Exhibit 10(lvi)

EXECUTION VERSION

SPONSOR AGREEMENT

Dated as of December 27, 2007

Among

ANADARKO PETROLEUM CORPORATION

and

PECOS INVESTORS LLC

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TABLE OF CONTENTS

 

          Page

SECTION 1

       DEFINED TERMS; RULES OF CONSTRUCTION    1

1.1

   Definitions    1

1.2

   Use of Certain Terms    1

1.3

   Accounting Terms    2

1.4

   No Presumption Against Any Party    2

1.5

   Headings and References    2

SECTION 2

       REPRESENTATIONS AND WARRANTIES    2

2.1

   Due Formation    2

2.2

   Authorization of Transaction Agreements    3

2.3

   Consents    3

2.4

   Enforceability    3

2.5

   Accounts    3

2.6

   Compliance with Laws, Etc    4

2.7

   Litigation    4

2.8

   Taxes    4

2.9

   Environmental    4

2.10

   Title to Assets    4

2.11

   ERISA    4

2.12

   Investment Company; Holding Company    5

2.13

   Sponsor Subsidiaries    5

2.14

   Priority    5

2.15

   Demand Loans    5

2.16

   No Default    6

2.17

   Disclosure    6

2.18

   Gathering and Processing Agreements    7

SECTION 3

       PERFORMANCE GUARANTEE AND INDEMNIFICATION    7

3.1

   Subsidiary Guaranties    7

3.2

   General Indemnities    7

3.3

   Survival of Indemnification Obligations    10

3.4

   Limitations on Indemnification Obligations    10

 

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TABLE OF CONTENTS

(continued)

 

          Page

3.5

   Procedural Requirements    11

3.6

   Contributory Negligence    11

3.7

   Limitation with Respect to Obligations Under WGRAH Advance Documents    12
SECTION 4        PAYMENTS    12

4.1

   Payments    12

4.2

   Taxes    12 SECTION 5        SPONSOR COVENANTS    14

5.1

   Separate Existence    14

5.2

   Affirmative Covenants    18

5.3

   Negative Covenants    20

5.4

   Reporting Requirements    21 SECTION 6        MISCELLANEOUS    23

6.1

   Amendments    23

6.2

   Addresses for Notices    23

6.3

   No Waiver; Cumulative Remedies    23

6.4

   Waiver of Jury Trial    24

6.5

   Jurisdiction, Etc    24

6.6

   Assignment    24

6.7

   Governing Law    25

6.8

   Counterparts    25

6.9

   Survival of Representations, Warranties and Indemnities; Entire Agreement   
25

6.10

   Severability    25

6.11

   No Third-Party Beneficiaries    25

6.12

   Obligations Absolute    25

6.13

   Waiver    26

6.14

   Subrogation    26

 

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SPONSOR AGREEMENT

This SPONSOR AGREEMENT, dated as of December 27, 2007 (this “Sponsor
Agreement”), is entered into by and between Anadarko Petroleum Corporation, a
Delaware corporation, in favor of Pecos Investors LLC, a Delaware limited
liability company, and the other Indemnified Persons.

PRELIMINARY STATEMENTS

A. Anadarko is, through one or more wholly owned subsidiaries, the owner of 100%
of the member interests of Trinity Associates Class A Holdings LLC, a Delaware
limited liability company. Holdings is the Trinity Class A Member and is the
Trinity Managing Member of Trinity;

B. Anadarko and Holdings desire Pecos to become a Trinity Class B Member in
accordance with that certain Trinity Company Agreement;

C. It is a condition to Pecos becoming a Trinity Class B Member that Anadarko
provides certain assurances as set forth in this Sponsor Agreement; and

In consideration of the premises, and intending to be legally bound by this
Sponsor Agreement, Anadarko agrees as follows:

SECTION 1

DEFINED TERMS; RULES OF CONSTRUCTION

1.1 Definitions.

As used in this Sponsor Agreement, capitalized terms defined in the preamble and
other Sections of this Sponsor Agreement shall have the meanings set forth
therein and capitalized terms used herein (including in the Preliminary
Statements) but not otherwise defined herein shall have the meanings set forth
in Exhibit A to the Trinity Company Agreement.

1.2 Use of Certain Terms.

In this Sponsor Agreement, in the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” mean “to but excluding”. Unless the
context of this Sponsor Agreement requires otherwise, the plural includes the
singular the singular includes the plural, and “including” has the meaning of
“including without limitation”. The words “hereof”, “herein”, “hereby”,
“hereunder “, and other similar terms of this Sponsor Agreement refer to this
Sponsor Agreement as a whole and not exclusively to any particular provision of
this Sponsor Agreement. References to any agreement or contract are to such
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.

 

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1.3 Accounting Terms.

All accounting terms not specifically defined herein shall be construed in
accordance with GAAP applied consistently.

1.4 No Presumption Against Any Party.

Neither this Sponsor Agreement nor any uncertainty or ambiguity herein shall be
construed against any particular party, whether under any rule of construction
or otherwise. On the contrary, this Sponsor Agreement has been reviewed by each
of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.

1.5 Headings and References.

Section and other headings are for reference only, and shall not affect the
interpretation or meaning of any provision of this Sponsor Agreement. Unless
otherwise provided, references to Articles, Sections, Schedules, Annexes and
Exhibits shall be deemed references to Articles and Sections of, and Schedules,
Annexes and Exhibits to, this Sponsor Agreement. Whether or not specified herein
or therein, references to this Sponsor Agreement and any other Transaction
Agreement include this Sponsor Agreement and the other Transaction Agreements as
the same may be modified, amended, restated or supplemented from time to time
pursuant to the provisions hereof or thereof as permitted by the Transaction
Agreements. Whether or not specified herein, a reference to any law shall mean,
that law as it may be amended, modified or supplemented from time to time, and
any successor law. A reference to a Person includes the successors and assigns
of such Person, but such reference shall not increase, decrease or otherwise
modify in any way the provisions in this Sponsor Agreement governing the
assignment of rights and obligations under or the binding effect of any
provision of this Sponsor Agreement, including Section 6.6.

SECTION 2

REPRESENTATIONS AND WARRANTIES

Anadarko hereby represents and warrants as of the Effective Date and, with
respect to Section 2.15 only, the date of each Information Memorandum as
follows:

2.1 Due Formation. Anadarko is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each Transaction
Party is duly incorporated or formed, validly existing and in good standing in
the jurisdiction of its incorporation or formation. Each Transaction Party
possesses all corporate, limited liability company or other applicable Business
Entity powers and other authorizations and licenses necessary to engage in its
business and operations as now conducted, the failure to obtain or maintain
which would have an Anadarko Material Adverse Change.

2.2 Authorization of Transaction Agreements. The execution, delivery and
performance by each Transaction Party of each Transaction Agreement to which it
is a party and the consummation of the transactions contemplated thereby are
within its applicable Business

 

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Entity powers, have been duly authorized by all necessary corporate, limited
liability company or other applicable Business Entity action, and do not
contravene (i) its organizational documents or (ii) any Applicable Law or
material contractual restriction binding on or affecting it.

2.3 Consents. No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or any other third party is required
for the due execution, delivery and performance by each Transaction Party of
each Transaction Agreement to which it is a party, except those necessary to
comply with Applicable Law required in the ordinary course to comply with the
ongoing obligations of Anadarko under Sections 5.2 and 5.3 and of the other
Transaction Parties under the Transaction Agreements and to perfect security
interests. In connection with the asset and equity transfers that were
consummated in connection with the formation of WGRAH and its Affiliates, there
are no authorizations or approvals or other action by, and no notice to or
filing with, any Governmental Authority or any other third party that were
required to be obtained that have not yet been obtained, except for
authorizations and approvals the absence of which is not reasonably likely to
cause an Anadarko Material Adverse Change.

2.4 Enforceability. This Sponsor Agreement and each other Transaction Agreement
to which a Transaction Party is a party has been duly executed and delivered by
Anadarko or the Transaction Party, as applicable. Each Transaction Agreement to
which any Transaction Party is a party constitutes the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, except as may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
or by general principles of equity.

2.5 Accounts.

(a) The consolidated balance sheet of Anadarko and its consolidated Subsidiaries
as of December 31, 2006 and the related consolidated statements of income and
cash flows of Anadarko and its consolidated Subsidiaries for the fiscal year
then ended, reported on by KPMG LLP, independent public accountants, fairly
present the consolidated financial condition of Anadarko and its consolidated
Subsidiaries as of such date and the consolidated results of operations of
Anadarko and its consolidated Subsidiaries for the period ended on such date,
all in accordance with GAAP consistently applied, and except as may have been
disclosed in public filings of Anadarko since December 31, 2006 there has been
no material adverse change in such condition or operations.

(b) The unaudited consolidated balance sheet of Anadarko and its consolidated
Subsidiaries as of September 30, 2007, and the related consolidated statements
of income and cash flows of Anadarko and its consolidated Subsidiaries for the
three months then ended, certified by the chief financial officer of Anadarko,
fairly present the consolidated results of operations of Anadarko and its
consolidated Subsidiaries for the three months then ended, all in accordance
with GAAP consistently applied (except that Anadarko adopted successful efforts
accounting and except as approved by the chief financial officer of Anadarko and
as disclosed therein) and subject to normal year end audit adjustments.

 

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2.6 Compliance with Laws, Etc. Anadarko and each Transaction Party is in
compliance with all Applicable Laws applicable to it or its property, except
where the failure to so comply, individually or in, the aggregate, would not be
expected to result in an Anadarko Material Adverse Change.

2.7 Litigation. Except as set forth in public filings of Anadarko pursuant to
the Exchange Act or the Securities Act, there is no action, suit or proceeding
pending, or to the knowledge of Anadarko threatened, against or involving
Anadarko or any Transaction Party in any court, or before any arbitrator of any
kind, or before or by any governmental body, which (taking into account the
exhaustion of all appeals) if adversely determined would be reasonably likely to
have an Anadarko Material Adverse Change, or which purports to affect the
legality, validity, binding effect or enforceability of any Transaction
Agreement.

2.8 Taxes. Anadarko and each of its Subsidiaries have duly filed all Tax Returns
required to be filed, and have duly paid and discharged all Taxes imposed upon
them or against their properties or have made adequate provision for any such
Taxes not yet due and payable on the appropriate balance sheet, in accordance
with GAAP, except to the extent the failure to pay or make such provision would
not result in an Anadarko Material Adverse Change. Anadarko and each of its
Subsidiaries have duly withheld and remitted all Taxes which such parties have
the responsibility to withhold or remit other than such Taxes the failure to
withhold or remit would not result in an Anadarko Material Adverse Change. Each
Subsidiary of Anadarko that is eligible to be included in the U.S. federal
income tax consolidated return of Anadarko will elect to be so included. Each
Transaction Party listed on Schedule 2.8 hereto is included in the U.S. federal
income tax consolidated return of Anadarko. WGRAH is, and at all times from and
after the date of its formation has been, a disregarded entity for U.S. federal
income tax purposes.

2.9 Environmental. Each of Anadarko and each of the Transaction Parties: (i) is
in compliance in all material respects with all applicable Environmental Laws
including without limitation requirements to possess, maintain in full force and
effect, and comply with any Environmental Permits; (ii) is not subject to any
pending or, to its knowledge, threatened Environmental Actions, including
without limitation any claims by any Governmental Authority or any third party
arising under Environmental Laws or relating in any way to a release of or
exposure to any Hazardous Materials; and (iii) has no knowledge of any other
occurrences, circumstances, or conditions that could be reasonably expected to
result in losses, costs, expenses, obligations, responsibilities, liabilities,
or claims relating to Environmental Laws or Hazardous Materials which would be
reasonably likely to cause an Anadarko Material Adverse Change.

2.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan which, with the giving of notice or lapse of time, or both,
would be reasonably likely to cause an Anadarko Material Adverse Change. The
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets
of all such underfunded Plans by an amount that could reasonably be expected to
be an Anadarko Material Adverse Change.

 

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2.11 Investment Company; Holding Company. Neither Anadarko nor any Transaction
Party is an “investment company” within the meaning of the Investment Company
Act of 1940.

2.12 Entities. Each of Holdings and each WGRAH Loan Party is a direct or
indirect wholly owned Subsidiary of Anadarko.

2.13 Priority. The obligations of Anadarko under this Sponsor Agreement are not
contractually subordinated to any other unsecured Indebtedness of Anadarko

2.14 No Default. As of the Effective Date, no Anadarko Event, Event of Default,
Notice Event, Liquidating Event, Termination Event or Incipient Event has
occurred and is continuing.

2.15 Disclosure. With respect to the Effective Date or the date of each
Information Memorandum (each, a “Relevant Date”), as the case may be:

(a) Subject to Section 2.15(c), all written information (including information
in electronic form) that has been made available to the Agent and the Pecos
Member Interest Owners (and the members of the Pecos Member Interest Owners or
their agents (it being agreed that Citibank, NA. and its Affiliates are not
agents of the Pecos Member Interest Owners)) by Anadarko or any of its
Affiliates or any of its directors, partners, officers, employees, agents,
advisors or representatives (all of the foregoing, collectively,
“Representatives”) prior to such Relevant Date in connection with the
Transaction Agreements and the Transaction Agreements and the transactions
contemplated by the Transaction Agreements, in each case taken as a whole and as
modified or supplemented from time to time prior to such Relevant Date, was
complete and correct in all material respects on such Relevant Date and did not
on such Relevant Date contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in any material respect in light of the circumstances
under which such statements were made.

(b) Any historical financial data provided by Anadarko or any of its Affiliates
or any of their respective Representatives to the Agent and the Pecos Member
Interest Owners (and the members of the Pecos Member Interest Owners or their
agents) prior to such Relevant Date in connection with the transactions
contemplated by the Transaction Agreements and the Transaction Agreements was
prepared in accordance with GAAP then in effect (or with appropriate
reconciliation to such GAAP if required by Applicable Law or requested by the
Agent or the Pecos Member Interest Owners) and fairly presents the financial
condition and results of operations of the WGRAH Loan Parties (subject to year
end audit adjustments) as of the date thereof except as otherwise disclosed
therein or in the footnotes thereto or as otherwise disclosed in writing to the
Agent and the Pecos Member Interest Owners.

(c) All financial projections that were prepared by Anadarko or any of its
Affiliates or their Representatives and made available to, the Agent and the
Pecos Member Interest Owners (and the members of the Pecos Member Interest
Owners or their agents) prior to such Relevant Date in connection with the
transactions contemplated by the Transaction Agreements were prepared in good
faith based upon assumptions believed by Anadarko to be reasonable at the time
such projections were prepared (it being understood that such projections

 

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are subject to significant uncertainties and contingencies, many of which are
beyond Anadarko ‘s control, and that no assurance can be given that the
projections will be realized or that such assumptions will prove to be correct).

(d) The financial model for Pecos dated as of the Effective Date attached hereto
as Annex I (the “Financial Model”), subject to the qualifications and
assumptions set forth in the Financial Model, (x) contains formulas which are
consistent with and fairly reflect (i) the allocations provided in the Trinity
Company Agreement and (ii) the other relevant financial terms of the Transaction
Documents and (y) sets forth computed amounts that fairly reflect the
application of such formulae to the assumptions contained in the Financial
Model. The parties hereto recognize that the financial projections set out in
the Financial Model are subject to significant uncertainties and contingencies,
many of which are beyond Anadarko’s control.

The Parties acknowledge that Anadarko is not obligated to supplement any
information or projection or other materials referred to in this Section 2.15
after the Effective Date except with respect to the making of the foregoing
representations and warranties on the date of any Information Memorandum and
except as otherwise required pursuant to the Transaction Agreements.

2.16 Value. Anadarko, as direct or indirect owner of WGRAH and Holdings, has
received reasonably equivalent value for its agreement to enter into this
Sponsor Agreement.

SECTION 3

PERFORMANCE GUARANTEE AND INDEMNIFICATION

3.1 Subsidiary Guaranties.

Subject to the limitations set forth in Section 3.7, Anadarko hereby absolutely,
unconditionally and irrevocably guarantees, for the benefit of the Indemnified
Persons, the due and punctual payment, performance and observance by each
Transaction Party of its Responsibilities under each Transaction Agreement to
which it is a party, but excluding any obligation of Trinity (or of Holdings as
the Trinity Managing Member to cause Trinity) to make any distribution pursuant
to Article V of the Trinity Company Agreement (except to the extent that there
are funds available to Trinity to be applied to such payment at the time such
payment is due, and then only from such funds) (such non-excluded
Responsibilities, the “Transaction Obligations”).

3.2 General Indemnities.

Subject to the limitations set forth in Sections 3.4 and 3.7 below, Anadarko
agrees to the fullest extent permitted by Applicable Law to indemnify and hold
harmless each Indemnified Person for and against and to pay on an After-Tax
Basis, all Expenses (the Expenses on an After-Tax Basis being referred to
collectively as the “Sponsor Indemnified Amounts”) that may be incurred or
realized by or asserted against such Indemnified Person relating to, growing out
of or resulting from:

(a) Transactions Obligations. Any breach by any Transaction Party of any
Transaction Obligation; or

 

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(b) Sponsor Obligations. Any breach by Anadarko in the due and punctual payment,
performance and observance of each of its covenants and obligations under this
Sponsor Agreement and each other Transaction Agreement to which it is a party;
or

(c) Representations and Warranties. Any material inaccuracy in, or any material
breach of, any written certification, representation or warranty made or deemed
made:

(i) by Anadarko in this Sponsor Agreement or by any of its Affiliates (or any
officer or other authorized representative thereof) to or for the benefit of any
Indemnified Person, in any Transaction Agreement or Transaction Agreement to
which Anadarko or any of its Affiliates is a party; or

(ii) by any Transaction Party (or any officer or other authorized representative
thereof) in any written report or certification required hereunder or under any
Transaction Agreement or Transaction Agreement to which any Transaction Party is
a party, in each case (A) if such certification, representation or warranty is
made as of a specific date, as of the date as of which the facts stated therein
were certified, represented or warranted and (B) in all other cases, as of any
date or during any period to which such certification, representation or
warranty may be applicable; or

(d) Investigations; Litigation; Proceedings; Enforcement. (i) Enforcement of
this Sponsor Agreement or any other Transaction Agreement or Transaction
Agreement to which a Transaction Party is a party and (ii) any investigation,
litigation or proceeding, whether or not such Indemnified Person is a party
thereto, that:

(i) relates to, grows out of or results from any action or omission, or alleged
action or omission, by or on behalf of or attributable to any Transaction Party
in the performance or observance of its obligations under or in relation to the
Transaction Agreements or the transactions contemplated thereby; and

(ii) would not have resulted in Sponsor Indemnified Amounts incurred or realized
by or asserted against such Indemnified Person but for their being a party to,
or a direct or indirect participant in, or having a relationship described in
the definition of “Indemnified Person” to a party to, or a direct or indirect
participant in, the Transaction Agreements or any of the transactions
contemplated thereby; or

(e) Substantive Consolidation. (i) Any petition or proceeding (x) seeking or
asserting or (y) a court ordering, in any case or proceeding under the United
States Bankruptcy Code involving Anadarko or any Transaction Party, as debtor,
that the assets and liabilities of Trinity be consolidated substantively with
the assets and liabilities of Anadarko or any Transaction Party (other than
Trinity) and (ii) defending against any petition, proceeding or order referred
to in clause (i) above; it being agreed that upon the occurrence of an event
described in clause (i)(y) above, the Indemnified Persons involved shall be
entitled to recover from Anadarko, as liquidated damages for Sponsor Indemnified
Amounts under such clause (i) (but without prejudice to amounts recoverable
under clause (ii) above or any other provision of the

 

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Transaction Agreements), and not as a penalty, an aggregate amount equal to the
sum of all (x) Unrecovered Capital plus (y) the Cumulative Preferred Return
Distribution Amount at the time of redemption, plus (z) all Trinity Expenses
then unpaid in addition to all other Sponsor Indemnified Amounts hereunder; or

(f) ERISA. Any liability or other Sponsor Indemnified Amounts that Trinity or
any Transaction Party may incur in connection with any Plan or Multiemployer
Plan or otherwise under Title IV of ERISA; or

(g) Expenses. Any amendment, supplement, modification, consent or waiver of, to
or under any Transaction Agreement (to the extent not otherwise reimbursed
pursuant to any Transaction Agreement); or

(h) Environmental Liabilities. The actual or alleged presence of Hazardous
Materials on any property of any Transaction Party, any Environmental Action
relating in any way to any Transaction Party, any violation of applicable
Environmental Laws (including without limitation any penalties associated
therewith, as well as any costs of correcting any such violation), or any other
losses, costs, expenses, obligations, responsibilities, liabilities, or claims
arising under Environmental Laws or relating in any way to a release of or
exposure to any Hazardous Materials; or

(i) Casualty, Etc. Any casualty, theft, personal injury, tort or other liability
to a third party arising under or in connection with or attributable to the
operations or properties of Anadarko or any Transaction Party or any violation
of any Applicable Law by Anadarko or any of its Affiliates; or

(j) Fraudulent Transfer or Conveyance. Any transfer, pledge or conveyance by any
Transaction Party to Trinity, Holdings, WGRAH or any of their Subsidiaries or
the transfer, pledge or conveyance thereof under the WGRAH Loan Documents to the
extent found in any bankruptcy, insolvency, receivership or other similar
proceeding to be a “fraudulent transfer” or “fraudulent conveyance” or
“fraudulent preference”; or

(k) Tax Liability. All Taxes for which Anadarko or any of its Subsidiaries is
liable (including with respect to any assets or income of a partnership or
disregarded entity owned in whole or in part by Anadarko or any of its
Subsidiaries). If the shares of any Transaction Party and any assets directly or
indirectly held thereby (including any assets held by any partnership or
disregarded entity in which a Transaction Party is a partner or owner) are sold
following a Liquidating Event, the benefits of this Section 3.2(k) shall inure
to the purchaser of such shares or assets with respect to any taxable period or
portion thereof ending on or prior to the date of such sale.

3.3 Survival of Indemnification Obligations. All indemnities provided for in
this Sponsor Agreement shall survive the Transfer of any Trinity Membership
Interest or the liquidation of Trinity. After any such Transfer or liquidation,
the provisions of Section 3.2 shall inure to the benefit of each Indemnified
Person with respect to Sponsor Indemnified Amounts arising in respect of the
period during which the member or shareholder or other holder of an Equity
Interest (as applicable) who has Transferred its Trinity Membership Interest was
a member (including with respect to actions taken or omitted to be taken, and
events occurring and circumstances existing, during such period) of Trinity.

 

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3.4 Limitations on Indemnification Obligations. The indemnities provided in
Section 3.2 and Section 3.8 shall be subject to the following limitations:

(a) Limitation by Law. Such Sections shall be enforced only to the maximum
extent permitted by Applicable Law.

(b) Misconduct, Etc. No Person, shall be indemnified or held harmless for, and
Anadarko shall have no liability for or in respect of, any Expenses with respect
to such Person to the extent caused by or resulting from (i) the actual fraud,
willful misconduct, bad faith or gross negligence of such Person or any of its
Related Persons or (ii) any inaccuracy in, or breach of, any written
certification, representation or warranty made by such Person or any of its
Related Persons in any Transaction Agreement or in any written report or
certification required hereunder or under any other Transaction Agreement
(unless and to the extent such inaccuracy or breach is attributable to any
written information provided by any Transaction Party), in each case under this
clause (ii): (x) if, but only if, such certification, representation or warranty
is made as of a specific date, as of the date as of which the facts stated
therein were certified, represented or warranted and (y) in all other cases as
of any date or during any period to which such certification, representation or
warranty may be applicable. For purposes of this Section 3.4(b), it is agreed
that Trinity is not a Related Person of Pecos.

(c) No Duplication. Sponsor Indemnified Amounts under Section 3.2 shall be
without duplication of any amounts payable under indemnification provisions of
any other Transaction Agreement or other agreement or any amounts actually paid
thereunder.

(d) Exculpation. ANADARKO, ON BEHALF OF ITSELF AND ITS AFFILIATES, AGREES THAT
NO INDEMNIFIED PERSON SHALL BE LIABLE TO ANADARKO OR ANY OF ITS AFFILIATES FOR
ANY ACTION IN GOOD FAITH TAKEN OR OMITTED TO BE TAKEN BY SUCH INDEMNIFIED PERSON
PURSUANT TO, IN CONNECTION WITH, OR IN ANY WAY RELATED TO THIS SPONSOR AGREEMENT
OR ANY OTHER TRANSACTION AGREEMENT, INCLUDING AN INDEMNIFIED PERSON’S OWN
NEGLIGENCE OR CO-NEGLIGENCE EXCEPT TO THE EXTENT SUCH ACTION OR OMISSION
CONSTITUTES WILLFUL MISCONDUCT, FRAUD OR GROSS NEGLIGENCE ON THE PART OF SUCH
INDEMNIFIED PERSON.

3.5 Procedural Requirements.

(a) Notice of Claims. Any Indemnified Person that proposes to assert a right to
be indemnified under this Section 3 will, promptly after receipt of notice of
commencement of any action, suit, or proceeding against such Indemnified Person
in respect of which a claim is to be made against Anadarko under this Section 3
(a “Sponsor Indemnified Proceeding”), or the incurrence or realization of
Sponsor Indemnified Amounts in respect of which a claim is to be made against
Anadarko, under this Section 3, notify Anadarko of the commencement of such
Sponsor Indemnified Proceeding or of such incurrence or realization, enclosing a
copy of all relevant documents, including all papers served and claims made, but
the omission so to notify

 

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Anadarko promptly of any such Sponsor Indemnified Proceeding or incurrence or
realization shall not relieve (i) Anadarko from any liability that it may have
to such Indemnified Person under this Section 3 or otherwise, except, as to
Anadarko’s liability, under this Section 3, to the extent, but only to the
extent, that Anadarko shall have been prejudiced by such omission or (ii) any
other indemnitor from liability that it may have to any Indemnified Person under
the Transaction Agreements.

(b) Defense of Proceedings. In case any Sponsor Indemnified Proceeding shall be
brought against any Indemnified Person and it shall notify Anadarko of the
commencement thereof, Anadarko shall be entitled to participate in, and to
assume the defense of, such Sponsor Indemnified Proceeding with counsel
reasonably satisfactory to such Indemnified Person, and after notice from
Anadarko to such Indemnified Person of Anadarko’s election so to assume the
defense thereof and the failure by such Indemnified Person to object to such
counsel within ten (10) Business Days following its receipt of such notice,
Anadarko shall not be liable to such Indemnified Person for legal or other
expenses incurred after such notice of election to assume such defense except as
provided below and except for the reasonable costs of investigating, monitoring
or cooperating in such defense subsequently incurred by such Indemnified Person
reasonably necessary, in connection with the defense thereof; provided that
without the prior written consent of such Indemnified Person, Anadarko shall not
settle or compromise, or consent to the entry of any judgment in, any pending or
threatened Sponsor Indemnified Proceeding, unless such settlement, compromise or
consent or related judgment includes an unconditional release of such
Indemnified Person from all liability for Expenses arising out of such claim,
action, investigation, suit or other legal proceeding. No Indemnified Person
shall settle or compromise, or consent to the entry of any judgment in, any
pending or threatened Sponsor Indemnified Proceeding in respect of which any
payment would result hereunder or under the other Transaction Agreements without
the prior written consent of Anadarko, such consent not to be unreasonably
withheld or delayed. Such Indemnified Person shall have the right to employ its
separate counsel in any such Sponsor Indemnified Proceeding, in which case the
fees and expenses of counsel for such Indemnified Person shall be at the expense
of the Indemnified Person unless (i) Anadarko and the Indemnified Person shall
have mutually agreed to the retention of such counsel and the payment of fees
and expenses thereof by Anadarko, (ii) the use of counsel chosen by Anadarko to
represent the Indemnified Person would present such counsel with a conflict of
interest, (iii) the actual or potential parties to any Sponsor Indemnified
Proceeding (including any impleaded parties) include both Anadarko and an
Indemnified Party and the Indemnified Party shall have reasonably concluded that
there may be legal defenses available to it which are different from or
additional to those available to Anadarko, or (iv) Anadarko shall have failed to
retain satisfactory counsel as provided herein.

3.6 Contributory Negligence. The indemnities set forth herein shall expressly
include any Sponsor Indemnified Amounts attributable to the ordinary, sole or
contributory negligence of any Indemnified Person.

3.7 Limitation with Respect to Obligations Under WGRAH Loan Documents.

(a) Notwithstanding anything to the contrary contained in this Sponsor Agreement
or in any other Transaction Agreement, without limiting the liability of
Anadarko for damages in respect of any indemnity obligation, however such
damages may be measured,

 

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Anadarko does not guaranty any payment obligation or deficiency of any
Transaction Party for or in respect of principal or interest under the WGRAH
Loan Documents (or any instrument or security evidencing any obligation in
respect thereof).

(b) Notwithstanding anything to the contrary contained in this Sponsor Agreement
or in any other Transaction Agreement, without limiting the liability of
Anadarko for damages in respect of any indemnity obligation, however such
damages may be measured, Anadarko shall have no liability to indemnify or hold
harmless any Indemnified Person for, or to pay, any Expense arising out of any
failure by any Subsidiary to pay any payment obligation or any deficiency of any
Subsidiary for or in respect of principal or interest under the WGRAH Loan
Documents (or any instrument or security evidencing any obligation in respect
thereof).

3.8 Indemnification of Pecos Administrator and Trinity Custodian. Subject to the
limitations set forth in Sections 3.4 and 3.7, Anadarko agrees to the fullest
extent permitted by Applicable Law to (a) indemnify and hold harmless each of
the “Indemnified Parties” (as such term is defined in the Pecos Administration
Agreement to the same extent that Pecos is required to indemnify such persons in
accordance with Section 7 of the Pecos Administration Agreement, and
(b) indemnify and hold harmless each of the “Indemnified Parties” (as such term
is defined in the Trinity Custodian Agreement to the same extent that Trinity is
required to indemnify such persons in accordance with Section 7 of the Trinity
Custodian Agreement.

SECTION 4

PAYMENTS

4.1 Payments.

All payments to be made by Anadarko under Section 3 shall be paid by Anadarko
within five (5) Business Days following demand therefor, accompanied, as may be
appropriate in the context, by supporting documentation in reasonable detail.
Payment shall be made to the bank account or at another location as such
Indemnified Person shall designate in writing or as is expressly required under
any Transaction Agreement the obligations under which are the subject of any
such payment, not later than 10:00 AM (New York time) on the date for such
payment in immediately available funds.

4.2 Taxes.

(a) Any and all payments by Anadarko hereunder to each Indemnified Person shall
be made, in accordance with Section 4.1, free and clear of and without deduction
for any and all present or future Taxes. If Anadarko shall be required by
Applicable Law to deduct any Taxes from or in respect of any sum payable
hereunder to any Indemnified Person, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 4.2) such
Indemnified Person receives an amount equal to the sum it would have received
had no such deductions been made, (ii) Anadarko shall make or cause to be made
such deductions and (iii) Anadarko shall pay or cause to be paid the full amount
deducted to the relevant taxation authority or other authority in accordance
with Applicable Law, provided that should an

 

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Indemnified Person become subject to Taxes because of its failure to deliver a
form required under Section 4.2(d), Anadarko shall take such steps as such
Indemnified Person shall reasonably request to assist such Indemnified Person to
recover such Taxes, and provided further; that each Indemnified Person, with
respect to itself, agrees to indemnify and hold harmless Anadarko from any
taxes, penalties, interest or other expenses, costs and losses incurred or
payable by Anadarko as a result of the failure of Anadarko to comply with its
obligations under Section 4.2(a)(ii) or (iii) in reliance on any form or
certificate provided to it by such Indemnified Person pursuant to
Section 4.2(d). If any Indemnified Person receives a net credit, refund or
reduction in Taxes in respect of such Taxes or amounts so paid by Anadarko, it
shall promptly notify Anadarko of such net credit, refund or reduction in Taxes
and shall promptly pay such net credit, refund or reduction in Taxes to
Anadarko, provided that Anadarko agrees to return such net credit, refund or
reduction in Taxes if the Indemnified Person to which such net credit, refund or
reduction in Taxes is applicable is required to repay it.

(b) In addition, Anadarko agrees to pay any present or future stamp or
documentary Taxes or any other excise or property Taxes, charges or similar
levies, which arise from any payment made by Anadarko hereunder or from the
execution, delivery or performance of, or otherwise with respect to, this
Sponsor Agreement (hereinafter referred to as “Other Sponsor Taxes”).

(c) Anadarko will indemnify each Indemnified Person for the full amount of Taxes
or Other Sponsor Taxes (including, without limitation, any Taxes or Other
Sponsor Taxes imposed by any jurisdiction on amounts payable under this
Section 4.2) paid by such Indemnified Person and any liability (including
penalties, interest and expenses) arising, therefrom or with respect thereto
except as a result of the gross negligence (which shall in any event include the
failure of such Indemnified Person to provide to Anadarko any form or
certificate that it was required to provide pursuant to subsection (d) below and
such Indemnified Person was able to provide under Applicable Law) or willful
misconduct of such Indemnified Person, whether or not such Taxes or Other
Sponsor Taxes were correctly or legally asserted. This indemnification shall be
made within thirty (30) days from the date such Indemnified Person makes written
demand therefor.

(d) On or prior to the date on which each Indemnified Person organized under the
laws of a jurisdiction outside the United States becomes an Indemnified Person
hereunder, such Indemnified Person to the extent permitted under Applicable Law,
shall provide Anadarko with U.S. Internal Revenue Service form W-BEN or W-8ECI,
as appropriate, or any successor form prescribed by the U.S. Internal Revenue
Service, certifying that such Indemnified Person is fully exempt from or subject
to a reduced rate of United States withholding taxes with respect to all
payments to be made to such Indemnified Person hereunder, or other documents
satisfactory to Anadarko indicating that all payments to be made to such
Indemnified Person hereunder are fully exempt from or subject to a reduced rate
of such taxes. Thereafter and from time to time (but only so long as such
Indemnified Person remains lawfully able to do so), each such Indemnified Person
shall submit to Anadarko such additional duly completed and signed copies of one
or the other of such forms (or such successor forms as shall be adopted from
time to time by the relevant U.S. taxing authorities) as may be (i) requested by
Anadarko from such Indemnified Person and (ii) required under then-current U.S.
law or regulations to avoid or reduce U.S. withholding taxes on payments in
respect of all amounts to be received by such

 

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Indemnified Person pursuant to this Sponsor Agreement. Each Indemnified Person
that is a U.S. person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to Anadarko a certificate to the effect that it is such a
U.S. person. If any Indemnified Person determines as a result of any change in
Applicable Law, or in any official application or interpretation thereof, that
it is unable to submit to Anadarko any form or certificate that such Indemnified
Person is obligated to submit pursuant to this subsection (d), or that such
Indemnified Person is required to withdraw or cancel any such form or
certificate previously submitted, such Indemnified Person shall promptly notify
Anadarko of such fact.

(e) Without prejudice to the survival of any other agreement of Anadarko
hereunder, the agreements and obligations of Anadarko and each Indemnified
Person contained in this Section 4.2 shall survive the payment in full of
principal and interest owing under the WGRAH Loan Agreement.

(f) Any other provision of this Sponsor Agreement to the contrary
notwithstanding, any amounts which are payable by Anadarko under this
Section 4.2 shall not also be payable under Section 3.

SECTION 5

SPONSOR COVENANTS

5.1 Separate Existence.

Anadarko hereby covenants and agrees that, so long as Pecos, or its successors
and assigns (other than any Transaction Party), holds an interest in Trinity,
Anadarko will, and will cause each of the Transaction Parties, Trinity (for so
long as the Trinity Class A Member is a Transaction Party and has the power and
authority to manage the business and affairs of Trinity) and each Transaction
Party, to comply with the following undertakings:

(i) Anadarko and its Affiliates (other than Trinity) will maintain their books,
financial records and accounts, including checking and other bank accounts and
custodian and other securities safekeeping accounts, separate and distinct from
those of Trinity.

(ii) Anadarko and its Affiliates (other than Trinity) will maintain their books,
financial records and accounts (including inter-entity transaction accounts) in
a manner so that it will not be difficult or costly to segregate, ascertain or
otherwise identify their assets and liabilities separate and distinct from the
assets and liabilities of Trinity.

(iii) Anadarko and its Affiliates (other than Trinity) on the one hand, will not
commingle any of their assets, funds, liabilities or business functions with the
assets, funds, liabilities or business functions of Trinity on the other hand.

(iv) Anadarko and its Affiliates (other than Trinity) will each observe all
requisite corporate procedures and formalities, including the holding of
periodic and special meetings of shareholders and boards of directors, the
recordation and maintenance of minutes of such meetings, and the recordation and
maintenance of resolutions adopted at such meetings.

 

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(v) Trinity will observe all requisite organizational procedures and
formalities, including the holding of meetings of members and boards of managers
as required by the Trinity Company Agreement, the recordation and maintenance of
minutes of such meetings, and the recordation of and maintenance of resolutions
adopted at such meetings.

(vi) None of Anadarko or its Affiliates (other than Trinity) will be
consensually merged or consolidated with Trinity (other than with respect to
Trinity, for financial reporting purposes, and with respect to Anadarko and its
Subsidiaries that are eligible to be consolidated with Anadarko under Code
Section 1504, for federal income tax purposes). None of the Transaction Parties
(other than Trinity) will be consensually merged or consolidated with Pecos for
any purpose.

(vii) Anadarko will include in its consolidated financial statements footnotes
that clearly disclose, among other things, the separate existence and identity
of Trinity from the other Transaction Parties and that Trinity has separate
assets and liabilities. Schedule 5.1(vii) sets out the language that will be
included in such disclosures. Pecos will not be consolidated with Anadarko for
the purposes of Anadarko’s consolidated financial statements.

(viii) All transactions, agreements and dealings between the Anadarko and its
Affiliates (other than Trinity), on the one hand, and Trinity, as the case may
be, on the other hand (including transactions, agreements and dealings pursuant
to which the assets or property of one is used or to be used by the other), will
reflect the separate identity and legal existence of each entity.

(ix) Transactions between Trinity, on the one hand, and any third parties, on
the other hand, will be conducted in the name of Trinity as an entity separate
and distinct from the Transaction Parties (other than Trinity).

(x) Except as otherwise specified in the Transaction Agreements, each of
Trinity, on the one hand, will pay its liabilities and losses from its
respective assets, and the Anadarko and its Affiliates (other than Trinity), on
the other hand, will pay their liabilities and losses from their respective
assets.

(xi) Representatives and agents of Trinity (whether or not they are “loaned”
employees of Anadarko and its Affiliates (other than Trinity)) will, when
purporting to act on behalf of Trinity, hold themselves out to third parties as
being representatives or agents, as the case may be, of Trinity, and will
utilize business cards, letterhead, purchase orders, invoices and the like of
Trinity.

(xii) Except for capital expenditures funded by Anadarko, Trinity will
compensate all consultants, independent contractors and agents from its own
funds for services provided to it by such consultants, independent contractors
and agents.

(xiii) To the extent that Trinity, on the one hand, and Anadarko and its
Affiliates (other than Trinity), on the other hand, jointly contract or do
business with vendors or service providers or share overhead expenses, the costs
and expenses incurred in so doing will be fairly and nonarbitrarily allocated
between or among such entities, with the result that

 

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each such entity bears its fair share of all such costs and expenses. To the
extent that Trinity, on the one hand, and Anadarko and its Affiliates (other
than Trinity), on the other hand, contracts or does business with vendors or
service providers where the goods or services are wholly or partially for the
benefit of the other, then the costs incurred in so doing will be fairly and
nonarbitrarily allocated to the entity for whose benefit the goods or services
are provided, with the result that each such entity bears its fair share of all
such costs, except to the extent otherwise provided in the Transaction
Agreements.

(xiv) Trinity will have annual financial statements prepared in accordance with
GAAP, separate from Anadarko and its Affiliates (other than Trinity), provided
that Anadarko may consolidate Trinity for Anadarko’s financial reporting
purposes.

(xv) Neither Anadarko nor its Affiliates (other than Trinity) will make any
inter-entity loans, advances, guarantees, extensions of credit or contributions
of capital to, from or for the benefit of Trinity, as the case may be, without
proper documentation and accounting in accordance with GAAP and only in
accordance with, or as contemplated by, the provisions of the Trinity Company
Agreement and the other Transaction Agreements.

(xvi) Trinity will not be included in the consolidated Tax Returns of Anadarko
and its consolidated Subsidiaries but their share of taxable income or loss from
Trinity may be included in such consolidated Tax Returns.

(xvii) Anadarko and its Affiliates (other than Trinity) will not refer to
Trinity as a department or division of Anadarko or any of its Affiliates (other
than Trinity) and will not otherwise refer to Trinity in a manner inconsistent
with its status as a separate and distinct legal entity. In addition, Trinity
will hold itself out as separate and distinct from Anadarko and its Affiliates
(other than Trinity).

(xviii) Anadarko and its Affiliates (other than Trinity) will not hold out the
credit of Trinity as being available to satisfy the obligations of Anadarko and
its Affiliates (other than Trinity).

(xix) Anadarko and its Affiliates will not acquire the obligations or securities
of Trinity (except as contemplated by or permitted under the Transaction
Agreements).

(xx) Anadarko and its Affiliates (other than Trinity) will not use stationery,
invoices, and checks bearing the name of Trinity.

(xxi) Anadarko and its Affiliates (other than Trinity) will not pledge their
respective assets for the benefit of Trinity (except as contemplated by or
permitted under the Transaction Agreements).

(xxii) Anadarko and its Affiliates (other than Trinity) will correct any known
misunderstanding regarding their respective identities as separate from the
identity of Trinity.

 

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(xxiii) Neither Anadarko nor its Affiliates will use the separate existence of
Trinity to abuse creditors or to perpetrate a fraud, injury, or injustice on
creditors.

(xxiv) All transactions between Anadarko and its Affiliates (other than
Trinity), on the one hand, and Trinity, on the other, are, and will be, duly
authorized and documented, and recorded accurately in the appropriate books and
records of such entities. All such transactions will be made in good faith and
without any intent to hinder, delay, or defraud creditors.

(xxv) Neither Anadarko nor its Affiliates (including Trinity) has entered into
the transactions contemplated by this Sponsor Agreement or any Transaction
Agreement to which it is a party in contemplation of insolvency or with a design
to prefer one or more creditors of such Person to the exclusion in whole or in
part of others in violation of Applicable Law or with an intent to hinder, delay
or defraud any of its creditors.

(xxvi) The assets of Sponsor and its Affiliates (including Trinity) are, as of
the date hereof, intended to be sufficient to pay the ongoing business expenses
of each such respective entity as they are incurred and to discharge all of
their respective liabilities.

5.2 Affirmative Covenants. Anadarko hereby covenants and agrees that, until the
Collection Date:

(a) Preservation of Corporate Existence, Etc. Anadarko shall preserve and
maintain, and cause Trinity and each WGRAH Loan Party to preserve and maintain,
its corporate existence, rights (organizational and statutory) and material
franchises, except in the case of each such Person as otherwise permitted by
Section 5.3(c); provided, however, that nothing herein shall prevent any change
in Business Entity form of Anadarko of any Affiliate of Anadarko (other than
Trinity or any WGRAH Loan Party).

(b) Compliance with Laws, Etc. Anadarko shall comply, and cause each of the
WGRAH Loan Parties to comply, with all Applicable Law applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in an Anadarko Material Adverse
Change.

(c) Visitation Rights. Anadarko shall, at any reasonable time and from time to
time, permit Pecos, the Agent, the Collateral Agent, and the Pecos Member
Interest Owners (as such terms are defined in the Pecos Credit Agreement), or
any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the properties of
any Transaction Party and to discuss the affairs, finances and accounts of any
Transaction Party (other than Trinity) with any of their respective officers and
with their respective independent certified public accountants. Anadarko shall
assume or pay all reasonable costs and expenses associated with any such
discussion or examination at any time when an Event of Default, Incipient Event,
or Anadarko Event has occurred and is continuing and shall assume or pay all
reasonable costs and expenses of such single discussion or examination per
calendar year for each of Pecos, the Pecos Member Interest Owners, the Agent and
the Collateral Agent at all other times.

 

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(d) Tax Status. Anadarko shall, and cause each of its Subsidiaries, to maintain
(i) WGRAH as a disregarded entity and (ii) Trinity as a partnership for U.S.
federal income tax purposes, to the extent possible under Applicable Law.

(e) Liquidator Notices. Upon receipt of a notice from the Liquidator following
the occurrence of a Liquidating Event, Anadarko shall: (i) contribute, to the
capital of the WGRAH Loan Parties, or, at Anadarko’s sole option waive repayment
of, those amounts receivable from such WGRAH Loan Parties in respect of
Consolidated Taxes as may be specified in the notice from the Trinity Liquidator
and (ii) cause those WGRAH Loan Parties that the Liquidator may request to make
the election provided in Code Section 754 provided that the underlying WGRAH
Loan Party member agreement or partnership agreement permits such election to be
made and that such WGRAH Loan Party is classified as a partnership for U.S.
federal income tax purposes.

(f) Capital Expenditures. Anadarko shall cause WGR to contribute capital to
WGRAH for the payment of capital expenditures incurred by WGRAH and its
Subsidiaries, to the extent that such capital expenditures are incurred.

(g) Casualty and other Losses. Anadarko shall reimburse WGRAH for any losses
suffered by any WGRAH Loan Party as a result of any casualty, business
interruption, acts of terrorism, acts of God or other force majeure events,
theft, personal injury, tort or other liability to a third party, and all other
litigation costs (including any losses associated with any Environmental
Actions) arising in any such case in connection with or attributable to any
WGRAH Loan Party or the operations or properties of any WGRAH Loan Party, but
only to the extent such Person is not reimbursed for any such loss or cost
through the receipt of insurance proceeds.

(h) Operational Losses. Anadarko shall reimburse WGRAH for any losses suffered
by any WGRAH Loan Party as a result of (i) the failure of any WGRAH Loan Party
to be in compliance with all Applicable Laws including all Environmental Laws;
(ii) the remediation of any conditions as required by any Governmental Authority
including without limitation any remediation, correction, or costs associated
with any environmental conditions or releases of Hazardous Materials; and
(iii) the failure of any WGRAH Loan Party to have good and defensible title to
all of its tangible and intangible assets, including all costs incurred in
curing any title defect and obtaining replacement assets.

(i) Midstream Agreements. Within sixty (60) days after the Effective Date,
Anadarko shall cause the Transaction Parties to document the Midstream
Agreements more fully described on Schedule III-B to the WGRAH Loan Agreement,
which documentation of such Midstream Agreements shall include the commercial
terms more fully set out on such Schedule. Anadarko shall reimburse WGRAH for
any losses suffered by any WGRAH Loan Party as a result of the failure to have
such Midstream Agreements in place as of the Effective Date. Anadarko shall
cause the Transaction Parties to enter into or renew Midstream Agreements from
time to time such that at all times the pricing and other terms of all Midstream
Agreements with Transaction Parties are not, taken as a whole, materially less
beneficial to WGRAH and its Subsidiaries than the pricing and other terms of all
Midstream Agreements (both in written form and not in written form) with
Transaction Parties existing on the Effective Date.

 

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(j) Form of Contribution. With respect to any payments due by Anadarko to a
Transaction Party pursuant to the terms of Sections 5.2 (g), (h) and (i), all
such payments shall be funded by Anadarko either directly to the third party
entitled to any such payment or directly or indirectly to WGRAH. All payments
made by Anadarko to WGRAH with respect to such obligations shall be made
directly or indirectly by Anadarko as capital contributions and shall be made
within thirty (30) days of the occurrence of the event giving rise to such
payment obligation.

(k) Compliance with Indenture. Anadarko shall comply with the provisions of
Sections 1004 and 1005 of the Public Indenture, which provisions, together with
related definitions, are hereby incorporated herein by reference for the benefit
of the Indemnified Parties and shall continue in effect for purposes of this
Section 5.2(k), regardless of termination, or any amendment or waiver of, or any
consent to any deviation from or other modification of, the Public Indenture;
provided, however, that, for purposes of this Section 5.2(k), (i) references in
the Public Indenture to “the Securities” shall be deemed to refer to the
Responsibilities of Anadarko under this Sponsor Agreement, (ii) references in
the Public Indenture to “the Trustee” shall be deemed to refer to Pecos,
(iii) references in the Public Indenture to “this Indenture” shall be deemed to
refer to this Sponsor Agreement, and (iv) references in the Public Indenture to
“supplemental indentures” shall be deemed to refer to amendments or supplements
to this Sponsor Agreement.

(l) Insurance. Anadarko shall at all times maintain, and will cause its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance of the kinds, covering the risks and in the relative proportionate
amounts (including as to self-insurance) consistent with that carried by
companies engaged in the same or similar business and similarly situated;
provided, that Anadarko shall not be required to maintain insurance against
risks or in amounts no longer economically available, on a de novo or renewal
basis, as applicable, to Anadarko and other companies engaged in the same or
similar business and similarly situated.

(m) Trinity Expenses. In the event Trinity is required to make any payment
(without duplication) (i) in respect of Trinity Expenses, or (ii) pursuant to
Article VII of the Trinity Company Agreement, Anadarko shall make such required
payment to Pecos; provided, however; that in the case of Trinity Expenses
comprising Additional Financing Costs and/or Pecos Transaction Costs, Anadarko
shall only be required to make such payment to Pecos in respect of such Trinity
Expenses to the extent such Trinity Expenses are not paid when due by WGRAH
pursuant to the terms of the WGRAH Loan Agreement.

(n) Capital Contribution Obligations.

(i) Anadarko shall cause a cash contribution to be made to WGRAH in the amount
of $200,000,000 upon the first occurrence of a Capital Contribution Event and
shall ensure that such amount is deposited into the Pledged Accounts.

(ii) Anadarko shall cause a cash contribution to be made to WGRAH on the each
date that financial statements are to be delivered pursuant to Section 4.01 of
the WGRAH Loan Agreement in an amount equal to the Commodity Payment Amount
relating to the Payment Period to which such financial statements relate.

 

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(iii) Anadarko shall cause cash contributions to be made to WGRAH in the amounts
and on the dates as set forth on Schedule 5.2(n)(iii) attached hereto.

5.3 Negative Covenants.

Anadarko hereby covenants and agrees that, at any time until the Collection
Date:

(a) Limitations on Sales and Leasebacks. Anadarko will not itself, and will not
permit any Transaction Party or other Subsidiary to,

(i) except as otherwise permitted under Section 5.3(c) below or the other
Transaction Agreements, enter into any arrangement for the sale, transfer,
conveyance, either directly or indirectly, of any Equity Interests in Trinity or
any Transaction Party; or

(ii) enter into any arrangement with any bank, insurance company or other lender
or investor or to which any such lender or investor is a party, providing for
the leasing by a Transaction Party for a period, including renewals, in excess
of three years, of any property or assets of any Transaction Party which has
been or is to be sold or transferred more than one hundred eighty (180) days
after the completion of construction and commencement of full operation thereof,
by any Transaction Party to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of any properties or assets of the Transaction Parties (herein referred to as a
“sale and leaseback transaction”) unless Anadarko or any Transaction Party
within one hundred eighty (180) days after the sale or transfer shall have been
made by the Transaction Party, applies an amount equal to the greater of (i) the
net proceeds of the sale of the properties or assets of the Transaction Parties
sold and leased back pursuant to such arrangement or (ii) the net amount (after
deducting applicable reserves) at which such property or assets is carried on
the books of such Transaction Party at the time of entering into such
arrangement, to the retirement of Indebtedness under the WGRAH Loan Agreement.

(b) Limitation on Secured Indebtedness. Anadarko will not, nor permit any
Subsidiary to, grant or allow to exist any Lien on any Equity Interests in
Trinity or any Transaction Party. Anadarko will not incur, issue, assume or
guarantee any Indebtedness secured by a mortgage on oil, gas, coal or other
minerals in place, or on related leasehold or other property interests, which is
incurred for any reason if the aggregate amount of all such Indebtedness exceeds
10% of Consolidated Net Tangible Assets (as defined in the Public Indenture).

(c) Fundamental Changes. Except as otherwise permitted under the Transaction
Agreements, Anadarko shall not itself, and will not permit Trinity or any
Transaction Party to, consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person unless: (i) (A) in the case of a merger or amalgamation of Anadarko,
Anadarko is the surviving entity; or (B) the Person formed by such consolidation
or into which Anadarko is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of Anadarko substantially
as an entirety shall be a corporation, partnership or trust, shall be organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia, shall have

 

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unsecured non-credit enhanced publicly held indebtedness rated “investment
grade” by S&P or Moody’s, and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to Pecos, in form satisfactory to
Pecos, the obligations of Anadarko hereunder, including the due and punctual
payment of and the performance of every covenant of this Sponsor Agreement on
the part of the Anadarko to be performed or observed; and (ii) immediately after
giving effect to such transaction, no Notice Event, Liquidating Event,
Termination Event, Event of Default or Incipient Event or any “Event of Default”
as such term is defined in the Sponsor Term Credit Agreement shall have occurred
and be continuing.

(d) Trinity, Holdings, WGR, WGRAH Loan Parties or Pecos Bankruptcy. Anadarko
will not itself, and will not permit any Transaction Party or other Subsidiary
to,

(i) Consent to, vote for, or otherwise cause or permit (or permit any of its
Subsidiaries or, to the extent it can control them, other Affiliates, to
consent, to, or vote for, or otherwise cause or permit) Trinity, WGR, Holdings
or any WGRAH Loan Party voluntarily to take any Bankruptcy Action.

(ii) Consent to, vote for, or otherwise cause (or permit any of its Affiliates,
to consent to, or vote for, or otherwise cause) Pecos voluntarily to take any
Bankruptcy Action.

(e) Subsidiaries. Permit at any time any of WGRAH, WGR, or Holdings to fail to
be a Wholly-Owned Subsidiary of Anadarko.

(f) Consolidated Taxes. Permit any WGRAH Loan Party to pay any Consolidated
Taxes (including, without limitation, any Consolidated Taxes attributable to
such WGRAH Loan Party) or to pay or reimburse any Transaction Party for or in
respect of any Consolidated Taxes (including, without limitation, any
Consolidated Taxes attributable to such WGRAH Loan Party).

5.4 Reporting Requirements. Anadarko hereby covenants and, agrees that, until
the Collection Date, it will furnish to Pecos the following:

(a) Financial Statements and Other Information. Anadarko will furnish to Pecos:

(i) Within fifteen (15) days after the Anadarko is required to file the same
with the Securities and Exchange Commission, copies of the annual reports of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Securities and Exchange Commission may from time to time by
rules and regulations prescribe) which the Anadarko may be required to file with
the Securities and Exchange Commission pursuant to Section 13 or Section 15(d)
of the Securities Act; or, if Anadarko is not required to file information,
documents or reports pursuant to either of said Sections, then such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations; provided, however, that
Anadarko shall be deemed to have furnished the information required by this
Section 5.4(a)(i) if it shall have timely made the same available on

 

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“EDGAR” and/or on its home page on the worldwide web (at the date of this
Sponsor Agreement located at http://www.anadarko.com) and complied with
Section 5.4(a)(i) in respect thereof; provided further, however, that if Pecos
is unable to access EDGAR or the Anadarko’s home page on the worldwide web,
Anadarko agrees to provide Pecos with paper copies of the information required
to be furnished pursuant to this Section 5.4(a) promptly following notice from
Pecos.

(ii) Within sixty (60) days after the close of each of the first three quarters
of each fiscal year of Anadarko, a statement by a Responsible Officer of
Anadarko stating whether to the knowledge of Anadarko an event has occurred
during such period and is continuing which constitutes a Notice Event,
Liquidating Event, Termination Event, Event of Default or Incipient Event or any
“Event of Default” as such term is defined in the Sponsor Term Credit Agreement,
and, if so, stating the facts with respect thereto.

(iii) Within one hundred twenty (120) days after the close of each fiscal year
of Anadarko a statement by a Responsible Officer of Anadarko stating whether to
the knowledge of Anadarko an event has occurred during such period and is
continuing which constitutes a Notice Event, Liquidating Event, Termination
Event, Event of Default or Incipient Event or any “Event of Default” as such
term is defined in the Sponsor Term Credit Agreement, if so, stating the facts
with respect thereto.

(iv) Such other information respecting the financial condition or operations of
the Anadarko and its Subsidiaries as Pecos may from time to time reasonably
request.

(v) Information required to be delivered pursuant to Section 5.4(a)(i) above
shall be deemed to have been delivered on the date on which Anadarko provides
notice to Pecos that such information has been posted on “EDGAR” or Anadarko’s
website or another website identified in such notice and accessible by Anadarko
without charge (and the Anadarko hereby agrees to provide such notice).

(b) Notices of Material Events. Anadarko will furnish to Pecos prompt written
notice of the following:

(i) the occurrence of any Notice Event, Liquidating Event, Termination Event,
Event of Default, Incipient Event, or any “Event of Default” as such term is
defined in the Sponsor Term Credit Agreement;

(ii) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting Anadarko, Trinity
or any Transaction Party that if adversely determined, could reasonably be
expected to result in an Anadarko Material Adverse Change; and

(iii) any other development that results in, or could reasonably be expected to
result in, an Anadarko Material Adverse Change. Each notice delivered under this
Section 5.4(b)(iii) shall be accompanied by a statement of a Responsible Officer
of the Anadarko setting forth the details of the event or development requiring
such notice and any action taken with respect thereto.

 

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SECTION 6

MISCELLANEOUS

6.1 Amendments. No amendment or waiver of any provision of this Sponsor
Agreement, and no consent to any departure by Anadarko herefrom, shall in any
event be effective unless the same shall be in writing and signed by Pecos and
Anadarko. No such waiver of a provision or consent to a departure in any one
instance shall be construed as a further or continuing waiver of or consent to
subsequent occurrences, or a waiver of any other provision or consent to any
other departure. Any such amendment, waiver or consent signed by Pecos shall be
binding on all Indemnified Persons.

6.2 Addresses for Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows

(a) if to Anadarko, to it at 1201 Lake Robbins Drive, The Woodlands, Texas
77380, Attention of the Treasurer, Telecopy No. (832) 636-5029; messenger
delivery to 1201 Lake Robbins Drive, The Woodlands, Texas 77380;

(b) if to Pecos, at its address specified in accordance with Section 14.11 of
the Trinity Company Agreement; and

(c) if to any other Indemnified Party, at its address specified by notice given
in the manner provided herein to each other Person entitled to receive notice
hereunder, or, in each case, to, such other address (and with copies to such
other Persons) as the Person entitled to receive notice hereunder shall specify
by notice given in the manner provided herein to the other Persons entitled to
receive notice hereunder.

6.3 No Waiver; Cumulative Remedies. No failure on the part of any Indemnified
Person to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by Applicable Law.

6.4 Waiver of Jury Trial. ANADARKO AND BY ACCEPTING THE BENEFITS HEREOF, EACH
INDEMNIFIED PERSON, EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS SPONSOR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

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6.5 Jurisdiction, Etc.

(a) Anadarko hereby irrevocably submits to the jurisdiction of any New York
State or Federal court sitting in New York City and any appellate court from any
thereof in any action or proceeding by any Indemnified Person in respect of, but
only in respect of, any claims or causes of action arising out of or relating to
this Sponsor Agreement (such claims and causes of action collectively, being
“Permitted Claims”), and Anadarko hereby irrevocably agrees that all. Permitted
Claims may be heard and determined in such New York State court or in such
Federal court. Anadarko hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any aforementioned court in respect of Permitted
Claims. Each party agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Applicable Law.

(b) Nothing in this Section 6.5 shall affect the right of any Indemnified Person
to serve legal process in any other manner permitted, by Applicable Law or
affect any right otherwise existing of any Indemnified Person to bring any
action or proceeding against Anadarko or its property in the, courts of other
jurisdictions or (ii) shall be deemed to be a general consent to jurisdiction in
any particular court or a general waiver of any defense or a consent to
jurisdiction of the courts expressly referred to in subsection (a) above in any,
action or proceeding in respect of any claim or cause of action other than
Permitted Claims.

6.6 Assignment. All covenants and other agreements and obligations in this
Sponsor Agreement shall (a) be binding upon Anadarko and its successors, but
Anadarko may not assign its obligations hereunder without the consent of Pecos,
except pursuant to a merger or consolidation not prohibited by Section 5.3(c),
and (b) inure to the exclusive benefit of, and be enforceable by, Pecos and any
Indemnified Person and, in each case, by its respective permitted successors,
transferees and assigns (including any assignee for security purposes or Person
holding a security interest herein).

6.7 Governing Law. This Sponsor Agreement shall be governed by, and construed in
accordance with the laws of the State of New York.

6.8 Counterparts. This Sponsor Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. This agreement may be
delivered by facsimile transmission of the relevant signature pages hereof.

6.9 Survival of Representations, Warranties and Indemnities; Entire Agreement.

All representations, warranties and indemnities and undertakings to pay costs
and expenses contained herein or made by or on behalf of Anadarko, as the case
may be, in connection herewith or in connection with the Transaction Agreements
shall survive (a) the execution and delivery of this Sponsor Agreement, (b) the
completion of the performance by each other Transaction Party of its
Responsibilities under the Transaction Agreements to which it is a party, and
(c) the Transfer (whether or not such Transfer was a permitted Transfer) by any
Transaction Party of all or a portion of its Trinity Class A Membership Interest
or any termination of its status as a Trinity Class A Member pursuant to the
Trinity Company

 

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Agreement and may be relied upon by any Indemnified Person, or any assignee of
such Indemnified Person permitted hereunder, regardless of any investigation
made at any time by or on behalf of any Indemnified Person or any such assignee.

6.10 Severability. Every provision of this Sponsor Agreement that is prohibited
by or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render-unenforceable such-provision in any other jurisdiction.

6.11 No Third-Party Beneficiaries. This Sponsor Agreement is intended for the
exclusive benefit of the Indemnified Persons and no other Person shall have any
rights hereunder, whether as a third-party beneficiary or otherwise.

6.12 Obligations Absolute.

(a) To the fullest extent permitted under Applicable Law, Anadarko covenants and
agrees that its obligations hereunder will be performed strictly in accordance
with the terms of this Sponsor Agreement, regardless of any Applicable Law now
or hereafter in effect in any jurisdiction affecting the ability of any
Transaction Party to perform its obligations under any Transaction Agreement or
the rights of any Indemnified Person with respect thereto.

(b) To the fullest extent permitted under Applicable Law, any action or actions
may be brought hereunder by any Indemnified Person without the necessity of
joining any prior or other Indemnified Person in such action or actions. To the
fullest extent permitted under Applicable Law, the liability of Anadarko under
this Sponsor Agreement shall be irrevocable, absolute and unconditional
irrespective of, and Anadarko hereby irrevocably, waives any defenses it may now
or hereafter have in any way relating to, any or all of the following:

(i) Any change in the time, manner or place of performance, or in any other
term, of all or any of the Responsibilities of Anadarko or any Transaction Party
under any other Transaction Agreement, or any other amendment, supplement or
waiver of or any consent to departure from any of the Transaction Agreements,
including any increase in or modification of the Responsibilities of Anadarko or
any Transaction Party thereunder or the dissolution of any of the Transaction
Parties;

(ii) Any change, restructuring or termination of the corporate, limited
liability company, or partnership structure, as the case may be, or in the
existence or ownership of any of the Transaction Parties;

(iii) Any act or omission of any Indemnified Person or any prior or subsequent
Indemnified Person hereunder (other than any written amendment or waiver of, or
consent to departure from, this Sponsor Agreement meeting the requirements of
Section 6.1);

(iv) Any failure of any Indemnified Person to disclose to Anadarko any
information relating to the financial condition, operations, properties or
prospects of Pecos, Trinity, any Transaction Party or any Pecos Member now or in
the future known to any Indemnified Person (Anadarko waiving any duty on the
part of each Indemnified Person to disclose such information);

 

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(v) Any lack of validity or unenforceability of any of the Transactions
Obligations;

(vi) Any Transaction Obligation being unenforceable or not allowable due to the
existence of a Bankruptcy involving any Transaction Party; or

(vii) Any other circumstance (including any statute of limitations or any
existence of or reliance on any representation by any Indemnified Person) that
might otherwise constitute a defense available to, or a discharge of, any of the
Transaction Parties or Anadarko or a guarantor or indemnitor generally other
than payment and performance when due.

(c) Anadarko’s obligations under this Sponsor Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment by
Anadarko or any Transaction Party in satisfaction of any of the obligations of
Anadarko or any Transaction Party under the Transaction Agreements, is rescinded
or must otherwise be returned upon the insolvency, bankruptcy or reorganization
of Anadarko or any Transaction Party or any Subsidiary of such Person, or
otherwise, all as though such payment had not been made.

6.13 Waiver. Subject to the provisions of Section 3, Anadarko hereby waives (to
the extent it may do so under Applicable Law) promptness, diligence, and any
notice from any Indemnified Person with respect to any of Anadarko’s obligations
under this Sponsor Agreement and any requirement that any Indemnified Person
exhaust any right or take any action against any of the Transaction Parties or
any other Person.

6.14 Subrogation. Until indefeasible payment in full of (a) Anadarko’s
obligations hereunder (b) the Transactions Obligations, and (c) any other
obligations of any other Transaction Party under the Transaction Agreements,
Anadarko hereby waives any rights that it may acquire by way of subrogation
hereunder, by any payment made hereunder or otherwise. If any amount shall be
paid to Anadarko on account of such subrogation rights at any time prior to such
obligations having been paid in full, such amount shall be held in trust for the
benefit of the, relevant Indemnified Person and shall forthwith be paid to such
Indemnified Person to be credited and applied to any such obligations; whether
matured or unmatured, in accordance with the terms hereof.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, Anadarko and Pecos have each caused this Sponsor Agreement
to be duly executed and delivered by its officer or other duly authorized
signatory thereunto duly authorized as of the date first above written.

 

ANADARKO PETROLEUM CORPORATION By:  

/s/ Robert G. Gwin

Name:   Robert G. Gwin Title:   Vice-President and Treasurer

Signature Page to Sponsor Agreement

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PECOS INVESTORS LLC By:   GSO Special Situations Fund LP, as a managing member  
By:   GSO Capital Partners LP, its investment manager By:  

/s/ George Fan

Name:   George Fan Title:   Chief Legal Officer By:   GSO COF Facility LLC, as a
managing member   By:   GSO Capital Partners LP, its investment manager By:  

/s/ George Fan

Name:   George Fan Title:   Chief Legal Officer

Signature Page to Sponsor Agreement

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Schedule 5.2(n)(iii)

“Contributed Margins from National Helium and Satanta Contracts”

(a) One payment in the amount of $43.1 million no later than February 28, 2008;

(b) Four payments each in the amount of $9.0 million no later than 60 days
following the last day of each calendar quarter during 2008, or
May 31, August 31, November 30 and February 28, 2009;

(c) Four payments each in the amount of $6.3 million no later than 60 days
following the last day of each calendar quarter during 2009, or
May 31, August 31, November 30 and February 28, 2010;

(d) Four payments each in the amount of $5.8 million no later than 60 days
following the last day of each calendar quarter during 2010, or
May 31, August 31, November 30 and February 28, 2011;

(e) Four payments each in the amount of $6.0 million no later than 60 days
following the last day of each calendar quarter during 2011, or
May 31, August 31, November 30 and February 28, 2012; and

(f) Four payments each in the amount of $6.0 million no later than 60 days
following the last day of each calendar quarter during 2012, or
May 31, August 31, November 30 and February 28, 2013.

 

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