EXHIBIT 10.4
GUARANTY
This Guaranty, made and entered into as of December 12, 2001
(this "Guaranty"), is by and between El Paso Corporation, a Delaware corporation
("Guarantor"), and Cedar Brakes II, L.L.C., a Delaware limited liability company
("CBII").
WITNESSETH:
WHEREAS, CBII has acquired (a) the rights of Cogen
Technologies NJ Venture, a New Jersey general partnership (the "Bayonne
Venture"), under the Power Purchase and Operations Coordination Agreement dated
June 5, 1989 (the "Original Bayonne PPA") originally entered into between Public
Service Electric and Gas Company ("PSE&G") and the Bayonne Venture and (b) the
rights of Camden Cogen L.P., a Delaware limited partnership (the "Camden
Venture"), under the Power Purchase and Interconnection Agreement dated April
15, 1988 (the "Original Camden PPA"), as amended by the First Amendment dated
June 12, 1990 and the Second Amendment dated August 21, 1990, originally entered
into between PSE&G and the Camden Venture;
WHEREAS, CBII has entered into the Amended and Restated Power
Purchase Agreement dated May 23, 2001 with PSE&G to amend and restate the
Original Bayonne PPA and the Original Camden PPA (as so amended and restated,
the "Amended and Restated PPA");
WHEREAS, El Paso Merchant Energy, L.P. ("EPM"), a wholly-owned
indirect subsidiary of Guarantor, and CBII have entered into a Power Purchase
Agreement (the "Mirror PPA"), dated October 1, 2001, as amended on November 26,
2001, pursuant to which EPM has agreed to sell and deliver to CBII capacity and
energy sufficient to enable CBII to meet its obligations under the Amended and
Restated PPA;
WHEREAS, EPM and CBII also have entered into an Administrative
Services Agreement (the "Administrative Services Agreement"), dated as of the
date of this Guaranty, pursuant to which EPM has agreed to perform all of CBII's
administrative and managerial functions; and
WHEREAS, Guarantor has determined that EPM's financial and
performance obligations pursuant to the Mirror PPA and the Administrative
Services Agreement are beneficial to Guarantor and Guarantor desires to
guarantee such obligations.
NOW, THEREFORE, in consideration of the premises and in order
to induce CBII to enter into the Mirror PPA and the Administrative Services
Agreement, Guarantor does hereby agree as follows:
1. Guarantor hereby irrevocably and unconditionally guarantees
to CBII the punctual performance by EPM of all its obligations under the Mirror
PPA and the Administrative Services Agreement (collectively the "Obligations").
Performance by Guarantor of the Obligations hereunder shall be made in full
irrespective of (but otherwise without prejudice to the rights of Guarantor with
respect to) any claim, set-off or other right that Guarantor may have at any
time against CBII, EPM, or any other person or entity, whether in connection
herewith or with any unrelated transaction.
2. This Guaranty is a primary obligation of Guarantor and
shall be construed as an irrevocable, unconditional, absolute and continuing
guaranty of the full and punctual performance of all of the Obligations and not
of their collectibility only, irrespective of (a) the validity or enforceability
of the Mirror PPA or the Administrative Services Agreement or any other
agreement or instrument relating thereto, (b) any amplification, alteration,
amendment, variation, supplement, renewal or replacement of the provisions of
the Mirror PPA or the Administrative Services Agreement or (c) any other
circumstances which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. This Guaranty shall remain in full force and effect
until all Obligations of EPM have been performed.
3. Guarantor hereby irrevocably waives diligence, promptness,
presentment, demand for payment or performance, protest, notice of protest,
notice of non-performance or non-payment, notice of acceptance, notice of
dishonor and any other notice with respect to any of the Obligations and this
Guaranty, and covenants that the obligations of Guarantor under this Guaranty
will not be discharged except by complete and final performance of all
Obligations. All payments that Guarantor is required to make under this Guaranty
shall be without any set-off, counterclaim or condition. The obligations of
Guarantor shall not be affected by any change of ownership of EPM or the
insolvency, bankruptcy or any other change in the legal status of EPM. In the
event that the performance of EPM's Obligations are stayed or performance is
delayed or deferred upon the insolvency, bankruptcy, reorganization or other
proceeding involving EPM, all obligations of Guarantor shall remain in full
force and effect and shall become immediately due to the extent that EPM would
have otherwise been required to perform the Obligations absent the stay, delay
or deferral in the enforceability of such Obligations. Guarantor hereby waives
any legal or equitable defenses arising out of the insolvency, bankruptcy or
other legal disability of EPM.
4. This Guaranty constitutes the entire agreement, and
supersedes all prior written agreements and understandings, and all oral
agreements, between Guarantor and CBII with respect to the subject matter hereof
and may be executed simultaneously in several counterparts, each of which shall
be deemed an original, and all of which together shall constitute one and the
same instrument.
5. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or sections in this Guaranty shall not affect the
validity or enforceability of the remaining portions of this Guaranty or any
part thereof.
2
6. Guarantor represents and warrants to CBII that (a) it has
the legal right to execute and deliver this Guaranty and to perform its
obligations hereunder, (b) this Guaranty and the performance of Guarantor's
obligations hereunder have been duly authorized by Guarantor and constitute
legal, valid and binding obligations of Guarantor enforceable against Guarantor
in accordance with their terms and (c) neither the execution and delivery by
Guarantor of this Guaranty, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
Guarantor or the provisions of any indenture, instrument or agreement to which
Guarantor or Guarantor's property is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any lien in, of
or on the property of Guarantor pursuant to the terms of any such indenture,
instrument or agreement.
7. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW. GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
ACTIONS OF GUARANTOR OR CBII IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF. Guarantor, by its execution hereof, hereby submits to the
non-exclusive jurisdiction of the courts of the State of New York in connection
with any action or proceeding relating to this Guaranty and hereby consents to
service of process or other summons in any such action or proceeding brought by
CBII against it in any such court by means of registered mail to the last known
address of Guarantor. Nothing herein, however, shall prevent service of process
by any other means permitted by law or the bringing of any such action or
proceeding in any other jurisdiction.
8. This Guaranty shall remain in full force and effect or
shall be reinstated (as the case may be) if at any time any payment by EPM, in
whole or in part, is rescinded or must otherwise be returned by CBII upon the
insolvency, bankruptcy or reorganization of EPM, or otherwise, all as though
that payment had not been made.
9. Notwithstanding any payment or payments made by Guarantor
hereunder or any set-off or application of funds of Guarantor by CBII, until all
of the Obligations are performed or paid in full, Guarantor shall not (a)
exercise any right of subrogation or indemnity, or similar right or remedy,
against EPM or any of its assets or property in respect of any amount paid by
Guarantor under this Guaranty or (b) file a proof of claim in competition with
CBII for any amount owing to Guarantor by EPM on any account whatsoever in the
event of the bankruptcy, insolvency or liquidation of EPM.
3
10. The rights and remedies set forth in the Mirror PPA, the
Administrative Services Agreement and this Guaranty are in addition to and not
exclusive of any rights and remedies available to CBII by law in respect of this
Guaranty. If any amount payable by Guarantor under this Guaranty is not paid
when due, CBII may, without notice or demand of any kind, set-off and apply such
amount against any indebtedness of CBII to Guarantor then due and payable
(including, without limitation, principal, interest, indemnity or reimbursement
for losses) whether under any loan or credit agreement, note, interest rate or
currency exchange agreement, or otherwise, and such set-off and application
shall satisfy the obligations hereunder of Guarantor to CBII to the extent such
amount is so set-off and applied. CBII shall be entitled to apply any amount
received by it from any source, including Guarantor, in respect of EPM's
Obligations to the discharge of those Obligations in such order as CBII may from
time to time elect in its sole discretion.
11. Guarantor shall pay or reimburse CBII on demand for all
reasonable costs and expenses (including fees and expenses of counsel) incurred
in connection with the enforcement of CBII's rights under this Guaranty.
12. All amendments, waivers and modifications of or to any
provision of this Guaranty and any consent to departure by Guarantor from the
terms hereof shall be in writing and signed and delivered by CBII and, in the
case of any such amendment or modification, by Guarantor, and shall not
otherwise be effective. Any such waiver or consent shall be effective only in
the specific instance and for the purpose for which it is given.
13. This Guaranty shall be binding on Guarantor and its
successors and assigns. However, Guarantor shall not transfer any of its
obligations hereunder without the prior written consent of CBII and any
purported transfer without that consent shall be void. Guarantor hereby
expressly agrees that CBII may assign all of its rights hereunder without
Guarantor's approval to (a) transfer, pledge, encumber or assign this Guaranty
or the accounts, revenues or proceeds hereof in connection with any financing or
other financial arrangements or (b) transfer or assign this Guaranty to any
affiliate or to any person or entity succeeding to all or substantially all of
the assets of CBII. This Guaranty shall inure to the benefit of CBII and its
successors and assigns.
14. Any notice, request, demand or statement which either
Guarantor or CBII may desire to give the other shall be in writing and shall be
considered as duly delivered when mailed by certified mail or delivered against
receipt by messenger or overnight courier addressed to said party as follows:
4
(a) If to Guarantor:
El Paso Corporation
1001 Louisiana Street
Houston, TX 77002
Attention: General Counsel
With electronic mail copies to:
Tim.Sullivan@elpaso.com
(b) If to CBII:
El Paso Merchant Energy, L.P.
1001 Louisiana Street
Houston, TX 77002
Attention: General Counsel
With electronic mail copies to:
Kurt.Regulski@elpaso.com
[The remainder of this page was left blank intentionally.]
5
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
executed in its name and behalf as of the date first written above.
EL PASO CORPORATION
By /s/ John J. Hopper
----------------------------------------
Name: John J. Hopper
Title: Vice President
AGREED TO AND ACCEPTED BY:
CEDAR BRAKES II, L.L.C.
By /s/ Andrew C. Kidd
----------------------------------------
Name: Andrew C. Kidd
Title: Vice President and Associate General
Counsel