic midstream infrastructure assets onshore
and offshore, including the following projects:
- a $100 million, 60-mile takeaway pipeline, including a 9,000-horsepower
compression station, connected to the Petal facility with design capacity
of 1.25 billion cubic feet per day, or Bcf/d (currently FERC-certified to
700 MMcf/d), completed in June 2002.
- a $68 million, 8.9 Bcf (6.3 Bcf working capacity) expansion of the Petal
natural gas storage facility, including a withdrawal facility and a
20,000 horsepower compression station, located near Hattiesburg,
Mississippi, completed in June 2002.
- the $28 million, 37-mile Medusa natural gas pipeline extension of our
Viosca Knoll gathering system. Murphy Exploration and Production Company
has dedicated 34,560 acres of property to this pipeline for the life of
the reserves, which means that all natural gas produced from this acreage
will flow
3
through this pipeline. This project is currently under construction. As of
September 30, 2002, we have spent approximately $12.7 million related to this
pipeline extension, which is expected to be in service in the first quarter of
2003.
- the $53 million Falcon Nest fixed-leg platform and pipelines, expected to
be in service during the first quarter of 2003. This project is currently
under construction. As of September 30, 2002, we have spent approximately
$18.2 million related to this platform.
- the $206 million Marco Polo tension leg platform, or TLP, expected to be
in service in the fourth quarter of 2003. This project is currently under
construction. As of September 30, 2002, we have spent approximately $58.3
million related to this TLP.
- the $96 million Marco Polo oil and natural gas pipelines, expected to be
in service in the fourth quarter of 2003. These pipelines are in the
development stage. As of September 30, 2002, we have spent approximately
$1.3 million related to development of these pipelines.
- the $458 million, 390-mile Cameron Highway Oil Pipeline, expected to be
in service by the third quarter of 2004. We have entered into a
non-binding letter of intent with Valero Energy Corporation under which
Valero would acquire a 50% interest in the entity we form to construct,
install and own this pipeline, which we will operate. The formation of
this joint venture is subject to specific conditions set forth in the
letter of intent, including negotiating and executing definitive
documentation and obtaining financing acceptable to Valero and us. As of
September 30, 2002, we have spent approximately $3.1 million related to
this pipeline. We will construct a substantial portion of this pipeline
in 2003 and early 2004.
- the $63 million, 86-mile Red Hawk natural gas pipeline, recently
announced, expected to be in service during the second quarter of 2004.
No costs have been incurred as of September 30, 2002.
CHACO PLANT
In October 2001, we consummated a series of transactions resulting in us
acquiring the Chaco Plant -- the fifth largest natural gas processing plant in
the United States measured by liquids produced -- for approximately $198.5
million. As of our November 2002 San Juan asset acquisition, we effectively own
100 percent of the economic interest in the Chaco Plant.
RECENT FINANCINGS
During 2002, we executed several financings intended to facilitate growth
and help achieve our targeted capital structure, including:
- raising approximately $149 million in net proceeds through the issuance
of 4,083,938 common units in April;
- raising approximately $230 million in net proceeds in a private offering
of long-term debt securities in May;
- entering into the $535 million EPN Holding acquisition facility, of which
$375 million has been repaid to date, and a $25 million working capital
facility, none of which was outstanding at September 30, 2002 and which
was terminated in October;
- repaying a $95 million limited recourse term loan used to construct our
Prince TLP, which we sold to El Paso Corporation in connection with our
April 2002 EPN Holding acquisition;
- entering into a $160 million senior secured term loan in October,
including related amendments of our credit facility and the EPN Holding
acquisition facility;
- raising approximately $350 million in November through the issuance of
10,937,500 Series C units;
4
- raising approximately $199 million through the November issuance of the
Series A notes; and
- borrowings of $238 million under our senior secured acquisition term loan
in November.
In addition, Deepwater Gateway, L.L.C., a new offshore platform joint
venture we formed with Cal Dive International Inc., entered into a $155 million
project construction loan to finance a substantial portion of the cost to
construct the Marco Polo TLP and related facilities.
Our credit facility provides up to $600 million of available credit subject
to compliance with financial ratios as specified in the agreement. As of
September 30, 2002, we had $569 million outstanding under this facility with the
full unused amount available. The average variable interest rate on the debt
outstanding was 4.46% at September 30, 2002. We pay a variable commitment fee on
the unused portion of the credit facility. Our credit facility matures in May
2004, is guaranteed by all of our subsidiaries except for our unrestricted
subsidiaries and El Paso Energy Partners Finance Corporation, and is
collateralized by substantially all of our assets (excluding our unrestricted
subsidiaries), and our general partner's one percent general partner interest in
us and its general and administrative services agreement. In addition, the new
senior secured term loan is payable in semi-annual installments of approximately
1% of the aggregate principal amount of the senior secured term loan for the
first nine installments with the remaining balance payable at maturity, in
October 2007. The senior secured term loan bears an annual interest rate, at our
election, equal to either:
- 2.25% plus a variable rate equal to the highest of (1) the prime rate, as
determined by JPMorgan Chase Bank, (2) the federal funds rate, plus 0.5%,
and (3) the certificate of deposit rate as determined by JPMorgan Chase
Bank, plus 1.0%; or
- the Eurodollar rate, plus 3.50%.
The interest rate under the EPN Holding $160 million acquisition facility
varies, but was 4.32% on September 30, 2002. The acquisition facility matures in
April 2005, at which time any remaining balance becomes due and payable.
In connection with our November 2002 acquisition of the San Juan assets, we
entered into a $238 million senior secured acquisition term loan. This loan is
cross-collateralized on a pari passu basis with our credit facility and the EPN
Holding acquisition facility, and will mature on or before May 2004. The senior
secured acquisition term loan will require us to make mandatory repayments under
certain circumstances, including when we sell certain assets, issue certain
equity or debt securities or experience certain changes in control.
These credit facilities contain covenants that include restrictions on our
(and our subsidiaries') ability to incur additional indebtedness or liens, sell
assets, make loans or investments, acquire or be acquired by other companies and
amend some of our contracts, as well as requiring maintenance of certain
financial ratios. As of the date of this prospectus, we are not aware of
anything that causes us not to be in compliance with the financial ratios and
covenants contained in our credit agreements.
As part of the financing for the San Juan asset acquisition, we agreed,
during the period that the $238 million San Juan term loan is outstanding, to
pay interest at rates of LIBOR plus 3.50% on Eurodollar loans, or on a variable
base rate plus 2.25% on our revolving credit facility and the EPN Holding
acquisition facility.
OFFICES
Our principal executive offices are located at 4 Greenway Plaza, Houston,
TX 77046, and the phone number at this address is (832) 676-2600.
5
THE EXCHANGE OFFER
You are entitled to exchange in the exchange offer your outstanding Series
A notes for Series B notes with substantially identical terms. You should read
the discussion under the heading "Description of notes" for further information
regarding the Series B notes.
We summarize the terms of the exchange offer below. You should read the
discussion under the heading "The exchange offer" beginning on page 26 for
further information regarding the exchange offer and resale of the Series B
notes.
Registration rights
agreement..................... We sold $200 million in aggregate principal
amount of Series A notes to J.P. Morgan
Securities Inc., Goldman, Sachs & Co., UBS
Warburg LLC and Wachovia Securities Inc., as
initial purchasers in a transaction exempt from
the registration requirements of the Securities
Act. We entered into a registration rights
agreement dated as of November 27, 2002 with
the initial purchasers which grants the holders
of the Series A notes exchange and registration
rights. This exchange offer satisfies those
exchange rights.
The exchange offer............ $1,000 principal amount of Series B notes in
exchange for each $1,000 principal amount of
Series A notes. As of the date of this
prospectus, $200 million aggregate principal
amount of the Series A notes are outstanding.
We will issue Series B notes to holders on the
earliest practicable date following the
Expiration Date.
Resales of the Series B
Notes......................... Based on interpretations by the staff of the
SEC set forth in no-action letters issued to
third parties, we believe that, except as
described below, the Series B notes issued
pursuant to the exchange offer may be offered
for resale, resold and otherwise transferred by
holders of the Series B notes (other than a
holder that is an "affiliate" of ours within
the meaning of Rule 405, a person who is a
broker-dealer or a person who intends to
participate in the exchange offer for the
purpose of distributing the Series B notes)
under the Securities Act, without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
the Series B notes are acquired in the ordinary
course of the holder's business and the holder
has no arrangement or understanding with any
person to participate in the distribution of
the Series B notes.
Each broker-dealer that receives Series B notes
pursuant to the exchange offer in exchange for
Series A notes that the broker-dealer acquired
for its own account as a result of
market-making activities or other trading
activities, other than Series A notes acquired
directly from us or our affiliates, must
acknowledge that it will deliver a prospectus
in connection with any resale of the Series B
notes. The letter of transmittal states that by
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act.
If we receive notices in the letter of
transmittal, this prospectus, as it may be
amended or supplemented from time to time, may
be used for the period described below by a
broker-dealer in connection with resales of
Series B notes received in exchange for
6
Series A notes where the Series A notes were
acquired by the broker-dealer as a result of
market-making activities or other trading
activities and not acquired directly from us.
The letter of transmittal requires
broker-dealers tendering Series A notes in the
exchange offer to indicate whether the
broker-dealer acquired the Series A notes for
its own account as a result of market-making
activities or other trading activities, other
than Series A notes acquired directly from us
or any of our affiliates. If no broker-dealer
indicates that the Series A notes were so
acquired, we have no obligation under the
registration rights agreement to maintain the
effectiveness of the registration statement
past the consummation of the exchange offer or
to allow the use of this prospectus for such
resales. See "The Exchange
Offer -- Registration Rights" and "-- Resale of
the Series B Notes; Plan of Distribution."
Expiration date............... The exchange offer expires at 5:00 p.m., New
York City time, on , 2003, unless we
extend the exchange offer in our sole
discretion, in which case the term "Expiration
Date" means the latest date and time to which
the exchange offer is extended.
Conditions to the exchange
offer......................... The exchange offer is subject to certain
conditions which we may waive. See "The
Exchange Offer -- Conditions to the Exchange
Offer."
Procedures for tendering the
Series A Notes................ Each holder of Series A notes wishing to accept
the exchange offer must complete, sign and date
the accompanying letter of transmittal in
accordance with the instructions, and mail or
otherwise deliver the letter of transmittal
together with the Series A notes and any other
required documentation to the exchange agent
identified below under "Exchange Agent" at the
address set forth in this prospectus. By
executing the letter of transmittal, a holder
will make certain representations to us. See
"The Exchange Offer -- Registration Rights" and
"-- Procedures for Tendering Series A Notes."
Special procedures for
beneficial
owners........................ Any beneficial owner whose Series A notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact the
registered holder promptly and instruct the
registered holder to tender on its behalf. See
"The Exchange Offer -- Procedures for Tendering
Series A Notes."
Guaranteed delivery
procedures.................... Holders of Series A notes who wish to tender
their Series A notes when those securities are
not immediately available or who cannot deliver
their Series A notes, the letter of transmittal
or any other documents required by the letter
of transmittal to the exchange agent prior to
the Expiration Date must tender their Series A
notes according to the guaranteed delivery
procedures set forth in "The Exchange
Offer -- Procedures for Tendering Series A
Notes -- Guaranteed Delivery."
7
Withdrawal rights............. Tenders of Series A notes pursuant to the
exchange offer may be withdrawn at any time
prior to the Expiration Date.
Acceptance of Series A Notes
and delivery of Series B
Notes......................... We will accept for exchange any and all Series
A notes that are properly tendered in the
exchange offer, and not withdrawn, prior to the
Expiration Date. The Series B notes issued
pursuant to the exchange offer will be issued
on the earliest practicable date following our
acceptance for exchange of Series A notes. See
"The Exchange Offer -- Terms of the Exchange
Offer."
Exchange agent................ JPMorgan Chase Bank is serving as exchange
agent in connection with the exchange offer.
See "The Exchange Offer -- Exchange Agent."
Federal income tax
considerations................ The exchange of Series A notes for Series B
notes pursuant to the exchange offer will not
be treated as a taxable exchange for federal
income tax purposes. See "Federal Income Tax
Considerations."
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------
SEPTEMBER 30, 2002 2001 2000 1999 1998 1997
- ------------------ ---- ---- ---- ---- ----
2.07 2.25 1.54 1.81 1.17 --(1)
- ---------------
(1) Earnings were inadequate to cover fixed charges by $5,362,000 for 1997.
These computations include us and our Restricted Subsidiaries. For these
ratios, "earnings" is the aggregate of the following items:
- pre-tax income from continuing operations before adjustment for minority
interests in consolidated subsidiaries and income or loss from equity
investees;
- plus fixed charges;
- plus amortization of capitalized interests;
- plus distributed income of equity investees;
- plus our share of pre-tax losses of equity investees for which charges
arising from guarantees are included in our fixed charges;
- less interest capitalized; and
- less minority interest in pre-tax income of subsidiaries that have not
incurred fixed charges.
The term "fixed charges" means the sum of the following:
- interest expensed and capitalized, including amortized premiums,
discounts and capitalized expenses related to indebtedness; and
- an estimate of the interest within rental expenses.
8
RISK FACTORS
An investment in the notes is subject to a number of risks. You should
carefully consider the following risk factors as well as the section entitled
"Risk Factors and Cautionary Statement" included in our Annual Report on Form
10-K for the year ended December 31, 2001 as amended January 2, 2003 on Form
10-K/A and incorporated herein by reference, as well as and the other documents
incorporated herein by reference, in evaluating this investment. Realization of
any of the following risks could have a material adverse effect on the notes.
RISKS RELATED TO OUR BUSINESS
OUR INDEBTEDNESS COULD ADVERSELY RESTRICT OUR ABILITY TO OPERATE, AFFECT OUR
FINANCIAL CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR
DEBT SECURITIES.
We have a significant amount of indebtedness and the ability to incur
substantially more indebtedness. In November 2002, we issued $200 million of
10 5/8% Senior Subordinated Notes due in 2012; in May 2002, we issued $230
million of 8 1/2% Senior Subordinated Notes due in 2011; and in May 2001, we
issued $250 million of 8 1/2% Senior Subordinated Notes due in 2011; in May
1999, we issued $175 million of 10 3/8% Senior Subordinated Notes due in 2009.
All of our senior subordinated notes are supported by guarantees of our material
subsidiaries. We are also party to a credit facility that includes a $600
million revolving loan and a $160 million term loan, our indirect wholly-owned
subsidiary, EPN Holding is party to a $160 million term credit facility, and, in
November 2002, we borrowed $237.5 million under a senior secured acquisition
term loan in connection with our acquisition of the San Juan assets. This senior
secured acquisition term loan, the EPN Holding term credit facility and our
credit facility are all jointly collateralized by a pledge of the equity of our
material subsidiaries and substantially all of our other assets and supported by
guarantees of our material subsidiaries. As of November 30, 2002, we had $461
million outstanding under our credit facility, and $237.5 million outstanding
under our senior secured acquisition term loan, and EPN Holding had $160 million
outstanding under its credit facility.
From time to time, our joint ventures also incur indebtedness. As of
November 30, 2002, one of our joint ventures, Poseidon Oil Pipeline Company,
L.L.C., had a revolving credit facility to provide up to $185 million, $148
million of which was outstanding, which is collateralized by a substantial
portion of Poseidon's assets. The average floating interest rate for the
Poseidon credit facility was 3.38% at November 30, 2002. In addition, as of
November 30, 2002, one of our joint ventures, Deepwater Gateway, L.L.C., had a
$155 million limited recourse term loan, $27 million of which was outstanding.
The average interest rate for the Deepwater Gateway loan was 3.38%. If Deepwater
Gateway defaults on its payment obligations, we would be required to pay to the
lenders all distributions we or any of our subsidiaries have received from
Deepwater Gateway up to $22.5 million. Our obligation to make such a payment is
collateralized by substantially all of our assets on the same basis as our
obligations under our credit facility, our senior secured acquisition term loan
and the EPN Holding term credit facility.
We and all of our subsidiaries except for our unrestricted subsidiaries
must comply with various affirmative and negative covenants contained in the
indentures related to our senior subordinated notes, our credit facility, our
senior acquisition term loan and EPN Holding's term credit facility. Among other
things, these covenants limit the ability of us and those subsidiaries except
for our unrestricted subsidiaries to:
- incur additional indebtedness or liens;
- make payments in respect of or redeem or acquire any debt or equity
issued by us;
- sell assets;
- make loans or investments;
9
- acquire or be acquired by other companies; and
- amend some of our contracts.
We do not have the right to prepay the balance outstanding under our senior
subordinated notes without incurring substantial economic penalties.
Additionally, we are required to use the net proceeds of any securities
offerings we complete to repay our senior secured acquisition term loan. The
restrictions under our indebtedness may prevent us from engaging in certain
transactions which might otherwise be considered beneficial to us and could have
other important consequences to you. For example, they could:
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future working capital, capital expenditures
and other general partnership requirements, to engage in future
acquisitions, construction or development activities, or to otherwise
fully realize the value of our assets and opportunities because of the
need to dedicate a substantial portion of our cash flow from operations
to payments on our indebtedness or to comply with any restrictive terms
of our indebtedness;
- limit our flexibility in planning for, or reacting to, changes in our
businesses and the industries in which we operate; and
- place us at a competitive disadvantage as compared to our competitors
that have less debt.
We may incur additional indebtedness (public or private) in the future,
either under our existing credit facility, by issuing debt securities, under new
credit agreements, under joint venture credit agreements, under capital leases
or synthetic leases, on a project finance or other basis, or a combination of
any of these. If we incur additional indebtedness in the future, it would be
under our existing credit facility or under arrangements which may have terms
and conditions at least as restrictive as those contained in our existing credit
facility and existing indentures. Failure to comply with the terms and
conditions of any existing or future indebtedness would constitute an event of
default. If an event of default occurs, the lenders will have the right to
accelerate the maturity of such indebtedness and foreclose upon the collateral,
if any, securing that indebtedness. If an event of default occurs under our
joint ventures' credit facilities, we may be required to repay amounts
previously distributed to us and our subsidiaries. Any such an event could limit
our ability to fulfill our obligations under our debt securities, which could
adversely affect the market price of our securities.
WE MAY NOT BE ABLE TO FULLY EXECUTE OUR GROWTH STRATEGY IF WE ENCOUNTER TIGHT
CAPITAL MARKETS OR INCREASED COMPETITION FOR QUALIFIED ASSETS.
Our strategy contemplates substantial growth through the acquisition and
development of a wide range of midstream and other energy infrastructure assets
while maintaining a strong balance sheet. We intend to continue de-emphasizing
our commodity-based activities, such as exploration and production operations,
and to concentrate on fee-based operations, such as gathering, transportation,
processing, storage and fractionation. This strategy includes constructing and
acquiring additional assets and businesses to enhance our ability to compete
effectively, diversify our asset portfolio and, thereby, provide more stable
cash flow. We regularly consider and enter into discussions regarding, and are
currently contemplating, additional potential acquisitions, joint ventures and
stand-alone projects that we believe will present opportunities to realize
synergies, expand our role in the energy infrastructure business, increase our
market position. These acquisitions can be effected quickly, may occur at any
time and may be significant in size relative to our existing assets. If we
consummate any future acquisitions, our capitalization and results of operations
may change significantly and you will not have the opportunity to evaluate the
economic, financial and other relevant information that we will consider in
determining the application of these funds.
We will need new capital to finance the future acquisition and construction
of assets and businesses. Limitations on our access to capital will impair our
ability to execute this strategy. Expensive capital will limit our ability to
acquire or construct accretive assets. Although we intend to continue to expand
our
10
business, this strategy may require substantial capital, and we may not be able
to raise the necessary funds on satisfactory terms, if at all.
In addition, we are experiencing increased competition for the assets we
purchase or contemplate purchasing. Increased competition for a limited pool of
assets could result in our not being the successful bidder more often or our
acquiring assets at a higher relative price than we have paid historically.
Either occurrence would limit our ability to fully execute our growth strategy.
Our ability to execute our growth strategy may impact the market price of our
securities.
OUR GROWTH STRATEGY MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS IF WE DO
NOT SUCCESSFULLY INTEGRATE THE BUSINESSES THAT WE ACQUIRE OR IF WE SUBSTANTIALLY
INCREASE OUR INDEBTEDNESS AND CONTINGENT LIABILITIES TO MAKE ACQUISITIONS.
We may be unable to integrate successfully businesses we acquire. We may
incur substantial expenses, delays or other problems in connection with our
growth strategy that could negatively impact our results of operations.
Moreover, acquisitions and business expansions involve numerous risks,
including:
- difficulties in the assimilation of the operations, technologies,
services and products of the acquired companies or business segments;
- inefficiencies and complexities that can arise because of unfamiliarity
with new assets and the businesses associated with them, including
unfamiliarity with their markets; and
- diversion of the attention of management and other personnel from
day-to-day business, the development or acquisition of new businesses and
other business opportunities.
If consummated, any acquisition or investment would also likely result in
the incurrence of indebtedness and contingent liabilities and an increase in
interest expense and depreciation, depletion and amortization expenses. A
substantial increase in our indebtedness and contingent liabilities could have a
material adverse effect upon our business, as discussed above.
OUR ACTUAL ACQUISITION, CONSTRUCTION AND DEVELOPMENT COSTS COULD EXCEED OUR
FORECAST, AND OUR CASH FLOW FROM CONSTRUCTION AND DEVELOPMENT PROJECTS MAY NOT
BE IMMEDIATE.
Our forecast contemplates significant expenditures for the purchase,
construction or other acquisition of energy infrastructure assets, including
some construction and development projects with significant technological
challenges. For example, underwater operations, especially those in water depths
in excess of 600 feet, are very expensive and involve much more uncertainty and
risk and if a problem occurs, the solution, if one exists, may be very expensive
and time consuming. Accordingly, there is an increase in the frequency and
amount of cost overruns related to underwater operations, especially in depths
in excess of 600 feet. We may not be able to complete our projects, whether in
deep water or otherwise, at the costs currently estimated. If we experience
material cost overruns, we will have to finance these overruns using one or more
of the following methods:
- using cash from operations;
- delaying other planned projects;
- incurring additional indebtedness; or
- issuing additional equity.
Any or all of these methods may not be available when needed or may
adversely affect our future results of operations.
Our revenues and cash flow may not increase immediately upon the
expenditure of funds on a particular project. For instance, if we build a new
pipeline or platform or expand an existing facility, the design, construction,
development and installation may occur over an extended period of time and we
may not receive any material increase in revenue or cash flow from that project
until after it is placed in service and
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customers enter into binding arrangements. If our revenues and cash flow do not
increase at projected levels because of substantial unanticipated delays, we may
not meet our obligations as they become due.
FERC REGULATION AND A CHANGING REGULATORY ENVIRONMENT COULD AFFECT OUR CASH
FLOW.
The Federal Energy Regulatory Commission, or FERC, extensively regulates
certain of our energy infrastructure assets. This regulation extends to such
matters as:
- rate structures;
- rates of return on equity;
- recovery of costs;
- the services that our regulated assets are permitted to perform;
- the acquisition, construction and disposition of assets; and
- to an extent, the level of competition in that regulated industry.
In September 2001, the FERC issued a Notice of Proposed Rule Making, or
NOPR, that proposes to apply the standards of conduct governing the relationship
between interstate pipelines and marketing affiliates to all energy affiliates.
Since our High Island Offshore System, L.L.C., or HIOS, natural gas pipeline and
Petal Gas Storage, L.L.C., or Petal, natural gas storage facilities are
interstate facilities as defined by the Natural Gas Act, the proposed
regulations, if adopted by FERC, would dictate how HIOS and Petal conduct
business and interact with all energy affiliates of El Paso Corporation and us.
If the standards of conduct NOPR is adopted by the FERC, we will be required to
functionally separate our HIOS and Petal interstate facilities from our other
entities. Under the proposed rule, we would be required to dedicate employees to
manage and operate our interstate facilities independently from our other
non-jurisdictional facilities. This employee group would be required to function
independently and would be prohibited from communicating non-public
transportation information to affiliates. Separate office facilities and systems
would be necessary because of the requirement to restrict affiliate access to
interstate transportation information. The NOPR also limits the sharing of
employees and officers with non-regulated entities. Because of the loss of
synergies and shared employee restrictions, a disposition of the interstate
facilities may be necessary for us to effectively comply with the rule.
In August 2002, the FERC issued a NOPR requiring that all cash management
or money pool arrangements between a FERC regulated subsidiary and a non-FERC
regulated parent must be in writing, and set forth: the duties and
responsibilities of cash management participants and administrators; the methods
of calculating interest and for allocating interest income and expenses; and the
restrictions on deposits or borrowings by money pool members. The NOPR also
requires specified documentation for all deposits into, borrowings from,
interest income from, and interest expenses related to, these arrangements.
Finally, the NOPR proposes that as a condition of participating in a cash
management or money pool arrangement, the FERC regulated entity must maintain a
minimum proprietary capital balance of 30 percent, and the FERC regulated entity
and its parent must maintain investment grade credit ratings.
Also in August 2002, FERC's Chief Accountant issued an Accounting Release,
to be effective immediately, providing guidance on how companies should account
for money pool arrangements and the types of documentation that should be
maintained for these arrangements. However, the Accounting Release did not
address the proposed requirements that the FERC regulated entity maintain a
minimum proprietary capital balance of 30 percent and that the entity and its
parent have investment grade credit ratings.
If the cash management NOPR is adopted by the FERC, our HIOS and Petal
interstate facilities will no longer be permitted to participate in a money pool
or cash management program. As a result, more frequent distributions or equity
contributions may be needed in anticipation of monthly cash flow requirements
for those interstate facilities. Also, separate credit facilities and resources
may be required to support the capital and day-to-day activities for the
interstate facilities separate from other of our subsidiaries and our primary
bank accounts.
12
Given the extent of this regulation, the extensive changes in FERC policy
over the last several years, the evolving nature of regulation and the
possibility for additional changes, the current regulatory regime may change and
affect our financial position, results of operations or cash flows.
ENVIRONMENTAL COSTS AND LIABILITIES AND CHANGING ENVIRONMENTAL REGULATION
COULD AFFECT OUR CASH FLOW.
Our operations are subject to extensive federal, state and local regulatory
requirements relating to environmental affairs, health and safety, waste
management and chemical and petroleum products. Governmental authorities have
the power to enforce compliance with applicable regulations and permits and to
subject violators to civil and criminal penalties, including fines, injunctions
or both. Third parties may also have the right to pursue legal actions to
enforce compliance. We will make expenditures in connection with environmental
matters as part of normal capital expenditure programs. However, future
environmental law developments, such as stricter laws, regulations, permits or
enforcement policies, could significantly increase some costs of our operations,
including the handling, manufacture, use, emission or disposal of substances and
wastes. Moreover, as with other companies engaged in similar or related
businesses, our operations always have some risk of environmental costs and
liabilities because we handle petroleum products.
A NATURAL DISASTER, CATASTROPHE OR OTHER INTERRUPTION EVENT INVOLVING US COULD
RESULT IN SEVERE PERSONAL INJURY, PROPERTY DAMAGE AND ENVIRONMENTAL DAMAGE,
WHICH COULD CURTAIL OUR OPERATIONS AND OTHERWISE ADVERSELY AFFECT OUR ASSETS AND
CASH FLOW.
Some of our operations involve higher risks of severe personal injury,
property damage and environmental damage, any of which could curtail our
operations and otherwise expose us to liability and adversely affect our cash
flow. For example, our natural gas facilities operate at high pressures,
sometimes in excess of 1,100 pounds per square inch. We also operate oil and
natural gas facilities located underwater in the Gulf of Mexico, which can
involve complexities, such as extreme water pressure. Virtually all of our
operations are exposed to the elements, including hurricanes, tornadoes, storms,
floods and earthquakes.
If one or more facilities that are owned by us or that deliver oil, natural
gas or other products to us is damaged or otherwise affected by severe weather
or any other disaster, accident, catastrophe or event, our operations could be
significantly interrupted. Similar interruptions could result from damage to
production or other facilities that supply our facilities or other stoppages
arising from factors beyond our control. These interruptions might involve
significant damage to people, property or the environment, and repairs might
take from a week or less for a minor incident to six months or more for a major
interruption. Additionally, some of our storage contracts obligate us to
indemnify our customers for any damage or injury occurring during the period in
which the customers' natural gas is in our possession. Any event that interrupts
the fees generated by our energy infrastructure assets, or which causes us to
make significant expenditures not covered by insurance, could reduce our cash
available for paying our interest obligations as well as unitholder
distributions and, accordingly, adversely impact the market price of our
securities. Additionally, the proceeds of any property and business interruption
insurance maintained by us may not be paid in a timely manner or be in an amount
sufficient to meet our needs if such an event were to occur, and we may not be
able to renew it or obtain other desirable insurance on commercially reasonable
terms, if at all.
THE FUTURE PERFORMANCE OF OUR ENERGY INFRASTRUCTURE OPERATIONS, AND THUS OUR
ABILITY TO SATISFY OUR DEBT REQUIREMENTS, DEPENDS ON SUCCESSFUL EXPLORATION AND
DEVELOPMENT OF ADDITIONAL OIL AND NATURAL GAS RESERVES BY OTHERS.
The oil, natural gas and other products available to our energy
infrastructure assets are derived from reserves produced from existing wells,
which reserves naturally decline over time. In order to offset this natural
decline, our energy infrastructure assets must access additional reserves.
Additionally, some of the projects we have planned or recently completed,
including our Falcon Nest platform, our Deepwater Gateway joint venture, and our
Cameron Highway project, are dependent on reserves that we expect to be produced
from newly discovered properties that producers are currently developing.
13
Finding and developing new oil and natural gas reserves is very expensive,
especially offshore. The flextrend (water depths of 600 to 1,500 feet) and
deepwater (water depths greater than 1,500 feet) areas of the Gulf of Mexico in
particular, will require large capital expenditures by producers for exploration
and development drilling, installing production facilities and constructing
pipeline extensions to reach the new wells. Many economic and business factors
out of our control can adversely affect the decision by any producer to explore
for and develop new reserves. These factors include relatively low oil and
natural gas prices, cost and availability of equipment, regulatory changes,
capital budget limitations or the lack of available capital. Additional
reserves, if discovered, may not be developed in the near future or at all. For
example, because of the level to which hydrocarbon prices declined during 1998
and the first quarter of 1999, overall oil and natural gas activity declined in
relation to prior years. If hydrocarbon prices decline to those levels again or
if capital spending by the energy industry decreases or remains at low levels
for prolonged periods, our results of operations and cash flow could suffer.
OUR NATURAL GAS STORAGE BUSINESSES DEPEND ON NEIGHBORING PIPELINES TO
TRANSPORT NATURAL GAS.
To obtain natural gas, our natural gas storage businesses depend on the
pipelines to which they have access. Any interruption of service on those
pipelines or adverse change in their terms and conditions of service could have
an adverse effect on our ability (and the ability of our customers) to transport
natural gas to and from our facilities and a corresponding adverse effect on our
natural gas storage revenues. In addition, the rates charged by those
interconnected pipelines for transportation to and from our facilities affect
the utilization and value of our natural gas storage services. Significant
changes in the rates charged by those pipelines or the rates charged by other
pipelines with which the interconnected pipelines compete could also adversely
effect our natural gas storage revenues.
WE WILL FACE COMPETITION FROM THIRD PARTIES TO GATHER, TRANSPORT, PROCESS,
FRACTIONATE, STORE OR OTHERWISE HANDLE OIL, NATURAL GAS AND OTHER PETROLEUM
PRODUCTS.
Even if reserves exist in the areas accessed by our facilities and are
ultimately produced, we may not be chosen by the producers to gather, transport,
process, fractionate, store or otherwise handle any of these reserves. We
compete with others, including producers of oil and natural gas, for any such
production on the basis of many factors, including:
- geographic proximity to the production;
- costs of connection;
- available capacity;
- rates; and
- access to markets.
FLUCTUATIONS IN ENERGY COMMODITY PRICES COULD ADVERSELY AFFECT OUR BUSINESS.
Oil, natural gas and other petroleum products prices are volatile and could
have an adverse effect on a portion of our revenues and cash flow. Although our
strategy involves reducing our exposure to the volatility in commodity prices,
primarily by focusing on fee-based services, all segments of our operations are
somewhat affected by price reductions and some of our segments are significantly
affected by price reductions. Price reductions can materially reduce the level
of oil and natural gas exploration, pipeline volumes, production and development
operations, which provide reserves to replace those that are produced over time.
In addition, some of our operations, like production, processing and
fractionation, are very sensitive to price declines.
14
PIPELINES AND PLATFORMS--PRICE DECREASES COULD HAVE AN ADVERSE EFFECT ON THE
DISCOVERY AND DEVELOPMENT OF REPLACEMENT RESERVES AND ON THE RESULTS OF
OPERATIONS OF OUR SAN JUAN NATURAL GAS GATHERING SYSTEM AND OUR CHACO PLANT.
Currently, the primary consequence of commodity price reductions to our
pipeline and platform operations is the risk that less replacement reserves will
be discovered and developed as a result of a long-term decline in prices.
Although the majority of our pipeline and platform operations involve fee-based
arrangements for gathering, transporting and handling reserves that are
dedicated to the facilities for the life of the reserves, some of our pipelines
can be dramatically affected by a reduction in commodity prices because those
pipelines purchase and resell the commodity.
The financial results from our San Juan natural gas gathering system can be
dramatically affected by a reduction in, or the volatility of, commodity prices.
For example, over 95 percent of the volumes handled by the San Juan gathering
system are fee-based arrangements, with 80 percent of which having the fees
calculated as a percentage of a regional natural gas price index. In addition,
the San Juan gathering system provides aggregating and bundling services--in
which it purchases gas at the wellhead and resells gas in the open market--for
some smaller producers, which account for less than 5 percent of the volumes on
that system.
NATURAL GAS STORAGE--NATURAL GAS PRICE STABILITY COULD HAVE AN ADVERSE EFFECT
ON REVENUES AND CASH FLOW FROM OUR STORAGE ASSETS.
Prices for natural gas have historically been seasonal and volatile, which
has enhanced demand for our storage services. The storage business has benefited
from large price swings resulting from seasonal price sensitivity through
increased withdrawal charges and demand for non-storage hub services. However,
the market for natural gas may not continue to experience volatility and
seasonal price sensitivity in the future at the levels previously seen. If
volatility and seasonality in the natural gas industry decrease, because of
increased storage capacity throughout the pipeline grid, increased production
capacity or otherwise, the demand for our storage services and, therefore, the
prices that we will be able to charge for those services may decline.
PROCESSING AND FRACTIONATION--THE PROCESSING AND FRACTIONATION BUSINESSES ARE
CYCLICAL AND ARE DEPENDENT IN PART UPON THE SPREADS BETWEEN PRICES FOR NATURAL
GAS, NGLS AND PETROLEUM PRODUCTS.
Prices for natural gas, NGLs and NGL components can fluctuate in response
to changes in supply, market uncertainty and a variety of additional factors
that are beyond our control. Contemporaneously with the November 2002 San Juan
assets acquisition, our tolling arrangement with a subsidiary of El Paso
Corporation relating to the Chaco plant was terminated. Accordingly, a
substantial portion of our Chaco plant processing arrangements are now exposed
to commodity price risk - specifically, to the variable spreads between prices
for natural gas on one hand and NGLs and petroleum products on the other. More
than 80 percent of our revenues for natural gas processing services at the Chaco
plant will fluctuate directly with the monthly price of NGLs.
Since our fractionation facilities provide fee-based services, for which we
receive a fixed fee for each unit of NGLs we fractionate, our fractionation
operations are not directly affected by fluctuations in prices for natural gas,
NGLs and NGL components. However, if the spread between prices for natural gas,
NGLs and NGL components does not provide sufficient profits to natural gas
producers, then those producers may decide not to process their natural gas or
fractionate their NGLs, or to process less natural gas or fractionate less NGLs.
This could decrease the volumes to our processing and fractionation facilities
and, accordingly, negatively affect our operational results. In many cases,
processing and fractionating is profitable only when the producer can receive
more net proceeds by physically separating the natural gas from the NGLs and
separating the NGL components from the NGLs and selling those products than it
would receive by merely selling the raw natural gas stream. The spread between
the prices for natural gas and NGLs is greatest when the demand for NGLs
increases for use in petrochemical and refinery feedstock. If, and when, this
spread becomes too narrow to justify the costs, producers have the option to
sell the raw natural gas stream rather
15
than process and fractionate. In such a case, our processing or fractionation
facilities or both will be underutilized. Although our fixed fee-based
arrangements limit the direct effects of decreases in commodity prices on our
fractionation operations, those arrangements also cause us to forego any
benefits we would otherwise experience if commodity prices were to increase.
Utilization rates in the processing and fractionation industries can
fluctuate dramatically from month to month, depending on the needs of producers.
The average utilization rate for the Chaco processing plant for the nine months
ended September 30, 2002, and for the calendar years 2001, 2000 and 1999 was 89
percent, 89 percent, 91 percent and 93 percent. The monthly utilization rate for
our fractionation facilities during the 12 months ending December 31, 2001 was
as low as 41 percent and as high as 88 percent. However, our average utilization
rate for our fractionation facilities for the nine months ended September 30,
2002, and for the calendar years 2001, 2000 and 1999 were 76 percent, 73
percent, 89 percent and 88 percent.
OIL AND NATURAL GAS PRODUCTION--PRICE AND VOLUME VOLATILITY IS SUBSTANTIALLY
OUT OF OUR CONTROL AND COULD HAVE AN ADVERSE EFFECT ON REVENUES AND CASH FLOW
FROM OUR PRODUCING OIL AND NATURAL GAS PROPERTIES.
We have exposure to movements in commodity prices relating to our oil and
natural gas production, which we partially hedge, from time to time, using
financial derivative instruments. Our results of operations and our cash flow
could be materially adversely affected by factors we cannot control, including:
- fluctuations in prices of oil and natural gas;
- future operating costs; and
- risks incident to the operation of oil and natural gas wells.
FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS.
In addition to our exposure to commodity prices, we also have exposure to
movements in interest rates. The interest rates on some of our indebtedness,
like our senior subordinated notes, are fixed and the interest rates on some of
our other indebtedness, like our credit facility and senior secured acquisition
term loan, EPN Holding's term credit facility and the credit facilities of our
joint ventures, are variable. We partially hedge our interest rate exposure,
from time to time, using financial derivative instruments. Our results of
operations and our cash flow, as well as our access to future capital and our
ability to fund our growth strategy, could be adversely affected by significant
increases or decreases in interest rates.
OUR USE OF DERIVATIVE FINANCIAL INSTRUMENTS COULD RESULT IN FINANCIAL LOSSES.
We try to limit a portion of the adverse effects resulting from changes in
oil and natural gas commodity prices and interest rates by using financial
derivative instruments and other hedging mechanisms from time to time, although
there are times when we do not have any hedging mechanisms in place. To the
extent we hedge our commodity price exposure and interest rate exposure, we
forego the benefits we would otherwise experience if commodity prices were to
increase or interest rates were to decrease. In addition, we could experience
losses resulting from our hedging and other derivative positions. Such losses
could occur under various circumstances, including if our counterparty does not
perform its obligations under the hedge arrangement, our hedge is imperfect, or
our hedging policies and procedures are not followed.
OUR FRACTIONATION FACILITIES ARE DEDICATED TO A SINGLE CUSTOMER, THE LOSS OF
WHICH COULD ADVERSELY AFFECT US.
In connection with our acquisition of our fractionation facilities, we
entered into a 20-year fee-based transportation and fractionation agreement and
have dedicated 100 percent of the capacity of our fractionation facilities to a
subsidiary of El Paso Corporation. In that agreement, all of the NGLs derived
from processing operations at seven natural gas processing plants in south Texas
owned by subsidiaries of El Paso Corporation are delivered to our NGL
transportation and fractionation facilities. Effectively, we will receive a
fixed fee for each barrel of NGLs transported and fractionated by our
facilities. Approximately 25 percent of our per barrel
16
fee is escalated annually for increases in inflation. El Paso Corporation's
subsidiary will bear substantially all of the risks and rewards associated with
changes in the commodity prices for NGLs.
Our operations are likely to be materially adversely affected if this
arrangement is terminated or if El Paso Field Services does not deliver enough
NGLs to us to ensure that we can maintain a profitable utilization rate or does
not fully perform its obligations under the agreement.
WE WILL BE ADVERSELY AFFECTED IF WE CANNOT NEGOTIATE AN EXTENSION OR A
REPLACEMENT ON COMMERCIALLY REASONABLE TERMS OF APPROXIMATELY 900 MILES OF
RIGHTS-OF-WAY UNDERLYING THE SAN JUAN GATHERING SYSTEM.
Approximately 900 miles of the San Juan gathering system benefits from
rights-of-way granted over Native American lands. These rights-of-way expire in
2005. Although these rights-of-way have been renewed in the past, these
rights-of-way may not continue to be renewed on commercially reasonable terms,
or on any terms. If these rights-of-way are not renewed or if the fees for these
rights-of-way increase substantially, the effect on us will be adverse and
material.
WE WILL BE ADVERSELY AFFECTED IF WE CANNOT NEGOTIATE AN EXTENSION OR
REPLACEMENT ON COMMERCIALLY REASONABLE TERMS OF THREE MATERIAL CONTRACTS WHICH
ACCOUNT FOR APPROXIMATELY 71 PERCENT OF THE VOLUME ATTRIBUTABLE TO THE SAN JUAN
GATHERING SYSTEM DURING THE NINE MONTHS ENDED SEPTEMBER 30, 2002, AND WHICH
EXPIRE BETWEEN 2006 AND 2008.
For the nine months ended September 30, 2002, approximately 71 percent of
the volume attributable to the San Juan gathering system is derived from
contracts with three major customers, Burlington Resources, Conoco and BP. These
contracts expire in 2008, 2006, and 2006. If we are not able to successfully
negotiate replacement contracts, or if the replacement contracts are on less
favorable terms, the effect on us will be adverse and material. The following
table indicates the percentage revenue generated by each contract in relation to
the indicated denominator for the nine months ended September 30, 2002:
BURLINGTON
BASE REVENUE RESOURCES CONOCO BP TOTAL
- ------------ ---------- ------ ----- -----
San Juan gathering revenue................................. 31.09% 18.83% 14.73% 64.65%
Total revenue of San Juan assets........................... 8.58% 5.20% 4.07% 17.85%
Pro forma total revenue of El Paso Energy Partners,
L.P. .................................................... 4.23% 2.56% 2.00% 8.79%
ARTHUR ANDERSEN LLP, THE PUBLIC ACCOUNTANTS THAT AUDITED THE 2000 FINANCIAL
STATEMENTS OF OUR JOINT VENTURE POSEIDON OIL PIPELINE COMPANY, L.L.C., HAS BEEN
CONVICTED OF A FELONY, WHICH MAY ADVERSELY AFFECT THE ABILITY OF ARTHUR ANDERSEN
LLP TO SATISFY ANY CLAIMS THAT MAY ARISE OUT OF ARTHUR ANDERSEN LLP'S AUDIT OF
POSEIDON'S FINANCIAL STATEMENTS. IN ADDITION, ARTHUR ANDERSEN LLP HAS NOT
CONSENTED TO THE USE OF THEIR OPINION IN THIS FILING. BECAUSE OF THIS ABSENCE OF
CONSENT, YOUR ABILITY TO EVER CLAIM AGAINST ARTHUR ANDERSEN LLP MAY BE LIMITED.
Arthur Andersen LLP is the independent public accountant that audited the
financial statements of our Poseidon joint venture for the years ended December
31, 1999 and 2000. Arthur Andersen LLP was recently convicted of obstruction of
justice in connection with the U.S. government's investigation of Enron Corp.
Events arising out of this conviction may adversely affect the ability of Arthur
Andersen LLP to satisfy any claims that may arise out of Arthur Andersen LLP's
audits of Poseidon's financial statements. Additionally, because the personnel
responsible for the audit of Poseidon's financial statements are no longer
employed by Arthur Andersen LLP, we have not received Arthur Andersen LLP's
consent with respect to the inclusion of those financial statements and the
related audit report; accordingly, if those financial statements are inaccurate,
your ability to make a claim against Arthur Andersen LLP may be limited or
prohibited.
17
RISKS RELATED TO THE EXCHANGE OFFER
THE MARKET VALUE OF YOUR SERIES A NOTES MAY BE LOWER IF YOU DO NOT EXCHANGE
YOUR SERIES A NOTES OR FAIL TO PROPERLY TENDER YOUR SERIES A NOTES FOR EXCHANGE.
Consequences of Failure to Exchange. To the extent that Series A notes are
tendered and accepted for exchange pursuant to the exchange offer, the trading
market for Series A notes that remain outstanding may be significantly more
limited, which might adversely affect the liquidity of the Series A notes not
tendered for exchange. The extent of the market and the availability of price
quotations for Series A notes would depend upon a number of factors, including
the number of holders of Series A notes remaining at such time and the interest
in maintaining a market in such Series A notes on the part of securities firms.
An issue of securities with a smaller outstanding market value available for
trading, or float, may command a lower price than would a comparable issue of
securities with a greater float. Therefore, the market price for Series A notes
that are not exchanged in the exchange offer may be affected adversely to the
extent that the amount of Series A notes exchanged pursuant to the exchange
offer reduces the float. The reduced float also may tend to make the trading
price of the Series A notes that are not exchanged more volatile.
Consequences of Failure to Properly Tender. Issuance of the Series B notes
in exchange for the Series A notes pursuant to the exchange offer will be made
following the prior satisfaction, or waiver, of the conditions set forth in "The
Exchange Offer -- Conditions to the Exchange Offer" and only after timely
receipt by the exchange agent of the Series A notes, a properly completed and
duly executed letter of transmittal and all other required documents. Therefore,
holders of Series A notes desiring to tender Series A notes in exchange for
Series B notes should allow sufficient time to ensure timely delivery of all
required documentation. Neither we, the exchange agent nor any other person is
under any duty to give notification of defects or irregularities with respect to
the tenders of Series A notes for exchange. Series A notes that may be tendered
in the exchange offer but which are not validly tendered will, following the
consummation of the exchange offer, remain outstanding and will continue to be
subject to the same transfer restrictions currently applicable to the Series A
notes.
AN ACTIVE TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.
The Series A notes have not been registered under the Securities Act, and
may not be resold by purchasers thereof unless the Series A notes are
subsequently registered or an exemption from the registration requirements of
the Securities Act is available. However, even following registration or
exchange of the Series A notes for Series B notes, an active trading market for
the Series A notes or the Series B notes may not exist, and we will have no
obligation to create such a market. At the time of the private placement of the
Series A notes, the initial purchasers advised us that they intended to make a
market in the Series A notes and, if issued, the Series B notes. The initial
purchasers are not obligated, however, to make a market in the Series A notes or
the Series B notes and any market-making may be discontinued at any time at
their sole discretion. No assurance can be given as to the liquidity of or
trading market for the Series A notes or the Series B notes.
The liquidity of any trading market for the notes and the market price
quoted for the notes will depend upon the number of holders of the notes, the
overall market for high yield securities, our financial performance or prospects
or the prospects for companies in our industry generally, the interest of
securities dealers in making a market in the notes and other factors.
If the number of outstanding Series A notes is reduced through the exchange
offer, the existing limited market for the Series A notes will become further
constricted, with a probable decrease in the liquidity of the Series A notes.
Further, the Series A notes that are not tendered in the exchange offer will
continue to be subject to the existing restrictions upon their transfer. We will
have no obligation to provide for the registration under the Securities Act of
unexchanged Series A notes.
18
RISKS RELATED TO THE NOTES
FEDERAL AND STATE STATUTES WOULD ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES,
TO SUBORDINATE FURTHER OR VOID THE NOTES AND THE RELATED GUARANTEES AND REQUIRE
HOLDERS OF NOTES TO RETURN PAYMENTS RECEIVED FROM US.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a court could further subordinate or void the notes
and the related guarantees if, at the time the notes and the guarantees were
issued, certain facts, circumstances and conditions existed, including that:
- we received less than reasonably equivalent value or fair consideration
for the incurrence of such indebtedness;
- we were insolvent or rendered insolvent by reason of such incurrence;
- we were engaged in a business or transaction for which our remaining
assets constituted unreasonably small capital; or
- we intended to incur, or believed that we would incur, indebtedness we
could not repay at its maturity.
In such a circumstance, a court could require the holders of the notes to
return to us or pay to our other creditors amounts we paid under the notes. This
would entitle other creditors to be paid in full before any payment could be
made under the notes. We may not have sufficient assets to fully pay the notes
after the payment to other creditors. The guarantees of the notes by our
subsidiaries could be challenged on the same grounds as the notes. In addition,
a creditor may avoid a guarantee based on the level of benefits received by a
guarantor compared to the amount of the subsidiary guarantee. The indenture will
contain a savings clause, which generally limits the obligations of each
guarantor to the maximum amount that is not a fraudulent conveyance. If a
subsidiary guarantee is avoided, or limited as a fraudulent conveyance or held
unenforceable for any other reason, you would not have any claim against the
guarantors and would be only creditors of us and El Paso Energy Partners Finance
Corporation and any guarantor whose subsidiary guarantee was not avoided or held
unenforceable. In such event, claims of holders of notes against a guarantor
would be subject to the prior payment of all liabilities (including trade
payables) of such guarantor. We cannot assure you that, after providing for all
prior claims, there would be sufficient assets to satisfy claims of holders of
notes relating to any avoided portions of any of the subsidiary guarantees.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, we would be considered
insolvent if:
- the sum of our indebtedness, including contingent liabilities, were
greater than the fair value or fair saleable value of all of our assets;
- if the present fair value or fair saleable value of our assets were less
than the amount that would be required to pay our probable liability on
our existing indebtedness, including contingent liabilities, as it
becomes absolute and mature; or
- we could not pay our indebtedness as it becomes due.
There is a risk of a preferential transfer if:
- a subsidiary guarantor declares bankruptcy or its creditors force it to
declare bankruptcy within 90 days (or in certain cases, one year) after a
payment on the guarantee; or
- a subsidiary guarantee was made in contemplation of insolvency.
The subsidiary guarantee could be avoided by a court as a preferential
transfer. In addition, a court could require holders of notes to return any
payments made on the debt securities during the 90-day (or one-year) period.
19
WE MAY NOT BE ABLE TO SATISFY OUR OBLIGATION TO REPURCHASE NOTES UPON A CHANGE
OF CONTROL.
Upon a change of control (among other things, the acquisition of 50 percent
or more of El Paso Corporation's voting stock, or if El Paso Corporation and its
subsidiaries no longer own all of our general partner interests, or the sale of
all or substantially all of our assets), we will be required to repay the
amounts outstanding under our credit facilities and to offer to repurchase our
outstanding senior subordinated notes at 101 percent of the principal amount,
plus accrued and unpaid interest to the date of repurchase, including any
outstanding notes issued to you. We cannot assure you that we will have
sufficient funds available or that we will be permitted by our other debt
instruments to fulfill these obligations upon the occurrence of a change of
control.
THE RIGHTS OF HOLDERS OF THE NOTES TO RECEIVE PAYMENTS WILL BE UNSECURED AND
CONTRACTUALLY SUBORDINATED TO MOST OF OUR EXISTING INDEBTEDNESS AND, POSSIBLY,
ANY ADDITIONAL INDEBTEDNESS WE INCUR. FURTHER, THE GUARANTEES OF THE NOTES WILL
BE JUNIOR TO ALL THE GUARANTORS' EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR
FUTURE BORROWINGS.
The notes and the related subsidiary guarantees will rank behind most of
our and the subsidiary guarantors' existing senior indebtedness (other than
trade payables and certain other indebtedness) and possibly all additional
senior indebtedness (other than trade payables) we incur unless, and to the
extent, that additional indebtedness expressly provides that it ranks equal
with, or junior in right of payment to, the notes and the related guarantees.
Further, the notes may rank senior to, equal with or subordinate to our existing
senior subordinated notes and the guarantees of those notes.
In addition, all payments on the notes and the related guarantees may be
blocked in the event of a payment default or in the event of certain non-payment
defaults on our senior indebtedness.
In the event of a bankruptcy, liquidation, reorganization or similar
proceeding relating to us, any subsidiary guarantors or our property, our assets
or the assets of the subsidiary guarantors would be available to pay obligors
under the notes only after all payments had been made on our or the guarantors'
senior indebtedness. Our creditors and the subsidiary guarantors' creditors
holding claims which are not subordinated to any applicable senior indebtedness
will in all likelihood be entitled to payments before all of our or the
subsidiary guarantors' senior indebtedness has been paid in full. Therefore,
holders of the notes will participate with trade creditors and all other holders
of our and the guarantors' unsubordinated indebtedness in the assets remaining
after we and the guarantors have paid all of the senior indebtedness. However,
because the notes indenture may require that amounts otherwise payable to
holders of the notes in a bankruptcy, liquidation, reorganization or similar
proceeding be paid to holders of senior indebtedness instead, holders of the
notes may receive less, ratably, than holders of trade payables and other
creditors in any such proceeding. In any of these cases, we and the subsidiary
guarantors may not have sufficient funds to pay all of our creditors and,
therefore, holders of notes would receive less, ratably, than the holders of
senior indebtedness.
THE NOTES WILL BE EFFECTIVELY SUBORDINATED TO INDEBTEDNESS AND LIABILITIES OF
OUR SUBSIDIARIES THAT ARE NOT GUARANTORS.
The notes will be effectively subordinated to claims of all creditors of
any of our subsidiaries that are not guarantors of the notes, including EPN
Arizona Gas, L.L.C.; Arizona Gas Storage, L.L.C. and Matagorda Island Area
Gathering System. If any of EPN Arizona Gas, L.L.C.; Arizona Gas Storage, L.L.C.
and Matagorda Island Area Gathering System defaults on its debt, the holders of
the notes would not receive any money from that subsidiary until its debts are
repaid in full. For example, we do not expect that our unrestricted subsidiaries
will guarantee the notes. Most of our existing subsidiaries other than El Paso
Energy Partners Finance Corporation, EPN Arizona Gas, L.L.C.; Arizona Gas
Storage, L.L.C. and Matagorda Island Area Gathering System will guarantee the
notes. See "Description of notes."
20
CONFLICTS OF INTEREST RISKS
EL PASO CORPORATION AND ITS SUBSIDIARIES HAVE CONFLICTS OF INTEREST WITH US
AND, ACCORDINGLY, YOU.
We have potential and existing conflicts of interest with El Paso
Corporation and its affiliates in four general areas:
- we often enter into transactions with each other, including some relating
to operating and managing assets, acquiring and selling assets, and
performing services;
- we often share personnel, assets, systems and other resources;
- from time to time, we compete for business and customers; and
- from time to time, we both may have an interest in acquiring the same
asset, business or other business opportunity.
We expect to continue to enter into substantial transactions and other
activities with El Paso Corporation and its subsidiaries because of the
businesses and areas in which we and El Paso Corporation currently operate, as
well as those in which we plan to operate in the future. Some more recent
transactions in which we, on the one hand, and El Paso Corporation and its
subsidiaries, on the other hand, had a conflict of interest include:
- in November 2002, we acquired the San Juan assets from El Paso
Corporation for $782 million, $766 million after adjustments for capital
expenditures and working capital;
- in April 2002, we acquired the EPN Holding assets from El Paso
Corporation for approximately $735 million of net consideration;
- in October 2001, we acquired interests in the titleholder of, and other
interests in, the Chaco cryogenic natural gas processing plant in New
Mexico from a subsidiary of El Paso Corporation, among others;
- in October 2001, we purchased the remaining 50 percent equity interest
that we did not already own in Deepwater Holdings, L.L.C. from a
subsidiary of El Paso Corporation;
- in May 2001, we purchased our general partner's 1.01 percent non-managing
interest owned in 12 of our subsidiaries;
- in February 2001, we purchased fee-based NGL transportation and
fractionation assets located in south Texas from subsidiaries of El Paso
Corporation;
- in January and April 2001, we and Deepwater Holdings sold our interests
in several offshore Gulf of Mexico assets as a result of an FTC order
related to El Paso Corporation's merger with The Coastal Corporation; and
- pursuant to a general and administrative services agreement, subsidiaries
of El Paso Corporation provide us administrative, operational and other
services.
In addition, we and El Paso Corporation and its subsidiaries share and,
therefore will compete for, the time and effort of El Paso Corporation personnel
who provide services to us, including directors, officers and other personnel.
Officers of the general partner and its subsidiaries do not, and will not be
required to, spend any specified percentage or amount of time on our business.
Since these shared officers and directors function as both our representatives
and those of El Paso Corporation and its subsidiaries, conflicts of interest
could arise between El Paso Corporation and its subsidiaries, on the one hand,
and us and our unitholders, on the other. Additionally, some of these shared
officers and directors own and are awarded from time to time financial shares,
or options to purchase shares, of El Paso Corporation; accordingly, their
financial interests may not always be aligned completely with ours or those of
our limited partners.
Some other situations in which an actual or potential conflict of interest
arises between us, on the one hand, and our general partner and its affiliates
(including El Paso Corporation), on the other hand, and there
21
is a benefit to our general partner or its subsidiaries in which neither us nor
our limited partners will share include:
- compensation paid to the general partner, which includes incentive
distributions and reimbursements for reasonable general and
administrative expenses;
- payments to the general partner and its affiliates for any services
rendered to us or on our behalf;
- our general partner's determination of which direct and indirect costs we
must reimburse; and
- our general partner's determination to establish cash reserves under
certain circumstances and thereby decrease cash available for
distributions to unitholders.
In addition, El Paso Corporation's beneficial ownership interest in our
outstanding partnership interests could have a substantial effect on the outcome
of some actions requiring partner approval. Accordingly, subject to certain
minimum legal requirements, El Paso Corporation makes the final determination
regarding how any particular conflict of interest is resolved.
The interests of El Paso Corporation and its subsidiaries may not always be
aligned with our interest, and, accordingly, they may not always act in your
best interest. El Paso Corporation is neither contractually nor legally bound to
use us as its primary vehicle for growth and development of midstream energy
assets, and may reconsider at any time, without notice. Further, El Paso
Corporation is not required to pursue any business strategy that will favor our
business opportunities over the business opportunities of El Paso Corporation or
any of its affiliates (or any of its other competitors acquired by El Paso
Corporation). In fact, El Paso Corporation may have financial motives to favor
our competitors. El Paso Corporation and its subsidiaries (many of which are
wholly owned) operate in some of the same lines of business and in some of the
same geographic areas in which we operate.
CASH RESERVES, EXPENDITURES AND OTHER MATTERS WITHIN THE DISCRETION OF OUR
GENERAL PARTNER MAY AFFECT DISTRIBUTIONS TO UNITHOLDERS AND RESERVES FOR DEBT
SERVICE.
Our general partner has broad discretion to make cash expenditures and to
establish and make additions to cash reserves for any proper partnership
purpose, including reserves for the purpose of:
- providing for future operating and capital expenditures;
- providing for debt service;
- providing funds for up to the next four quarterly distributions;
- providing funds to redeem or otherwise repurchase our outstanding debt or
equity;
- stabilizing distributions of cash to capital security holders;
- complying with the terms of any agreement or obligation of ours; and
- providing for a discretionary reserve amount.
OUR PARTNERSHIP AGREEMENT PURPORTS TO LIMIT OUR GENERAL PARTNER'S FIDUCIARY
DUTIES AND CERTAIN OTHER OBLIGATIONS RELATING TO US.
Although our general partner owes certain fiduciary duties to us and will
be liable for all our debts, other than non-recourse debts, to the extent not
paid by us, certain provisions of our partnership agreement contain exculpatory
language purporting to limit the liability of our general partner to us and
unitholders. For example, the partnership agreement provides that:
- borrowings of money by us, or the approval thereof by our general
partner, will not constitute a breach of any duty of our general partner
to us or you whether or not the purpose or effect of the borrowing is to
permit distributions on our limited partner interests or to result in or
increase incentive distributions to our general partner;
22
- any action taken by our general partner consistent with the standards of
reasonable discretion set forth in certain definitions in our partnership
agreement will be deemed not to breach any duty of our general partner to
us or to unitholders; and
- in the absence of bad faith by our general partner, the resolution of
conflicts of interest by our general partner will not constitute a breach
of the partnership agreement or a breach of any standard of care or duty.
Provisions of the partnership agreement also purport to modify the
fiduciary duty standards to which our general partner would otherwise be subject
under Delaware law, under which a general partner owes its limited partners the
highest duties of good faith, fairness and loyalty. The duty of loyalty would
generally prohibit our general partner from taking any action or engaging in any
transaction as to which it had a conflict of interest. The partnership agreement
permits our general partner to exercise the discretion and authority granted to
it in that agreement in managing us and in conducting its retained operations,
so long as its actions are not inconsistent with our interests. Our general
partner and its officers and directors may not be liable to us or to unitholders
for certain actions or omissions which might otherwise be deemed to be a breach
of fiduciary duty under Delaware or other applicable state law. Further, the
partnership agreement requires us to indemnify our general partner to the
fullest extent permitted by law, which indemnification, in light of the
exculpatory provisions in the partnership agreement, could result in us
indemnifying our general partner for negligent acts. Neither El Paso Corporation
nor any of its other subsidiaries, other than our general partner, owes
fiduciary duties to us.
BECAUSE WE DEPEND UPON EL PASO CORPORATION AND ITS AFFILIATES FOR EMPLOYEES TO
MANAGE OUR BUSINESS AND AFFAIRS, A DECREASE IN THE AVAILABILITY OF EMPLOYEES
FROM EL PASO CORPORATION AND ITS AFFILIATES COULD ADVERSELY AFFECT US.
We have no employees. In managing our business and affairs, our general
partner relies on employees of El Paso Corporation and its affiliates under a
general and administrative services agreement between our general partner, on
one hand, and subsidiaries of El Paso Corporation, on the other hand. Those
employees will act on behalf of and as agents for us. A decrease in the
availability of employees from El Paso Corporation and its affiliates could
adversely affect us. Additionally, such employees may have conflicts of interest
with us and, accordingly, you.
RISKS RELATED TO OUR LEGAL STRUCTURE
THE INTERRUPTION OF DISTRIBUTIONS TO US FROM OUR SUBSIDIARIES AND JOINT
VENTURES MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON OUR DEBT SECURITIES.
We are a holding company. As such, our primary assets are the capital stock
and other equity interests in our subsidiaries and joint ventures. Consequently,
our ability to fund our commitments (including payments on our debt securities)
depends upon the earnings and cash flow of our subsidiaries and joint ventures
and the distribution of that cash to us. Distributions from our joint ventures
are subject to the discretion of their respective management committees. In
addition, from time to time, our joint ventures and some of our subsidiaries
have separate credit arrangements that contain various restrictive covenants.
Among other things, those covenants limit or restrict each such company's
ability to make distributions to us under certain circumstances. Further, each
joint venture's charter documents typically vest in its management committee
sole discretion regarding distributions. Accordingly, our joint ventures and our
unrestricted subsidiaries may not continue to make distributions to us at
current levels or at all. Moreover, pursuant to Deepwater Gateway's credit
arrangements, we have agreed to return a limited amount of the distributions
made to us by Deepwater Gateway if certain conditions exist.
WE CANNOT CAUSE OUR JOINT VENTURES TO TAKE OR NOT TO TAKE CERTAIN ACTIONS
UNLESS SOME OR ALL OF THE JOINT VENTURE PARTICIPANTS AGREE.
Due to the nature of joint ventures, each participant (including us) in
each of our joint ventures, including Poseidon, Deepwater Gateway and Coyote Gas
Treating, L.L.C., has made substantial investments
23
(including contributions and other commitments) in that joint venture and,
accordingly, has required that the relevant charter documents contain certain
features designed to provide each participant with the opportunity to
participate in the management of the joint venture and to protect its investment
in that joint venture, as well as any other assets that may be substantially
dependent on or otherwise affected by the activities of that joint venture.
These participation and protective features include a corporate governance
structure that requires at least a majority in interest vote to authorize many
basic activities and requires a greater voting interest (sometimes up to 100
percent) to authorize more significant activities. Examples of these more
significant activities are large expenditures or contractual commitments, the
construction or acquisition of assets, borrowing money or otherwise raising
capital, transactions with affiliates of a joint venture participant, litigation
and transactions not in the ordinary course of business, among others. Thus,
without the concurrence of joint venture participants with enough voting
interests, we cannot cause our joint ventures to take or not to take certain
actions, even though those actions may be in the best interest of the particular
joint venture or us. As of September 30, 2002, our aggregate investments in
Deepwater Gateway and Poseidon totaled $27 million and $31.2 million.
WE DO NOT HAVE THE SAME FLEXIBILITY AS OTHER TYPES OF ORGANIZATIONS TO
ACCUMULATE CASH AND EQUITY TO PROTECT AGAINST ILLIQUIDITY IN THE FUTURE.
Unlike a corporation, our partnership agreement requires us to make
quarterly distributions to our unitholders of all available cash reduced by any
amounts reserved for commitments and contingencies, including capital and
operating costs and debt service requirements. The value of our units and other
limited partner interests will decrease in direct correlation with decreases in
the amount we distribute per unit. Accordingly, if we experience a liquidity
problem in the future, we may not be able to issue more equity to recapitalize.
CHANGES OF CONTROL OF OUR GENERAL PARTNER MAY ADVERSELY AFFECT YOU.
Our results of operations and, thus, our ability to pay amounts due under
the debt securities could be adversely affected if there is a change of control
of our general partner. For example, El Paso Corporation and its subsidiaries
are parties to various credit agreements and other financing arrangements, the
obligations of which may be collateralized (directly or indirectly). El Paso
Corporation and its subsidiaries have used, and may use in the future, their
interests, which include our general partner interest, common units, Series C
units and Series B preference units as collateral. These arrangements may allow
such lenders to foreclose on that collateral in the event of a default. Further,
El Paso Corporation could sell our general partner or any of the common units or
other limited partner interests it holds. El Paso Corporation's sale of our
general partner would constitute a change of control under our existing credit
agreement and indentures. In such a circumstance, our indebtedness for borrowed
money would effectively become due and payable unless our creditors agreed
otherwise, and we might be required to refinance our indebtedness, potentially
on less advantageous terms. In addition, El Paso Corporation could sell control
of our general partner to another company with less familiarity and experience
with our businesses and with different business philosophies and objectives. In
such a situation, we may not be able to refinance our indebtedness. Any such
acquirer also may not continue our current business strategy, or even a business
strategy economically compatible with our current business strategy.
TAX RISKS
WE HAVE NOT RECEIVED A RULING OR ASSURANCES FROM THE IRS ON MANY MATTERS
AFFECTING US.
We have not requested, and will not request, any ruling from the Internal
Revenue Service (IRS) with respect to our classification, or the classification
of any of our subsidiaries which are organized as limited liability companies or
partnerships, as a partnership for federal income tax purposes or many other
matters affecting us or our subsidiaries. Accordingly, the IRS may propose
positions that differ from the conclusions expressed by us. It may be necessary
to resort to administrative or court proceedings in an effort to sustain some or
all of those conclusions, and some or all of those conclusions ultimately may
not be sustained. The limited partners and our general partner will bear,
directly or indirectly, the costs of any contest with the IRS.
24
OUR TAX TREATMENT DEPENDS ON OUR PARTNERSHIP STATUS AND IF THE IRS TREATS US
AS A CORPORATION FOR TAX PURPOSES, IT WOULD ADVERSELY AFFECT OUR ABILITY TO MAKE
PAYMENTS ON OUR DEBT SECURITIES.
Based upon the continued accuracy of the representations of our general
partner, we believe that under current law and regulations, we and our
subsidiaries, which are limited liability companies or partnerships, have been
and will continue to be classified as partnerships for federal income tax
purposes or will be ignored as separate entities for federal income tax
purposes. However, as stated above, we have not requested, and will not request,
any ruling from the IRS as to this status. In addition, you cannot be sure that
those representations will continue to be accurate. Except as specifically
noted, this discussion assumes that we and our subsidiaries which are organized
as limited liability companies or partnerships have been and are treated as
single member limited liability companies disregarded from their owners or
partnerships for federal income tax purposes.
If we or any of our subsidiaries which are organized as limited liability
companies, limited partnerships or general partnerships were taxable as a
corporation for federal income tax purposes in any taxable year, its income,
gains, losses and deductions would be reflected on its tax return rather than
being passed through (proportionately) to unitholders, and its net income would
be taxed at corporate rates. This would materially and adversely affect our
ability to make payments on our debt securities.
25
THE EXCHANGE OFFER
For the purposes of this section, "we" means El Paso Energy Partners, L.P.,
El Paso Energy Partners Finance Corporation and the Subsidiary Guarantors.
REGISTRATION RIGHTS
At the closing of the offering of the Series A notes, we entered into a
registration rights agreement with the initial purchasers pursuant to which we
agreed, for the benefit of the holders of the Series A notes, at our cost,
- to file an exchange offer registration statement with the SEC with
respect to the exchange offer for the Series B notes within 95 days after
the date of the original issuance of the Series A notes, and
- to use our best efforts to cause the exchange offer registration
statement to be declared effective under the Securities Act within 150
days after the date of original issuance of the Series A notes.
Upon the exchange offer registration statement being declared effective, we
agreed to offer the Series B notes in exchange for surrender of the Series A
notes. We agreed to use our best efforts to cause the exchange offer
registration statement to be effective continuously, to keep the exchange offer
open for a period of not less than 20 business days and to use our best efforts
to cause the exchange offer to be consummated no later than 30 business days
after the exchange offer registration statement is declared effective by the
SEC.
For each Series A note surrendered to us pursuant to the exchange offer,
the holder of such Series A note will receive a Series B note having a principal
amount equal to that of the surrendered Series A note. Interest on each Series B
note will accrue from the last interest payment date on which interest was paid
on the Series A note surrendered in exchange therefor or, if no interest has
been paid on such Series A note, from the date of its original issue. The
registration rights agreement also provides an agreement to include in the
prospectus for the exchange offer certain information necessary to allow a
broker-dealer who holds Series A notes that were acquired for its own account as
a result of market-making activities or other ordinary course trading activities
(other than Series A notes acquired directly from us or one of our affiliates)
to exchange such Series A notes pursuant to the exchange offer and to satisfy
the prospectus delivery requirements in connection with resales of Series B
notes received by such broker-dealer in the exchange offer. We agreed to use our
best efforts to maintain the effectiveness of the exchange offer registration
statement for these purposes for a period of not more than 30 business days plus
one year after the exchange offer registration statement has become effective.
The preceding agreement is needed because any broker-dealer who acquires
Series A notes for its own account as a result of market-making activities or
other trading activities is required to deliver a prospectus meeting the
requirements of the Securities Act. This prospectus covers the offer and sale of
the Series B notes pursuant to the exchange offer made hereby and the resale of
Series B notes received in the exchange offer by any broker-dealer who held
Series A notes of the same series acquired for its own account as a result of
market-making activities or other trading activities other than Series A notes
acquired directly from us or one of our affiliates.
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that the Series B notes issued
pursuant to the exchange offer would in general be freely tradable after the
exchange offer without further registration under the Securities Act. However,
any purchaser of Series A notes who is an "affiliate" of ours, who is a
broker-dealer or who intends to participate in the exchange offer for the
purpose of distributing the related Series B notes
- will not be able to rely on the interpretation of the staff of the SEC,
- will not be able to tender its Series A notes in the exchange offer, and
26
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the Series
A notes unless such sale or transfer is made pursuant to an exemption
from such requirements.
Each holder of the Series A notes (other than certain specified holders)
who wishes to exchange Series A notes for Series B notes in the exchange offer
will be required to make certain representations, including
- that it is not an affiliate of El Paso Energy Partners,
- that it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B notes, and
- that it is acquiring the Series B notes in the exchange offer in its
ordinary course of business.
We further agreed to file with the SEC a shelf registration statement to
register for public resale the Transfer Restricted Securities held by any such
holder who provides El Paso Energy Partners with certain information for
inclusion in the shelf registration statement if:
- the exchange offer is not permitted by applicable law or SEC policy, or
- any holder of notes which are Transfer Restricted Securities notifies El
Paso Energy Partners prior to the 20th business day following the
consummation of the exchange offer that:
- it is a broker-dealer and holds notes acquired directly from El Paso
Energy Partners or any of the affiliates of El Paso Energy Partners,
- it is prohibited by law or SEC policy from participating in the
exchange offer, or
- it may not resell the Series B notes acquired by it in the exchange
offer to the public without delivering a prospectus, and the
prospectus contained in the exchange offer registration statement is
not appropriate or available for such resales by it.
For the purposes of the registration rights agreement, Transfer Restricted
Securities means each Series A note or Series B note until the earliest of the
date of which
- such Series A note or Series B note is exchanged in the exchange offer
and entitled to be resold to the public by the holder thereof without
complying with the prospectus delivery requirements of the Securities
Act,
- such Series A note or Series B note has been disposed of in accordance
with the shelf registration statement,
- such Series A note or Series B note is disposed of by a broker-dealer as
set forth in "Plan of Distribution" (including delivery of the prospectus
contained therein), or
- such Series A note or Series B note is distributed to the public pursuant
to Rule 144 under the Securities Act.
The registration rights agreement provides that:
(1) if we fail to file an exchange offer registration statement with
the SEC on or prior to the 95th day after the closing of the offering of
the Series A notes,
(2) if the exchange offer registration statement is not declared
effective by the SEC on or prior to the 150th day after the closing of the
offering of the Series A notes,
(3) if the exchange offer is not consummated on or before the 30th
business day after the exchange offer registration statement is declared
effective,
(4) if obligated to file the shelf registration statement and we fail
to file the shelf registration statement with the SEC on or prior to the
30th day after such filing obligation arises,
27
(5) if obligated to file a shelf registration statement and the shelf
registration statement is not declared effective on or prior to the 60th
day after the obligation to file a shelf registration statement arises, or
(6) subject to certain conditions, if the exchange offer registration
statement or the shelf registration statement, as the case may be, is
declared effective but thereafter ceases to be effective or useable in
connection with resales of the Transfer Restricted Securities, for such
time of non-effectiveness or non-usability (each, a "Registration
Default"),
we agree to pay to each holder of Transfer Restricted Securities affected
thereby liquidated damages in an amount equal to $0.05 per week per $1,000 in
original principal amount of Transfer Restricted Securities held by such holder
for each week or portion thereof that the Registration Default continues for the
first 90 day period immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall increase by an additional
$0.05 per week per $1,000 in original principal amount of Transfer Restricted
Securities with respect to each subsequent 90 day period until all Registration
Defaults have been cured, up to a maximum amount of liquidated damages of $0.50
per week per $1,000 in principal amount of Transfer Restricted Securities. We
shall not be required to pay liquidated damages for more than one Registration
Default at any given time. Upon curing all Registration Defaults, liquidated
damages will cease to accrue.
A Registration Default will be cured and liquidated damages will cease to
accrue upon:
- filing of the exchange offer registration statement (and/or, if
applicable, the shelf registration statement), in the cases of the
Registration Defaults described in clauses (1) and (4) above,
- the effectiveness of the exchange offer registration statement (and/or,
if applicable, the shelf registration statement), in the cases of the
Registration Defaults described in clauses (2) and (5) above,
- consummation of the exchange offer, in the case of the Registration
Default described in clause (3) above, and
- the filing of a post-effective amendment to the registration statement or
an additional registration statement that causes the exchange offer
registration statement (and/or, if applicable, the shelf registration
statement) to again be declared effective or made usable, in the case of
the Registration Default described in clause (6) above.
All accrued liquidated damages shall be paid by us to holders entitled
thereto by wire transfer to the accounts specified by them or by mailing checks
to their registered address if no such accounts have been specified.
Holders of the notes will be required to make certain representations to us
(as described in the registration rights agreement) in order to participate in
the exchange offer and will be required to deliver information to be used in
connection with the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the
registration rights agreement in order to have their notes included in the shelf
registration statement.
If we effect the registered exchange offer, we will be entitled to close
the registered exchange offer 20 business days after the commencement thereof;
provided that the we have accepted all notes theretofore validly rendered in
accordance with the terms of the exchange offer and no brokers or dealers
continue to hold any notes.
This summary of the material provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
Except as set forth above, after consummation of the exchange offer,
holders of Series A notes which are the subject of the exchange offer have no
registration or exchange rights under the registration rights
28
agreement. See "-- Consequences of failure to exchange," and "-- Resale of the
Series B Notes; plan of distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The Series A notes which are not exchanged for Series B notes pursuant to
the exchange offer and are not included in a resale prospectus which, if
required, will be filed as part of an amendment to the registration statement of
which this prospectus is a part, will remain restricted securities and subject
to restrictions on transfer. Accordingly, such Series A notes may only be resold
(1) to us, upon redemption thereof or otherwise,
(2) so long as the Series A notes are eligible for resale pursuant to
Rule 144A, to a person whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities
Act, purchasing for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
other transfer is being made in reliance on Rule 144A,
(3) in an offshore transaction in accordance with Regulation S under
the Securities Act,
(4) pursuant to an exemption from registration in accordance with Rule
144, if available, under the Securities Act,
(5) in reliance on another exemption from the registration
requirements of the Securities Act, or
(6) pursuant to an effective registration statement under the
Securities Act.
In all of the situations discussed above, the resale must be in accordance
with any applicable securities laws of any state of the United States and
subject to certain requirements of the registrar or co-registrar being met,
including receipt by the registrar or co-registrar of a certification and, in
the case of (3), (4) and (5) above, an opinion of counsel reasonably acceptable
to us and the registrar.
To the extent Series A notes are tendered and accepted in the exchange
offer, the principal amount of outstanding Series A notes will decrease with a
resulting decrease in the liquidity in the market therefor. Accordingly, the
liquidity of the market of the Series A notes could be adversely affected. See
"Risk factors -- risks related to the exchange offer."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, a copy of which is attached to this prospectus
as Annex A, we will accept any and all Series A notes validly tendered and not
withdrawn prior to the Expiration Date. We will issue $1,000 principal amount of
Series B notes in exchange for each $1,000 principal amount of Series A notes
accepted in the exchange offer. Holders may tender some or all of their Series A
notes pursuant to the exchange offer. However, Series A notes may be tendered
only in integral multiples of $1,000 principal amount.
The form and terms of the Series B notes are the same as the form and terms
of the Series A notes, except that
- the Series B notes will have been registered under the Securities Act and
will not bear legends restricting their transfer pursuant to the
Securities Act, and
- except as otherwise described above, holders of the Series B notes will
not be entitled to the rights of holders of Series A notes under the
registration rights agreement.
The Series B notes will evidence the same debt as the Series A notes which
they replace, and will be issued under, and be entitled to the benefits of, the
indenture which governs all of the notes.
Solely for reasons of administration and for no other purpose, we have
fixed the close of business on , 2003 as the record date for the
exchange offer for purposes of determining the persons to whom this prospectus
and the letter of transmittal will be mailed initially. Only a registered holder
of Series A notes
29
or such holder's legal representative or attorney-in-fact as reflected on the
records of the trustee under the indenture may participate in the exchange
offer. There will be no fixed record date for determining registered holders of
the Series A notes entitled to participate in the exchange offer.
Holders of the Series A notes do not have any appraisal or dissenters'
rights under Delaware law or the indenture in connection with the exchange
offer. We intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
We shall be deemed to have accepted validly tendered Series A notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders of the Series A
notes for the purposes of receiving the Series B notes. The Series B notes
delivered pursuant to the exchange offer will be issued on the earliest
practicable date following our acceptance for exchange of Series A notes.
If any tendered Series A notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Series A notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Series A notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of the
Series A notes pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the exchange
offer. See '-- Fees and expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" with respect to the exchange offer means 5:00
p.m., New York City time, on , 2003 unless we, in our sole discretion,
extend the exchange offer, in which case "Expiration Date" shall mean the latest
date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
WE RESERVE THE RIGHT, IN OUR SOLE DISCRETION,
(1) to delay accepting any Series A notes,
(2) to extend the exchange offer,
(3) if any of the conditions set forth below under "-- Conditions to
the Exchange Offer" have not been satisfied, to terminate the exchange
offer, or
(4) to amend the terms of the exchange offer in any manner.
We may effect any such delay, extension or termination by giving oral or
written notice thereof to the exchange agent.
Except as specified in the second paragraph under this heading, any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. If the exchange offer
is amended in a manner determined by us to constitute a material change, we will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the Series A notes. The exchange
offer will then be extended for a period of five to 10 business days, as
required by law, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to 10 business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, we shall not have an obligation to publish,
30
advertise, or otherwise communicate any such public announcement, other than by
making a timely release thereof to the Dow Jones News Service.
PROCEDURES FOR TENDERING SERIES A NOTES
Tenders of Series A Notes. The tender by a holder of Series A notes
pursuant to any of the procedures set forth below will constitute the tendering
holder's acceptance of the terms and conditions of the exchange offer. Our
acceptance for exchange of Series A notes tendered pursuant to any of the
procedures described below will constitute a binding agreement between such
tendering holder and us in accordance with the terms and subject to the
conditions of the exchange offer. Only holders are authorized to tender their
Series A notes. The procedures by which Series A notes may be tendered by
beneficial owners that are not holders will depend upon the manner in which the
Series A notes are held.
DTC has authorized DTC participants that are beneficial owners of Series A
notes through DTC to tender their Series A notes as if they were holders. To
effect a tender, DTC participants should either (1) complete and sign the letter
of transmittal or a facsimile thereof, have the signature thereon guaranteed if
required by Instruction 1 of the letter of transmittal, and mail or deliver the
letter of transmittal or such facsimile pursuant to the procedures for
book-entry transfer set forth below under "-- Book-Entry Delivery Procedures,"
or (2) transmit their acceptance to DTC through the DTC Automated Tender Offer
Program ("ATOP"), for which the transaction will be eligible, and follow the
procedures for book-entry transfer, set forth below under "-- Book-Entry
Delivery Procedures."
Tender of Series A Notes Held in Physical Form. To tender effectively
Series A notes held in physical form pursuant to the exchange offer,
- a properly completed letter of transmittal applicable to such notes (or a
facsimile thereof) duly executed by the holder thereof, and any other
documents required by the letter of transmittal, must be received by the
exchange agent at one of its addresses set forth below, and tendered
Series A notes must be received by the exchange agent at such address (or
delivery effected through the deposit of Series A notes into the exchange
agent's account with DTC and making book-entry delivery as set forth
below) on or prior to the Expiration Date, or
- the tendering holder must comply with the guaranteed delivery procedures
set forth below.
Letters of transmittal or Series A notes should be sent only to the
exchange agent and should not be sent to us.
Tender of Series A Notes Held Through a Custodian. To tender effectively
Series A notes that are held of record by a custodian bank, depository, broker,
trust company or other nominee, the beneficial owner thereof must instruct such
holder to tender the Series A notes on the beneficial owner's behalf. A letter
of instructions from the record owner to the beneficial owner may be included in
the materials provided along with this prospectus which may be used by the
beneficial owner in this process to instruct the registered holder of such
owner's Series A notes to effect the tender.
Tender of Series A Notes Held Through DTC. To tender effectively Series A
notes that are held through DTC, DTC participants should either
- properly complete and duly execute the letter of transmittal (or a
facsimile thereof), and any other documents required by the letter of
transmittal, and mail or deliver the letter of transmittal or such
facsimile pursuant to the procedures for book-entry transfer set forth
below, or
- transmit their acceptance through ATOP, for which the transaction will be
eligible, and DTC will then edit and verify the acceptance and send an
Agent's Message to the exchange agent for its acceptance.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each participant in DTC tendering the Series A notes and that such participant
has
31
received the letter of transmittal and agrees to be bound by the terms of the
letter of transmittal and we may enforce such agreement against such
participant.
Delivery of tendering Series A notes held through DTC must be made to the
exchange agent pursuant to the book-entry delivery procedures set forth below or
the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below.
The method of delivery of Series A notes and letters of transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance or Agent's Message transmitted through
ATOP, is at the election and risk of the person tendering Series A notes and
delivering letters of transmittal. Except as otherwise provided in the letter of
transmittal, delivery will be deemed made only when actually received by the
exchange agent. If delivery is by mail, it is suggested that the holder use
properly insured, registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the exchange agent prior to such date.
Except as provided below, unless the Series A notes being tendered are
deposited with the exchange agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed letter of transmittal or
a properly transmitted Agent's Message), we may, at our option, reject such
tender. Exchange of Series B notes for Series A notes will be made only against
deposit of the tendered Series A notes and delivery of all other required
documents.
Book-Entry Delivery Procedures. The exchange agent will establish accounts
with respect to the Series A notes at DTC for purposes of the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in DTC may make book-entry delivery of the
Series A notes by causing DTC to transfer such Series A notes into the exchange
agent's account in accordance with DTC's procedures for such transfer. However,
although delivery of Series A notes may be effected through book-entry at DTC,
the letter of transmittal (or facsimile thereof), with any required signature
guarantees or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the exchange agent at one or more of its addresses set forth in this
prospectus on or prior to the Expiration Date, or compliance must be made with
the guaranteed delivery procedures described below. Delivery of documents to DTC
does not constitute delivery to the exchange agent. The confirmation of a
book-entry transfer into the exchange agent's account at DTC as described above
is referred to herein as a "Book-Entry Confirmation."
Signature Guarantees. Signatures on all letters of transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Series A notes tendered thereby are tendered
(1) by a registered holder of Series A notes (or by a participant in DTC whose
name appears on a DTC security position listing as the owner of such Series A
notes) who has not completed either the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of transmittal,
or (2) for the account of an Eligible Institution. See Instruction 1 of the
letter of transmittal. If the Series A notes are registered in the name of a
person other than the signer of the letter of transmittal or if Series A notes
not accepted for exchange or not tendered are to be returned to a person other
than the registered holder, then the signatures on the letter of transmittal
accompanying the tendered Series A notes must be guaranteed by an Eligible
Institution as described above. See Instructions 1 and 5 of the letter of
transmittal.
Guaranteed Delivery. If a holder desires to tender Series A notes pursuant
to the exchange offer and time will not permit the letter of transmittal,
certificates representing such Series A notes and all other required documents
to reach the exchange agent, or the procedures for book-entry transfer cannot be
32
completed, on or prior to the Expiration Date, such Series A notes may
nevertheless be tendered if all the following conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed notice of guaranteed
delivery, substantially in the form provided by us herewith, or an Agent's
Message with respect to guaranteed delivery that is accepted by us, is
received by the exchange agent on or prior to the Expiration Date, as
provided below; and
(3) the certificates for the tendered Series A notes, in proper form
for transfer (or a Book-Entry Confirmation of the transfer of such Series A
notes into the exchange agent's account at DTC as described above),
together with the letter of transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by the letter of transmittal or a properly
transmitted Agent's Message, are received by the exchange agent within two
business days after the date of execution of the notice of guaranteed
delivery.
The notice of guaranteed delivery may be sent by hand delivery, telegram,
facsimile transmission or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in the notice of
guaranteed delivery.
Notwithstanding any other provision hereof, delivery of Series B notes by
the exchange agent for Series A notes tendered and accepted for exchange
pursuant to the exchange offer will, in all cases, be made only after timely
receipt by the exchange agent of such Series A notes (or Book-Entry Confirmation
of the transfer of such Series A notes into the exchange agent's account at DTC
as described above), and the letter of transmittal (or facsimile thereof) with
respect to such Series A notes, properly completed and duly executed, with any
required signature guarantees and any other documents required by the letter of
transmittal, or a properly transmitted Agent's Message.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
Series A notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all Series A notes not properly tendered or any Series A notes our
acceptance of which, in the opinion of our counsel, would be unlawful.
We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular Series A notes. The interpretation of the
terms and conditions of our exchange offer (including the instructions in the
letter of transmittal) by us will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Series A
notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of Series A notes through the exchange agent, neither we, the
exchange agent nor any other person is under any duty to give such notice, nor
shall they incur any liability for failure to give such notification. Tenders of
Series A notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
Any Series A notes received by the exchange agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if Series A notes are submitted in a principal amount greater than
the principal amount of Series A notes being tendered by such tendering holder,
such unaccepted or non-exchanged Series A notes will either be
(1) returned by the exchange agent to the tendering holders, or
(2) in the case of Series A notes tendered by book-entry transfer into
the exchange agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described below, credited to an
account maintained with such Book-Entry Transfer Facility.
By tendering, each registered holder will represent to us that, among other
things,
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- the Series B notes to be acquired by the holder and any beneficial
owner(s) of the Series A notes in connection with the exchange offer are
being acquired by the holder and any beneficial owner(s) in the ordinary
course of business of the holder and any beneficial owner(s),
- the holder and each beneficial owner are not participating, do not intend
to participate, and have no arrangement or understanding with any person
to participate, in a distribution of the Series B notes,
- the holder and each beneficial owner acknowledge and agree that (x) any
person participating in the exchange offer for the purpose of
distributing the Series B notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
a secondary resale transaction with respect to the Series B notes
acquired by such person and cannot rely on the position of the Staff of
the SEC set forth in no-action letters that are discussed herein under
"-- Resale of the Series B Notes; Plan of Distribution," and (y) any
broker-dealer that receives Series B notes for its own account in
exchange for Series A notes pursuant to the exchange offer must delivery
a prospectus in connection with any resale of such Series B notes, but by
so acknowledging, the holder shall not be deemed to admit that, by
delivering a prospectus, it is an "underwriter" within the meaning of the
Securities Act,
- neither the holder nor any beneficial owner is an "affiliate," as defined
under Rule 405 of the Securities Act, of ours except as otherwise
disclosed to us in writing, and
- the holder and each beneficial owner understands, that a secondary resale
transaction described in clause (3) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the SEC.
Each broker-dealer that receives Series B notes for its own account in
exchange for Series A notes, where such Series A notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Series B notes. See "-- Resale of the Series B Notes;
Plan of Distribution."
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Series A notes pursuant to
the exchange offer may be withdrawn, unless accepted for exchange as provided in
the exchange offer, at any time prior to the Expiration Date.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the exchange agent at its address set forth herein prior to
the Expiration Date. Any such notice of withdrawal must
- specify the name of the person having deposited the Series A notes to be
withdrawn,
- identify the Series A notes to be withdrawn, including the certificate
number or numbers of the particular certificates evidencing the Series A
notes (unless such Series A notes were tendered by book-entry transfer),
and aggregate principal amount of such Series A notes, and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the trustee
under the indenture register the transfer of the Series A notes into the
name of the person withdrawing such Series A notes.
If Series A notes have been delivered pursuant to the procedures for
book-entry transfer set forth in "-- Procedures for Tendering Series A
Notes -- Book-Entry Delivery Procedures," any notice of withdrawal must specify
the name and number of the account at the appropriate book-entry transfer
facility to be credited with such withdrawn Series A notes and must otherwise
comply with such book-entry transfer facility's procedures.
If the Series A notes to be withdrawn have been delivered or otherwise
identified to the exchange agent, a signed notice of withdrawal meeting the
requirements discussed above is effective immediately upon written
34
or facsimile notice of withdrawal even if physical release is not yet effected.
A withdrawal of Series A notes can only be accomplished in accordance with these
procedures.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us in our sole discretion, which
determination shall be final and binding on all parties. No withdrawal of Series
A notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither we, the exchange
agent nor any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or revocation, nor shall
we or they incur any liability for failure to give any such notification. Any
Series A notes so withdrawn will be deemed not to have been validly tendered for
purposes of the exchange offer and no Series B notes will be issued with respect
thereto unless the Series A notes so withdrawn are retendered. Properly
withdrawn Series A notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering Series A Notes" at any time
prior to the Expiration Date.
Any Series A notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the prior
termination of the exchange offer, or which have been validly withdrawn, will be
returned to the holder thereof unless otherwise provided in the letter of
transmittal, as soon as practicable following the Expiration Date or, if so
requested in the notice of withdrawal, promptly after receipt by us of notice of
withdrawal without cost to such holder.
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer shall not be subject to any conditions, other than that
(1) the SEC has issued an order or orders declaring the indenture
governing the notes qualified under the Trust Indenture Act of 1939,
(2) the exchange offer, or the making of any exchange by a holder,
does not violate applicable law or any applicable interpretation of the
staff of the SEC,
(3) no action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency with respect to the
exchange offer, which, in our judgment, might impair our ability to proceed
with the exchange offer,
(4) there shall not have been adopted or enacted any law, statute,
rule or regulation which, in our judgment, would materially impair our
ability to proceed with the exchange offer, or
(5) there shall not have occurred any material change in the financial
markets in the United States or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which on the financial
markets of the United States, in our judgment, would materially impair our
ability to proceed with the exchange offer.
If we determine in our sole discretion that any of the conditions to the
exchange offer are not satisfied, we may
(1) refuse to accept any Series A notes and return all tendered Series
A notes to the tendering holders,
(2) extend the exchange offer and retain all Series A notes tendered
prior to the Expiration Date applicable to the exchange offer, subject,
however, to the rights of holders to withdraw such Series A notes (see
"-- Withdrawal of Original Tenders"), or
(3) waive such unsatisfied conditions with respect to the exchange
offer and accept all validly tendered Series A notes which have not been
withdrawn.
If such waiver constitutes a material change to the exchange offer, we will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and will extend the exchange offer for a
period of five to 10 business days, depending upon the significance of the
waiver and
35
the manner of disclosure to the registered holders, if the exchange offer would
otherwise expire during such five to 10 business day period.
EXCHANGE AGENT
JPMorgan Chase Bank, the trustee under the indenture governing the notes,
has been appointed as exchange agent for the exchange offer. Questions and
requests for assistance, requests for additional copies of this prospectus or of
the letter of transmittal and requests for notices of guaranteed delivery and
other documents should be directed to the exchange agent addressed as follows:
By Mail:
JPMorgan Chase Bank
Attn: Mr. Cary Gilliam
700 Lavaca
Fifth Floor
Austin, TX 78701
By Facsimile:
(512) 479-2553
Attention: Mr. Cary Gilliam
Confirm by Telephone:
(512) 479-2575
Attention: Mr. Cary Gilliam
By Hand:
JPMorgan Chase Bank
Attn: Mr. Cary Gilliam
700 Lavaca
Fifth Floor
Austin, TX 78701
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by officers and regular employees of
El Paso Energy Partners, L.P., our general partner and their affiliates.
No dealer-manager has been retained in connection with the exchange offer
and no payments will be made to brokers, dealers or others soliciting acceptance
of the exchange offer. However, reasonable and customary fees will be paid to
the exchange agent for its services and it will be reimbursed for its reasonable
out-of-pocket expenses in connection therewith.
Our out of pocket expenses for the exchange offer will include fees and
expenses of the exchange agent and the trustee under the indenture, accounting
and legal fees and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the
Series A notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Series A notes pursuant to
the exchange offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the letter of transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The Series B notes will be recorded at the carrying value of the Series A
notes and no gain or loss for accounting purposes will be recognized. The
expenses of the exchange offer will be amortized over the term of the Series B
notes.
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RESALE OF THE SERIES B NOTES; PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of Series B notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Series B notes received in exchange
for Series A notes where such Series A notes were acquired as a result of
market-making activities or other trading activities. In addition, until
, 2003 (90 days after the date of this prospectus), all dealers
effecting transactions in the Series B notes, whether or not participating in
this distribution, may be required to deliver a prospectus. This requirement is
in addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
We will not receive any proceeds from any sale of Series B notes by
broker-dealers. Series B notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions
(1) in the over-the-counter market,
(2) in negotiated transactions,
(3) through the writing of options on the Series B notes or a
combination of such methods of resale,
(4) at market prices prevailing at the time of resale,
(5) at prices related to such prevailing market prices, or
(6) at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Series B
notes.
Any broker-dealer that resells Series B notes that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such Series B notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Series B notes and any commission on concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver a prospectus and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
We agreed to permit the use of this prospectus by such broker-dealers to
satisfy this prospectus delivery requirement. To the extent necessary to ensure
that the prospectus is available for sales of Series B notes by broker-dealers,
we agreed to use our best efforts to keep the exchange offer registration
statement continuously effective, supplemented, amended and current for a period
of 30 business days plus one year from the closing of the offering of the Series
A notes or such shorter period as will terminate when all Transfer Restricted
Securities covered by such registration statement have been sold. We will
provide sufficient copies of the latest version of this prospectus to such
broker-dealers no later than one day after such request at any time during this
period.
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USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any cash proceeds from the
issuance of the Series B notes offered by this prospectus. In consideration for
issuing the Series B notes as contemplated in this prospectus, we will receive
in exchange Series A notes in like principal amount, the form and terms of which
are the same as the form and terms of the Series B notes, except as otherwise
described herein under "The exchange offer -- Terms of the exchange offer." The
Series A notes surrendered in exchange for the Series B notes will be retired
and canceled and cannot be reissued. Accordingly, issuance of the Series B notes
will not result in any increase in our indebtedness.
DESCRIPTION OF NOTES
You can find the definitions of terms in this description under the
subheading "Definitions." In this description, the word "Issuers" refers only to
El Paso Energy Partners and El Paso Finance and not to any of their subsidiaries
and any reference to "El Paso Energy Partners" or "El Paso Finance" does not
include any of their respective subsidiaries. As used in this section, "El Paso
Finance" means our subsidiary, El Paso Energy Partners Finance Corporation,
which is a co-issuer of the notes.
The Issuers issued the Series A notes under the Indenture (the "Indenture")
dated as of November 27, 2002, among the Issuers, the Subsidiary Guarantors and
JPMorgan Chase Bank, as trustee (the "Trustee") in a private transaction that
was not subject to the registration requirements of the Securities Act. The
Series B notes will be issued under the same Indenture. The terms of the notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
Indenture. It does not restate that agreement in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
a holder of these notes. Copies of the Indenture are available upon request from
El Paso Energy Partners. Terms used herein are defined below under
'--Definitions."
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
GENERAL
The Series A notes and the Series B notes will constitute a single class of
debt securities under the Indenture. If the exchange offer is completed, holders
of Series A notes who do not exchange their Series A notes for Series B notes
will vote together with holders of the Series B notes for all relevant purposes
under the Indenture. In that regard, the Indenture requires that certain actions
by holders, including acceleration following an event of default, must be taken,
and certain rights must be exercised, by specified minimum percentages of the
aggregate principal amount of the outstanding securities issued under the
Indenture. In determining whether the required holders have given any notice,
consent or waiver or taken any other action permitted under the Indenture, any
Series A notes that remain outstanding after the exchange offer will be
aggregated with the Series B notes, and the holders of the Series A notes and
the Series B notes will vote together as a single series. All references in this
prospectus to specified percentages in aggregate principal amount of the notes
means, at any time after the exchange offer is completed, the percentages in
aggregate principal amount of the Series A notes and the Series B notes
collectively then outstanding.
THE NOTES
The notes are:
- general unsecured obligations of the Issuers;
- subordinated in right of payment to all existing and future Senior Debt
of the Issuers, including borrowings under the Partnership Credit
Facility;
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- senior or equal in right of payment to any future subordinated
Indebtedness of the Issuers and equal in right of payment to our existing
senior subordinated notes; and
- unconditionally guaranteed by the Subsidiary Guarantors.
THE GUARANTEES
As of the date of this prospectus, the notes are guaranteed by the
following subsidiaries of El Paso Energy Partners:
- Chaco Liquids Plant Trust
- Crystal Holding, L.L.C.
- El Paso Energy Intrastate, L.P.
- El Paso Energy Partners Oil Transport, L.L.C.
- El Paso Energy Partners Operating Company, L.L.C.
- El Paso Energy Warwink I Company, L.P.
- El Paso Energy Warwink II Company, L.P.
- El Paso Offshore Gathering & Transmission, L.P.
- El Paso South Texas, L.P.
- EPGT Texas Pipeline, L.P.
- EPN Alabama Intrastate, L.L.C.
- EPN Field Services, L.L.C.
- EPN Gathering and Treating Company, L.P.
- EPN Gathering and Treating GP Holding, L.L.C.
- EPN GP Holding, L.L.C.
- EPN GP Holding I, L.L.C.
- EPN Gulf Coast, L.P.
- EPN Holding Company, L.P.
- EPN Holding Company I, L.P.
- EPN NGL Storage, L.L.C.
- EPN Pipeline GP Holding, L.L.C.
- First Reserve Gas, L.L.C.
- Flextrend Development Company, L.L.C.
- Hattiesburg Gas Storage Company
- Hattiesburg Industrial Gas Sales, L.L.C.
- High Island Offshore System, L.L.C.
- Manta Ray Gathering Company, L.L.C.
- Petal Gas Storage, L.L.C.
- Poseidon Pipeline Company, L.L.C.
- Warwink Gathering and Treating Company
39
Each Guarantee of a Subsidiary Guarantor of these notes:
- is a general unsecured obligation of that Subsidiary Guarantor;
- is subordinated in right of payment to all existing and future Senior
Debt of that Subsidiary Guarantor; and
- is senior or equal in right of payment to any future subordinated
Indebtedness of that Subsidiary Guarantor.
As of November 30, 2002, the Issuers and the Subsidiary Guarantors would
have had total Senior Debt and Guarantor Senior Debt of approximately $1
billion, although the Indenture will allow us to incur at least $1.2 billion of
Senior Debt. As indicated above and as discussed in detail below under the
subheading "Subordination," payments on the notes and the Guarantees will be
subordinated to the payment of Senior Debt and Guarantor Senior Debt,
respectively. The Indenture will permit the Issuers and the Subsidiary
Guarantors to incur additional Senior Debt and Guarantor Senior Debt. The
Guarantee of each Subsidiary Guarantor will be subordinated to all Senior Debt
of that Subsidiary Guarantor. In addition, payments on the notes will be
effectively subordinated to claims of creditors (other than El Paso Energy
Partners) of our subsidiaries that are not guarantors of the notes. As of
November 30, 2002, our non-guarantor subsidiaries had no indebtedness.
As of the date of the Indenture, all of our Subsidiaries (other than El
Paso Finance and our Unrestricted Subsidiaries) will be "Restricted
Subsidiaries." Certain Subsidiaries in the future may not be Subsidiary
Guarantors. Also, under the circumstances described below under the subheading
"Covenants--Designation of restricted and unrestricted subsidiaries," we will be
permitted to designate certain of our Subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants in the Indenture. Unrestricted Subsidiaries will not
guarantee the notes. As of the date of this prospectus, EPN Arizona Gas, LLC;
Arizona Gas Storage, LLC and Matagorda Island Area Gathering System are the only
Unrestricted Subsidiaries. In addition, El Paso Energy Partners has invested,
and may invest in the future, in Joint Ventures. The rights of El Paso Energy
Partners to receive assets from any Subsidiary that is not a Subsidiary
Guarantor or from any Joint Venture that are attributable to El Paso Energy
Partners's Equity Interests therein (and thus the ability of the holders of the
notes to benefit indirectly from such assets) are subject to the claims of all
existing and future third party indebtedness and liabilities (including trade
debt) of such Subsidiary or Joint Venture.
PRINCIPAL, MATURITY AND INTEREST
The Issuers will issue notes offered hereby in an initial aggregate
principal amount of $200 million. Subject to compliance with the covenant
described below under "--Incurrence of indebtedness and issuance of disqualified
equity," we may issue additional notes from time to time under the Indenture.
The Issuers will issue notes in denominations of $1,000 and integral multiples
of $1,000. The notes will mature on December 1, 2012.
Interest on the notes offered hereby will accrue at the rate of 10 5/8% per
annum and will be payable semi-annually in arrears on June 1 and December 1,
commencing on June 1, 2003. The Issuers will make each interest payment to the
holders of record of these notes on the immediately preceding May 15 and
November 15.
Interest on the notes offered hereby will accrue from November 27, 2002 or,
if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to the Issuers, the
Issuers will make all payments of principal of, premium, if any, and interest
and Liquidated Damages, if any, on the notes in accordance with those
instructions. All other payments on these notes will be made at the office or
agency of the Paying
40
Agent and Registrar within the City and State of New York, unless the Issuers
elect to make interest payments by check mailed to the holders at their address
set forth in the register of holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. The Issuers
may change the Paying Agent or Registrar without prior notice to the holders of
the notes, and the Issuers or any of their Subsidiaries may act as Paying Agent
or Registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Issuers may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any note
selected for redemption or repurchase (except in the case of a note to be
redeemed or repurchased in part, the portion not to be redeemed or repurchased).
Also, the Issuers are not required to transfer or exchange any note for a period
of 15 days before a selection of notes to be redeemed or between a record date
and the next succeeding interest payment date.
The registered holder of a note will be treated as the owner of it for all
purposes.
SUBORDINATION
The payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, and other Obligations on, the notes, including upon the
acceleration or redemption of the notes, will be subordinated to the prior
payment in full in cash of all Senior Debt of the Issuers.
The holders of Senior Debt of the Issuers and the holders of Guarantor
Senior Debt of the Subsidiary Guarantors will be entitled to receive payment in
full in cash of all Obligations due in respect of Senior Debt and Guarantor
Senior Debt (including interest after the commencement of any of the following
specified proceedings at the rate specified in the applicable Senior Debt,
whether or not such interest would be an allowed claim in such proceeding), as
applicable, before the holders of notes will be entitled to receive any payment
or distribution with respect to the notes (except that holders of notes may
receive and retain Permitted Junior Securities and payments made from the trust
described under "--Legal defeasance and covenant defeasance," provided that the
funding of such trust was permitted), in the event of any payment or
distribution to creditors of an Issuer:
(1) in a liquidation or dissolution of that Issuer;
(2) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to that Issuer or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshalling of that Issuer's assets and liabilities.
Neither of the Issuers may make any payment or distribution (whether by
redemption, purchase, defeasance or otherwise) in respect of the notes (except
in Permitted Junior Securities or from the trust described under "--Legal
defeasance and covenant defeasance") if:
(1) a default in the payment of principal, premium or interest (and
other Obligations in the case of the Credit Facilities) on Designated
Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on Designated Senior
Debt that permits holders of the Designated Senior Debt to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Issuers or the holders of any Designated Senior
Debt (or their representative).
41
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such
default is cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived and 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 120 days. If the Trustee or
any holder receives payment that violates the above, such payment shall be held
in trust by the Trustee or such holder for the benefit of, and upon written
request shall be paid to, the holder of Designated Senior Debt. Holders of the
notes shall have subrogation rights.
The Issuers must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of El Paso Energy Partners or El
Paso Finance, holders of these notes may recover less ratably than creditors of
the Issuers who are holders of Senior Debt. See "Risk factors."
THE GUARANTEES
To the extent that any of our Restricted Subsidiaries guarantees any of our
indebtedness or any indebtedness of any other Restricted Subsidiary, such
Subsidiary will be required to guarantee our obligations under the notes and the
Indenture.
The Subsidiary Guarantors will jointly and severally guarantee the Issuers'
obligations under these notes. Each Guarantee and the related obligations will
be subordinated to the prior payment in full of all Senior Debt of that
Subsidiary Guarantor. The obligations of each Subsidiary Guarantor under its
Guarantee will be limited as necessary to prevent that Guarantee from
constituting a fraudulent conveyance under applicable law. See "Risk factors."
The Obligations of each Subsidiary Guarantor with respect to the notes
under its Guarantee will be subordinated to its Guarantor Senior Debt on the
same basis as the notes are subordinated to Senior Debt.
No Subsidiary Guarantor will incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Guarantor Senior Debt of such Subsidiary Guarantor and
senior in any respect in right of payment to such Subsidiary Guarantor's
Guarantee.
A Subsidiary Guarantor may not consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
Person unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(2) the Person (if not otherwise a Subsidiary Guarantor) formed by or
surviving any such consolidation or merger assumes all the obligations of
that Subsidiary Guarantor pursuant to a supplemental indenture satisfactory
to the Trustee, except as provided in the next paragraph.
El Paso Energy Partners or any Subsidiary Guarantor, however, may be merged
or consolidated with or into any one or more Subsidiary Guarantors or El Paso
Energy Partners.
The Guarantee of a Subsidiary Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Subsidiary Guarantor (including by
way of merger or consolidation), if El Paso Energy Partners applies
42
the Net Proceeds of that sale or other disposition in accordance with the
applicable provisions of the Indenture; or
(2) in connection with any sale or other disposition of all of the
Equity Interests of a Subsidiary Guarantor, if El Paso Energy Partners
applies the Net Proceeds of that sale in accordance with the applicable
provisions of the Indenture applicable to Asset Sales; or
(3) if El Paso Energy Partners designates any Restricted Subsidiary
that is a Subsidiary Guarantor as an Unrestricted Subsidiary; or
(4) at such time as such Subsidiary Guarantor ceases to guarantee any
other Indebtedness of El Paso Energy Partners.
See "Repurchase at the option of holders--Asset sales."
Any Restricted Subsidiary that guarantees Indebtedness of either of the
Issuers or any other Restricted Subsidiary at a time when it is not a Subsidiary
Guarantor shall execute a Guarantee.
OPTIONAL REDEMPTION
Prior to December 1, 2005, the Issuers may on any one or more occasions
redeem up to 33 percent of the aggregate principal amount of notes originally
issued under the Indenture at a redemption price of 110.625 percent of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of one or
more Equity Offerings. However, at least 67 percent of the aggregate principal
amount of notes must remain outstanding immediately after the occurrence of such
redemption (excluding notes held by El Paso Energy Partners, El Paso Finance and
our Restricted Subsidiaries). Any redemption must occur within 90 days of the
date of the closing of such Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be
redeemable at the Issuers' option prior to December 1, 2007
On or after December 1, 2007, the Issuers may redeem all or a part of these
notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, if any, and Liquidated Damages, if any, to
the applicable redemption date, if redeemed during the 12-month period beginning
on December 1st of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2007........................................................ 105.313%
2008........................................................ 103.542%
2009........................................................ 101.771%
2010 and thereafter......................................... 100.0%
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of
the principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed or there are no such requirements,
on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
43
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest and
Liquidated Damages, if applicable, ceases to accrue on notes or portions of them
called for redemption unless the Issuers default in making such redemption
payment.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of notes will have the right to
require the Issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that holder's notes pursuant to the Change of
Control Offer. In the Change of Control Offer, the Issuers will offer a Change
of Control Payment in cash equal to 101 percent of the aggregate principal
amount of notes repurchased plus accrued and unpaid interest thereon, if any,
and Liquidated Damages, if any, to the date of purchase (the "Change of Control
Payment"), subject to the rights of holders in whose name a note is registered
on a record date occurring prior to the Change of Control Payment Date to
receive interest on an interest payment date occurring after such Change of
Control Payment Date. Within 30 days following any Change of Control, the
Issuers will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
notes on the Change of Control Payment Date specified in such notice, pursuant
to the procedures required by the Indenture and described in such notice. The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all notes or portions thereof so tendered;
and
(3) deliver or cause to be delivered to the Trustee the notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of notes or portions thereof being purchased by El Paso
Energy Partners.
The Paying Agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof. The Issuers will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Issuers will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of notes required by this covenant.
The provisions described above that require the Issuers to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the holder of the notes to require that the
Issuers repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.
El Paso Energy Partners's outstanding Partnership Credit Facility currently
prohibits El Paso Energy Partners from purchasing any notes, and also provides
that certain change of control events with respect to El
44
Paso Energy Partners would constitute a default under the agreements governing
such Senior Debt. Any future credit agreements or other agreements relating to
Senior Debt to which El Paso Energy Partners becomes a party may contain similar
restrictions and provisions. Moreover, the exercise by the holders of their
right to require the Issuers to repurchase the notes could cause a default under
such Senior Debt, even if the Change of Control does not, due to the financial
effect of such a repurchase on El Paso Energy Partners. If a Change of Control
occurs at a time when El Paso Energy Partners is prohibited from purchasing
notes, El Paso Energy Partners could seek the consent of its senior lenders to
the purchase of notes or could attempt to refinance the borrowings that contain
such prohibition. If El Paso Energy Partners does not obtain such a consent or
repay such borrowings, El Paso Energy Partners will remain prohibited from
purchasing notes. In such case, El Paso Energy Partners's failure to purchase
tendered notes would constitute an Event of Default under the Indenture which
would, in turn, in all likelihood constitute a default under such Senior Debt.
In such circumstances, the subordination provisions in the Indenture would
likely restrict payments to the holders of notes. Finally, the Issuers' ability
to pay cash to the holders upon a repurchase may be limited by El Paso Energy
Partners's then existing financial resources. We cannot assure you that
sufficient funds will be available when necessary to make any required
repurchases.
Notwithstanding the preceding paragraphs of this covenant, the Issuers will
not be required to make a Change of Control Offer upon a Change of Control and a
holder will not have the right to require the Issuers to repurchase any notes
pursuant to a Change of Control Offer if a third party makes an offer to
purchase the notes in the manner, at the times and otherwise in substantial
compliance with the requirements set forth in the Indenture applicable to a
Change of Control Offer and purchases all notes validly tendered and not
withdrawn under such purchase offer.
The definition of Change of Control includes a phrase relating to the sale,
transfer, lease, conveyance or other disposition of "all or substantially all"
of the assets of El Paso Energy Partners and its Subsidiaries taken as a whole.
Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of notes to require
El Paso Energy Partners to repurchase such notes as a result of a sale,
transfer, lease, conveyance or other disposition of less than all of the assets
of El Paso Energy Partners and its Restricted Subsidiaries taken as a whole to
another Person or group may be uncertain.
ASSET SALES
The Issuers will not, and will not permit any of El Paso Energy Partners's
Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) El Paso Energy Partners (or the Restricted Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(2) such fair market value is determined by (a) an executive officer
of El Paso Energy Partners if the value is less than $10.0 million, as
evidenced by an Officers' Certificate delivered to the Trustee or (b) the
Board of Directors of the General Partner if the value is $10.0 million or
more, as evidenced by a resolution of such Board of Directors of the
General Partner; and
(3) at least 75 percent of the consideration therefor received by El
Paso Energy Partners or such Restricted Subsidiary is in the form of cash
or Cash Equivalents. For purposes of this provision, each of the following
shall be deemed to be cash:
a. any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's most recent balance sheet) of El Paso Energy
Partners or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated
to the notes or any Guarantee) that are assumed by the
transferee of any such assets pursuant to a customary novation
agreement that releases El Paso Energy Partners or such
Restricted Subsidiary from further liability; and
45
b. any securities, notes or other obligations received by El Paso
Energy Partners or any such Restricted Subsidiary from such
transferee that are within 90 days after the Asset Sale (subject
to ordinary settlement periods) converted by such Issuer or such
Restricted Subsidiary into cash (to the extent of the cash
received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
El Paso Energy Partners or a Restricted Subsidiary may apply (or enter into a
definitive agreement for such application within such 360-day period, provided
that such capital expenditure or purchase is closed within 90 days after the end
of such 360-day period) such Net Proceeds at its option:
(1) to repay Senior Debt of El Paso Energy Partners and/or its
Restricted Subsidiaries (or to make an offer to repurchase or redeem Senior
Debt, provided that such repurchase or redemption closes within 45 days
after the end of such 360-day period) with a permanent reduction in
availability for any revolving credit Indebtedness;
(2) to make a capital expenditure in a Permitted Business;
(3) to acquire other long-term tangible assets that are used or useful
in a Permitted Business; or
(4) to invest in any other Permitted Business Investment or any other
Permitted Investments other than Investments in Cash Equivalents, Interest
Swaps or Currency Agreements.
Pending the final application of any such Net Proceeds, we may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuers will make
a pro rata offer (an "Asset Sale Offer") to all holders of notes and all holders
of other Indebtedness that is pari passu with the notes containing provisions
similar to those set forth in the Indenture with respect to offers to purchase
or redeem with the proceeds of sales of assets to purchase the maximum principal
amount of notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100 percent of principal amount plus accrued and unpaid interest (including any
Liquidated Damages in the case of the notes), if any, and premium, if any, to
the date of purchase, and will be payable in cash. If any Excess Proceeds remain
after consummation of an Asset Sale Offer, El Paso Energy Partners may use such
Excess Proceeds for any purpose not otherwise prohibited by the Indenture,
including, without limitation, the repurchase or redemption of Indebtedness of
the Issuers or any Subsidiary Guarantor that is subordinated to the notes or, in
the case of any Subsidiary Guarantor, the Guarantee of such Subsidiary
Guarantor. If the aggregate principal amount of notes tendered into such Asset
Sale Offer exceeds the amount of Excess Proceeds allocated for repurchases of
notes pursuant to the Asset Sale Offer for notes, the Trustee shall select the
notes to be purchased on a pro rata basis. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
The term Asset Sale excludes:
(1) any transaction whereby assets or properties (including (a)
ownership interests in any Subsidiary or Joint Venture and (b) in the case
of an exchange or contribution for tangible assets, up to 25 percent in the
form of cash, Cash Equivalents, accounts receivable or other current
assets), owned by El Paso Energy Partners or a Restricted Subsidiary are
exchanged or contributed for the Equity Interests of a Joint Venture or
Unrestricted Subsidiary in a transaction that satisfies the requirements of
a Permitted Business Investment or for other assets (not more than 25
percent of which consists of cash, Cash Equivalents, accounts receivables
or other current assets) or properties (including interests in any
Subsidiary or Joint Venture) so long as (i) the fair market value of the
assets or properties (if other than a Permitted Business Investment)
received are substantially equivalent to the fair market value of the
assets or properties given up, and (ii) any cash received in such exchange
or contribution by El Paso Energy Partners or any Restricted Subsidiary is
applied in accordance with the foregoing "--Asset sales" provision;
(2) any sale, transfer or other disposition of cash or Cash
Equivalents;
46
(3) any sale, transfer or other disposition of Restricted Investments;
and
(4) any sale, transfer or other disposition of interests in oil and
gas leaseholds (including, without limitation, by abandonment, farm-ins,
farm-outs, leases, swaps and subleases), hydrocarbons and other mineral
products in the ordinary course of business of the oil and gas operations
conducted by El Paso Energy Partners or any Restricted Subsidiary, which
sale, transfer or other disposition is made by El Paso Energy Partners or
any Restricted Subsidiary.
COVENANTS
RESTRICTED PAYMENTS
The Issuers will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of El Paso Energy Partners's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving El
Paso Energy Partners or any of its Restricted Subsidiaries) or to the
direct or indirect holders of El Paso Energy Partners's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other
than distributions or dividends payable in Equity Interests of El Paso
Energy Partners (other than Disqualified Equity) and other than
distributions or dividends payable to El Paso Energy Partners or a
Restricted Subsidiary);
(2) except to the extent permitted in clause (4) below, purchase,
redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving an
Issuer) any Equity Interests of El Paso Energy Partners or any of its
Restricted Subsidiaries (other than any such Equity Interests owned by El
Paso Energy Partners or any of its Restricted Subsidiaries);
(3) except to the extent permitted in clause (4) below, make any
payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is pari passu with or
subordinated to the notes or the Guarantees (other than the notes or the
Guarantees), except (a) a payment of interest or principal at the Stated
Maturity thereof, (b) a purchase, redemption, acquisition or retirement
required to be made pursuant to the terms of such Indebtedness (including
pursuant to an asset sale or change of control provision) and (c) any such
Indebtedness of El Paso Energy Partners or a Restricted Subsidiary owned by
El Paso Energy Partners or a Restricted Subsidiary; or
(4) make any Investment other than a Permitted Investment or a
Permitted Business Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof and either:
(1) if the Fixed Charge Coverage Ratio for El Paso Energy Partners's
four most recent fiscal quarters for which internal financial statements
are available is not less than 2.0 to 1.0, such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by
El Paso Energy Partners and its Restricted Subsidiaries during the quarter
in which such Restricted Payment is made, is less than the sum, without
duplication, of:
a. Available Cash constituting Cash from Operations as of the end
of the immediately preceding quarter, plus
b. the aggregate net cash proceeds of any (i) substantially
concurrent capital contribution to El Paso Energy Partners from
any Person (other than a Restricted Subsidiary of El Paso Energy
Partners) made after the Issue Date, (ii) substantially
concurrent issuance and sale made after the Issue Date of Equity
Interests (other than Disqualified Equity) of El Paso Energy
Partners or from the issuance or sale made after the Issue Date
of convertible or exchangeable Disqualified Equity or
convertible or exchangeable debt securities of El Paso Energy
Partners that have been converted into or exchanged for such
Equity Interests (other
47
than Disqualified Equity), (iii) to the extent that any Restricted
Investment that was made after the Issue Date is sold for cash or
Cash Equivalents or otherwise liquidated or repaid for cash or
Cash Equivalents, the lesser of the refund of capital or similar
payment made in cash or Cash Equivalents with respect to such
Restricted Investment (less the cost of such disposition, if any)
and the initial amount of such Restricted Investment (other than
to a Restricted Subsidiary of El Paso Energy Partners), plus
c. the net reduction in Investments in Restricted Investments
resulting from dividends, repayments of loans or advances, or
other transfers of assets in each case to El Paso Energy
Partners or any of its Restricted Subsidiaries from any Person
(including, without limitation, Unrestricted Subsidiaries) or
from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries, to the extent such amounts have not been included
in Available Cash constituting Cash from Operations for any
period commencing on or after the Issue Date (items (b) and (c)
being referred to as "Incremental Funds"), minus
d. the aggregate amount of Incremental Funds previously expended
pursuant to this clause (1) or clause (2) below; or
(2) if the Fixed Charge Coverage Ratio for El Paso Energy Partners's
four most recent fiscal quarters for which internal financial statements
are available is less than 2.0 to 1.0, such Restricted Payment, together
with the aggregate amount of all other Restricted Payments made by El Paso
Energy Partners and its Restricted Subsidiaries during the quarter in which
such Restricted Payment is made, is less than the sum, without duplication,
of:
a. $60.0 million less the aggregate amount of all Restricted
Payments made by El Paso Energy Partners and its Restricted
Subsidiaries pursuant to this clause (2)(a) during the period
ending on the last day of the fiscal quarter of El Paso Energy
Partners immediately preceding the date of such Restricted
Payment and beginning on the Issue Date, plus
b. Incremental Funds to the extent not previously expended pursuant
to this clause (2) or clause (1) above.
For purposes of clauses (1) and (2) above, the term "substantially
concurrent" means that either (x) the offering was consummated within 120 days
of the date of determination or (y) the offering was consummated within 24
months of the date of determination and the proceeds therefrom were used for the
purposes expressly stated in the documents related thereto and may be traced to
such use by segregating, separating or otherwise specifically identifying the
movement of such proceeds.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment by El Paso Energy Partners or any Restricted
Subsidiary of any distribution or dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness of El Paso
Energy Partners or any of its Restricted Subsidiaries or of any Equity
Interests of El Paso Energy Partners or any of its Restricted Subsidiaries
in exchange for, or out of the net cash proceeds of, a substantially
concurrent (a) capital contribution to El Paso Energy Partners or such
Restricted Subsidiary from any Person (other than El Paso Energy Partners
or another Restricted Subsidiary) or (b) sale (a sale will be deemed
substantially concurrent if such redemption, repurchase, retirement,
defeasance or acquisition occurs not more than 120 days after such sale)
(other than to a Restricted Subsidiary of El Paso Energy Partners) of (i)
Equity Interests (other than Disqualified Equity) of El Paso Energy
Partners or such Restricted Subsidiary or (ii) Indebtedness that is
subordinated to the notes or the Guarantees, provided that such new
subordinated Indebtedness with respect to the redemption, repurchase,
retirement, defeasance or other acquisition of pari passu or subordinated
Indebtedness (W) is subordinated to the same extent as such refinanced
subordinated Indebtedness,
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(X) has a Weighted Average Life to Maturity of at least the remaining
Weighted Average Life to Maturity of the refinanced subordinated
Indebtedness, (Y) is for the same principal amount as either such
refinanced subordinated Indebtedness plus original issue discount to the
extent not reflected therein or the redemption or purchase price of such
Equity Interests (plus reasonable expenses of refinancing and any premiums
paid on such refinanced subordinated Indebtedness) and (Z) is incurred by
El Paso Energy Partners or the Restricted Subsidiary that is the obligor on
the Indebtedness so refinanced or the issuer of the Equity Interests so
redeemed, repurchased or retired; provided, however, that the amount of any
net cash proceeds that are utilized for any such redemption, repurchase or
other acquisition or retirement shall be excluded or deducted from the
calculation of Available Cash and Incremental Funds;
(3) the defeasance, redemption, repurchase or other acquisition of
pari passu or subordinated Indebtedness of El Paso Energy Partners or any
Restricted Subsidiary with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(4) the payment of any distribution or dividend by a Restricted
Subsidiary to El Paso Energy Partners or to the holders of its Equity
Interests (other than Disqualified Equity) on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of El Paso Energy Partners or any Restricted
Subsidiary of El Paso Energy Partners held by any member of the General
Partner's or El Paso Energy Partners's or any Restricted Subsidiary's
management pursuant to any management equity subscription agreement or
stock option agreement or to satisfy obligations under any Equity Interests
appreciation rights or option plan or similar arrangement; provided that
the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $5.0 million in any 12-month
period; and
(6) any payment by El Paso Energy Partners pursuant to section 3.1(b)
of the Management Agreement to compensate for certain tax liabilities
resulting from certain allocated income.
In computing the amount of Restricted Payments previously made for purposes
of the immediately preceding paragraph, Restricted Payments made under clauses
(1) (but only if the declaration of such dividend or other distribution has not
been counted in a prior period) and, to the extent of amounts paid to holders
other than El Paso Energy Partners or a Restricted Subsidiary, (4) of this
paragraph shall be included, and Restricted Payments made under clauses (2),
(3), (5) and (6) and, except to the extent noted above, (4) of this paragraph
shall not be included. The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
asset(s) or securities proposed to be transferred or issued by El Paso Energy
Partners or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. The fair market value of any assets or securities that are
required to be valued by this covenant shall be determined by the Board of
Directors of the General Partner whose resolution with respect thereto shall be
delivered to the Trustee.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED EQUITY
El Paso Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and El Paso Energy Partners will not issue any Disqualified Equity and
will not permit any of its Restricted Subsidiaries to issue any Disqualified
Equity; provided, however, that El Paso Energy Partners and any Restricted
Subsidiary may incur Indebtedness (including Acquired Debt), and El Paso Energy
Partners and the Restricted Subsidiaries may issue Disqualified Equity, if the
Fixed Charge Coverage Ratio for El Paso Energy Partners's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Equity is issued would have been at least 2.25 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Equity had been issued, as the case may be, at the beginning of
such four-quarter period.
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So long as no Default shall have occurred and be continuing or would be
caused thereby, the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by El Paso Energy Partners and any Restricted
Subsidiary of the Indebtedness under Credit Facilities and the guarantees
thereof; provided that the aggregate principal amount of all Indebtedness
of El Paso Energy Partners and the Restricted Subsidiaries outstanding
under all Credit Facilities after giving effect to such incurrence does not
exceed $1.2 billion less the aggregate amount of all repayments of
Indebtedness under a Credit Facility that have been made by El Paso Energy
Partners or any of its Restricted Subsidiaries in respect of Asset Sales to
the extent such repayments constitute a permanent reduction of commitments
under such Credit Facility;
(2) the incurrence by El Paso Energy Partners and its Restricted
Subsidiaries of Existing Indebtedness;
(3) the incurrence by El Paso Energy Partners and the Subsidiary
Guarantors of Indebtedness represented by the notes and the Guarantees and
the related Obligations;
(4) the incurrence by El Paso Energy Partners or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of El Paso Energy Partners or such Restricted Subsidiary, in an
aggregate principal amount not to exceed $20.0 million at any time
outstanding;
(5) the incurrence by El Paso Energy Partners or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that was not incurred
in violation of the Indenture;
(6) the incurrence by El Paso Energy Partners or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among El Paso Energy
Partners and any of its Restricted Subsidiaries; provided, however, that:
a. if El Paso Energy Partners or any Subsidiary Guarantor is the
obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the notes, in the case of El
Paso Energy Partners, or the Guarantee of such Subsidiary
Guarantor, in the case of a Subsidiary Guarantor, and
b. (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other
than El Paso Energy Partners or a Restricted Subsidiary thereof
and (ii) any sale or other transfer of any such Indebtedness to
a Person that is not either El Paso Energy Partners or a
Restricted Subsidiary thereof, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by El Paso Energy
Partners or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (6);
(7) the incurrence by El Paso Energy Partners or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging foreign currency exchange rate risk of El Paso Energy
Partners or any Restricted Subsidiary or interest rate risk with respect to
any floating rate Indebtedness of El Paso Energy Partners or any Restricted
Subsidiary that is permitted by the terms of this Indenture to be
outstanding or commodities pricing risks of El Paso Energy Partners or any
Restricted Subsidiary in respect of hydrocarbon production from properties
in which El Paso Energy Partners or any of its Restricted Subsidiaries owns
an interest;
(8) the guarantee by El Paso Energy Partners or any of the Restricted
Subsidiaries of Indebtedness of El Paso Energy Partners or a Restricted
Subsidiary that was permitted to be incurred by another provision of this
covenant;
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(9) bid, performance, surety and appeal bonds in the ordinary course
of business, including guarantees and standby letters of credit supporting
such obligations, to the extent not drawn;
(10) the incurrence by El Paso Energy Partners or any of its
Restricted Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (10), not to exceed $20.0 million;
(11) the incurrence by El Paso Energy Partners's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary,
such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of El Paso Energy Partners that was not permitted by
this clause (11);
(12) the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Equity, in the form of additional shares of the same class
of Disqualified Equity, provided, in each such case, that the amount
thereof is included in Fixed Charges of El Paso Energy Partners as so
accrued, accredited or amortized; and
(13) Indebtedness incurred by El Paso Energy Partners or any of its
Restricted Subsidiaries arising from agreements or their respective bylaws
providing for indemnification, adjustment of purchase price or similar
obligations.
For purposes of determining compliance with this "--Incurrence of
indebtedness and issuance of disqualified equity" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (13) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, El
Paso Energy Partners will be permitted to classify such item of Indebtedness in
any manner that complies with this covenant. An item of Indebtedness may be
divided and classified in one or more of the types of Permitted Indebtedness.
LIMITATION ON LAYERING
The Issuers will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of either Issuer and senior in any respect in right
of payment to the notes. No Subsidiary Guarantor will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt of such Subsidiary
Guarantor and senior in any respect in right of payment to such Subsidiary
Guarantor's Guarantee.
LIENS
El Paso Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness, Attributable Debt or trade
payables on any asset now owned or hereafter acquired, except Permitted Liens,
without making effective provision whereby all Obligations due under the notes
and Indenture or any Guarantee, as applicable, will be secured by a Lien equally
and ratably with any and all Obligations thereby secured for so long as any such
Obligations shall be so secured.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
El Paso Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Equity
Interests to El Paso Energy Partners or any of El Paso Energy Partners's
Restricted Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any indebtedness owed
to El Paso Energy Partners or any of the other Restricted Subsidiaries;
51
(2) make loans or advances to or make other investments in El Paso
Energy Partners or any of the other Restricted Subsidiaries; or
(3) transfer any of its properties or assets to El Paso Energy
Partners or any of the other Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements as in effect on the Issue Date and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of any such agreements or any Existing
Indebtedness to which such agreement relates, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive, taken as
a whole, with respect to such distribution, dividend and other payment
restrictions and loan or investment restrictions than those contained in
such agreement, as in effect on the Issue Date;
(2) the Partnership Credit Facility and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive, taken as a whole, with respect to
such distribution, dividend and other payment restrictions and loan or
investment restrictions than those contained in such Credit Facility as in
effect on the Issue Date;
(3) the Indenture, the notes and the Guarantees;
(4) applicable law;
(5) any instrument governing Indebtedness or Equity Interests of a
Person acquired by El Paso Energy Partners or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than such Person, or the property or assets of such Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted
by the terms of the Indenture to be incurred;
(6) customary non-assignment provisions in licenses and leases entered
into in the ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted
Subsidiary that contains any one or more of the restrictions described in
clauses (1) through (3) of the preceding paragraph by such Restricted
Subsidiary pending its sale or other disposition, provided that such sale
or disposition is consummated, or such restrictions are canceled or
terminated or lapse, within 90 days;
(9) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(10) Liens securing Indebtedness otherwise permitted to be issued
pursuant to the provisions of the covenant described above under the
caption "--Liens" that limit the right of El Paso Energy Partners or any of
its Restricted Subsidiaries to dispose of the assets subject to such Lien;
(11) any agreement or instrument relating to any property or assets
acquired after the Issue Date, so long as such encumbrance or restriction
relates only to the property or assets so acquired and is not and was not
created in anticipation of such acquisitions;
(12) any agreement or instrument relating to any Acquired Debt of any
Restricted Subsidiary at the date on which such Restricted Subsidiary was
acquired by El Paso Energy Partners or any Restricted
52
Subsidiary (other than Indebtedness incurred in anticipation of such
acquisition and provided such encumbrances or restrictions extend only to
property of such acquired Restricted Subsidiary);
(13) any agreement or instrument governing Indebtedness permitted to
be incurred under the Indenture, provided that the terms and conditions of
any such restrictions and encumbrances, taken as a whole, are not
materially more restrictive than those contained in the Indenture, taken as
a whole;
(14) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements, including clawback, "make-well" or "keep-well" agreements, to
maintain financial performance or results of operations of a joint venture
entered into in the ordinary course of business; and
(15) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither of the Issuers may, directly or indirectly: (1) consolidate or
merge with or into another Person (whether or not such Issuer is the survivor);
or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person; unless:
(1) either: (a) such Issuer is the surviving entity of such
transaction; or (b) the Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made is an entity organized or existing under the laws of the United
States, any state thereof or the District of Columbia, provided that El
Paso Finance may not consolidate or merge with or into any entity other
than a corporation satisfying such requirement for so long as El Paso
Energy Partners remains a partnership;
(2) the Person formed by or surviving any such consolidation or merger
(if other than such Issuer) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made
expressly assumes all the obligations of such Issuer under the notes and
the Indenture pursuant to agreements reasonably satisfactory to the
Trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) such Issuer or the Person formed by or surviving any such
consolidation or merger (if other than such Issuer):
a. will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth
of such Issuer immediately preceding the transaction; and
b. will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-
quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant
described above under the caption "Incurrence of Indebtedness
and Issuance of Disqualified Equity;" provided, however, that
this clause (b) shall be suspended during any period in which we
and our Restricted Subsidiaries are not subject to the Suspended
Covenants; and
(5) such Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and, if a supplemental indenture is required, such supplemental
indenture comply with the Indenture and all conditions precedent therein
relating to such transaction have been satisfied.
53
Notwithstanding the foregoing paragraph, El Paso Energy Partners is
permitted to reorganize as any other form of entity in accordance with the
procedures established in the Indenture; provided that:
(1) the reorganization involves the conversion (by merger, sale,
contribution or exchange of assets or otherwise) of El Paso Energy Partners
into a form of entity other than a limited partnership formed under
Delaware law;
(2) the entity so formed by or resulting from such reorganization is
an entity organized or existing under the laws of the United States, any
state thereof or the District of Columbia;
(3) the entity so formed by or resulting from such reorganization
assumes all the obligations of El Paso Energy Partners under the notes and
the Indenture pursuant to agreements reasonably satisfactory to the
Trustee;
(4) immediately after such reorganization no Default or Event of
Default exists; and
(5) such reorganization is not adverse to the holders of the notes
(for purposes of this clause (5) it is stipulated that such reorganization
shall not be considered adverse to the holders of the notes solely because
the successor or survivor of such reorganization (i) is subject to federal
or state income taxation as an entity or (ii) is considered to be an
"includible corporation" of an affiliated group of corporations within the
meaning of Section 1504(b)(i) of the Code or any similar state or local
law).
The "Merger, consolidation, or sale of assets" covenant described in the
first paragraph of this section will not apply to a merger or consolidation, or
any sale, assignment, transfer, lease, conveyance or other disposition of assets
between or among El Paso Energy Partners and any of its Restricted Subsidiaries.
No Subsidiary Guarantor may consolidate with or merge with or into (whether
or not such Subsidiary Guarantor is the surviving Person) another Person,
whether or not affiliated with such Subsidiary Guarantor, but excluding El Paso
Energy Partners or another Subsidiary Guarantor, unless (i) subject to the
provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Subsidiary Guarantor) assumes
all the obligations of such Subsidiary Guarantor pursuant to the Subsidiary
Guarantor's Guarantee of the notes and the Indenture pursuant to a supplemental
indenture and (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists. Any Subsidiary Guarantor may be merged or
consolidated with or into any one or more Subsidiary Guarantors.
In the event of a sale or other disposition of all or substantially all of
the assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all or substantially all of the
Equity Interests of any Subsidiary Guarantor, then such Subsidiary Guarantor (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all of the Equity Interests of such Subsidiary Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all or substantially all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Guarantee; provided that the
transaction complies with the provisions set forth under "Asset sales."
TRANSACTIONS WITH AFFILIATES
El Paso Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to El Paso Energy Partners or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by El Paso Energy
Partners or such Restricted Subsidiary with an unrelated Person; and
(2) El Paso Energy Partners delivers to the Trustee:
a. with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $10.0 million but less than or equal to $25.0 million,
54
an Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved (either pursuant to specific or general resolutions)
by the Board of Directors of the General Partner or has been
approved by an officer pursuant to a delegation (specific or
general) of authority from the Board of Directors of the General
Partner; and
b. with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $25.0 million, (A) a resolution of the Board of
Directors of the General Partner set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies
with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board
of Directors of the General Partner and (B) either (I) an
opinion as to the fairness to El Paso Energy Partners of such
Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national
standing recognized as an expert in rendering fairness opinions
on transactions such as those proposed, (II) with respect to
assets classified, in accordance with GAAP, as property, plant
and equipment on El Paso Energy Partners's or such Restricted
Subsidiary's balance sheet, a written appraisal from a
nationally recognized appraiser showing the assets have a fair
market value not less than the consideration to be paid
(provided that if the fair market value determined by such
appraiser is a range of values or otherwise inexact, the Board
of Directors of the General Partner shall determine the exact
fair market value, provided that it shall be within the range so
determined by the appraiser), (III) in the case of gathering,
transportation, marketing, hedging, production handling,
operating, construction, storage, platform use, or other
operational contracts, any such contracts are entered into in
the ordinary course of business on terms substantially similar
to those contained in similar contracts entered into by El Paso
Energy Partners or any Restricted Subsidiary and third parties
or, if none of El Paso Energy Partners or any Restricted
Subsidiary has entered into a similar contract with a third
party, that the terms are no less favorable than those available
from third parties on an arm's-length basis, as determined by
the Board of Directors of the General Partner or (IV) in the
case of any transaction between El Paso Energy Partners or any
of its Restricted Subsidiaries and any Affiliate thereof in
which El Paso Energy Partners beneficially owns 50 percent or
less of the Voting Stock and one or more Persons not Affiliated
with El Paso Energy Partners beneficially own (together) a
percentage of Voting Stock at least equal to the interest in
Voting Stock of such Affiliate beneficially owned by El Paso
Energy Partners, a resolution of the Board of Directors of the
General Partner set forth in the Officers' Certificate
certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved
by a majority of the disinterested members of the Board of
Directors of the General Partner. Even though a particular
Affiliate Transaction or series of Affiliate Transactions may be
covered by two or more of clauses (I) through (IV) above, the
compliance with any one of such applicable clauses shall be
satisfactory.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) transactions pursuant to the Management Agreement as in effect on
the date hereof,
(2) any employment, equity option or equity appreciation agreement or
plan entered into by El Paso Energy Partners or any of its Restricted
Subsidiaries in the ordinary course of business and, as applicable,
consistent with the past practice of El Paso Energy Partners or such
Restricted Subsidiary;
(3) transactions between or among El Paso Energy Partners and/or its
Restricted Subsidiaries;
(4) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "--Restricted payments;"
(5) transactions effected in accordance with the terms of agreements
as in effect on the Issue Date;
55
(6) customary compensation, indemnification and other benefits made
available to officers, directors or employees of El Paso Energy Partners or
a Restricted Subsidiary, including reimbursement or advancement of
out-of-pocket expenses and provisions of officers' and directors' liability
insurance; and
(7) loans to officers and employees made in the ordinary course of
business in an aggregate amount not to exceed $1.0 million at any one time
outstanding.
ADDITIONAL SUBSIDIARY GUARANTEES
If El Paso Energy Partners or any of its Restricted Subsidiaries acquires
or creates another Restricted Subsidiary after the Issue Date that guarantees
any Indebtedness of either of the Issuers, then that newly acquired or created
Restricted Subsidiary must become a Subsidiary Guarantor and execute a
supplemental indenture satisfactory to the Trustee and deliver an Opinion of
Counsel to the Trustee within 10 Business Days of the date on which it was
acquired or created. If a Restricted Subsidiary that is not then a Subsidiary
Guarantor guarantees Indebtedness of either of the Issuers or any other
Restricted Subsidiary, such Restricted Subsidiary shall execute and deliver a
Guarantee. El Paso Energy Partners will not permit any of its Restricted
Subsidiaries, directly or indirectly, to guarantee or pledge any assets to
secure the payment of any other Indebtedness of either Issuer unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture providing for the guarantee of the payment of the notes by such
Restricted Subsidiary, which guarantee shall be senior to or pari passu with
such Restricted Subsidiary's guarantee of or pledge to secure such other
Indebtedness, unless such other Indebtedness is Senior Debt, in which case the
guarantee of the notes may be subordinated to the guarantee of such Senior Debt
to the same extent as the notes are subordinated to such Senior Debt.
Notwithstanding the foregoing, any Guarantee of a Restricted Subsidiary that was
incurred pursuant to this paragraph shall provide by its terms that it shall be
automatically and unconditionally released upon the release or discharge of the
guarantee which resulted in the creation of such Restricted Subsidiary's
Subsidiary Guarantee, except a discharge or release by, or as a result of
payment under, such guarantee.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The General Partner may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default or Event
of Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, all outstanding Investments owned by El Paso Energy Partners and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "--Restricted payments," for Permitted
Investments or for Permitted Business Investments, as applicable. All such
outstanding Investments will be valued at their fair market value at the time of
such designation. That designation will only be permitted if such Restricted
Payment, Permitted Investments or Permitted Business Investments would be
permitted at that time and such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. All Subsidiaries of an Unrestricted
Subsidiary shall be also Unrestricted Subsidiaries. The Board of Directors of
the General Partner may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if a Default or Event of Default is not continuing, the
redesignation would not cause a Default or Event of Default and provided that,
if at the time of such designation such Subsidiary is a Subsidiary Guarantor,
after giving effect to such designation, El Paso Energy Partners and its
remaining Restricted Subsidiaries could incur at least $1.00 of additional
Indebtedness under the limitation on indebtedness included in the first
paragraph under the caption "Incurrence of indebtedness and issuance of
disqualified equity" above. A Subsidiary may not be designated as an
Unrestricted Subsidiary unless at the time of such designation, (x) it has no
Indebtedness other than Non-Recourse Debt; (y) no portion of the Indebtedness or
any other obligation of such Subsidiary (whether contingent or otherwise and
whether pursuant to the terms of such Indebtedness or the terms governing the
organization and operation of such Subsidiary or by law) (A) is guaranteed by El
Paso Energy Partners or any other Restricted Subsidiary, except as such
Indebtedness is permitted by the covenants under "--Restricted payments" and
'--Incurrence of indebtedness and issuance of disqualified equity" above, (B) is
recourse to or obligates El Paso Energy Partners or any Restricted Subsidiary in
any way (including
56
any "claw-back," "keep-well" or "make-well" agreements or other agreements,
arrangements or understandings to maintain the financial performance or results
of operations of such Subsidiary, except as such Indebtedness or Investment is
permitted by the covenants captioned "--Incurrence of indebtedness and issuance
of disqualified equity" and "--Restricted payments") or (C) subjects any
property or assets of El Paso Energy Partners or any Restricted Subsidiary,
directly or indirectly, contingently or otherwise, to the satisfaction thereof;
and (z) no Equity Interests of a Restricted Subsidiary are held by such
Subsidiary, directly or indirectly. Upon the designation of a Restricted
Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary, the
Guarantee of such entity shall be released.
SALE AND LEASE-BACK TRANSACTIONS
El Paso Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and lease-back transaction; provided that
El Paso Energy Partners or any Restricted Subsidiary that is a Subsidiary
Guarantor may enter into a sale and lease-back transaction if:
(1) El Paso Energy Partners or that Subsidiary Guarantor, as
applicable, could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and lease-back transaction under
the Fixed Charge Coverage Ratio test in the first paragraph of the covenant
described above under the caption "--Incurrence of additional indebtedness
and issuance of disqualified equity," and (b) incurred a Lien to secure
such Indebtedness pursuant to the covenant described above under the
caption "--Liens;" provided, however, that clause (a) of this clause (1)
shall be suspended during any period in which we and our Restricted
Subsidiaries are not subject to the Suspended Covenants;
(2) the gross cash proceeds of that sale and lease-back transaction
are at least equal to the fair market value, as determined in good faith by
the Board of Directors of the General Partner, of the property that is the
subject of such sale and lease-back transaction; and
(3) the transfer of assets in that sale and lease-back transaction is
permitted by, and El Paso Energy Partners applies the proceeds of such
transaction in compliance with, the covenant described above under the
caption "--Repurchase at the option of holders--Asset sales."
BUSINESS ACTIVITIES
El Paso Energy Partners will not, and will not permit any Restricted
Subsidiary to, engage in any business other than Permitted Businesses.
PAYMENTS FOR CONSENT
El Paso Energy Partners will not, and will not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any holder of notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the notes unless such consideration is offered to be paid
and is paid to all holders of the notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
El Paso Energy Partners will file with the SEC (unless the SEC will not accept
such a filing) within the time periods specified in the SEC's rules and
regulations, and upon request, El Paso Energy Partners will furnish (without
exhibits) to the Trustee for delivery to the holders of the notes:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
El Paso Energy Partners were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on
the annual financial statements by El Paso Energy Partners's certified
independent accountants; and
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(2) all current reports that would be required to be filed with the
SEC on Form 8-K if El Paso Energy Partners were required to file such
reports.
If as of the end of any such quarterly or annual period El Paso Energy
Partners has designated any of its Subsidiaries as Unrestricted Subsidiaries or
if El Paso Energy Partners owns more than 50 percent of Deepwater Holdings, but
such entity or any of its Subsidiaries still is designated as a Joint Venture,
then El Paso Energy Partners shall deliver (promptly after such SEC filing
referred to in the preceding paragraph) to the Trustee for delivery to the
holders of the notes quarterly and annual financial information required by the
preceding paragraph as revised to include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of El Paso
Energy Partners and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries and the
designated Joint Ventures of El Paso Energy Partners.
In addition, whether or not required by the SEC, El Paso Energy Partners
will make such information available to securities analysts, investors and
prospective investors upon request.
SUSPENDED COVENANTS
During any period when the notes have an Investment Grade Rating from both
Rating Agencies and no Default has occurred and is continuing under the
Indenture, we and our Restricted Subsidiaries will not be subject to the
provisions of the Indenture described above under the following headings under
the caption "-- Covenants":
- "-- Incurrence of indebtedness and issuance of disqualified equity,"
- "-- Restricted payments,"
- "-- Dividend and other payment restrictions affecting subsidiaries,"
- "-- Asset sales,"
- "-- Transactions with affiliates,"
- "-- Sale--Leaseback transactions" (only to the extent set forth in that
covenant), and
- "-- Merger, consolidation or sale of assets" (only to the extent set
forth in that covenant)
(collectively, the "Suspended Covenants"); provided, however, that the
provisions of the Indenture described above under the caption "-- Change of
control," and described above under the following headings:
- "-- Liens,"
- "-- Additional subsidiary guarantees,"
- "-- Reports,"
- "-- Business activities,"
- "-- Payments for consent," and
- "-- Limitation on layering"
will not be so suspended; and provided further, that if we and our Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time
as a result of the preceding portion of this sentence and, subsequently, either
of the Rating Agencies withdraws its ratings or downgrades the ratings assigned
to the notes below the Investment Grade Ratings so that the notes do not have an
Investment Grade Rating from both Rating Agencies, or a Default (other than with
respect to the Suspended Covenants) occurs and is continuing, we and our
Restricted Subsidiaries will thereafter again be subject to the Suspended
Covenants, subject to the terms, conditions and obligations set forth in the
Indenture (each such date of reinstatement being the "Reinstatement Date").
Compliance with the Suspended Covenants with respect to Restricted Payments made
after the Reinstatement Date will be calculated in accordance with the terms of
the covenant
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described under "-- Restricted payments" as though such covenants had been in
effect during the entire period of time from which the notes are issued. As a
result, during any period in which we and our Restricted Subsidiaries are not
subject to the Suspended Covenants, the notes will be entitled to substantially
reduced covenant protection.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the notes, whether or not prohibited by
the subordination provisions of the Indenture;
(2) default in payment when due of the principal of or premium, if
any, on the notes, whether or not prohibited by the subordination
provisions of the Indenture;
(3) failure by El Paso Energy Partners or any of its Subsidiaries to
comply with the provisions described under the captions "-- Change of
control" or "-- Asset sales";
(4) failure by El Paso Energy Partners or any of its Restricted
Subsidiaries for 60 days after notice to comply with any of the other
agreements in the Indenture (provided that notice need not be given, and an
Event of Default shall occur, 60 days after any breach of the covenants
under "-- Covenants -- Restricted payments," "-- Covenants -- Incurrence of
indebtedness and issuance of disqualified equity" and "-- Merger,
consolidation or sale of assets");
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by an Issuer or any of El Paso Energy
Partners's Restricted Subsidiaries (or the payment of which is guaranteed
by El Paso Energy Partners or any of its Restricted Subsidiaries), whether
such Indebtedness or guarantee now exists or is created after the Issue
Date, if that default:
a. is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such
default (a "Payment Default"); or
b. results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $20.0 million or more;
(6) failure by an Issuer or any of El Paso Energy Partners's
Restricted Subsidiaries to pay final judgments aggregating in excess of
$10.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(7) except as permitted by the Indenture, any Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in force and effect or any Subsidiary Guarantor, or
any Person acting on behalf of any Subsidiary Guarantor, shall deny or
disaffirm its obligations under its Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to El Paso
Energy Partners or any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Issuers, all outstanding notes
will become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the Trustee or the holders of
at least 25 percent in principal amount of the then outstanding notes may
declare all the notes to be due and payable immediately. Notwithstanding the
foregoing, so long as any Credit Facility shall be in full force and effect, if
an Event of Default pursuant to clause (5) above with regard to such Credit
Facility shall have occurred and be continuing, the notes shall not become due
and payable until the earlier to occur of (x) five business days
59
following delivery of written notice of such acceleration of the notes to the
agent under such Credit Facility and (y) the acceleration of any Indebtedness
under such Credit Facility.
Holders of the notes may not enforce the Indenture or the notes except as
provided in the Indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
The holder of a majority in aggregate principal amount of the notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest (or Liquidated Damages, if any) on, or the principal of, the notes.
The Issuers and the Subsidiary Guarantors are required to deliver to the
Trustee annually a statement regarding compliance with the Indenture. Upon any
officer of the General Partner or El Paso Finance becoming aware of any Default
or Event of Default, the Issuers are required to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, partner, employee,
incorporator, stockholder or member of the Issuers, the General Partner, or any
Subsidiary Guarantor, as such, shall have any liability for any obligations of
the Issuers or the Subsidiary Guarantors under the notes, the Indenture, the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of the
Issuers' obligations discharged with respect to the outstanding notes and all
obligations of the Subsidiary Guarantors discharged with respect to their
Guarantees ("Legal Defeasance"), except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, premium, if any, and interest on such notes
when such payments are due (but not the Change of Control Payment or the
payment pursuant to an Asset Sale Offer);
(2) the Issuers' obligations with respect to the notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and the Issuers' obligations in connection therewith;
(4) the Legal Defeasance provisions of the Indenture; and
(5) the Issuers' rights of optional redemption.
In addition, El Paso Energy Partners may, at its option and at any time,
elect to have the obligations of the Issuers and the Guarantors released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with those covenants shall
not constitute a Default or Event of Default with respect to the notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the notes.
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In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the notes, cash in U.S. dollars,
non-callable U.S. Government Obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding notes at the Stated Maturity
thereof or on the applicable redemption date, as the case may be, and El
Paso Energy Partners must specify whether the notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, El Paso Energy Partners shall
have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that (a) El Paso Energy Partners has received
from, or there has been published by, the Internal Revenue Service a ruling
or (b) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the holders of the
outstanding notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(3) in the case of Covenant Defeasance, El Paso Energy Partners shall
have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the holders of the outstanding notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing either: (a) on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or a
portion of the proceeds of which shall be applied to such deposit); or (b)
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which El Paso Energy
Partners or any of its Restricted Subsidiaries is a party or by which El
Paso Energy Partners or any of its Restricted Subsidiaries is bound;
(6) El Paso Energy Partners must have delivered to the Trustee an
Opinion of Counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(7) El Paso Energy Partners must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by El Paso Energy
Partners with the intent of preferring the holders of notes over the other
creditors of El Paso Energy Partners with the intent of defeating,
hindering, delaying or defrauding other creditors of El Paso Energy
Partners; and
(8) El Paso Energy Partners must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Generally, the Issuers, the Subsidiary Guarantors and the Trustee may amend
or supplement the Indenture, the Guarantees and the notes with the consent of
the holders of at least a majority in principal amount of the notes then
outstanding. However, without the consent of each holder affected, an amendment
or waiver may not (with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver;
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(2) reduce the principal of or change the fixed maturity of any note
or alter or waive the provisions with respect to the redemption of the
notes (other than provisions relating to the covenants described above
under the caption "-- Repurchase at the option of holders");
(3) reduce the rate of or change the time for payment of interest on
any note;
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the notes (except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment default
that resulted from such acceleration);
(5) make any note payable in money other than that stated in the
notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of or premium, if any, or interest on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the caption
"-- Repurchase at the option of holders");
(8) except as otherwise permitted in the Indenture, release any
Subsidiary Guarantor from its obligations under its Guarantee or the
Indenture or change any Guarantee in any manner that would adversely affect
the rights of holders; or
(9) make any change in the preceding amendment and waiver provisions
(except to increase any percentage set forth therein).
In addition, any amendment to, or waiver of, the provisions of the
Indenture relating to subordination that adversely affects the rights of the
holders of the notes will require the consent of the holders of at least 75
percent in aggregate principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any holder of notes,
the Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of an Issuer's or Subsidiary
Guarantor's obligations to holders of notes in the case of a merger or
consolidation or sale of all or substantially all of such Issuer's assets;
(4) to add or release Subsidiary Guarantors pursuant to the terms of
the Indenture;
(5) to make any change that would provide any additional rights or
benefits to the holders of notes or surrender any right or power conferred
upon the Issuers or the Subsidiary Guarantors by the Indenture that does
not adversely affect the rights under the Indenture of any holder of the
notes;
(6) to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act;
(7) to evidence or provide for the acceptance of appointment under the
Indenture of a successor Trustee;
(8) to add any additional Events of Default; or
(9) to secure the notes and/or the Guarantees.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of an Issuer or any Subsidiary Guarantor,
the Indenture limits its right to obtain payment of claims in certain cases, or
to realize on certain property received in aspect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
however, if it
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acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent person the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to El Paso Energy
Partners at 4 Greenway Plaza, Houston, Texas, 77046, Attention: Investor
Relations.
BOOK-ENTRY, DELIVERY AND FORM
The Series A notes were offered and sold to QIBs in reliance on Rule 144A
("Rule 144A notes") and in offshore transactions in reliance on Regulation S
("Regulation S notes"). Notes resold to Institutional Accredited Investors (as
defined below in "Transfer restrictions") may have been represented by one or
more Global notes in registered, global form without interest coupons
(collectively, "IAI Global Notes").
Rule 144A notes initially were represented by one or more notes in
registered, global form without interest coupons (collectively, the "Rule 144A
Global notes"). Upon issuance, the Rule 144A Global notes were:
- deposited with the Trustee as custodian for The Depository Trust Company
("DTC"), in New York, New York, and
- registered in the name of DTC or its nominee,
in each case for credit to an account of a direct or indirect participant as
described below. Initially, Regulation S notes were represented by one or more
Global notes in registered, global form without interest coupons (collectively,
the "Regulation S Global notes"). The Regulation S Global notes were deposited
with the Trustee, as a custodian for DTC, in New York, New York and registered
in the name of a nominee of DTC for credit to the accounts of Indirect
Participants participating in DTC through the Euroclear System ("Euroclear") and
Clearstream International ("Clearstream"). During the 40-day period commencing
on the day after the later of the commencement of the offering of the original
notes and the original Issue Date (as defined) of the notes (the "Distribution
Compliance Period"), beneficial interests in the Regulation S Global note may be
held only through Euroclear or Clearstream, and, pursuant to DTC's procedures,
Indirect Participants that hold a beneficial interest in the Regulation S Global
note will not be able to transfer such interest to a person that takes delivery
thereof in the form of an interest in the Rule 144A Global notes or the IAI
Global Notes. After the Distribution Compliance Period, (i) beneficial interests
in the Regulation S Global Notes may be transferred to a person that takes
delivery in the form of an interest in the Rule 144A Global notes or the IAI
Global Notes and (ii) beneficial interests in the Rule 144A Global notes or the
IAI Global Notes may be transferred to a person that takes delivery in the form
of an interest in the Regulation S Global notes, provided, in each case, that
the certification requirements described below are complied with. See
"--Transfers of interests in one Global note for interests in another Global
note." All registered global notes are referred to herein collectively as
"Global notes."
Except as set forth below, the Series B notes issued in the exchange offer
will be represented by one or more registered notes in global form (referred to
herein as the "Exchange Global note") and the Series A notes, if any remain
outstanding after the exchange offer, will be represented by one or more
registered notes in global form, in each case without interest coupons
(collectively, the "Global notes"). The Exchange
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Global note will be deposited with, or on behalf of, the DTC and registered in
the name of Cede & Co., as nominee of DTC, or will remain in the custody of the
Trustee pursuant to the FAST Balance Certificate Agreement between DTC and the
Trustee.
Beneficial interests in Series A notes, if any remain outstanding after the
exchange offer, will be subject to certain restrictions on transfer and will
bear a restrictive legend. In addition, transfer of beneficial interests in any
Global notes will be subject to the applicable rules and procedures of DTC and
its direct or Indirect Participants (including, if applicable, those of
Euroclear and Clearstream), which may change from time to time.
The Global notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in limited
circumstances. Beneficial interests in the Global notes may be exchanged for
notes in certificated form in limited circumstances. See "-- Transfers of
interests in Global notes for Certificated notes."
Initially, the Trustee will act as Paying Agent and Registrar. The notes
may be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITARY PROCEDURES
DTC has advised El Paso Energy Partners that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "Direct Participants") and to facilitate the clearance and
settlement of transactions in those securities between Direct Participants
through electronic book-entry changes in accounts of Participants. The Direct
Participants include securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and other
organizations, including Euroclear and Clearstream. Access to DTC's system is
also available to other entities that clear through or maintain a direct or
indirect, custodial relationship with a Direct Participant (collectively, the
"Indirect Participants").
DTC has advised El Paso Energy Partners that, pursuant to DTC's procedures,
(i) upon deposit of the Global notes, DTC will credit the accounts of the Direct
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global notes that have been allocated to them by the Initial
Purchasers, and (ii) DTC will maintain records of the ownership interests of
such Direct Participants in the Global notes and the transfer of ownership
interests by and between Direct Participants. DTC will not maintain records of
the ownership interests of, or the transfer of ownership interests by and
between, Indirect Participants or other owners of beneficial interests in the
Global notes. Direct Participants and Indirect Participants must maintain their
own records of the ownership interests of, and the transfer of ownership
interests by and between, Indirect Participants and other owners of beneficial
interests in the Global notes.
Investors in the Rule 144A Global notes and the IAI Global notes may hold
their interests therein directly through DTC if they are Direct Participants in
DTC or indirectly through organizations that are Direct Participants in DTC.
Investors in the Regulation S Global notes may hold their interests therein
directly through Euroclear or Clearstream or indirectly through organizations
that are participants in Euroclear or Clearstream. After the expiration of the
Distribution Compliance Period (but not earlier), investors may hold interests
in the Regulation S Global notes through organizations other than Euroclear and
Clearstream that are Direct Participants in the DTC system. Morgan Guaranty
Trust Company of New York, Brussels office will act initially as depository for
Euroclear, and Citibank, N.A. will act initially as depository for Clearstream
(each a "Nominee" of Euroclear and Clearstream, respectively). Therefore, they
will each be recorded on DTC's records as the holders of all ownership interests
held by them on behalf of Euroclear and Clearstream, respectively. Euroclear and
Clearstream must maintain on their own records the ownership interests, and
transfers of ownership interests by and between, their own customers' securities
accounts. DTC will not maintain such records. All ownership interests in any
Global notes, including those of customers' securities accounts held through
Euroclear or Clearstream, may be subject to the procedures and requirements of
DTC.
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The laws of some states in the United States require that certain persons
take physical delivery in definitive, certificated form, of securities that they
own. This may limit or curtail the ability to transfer beneficial interest in a
Global note to such persons. Because DTC can act only on behalf of Direct
Participants, which in turn act on behalf of Indirect Participants and others,
the ability of a person having a beneficial interest in a Global note to pledge
such interest to persons or entities that are not Direct Participants in DTC, or
to otherwise take actions in respect of such interests, may be affected by the
lack of physical certificates evidencing such interests. For other restrictions
on the transferability of the notes see "-- Transfers of interests in Global
notes for Certificated notes."
EXCEPT AS DESCRIBED IN "-- TRANSFERS ON INTERESTS IN GLOBAL NOTES FOR
CERTIFICATED NOTES," OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Under the terms of the Indenture, the Issuers, the Subsidiary Guarantors
and the Trustee will treat the persons in whose names the notes are registered
(including notes represented by Global notes) as the owners thereof for the
purpose of receiving payments and for any and all other purposes whatsoever.
Payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on Global notes registered in the name of DTC or its
nominee will be payable by the Trustee to DTC or its nominee as the registered
holder under the Indenture. Consequently, none of the Issuers, the Trustee nor
any agent of the Issuers or the Trustee has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Direct Participant's or
Indirect Participant's records relating to or payments made on account of
beneficial ownership interests in the Global notes or for maintaining,
supervising or reviewing any of DTC's records or any Direct Participant's or
Indirect Participant's records relating to the beneficial ownership interests in
any Global note or (ii) any other matter relating to the actions and practices
of DTC or any of its Direct Participants or Indirect Participants.
DTC has advised the Issuers that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the
notes is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global notes as shown on
DTC's records. Payments by Direct Participants and Indirect Participants to the
beneficial owners of the notes will be governed by standing instructions and
customary practices between them and will not be the responsibility of DTC, the
Trustee, the Issuers or the Subsidiary Guarantors. None of the Issuers, the
Subsidiary Guarantors or the Trustee will be liable for any delay by DTC or its
Direct Participants or Indirect Participants in identifying the beneficial
owners of the notes, and the Issuers and the Trustee may conclusively relay on
and will be protected in relying on instructions from DTC or its nominee as the
registered owner of the notes for all purposes.
The Global notes will trade in DTC's Same-day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the notes through Euroclear or Clearstream) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the notes through Euroclear and Clearstream will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between Direct Participants in
DTC, on the one hand, and Indirect Participants who hold interests in the notes
through Euroclear or Clearstream, on the other hand, will be effected by
Euroclear's or Clearstream's respective Nominee through DTC in accordance with
DTC's rules on behalf of Euroclear or Clearstream; however, delivery of
instructions relating to crossmarket transactions must be made directly to
Euroclear or Clearstream and within their established deadlines (Brussels time)
of such systems. Indirect Participants who hold interest in the notes through
Euroclear and Clearstream may not deliver instructions directly to Euroclear's
and Clearstream's Nominee. Euroclear and Clearstream will, if the transaction
meets
65
its settlement requirements, deliver instructions to its respective Nominee to
deliver or receive interests on Euroclear's or Clearstream's behalf in the
relevant Global note in DTC, and make or receive payment in accordance with
normal procedures for same-day fund settlement applicable to DTC.
Because of time zone differences, the securities accounts of an Indirect
Participant who holds an interest in the notes through Euroclear or Clearstream
purchasing an interest in a Global Note from a Direct Participant in DTC will be
credited, and any such crediting will be reported to Euroclear or Clearstream
during the European business day immediately following the settlement date of
DTC in New York. Although recorded in DTC's accounting records as of DTC's
settlement date in New York, Euroclear and Clearstream customers will not access
to the cash amount credited to their accounts as a result of a sale of an
interest in a Regulation S Global Note to a DTC Participant unit the European
business for Euroclear and Clearstream immediately following DTC's settlement
date.
DTC has advised El Paso Energy Partners that it will take any action
permitted to be taken by a holder of notes only at the direction of one or more
Direct Participants to whose account interests in the Global notes are credited
and only in respect of such portion of the aggregate principal amount of the
notes to which such Direct Participant or Direct Participants has or have given
direction. However, if there is an Event of Default under the notes, DTC
reserves the right to exchange Global notes (without the direction of one or
more of its Direct Participants) for legend notes in certificated form, and to
distribute such certificated forms of notes to its Direct Participants. See
"-- Transfers of interests in Global notes for Certificated notes."
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Regulation S Global
notes, the Rule 144A Global notes and the IAI Global notes among Direct
Participants, including Euroclear and Clearstream, they are under no obligation
to perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. None of the Issuers, the Subsidiary Guarantors, the
Initial Purchasers or the Trustee shall have any responsibility for the
performance by DTC, Euroclear and Clearstream or their respective Direct and
Indirect Participants of their respective obligations under the rules and
procedures governing any of their operations.
The information in this section concerning DTC, Euroclear and Clearstream
and their book-entry systems has been obtained from sources that the Issuers
believe to be reliable, but the Issuers take no responsibility for the accuracy
thereof.
TRANSFERS OF INTERESTS IN ONE GLOBAL NOTE FOR INTERESTS IN ANOTHER GLOBAL NOTE
Prior to the expiration of the Distribution Compliance Period, an Indirect
Participant who holds an interest in the Regulation S Global Note through
Euroclear or Clearstream will not be permitted to transfer its interest to a
U.S. Person who takes delivery in the form of an interest in Rule 144A Global
notes or the IAI Global notes. After the expiration of the Distribution
Compliance Period, an Indirect Participant who holds an interest in Regulation S
Global notes will be permitted to transfer its interest to a U.S. Person who
takes delivery in the form of an interest in Rule 144A Global notes or the IAI
Global notes only upon receipt by the Trustee of a written certification from
the transferor to the effect that such transfer is being made in accordance with
the restrictions on transfer set forth under "Transfer restrictions" and set
forth in the legend printed on the Regulation S Global note.
"U.S. Person" means (i) any individual resident in the United States, (ii)
any partnership or corporation organized or incorporated under the laws of the
United States, (iii) any estate of which an executor or administrator is a U.S.
Person (other than an estate governed by foreign law and of which at least one
executor or administrator is a non-U.S. Person who has sole or shared investment
discretion with respect to its assets), (iv) any trust of which any trustee is a
U.S. Person (other than a trust of which at least one trustee is a non-U.S.
Person who has sole or shared investment discretion with respect to its assets
and no beneficiary of the trust (and no settler, if the trust is revocable) is a
U.S. Person), (v) any agency or branch of a foreign entity located in the United
States, (vi) any non-discretionary or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
Person, (vii) any discretionary or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States (other than such an account held for
the benefit
66
or account of a non-U.S. Person), (viii) any partnership or corporation
organized or incorporated under the laws of a foreign jurisdiction and formed by
a U.S. Person principally for the purpose of investing in securities not
registered under the Securities Act (unless it is organized or incorporated and
owned by "accredited investors" within the meaning of Rule 501(a) under the
Securities Act who are not natural persons, estates or trusts); provided,
however, that the term "U.S. Person" shall not include (A) a branch or agency of
a U.S. Person that is located and operating outside the United States for valid
business purposes as a locally regulated branch or agency engaged in the banking
or insurance business, (B) any employee benefit plan established and
administered in accordance with the law, customary practices and documentation
of a foreign country and (C) the international organizations set forth in
Section 902(k)(2)(vi) of Regulation S under the Securities Act and any other
similar international organizations, and their agencies, affiliates and pension
plans.
Prior to the expiration of the Distribution Compliance Period, a Direct or
Indirect Participant who holds an interest in Rule 144A Global notes or IAI
Global notes will not be permitted to transfer its interests to any person that
takes delivery thereof in the form of an interest in Regulation S Global notes.
After the expiration of the Distribution Compliance Period, a Direct or Indirect
Participant who holds an interest in Rule 144A Global notes or IAI Global notes
may transfer its interests to a person who takes delivery in the form of an
interest in Regulation S Global notes only upon receipt by the Trustee of a
written certification from the transferor to the effect that such transfer is
being made in accordance with Rule 904 of Regulation S.
Transfers involving an exchange of a beneficial interest in Regulation S
Global notes for a beneficial interest in Rule 144A Global notes, or vice versa,
will be effected by DTC by means of an instruction originated by the Trustee
through DTC/Deposit Withdraw at Custodian (DWAC) system. In connection with such
transfer, therefore, appropriate adjustments will be made to reflect a decrease
in the principal amount of the one Global note and a corresponding increase in
the principal amount of the other Global note, as applicable. Any beneficial
interest in the one Global note that is transferred to a person who takes
delivery in the form of the other Global note will, upon transfer, cease to be
an interest in such first Global note and become an interest in such other
Global note and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in such
other Global note for as long as it remains such an interest.
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global note may be exchanged for definitive notes in registered,
certificated form without interest coupons ("Certificated notes") if (i) DTC (x)
notifies the Issuers that it is unwilling or unable to continue as depositary
for the Global notes and the Issuers thereupon fail to appoint a successor
depositary within 90 days or (y) has ceased to be a clearing agency registered
under the Exchange Act, (ii) the Issuers, at their option, notify the Trustee in
writing that they elect to cause the issuance of Certificated notes or (iii)
there shall have occurred and be continuing a Default or an Event of Default
with respect to the notes. In any such case, the Issuers will notify the Trustee
in writing that, upon surrender by the Direct and Indirect Participants of their
interest in such Global Note, Certificated notes will be issued to each person
that such Direct and Indirect Participants and the DTC identify as being the
beneficial owner of the related notes.
Beneficial interests in the Global notes held by any Direct or Indirect
Participant may be exchanged for Certificated notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
Trustee in accordance with customary DTC procedures. Certificated notes
delivered in exchange for any beneficial interest in any Global note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct or Indirect Participants (in accordance with DTC's
customary procedures).
None of the Issuers, the Subsidiary Guarantors or the Trustee will be
liable for any delay by the holder of any Global note or DTC in identifying the
beneficial owners of notes, and the Issuers and the Trustee may conclusively
rely on, and will be protected in relying on, instructions from the holder of
the Global note or DTC for all purposes.
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SAME DAY SETTLEMENT AND PAYMENT
Payments in respect of the notes represented by the Global notes (including
principal, premium, if any, interest and Liquidated Damages, if any) will be
made by wire transfer of immediately available same day funds to the accounts
specified by the holder of interests in such Global Note. With respect to
Certificated notes, the Issuers will make all payments of principal, premium, if
any, interest and Liquidated Damages, if any, by wire transfer of immediately
available same day funds to the accounts specified by the holders thereof or, if
no such account is specified, by mailing a check to each such holder's
registered address. The Issuers expect that secondary trading in the
Certificated notes will also be settled in immediately available funds.
DEFINITIONS
Set forth below are defined terms used in the Indenture. Reference is made
to the Indenture for a full disclosure of all such terms, as well as any other
capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with, or
in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person, but excluding Indebtedness which is
extinguished, retired or repaid in connection with such Person merging with
or becoming a Subsidiary of such specific Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10 percent or more
of the Voting Stock of a specified Person shall be deemed to be control by the
other Person; provided, further, that any third Person which also beneficially
owns 10 percent or more of the Voting Stock of a specified Person shall not be
deemed to be Affiliate of either the specified Person or the other Person merely
because of such common ownership in such specified Person. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings. Notwithstanding the foregoing, the term
"Affiliate" shall not include a Restricted Subsidiary of any specified Person.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of business
consistent with past practices; provided that the sale, conveyance or other
disposition of all or substantially all of the assets of El Paso Energy
Partners or El Paso Energy Partners and its Restricted Subsidiaries taken
as a whole will be governed by the provisions of the Indenture described
above under the caption "-- Change of control," and/or the provisions
described above under the caption "-- Merger, consolidation or sale of
assets" and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of El Paso Energy
Partners's Restricted Subsidiaries or the sale by El Paso Energy Partners
or any of its Restricted Subsidiaries of Equity Interests in any of its
Restricted Subsidiaries;
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $5.0 million; or
(b) results in net proceeds to El Paso Energy Partners and its Restricted
Subsidiaries of less than $5.0 million;
68
(2) a transfer of assets between or among El Paso Energy Partners and
its Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to El
Paso Energy Partners or to another Restricted Subsidiary;
(4) a Restricted Payment that is permitted by the covenant described
above under the caption "-- Restricted payments;" and
(5) a transaction of the type described in the last paragraph of the
covenant entitled "Asset sales."
"Attributable Debt" in respect of a sale and lease-back transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and lease-back transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Available Cash" has the meaning assigned to such term in the Partnership
Agreement, as in effect on the Issue Date.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Cash Equivalent" means:
(1) United States dollars or, in an amount up to the amount necessary
or appropriate to fund local operating expenses, other currencies;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than one year from the date
of acquisition;
(3) certificates of deposit, time deposits and Eurodollar deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding 365 days, demand and overnight
bank deposits and other similar types of investments routinely offered by
commercial banks, in each case, with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thompson Bank Watch
Rating of "B" or better or any commercial bank of any other country that is
a member of the Organization for Economic Cooperation and Development
("OECD") and has total assets in excess of $500.0 million;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and
in each case maturing within six months after the date of acquisition; and
(6) money market funds at least 95 percent of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through
(5) of this definition.
"Cash from Operations" shall have the meaning assigned to such term in the
Partnership Agreement, as in effect on the Issue Date.
"Change of Control" means the occurrence of any of the following:
(1) the sale, transfer, lease, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of El Paso Energy
Partners and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Section 13(d)(3) of the Exchange Act) other than
the El Paso Group;
69
(2) the adoption of a plan relating to the liquidation or dissolution
of El Paso Energy Partners or the General Partner; and
(3) such time as the El Paso Group ceases to own, directly or
indirectly, the general partner interests of El Paso Energy Partners, or
members of the El Paso Group cease to serve as the only general partners of
El Paso Energy Partners.
Notwithstanding the foregoing, a conversion of El Paso Energy Partners from
a limited partnership to a corporation, limited liability company or other form
of entity or an exchange of all of the outstanding limited partnership interests
for capital stock in a corporation, for member interests in a limited liability
company or for Equity Interests in such other form of entity shall not
constitute a Change of Control, so long as following such conversion or exchange
the El Paso Group beneficially owns, directly or indirectly, in the aggregate
more than 50 percent of the Voting Stock of such entity, or continues to own a
sufficient number of the outstanding shares of Voting Stock of such entity to
elect a majority of its directors, managers, trustees or other persons serving
in a similar capacity for such entity.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to the dividends or distributions paid during such
period in cash or Cash Equivalents to such Person or any of its Restricted
Subsidiaries by a Person that is not a Restricted Subsidiary of such
Person; plus
(2) an amount equal to any extraordinary loss of such Person and its
Restricted Subsidiaries plus any net loss realized by such Person and its
Restricted Subsidiaries in connection with an Asset Sale, to the extent
such losses were deducted in computing such Consolidated Net Income; plus
(3) the provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income;
plus
(4) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with aspect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net payments, if any, pursuant to Hedging Obligations), to the extent
that any such expense was deducted in computing such Consolidated Net
Income, excluding any such expenses to the extent incurred by a Person that
is not a Restricted Subsidiary of the Person for which the calculation is
being made; plus
(5) depreciation, depletion and amortization (including amortization
of goodwill and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents an
accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of
such Person and its Restricted Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income (excluding any such
expenses to the extent incurred by a Person that is neither El Paso Energy
Partners, El Paso Finance, nor a Restricted Subsidiary;) minus
(6) non-cash items increasing such Consolidated Net Income for such
period, other than items that were accrued in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Restricted Subsidiary of El Paso Energy Partners shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of El Paso Energy
Partners only to the extent that a corresponding amount would be permitted at
the date of determination to be
70
dividended or distributed to El Paso Energy Partners by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the aggregate Net Income (but not net loss in excess of such
aggregate Net Income) of all Persons that are Unrestricted Subsidiaries
shall be excluded (without duplication);
(2) the earnings included therein attributable to all entities that
are accounted for by the equity method of accounting and the aggregate Net
Income (but not net loss in excess of such aggregate Net Income) included
therein attributable to all entities constituting Joint Ventures that are
accounted for on a consolidated basis (rather than by the equity method of
accounting) shall be excluded;
(3) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement (other than the Indenture or its
Guarantee), instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders;
(4) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded; and
(5) the cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common stockholders or members (or
consolidated partners' capital in the case of a partnership) of such Person
and its consolidated Subsidiaries as of such date as determined in
accordance with GAAP; plus
(2) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred stock (other than
Disqualified Equity) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock.
"Credit Facilities" means, with respect to El Paso Energy Partners, El Paso
Finance or any Restricted Subsidiary, one or more debt facilities or commercial
paper facilities, including the Partnership Credit Facility, providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Senior Debt" means any Indebtedness under the Partnership
Credit Facility and any Senior Debt permitted under the Indenture the principal
amount of which is $25.0 million or more and that has been designated by El Paso
Energy Partners as "Designated Senior Debt."
"Disqualified Equity" means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date on
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which the notes mature. Notwithstanding the preceding sentence, any Equity
Interest that would constitute Disqualified Equity solely because the holders
thereof have the right to require El Paso Energy Partners or a Restricted
Subsidiary to repurchase such Equity Interests upon the occurrence of a change
of control or an asset sale shall not constitute Disqualified Equity if the
terms of such Equity Interests provide that El Paso Energy Partners or
Restricted Subsidiary may not repurchase or redeem any such Equity Interests
pursuant to such provisions unless such repurchase or redemption complies with
the covenant described above under the caption "-- Covenants -- Restricted
payments."
"El Paso" means El Paso Corporation, a Delaware corporation, and its
successors.
"El Paso Group" means, collectively, (1) El Paso, (2) each Person of which
El Paso is a direct or indirect Subsidiary and (3) each Person which is a direct
or indirect Subsidiary of any Person described in (1) or (2) above.
"Equity Interests" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited);
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, and any rights (other than debt securities
convertible into capital stock) warrants or options exchangeable for or
convertible into such capital stock; and
(5) all warrants, options or other rights to acquire any of the
interests described in clauses (1) - (4) above (but excluding any debt
security that is convertible into, or exchangeable for, any of the
interests described in clauses (1) - (4) above).
"Equity Offering" means any sale for cash of Equity Interests of El Paso
Energy Partners (excluding sales made to any Restricted Subsidiary and excluding
sales of Disqualified Equity).
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of El Paso Energy Partners and its Restricted Subsidiaries in
existence on the Issue Date.
"Fixed Charges" means, with respect to any Person for any period, without
duplication,
(A) the sum of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries (excluding for purposes of this clause (1)
consolidated interest expense included therein that is attributable to
Indebtedness of a Person that is not a Restricted Subsidiary of the Person
for which the calculation is being made) for such period, whether paid or
accrued, including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts, and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period (excluding for
purposes of this clause (2) any such consolidated interest included therein
that is attributable to Indebtedness of a Person that is not a Restricted
Subsidiary); plus
(3) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
whether or not such guarantee or Lien is called upon, provided that this
clause (3) excludes
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interest on "claw-back," "make-well" or "keep-well" payments made by El
Paso Energy Partners or any Restricted Subsidiary; plus
(4) the product of (a) all dividend payments, whether or not in cash,
on any series of Disqualified Equity of such Person or any of its
Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of El Paso Energy Partners (other than
Disqualified Equity) or to El Paso Energy Partners or a Restricted
Subsidiary of El Paso Energy Partners, times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP; less
(B) to the extent included in (A) above, amortization or write-off of
deferred financing costs of such Person and its Restricted Subsidiaries during
such period and any charge related to, or any premium or penalty paid in
connection with, incurring any such Indebtedness of such Person and its
Restricted Subsidiaries prior to its Stated Maturity.
In the case of both (A) and (B), such amounts will be determined after
elimination of intercompany accounts among such Person and its Restricted
Subsidiaries and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays or redeems any Indebtedness
(other than revolving credit borrowings not constituting a permanent commitment
reduction) or issues or redeems Disqualified Equity subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence (and the application of the net proceeds thereof), assumption,
guarantee, repayment or redemption of Indebtedness, or such issuance or
redemption of Disqualified Equity, as if the same had occurred at the beginning
of the applicable four-quarter reference period (and if such Indebtedness is
incurred to finance the acquisition of assets (including, without limitation, a
single asset, a division or segment or an entire company) that were conducting
commercial operations prior to such acquisition, there shall be included pro
forma net income for such assets, as if such assets had been acquired on the
first day of such period).
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of
its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (4) of
the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, but only to the extent
that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date;
(4) interest on outstanding Indebtedness of the specified Person or
any of its Restricted Subsidiaries as of the last day of the four-quarter
reference period shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on such last
day after giving effect to any Hedging Obligation then in effect; and
73
(5) if interest on any Indebtedness incurred by the specified Person
or any of its Restricted Subsidiaries on such date may optionally be
determined at an interest rate based upon a factor of a prime or similar
rate, a eurocurrency interbank offered rate or other rates, then the
interest rate in effect on the last day of the four-quarter reference
period will be deemed to have been in effect during such period.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets, or through letters of credit or reimbursement, "claw-back," "make-well,"
or "keep-well" agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantor Senior Debt" of a Subsidiary Guarantor means all Obligations
with respect to any Indebtedness of such Subsidiary Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall be on a parity with or subordinated in
right of payment to such Subsidiary Guarantor's Guarantee. Without limiting the
generality of the foregoing, (x) "Guarantor Senior Debt" shall include the
principal of, premium, if any, and interest on all Obligations of every nature
of such Subsidiary Guarantor from time to time owed to the lenders under the
Partnership Credit Facility, including, without limitation, principal of and
interest on, and all fees, indemnities and expenses payable by such Subsidiary
Guarantor under, the Partnership Credit Facility, and (y) in the case of amounts
owing by such Subsidiary Guarantor under the Partnership Credit Facility and
guarantees of Designated Senior Indebtedness, "Guarantor Senior Debt" shall
include interest accruing thereon subsequent to the occurrence of any bankruptcy
Event of Default specified in the Indenture relating to such Subsidiary
Guarantor, whether or not the claim for such interest is allowed under any
applicable Bankruptcy Law. Notwithstanding the foregoing, "Guarantor Senior
Indebtedness" shall not include (i) Indebtedness evidenced by the notes or the
Guarantees, (ii) Indebtedness that is expressly subordinate or junior in right
of payment to any other Indebtedness of such Subsidiary Guarantor, (iii) any
liability for federal, state, local or other taxes owed or owing by such
Subsidiary Guarantor, (vi) Indebtedness of such Subsidiary Guarantor to El Paso
Energy Partners or a Subsidiary of El Paso Energy Partners or any other
Affiliate of El Paso Energy Partners, (vii) any trade payables of such
Subsidiary Guarantor, and (viii) any Indebtedness which is incurred by such
Subsidiary Guarantor in violation of the Indenture.
"Hedging Obligations" means, with respect to any Person, the net
obligations (not the notional amount) of such Person under interest rate and
commodity price swap agreements, interest rate and commodity price cap
agreements, interest rate and commodity price collar agreements and foreign
currency and commodity price exchange agreements, options or futures contract or
other similar agreements or arrangements or hydrocarbon hedge contracts or
hydrocarbon forward sale contracts, in each case designed to protect such Person
against fluctuations in interest rates, of foreign exchange rates, or commodity
prices.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof), other
than standby letters of credit and performance bonds issued by such Person
in the ordinary course of business, to the extent not drawn;
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
74
(5) all Attributable Debt of such Person in respect of any sale and
lease-back transactions not involving a Capital Lease Obligation;
(6) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable incurred in the ordinary course of business;
(7) representing Disqualified Equity; or
(8) representing any Hedging Obligations other than to (in the
ordinary course of business and consistent with prior practice) hedge risk
exposure in the operations, ownership of assets or the management of
liabilities of such Person and its Restricted Subsidiaries;
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person, provided that a
guarantee otherwise permitted by the Indenture to be incurred by El Paso Energy
Partners or any of its Restricted Subsidiaries of Indebtedness incurred by El
Paso Energy Partners or a Restricted Subsidiary in compliance with the terms of
the Indenture shall not constitute a separate incurrence of Indebtedness.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
For purposes of clause (7) of the preceding paragraph, Disqualified Equity
shall be valued at the maximum fixed redemption, repayment or repurchase price,
which shall be calculated in accordance with the terms of such Disqualified
Equity as if such Disqualified Equity were repurchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that if such Disqualified Equity is not then permitted by its
terms to be redeemed, repaid or repurchased, the redemption, repayment or
repurchase price shall be the book value of such Disqualified Equity. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability of any guarantees at such date; provided that for purposes of
calculating the amount of any non-interest bearing or other discount security,
such Indebtedness shall be deemed to be the principal amount thereof that would
be shown on the balance sheet of the issuer thereof dated such date prepared in
accordance with GAAP, but that such security shall be deemed to have been
incurred only on the date of the original issuance thereof. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by Standard & Poor's.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of the lender and
commission, moving, travel and similar advances to officers and employees made
in the ordinary course of business) or capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. For purposes of
the definition of "Unrestricted Subsidiary," the definition of "Restricted
Payment" and the covenant described under the "Limitation on Restricted
Payments" covenant (i) the term "Investment" shall include the portion
(proportionate to El Paso Energy Partners's Equity Interest in such
75
Subsidiary) of the fair market value of the net assets of any Subsidiary of El
Paso Energy Partners or any of its Restricted Subsidiaries at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however, that
upon a redesignation of such Subsidiary as a Restricted Subsidiary, El Paso
Energy Partners or such Restricted Subsidiary shall be deemed to continue to
have a permanent "Investment" in such Subsidiary at the time immediately before
the effectiveness of such redesignation less the portion (proportionate to El
Paso Energy Partners's or such Restricted Subsidiary's Equity Interest in such
Subsidiary) of the fair market value of the net assets of such Subsidiary at the
time of such redesignation, and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors of the General Partner. If El Paso Energy Partners or any Restricted
Subsidiary of El Paso Energy Partners sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of El Paso Energy
Partners such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of El Paso Energy Partners, El Paso
Energy Partners shall be deemed to have made an Investment on the date of any
such sale or disposition equal to the fair market value of the Equity Interests
of such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption "-- Restricted payments."
"Issue Date" means November 27, 2002, the date of the first issuance of
notes under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, charge, security interest, hypothecation, assignment for
security, claim, preference, priority or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention
agreement or any lease in the nature thereof, any option or other agreement to
grant a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
the Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Net Income" means, with respect to any Person, the consolidated net income
(loss) of such Person and its Restricted Subsidiaries, determined in accordance
with GAAP and before any reduction in respect of preferred stock dividends,
excluding, however:
(1) the aggregate gain (but not loss in excess of such aggregate
gain), together with any related provision for taxes on such gain, realized
in connection with:
a. any Asset Sale; or
b. the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted
Subsidiaries; and
(2) the aggregate extraordinary gain (but not loss in excess of such
aggregate extraordinary gain), together with any related provision for
taxes on such aggregate extraordinary gain (but not loss in excess of such
aggregate extraordinary gain).
"Net Proceeds" means, with respect to any Asset Sale or sale of Equity
Interests, the aggregate proceeds received by El Paso Energy Partners or any of
its Restricted Subsidiaries in cash or Cash Equivalents in respect of any Asset
Sale or sale of Equity Interests (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received in any such sale), net of, without duplication, (i) the direct costs
relating to such Asset Sale or sale of Equity Interests, including, without
limitation, brokerage commissions and legal, accounting and investment banking
fees, sales commissions, recording fees, title transfer fees, and any relocation
expenses incurred as a result thereof, (ii) taxes paid or payable as a result
thereof, in each case after taking into account any available tax credits or
deductions and any tax sharing arrangements and amounts required to be applied
to the repayment of Indebtedness secured by a Lien on the asset or Equity
Interests that were the subject of such Asset Sale or sale of Equity Interests,
(iii) all
76
distributions and payments required to be made to minority interest holders in
Restricted Subsidiaries as a result of such Asset Sale and (iv) any amounts to
be set aside in any reserve established in accordance with GAAP or any amount
placed in escrow, in either case for adjustment in respect of the sale price of
such asset or assets or for liabilities associated with such Asset Sale or sale
of Equity Interests and retained by El Paso Energy Partners or any of its
Restricted Subsidiaries until such time as such reserve is reversed or such
escrow arrangement is terminated, in which case Net Proceeds shall include only
the amount of the reserve so reversed or the amount returned to El Paso Energy
Partners or its Restricted Subsidiaries from such escrow arrangement, as the
case may be.
"Non-Recourse Debt" means Indebtedness as to which:
(1) neither El Paso Energy Partners nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender of such Indebtedness;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the notes) of El Paso Energy Partners or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(3) the lenders have been notified in writing that they will not have
any recourse to the stock or assets of El Paso Energy Partners or any of
its Restricted Subsidiaries;
provided that in no event shall Indebtedness of any Person which is not a
Restricted Subsidiary fail to be Non-Recourse Debt solely as a result of any
default provisions contained in a guarantee thereof by El Paso Energy Partners
or any of its Restricted Subsidiaries, provided that El Paso Energy Partners or
such Restricted Subsidiary was otherwise permitted to incur such guarantee
pursuant to the Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Partnership Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of El Paso Energy Partners, L.P., amended and restated
effective as of August 31, 2000, as such may be amended, modified or
supplemented from time to time.
"Partnership Credit Facility" means (1) the Sixth Amended and Restated
Credit Agreement among El Paso Energy Partners, El Paso Finance, the lenders
from time to time party thereto and JPMorgan Chase Bank, as administrative
agent, including any deferrals, renewals, extensions, replacements, refinancings
or refundings thereof, and any amendments, modifications or supplements thereto
and any agreement providing therefor (including any restatement thereof and any
increases in the amount of commitments thereunder), whether by or with the same
or any other lenders, creditors, group of lenders or group of creditors and
including related notes, guarantees, collateral security documents and other
instruments and agreements executed in connection therewith, (2) the Amended and
Restated Credit Agreement among EPN Holding Company, L.P., the lenders from time
to time party thereto and JPMorgan Chase Bank, as administrative agent,
including any deferrals, renewals, extensions, replacements, refinancings or
refundings thereof, and any amendments, modifications or supplements thereto and
any agreement providing therefor (including any restatement thereof and any
increases in the amount of commitments thereunder), whether by or with the same
or any other lenders, creditors, group of lenders or group of creditors and
including related notes, guarantees, collateral security documents and other
instruments and agreements executed in connection therewith, and (3) the Senior
Secured Acquisition Term Loan Credit Agreement among the Issuers, the lenders
from time to time party thereto and JPMorgan Chase Bank, as administrative
agent, including any deferrals, renewals, extensions, replacements, refinancings
or refundings thereof, and any amendments, modifications or supplements thereto
and any agreement providing therefor (including any restatement thereof and any
increases in the amount of commitments thereunder), whether by or with the same
or any other
77
lenders, creditors, group of lenders or group of creditors and including related
notes, guarantees, collateral security documents and other instruments and
agreements executed in connection therewith.
"Permitted Business" means (1) gathering, transporting (by barge, pipeline,
ship, truck or other modes of hydrocarbon transportation), terminalling,
storing, producing, acquiring, developing, exploring for, processing,
dehydrating and otherwise handling hydrocarbons, including, without limitation,
constructing pipeline, platform, dehydration, processing and other
energy-related facilities, and activities or services reasonably related or
ancillary thereto, (2) any business that generates gross income that constitutes
"qualifying income" under Section 7704(d) of the Internal Revenue Code of 1986,
as amended, other than any business that generates any gross income arising from
the refining of a natural resource, and (3) any other business that does not
constitute a reportable segment (as determined in accordance with GAAP) for El
Paso Energy Partners's annual audited consolidated financial statements.
"Permitted Business Investments" means Investments by El Paso Energy
Partners or any of its Restricted Subsidiaries in any Unrestricted Subsidiary of
El Paso Energy Partners or in any Person that does not constitute a direct or
indirect Subsidiary of El Paso Energy Partners (a "Joint Venture"), provided
that:
(1) either (a) at the time of such Investment and immediately
thereafter, El Paso Energy Partners could incur $1.00 of additional
Indebtedness under the first paragraph in the limitation of indebtedness
set forth under the caption "-- Incurrence of indebtedness and issuance of
disqualified equity" above or (b) such Investment is made with the proceeds
of Incremental Funds (as defined in the covenant described under
"-- Covenants -- Restricted payments");
(2) if such Unrestricted Subsidiary or Joint Venture has outstanding
Indebtedness at the time of such Investment, either (a) all such
Indebtedness is non-recourse to El Paso Energy Partners and its Restricted
Subsidiaries or (b) any such Indebtedness of such Unrestricted Subsidiary
or Joint Venture that is recourse to El Paso Energy Partners or any of its
Restricted Subsidiaries (which shall include all Indebtedness of such
Unrestricted Subsidiary or Joint Venture for which El Paso Energy Partners
or any of its Restricted Subsidiaries may be directly or indirectly,
contingently or otherwise, obligated to pay, whether pursuant to the terms
of such Indebtedness, by law or pursuant to any guaranty or "claw-back,"
"make-well" or "keep-well" arrangement) could, at the time such Investment
is made and, if later, at the time any such Indebtedness is incurred, be
incurred by El Paso Energy Partners and its Restricted Subsidiaries in
accordance with the limitation on indebtedness set forth in the first
paragraph under the caption "-- Incurrence of indebtedness and issuance of
disqualified equity" above; and
(3) such Unrestricted Subsidiary's or Joint Venture's activities are
not outside the scope of the Permitted Business.
The term "Joint Venture" shall include Atlantis Offshore, L.L.C., Copper
Eagle Gas Storage, L.L.C., Coyote Gas Treating, L.L.C., Deepwater Gateway,
L.L.C., and Poseidon Oil Pipeline Company, L.L.C. and none of Atlantis Offshore,
Copper Eagle Gas Storage, Deepwater Gateway, and Poseidon Oil Pipeline Company
shall constitute a Restricted Subsidiary for purposes of the Indenture (even if
such Person is then a Subsidiary of El Paso Energy Partners), until such time as
the Board of Directors of the General Partner designates, in a manner consistent
with the designation of an Unrestricted Subsidiary as a Restricted Subsidiary or
a Restricted Subsidiary as an Unrestricted Subsidiary, each as described under
"Covenants -- Designation of restricted and unrestricted subsidiaries," Atlantis
Offshore, Copper Eagle Gas Storage, Deepwater Gateway, or Poseidon Oil Pipeline
Company, including one or more of its Subsidiaries, as the case may be, as a
Restricted Subsidiary or an Unrestricted Subsidiary.
"Permitted Investments" means:
(1) any Investment in, or that results in the creation of, any
Restricted Subsidiary of El Paso Energy Partners;
(2) any Investment in El Paso Energy Partners or in a Restricted
Subsidiary of El Paso Energy Partners (excluding redemptions, purchases,
acquisitions or other retirements of Equity Interests in El Paso Energy
Partners) at any one time outstanding;
78
(3) any Investment in cash or Cash Equivalents;
(4) any Investment by El Paso Energy Partners or any Restricted
Subsidiary of El Paso Energy Partners in a Person if as a result of such
Investment:
a. such Person becomes a Restricted Subsidiary of El Paso Energy
Partners; or
b. such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or
is liquidated into, El Paso Energy Partners or a Restricted
Subsidiary of El Paso Energy Partners;
(5) any Investment made as a result of the receipt of consideration
consisting of other than cash or Cash Equivalents from an Asset Sale that
was made pursuant to and in compliance with the covenant described above
under the caption "-- Repurchase at the option of holders -- Asset sales;"
(6) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Equity) of El Paso Energy
Partners;
(7) payroll advances in the ordinary course of business and other
advances and loans to officers and employees of El Paso Energy Partners or
any of its Restricted Subsidiaries, so long as the aggregate principal
amount of such advances and loans does not exceed $1.0 million at any one
time outstanding;
(8) Investments in stock, obligations or securities received in
settlement of debts owing to El Paso Energy Partners or any of its
Restricted Subsidiaries as a result of bankruptcy or insolvency proceedings
or upon the foreclosure, perfection or enforcement of any Lien in favor of
El Paso Energy Partners or any such Restricted Subsidiary, in each case as
to debt owing to El Paso Energy Partners or any of its Restricted
Subsidiary that arose in the ordinary course of business of El Paso Energy
Partners or any such Restricted Subsidiary;
(9) any Investment in Hedging Obligations;
(10) any Investments in prepaid expenses, negotiable instruments held
for collection and lease, utility, workers' compensation and performance
and other similar deposits and prepaid expenses made in the ordinary course
of business;
(11) any Investments required to be made pursuant to any agreement or
obligation of El Paso Energy Partners or any Restricted Subsidiary of El
Paso Energy Partners in effect on the Issue Date and listed on a schedule
to the Indenture; and
(12) other Investments in any Person engaged in a Permitted Business
(other than an Investment in an Unrestricted Subsidiary) having an
aggregate fair market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (12) since
the Issue Date and existing at the time the Investment, which is the
subject of the determination, was made, not to exceed $5.0 million.
"Permitted Junior Securities" means: (1) nonmandatorily redeemable Equity
Interests in El Paso Energy Partners or any Subsidiary Guarantor, as reorganized
or readjusted; or (2) debt securities of El Paso Energy Partners or any
Subsidiary Guarantor as reorganized or readjusted that are subordinated to all
Senior Debt and Guarantor Senior Debt and any debt securities issued in exchange
for Senior Debt and Guarantor Senior Debt to substantially the same extent as,
or to a greater extent than, the notes and the Guarantees are subordinated to
Senior Debt and Guarantor Senior Debt pursuant to the Indenture, provided that
the rights of the holders of Senior Debt and Guarantor Senior Debt under the
Partnership Credit Facility are not altered or impaired by such reorganization
or readjustment.
"Permitted Liens" means:
(1) Liens on the assets of El Paso Energy Partners and any Subsidiary
securing Senior Debt and Guarantor Senior Debt;
79
(2) easements, rights-of-way, restrictions, minor defects and
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of El Paso Energy
Partners or its Restricted Subsidiaries;
(3) Liens securing reimbursement obligations of El Paso Energy
Partners or a Restricted Subsidiary with respect to letters of credit
encumbering only documents and other property relating to such letters of
credit and the products and proceeds thereof;
(4) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of El Paso
Energy Partners and its Restricted Subsidiaries;
(5) Liens in favor of El Paso Energy Partners or any of the Restricted
Subsidiaries;
(6) any interest or title of a lessor in the property subject to a
Capital Lease Obligation;
(7) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with El Paso Energy Partners or any
Restricted Subsidiary of El Paso Energy Partners, provided that such Liens
were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with El Paso Energy Partners or such
Restricted Subsidiary;
(8) Liens on property existing at the time of acquisition thereof by
El Paso Energy Partners or any Restricted Subsidiary of El Paso Energy
Partners, provided that such Liens were in existence prior to the
contemplation of such acquisition and relate solely to such property,
accessions thereto and the proceeds thereof;
(9) Liens to secure the performance of tenders, bids, leases,
statutory obligations, surety or appeal bonds, government contracts,
performance bonds or other obligations of a like nature incurred in the
ordinary course of business;
(10) Liens on any property or asset acquired, constructed or improved
by El Paso Energy Partners or any Restricted Subsidiary (a "Purchase Money
Lien"), which (A) are in favor of the seller of such property or assets, in
favor of the Person constructing or improving such asset or property, or in
favor of the Person that provided the funding for the acquisition,
construction or improvement of such asset or property, (B) are created
within 360 days after the date of acquisition, construction or improvement,
(C) secure the purchase price or construction or improvement cost, as the
case may be, of such asset or property in an amount up to 100 percent of
the fair market value (as determined by the Board of Directors of the
General Partner) of such acquisition, construction or improvement of such
asset or property, and (D) are limited to the asset or property so
acquired, constructed or improved (including proceeds thereof, accessions
thereto and upgrades thereof);
(11) Liens to secure performance of Hedging Obligations of El Paso
Energy Partners or a Restricted Subsidiary;
(12) Liens existing on the Issue Date and Liens on any extensions,
refinancing, renewal, replacement or defeasance of any Indebtedness or
other obligation secured thereby;
(13) Liens on and pledges of the Equity Interests of any Unrestricted
Subsidiary or any Joint Venture owned by El Paso Energy Partners or any
Restricted Subsidiary to the extent securing Non-Recourse Debt or
Indebtedness (other than Permitted Debt) otherwise permitted by the first
paragraph under "-- Incurrence of indebtedness and issuance of disqualified
equity;"
(14) statutory Liens of landlords and warehousemen, carriers,
mechanics, suppliers, materialmen, repairmen, or other like Liens
(including contractual landlord's liens) arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested
in good faith by appropriate proceedings, if a reserve or appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor;
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(15) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other similar types of social security, old age pension or public
liability obligations;
(16) Liens on pipelines or pipeline facilities that arise by operation
of law;
(17) Liens arising under operating agreements, joint venture
agreements, partnership agreements, oil and gas leases, farmout agreements,
division orders, contracts for sale, transportation or exchange of oil and
natural gas, unitization and pooling declarations and agreements, area of
mutual interest agreements and other agreements arising in the ordinary
course of El Paso Energy Partners's or any Restricted Subsidiary's business
that are customary in the Permitted Business;
(18) judgment and attachment Liens not giving rise to a Default or
Event of Default;
(19) Liens securing the Obligations of the Issuers under the notes and
the indenture and of the Subsidiary Guarantors under the Guarantees;
(20) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(21) Liens arising from protective filings made in the appropriate
office(s) for the filing of a financing statement in the applicable
jurisdiction(s) in connection with any lease, consignment or similar
transaction otherwise permitted hereby, which filings are made for the
purpose of perfecting the interest of the secured party in the relevant
items, if the transaction were subsequently classified as a sale and
secured lending arrangement;
(22) Liens arising out of consignment or similar arrangements for sale
of goods;
(23) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(24) Liens securing any Indebtedness which includes a covenant that
limits liens in a manner substantially similar to the covenant entitled
"Liens;"
(25) Liens incurred in the ordinary course of business of El Paso
Energy Partners or any Restricted Subsidiary of El Paso Energy Partners
with respect to obligations that do not exceed $10.0 million at any one
time outstanding; and
(26) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or
instruments of El Paso Energy Partners or any of its Restricted
Subsidiaries on deposit with or in possession of such bank.
"Permitted Refinancing Indebtedness" means any Indebtedness of El Paso
Energy Partners or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of El Paso Energy Partners or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of necessary fees and expenses incurred in
connection therewith and any premiums paid on the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded);
(2) such Permitted Refinancing Indebtedness has a final maturity date
no earlier than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
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(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes or
the Guarantees, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the notes or the Guarantees, as the case may be, on
terms at least as favorable to the holders of notes as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by El Paso Energy Partners or
by the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Rating Agency" means each of Standard & Poor's and Moody's, or if Standard
& Poor's or Moody's or both shall not make a rating on the notes publicly
available, a nationally recognized statistical rating agency or agencies, as the
case may be, selected by the Issuer (as certified by a resolution of the Board
of Directors) which shall be substituted for Standard & Poor's or Moody's, or
both, as the case may be.
"Restricted Investment" means an Investment other than a Permitted
Investment or a Permitted Business Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referenced
Person that is not an Unrestricted Subsidiary. Notwithstanding anything in the
Indenture to the contrary, El Paso Finance shall be designated as a Restricted
Subsidiary of El Paso Energy Partners.
"Senior Debt" means:
(1) all Indebtedness outstanding under Credit Facilities and all
Hedging Obligations with respect thereto;
(2) any other Indebtedness permitted to be incurred by El Paso Energy
Partners and the Restricted Subsidiaries under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to
the notes; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any Indebtedness that is expressly subordinate or junior in right
of payment to any Indebtedness of El Paso Energy Partners or any Subsidiary
Guarantor;
(2) Indebtedness evidenced by the notes or the Guarantees;
(3) any liability for federal, state, local or other taxes owed or
owing by El Paso Energy Partners or any Restricted Subsidiary of El Paso
Energy Partners;
(4) any Indebtedness of El Paso Energy Partners or any of its
Subsidiaries to any of its Subsidiaries or other Affiliates;
(5) any trade payables; or
(6) any Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act and the Exchange Act, as such Regulation is in
effect on the date hereof.
"Standard & Poor's" means Standard & Poor's Ratings Group, Inc., or any
successor to the rating agency business thereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
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repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which
more than 50 percent of the Voting Stock is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (whether general or limited), limited liability
company or joint venture (a) the sole general partner or the managing
general partner or managing member of which is such Person or a Subsidiary
of such Person, or (b) if there are more than a single general partner or
member, either (i) the only general partners or managing members of which
are such Person and/or one or more Subsidiaries of such Person (or any
combination thereof) or (ii) such Person owns or controls, directly or
indirectly, a majority of the outstanding general partner interests, member
interests or other Voting Stock of such partnership, limited liability
company or joint venture, respectively.
"Subsidiary Guarantors" means each of:
(1) as of the date of this prospectus, Chaco Liquids Plant Trust;
Crystal Holding, L.L.C.; El Paso Energy Intrastate, L.P.; El Paso Energy
Partners Oil Transport, L.L.C.; El Paso Energy Partners Operating Company,
L.L.C.; El Paso Energy Warwink I Company, L.P.; El Paso Energy Warwink II
Company, L.P.; El Paso Offshore Gathering & Transmission, L.P.; El Paso
South Texas, L.P.; EPGT Texas Pipeline, L.P.; EPN Alabama Intrastate,
L.L.C.; EPN Field Services, L.L.C.; EPN Gathering and Treating Company,
L.P.; EPN Gathering and Treating GP Holding, L.L.C.; EPN GP Holding,
L.L.C.; EPN GP Holding I, L.L.C.; EPN Gulf Coast, L.P.; EPN Holding
Company, L.P.; EPN Holding Company I, L.P.; EPN NGL Storage, L.L.C.; EPN
Pipeline GP Holding, L.L.C.; First Reserve Gas, L.L.C.; Flextrend
Development Company, L.L.C.; Hattiesburg Gas Storage Company; Hattiesburg
Industrial Gas Sales, L.L.C.; High Island Offshore System, L.L.C.; Manta
Ray Gathering Company, L.L.C.; Petal Gas Storage, L.L.C.; Poseidon Pipeline
Company, L.L.C.; and Warwink Gathering and Treating Company; and
(2) any other Subsidiary that executes a Guarantee in accordance with
the provisions of the Indenture; and
(3) their respective successors and assigns.
Notwithstanding anything in the Indenture to the contrary, El Paso Finance
shall not be a Subsidiary Guarantor.
"Suspended Covenants" has the meaning given to such term under the caption
"-- Suspended covenants."
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) above, are not callable or redeemable at the option of the
issuers thereof: or (iii) depository receipts issued by a bank or trust company
as custodian with respect to any such U.S. Government Obligations or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a Depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such Depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation evidenced by such Depository receipt.
"Unrestricted Subsidiary" means any Subsidiary of El Paso Energy Partners
(other than El Paso Finance) that is designated by the Board of Directors of the
General Partner as an Unrestricted Subsidiary pursuant to a Board Resolution,
provided that, at the time of such designation, (x) no portion of the
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Indebtedness or other obligation of such Subsidiary, whether contingent or
otherwise and whether pursuant to the terms of such Indebtedness or the terms
governing the organization of such Subsidiary or by law, (A) is guaranteed by El
Paso Energy Partners or any other Restricted Subsidiary, (B) is recourse to or
obligates El Paso Energy Partners or any Restricted Subsidiary in any way
(including any "claw-back," "keep-well," "make-well" or other agreements,
arrangements or understandings to maintain the financial performance or results
of operations of such Subsidiary or to otherwise infuse or contribute cash to
such Subsidiary), or (C) subjects any property or assets of El Paso Energy
Partners or any Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction of such Indebtedness, unless such Investment or
Indebtedness is permitted by the provisions of the Indenture described above
under the captions "-- Restricted payments" and "-- Incurrence of indebtedness
and issuance of disqualified equity," (y) no Equity Interests of a Restricted
Subsidiary are held by such Subsidiary, directly or indirectly, and (z) the
amount of El Paso Energy Partners's Investment, as determined at the time of
such designation, in such Subsidiary since the Issue Date to the date of
designation is treated as of the date of such designation as a Restricted
Investment, Permitted Investment or Permitted Business Investment, as
applicable. Currently, EPN Arizona Gas, L.L.C.; Arizona Gas Storage, L.L.C. and
Matagorda Island Area Gathering System are designated as Unrestricted
Subsidiaries. Notwithstanding anything in the Indenture to the contrary, El Paso
Finance shall not be, and shall not be designated as, an Unrestricted
Subsidiary.
Any designation of a Subsidiary of El Paso Energy Partners as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolutions of the Board of Directors of the
General Partner giving effect to such designation and an Officers' Certificate
certifying that such designation compiled with the preceding conditions and was
permitted by the covenant described above under the caption
"-- Covenants -- Restricted payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of El Paso Energy Partners as
of such date and, if such Indebtedness is not permitted to be incurred as of
such date under the covenant described under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock," El Paso Energy Partners shall be
in default of such covenant. The Board of Directors of the General Partner may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of El Paso Energy Partners of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (1) such Indebtedness is permitted under the covenant
described under the caption "-- Covenants -- Incurrence of indebtedness and
issuance of disqualified equity," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period;
and (2) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Equity Interests of
such Person pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers, general partners or trustees of any Person (regardless of
whether, at the time, Equity Interests of any other class or classes shall have,
or might have, voting power by reason of the occurrence of any contingency) or,
with respect to a partnership (whether general or limited), any general partner
interest in such partnership.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at
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final maturity, in respect thereof, by (b) the number of years (calculated
to the nearest one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS
The following is a discussion of material United States federal income tax
considerations applicable to initial investors who purchase the notes pursuant
to this offering at the note's initial offering price and hold the notes as
"capital assets" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). This summary is based upon provisions of the
Code, regulations, rulings and decisions currently in effect, all of which are
subject to change, possibly with retroactive effect. The discussion does not
purport to deal with all aspects of the United States federal taxation that may
be relevant to particular investors in light of their particular circumstances
(for example, to persons holding notes as part of a conversion transaction or as
part of a hedge or hedging transaction, or as a position in a straddle for tax
purposes), nor does it discuss the United States federal income tax
considerations applicable to certain types of investors subject to special
treatment under the federal income tax laws (for example, insurance companies,
tax-exempt organizations and financial institutions). In addition, the
discussion does not consider the effect of any foreign, state, local or other
tax laws that may be applicable to a particular investor.
PROSPECTIVE INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT
THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE UNITED STATES FEDERAL
INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
As used in this tax discussion, the term "United States holder" means a
beneficial owner of a note that is, for United States federal income tax
purposes,
- a citizen or resident of the United States,
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof,
- an estate, the income of which is subject to United States federal income
taxation regardless of its source, or
- a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
The term also includes certain former citizens and certain former long-term
residents of the United States. If a partnership holds notes, the tax treatment
of a partner will generally depend on the status of the partner and on the
activities of the partnership. Partners of partnerships holding notes should
consult their tax advisors.
Interest on a note. The Series A notes were issued with no more than a de
minimus amount of original issue discount. Accordingly, interest on a note will
generally be taxable to a United States holder as ordinary interest income at
the time it accrues or is received in accordance with the United States holder's
method of accounting for United States federal income tax purposes.
Sale or retirement of a note. Upon the sale or retirement of a note, a
United States holder will recognize a taxable gain or loss equal to the
difference between the amount realized on the sale or retirement and the
holder's adjusted tax basis in the note. A holder's adjusted tax basis in a note
generally will be the cost for the note. This gain or loss generally will be
capital gain or loss and will be long-term capital gain or loss if the notes
have been held for more than one year. To the extent the amount realized
represents accrued but unpaid interest, that amount must be taken into account
as interest income, if it was not previously included in income of the holder.
85
Exchange offer. The exchange of the notes for exchange notes pursuant to
the Registration Rights Agreement will not result in any United States federal
income tax consequences to the United States holders. When a United States
holder exchanges a note for an exchange note pursuant to the Registration Rights
Agreement, the holder will have the same adjusted tax basis and holding period
in the exchange note as in the note immediately before the exchange.
Payments under registration rights agreement. As more fully discussed
under "Description of notes -- Registration rights; liquidated damages," we may
be required to pay liquidated damages to holders in the event we do not comply
with certain covenants. Although the matter is not free from doubt, we intend to
take the position that a holder should be required to report any liquidated
damages as ordinary income for United States federal income tax purposes at the
time it accrues or is received in accordance with the holder's regular method of
accounting. It is possible, however, that the Internal Revenue Service may take
a different position, in which case the timing and amount of income may be
different.
Backup withholding and information reporting. Information reporting will
apply to payments of principal, premium and interest on, and the proceeds of
disposition of, a note with respect to certain noncorporate United States
holders and backup withholding may also apply. Backup withholding will apply
only if the United States holder (i) fails to furnish its Taxpayer
Identification Number ("TIN") which, for an individual, would be his Social
Security number, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that it has failed to properly report payments of
interest or dividends or (iv) under certain circumstances, fails to certify,
under penalties of perjury, that it has not been notified by the IRS that it is
subject to backup withholding for failure to report interest and dividend
payments. The backup withholding rate is currently 30 percent and will be
reduced periodically until 2006, when the backup withholding rate will be 28
percent. After December 31, 2010, the backup withholding rate will be increased
to 31 percent. United States holders should consult their tax advisors regarding
their qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a United States
holder will be allowed as a credit against the holder's United States federal
income tax liability and may entitle the holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
As used in this tax discussion, a non-United States holder means any
beneficial owner of a note that is not a United States holder. The rules
governing the United States federal income and estate taxation of a non-United
States holder are complex, and no attempt will be made herein to provide more
than a summary of those rules. Special rules may apply to a non-United States
holder if that holder is a controlled foreign corporation, passive foreign
investment company or foreign personal holding company and therefore subject to
special treatment under the Code. NON-UNITED STATES HOLDERS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS WITH REGARD TO AN INVESTMENT IN THE NOTES, INCLUDING ANY
REPORTING REQUIREMENTS.
Payment of interest. Generally, payment of interest on a note to a
non-United States holder will qualify for the "portfolio interest" exemption
and, therefore, will not be subject to United States federal income tax or
withholding tax, provided that this interest income is not effectively connected
with a United States trade or business of the non-United States holder and
provided that the non-United States holder:
- does not actually or constructively own 10 percent or more of the capital
or profits interest in any issuer or 10 percent or more of the combined
voting power of all classes of stock of any issuer entitled to vote,
- is not, for United States federal income tax purposes, a controlled
foreign corporation related to the issuer within the meaning of the Code,
- is not a bank receiving interest on a loan entered into in the ordinary
course of its business within the meaning of the Code and
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- either:
(a) provides a Form W-8BEN or W-8IMY, as appropriate (or a suitable
substitute form), signed under penalties of perjury that includes
its name and address and certifies as to its non-United States
holder status in compliance with applicable law and regulations or
(b) holds its notes through a securities clearing organization, bank
or other financial institution that holds customers' securities in
the ordinary course of its trade or business and that provides a
statement signed under penalties of perjury in which it certifies
to the issuers or the issuers' agent that a Form W-8BEN or W-8IMY,
as appropriate (or suitable substitute), has been received by it
from the non-United States holder or qualifying intermediary and
furnishes the issuers or the issuers' agent with a copy thereof.
United States Treasury Regulations provide alternative methods for
satisfying these certification requirements. For example, in the case of notes
held by a foreign partnership, the regulations require that the certification
described above be provided by the partners rather than by the partnership and
that the partnership provide certain information, including a U.S. taxpayer
identification number. A look-through rule applies in the case of tiered
partnerships. Non-United States holders are urged to consult their own tax
advisors regarding these regulations.
Except to the extent that an applicable treaty otherwise provides, a
non-United States holder generally will be taxed in the same manner as a United
States holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the non-United States
holder. Effectively connected interest received by a corporate non-United States
holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30 percent rate (or, if applicable, a lower treaty
rate). Even though this effectively connected interest is subject to income tax,
and may be subject to the branch profits tax, it is not subject to withholding
tax, unless derived through a partnership, if the non-United States holder
delivers IRS Form W-8ECI (or successor form) annually to the payor.
Interest income of a non-United States holder that is not effectively
connected with a United States trade or business and that does not qualify for
the portfolio interest exemption described above will generally be subject to a
withholding tax at a 30 percent rate unless that rate is reduced or eliminated
pursuant to an applicable tax treaty.
Sale, exchange or redemption of the notes. A non-United States holder of a
note will generally not be subject to United States federal income tax or
withholding tax on any gain realized on the sale, exchange, redemption or other
disposition of the note unless:
- the gain is effectively connected with a United States trade or business
of the non-United States holder,
- in the case of a non-United States holder who is an individual, the
holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition,
and either the holder has a "tax home" in the United States or the
disposition is attributable to an office or other fixed place of business
maintained by that holder in the United States or
- the non-United States holder is subject to tax pursuant to the provisions
of the Code applicable to certain United States expatriates.
U.S. federal estate tax considerations. A note beneficially owned by an
individual who is not a citizen or resident of the United States at the time of
death will generally not be includable in the decedent's gross estate for United
States federal estate tax purposes, provided that the beneficial owner did not
at the time of death actually or constructively own 10 percent or more of the
capital or profits interests in any issuer or 10 percent or more of the combined
voting power of all classes of stock of any issuer entitled to vote, and
provided that, at the time of the holder's death, payments with respect to that
note would not have been effectively connected with the holder's conduct of a
trade or business within the United States.
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Information reporting and backup withholding tax. Information reporting
will generally apply to payments of interest and the amount of tax, if any,
withheld with respect to such payments to a non-United States holder. Copies of
the information returns reporting such interest payments and any withholding may
also be made available to the tax authorities in the country in which the
non-United States holder resides under the provisions of an applicable income
tax treaty. United States backup withholding tax generally will not apply to
payments of interest and principal on a note to a non-United States holder if
the statement described in "-- Payment of interest" is duly provided by the
holder or the holder otherwise establishes an exemption, provided that the
issuers do not have actual knowledge that the holder is a United States person.
In addition, backup withholding tax generally will not apply to any payment
of the proceeds of the sale of a note effected outside the United States by a
foreign office of a "broker" (as defined in applicable United States Treasury
Regulations). However, if the broker:
- is a United States person,
- derives 50 percent or more of its gross income from all sources for
certain periods from the conduct of a United States trade or business,
- is a controlled foreign corporation for United States tax purposes or
- is a foreign partnership in which one or more United States persons, in
the aggregate, own more than 50 percent of the income or capital
interests in the partnership or a foreign partnership that is engaged in
a trade or business in the United States,
payment of the proceeds will be subject to information reporting
requirements unless the broker has documentary evidence in its records that the
beneficial owner is a non-United States holder and certain other conditions are
met, or the beneficial owner otherwise establishes an exemption.
Payment of the proceeds of any sale of a note to or through the United
States office of a broker, whether foreign or United States, is subject to
information reporting and backup withholding requirements, unless the beneficial
owner of the note provides the statement described in "--Payment of interest" or
otherwise establishes an exemption and the broker does not have actual knowledge
that the payee is a United States person or that the exemption conditions are
not satisfied.
Any amounts withheld from a payment to a non-United States holder under the
backup withholding rules will be allowed as a credit against the holder's United
States federal income tax liability and may entitle the non-United States holder
to a refund, provided that the required information is provided to the IRS.
United States Treasury Regulations provide certain presumptions under which
a non-United States holder is subject to backup withholding and information
reporting unless such holder provides a certification as to its non-United
States status. Non-United States holders should consult their own tax advisors
with respect to the impact of these regulations.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
CERTAIN ERISA CONSIDERATIONS
The following is a summary of certain considerations associated with the
exchange or purchase of the notes by employee benefit plans that are subject to
Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended
("ERISA"), plans, individual retirement accounts and other arrangements that are
subject to Section 4975 of the Code or provisions under any federal, state,
local, non-U.S. or other laws or regulations that are similar to such provisions
of ERISA or the Code (collectively, "Similar Laws"), and entities whose
underlying assets are considered to include "plan assets" of such plans,
accounts and arrangements (each, a "Plan").
88
GENERAL FIDUCIARY MATTERS
ERISA and the Code impose certain duties on persons who are fiduciaries of
a Plan subject to Title I of ERISA or Section 4975 of the Code (an "ERISA Plan")
and prohibit certain transactions involving the assets of an ERISA Plan and its
fiduciaries or other interested parties. Under ERISA and the Code, any person
who exercises any discretionary authority or control over the administration of
an ERISA Plan or the management or disposition of the assets of an ERISA Plan,
or who renders investment advice for a fee or other compensation to an ERISA
Plan, is generally considered to be a fiduciary of the ERISA Plan.
In considering the exchange offer or an investment in the notes of a
portion of the assets of any Plan, a fiduciary should determine whether the
investment is in accordance with the documents and instruments governing the
plan and the applicable provisions of ERISA, the Code or any Similar Law
relating to a fiduciary's duties to the Plan including, without limitation, the
prudence, diversification, delegation of control and prohibited transaction
provisions of ERISA, the Code and any other applicable Similar Laws.
Any insurance company proposing to invest assets of its general account in
the notes should consider the extent that such investment would be subject to
the requirements of ERISA in light of the U.S. Supreme Court's decision in John
Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any
subsequent legislation or other guidance that has or may become available
relating to that decision, including the enactment of Section 401(c) of ERISA by
the Small Business Job Protection Act of 1996 and the regulations promulgated
thereunder.
PROHIBITED TRANSACTION ISSUES
Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from
engaging in specified transactions involving plan assets with persons or
entities who are "parties in interest," within the meaning of ERISA, or
"disqualified persons," within the meaning of Section 4975 of the Code, unless
an exemption is available. A party in interest or disqualified person who
engaged in a non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code. In addition, the
fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited
transaction may be subject to penalties and liabilities under ERISA and the
Code.
The exchange, acquisition and/or holding of notes by an ERISA Plan with
respect to which the Issuers, the Initial Purchasers, the Subsidiary Guarantors,
or any of their respective affiliates is considered a party in interest or a
disqualified person may constitute or result in a direct or indirect prohibited
transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless
the investment is acquired and is held in accordance with an applicable
statutory, class or individual prohibited transaction exemption. In this regard,
the United States Department of Labor (the "DOL") has issued prohibited
transaction class exemptions, or "PTCEs," that may apply to the exchange,
acquisition and holding of the notes. These class exemptions include, without
limitation, PTCE 84-14 respecting transactions determined by independent
qualified professional asset managers, PTCE 90-1 respecting insurance company
pooled separate accounts, PTCE 91-38 respecting bank collective investment
funds, PTCE 95-60 respecting life insurance company general accounts and PTCE
96-23 respecting transactions determined by in-house asset managers, although
there can be no assurance that all of the conditions of any such exemptions will
be satisfied.
Because of the foregoing, the notes should not be purchased or held by any
person investing "plan assets" of any Plan, unless such purchase and holding
will not constitute a non-exempt prohibited transaction under ERISA and the Code
or violation of any applicable Similar Laws.
PLAN ASSET ISSUES
ERISA and the Code do not define "plan assets." However, regulations (the
"Plan Assets Regulations") promulgated under ERISA by the DOL generally provide
that when an ERISA Plan acquires an "equity" interest in an entity that is
neither a "publicly-offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the ERISA Plan's
assets include both the equity interest and an undivided interest in each of the
underlying assets of the entity unless it is established
89
either that equity participation in the entity by "benefit plan investors" is
not "significant" (i.e., it is significant if 25 percent or more of any class of
equity is held by benefit plan investors) or that the entity is an "operating
company," in each case as defined in the Plan Assets Regulation.
It is not anticipated that (i) the notes will constitute "publicly-offered
securities" for purposes of the Plan Asset Regulations, (ii) the Issuers will be
an investment company registered under the Investment Company Act of 1940, (iii)
the Issuers would be in a position to monitor whether investment in the notes by
benefit plan investors will be "significant" for purposes of the Plan Assets
Regulations or (iv) El Paso Energy Partners Finance Corporation will qualify as
an operating company within the meaning of the Plan Assets Regulations. It is
anticipated that El Paso Energy Partners, L.P. will qualify as an operating
company within the meaning of the Plan Assets Regulations, although no assurance
can be given in this regard.
The Plan Assets Regulations defines an "equity interest" as any interest in
an entity other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Although
there is little authority on the subject, we believe that the notes will be debt
rather than equity interests, regardless of whether or not the exchange offer is
accepted. However, there can be no assurance that the DOL or others would
characterize the notes as indebtedness on the date of issuance or at any given
time thereafter.
PLAN ASSETS CONSEQUENCES
If our assets were deemed to be "plan assets" under ERISA, this would
result, among other things, in (i) the application of the prudence and other
fiduciary responsibility standards of ERISA to investments made by us and (ii)
the possibility that certain transactions in which we might seek to engage could
constitute "prohibited transactions" under ERISA and the Code. (Whether or not
our assets are deemed to be "plan assets" under ERISA, see discussion under
Prohibited Transactions above).
REPRESENTATION
Accordingly, by its acceptance of a note, each purchaser and subsequent
transferee of a note (or any interest therein) will be deemed to have
represented and warranted that either (i) no portion of the assets used by such
purchaser or transferee to acquire and hold the notes (or any interest therein)
constitutes assets of any Plan or (ii) the purchase and holding of the notes (or
any interest therein) by such purchaser or transferee will not constitute a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code or violation under any applicable Similar Laws.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
the notes on behalf of, or with the assets of, any Plan, consult with their
counsel regarding the potential applicability of ERISA, Section 4975 of the Code
and any Similar Laws to such investment and whether an exemption would be
applicable to the purchase and holding of the notes.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that you may freely transfer Series
B notes issued under the exchange offer in exchange for Series A notes, unless
you are:
- our "affiliate" within the meaning of Rule 405 under the Securities Act;
- a broker-dealer or an initial purchaser that acquired Series A notes
directly from us; or
- a broker-dealer that acquired Series A notes as a result of market-making
or other trading activities without compliance with the registration and
prospectus delivery provisions of the Securities Act;
90
provided that you acquire the Series B notes in the ordinary course of your
business and you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of the Series B notes. Broker-dealers receiving Series B notes in the exchange
offer in exchange for Series A notes that were acquired in market-making or
other trading activities will be subject to a prospectus delivery requirement
with respect to resales of the Series B notes.
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original sale of the Series
A notes, with the prospectus contained in the exchange offer registration
statement. Pursuant to the registration agreement, we have agreed to permit such
participating broker-dealers to use this prospectus in connection with the
resale of Series B notes.
If you wish to exchange your Series A notes for Series B notes in the
exchange offer, you will be required to make certain representations to us as
set forth in "The Exchange Offer -- Registration Rights" and "The Exchange
Offer -- Procedures for Tendering Series A Notes -- Determination of Validity"
of this prospectus beginning on pages 26 and 33, and in the letter of
transmittal. In addition, if you are a broker-dealer who receives Series B notes
for your own account in exchange for Series A notes that were acquired by you as
a result of market-making activities or other trading activities, you will be
required to acknowledge that you will deliver a prospectus in connection with
any resale by you of those Series B notes. See "The Exchange Offer -- Resale of
Series B Notes; Plan of Distribution" beginning on page 37.
We will not receive any proceeds from any sale of Series B notes by
broker-dealers. Broker-dealers who receive Series B notes for their own account
in the exchange offer may sell them from time to time in one or more
transactions in the over-the-counter market:
- in negotiated transactions;
- through the writing of options on the Series B notes or a combination of
such methods of resale;
- at market prices prevailing at the time of resale; or
- at prices related to the prevailing market prices or negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any Series B notes. Any
broker-dealer that resells Series B notes it received for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of Series B notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any resale of Series B notes
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. Although the letter of
transmittal requires a broker-dealer to deliver a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act as a result of such delivery.
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the Series A notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act, as set forth in the
registration rights agreement.
VALIDITY OF THE SERIES B NOTES
The validity of the Series B notes being offered hereby will be passed upon
for us by Akin Gump Strauss Hauer & Feld LLP, Houston, Texas.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to the Current Report on Form 8-K/A dated January 2, 2003 of El Paso
Energy Partners, L.P., the Annual Report on Form 10-K of
91
El Paso Energy Partners, L.P. for Poseidon Oil Pipeline Company, L.L.C., the
Current Report on Form 8-K dated April 22, 2002 of El Paso Energy Partners,
L.P., and the Current Report on Form 8-K dated August 12, 2002 of El Paso Energy
Partners, L.P., have been so incorporated in reliance on the reports of
PricewaterhouseCoopers L.L.P., independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consent of Arthur Andersen LLP to the inclusion of its report regarding
the financial statements of Poseidon Oil Pipeline Company, L.L.C. with respect
to periods prior to 2001, incorporated in this prospectus and registration
statement by reference to El Paso Energy Partners' Annual Report on Form 10-K
for the year ended December 31, 2000, is omitted pursuant to Securities Act Rule
437a. We attempted to obtain the appropriate consent from Arthur Andersen LLP,
but the personnel responsible for the audit of Poseidon's financial statements
are no longer employed by Arthur Andersen LLP. Because Arthur Andersen LLP has
not consented to the inclusion of their report in this prospectus, you will not
be able to recover against Arthur Andersen LLP under Section 11 of the
Securities Act of 1933 for any untrue statement of a material fact contained in
the financial statements audited by Arthur Andersen LLP or any omissions to
state a material fact required to be stated therein. We have not obtained a
consent from Arthur Andersen LLP with respect to such financial statements.
Information derived from the report of Netherland, Sewell & Associates,
Inc., independent petroleum engineers, with respect to El Paso Energy Partners'
estimated oil and natural gas reserves incorporated in this prospectus and
registration statement by reference to El Paso Energy Partners' Current Report
on Form 8-K/A dated January 2, 2003, has been so incorporated in reliance on the
authority of said firm as experts with respect to such matters contained in
their report.
92
ANNEX A
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10 5/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2012
OF
EL PASO ENERGY PARTNERS, L.P.
EL PASO ENERGY PARTNERS FINANCE CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 2003
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2003
UNLESS EXTENDED BY EL PASO ENERGY PARTNERS, L.P. AND EL PASO ENERGY PARTNERS
FINANCE CORPORATION IN THEIR SOLE DISCRETION (THE "EXPIRATION DATE"). TENDERS
OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
JPMORGAN CHASE BANK
By Mail: By Facsimile: By Hand:
JPMorgan Chase Bank (512) 479-2553 JPMorgan Chase Bank
Attention: Mr. Cary Gilliam Attention: Mr. Cary Gilliam Attention: Mr. Cary Gilliam
700 Lavaca 700 Lavaca
Fifth Floor Fifth Floor
Austin, TX 78701 Austin, TX 78701
Confirm by Telephone:
(512) 479-2575
Attention: Mr. Cary Gilliam
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE SERIES B NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR SERIES A NOTES TO
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders ("Holders") of 10 5/8%
Series A Senior Subordinated Notes due 2012 (the "Series A Notes") of El Paso
Energy Partners, L.P. and El Paso Energy Partners Finance Corporation (together,
the "Issuers") to receive 10 5/8% Series B Senior Subordinated Notes due 2012
(the "Series B Notes") if: (i) certificates representing Series A Notes are to
be physically delivered to the Exchange Agent herewith by such Holders; (ii)
tender of Series A Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth under the caption "The Exchange Offer -- Procedures for
Tendering Series A Notes Book-Entry Delivery Procedures" in the Prospectus dated
(the "Prospectus"); or (iii) tender of Series A Notes is to be made according to
the guaranteed delivery procedures set forth under the caption "The Exchange
Offer -- Procedures for Tendering Series A Notes -- Guaranteed Delivery" in the
Prospectus, and, in each case, instructions are not being transmitted through
the DTC Automated Tender Offer Program ("ATOP"). The undersigned hereby
acknowledges receipt of the Prospectus. All capitalized terms used herein and
not defined shall have the meanings ascribed to them in the Prospectus.
A-1
Holders of Series A Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to execution and delivery of a Letter of
Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a notice of
guaranteed delivery through ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
If a Holder desires to tender Series A Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Series A Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, then such Holder must tender such Series A Notes
according to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Series A Notes -- Guaranteed
Delivery" in the Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
TENDER OF SERIES A NOTES
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of
Tendering Institution:
Account Number:
Transaction
Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of
Registered Holder(s):
Window Ticker Number
(if any):
Date of Execution of Notice
of Guaranteed Delivery:
Name of Eligible Institution
that Guaranteed Delivery:
A-2
List below the Series A Notes to which this Letter of Transmittal relates.
The name(s) and address(es) of the registered Holder(s) should be printed, if
not already printed below, exactly as they appear on the Series A Notes tendered
hereby. The Series A Notes and the principal amount of Series A Notes that the
undersigned wishes to tender would be indicated in the appropriate boxes. If the
space provided is inadequate, list the certificate number(s) and principal
amount(s) on a separately executed schedule and affix the schedule to this
Letter of Transmittal.
DESCRIPTION OF SERIES A NOTES
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) AGGREGATE
OF REGISTERED HOLDER(S) PRINCIPAL PRINCIPAL TOTAL PRINCIPAL
(PLEASE FILL IN IF BLANK) CERTIFICATE AMOUNT AMOUNT AMOUNT OF
SEE INSTRUCTION 3. NUMBER(S)* REPRESENTED** TENDERED** SERIES A NOTES
- --------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount represented by the Series A Notes described above
will be deemed to be tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to El Paso Energy Partners, L.P. and El Paso
Energy Partners Finance Corporation (together, the "Issuers"), upon the terms
and subject to the conditions set forth in their Prospectus dated ,
2003 (the "Prospectus"), receipt of which is hereby acknowledged, and in
accordance with this Letter of Transmittal (which together constitute the
"Exchange Offer"), the principal amount of Series A Notes indicated in the
foregoing table entitled "Description of Series A Notes" under the column
heading "Principal Amount Tendered." The undersigned represents that it is duly
authorized to tender all of the Series A Notes tendered hereby which it holds
for the account of beneficial owners of such Series A Notes ("Beneficial
Owner(s)") and to make the representations and statements set forth herein on
behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the
principal amount of Series A Notes tendered herewith in accordance with the
terms and subject to the conditions of the Exchange Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Issuers, all
right, title and interest in and to all of the Series A Notes tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Issuers) with
respect to such Series A Notes, with full powers of substitution and revocation
(such power of attorney being deemed to be an irrevocable power coupled with an
interest) to (i) present such Series A Notes and all evidences of transfer and
authenticity to, or transfer ownership of, such Series A Notes on the account
books maintained by DTC to, or upon the order of, the Issuers, (ii) present such
Series A Notes for transfer of ownership on the books of the Issuers, and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Series A Notes, all in accordance with the terms and conditions of the
Exchange Offer as described in the Prospectus.
A-3
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that:
(1) the Series B Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being
acquired by the undersigned and any Beneficial Owner(s) in the
ordinary course of business of the undersigned and any Beneficial
Owner(s),
(2) the undersigned and each Beneficial Owner are not participating, do
not intend to participate, and have no arrangement or understanding
with any person to participate, in the distribution of the Series B
Notes,
(3) except as indicated below, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), of the
Issuers, and
(4) the undersigned and each Beneficial Owner acknowledge and agree that
(x) any person participating in the Exchange Offer with the
intention or for the purpose of distributing the Series B Notes must
comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the
Series B Notes acquired by such person with a registration statement
containing the selling securityholder information required by Item
507 of Regulation S-K of the Securities and Exchange Commission (the
"SEC") and cannot rely on the interpretation of the Staff of the SEC
set forth in the no-action letters that are noted in the section of
the Prospectus entitled "The Exchange Offer -- Registration Rights"
and (y) any broker-dealer that pursuant to the Exchange Offer
receives Series B Notes for its own account in exchange for Series A
Notes which it acquired for its own account as a result of
market-making activities or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of such Series B Notes.
If the undersigned is a broker-dealer that will receive Series B Notes for
its own account in exchange for Series A Notes that were acquired as the result
of market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Series B Notes.
By so acknowledging and by delivering a prospectus, a broker-dealer shall not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned understands that tenders of Series A Notes may be withdrawn
by written notice of withdrawal received by the Exchange Agent at any time prior
to the Expiration Date in accordance with the Prospectus. In the event of a
termination of the Exchange Offer, the Series A Notes tendered pursuant to the
Exchange Offer will be returned to the tendering Holders promptly (or, in the
case of Series A Notes tendered by book-entry transfer, such Series A Notes will
be credited to the account maintained at DTC from which such Series A Notes were
delivered). If the Issuers make a material change in the terms of the Exchange
Offer or the information concerning the Exchange Offer or waives a material
condition of such Exchange Offer, the Issuers will disseminate additional
Exchange Offer materials and extend such Exchange Offer, if and to the extent
required by law.
The undersigned understands that the tender of Series A Notes pursuant to
any of the procedures set forth in the Prospectus and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer. The Issuers' acceptance for exchange of Series A Notes tendered
pursuant to any of the procedures described in the Prospectus will constitute a
binding agreement between the undersigned and the Issuers in accordance with the
terms and subject to the conditions of the Exchange Offer. For purposes of the
Exchange Offer, the undersigned understands that validly tendered Series A Notes
(or defectively tendered Series A Notes with respect to which the Issuers have,
or have caused to be, waived such defect) will be deemed to have been accepted
by the Issuers if, as and when the Issuers give oral or written notice thereof
to the Exchange Agent.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Series A Notes
tendered hereby, and that when such tendered Series A Notes are accepted for
purchase by the Issuers, the Issuers will acquire good title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned
A-4
and each Beneficial Owner will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or by the Issuers to be necessary or
desirable to complete the sale, assignment and transfer of the Series A Notes
tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned understands that the delivery and surrender of any Series A
Notes is not effective, and the risk of loss of the Series A Notes does not pass
to the Exchange Agent or the Issuers, until receipt by the Exchange Agent of
this Letter of Transmittal, or a manually signed facsimile hereof, properly
completed and duly executed, together with all accompanying evidences of
authority and any other required documents in form satisfactory to the Issuers.
All questions as to form of all documents and the validity (including time of
receipt) and acceptance of tenders and withdrawals of Series A Notes will be
determined by the Issuers, in their discretion, which determination shall be
final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Series A Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and in the case of Series A Notes tendered by book-entry
transfer, by credit to the account of DTC), and Series B Notes issued in
exchange for Series A Notes pursuant to the Exchange Offer be issued to the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Series A Notes
representing principal amounts not tendered or not accepted for exchange and
Series B Notes issued in exchange for Series A Notes pursuant to the Exchange
Offer be delivered to the undersigned at the address shown below the
undersigned's signature(s). In the event that the "Special Issuance
Instructions" box or the "Special Delivery Instructions" box is, or both are,
completed, the undersigned hereby requests that any Series A Notes representing
principal amounts not tendered or not accepted for purchase be issued in the
name(s) of, certificates for such Series A Notes be delivered to, and Series B
Notes issued in exchange for Series A Notes pursuant to the Exchange Offer be
issued in the name(s) of, and be delivered to, the person(s) at the address(es)
so indicated, as applicable. The undersigned recognizes that the Issuers have no
obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Series A Notes from the name of the
registered Holder(s) thereof if the Issuers do not accept for exchange any of
the principal amount of such Series A Notes so tendered.
A-5
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Series A Notes in a principal amount not tendered or not
accepted for exchange are to be issued in the name of, or Series B Notes are to
be issued in the name of, someone other than the person(s) whose signature(s)
appear(s) within this Letter of Transmittal or issued to an address different
from that shown in the box entitled 'Description of Series A Notes' within this
Letter of Transmittal.
Issue: [ ] Series A Notes [ ] Series B Notes
(check as applicable)
Name --------------------------------------------------------------------------
(PLEASE PRINT)
Address -----------------------------------------------------------------------
(PLEASE PRINT)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(ZIP CODE)
- --------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Series A Notes in a principal amount not tendered or not
accepted for exchange or Series B Notes are to be sent to someone other than the
person(s) whose signature(s) appear(s) within this Letter of Transmittal or to
an address different from that shown in the box entitled 'Description of Series
A Notes' within this Letter of Transmittal.
Issue: [ ] Series A Notes [ ] Series B Notes
(check as applicable)
Name --------------------------------------------------------------------------
(PLEASE PRINT)
Address -----------------------------------------------------------------------
(PLEASE PRINT)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(ZIP CODE)
- --------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
A-6
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF SERIES A NOTES
REGARDLESS OF WHETHER SERIES A NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) exactly as
name(s) appear(s) on certificate(s) for Series A Notes or, if tendered by a
participant in DTC exactly as such participant's name appears on a security
position listing as owner of Series A Notes, or by the person(s) authorized to
become registered Holder(s) by endorsements and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
(SEE GUARANTEE REQUIREMENT BELOW)
Dated: ------------------------------------------------------------------------
Name(s): ----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full
Title): -----------------------------------------------------------------------
Address: ----------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone
No.: --------------------------------------------------------------------------
Tax Identification or Social Security
Number: -----------------------------------------------------------------------
COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------
(NAME OF FIRM)
[PLACE SEAL HERE]
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Signature Guarantees. Signatures of this Letter of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Series A Notes tendered hereby are tendered
(i) by a registered Holder of
A-7
Series A Notes (or by a participant in DTC whose name appears on a security
position listing as the owner of such Series A Notes) that has not completed
either the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal, or (ii) for the
account of an Eligible Institution. If the Series A Notes are registered in the
name of a person other than the signer of this Letter of Transmittal, if Series
A Notes not accepted for exchange or not tendered are to be returned to a person
other than the registered Holder or if Series B Notes are to be issued in the
name of or sent to a person other than the registered Holder, then the
signatures on this Letter of Transmittal accompanying the tendered Series A
Notes must be guaranteed by an Eligible Institution as described above. See
Instruction 5.
2. Delivery of Letter of Transmittal and Series A Notes. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Series A Notes are to be physically delivered to the Exchange Agent herewith by
such Holders; (ii) tender of Series A Notes is to be made by book-entry transfer
to the Exchange Agent's account at DTC pursuant to the procedures set forth
under the caption "The Exchange Offer -- Procedures for Tendering Series A
Notes -- Book-Entry Delivery Procedures" in the Prospectus; or (iii) tender of
Series A Notes is to be made according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer -- Procedures for Tendering Series A
Notes -- Guaranteed Delivery" in the Prospectus. All physically delivered Series
A Notes, or a confirmation of a book-entry transfer into the Exchange Agent's
account at DTC of all Series A Notes delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at one of its addresses set forth on the cover page hereto on or prior to the
Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If a Holder desires to tender Series A Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Series A Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Holder must tender such Series A Notes
pursuant to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Series A Notes -- Guaranteed
Delivery" in the Prospectus. Pursuant to such procedures, (i) such tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form provided
by the Issuers, or an Agent's Message with respect to guaranteed delivery that
is accepted by the Issuers, must be received by the Exchange Agent, either by
hand delivery, mail, telegram, or facsimile transmission, on or prior to the
Expiration Date; and (iii) the certificates for all tendered Series A Notes, in
proper form for transfer (or confirmation of a book-entry transfer or all Series
A Notes delivered electronically into the Exchange Agent's account at DTC
pursuant to the procedures for such transfer set forth in the Prospectus),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, or in the case of a book-entry transfer, a properly
transmitted Agent's Message, must be received by the Exchange Agent within two
business days after the date of the execution of the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE SERIES A NOTES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND
RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS
INSTRUCTION 2, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Series A Notes for exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Series A Notes
should be listed on separate signed schedule attached hereto.
A-8
4. Partial Tenders. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by a Series A Note submitted, such Holders must fill in the principal
amount that is to be tendered in the column entitled "Principal Amount
Tendered." The minimum permitted tender is $1,000 in principal amount of Series
A Notes. All other tenders must be in integral multiples of $1,000 in principal
amount. In the case of a partial tender of Series A Notes, as soon as
practicable after the Expiration Date, new certificates for the remainder of the
Series A Notes that were evidenced by such Holder's old certificates will be
sent to such Holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal. The entire principal amount that is represented by Series
A Notes delivered to the Exchange Agent will be deemed to have been tendered,
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
Holder(s) of the Series A Notes tendered hereby, the signatures must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is shown as the owner of the Series
A Notes tendered hereby, the signature must correspond with the name shown on
the security position listing as the owner of the Series A Notes.
If any of the Series A Notes tendered hereby are registered in the name of
two or more Holders, all such Holders must sign this Letter of Transmittal. If
any of the Series A Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Series A Note or instrument of
transfer is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Issuers of such person's
authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered Holder(s) of
the Series A Notes listed herein and transmitted hereby, no endorsements of
Series A Notes or separate instruments of transfer are required unless Series B
Notes are to be issued, or Series A Notes not tendered or exchanged are to be
issued, to a person other than the registered Holder(s), in which case
signatures on such Series A Notes or instruments of transfer must be guaranteed
by an Eligible Institution.
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDER(S) OF THE SERIES A NOTES LISTED HEREIN, THE SERIES A NOTES MUST BE
ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE
SIGNED EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE SERIES A
NOTES AND SIGNATURES ON SUCH SERIES A NOTES OR INSTRUMENTS OF TRANSFER ARE
REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE
IS THAT OF AN ELIGIBLE INSTITUTION.
6. Special Issuance and Delivery Instructions. If certificates for Series
B Notes or unexchanged or untendered Series A Notes are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or if Series B
Notes or such Series A Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown herein, the
appropriate boxes on this Letter of Transmittal should be completed. All Series
A Notes tendered by book-entry transfer and not accepted for payment will be
returned by crediting the account at DTC designated herein as the account for
which such Series A Notes were delivered.
7. Transfer Taxes. Except as set forth in this Instruction 7, the Issuers
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Series A Notes to it, or to its order, pursuant to the Exchange Offer.
If Series B Notes, or Series A Notes not tendered or exchanged are to be
registered in the name of any persons other than the registered owners, or if
tendered Series A Notes are registered in the name of any persons other than the
persons signing this Letter of Transmittal, the amount of any transfer taxes
(whether imposed on the registered Holder or such other person) payable on
account of the transfer to such other person must be paid to the Issuers or the
Exchange Agent (unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted) before the Series B Notes will be issued.
A-9
8. Waiver of Conditions. The conditions of the Exchange Offer may be
amended or waived by the Issuers, in whole or in part, at any time and from time
to time in the Issuers' discretion, in the case of any Series A Notes tendered.
9. Substitute Form W-9. Each tendering owner of a Note (or other payee) is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided hereafter under "Important Tax Information," and to
certify that the owner (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering owner (or other payee) to a $50 penalty imposed by the Internal
Revenue Service and 31% federal income tax withholding. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering owner (or other payee) has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN in
the near future. If the box in Part 3 is checked and the Exchange Agent is not
provided with a TIN within 60 days of the date on the Substitute Form W-9, the
Exchange Agent will withhold 31% until a TIN is provided to the Exchange Agent.
10. Broker-dealers Participating in the Exchange Offer. If no
broker-dealer checks the last box on page 6 of this Letter of Transmittal, the
Issuers have no obligation under the Registration Rights Agreement to allow the
use of the Prospectus for resales of the Series B Notes by broker-dealers or to
maintain the effectiveness of the Registration Statement of which the Prospectus
is a part after the consummation of the Exchange Offer.
11. Requests for Assistance or Additional Copies. Any questions or
requests for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at the telephone numbers and location listed above. A Holder or owner may
also contact such Holder's or owner's broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Exchange Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING THE SERIES A NOTES AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Series A Notes whose tendered
Series A Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other recipient of
Series B Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, any interest on Series B Notes paid to such owner or other
recipient may be subject to 31% backup withholding tax.
Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Forms W-8ECI, W-8BEN, W-8EXP or W-8IMY
(collectively, a "Form W-8"), signed under penalties of perjury, attesting to
that individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
A-10
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding the owner is required to notify the Exchange
Agent of the owner's current TIN (or the TIN of any other payee) by completing
the following form, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such owner is awaiting a TIN), and that (i) the owner is exempt
from withholding, (ii) the owner has not been notified by the Internal Revenue
Service that the owner is subject to backup withholding as a result of failure
to report all interest or dividends or (iii) the Internal Revenue Service has
notified the owner that the owner is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Series A
Notes. If the Series A Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9," for
additional guidance on which number to report.
A-11
- ---------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN SOCIAL SECURITY NUMBER
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING OR
AND DATING BELOW. EMPLOYER IDENTIFICATION NUMBER
---------------------------
- ---------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- CERTIFICATION -- Under PART 3 -- Awaiting TIN
INTERNAL REVENUE SERVICE penalties of perjury, I certify that: [ ]
(1) The number shown on this form is my
PAYER'S REQUEST FOR TAXPAYER correct taxpayer identification number
IDENTIFICATION NO. ("TIN") (or I am waiting for a number to be
issued to me), and (2) I am not subject
to backup withholding because: (a) I am
exempt from backup withholding, or (b)
I have not been notified by the
Internal Revenue Service ("IRS") that I
am subject to backup withholding as a
result of a failure to report all
interest or dividends, or (c) the IRS
has notified me that I am no longer
subject to backup withholding.
------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must
cross out item (2) above if you have
been notified by the IRS that you are
currently subject to backup withholding
because of under-reporting interest or
dividends on your tax return.
------------------------------------------------------------------------
Signature: DATE: ------------------------
-------------------------------------
- ---------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31%.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within 60 days of the date in this
form, 31% of all reportable cash payments made to me will be withheld until I
provide a taxpayer identification number.
Signature
- ------------------------------------------------------------------ Date
- ------------------------------------
A-12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- ---------------------------------------------
GIVE THE
SOCIAL
SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ---------------------------------------------
1. An individual's account The individual
- ---------------------------------------------
2. Two or more individuals The actual
(joint account) owner of the
account or, if
combined
funds, the
first
individual on
the account(1)
- ---------------------------------------------
3. Husband and wife (joint The actual
account) owner of the
account or, if
joint funds,
either
person(1)
- ---------------------------------------------
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
- ---------------------------------------------
5. Adult and minor (joint The adult or,
account) if the minor
is the only
contributor,
the minor(1)
- ---------------------------------------------
6. Account in the name of The ward,
guardian or committee minor, or
for a designated ward, incompetent
minor or incompetent person(3)
person
- ---------------------------------------------
7. a. A revocable savings The grantor-
trust account trustee(1)
(in which grantor is
also trustee)
b. Any "trust" account The actual
that is not a owner(1)
legal or valid trust
under State law
- ---------------------------------------------
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
- ---------------------------------------------
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ---------------------------------------------
9. A valid trust, estate, The legal
or pension entity (do not
furnish the
identifying
number of the
personal
representative
or trustee
unless the
legal entity
itself is not
designated in
the account
title)(5)
- ---------------------------------------------
10. Corporate account The
corporation
- ---------------------------------------------
11. Religious, charitable The
or educational organization
organization account
- ---------------------------------------------
12. Partnership account The
held in the name of the partnership
business
- ---------------------------------------------
13. Association, club, or The
other tax-exempt organization
organization
- ---------------------------------------------
14. A broker or registered The broker or
nominee nominee
- ---------------------------------------------
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
A-13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- - The United States or any agency or instrumentality thereof.
- - A state, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- - A foreign government or a political subdivision, agency or instrumentality
thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A foreign central bank issue.
- - Unless otherwise noted herein, all reference below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following.
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee
Payments of interest not generally subject to backup withholding include the
following.
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, and (ii)
the interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE SUBSTITUTE FORM W-9 TO AVOID POSSIBLE
ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a), 6045
and 6050A.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipient are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to the
failure.
(3) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- If you falsify
certifications or affirmations, you are subject to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
A-14
ANNEX B
NOTICE OF GUARANTEED DELIVERY
EL PASO ENERGY PARTNERS, L.P.
EL PASO ENERGY PARTNERS FINANCE CORPORATION
OFFER TO EXCHANGE
10 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2012 FOR ANY AND ALL
OUTSTANDING 10 5/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2012
As set forth in the Prospectus, dated , 2003 (as the same may be
amended from time to time, the "Prospectus"), of El Paso Energy Partners, L.P.
and El Paso Energy Partners Finance Corporation (together, the "Issuers"), under
the caption of "The Exchange Offer -- Procedures for Tendering Series A
Notes -- Guaranteed Delivery," this form or one substantially equivalent hereto
must be used to accept the Issuers' offer (the "Exchange Offer") to exchange
their 10 5/8% Series B Senior Subordinated Notes due 2012 (the "Series B
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for an equal principal amount of their 10 5/8% Series A
Senior Subordinated Notes due 2012 (the "Series A Notes"), if (i) certificates
representing the Series A Notes to be exchanged are not lost but are not
immediately available, or (ii) time will not permit all required documents to
reach the Exchange Agent prior to the Expiration Date. This form may be
delivered by an eligible institution by mail or hand delivery or transmittal,
via facsimile, to the Exchange Agent at its address set forth below not later
than 5:00 p.m., New York City time, on , 2003. All capitalized terms
used herein but not defined herein shall have the meanings ascribed to them in
the Prospectus.
The Exchange Agent for the Exchange Offer is:
JPMORGAN CHASE BANK
By Mail: By Facsimile:
JPMorgan Chase Bank (512) 479-2553
700 Lavoca Attention: Mr. Cary Gilliam
Fifth Floor
Austin, TX 78701 Confirm by Telephone:(512) 479-2575
Attention: Mr. Cary Gilliam Attention: Mr. Cary Gilliam
DELIVERY OR TRANSMISSION VIA FACSIMILE OF THIS NOTICE OF GUARANTEED
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
B-1
Ladies and Gentlemen:
The undersigned hereby tender(s) for exchange to the Issuers, upon the
terms and subject to the conditions set forth in the Prospectus and the Letter
of Transmittal, receipt of which is hereby acknowledged, the principal amount of
the Series A Notes as set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus under the caption of "The Exchange
Offer -- Procedures for Tendering Series A Notes -- Guaranteed Delivery."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on , 2003, unless extended by
the Issuers. With respect to the Exchange Offer, "Expiration Date" means such
time and date, or if the Exchange Offer is extended, the latest time and date to
which the Exchange Offer is so extended by the Issuers.
All authority herein conferred or agreed to be conferred by the Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
SIGNATURES
- -------------------------------------------- Principal Amount of Series A Notes
Signature of Owner Exchanged:
$
--------------------------------------------
- -------------------------------------------- Certificate Nos. of Series A Notes (if
Signature of Owner (if more than one) available)
--------------------------------------------
Dated: ,2003 --------------------------------------------
Name(s):
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
(Please Print)
Address:
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
- ---------------------------------------------------------------------------------------------
Capacity (full title), if signing in a representative capacity:
- ---------------------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- ---------------------------------------------------------------------------------------------
B-2
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States, or is
otherwise an "eligible guaranteed institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees
that, within three New York Stock Exchange trading days from the date of this
Notice of Guaranteed Delivery, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with certificates representing
the Series A Notes tendered hereby in proper form for transfer (or confirmation
of the book-entry transfer of such Series A Notes into the account of JPMorgan
Chase Bank (the "Trust Company") at a Book-Entry Transfer Facility, pursuant to
the Trust Company's account at a Book-Entry Transfer Facility, pursuant to the
procedure for book-entry transfer set forth in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering Series A Notes -- Book-entry
delivery procedures"), and any other required documents will be deposited by the
undersigned with the Trust Company.
Name of Firm: ------------------------------------ -----------------------------------------------------
Address: ------------------------------------------- Name: ----------------------------------------------
Title:
Area Code and Telephone No.: Date:
DO NOT SEND SERIES A NOTES WITH THIS FORM.
ACTUAL SURRENDER OF SERIES A NOTES MUST BE MADE PURSUANT TO,
AND BE ACCOMPANIED BY, THE LETTER OF TRANSMITTAL.
B-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our partnership agreement provides that we:
- will indemnify (1) El Paso Energy Partners Company, (2) any departing
general partner and (3) any person who is or was an officer, director or
other representative of El Paso Energy Partners Company, any departing
general partner or us, to the fullest extent permitted by law; and
- may indemnify, to the fullest extent permitted by law, (1) any person who
is or was an affiliate of El Paso Energy Partners Company, any departing
general partner or us, (2) any person who is or was an employee, partner,
agent or trustee of El Paso Energy Partners Company, any departing
general partner, us or any such affiliate, or (3) any person who is or
was serving at our request as an officer, director, employee, partner,
member, agent or other representative of another corporation,
partnership, joint venture, trust, committee or other enterprise;
each, as well as any employee, partner, agent or other representative of El Paso
Energy Partners Company, any departing general partner, us or any of their or
our affiliates, which we refer to as an "Indemnitee," from and against any and
all claims, damages, expenses and fines, whether civil, criminal, administrative
or investigative, in which any Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, by reason of its status as (1) El Paso
Energy Partners Company, departing general partner, us or an affiliate of
either, (2) an officer, director, employee, partner, agent, trustee or other
representative of El Paso Energy Partners Company, any departing general
partner, us or any of their or our affiliates or (3) a person serving at our
request in any other entity in a similar capacity. Indemnification will be
conditioned on the determination that, in each case, the Indemnitee acted in
good faith, in a manner which such Indemnitee believed to be in, or not opposed
to, our best interests and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful.
The above indemnification may result in indemnification of Indemnitees for
negligent acts, and may include indemnification for liabilities under the
Securities Act. We have been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. Any indemnification under these provisions will be
only out of our assets. We are authorized to purchase, or to reimburse El Paso
Energy Partners Company or its affiliates for the cost of, insurance against
liabilities asserted against and expenses incurred by such persons in connection
with our activities, whether or not we would have the power to indemnify such
person against such liabilities under the provisions described above.
Subject to any terms, conditions or restrictions set forth in our
partnership agreement, Section 17-108 of the Delaware Revised Uniform Limited
Partnership Act empowers a Delaware limited partnership to indemnify and hold
harmless any partner or other person from and against all claims and demands
whatsoever.
Section 145(a) of the General Corporation Law of the State of Delaware, or
the "DGCL," provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorney
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no cause to believe his or her conduct
was unlawful.
II-1
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person set forth against expenses (including attorney fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted above in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interest of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the court in which such
action or suit was brought shall determine, that despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to be indemnified for such expenses which the
court shall deem proper.
Section 145 of the DGCL further provides that to the extent a present or
former director or officer of a corporation has been successful in the defense
of any action, suit or proceeding referred to in the immediately preceding two
paragraphs above or in the defense of any claim, issue or matter therein, he or
she shall be indemnified against any expenses (including attorney fees) actually
and reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled both to actions in
his or her official capacity and in other capacities while holding such office;
and that the corporation may purchase and maintain insurance on behalf of a
director, officer, employee or agent of the corporation against any liability
asserted against him or her or incurred by him or her in any such capacity or
arising out of his or her status as such whether or not the corporation would
have the power to indemnify him or her against such liabilities under Section
145.
Section 102(b)(7) of the DGCL provides that a corporation in its original
certificate of incorporation or an amendment thereto validly approved by
stockholders may eliminate or limit personal liability of members of its board
of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his or her duty of loyalty, not acting in good faith, failing to
act in good faith, engaging in intentional misconduct, knowingly violating a
law, paying a dividend or approving a stock repurchase which was illegal or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty.
The certificate of incorporation of El Paso Energy Partners Company
contains a provision which limits the liability of its directors to El Paso
Energy Partners Company or its stockholders, in their capacity as directors but
not in their capacity as officers, to the fullest extent permitted by the DGCL.
In addition, the bylaws of El Paso Energy Partners Company, in substance,
require El Paso Energy Partners Company to indemnify each person who is or was a
director, officer, employee or agent of El Paso Energy Partners Company to the
full extent permitted by the laws of the State of Delaware in the event such
person is involved in legal proceedings by reason of the fact that he or she is
or was a director, officer, employee or agent of El Paso Energy Partners
Company, or is or was serving at El Paso Energy Partners Company's request as a
director, officer, employee or agent of El Paso Energy Partners Company and its
subsidiaries, another corporation, partnership or other enterprise. El Paso
Energy Partners Company is also required to advance to these persons payments
incurred in defending a proceeding to which indemnification might apply,
provided the recipient provides an undertaking agreeing to repay all such
advanced amounts if it is ultimately determined that he or she is not entitled
to be indemnified. In addition, El Paso Energy Partners Company's bylaws
specifically provide that the indemnification rights granted in it are
non-exclusive.
El Paso Energy Partners Company has entered into indemnification agreements
with certain of its current and past directors providing for indemnification to
the full extent permitted by the laws of the State of Delaware. These agreements
provide for specific procedures to assure the directors' rights to
indemnification, including procedures for directors to submit claims, for
determination of directors' entitlement to indemnification, including the
allocation of the burden of proof and selection of a reviewing party, and for
enforcement of directors' indemnification rights.
II-2
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us or El Paso
Energy Partners Company as set forth above, we and El Paso Energy Partners
Company have been informed that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
El Paso Energy Partners Company has purchased liability insurance policies
covering its directors and officers, including to provide protection where we
cannot legally indemnify a director or officer and where a claim arises under
the Employee Retirement Income Security Act of 1974 against a director or
officer based on an alleged breach of fiduciary duty or other wrongful act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.A** Purchase Agreement dated November 22, 2002 among El Paso
Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors listed on Schedule A
thereto, J.P. Morgan Securities Inc., Goldman, Sachs & Co.,
UBS Warburg LLC and Wachovia Securities, Inc. (filed as
Exhibit 10.R to our Current Report on Form 8-K filed
December 12, 2002).
4.A* Indenture dated November 27, 2002 among El Paso Energy
Partners, L.P., El Paso Energy Partners Finance Corporation,
the Subsidiary Guarantors named therein and JPMorgan Chase
Bank, as Trustee.
4.B* Form of 10 5/8% Note (contained in the Indenture filed as
Exhibit 4.A).
4.C** A/B Exchange Registration Rights Agreement dated as of
November 27, 2002 between El Paso Energy Partners, El Paso
Energy Partners Finance Corporation, the Subsidiary
Guarantors listed on Schedule A thereto, J.P. Morgan
Securities Inc., Goldman, Sachs & Co., UBS Warburg LLC and
Wachovia Securities, Inc. (filed as Exhibit 4.H to our
Current Report on Form 8-K filed December 12, 2002)
5.A*** Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to
the legality of the securities being offered.
12.A* Calculation of Earnings to Fixed Charges.
23.A* Consent of PricewaterhouseCoopers LLP.
23.B* Consent of Netherland, Sewell & Associates, Inc.
24.A* Power of attorney (included in the signature page hereto).
25.A* Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of JPMorgan Chase Bank.
- ---------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
Arthur Andersen LLP has not consented to the incorporation by reference of
their report in this registration statement, and we have dispensed with the
requirement to file their consent in reliance upon Rule 437(a) of the Securities
Act of 1933.
(b) Financial Statement Schedules
No financial statement schedules are included herein. All other schedules
for which provision is made in the applicable accounting regulation of the
Commission are not required under the related instructions, are inapplicable, or
the information is included in the consolidated financial statements, and have
therefore been omitted.
(c) Reports, Opinions, and Appraisals
None.
II-3
ITEM 22. UNDERTAKINGS
(a) Regulation S-K, Item 512 Undertakings
(1) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(ii) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) Registration on Form S-4 of Securities Offered for Resale.
(i) The undersigned hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through the use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the
applicable form.
(ii) The registrant undertakes that every prospectus: (a) that is
filed pursuant to the paragraph immediately preceding, or (b) that
purports to meet the requirements of section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the
II-4
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(c) The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrants have
duly caused this registration statement or amendment thereto to be signed on
their behalf by the undersigned, thereunto duly authorized, in the city of
Houston, state of Texas, on February 28, 2003.
EL PASO ENERGY PARTNERS, L.P.
(REGISTRANT)
By: El Paso Energy Partners Company,
its General Partner
By: /s/ KEITH B. FORMAN
--------------------------------------
Keith B. Forman
Chief Financial Officer and
Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the persons whose signatures
appear below, constitute and appoint D. Mark Leland and Peggy A. Heeg, and each
of them as their true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for them and in their names, places and
steads, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any subsequent
registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and the other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates as indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT G. PHILLIPS Chairman of the Board and February 28, 2003
- ------------------------------------------------ Chief Executive Officer
Robert G. Phillips (1)
/s/ KEITH B. FORMAN Chief Financial Officer February 28, 2003
- ------------------------------------------------ and Vice President (2)
Keith B. Forman
/s/ JAMES H. LYTAL President and Director February 28, 2003
- ------------------------------------------------ (3)
James H. Lytal
/s/ KATHY A. WELCH Vice President and February 28, 2003
- ------------------------------------------------ Controller (Principal
Kathy A. Welch Accounting Officer (4)
II-6
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MICHAEL B. BRACY Director (6) February 28, 2003
- ------------------------------------------------
Michael B. Bracy
/s/ H. DOUGLAS CHURCH Director (7) February 28, 2003
- ------------------------------------------------
H. Douglas Church
/s/ KENNETH L. SMALLEY Director (8) February 28, 2003
- ------------------------------------------------
Kenneth L. Smalley
- ---------------
1. Robert G. Phillips has signed this registration statement in his capacity as
Chairman of the Board and Chief Executive Officer of El Paso Energy Partners
Company and El Paso Energy Partners Finance Corporation, and Chief Executive
Officer of El Paso Energy Partners, L.P., Chaco Liquids Plant Trust; Crystal
Holding, L.L.C.; El Paso Energy Intrastate, L.P.; El Paso Energy Partners Oil
Transport, L.L.C.; El Paso Energy Partners Operating Company, L.L.C.; El Paso
Energy Warwink I Company, L.P.; El Paso Energy Warwink II Company, L.P.; El
Paso Offshore Gathering & Transmission, L.P.; El Paso South Texas, L.P.; EPGT
Texas Pipeline, L.P.; EPN Alabama Intrastate, L.L.C.; EPN Field Services,
L.L.C.; EPN Gathering and Treating Company, L.P.; EPN Gathering and Treating
GP Holding, L.L.C.; EPN GP Holding, L.L.C.; EPN GP Holding I, L.L.C.; EPN
Gulf Coast, L.P.; EPN Holding Company, L.P.; EPN Holding Company I, L.P.; EPN
NGL Storage, L.L.C.; EPN Pipeline GP Holding, L.L.C.; First Reserve Gas,
L.L.C.; Flextrend Development Company, L.L.C.; Hattiesburg Gas Storage
Company; Hattiesburg Industrial Gas Sales, L.L.C.; High Island Offshore
System, L.L.C.; Manta Ray Gathering Company, L.L.C.; Petal Gas Storage,
L.L.C.; Poseidon Pipeline Company, L.L.C.; and Warwink Gathering and Treating
Company; and
2. Keith B. Forman has signed this registration statement in his capacity as
Vice President and Chief Financial Officer of El Paso Energy Partners
Company, El Paso Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, Chaco Liquids Plant Trust; Crystal Holding, L.L.C.; El Paso
Energy Intrastate, L.P.; El Paso Energy Partners Oil Transport, L.L.C.; El
Paso Energy Partners Operating Company, L.L.C.; El Paso Energy Warwink I
Company, L.P.; El Paso Energy Warwink II Company, L.P.; El Paso Offshore
Gathering & Transmission, L.P.; El Paso South Texas, L.P.; EPGT Texas
Pipeline, L.P.; EPN Alabama Intrastate, L.L.C.; EPN Field Services, L.L.C.;
EPN Gathering and Treating Company, L.P.; EPN Gathering and Treating GP
Holding, L.L.C.; EPN GP Holding, L.L.C.; EPN GP Holding I, L.L.C.; EPN Gulf
Coast, L.P.; EPN Holding Company, L.P.; EPN Holding Company I, L.P.; EPN NGL
Storage, L.L.C.; EPN Pipeline GP Holding, L.L.C.; First Reserve Gas, L.L.C.;
Flextrend Development Company, L.L.C.; Hattiesburg Gas Storage Company;
Hattiesburg Industrial Gas Sales, L.L.C.; High Island Offshore System,
L.L.C.; Manta Ray Gathering Company, L.L.C.; Petal Gas Storage, L.L.C.;
Poseidon Pipeline Company, L.L.C.; and Warwink Gathering and Treating
Company; and
3. James H. Lytal has signed this registration statement in his capacity as
President and Director of El Paso Energy Partners Company, and El Paso Energy
Partners Finance Corporation; President of El Paso Energy Partners, L.P.,
Chaco Liquids Plant Trust; Crystal Holding, L.L.C.; El Paso Energy
Intrastate, L.P.; El Paso Energy Partners Oil Transport, L.L.C.; El Paso
Energy Partners Operating Company, L.L.C.; El Paso Energy Warwink I Company,
L.P.; El Paso Energy Warwink II Company, L.P.; El Paso Offshore Gathering &
Transmission, L.P.; El Paso South Texas, L.P.; EPGT Texas Pipeline, L.P.; EPN
Alabama Intrastate, L.L.C.; EPN Field Services, L.L.C.; EPN Gathering and
Treating Company, L.P.; EPN Gathering and Treating GP Holding, L.L.C.; EPN GP
Holding, L.L.C.; EPN GP Holding I, L.L.C.; EPN Gulf Coast, L.P.; EPN Holding
Company, L.P.; EPN Holding Company I, L.P.; EPN NGL Storage, L.L.C.; EPN
Pipeline GP Holding, L.L.C.; First Reserve Gas, L.L.C.; Flextrend Development
Company, L.L.C.; Hattiesburg Gas Storage Company; Hattiesburg Industrial Gas
Sales, L.L.C.; High Island Offshore System, L.L.C.; Manta Ray Gathering
Company, L.L.C.; Petal Gas Storage, L.L.C.; Poseidon Pipeline Company,
L.L.C.; and Warwink Gathering and Treating Company; and
4. Kathy A. Welch has signed this registration statement in her capacity as Vice
President and Controller of El Paso Energy Partners Company, El Paso Energy
Partners, L.P., El Paso Energy Partners Finance
II-7
Corporation, Chaco Liquids Plant Trust; Crystal Holding, L.L.C.; El Paso
Energy Intrastate, L.P.; El Paso Energy Partners Oil Transport, L.L.C.; El
Paso Energy Partners Operating Company, L.L.C.; El Paso Energy Warwink I
Company, L.P.; El Paso Energy Warwink II Company, L.P.; El Paso Offshore
Gathering & Transmission, L.P.; El Paso South Texas, L.P.; EPGT Texas
Pipeline, L.P.; EPN Alabama Intrastate, L.L.C.; EPN Field Services, L.L.C.;
EPN Gathering and Treating Company, L.P.; EPN Gathering and Treating GP
Holding, L.L.C.; EPN GP Holding, L.L.C.; EPN GP Holding I, L.L.C.; EPN Gulf
Coast, L.P.; EPN Holding Company, L.P.; EPN Holding Company I, L.P.; EPN NGL
Storage, L.L.C.; EPN Pipeline GP Holding, L.L.C.; First Reserve Gas, L.L.C.;
Flextrend Development Company, L.L.C.; Hattiesburg Gas Storage Company;
Hattiesburg Industrial Gas Sales, L.L.C.; High Island Offshore System,
L.L.C.; Manta Ray Gathering Company, L.L.C.; Petal Gas Storage, L.L.C.;
Poseidon Pipeline Company, L.L.C.; and Warwink Gathering and Treating
Company; and
6. Michael B. Bracy has signed this registration statement in his capacity as a
Director of El Paso Energy Partners Company, general partner of El Paso
Energy Partners, L.P.
7. H. Douglas Church has signed this registration statement in his capacity as a
Director of El Paso Energy Partners Company, general partner of El Paso
Energy Partners, L.P.
8. Kenneth L. Smalley has signed this registration statement in his capacity as
a Director of El Paso Energy Partners Company, general partner of El Paso
Energy Partners, L.P.
EL PASO ENERGY PARTNERS FINANCE
CORPORATION
By: /s/ KEITH B. FORMAN
--------------------------------------
Keith B. Forman
Chief Financial Officer and
Vice President
II-8
Subsidiary Guarantors:
CHACO LIQUIDS PLANT TRUST
By: EL PASO ENERGY PARTNERS OPERATING
COMPANY, L.L.C., in its capacity as trustee of the
Chaco Liquids Plant Trust
CRYSTAL HOLDING, L.L.C.
EL PASO ENERGY INTRASTATE, L.P.
EL PASO ENERGY PARTNERS OIL TRANSPORT, L.L.C.
EL PASO ENERGY PARTNERS OPERATING COMPANY, L.L.C.
EL PASO ENERGY WARWINK I COMPANY, L.P.
EL PASO ENERGY WARWINK II COMPANY, L.P.
EL PASO OFFSHORE GATHERING & TRANSMISSION, L.P.
EL PASO SOUTH TEXAS, L.P.
EPGT TEXAS PIPELINE, L.P.
EPN ALABAMA INTRASTATE, L.L.C.
EPN FIELD SERVICES, L.L.C.
EPN GATHERING AND TREATING COMPANY, L.P.
EPN GATHERING & TREATING GP HOLDING, L.L.C.
EPN GP HOLDING, L.L.C.
EPN GP HOLDING, I, L.L.C.
EPN GULF COAST, L.P.
EPN HOLDING COMPANY, L.P.
EPN HOLDING COMPANY, I, L.P.
EPN NGL STORAGE, L.L.C.
EPN PIPELINE GP HOLDING, L.L.C.
FIRST RESERVE GAS, L.L.C.
FLEXTREND DEVELOPMENT COMPANY, L.L.C.
HATTIESBURG GAS STORAGE COMPANY
HATTIESBURG INDUSTRIAL GAS SALES, L.L.C.
HIGH ISLAND OFFSHORE SYSTEM, L.L.C.
MANTA RAY GATHERING COMPANY, L.L.C.
PETAL GAS STORAGE, L.L.C.
POSEIDON PIPELINE COMPANY, L.L.C.
WARWINK GATHERING AND TREATING COMPANY
By: /s/ KEITH B. FORMAN
--------------------------------------
Keith B. Forman
Chief Financial Officer and
Vice President
II-9
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.A** Purchase Agreement dated November 22, 2002 among El Paso
Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors listed on Schedule A
thereto, J.P. Morgan Securities Inc., Goldman, Sachs & Co.,
UBS Warburg LLC and Wachovia Securities, Inc. (filed as
Exhibit 10.R to our Current Report on Form 8-K filed
December 12, 2002).
4.A* Indenture dated November 27, 2002 among El Paso Energy
Partners, L.P., El Paso Energy Partners Finance Corporation,
the Subsidiary Guarantors named therein and JPMorgan Chase
Bank, as Trustee.
4.B* Form of 10 5/8% Note (contained in the Indenture filed as
Exhibit 4.A).
4.C** A/B Exchange Registration Rights Agreement dated as of
November 27, 2002 between El Paso Energy Partners, El Paso
Energy Partners Finance Corporation, the Subsidiary
Guarantors listed on Schedule A thereto, J.P. Morgan
Securities Inc., Goldman, Sachs & Co., UBS Warburg LLC and
Wachovia Securities, Inc. (filed as Exhibit 4.H to our
Current Report on Form 8-K filed December 12, 2002)
5.A*** Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as to
the legality of the securities being offered.
12.A* Calculation of Earnings to Fixed Charges.
23.A* Consent of PricewaterhouseCoopers LLP.
23.B* Consent of Netherland, Sewell & Associates, Inc.
24.A* Power of attorney (included in the signature page hereto).
25.A* Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of JPMorgan Chase Bank.
- ---------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
EXHIBIT 4.A
EL PASO ENERGY PARTNERS, L.P.,
EL PASO ENERGY PARTNERS FINANCE CORPORATION, as Issuers,
THE SUBSIDIARIES NAMED HEREIN, as Subsidiary Guarantors
And
JPMORGAN CHASE BANK, as Trustee
10 5/8% Series A Senior Subordinated Notes due 2012
10 5/8% Series B Senior Subordinated Notes due 2012
INDENTURE
Dated as of November 27, 2002
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- ----------- -----------------
310 (a)(1)............................................................................. 7.10
(a)(2)............................................................................. 7.10
(a)(3)............................................................................. N.A.
(a)(4)............................................................................. N.A.
(a)(5)............................................................................. 7.10
(b)................................................................................ 7.10
(c)................................................................................ N.A.
311 (a)................................................................................ 7.11
(b)................................................................................ 7.11
(c)................................................................................ N.A.
312 (a)................................................................................ 2.05
(b)................................................................................ 13.03
(c)................................................................................ 13.03
313 (a)................................................................................ 7.06
(b)(1)............................................................................. N.A.
(b)(2)............................................................................. 7.06
(c)................................................................................ 7.06; 13.02
(d)................................................................................ 7.6
314 (a)................................................................................ 4.03; 4.19; 13.02
(b)................................................................................ N.A.
(c)(1)............................................................................. 13.04
(c)(2)............................................................................. 13.04
(c)(3)............................................................................. N.A.
(d)................................................................................ N.A.
(e)................................................................................ 13.05
(f)................................................................................ N.A.
315 (a)................................................................................ 7.01
(b)................................................................................ 7.05, 13.02
(c)................................................................................ 7.01
(d)................................................................................ 7.01; 6.05
(e)................................................................................ 6.11
316 (a)(last sentence)................................................................. 2.09
(a)(1)(A).......................................................................... 6.05
(a)(1)(B).......................................................................... 6.04
(a)(2)............................................................................. N.A.
(b)................................................................................ 6.07
(c)................................................................................ 2.12
317 (a)(1)............................................................................. 6.08
(a)(2)............................................................................. 6.09
(b)................................................................................ 2.04
i
ACT SECTION INDENTURE SECTION
- ----------- -----------------
318 (a)................................................................................ 13.01
(b)................................................................................ N.A.
(c)................................................................................ 13.01
- ----------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
ii
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..............................................................1
SECTION 1.01. DEFINITIONS..............................................................................1
SECTION 1.02. OTHER DEFINITIONS.......................................................................28
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT......................................29
SECTION 1.04. RULES OF CONSTRUCTION...................................................................29
ARTICLE 2 THE NOTES..............................................................................................30
SECTION 2.01. FORM AND DATING.........................................................................30
SECTION 2.02. EXECUTION AND AUTHENTICATION............................................................31
SECTION 2.03. REGISTRAR AND PAYING AGENT..............................................................31
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.....................................................32
SECTION 2.05. HOLDER LISTS............................................................................32
SECTION 2.06. TRANSFER AND EXCHANGE...................................................................32
SECTION 2.07. REPLACEMENT NOTES.......................................................................46
SECTION 2.08. OUTSTANDING NOTES.......................................................................47
SECTION 2.09. TREASURY NOTES..........................................................................47
SECTION 2.10. TEMPORARY NOTES.........................................................................47
SECTION 2.11. CANCELLATION............................................................................48
SECTION 2.12. DEFAULTED INTEREST......................................................................48
SECTION 2.13. CUSIP NUMBERS...........................................................................48
ARTICLE 3 REDEMPTION AND PREPAYMENT..............................................................................49
SECTION 3.01. NOTICES TO TRUSTEE......................................................................49
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.......................................................49
SECTION 3.03. NOTICE OF REDEMPTION....................................................................49
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..........................................................50
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.............................................................50
SECTION 3.06. NOTES REDEEMED IN PART..................................................................51
SECTION 3.07. OPTIONAL REDEMPTION.....................................................................51
SECTION 3.08. MANDATORY REDEMPTION....................................................................52
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF NET PROCEEDS........................................52
iii
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ARTICLE 4 COVENANTS..............................................................................................54
SECTION 4.01. PAYMENT OF NOTES........................................................................54
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.........................................................54
SECTION 4.03. COMPLIANCE CERTIFICATE..................................................................55
SECTION 4.04. TAXES...................................................................................55
SECTION 4.05. STAY, EXTENSION AND USURY LAWS..........................................................56
SECTION 4.06. CHANGE OF CONTROL.......................................................................56
SECTION 4.07. ASSET SALES.............................................................................58
SECTION 4.08. RESTRICTED PAYMENTS.....................................................................61
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED EQUITY..........................64
SECTION 4.10. ANTI-LAYERING...........................................................................67
SECTION 4.11. LIENS...................................................................................67
SECTION 4.12. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..........................67
SECTION 4.13. TRANSACTIONS WITH AFFILIATES............................................................69
SECTION 4.14. ADDITIONAL SUBSIDIARY GUARANTEES........................................................71
SECTION 4.15. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.................................72
SECTION 4.16. BUSINESS ACTIVITIES.....................................................................73
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.........................................................73
SECTION 4.18. PAYMENTS FOR CONSENT....................................................................73
SECTION 4.19. REPORTS.................................................................................73
SECTION 4.20. SUSPENSION OF COVENANTS.................................................................74
ARTICLE 5 SUCCESSORS.............................................................................................75
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS................................................75
SECTION 5.02. SUCCESSOR ENTITY SUBSTITUTED............................................................77
ARTICLE 6 DEFAULTS AND REMEDIES..................................................................................78
SECTION 6.01. EVENTS OF DEFAULT.......................................................................78
SECTION 6.02. ACCELERATION............................................................................80
SECTION 6.03. OTHER REMEDIES..........................................................................80
SECTION 6.04. WAIVER OF PAST DEFAULTS.................................................................80
SECTION 6.05. CONTROL BY MAJORITY.....................................................................81
SECTION 6.06. LIMITATION ON SUITS.....................................................................81
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...........................................81
iv
Page
SECTION 6.08. COLLECTION SUIT BY TRUSTEE..............................................................82
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM........................................................82
SECTION 6.10. PRIORITIES..............................................................................82
SECTION 6.11. UNDERTAKING FOR COSTS...................................................................83
ARTICLE 7 TRUSTEE................................................................................................83
SECTION 7.01. DUTIES OF TRUSTEE.......................................................................83
SECTION 7.02. RIGHTS OF TRUSTEE.......................................................................84
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE............................................................86
SECTION 7.04. TRUSTEE'S DISCLAIMER....................................................................86
SECTION 7.05. NOTICE OF DEFAULTS......................................................................86
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES..............................................86
SECTION 7.07. COMPENSATION AND INDEMNITY..............................................................87
SECTION 7.08. REPLACEMENT OF TRUSTEE..................................................................88
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC........................................................89
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...........................................................89
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.......................................89
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE...............................................................89
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE................................89
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE..........................................................89
SECTION 8.03. COVENANT DEFEASANCE.....................................................................90
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE..............................................90
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS........................................................92
SECTION 8.06. REPAYMENT TO ISSUERS....................................................................92
SECTION 8.07. REINSTATEMENT...........................................................................93
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER.......................................................................93
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.....................................................93
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES........................................................94
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.....................................................96
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.......................................................96
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES........................................................96
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.........................................................96
SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES.......................................................96
v
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ARTICLE 10 SUBORDINATION.........................................................................................97
SECTION 10.01. AGREEMENT TO SUBORDINATE...............................................................97
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY...................................................97
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT......................................................97
SECTION 10.04. ACCELERATION OF NOTES..................................................................98
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER....................................................98
SECTION 10.06. NOTICE BY ISSUERS......................................................................99
SECTION 10.07. SUBROGATION............................................................................99
SECTION 10.08. RELATIVE RIGHTS........................................................................99
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS...........................................99
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE..............................................100
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT....................................................100
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.................................................100
SECTION 10.13. AMENDMENTS............................................................................100
ARTICLE 11 GUARANTEES...........................................................................................101
SECTION 11.01. GUARANTEES............................................................................101
SECTION 11.02. LIMITATION OF GUARANTOR'S LIABILITY...................................................102
SECTION 11.03. EXECUTION AND DELIVERY OF GUARANTEES..................................................102
SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.........................103
SECTION 11.05. RELEASES..............................................................................103
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.....................................................104
SECTION 11.07. SUBORDINATION OF GUARANTEES...........................................................104
ARTICLE 12 SATISFACTION AND DISCHARGE...........................................................................104
SECTION 12.01. SATISFACTION AND DISCHARGE............................................................104
SECTION 12.02. APPLICATION OF TRUST..................................................................106
SECTION 12.03. REPAYMENT OF THE ISSUERS..............................................................106
SECTION 12.04. REINSTATEMENT.........................................................................106
ARTICLE 13 MISCELLANEOUS........................................................................................107
SECTION 13.01. TRUST INDENTURE ACT CONTROLS..........................................................107
SECTION 13.02. NOTICES...............................................................................107
vi
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SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.........................108
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................................108
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.........................................109
SECTION 13.06. RULES BY TRUSTEE AND AGENTS...........................................................109
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, PARTNERS, EMPLOYEES,
INCORPORATORS, STOCKHOLDERS AND MEMBERS........................................109
SECTION 13.08. GOVERNING LAW.........................................................................110
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.........................................110
SECTION 13.10. SUCCESSORS............................................................................110
SECTION 13.11. SEVERABILITY..........................................................................110
SECTION 13.12. COUNTERPART ORIGINALS.................................................................110
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC......................................................110
Schedule A - Schedule of Subsidiary Guarantors
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF GUARANTEE NOTATION
Exhibit E FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
INDENTURE dated as of November 27, 2002 among El Paso Energy
Partners, L.P., a Delaware limited partnership (the "Partnership"), El Paso
Energy Partners Finance Corporation, a Delaware corporation ("El Paso Finance,"
and collectively with the Partnership, the "Issuers"), the Subsidiary Guarantors
(as defined herein) listed on Schedule A hereto, and JPMorgan Chase Bank, a New
York state banking corporation, as trustee (the "Trustee").
The Issuers, the Subsidiary Guarantors, and the Trustee agree
as follows for the benefit of each other and for the equal and ratable benefit
of the Holders of the 10 5/8% Series A Senior Subordinated Notes due 2012 (the
"Series A Notes") and the 10 5/8% Series B Senior Subordinated Notes due 2012
(the "Exchange Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means the Global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and that has the "Schedule of Exchange of Interests in the Global Note" attached
thereto and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A, subject to adjustment as
provided in Section 2.06 hereof.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person, but excluding Indebtedness that is extinguished, retired or
repaid in connection with such Person merging with or becoming a Subsidiary of
such specified Person; and (ii) Indebtedness secured by a Lien encumbering any
asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of 10%
or more of the Voting Stock of a specified Person shall be deemed to be control
by the other Person; provided, further, that any third Person which also
beneficially owns 10% or more of the Voting Stock of a specified Person shall
not be deemed to be an Affiliate of either the specified Person or the other
Person merely because of such common ownership in such specified Person. For
purposes of this definition, the terms "controlling," "controlled by" and "under
common control with" shall have correlative meanings. Notwithstanding the
foregoing, the term "Affiliate" shall not include a Restricted Subsidiary of any
specified Person.
1
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.
"Argo I" means Argo I, L.L.C., a Delaware limited liability
company and a subsidiary of the Partnership.
"Asset Sale" means, (i) the sale, lease, conveyance or other
disposition of any assets or rights, other than sales of inventory in the
ordinary course of business consistent with past practices; provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Partnership or the Partnership and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of Section 4.06 and/or the
provisions of Article 5 hereof and not by the provisions of Section 4.07; and
(ii) the issuance of Equity Interests by any of the Partnership's Restricted
Subsidiaries or the sale by the Partnership or any of its Restricted
Subsidiaries of Equity Interests in any of its Restricted Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales: (i) any single transaction or series of related transactions that:
(a) involves assets having a fair market value of less than $5.0 million; or (b)
results in net proceeds to the Partnership and its Restricted Subsidiaries of
less than $5.0 million; (ii) a transfer of assets between or among the
Partnership and its Restricted Subsidiaries; (iii) an issuance of Equity
Interests by a Restricted Subsidiary to the Partnership or to another Restricted
Subsidiary of the Partnership; (iv) a Restricted Payment that is permitted under
Section 4.08 hereof; and (v) a transaction of the type described in Section
4.07(d).
"Attributable Debt" in respect of a sale and lease-back
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and lease-back transaction, including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.
"Available Cash" has the meaning assigned to such term in the
Partnership Agreement, as in effect on the Issue Date.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means, with respect to the Partnership,
the Board of Directors of the General Partner, or any authorized committee of
such Board of Directors, and with respect to El Paso Finance or any other
Subsidiary of the Partnership, the Board of Directors or managing members of
such Person.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the General Partner or El Paso
Finance, as applicable, to have been duly adopted by the Board of Directors of
the General Partner or El Paso Finance, as applicable, and to be in full force
and effect on the date of such certification.
2
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Cash Equivalent" means:
(i) United States dollars or, in an amount up to the
amount necessary or appropriate to fund local operating
expenses, other currencies;
(ii) securities issued or directly and fully
guaranteed or insured by the United States government or any
agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the
date of acquisition;
(iii) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less
from the date of acquisition, bankers' acceptances with
maturities not exceeding 365 days, demand and overnight bank
deposits and other similar types of investments routinely
offered by commercial banks, in each case with any domestic
commercial bank having a combined capital and surplus of not
less than $500.0 million and a Thompson Bank Watch Rating of
"B" or better or any commercial bank of any other country that
is a member of the Organization for Economic Cooperation and
Development ("OECD") and has total assets in excess of $500.0
million;
(iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with
any financial institution meeting the qualifications specified
in clause (iii) above;
(v) commercial paper having one of the two highest
ratings obtainable from Moody's Investors Service, Inc. or
Standard & Poor's Ratings Group and in each case maturing
within six months after the date of acquisition; and
(vi) investments in money market funds at least 95%
of whose assets consist of investments of the types described
in clauses (i) through (v) above.
"Cash from Operations" shall have the meaning assigned to such
term in the Partnership Agreement, as in effect on the Issue Date.
"Certificated Note" means a certificated Note registered in
the name of the Holder thereof and issued in accordance with Section 2.06
hereof, in the form of Exhibit A, hereto except that such Note shall not bear
the Global Note Legend, shall not have the phrase identified by footnote 1
thereto and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Change of Control" means the occurrence of any of the
following:
3
(i) the sale, transfer, lease, conveyance or other
disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or
substantially all of the assets of the Partnership and its
Restricted Subsidiaries taken as a whole to any "person" (as
such term is used in Section 13(d)(3) of the Exchange Act)
other than the El Paso Group;
(ii) the adoption of a plan relating to the
liquidation or dissolution of the Partnership or the General
Partner; and
(iii) such time as the El Paso Group ceases to own,
directly or indirectly, the general partner interests of the
Partnership, or members of the El Paso Group cease to serve as
the only general partners of the Partnership.
Notwithstanding the foregoing, a conversion of the Partnership from a limited
partnership to a corporation, limited liability company or other form of entity
or an exchange of all of the outstanding limited partnership interests for
capital stock in a corporation, for member interests in a limited liability
company or for Equity Interests in such other form of entity shall not
constitute a Change of Control, so long as following such conversion or exchange
the El Paso Group beneficially owns, directly or indirectly, in the aggregate
more than 50% of the Voting Stock of such entity, or continues to own a
sufficient number of the outstanding shares of Voting Stock of such entity to
elect a majority of its directors, managers, trustees or other persons serving
in a similar capacity for such entity.
"Clearstream" means Clearstream Banking, societe anonyme.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations thereunder.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus
(i) an amount equal to the dividends or distributions
paid during such period in cash or Cash Equivalents to such
Person or any of its Restricted Subsidiaries by a Person that
is not a Restricted Subsidiary of such Person; plus
(ii) an amount equal to any extraordinary loss of
such Person and its Restricted Subsidiaries plus any net loss
realized by such Person and its Restricted Subsidiaries in
connection with an Asset Sale, to the extent such losses were
deducted in computing such Consolidated Net Income; plus
(iii) the provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for
such period, to the extent that such provision for taxes was
deducted in computing such Consolidated Net Income; plus
(iv) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid
or accrued (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred
payment
4
obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with aspect
to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments, if any,
pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net
Income, excluding any such expenses to the extent incurred by
a Person that is not a Restricted Subsidiary of the Person for
which the calculation is being made; plus
(v) depreciation, depletion and amortization
(including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an
accrual of or reserve for cash expenses in any future period
or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income (excluding any such
expenses to the extent incurred by a Person that is neither an
Issuer nor a Restricted Subsidiary); minus
(vi) non-cash items increasing such Consolidated Net
Income for such period, other than items that were accrued in
the ordinary course of business, in each case, on a
consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of the Partnership shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Partnership only to the extent
that a corresponding amount would be permitted at the date of determination to
be dividended or distributed to the Partnership by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that: (i) the aggregate Net Income (but not net
loss in excess of such aggregate Net Income) of all Persons that are
Unrestricted Subsidiaries shall be excluded (without duplication); (ii) the
earnings included therein attributable to all Persons that are accounted for by
the equity method of accounting and the aggregate Net Income (but not net loss
in excess of such aggregate Net Income) included therein attributable to all
entities constituting Joint Ventures that are accounted for on a consolidated
basis (rather than by the equity method of accounting) shall be excluded; (iii)
the Net Income of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement (other than this Indenture, the Notes or any Guarantee), instrument,
5
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders; (iv) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded; and (v) the cumulative effect of
a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of: (i) the consolidated equity of the common stockholders
or members (or consolidated partners' capital in the case of a partnership) of
such Person and its consolidated Subsidiaries as of such date as determined in
accordance with GAAP; plus (ii) the respective amounts reported on such Person's
balance sheet as of such date with respect to any series of preferred stock
(other than Disqualified Equity) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment, but only to
the extent of any cash received by such Person upon issuance of such preferred
stock.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 13.02 hereof or such other address
as to which the Trustee may give notice to the Issuers.
"Credit Facilities" means, with respect to the Partnership, El
Paso Finance or any Restricted Subsidiary, one or more debt facilities or
commercial paper facilities, including the Partnership Credit Facility, in each
case providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Deepwater Holdings" means Deepwater Holdings, L.L.C., a
Delaware limited liability company.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Guarantor Senior Indebtedness" means, with respect
to a Subsidiary Guarantor, amounts owing by such Restricted Subsidiary under the
Credit Facility and guarantees, if any, by such Subsidiary Guarantor of
Designated Senior Debt.
"Designated Senior Debt" means Obligations under the
Partnership Credit Facility and any other Senior Debt permitted under this
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Partnership as "Designated Senior Debt."
6
"Disqualified Equity" means any Equity Interests that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case at the option of the holder thereof), or
upon the occurrence of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date on which the Notes
mature. Notwithstanding the preceding sentence, any Equity Interests that would
constitute Disqualified Equity solely because the holders thereof have the right
to require the Partnership or any of its Restricted Subsidiaries or El Paso
Finance to repurchase such Equity Interests upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Equity if the terms
of such Equity Interests provide that such Equity Interests shall not be
repurchased or redeemed pursuant to such provisions unless such repurchase or
redemption is conditioned upon, and subject to, compliance with Section 4.08
hereof.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
"East Breaks" means East Breaks Gathering Company, L.L.C., a
Delaware limited liability company.
"El Paso" means El Paso Corporation, a Delaware corporation,
and its successors.
"El Paso Finance" means the Person named as such in the
preamble of this Indenture under and until a successor replaces it pursuant to
the applicable provision of this Indenture and thereafter means such successor.
"El Paso Group" means, collectively, (1) El Paso, (2) each
Person of which, as of the time of the determination, El Paso is a direct or
indirect Subsidiary and (3) each Person which is a direct or indirect Subsidiary
of any Person described in (1) or (2) above.
"Equity Interests" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business
entity, any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock;
(iii) in the case of a partnership or limited
liability company, partnership or membership interests
(whether general or limited);
(iv) any other interest or participation that confers
on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person,
and any rights (other than debt securities convertible into
capital stock) warrants or options exchangeable for or
convertible into such capital stock; and
(v) all warrants, options or other rights to acquire
any of the interests described in clauses (i) through (iv)
above (but excluding any debt security that is
7
convertible into, or exchangeable for, any of the interests
described in clauses (i) through (iv) above).
"Equity Offering" means any sale for cash of Equity Interests
of the Partnership (excluding sales made to any Restricted Subsidiary and
excluding sales of Disqualified Equity).
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the 10 5/8% Series B Senior
Subordinated Notes due 2012, having terms substantially identical to the Series
A Notes, offered to the Holders of the Series A Notes under the Exchange Offer
Registration Statement.
"Exchange Offer" means the offer that may be made by the
Issuers pursuant to the Registration Rights Agreement to the Holders of the
Series A Notes to exchange their Series A Notes for the Exchange Notes.
"Exchange Offer Registration Statement" means that certain
registration statement filed by the Issuers and the Subsidiary Guarantors with
the SEC to register the Exchange Notes for issuance in the Exchange Offer.
"Existing Indebtedness" means the aggregate principal amount
of Indebtedness of the Partnership and its Restricted Subsidiaries in existence
on the Issue Date.
"Fixed Charge Coverage Ratio" means, with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of such
Person and its Restricted Subsidiaries for such period to the Fixed Charges of
such Person for such period. In the event that the specified Person or any of
its Restricted Subsidiaries incurs, assumes, guarantees, repays or redeems any
Indebtedness (other than revolving credit borrowings not constituting a
permanent commitment reduction) or issues or redeems Disqualified Equity
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence (and the application of the net proceeds thereof),
assumption, guarantee, repayment or redemption of Indebtedness, or such issuance
or redemption of Disqualified Equity, as if the same had occurred at the
beginning of the applicable four-quarter reference period (and if such
Indebtedness is incurred to finance the acquisition of assets (including,
without limitation, a single asset, a division or segment or an entire company)
that were conducting commercial operations prior to such acquisition, there
shall be included pro forma net income for such assets, as if such assets had
been acquired on the first day of such period).
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(i) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including
through mergers or consolidations and
8
including any related financing transactions, during the
four-quarter reference period or subsequent to such reference
period and on or prior to the Calculation Date shall be deemed
to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause
(iv) of the proviso set forth in the definition of
Consolidated Net Income;
(ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded;
(iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date;
(iv) interest on outstanding Indebtedness of the
specified Person or any of its Restricted Subsidiaries as of
the last day of the four-quarter reference period shall be
deemed to have accrued at a fixed rate per annum equal to the
rate of interest on such Indebtedness in effect on such last
day after giving effect to any Hedging Obligation then in
effect; and
(v) if interest on any Indebtedness incurred by the
specified Person or any of its Restricted Subsidiaries on such
date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate or other rates, then the interest rate
in effect on the last day of the four-quarter reference period
will be deemed to have been in effect during such period.
"Fixed Charges" means, with respect to any Person for any
period, without duplication,
(A) the sum of:
(i) the consolidated interest expense of
such Person and its Restricted Subsidiaries
(excluding for purposes of this clause (i)
consolidated interest expense included therein that
is attributable to Indebtedness of a Person that is
not a Restricted Subsidiary of the Person for which
the calculation is being made) for such period,
whether paid or accrued, including, without
limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments,
the interest component of any deferred payment
obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt,
commissions, discounts, and other fees and charges
incurred in respect of letter of credit or bankers'
acceptance
9
financings, and net payments, if any, pursuant to
Hedging Obligations; plus
(ii) the consolidated interest expense of
such Person and its Restricted Subsidiaries that was
capitalized during such period (excluding for
purposes of this clause (ii) any such consolidated
interest included therein that is attributable to
Indebtedness of a Person that is not a Restricted
Subsidiary); plus
(iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person
or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its
Restricted Subsidiaries, whether or not such
guarantee or Lien is called upon, provided that this
clause (iii) excludes interest on "claw-back,"
"make-well" or "keep- well" payments made by the
Partnership or any Restricted Subsidiary; plus
(iv) the product of (a) all dividend
payments, whether or not in cash, on any series of
Disqualified Equity of such Person or any of its
Restricted Subsidiaries, other than dividend payments
on Equity Interests payable solely in Equity
Interests of the Partnership (other than Disqualified
Equity) or to the Partnership or a Restricted
Subsidiary of the Partnership, times (b) a fraction,
the numerator of which is one and the denominator of
which is one minus the then current combined federal,
state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP, less
(B) to the extent included in clause (A) above,
amortization or write-off of deferred financing costs of such
Person and its Restricted Subsidiaries during such period and
any charge related to, or any premium or penalty paid in
connection with, incurring any such Indebtedness of such
Person and its Restricted Subsidiaries prior to its Stated
Maturity.
In the case of both clauses (A) and (B) of this definition, such amounts will be
determined after elimination of intercompany accounts among such Person and its
Restricted Subsidiaries and in accordance with GAAP.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect from time
to time.
"General Partner" means El Paso Energy Partners Company, a
Delaware corporation, in its capacity as the general partner of the Partnership.
10
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b), 2.06(d) or
2.06(f) hereof.
"guarantee" means a guarantee, other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner, including, without limitation, by way of pledge of
assets, or through letters of credit or reimbursement, "claw-back," "make-well"
or "keep-well" agreement in respect thereof, of all or any part of any
Indebtedness. The term "guarantee" used as a verb has a corresponding meaning.
The term "guarantor" shall mean any Person providing a guarantee of any
obligation.
"Guarantee" means, individually and collectively, the
guarantees given by the Subsidiary Guarantors pursuant to Article 11 hereof,
including a notation in the Notes substantially in the form attached hereto as
Exhibit D.
"Guarantee Obligations" means, with respect to each Subsidiary
Guarantor, the obligations of such Guarantor under Article 11.
"Guarantor Senior Debt" of a Subsidiary Guarantor means all
Obligations with respect to any Indebtedness of such Subsidiary Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall be on a parity with or
subordinated in right of payment to such Subsidiary Guarantor's Guarantee.
Without limiting the generality of the foregoing, (x) "Guarantor Senior Debt"
shall include the principal of, premium, if any, and interest on all Obligations
of every nature of such Subsidiary Guarantor from time to time owed to the
lenders under the Partnership Credit Facility, including, without limitation,
principal of and interest on, and all fees, indemnities and expenses payable by
such Subsidiary Guarantor under, the Partnership Credit Facility, and (y) in the
case of amounts owing by such Subsidiary Guarantor under the Partnership Credit
Facility and guarantees of Designated Senior Indebtedness, "Guarantor Senior
Debt" shall include interest accruing thereon subsequent to the occurrence of
any Event of Default specified in clause (h) or (i) of Section 6.01 relating to
such Subsidiary Guarantor, whether or not the claim for such interest is allowed
under any applicable Bankruptcy Law. Notwithstanding the foregoing, "Guarantor
Senior Indebtedness" shall not include (i) Indebtedness evidenced by the Notes
or the Guarantees, (ii) Indebtedness that is expressly subordinate or junior in
right of payment to any other Indebtedness of such Subsidiary Guarantor, (iii)
any liability for federal, state, local or other taxes owed or owing by such
Subsidiary Guarantor, (iv) Indebtedness of such Subsidiary Guarantor to the
Partnership or a Subsidiary of the Partnership or any other Affiliate of the
Partnership, (v) any trade payables of such Subsidiary Guarantor, and (vi) any
Indebtedness which is incurred by such Subsidiary Guarantor in violation of this
Indenture.
11
"Guarantor Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, indebtedness and other obligations of such Subsidiary
Guarantor which are expressly subordinated in right of payment to such
Subsidiary Guarantor's Guarantee.
"Hedging Obligations" means, with respect to any Person, the
net obligations (not the notional amount) of such Person under interest rate and
commodity price swap agreements, interest rate and commodity price cap
agreements, interest rate and commodity price collar agreements and foreign
currency and commodity price exchange agreements, options or futures contracts
or other similar agreements or arrangements or hydrocarbon hedging contracts or
hydrocarbon forward sales contracts, in each case designed to protect such
Person against fluctuations in interest rates, foreign exchange rates, or the
commodities prices.
"Holder" means the Person in whose name a Note is registered
on the Registrar's books.
"IAI Global Note" means the Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
that has the "Schedule of Exchange of Interests in the Global Note" attached
thereto and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes transferred to Institutional Accredited Investors in
accordance with 2.06(b)(iii)(C) or 2.06(d)(i)(D), subject to adjustment as
provided in Section 2.06 hereof.
"Indebtedness" means, with respect to any specified Person,
any indebtedness of such Person, whether or not contingent, in respect of:
(i) borrowed money;
(ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements
in respect thereof), other than standby letters of credit and
performance bonds issued by such Person in the ordinary course
of business, to the extent not drawn;
(iii) banker's acceptances;
(iv) representing Capital Lease Obligations;
(v) all Attributable Debt of such Person in respect
of any sale and lease-back transactions not involving a
Capital Lease Obligation;
(vi) the balance deferred and unpaid of the purchase
price of any property, except any such balance that
constitutes an accrued expense or trade payable incurred in
the ordinary course of business;
(vii) representing Disqualified Equity; or
(viii) representing any Hedging Obligations other
than to (in the ordinary course of business and consistent
with prior practice) hedge risk
12
exposure in the operations, ownership of assets or the
management of liabilities of such Person and its Restricted
Subsidiaries;
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the guarantee by such Person of any indebtedness of any other Person, provided
that a guarantee otherwise permitted by this Indenture to be incurred by the
Partnership or any of its Restricted Subsidiaries of Indebtedness incurred by
the Partnership or a Restricted Subsidiary in compliance with the terms of this
Indenture shall not constitute a separate incurrence of Indebtedness.
The amount of any Indebtedness outstanding as of any date
shall be: (i) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness. For purposes of clause (vii) of this definition of
Indebtedness, Disqualified Equity shall be valued at the maximum fixed
redemption, repayment or repurchase price, which shall be calculated in
accordance with the terms of such Disqualified Equity as if such Disqualified
Equity were repurchased on any date on which Indebtedness shall be required to
be determined pursuant to this Indenture; provided, however, that if such this
Disqualified Equity is not then permitted by its terms to be redeemed, repaid or
repurchased, the redemption, repayment or repurchase price shall be the book
value of such Disqualified Equity. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
Obligations as described above and the maximum liability of any guarantees at
such date; provided that for purposes of calculating the amount of any
non-interest bearing or other discount security, such Indebtedness shall be
deemed to be the principal amount thereof that would be shown on the balance
sheet of the issuer thereof dated such date prepared in accordance with GAAP,
but that such security shall be deemed to have been incurred only on the date of
the original issuance thereof. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Purchasers" means J.P. Morgan Securities Inc.,
Goldman, Sachs & Co., UBS Warburg LLC and Wachovia Securities, Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of the
rules and regulations promulgated under the Securities Act.
13
"Interest Payment Date" means Stated Maturity of an
installment of interest on the Notes.
"Investment Grade Rating" means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances (other than advances to customers in the ordinary course
of business that are recorded as accounts receivable on the balance sheet of the
lender and commission, moving, travel and similar advances to officers and
employees made in the ordinary course of business) or capital contributions,
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
For purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and the covenant in Section 4.08, (i) the term "Investment"
shall include the portion (proportionate to the Partnership's Equity Interest in
such Subsidiary) of the fair market value of the net assets of any Subsidiary of
the Partnership or any of its Restricted Subsidiaries at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however, that
upon a redesignation of such Subsidiary as a Restricted Subsidiary, the
Partnership or such Restricted Subsidiary shall be deemed to continue to have a
permanent "Investment" in such Subsidiary at the time of such redesignation
equal to the amount thereof as determined immediately prior to redesignation
less the portion (proportionate to the Partnership's or such Restricted
Subsidiary's Equity Interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation, and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors of the General Partner. If the
Partnership or any Restricted Subsidiary of the Partnership sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Partnership such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the
Partnership, the Partnership shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in Section 4.08(b).
"Issue Date" means November [ ], 2002.
"Issuers" means the Partnership and El Paso Finance,
collectively; "Issuer" means the Partnership or El Paso Finance.
"Joint Venture" shall have the meaning assigned to such term
in the definition of "Permitted Business Investments" set forth in this Section
1.01. The term "Joint Venture" shall initially include Atlantis Offshore,
L.L.C., Copper Eagle Gas Storage, L.L.C., Coyote Gas Treating, L.L.C., Poseidon
Oil Pipeline Company, L.L.C. and Deepwater Gateway, L.L.C. and its Subsidiaries.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of Houston, Texas or New York, New York or at a
place of payment are
14
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Issuers and sent to all Holders of the Series A Notes for use by
such Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien
(statutory or otherwise), pledge, charge, security interest, hypothecation,
assignment for security, claim, preference, priority or encumbrance of any kind
in respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law, including any conditional sale or other title retention
agreement or any lease in the nature thereof, any option or other agreement to
grant a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Management Agreement" means the General and Administrative
Services Agreement, dated as of April 8, 2002, by and among DeepTech
International, Inc., a Delaware corporation, El Paso Field Services, L.P., a
Delaware limited partnership, and the General Partner, as amended and in effect
on the Issue Date.
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business
thereof.
"Net Income" means, with respect to any Person, the
consolidated net income (loss) of such Person and its Restricted Subsidiaries,
determined in accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however: (i) the aggregate gain (but not
loss in excess of such aggregate gain), together with any related provision for
taxes on such gain, realized in connection with (a) any Asset Sale or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and (ii) the aggregate extraordinary gain (but not
loss in excess of such extraordinary gain), together with any related provision
for taxes on such extraordinary gain (but not loss in excess of such aggregate
extraordinary gain).
"Net Proceeds" means, with respect to any Asset Sale or sale
of Equity Interests, the aggregate proceeds received by the Partnership or any
of its Restricted Subsidiaries in cash or Cash Equivalents in respect of any
Asset Sale or sale of Equity Interests (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received in any such sale), net of (without duplication): (i) the direct costs
relating to such Asset Sale or sale of Equity Interests, including, without
limitation, brokerage commissions and legal, accounting and investment banking
fees, sales commissions, recording fees, title transfer fees and any relocation
expenses incurred as a result thereof, (ii) taxes paid or payable as a result
thereof, in each case after taking into account any available tax credits or
deductions and any tax
15
sharing arrangements and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale or sale of Equity Interests, (iii) all distributions and
payments required to be made to minority interest holders in Restricted
Subsidiaries as a result of such Asset Sale and (iv) any amounts to be set aside
in any reserve established in accordance with GAAP or any amount placed in
escrow, in either case for adjustment in respect of the sale price of such asset
or Equity Interests or for liabilities associated with such Asset Sale or sale
of Equity Interests and retained by the Partnership or any of its Restricted
Subsidiaries until such time as such reserve is reversed or such escrow
arrangement is terminated, in which case Net Proceeds shall include only the
amount of the reserve so reserved or the amount returned from such escrow
arrangement to the Partnership or its Restricted Subsidiaries, as the case may
be.
"Non-Recourse Debt" means Indebtedness as to which:
(i) neither the Partnership nor any of its Restricted
Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable
as a guarantor or otherwise, or (c) constitutes the lender of
such Indebtedness;
(ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit upon
notice, lapse of time or both any holder of any other
Indebtedness (other than the Notes) of the Partnership or any
of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and
(iii) the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the
Partnership or any of its Restricted Subsidiaries,
provided that in no event shall Indebtedness of any Person which is not a
Restricted Subsidiary fail to be Non-Recourse Debt solely as a result of any
default provisions contained in a guarantee thereof by the Partnership or any of
its Restricted Subsidiaries provided that the Partnership or such Restricted
Subsidiary was otherwise permitted to incur such guarantee pursuant to this
Indenture.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Series A Notes by the
Issuers.
16
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Chief Accounting Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person (or, with respect to the Partnership, so long as
it remains a partnership, the General Partner).
"Officers' Certificate" means a certificate signed on behalf
of the Partnership by an Officer of the Partnership or an Officer of the General
Partner, El Paso Finance or any Subsidiary Guarantor, as the case may be, one of
whom must be the principal executive officer, the principal financial officer or
the principal accounting officer of such Person, that meets the requirements of
Section 13.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Partnership,
El Paso Finance or the General Partner (or any Subsidiary Guarantor, if
applicable), any Subsidiary of the Partnership or the Trustee.
"Participant" means, with respect to DTC, Euroclear or
Clearstream, a Person who has an account with DTC, Euroclear or Clearstream,
respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).
"Partnership" means the Person named as such in the preamble
of this Indenture unless and until a successor replaces it pursuant to the
applicable provisions of this Indenture and thereafter means such successor.
"Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of the Partnership, amended and restated
effective as of August 31, 2000, as such may be amended, modified or
supplemented from time to time.
"Partnership Credit Facility" means (i) the Sixth Amended and
Restated Credit Agreement dated as of March 23, 1995, as amended and restated
through October 10, 2002, among the Partnership, El Paso Finance and the lenders
from time to time party thereto, Credit Lyonnais, New York Branch and Wachovia
Bank, National Association, as co-syndication agents, Fleet National Bank and
Fortis Capital Corp., as co-documentation agents, and JPMorgan Chase Bank, as
administrative agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, and any amendments,
modifications or supplements thereto and any agreement providing therefor
(including any restatement thereof and any increases in the amount of
commitments thereunder), whether by or with the same or any other lenders,
creditors, group of lenders or group of creditors and including related notes,
guarantees, collateral security documents and other instruments and agreements
executed in connection therewith and (ii) the Amended and Restated Credit
Agreement, dated as of October 10, 2002, among EPN Holding Company, L.P., the
lenders from time to time party thereto, Bank One Capital Markets, Inc. and
Wachovia Bank, National Association, as co-syndication agents, Fleet National
Bank and Fortis Capital Corp., as co-documentation agents, and JPMorgan Chase
Bank, as administrative agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, and any amendments,
modifications or supplements thereto and any agreement providing therefor
(including any restatement thereof and any increases in the
17
amount of commitments thereunder), whether by or with the same or any lenders,
creditors, group of lenders or group of creditors and including related notes,
guarantees, collateral security documents and other instruments and agreements
executed in connection therewith, and (iii) the Senior Secured Acquisition Term
Loan Credit Agreement, dated as of November 27, 2002, among the Partnership, El
Paso Finance, the lenders from time to time party thereto and JPMorgan Chase
Bank, as administrative agent, UBS Warburg LLC and Wachovia Bank, National
Association, as co-syndication agents, and Goldman Sachs Credit Partners L.P. as
documentation agent.
"Permitted Business" means:
(i) gathering, transporting (by barge, pipeline,
ship, truck or other modes of hydrocarbon transportation),
terminalling, storing, producing, acquiring, developing,
exploring for, processing, dehydrating and otherwise handling
hydrocarbons, including, without limitation, constructing
pipeline, platform, dehydration, processing and other
energy-related facilities, and activities or services
reasonably related or ancillary thereto,
(ii) any business that generates gross income that
constitutes "qualifying income" under Section 7704(d) of the
Internal Revenue Code of 1986, as amended, other than any
business that generates any gross income arising from the
refining of a natural resource, and
(iii) any other business that does not constitute a
reportable segment (as determined in accordance with GAAP) for
the Partnership's annual audited consolidated financial
statements.
"Permitted Business Investments" means Investments by the
Partnership or any of its Restricted Subsidiaries in any Unrestricted Subsidiary
of the Partnership or in any Person that does not constitute a direct or
indirect Subsidiary of the Partnership (a "Joint Venture"), provided that (i)
either (a) at the time of such Investment and immediately thereafter, the
Partnership could incur $1.00 of additional Indebtedness under Section 4.09(a)
or (b) such investment is made with the proceeds of Incremental Funds; (ii) if
such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at
the time of such Investment, either (a) all such Indebtedness is Non-Recourse
Debt with respect to the Partnership and its Restricted Subsidiaries or (b) any
such Indebtedness of such Unrestricted Subsidiary or Joint Venture that is
recourse to the Partnership or any of its Restricted Subsidiaries (which shall
include all Indebtedness of such Unrestricted Subsidiary or Joint Venture for
which the Partnership or any of its Restricted Subsidiaries may be directly or
indirectly, contingently or otherwise, obligated to pay, whether pursuant to the
terms of such Indebtedness, by law or pursuant to any guaranty or "claw-back,"
"make-well" or "keep-well" arrangement) could, at the time such Investment is
made and, if later, at the time any such Indebtedness is incurred, be incurred
by the Partnership and its Restricted Subsidiaries in accordance with the
limitation on indebtedness set forth in Section 4.09(a); and (iii) such
Unrestricted Subsidiary's or Joint Venture's activities are not outside the
scope of the Permitted Business.
"Permitted Investments" means:
18
(i) any Investment in, or that results in the
creation of, a Restricted Subsidiary of the Partnership;
(ii) any Investment in the Partnership or in a
Restricted Subsidiary of the Partnership (excluding
redemptions, purchases, acquisitions or other retirements of
Equity Interests in the Partnership);
(iii) any Investment in cash or Cash Equivalents;
(iv) any Investment by the Partnership or any
Restricted Subsidiary of the Partnership in a Person if as a
result of such Investment: (a) such Person becomes a
Restricted Subsidiary of the Partnership; or (b) such Person
is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Partnership or a Restricted Subsidiary of
the Partnership;
(v) any Investment made as a result of the receipt of
consideration consisting of other than cash or Cash
Equivalents from an Asset Sale that was made pursuant to and
in compliance with Section 4.07;
(vi) any acquisition of assets solely in exchange for
the issuance of Equity Interests (other than Disqualified
Equity) of the Partnership;
(vii) payroll advances arising in the ordinary course
of business and other advances and loans to officers and
employees of the Partnership or any of its Restricted
Subsidiaries, so long as the aggregate principal amount of
such advances and loans does not exceed $1.0 million at any
one time outstanding;
(viii) Investments in stock, obligations or
securities received in settlement of debts owing to the
Partnership or any of its Restricted Subsidiaries as a result
of bankruptcy or insolvency proceedings or upon the
foreclosure, perfection or enforcement or any Lien in favor of
the Partnership or any such Restricted Subsidiary, in each
case as to debt owing to the Partnership or any such
Restricted Subsidiary that arose in the ordinary course of
business of the Partnership or any such Restricted Subsidiary;
(ix) any Investment in Hedging Obligations;
(x) any Investments in prepaid expenses, negotiable
instruments held for collection and lease, utility, workers'
compensation and performance and other similar deposits and
prepaid expenses made in the ordinary course of business;
(xi) any Investments required to be made pursuant to
any agreement or obligation of the Partnership or any
Restricted Subsidiary in effect on the Issue Date; and
19
(xii) other Investments in any Person engaged in a
Permitted Business (other than an Investment in an
Unrestricted Subsidiary) having an aggregate fair market value
(measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when
taken together with all other Investments made pursuant to
this clause (xii) since the Issue Date and existing at the
time the Investment, which is the subject of the
determination, was made, not to exceed $5.0 million.
"Permitted Junior Securities" means (i) nonmandatorily
redeemable Equity Interests in the Partnership or any Subsidiary Guarantor, as
reorganized or adjusted, or (ii) debt securities of the Partnership or any
Subsidiary Guarantor as reorganized or readjusted that are subordinated to all
Senior Debt and Guarantor Senior Debt and any debt securities issued in exchange
for Senior Debt and Guarantor Senior Debt to substantially the same extent as,
or to a greater extent than, the Notes and the Guarantees are subordinated to
Senior Debt and Guarantor Senior Debt pursuant to Article 10 and Article 11 of
this Indenture, provided that the rights of the holders of Senior Debt and
Guarantor Senior Debt under the Partnership Credit Facility are not altered or
impaired by such reorganization or readjustment.
"Permitted Liens" means,
(i) Liens on the assets of the Partnership and any
Subsidiary securing Senior Debt and Guarantor Senior Debt;
(ii) Liens in favor of the Partnership or any of its
Restricted Subsidiaries;
(iii) Liens on property of a Person existing at the
time such Person is merged with or into or consolidated with
the Partnership or any Restricted Subsidiary of the
Partnership, provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged
into or consolidated with the Partnership or such Restricted
Subsidiary;
(iv) Liens on property existing at the time of
acquisition thereof by the Partnership or any Restricted
Subsidiary of the Partnership, provided that such Liens were
in existence prior to the contemplation of such acquisition
and relate solely to such property, accessions thereto and the
proceeds thereof;
(v) Liens to secure the performance of tenders, bids,
leases, statutory obligations, surety or appeal bonds,
government contracts, performance bonds or other obligations
of a like nature incurred in the ordinary course of business;
(vi) Liens on any property or asset acquired,
constructed or improved by the Partnership or any Restricted
Subsidiary (a "Purchase Money Lien"), which (A) are in favor
of the seller of such property or assets, in favor of the
Person constructing or improving such asset or property, or in
favor of the Person that provided the funding for the
acquisition, construction or improvement of such asset or
property, (B) are created within 360 days after the date of
acquisition,
20
construction or improvement, (C) secure the purchase price or
construction or improvement cost, as the case may be, of such
asset or property in an amount up to 100% of the fair market
value (as determined by the Board of Directors of the General
Partner) of such acquisition, construction or improvement of
such asset or property, and (D) are limited to the asset or
property so acquired, constructed or improved (including
proceeds thereof and accretions and upgrades thereof);
(vii) Liens on assets of a Subsidiary Guarantor to
secure Guarantor Senior Debt of such a Subsidiary Guarantor
that, at the time of such incurrence, was permitted by this
Indenture to be incurred;
(viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that
any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made
therefor;
(ix) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, old
age pension or public liability obligations;
(x) easements, rights-of-way, restrictions, minor
defects and irregularities in title and other similar charges
or encumbrances not interfering in any material respect with
the business of the Partnership or its Restricted
Subsidiaries;
(xi) Liens securing reimbursement obligations of the
Partnership or a Restricted Subsidiary with respect to letters
of credit encumbering only documents and other property
relating to such letters of credit and the products and
proceeds thereof;
(xii) judgment and attachment Liens not giving rise
to a Default or Event of Default;
(xiii) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual or
warranty requirements of the Partnership and its Restricted
Subsidiaries;
(xiv) liens arising out of consignment or similar
arrangements for the sale of goods;
(xv) any interest or title of a lessor in property
subject to any Capital Lease Obligation;
(xvi) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen and
repairmen and other like Liens (including contractual
landlord's Liens) arising in the ordinary course of business
and with respect to amounts not yet delinquent or being
contested in good faith by
21
appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have
been made therefor;
(xvii) Liens upon specific items of inventory or
other goods and proceeds of any Person securing such Person's
obligations in respect of bankers' acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment, or storage of such inventory or other
goods;
(xviii) Liens to secure the performance of Hedging
Obligations of the Partnership or any Restricted Subsidiary;
(xix) Liens on pipelines or pipeline facilities that
arise by operation of law;
(xx) Liens arising under operating agreements, joint
venture agreements, partnership agreements, oil and gas
leases, farmout agreements, division orders, contracts for
sale, transportation or exchange of oil and natural gas,
unitization and pooling declarations and agreements, area of
mutual interest agreements and other agreements arising in the
ordinary course of the Partnership's or any Restricted
Subsidiary's business that are customary in the Permitted
Businesses;
(xxi) Liens securing the Obligations of the Issuers
under the Notes and this Indenture and of the Subsidiary
Guarantors under the Guarantees;
(xxii) Liens in favor of collecting or payor banks
having a right of setoff, revocation, refund or chargeback
with respect to money or instruments of the Partnership or any
of its Restricted Subsidiaries on deposit with or in
possession of such bank;
(xxiii) Liens on and pledges of the Equity Interests
of an Unrestricted Subsidiary or any Joint Venture owned by
the Partnership or any Restricted Subsidiary to the extent
securing Non- Recourse Debt or Indebtedness incurred pursuant
to Section 4.09(a);
(xxiv) Liens existing on the Issue Date and Liens on
any extensions, refinancing, renewal, replacement or
defeasance of any Indebtedness or other obligation secured
thereby;
(xxv) Liens arising from protective filings made in
the appropriate office(s) for the filing of a financing
statement in the applicable jurisdiction(s) in connection with
any lease, consignment or similar transaction otherwise
permitted hereby, which filings are made for the purpose of
perfecting the interest of the secured party in the relevant
items, if the transaction were subsequently classified as a
sale and secured lending arrangement;
(xxvi) Liens securing any Indebtedness, which
Indebtedness includes a covenant that limits Liens in a manner
substantially similar to Section 4.11;
22
(xxvii) in addition to Liens permitted by clauses (i)
through (xxvi) above, Liens that are incurred in the ordinary
course of business of the Partnership or any Restricted
Subsidiary of the Partnership with respect to obligations that
do not exceed $10.0 million at any one time outstanding;
(xxviii) Liens in favor of collecting or payor banks
having a right of setoff, revocation, refund or chargeback
with respect to money or instruments of the Partnership or any
of its Restricted Subsidiaries on deposit with or in
possession of such bank.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Partnership or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Partnership or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
necessary fees and expenses incurred in connection therewith and any premiums
paid on the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded); (ii) such Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes
or the Guarantees, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Notes or the Guarantees, as the case may be, on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Partnership or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership
(general or limited), limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government or agency
or political subdivision thereof or other entity.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A of the rules and regulations promulgated by the SEC under the
Securities Act.
"Rating Agency" means each of S&P and Moody's, or if S&P or
Moody's or both shall not make a rating on the notes publicly available, a
nationally recognized statistical rating agency or agencies, as the case may be,
selected by the Issuers (as certified by a resolution of the
23
Boards of Directors of the Issuers) which shall be substituted for S&P or
Moody's, or both, as the case may be.
"Registrable Securities" has the meaning set forth in the
Registration Rights Agreement.
"Registration Rights Agreement" means (i) that certain
agreement among the Issuers, the Subsidiary Guarantors and the Initial
Purchasers requiring the Issuers and the Subsidiary Guarantors to file the
Exchange Offer Registration Statement and the Shelf Registration Statement and
(ii) any other registration rights agreement relating to any additional Notes
issued by the Issuers after the Issue Date pursuant to Section 2.02.
"Regulation S" means Regulation S promulgated by the SEC under
the Securities Act.
"Regulation S Global Note" means a global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and that has the "Schedule of Exchange of Interests in the Global Note" attached
thereto and deposited with or on behalf of and registered in the name of the
Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount of the Notes initially sold in reliance on Rule 903 of
Regulation S, subject to adjustment as provided in Section 2.06 hereof.
"Representative" means this Indenture trustee or other
trustee, agent or representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee,
means the officer in the Institutional Trust Services department of the Trustee
having direct responsibility for administration of this Indenture.
"Restricted Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Restricted Certificated Note" means a Certificated Note
bearing the Private Placement Legend.
"Restricted Global Note" means a global Note bearing the
Private Placement Legend and that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto.
"Restricted Investment" means an Investment other than a
Permitted Investment or a Permitted Business Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referenced Person that is not an Unrestricted Subsidiary, provided that none
of Atlantis Offshore, L.L.C., Copper Eagle Gas Storage, L.L.C., Coyote Gas
Treating, L.L.C., Deepwater Gateway, L.L.C. and Poseidon Oil Pipeline, L.L.C.,
as the case may be, shall constitute a Restricted Subsidiary for purposes of
this Indenture (even if such Person is then a Subsidiary of the Partnership),
until such time as the Board of Directors of the General Partner designates
Atlantis Offshore, L.L.C.,
24
Copper Eagle Gas Storage, L.L.C., Deepwater Gateway, L.L.C. and Poseidon Oil
Pipeline, L.L.C., as the case may be, as a Restricted Subsidiary in a manner
consistent with the designation of an Unrestricted Subsidiary as a Restricted
Subsidiary, as described in Section 4.15. Notwithstanding anything in this
Indenture to the contrary, El Paso Finance shall constitute a Restricted
Subsidiary of the Partnership.
"Rule 144" means Rule 144 promulgated by the SEC under the
Securities Act.
"Rule 144A" means Rule 144A promulgated by the SEC under the
Securities Act.
"Rule 903" means Rule 903 of Regulation S promulgated by the
SEC under the Securities Act.
"Rule 904" means Rule 904 of Regulation S promulgated by the
SEC under the Securities Act.
"S&P" means Standard & Poor's Ratings Group or any successor
to the rating agency business thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means,
(i) all Indebtedness outstanding under Credit
Facilities and all Hedging Obligations with respect thereto,
(ii) any other Indebtedness permitted to be incurred
by the Partnership and the Restricted Subsidiaries under the
terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on
a parity with or subordinated in right of payment to the Notes
or the Guarantees, as applicable; and
(iii) all Obligations with respect to the items
listed in the preceding clauses (i) and (ii).
Notwithstanding anything to the contrary in the preceding,
Senior Debt will not include:
(a) Indebtedness evidenced by the Notes or the
Guarantees;
(b) Indebtedness that is expressly subordinate or
junior in right of payment to any other indebtedness of the
Partnership, El Paso Finance or any Subsidiary Guarantor;
(c) any liability for federal, state, local or other
taxes owed or owing by the Partnership or any Restricted
Subsidiary;
25
(d) any Indebtedness of the Partnership or any of its
Subsidiaries to any of its Subsidiaries or other Affiliates;
(e) any trade payables; or
(f) any Indebtedness that is incurred in violation of
this Indenture.
"Series A Notes" has the meaning set forth in the preamble of
this Indenture.
"Shelf Registration Statement" means that certain shelf
registration statement filed by the Issuers and the Subsidiary Guarantors in
accordance with the Registration Rights Agreement with the SEC to register
resales of the Notes or the Exchange Notes.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act and the Exchange Act, as such
Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person: (i) any
corporation, association or other business entity of which more than 50% of the
total Voting Stock is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and (ii) any partnership (whether general or limited),
limited liability company or joint venture (a) the sole general partner or the
managing general partner or managing member of which is such Person or a
Subsidiary of such Person or (b) if there are more than a single general partner
or member either (i) the only general partners or managing members of such
Person are such Person or of one or more Subsidiaries of such Person (or any
combination thereof) or (ii) such Person owns or controls, directly or
indirectly, a majority of the outstanding general partner interests, member
interests or other Voting Stock of such partnership, limited liability company
or joint venture, respectively.
"Subsidiary Guarantors" means each of: (i) the entities listed
on Schedule A hereto; and (ii) any other Restricted Subsidiary of the
Partnership that executes a Guarantee in accordance with the provisions of
Section 4.14 and Article 11 of this Indenture; and (iii) their respective
successors and assigns. Notwithstanding anything in this Indenture to the
contrary, El Paso Finance shall not be a Subsidiary Guarantor.
"Tax Payment" means any payment of foreign, federal, state or
local tax liabilities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA, except as provided in Section 9.03 hereof.
26
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Certificated Note" means one or more
Certificated Notes that do not bear and are not required to bear the Private
Placement Legend.
"Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the
Partnership (other than El Paso Finance) that is designated by the Board of
Directors of the General Partner as an Unrestricted Subsidiary pursuant to a
Board Resolution, provided that, at the time of such designation, (i) no portion
of the Indebtedness or other obligation of such Subsidiary (whether contingent
or otherwise and whether pursuant to the terms of such Indebtedness or the terms
governing the organization of such Subsidiary or by law (A) is guaranteed by the
Partnership or any Restricted Subsidiary of the Partnership, (B) is recourse to
or obligates the Partnership or any Restricted Subsidiary of the Partnership in
any way (including any "claw-back," "keep-well," "make- well" or other
agreements, arrangements or understandings to maintain the financial performance
or results of operations of such Subsidiary or to otherwise infuse or contribute
cash to such Subsidiary), or (C) subjects any property or assets of the
Partnership or any Restricted Subsidiary, directly or indirectly, contingently
or otherwise, to the satisfaction of such Indebtedness, unless such Investment
or Indebtedness is permitted by Section 4.08 or Section 4.09, (ii) no Equity
Interests of a Restricted Subsidiary are held by such Subsidiary, directly or
indirectly, and (iii) the amount of the Partnership's Investment, as determined
at the time of such designation, in such Subsidiary since the Issue Date to the
date of designation is treated as of the date of such designation as a
Restricted Investment, Permitted Investment or Permitted Business Investment, as
applicable. EPN Arizona Gas, L.L.C., Arizona Gas Storage, L.L.C. and Matagorda
Island Area Gathering System are designated as Unrestricted Subsidiaries.
Notwithstanding anything in the Indenture to the contrary, El Paso Finance shall
not be, and shall not be designated as, an Unrestricted Subsidiary.
Any designation of a Subsidiary of the Partnership as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by Section 4.08. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Partnership as of such
date and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.09, the Partnership shall be in default of such covenant. The
Board of Directors of the General Partner may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Partnership of any outstanding Indebtedness of
27
such Unrestricted Subsidiary and such designation shall only be permitted if (1)
such Indebtedness is permitted under the covenant described under Section 4.09,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four- quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged; (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) above, are not callable or redeemable at the option of the
issuers thereof; or (iii) depository receipts issued by a bank or trust company
as custodian with respect to any such U.S. Government Obligations or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a Depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such Depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation evidenced by such Depository receipt.
"U.S. Person" means a U.S. person as defined in Rule 902(k) of
Regulation S promulgated by the SEC under the Securities Act.
"Voting Stock" of any Person as of any date means the Equity
Interests of such Person pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers, general partners or trustees of any Person
(regardless of whether, at the time, Equity Interests of any other class or
classes shall have, or might have, voting power by reason of the occurrence of
any contingency) or, with respect to a partnership (whether general or limited),
any general partner interest in such partnership.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.
SECTION 1.02. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
- ---- ------------------
"Affiliate Transaction"........................................... 4.13
"Asset Sale Offer"................................................ 3.09
"Calculation Date"................................................ 1.01 (definition of Fixed Charge
Coverage Ratio)
"Change of Control Offer"......................................... 4.06
28
"Change of Control Payment"....................................... 4.06
"Change of Control Payment Date".................................. 4.06
"Covenant Defeasance"............................................. 8.03
"DTC"............................................................. 2.03
"Event of Default"................................................ 6.01
"Excess Proceeds"................................................. 4.07(c)
"Incremental Funds"............................................... 4.08(a)
"incur"........................................................... 4.09
"Legal Defeasance"................................................ 8.02
"Offer Amount".................................................... 3.09
"Offer Period".................................................... 3.09
"Paying Agent".................................................... 2.03
"Payment Blockage Notice"......................................... 10.03
"Payment Default"................................................. 6.01(e)
"Permitted Debt".................................................. 4.09(b)
"Purchase Date"................................................... 3.09
"Registrar"....................................................... 2.03
"Reinstatement Date".............................................. 4.20
"Restricted Payment".............................................. 4.08
"Suspended Covenants"............................................. 4.20
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes and the Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Partnership, El Paso Finance
or any Subsidiary Guarantor and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
29
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in
the plural include the singular;
(v) provisions apply to successive events and
transactions; and
(vi) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The notation on each
Note relating to the Guarantees shall be substantially in the form set forth on
Exhibit D, which is a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes (including the
Guarantees) shall constitute, and are hereby expressly made, a part of this
Indenture and the Partnership, El Paso Finance, the Subsidiary Guarantors, and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form
of Exhibits A attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A attached hereto
(but without the Global Note Legend, the phrase identified in footnote 1 thereto
and without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
30
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer of the Partnership and one Officer of El Paso
Finance shall sign the Notes for the Partnership and El Paso Finance,
respectively, by manual or facsimile signature. The seal of the Partnership and
El Paso Finance shall be reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Partnership and
El Paso Finance signed by one Officer of the Partnership and one Officer of El
Paso Finance, authenticate (i) $200,000,000 aggregate principal amount of Notes,
with the Guarantees endorsed thereon, for original issue on the Issue Date and
(ii) any amount of additional Notes specified by the Issuers, in each case, upon
a written order of the Partnership and El Paso Finance signed by one Officer of
the Partnership and one Officer of El Paso Finance. Such order shall specify (a)
the amount of the Notes of each series to be authenticated and the date of
original issue thereof, and (b) whether the Notes are Series A Notes or Exchange
Notes. The aggregate principal amount of Notes of any series outstanding at any
time may not exceed the aggregate principal amount of Notes of such series
authorized for issuance by the Issuers pursuant to one or more written orders of
the Issuers, except as provided in Section 2.07 hereof. Subject to the
foregoing, the aggregate principal amount of Notes of any series that may be
issued under this Indenture shall not be limited.
The Trustee may appoint an authenticating agent acceptable to
the Issuers to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of either of the Issuers.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Partnership, El Paso Finance and the Subsidiary Guarantors
shall maintain an office or agency where Notes may be presented for registration
of transfer or for exchange ("Registrar") and an office or agency in the State
of New York where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Issuers may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Issuers may change any
Paying Agent or Registrar without notice to any Holder. The Issuers shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuers fail to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The
31
Partnership, El Paso Finance or any of the Subsidiary Guarantors may act as
Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium, if any, or interest or Liquidated Damages, if
any, on the Notes, and will notify the Trustee of any default by the
Partnership, El Paso Finance or the Subsidiary Guarantors in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than an Issuer or a Subsidiary
Guarantor) shall have no further liability for the money. If an Issuer or a
Subsidiary Guarantor acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Partnership or El Paso Finance, the Trustee shall serve as Paying Agent for the
Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Issuers shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
may be exchanged by the Issuers for Certificated Notes if (i) the Issuers
deliver to the Trustee notice from the Depositary that it is unwilling or unable
to continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is
not appointed by the Issuers within 90 days after the date of such notice from
the Depositary, (ii) the Issuers in their sole discretion determine that the
Global Notes (in whole but not in part) should be exchanged for Certificated
Notes and deliver a written notice to such effect to the Trustee; provided that
in no event shall the Regulation S Global Note
32
be exchanged by the Issuers for Certificated Notes prior to (x) the expiration
of the Distribution Compliance Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act, or
(iii) if a Default or an Event of Default occurs and is continuing. Whenever a
Global Note is exchanged as a whole for one or more Certificated Notes, it shall
be surrendered by the Holder thereof to the Trustee for cancellation. Whenever a
Global Note is exchanged in part for one or more Certificated Notes, it shall be
surrendered by the Holder thereof to the Trustee and the Trustee shall make the
appropriate notations to the Schedule of Exchanges of Interests in the Global
Notes attached thereto pursuant to Section 2.01 hereof. All Certificated Notes
issued in exchange for a Global Note or any portion thereof shall be registered
in such names, and delivered, as the Depositary shall instruct the Trustee.
Global Notes also may be exchanged or replaced, in whole or in part, as provided
in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same
Global Note. Beneficial interests in any Restricted Global
Note may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that
prior to the expiration of the Distribution Compliance Period
transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be
transferred only to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note.
No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers
and exchanges of beneficial interests (other than a transfer
of a beneficial interest in a Global Note to a Person who
takes delivery thereof in the form of a beneficial interest in
the same Global Note), the transferor of such beneficial
interest must deliver to the Registrar either (A) (i) a
written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an
33
amount equal to the beneficial interest to be transferred or
exchanged and (ii) instructions given in accordance with the
Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B)
(i) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be
issued a Certificated Note in an amount equal to the
beneficial interest to be transferred or exchanged and (ii)
instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Certificated Note shall be registered to effect the transfer
or exchange referred to in (i) above; provided that in no
event shall Certificated Notes be issued upon the transfer or
exchange of beneficial interests in the Regulation S Global
Note prior to (x) the expiration of the Distribution
Compliance Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903 under the
Securities Act. Upon an Exchange Offer by the Issuers in
accordance with Section 2.06(f) hereof, the requirements of
this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes.
Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in
this Indenture, the Notes and otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount
of the relevant Global Note(s) pursuant to Section 2.06(h)
hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Note. A beneficial interest in any
Restricted Global Note may be transferred to a Person who
takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with
the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in
the form of a beneficial interest in the 144A Global
Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in
the form of a beneficial interest in the Regulation S
Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in
the form of a beneficial interest in the IAI Global
Note, then the transferor must deliver (x) a
certificate in the form of Exhibit B hereto,
including the certifications and certificates and
Opinion of Counsel required by item (3)(c) thereof,
if applicable.
(iv) Transfer and Exchange of Beneficial Interests in
a Restricted Global Note for Beneficial Interests in the
Unrestricted Global Note. A beneficial
34
interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted
Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies
with the requirements of clause (ii) above and:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of
an exchange, or the transferee, in the case of a
transfer, is not (i) a broker-dealer, (ii) a Person
participating in the distribution of the Exchange
Notes or (iii) a Person who is an affiliate (as
defined in Rule 144) of the Partnership;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;
(C) any such transfer is effected by a
Restricted Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the holder of such
beneficial interest in a Restricted Global
Note proposes to exchange such beneficial
interest for a beneficial interest in an
Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a)
thereof;
(ii) if the holder of such
beneficial interest in a Restricted Global
Note proposes to transfer such beneficial
interest to a Person who shall take delivery
thereof in the form of a beneficial interest
in an Unrestricted Global Note, a
certificate from such holder in the form of
Exhibit B hereto, including the
certifications in item (4) thereof; and
(iii) in each such case set forth
in this subparagraph (D), an opinion of
counsel in form reasonably acceptable to the
Issuers to the effect that such exchange or
transfer is in compliance with the
Securities Act and that the restrictions on
transfer contained herein and in the Private
Placement Legend are not required in order
to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Issuers shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes (accompanied by a notation of the Guarantees duly
endorsed by the Subsidiary Guarantors) in an aggregate principal amount equal
35
to the principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for
Certificated Notes.
(i) If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Certificated Note or to transfer such
beneficial interest to a Person who takes delivery thereof in
the form of a Certificated Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Restricted
Certificated Note, a certificate from such holder in
the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the
registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being
transferred to an Institutional Accredited Investor
in reliance on an exemption from the registration
requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates
and Opinion of Counsel required by item (3)(c)
thereof, if applicable; or
(F) if such beneficial interest is being
transferred to the Partnership, El Paso Finance or
any Restricted Subsidiary of the Partnership, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b)
thereof.
36
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuers shall execute and the
Trustee shall authenticate and deliver to the Person
designated in the instructions a Certificated Note
(accompanied by a notation of the Guarantees duly endorsed by
the Subsidiary Guarantors) in the appropriate principal
amount. Any Certificated Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver
such Certificated Notes to the Persons in whose names such
Notes are so registered. Any Certificated Note issued in
exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on
transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C)
hereof, a beneficial interest in the Regulation S Global Note
may not be (A) exchanged for a Certificated Note prior to (x)
the expiration of the Distribution Compliance Period and (y)
the receipt by the Registrar of any certificates required
pursuant to Rule 903 under the Securities Act or (B)
transferred to a Person who takes delivery thereof in the form
of a Certificated Note prior to the conditions set forth in
clause (A) above or unless the transfer is pursuant to an
exemption from the registration requirements of the Securities
Act other than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i) hereof, a holder of
a beneficial interest in a Restricted Global Note may exchange
such beneficial interest for an Unrestricted Certificated Note
or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Certificated
Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or
the transferee, in the case of a transfer, is not (i)
a broker-dealer, (ii) a Person participating in the
distribution of the Exchange Notes or (iii) a Person
who is an affiliate (as defined in Rule 144) of the
Partnership;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;
(C) any such transfer is effected by a
Restricted Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
37
(i) if the holder of such
beneficial interest in a Restricted Global
Note proposes to exchange such beneficial
interest for a Certificated Note that does
not bear the Private Placement Legend, a
certificate from such holder in the form of
Exhibit C hereto, including the
certifications in item (1)(b) thereof;
(ii) if the holder of such
beneficial interest in a Restricted Global
Note proposes to transfer such beneficial
interest to a Person who shall take delivery
thereof in the form of a Certificated Note
that does not bear the Private Placement
Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(iii) in each such case set forth
in this subparagraph (D), an opinion of
counsel in form reasonably acceptable to the
Issuers, to the effect that such exchange or
transfer is in compliance with the
Securities Act and that the restrictions on
transfer contained herein and in the Private
Placement Legend are not required in order
to maintain compliance with the Securities
Act.
(iv) If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial
interest for a Certificated Note or to transfer such
beneficial interest to a Person who takes delivery thereof in
the form of a Certificated Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuers shall execute and the
Trustee shall authenticate and deliver to the Person
designated in the instructions a Certificated Note
(accompanied by a notation of the Guarantees duly endorsed by
the Subsidiary Guarantors) in the appropriate principal
amount. Any Certificated Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iv) shall
be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Certificated Notes
to the Persons in whose names such Notes are so registered.
Any Certificated Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iv) shall not bear
the Private Placement Legend. A beneficial interest in an
Unrestricted Global Note cannot be exchanged for a
Certificated Note bearing the Private Placement Legend or
transferred to a Person who takes delivery thereof in the form
of a Certificated Note bearing the Private Placement Legend.
(d) Transfer and Exchange of Certificated Notes for Beneficial
Interests.
(i) If any Holder of a Restricted Certificated Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Certificated Notes
to a Person who takes delivery thereof in the form
38
of a beneficial interest in a Restricted Global Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted
Certificated Note proposes to exchange such Note for
a beneficial interest in a Restricted Global Note, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b)
thereof;
(B) if such Certificated Note is being
transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Certificated Note is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Certificated Note is being
transferred to an Institutional Accredited Investor
in reliance on an exemption from the registration
requirements of the Securities Act other than those
listed in subparagraphs (B) and (C) above, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates
and Opinion of Counsel required by item (3)(c)
thereof, if applicable; or
(E) if such Certificated Note is being
transferred to the Partnership, El Paso Finance or
any Restricted Subsidiary of the Partnership, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b)
thereof.
the Trustee shall cancel the Certificated Note, increase or
cause to be increased the aggregate principal amount of, in
the case of clause (A) above, the appropriate Restricted
Global Note, in the case of clause (B) above, the 144A Global
Note, and in the case of clause (C) above, the Regulation S
Global Note, in the case of clause (D) above, the IAI Global
Note, and in all other cases, the Restricted Global Note.
(ii) A Holder of a Restricted Certificated Note may
exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Restricted
Certificated Note to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global
Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the
case of an exchange, or the transferee, in the case
of a transfer, is not (i) a broker-dealer, (ii) a
Person participating in the distribution of the
Exchange Notes or (iii) a Person who is an affiliate
(as defined in Rule 144) of the Partnership;
39
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;
(C) any such transfer is effected by a
Restricted Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(i) if the Holder of such
Restricted Certificated Notes proposes to
exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a
certificate from such Holder in the form of
Exhibit C hereto, including the
certifications in item (1)(c) thereof;
(ii) if the Holder of such
Restricted Certificated Notes proposes to
transfer such Notes to a Person who shall
take delivery thereof in the form of a
beneficial interest in the Unrestricted
Global Note, a certificate from such Holder
in the form of Exhibit B hereto, including
the certifications in item (4) thereof; and
(iii) in each such case set forth
in this subparagraph (D), an opinion of
counsel in form reasonably acceptable to the
Issuers to the effect that such exchange or
transfer is in compliance with the
Securities Act, that the restrictions on
transfer contained herein and in the Private
Placement Legend are not required in order
to maintain compliance with the Securities
Act, and such Certificated Notes are being
exchanged or transferred in compliance with
any applicable blue sky securities laws of
any State of the United States.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall
cancel the Certificated Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted
Global Note.
(iii) A Holder of an Unrestricted Certificated Note
may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Certificated Notes
to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted
Certificated Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Certificated Note to a
beneficial interest is effected pursuant to subparagraphs (ii) or (iii) above at
a time when an Unrestricted Global Note has not yet been issued, the Issuers
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes (accompanied by a notation of the Guarantees duly endorsed by the
Guarantors) in
40
an aggregate principal amount equal to the principal amount of beneficial
interests transferred pursuant to subparagraphs (ii) or (iii) above.
(e) Transfer and Exchange of Certificated Notes for
Certificated Notes. Upon request by a Holder of Certificated Notes and such
Holder's compliance with the provisions of this Section 2.06(e), the Registrar
shall register the transfer or exchange of Certificated Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Certificated Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, pursuant to the provisions of this
Section 2.06(e).
(i) Restricted Certificated Notes may be transferred
to and registered in the name of Persons who take delivery
thereof if the Registrar receives the following:
(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the
transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904, then the transferor must
deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to
any other exemption from the registration
requirements of the Securities Act, then the
transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item
(3) thereof, if applicable.
(ii) Any Restricted Certificated Note may be
exchanged by the Holder thereof for an Unrestricted
Certificated Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted
Certificated Note if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the
case of an exchange, or the transferee, in the case
of a transfer, is not (i) a broker-dealer, (ii) a
Person participating in the distribution of the
Exchange Notes or (iii) a Person who is an affiliate
(as defined in Rule 144) of the Partnership;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
41
(D) the Registrar receives the following:
(i) if the Holder of such
Restricted Certificated Notes proposes to
exchange such Notes for an Unrestricted
Certificated Note, a certificate from such
Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d)
thereof;
(ii) if the Holder of such
Restricted Certificated Notes proposes to
transfer such Notes to a Person who shall
take delivery thereof in the form of an
Unrestricted Certificated Note, a
certificate from such Holder in the form of
Exhibit B hereto, including the
certifications in item (4) thereof; and
(iii) in each such case set forth
in this subparagraph (D), an opinion of
counsel in form reasonably acceptable to the
Issuers to the effect that such exchange or
transfer is in compliance with the
Securities Act, that the restrictions on
transfer contained herein and in the Private
Placement Legend are not required in order
to maintain compliance with the Securities
Act, and such Restricted Certificated Note
is being exchanged or transferred in
compliance with any applicable blue sky
securities laws of any State of the United
States.
(iii) A Holder of Unrestricted Certificated Notes may
transfer such Notes to a Person who takes delivery thereof in
the form of an Unrestricted Certificated Note. Upon receipt of
a request for such a transfer, the Registrar shall register
the Unrestricted Certificated Notes pursuant to the
instructions from the Holder thereof. Unrestricted
Certificated Notes cannot be exchanged for or transferred to
Persons who take delivery thereof in the form of a Restricted
Certificated Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Issuers shall issue
and, upon receipt of an authentication order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes
(accompanied by a notation of the Guarantees duly endorsed by the Subsidiary
Guarantors) in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as defined
in Rule 144) of the Partnership and accepted for exchange in the Exchange Offer
and (ii) Certificated Notes (accompanied by a notation of the Guarantees duly
endorsed by the Subsidiary Guarantors) in an aggregate principal amount equal to
the principal amount of the Restricted Certificated Notes accepted for exchange
in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee
shall cause the aggregate principal amount of the applicable Restricted Global
Notes to be reduced accordingly, and the Issuers shall execute and the Trustee
shall authenticate and deliver to the Persons designated by the Holders of
Certificated Notes so accepted Certificated Notes in the appropriate principal
amount.
42
(g) Legends. The following legends shall appear on the face of
all Global Notes and Certificated Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Note and each Certificated Note
(and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT
THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE
ISSUERS OF THIS NOTE THAT: (A) THIS NOTE MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) TO EL PASO PARTNERS, L.P., EL PASO ENERGY
PARTNERS FINANCE CORPORATION, OR ANY OF THEIR
SUBSIDIARIES, (II) IN THE UNITED STATES TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
(V) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (VI) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT
43
UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any
Global Note or Certificated Note issued pursuant to
subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear
a legend in substantially the following form:
"UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS
NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
44
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV)
THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
ISSUERS."
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Certificated Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note or
for Certificated Notes, the principal amount of Notes represented by such Global
Note shall be reduced accordingly and an endorsement shall be made on such
Global Note, by the Trustee or by the Depositary at the direction of the
Trustee, to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note, by the Trustee or by the Depositary at the direction of the Trustee, to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Issuers shall execute and the Trustee shall
authenticate Global Notes and Certificated Notes (in each
case, accompanied by a notation of the Guarantees duly
endorsed by the Subsidiary Guarantors) upon the Issuers' order
or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a
Certificated Note for any registration of transfer or
exchange, but the Issuers may require payment of a sum
sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09,
4.06 and 9.05 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
(iv) All Global Notes and Certificated Notes (in each
case, accompanied by a notation of the Guarantees duly
endorsed by the Subsidiary Guarantors) issued upon any
registration of transfer or exchange of Global Notes or
Certificated Notes shall be the valid obligations of the
Issuers and the Subsidiary Guarantors, evidencing the same
debt, and entitled to the same benefits under this Indenture,
as the Global Notes or Certificated Notes surrendered upon
such registration of transfer or exchange.
45
(v) The Issuers shall not be required (A) to issue,
to register the transfer of or to exchange Notes during a
period beginning at the opening of business 15 days before the
day of mailing of notice of redemption and ending at the close
of business on the day of such mailing, (B) to register the
transfer of or to exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of or
to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Issuers
may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such
Notes and for all other purposes, and none of the Trustee, any
Agent or the Issuers shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and
Certificated Notes (in each case, accompanied by a notation of
the Guarantees duly endorsed by the Subsidiary Guarantors) in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and opinions
of counsel required to be submitted to the Registrar pursuant
to this Section 2.06 to effect a transfer or exchange may be
submitted by facsimile.
(ix) Each Holder of a Note agrees to indemnify the
Issuers and the Trustee against any liability that may result
from the transfer, exchange or assignment of such Holder's
Note in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
(j) Each beneficial owner of an interest in a Note agrees to
indemnify the Issuers and the Trustee against any liability that may result from
the transfer, exchange or assignment by such beneficial owner of such interest
in violation of any provision of this Indenture and/or applicable United States
federal or state securities law.
(k) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among beneficial owners
of interest in any Global Note) other than to require delivery of such
certificate and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or either
of the Issuers and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Issuers shall issue and the Trustee,
upon the written order of the Issuers signed by one Officer of the Partnership
and one Officer of El Paso Finance, shall authenticate a replacement Note
46
(accompanied by a notation of the Guarantees duly endorsed by the Subsidiary
Guarantors) if the Trustee's requirements are met. An indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Issuers to protect the Issuers, the Subsidiary Guarantors, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Note is replaced. The Issuers may charge for their expenses in replacing a
Note.
Every replacement Note is an additional obligation of the
Issuers and the Subsidiary Guarantors and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder. The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Notes.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because an Issuer or an Affiliate of an
Issuer holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest and Liquidated
Damages, if applicable, on it cease to accrue.
If the Paying Agent (other than an Issuer or a Subsidiary or
an Affiliate of an Issuer) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest (and Liquidated Damages, if any).
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by an Issuer, by any Subsidiary Guarantor or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Partnership or any Subsidiary Guarantor, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until Certificated Notes are ready for delivery, the Issuers
may prepare and the Trustee shall authenticate temporary Notes (accompanied by a
notation of the Guarantees duly
47
endorsed by the Subsidiary Guarantors) upon a written order of the Issuers
signed by one Officer of the Partnership and one Officer of El Paso Finance.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Issuers consider appropriate for temporary Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable delay, the
Issuers shall prepare and the Trustee shall authenticate definitive Notes
(accompanied by a notation of the Guarantees duly endorsed by the Subsidiary
Guarantors) in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
Either of the Issuers at any time may deliver Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall treat such canceled Notes in accordance with its documents retention
policies. The Issuers may not issue new Notes to replace Notes that it has paid
or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If any of the Partnership, El Paso Finance or any Subsidiary
Guarantor defaults in a payment of interest on the Notes, it or they (to the
extent of their obligations under the Guarantees) shall pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on
the defaulted interest, to the Persons who are Holders on a subsequent special
record date, in each case at the rate provided in the Notes and in Section 4.01
hereof. The Issuers shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of the proposed
payment. The Issuers shall fix or cause to be fixed each such special record
date and payment date, provided that no such special record date shall be less
than 10 days prior to the related payment date for such defaulted interest. At
least 15 days before the special record date, the Issuers (or, upon the written
request of the Issuers, the Trustee in the name and at the expense of the
Issuers) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
SECTION 2.13. CUSIP NUMBERS.
The Issuers in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if they do so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Issuers will promptly notify the
Trustee of any change in the "CUSIP" numbers.
48
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If an Issuer elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 35 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee will select Notes for redemption as follows:
(a) if the Notes are listed for trading on a national
securities exchange, in compliance with the requirements of
the principal national securities exchange on which the Notes
are so listed; or
(b) if the Notes are not so listed or there are no
such requirements, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
No Notes of $1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
If any Note is to be redeemed in part only, the notice of
redemption that relates to that Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion of the original Note will be issued in the name of the Holder
thereof upon cancellation of the original Note. Notes called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest and Liquidated Damages, if applicable, cease to accrue on Notes or
portions of them called for redemption unless the Issuers default in making such
redemption payment.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption
date, the Issuers shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its
registered address.
The notice shall identify the Notes to be redeemed (including
CUSIP numbers) and shall state:
(a) the redemption date;
49
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption (other than a Global
Note) must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption
payment, interest and Liquidated Damages, if applicable, on Notes called for
redemption cease to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' names and at their expense; provided, however, that
the Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter period is otherwise acceptable to the
Trustee), an Officers' Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
Not later than 11:00 a.m., New York City time, on the
redemption date, the Issuers shall deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption price of and accrued interest and
Liquidated Damages, if applicable, on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Issuers any money
deposited with the Trustee or the Paying Agent by the Issuers in excess of the
amounts necessary to pay the redemption price of, and accrued interest and
Liquidated Damages, if applicable, on, all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding
paragraph, on and after the redemption date, interest and Liquidated Damages, if
applicable, shall cease to accrue on the Notes or the portions of Notes called
for redemption. If a Note is redeemed on or after an interest
50
record date but on or prior to the related Interest Payment Date, then any
accrued and unpaid interest (and Liquidated Damages, if any) shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Issuers to comply with
the preceding paragraph, interest (and Liquidated Damages, if any) shall be paid
on the unpaid principal, from the redemption date until such principal is paid,
and to the extent lawful on any interest not paid on such unpaid principal, in
each case at the rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Issuers
shall issue and, upon the Issuers' written request, the Trustee shall
authenticate for the Holder at the expense of the Issuers a new Note
(accompanied by a notation of the Guarantees duly endorsed by the Subsidiary
Guarantors) equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07,
the Issuers shall not have the option to redeem the Notes pursuant to this
Section 3.07 prior to December 1, 2007. From and after December 1, 2007, the
Issuers may redeem all or a part of these Notes upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon, if
any, and Liquidated Damages, if any, to the applicable redemption date, if
redeemed during the 12-month period beginning on December 1 of the years
indicated below:
YEAR PERCENTAGE
---- ----------
2007............................................................ 105.313%
2008............................................................ 103.542%
2009............................................................ 101.771%
2010 and thereafter............................................. 100.000%
(b) Notwithstanding the provisions of Section 3.07(a), at any
time prior to December 1, 2005, the Issuers may on any one or more occasions
redeem up to 33% of the aggregate principal amount of Notes originally issued
under this Indenture at a redemption price of 110.625% of the principal amount
thereof, plus accrued and unpaid interest, if any, and Liquidated Damages, if
any, to the redemption date, with the net cash proceeds of one or more Equity
Offerings; provided that: (i) at least 67% of the aggregate principal amount of
Notes remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Partnership, El Paso Finance or any Restricted
Subsidiary of the Partnership); and (ii) the redemption must occur within 90
days of the date of the closing of such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
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SECTION 3.08. MANDATORY REDEMPTION.
Except for any repurchase offers required to be made pursuant
to Sections 4.06 and 4.07 hereof, the Issuers shall not be required to make
mandatory redemption payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF NET PROCEEDS.
In the event that, pursuant to Section 4.07 hereof, the
Issuers shall be required to commence a pro rata offer (an "Asset Sale Offer")
to all Holders and all holders of other Indebtedness that is pari passu with the
Notes containing provisions similar to those set forth in this Indenture with
respect to offers to purchase or redeem with the Net Proceeds of sales of assets
to purchase Notes and such other pair passu Indebtedness, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of at
least 30 days following its commencement but no longer than 60 days, except to
the extent that a longer period is required by applicable law (the "Offer
Period"). Promptly after the termination of the Offer Period (the "Purchase
Date"), the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.07 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered and not withdrawn in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related Interest Payment Date, accrued and unpaid interest,
if any, and Liquidated Damages (to the extent involving interest that is due and
payable on such Interest Payment Date), if any, shall be paid to the Person in
whose name a Note is registered at the close of business on such record date,
and no additional interest (or Liquidated Damages, if any) shall be payable to
Holders who validly tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.07 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not validly tendered or accepted for payment
shall continue to accrue interest and Liquidated Damages, if applicable;
(d) that, unless the Issuers default in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest and Liquidated Damages, if applicable, after the Purchase Date;
52
(e) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Issuers, a depositary, if
appointed by the Issuers, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(f) that Holders shall be entitled to withdraw their election
if the Issuers, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Issuers shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Issuers so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall
be issued new Notes (accompanied by a notation of the Guarantees duly endorsed
by the Subsidiary Guarantors) equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof validly tendered and not properly
withdrawn pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been validly tendered and not properly withdrawn, all Notes so tendered and not
withdrawn, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Issuers in
accordance with the terms of this Section 3.09. Upon surrender and cancellation
of a Certificated Note that is purchased in part, the Issuers shall promptly
issue and the Trustee shall authenticate and deliver to the surrendering Holder
of such Certificated Note a new Certificated Note equal in principal amount to
the unpurchased portion of such surrendered Certificated Note; provided that
each such new Certificated Note shall be in a principal amount of $1,000 or an
integral multiple thereof. Upon surrender of a Global Note that is purchased in
part pursuant to an Asset Sale Offer, the Paying Agent shall forward such Global
Note to the Trustee who shall make an endorsement thereon to reduce the
principal amount of such Global Note to an amount equal to the unpurchased
portion of such Global Note, as provided in Section 2.06(h) hereof. The Issuers,
the Depositary or the Paying Agent, as the case may be, shall promptly mail or
deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Issuers for purchase, and the
Issuers shall promptly issue a new Note (in each case, accompanied by a notation
of the Guarantees duly endorsed by the Subsidiary Guarantors), and the Trustee,
upon written request from the Issuers shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Issuers to the Holder thereof. The Issuers shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
53
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of and
premium, if any, interest and Liquidated Damages, if any, on the Notes in New
York, New York on the dates and in the manner provided in the Notes. Principal,
premium, if any, interest and Liquidated Damages, if any, shall be considered
paid on the date due if the Paying Agent, if other than an Issuer or any
Subsidiary Guarantor thereof, holds as of 11:00 a.m. Eastern Time on the due
date money deposited by the Issuers in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, interest
and Liquidated Damages, if any, then due. The Issuers shall pay all Liquidated
Damages, if any, in the same manner on the dates and in the amounts set forth in
the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium at the then applicable interest rate on the Notes to the extent lawful.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an Affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers or the Subsidiary Guarantors in respect of the
Notes and this Indenture may be served. The Issuers shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Issuers shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Issuers may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Issuers shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Issuers in accordance with Section
2.03.
54
SECTION 4.03. COMPLIANCE CERTIFICATE.
(a) The Issuers and the Subsidiary Guarantors shall deliver to
the Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Issuers and the
Restricted Subsidiaries of the Partnership during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether the Issuers and the Subsidiary Guarantors have kept,
observed, performed and fulfilled their respective obligations under this
Indenture and the Guarantees, respectively, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge each
of such Issuers and such Subsidiary Guarantors, as the case may be, has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action such Issuer or such
Subsidiary Guarantor, as the case may be, is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action such Issuer or such
Subsidiary Guarantor, as the case may be, is taking or proposes to take with
respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.19(a) shall be
accompanied by a written statement of the Issuers' independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Issuers have violated any provisions of Article 4 or Article 5 hereof (except
that such written statement need not address the Issuers' and Subsidiary
Guarantors' compliance with Sections 4.02, 4.05, 4.06 or 4.13 hereof) or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) Each of the Issuers shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer of the
Partnership, the General Partner or El Paso Finance becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Issuers are taking or propose to take with
respect thereto.
SECTION 4.04. TAXES.
The Issuers shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
55
SECTION 4.05. STAY, EXTENSION AND USURY LAWS.
Each of the Issuers and the Subsidiary Guarantors covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and each of the Issuers and the Subsidiary Guarantors (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.06. CHANGE OF CONTROL.
(a) If a Change of Control occurs, each Holder of Notes shall
have the right to require the Issuers to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of that Holder's Notes pursuant to the
offer described below (the "Change of Control Offer"). In the Change of Control
Offer, the Issuers shall offer a "Change of Control Payment" in cash equal to
101% of the aggregate principal amount of Notes repurchased plus accrued and
unpaid interest thereon, if any, and Liquidated Damages, if any, to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
of Control, the Issuers shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the Change of Control Payment Date specified in such
notice, pursuant to the procedures required by this Indenture and described in
such notice. If the Change of Control Payment Date is on or after a record date
and on or before the related Interest Payment Date, any accrued and unpaid
interest and Liquidated Damages (to the extent involving interest that is due
and payable on such Interest Payment Date), if any, shall be paid to the Person
in whose name a Note is registered at the close of business on such record date,
and no additional interest (or Liquidated Damages, if any) (to the extent
involving interest that is due and payable on such Interest Payment Date) shall
be payable to Holders who validly tender Notes pursuant to the Change of Control
Offer. The Issuers shall comply with the requirements of Rule 14e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) Within 30 days following any Change of Control, the
Issuers shall mail by first class mail, a notice to each Holder, with a copy of
such notice to the Trustee. The notice, which shall govern the terms of the
Change of Control Offer, shall state, among other things:
(i) that a Change of Control has occurred and a
Change of Control Offer is being made as
provided for herein, and that, although
Holders are not required to tender their
Notes, all Notes that are validly tendered
shall be accepted for payment;
56
(ii) the Change of Control Payment and the Change
of Control Payment Date, which will be no
earlier than 30 days and no later than 60
days after the date such notice is mailed;
(iii) that any Note accepted for payment pursuant
to the Change of Control Offer (and duly
paid for on the Change of Control Payment
Date) shall cease to accrue interest and
Liquidated Damages, if applicable, after the
Change of Control Payment Date;
(iv) that any Notes (or portions thereof) not
validly tendered shall continue to accrue
interest and Liquidated Damages, if
applicable;
(v) that any Holder electing to have a Note
purchased pursuant to any Change of Control
Offer shall be required to surrender the
Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of
the Note completed, or transfer by
book-entry transfer, to the Issuers, a
depositary, if appointed by the Issuers, or
a Paying Agent at the address specified in
the notice at least one (1) Business Day
before the Change of Control Payment Date;
(vi) that Holders shall be entitled to withdraw
their election if the Issuers, the
Depositary or the Paying Agent, as the case
may be, receives, not later than the
expiration of the Change of Control Offer, a
telegram, facsimile transmission or letter
setting forth the name of the Holder, the
principal amount of the Note the Holder
delivered for purchase and a statement that
such Holder is withdrawing his election to
have such Note purchased; and
(vii) the instructions and any other information
necessary to enable Holders to tender their
Notes (or portions thereof) and have such
Notes (or portions thereof) purchased
pursuant to the Change of Control Offer.
(c) Subject to Section 4.06(f), on the Change of Control
Payment Date, the Issuers shall, to the extent lawful:
(i) accept for payment all Notes or portions thereof
properly tendered and not withdrawn pursuant to the Change of
Control Offer;
(ii) deposit by 11:00 a.m., New York Time with the
Paying Agent an amount equal to the Change of Control Payment
in respect of all Notes or portions thereof so tendered; and
57
(iii) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased
by the Issuers.
(d) The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Issuers shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(e) Upon surrender and cancellation of a Certificated Note that is
purchased in part pursuant to the Change of Control Offer, the Issuers shall
promptly issue and the Trustee shall authenticate and mail (or cause to be
transferred by book entry) to the surrendering Holder of such Certificated Note,
a new Certificated Note equal in principal amount to the unpurchased portion of
such surrendered Certificated Note; provided that each such new Certificated
Note shall be in principal amount of $1,000 or an integral multiple thereof.
(f) Prior to complying with any of the provisions of this Section 4.06,
but in any event within 90 days following a Change of Control, the Issuers shall
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this covenant.
(g) The provisions described in this Section 4.06 require the Issuers
to make a Change of Control Offer following a Change of Control shall be
applicable regardless of whether or not any other provisions of this Indenture
are applicable.
(h) Notwithstanding the other provisions of this Section 4.06, the
Issuers shall not be required to make a Change of Control Offer upon a Change of
Control, and a Holder will not have the right to require that the Issuers
repurchase any Notes pursuant to a Change of Control Offer, if a third party
makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Indenture applicable to a
Change of Control Offer made by the Issuers and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
SECTION 4.07. ASSET SALES.
(a) The Issuers shall not, and shall not permit any Restricted
Subsidiary of the Partnership to, consummate an Asset Sale unless:
(i) such Issuer (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or Equity Interests issued
or sold or otherwise disposed of;
(ii) such fair market value is determined by (a) an executive
officer of the Partnership if the value is less than $10.0 million, as
evidenced by an Officers'
58
Certificate delivered to the Trustee or (b) the Board of Directors of
the General Partner if the value is $10.0 million or more, as evidenced
by a resolution of such Board of Directors of the General Partner; and
(iii) at least 75% of the Net Proceeds received by such Issuer
or such Restricted Subsidiary is in the form of cash or Cash
Equivalents.
For purposes of this clause (iii), each of the following shall be
deemed to be cash:
(A) any liabilities (as shown on such Issuer's or such
Restricted Subsidiary's most recent balance sheet), of the Issuers or
any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any
Guarantee) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases such Issuer or
such Restricted Subsidiary from further liability; and
(B) any securities, notes or other obligations received by
such Issuer or any such Restricted Subsidiary from such transferee that
are within 90 days after the Asset Sales (subject to ordinary
settlement periods) converted by such Issuer or such Restricted
Subsidiary into cash (to the extent of the cash received in that
conversion).
(b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Partnership or a Restricted Subsidiary may apply (or enter into a
definitive agreement for such application, provided that such capital
expenditure or purchase is closed within 90 days after the end of such 360-day
period) such Net Proceeds at its option: (i) to repay Senior Debt of the
Partnership and/or its Restricted Subsidiaries (or to make an offer to
repurchase or redeem any such Senior Debt, provided that such repurchase or
redemption closes within 45 days after the end of such 360-day period) with a
permanent reduction in availability for any revolving credit Indebtedness;
(i) to make a capital expenditure in a Permitted Business;
(ii) to acquire other long-term tangible assets that are used
or useful in a Permitted Business; or
(iii) to invest in any other Permitted Business Investment or
any other Permitted Investments other than Investments in Cash
Equivalents, Interest Swaps or Currency Agreements.
Pending the final application of any such Net Proceeds, the Partnership or a
Restricted Subsidiary may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture.
(c) Any Net Proceeds from Asset Sales that are not applied or invested
as provided in Section 4.07(b) above will constitute "Excess Proceeds". When the
aggregate amount of Excess Proceeds exceeds $10 million, the Issuers will make a
pro rata offer (an "Asset Sale Offer") to all Holders of Notes and all holders
of other Indebtedness that is pari passu with
59
the Notes containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds. The offer
price in any Asset Sale Offer will be equal to 100% of principal amount plus
accrued and unpaid interest (including any Liquidated Damages in the case of the
Notes), if any, and premium, if any, to the date of purchase, and will be
payable in cash. If any Excess Proceeds remain after consummation of an Asset
Sale Offer, the Partnership may use such Excess Proceeds for any purpose not
otherwise prohibited by this Indenture, including, without limitation, the
repurchase or redemption of Indebtedness of the Issuers or any Subsidiary
Guarantor that is subordinated to the Notes or, in the case of any Subsidiary
Guarantor, the Guarantee of such Subsidiary Guarantor. If the aggregate
principal amount of Notes tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds allocated for repurchases of Notes pursuant to the Asset Sale
Offer for Notes, the Trustee shall select the Notes to be purchased on a pro
rata basis. Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
(d) Notwithstanding the definition of the term "Asset Sale" in Section
1.01 hereof, the following transactions shall not constitute an Asset Sale for
purposes of this Indenture:
(i) any transaction whereby assets or properties (including
(a) ownership interests in any Subsidiary or Joint Venture and (b) in
the case of an exchange or contribution for tangible assets, up to 25%
in the form of cash, Cash Equivalents, accounts receivable or other
current assets), owned by the Partnership or a Restricted Subsidiary of
the Partnership are exchanged or contributed for the Equity Interests
of a Joint Venture or Unrestricted Subsidiary in a transaction that
satisfies the requirements of a Permitted Business Investment or for
other assets (not more than 25% of which consists of cash, Cash
Equivalents, accounts receivables or other current assets) or
properties (including interests in any Subsidiary or Joint Venture) so
long as (i) the fair market value of the assets or properties (if other
than a Permitted Business Investment) received are substantially
equivalent to the fair market value of the assets or properties given
up, and (ii) any cash received in such exchange or contribution by the
Partnership or any Restricted Subsidiary of the Partnership is applied
in accordance with the foregoing provisions of this Section 4.07;
(ii) any sale, transfer or other disposition of cash or Cash
Equivalents;
(iii) any sale, transfer or other disposition of Restricted
Investments; and
(iv) any sale, transfer or other disposition of interests in
oil and gas leaseholds (including, without limitation, by abandonment,
farm-ins, farm-outs, leases, swaps and subleases), hydrocarbons and
other mineral products in the ordinary course of business of the oil
and gas operations conducted by the Partnership or any Restricted
Subsidiary of the Partnership, which sale, transfer or other
disposition is made by the Partnership or any such Restricted
Subsidiary.
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SECTION 4.08. RESTRICTED PAYMENTS.
(a) The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Equity Interests of the Partnership or
any of its Restricted Subsidiaries (including, without limitation, any
payment in connection with any merger or consolidation involving the
Partnership or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Equity Interests of the Partnership or of any
of its Restricted Subsidiaries in their capacity as such (other than
dividends or distributions payable in Equity Interests of the
Partnership (other than Disqualified Equity) and other than
distributions or dividends payable to the Partnership or a Restricted
Subsidiary of the Partnership).
(ii) except to the extent permitted in clause (iv) below,
purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving an Issuer) any Equity Interests of the Partnership or of any
of its Restricted Subsidiaries (other than any such Equity Interests
owned by the Partnership or any of its Restricted Subsidiaries);
(iii) except to the extent permitted in clause (iv) below,
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is pari
passu with or subordinated to the Notes or the Guarantees (other than
the Notes or the Guarantees), except (a) a payment of interest or
principal at the Stated Maturity thereof, (b) a purchase, redemption,
acquisition or retirement required to be made pursuant to the terms of
such Indebtedness (including pursuant to an asset sale or change of
control provision) and (c) any such Indebtedness of the Partnership or
any Restricted Subsidiary owned by the Partnership or a Restricted
Subsidiary;
(iv) make any Investment other than a Permitted Investment or
a Permitted Business Investment (all such payments and other actions
set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof and either:
(A) if the Fixed Charge Coverage Ratio for the Partnership's
four most recent fiscal quarters for which internal financial
statements are available is not less than 2.0 to 1.0, such Restricted
Payment, together with the aggregate amount of all other Restricted
Payments made by the Partnership and its Restricted Subsidiaries during
the quarter in which such Restricted Payment is made, is less than the
sum, without duplication, of (a) Available Cash constituting Cash from
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Operations as of the end of the immediately preceding quarter, plus (b)
the aggregate net cash proceeds of any (i) substantially concurrent
capital contribution to the Partnership from any Person (other than a
Restricted Subsidiary of the Partnership) after the Issue Date, (ii)
substantially concurrent issuance and sale after the Issue Date of
Equity Interests (other than Disqualified Equity) of the Partnership or
from the issuance or sale after the Issue Date of convertible or
exchangeable Disqualified Equity or convertible or exchangeable debt
securities of the Partnership that have been converted into or
exchanged for such Equity Interests (other than Disqualified Equity),
(iii) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or Cash Equivalents or otherwise
liquidated or repaid for cash or Cash Equivalents, the lesser of the
refund of capital or similar payment made in other Cash Equivalents
with respect to such Restricted Investment (less the cost of such
disposition, if any) and the initial amount of such Restricted
Investment (other than to a Restricted Subsidiary of the Partnership),
plus (c) the net reduction in Investments in Restricted Investments
resulting from dividends, repayments of loans or advances, or other
transfers of assets in each case to the Partnership or any of its
Restricted Subsidiaries from any Person (including, without limitation,
Unrestricted Subsidiaries) or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries to the extent such amounts have
not been included in Available Cash constituting Cash from Operations
for any quarter commencing on or after the Issue Date (items (b) and
(c) being referred to as "Incremental Funds"), minus (d) the aggregate
amount of Incremental Funds previously expended pursuant to this clause
(A) or clause (B) below; or
(B) if the Fixed Charge Coverage Ratio for the Partnership's
four most recent fiscal quarters for which internal financial
statements are available is less than 2.0 to 1.0, such Restricted
Payment, together with the aggregate amount of all other Restricted
Payments made by the Partnership and its Restricted Subsidiaries during
the quarter in which such Restricted Payment is made, is less than the
sum, without duplication, of (a) $60.0 million less the aggregate
amount of all Restricted Payments made by the Partnership and its
Restricted Subsidiaries pursuant to this clause (B)(a) during the
period ending on the last day of the fiscal quarter of the Partnership
immediately preceding the date of such Restricted Payment and beginning
on the Issue Date, plus (b) Incremental Funds to the extent not
previously expended pursuant to this clause (B) or clause (A) above.
For purposes of clauses (A) and (B) above, the term "substantially concurrent"
means that either (x) the offering was consummated within 120 days of the date
of determination or (y) the offering was consummated within 24 months of the
date of determination and the proceeds therefrom were used for the purposes
expressly stated in the documents related thereto and may be traced to such use
by segregating, separating or otherwise specifically identifying the movement of
such proceeds.
(b) So long as no Default has occurred and is continuing or would be
caused thereby, the preceding provisions of this Section 4.08 shall not
prohibit:
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(i) the payment by the Partnership or any of its Restricted
Subsidiaries of any distribution or dividend within 60 days after the
date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any pari passu or subordinated Indebtedness of the
Partnership or any of its Restricted Subsidiaries or of any Equity
Interests of the Partnership or any of its Restricted Subsidiaries in
exchange for, or out of the net cash proceeds of, a substantially
concurrent (a) capital contribution to the Partnership or such
Restricted Subsidiary from any Person (other than the Partnership or
another Restricted Subsidiary) or (b) sale (a sale will be deemed
substantially concurrent if such redemption, repurchase, retirement,
defeasance or acquisition occurs not more than 120 days after such
sale) (other than to a Restricted Subsidiary of the Partnership) of (i)
Equity Interests (other than Disqualified Equity) of the Partnership or
such Restricted Subsidiary or (ii) Indebtedness that is subordinated to
the Notes or the Guarantees, provided that such new subordinated
Indebtedness with respect to the redemption, repurchase, retirement,
defeasance or other acquisition of pari passu or subordinated
Indebtedness (W) is subordinated to the same extent as such refinanced
subordinated Indebtedness, (X) has a Weighted Average Life to Maturity
of at least the remaining Weighted Average Life to Maturity of the
refinanced subordinated Indebtedness, (Y) is for the same principal
amount as either such refinanced subordinated Indebtedness plus
original issue discount to the extent not reflected therein or the
redemption or purchase price of such Equity Interests (plus reasonable
expenses of refinancing and any premiums paid on such refinanced
subordinated Indebtedness) and (Z) is incurred by the Partnership or
the Restricted Subsidiary that is the obligor on the Indebtedness so
refinanced or the issuer of the Equity Interests so redeemed,
repurchased or retired; provided, however, that the amount of any net
cash proceeds that are utilized for any such redemption, repurchase or
other acquisition or retirement shall be excluded or deducted from the
calculation of Available Cash and Incremental Funds;
(iii) the defeasance, redemption, repurchase or other
acquisition of pari passu or subordinated Indebtedness of the
Partnership or any Restricted Subsidiary with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness;
(iv) the payment of any distribution or dividend by a
Restricted Subsidiary to the Partnership or to the holders of the
Equity Interests (other than Disqualified Equity) of such Restricted
Subsidiary on a pro rata basis;
(v) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Partnership or any
of its Restricted Subsidiaries held by any member of the General
Partner's or the Partnership's or any Restricted Subsidiary's
management pursuant to any management equity subscription agreement or
stock option agreement or to satisfy obligations under
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any Equity Interests appreciation rights or option plan or similar
arrangement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $5.0 million in any 12-month period; and
(vi) any payment by the Partnership pursuant to section 3.1(b)
of the Management Agreement to compensate for certain tax liabilities
resulting from certain allocated income.
In computing the amount of Restricted Payments made for purposes of
Section 4.08(a), Restricted Payments made under clauses (i) (but only if the
declaration of such dividend or other distribution has not been counted in a
prior period) and, to the extent of amounts paid to holders other than the
Partnership or any of its Restricted Subsidiaries, (iv) of this Section 4.08(b)
shall be included, and Restricted Payments made under clauses (ii), (iii), (v)
and (vi) and, except to the extent noted above, (iv) of this Section 4.08(b)
shall not be included. The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
asset(s) or securities proposed to be transferred or issued by the Partnership
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required to
be valued by this covenant shall be determined by the Board of Directors of the
General Partner whose resolution with respect thereto shall be delivered to the
Trustee.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED EQUITY.
(a) The Partnership shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Partnership will not issue any
Disqualified Equity and will not permit any of its Restricted Subsidiaries to
issue any Disqualified Equity; provided, however, that the Partnership and any
Restricted Subsidiary may incur Indebtedness (including Acquired Debt), and the
Partnership and the Restricted Subsidiaries may issue Disqualified Equity, if
the Fixed Charge Coverage Ratio for the Partnership's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Equity is issued would have been at least 2.25 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Equity had been issued, at the beginning of such four-quarter
period.
(b) Notwithstanding the prohibitions of Section 4.09(a), so long as no
Default or Event of Default shall have occurred and be continuing or would be
caused thereby, the Partnership and its Restricted Subsidiaries may incur any of
the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Partnership and any of its
Restricted Subsidiaries of the Indebtedness under Credit Facilities and
the guarantees
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thereof; provided that the aggregate principal amount of all
Indebtedness of the Partnership and the Restricted Subsidiaries
outstanding under all Credit Facilities after giving effect to such
incurrence does not exceed $1.2 billion less the aggregate amount of
all repayments of Indebtedness under a Credit Facility that may have
been made by the Partnership or any of its Restricted Subsidiaries with
Net Proceeds from Asset Sales to the extent such repayments constitute
a permanent reduction of commitments under such Credit Facility;
(ii) the incurrence by the Partnership and its Restricted
Subsidiaries of Existing Indebtedness;
(iii) the incurrence by the Partnership and the Subsidiary
Guarantors of Indebtedness represented by the Notes and the Guarantees
and the related Obligations;
(iv) the incurrence by the Partnership or any of its
Restricted Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligation, in each
case, incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Partnership or such
Restricted Subsidiary, in an aggregate principal amount not to exceed
$20.0 million at any time outstanding;
(v) the incurrence by the Partnership or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that was not
incurred in violation of this Indenture;
(vi) the incurrence by the Partnership or any of its
Restricted Subsidiaries of intercompany Indebtedness between or among
the Partnership and any of its Restricted Subsidiaries; provided,
however, that:
(A) if the Partnership or any Subsidiary Guarantor is
the obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the Notes, in the case of the
Partnership, or the Guarantee of such Subsidiary Guarantor, in
the case of a Subsidiary Guarantor; and
(B) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by
a Person other than the Partnership or a Restricted Subsidiary
thereof and (ii) any sale or other transfer of any such
Indebtedness to a Person that is not either the Partnership or
a Restricted Subsidiary thereof, shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the
Partnership or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (vi);
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(vii) the incurrence by the Partnership or any of its
Restricted Subsidiaries of Hedging Obligations that are incurred for
the purpose of fixing or hedging foreign currency exchange rate risk of
the Partnership or any Restricted Subsidiary or interest rate risk with
respect to any floating rate Indebtedness of the Partnership or any
Restricted Subsidiary that is permitted by the terms of this Indenture
to be outstanding or commodities pricing risks of the Partnership or
any Restricted Subsidiary in respect of hydrocarbon production from
properties in which the Partnership or any of its Restricted
Subsidiaries owns an interest;
(viii) the guarantee by the Partnership or any of its
Restricted Subsidiaries of Indebtedness of the Partnership or a
Restricted Subsidiary of the Partnership that was permitted to be
incurred by another provision of this covenant;
(ix) bid, performance, surety and appeal bonds incurred in the
ordinary course of business, including guarantees and standby letters
of credit supporting such obligations, to the extent not drawn;
(x) the incurrence by the Partnership or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(x), not to exceed $20.0 million;
(xi) the incurrence by the Partnership's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Partnership that was not
permitted by this clause (xi);
(xii) the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Equity, in the form of additional shares of
the same class of Disqualified Equity, provided, in each such case,
that the amount thereof is included in Fixed Charges of the Partnership
as so accrued, accredited or amortized; and
(xiii) Indebtedness incurred by the Partnership or any of its
Restricted Subsidiaries arising from agreements or their respective
bylaws providing for indemnification, adjustment of purchase price or
similar obligations.
(c) For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in paragraphs (b)(i) through
(b)(xiii) above, or is entitled to be incurred pursuant to Section 4.09(a), the
Partnership shall be permitted to classify such item of Indebtedness on the date
of its incurrence in any manner that complies with this Section 4.09. An
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item of Indebtedness may be divided and classified in one or more of the types
of Permitted Indebtedness.
SECTION 4.10. ANTI-LAYERING.
The Issuers shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of either of the Issuers and senior in any
respect in right of payment to the Notes. No Subsidiary Guarantor shall incur,
create, issue, assume, guarantee or otherwise become liable for any Indebtedness
that is subordinate or junior in right of payment to any Senior Debt of such
Subsidiary Guarantor and senior in any respect in right of payment to such
Subsidiary Guarantor's Guarantee.
SECTION 4.11. LIENS.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness, Attributable Debt or trade
payables on any asset now owned or hereafter acquired, except Permitted Liens,
without making effective provision whereby all Obligations due under the Notes
and this Indenture or any Guarantee, as applicable, will be secured by a Lien
equally and ratably with any and all Obligations thereby secured for so long as
any such Obligations shall be so secured.
SECTION 4.12. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(a) pay dividends or make any other distributions on its Equity
Interests to the Partnership or any of the Partnership's Restricted
Subsidiaries, or with respect to any other interest or participation in, or
measured by, its profits, or pay any indebtedness owed to the Partnership or any
of the other Restricted Subsidiaries;
(b) make loans or advances to or make other investments in the
Partnership or any of the other Restricted Subsidiaries; or
(c) transfer any of its properties or assets to the Partnership or any
of the other Restricted Subsidiaries.
The restrictions contained in the immediately preceding sentence will not apply
to encumbrances or restrictions existing under or by reason of:
(i) agreements as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of any such
agreements or any Existing Indebtedness to which such agreement
relates, provided that such amendments,
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modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive, taken
as a whole, with respect to such distribution, dividend and other
payment restrictions and loan or investment restrictions than those
contained in such agreement, as in effect on the Issue Date;
(ii) the Partnership Credit Facility and any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such distribution,
dividend and other payment restrictions and loan or investment
restrictions than those contained in such Credit Facility as in effect
on the Issue Date;
(iii) this Indenture, the Notes and the Guarantees;
(iv) applicable law;
(v) any instrument governing Indebtedness or Equity Interests
of a Person acquired by the Partnership or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, other than such Person, or the property
or assets of such Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this
Indenture to be incurred;
(vi) customary non-assignment provisions in licenses and
leases entered in the ordinary course of business and consistent with
past practices;
(vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so
acquired of the nature described in clause (c) of the preceding
sentence;
(viii) any agreement for the sale or other disposition of a
Restricted Subsidiary that contains any one or more of the restrictions
described in clauses (a) through (c) of the preceding sentence by such
Restricted Subsidiary pending its sale or other disposition, provided
that such sale or disposition is consummated, or such restrictions are
canceled or terminated or lapse, within 90 days;
(ix) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced;
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(x) Liens securing Indebtedness otherwise permitted to be
issued pursuant to the provisions of Section 4.11 that limit the right
of the Partnership or any of its Restricted Subsidiaries to dispose of
the assets subject to such Lien;
(xi) any agreement or instrument relating to any property or
assets acquired after the Issue Date, so long as such encumbrance or
restriction relates only to the property or assets so acquired and is
not and are not created in anticipation of such acquisitions;
(xii) any agreement or instrument relating to any Acquired
Debt of any Restricted Subsidiary at the date on which such Restricted
Subsidiary was acquired by the Partnership or any Restricted Subsidiary
(other than the Indebtedness incurred in anticipation of such
acquisition and provided such encumbrances or restrictions extend only
to property of such acquired Restricted Subsidiary);
(xiii) any agreement or instrument governing Indebtedness
permitted to be incurred under this Indenture, provided that the terms
and conditions of any such restrictions and encumbrances, taken as a
whole, are not materially more restrictive than those contained in this
Indenture, taken as a whole;
(xiv) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and
other similar agreements, including "clawback," "make-well" or
"keep-well" agreements, to maintain financial performance or results of
operations of a joint venture entered into in the ordinary course of
business; and
(xv) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business.
SECTION 4.13. TRANSACTIONS WITH AFFILIATES.
(a) The Partnership shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less
favorable to the Partnership or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Partnership or such Restricted Subsidiary with an unrelated Person; and
(ii) the Partnership delivers to the Trustee:
(A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million but less than or
equal to $25.0 million, an Officers'
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Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate
Transaction has been approved (either pursuant to specific or
general resolutions) by the Board of Directors of the General
Partner or has been approved by an officer pursuant to a
delegation (specific or general) of authority from the Board
of Directors of the General Partner; and
(B) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $25.0 million, (I) a resolution of
the Board of Directors of the General Partner set forth in an
Officers' Certificate certifying that such Affiliate
Transaction complies with this covenant and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the General
Partner and (II) either (a) an opinion as to the fairness to
the Partnership of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment
banking firm of national standing recognized as an expert in
rendering fairness opinions on transactions such as those
proposed, (b) with respect to assets classified, in accordance
with GAAP, as property, plant and equipment on the
Partnership's or such Restricted Subsidiary's balance sheet, a
written appraisal from a nationally recognized appraiser
showing the assets have a fair market value not less than the
consideration to be paid (provided that if the fair market
value determined by such appraiser is a range of values or
otherwise inexact, the Board of Directors of the General
Partner shall determine the exact fair market value, provided
that it shall be within the range so determined by the
appraiser), (c) in the case of gathering, transportation,
marketing, hedging, production handling, operating,
construction, storage, platform use, or other operational
contracts, any such contracts are entered into in the ordinary
course of business on terms substantially similar to those
contained in similar contracts entered into by the Partnership
or any Restricted Subsidiary and third parties or, if none of
the Partnership or any Restricted Subsidiary has entered into
a similar contract with a third party, that the terms are no
less favorable than those available from third parties on an
arm's-length basis, as determined by the Board of Directors of
the General Partner or (d) in the case of any transaction
between the Partnership or any of its Restricted Subsidiaries
and any Affiliate thereof in which the Partnership
beneficially owns 50% or less of the Voting Stock and one or
more Persons not Affiliated with the Partnership beneficially
own (together) a percentage of Voting Stock at least equal to
the interest in Voting Stock of such Affiliate beneficially
owned by the Partnership, a resolution of the Board of
Directors of the General Partner set forth in the Officers'
Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate
Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the General
Partner. Even though a particular Affiliate Transaction or
series of Affiliate Transactions may be covered by two or more
of clauses (a)
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through (d) above, the compliance with any one of such
applicable clauses shall be satisfactory.
(b) The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section
4.13(a):
(i) transactions pursuant to the Management Agreement as in
effect on the date hereof;
(ii) any employment, equity option or equity appreciation
agreement or plan entered into by the Partnership or any of its
Restricted Subsidiaries in the ordinary course of business and, as
applicable, consistent with the past practice of the Partnership or
such Restricted Subsidiary; (iii) transactions between or among the
Partnership and/or its Restricted Subsidiaries;
(iv) Restricted Payments that are permitted by Section 4.08;
(v) transactions effected in accordance with the terms of
agreements as in effect on the Issue Date;
(vi) customary compensation, indemnification and other
benefits made available to officers, directors or employees of the
Partnership or a Restricted Subsidiary, including reimbursement or
advancement of out-of-pocket expenses and provisions of officers' and
directors' liability insurance; and
(vii) loans to officers and employees made in the ordinary
course of business in an aggregate amount not to exceed $1.0 million at
any one time outstanding.
SECTION 4.14. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Partnership or any of its Restricted Subsidiaries acquires or
creates another Restricted Subsidiary after the Issue Date that guarantees any
Indebtedness of either of the Issuers, then that newly acquired or created
Restricted Subsidiary must become a Subsidiary Guarantor and execute a
supplemental indenture satisfactory to the Trustee and deliver an Opinion of
Counsel to the Trustee within 10 Business Days of the date on which it was
acquired or created. If a Restricted Subsidiary that is not then a Subsidiary
Guarantor guarantees Indebtedness of either of the Issuers or any other
Restricted Subsidiary, such Restricted Subsidiary shall execute and deliver a
Guarantee. The Partnership will not permit any of its Restricted Subsidiaries,
directly or indirectly, to guarantee or pledge any assets to secure the payment
of any other Indebtedness of either Issuer unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture providing for the
guarantee of the payment of the Notes by such Restricted Subsidiary, which
Guarantee shall be senior to or pari passu with such Restricted Subsidiary's
guarantee of or pledge to secure such other Indebtedness, unless such other
Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be
subordinated to the guarantee of such Senior Debt to the same extent as the
Notes
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are subordinated to such Senior Debt. Notwithstanding the foregoing, any
Guarantee of a Restricted Subsidiary that was incurred pursuant to this
paragraph shall provide by its terms that it shall be automatically and
unconditionally released upon the release or discharge of the guarantee which
resulted in the creation of such Restricted Subsidiary's Subsidiary Guarantee,
except a discharge or release by, or as a result of payment under, such
guarantee.
SECTION 4.15. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
The General Partner may designate any Restricted Subsidiary of the
Partnership to be an Unrestricted Subsidiary if that designation would not cause
a Default or Event of Default. If a Restricted Subsidiary is designated as an
Unrestricted Subsidiary, all outstanding Investments owned by the Partnership
and its Restricted Subsidiaries in the Subsidiary so designated will be deemed
to be an Investment made as of the time of such designation and will reduce the
amount available for Restricted Payments under Section 4.08(a), Permitted
Investments or Permitted Business Investments, as applicable. All such
outstanding Investments will be valued at their fair market value, as determined
by the Board of Directors of the General Partner, at the time of such
designation. That designation will only be permitted if such Restricted Payment,
Permitted Investments or Permitted Business Investments would be permitted under
this Indenture at that time and such Restricted Subsidiary otherwise complies
with the definition of an Unrestricted Subsidiary. All Subsidiaries of such an
Unrestricted Subsidiary shall be also thereafter constitute Unrestricted
Subsidiaries. A Subsidiary may not be designated as an Unrestricted Subsidiary
unless at the time of such designation, (x) it has no Indebtedness other than
Non-Recourse Debt; (y) no portion of the Indebtedness or any other obligation of
such Subsidiary (whether contingent or otherwise and whether pursuant to the
terms of such Indebtedness or the terms governing the organization and operation
of such Subsidiary or by law) (A) is guaranteed by the Partnership or any of its
other Restricted Subsidiaries, except as such Indebtedness is permitted by
Sections 4.08 and 4.09, (B) is recourse to or obligates the Partnership or any
of its Restricted Subsidiaries in any way (including any "claw-back",
"keep-well' or "make-well" agreements or other agreements, arrangements or
understandings to maintain the financial performance or results of operations of
such Subsidiary, except as such Indebtedness or Investment is permitted by
Sections 4.08 and 4.09), or (C) subjects any property or assets of the
Partnership or any of its other Restricted Subsidiaries, directly or indirectly,
contingently or otherwise, to the satisfaction thereof; and (z) no Equity
Interests of a Restricted Subsidiary are held by such Subsidiary, directly or
indirectly. Upon the designation of a Restricted Subsidiary that is a Subsidiary
Guarantor as an Unrestricted Subsidiary, the Guarantee of such entity shall be
released and the Trustee shall be authorized to take such actions as may be
appropriate to reflect such release.
The Board of Directors of the General Partner may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if a Default or Event of
Default is not continuing, the redesignation would not cause a Default or Event
of Default and provided that, if at the time of such designation such Subsidiary
is a Subsidiary Guarantor, after giving effect to such designation, the
Partnership and its remaining Restricted Subsidiaries could incur at least $1.00
of additional Indebtedness under Section 4.09(a).
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SECTION 4.16. BUSINESS ACTIVITIES.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses.
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Partnership will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Partnership or any Restricted Subsidiary that is a Subsidiary Guarantor may
enter into a sale and leaseback transaction if:
(a) the Partnership or that Subsidiary Guarantor, as applicable, could
have (i) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under Section 4.09(a), and (ii)
incurred a Lien to secure such Indebtedness pursuant to Section 4.11; provided,
however, that clause (i) of this clause (a) shall be suspended during any period
in which the Partnership and the Restricted Subsidiaries are not subject to the
Suspended Covenants;
(b) the gross cash proceeds of that sale and leaseback transaction are
at least equal to the fair market value, as determined in good faith by the
Board of Directors of the General Partner, of the property that is the subject
of such sale and leaseback transaction; and
(c) the transfer of assets in that sale and leaseback transaction is
permitted by, and the Partnership applies the proceeds of such transaction in
compliance with, Section 4.07.
SECTION 4.18. PAYMENTS FOR CONSENT.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Notes unless such considerations is offered to be paid and is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.19. REPORTS.
(a) Whether or not required by the SEC, so long as any Notes are
outstanding, the Partnership will file with the SEC (unless the SEC will not
accept such a filing) within the time periods specified in the SEC's rules and
regulations and, upon request, the Partnership will furnish the Trustee for
delivery to Holders upon their request:
(i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Partnership were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by the Partnership's
certified independent accountants; and
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(ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Partnership were required to file such
reports.
(b) If at the end of any such quarterly or annual period referred to in
Section 4.19(a), the Partnership has designated any of its Subsidiaries as
Unrestricted Subsidiaries or if the Partnership owns more than 50% of Atlantis
Offshore, L.L.C., Copper Eagle Gas Storage, L.L.C., Deepwater Gateway, L.L.C.
and Poseidon Oil Pipeline Company, L.L.C. but such entity or any of its
Subsidiaries still is designated as a Joint Venture, then the Partnership shall
deliver (promptly after such SEC filing referred to in Section 4.19(a)) to the
Trustee for delivery to the Holders of the Notes quarterly and annual financial
information required by Section 4.19(a) as revised to include a reasonably
detailed presentation, either on the face of the financial statements or in the
footnotes thereto, and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, of the financial condition and results of
operations of the Partnership and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Partnership and the designated Joint Ventures of the Partnership.
(c) In addition, whether or not required by the SEC, the Partnership
will make such information available to securities analysts, investors and
prospective investors upon request. In addition, upon request the Partnership
shall furnish the Trustee such other non-confidential information, documents and
other reports which the Partnership is required to file with the SEC pursuant to
Section 13 or Section 15(d) of the Exchange Act.
(d) For so long as any Series A Notes remain outstanding (unless the
Partnership is subject to the reporting requirements of the Exchange Act), the
Partnership and the Securities Guarantors shall furnish to the Holders thereof,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act to the extent such information is not
provided pursuant to Sections 4.19(a) and 4.19(b).
(e) Delivery of reports, information and documents to the Trustee
pursuant to this Section 4.19 is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Partnership's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.20. SUSPENSION OF COVENANTS.
During any period of time that the Notes have an Investment Grade
Rating from both Rating Agencies and no Default has occurred and is continuing,
the Partnership and the Restricted Subsidiaries shall not be subject to Sections
4.07, 4.08, 4.09, 4.12, 4.13, 4.17(a)(i) and 5.01(a)(iv)(B) (collectively, the
"Suspended Covenants"); provided, however, that if the Partnership and the
Restricted Subsidiaries are not subject to the Suspended Covenants for any
period of time as a result of this Section 4.20 and, subsequently, either of the
Rating Agencies withdraws its ratings or downgrades the ratings assigned to the
Notes below the Investment Grade Ratings so that the Notes do not have an
Investment Grade Rating from both Rating Agencies, or a Default (other than with
respect to the Suspended Covenants) occurs and is continuing, the Issuers and
the Restricted Subsidiaries shall thereafter again be subject to the
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Suspended Covenants, subject to the terms, conditions and obligations set forth
in this Indenture (each such date of reinstatement being the "Reinstatement
Date"). Compliance with the Suspended Covenants with respect to Restricted
Payments made after the Reinstatement Date shall be calculated in accordance
with Section 4.08 as though Section 4.08 had been in effect during the entire
period of time from which the Notes are issued.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) Neither of the Issuers may, directly or indirectly: (x) consolidate
or merge with or into another Person (whether or not such Issuer is the
survivor); or (y) sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or more related
transactions, to another Person; unless:
(i) either: (A) such Issuer is the surviving entity; or (B)
the Person formed by or surviving any such consolidation or merger (if
other than such Issuer) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is an
entity organized or existing under the laws of the United States, any
state thereof or the District of Columbia (provided that El Paso
Finance may not consolidate or merge with or into any entity other than
a corporation satisfying such requirement for so long as the
Partnership remains a partnership);
(ii) the Person formed by or surviving any such consolidation
or merger (if other than such Issuer) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made expressly assumes all the obligations of such Issuer under
the Notes and this Indenture pursuant to agreements reasonably
satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event
of Default exists;
(iv) such Issuer or the Person formed by or surviving any such
consolidation or merger (if other than such Issuer):
(A) shall have Consolidated Net Worth immediately
after the transaction equal to or greater than the
Consolidated Net Worth of such Issuer immediately preceding
the transaction; and
(B) shall, on the date of such transaction after
giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in Section 4.09(a);
provided, however, that this clause (B) shall be suspended
during any period in
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which the Partnership and the Restricted Subsidiaries are not
subject to the Suspended Covenants; and
(C) has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and, if a supplemental
indenture is required, such supplemental indenture comply with
this Indenture and all conditions precedent therein relating
to such transaction have been satisfied.
(b) Notwithstanding Section 5.01(a), the Partnership is permitted to
reorganize as any other form of entity in accordance with the procedures
established in this Indenture; provided that:
(i) the reorganization involves the conversion (by merger,
sale, contribution or exchange of assets or otherwise) of the
Partnership into a form of entity other than a limited partnership
formed under Delaware law;
(ii) the entity so formed by or resulting from such
reorganization is an entity organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(iii) the entity so formed by or resulting from such
reorganization assumes all of the obligations of the Partnership under
the Notes and this Indenture pursuant to agreements reasonably
satisfactory to the Trustee;
(iv) immediately after such reorganization no Default or Event
of Default exists; and
(v) such reorganization is not adverse to the Holders of the
Notes (for purposes of this clause (v) it is stipulated that such
reorganization shall not be considered adverse to the Holders of the
Notes solely because the successor or survivor of such reorganization
(1) is subject to federal or state income taxation as an entity or (2)
is considered to be an "includible corporation" of an affiliated group
of corporations within the meaning of Section 1504(b)(i) of the Code or
any similar state or local law).
(c) Section 5.01(a) shall not apply to a merger or consolidation or any
sale, assignment, transfer, lease, conveyance or other disposition of assets
between or among the Partnership and any of its Restricted Subsidiaries.
(d) No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
Person, whether or not affiliated with such Subsidiary Guarantor, but excluding
the Partnership or another Subsidiary Guarantor, unless (i) subject to the
provisions of Section 5.01(e), the Person formed by or surviving any such
consolidation or merger (if other than such Subsidiary Guarantor) assumes all
the obligations of such Subsidiary Guarantor pursuant to the Subsidiary
Guarantor's Guarantee of the Notes and the Indenture pursuant to a supplemental
indenture and (ii) immediately after
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giving effect to such transaction, no Default or Event of Default exists. Any
Subsidiary Guarantor may be merged or consolidated with or into any one or more
Subsidiary Guarantors.
(e) In the event of a sale or other disposition of all or substantially
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all or substantially all of the
Equity Interests of any Subsidiary Guarantor, then such Subsidiary Guarantor (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise, of all of the Equity Interests of such Subsidiary Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all or substantially all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Guarantee; provided that the
Partnership applies the Net Proceeds of such sale or other disposition in
accordance with the provisions set forth under Sections 3.09 and 4.07.
SECTION 5.02. SUCCESSOR ENTITY SUBSTITUTED.
(a) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of an Issuer in accordance with Section 5.01 hereof, the surviving
entity formed by such consolidation or into or with which such Issuer is merged
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Partnership" or
"El Paso Finance," as the case may be, shall refer instead to the surviving
entity and not to the Partnership or El Paso Finance, as the case may be), and
may exercise every right and power of the Partnership or El Paso Finance, as the
case may be, under this Indenture with the same effect as if such successor
Person had been named as an Issuer herein; provided, however, that the
predecessor shall not be relieved from the obligation to pay the principal of
and interest on the Notes except in the case of a sale of all of an Issuer's
assets that meets the requirements of Section 5.01 hereof.
(b) If the surviving entity shall have succeeded to and been
substituted for an Issuer, such surviving entity may cause to be signed, and may
issue either in its own name or in the name of the applicable Issuer prior to
such succession any or all of the Notes issuable hereunder which theretofore
shall not have been signed by such Issuer and delivered to the Trustee; and,
upon the order of such surviving entity, instead of such Issuer, and subject to
all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Notes which previously shall
have been signed and delivered by the Officers of such Issuer to the Trustee for
authentication, and any Notes which such surviving entity thereafter shall cause
to be signed and delivered to the Trustee for that purpose (in each instance
with notations of Guarantees thereon by the Subsidiary Guarantors). All of the
Notes so issued and so endorsed shall in all respects have the same legal rank
and benefit under this Indenture as the Notes theretofore or thereafter issued
and endorsed in accordance with the terms of this Indenture and the Guarantees
as though all such Notes had been issued and endorsed at the date of the
execution hereof.
(c) In case of any such consolidation, merger, continuance, sale,
transfer, conveyance or other disposal, such changes in phraseology and form
(but not in substance) may
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be made in the Notes thereafter to be issued or the Guarantees to be endorsed
thereon as may be appropriate.
(d) For all purposes of this Indenture and the Notes, Subsidiaries of
any surviving entity will, upon such transaction or series of transactions,
become Restricted Subsidiaries or Unrestricted Subsidiaries as provided pursuant
to this Indenture and all Indebtedness, and all Liens on property or assets, of
the surviving entity and its Restricted Subsidiaries immediately prior to such
transaction or series of transactions shall be deemed to have been incurred upon
such transaction or series of transactions.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following is an Event of Default:
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes, whether or not prohibited by the
subordination provisions of this Indenture;
(b) default in payment when due of the principal of or premium, if any,
on the Notes, whether or not prohibited by the subordination provisions of this
Indenture;
(c) failure by the Partnership or any of its Restricted Subsidiaries to
comply with the provisions described under Sections 3.09, 4.06, and 4.07 hereof;
(d) failure by the Partnership or any of its Restricted Subsidiaries to
comply with any of the other agreements in this Indenture for 60 days after
notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of
at least 25% in aggregate principal amount of the Notes then outstanding
(provided that no such notice need be given, and an Event of Default shall
occur, 60 days after a failure to comply with the covenants in Section 4.08,
4.09 or 5.01 hereof, unless theretofore cured);
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by either Issuer or any of the Restricted
Subsidiaries of the Partnership (or the payment of which is guaranteed by either
Issuer or any of such Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists or is created after the date of this Indenture, if that
default:
(i) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default"); or
(ii) results in the acceleration of such Indebtedness prior to
its express maturity,
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and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$20.0 million or more;
(f) failure by an Issuer or any Restricted Subsidiary of the
Partnership to pay final judgments aggregating in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(g) except as permitted by this Indenture, any Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Guarantee;
(h) either Issuer or any Restricted Subsidiary of the Partnership that
is a Significant Subsidiary or any group of Restricted Subsidiaries of the
Partnership that, taken as a whole, would constitute a Significant Subsidiary,
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; and
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against an Issuer or any Restricted
Subsidiary of the Partnership that is a Significant Subsidiary or any
group of Restricted Subsidiaries of the Partnership that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a custodian of an Issuer or any Restricted
Subsidiary of the Partnership that is a Significant Subsidiary or any
group of Restricted Subsidiaries of the Partnership that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of an Issuer or any Restricted
Subsidiary of the Partnership that is a Significant Subsidiary or any
group of Restricted Subsidiaries of the Partnership that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of an Issuer or any Restricted
Subsidiary of the Partnership that is a Significant Subsidiary or any
group of Restricted
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Subsidiaries of the Partnership that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clauses (h) or (i) of Section 6.01 hereof) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (h) or (i) of Section
6.01 hereof occurs, all outstanding Notes shall be due and payable immediately
without further action or notice. Notwithstanding the foregoing, so long as any
Credit Facility shall be in full force and effect, if an Event of Default
pursuant to clause (e) of Section 6.01 with regard to such Credit Facility shall
have occurred and be continuing, the Notes shall not become due and payable
until the earlier to occur of (x) five Business Days following delivery of
written notice of such acceleration of the Notes to the agent under such Credit
Facility and (y) the acceleration of any Indebtedness under such Credit
Facility. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest (and Liquidated Damages, if any) on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and/or interest, if any, or Liquidated
Damages, if any, on, the Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Notes may rescind an acceleration and
its consequences, including any related
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payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and interest and
Liquidated Damages, if any, on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover a judgment in its own name
and as trustee of an express trust against the Issuers for the whole amount of
principal of, premium and interest and Liquidated Damages, if any, remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to an Issuer
or any of the Subsidiary Guarantors (or any other obligor upon the Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: subject to the subordination provisions of this Indenture, to
Holders of Notes for amounts due and unpaid on the Notes for principal, premium
and Liquidated Damages, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts
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due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
Third: to the Issuers or the Subsidiary Guarantors or to such other
party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
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(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to any provision of this Indenture
relating to the time, method and place of conducting any proceeding or
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any claim,
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Partnership or El Paso
Finance. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) Subject to the provisions of Section 7.01(a) hereof, the Trustee
may conclusively rely upon any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting in the
administration of this Indenture, it may require an Officers' Certificate or an
Opinion of Counsel or both. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may execute any of its trusts or powers or perform any
duties under this Indenture either directly by or through agents or attorneys,
and may in all cases pay, subject to reimbursement as provided herein, such
reasonable compensation as it deems proper to
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all such agents and attorneys employed or retained by it, and the Trustee shall
not be responsible for any misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from an Issuer or any Subsidiary Guarantor
shall be sufficient if signed by an Officer of the Partnership or the General
Partner (in the case of the Partnership), by an Officer of the General Partner
(in the case of the General Partner) or by an Officer of El Paso Finance or any
Subsidiary Guarantor (in the case of El Paso Finance or such Subsidiary
Guarantor).
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the claims, costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(g) The Trustee is not required to make any inquiry or investigation
into facts or matters stated in any document but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit and, if the Trustee determines to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuers.
(h) The Trustee is not required to take notice or shall not be deemed
to have notice of any Default or Event of Default hereunder except Defaults or
Events of Default under Sections 6.01(a) and 6.01(b) hereof, unless a
Responsible Officer of the Trustee has actual knowledge thereof or has received
notice in writing of such Default or Event of Default from the Issuers or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, and in the absence of any such notice, the Trustee may conclusively
assume that no such Default or Event of Default exists.
(i) The Trustee is not required to give any bond or surety with respect
to the performance of its duties or the exercise of its powers under this
Indenture.
(j) In the event the Trustee receives inconsistent or conflicting
requests and indemnity from two or more groups of Holders of Notes, each
representing less than the aggregate principal amount of Notes outstanding
required to take any action hereunder, the Trustee, in its sole discretion may
determine what action, if any, shall be taken.
(k) The Trustee's immunities and protections from liability and its
right to indemnification in connection with the performance of its duties under
this Indenture shall extend to the Trustee's officers, directors, agents,
attorneys and employees. Such immunities and protections and right to
indemnification, together with the Trustee's right to compensation, shall
survive the Trustee's resignation of removal, the discharge of this Indenture
and final payments of the Notes.
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(l) The permissive right of the Trustee to take actions permitted by
this Indenture shall not be construed as an obligation or duty to do so.
(m) Except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility for any information and any
offering memorandum, disclosure material or prospectus distributed with respect
to the Notes.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its commercial banking or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuers, any
Subsidiary Guarantors or any Affiliate of the Partnership with the same rights
it would have if it were not Trustee. Any Affiliate of the Trustee or Agent may
do the same with like rights and duties. However, in the event that the Trustee
acquires any conflicting interest (as defined in the TIA) it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture, the Notes or the Guarantees, it
shall not be accountable for the Issuers' use of the proceeds from the Notes or
any money paid to an Issuer or upon an Issuer's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default known to the Trustee occurs, the
Trustee shall mail to Holders of Notes a notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium, if any, or interest or
Liquidated Damages, if any, on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
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A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Partnership and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Issuers shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers and the Subsidiary Guarantors shall pay to the Trustee from
time to time such compensation as shall be agreed upon in writing between the
Issuers and the Trustee for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers and the Subsidiary
Guarantors shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Issuers and the Subsidiary Guarantors shall indemnify each of the
Trustee or any successor Trustee against any and all losses, damages, claims,
liabilities or expenses (including reasonable attorneys' fees and expenses)
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against either of the Issuers or any
Subsidiary Guarantor (including this Section 7.07) and defending itself against
any claim (whether asserted by an Issuer, any Subsidiary Guarantor, or any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Issuers promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Issuers shall not
relieve the Issuers and the Subsidiary Guarantors of their obligations
hereunder. The Issuers and the Subsidiary Guarantors shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Issuers and the Subsidiary Guarantors shall pay the reasonable
fees and expenses of such separate counsel. The Issuers and the Subsidiary
Guarantors need not pay for any settlement made without their consent, which
consent shall not be unreasonably withheld.
The obligations of the Issuers and the Subsidiary Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Issuers' and the Subsidiary Guarantors' payment
obligations in this Section, the Trustee shall have a Lien (which it may
exercise through right of set-off) prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and Liquidated Damages, if any, and interest on particular
Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
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The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, any
Subsidiary Guarantor or the Holders of Notes of at least 10% in principal amount
of the then outstanding Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Issuers' and the Subsidiary Guarantors' obligations
under Section 7.07 hereof shall continue for the benefit of the retiring
Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trust powers, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b), provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(l) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Issuers are outstanding if the requirements of such exclusion set forth in
TIA Section 310(b)(l) are met. For purposes of the preceding sentence, the
optional provision permitted by the second sentence of Section 310(b)(9) of the
Trust Indenture Act shall be applicable.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Issuers may, at the option of the Board of Directors of the General
Partner (in the case of the Partnership) or of the Board of Directors of El Paso
Finance (in the case of El Paso Finance) evidenced by a resolution set forth in
an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers and the Subsidiary Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from their respective Obligations and
certain other obligations with respect to all outstanding Notes and Guarantees,
as applicable, on the date the conditions set forth below are satisfied
(hereinafter,
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"Legal Defeasance"). For this purpose, Legal Defeasance means that the Issuers
and the Subsidiary Guarantors shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and
the other Sections of this Indenture referred to in clauses (a) and (b) of this
sentence below, and to have satisfied all its other obligations under such Notes
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuers, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest and Liquidated Damages, if any, on such Notes when such
payments are due (but not the Change of Control Payment or the payment pursuant
to the Asset Sale Offer), (b) the Issuers' obligations with respect to such
Notes under Sections 2.03, 2.04, 2.06, 2.07, 2.10 and 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Issuers' and the Subsidiary Guarantors' obligations in connection therewith, (d)
the Issuers' rights of optional redemption and (e) this Article 8. Subject to
compliance with this Article 8, the Issuers may exercise the option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers and the Subsidiary Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants contained in
Sections 3.09, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
4.17, 4.19 and 5.01(a)(iv) hereof and any covenant added to this Indenture
subsequent to the Issue Date pursuant to Section 9.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Issuers may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Issuers' exercise under Section 8.01 hereof of
the option applicable to this Section 8.03 hereof, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through
6.01(g) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
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In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable U.S.
Government Obligations, or a combination thereof, in such amounts as shall be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest, on the
outstanding Notes at the Stated Maturity thereof or on the applicable redemption
date, as the case may be, and the Issuers must specify whether the Notes are
being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Partnership has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Partnership shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which shall be applied to such deposit) or insofar as Sections 6.01(h) and
6.01(i) hereof are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which either of the Issuers or any
Restricted Subsidiary of the Partnership is a party or by which either of the
Issuers or any Restricted Subsidiary of the Partnership is bound;
(f) the Partnership shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Partnership shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by such Issuer with the intent
of preferring the Holders over any other creditors of such Issuer or the
Subsidiary Guarantors or with the intent of defeating, hindering, delaying or
defrauding other creditors of such Issuer; and
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(h) the Partnership shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including either Issuer acting as a
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, and Liquidated Damages, if any, but such money need not be segregated
from other funds except to the extent required by law.
The Issuers and the Subsidiary Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
cash or non-callable U.S. Government Obligations deposited pursuant to Section
8.04 hereof or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the request of the
Issuers any money or non-callable U.S. Government Obligations held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO ISSUERS.
Any money deposited with the Trustee or any Paying Agent, or then held
by an Issuer, in trust for the payment of the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, and premium, if any, interest or Liquidated
Damages, if any, has become due and payable shall, subject to applicable escheat
law, be paid to the Issuers on the request of the Issuers or (if then held by an
Issuer) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a creditor, look only to the Issuers or Subsidiary Guarantors for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of such Issuer as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuers cause to be published once, in The New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining shall be repaid to the Issuers.
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SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' and the Subsidiary Guarantors' Obligations under
this Indenture, the Notes and the Guarantees, as applicable, shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.02 or 8.03 hereof, as the case may
be; provided, however, that, if the Issuers or the Subsidiary Guarantors make
any payment of principal of, premium, if any, interest or Liquidated Damages, if
any, on any Note following the reinstatement of its Obligations, the Issuers and
the Subsidiary Guarantors shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Issuers and the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Guarantees, or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of an Issuer's or a Subsidiary
Guarantor's obligations to the Holders of the Notes in the case of a merger or
consolidation or sale of all or substantially all of such Issuer's or Subsidiary
Guarantors' assets pursuant to Article 5 hereof;
(d) to add or release Subsidiary Guarantors pursuant to the terms of
this Indenture;
(e) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or surrender any right or power conferred
upon the Issuers or the Subsidiary Guarantors by the Indenture that does not
adversely affect the legal rights hereunder of any Holder of the Notes; or
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(g) to evidence or provide for the appointment under this Indenture of
a successor Trustee;
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(h) to add additional Events of Default; or
(i) to secure the Notes and/or the Guarantees.
Upon the request of the Issuers accompanied by a resolution of the
Board of Directors of the General Partner (in the case of the Partnership), and
of the Board of Directors of El Paso Finance and each of the Subsidiary
Guarantors (in the case of El Paso Finance and the Subsidiary Guarantors),
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Issuers and each of the Subsidiary Guarantors in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Issuers, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
(including Sections 3.09, 4.06 and 4.07 hereof), the Guarantees, and the Notes
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes).
Upon the request of the Issuers accompanied by a resolution of the
Board of Directors of the General Partner (in the case of the Partnership) and
of the Board of Directors of El Paso Finance and each of the Subsidiary
Guarantors (in the case of El Paso Finance and each of the Subsidiary
Guarantors) authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Issuers and each of the Subsidiary Guarantors in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Issuers with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes, except as provided above with respect to Sections 3.09, 4.06 and 4.07
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, interest or Liquidated Damages, if any, on the Notes (except
a rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by the covenants contained in Sections 3.09, 4.06 or 4.07
hereof;
(h) except as otherwise permitted by this Indenture, release any
Subsidiary Guarantor from any of its obligations under its Guarantee or this
Indenture, or change any Guarantee in any manner that would adversely affect the
right of Holders; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions (except to increase any percentage set forth
therein).
In addition, any amendment to the provisions of Article 10 or Section
11.07 of this Indenture (which relate to subordination) shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Guarantees, or the
Notes shall be set forth in an amended or supplemental Indenture that complies
with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Guarantees duly endorsed by the Subsidiary
Guarantors) that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Issuers
and the Subsidiary Guarantors may not sign an amendment or supplemental
Indenture until the Board of Directors of the General Partner approves it. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate of the Board of Directors of the General Partner
and an Opinion of Counsel stating that the execution of such amended or
supplemental indenture is authorized or permitted by this Indenture.
SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article 9,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby. After a supplemental indenture becomes effective, the Issuers
shall mail to Holders a notice briefly describing such amendment. The failure to
give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section.
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ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Issuers covenant and agree, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by, and any Liquidated Damages and other
Obligations with respect to, the Notes are subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full in cash of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution to creditors of either of the Issuers
or any Subsidiary Guarantor in a liquidation or dissolution of such Issuer or
such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Issuer or such Subsidiary
Guarantor or its property, in an assignment for the benefit of creditors or any
marshaling of such Issuer's or such Subsidiary Guarantor's assets and
liabilities:
(a) holders of Senior Debt shall be entitled to receive payment in full
in cash of all Obligations in respect of Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not such interest would be an allowed claim in such
proceeding) before Holders of the Notes shall be entitled to receive any payment
with respect to the Notes (except that Holders may receive and retain (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Article 8 hereof, provided that the
funding of such trust was permitted); and
(b) until all Obligations with respect to Senior Debt (as provided in
subsection (a) above) are paid in full in cash, any payment or distribution to
which Holders would be entitled but for this Article 10 shall be made to holders
of Senior Debt (except that Holders of Notes may receive and retain (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Article 8 hereof, provided that the
funding of such trust was permitted), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Issuers and the Subsidiary Guarantors may not make any payment or
distribution in respect of Obligations with respect to the Notes (whether by
redemption, purchase, defeasance or otherwise) and may not acquire any Notes for
cash or property (other than (i) Permitted Junior Securities and (ii) payments
and other distributions made from any defeasance trust created pursuant to
Article 8 hereof, provided that the funding of such trust was permitted) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full in cash if:
(a) a default in the payment of any principal, premium, if any, or
interest (and other Obligations in the case of the Credit Facilities) on
Designated Senior Debt occurs and is continuing; or
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(b) any other default on Designated Senior Debt occurs and is
continuing that permits holders of the Designated Senior Debt to accelerate its
maturity and the Trustee receives a notice of the default (a "Payment Blockage
Notice") from a Person who may give it pursuant to Section 10.11 hereof. If the
Trustee receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and until
at least 360 days shall have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been cured or waived for a period of not less than 120
days.
The Issuers may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(a) in the case of a default referred to in clause (a) of the
immediately preceding paragraph, the date upon which the default is cured or
waived, or
(b) in the case of a default referred to in clause (b) of the
immediately preceding paragraph, the earlier of the date on which such
non-payment default is cured or waived and 179 days after the date on which the
applicable Payment Blockage Notice is received by the Trustee unless the
maturity of such Designated Senior Debt has been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Issuers shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of or
distribution with respect to any Obligations with respect to the Notes at a time
when such payment or distribution is prohibited by Section 10.02 or 10.03
hereof, such payment or distribution shall be held by the Trustee or such
Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Designated Senior Debt as
their interests may appear or their Representative under this Indenture or other
agreement (if any) pursuant to which such Designated Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
in cash of all Obligations with respect to such Designated Senior Debt remaining
unpaid to the extent necessary to pay such Obligations in full in cash in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Designated Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
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holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Issuers
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY ISSUERS.
The Issuers shall promptly notify the Trustee and the Paying Agent of
any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full in cash and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Issuers and Holders, a payment by the Issuers on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(a) impair, as between the Issuers and Holders of Notes, the obligation
of the Issuers, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms; (b) affect the relative
rights of Holders of Notes and creditors of the Issuers other than their rights
in relation to holders of Senior Debt; or
(c) subject to Section 6.02, prevent the Trustee or any Holder of Notes
from exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Issuers fail because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by either of the Issuers or any Holder or by the failure of either of the
Issuers or any Holder to comply with this Indenture.
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SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a payment or distribution is to be made or a notice given to
holders of Senior Debt, the payment or distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of either of the Issuers or
any of the Subsidiary Guarantors referred to in this Article 10, the Trustee and
the Holders of Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of Notes for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Indebtedness of such Issuer or Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least two Business Days prior to
the date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Notes to violate this Article 10. Only the
Issuers or the holders of Designated Senior Debt or their Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof. Each Paying
Agent shall be subject to the same obligations under this Article 10 as is the
Trustee.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Affiliate of
the Trustee or Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative of the Designated Senior Debt are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Designated Senior Debt.
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ARTICLE 11
GUARANTEES
SECTION 11.01. GUARANTEES.
Subject to the provisions of this Article 11, each of the Subsidiary
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the Obligations of the Issuers hereunder or
thereunder, that: (a) the principal of, premium, interest and Liquidated
Damages, if any, on the Notes shall be promptly paid in full when due, whether
at the maturity or interest payment or mandatory redemption date, by
acceleration, redemption or otherwise, and interest on the overdue principal of,
premium, interest and Liquidated Damages, if any, on the Notes, if any, if
lawful, and all other Obligations of the Issuers to the Holders or the Trustee
under this Indenture and the Notes shall be promptly paid in full or performed,
all in accordance with the terms of this Indenture and the Notes; and (b) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors shall be jointly and severally obligated to pay the same
immediately. The Subsidiary Guarantors hereby agree that to the fullest extent
permitted by applicable law, their obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions of this Indenture and
the Notes, the recovery of any judgment against the Issuers, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Subsidiary Guarantor. To the
fullest extent permitted by applicable law, each Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuers, any right to require a
proceeding first against the Issuers, protest, notice and all demands whatsoever
and covenant that the Guarantees shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Issuers or Subsidiary Guarantors, or any custodian, trustee,
liquidator or other similar official acting in relation to either the Issuers or
Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder,
these Guarantees, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Subsidiary Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any Obligations guaranteed hereby until payment in full of all Obligations
guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of these
Guarantees, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby, and (y) in
the event
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of any declaration of acceleration of such Obligations as provided in Article 6
hereof, such Obligations (whether or not due and payable) shall forthwith become
due and payable by the Subsidiary Guarantors for the purpose of these
Guarantees. The Subsidiary Guarantors shall have the right to seek contribution
from any non-paying Subsidiary Guarantor so long as the exercise of such right
does not impair the rights of the Holders under these Guarantees.
SECTION 11.02. LIMITATION OF GUARANTOR'S LIABILITY.
Each Subsidiary Guarantor and, by its acceptance hereof, each Holder
hereby confirms that it is its intention that the Guarantee by such Subsidiary
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to the
Guarantees. To effectuate the foregoing intention, each such Person hereby
irrevocably agrees that the Obligation of such Subsidiary Guarantor under its
Guarantee under this Article 11 shall be limited to the maximum amount as shall,
after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Subsidiary Guarantor that are relevant under such
laws, and after giving effect to any rights to contribution of such Subsidiary
Guarantor pursuant to any agreement providing for an equitable contribution
among such Subsidiary Guarantor and other Affiliates of the Issuers of payments
made by guarantees by such parties, result in the Obligations of such Subsidiary
Guarantor in respect of such maximum amount not constituting a fraudulent
conveyance. Each Holder, by accepting the benefits hereof, confirms its
intention that, in the event of bankruptcy, reorganization or other similar
proceeding of either of the Issuers or any Subsidiary Guarantor in which
concurrent claims are made upon such Subsidiary Guarantor hereunder, to the
extent such claims shall not be fully satisfied, each such claimant with a valid
claim against such Issuer shall be entitled to a ratable share of all payments
by such Subsidiary Guarantor in respect of such concurrent claims.
SECTION 11.03. EXECUTION AND DELIVERY OF GUARANTEES.
To evidence the Guarantees set forth in Section 11.01 hereof, each
Subsidiary Guarantor hereby agrees that a notation of the Guarantees
substantially in the form of Exhibit D shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Subsidiary Guarantor by
its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that the Guarantees set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of the Guarantees.
If an Officer or Officer whose signature is on this Indenture or on the
Guarantees no longer holds that office at the time the Trustee authenticates the
Note on which the notation of the Guarantees are endorsed, the Guarantees shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantees set forth in
this Indenture on behalf of the Subsidiary Guarantors.
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SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained
in this Indenture or in any of the Notes shall prevent any consolidation or
merger of the Partnership or a Subsidiary Guarantor with or into the Partnership
or another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety, to the Partnership or another Subsidiary Guarantor.
(b) Except as set forth in Articles 4 and 5 hereof, nothing contained
in this Indenture or in any of the Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into another Person other than the
Partnership or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor), or successive consolidations or mergers in which a
Subsidiary Guarantor or its successor or successors shall be a party or parties,
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor as an entirety or substantially as an entirety, to a person other than
the Partnership (whether or not affiliated with the Subsidiary Guarantor)
authorized to acquire and operate the same; provided, however, that such
transaction meets all of the following requirements: (i) each Subsidiary
Guarantor hereby covenants and agrees that, upon any such consolidation, merger,
sale or conveyance, the Guarantee contained herein, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by such Subsidiary Guarantor, shall be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving
corporation in the merger or consolidation), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee, by
the Person formed by such consolidation, or into which the Subsidiary Guarantor
shall have been merged, or by the Person which shall have acquired such
property, and (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists. In case of any such consolidation, merger,
sale or conveyance and upon the assumption by the successor Person by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Guarantees contained herein and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Subsidiary Guarantor, such successor shall succeed to and be
substituted for the Subsidiary Guarantor with the same effect as if it had been
named herein as a Subsidiary Guarantor. Such successor thereupon may cause to be
signed any or all of the notations of the Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been signed by the
Issuers and delivered to the Trustee. All the Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Guarantees had been issued at the date of
the execution hereof.
SECTION 11.05. RELEASES.
Concurrently with any sale of assets (including, if applicable, all of
the Equity Interests of any Subsidiary Guarantor), any Liens in favor of the
Trustee in the assets sold thereby shall be released; provided that in the event
of an Asset Sale, the Net Proceeds from such sale or other disposition are
treated in accordance with the provisions of Section 4.07 hereof. The Guarantee
or the obligations under Section 11.04 hereof of a Subsidiary Guarantor will be
released (i) in connection with any sale or other disposition of all or
substantially all of the assets
103
of such Subsidiary Guarantor (including by way of merger or consolidation), if
the Partnership applies the Net Proceeds of that sale or other disposition in
accordance with Section 4.07 hereof; or (ii) in connection with the sale or
other disposition of all of the Equity Interests of a Subsidiary Guarantor, if
the Partnership applies the Net Proceeds of that sale in accordance with Section
4.07 hereof; or (iii) if the Partnership designates any Restricted Subsidiary
that is a Subsidiary Guarantor as an Unrestricted Subsidiary; or (iv) at such
time as such Subsidiary Guarantor ceases to guarantee any other Indebtedness of
the Partnership. Upon delivery by the Partnership to the Trustee of an Officers'
Certificate to the effect that such sale or other disposition was made by the
Partnership in accordance with the provisions of this Indenture, including
without limitation Section 4.07 hereof or such Guarantee is to be released
pursuant to the provisions of the immediately preceding sentence, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Subsidiary Guarantor from its obligations under its Guarantees. Any
Subsidiary Guarantor not released from its obligations under its Guarantee shall
remain liable for the full amount of principal of and interest on the Notes and
for the other obligations of any Subsidiary Guarantor under this Indenture as
provided in this Article 11.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Issuers and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
SECTION 11.07. SUBORDINATION OF GUARANTEES.
The obligations of each Subsidiary Guarantor under its Guarantee
pursuant to this Article 11 shall be junior and subordinated to the prior
payment in full in cash of all Senior Debt and Guarantor Senior Debt (including
interest after the commencement of any proceeding of the type described in
Section 10.02 with respect to such Subsidiary Guarantor at the rate specified in
the applicable Guarantor Senior Debt, whether or not such interest would be an
allowed claim in such proceeding) of such Subsidiary Guarantor, in each case on
the same basis as the Notes are junior and subordinated to Senior Debt, mutatis
mutandis. For the purposes of the foregoing sentence, the Trustee and the
Holders shall have the right to receive and/or retain payments by any of the
Subsidiary Guarantors only at such times as they may receive and/or retain
payments and distributions in respect of the Notes pursuant to this Indenture,
including Article 10 hereof.
ARTICLE 12
SATISFACTION AND DISCHARGE
SECTION 12.01. SATISFACTION AND DISCHARGE.
This Indenture shall upon the request of the Issuers cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for, the Issuers' obligations under
Section 7.07 hereof, the Issuers' rights of optional redemption under Article 3
hereof, and the Trustee's and the Paying Agent's obligations under
104
Section 12.02 and 12.03 hereof) and the Trustee, at the expense of the Issuers,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture when
(a) either
(i) all Notes therefore authenticated and delivered (other
than (A) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07 and (B) Notes for
whose payment money has been deposited in trust with the Trustee or any
Paying Agent and thereafter paid to the Issuers or discharged from such
trust) have been delivered to the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable; or
(B) shall become due and payable at their Stated
Maturity within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuers,
and the Issuers, in the case of clause (A), (B) or (C) above, have
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose money or U.S. Government
Obligations in an amount sufficient (as certified by an independent
public accountant designated by the Issuers) to pay and discharge the
entire indebtedness of such Notes not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest, if any, to the date of such deposit (in the case of Notes
which have become due and payable) or the Stated Maturity or redemption
date, as the case may be;
(b) the Issuers have paid or caused to be paid all other sums then due
and payable hereunder by the Issuers;
(c) no Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit and after giving effect
to such deposit; and
(d) the Issuers have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
Issuers' obligations in Sections 2.03, 2.04, 2.06, 2.07, 2.11, 7.07, 7.08,
12.02, 12.03 and 12.04, and the Trustee's and Paying Agent's obligations in
Section 12.03 shall survive until the Notes are no longer outstanding.
Thereafter, only the Issuers' obligations in Section 12.03 shall survive.
105
In order to have money available on a payment date to pay principal
(and premium, if any, on) or interest on the Notes, the U.S. Government
Obligations shall be payable as to principal (and premium, if any) or interest
at least one Business Day before such payment date in such amounts as shall
provide the necessary money. The U.S. Government Obligations shall not be
callable at the issuer's option.
SECTION 12.02. APPLICATION OF TRUST.
All money deposited with the Trustee pursuant to Section 12.01 shall be
held in trust and, at the written direction of the Issuers, be invested prior to
maturity in non-callable U.S. Government Obligations, and applied by the Trustee
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
SECTION 12.03. REPAYMENT OF THE ISSUERS.
The Trustee and the Paying Agent shall promptly pay to the Issuers upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall notify the Issuers of, and pay
to the Issuers upon written request, any money held by them for the payment of
principal or interest that remains unclaimed for two years after the date upon
which such payment shall have become due; provided that the Issuers shall have
either caused notice of such payment to be mailed to each Holder of the Notes
entitled thereto no less than 30 days prior to such repayment or within such
period shall have published such notice in a financial newspaper of widespread
circulation published in The City of New York, including, without limitation,
The Wall Street Journal (national edition). After payment to the Issuers,
Holders entitled to the money must look to the Issuers for payment as general
creditors unless an applicable abandoned property law designates another Person,
and all liability of the Trustee and such Paying Agent with respect to such
money shall cease. In the absence of a written request from the Issuers to
return unclaimed funds to the Issuers, the Trustee shall from time to time
deliver all unclaimed funds to or as directed by applicable escheat authorities,
as determined by the Trustee in its sole discretion, in accordance with the
customary practices and procedures of the Trustee. Any unclaimed funds held by
the Trustee pursuant to this Section 12.03 shall be held uninvested and without
any liability for interest.
SECTION 12.04. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 12.01 by reason of any legal
proceeding or by reason of any order or judgment of any court of governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuers' and Subsidiary Guarantors' Obligations under this Indenture, the Notes
and the Guarantees shall be revived and reinstated as though no deposit has
occurred pursuant to Section 12.01 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 12.02,
106
provided, however, that if the Issuers or the Subsidiary Guarantors have made
any payment of interest on or principal of any Notes because of the
reinstatement of their Obligations, the Issuers or such Subsidiary Guarantors
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Issuers or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Issuers or any Subsidiary Guarantor:
El Paso Energy Partners, L.P.
4 Greenway Plaza
Houston, Texas 77046
Telecopier No.: (713) 420-2131
Attention: Chief Financial Officer
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place, South Tower
711 Louisiana Street
Houston, Texas 77002
Telecopier No.: (713) 236-0822
Attention: J. Vincent Kendrick
If to the Trustee or Paying Agent:
JPMorgan Chase Bank
600 Travis, Suite 1150
Houston, Texas 77002
Telecopier No.: (713) 577-5200
Attention: Rebecca A. Newman
The Issuers, any Subsidiary Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
107
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if sent by facsimile
transmission; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mail a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
The Trustee is subject to TIA Section 312(b), and Holders may
communicate pursuant thereto with other Holders with respect to their rights
under this Indenture or the Notes. The Issuers, the Subsidiary Guarantors, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers or any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, the Issuers or
such Subsidiary Guarantors shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
108
Any certificate or opinion of an Officer of the General Partner, an
Issuer or any Subsidiary Guarantor may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such Officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, and may state that it is so
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the General Partner, an
Issuer or such Subsidiary Guarantor stating that the information with respect to
such factual matters is in possession of the General Partner, an Issuer or such
Subsidiary Guarantor, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate of opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, PARTNERS,
EMPLOYEES, INCORPORATORS, STOCKHOLDERS AND MEMBERS.
No past, present or future director, officer, partner, employee,
incorporator, stockholder or member of either of the Issuers, the General
Partner or any Subsidiary Guarantor, as such, shall have any liability for any
Obligations of either of the Issuers or any Subsidiary
109
Guarantor under the Notes, this Indenture or the Guarantees or for any claim
based on, in respect of, or by reason of, such Obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of either of the Issuers or any Subsidiary of the Partnership
or of any other Person. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture or the Guarantees.
SECTION 13.10. SUCCESSORS.
All agreements of the Issuers and the Subsidiary Guarantors in this
Indenture, the Notes and the Guarantees shall bind its successors. All
agreements of the Trustee in this Indenture shall bind their respective
successors.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture, the Notes or the Guarantees
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
110
IN WITNESS WHEREOF, the parties have executed this Indenture as of the
date first written above. Issuers:
EL PASO ENERGY PARTNERS, L.P.
By: EL PASO ENERGY PARTNERS
COMPANY, as General Partner
By: /s/ D. Mark Leland
---------------------------------------
Name: D. Mark Leland
-------------------------------------
Title: Senior Vice President and Controller
------------------------------------
EL PASO ENERGY PARTNERS FINANCE
CORPORATION
By: /s/ D. Mark Leland
---------------------------------------
Name: D. Mark Leland
-------------------------------------
Title: Senior Vice President and Controller
------------------------------------
Subsidiary Guarantors:
ANR CENTRAL GULF GATHERING COMPANY, L.L.C.*
ARGO, L.L.C.*
ARGO I, L.L.C*
ARGO II, L.L.C.*
CRYSTAL HOLDING, L.L.C.*
CHACO LIQUIDS PLANT TRUST
By: EL PASO ENERGY PARTNERS OPERATING
COMPANY, L.L.C., in its capacity as trustee of the
Chaco Liquids Plant Trust*
DELOS OFFSHORE COMPANY, L.L.C.*
EAST BREAKS GATHERING COMPANY, L.L.C.*
By: EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.
its sole member*
EL PASO ENERGY INTRASTATE, L.P.*
EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.*
EL PASO ENERGY PARTNERS OIL TRANSPORT, L.L.C.*
EL PASO ENERGY PARTNERS OPERATING
COMPANY, L.L.C.*
EL PASO ENERGY WARWINK I COMPANY, L.P.*
EL PASO ENERGY WARWINK II COMPANY, L.P.*
EL PASO HUB SERVICES COMPANY, L.L.C.*
EL PASO INDIAN BASIN, L.P.*
EL PASO OFFSHORE GATHERING & TRANSMISSION, L.P.*
EL PASO SAN JUAN, L.L.C.*
EL PASO SOUTH TEXAS, L.P.*
EPGT TEXAS PIPELINE, L.P.*
EPN GATHERING AND TREATING COMPANY, L.P.*
EPN GATHERING AND TREATING GP HOLDING, L.L.C.*
EPN GP HOLDING, L.L.C.*
EPN GP HOLDING, I, L.L.C.*
EPN HOLDING COMPANY, L.P.*
EPN HOLDING COMPANY, I, L.P.*
EPN NGL STORAGE, L.L.C.*
EPN PIPELINE GP HOLDING, L.L.C.*
FIRST RESERVE GAS, L.L.C.*
FLEXTREND DEVELOPMENT COMPANY, L.L.C.*
GREEN CANYON PIPE LINE COMPANY, L.P.*
HATTIESBURG GAS STORAGE COMPANY*
HATTIESBURG INDUSTRIAL GAS SALES, L.L.C.*
HIGH ISLAND OFFSHORE SYSTEM, L.L.C.
By: EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.,
its sole member*
MANTA RAY GATHERING COMPANY, L.L.C.*
PETAL GAS STORAGE, L.L.C.*
POSEIDON PIPELINE COMPANY, L.L.C.*
VK DEEPWATER GATHERING COMPANY, L.L.C.*
VK-MAIN PASS GATHERING COMPANY, L.L.C.*
WARWINK GATHERING AND TREATING COMPANY*
By: /s/ D. Mark Leland
------------------------------------------------
Name: D. Mark Leland
----------------------------------------------
Title: Senior Vice President and Controller
---------------------------------------------
Trustee:
JPMORGAN CHASE BANK, as Trustee
By: /s/ Cary Gilliam
------------------------------------
Name: Cary Gilliam
----------------------------------
Title: Vice President
---------------------------------
Schedule A
Schedule of Subsidiary Guarantors
ANR Central Gulf Gathering Company, L.L.C.
Argo, L.L.C.
Argo I, L.L.C.
Argo II, L.L.C.
Chaco Liquids Plant Trust
Crystal Holding, L.L.C.
Delos Offshore Company, L.L.C.
East Breaks Gathering Company, L.L.C.
El Paso Energy Intrastate, L.P.
El Paso Energy Partners Deepwater, L.L.C.
El Paso Energy Partners Oil Transport, L.L.C.
El Paso Energy Partners Operating Company, L.L.C
El Paso Energy Warwink I Company, L.P.
El Paso Energy Warwink II Company, L.P.
El Paso Hub Services Company, L.L.C.
El Paso Indian Basin, L.P.
El Paso Offshore Gathering & Transmission, L.P.
El Paso San Juan, L.L.C.
El Paso South Texas, L.P.
EPGT Texas Pipeline, L.P.
EPN Gathering and Treating Company, L.P.
EPN Gathering and Treating GP Holding, L.L.C.
EPN GP Holding, L.L.C.
EPN GP Holding, I, L.L.C.
EPN Holding Company, L.P.
EPN Holding Company, I, L.P.
EPN NGL Storage, L.L.C.
EPN Pipeline GP Holding, L.L.C.
First Reserve Gas, L.L.C.
Flextrend Development Company, L.L.C.
Green Canyon Pipe Line Company, L.P.
Hattiesburg Gas Storage Company
Hattiesburg Industrial Gas Sales, L.L.C.
High Island Offshore System, L.L.C.
Manta Ray Gathering Company, L.L.C.
Petal Gas Storage, L.L.C.
Poseidon Pipeline Company, L.L.C.
VK Deepwater Gathering Company, L.L.C.
VK-Main Pass Gathering Company, L.L.C.
Warwink Gathering and Treating Company
Schedule A Page 1
EXHIBIT A
(Face of Note)
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.(1)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)
*THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS OF THIS NOTE THAT:
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I)
TO EL PASO ENERGY PARTNERS, L.P., EL PASO ENERGY PARTNERS FINANCE CORPORATION,
OR ANY OF THEIR SUBSIDIARIES, (II) IN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A
Exhibit A Page 1
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (V) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
CUSIP: ___________
10 5/8% [Series A] [Series B] Senior Subordinated Note due 2012
No. ______ $ _________
EL PASO ENERGY PARTNERS, L.P.
and
EL PASO ENERGY PARTNERS FINANCE CORPORATION
promise to pay to _______________________ or registered assigns, the principal
sum of _________________________ Dollars of the United States of America or such
greater or lesser amount as may from time to time be endorsed on the Schedule of
Exchanges of Interests in the Global Note1 on December 1, 2012.
Interest Payment Dates: June 1 and December 1 of each year
Record Dates: May 15 and November 15
Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
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(1) This is included in Global Notes only
* Legend appears only on the Series A Notes.
Exhibit A Page 2
Unless the certificate of authorization hereon has been duly executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit of this Indenture or be valid or obligatory for
any purpose.
Dated: ________ ___, ____
EL PASO ENERGY PARTNERS FINANCE EL PASO ENERGY PARTNERS, L.P.
CORPORATION
By: El Paso Energy Partners Company,
as General Partner
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
Certificate of Authentication:
This is one of the Notes referred to in the within-mentioned Indenture.
JPMORGAN CHASE BANK, as Trustee
By:
---------------------------------------
Authorized Signatory
Date of Authentication: ________ ___, ____
Exhibit A Page 3
[Back of Note]
10 5/8% [Series A] [Series B] Senior Subordinated Note due 2012
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. El Paso Energy Partners, L.P., a Delaware limited
partnership (the "Partnership"), and El Paso Energy Partners Finance
Corporation, a Delaware corporation ("El Paso Finance" and, together with the
Partnership, the "Issuers"), promise to pay interest on the principal amount of
this Note at 10 5/8% per annum and shall pay any Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Issuers will pay interest and Liquidated Damages, if any, semi-annually on
June 1 and December 1 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an "Interest Payment Date"). Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the Issue Date; provided that if there is
no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be June 1, 2003. The Issuers shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at the rate then in
effect; the Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
2. Method of Payment. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the May 15 or November
15 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and interest and Liquidated
Damages, if any, at the office or agency of the Paying Agent and Registrar
maintained for such purpose within the City and State of New York, or, at the
option of the Issuers, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Liquidated Damages, if any, on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Issuers or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar. Initially, JPMorgan Chase Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers
may change any Paying Agent or Registrar without notice to any Holder. The
Issuers or any of the Subsidiary Guarantors may act in any such capacity.
Exhibit A Page 4
4. Indenture. The Issuers issued the Notes under an Indenture dated as
of November 27, 2002 ("Indenture") among the Issuers, the Subsidiary Guarantors
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are unsecured general obligations of the
Issuers. Payment of the Notes and Guarantees and related obligations are
subordinated to the prior payment in full in cash of Senior Debt and Guarantor
Senior Debt to the extent provided in the Indenture.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Issuers shall not have the option to redeem the Notes prior to December 1, 2007.
From and after December 1, 2007, the Issuers shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest, if any, and Liquidated Damages, if
any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on December 1 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2007............................................................ 105.313%
2008............................................................ 103.542%
2009............................................................ 101.771%
2010 and thereafter............................................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to December 1, 2005, the Issuers may (but shall
not have the obligation to) redeem, on one or more occasions, up to an aggregate
of 33% of the aggregate principal amount of Notes originally issued under this
Indenture at a redemption price equal to 110.625% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the redemption date, with the net cash proceeds of one or more
Equity Offerings; provided that at least 67% of the aggregate principal amount
of Notes remains outstanding immediately after the occurrence of such redemption
(excluding for purposes of determining the Notes that remain outstanding any
Notes held by the Issuers or any Restricted Subsidiary of the Partnership); and
provided further, that such redemption shall occur within 90 days of the date of
the closing of such Equity Offering.
6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Issuers shall not be required to make mandatory redemption payments with respect
to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes will have the
right to require the Issuers to repurchase all or any part (equal to $1,000 or
an integral multiple thereof)
Exhibit A Page 5
of such Holder's Notes (the "Change of Control Offer") at a purchase price equal
to 101% of the aggregate principal amount of the Notes repurchased plus accrued
and unpaid interest, if any, thereon, and Liquidated Damages, if any, thereon,
to the date of purchase. Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture and
information regarding such other matters as is required under Section 4.06 of
the Indenture. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Change of Control Offer.
(b) If the Issuers or any Restricted Subsidiary of the Partnership
consummates an Asset Sale, the Issuers shall promptly commence a pro rata offer
to all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in the Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest thereon, if any, and Liquidated Damages (in the case of the
Notes) thereon, if any, to the date of purchase in accordance with the
procedures set forth in the Indenture. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds
allocated for repurchase of Notes, the Trustee shall select the Notes to be
purchased on a pro rata basis. Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Issuers prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest and Liquidated Damages, if any, cease to
accrue on Notes or portions thereof called for redemption unless the Issuers
defaults in making such redemption payment.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before
the mailing of a notice of redemption or during the period between a record date
and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
Exhibit A Page 6
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture, the Guarantees, or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes. Without
the consent of any Holder of a Note, the Indenture, the Guarantees, or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of an Issuer's or a Subsidiary Guarantor's
obligations to Holders of the Notes in case of a merger or consolidation or sale
of all or substantially all of such Issuer's or Subsidiary Guarantor's assets,
to add or release Subsidiary Guarantors pursuant to the terms of the Indenture,
to make any change that would provide any additional rights or benefits to the
Holders of the Notes or surrender any right or power conferred upon the Issuers
or the Subsidiary Guarantors by the Indenture that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act, to evidence or provide for the
acceptance of appointment under the Indenture of a successor Trustee, to add
additional Events of Default or to secure the Notes and/or the Guarantees.
12. Defaults and Remedies. Events of Default include in summary form:
(i) default for 30 days in the payment when due of interest on or Liquidated
Damages, if any, with respect to the Notes (whether or not prohibited by Article
10 of the Indenture); (ii) default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by Article 10 of the
Indenture); (iii) failure by the Partnership or any of its Restricted
Subsidiaries to comply with Sections 3.09, 4.06 and 4.07 of the Indenture; (iv)
failure by the Partnership for 60 days after notice to the Issuers by the
Trustee or to the Issuers and the Trustee by Holders of at least 25% in
principal amount of the Notes then outstanding to comply with certain other
agreements in the Indenture or the Notes (provided that no such notice need be
given, and an Event of Default shall occur, 60 days after a failure by an Issuer
or any Restricted Subsidiary of the Partnership to comply with the covenants in
section 4.08, 4.09 or 5.01 of the Indenture, unless theretofore cured); (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by an Issuer or any Restricted Subsidiary of the Partnership (or the
payment of which is guaranteed by an Issuer or any Restricted Subsidiary of the
Partnership) whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, if that default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $20.0 million or more; (vi) the
failure by an Issuer or any Restricted Subsidiary of the Partnership to pay
final judgments by courts of competent jurisdiction aggregating in excess of
$10.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days; (vii) except as permitted by the Indenture, any Guarantee of a
Subsidiary Guarantor shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in force and effect
or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary
Exhibit A Page 7
Guarantor, shall deny or disaffirm its obligations under its Guarantee; and
(viii) certain events of bankruptcy or insolvency with respect to an Issuer or
any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, so long as any Credit Facility shall be in full
force and effect, if an Event of Default pursuant to clause (v) above with
regard to such Credit Facility shall have occurred and be continuing, the Notes
shall not become due and payable until the earlier to occur of (x) five Business
Days following delivery of written notice of such acceleration of the Notes to
the agent under such Credit Facility and (y) the acceleration of any
Indebtedness under such Credit Facility. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to an Issuer, any Restricted Subsidiary of the
Partnership constituting a Significant Subsidiary or any group of Restricted
Subsidiaries of the Partnership that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages, if any, on, or the principal or premium, if any,
of the Notes. The Partnership is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Issuers are required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. Ranking. Payment and principal, premium, if any, and interest on,
and other Obligations with respect to, the Notes is subordinated, in the manner
and to the extent set forth in the Indenture, to prior payment in full of all
Senior Debt.
14. Trustee Dealings with Partnership. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Partnership or its Affiliates, and may otherwise deal with the
Partnership or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A past, present or future director,
officer, partner, employee, incorporator, stockholder or member of an Issuer,
the General Partner or any Subsidiary Guarantor, as such, shall not have any
liability for any Obligations of either of the Issuers or any Subsidiary
Guarantor under the Notes, the Indenture or the Guarantees, or for any claim
based on, in respect of, or by reason of, such Obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
Exhibit A Page 8
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights and Obligations of Holders of Restricted Global
Notes and Restricted Definitive Notes. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Certificated Notes shall have all the rights and obligations set
forth in the Registration Rights Agreement dated as of November 27, 2002, among
the Issuers, the Subsidiary Guarantors and the parties named on the signature
pages thereof (the "Registration Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
El Paso Energy Partners, L.P.
4 Greenway Plaza
Houston, Texas 77046
Attention: Chief Financial Officer
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place, South Tower
711 Louisiana Street
Houston, Texas 77002
Attention: J. Vincent Kendrick
Exhibit A Page 9
[FORM OF ASSIGNMENT]
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to:
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date: Your Signature:
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(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee*
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* NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee Programs:
(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The
New York Stock Exchange Medallion Program (MNSP); (iii) The Stock
Exchange Medallion Program (SEMP); or (iv) in such other guarantee
program acceptable to the Trustee.
Exhibit A Page 10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 3.09, 4.07 or 4.06 of the Indenture, check the box below:
[ ] Section 3.09 and 4.07 [ ] Section 4.06
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 3.09, 4.07 or Section 4.06 of the Indenture, state
the amount you elect to have purchased (must be an integral multiple of $1,000):
$
---------------------
Date: Your Signature:
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(Sign exactly as name
appears on the other side
of the Note)
Tax Identification No.**
-----------------
Signature Guarantee**
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** NOTICE: The Signature must be guaranteed by an Institution which is a member
of one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee program acceptable to the Trustee.
Exhibit A Page 11
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Certificated Note, or exchanges of a part of
another Global Note or Certificated Note for an interest in this Global Note,
have been made:
Principal amount
Signature of of this Global
authorized signatory Amount of decrease Amount of increase Note following
of Trustee or Note in Principal amount in Principal amount such decrease (or
Date of Exchange Custodian of this Global Note of this Global Note increase)
- ---------------- -------------------- ------------------- ------------------- -----------------
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* This schedule should only be included if the Note is issued in global
form.
Exhibit A Page 12
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
JPMorgan Chase Bank
[600 Travis, Suite 1150
Houston, Texas 77002
Attention: Corporate Trust Division]
[Registrar address block]
Re: [ ]% Senior Subordinated Notes due 2012 of El Paso Energy
Partners, L.P. and El Paso Energy Partners Finance Corporation
Reference is hereby made to the Indenture, dated as of November [ ],
2002 (the "Indenture"), between El Paso Energy Partners, L.P. and El Paso Energy
Partners Finance Corporation, as issuers (the "Issuers"), the Persons acting as
guarantors and named herein (the "Subsidiary Guarantors") and JPMorgan Chase
Bank, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
___________________________________________, (the "Transferor") owns
and proposes to transfer the Note[s] or interest in such Note[s] specified in
Annex A hereto, in the principal amount of $_________________________ in such
Note[s] or interests (the "Transfer"), to _______________________________ (the
"Transferee"), as further specified in Annex A hereto. In connection with the
Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Certificated Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Certificated Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Certificated Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Certificated Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the 144A Global Note and/or the
Certificated Note and in the Indenture and the Securities Act.
2. [ ] Check if Transferee will take delivery of a beneficial interest
in the Regulation S Global Note or a Certificated Note pursuant to Regulation S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was
Exhibit B Page 1
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act, and (iv) if the
proposed transfer is being made prior to the expiration of the Distribution
Compliance Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Certificated Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Certificated Note and
in the Indenture and the Securities Act.
3. [ ] Check and complete if Transferee will take delivery of a
beneficial interest in the Restricted Global Note or a Certificated Note
pursuant to any provision of the Securities Act other than Rule 144A or
Regulation S. The Transfer is being effected in compliance with the transfer
restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Certificated Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Partnership, El Paso
Finance or a Restricted Subsidiary of the Partnership;
or
(c) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or
Restricted Certificated Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the Transferee
in the form of Exhibit E to the Indenture and (2) if such Transfer is in respect
of a principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Certificated Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Note and/or the Certificated Notes and in the Indenture and the
Securities Act.
Exhibit B Page 2
4. [ ] Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Certificated Note.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Certificated
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Certificated Notes and in the Indenture.
(b) [ ] Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Certificated Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Certificated Notes and in the Indenture.
(c) [ ] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Certificated Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Certificated Notes and in the Indenture.
(d) [ ] Check if Transfer is Pursuant to an Effective Registration
Statement. The transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus
delivery requirements of the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Certificated Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Certificated Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and for the benefit of the Issuers and J.P. Morgan Securities Inc.,
Goldman, Sachs & Co., UBS Warburg LLC and Wachovia Securities, Inc.
(collectively, the "Initial Purchasers"), the Initial Purchasers of such Notes
being transferred. We acknowledge that you, the Issuers and the Initial
Purchasers will rely upon our confirmations, acknowledgments and agreements set
forth herein,
Exhibit B Page 3
and we agree to notify you promptly in writing if any of our representations or
warranties herein ceases to be accurate and complete.
[Insert Name of Transferor]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Dated: ________ ___, ____
cc: Issuers
Initial Purchasers
Exhibit B Page 4
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ______), or
(ii) [ ] Regulation S Global Note (CUSIP ______), or
(iii) [ ] Restricted Global Note (CUSIP ______); or
(b) [ ] a Restricted Certificated Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ______), or
(ii) [ ] Regulation S Global Note (CUSIP ______), or
(iii) [ ] Restricted Global Note (CUSIP ______), or
(iv) [ ] Unrestricted Global Note (CUSIP ______); or
(b) [ ] a Restricted Certificated Note; or
(c) [ ] an Unrestricted Certificated Note,
in accordance with the terms of the Indenture.
Exhibit B Page 5
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
JPMorgan Chase Bank
[600 Travis, Suite 1150
Houston, Texas 77002
Attention: Corporate Trust Division]
[Registrar address block]
Re: 10 5/8% Senior Subordinated Notes due 2012 of El Paso Energy
Partners, L.P. and El Paso Energy Partners Finance
Corporation
(CUSIP _____________)
Reference is hereby made to the Indenture, dated as of November 27,
2002 (the "Indenture"), between El Paso Energy Partners, L.P. and El Paso Energy
Partners Finance Corporation, as issuers (the "Issuers"), the Persons acting as
guarantors and named therein (the "Subsidiary Guarantors") and JPMorgan Chase
Bank, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
_____________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $_________________________ in such Note[s] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Certificated Notes or Beneficial Interests in
a Restricted Global Note for Unrestricted Certificated Notes or Beneficial
Interests in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Certificated Note. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Certificated Note, the Owner hereby certifies (i) the Certificated
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the
Exhibit C Page 1
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Certificated Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(c) [ ] Check if Exchange is from Restricted Certificated Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Certificated Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Certificated Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] Check if Exchange is from Restricted Certificated Note to
Unrestricted Certificated Note. In connection with the Owner's Exchange of a
Restricted Certificated Note for an Unrestricted Certificated Note, the Owner
hereby certifies (i) the Unrestricted Certificated Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to Restricted
Certificated Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Certificated Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
2. Exchange of Restricted Certificated Notes or Beneficial Interests in
Restricted Global Notes for Restricted Certificated Notes or Beneficial
Interests in Restricted Global Notes
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Certificated Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Certificated Note with an equal principal amount, the Owner hereby certifies
that the Restricted Certificated Note is being acquired for the Owner's own
account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Certificated Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Certificated Note and in
the Indenture and the Securities Act.
(b) [ ] Check if Exchange is from Restricted Certificated Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Certificated Note for a beneficial interest in the
[CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] Restricted
Global Note, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities
Exhibit C Page 2
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers and J.P. Morgan Securities, Inc.,
Goldman, Sachs & Co., UBS Warburg LLC and Wachovia Securities, Inc.
(collectively, the "Initial Purchasers"), the Initial Purchasers of such Notes
being transferred. We acknowledge that you, the Issuers and the Initial
Purchasers will rely upon our confirmations, acknowledgments and agreements set
forth herein, and we agree to notify you promptly in writing if any of our
representations or warranties herein ceases to be accurate and complete.
[Insert Name of Owner]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Dated: ________ ___, ____
cc: Issuers
Initial Purchasers
Exhibit C Page 3
EXHIBIT D
FORM OF GUARANTEE NOTATION
Subject to the limitations set forth in the Indenture (the "Indenture")
referred to in the Note upon which this notation is endorsed, each of the
entities listed on Schedule A hereto (hereinafter referred to as the "Subsidiary
Guarantors," which term includes any successor or additional Subsidiary
Guarantor under the Indenture, (i) has unconditionally guaranteed: (a) the due
and punctual payment of the principal of and premium, interest and Liquidated
Damages on the Notes, whether at maturity or interest payment date, by
acceleration, call for redemption or otherwise, (b) the due and punctual payment
of interest on the overdue principal of and premium, interest and Liquidated
Damages, if any, if lawful, on the Notes, (c) the due and punctual performance
of all other Obligations of the Issuers to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the prompt payment in full thereof when due or performance thereof
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise and (ii) has agreed to pay any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Guarantee.
This Guarantee Notation is subject to the limitations set forth in the
Indenture, including Article 11 thereof.
No member, stockholder, partner, officer, employee, director or
incorporator, as such, past, present or future, of the Subsidiary Guarantors
shall have any personal liability under this Guarantee by reason of his or its
status as such member, manager, partner, stockholder, officer, employee,
director or incorporator.
The Guarantee shall be binding upon each Subsidiary Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
Each Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this notation of
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
The obligations of the Subsidiary Guarantors to the Holders of Notes
and to the Trustee pursuant to the Guarantees and the Indenture are expressly
subordinated to the extent set forth in Articles 10 and 11 of the Indenture and
reference is hereby made to such Indenture for the precise terms of such
subordination.
Certain of the Subsidiary Guarantors may be released from their
Guarantees upon the terms and subject to the conditions provided in the
Indenture.
Exhibit D Page 1
ANR CENTRAL GULF GATHERING COMPANY, L.L.C.*
ARGO, L.L.C.*
ARGO I, L.L.C*
ARGO II, L.L.C.*
CRYSTAL HOLDING, L.L.C.*
CHACO LIQUIDS PLANT TRUST
By: EL PASO ENERGY PARTNERS OPERATING
COMPANY, L.L.C., in its capacity as trustee of the
Chaco Liquids Plant Trust*
DELOS OFFSHORE COMPANY, L.L.C.*
EAST BREAKS GATHERING COMPANY, L.L.C.*
By: EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.
its sole member*
EL PASO ENERGY INTRASTATE, L.P.*
EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.*
EL PASO ENERGY PARTNERS OIL TRANSPORT, L.L.C.*
EL PASO ENERGY PARTNERS OPERATING
COMPANY, L.L.C.*
EL PASO ENERGY WARWINK I COMPANY, L.P.*
EL PASO ENERGY WARWINK II COMPANY, L.P.*
EL PASO HUB SERVICES COMPANY, L.L.C.*
EL PASO INDIAN BASIN, L.P.*
EL PASO OFFSHORE GATHERING & TRANSMISSION, L.P.*
EL PASO SAN JUAN, L.L.C.*
EL PASO SOUTH TEXAS, L.P.*
EPGT TEXAS PIPELINE, L.P.*
EPN GATHERING AND TREATING COMPANY, L.P.*
EPN GATHERING AND TREATING GP HOLDING, L.L.C.*
EPN GP HOLDING, L.L.C.*
EPN GP HOLDING, I, L.L.C.*
EPN HOLDING COMPANY, L.P.*
EPN HOLDING COMPANY, I, L.P.*
EPN NGL STORAGE, L.L.C.*
EPN PIPELINE GP HOLDING, L.L.C.*
FIRST RESERVE GAS, L.L.C.*
FLEXTREND DEVELOPMENT COMPANY, L.L.C.*
GREEN CANYON PIPE LINE COMPANY, L.P.*
HATTIESBURG GAS STORAGE COMPANY*
HATTIESBURG INDUSTRIAL GAS SALES, L.L.C.*
HIGH ISLAND OFFSHORE SYSTEM, L.L.C.
By: EL PASO ENERGY PARTNERS DEEPWATER, L.L.C.,
its sole member*
MANTA RAY GATHERING COMPANY, L.L.C.*
PETAL GAS STORAGE, L.L.C.*
POSEIDON PIPELINE COMPANY, L.L.C.*
VK DEEPWATER GATHERING COMPANY, L.L.C.*
Exhibit D Page 2
VK-MAIN PASS GATHERING COMPANY, L.L.C.*
WARWICK GATHERING AND TREATING COMPANY*
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Exhibit D Page 3
EXHIBIT E
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
El Paso Energy Partners, L.P.
4 Greenway Plaza
Houston, Texas 77046
JPMorgan Chase Bank
600 Travis, Suite 1150
Houston, Texas 77002
Re: El Paso Energy Partners, L.P.
El Paso Energy Partners Finance Corporation
10 5/8% Senior Subordinated Notes due 2012
Reference is hereby made to the Indenture, dated as of November 27,
2002 (the "Indenture"), among El Paso Energy Partners, L.P. (the "Partnership")
and El Paso Energy Partners Finance Corporation ("El Paso Finance"), as issuers
(the "Issuers"), the Subsidiaries named therein, as Subsidiary Guarantors, and
JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $_______________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Certificated Note,
we confirm that:
1. We understand that any subsequent transfer of the Series A Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Series A Notes or any interest therein except
in compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Series A Notes have not
been registered under the Securities Act, and that the Series A Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Series A Notes or
any interest therein, we will do so only (A) to the Partnership, El Paso
Finance, or any subsidiary of the Partnership, (B) in the United States to a
person who the seller reasonably believes is a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, (C) outside the United States in an offshore
transaction in accordance with Rule 904 under the Securities Act, (D) pursuant
to an exemption from registration under the Securities Act provided by Rule 144
thereunder (if available), (E) to an institutional "accredited investor" within
the meaning of Rule 501(A)(1), (2), (3) or (7) under the Securities Act that is
an institutional accredited investor acquiring the security for its own account
or for the account of such institutional accredited investor, in each case in a
minimum principal amount of the securities of $250,000, for investment purposes
and not with a view to or for offer or sale in connection with any distribution
in violation of the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, in each cases (A) through (E) in accordance
with any applicable securities laws of any state of the United States, and we
further agree to provide to any person purchasing a Certificated Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Series A Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certification, legal opinions and other information as you and the
Company may reasonably requires to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Series A Notes
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Series A Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment. We are acquiring the Series A Notes for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act.
5. We are acquiring the Series A Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
--------------------------------------------------
[Insert Name of Institutional Accredited Investor]
By:
-------------------------------------------
Name:
Title:
Dated: ________ ___, ____
Exhibit 12.A
EL PASO ENERGY PARTNERS, L.P.
COMPUTATION OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
(DOLLARS IN THOUSANDS)
FOR
THE
NINE
MONTHS
ENDED FOR THE YEAR ENDED DECEMBER 31,
SEPTEMBER ----------------------------------------------------
30, 2002 2001 2000 1999 1998 1997
--------- -------- -------- -------- -------- --------
Earnings
Pre-tax income (loss) from continuing
operations.......................... $ 66,772 $ 54,052 $ 20,749 $ 18,382 $ 275 $ (1,449)
Minority interest in consolidated
subsidiaries........................ 13 100 95 197 15 (7)
Income from equity investees........... (10,541) (8,449) (22,931) (32,814) (26,724) (29,327)
-------- -------- -------- -------- -------- --------
Pre-tax income (loss) from continuing
operations before minority interest
in consolidated subsidiaries and
income from equity investees........ 56,244 45,703 (2,087) (14,235) (26,434) (30,783)
Fixed charges.......................... 61,051 54,924 51,077 37,336 21,330 15,883
Distributed income of equity
investees........................... 13,140 35,062 33,960 46,180 31,171 27,135
Capitalized interest................... (4,309) (11,755) (4,005) (1,799) (1,066) (1,721)
Minority interest in consolidated
subsidiaries........................ (13) (100) (95) (197) (15) 7
-------- -------- -------- -------- -------- --------
Total earnings available for fixed
charges.......................... $126,113 $123,834 $ 78,850 $ 67,285 $ 24,986 $ 10,521
======== ======== ======== ======== ======== ========
Fixed charges
Interest and debt expense.............. $ 59,671 $ 54,885 $ 51,077 $ 37,122 $ 21,308 $ 15,890
Interest component of rent............. 1,380 39 -- 17 7 --
-------- -------- -------- -------- -------- --------
Total fixed charges................. $ 61,051 $ 54,924 $ 51,077 $ 37,139 $ 21,315 $ 15,890
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges(1)..... 2.07 2.25 1.54 1.81 1.17 --(2)
- ------------------------------------
(1) The ratio of earnings to combined fixed charges and preferred and
preference stock dividend requirements for the periods presented is the
same as the ratio of earnings to fixed charges since El Paso has no
outstanding preferred stock or preference stock and, therefore, no dividend
requirements.
(2) Earnings were inadequate to cover fixed charges by $5,362 for 1997.
For purposes of calculating these ratios: (i) "fixed charges" represent
interest cost (exclusive of interest on rate refunds), amortization of debt
costs, the estimated portion of rental expense representing the interest
factor, pretax preferred stock dividend requirements of consolidated
subsidiaries, and minority interests in consolidated subsidiaries; and
(ii) "earnings" represent the aggregate of pre-tax income (loss) from
continuing operations before adjustment for minority interest in consolidated
subsidiaries and income from equity investees, fixed charges, and distributed
income of equity investees, less capitalized interest, minority interest in
consolidated subsidiaries, and preferred stock dividend requirement of
consolidated subsidiaries.
EXHIBIT 23.A
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of El Paso Energy Partners, L.P. (the "Partnership"), of:
(A) our report dated February 28, 2002 (except for Note 18, as to which the date
is June 28, 2002) relating to the consolidated financial statements of the
Partnership and subsidiaries, which appears in the Partnership's Current Report
on Form 8-K/A dated January 2, 2003; (B) our report dated February 28, 2002
relating to the financial statements of Poseidon Oil Pipeline Company, L.L.C.,
which appears in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 2001; (C)(i) our report dated April 18, 2002 relating to the
consolidated balance sheet of El Paso Energy Partners Company, (ii) our report
dated April 15, 2002 relating to the balance sheets of El Paso Energy Partners
Finance Corporation, (iii) our report dated April 18, 2002 relating to the
combined financial statements of EPGT Texas Pipeline, L.P., El Paso Gas Storage
Company and El Paso Hub Services Company, and (iv) our report dated April 18,
2002 relating to the combined financial statements of EPGT Texas Pipeline, L.P.,
El Paso Gas Storage Company, El Paso Hub Services Company and the El Paso Field
Services' Gathering and Processing Businesses, each of which appears in the
Partnership's Current Report on Form 8-K dated April 22, 2002; and (D) our
report dated August 10, 2002 relating to the combined financial statements of El
Paso Field Services' San Juan Gathering and Processing Businesses, Typhoon Gas
Pipeline, Typhoon Oil Pipeline and Coastal Liquids Partners' NGL Business, which
appears in the Partnership's Current Report on Form 8-K dated August 12, 2002.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 27, 2003
EXHIBIT 23.B
[NSA NETHERLAND, SEWELL & ASSOCIATES, INC. LOGO]
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
---------------------------------------------------------
We hereby consent to the incorporation by reference into this Registration
Statement on Form S-4 of El Paso Energy Partners, L.P., El Paso Energy Partners
Finance Corporation, and the Subsidiary Guarantors listed therein of our reserve
reports dated as of December 31, 1999, 2000, and 2001, each of which is included
in the Current Report on Form 8-K/A of El Paso Energy Partners, L.P. dated
January 2, 2003. We also consent to the reference to us under the heading of
"Experts" in such Registration Statement.
NETHERLAND, SEWELL & ASSOCIATES, INC.
By: /s/ Frederic D. Sewell
------------------------------------
Frederic D. Sewell
Chairman and Chief Executive Officer
Dallas, Texas
February 28, 2003
------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------
JPMORGAN CHASE BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
WILLIAM H. MCDAVID
GENERAL COUNSEL
270 PARK AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 270-2611
(Name, address and telephone number of agent for service)
(1) EL PASO ENERGY PARTNERS, L.P.
(2) EL PASO ENERGY PARTNERS FINANCE CORPORATION
(Exact name of obligor as specified in its charter)
SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS BELOW
(1) DELAWARE (1)76-0396023
(2) DELAWARE (2)76-0605880
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
4 GREENWAY PLAZA
HOUSTON, TEXAS 77046
(Address of principal executive offices) (Zip Code)
----------
10 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2012
----------
TABLE OF ADDITIONAL REGISTRANT GUARANTORS
ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
NUMBER, INCLUDING AREA
STATE OR OTHER CODE, OF REGISTRANT
JURISDICTION OF IRS EMPLOYER GUARANTOR'S PRINCIPAL
NAME INCORPORATION ID NO. EXECUTIVE OFFICE
---- --------------- ------------ ----------------------
Chaco Liquids Plant Trust Massachusetts N/A *
Crystal Holding, L.L.C. Delaware 76-0396023 *
El Paso Energy Intrastate, L.P. Delaware N/A *
El Paso Energy Partners Oil Transport, L.L.C. Delaware 76-0396023 *
El Paso Energy Partners Operating Company, L.L.C. Delaware 76-0396023 *
El Paso Energy Warwink I Company, L.P. Delaware N/A *
El Paso Energy Warwink II Company, L.P. Delaware N/A *
El Paso Offshore Gathering & Transmission, L.P. Delaware N/A *
El Paso South Texas, L.P. Delaware 04-3714142 *
EPGT Texas Pipeline, L.P. Delaware N/A *
EPN Alabama Intrastate, L.L.C. Delaware 76-0396023 *
EPN Field Services, L.L.C. Delaware 76-0396023 *
EPN Gathering and Treating Company, L.P. Delaware N/A *
EPN Gathering and Treating GP Holding, L.L.C. Delaware 76-0396023 *
EPN GP Holding, L.L.C. Delaware 76-0396023 *
EPN GP Holding I, L.L.C. Delaware 76-0396023 *
EPN Gulf Coast, L.P. Delaware N/A *
EPN Holding Company, L.P. Delaware N/A *
EPN Holding Company I, L.P. Delaware N/A *
EPN NGL Storage, L.L.C. Delaware 76-0396023 *
EPN Pipeline GP Holding, L.L.C. Delaware 76-0396023 *
First Reserve Gas. L.L.C. Delaware 76-0396023 *
Flextrend Development Company, L.L.C. Delaware 76-0396023 *
Hattiesburg Gas Storage Company Delaware N/A *
Hattiesburg Industrial Gas Sales, L.L.C. Delaware 76-0396023 *
High Island Offshore System, L.L.C. Delaware 76-0396023 *
Manta Ray Gathering Company, L.L.C. Delaware 76-0396023 *
Petal Gas Storage, L.L.C. Delaware 76-0396023 *
Poseidon Pipeline Company, L.L.C. Delaware 76-0396023 *
Warwink Gathering and Treating Company Texas N/A *
* The address for each Additional Registrant Guarantor is 4 Greenway Plaza,
Houston, Texas 77046, and the telephone number for each is (832) 676-2600.
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551.
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR AND GUARANTORS.
IF THE OBLIGOR OR ANY GUARANTOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
None.
ITEMS 3 THROUGH 15, INCLUSIVE, ARE NOT APPLICABLE BY VIRTUE OF T-1 GENERAL
INSTRUCTION B.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
ITEM 16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the Restated Organization Certificate of the Trustee dated
March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-76894, which exhibit is incorporated by reference.)
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which exhibit is incorporated by reference). On November
11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York, the surviving corporation was renamed
JPMorgan Chase Bank.
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-76894, which exhibit
is incorporated by reference.)
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which exhibit is incorporated by reference). On November 11, 2001, in
connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust
Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Houston and State of Texas, on the 27th day of February, 2003.
JPMORGAN CHASE BANK
By: /s/ REBECCA A. NEWMAN
---------------------------------
Rebecca A. Newman
Vice President and Trust Officer
EXHIBIT 7 TO FORM T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
JPMorgan Chase Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30,
2002, in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ...................................................... $ 17,141
Interest-bearing balances .............................................. 13,564
Securities:
Held to maturity securities ................................................. 408
Available for sale securities ............................................... 74,344
Federal funds sold and securities purchased under
agreements to resell
Federal funds sold in domestic offices ................................. 7,094
Securities purchased under agreements to resell ........................ 72,512
Loans and lease financing receivables:
Loans and leases held for sale ......................................... 17,153
Loans and leases, net of unearned income ............................... $161,915
Less: Allowance for loan and lease losses .............................. 3,458
Loans and leases, net of unearned income and
allowance .............................................................. 158,457
Trading Assets .............................................................. 186,290
Premises and fixed assets (including capitalized leases) .................... 6,177
Other real estate owned ..................................................... 57
Investments in unconsolidated subsidiaries and
associated companies ................................................... 326
Customers' liability to this bank on acceptances
outstanding ............................................................ 281
Intangible assets
Goodwill ............................................................ 2,168
Other Intangible assets ............................................. 3,696
Other assets ................................................................ 45,403
TOTAL ASSETS ................................................................ $605,071
========
LIABILITIES
Deposits
In domestic offices .................................................... $167,400
Noninterest-bearing .................................................... $ 66,691
Interest-bearing ....................................................... 100,709
In foreign offices, Edge and Agreement
subsidiaries and IBF's ................................................. 118,273
Noninterest-bearing .................................................... $ 8,445
Interest-bearing ....................................................... 109,828
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices ............................ 6,317
Securities sold under agreements to repurchase ......................... 105,558
Trading liabilities ......................................................... 126,199
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases) .............................. 11,025
Bank's liability on acceptances executed and outstanding .................... 304
Subordinated notes and debentures ........................................... 7,895
Other liabilities ........................................................... 25,977
TOTAL LIABILITIES ........................................................... 568,948
Minority Interest in consolidated subsidiaries .............................. 91
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................... 0
Common stock ................................................................ 1,785
Surplus (exclude all surplus related to preferred stock) ................... 16,304
Retained earnings ........................................................... 16,560
Accumulated other comprehensive income ...................................... 1,383
Other equity capital components ............................................. 0
TOTAL EQUITY CAPITAL ........................................................ 36,032
--------
TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL .................... $605,071
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WILLIAM B. HARRISON, JR.)
HANS W. BECHERER )DIRECTORS
LAWRENCE A. BOSSIDY )
