EXHIBIT 1.1
EL PASO ENERGY PARTNERS, L.P.
EL PASO ENERGY PARTNERS FINANCE CORPORATION
as Issuers
and
THE SUBSIDIARIES LISTED ON SCHEDULE A
as Subsidiary Guarantors
$230,000,000
8 1/2% Series A Senior Subordinated Notes due 2011
Purchase Agreement
May 14,2002
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
FLEET SECURITIES, INC.
FORTIS INVESTMENT SERVICES LLC
BNP PARIBAS SECURITIES CORP.
THE ROYAL BANK OF SCOTLAND PLC
as Initial Purchasers
$230,000,000
8 1/2% Series A Senior Subordinated Notes due 2011
of
EL PASO ENERGY PARTNERS, L.P.
and
EL PASO ENERGY PARTNERS FINANCE CORPORATION
Purchase Agreement
May 14, 2002
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
FLEET SECURITIES, INC.
FORTIS INVESTMENT SERVICES LLC
BNP PARIBAS SECURITIES CORP.
THE ROYAL BANK OF SCOTLAND PLC
(TM)CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Ladies and Gentlemen:
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"), propose to issue and sell to Credit Suisse First Boston Corporation,
Goldman, Sachs & Co., J.P. Morgan Securities Inc. and First Union Securities,
Inc. (each an "Initial Purchaser" and, collectively, the "Initial Purchasers")
an aggregate of $230,000,000 in principal amount of its 8 1/2% Series A Senior
Subordinated Notes due 2011 (the "Series A Notes"), subject to the terms and
conditions set forth herein. The Series A Notes are to be issued pursuant to the
provisions of an indenture, dated as of May 17, 2001, as supplemented by the
First Supplemental Indenture and the Second Supplemental Indenture thereto, each
dated as of April 18, 2002 (as so supplemented, the "Indenture"), among the
Issuers, the Guarantors (as defined below) and JPMorgan Chase Bank, as trustee
(the "Trustee"). The Series A Notes and the Series B Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be guaranteed pursuant to guarantees (the "Guarantees")
by each of the entities listed on Schedule A hereto (each, a "Subsidiary
Guarantor" and, collectively, the "Subsidiary Guarantors"). Capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Indenture.
1. Offering Circular. The Series A Notes will be offered and sold to the
Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). The
Issuers and the Subsidiary Guarantors have prepared a final offering
circular, dated May 14, 2002 relating to the Series A Notes and the
Guarantees. Such final
offering circular, including the documents and other information
incorporated by reference therein, is referred to herein as the "Offering
Circular".
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"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 SUBSIDIARY OF
EL PASO ENERGY PARTNERS, L.P., (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) OR (V) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (V) 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."
2. Agreements to Sell and Purchase. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the
terms and conditions contained herein, the Issuers agree to issue and sell
to the Initial Purchasers, and each Initial Purchaser agrees, severally and
not jointly, to purchase from the Issuers, the principal amounts of Series
A Notes set forth opposite the name of such Initial Purchaser on Schedule B
hereto at a purchase price equal to 99.96% of the principal amount thereof
(the "Purchase Price").
3. Terms of Offering. The Initial Purchasers have advised the Issuers that the
Initial Purchasers will make offers (the "Exempt Resales") of the Series A
Notes purchased hereunder on the terms set forth in the Offering Circular,
as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs") and (ii) persons permitted to
purchase the Series A Notes in offshore transactions in reliance upon
Regulation S under the Act (each, a "Regulation S Purchaser") (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). The
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Initial Purchasers will offer the Series A Notes to Eligible Purchasers
initially at a price equal to 102% of the principal amount thereof.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated as of the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Series A Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Issuers
and the Subsidiary Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Issuers' 8 1/2% Series B Senior
Subordinated Notes due 2011 (the "Series B Notes"), to be offered in exchange
for the Series A Notes (such offer to exchange being referred to as the
"Exchange Offer") and the Guarantees thereof and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement"
and, together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Series A Notes and
to use its best efforts to cause such Registration Statements to be declared and
remain effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer. This Agreement, the Indenture,
the Notes, the Guarantees and the Registration Rights Agreement are hereinafter
sometimes referred to collectively as the "Operative Documents."
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the Series A Notes
shall be made at the offices of Andrews & Kurth Mayor, Day, Caldwell &
Keeton L.L.P., 600 Travis, Houston, Texas 77002, or such other location as
may be mutually acceptable. Such delivery and payment shall be made at 9:00
a.m. New York City time, on May 17, 2002 or at such other time on the same
date or such other date as shall be agreed upon by the Initial Purchasers
and the Issuers in writing. The time and date of such delivery and the
payment for the Series A Notes are herein called the "Closing Date."
(b) One or more of the Series A Notes in definitive global form, registered
in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "Global
Note"), shall be delivered by the Issuers to the Initial Purchasers (or as
the Initial Purchasers direct) in each case with any transfer taxes thereon
duly paid by the Issuers against payment by the Initial Purchasers of the
Purchase Price thereof by wire transfer in same day funds to the order of
the Partnership. The Global Note shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on
the business day immediately preceding the Closing Date.
5. Agreements of the Issuers and the Subsidiary Guarantors. Each of the
Partnership, El Paso Finance and the Subsidiary Guarantors hereby agrees
with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, to confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory
authority for such purpose and (ii) of the happening of any event during
the period referred to in Section 5(c) below that makes any statement of a
material fact made in the Offering Circular untrue or that requires any
additions to or changes in the Offering Circular in
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order to make the statements therein not misleading. The Issuers and the
Subsidiary Guarantors shall use their best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of any
Series A Notes under any state securities or Blue Sky laws and, if at any
time any state securities commission or other federal or state regulatory
authority shall issue an order suspending the qualification or exemption of
any Series A Notes under any state securities or Blue Sky laws, the Issuers
and the Subsidiary Guarantors shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(b) To furnish the Initial Purchasers and those persons identified by the
Initial Purchasers to the Issuers as many copies of the Offering Circular,
and any amendments or supplements thereto, as the Initial Purchasers may
reasonably request for the time period specified in Section 5(c). Subject
to the Initial Purchasers' compliance with its representations and
warranties and agreements set forth in Section 7 hereof, the Issuers
consent to the use of the Offering Circular, and any amendments and
supplements thereto required pursuant hereto, by the Initial Purchasers in
connection with Exempt Resales;
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Circular is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection
with market-making activities of the Initial Purchasers for so long as any
Series A Notes are outstanding, (i) not to make any amendment or supplement
to the Offering Circular of which the Initial Purchasers shall not
previously have been advised or to which the Initial Purchasers shall
reasonably object after being so advised, provided, that this clause (i)
shall not apply to any filing by the Partnership of an Annual Report on
Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K with
respect to matters unrelated to the Series A Notes and the offering or
exchange thereof, and (ii) to prepare promptly upon the Initial Purchasers'
reasonable request, any amendment or supplement to the Offering Circular
which may be necessary or advisable in connection with such Exempt Resales
or such market-making activities;
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Circular in order to make the statements therein,
in the light of the circumstances when such Offering Circular is delivered
to an Eligible Purchaser, not misleading, or if, in the opinion of counsel
to the Initial Purchasers, it is necessary to amend or supplement the
Offering Circular to comply with any applicable law, forthwith to prepare
an appropriate amendment or supplement to such Offering Circular so that
the statements therein, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or so
that such Offering Circular will comply with applicable law, and to furnish
to the Initial Purchasers and such other persons as the Initial Purchasers
may designate such number of copies thereof as the Initial Purchasers may
reasonably request;
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel
to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may request and to
continue such registration or qualification in effect so long as required
for Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither the Issuers nor any
Subsidiary Guarantor shall be required in connection therewith to qualify
as a foreign partnership, limited liability company, trust or corporation
in any jurisdiction in which it is not now so qualified or to take any
action that would subject it to general consent to
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service of process or taxation other than as to matters and transactions
relating to the Preliminary Offering Circular, the Offering Circular or
Exempt Resales, in any jurisdiction in which it is not now so subject;
(f) To provide to the Initial Purchasers and, upon request, to the record
holders of the Notes, all the information required by Section 4.19 of the
Indenture;
(g) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Issuers and
the Subsidiary Guarantors under this Agreement, including:
(i) the fees, disbursements and expenses of counsel to the Issuers and
the Subsidiary Guarantors and accountants of the Issuers and the
Subsidiary Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Offering
Circular and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivery
of copies thereof to the Initial Purchasers and persons designated by
them in the quantities specified herein,
(ii) all costs and expenses related to the transfer and delivery of
the Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon,
(iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Series
A Notes,
(iv) all expenses in connection with the registration or qualification
of the Series A Notes and the Guarantees for offer and sale under the
securities or Blue Sky laws of the several states and all costs of
printing or producing any preliminary and supplemental Blue Sky
memoranda in connection therewith (including the filing fees and fees
and disbursements of counsel for the Initial Purchasers in connection
with such registration or qualification and memoranda relating
thereto),
(v) the cost of printing certificates representing the Series A Notes
and the Guarantees,
(vi) all expenses and listing fees in connection with the application
for quotation of the Series A Notes in the National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"),
(vii) the fees and expenses of the Trustee and the Trustee's counsel
in connection with the Indenture, the Notes and the Guarantees,
(viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC),
(ix) any fees charged by rating agencies for the rating of the Notes,
(x) all costs and expenses of the Exchange offer and any Registration
Statement, as set forth in the Registration Rights Agreement, and
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(xi) all other costs and expenses incident to the performance of the
obligations of the Issuers and the Subsidiary Guarantors hereunder for
which provision is not otherwise made in this Section;
(h) To use its best efforts to effect the inclusion of the Series A Notes
in PORTAL and to maintain the listing of the Series A Notes on PORTAL for
so long as the Series A Notes are outstanding;
(i) To obtain the approval of DTC for "book-entry" transfer of the Notes,
and to comply with all of its agreements set forth in the representation
letters of the Issuers and the Subsidiary Guarantors to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer,
(j) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of each of the Issuers
or any Subsidiary Guarantor or any warrants, rights or options to purchase
or otherwise acquire debt securities of the Issuers or any Subsidiary
Guarantor substantially similar to the Notes and the Guarantees (other than
(i) the Notes and the Guarantees, (ii) commercial paper issued in the
ordinary course of business and (iii) the incurrence of debt in connection
with the Credit Facility) without the prior written consent of the Initial
Purchasers. As used herein, the term "Credit Facility" means the Fifth
Amended and Restated Credit Agreement among the Partnership, El Paso
Finance, the several lenders from time to time parties thereto, Credit
Lyonnais and First Union National Bank, as Co-Syndication Agents, Fleet
National Bank and Fortis Capital Group, as Co-Documentation Agents, and The
Chase Manhattan Bank, as Administrative Agent, dated as of March 23, 1995,
as amended and restated through May 24, 2001 (including the First Amendment
thereto dated as of October 10, 2001 and the Second Amendment thereto dated
as of March 28,2002), and the collateral documents related thereto;
(k) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration
of any such sale of the Series A Notes under the Act;
(l) Not to voluntarily claim, and to actively resist any attempts to claim,
the benefit of any usury laws against the holders of any Notes and the
related Guarantees;
(m) To comply with all of its agreements set forth in the Registration
Rights Agreement;
(n) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Guarantees; and
(o) Promptly following the Closing Date, apply the proceeds from the
issuance and sale of the Series A Notes as described in the Offering
Circular under "Use of Proceeds."
6. Representations, Warranties and Agreements of the Partnership, El Paso
Finance and the Subsidiary Guarantors. As of the date hereof, each of the
Partnership, El Paso Finance and the Subsidiary Guarantors represents and
warrants to, and agrees with, the Initial Purchasers as to the following:
(a) the Offering Circular does not, and any supplement or amendment to it
will not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein
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or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not
apply to statements in or omissions from the Offering Circular (or any
supplement or amendment thereto) based upon information relating to the
Initial Purchasers furnished to the Issuers in writing by the Initial
Purchasers expressly for use therein. The parties hereto acknowledge and
agree that for purposes of this Agreement, including this Section 6(a) and
Section 8(b) hereof, the only information furnished to the Issuers in
writing by the Initial Purchasers expressly for use in the Offering
Circular (or any amendment or supplement to it) is (i) the list of Initial
Purchasers and the aggregate principal amount of Series A Notes to be
purchased by each of them, set forth in the first table under the caption
"Plan of Distribution" in the Offering Circular and (ii) the information
set forth in the third, ninth, tenth and twelfth paragraphs under the
caption "Plan of Distribution" in the Offering Circular, and the
information set forth in the second sentence of the fourth paragraph, the
first sentence of the fifth paragraph and in the second sentence of the
eighth paragraph under such caption in the Offering Circular. Furthermore,
the parties hereto acknowledge that for purposes of this Agreement,
including this Section 6(a) and Section 8(b) hereof, the Initial Purchasers
shall not be deemed to have provided any information (and therefore are not
responsible for any statements or omissions) pertaining to any arrangement
or agreement with respect to any party other than the Initial Purchasers.
No stop order preventing the use of the Offering Circular, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements
of the Act, has been issued.
(b) Each of the Partnership and its Restricted Subsidiaries and El Paso
Finance, as applicable, has been duly formed or incorporated, is validly
existing as a partnership, corporation, business trust or limited liability
company in good standing under the laws of their respective jurisdictions
of formation or incorporation and has the partnership, corporate, trust or
limited liability company power and authority to carry on their respective
businesses as described in the Offering Circular and to own, lease and
operate their respective properties, and each (other than the general
partnerships) is duly qualified and is in good standing as a foreign
limited partnership, corporation, business trust or limited liability
company authorized to do business in each jurisdiction in which the nature
of each of their businesses or their ownership or leasing of property
requires such qualification, except where the failure to be so qualified
could reasonably be expected not to have a material adverse effect on the
business, financial condition or results of operations of the Partnership,
its subsidiaries and El Paso Finance, taken as a whole (a "Material Adverse
Effect").
(c) El Paso Energy Partners Company, a Delaware corporation, (the "General
Partner") has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware with full corporate power
and authority to carry on its businesses; to own, lease and operate its
properties; and to act as the general partner of the Partnership in all
material respects as described in the Offering Circular. The General
Partner is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
businesses or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified could reasonably
be expected not to (i) have a Material Adverse Effect, or (ii) subject the
limited partners of the Partnership to any material liability or
disability.
(d) All of the issued and outstanding shares of capital stock of the
General Partner have been duly and validly authorized and issued and are
fully paid and nonassessable, and are owned by DeepTech International Inc.
("DeepTech") free and clear of any lien, adverse claim, security interest
equity or other encumbrance (each, a "Lien"), except for any Permitted
Encumbrances. DeepTech is a wholly-owned subsidiary of El Paso Corporation.
As used herein "Permitted
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Encumbrances" means any lien, adverse claim, (i) the Credit Facility, (ii)
the credit agreement to which Poseidon Oil Pipeline Company, L.L.C., a
Delaware limited liability company in which a Subsidiary of the Partnership
owns a 36% membership interest, is party, and the collateral documents
related thereto, (iii) the financing arrangements to which Sabine I and
Sabine II (each as defined below) are parties, and the collateral documents
related thereto, (iv) the credit agreement to which EPN Holding Company,
L.P., a Delaware limited partnership and a wholly owned indirect subsidiary
of the Partnership, is party, and the collateral documents related thereto,
(v) the indenture into which the Partnership entered on May 27, 1999, as
amended and supplemented, and (vi) the Indenture, as amended and
supplemented.
(e) All outstanding shares of capital stock or partnership interests of El
Paso Finance or the Partnership, as applicable, have been duly authorized
and validly issued and are fully paid, non-assessable (except, in the case
of the partnership interests of the Partnership, to the extent set forth in
Section 17-303 of the Delaware Revised Uniform Limited Partnership Act (the
"DRULPA")) and not subject to any preemptive or similar rights except as
otherwise set forth in the Partnership Agreement and disclosed in the
Offering Circular.
(f) The entities listed on Schedule C hereto are the only subsidiaries,
direct or indirect, of the Partnership. All of the outstanding shares of
capital stock, limited partner interests, general partner interests or
limited liability company interests or other equity interests of each of
the Partnership's subsidiaries have been duly authorized and validly issued
and are fully paid and (except (i) as required to the contrary by the
Delaware Limited Liability Company Act and DRULPA and (ii) with respect to
any general partner interests) non-assessable, and except as otherwise set
forth in the Offering Circular (exclusive of any supplement or amendment)
or on Schedule C are owned by the Partnership, directly or indirectly
through one or more wholly-owned subsidiaries or the General Partner, free
and clear of any Lien, other than Permitted Encumbrances.
(g) The General Partner is the sole general partner of the Partnership with
a 1.0% general partner interest in the Partnership, and such general
partner interest is duly authorized and validly issued to the General
Partner in accordance with the Second Amended and Restated Agreement of
Limited Partnership of El Paso Energy Partners, L.P. dated as of February
19, 1993 as amended and restated effective as of August 31, 2000 (as
amended, the "Partnership Agreement"). The Partnership Agreement has been
duly authorized, executed and delivered by the General Partner and is a
valid and legally binding agreement of the General Partner, enforceable
against the General Partner in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. The General Partner owns such general
partner interest free and clear of any Lien, other than Permitted
Encumbrances.
(h) The General Partner, El Paso Field Services Holding Company ("EPFS
Holding"), Sabine River Investors I, L.L.C. ("Sabine I") and Sabine River
Investors II, L.L.C. ("Sabine II") own limited partner interests in the
Partnership represented by 11,674,245 common units ("Common Units"); all of
such Common Units and the limited partner interests represented thereby
have been duly authorized and validly issued and are fully paid (to the
extent required by the Partnership Agreement) and nonassessable (except (i)
as required to the contrary by DRULPA and (ii) as such nonassessability
may be affected by matters described in the Offering Circular); and the
General Partner and its affiliates own such limited partner interests free
and clear of any Lien, other than Permitted Encumbrances.
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(i) This Agreement has been duly authorized, executed and delivered by each
of the Issuers and each of the Subsidiary Guarantors and constitutes a
valid and binding obligation of each of the Issuers and each of the
Subsidiary Guarantors, enforceable in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(j) The Indenture has been duly authorized by each of the Issuers and each
of the Subsidiary Guarantors, and has been validly executed and delivered
by each of the Issuers and each of the Subsidiary Guarantors, and is a
valid and binding agreement of each of the Issuers and each of the
Subsidiary Guarantors, enforceable against each of the Issuers and each of
the Subsidiary Guarantors in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. The Indenture conforms in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended
(the "TIA"), and the rules and regulations of the Commission applicable to
an indenture which is qualified thereunder.
(k) The Series A Notes have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by each of the Issuers. When
the Series A Notes have been issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid
for by the Initial Purchasers in accordance with the terms of this
Agreement, the Series A Notes will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Issuers,
enforceable in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, the Series A
Notes will conform as to legal matters to the description thereof
contained in the Offering Circular.
(l) On the Closing Date, the Series B Notes will have been duly authorized
by each of the Issuers. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(m) The Guarantee to be endorsed on the Series A Notes by each Subsidiary
Guarantor has been duly authorized by such Subsidiary Guarantor and, on the
Closing Date, will have been duly executed and delivered by each such
Subsidiary Guarantor. When the Series A Notes have been issued, executed
and authenticated in accordance with the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Guarantee of each Subsidiary Guarantor endorsed thereon will
be entitled to the benefits of the Indenture and will be the valid and
binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, the Guarantees to
be endorsed on the
9
Series A Notes will conform as to legal matters to the description thereof
contained in the Offering Circular.
(n) The Guarantee to be endorsed on the Series B Notes by each Subsidiary
Guarantor has been duly authorized by such Subsidiary Guarantor and, when
issued, will have been duly executed and delivered by each such Subsidiary
Guarantor. When the Series B Notes have been issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Guarantee of each Subsidiary Guarantor endorsed thereon will
be entitled to the benefits of the Indenture and will be the valid and
binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. When the Series B Notes are issued,
authenticated and delivered, the Guarantees to be endorsed on the Series B
Notes will conform as to legal matters to the description thereof in the
Offering Circular.
(o) The Registration Rights Agreement has been duly authorized by each of
the Issuers and each of the Subsidiary Guarantors and, on the Closing Date,
will have been duly executed and delivered by each of the Issuers and each
of the Subsidiary Guarantors. When the Registration Rights Agreement has
been duly executed and delivered, the Registration Rights Agreement will be
a valid and binding agreement of each of the Issuers and each of the
Subsidiary Guarantors, enforceable against each of the Issuers and each of
the Subsidiary Guarantors in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, the Registration
Rights Agreement will conform as to legal matters to the description
thereof in the Offering Circular.
(p) Neither the Issuers nor any of their subsidiaries is in violation of
its respective limited partnership agreement, limited liability company
agreement, charter, by-laws or similar organizational document or in
default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Issuers and their
subsidiaries, taken as a whole, to which the Issuers or any of their
subsidiaries is a party or by which the Issuers or any of their
subsidiaries or their respective property is bound, except with respect to
any such indenture, loan agreement, mortgage, lease or other agreement or
instrument, any default which could reasonably be expected not to have a
Material Adverse Effect.
(q) The execution, delivery and performance of this Agreement and the other
Operative Documents by each of the Issuers and each of the Subsidiary
Guarantors, compliance by each of the Issuers and each of the Subsidiary
Guarantors with all provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby did not and will not (i)
require any consent, approval, authorization, filing with or other order
of, or qualification with, any court or governmental body or agency (except
such as may be required under the securities or Blue Sky laws of the
various states or, with respect to the proposed offer to exchange the
Exchange Notes for the Notes, the federal securities laws), (ii) conflict
with or constitute a breach of any of the terms or provisions of, or a
default under, the limited partnership agreement, limited liability company
agreement, charter, by-laws or similar organizational document of the
Partnership or any of its Restricted Subsidiaries or El Paso Finance or any
existing indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Partnership and its Restricted
Subsidiaries and El Paso Finance, taken as a whole, to which the
Partnership or
10
any of its Restricted Subsidiaries or El Paso Finance is a party or by
which the Partnership or any of its Restricted Subsidiaries or El Paso
Finance or their respective property is bound, (iii) violate or conflict
with any applicable existing law or any rule, regulation, judgment, order
or decree of any court or any governmental body or agency having
jurisdiction over the Partnership or any of its Restricted Subsidiaries or
El Paso Finance or their respective property, (iv) result in the imposition
or creation of (or the obligation to create or impose) a Lien under, any
existing agreement or instrument to which the Partnership or any of its
Restricted Subsidiaries or El Paso Finance is a party or by which the
Partnership or any of its Restricted Subsidiaries or El Paso Finance or
their respective property is bound, or (v) result in the termination,
suspension or revocation of any existing Authorization (as defined below)
of the Partnership or any of its Restricted Subsidiaries or El Paso Finance
or result in any other impairment of the rights of the holder of any such
Authorization, except to the extent they could reasonably be expected not
to have a Material Adverse Effect.
(r) No action, suit or governmental proceedings by or before any court or
governmental agency, authority or body is pending or, to our knowledge,
threatened to which the Partnership or any of its Restricted Subsidiaries
or El Paso Finance is or could be a party or to which any of their
respective property is or could be subject, except for such proceedings
which, singly or in the aggregate, could reasonably be expected not to
result in a Material Adverse Effect and except as set forth in the Offering
Circular.
(s) The Partnership, its Restricted Subsidiaries and El Paso Finance are
(i) in compliance with any and all foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability
under the Environmental Laws, in the case of (i) through (iii), except
where such non-compliance or liability, singly or in the aggregate, could
reasonably be expected not to result in a Material Adverse Effect. None of
the Partnership, its Restricted Subsidiaries or El Paso Finance have been
named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"). The Partnership, its Restricted Subsidiaries and El Paso
Finance are not in violation of any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any provisions of the
Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate,
could reasonably be expected not to result in a Material Adverse Effect.
(t) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on
operating activities and any potential liabilities to third parties) which,
singly or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
(u) Each of the Partnership and its Restricted Subsidiaries and El Paso
Finance has such permits, licenses, consents, exemptions, franchises,
authorizations and other approvals (each, an "Authorization") of, and has
made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have
any such Authorization or to make any such filing or notice could, singly
or in the aggregate,
11
reasonably be expected not to have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the
Partnership and its Restricted Subsidiaries and El Paso Finance is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results
or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; and such
Authorizations contain no restrictions that are burdensome to the
Partnership or any of its Restricted Subsidiaries or El Paso Finance;
except where such failure to be valid and in full force and effect or to be
in compliance, the occurrence of any such event or the presence of any such
restriction could, singly or in the aggregate, reasonably be expected not
to have a Material Adverse Effect.
(v) Each of the Partnership and its Restricted Subsidiaries and El Paso
Finance owns or leases all such properties as are necessary to the conduct
of its operations as presently conducted, except where the lack of
ownership or leasing would not, individually or in the aggregate, have a
Material Adverse Effect.
(w) Each of the Partnership and its Restricted Subsidiaries and El Paso
Finance has, or at the Closing Date will have, such consents, easements,
right-of-way or licenses from any person ("rights-of-way") as are necessary
to conduct its business in the manner described in the Offering Circular,
subject to such qualifications as may be set forth in the Offering Circular
and except for such rights-of-way which, if not obtained, could, singly or
in the aggregate, reasonably be expected not to have a Material Adverse
Effect; each of the Partnership and its subsidiaries and El Paso Finance
has, or at the Closing Date will have, fulfilled and performed all its
material obligations with respect to such rights-of-way and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or would result in any impairment of the
rights of the holder of any such rights-of-way, except for such
revocations, terminations and impairments that could reasonably be expected
not to have a Material Adverse Effect, subject in each case to such
qualifications as may be set forth in the Offering Circular; and except as
described in the Offering Circular, none of such rights-of-way contains any
restriction that is materially burdensome to the Partnership and its
subsidiaries and El Paso Finance considered as a whole.
(x) The accountants, PricewaterhouseCoopers LLP, that have certified
financial statements and supporting schedules included in the Offering
Circular are independent public accountants with respect to the Issuers,
the Subsidiary Guarantors and Poseidon Oil Pipeline Company, L.L.C., as
required by the Act and the Exchange Act; and the accountants Arthur
Andersen L.L.P., that have certified financial statements and supporting
schedules included in the Offering Circular are independent public
accountants with respect to Poseidon Oil Pipeline Company, L.L.C. as
required by the Act and the Exchange Act. The historical financial
statements, together with related schedules and notes, set forth in the
Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements on Form S-3 under the
Act.
(y) The historical financial statements, together with related schedules
and notes forming part of the Offering Circular (and any amendment or
supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Partnership
and its subsidiaries and El Paso Finance on the basis stated in the
Offering Circular at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
12
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set
forth in the Offering Circular (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Partnership and El Paso Finance.
(z) The pro forma financial statements included in the Offering Circular
have been prepared on a basis consistent with the historical financial
statements of the Partnership and its subsidiaries and El Paso Finance and
give effect to assumptions used in the preparation thereof on a reasonable
basis and in good faith and present fairly the historical and proposed
transactions contemplated by the Offering Circular, and such pro forma
financial statements comply as to form in all material respects with the
requirements applicable to pro forma financial statements included in
registration statements on Form S-3 under the Act. The other pro forma
financial and statistical information and data included in the Offering
Circular are, in all material respects, accurately presented and prepared
on a basis consistent with the pro forma financial statements.
(aa) Neither of the Issuers is and, after giving effect to the offering and
sale of the Series A Notes and the application of the net proceeds thereof
as described in the Offering Circular, neither of the Issuers will be, an
"investment company," as such term is defined in the Investment Company Act
of 1940, as amended or a "holding company" within the meaning of, or
subject to regulation under, the Public Utility Holding company Act of
1935, as amended, and the rules and regulations promulgated by the
Commission thereunder.
(bb) There are no contracts, agreements or understandings between the
Issuers or any Subsidiary Guarantor and any person granting such person the
right to require the Issuers or such Subsidiary Guarantor to file a
registration statement under the Act with respect to any securities of the
Issuers or such Subsidiary Guarantor other than the rights (i) of the
General Partner and its affiliates in Section 6.14 of the Partnership
Agreement; (ii) of EPEC Deepwater Gathering Company ("EPEC") and its
successors pursuant to a registration rights agreement between EPEC and the
Partnership executed in connection with the acquisition by the Partnership
of an additional interest in Viosca Knoll Gathering Company; (iii) of
Crystal Gas Storage, Inc. pursuant to the registration rights agreement
between Crystal Gas Storage, Inc. and the Partnership which was executed in
connection with the acquisition by the Partnership of the Crystal storage
facilities; provided, however, that with respect to (i) and (ii) above, the
General Partner, EPEC, Sabine I and Sabine II have agreed not to exercise
their rights with respect to such securities in connection with the
offering of the Notes for 90 days hereafter pursuant to letter agreements
of even date herewith; and (iv) granted under the Credit Facility and
related agreements. There are no contracts, agreements or understandings
between the Issuers or any Subsidiary Guarantor and any person granting
such person the right to require the Issuers or such Subsidiary Guarantor
to include such securities with the Notes and Guarantees registered
pursuant to any Registration Statement, other than the rights of the
General Partner and its affiliates in Section 6.14 of the Partnership
Agreement (which rights have been waived in connection with any
Registration Statement filed pursuant to the Registration Rights
Agreement).
(cc) Neither the Partnership nor any of its subsidiaries nor El Paso
Finance nor any agent thereof acting on the behalf of them has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Series A Notes to violate Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve System.
13
(dd) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Issuers or any Subsidiary Guarantor that it is
considering imposing) any condition (financial or otherwise) on the
Issuers' or any Subsidiary Guarantor's retaining any rating assigned to the
Issuers or any Subsidiary Guarantor, any securities of the Issuer or any
Subsidiary Guarantor or (ii) has indicated to the Issuers or any Subsidiary
Guarantor that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate
the direction of the possible change in, any rating so assigned or (b) any
change in the outlook for any rating of the Issuers, any Subsidiary
Guarantor or any securities of the Issuers or any Subsidiary Guarantor.
(ee) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Partnership and its subsidiaries and El Paso Finance,
taken as a whole, (ii) there has not been any material adverse change or
any development involving a prospective material adverse change in the
capital stock, limited liability company interests or partnership units, as
applicable, or in the long-term debt of the Partnership or any of its
subsidiaries or El Paso Finance and (iii) neither the Partnership nor any
of its subsidiaries nor El Paso Finance has incurred any material liability
or obligation, direct or contingent.
(ff) The Offering Circular, as of its date, contains all the information
specified in, and meets all of the requirements of, Rule 144A(d)(4) under
the Act.
(gg) The Offering Circular, as of its date, contains all of the information
specified in, and complies in all material respects with, the applicable
requirements of the Act as if such document were filed using a registration
statement on Form S-3.
(hh) The statements under the captions "Description of Notes," "Description
of Other Indebtedness," "United States Federal Income and Estate Tax
Considerations" and "Plan of Distribution" in the Offering Circular,
insofar as such statements purport to constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present in
all material respects such legal matters, documents and proceedings.
(ii) When the Series A Notes and the Guarantees are issued and delivered
pursuant to this Agreement, neither the Series A Notes nor the Guarantees
will be of the same class (within the meaning of Rule 144A under the Act)
as any security of the Issuers or the Subsidiary Guarantors that is listed
on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(jj) No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by the Issuers, the Subsidiary
Guarantors or any of their respective representatives (other than the
Initial Purchasers, as to whom the Issuers and the Subsidiary Guarantors
make no representation) in connection with the offer and sale of the Series
A Notes contemplated hereby, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Series A Notes
have been issued and sold by the Issuers within the six-month period
immediately prior to the date hereof.
14
(kk) It is not necessary to qualify the Indenture under the TIA in
connection with the offering of the Series A Notes.
(ll) None of the Issuers, the Subsidiary Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Issuers and the Subsidiary
Guarantors make no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S under the Act
("Regulation S") with respect to the Series A Notes or the Guarantees.
(mm) The Issuers, the Subsidiary Guarantors and their respective affiliates
and all persons acting on their behalf (other than the Initial Purchasers,
as to whom the Issuers and the Subsidiary Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Series A Notes outside the United States and, in connection
therewith, the Offering Circular will contain the disclosure required by
Regulation S.
(nn) The Partnership is a "reporting issuer," as defined in Rule 902 under
the Act.
(oo) The Series A Notes offered and sold in reliance on Regulation S have
been and will be offered and sold only in offshore transactions.
(pp) The sale of the Series A Notes pursuant to Regulation S is not part
of a plan or scheme to evade the registration provisions of the Act.
(qq) No registration under the Act of the Series A Notes or the Guarantees
is required for the sale of the Series A Notes and the Guarantees to the
Initial Purchasers as contemplated hereby or for the Exempt Resales
assuming the accuracy of the Initial Purchasers' representations and
warranties and agreements set forth in Section 7 hereof.
(rr) Each certificate signed by any officer of the Issuers or any
Subsidiary Guarantor and delivered to the Initial Purchasers or counsel for
the Initial Purchasers shall be deemed to be a representation and warranty
by the Issuers or such Subsidiary Guarantor to the Initial Purchasers as to
the matters covered thereby.
(ss) Except as otherwise set forth in the Offering Circular or such as are
not material to the business, prospects, financial condition or results of
operations of the Partnership and its subsidiaries (taken as a whole), and
except for liens created by operation and maintenance agreements, space
lease agreements and other similar types of agreements ordinary and
customary to the operations of the General Partner, the Partnership and its
subsidiaries, the Partnership and the Subsidiary Guarantors have good and
defensible title to their interests in their oil and gas properties.
(tt) The information which was supplied by the Partnership to Netherland,
Sewell & Associates, Inc. ("Netherland & Sewell"), independent petroleum
engineers, for purposes of evaluating the oil and gas reserves of the
Partnership and the Subsidiary Guarantors as of December 31, 2001,
including, without limitation, production, costs of operation and
development, current prices for production, agreements relating to current
and future operations and sales of production, was true and correct in all
material respects on the dates such estimates were made and such
information was supplied and was prepared in accordance with customary
industry practices, as indicated in the letter of Netherland & Sewell dated
January 28, 2002 (the "Netherland & Sewell Letter"); Netherland & Sewell
was, as of the date of the Netherland & Sewell Letter, and is, as of the
date
15
hereof, independent with respect to the Partnership and the Subsidiary
Guarantors; other than normal production of the reserves and intervening
spot market product price fluctuations, the Partnership is not aware of any
facts or circumstances that would result in a materially adverse change in
the reserves, or the present value of future net cash flows therefrom, as
described in the Offering Circular and as reflected in the Netherland &
Sewell Letter and the reserve report referenced therein; estimates of such
reserves and present values as described in the Offering Circular and
reflected in the Netherland & Sewell Letter and the reserve report
referenced therein comply in all material respects to the applicable
requirements of Regulation S-X and Industry Guide 2 under the Securities
Act.
(uu) The Partnership and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Partnership nor any of its subsidiaries (i)
has received notice from any insurer or agent of such insurer that
substantial capital improvements or other material expenditures will have
to be made in order to continue such insurance or (ii) has any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers at a cost that could reasonably be expected not to have a
Material Adverse Effect;
(vv) Except as disclosed in the Offering Circular, no relationship, direct
or indirect, exists between or among the Partnership or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Partnership or any of its subsidiaries on the
other hand, which would be required by the Act to be described in the
Offering Circular if the Offering Circular were a prospectus included in a
registration statement on Form 5-1 filed with the Commission.
(ww) There is no (i) significant unfair labor practice complaint, grievance
or arbitration proceeding pending or threatened against the Partnership or
any of its subsidiaries before the National Labor Relations Board or any
state or local labor relations board, (ii) strike, labor dispute, slowdown
or stoppage pending or threatened against the Partnership or any of its
subsidiaries or (iii) union representation question existing with respect
to the employees of the Partnership or any of its subsidiaries, except in
the case of clauses (i), (ii) and (iii) for such actions which, singly or
in the aggregate, could reasonably be expected not to have a Material
Adverse Effect To the best knowledge of the Partnership, no collective
bargaining organizing activities are taking place with respect to the
Partnership or any of its subsidiaries.
(xx) The Issuers and each of their subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(yy) All material tax returns required to be filed by the Issuers and each
of their subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received
by the Issuers or any of their subsidiaries have been paid, other than
those being contested in good faith and for which adequate reserves have
been provided. There are no transfer taxes or other similar fees or charges
16
under Federal law or the laws of any state, or any political subdivision
thereof, required to paid in connection with the execution and delivery of
this Agreement or the issuance and sale of the Notes.
(zz) All indebtedness of the Partnership that will be repaid with the
proceeds of the issuance and sale of the Series A Notes was incurred, and
the indebtedness represented by the Series A Notes is being incurred, for
proper purposes and in good faith and each of the Issuers and the
Subsidiary Guarantors was, at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale
of the Series A Notes, and will be on the Closing Date (after giving effect
to the application of the proceeds from the issuance of the Series A Notes)
solvent, and had at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the Series A
Notes and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes)
sufficient capital for carrying on their respective business and were, at
the time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Series A Notes, and will be on
the Closing Date (after giving effect to the application of the proceeds
from the issuance of the Series A Notes) able to pay their respective debts
as they mature.
(aaa) No action has been taken and no law, statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents (or, with respect to the execution and delivery of the
Indenture, prevented) the execution, delivery and performance of any of the
Operative Documents, or the issuance of the Series A Notes or the
Guarantees, or suspends the sale of the Series A Notes or the Guarantees in
any jurisdiction referred to in Section 5(e); and no injunction,
restraining order or other order or relief of any nature by a federal or
state court or other tribunal of competent jurisdiction has been issued
with respect to the Issuers or any of their subsidiaries which would
prevent or suspend the issuance or sale of the Series A Notes or the
Guarantees in any jurisdiction referred to in Section 5(e).
The Issuers acknowledge that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Issuers and the Subsidiary Guarantors and counsel to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of the Initial
Purchasers, severally and not jointly, represents and warrants to each of
the Issuers and the Subsidiary Guarantors, and agrees that:
(a) Such Initial Purchaser is a QIB with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the
merits and risks of an investment in the Series A Notes;
(b) Such Initial Purchaser (A) is not acquiring the Series A Notes with a
view to any distribution thereof or with any present intention of offering
or selling any of the Series A Notes in a transaction that would violate
the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A, and (y) in
offshore transactions in reliance upon Regulation S under the Act;
(c) Such Initial Purchaser agrees that no form of general solicitation or
general advertising (within the meaning of Regulation D under the Act) has
been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant
17
hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising;
(d) Such Initial Purchaser agrees that, in connection with Exempt Resales,
such Initial Purchaser will solicit offers to buy the Series A Notes only
from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Each Initial Purchaser further agrees that it will offer to
sell the Series A Notes only to, and will solicit offers to buy the Series
A Notes only from (A) Eligible Purchasers that the Initial Purchaser
reasonably believes are QIBs, and (B) Regulation S Purchasers, in each
case, that agree that (x) the Series A Notes purchased by them may be
offered, resold, pledged or otherwise transferred, only (i) to the
Partnership, El Paso Finance, or any subsidiary of the Partnership, (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) or
(v) pursuant to an effective registration statement under the Securities
Act, in each of cases (i) through (v) in accordance with any applicable
securities laws of any state of the United States, and (y) they will
deliver to each person to whom such Series A Notes or an interest therein
is transferred a notice substantially to the effect of the foregoing;
(e) Such Initial Purchaser and its affiliates or any person acting on its
or their behalf have not engaged or will not engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A
Notes or the Guarantees;
(f) The Series A Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold
only in offshore transactions;
(g) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan
or scheme to evade the registration provisions of the Act;
(h) Such Initial Purchaser agrees that it has not offered or sold and will
not offer or sell the Series A Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Act (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Series A Notes pursuant hereto and the
Closing Date, other than in accordance with Regulation S of the Act or
another exemption from the registration requirements of the Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it
will not cause any advertisement with respect to the Series A Notes
(including any "tombstone" advertisement) to be published in any newspaper
or periodical or posted in any public place and will not issue any circular
relating to the Series A Notes, except such advertisements as are permitted
by and include the statements required by Regulation S; and
(i) Such Initial Purchaser agrees that, at or prior to confirmation of a
sale of Series A Notes by it to any distributor, dealer or person receiving
a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(b) under the Act, it will send to
such distributor, dealer or person receiving a selling concession, fee or
other remuneration a confirmation or notice to substantially the following
effect:
18
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to institutional accredited investors as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, in transactions
that are exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the Series
A Notes covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a
selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have
the meanings assigned to them in Regulation S."
Each Initial Purchaser acknowledges that the Issuers and the Subsidiary
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Issuers and the
Subsidiary Guarantors and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and the Initial Purchasers
hereby consent to such reliance.
8. Indemnification.
(a) Each of the Issuers and each Subsidiary Guarantor agree, jointly and
severally, to indemnify and hold harmless the Initial Purchasers, their
directors, their officers and each person, if any, who controls such
Initial Purchasers within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any
such losses, claims, damages, liabilities or judgments) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Offering Circular (or any amendment or supplement thereto), any Rule
144A Information provided by the Issuers or any Subsidiary Guarantor to any
holder or prospective purchaser of Series A Notes pursuant to Section 5(h)
or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to the Initial Purchasers furnished in writing to the Issuers by
such Initial Purchaser (and not with respect to the information provided by
any other Initial Purchaser).
(b) The Initial Purchasers agree, severally and not jointly, to indemnify
and hold harmless the Issuers and the Subsidiary Guarantors, and their
respective directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act) the Issuers or the Subsidiary Guarantors, to the same extent as the
foregoing indemnity from the Issuers and the Subsidiary Guarantors to the
Initial Purchasers but only with reference to information relating to the
Initial Purchaser furnished in writing to the Issuers by such Initial
Purchaser expressly for use in the Offering Circular and not with respect
to the information provided by any other Initial Purchaser.
19
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel,
as incurred (except that in the case of any action in respect of which
indemnity may be sought pursuant to both Sections 8(a) and 8(b), the
Initial Purchasers shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Initial
Purchasers). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action
or employ counsel reasonably satisfactory to the indemnified party or (iii)
the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by Credit Suisse First Boston Corporation, in the
case of the parties indemnified pursuant to Section 8(a), and by the
Issuers, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party
for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and,
prior to the date of such settlement, the indemnifying party shall have
failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect
any settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened action in respect of which the
indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Issuers and the Subsidiary Guarantors, on the one hand, and the
Initial Purchasers on the other hand from the offering of the Series A
20
Notes or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Issuers and the Subsidiary Guarantors,
on the one hand, and the Initial Purchasers, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers and
the Subsidiary Guarantors, on the one hand and the Initial Purchasers, on
the other hand, shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Series A Notes (after underwriting
discounts and commissions, but before deducting expenses) received by the
Issuers, and the total discounts and commissions received by the Initial
Purchasers bear to the total price to investors of the Series A Notes, in
each case as set forth in the table on the cover page of the Offering
Circular. The relative fault of the Issuers and the Subsidiary Guarantors,
on the one hand, and the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Issuers or the Subsidiary Guarantors, on the one hand, or the Initial
Purchasers, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
The Issuers and the Subsidiary Guarantors, and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation, even if the Initial
Purchasers were treated as one entity for such purpose, or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses incurred by such indemnified
party in connection with investigating or defending any matter, including
any action, that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8,
the Initial Purchasers shall not be required to contribute any amount in
excess of the amount by which the total discounts and commissions received
by such Initial Purchasers exceeds the amount of any damages which each
Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute pursuant to this Section 8(d) are
several in proportion to the respective principal amount of Series A Notes
purchased by each of the Initial Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. Conditions of Initial Purchasers' Obligations. The obligations of each of
the Initial Purchasers to purchase the Series A Notes under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers and the
Subsidiary Guarantors contained in this Agreement shall be true and correct
in all material respects on the Closing Date with the same force and effect
as if made on and as of the Closing Date, provided that the representations
and warranties qualified by "materiality" shall be true and correct on the
Closing Date;
21
(b) On or after the date hereof, there shall not have occurred (i) any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change
in, any rating of the Issuers or any Subsidiary Guarantor or any securities
of the Issuers or any Subsidiary Guarantor (including, without limitation,
the placing of any of the foregoing ratings on credit watch with negative
or developing implications or under review with an uncertain direction) by
any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) any change, nor
shall any notice have been given of any potential or intended change, in
the outlook for any rating of the Issuers or any Subsidiary Guarantor or
any securities of the Issuers or any Subsidiary Guarantor by any such
rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower rating to
the Notes than that on which the Notes were marketed; (iii) any change in
U.S. or international financial, political or economic conditions or
currency exchange rates or exchange controls as would, in the judgment of a
majority in interest of the Initial Purchasers including Credit Suisse
First Boston Corporation ("CSFBC"), be likely to prejudice materially the
success of the proposed issue, sale or distribution of the Notes, whether
in the primary market or in respect of dealings in the secondary market;
(iv) any material suspension or material limitation of trading in
securities generally on the New York Stock Exchange or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Issuers on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by U.S. Federal or New York
authorities; (vi) any major disruption of settlements of securities or
clearance services in the United States or (vii) any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States,
any declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of a majority in interest of the
Initial Purchasers including CSFBC, the effect of any such attack,
outbreak, escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering or
sale of and payment for the Notes.
(c) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the
Partnership and its subsidiaries and El Paso Finance, taken as a whole,
(ii) there shall not have been any change or any development involving a
prospective change in the capital stock, limited liability company
interests or partnership units, as applicable, or in the long-term debt of
the Issuers or any of their subsidiaries and (iii) neither the Issuers nor
any of their subsidiaries shall have incurred any liability or obligation,
direct or contingent, the effect of which, in any such case described in
clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is material and
adverse and, in your judgment, makes it impracticable to market the Series
A Notes on the terms and in the manner contemplated in the Offering
Circular;
(d) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by the President or a Senior Vice President and the
Chief Financial Officer of the Partnership and El Paso Finance and each of
the Subsidiary Guarantors, confirming the matters set forth in Sections
6(ee), 9(a) and 9(b)(i), (ii) and (iii) and stating that each of the
Issuers and the Subsidiary Guarantors has complied with all the agreements
and satisfied all of the conditions herein contained and required to be
complied with or satisfied on or prior to the Closing Date;
22
(e) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Initial Purchasers), dated the Closing Date, of
Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Issuers and the
Subsidiary Guarantors, to the effect that:
(i) Each of the Partnership and its Restricted Subsidiaries (other
than any business trust) and El Paso Finance, as applicable, has been
duly formed or incorporated and is validly existing as a partnership,
corporation or limited liability company and in good standing (other
than any general partnership) under the laws of its jurisdiction of
formation or incorporation and has the partnership, corporate or
limited liability company power and authority to carry on its business
as described in the Offering Circular and to own, lease and operate
its properties;
(ii) Each of the Partnership and its Restricted Subsidiaries (other
than general partnerships) and El Paso Finance, as applicable, is duly
qualified or registered to do business as a foreign limited
partnership, corporation, limited liability company or business trust,
as the case may be, and, based solely on the various certificates from
public officials of Texas, Louisiana, Mississippi, New Mexico and
Alabama (the "Good Standing Certificates"), is in good standing as a
foreign limited partnership, corporation, limited liability company or
business trust authorized to do business in the respective
jurisdictions listed on Schedule D hereto;
(iii) The General Partner has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware with
full corporate power and authority to carry on its businesses; to own,
lease and operate its properties; and to act as the general partner of
the Partnership in all material respects as described in the Offering
Circular. The General Partner is duly qualified and, based solely on
the Good Standing Certificates, is in good standing as a foreign
corporation authorized to do business in the jurisdictions listed on
Schedule D hereto;
(iv) The General Partner is the sole general partner of the
Partnership and owns (of record) a 1.0% general partner interest in
the Partnership;
(v) the Series A Notes have been duly authorized by each of the
Issuers and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement,
will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Issuers, enforceable in accordance with
their terms except as may be limited by (i) applicable bankruptcy,
insolvency, fraudulent transfer and conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally; (ii) general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity);
(iii) commercial reasonableness and unconscionability and an implied
covenant of good faith and fair dealing; (iv) the power of the courts
to award damages in lieu of equitable remedies; and (v) securities
laws and public policy underlying such laws with respect to rights to
indemnification and contribution (the "General Exceptions");
(vi) The Guarantees have been duly authorized and, when the Series A
Notes (including the notations of the Guarantees thereon) are executed
and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement, the Guarantees endorsed by
23
the notations on the Series A Notes will be entitled to the benefits
of the Indenture and will be valid and binding obligations of the
Subsidiary Guarantors, enforceable in accordance with their terms
except as may be limited by the General Exceptions;
(vii) The Indenture, as supplemented by the First and Second
Supplemental Indentures dated as of April 18, 2002, has been duly
authorized, executed and delivered by each of the Issuers and each
Subsidiary Guarantor and is a valid and binding agreement of each of
the Issuers and each Subsidiary Guarantor, enforceable against each of
the Issuers and each Subsidiary Guarantor in accordance with its terms
except as may be limited by the General Exceptions;
(viii) This Agreement has been duly authorized, executed and delivered
by each of the Issuers and the Subsidiary Guarantors;
(ix) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuers and the Subsidiary
Guarantors and is a valid and binding agreement of each of the Issuers
and each Subsidiary Guarantor, enforceable against each of the Issuers
and each Subsidiary Guarantor in accordance with its terms, except as
may be limited by the General Exceptions;
(x) The Series B Senior Notes have been duly authorized by each of the
Issuers;
(xi) The statements under the captions "Description of Notes,"
"Description of Other Indebtedness," "United States Federal Income and
Estate Tax Considerations" and "Plan of Distribution" in the Offering
Circular, insofar as such statements purport to constitute a summary
of the legal matters, documents or proceedings referred to therein,
fairly present in all material respects such legal matters, documents
and proceedings;
(xii) To the knowledge of such counsel, neither the Partnership nor
any of its Restricted Subsidiaries nor El Paso Finance is in violation
of its respective partnership agreement, limited liability company
agreement, charter or by-laws or other organizational documents, as
applicable and, neither the Partnership nor any of its subsidiaries
nor El Paso Finance is in default in the performance of any
obligation, agreement, covenant or condition contained in any of the
material agreements attached as exhibits to the Partnership's 2001
Annual Report on Form 10-K or any Current Report on Form 8-K or
Quarterly Report on Form 10-Q filed since January 1, 2002 (the
"Material Agreements");
(xiii) The execution, delivery and performance of this Agreement and
the other Operative Documents by each of the Issuers and each of the
Subsidiary Guarantors, the compliance by each of the Issuers and each
of the Subsidiary Guarantors with all provisions hereof and thereby
and the consummation by the Issuers and the Subsidiary Guarantors, of
the transactions contemplated by this Agreement and the other
Operative Documents will not (and, with respect to execution and
delivery of the Indenture, did not), to the knowledge of such counsel,
(i) require any consent, approval, authorization, filing with or other
order of, or qualification with, any court or governmental body or
agency (except (x) such as may be required under the securities or
Blue Sky laws of the various states or the TIA or, with respect to the
proposed offer to exchange the Exchange Notes for the Notes, the
federal securities laws (y) routine corporate, partnership and limited
liability company filings required after the date thereof, and (z)
routine filings under the Exchange Act), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the partnership agreement, limited liability company agreement,
charter or by-laws
24
or other organizational documents, as applicable, of the Partnership
or any of its Restricted Subsidiaries or El Paso Finance or any
Material Agreement, (iii) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Partnership,
any of its Restricted Subsidiaries or El Paso Finance or their
respective property, (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under any Material
Agreement, or (v) result in the termination, suspension or revocation
of any Authorization of the Partnership or any of its Restricted
Subsidiaries or El Paso Finance or result in any other impairment of
the rights of the holder of any such Authorization, except for those
which, singly or in the aggregate, could reasonably be expected not to
result in a Material Adverse Effect; and except that such counsel need
express no opinion regarding antifraud provisions of federal or state
securities or blue sky laws with respect to clauses (i) and (iii) of
this paragraph (xiii);
(xiv) To the knowledge of such counsel, (A) each of the Partnership
and its Restricted Subsidiaries and El Paso Finance has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without
limitation, under any applicable Environmental Laws, as are necessary
to own, lease, license and operate its respective properties and to
conduct its business, except where the failure to have any such
Authorization or to make any such filing or notice could, singly or in
the aggregate, reasonably be expected not to have a Material Adverse
Effect; (B) each such Authorization known to us is valid and in full
force and effect and, to the knowledge of such counsel, each of the
Partnership and its Restricted Subsidiaries and El Paso Finance is in
compliance with all the terms and conditions thereof and with the
rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; (C) no event has occurred
(including the receipt of any notice from any authority or governing
body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization
or results or, after notice or lapse of time or both, would result in
any other material impairment of the rights of the holder of any such
Authorization; and (D) such Authorizations contain no restrictions
that are materially burdensome to the Partnership or any of its
Restricted Subsidiaries or El Paso Finance; except in the case of (A)
through (D) above those which could reasonably be expected not to,
singly or in the aggregate, have a Material Adverse Effect;
(xv) Neither of the Issuers is and, after giving effect to the
offering and sale of the Series A Notes and the application of the net
proceeds thereof as described in the Offering Circular, neither of the
Issuers will be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended;
(xvi) To the knowledge of such counsel, there are no contracts,
agreements or understandings between the Partnership, El Paso Finance
or any Subsidiary Guarantor and any person granting such person the
right to require the Partnership, El Paso Finance or such Subsidiary
Guarantor to file a registration statement under the Act with respect
to any securities of the Partnership, El Paso Finance or such
Subsidiary Guarantor (other than the rights (i) of the General Partner
and its affiliates in Section 6.14 of the Partnership Agreement; (ii)
of EPEC and its successors pursuant to a registration rights agreement
between EPEC and the Partnership executed in connection with the
acquisition by the Partnership of an additional interest in Viosca
Knoll Gathering Company; (iii) of Crystal Gas Storage, Inc. pursuant
to the registration rights agreement between Crystal Gas Storage, Inc.
and the Partnership which was executed in connection
25
with the acquisition by the Partnership of the Crystal storage
facilities; provided, however, that with respect to (i) and (ii)
above, the General Partner, EPEC, Sabine I and Sabine II have agreed
not to exercise their rights with respect to such securities in
connection with the offering of the Notes for 90 days hereafter
pursuant to letter agreements of even date herewith; and (iv) granted
under the Credit Facility and related agreements); and to the
knowledge of such counsel there are no contracts, agreements or
understandings between the Partnership, El Paso Finance or any
Subsidiary Guarantor and any person granting such person the right to
require the Partnership, El Paso Finance or such Subsidiary Guarantor
to include such securities with the Notes and Guarantees registered
pursuant to any Registration Statement other than the rights of the
General Partner and its affiliates in Section 6.14 of the Partnership
Agreement (which rights have been waived in connection with any
Registration Statement filed pursuant to the Registration Rights
Agreement).
(xvii) The Indenture complies as to form in all material respects with
the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
It is not necessary in connection with the offer, sale and delivery of
the Series A Notes to the Initial Purchasers in the manner
contemplated by this Agreement or in connection with the initial
placement of the Series A Notes by the Initial Purchasers in the
manner contemplated by the Offering Circular pursuant to Exempt
Resales to qualify the Indenture under the TIA (it being understood
that such counsel need express no opinion as to any other offer or
sale);
(xviii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers
as contemplated by this Agreement or for the Exempt Resales assuming
that (i) each Initial Purchaser is a QIB, or a Regulation S Purchaser,
(ii) the accuracy of, and compliance with, the Initial Purchasers'
representations and agreements contained in Section 7 of this
Agreement and (iii) the accuracy of the representations and agreements
of each of the Issuers and the Subsidiary Guarantors set forth in
Sections 5(f) and (k) and 6(ff), (ii), (jj), (ll), (mm), (oo) and (pp)
of this Agreement;
(xix) The Offering Circular, as of its date, and each amendment or
supplement thereto, as of its date, complied as to form in all
material respects with the applicable requirements of Rule 144A(d)(4)
of the Act (it being understood that such counsel need express no
opinion with respect to this paragraph (xix) regarding the financial
statements and the notes thereto, oil and gas reserve information and
the schedules and other financial data included in the Offering
Circular);
(xx) A court applying Texas conflict of laws rules in a properly
presented and argued case should give effect to the express choice of
law provisions contained in the Operative Documents (other than the
Purchase Agreement, as to which such counsel need express no such
opinion) to the extent that such provisions provide that the laws of
the State of New York are to govern issues under the Operative
Documents.
In addition, such counsel shall include a statement in such opinion letter
to the effect that although such counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and does
not assume any responsibility for, the accuracy or completeness of the
statements in the Offering Circular, such counsel has participated in the
preparation of the Offering Circular and any amendments or supplements
thereto, including review and discussion of the contents thereof, and
nothing has come to the attention of such
26
counsel that has caused them to believe that, as of the date of the
Offering Circular or as of the Closing Date, the Offering Circular, as
amended or supplemented, if applicable, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and notes thereto, oil and gas reserve information and
the schedules and other financial data included in the Offering Circular).
The opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. described in
Section 9(e) above (i) may be subject to customary qualifications,
assumptions and limitations and (ii) shall be rendered to you at the
request of the Issuers and the Subsidiary Guarantors and shall so state
therein.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Robert W. Baker, counsel for the
Partnership, that except as set forth in the Offering Circular, such
counsel does not know of any legal or governmental proceedings pending or
threatened to which the Partnership or any of its Restricted Subsidiaries
or El Paso Finance is a party or to which any of their respective property
is subject, except for those which, singly or in the aggregate, could
reasonably be expected not to result in a Material Adverse Effect;
(g) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Andrews & Kurth L.L.P., counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers.
(h) The Initial Purchasers shall have received, at the time this Agreement
is executed and at the Closing Date, letters dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to the Initial
Purchasers from:
(i) PricewaterhouseCoopers LLP, independent public accountants, with
respect to the financial statements of the Issuers and their
subsidiaries, and certain financial information contained in the
Offering Circular, and
(ii) Arthur Andersen L.L.P., independent public accountants, with
respect to the financial statements of the Poseidon Pipeline Company,
L.L.C. and its subsidiaries,
(i) The Initial Purchasers shall have received, at the time of this
Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Netherland & Sewell.
(j) The Series A Notes shall have been approved by the NASD for trading and
duly listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart, conformed as
executed, of the Indenture which shall have been entered into by the
Issuers, the Subsidiary Guarantors and the Trustee.
(l) The Issuers and the Subsidiary Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Issuers and the
Subsidiary Guarantors.
27
(m) Neither the Issuers nor the Subsidiary Guarantors shall have failed at
or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with
by each of the Issuers or the Subsidiary Guarantors, as the case may be, at
or prior to the Closing Date.
10. Effectiveness of Agreement and Termination. This Agreement shall become
effective upon the execution and delivery of this Agreement by the parties
hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchasers by written notice to the Issuers if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Series A Notes on the terms and
in the manner contemplated in the Offering Circular, (ii) the suspension or
material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Issuers or any Subsidiary
Guarantor on any exchange or in the over-the-counter market, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will materially and adversely
affect, the business, prospects, financial condition or results of operations of
the Issuers and their subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
If on the Closing Date any one or more of the Initial Purchasers shall fail
or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
the aggregate principal amount of the Series A Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 2 hereof be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
the Series A Notes without the consent of such Initial Purchaser. If on the
Closing Date any Initial Purchaser or Initial Purchasers shall fail or refuse to
purchase the Series A Notes and the aggregate principal amount of the Series A
Notes with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Series A Notes to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Issuers for purchase of such the Series A Notes are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Initial Purchaser and the Issuers. In any such case which
does not result in termination of this Agreement, either you or the Issuers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Offering
Circular or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting
28
Initial Purchaser from liability in respect of any default of any such Initial
Purchaser under this Agreement.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Issuers by written notice to the Initial Purchasers if, there is a
failure to obtain any consent or waiver under, or amendment of, the Credit
Facility, that is required in order for the issuance of the Notes to not
constitute a default thereunder.
11. Miscellaneous.
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows:
(i) if to the Issuers or any Subsidiary Guarantor, to:
El Paso Energy Partners, L.P.
4 Greenway Plaza
Houston, Texas 77046
Attention: Chief Financial Officer;
With a copy to (which shall not constitute notice):
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1900 Pennzoil Place, South Tower
711 Louisiana Street
Houston, Texas 77002
Attention: J. Vincent Kendrick; and
(ii) if to the Initial Purchasers, to:
Credit Suisse First Boston Corporation
Eleven Madison Avenue,
New York, New York 10010-3629
Attention: Syndicate Department
or in any case to such other address as the person to be notified may have
requested in writing.
(b) The respective indemnities, contribution agreements, representations,
warranties and other statements of the Issuers, the Subsidiary Guarantors
and the Initial Purchasers, set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive
delivery of and payment for the Series A Notes, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf
of the Initial Purchasers, the officers or directors of the Initial
Purchasers, any person controlling the Initial Purchasers, the Issuers, any
Subsidiary Guarantor, the officers or directors of the Issuers or any
Subsidiary Guarantor, or any person controlling the Issuers or any
Subsidiary Guarantor, (ii) acceptance of the Series A Notes and payment for
them hereunder and (iii) termination of this Agreement.
(c) If for any reason the Series A Notes are not delivered by or on behalf
of the Issuers as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Issuers and each
Subsidiary Guarantor, jointly and severally, agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination
of this Agreement, the Issuers shall be liable
29
for all expenses which they have agreed to pay pursuant to Section 5(i)
hereof. Each of the Issuers and each Subsidiary Guarantor also agrees,
jointly and severally, to reimburse each of the Initial Purchasers and its
officers, directors and each person, if any, who controls such Initial
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act for any and all fees and expenses (including without
limitation the fees and expenses of counsel) incurred by them in connection
with enforcing their rights under this Agreement (including without
limitation its rights under Section 8).
(d) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Partnership, El
Paso Finance, the Subsidiary Guarantors, the Initial Purchasers, each of
these Initial Purchasers' directors and officers, any controlling persons
referred to herein, the directors of the Issuers and the Subsidiary
Guarantors and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include a purchaser of any of the Series A Notes
from the Initial Purchasers merely because of such purchase.
(e) This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
(f) This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
(Signatures Page Follows)
30
Please confirm that the foregoing correctly sets forth the agreement among
the Partnership, El Paso Finance, the Subsidiary Guarantors and the Initial
Purchasers.
Very truly yours,
Issuers:
EL PASO ENERGY PARTNERS, L.P.
By: /s/ KEITH FORMAN
---------------------------------------
Name: Keith Forman
Title: Vice President and Chief Financial
Officer
EL PASO PARTNERS FINANCE CORPORATION
By: /s/ KEITH FORMAN
---------------------------------------
Name: Keith Forman
Title: Vice President and Chief Financial
Officer
Subsidiary Guarantors:
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 PARTNERS DEEPWATER, L.L.C.*
EL PASO ENERGY PARTNERS OIL TRANSPORT, L.L.C.*
EL PASO ENERGY PARTNERS OPERATING COMPANY, L.L.C.*
EPN NGL STORAGE, 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.*
*By: /s/ KEITH FORMAN
---------------------------------------------
Name: Keith Forman
Title: Vice President and Chief Financial Officer
Initial Purchasers:
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
BANC ONE CAPITAL MARKETS, INC.
FLEET SECURITIES, INC.
FORTIS INVESTMENT SERVICES LLC
THE ROYAL BANK OF SCOTLAND PLC
BNP PARIBAS SECURITIES CORP
FIRST UNION SECURITIES, INC.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Townes G. Pressler, Jr.
---------------------------------
Name: Townes G. Pressler, Jr.
Title: Managing Director
SCHEDULE A
Subsidiary Guarantors
Argo, L.L.C.
Argo I, L.L.C.
Argo II, L.L.C.
Crystal Holding, L.L.C.
Chaco Liquids Plant Trust
Delos Offshore Company, L.L.C.
East Breaks Gathering Company, L.L.C.
El Paso Energy Partners Deepwater, L.L.C.
El Paso Energy Partners Oil Transport, L.L.C.
El Paso Partners Operating Company, L.L.C.
EPN NGL Storage, 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.
Schedule A -- Page 1
SCHEDULE B
<Table>
<Caption>
Principal Amount
Initial Purchaser of Notes
- ----------------- ----------------
Credit Suisse First Boston Corporation ............... $ 57,500,000
Goldman, Sachs & Co .................................. 57,500,000
J.P. Morgan Securities Inc ........................... 57,500,000
Banc One Capital Markets, Inc ........................ 11,500,000
First Union Securities, Inc .......................... 11,500,000
Fleet Securities, Inc ................................ 11,500,000
Fortis Investment Services LLC ....................... 11,500,000
BNP Paribas Securities Corp .......................... 5,750,000
The Royal Bank of Scotland plc 5,750,000
------------
Total ................................................ $230,000,000
============
</Table>
Schedule B -- Page 1
SCHEDULE C
<Table>
<Caption>
JURISDICTION OF
ENTITY NAME FORMATION OWNERSHIP
- ----------- ---------------- ---------
Argo, L.L.C. Delaware 100%
Argo I, L.L.C. Delaware 100%
Argo II, L.L.C. Delaware 100%
Atlantis Offshore, L.L.C. Delaware 50%
Chaco Liquids Plant Trust Massachusetts 100%
Crystal Holding, L.L.C. Delaware 100%
Delos Offshore Company, L.L.C. Delaware 100%
East Breaks Gathering Company, L.L.C. Delaware 100%
El Paso Energy Intrastate, L.P. Delaware 100%
El Paso Energy Partners Deepwater, L.L.C. Delaware 100%
El Paso Energy Partners Finance Corporation Delaware 100%
El Paso Energy Partners Oil Transport, L.L.C. Delaware 100%
El Paso Energy Partners Operating Company, L.L.C. Delaware 100%
El Paso Energy Warwink I Company, L.P. Delaware 100%
El Paso Energy Warwink II Company, L.P. Delaware 100%
El Paso Hub Services Company, L.L.C. Delaware 100%
El Paso Indian Basin, L.P. Delaware 100%
El Paso Offshore Gathering and Transmission, L.P. Delaware 100%
EPGT Texas Pipeline, L.P. Delaware 100%
EPN Gathering and Treating Company, L.P. Delaware 100%
EPN Gathering and Treating GP Holding, L.L.C. Delaware 100%
EPN GP Holding, L.L.C. Delaware 100%
EPN GP Holding I, L.L.C. Delaware 100%
EPN Holding Company, L.P. Delaware 100%
EPN Holding Company I, L.P. Delaware 100%
EPN NGL Storage, L.L.C. Delaware 100%
EPN Pipeline GP Holding, L.L.C. Delaware 100%
First Reserve Gas, L.L.C. Delaware 100%
Flextrend Development Company, L.L.C. Delaware 100%
Green Canyon Pipe Line Company, L.P. Delaware 100%
Hattiesburg Gas Storage Company Delaware 100%
Hattiesburg Industrial Gas Sales, L.L.C. Delaware 100%
High Island Offshore System, L.L.C. Delaware 100%
Manta Ray Gathering Company, L.L.C. Delaware 100%
Matagorda Island Area Gathering System Texas 83%
Petal Gas Storage, L.C.C. Delaware 100%
Poseidon Oil Pipeline Company, L.L.C. Delaware 36%
Poseidon Pipeline Company, L.L.C. Delaware 100%
VK Deepwater Gathering Company, L.L.C. Delaware 100%
VK-Main Pass Gathering Company, L.L.C. Delaware 100%
Warwink Gathering and Treating Company Texas 100%
</Table>
Schedule C -- Page 1
SCHEDULE D
<Table>
<Caption>
JURISDICTION OF FOREIGN QUALIFICATION
ENTITY NAME FORMATION JURISDICTIONS
----------- --------------- ---------------------
El Paso Energy Partners, L.P. Delaware Texas, Louisiana
El Paso Energy Partners Company Delaware Texas, Louisiana
Argo, L.L.C. Delaware Texas, Louisiana
Argo I, L.L.C. Delaware Texas
Argo II, L.L.C. Delaware Texas
Chaco Liquids Plant Trust Massachusetts New Mexico
Crystal Holding, L.L.C. Delaware --
Delos Offshore Company, L.L.C. Delaware Texas, Louisiana, New Mexico
East Breaks Gathering Company, L.L.C. Delaware Texas, Louisiana
El Paso Energy Partners Deepwater, L.L.C. Delaware --
El Paso Energy Partners Finance Corporation Delaware Texas
El Paso Energy Partners Oil Transport, L.L.C. Delaware Texas, Louisiana, Alabama
El Paso Energy Partners Operating Company, L.L.C. Delaware Texas, Louisiana, Massachusetts, New Mexico
EPN NGL Storage, L.L.C. Delaware Mississippi, Delaware
First Reserve Gas, L.L.C. Delaware Mississippi
Flextrend Development Company, L.L.C. Delaware Texas, Louisiana, Alabama
Green Canyon Pipe Line Company, L.P. Delaware Texas, Louisiana, Alabama, New Mexico
Hattiesburg Gas Storage Company Delaware --
Hattiesburg Industrial Gas Sales, L.L.C. Delaware Mississippi
High Island Offshore System, L.L.C. Delaware Texas, Louisiana
Manta Ray Gathering Company, L.L.C. Delaware Texas, Louisiana
Petal Gas Storage, L.L.C. Delaware Mississippi
Poseidon Pipeline Company, L.L.C. Delaware Texas
VK Deepwater Gathering Company, L.L.C. Delaware Texas
VK-Main Pass Gathering Company, L.L.C. Delaware Texas, Louisiana, Alabama
</Table>
Schedule D -- Page 1