UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: October 27, 1999
Commission File Number 1-14323
ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0568219
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2727 North Loop West
Houston, Texas 77008
(Address of principal executive (Zip Code)
offices)
(713) 880-6500
(Registrant's telephone number, including area code)
=====================================================================
This filing amends the Form 8-K Current Report filed by Enterprise Products
Partners L.P. on September 20, 1999.
Item 2. Acquisition or Disposition of Assets
Acquisition of Tejas Natural Gas Liquids, LLC
On September 17, 1999, Enterprise Products Partners L.P. ("Enterprise")
acquired Tejas Natural Gas Liquids, LLC ("TNGL") from a subsidiary of Tejas
Energy, LLC ("Tejas"), an affiliate of Shell Oil Company. Tejas has the
opportunity to earn an additional 6.0 million contingent convertible special
partnership units over the next two years upon the achievement of certain gas
production thresholds under a 20 year natural gas processing agreement entered
into among TNGL, Shell Oil Company and a number of its affiliates covering
substantially all of the Shell entities' Gulf of Mexico gas production. The
effective date of the transaction was August 1, 1999.
TNGL engages in natural gas processing and natural gas liquid ("NGL")
fractionation, transportation, storage and marketing in Louisiana and
Mississippi. TNGL's assets include varying interests in eleven natural gas
processing plants (including two under construction) with a combined gross
capacity of 11.0 billion cubic feet per day (Bcfd) and net capacity of 3.1 Bcfd;
four NGL fractionation facilities with a combined gross capacity of 281,000
barrels per day (BPD) and net capacity of 131,500 BPD; four NGL storage
facilities with approximately 29.5 million barrels of gross capacity and 8.8
million barrels of net capacity; and over 2,100 miles of NGL pipelines
(including a 11.5 percent interest in Dixie Pipeline).
The 14.5 million convertible special units received by Tejas at closing
represent a 17.6 percent equity ownership in Enterprise. These special units do
not accrue distributions and are not entitled to cash distributions until their
conversion into common units, which occurs automatically with respect to 1.0
million units on August 1, 2000 (or the day following the record date for
determining units entitled to receive distributions in the second quarter of
2000), 5.0 million units on August 1, 2001 and 8.5 million units on August 1,
2002. If all of the 6.0 million contingent special convertible units are earned,
Tejas' ownership interest in Enterprise would increase to 23.8 percent based on
the currently outstanding units, and 1.0 million of the contingent units would
convert into common units on August 1, 2002 and 5.0 million would convert on
August 1, 2003.
Under the rules of the New York Stock Exchange, conversion of the special
units into common units requires approval of the Enterprise unitholders. The
General Partner has agreed to call a special meeting of the unitholders of
Enterprise for the purpose of soliciting such approval. EPC Partners II, Inc.
("EPC II"), which owns in excess of 81% of the outstanding common units, has
agreed to vote its units in favor of such approval, which will satisfy the
approval requirement.
The $166 million cash portion of the purchase price was funded with
borrowings under Enterprise's existing credit facility led by The Chase
Manhattan Bank.
The consideration for the acquisition was determined by arms-length
negotiation among the
parties.
Unitholder Rights Agreement
In connection with the transactions described above, Tejas purchased from
EPC II a 30% membership interest in Enterprise Products GP, LLC (the "General
Partner"), which serves as the sole general partner of Enterprise, and entered
into a Unitholder Rights Agreement with Enterprise, the General Partner,
Enterprise Products Operating L.P., EPC II and Enterprise Products Company (the
"Unitholder Rights Agreement"). The Unitholder Rights Agreement provides that as
long as Tejas owns more than a 20% interest in the General Partner, it will be
entitled to designate one-third of the General Partner's board of directors, and
that as long as it owns at least a 10% interest in the General Partner it will
also be entitled to designate two members of a newly created Executive Committee
of the General Partner. Tejas' rights to board and committee representation
would decrease if their ownership interest decreases.
The Unitholder Rights Agreement provides that the General Partner will not
permit Enterprise, Enterprise Operating or the General Partner to take certain
actions without the consent of at least one of the Tejas designees on the
Executive Committee, including, among other things, paying special distributions
not in accordance with Enterprise's current cash distribution policy; material
dispositions of assets; dispositions of assets that could adversely affect
production or delivery of gas by Shell Oil Company or its affiliates in the Gulf
of Mexico; material acquisitions; mergers or similar transactions; issuing
partnership units in private financing transactions; incurrence of indebtedness
in excess of certain limits; repurchases of partnership units other than in
connection with employee benefit plans; entering into or modifying transactions
with affiliates; and submitting matters to a unitholder vote. The foregoing
limitations will terminate when the special units issued to Tejas have been
converted to common units and the market price of the common units has exceeded
$24 per unit for 120 consecutive calendar days (subject to certain extensions).
Pursuant to the Unitholder Rights Agreement, the board of directors of the
General Partner has been increased by three members to a total of nine, and
Tejas has designated Charles R. Crisp, Curtis R. Frasier and Stephen H. McVeigh
as its board designees. Tejas has designated Curtis R. Frasier and Stephen H.
McVeigh to serve on the Executive Committee, with the Enterprise designees being
Dan L. Duncan, O. S. Andras and Richard H. Bachmann. Mr. Crisp is President and
Chief Executive Officer of Coral Energy LLC, an affiliate of Shell Oil Company,
Mr. Frasier is Chief Operating, Administrative and Legal Officer of Coral Energy
LLC, and Mr. McVeigh is Manager of Production and Surveillance (Gulf of Mexico)
for Shell Offshore Inc.
The Unitholder Rights Agreement grants EPC II certain rights to acquire
Tejas' interest in the General Partner if Tejas disposes of its special or
common units, and to acquire Tejas' special or common units if it wishes to
dispose of them. Each of these purchase rights would also apply in the event of
specified change of control events relating to Tejas. The Unitholder Rights
Agreement grants Tejas preemptive rights to acquire additional units issued by
Enterprise in private equity financing transactions, and grants Tejas the right
to acquire all of the partnership units owned by EPC II, Enterprise Products
Company and their affiliates if certain change of control events occur with
respect to Enterprise.
The Unitholder Rights Agreement provides that if Tejas sells any of the
common units it receives upon conversion of the special units in specified types
of sale transactions for less than $18 per unit within one year after the
applicable conversion date for the special units in question, then Enterprise
will pay to Tejas the difference between the sales price and $18, either in cash
or in additional units at Enterprise's option.
Other Agreements
In connection with the transactions described above, Enterprise entered
into a Registration Rights Agreement with Tejas granting Tejas certain rights to
require Enterprise to register for resale under the Securities Act of 1933 all
of the common units issuable upon conversion of the special units, and certain
"piggy back" rights to require Enterprise to include such common units in any
registration begun by Enterprise.
Also, the partnership agreement of Enterprise and the limited liability
agreement of the General Partner were amended to give effect to the above
transactions, including the issuance of the special units.
The foregoing summaries of the Contribution Agreement governing the
acquisition, the Unitholder Rights Agreement, the Registration Rights Agreement,
the amended partnership agreement of Enterprise and the amended limited
liability company agreement of the General Partner are qualified in their
entirety by reference to the complete documents.
Item 7 . Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired:
1. Tejas Natural Gas Liquids, LLC and Subsidiaries -- Statement
of Assets Acquired and Liabilities Assumed and Statement of
Revenues and Direct Operating Expenses for the Years Ended
December 31, 1998, December 31, 1997, and December 31, 1996,
and Independent Auditor's Report.
(b) Pro Forma Financial Information:
Note: Pro Forma Financial Information for Enterprise giving effect to
the Tejas transaction is not included in this report and will
be filed by amendment on or prior to December 3, 1999.
(c) Exhibits:
99.4 Contribution Agreement dated September 17, 1999.
99.5 Unitholder Rights Agreement dated September 17, 1999.
99.6 Registration Rights Agreement dated September 17, 1999.
99.7 Second Amended and Restated Agreement of Limited Partnership
of Enterprise dated as of September 17, 1999.
Note:The Company incorporates by reference the above documents,
which were included in the Schedule 13 D filed September 27,
1999, by Tejas Energy LLC and others.
99.8 First Amended and Restated Limited Liability Company
Agreement of the General Partner dated as of September 17,
1999.
99.9 First Amendment to $200 million Credit Agreement dated July
28, 1999 among Enterprise Products Operating and certain
banks.
99.10$350 million Credit Agreement dated July 28, 1999 among
Enterprise Products Operating and certain banks.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTERPRISE PRODUCTS PARTNERS L.P.
By Enterprise Products GP, LLC, its general partner
Date: October 27, 1999 By: /s/ Gary L. Miller
Gary L. Miller
Executive Vice President and Chief Financial Officer
of Enterprise Products GP, LLC
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
99.4. Contribution Agreement dated September 17, 1999.
99.5. Unitholder Rights Agreement dated September 17, 1999.
99.6 Registration Rights Agreement dated September 17, 1999.
99.7 Second Amended and Restated Agreement of Limited Partnership of
Enterprise dated as of September 17, 1999.
Note:The Company incorporates by reference the above documents, which were
included in the Schedule 13 D filed September 27, 1999, by Tejas
Energy LLC and others.
99.8 First Amended and Restated Limited Liability Company Agreement of the
General Partner dated as of September 17, 1999.
99.9 First Amendment to $200 million Credit Agreement dated July 28, 1999,
among Enterprise Products Operating and certain banks.
99.10$350 million Credit Agreement dated July 28, 1999, among Enterprise
Products Operating and certain banks.
Tejas Natural Gas Liquids, LLC and Subsidiaries Statement of Assets
Acquired and Liabilities Assumed As of December 31, 1998 and Statements of
Revenues and Direct Operating Expenses for the Years Ended December 31,
1998, 1997 and 1996 and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
Tejas Natural Gas Liquids, LLC and Subsidiaries:
We have audited the accompanying statement of assets acquired and liabilities
assumed of Tejas Natural Gas Liquids, LLC and subsidiaries (the "Company"), a
wholly owned subsidiary of Tejas Midstream Enterprises, LLC, as of December 31,
1998, pursuant to the Contribution Agreement by and among Tejas Midstream
Enterprises, LLC, Tejas Energy, LLC, Enterprise Products Partners L.P.,
Enterprise Products Operating L.P., Enterprise Products GP, LLC, EPC Partners
II, Inc. and Enterprise Products Company, dated September 17, 1999 (the
"Agreement"), and the related statements of revenues and direct operating
expenses for the years ended December 31, 1998, 1997 and 1996. These statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statements. We believe that
our audits provide a reasonable basis for our opinion.
The statements referred to above were prepared to present the net assets and
operations of Tejas Natural Gas Liquids, LLC and subsidiaries to be acquired
pursuant to the Agreement described in Note 1 and are not intended to be a
complete presentation of the net assets or operations of Tejas Natural Gas
Liquids, LLC and subsidiaries.
In our opinion, such statements present fairly, in all material respects, the
assets acquired and liabilities assumed as of December 31, 1998, and the
revenues and direct operating expenses for the years ended December 31, 1998,
1997 and 1996 of Tejas Natural Gas Liquids, LLC and subsidiaries, pursuant to
the Agreement referred to above, in conformity with generally accepted
accounting principles.
Houston, Texas
September 17, 1999
TEJAS NATURAL GAS LIQUIDS, LLC AND SUBSIDIARIES
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED (Note 1)
DECEMBER 31, 1998 (In Thousands)
- --------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE - Trade, net of allowance for doubtful $ 55,536
accounts of $1,789
INVENTORIES 18,494
PROPERTY, PLANT AND EQUIPMENT, Net 99,605
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED 96,789
AFFILIATES
ACCOUNTS PAYABLE:
Trade (49,126)
Affiliate (8,739)
ACCRUED EXPENSES (4,135)
ADVANCES PAYABLE TO UNCONSOLIDATED AFFILIATES (31,195)
ASSETS ACQUIRED AND LIABILITIES ASSUMED, Net $177,229
See notes to statements.
TEJAS NATURAL GAS LIQUIDS, LLC AND SUBSIDIARIES
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (Note 1)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (In Thousands)
- ----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
REVENUES:
Sales $589,528 $819,523 $857,499
Dividend income 4,461 903 1,081
Equity earnings from unconsolidated affiliates 1,592 3,100
----- ----- -----
Total 595,581 823,526 858,580
DIRECT OPERATING EXPENSES:
Cost of goods sold and operating expenses 573,266 765,078 786,405
Depreciation 4,911 4,344 3,258
----- ----- -----
Total 578,177 769,422 789,663
------- ------- -------
EXCESS OF REVENUES OVER DIRECT
OPERATING EXPENSES $ 17,404 $ 54,104 $ 68,917
======== ======== ========
See notes to statements.
TEJAS NATURAL GAS LIQUIDS, LLC
NOTES TO STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
TejasNatural Gas Liquids, LLC ("TNGL" or the "Company") is a wholly owned
subsidiary of Tejas Midstream Enterprises, LLC ("TME"), which is an
affiliate of Shell Oil Company ("Shell"). The Company was formed on
January 7, 1998 in connection with Shell's contribution of certain of its
interests in natural gas processing plants, natural gas liquids ("NGLs"),
fractionation facilities and pipelines, and NGL marketing activities which
were previously part of approximately eight separate Shell divisions. The
various assets owned and operated by TNGL are located in Louisiana and
Mississippi.
As of July 31, 1999, TNGL distributed to its parent all of its interests in
Tejas Biogas, LLC, Tejas C Gas Plants LP, LLC, Texas Gas Plants GP, LLC,
and Tejas Sheridan Pipeline, LLC, and its subsidiary, Texas Gas Plants,
L.P. The Company also transferred certain other assets and liabilities to
its parent. In addition, pursuant to a Contribution Agreement (dated
September 17, 1999) by and among TME, Tejas Energy, LLC, Enterprise
Products Partners L.P. ("EPD"), Enterprise Products Operating L.P.,
Enterprise Products Company, Enterprise Products GP, LLC and EPC Partners
II, Inc., effective August 1, 1999, TME contributed the limited liability
company interest of TNGL and its subsidiaries to EPD for cash and certain
of EPD's general and limited partnership units as defined in the
Contribution Agreement. The sale closed on September 20, 1999. The assets
acquired under the Contribution Agreement included the TNGL assets and
liabilities (the "TNGL Assets'), located in Louisiana and Mississippi,
which includes: (a) interest in a number of gas processing and
fractionation facilities and related assets; (b) NGL pipelines and
(c) additional assets including transportation and terminalling assets
required to support the NGL marketing operations and certain related
contracts and working capital.
The accompanying statement of assets acquired and liabilities assumed
represents the assets and liabilities of the TNGL Assets at their
historical cost. The statements of revenues and direct operating expenses
include only those amounts related to the operations of the TNGL Assets and
do not include selling, general and administrative allocations from the
parent company. Historically, the Company has provided service and support
functions for Shell's integrated operations. In this role, the strategic
direction and economic development of the Company has been for the sole
benefit of Shell. Consequently, certain business decisions made in periods
of volatile market conditions were influenced by Shell's integrated
operations and strategic direction and, as such, were not necessarily made
autonomously for the profit of the individual assets. As a result, these
statements are not necessarily indicative of the financial condition or
results of operations that would have resulted had the TNGL Assets been
operated as a stand-alone entity. Additionally, the distinct and separate
accounts necessary to present an individual balance sheet as of December
31, 1998 and the related statements of income and of cash flows for the
years ended December 31, 1998, 1997 and 1996 in accordance with generally
accepted accounting principles have not been maintained and, therefore, are
not presented.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments in Unconsolidated Affiliates - The accompanying statements
include the accounts of the TNGL Assets and those of 50% or more owned
subsidiaries controlled by the Company and also part of the TNGL Assets.
The equity method is used to account for investments in unconsolidated
entities in which the Company owns more than 20% of the voting interest but
by definition does not have control. The cost method is used to account for
investments in unconsolidated affiliates in which the Company owns less
than 20% of the voting interest and by definition does not execute control.
Inventories - Inventories consisting of NGLs and NGL products are carried
at the lower of cost, on a last-in first-out (LIFO) basis, or market, and
include certain costs directly related to the production process. The
replacement cost of the inventory at December 31, 1998 was approximately
$18.0 million.
Property, Plant and Equipment - Property, plant and equipment is recorded
at cost and is generally depreciated using the straight-line method over
the assets' estimated useful lives. Some processing facilities are
depreciated on a units-of-production basis to the extent that the
processing facilities' sole operations are directly related to specific
gas-producing properties. The unit-of-production rate is based on total
proven reserves related to the dedicated gas producing properties.
Maintenance and repair costs are expensed as incurred; additions,
improvements and replacements are capitalized.
Variable Ownership Percentage Adjustments - The ownership percentage of
certain natural gas processing plants varies according to the plants' gas
throughput associated with the Company. These plants are jointly owned with
other entities which pay or are reimbursed by the Company to adjust the
ownership percentage on an annual basis.
Long-Lived Assets - The Company records impairment losses on long-lived
assets if the carrying amount of such assets, grouped at the lowest level
for which there are identifiable cash flows that are largely independent of
the cash flows from other assets, exceeds the estimated undiscounted future
cash flows of such assets. Measurement of any impairment loss is based on
the fair value of the asset. For the years ended December 31, 1998, 1997
and 1996, there were no charges for impairments included in the statements
of revenues and direct operating expenses.
Excess Cost Over Underlying Equity in Net Assets - The excess of the
Company's cost over the underlying equity in net assets of K/D/S Promix,
LLC, is being amortized using the straight-line method over the estimated
remaining life of the assets over a period not to exceed 20 years. Such
amortization is reflected in the equity earnings from unconsolidated
affiliates. The unamortized excess was approximately $20.3 million at
December 31, 1998.
Revenue Recognition - Revenue from processing and fractionation services is
recognized when the services are provided. Revenue from the sale of natural
gas liquids is generally recognized upon the passage of title. Revenue from
pipeline transportation of natural gas liquids is recognized upon receipt
of the natural gas liquids into the pipeline systems.
Federal Income Taxes - The Company is a limited liability company and is,
therefore, not taxable for federal tax purposes; as a result, income taxes
have been excluded from the statements.
Use of Estimates - The preparation of statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of certain
assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the statements, and the related reported amounts of revenue
and expenses during the reporting period. Actual results could differ from
these estimates.
Significant Risks - The Company is subject to a number of risks inherent in
the industry in which it operates, primarily fluctuating gas and liquids
prices and gas supply. The Company's financial condition and results of
operations will depend significantly on the prices received for NGLs and
the price paid for gas consumed in the NGL extraction process. These prices
are subject to fluctuations in response to changes in supply, market
uncertainty and a variety of additional factors that are beyond the control
of the Company. In addition, the Company must continually connect new wells
through third-party gathering systems which serve the plants in order to
maintain or increase throughput levels to offset natural declines in
dedicated volumes. The number of wells drilled by third parties will depend
on, among other factors, the price of gas and oil, the energy policy of the
federal government, and the availability of foreign oil and gas, none of
which is within the Company's control.
Recently Issued Accounting Standards - On June 6, 1999, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133 - an amendment of FASB Statement No. 133," which
effectively delays and amends the application of SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," for one year, to fiscal
years beginning after June 15, 2000. Management is currently studying this
item to determine the financial statement impact of adopting SFAS No. 133.
Dollar Amounts - Amounts presented in the tabulations within the notes to
the statements are stated in thousands of dollars, unless otherwise
indicated.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment and accumulated depreciation at December 31,
1998 were as follows:
Estimated
Useful Life
Description (in Years)
Plants 15 - 20 $ 99,673
Pipelines 10 - 20 21,497
Transportation equipment 22 3,313
Land 175
Construction-in-progress 54,186
------
Total property 178,844
Accumulated depreciation (79,239)
Property, net $ 99,605
========
4. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
At December 31, 1998, the Company's significant unconsolidated affiliates
included the following:
K/D/S Promix, LLC ("Promix") - A 33.33% economic interest in a Limited
Liability Company ("LLC") owning a fractionation plant and related pipeline
and storage facilities near Napoleonville, Louisiana. The economic interest
was acquired during 1997. The LLC is owned by three entities and operated
by Koch Hydrocarbon Southeast, Inc. At December 31, 1998, the Company had a
payable to Promix for capital expansions.
Dixie Pipeline Company ("Dixie") - An 11.5% economic interest in a
corporation owning a 1,300-mile propane pipeline and the associated
facilities extending from Mt. Belvieu, Texas, to North Carolina. Dixie has
seven owners, and Phillips Pipeline Company is the operator of the assets.
Venice Energy Services Company, LLC ("Vesco") - A 13.1% economic interest
in an LLC owning a natural gas processing plant with processing capacity of
1,300 MMCF/day, fractionation facilities, storage, and gas gathering
pipelines in Louisiana. Vesco is jointly owned by five entities including
TNGL. Dynegy Midstream Services L.P. is the operator of the assets.
Tri-States NGL Pipeline, LLC ("Tri-States") - A 16.7% economic interest in
an LLC owning a 161-mile NGL pipeline which stretches from Mobile Bay,
Alabama, to Kenner, Louisiana. The pipeline construction started in the
latter part of 1997 and was completed in January 1999. Tri-States is owned
by six entities, including TNGL, and WSF-NGL Pipeline Company, Inc.
("Williams") is the operator of the assets. Because the Tri-States LLC
agreement was not signed until January 1999, payment for a portion of its
capital contribution by TNGL was recorded as an advance payable to
unconsolidated affiliates as of December 31, 1998.
Belle Rose NGL Pipeline, LLC ("Belle Rose") - A 41.7% economic interest in
an LLC owning a 48-mile NGL pipeline extending from Kenner, Louisiana to
Belle Rose, Louisiana. The pipeline construction began during the latter
part of 1997 and began operations during March 1999. At December 31, 1998,
the LLC agreement was not finalized. As a result, payment by TNGL has not
been made for the investment in Belle Rose. Consequently, a payable was
recorded as advances payable to unconsolidated affiliates as of
December 31, 1998. Belle Rose will be owned by three entities, including
TNGL, with TNGL being the operator of the assets.
Following is a summary of the Company's investments in and advances to
unconsolidated affiliates at December 31, 1998:
Unconsolidated Affiliates
--------------------------------------------
--------------------------------------------
Investments in Advances
and Advances To Payable To
Promix $60,610 $ 7,000
Dixie 10,639
Vesco 1,345
Tri-States 13,058 13,058
Belle Rose 11,137 11,137
------ ------
Total $96,789 $31,195
======= =======
Equity earnings from unconsolidated affiliates for the years ended
December 31, 1998, 1997 and 1996 are as follows:
Unconsolidated Affiliates
----------------------------------------------------------------
1998 1997 1996
------------------------------ ---------------------------- ------------------
Dividend Equity in Dividend Equity in Dividend
Income Earnings Income Earnings Income
-------------- ------------- ----------- ------------- ------------------
Promix $1,592 $3,100
Dixie $1,373 $903 $1,081
Vesco 3,088
Tri-States
Belle Rose -------- -------- -------- -------- --------
Total $4,461 $1,592 $903 $3,100 $1,081
====== ====== ==== ====== ======
Following is selected financial data for Promix, the most significant
investment of the Company:
BALANCE SHEET DATA 1998
Current assets $ 12,801
Property, plant and equipment, net 114,945
-------
Total assets $127,746
========
Current liabilities $ 30,533
Members' equity 97,213
------
Total liabilities and members' equity $127,746
========
INCOME STATEMENT DATA 1997 1998
Revenues $24,563 $ 23,994
Expenses 12,639 16,009
------ ------
Net income $11,924 $ 7,985
======= ========
5. RELATED-PARTY TRANSACTIONS
Sales to Affiliates - The Company has transactions in the normal course of
business with the unconsolidated affiliates and other subsidiaries and
divisions of Shell. Such transactions include the buying, selling and
transportation of NGL products.
Products sold to related parties during 1998, 1997 and 1996 amounted to
$168.8 million, $250.5 million and $312.6 million, respectively.
Purchase of Raw Materials and Products - A contract exists between the
Company and other Shell affiliates to allow processing of natural gas owned
by Shell in the Company's operated and outside operated plants. Under this
agreement, the Shell affiliates are paid for the gas volumes lost in
processing at market prices. In addition, affiliates are reimbursed for any
additional royalty expense as a result of processing the gas. In return,
the Company receives 100% of the liquids extracted in these plants. Also,
the Company purchases NGL products from unconsolidated affiliates and other
subsidiaries and divisions of Shell. During 1998, 1997 and 1996, the
Company paid Shell and its affiliates $377.1 million, $492.3 million and
$466.3 million, respectively, representing raw material and product
purchases.
Cost Allocations - The Company has no employees. All individuals who
perform the day-to-day operational functions are employed by affiliates of
Shell. However, all direct operational salary costs are directly passed
through to the Company and, therefore, do not represent partial
allocations.
6. COMMITMENTS AND CONTINGENCIES
Capital Expenditures Commitments - As of December 31, 1998, the Company had
capital expenditures commitments totaling approximately $ 38.3 million, the
majority of which relates to the construction of projects of unconsolidated
affiliates.
Litigation - The Company is sometimes named as a defendant in litigation
relating to its normal business operations. Although the Company insures
itself against various business risks, to the extent management believes it
is prudent, there is no assurance that the nature and amount of such
insurance will be adequate, in every case, to indemnify the Company against
liabilities arising from future legal proceedings as a result of its
ordinary business activity. Except for the note below, management is aware
of no significant litigation or audit claims, pending or threatened, that
would have a materially adverse effect on the Company's financial position
or results of operations.
The State of Louisiana has conducted an audit of fuel gas consumed in plant
operations. Consumption of this fuel gas was exempt from taxation prior to
1987. However, in 1987 the state rescinded the fuel tax exemption, thus
making the gas subject to tax at 3% of its value. The audit period reviewed
by the state was January 1991 through December 1994 and included TNGL
operated plants (Toca, Calumet and North Terrebone). The state claims TNGL
Assets owes approximately $4.6 million in tax, interest and penalties based
on total fuel gas usage at those plants for this period. However, it is
expected that TNGL's tax liability will only be equivalent to its ownership
in these plants. It also appears TNGL will be liable for tax on its share
of the fuel at outside-operated plants located in Louisiana in which TNGL
owns an interest. Although the ultimate liability is difficult to
determine, the Company has $4.0 million included in accrued expenses as of
December 31, 1998 which represents the Company's share of tax on fuel
consumed at the operated as well as the outside-operated properties for the
period from 1991 through 1998, including interest.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The disclosure of the estimated fair value of accounts receivable and
accounts payable was determined by the Company using available market
information and appropriate valuation methodologies. Considerable judgment,
however, is necessary to interpret market data and develop the related
estimates of fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts that the Company could realize
upon disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies could have a material effect on
the estimated fair value amounts. Accounts receivable and accounts payable
are carried at amounts that approximate their fair value.
8. CONCENTRATION OF CREDIT RISK
Substantial portions of the Company's revenues are derived from the
fractionation, processing, marketing and transportation of NGLs to various
companies in the NGL industry located in the United States. Although this
concentration could affect the Company's overall exposure to credit risk,
since its customers might be influenced by similar economic or other
conditions, management believes that the Company is exposed to minimal
credit risk, because the majority of its business is conducted with major
companies within the industry and much of the business is conducted with
companies with whom the Company has joint operations. The Company generally
does not require collateral for its accounts receivable.
******
CONTRIBUTION AGREEMENT
by and among
TEJAS ENERGY, LLC,
TEJAS MIDSTREAM ENTERPRISES, LLC,
ENTERPRISE PRODUCTS PARTNERS L.P.,
ENTERPRISE PRODUCTS OPERATING L.P.,
ENTERPRISE PRODUCTS COMPANY,
ENTERPRISE PRODUCTS GP, LLC
AND
EPC PARTNERS II, INC.
Dated September 17, 1999
HOU04:132863.11
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND TERMS..........................................................2
Section 1.01 Specific Definitions..................................2
Section 1.02 General Definitions..................................10
Section 1.03 Construction and Interpretation......................10
ARTICLE II
CONTRIBUTION AND RELATED ITEMS................................................11
Section 2.01 The Closing..........................................11
Section 2.02 The Transactions.....................................11
Section 2.03 Special Units........................................11
Section 2.04 Other Closing Matters................................11
Section 2.05 Additional Special Units Following Closing...........12
Section 2.06 Prorations of Property Taxes.........................12
Section 2.07 Adjustment for Interim Operations....................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TEJAS AND TEJAS ENERGY AS
TO TEJAS AND TEJAS ENERGY.....................................................14
Section 3.01 Organization.........................................14
Section 3.02 Ownership of Company Interest........................14
Section 3.03 Validity and Enforceability..........................14
Section 3.04 Approvals and Consents...............................15
Section 3.05 No Violation.........................................15
Section 3.06 Litigation...........................................15
Section 3.07 Investment Intent....................................15
Section 3.08 No Brokers...........................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TEJAS AND TEJAS ENERGY AS
TO THE COMPANY AND ITS SUBSIDIARIES...........................................17
Section 4.01 Organization.........................................17
Section 4.02 Capitalization.......................................17
Section 4.03 No Violation.........................................18
Section 4.04 Permits..............................................18
Section 4.05 Compliance With Applicable Law.......................19
Section 4.06 Litigation...........................................19
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Section 4.07 Taxes................................................19
Section 4.08 Financial Statements.................................20
Section 4.09 Absence of Certain Changes...........................20
Section 4.10 Bank Accounts........................................21
Section 4.11 Conduct of Business From the Effective Date to the
Closing Date.........................................21
Section 4.12 Material Contracts or Indebtedness...................22
Section 4.13 Assets...............................................24
Section 4.14 Employees, Employee Benefits.........................24
Section 4.15 Sufficiency of Assets Held by the Company
and its Subsidiaries.................................24
Section 4.16 Intellectual Property................................24
Section 4.17 Non-Business Related Assets..........................25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ENTERPRISE PARTIES......................25
Section 5.01 Organization.........................................25
Section 5.02 Authorization of Agreement...........................26
Section 5.03 No Violations........................................27
Section 5.04 Approvals............................................27
Section 5.05 Litigation; Impairment...............................27
Section 5.06 Compliance With Applicable Law.......................28
Section 5.07 Permits..............................................28
Section 5.08 Taxes................................................28
Section 5.09 SEC Reports..........................................29
Section 5.10 Ownership; Issuance of Special Units.................29
Section 5.11 Financing............................................30
Section 5.12 No Brokers...........................................30
Section 5.13 Investment Intent....................................31
ARTICLE VI
COVENANTS.....................................................................31
Section 6.01 Access to Information Following the Closing...........31
Section 6.02 Intentionally Deleted.................................32
Section 6.03 Public Announcements..................................32
Section 6.04 Removal of Tradenames.................................32
Section 6.05 Further Assurances....................................32
Section 6.06 Books and Records.....................................33
Section 6.07 Intercompany Indebtedness.............................33
Section 6.08 Excluded Assets.......................................33
Section 6.09 Acts of Amendment.....................................34
Section 6.10 Collections...........................................34
Section 6.11 Preferential Rights...................................34
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Section 6.12 Preparation of Historical Financials................34
Section 6.13 Unitholder Approval.................................34
ARTICLE VII
EMPLOYEE MATTERS..............................................................35
Section 7.01 Employees...........................................35
Section 7.02 Solicitation of Employees...........................35
Section 7.03 Employee Benefit Plans..............................36
Section 7.04 Vacation............................................36
Section 7.05 Access to Information and Personnel.................37
Section 7.06 Tejas and Affiliates Benefit Plans..................37
Section 7.07 Third-Party Beneficiaries...........................37
ARTICLE VIII
INDEMNIFICATION; SURVIVAL.....................................................37
Section 8.01 Indemnification by the Enterprise Parties, EPC II and
Enterprise Products.........................................37
Section 8.02 Indemnification by Tejas and Tejas Energy............38
Section 8.03 Indemnification Procedure............................39
Section 8.04 Survival.............................................40
Section 8.05 Limitation on Claims.................................41
Section 8.06 Tejas Environmental Indemnity........................42
Section 8.07 Enterprise Contingent Environmental Payment..........43
Section 8.08 Louisiana Fuel Tax Audit.............................44
ARTICLE IX
GENERAL PROVISIONS............................................................44
Section 9.01 Expenses and Taxes; Tax Returns......................44
Section 9.02 Amendment............................................45
Section 9.03 Waiver...............................................45
Section 9.04 Notices..............................................45
Section 9.05 Headings; Disclosure Memorandum......................47
Section 9.06 Applicable Law.......................................47
Section 9.07 No Third Party Rights................................47
Section 9.08 Counterparts.........................................47
Section 9.09 Severability.........................................47
Section 9.10 Entire Agreement.....................................47
Section 9.11 Arbitration; Waiver..................................47
Section 9.12 Fair Construction....................................48
Section 9.13 Disclaimer of Other Representations and Warranties...48
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EXHIBITS
Exhibit 1.01(a) EPC II Assignment of GP Interest
Exhibit 1.01(b) Tejas Assignment of Company Interest
Exhibit 9.11 Arbitration Procedures
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SCHEDULES
Schedule 1.01(a) Assets of the Business
Schedule 1.01(b) Excluded Assets
Schedule 1.01(c) Permitted Liens
Schedule 1.01(d) Retained Liabilities
Schedule 2.02(c) Other Consideration
Schedule 2.04(d) Ancillary Agreements
Schedule 2.07 Interim Operations
Schedule 3.04 Tejas Required Consents
Schedule 3.06 Litigation Against Tejas or Tejas Energy
Schedule 4.02(b) Subsidiaries and Joint Ventures
Schedule 4.03 No Violation
Schedule 4.04 Permits
Schedule 4.05 Compliance with Applicable Law
Schedule 4.06(a) Pending Litigation Against the Company or its Subsidiaries
Schedule 4.06(b) Material Litigation
Schedule 4.07 Taxes
Schedule 4.08 Financial Statements
Schedule 4.09 Absence of Certain Changes
Schedule 4.10 Bank Accounts
Schedule 4.12(a) Material Contracts
Schedule 4.12(c) Defaults or Breaches
Schedule 4.13(a) Real Property
Schedule 4.13(b) Facilities
Schedule 4.13(c) Encumbered Assets
Schedule 4.15 Sufficiency of Assets
Schedule 4.16 Material Intellectual Property Rights
Schedule 5.04 Enterprise Required Consents
Schedule 5.10(e) Ownership of Units
Schedule 5.10(f) Enterprise Options/Obligations to Issue Units
Schedule 6.09 Act of Amendment
Schedule 7.01 Business Employees
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT dated September 17, 1999, is by and among TEJAS
ENERGY, LLC, a Delaware limited liability company ("Tejas Energy"), TEJAS
MIDSTREAM ENTERPRISES, LLC, a Delaware limited liability company ("Tejas"),
ENTERPRISE PRODUCTS PARTNERS L.P., a Delaware limited partnership ("Enterprise
Partners"), ENTERPRISE PRODUCTS OPERATING L.P., a Delaware limited partnership
("Enterprise Operating"), ENTERPRISE PRODUCTS GP, LLC, a Delaware limited
liability company ("Enterprise GP" and, together with Enterprise Partners and
Enterprise Operating, the "Enterprise Parties"), EPC PARTNERS II, INC., a
Delaware corporation ("EPC II") and ENTERPRISE PRODUCTS COMPANY, a Texas
corporation ("Enterprise Products") for the limited purposes of its obligations
in Articles V, VII and VIII hereof.
RECITALS:
WHEREAS, Tejas Energy is the sole member of Tejas;
WHEREAS, Tejas is the owner of all of the issued and outstanding limited
liability company membership interests of Tejas Natural Gas Liquids, LLC, a
Delaware limited liability company (the "Company"), which along with its
Subsidiaries (as defined herein) operates the Business (as defined herein);
WHEREAS, Tejas desires to contribute its interest in the Company to
Enterprise Partners (or Enterprise Operating as the designee of Enterprise
Partners) in exchange for Enterprise Partners issuing to Tejas (or Tejas Energy
as the designee of Tejas) certain special partnership units and Enterprise
Operating paying to Tejas the Other Consideration (as defined herein) on the
terms and conditions as hereinafter provided;
WHEREAS, the parties acknowledge and agree that the transactions
contemplated herein involve a transfer by Tejas of its interest in the Company
to Enterprise Partners and a subsequent contribution of such interest by
Enterprise Partners to Enterprise Operating;
WHEREAS, Tejas Energy (as the designee of Tejas) desires to acquire from
EPC II and EPC II desires to sell to Tejas Energy a 30% membership interest in
Enterprise GP, which is the general partner of Enterprise Partners and
Enterprise Operating, for a cash payment to EPC II on the terms and conditions
hereinafter provided; and
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth the terms, conditions and procedures of the above-described transactions.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration (the
HOU04:132863.11
receipt and sufficiency of which are hereby confirmed and acknowledged), the
parties hereto hereby agree as follows:
ARTICLE
DEFINITIONS AND TERMS
Section - Specific Definitions. As used in this Agreement, the following
terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such Person, by contract or
otherwise.
"Agreement" means this Contribution Agreement, as the same may be amended
or supplemented from time to time.
"Ancillary Agreements" shall have the meaning specified in Section 2.04(d).
"Business" means all of the midstream natural gas processing and NGL
business generated by the NGL assets, properties and commercial arrangements
listed on Schedule 1.01(a) and the NGL assets, properties and commercial
arrangements transferred or intended to be transferred pursuant to the acts of
amendment and conveyances referenced in Section 6.09 (which includes all of the
midstream natural gas processing and NGL business conducted by the Company and
its Subsidiaries) which involves the processing of raw natural gas and the
fractionation of NGLs in the States of Louisiana and Mississippi at the
Facilities listed on Schedule 1.01(a) and all related transporting, storing,
exchanging and marketing of NGLs. The parties intend that the Business includes
all business generated by the assets, properties and commercial arrangements
(other than the distribution or marketing of pipeline-quality natural gas)
related to such gas processing and NGL operations to the extent located
downstream of the inlet flange of each gas processing plant referenced on
Schedule 1.01(a) including: (i) the fractionation facilities listed on Schedule
1.01(a), (ii) pipelines, underground storage, shipping and receiving facilities
and transportation assets listed on Schedule 1.01(a) and related rights of way
and other real property interests used in such gas processing and fractionation
operations, (iii) processing, exchange, storage, marketing, sales and
transportation agreements related to the business conducted at such Facilities,
(iv) rail tank cars used to transport NGLs as listed on Schedule 1.01(a), (v)
equity interests in Venice Energy Services Company, L.L.C., Dixie Pipeline
Company, Entell NGL Services, L.L.C., Tri-States NGL Pipeline, L.L.C., K/D/S
Promix L.L.C., Belle Rose NGL Pipeline, L.L.C. and Progas, LLC as listed on
Schedule 1.01(a) and (vi) all assets used in the Business, wherever located,
including, without limitation, contracts, intangibles, books and records,
financial and accounting systems and records, management information systems,
files, computer hardware and software (including the Solarc
HOU04:132863.11
2
RightAngle license and the risk control model relating to the Business), office
equipment and other assets currently used in the Business, and the assets listed
for purposes of illustration but not limitation on Schedule 1.01(a) hereto;
provided, however, that the term Business shall not include any of the assets
listed on Schedule 1.01(b) hereto (the "Excluded Assets").
"Benefit Plan Date" has the meaning specified in Section 7.03.
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday on which banks in Houston, Texas and New York, New York are authorized
or obligated by Law to close.
"Business Employees" has the meaning specified in Section 7.01.
"Claim Notice" has the meaning specified in Section 8.03(a).
"Closing" means the closing of the transactions provided for in this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Common Units" means the common units representing limited partner
interests in Enterprise Partners having the rights specified in the Enterprise
Partners Amended Partnership Agreement.
"Company" has the meaning specified in the recitals.
"Company Interest" means 100% of the outstanding membership and other
equity interests in the Company.
"Company Required Consents" has the meaning specified in Section 4.03.
"Confidentiality Agreement" means the Confidentiality Agreement dated
January 19, 1999, between the Company and Enterprise Operating, as adopted by
Tejas and Enterprise Partners.
"Consent" means any consent, waiver, approval, authorization, exemption,
registration or declaration.
"Contingent Environmental Payments" has the meaning specified in
Section 8.07(a).
"Conversion Dates" has the meaning specified in Section 2.03.
HOU04:132863.11
3
"Court" shall mean any federal, state, or local court, arbitration tribunal
or other judicial authority.
"Damages" means all claims, liabilities, damages, penalties, Judgments,
assessments, losses, costs and expenses, including reasonable attorneys' fees.
"Direct Claim" has the meaning specified in Section 8.03(a).
"Effective Date" means 12:01 a.m. on August 1, 1999.
"Employment Commencement Date" has the meaning specified in Section 7.01.
"Enterprise Environmental Payments" has the meaning specified in
Section 8.07(a).
"Enterprise GP" has the meaning specified in the introductory paragraph of
this Agreement.
"Enterprise Indemnified Parties" has the meaning specified in Section 8.02.
"Enterprise Operating" has the meaning specified in the introductory
paragraph of this Agreement.
"Enterprise Operating Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Enterprise Operating dated July 31, 1998, as
amended, restated, supplemented or otherwise as defined.
"Enterprise Parties" has the meaning specified in the introductory
paragraph of this Agreement.
"Enterprise Partners" has the meaning specified in the introductory
paragraph of this Agreement.
"Enterprise Partners Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Enterprise Partners dated July 31, 1998, as
amended, restated, supplemented or otherwise updated.
"Enterprise Partners Amended Partnership Agreement" means the Second
Amended and Restated Agreement of Limited Partnership of Enterprise Partners.
"Enterprise Products" has the meaning specified in the introductory
paragraph of this Agreement.
HOU04:132863.11
4
"Enterprise Representations and Warranties" has the meaning specified in
Section 8.01.
"Enterprise Required Consents" means the requirements of the HSR Act and
the Consents listed in Schedule 5.04.
"Enterprise Third-Party Environmental Claims" has the meaning specified in
Section 8.07(a).
"Environmental Law" means any Law that relates to (i) the prevention,
abatement, remediation or elimination of pollution, (ii) the protection of the
environment, (iii) the protection of individuals or property from actual or
potential exposure (or the effects of exposure) to an actual or potential spill,
release or threatened release of a Hazardous Substance, or petroleum or produced
brine, or (iv) the operation, manufacture, processing, production, gathering,
transportation, importation, use, treatment, storage or disposal, arrangement
for transportation or arrangement for disposition of a Hazardous Substance, or
petroleum or produced brine. The term "Environmental Law" includes the Clean Air
Act, the Comprehensive Environmental, Response, Compensation, and Liability Act
of 1980, the Federal Water Pollution Control Act, the Occupational Safety and
Health Act of 1970, the Resource Conservation and Recovery Act of 1976, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Hazardous & Solid
Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act
of 1986, the Hazardous Materials Transportation Act, the Oil Pollution Act of
1990, any state Laws implementing the foregoing federal Laws and any Laws
pertaining to the handling of oil and gas exploration and production wastes or
the use, maintenance, and closure of pits and impoundments, and all other
environmental conservation or protection Laws.
"EPC II" has the meaning specified in the introductory paragraph of this
Agreement.
"EPC II Assignment" means the Assignment Agreement in the form of
Exhibit 1.01(a) hereto pursuant to which EPC II will assign the GP Interest to
Tejas Energy.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and as the same shall be in
effect from time to time.
"Facilities" means the gas processing plants, fractionation plants,
pipeline assets and storage facilities specified on Schedule 1.01(a) hereto.
"Governmental Authority" shall mean any federal, state or local
governmental agency or authority.
"Governmental Authorization" shall mean any required consent or approval by
a Governmental Authority.
HOU04:132863.11
5
"GP Interest" means a membership interest in Enterprise GP representing a
30% ownership interest in Enterprise GP.
"Hazardous Substance" means any substance, chemical, pollutant, waste or
other material (i) that consists, wholly or in part, of a substance that is
regulated as toxic or hazardous to human health or the environment under any
Environmental Law, or (ii) that exists in a condition or under circumstances
that constitute a violation of an Environmental Law. The term "Hazardous
Substance" includes any petroleum products, oils or derivatives thereof;
asbestos or asbestos- containing materials; polychlorinated biphenols; as well
as any "hazardous substance" as that term is defined in the Comprehensive
Environmental, Response, Compensation and Liability Act of 1980, any "hazardous
material" as that term is defined in the Hazardous Materials Transportation Act,
any "hazardous chemical substance" or "pollutant" as those terms are defined in
the Federal Water Pollution Control Act, and any "solid waste" or "hazardous
waste" as those terms are defined in the Resource Conservation and Recovery Act
of 1976 and any toxic substance as that term is defined under the Toxic
Substances Control Act.
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness for Borrowed Money" means all obligations for borrowed money,
including (a) any capital lease obligation, (b) any obligation (whether fixed or
contingent) to reimburse any bank or other Person in respect of amounts paid or
payable under a standby letter of credit (other than obligations under standby
letters of credit securing performance under Material Contracts), or (c) any
guarantee with respect to indebtedness for borrowed money (of the kind otherwise
described in this definition) of another Person.
"Indemnified Party" has the meaning specified in Section 8.03.
"Indemnifying Party" has the meaning specified in Section 8.03.
"Intellectual Property Right" means all registered trade marks, trade
names, patents and copyrights, unregistered trade marks, trade names and
copyrights and all patent applications, all technology, trade secrets, designs,
drawings, computer programs, processes and know how, both domestic and foreign,
used in connection with the Business.
"IRS" means the United States Internal Revenue Service.
"Joint Venture" means any corporation, partnership, limited liability
company, association, trust, joint venture or other entity or organization
(other than Subsidiaries) in which the Company or any of its Subsidiaries has an
interest.
"Judgments" means any judgments, injunctions, orders, decrees, writs,
rulings or awards of any Court or any Governmental Authority of competent
jurisdiction.
HOU04:132863.11
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"Knowledge" or "knowledge" means, with respect to any party hereto, the
actual knowledge of the executive officers of such party; provided that none of
the executive officers shall be deemed to have performed, or be obligated to
perform, any independent investigation or inquiry with respect to the matter to
which such Knowledge relates other than, in each case, making reasonable inquiry
with the head of the department who is principally responsible for the subject
matter of any representation or warranty given to the knowledge of such party.
"Laws" means any federal, state, local or foreign law, statute, ordinance,
rule, regulation, order or decree.
"Lien" means mortgages, deeds of trust, liens, pledges, security interests,
leases, conditional sale contracts, claims, rights of first refusal, options,
charges, liabilities, obligations, agreements, privileges, liberties, easements,
rights-of-way, limitations, reservations, restrictions and other encumbrances of
any kind.
"Material Adverse Effect" means a material adverse effect on the business,
assets, liabilities, or condition (financial or otherwise) of the subject party
and its Subsidiaries, taken as a whole.
"Material Contract" has the meaning set forth in Section 4.12.
"NGLs" means natural gas liquids.
"Other Consideration" has the meaning prescribed in Section 2.02(c).
"Permits" means all permits, authorizations, approvals, registrations,
licenses, certificates or variances granted by or obtained from any Governmental
Authority.
"Permitted Liens" means (i) Liens for or in respect of Taxes, impositions,
assessments, fees, rents and other governmental charges levied or assessed or
imposed which are not yet delinquent or are being contested in good faith by
appropriate proceedings and, if being contested, for which the appropriate party
has set forth reserves on its books, records and financial statements in
accordance with generally accepted accounting principles applied in a manner
consistent with past practice, (ii) the rights of lessors and lessees under
leases executed in the ordinary course of business, (iii) the rights of
licensors and licensees under licenses executed in the ordinary course of
business, and (iv) Liens, and rights to Liens, of mechanics, warehousemen,
carriers, repairmen and others arising by operation of law and incurred in the
ordinary course of business, securing obligations not yet delinquent or being
contested in good faith by appropriate proceedings, (v) any Liens which are
publicly recorded, (vi) other Liens entered into in the ordinary course of
business that do not secure the payment of indebtedness for borrowed money and
that do not materially and adversely affect the ability of Enterprise Operating,
directly or indirectly, to use the encumbered assets and properties in the
conduct of the Business and (vii) Liens set forth on Schedule 1.01(c) of the
Tejas Disclosure Memorandum.
HOU04:132863.11
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"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Proceeding" means any action, suit, demand, claim or legal,
administrative, arbitration or other alternative dispute resolution proceeding,
hearing or investigation.
"Retained Liabilities" means the liabilities identified as "Retained
Liabilities" on Schedule 1.01(d) of the Tejas Disclosure Memorandum.
"Securities Act" means the Securities Act of 1933, as amended or any
successor or federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and as the same shall be in
effect from time to time.
"Shell Affiliate" means any Affiliate of Shell Oil Company.
"Shell Processing Agreement" means that certain Fourth Amendment to
Conveyance of Gas Processing Rights among the Company, Shell Oil Company, Shell
Exploration & Production Company, Shell Offshore Inc., Shell Deepwater
Development Inc., Shell Deepwater Production Inc., Shell Consolidated Energy
Resources Inc., Shell Land & Energy Company and Shell Frontier Oil & Gas Inc.,
and any other parties thereto, dated as of August 1, 1999.
"Special Units" means each series of the Class A Special Units of limited
partnership interest in Enterprise Partners as described in Sections 2.03 and
2.05 and in the Enterprise Partners Amended Partnership Agreement.
"Subordinated Units" means the subordinated units representing partnership
interests in Enterprise Partners created under the Enterprise Partners Amended
Partnership Agreement.
"Subsidiary" or "Subsidiaries" of any Person means any corporation,
partnership, limited liability company, association, trust, joint venture or
other entity or organization of which such Person, either alone or through or
together with any other Subsidiary, owns, directly or indirectly, more than 50%
of the issued and outstanding stock or other equity or ownership interests, the
holder of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, limited
liability company, association, trust, joint venture or other entity or
organization.
"Taxes" means all taxes, however denominated, including any interest or
penalties that may become payable in respect thereof, imposed by any
Governmental Authority, which taxes shall include all net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, goods and
services, ad valorem or property, earnings, franchise, profits, license,
withholding (including all obligations to withhold or collect for Taxes imposed
on others), payroll, employment, excise, severance, stamp, occupation, premium,
property, excess profit or windfall profit tax, custom
HOU04:132863.11
8
duty, value added or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest and any penalty,
addition to tax or additional amount (whether payable directly, by withholding
or otherwise).
"Tax Returns" means any report, return, declaration or other filing
required to be supplied to any taxing authority or jurisdiction with respect to
Taxes including any amendments thereto.
"Tax Statute of Limitations Date" shall mean the close of business on the
30th day after the expiration of the applicable statute of limitations with
respect to Taxes, including any tollings or extensions thereof.
"Tejas" has the meaning specified in the introductory paragraph of this
Agreement.
"Tejas Assignment" means the Assignment Agreement in the form of Exhibit
1.01(b) hereto pursuant to which Tejas will assign the Company Interest to
Enterprise Operating (as Enterprise Partners' designee).
"Tejas Co-ownership" means a co-ownership arrangement wherein the Company
or its Subsidiary is a co-owner of assets and the co-owners have elected (or are
deemed to have elected under Treasury Regulation, Paragraph 1.761-2(b)) under
Section 761(a) of the Code to be excluded from the provisions of subchapter K of
chapter 1 of the Code.
"Tejas Disclosure Memorandum" means the disclosure memorandum delivered by
Tejas to the Enterprise Parties prior to execution of this Agreement containing
the disclosures contemplated by this Agreement.
"Tejas Energy" has the meaning specified in the introductory paragraph to
this Agreement.
"Tejas Indemnified Parties" has the meaning specified in Section 8.01.
"Tejas Joint Venture" means a limited liability company, association,
trust, partnership, joint venture or other entity or organization in which the
Company or any of its Subsidiaries owns, either alone or through or together
with any Subsidiary, directly or indirectly, less than 100% of the issued and
outstanding stock or other equity or ownership interests.
"Tejas LLC" means a limited liability company wherein the Company or its
Subsidiary owns 100% of the equity interests.
"Tejas Representations and Warranties" has the meaning specified in
Section 8.02.
"Tejas Required Consents" has the meaning specified in Section 3.04.
HOU04:132863.11
9
"Tejas Third-Party Environmental Claims" has the meaning specified in
Section 8.06(a).
"Third Party Claim" has the meaning specified in Section 8.03(a).
"Transactions" means the transactions contemplated by the Transaction
Agreements.
"Transaction Agreements" means this Agreement, and the other agreements
referred to in Sections 2.04(a), (b), (c), (e) and (g).
"Transferred Employees" has the meaning specified in Section 7.01.
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
"Unitholder Rights Agreement" has the meaning specified in Section 2.04(b).
"Units" means, collectively or individually or in any combination, as the
context may require, the Special Units and any Common Units into which the
Special Units are converted in accordance with the Enterprise Partners Amended
Partnership Agreement.
Section General Definitions. Capitalized terms used in this Agreement and
not defined in Section 1.01 shall have the meanings ascribed to them elsewhere
in this Agreement.
Section Construction and Interpretation. The following rules of
construction and interpretation shall apply to this Agreement, unless elsewhere
specifically indicated to the contrary:
(a) all terms defined herein in the singular shall include the plural,
as the context requires, and vice-versa;
(b) pronouns stated in the neuter gender shall include the masculine,
the feminine and the neuter genders;
(c) the term "or" is not exclusive and shall be deemed to mean
"and/or;"
(d) the term "including" (or any form thereof) shall not be limiting
or exclusive and shall be deemed to mean "including, without limitation;"
and
(e) unless otherwise indicated, any reference made in this Agreement
to a Section is a reference to a section of this Agreement, any reference
to an exhibit is a reference to an exhibit to this Agreement.
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ARTICLE
CONTRIBUTION AND RELATED ITEMS
Section The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the transactions contemplated by this Agreement
as set forth in Section 2.02 (the "Closing") will take place simultaneously with
the execution hereof or on such other date as may be agreed upon by the parties
hereto at 4:00 p.m. local time at the offices of Andrews & Kurth L.L.P. at 600
Travis, Houston, Texas.
Section The Transactions. Subject to the terms and conditions of this
Agreement, at the Closing:
(a) Tejas will contribute and assign the Company Interest to
Enterprise Operating (as Enterprise Partner's designee) by executing and
delivering the Tejas Assignment to Enterprise Operating;
(b) Enterprise Partners will issue and deliver to Tejas Energy (as
Tejas' designee) 14,500,000 Special Units;
(c) Enterprise Operating (as Enterprise Partners' designee) will pay
to Tejas $166,000,000 in cash as reflected on Schedule 2.02(c) attached
hereto (the "Other Consideration");
(d) EPC II will convey the GP Interest to Tejas Energy (as Tejas'
designee) by executing and delivering the EPC II Assignment to Tejas
Energy; and
(e) Tejas Energy shall pay $4,000,000 in cash to EPC II in
consideration for the GP Interest.
Section Special Units. The Special Units shall be represented by
certificates in the form contemplated by the Enterprise Partners Amended
Partnership Agreement and will have the rights and features set forth therein.
The Special Units will be automatically converted on a one- for-one basis into
Common Units of Enterprise Partners effective as of the Class A Special Units
Conversion Dates set forth in the Enterprise Partners Amended Partnership
Agreement (the "Conversion Dates").
Section Other Closing Matters. Subject to the terms and conditions of
this Agreement, simultaneously with the execution hereof unless waived by the
parties:
Enterprise Partners and Tejas will enter into the Registration Rights
Agreement in the form agreed upon by the parties;
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Tejas, the Enterprise Parties, Enterprise Products and EPC II will enter
into the Unitholder Rights Agreement in the form agreed upon by the parties;
Tejas and Enterprise Operating will enter into the Interim Services
Agreement in the form agreed upon by the parties;
Each of the agreements set forth on Schedule 2.04(d) hereto (the "Ancillary
Agreements") shall be or have been executed by the appropriate parties thereto;
Enterprise GP shall enter into the Enterprise Partners Amended Partnership
Agreement in the form agreed upon by the parties;
Tejas shall receive the opinion of counsel to the Enterprise Parties in the
form agreed upon by the parties and the Enterprise Parties shall receive the
opinion of counsel to Tejas in the form agreed upon by the parties; and
Tejas, Dan Duncan LLC, EPC II and Tejas shall enter into the Amended and
Restated Limited Liability Company Agreement of Enterprise GP in the form agreed
upon by the parties.
Section Additional Special Units Following Closing. Enterprise Partners
will issue to Tejas up to an additional 6,000,000 Special Units, at the times
and in accordance with and subject to the performance tests and procedures set
forth in the Enterprise Partners Amended Partnership Agreement.
Section Prorations of Property Taxes.
(a) The 1999 general property tax assessed against or pertaining to
the assets included in the Business for the taxable period that includes
the Closing Date shall be prorated between Tejas and the Company and its
Subsidiaries as of the Closing Date. Tejas' 1999 general property tax
responsibility will be for the period January 1, 1999 up to and including
the Closing Date (the "Tejas Property Tax"). The Tejas Property Tax shall
be an amount equal to the product of (i) the amount of such general
property Tax for the entire taxable period that includes the Closing Date
(or the amount of such general property Tax for the immediately preceding
taxable period in the case of those assets and properties, if any, for
which such general property Tax for the current period cannot be
determined), times (ii) a fraction, the numerator of which is the number of
days from January 1, 1999 to the Closing Date and the denominator of which
is the total number of days in the entire taxable period.
(b) Tejas shall pay the 1999 general property tax statement in full
and shall invoice Enterprise Partners and its Subsidiaries for the period
from the Closing Date to December 31, 1999. Enterprise Partners agrees to
make or cause to be made such payment
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(reimbursement) for the amount of the general property tax so prorated and
invoiced. Enterprise Partners shall provide the name and address to which
such invoice shall be sent.
Section Adjustment for Interim Operations.
The parties acknowledge and agree that the operations of the Company
and its Subsidiaries from and after the Effective Date shall be for the
account of Enterprise Partners; provided, Tejas and Tejas Energy will be
responsible for administering and shall administer, the financial accounts
of the Company and its Subsidiaries from the Effective Date through
September 30, 1999 (the "Interim Period"), including processing cash
collections and making required expenditures.
As promptly as practicable, but no later than November 15, 1999,
Enterprise Partners (with the assistance of Tejas and Tejas Energy to the
extent requested by Enterprise Partners) will cause to be prepared and
delivered to Tejas a certificate setting forth Enterprise Partners'
calculation of the Interim Period Adjustment as determined in accordance
with the procedures set forth in Schedule 2.07 hereto (the "Interim Period
Adjustment").
If Tejas or Tejas Energy disagrees with Enterprise Partners'
calculation of the Interim Period Adjustment, Tejas may, within 20 days
after delivery of such calculation, deliver a notice to Enterprise Partners
disagreeing with Enterprise Partners' calculation of the Interim Period
Adjustment and setting forth Tejas' calculation of the Interim Period
Adjustment.
If a notice of disagreement shall be duly delivered pursuant to
paragraph (c), Enterprise Partners, Tejas and Tejas Energy shall, during
the 30 days following such delivery, use their reasonable efforts to reach
agreement on the amounts in order to determine the final Interim Period
Adjustment. If, during such period, Enterprise Partners, Tejas and Tejas
Energy are unable to reach such agreement, they shall promptly thereafter
retain independent accountants (a "big 5" accounting firm other than
Deloitte & Touche LLP and PricewaterhouseCoopers LLP) to promptly review
this Agreement and the disputed amounts for the purpose of calculating the
final Interim Period Adjustment. The independent accountants shall deliver
to Enterprise Partners, Tejas and Tejas Energy, as promptly as practicable,
a report setting forth each such calculation. Such report shall be final
and binding upon Enterprise Partners, Tejas and Tejas Energy. The cost of
such review and report shall be borne equally by Enterprise Partners and
Tejas.
If the final Interim Period Adjustment is a positive number, then such
amount will be paid by Tejas or Tejas Energy to Enterprise Partners within
ten days following calculation of the final Interim Period Adjustment and
if the final Interim Period Adjustment is a negative number, then such
amount will be paid by Enterprise Partners to Tejas or Tejas Energy within
ten days following calculation of the final Interim Period Adjustment.
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ARTICLE
REPRESENTATIONS AND
WARRANTIES OF TEJAS AND TEJAS
ENERGY AS TO TEJAS AND TEJAS
ENERGY
Tejas and Tejas Energy, jointly and severally, represent and warrant to the
Enterprise Parties that the following statements were true and correct as of the
Effective Date and are true and correct as of the Closing Date:
Section Organization. Tejas is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, with all requisite power and authority to own the Company and its
Subsidiaries (each of which is listed in Schedule 4.02(b) of the Tejas
Disclosure Memorandum) and to carry on its business as it is now conducted.
Tejas is a wholly-owned subsidiary of Tejas Energy. Tejas Energy is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware, with all requisite power and authority to
carry on its business as it is now conducted. Tejas Energy is an indirect
majority-owned subsidiary of Shell Oil Company.
Section Ownership of Company Interest. Tejas is the owner, beneficially
and of record, of all the Company Interest free and clear of any Lien. At the
Closing, Tejas will assign and contribute all the Company Interest to Enterprise
Operating (as Enterprise Partners' designee) free and clear of any Lien as a
result of which Enterprise Operating (as Enterprise Partners' designee) will own
100% of the outstanding equity interests in the Company.
Section Validity and Enforceability. Each of Tejas Energy and Tejas has
the requisite power and authority to execute and deliver the Transaction
Agreements to which it is a party and to perform its obligations under such
Transaction Agreements. The execution and delivery of the Transaction Agreements
to which Tejas or Tejas Energy is a party and the consummation of the
Transactions have been duly authorized by Tejas and Tejas Energy, respectively,
and no additional authorization on the part of Tejas or Tejas Energy or any
Affiliate thereof is necessary in order to authorize the Transaction Agreements
or consummate the Transactions contemplated thereby. The Transaction Agreements
to which Tejas or Tejas Energy is a party have been or at Closing will be duly
executed and delivered by Tejas and Tejas Energy, respectively, and constitute
legal, valid and binding obligations of Tejas and Tejas Energy, respectively,
enforceable against Tejas and Tejas Energy in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, or by general principles of
equity
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(regardless of whether such enforceability is considered in a proceeding in
equity or at law), including the availability of specific performance.
Section Approvals and Consents. (a) Except for the requirements of
(i) the requirements and Consents listed in Schedule 3.04 of the Tejas
Disclosure Memorandum (the "Tejas Required Consents"), and (ii) those Laws,
noncompliance with which could not reasonably be expected to have an adverse
effect on the ability of Tejas or Tejas Energy to perform their respective
obligations under the Transaction Agreements, no filing or notice or
registration with, no waiting period imposed by and no Permit or Judgment of,
any Governmental Authority is required under any Law applicable to Tejas or
Tejas Energy and no notice to or Consent of any Person is required to permit
Tejas or Tejas Energy to execute, deliver or perform their obligations under the
Transaction Agreements to be executed and delivered by either of them at the
Closing.
(b) Tejas represents that all filings required under the HSR Act to be made
by Tejas or its Affiliates in order for Tejas to consummate the Transactions
have been made and the applicable waiting period thereunder has expired.
Section No Violation. Assuming receipt of all Tejas Required Consents,
neither the execution and delivery by Tejas Energy and Tejas of the Transaction
Agreements nor the performance by Tejas Energy or Tejas of their respective
obligations thereunder will violate or breach the terms of or cause a default
under (i) any Law or Judgment applicable to Tejas or Tejas Energy, (ii) the
certificate of formation, the limited liability company agreement or other
organizational documents of Tejas or Tejas Energy, or (iii) any contract or
agreement to which Tejas or Tejas Energy or any of their respective Affiliates
(other than the Company and its Subsidiaries) is a party or by which it or any
of its properties or assets is bound, except in any such case for any matters
described in this Section 3.05 that would not reasonably be expected to have an
adverse effect upon the ability of Tejas or Tejas Energy to perform their
respective obligations under the Transaction Agreements.
Section Litigation. Except as set forth on Schedule 3.06 of the Tejas
Disclosure Memorandum, there are no Proceedings pending, or, to the Knowledge of
Tejas or Tejas Energy, threatened, against Tejas or Tejas Energy, at law or in
equity, in any Court or before or by any Governmental Authority that
(i) questions the validity of any Transaction Agreement or seeks to restrain,
prohibit, invalidate, set aside, prevent or make unlawful any Transaction
Agreement or any of the Transactions, or (ii) if adversely determined (x) would
prevent or impair the ability of Tejas or Tejas Energy to perform any of their
obligations under the Transaction Agreements or (y) would have a Material
Adverse Effect on the Company.
Section Investment Intent.
(a) Each of Tejas and Tejas Energy is capable of evaluating the merits
and risks of its investment in the Units and the GP Interest. Tejas Energy
is taking the Units and the GP Interest for its own account and not with
any current view to or intent to sell in
HOU04:132863.11
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connection with any distribution of such securities as such terms are
defined under the Securities Act. Each of Tejas and Tejas Energy has
reviewed Enterprise Partners' Annual Report on Form 10-K for the year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999 (the "Enterprise Partners SEC Reports").
Each of Tejas and Tejas Energy has had an opportunity to discuss Enterprise
Partners' and Enterprise GP's business and financial condition, properties,
operations and prospects with Enterprise Partners' and Enterprise GP's
management and to ask questions of officers of Enterprise Partners and
Enterprise GP.
(b) Tejas and Tejas Energy understand that (i) the Units and the GP
Interest will be "restricted securities" under the applicable federal
securities laws, (ii) the Securities Act and the rules of the SEC provide
in substance that such unitholder may dispose of the Units and the GP
Interest only pursuant to an effective registration statement under the
Securities Act or in a transaction exempt from the registration
requirements of the Securities Act, and (iii) except as set forth in the
Registration Rights Agreement, Enterprise Partners has no obligation or
intention to register the sale of the Units or the GP Interest pursuant to
the Securities Act, and that, accordingly, Tejas Energy and Tejas may be
required to bear the economic risk of the investment in Units and the GP
Interest for a substantial period of time.
(c) Tejas and Tejas Energy agree that certificates representing the
Units shall be subject to appropriate stop-transfer instructions to be
given by Enterprise Partners to its transfer agents and shall have endorsed
thereon a legend substantially as follows:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or under any applicable state law, and may not be transferred without
registration under the Act or such applicable state law unless an
exemption from such registration is available thereunder.
Enterprise Partners agrees to remove such legend at such time as
the Units are freely tradeable under Rule 144 or otherwise.
Section No Brokers. None of Tejas Energy, Tejas, the Company nor any of
their respective Subsidiaries or Affiliates has, directly or indirectly, entered
into any agreement with any Person that would obligate the Company, any of its
Subsidiaries or any of the Enterprise Parties to pay any commission, brokerage
fee or "finder's fee" in connection with the Transactions.
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ARTICLE
REPRESENTATIONS AND
WARRANTIES OF TEJAS AND TEJAS
ENERGY AS TO THE COMPANY AND
ITS SUBSIDIARIES
Tejas and Tejas Energy, jointly and severally, represent and warrant to the
Enterprise Parties as to the Company and its Subsidiaries that the following
statements were true and correct at the Effective Date and are true and correct
as of the Closing Date:
Section Organization. Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
carry on its business as it is now being conducted and to own, lease and operate
its properties where now conducted, owned, leased or operated. Each of the
Company and its Subsidiaries is duly licensed or qualified to do business and is
in good standing in each jurisdiction where such license or qualification is
required to carry on its business as now conducted, except where the failure to
be so qualified or licensed or in good standing, as the case may be, could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section Capitalization.
(a) All of the issued and outstanding Company Interest has been duly
authorized and is validly issued. There are no outstanding or authorized
(i) options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments, other than this
Agreement, that could require the Company or Tejas to issue, sell, or
otherwise cause to become outstanding any member interests in the Company
or (ii) securities or rights convertible into or exchangeable or
exercisable for, membership interests of the Company or any contracts,
commitments, understandings or arrangements by which the Company or Tejas
is or may be bound to issue, redeem, purchase or sell membership interests
in the Company or securities convertible into or exchangeable for any such
membership interests in the Company.
(b) Schedule 4.02(b) of the Tejas Disclosure Memorandum sets forth a
complete list of (i) all of the Subsidiaries of the Company, the
jurisdiction of incorporation or formation of each such Subsidiary and the
number of issued and outstanding membership interests of each such
Subsidiary and the record holders thereof, (ii) all Joint Ventures,
including a description of the type of such entity, the ownership interest
of the Company its Subsidiaries therein and, to the Knowledge of Tejas, the
names and ownership interests of the other holders thereof and (iii) the
ownership interest of the Company and each Company Subsidiary in any
co-ownership arrangement wherein the Company or its Subsidiary is a co-
owner of assets. Except as set forth on Schedule 4.02(b) of the Tejas
Disclosure
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Memorandum all of the outstanding membership interests of the Company's
Subsidiaries are owned beneficially and of record by the Company or the
Company's Subsidiaries, free and clear of all Liens. There are no
outstanding or authorized (i) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or commitments other than as contemplated by this Agreement, that would
require the Company or any of its Subsidiaries or Tejas to issue, sell or
otherwise cause to become outstanding any membership interests of the
Company or any of its Subsidiaries or (ii) securities or rights convertible
into or exchangeable or exercisable for, any such membership interests or
any contracts, commitments, understandings or arrangements by which the
Company or Tejas is or may be bound to issue, redeem, purchase or sell such
membership interests or securities convertible into or exchangeable for any
such membership interests. Except as set forth on Schedule 4.02(b) of the
Tejas Disclosure Memorandum, all of the Company's or any of its
Subsidiary's interests in the Joint Ventures are owned beneficially and of
record by the Company or the Company's Subsidiaries, free and clear of all
Liens and neither Tejas, the Company nor any Subsidiary has entered into
any contracts or agreements by which the Company or any of its Subsidiaries
is or may be bound to sell or otherwise transfer, directly or indirectly,
such interests provided this representation is not intended to cover
preferential rights and other similar rights of refusal or purchase rights
contained in any of the Material Contracts listed on Schedule 4.12(a).
Section No Violation. Assuming receipt of all Company required consents
("Company Required Consents") indicated as required in Schedule 4.03 of the
Tejas Disclosure Memorandum, neither the execution and delivery by Tejas and
Tejas Energy of the Transaction Agreements nor the performance by Tejas or Tejas
Energy of their obligations hereunder or thereunder will (a) (i) violate or
breach the terms of or cause a default under any Law or any Judgment applicable
to the Company or any of its Subsidiaries, (ii) conflict with or violate any
provisions of the certificate of organization, the limited liability company
agreement or other organizational documents of the Company or any of its
Subsidiaries or (iii) conflict with, or result in the breach of, or constitute a
default under, or result in the termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or both) of any right
or obligation under, any note, bond, mortgage, indenture, license, lease,
agreement, contract, arrangement or commitment to which the Company or any of
its Subsidiaries is a party or by which they or any of their properties or
assets are bound, or (b) result in the creation or imposition of any Lien on any
of the properties or assets of the Company or any of its Subsidiaries, except in
any such case for any matters described in this Section 4.03 that individually
or in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company.
Section Permits. Except as set forth on Schedule 4.04 of the Tejas
Disclosure Memorandum, the Company and each of its Subsidiaries have all Permits
required to conduct their respective businesses as currently conducted and the
Company and each of the Subsidiaries have been operating their respective
businesses pursuant to and in compliance with the terms of all such Permits,
except for such failures to comply which have not resulted in, individually or
in the aggregate, a Material Adverse Effect on the Company. Except as set forth
on Schedule 4.04 of the
HOU04:132863.11
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Tejas Disclosure Memorandum, such Permits held by the Company and its
Subsidiaries are valid and in full force and effect and none of such Permits
will, assuming the Company Required Consents have been obtained, be cancelled,
forfeited, revoked, suspended or terminated as a result of the transactions
contemplated by this Agreement, except, in each case, such Permits the
cancellation, forfeiture, revocation, suspension or termination of which would
not have a Material Adverse Effect on the Company.
Section Compliance With Applicable Law. Except as set forth on
Schedule 4.05 of the Tejas Disclosure Memorandum, each of the Company and its
Subsidiaries is presently complying with and in the past has complied with all
applicable Laws and Judgments, except for such failures to comply which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on the Company.
Section Litigation.
(a) Except as set forth on Schedule 4.06(a) of the Tejas Disclosure
Memorandum, there are no Proceedings pending or, to the Knowledge of Tejas
or Tejas Energy, threatened, against the Company or any of its Subsidiaries
or to which the Company or any of the Subsidiaries is or will be a party.
(b) Except as set forth on Schedule 4.06(b) of the Tejas Disclosure
Memorandum, none of the Proceedings referred to in Section 4.06(a) above
would reasonably be expected to result in a Material Adverse Effect on the
Company or materially impair Tejas' or Tejas Energy's ability to effect the
Closing.
Section Taxes.
(a) The Company, its Subsidiaries, the Tejas Joint Ventures and the Tejas
Co- ownerships have not, on or prior to the Closing Date, filed an election
under Treasury Regulation, Paragraph 301.7701-3 to be classified as a
corporation for federal income Tax purposes. During the entirety of the period
from the date of its formation through the Closing Date, each of the Company and
the Tejas LLCs has been a business entity that has had and will have a single
owner at any given point in time and is and will be disregarded as an entity
separate from its owner for federal income Tax purposes under Treasury
Regulation Sections 301.7701-2 and -3 and any comparable provision of applicable
state or local Tax law that permits such treatment. Each of the Tejas Joint
Ventures (other than the Dixie Pipeline Company) is treated and classified as a
partnership for federal income Tax purposes under Treasury Regulation, Paragraph
301.7701-2 and -3. Each of the Tejas Co-ownerships is classified and treated as
a co-ownership rather than a partnership or association taxable as a corporation
for federal income Tax purposes under Treasury Regulation, Paragraph 301.7701-2
and -3.
(b) Except as set forth on Schedule 4.07 of the Tejas Disclosure
Memorandum, all Tax Returns of the Company, its Subsidiaries, the Tejas
Joint Ventures and the Tejas Co-
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ownerships that are required to be filed (taking into account any
extensions of time within which to file) before the Closing Date, have been
filed, the information provided in such Tax Returns is complete and
accurate in all material respects, and all Taxes owed by the Company, its
Subsidiaries, the Tejas Joint Ventures and the Tejas Co-ownerships have
been timely paid in full.
(c) There are no Liens for Taxes upon the assets of any of the Company
and its Subsidiaries or the Tejas Co-Ownerships, or, to the Knowledge of
Tejas or Tejas Energy, upon the assets of any of the Tejas Joint Ventures
(excluding the Company's Subsidiaries), other than with respect to ad
valorem Taxes which are not yet delinquent or Permitted Liens. Each of the
Company and its Subsidiaries, and, to the Knowledge of Tejas or Tejas
Energy, each of the Tejas Joint Ventures (excluding the Company's
Subsidiaries) has fully complied with all applicable federal, state and
local employment Tax, withholding and contribution obligations with respect
to its employees, and all other Tax withholding obligations required by
law.
(d) Each of the Company and its Subsidiaries and, to the Knowledge of
Tejas or Tejas Energy, the Joint Ventures (excluding the Company's
Subsidiaries) (or the operators of the Joint Ventures and/or Tejas), to the
extent required by Section 4081 et seq. of the Code, has obtained a
currently effective IRS Form 637 registration number.
Section Financial Statements. Copies of the financial statements of the
Company and its Subsidiaries consisting of a statement of assets acquired and
liabilities assumed of the Company and its Subsidiaries as of December 31, 1998,
and the related statement of revenues and direct operating expenses for the year
ended December 31, 1998 (including the notes thereto), which financial
statements have been audited, and are accompanied by the audit opinion of
Deloitte & Touche LLP (the "Financial Statements") have been provided to
Enterprise Partners. Except for the Retained Liabilities, such Financial
Statements present fairly, in all material respects, the assets acquired and
liabilities assumed as of December 31, 1998 and the revenues and direct
operating expenses for the year ended December 31, 1998 of the Company and its
Subsidiaries pursuant to this Agreement in conformity with generally accepted
accounting principles consistently applied.
Section Absence of Certain Changes. Since December 31, 1998, except as
set forth in Schedule 4.09 of the Tejas Disclosure Memorandum, the Company and
its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts (other than economic conditions or facts or circumstances applicable
to the natural gas liquids industry in general) which, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
HOU04:132863.11
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(b) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the Company and its Subsidiaries which,
individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on the Company;
(c) any material transaction or commitment made, or, any Material
Contract entered into, by the Company or any of its Subsidiaries (including
the acquisition or disposition of any assets) or any relinquishment by the
Company or any of its Subsidiaries of any Material Contract, other than
transactions and commitments in the ordinary course of business consistent
with past practices and those contemplated by the Transaction Agreements;
(d) except as contemplated by this Agreement and except for any such
change after the date of this Agreement required by reason of a concurrent
change in generally accepted accounting principles, any change in any
method of accounting or accounting practice with respect to the Company and
its Subsidiaries; and
(e) any amendment of the terms of or breach of the provisions of (or
any event which, with notice or passage of time or both would constitute a
breach by the Company or the Subsidiaries of) the Shell Processing
Agreement which could result in the termination of such agreement by any
Shell Affiliate party thereto.
Section Bank Accounts. Schedule 4.10 of the Tejas Disclosure Memorandum
includes the names and locations of all banks in which the Company or any of its
Subsidiaries has an account or safe deposit box related to the Business and the
names of all persons authorized to draw thereon or to have access thereto.
Section Conduct of Business From the Effective Date to the Closing Date.
From the Effective Date to the Closing Date and, except as otherwise
contemplated by this Agreement, Tejas and Tejas Energy:
(a) have caused the Company and its Subsidiaries to conduct the
business and operations of the Company and its Subsidiaries in the ordinary
course;
(b) have not permitted the Company or its Subsidiaries to dispose of
any assets of the Business except for Excluded Assets and inventory sold in
the ordinary course of business;
(c) have not permitted the Company or its Subsidiaries to make any
loans, advances, distributions or dividends to Tejas or its Affiliates
(other than the Company or its Subsidiaries);
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(d) have not permitted the Company or its Subsidiaries to use their
respective cash or properties to pay any Retained Liabilities other than as
adjusted for in Section 2.07;
(e) have not permitted the Company or its Subsidiaries to incur,
create or assume any Lien on any individual asset of the Company or its
Subsidiaries other than Permitted Liens; and
(f) have not permitted the Company or its Subsidiaries to incur any
Indebtedness for Borrowed Money except for amounts borrowed from Tejas or
its Affiliates which will be extinguished pursuant to Section 6.07 below.
Section Material Contracts or Indebtedness.
(a) Schedule 4.12(a) of the Tejas Disclosure Memorandum includes a
list of the following agreements, arrangements or understandings to which
the Company or any Subsidiary or any Joint Venture of which the Company or
a Company Subsidiary is the operator is a party (or with respect to
subsection (xii) below to which any such party or Tejas or Tejas Energy or
any other Shell Affiliate is a party) (each, a "Material Contract"):
(i) any site lease with respect to a Facility;
(ii) any lease (whether of real or personal property) providing
for annual rental payments or receipts of $1,500,000 or more;
(iii) any operating agreements under which the Company or any
Company Subsidiary is the operator;
(iv) any construction agreements providing for annual payments by
the Company or any Subsidiary of $1,500,000 or more;
(v) any pipeline tariff agreements;
(vi) any storage agreements providing for annual payments or
receipts by the Company or any Subsidiary of $1,500,000 or more, other
than agreements which have a term of 30 days or less or can be
terminated with 30 days or less notice without penalty;
(vii) partnership agreements, limited liability agreements and
joint venture agreements and construction and operation agreements;
(viii) any gas processing agreements, fractionation agreements,
NGL supply and sale agreements, marketing agreements, straddle
agreements, balancing agreements, interconnection agreements or
utility contracts in each case providing
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for annual payments or receipts in excess of $1,500,000 other than
agreements which have a term of 30 days or less or can be terminated
with 30 days or less notice without penalty;
(ix) any agreement (other than the Transaction Agreements)
relating to the acquisition or disposition of a Subsidiary or any
material asset outside the ordinary course of business (whether by
merger, sale of stock, sale of assets or otherwise), other than as set
forth on Schedule 4.12(a)(ix) of the Tejas Disclosure Memorandum;
(x) any agreement or series of related agreements relating to
Indebtedness for Borrowed Money or any guarantee thereof in excess of
$1,500,000;
(xi) any agreement or arrangement with Tejas Energy or Tejas or
an Affiliate of Shell Oil Company on the one hand and the Company or
any of its Subsidiaries on the other hand; and
(xii) any agreement which restricts the Company or its
Subsidiaries or Enterprise Partners or any of its Affiliates from
engaging in any line of business which the Company or any of the
Subsidiaries is conducting immediately prior to the Closing Date.
(b) True and complete copies of each such Material Contract have been
made available to Enterprise Partners.
(c) Except as disclosed in Schedule 4.12(c) of the Tejas Disclosure
Memorandum, each Material Contract is a legal, valid and binding obligation
of each of the Company and/or any Subsidiary that is a party thereto and,
to the Knowledge of Tejas or Tejas Energy, each other party to such
Material Contract, enforceable against the Company and/or such Subsidiary
and, to the Knowledge of Tejas or Tejas Energy, each such other party in
accordance with its terms (except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(regardless of whether such enforceability is considered in a proceeding at
law or in equity)), and neither the Company nor any Subsidiary nor, to the
Knowledge of Tejas Energy or Tejas, any other party to such Material
Contract is in material default or has failed to perform any material
obligation under such Material Contract, and there does not exist any
event, condition or omission which would constitute a material breach or
material default (whether by lapse of time or notice or both), except for
any such defaults, failures or breaches as, individually or in the
aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect.
(d) Neither the Company nor any Subsidiary is in breach of or has
failed to perform or has taken any action or failed to perform any action
that, with notice or passage of time or both, would be a breach, under any
Material Contract referred to in clause (a)(xi)
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above where such breach could result in the Shell Oil Company Affiliate
terminating or having the right to terminate or cancel such agreement or
which would otherwise have a Material Adverse Effect on the Company.
Section Assets.
(a) Schedule 4.13(a) of the Tejas Disclosure Memorandum correctly
describes all real property (the "Real Property") which the Company or any
of its Subsidiaries owns, leases or subleases, any title insurance policies
and surveys with respect to such Real Property, specifying in the case of
leases or subleases, the name of the lessor or sublessor, the lease term
and the basic annual rent.
(b) Schedule 4.13(b) of the Tejas Disclosure Memorandum sets forth,
with respect to each Facility, the name and location of such Facility,
whether such Facility is a gas processing, fractionation, storage or
pipeline facility, the capacity of such Facility, the ownership interest of
the Company and its Subsidiaries in each such Facility and the name of the
operator of each Facility.
(c) Subject to execution and filing of the acts of amendment and
conveyances (as described in Section 6.09), the Company or a Subsidiary
thereof has good and indefeasible title to, or in the case of leased Real
Property or personal property, valid leasehold interests in, all material
assets (whether real, personal, tangible or intangible) reflected in the
Audited Financial Statements or acquired after December 31, 1998, including
the interests in the Facilities described in Schedule 1.01(a) of the Tejas
Disclosure Memorandum. Except as set forth on Schedule 4.13(c) of the Tejas
Disclosure Memorandum, no material asset of the Company or any of its
Subsidiaries is subject to any Lien, except for Permitted Liens.
Section Employees, Employee Benefits. None of the Company nor any
Subsidiary thereof has any employees or maintains or is liable under any
employee compensation, benefit, pension or welfare plan or arrangement.
Section Sufficiency of Assets Held by the Company and its Subsidiaries.
Except as provided in Schedule 4.15 of the Tejas Disclosure Memorandum, the
assets to be held by the Company and its Subsidiaries as of the Closing will
constitute all of the properties or assets necessary to conduct the Business as
conducted at the Effective Date.
Section Intellectual Property.
(a) Schedule 4.16 of the Tejas Disclosure Memorandum contains a list
of all Intellectual Property Rights owned or licensed by Tejas Energy, or
Tejas or the Company or any of its Subsidiaries that Enterprise Partners
has identified that it desires to use following the Closing ("Material
Intellectual Property Rights").
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(b) Schedule 4.16 of the Tejas Disclosure Memorandum sets forth a list
of all material licenses, sublicenses and other agreements involving
Material Intellectual Property Rights as to which the Company or any of its
Subsidiaries is a party.
(c) (i) Except as set forth in Schedule 4.16 of the Tejas Disclosure
Memorandum, since February 2, 1998, none of the Company and its
Subsidiaries has been a defendant in any action, suit, investigation or
proceeding relating to, or otherwise has been notified of, any alleged
claim of infringement of any Material Intellectual Property Right, and none
of Tejas or the Company or any of its Subsidiaries has any Knowledge of any
other such infringement by the Company or any of its Subsidiaries, and (ii)
none of the Company and its Subsidiaries has any outstanding claim or suit
for, and has no Knowledge of, any continuing infringement by any other
Person of any Material Intellectual Property Rights. No Material
Intellectual Property Right is subject to any outstanding judgment,
injunction, order, decree or agreement restricting the use of such Material
Intellectual Property Right by the Company or any of its Subsidiaries or
restricting the licensing of such Material Intellectual Property Right by
the Company or any of its Subsidiaries to any Person. None of the Company
and its Subsidiaries has entered into any agreement to indemnify any other
Person against any charge of infringement of any Material Intellectual
Property Right.
Section Non-Business Related Assets. Since its formation in 1998 and
other than the Excluded Assets, neither the Company nor any of its Subsidiaries
has owned any assets which were not involved in, used in or otherwise related to
the conduct of the Business.
ARTICLE
REPRESENTATIONS AND
WARRANTIES OF THE ENTERPRISE
PARTIES
The Enterprise Parties, jointly and severally, and EPC II, severally and
only as to representations and warranties applicable to EPC II in Sections
5.01(b), 5.02(b), 5.03, 5.04(a), and 5.05, and to the representations and
warranties in 5.01(c) and 5.10(a), (b), (c), (e) and (h) and Enterprise Products
severally and only as to the representations applicable to Enterprise Products
in Sections 5.02(a), 5.03, 5.04(a) and 5.05, represent and warrant to Tejas and
Tejas Energy that the following statements were true and correct as of the
Effective Date and are true and correct as of the Closing Date:
Section Organization.
(a) Each of Enterprise Partners and Enterprise Operating is a limited
partnership duly organized, validly existing and in good standing under the
Laws of the State of Delaware with all requisite power and authority to
own, lease and operate its properties and to carry on its business as
currently conducted.
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(b) EPC II is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware with all requisite power and to
own, lease and operate its properties and to carry on its business as
currently conducted.
(c) Enterprise GP is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware with all requisite power and authority to own, lease and operate
its properties and to carry on its business as currently conducted.
Section Authorization of Agreement.
(a) Each of the Enterprise Parties and Enterprise Products has all
requisite power and authority to enter into the Transaction Agreements to
which it is a party, to perform its obligations thereunder and to
consummate the Transactions to which it is a party. The execution and
delivery by each of the Enterprise Parties and Enterprise Products of such
Transaction Agreements, and the performance of their obligations
thereunder, have been duly and validly authorized by all requisite action
on the part of the Enterprise Parties and Enterprise Products. The
Transaction Agreements to which the Enterprise Parties or Enterprise
Products are a party have been executed and delivered by such Enterprise
Parties and Enterprise Products, constitute legal, valid and binding
obligations of such Enterprise Parties and Enterprise Products, and are
enforceable against them in accordance with their terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting the rights and
remedies of creditors, or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), including the availability of specific performance.
(b) EPC II has all requisite corporate power and authority to enter
into the Transaction Agreements to which it is a party, to perform its
obligations thereunder and to consummate the Transactions. The execution
and delivery by EPC II of the Transaction Agreements to which it is a
party, and the performance of its obligations thereunder, have been duly
and validly authorized by all requisite action on the part of EPC II. Each
Transaction Agreement to which EPC II is a party has been duly executed and
delivered by EPC II, constitutes a legal, valid and binding obligation of
EPC II, and is enforceable against EPC II in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating
to or affecting the rights and remedies of creditors, or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including the availability
of specific performance.
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Section No Violations. The execution, delivery and performance by the
Enterprise Parties, EPC II and Enterprise Products of the Transaction
Agreements, and the consummation of the Transactions do not and will not
(i) conflict with or violate any provision of the organizational documents of
the Enterprise Parties, EPC II or Enterprise Products, (ii) subject to obtaining
the Enterprise Required Consents, conflict with, or result in the breach of, or
constitute a default under, or result in the termination, cancellation or
acceleration (whether after the giving of notice or the lapse of time or both)
of any right or obligation of the Enterprise Parties, EPC II or Enterprise
Products, under any note, bond, mortgage, indenture, Permit, license, lease,
agreement, contract, arrangement or commitment to which any of the Enterprise
Parties, EPC II or Enterprise Products is a party or by which the Enterprise
Parties, EPC II or Enterprise Products or any of their assets or properties are
bound or affected, or (iii) subject to obtaining the Enterprise Required
Consents, violate or result in a breach of or constitute a default under any Law
or Judgment applicable to the Enterprise Parties, EPC II or Enterprise Products,
or by which the Enterprise Parties, EPC II or Enterprise Products, or any of
their respective assets are bound or affected, except, in the cases of clauses
(ii) and (iii), for any conflict, breach, default, termination, cancellation,
acceleration, loss or violation which, individually or in the aggregate, would
not materially impair the Enterprise Parties', EPC II's or Enterprise Products'
ability to effect the Closing or have a Material Adverse Effect on Enterprise
Partners, Enterprise Operating and their respective Subsidiaries or on
Enterprise GP.
Section Approvals. (a) Except for the requirements of the Consents listed
in Schedule 5.04 ("Enterprise Required Consents"), no Consent is required to be
obtained by the Enterprise Parties, EPC II or Enterprise Products, or any of
their respective Affiliates from, and no notice or filing is required to be
given by the Enterprise Parties, EPC II or Enterprise Products or any of their
respective Affiliates to or made by the Enterprise Parties, EPC II or Enterprise
Products or any of their respective Affiliates with, any Governmental Authority
or other Person in connection with the execution, delivery and performance by
the Enterprise Parties, EPC II or Enterprise Products of the Transaction
Agreements, other than in all cases where the failure to obtain such Consent or
approval or to give or make such notice or filing would not, individually or in
the aggregate, impair the Enterprise Parties', EPC II's or Enterprise Products'
ability to effect the Closing or have a Material Adverse Effect on Enterprise
Partners, Enterprise Operating and their respective Subsidiaries or on
Enterprise GP.
(b) The Enterprise Parties represent that all filings required under the
HSR Act to be made by the Enterprise Parties or their Affiliates in order for
the Enterprise Parties to consummate the Transactions have been made and early
termination of the applicable waiting period thereunder has expired.
Section Litigation; Impairment. There are no actions, suits, claims or
proceedings pending (whether at law or in equity) or, to the Knowledge of the
Enterprise Parties, EPC II and Enterprise Products, threatened against or
involving Enterprise Partners, Enterprise Operating, or their respective
Subsidiaries or Enterprise GP in any Court or before or by any Governmental
Authority which (i) questions the validity of any Transaction Agreement or seeks
to
HOU04:132863.11
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restrain, prohibit, invalidate, set aside, prevent or make unlawful any
Transaction Agreement or any of the Transactions, or (ii) if adversely
determined (x) would prevent or impair the ability of Enterprise Partners or
Enterprise Operating to purchase the Company Interest, the ability of EPC II to
sell the GP Interest to Tejas or the ability of the Enterprise Parties or
Enterprise Products to perform any of their obligations under the Transaction
Agreements or (y) would have a Material Adverse Effect on Enterprise Partners,
Enterprise Operating and their respective Subsidiaries or on Enterprise GP.
Section Compliance With Applicable Law. Each of Enterprise Partners,
Enterprise Operating and its Subsidiaries and Enterprise GP is presently
complying with all applicable Laws and Judgments, except for such failures to
comply which, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect on Enterprise Partners, Enterprise
Operating or its Subsidiaries or Enterprise GP.
Section Permits. Each of the Enterprise Partners, Enterprise Operating
and each of their respective Subsidiaries and Enterprise GP have all Permits
required to conduct their respective business as currently conducted and such
entities have been operating their respective businesses pursuant to and in
compliance with the terms of all such Permits, except for such failures to
comply which have not resulted in, individually or in the aggregate, a Material
Adverse Effect on the Enterprise Parties, Enterprise Operating and their
respective Subsidiaries or on Enterprise GP. Such Permits held by the Enterprise
Partners, Enterprise Operating and their respective Subsidiaries and Enterprise
GP are valid and in full force and effect and none of the Permits will, assuming
the Enterprise Required Consents have been obtained, be terminated or become
terminable as a result of the transactions contemplated by this Agreement,
except, in each case, such Permits the termination or impairment of which would
not have a Material Adverse Effect on Enterprise Partners, Enterprise Operating
and their respective Subsidiaries or Enterprise GP.
Section Taxes.
(a) All Tax Returns of Enterprise Partners, Enterprise Operating,
Enterprise GP and their respective Subsidiaries that are required to be
filed (taking into account any extensions of time within which to file)
before the Closing Date, have been or will be filed, the information
provided in such Tax Returns is complete and accurate in all material
respects, and all Taxes shown to be due and payable by Enterprise Partners,
Enterprise Operating, Enterprise GP and their respective Subsidiaries on
such Tax Returns have been or will be paid in full.
(b) Enterprise Partners and Enterprise Operating have not, and will
not on or prior to the Closing Date, file an election under Treasury Reg.
Paragraph 301.7701-3 to be classified as a corporation for federal income
tax purposes. During the entirety of the period from the date of the
formation through the Closing, each of the Enterprise Partners and
Enterprise Operating has been and will be treated and classified as a
partnership for federal income tax purposes under Treasury Reg. Paragraph
301.7701-2 and -3 and ninety percent (90%) or more of
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Enterprise Partners' gross income is income derived from the exploration,
development, mining or production, processing, refining, transportation or
marketing of any mineral or natural resource or other items of "qualifying
income" within the meaning of Section 7704 of the Code.
Section SEC Reports. Since August 1, 1998 (a) Enterprise Partners
has timely made all filings required to be made by the Securities Act and
the Exchange Act, (b) all filings by Enterprise Partners with the SEC, at
the time filed (in the case of documents filed pursuant to the Exchange
Act) or when declared effective by the SEC (in the case of registration
statements filed under the Securities Act) complied in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations of the SEC thereunder, (c) no
such filing, at the time described above, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading, and (d) all
financial statements contained or incorporated by reference therein
complied as to form when filed in all material respects with the rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and fairly present in all material respects the financial
condition and results of operations of Enterprise Partners at and as of the
respective dates thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated (subject in the case of
unaudited statements, to normal year-end audit adjustments).
Section Ownership; Issuance of Special Units.
(a) Enterprise GP is the sole general partner of Enterprise Partners,
with a 1% general partner interest in Enterprise Partners.
(b) Enterprise GP is the sole general partner of Enterprise Operating,
with a 1.0101% general partner interest in Enterprise Operating.
(c) All of the general partner interests in Enterprise Partners and
Enterprise Operating have been duly authorized and have been validly issued
to Enterprise GP in accordance with the Enterprise Partners Partnership
Agreement and Enterprise Operating Partnership Agreement, and are owned by
Enterprise GP free and clear of all Liens.
(d) Enterprise Partners is the sole limited partner of Enterprise
Operating with a 98.9899% limited partner interest in Enterprise Operating;
such limited partner interest has been duly authorized and validly issued
in accordance with the Enterprise Operating Partnership Agreement, is fully
paid (to the extent required by the Enterprise Operating Partnership
Agreement) and nonassessable (as such nonassessability may be affected by
matters described in the Enterprise Partners' Prospectus dated July 27,
1998 under the
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caption "The Partnership Agreement--Limited Liability") and is owned by
Enterprise Partners free and clear of all Liens.
(e) Except as set forth on Schedule 5.10(e), all of the membership
interests in Enterprise GP have been duly authorized and validly issued and
are fully paid and nonassessable, and are owned 95% by EPC II and 5% by Dan
Duncan LLC free and clear of Liens.
(f) The only outstanding limited partner interests of Enterprise
Partners (other than the Special Units) are 45,552,915 Common Units and
21,409,870 Subordinated Units, which have been duly authorized by the
Enterprise Partners Partnership Agreement and are validly issued and fully
paid (to the extent required under the Enterprise Partners Partnership
Agreement) and nonassessable (except as such nonassessability may be
affected by matters described in the Enterprise Partners' Prospectus dated
July 27, 1998 under the caption "The Partnership Agreement--Limited
Liability"). Except as set forth on Schedule 5.10(f), there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts, commitments
or obligations that could require Enterprise Partners to issue any
additional units or equity other than as set forth in this Agreement.
Enterprise Partners has not granted any registration rights with respect to
partnership units or other equity to any third parties.
(g) When issued and delivered to Tejas at the Closing, the Special
Units shall have been duly authorized and validly issued to Tejas in
accordance with the Enterprise Partners Amended Partnership Agreement and
fully paid and nonassessable (except as such nonassessability may be
affected by matters described in the Enterprise Partners' Prospectus dated
July 27, 1998 under the caption "The Partnership Agreement--Limited
Liability.") Upon its receipt of the Special Units at Closing, Tejas will
receive good and indefeasible title to the Special Units free and clear of
Liens.
(h) EPC II owns Common Units representing 73.657% of the issued and
outstanding Common Units.
Section Financing. Enterprise Partners has, or has arranged for, the
funds necessary to pay the Other Consideration to Tejas.
Section No Brokers. None of the Enterprise Parties has employed any
investment banker, broker, or finder in connection with the transactions
contemplated by this Agreement, nor has any of them taken any action which would
give rise to a valid claim against Tejas or Tejas Energy for a brokerage
commission, finde's fee, or other like payment.
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Section Investment Intent.
(a) The Enterprise Parties are capable of evaluating the merits and
risks of their investment in the Company Interest. The Enterprise Parties
are taking the Company Interest for their own account and not with a
current view to or intent to sell in connection with any distribution of
such securities as such terms are defined under the Securities Act. The
Enterprise Parties have had an opportunity to discuss the Company's and its
Subsidiaries' and its Joint Ventures' and co-ownerships' business and
financial condition, properties, operations and prospects with the
Company's and its Subsidiaries' management and to ask questions of officers
of the Company and its Subsidiaries.
(b) The Enterprise Parties understand that (i) the Company Interests
will be "restricted securities": under the applicable federal securities
laws, and (ii) that the Securities Act and the rules of the SEC provide in
substance that such equity holder may dispose of the Company Interests only
pursuant to an effective registration statement under the Securities Act or
in a transaction exempt from the registration requirements of the
Securities Act, and that, accordingly, the Enterprise Parties may be
required to bear the economic risk of the investment in the Company
Interests for a substantial period of time.
ARTICLE
COVENANTS
Section Access to Information Following the Closing.
(a) To the extent reasonably necessary or desirable in connection
with Tejas' ownership of the Company Interest (including tax related
matters), after the consummation of the Transactions, Tejas will have
reasonable access at all reasonable times and in a manner so as not to
interfere with the normal business operations of the Company and its
Subsidiaries, to all premises, properties, personnel, books, records, work
papers, contracts and documents of or pertaining to each of the Company and
its Subsidiaries to the extent relating to the Business or assets of the
Business as existing at the Closing. Enterprise Partners shall preserve all
such information, records and documents for a period of seven (7) years
following the Closing.
(b) Each of the parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Tax Returns of or with
respect to the Company or any of its Subsidiaries or to any claims, audits
or other proceedings affecting the Company or any of its Subsidiaries until
the expiration of the statute of limitations (including extensions)
applicable to the taxable period to which such documents relate or until
the final determination of any controversy with respect to such taxable
period and until the final determination of any payments that may be
required with respect to such taxable period under this Agreement.
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Section Intentionally Deleted.
Section Public Announcements. The Enterprise Parties and Tejas and Tejas
Energy will consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated by this Agreement and, except as may be required by
applicable Law or any securities exchange on which the securities of the parties
or their Affiliates are listed (following notice and consultation), neither the
Enterprise Parties nor Tejas or Tejas Energy shall issue any such press release
or make any such public statement without the prior approval of the other party
to this Agreement, such approval not to be unreasonably withheld or delayed.
Section Removal of Tradenames. As soon as reasonably practicable after
the Closing (and in any event, within 180 days after the actual date of the
Closing (or such later date as may be reasonably requested by Enterprise
Operating and consented to by Tejas, such consent not to be unreasonably
withheld), the Enterprise Parties will remove the "Tejas," "Coral" and "Shell"
names (and all derivatives thereof), trademarks and symbols from the properties
and assets of the Company and its Subsidiaries (including changing all signage
relating thereto) and provide the requisite notices to, the appropriate federal,
state or local agencies to place the title or other evidences of ownership,
including operation of the properties and assets, in a name other than any name
of Tejas or any of its Affiliates or any variations thereof. In addition, within
15 days of the actual date of Closing (and 90 days of the actual date of Closing
with respect to Tejas NGL Pipelines, LLC), Enterprise Operating will change all
of the legal names of the Company and its Subsidiaries to delete from the name
thereof the word "Tejas".
Section Further Assurances.
(a) The parties hereto agree to cooperate fully with each other and
from time to time after the Closing, upon request and without further
consideration, to (i) execute, deliver, acknowledge and file (where
necessary) all such further instruments, agreements and documents, as may
be reasonably required to more effectively evidence the transfer of the
assets comprising the Business to the Company and its Subsidiaries or to
consummate the Transactions and carry out the intent and purposes of this
Agreement and (ii) take such actions as may be reasonably required to cause
Enterprise Operating (or its designee) to have actual control and
possession of the assets comprising the Business. Without in any manner
limiting the generality of the foregoing, if record and beneficial title to
any of the assets comprising the Business is not held by the Company or its
Subsidiaries but rather is held by an Affiliate of Tejas as of the Closing,
Tejas Energy and Tejas agree to execute and to cause their Affiliates to
execute such agreements as shall be reasonably required to cause such title
to effectively be transferred and conveyed from Tejas, Tejas Energy or
their Affiliates to the Company or its Subsidiaries.
(b) As to pre-closing Consents or governmental filings required to
transfer the Business to the Company or its Subsidiaries which are not
obtained prior to Closing, Tejas
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will (i) designate an in-house lawyer or business person (at Tejas' cost)
to assist Enterprise Partners in obtaining such Consents for a period of
twelve months following the Closing, (ii) subject to the limitation
contained in subsection (c) below, will be obligated to provide Enterprise
Partners funds to obtain such Consents and (iii) will, to the extent
possible (without any cost to Tejas or its Affiliates, which shall not
include the loss of such economic benefit) provide to the Company and its
Subsidiaries the economic benefit of such items if the necessary Consent is
not obtained within the above-referenced twelve month period. Except as
provided in this Section 6.05, neither Tejas nor Tejas Energy will have any
liability for obtaining Consents after the Closing.
(c) Tejas' payments to unaffiliated third parties pursuant to
paragraphs (a) and (b) of this Section 6.05 shall not exceed $500,000 in
the aggregate; provided, however, that if Tejas or its Affiliates shall
incur a cost that exceeds such amount, in connection with undertaking an
action requested by Enterprise Partners or one of its Affiliates, then
Enterprise Partners and Enterprise Operating shall reimburse such amount to
Tejas or its Affiliates as the case may be. The cost of the in-house lawyer
or business person referenced in subsection (b)(i) above and loss of
economic benefit pursuant to subsection (b)(iii) shall not be included in
or charged against the $500,000 ceiling. Tejas, subject to and as part of
the above-referenced $500,000 ceiling, agrees to reimburse Enterprise
Partners for local counsel fees incurred in connection with remedial
actions pursuant to subsections (a) and (b) above.
Section Books and Records. Within a reasonable period of time after
Closing, Tejas Energy and Tejas will, and will cause their respective Affiliates
to deliver to Enterprise Operating (or its designee) all books, accounting
records, contracts, leases, property files and other files and records relating
to the Business.
Section Intercompany Indebtedness. On or prior to the Closing, Tejas
Energy and Tejas shall (i pay or cause their Affiliates to pay to the Company
and its Subsidiaries all long- term debt (including current maturities) and
other Indebtedness for Borrowed Money owed by Tejas, Tejas Energy or any
Affiliate of Tejas or Tejas Energy (other than the Company and its Subsidiaries
and Joint Ventures) as of such date to the Company and its Subsidiaries and
(ii) pay to the Company a capital contribution and cause such capital
contribution to be applied to pay or satisfy all long-term debt (including
current maturities) and other Indebtedness for Borrowed Money owed by the
Company and its Subsidiaries to Tejas, Tejas Energy or their respective
Affiliates (other than the Company and its Subsidiaries and Joint Ventures) as
of such date. Tejas and Tejas Energy further agree to pay all Retained
Liabilities when, as and if they become due and payable.
Section Excluded Assets. On or prior to the Closing, Tejas and Tejas
Energy will cause the Excluded Assets to be transferred and conveyed out of the
Company and its Subsidiaries pursuant to documentation reasonably acceptable to
Enterprise Partners.
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Section Acts of Amendment. Tejas Energy and Tejas shall cause their
Affiliates which conveyed, assigned and contributed assets and properties to the
Company and its Subsidiaries as reflected in Section 6.09 of the Tejas
Disclosure Memorandum to enter into with the Company and its Subsidiaries, and
shall cause the Company and its Subsidiaries to execute an act of amendment to
the applicable conveyance and assignments or acts of sale or conveyances as
reflected on Schedule 6.09, effective as of the date of the original conveyance,
assignment and/or contribution.
Section Collections.
(a) After Closing, Tejas and Tejas Energy agree to cause to be paid to
the Company any amounts received in respect of accounts receivable related
to the Business after the Effective Date promptly upon receipt thereof.
(b) After Closing, the Enterprise Parties agree to, and to cause the
Company and its Subsidiaries to, pay to Tejas or Tejas Energy any amounts
received in respect of the Excluded Assets after the Effective Date
promptly upon receipt thereof.
Section Preferential Rights. The parties hereto acknowledge and agree
that if following the Closing and as a consequence of the transactions
contemplated by this Agreement, the Company or any of its Subsidiaries or Tejas
or any of its Affiliates is required to transfer title to any of the assets
included in the Business to satisfy a preferential right, then the Company or
its Subsidiary (as the case may be) shall be entitled to receive and retain such
proceeds paid by the Person exercising the preferential right.
Section Preparation of Historical Financials. Tejas and Tejas Energy
agree (at no out-of-pocket cost to Tejas or Tejas Energy) to cooperate with
Enterprise Partners and to provide Enterprise Partners with reasonable access
(at all reasonable times and in a manner so as not to interfere with the normal
business operations of Tejas and Tejas Energy) to books, records and personnel
reasonably required for Enterprise Partners to prepare statements of direct
operating revenues and expenses of the Company and its Subsidiaries for fiscal
years 1996 and 1997 as may be required for Enterprise Partners' SEC filings in
connection with the transactions contemplated by this Agreement.
Section Unitholder Approval.
Enterprise GP and EPC II agree to and shall call and schedule a meeting of
the Unitholders of Enterprise Partners and submit to the Unitholders of
Enterprise Partners for their approval a proposal to approve the issuance of the
Common Units to be issued upon conversion of the Special Units as soon as
practicable following the Closing Date and in any event prior to May 1, 2000.
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EPC II represents that it (alone and without any other equity holder in
Enterprise Partners) has the requisite ownership in Enterprise Partners to
approve the issuance of the Common Units upon conversion of the Special Units.
EPC II covenants and agrees that it will not dispose of any of its equity
interests in Enterprise Partners prior to such meeting of the Unitholders and
will vote its equity interests in favor of the issuance of the Common Units
required to be issued upon conversion of the Special Units.
The Enterprise Partners will, as soon as practicable, following the
Unitholders' meeting referenced in (a) above and in any event within 20 days
following such Unitholders' meeting, use its best efforts to cause the Common
Units which are to be issued upon conversion of the Special Units to be listed
on the New York Stock Exchange.
ARTICLE
EMPLOYEE MATTERS
Section Employees. Tejas has furnished Enterprise Products with a list of
the employees of Tejas or its Affiliates who are assigned to the Business (the
"Business Employees"), which list is attached hereto as Schedule 7.01.
Enterprise Products shall have the sole and absolute discretion in determining
which, if any, of the Business Employees it will offer employment and the terms,
conditions and benefits relating to such offers of employment, provided that the
same shall be substantially comparable with the terms, conditions and benefits
Enterprise Products provides to similarly situated employees of Enterprise
Products. Employment under such offers shall commence on the later of October 1,
1999, or the date such Business Employee, if not actively at work on October 1,
1999 for any reason, excluding vacation, sick leave or regularly scheduled days
off, returns to full-time active employment with Enterprise Products (the
"Employment Commencement Date"), provided such Business Employee returns within
180 days of the Closing Date. The Business Employees who accept and actually
commence employment with Enterprise Products are hereinafter collectively
referred to as "Transferred Employees."
Section Solicitation of Employees.
(a) Without the prior written consent of Enterprise Products, Tejas
shall cause its Affiliates to refrain for a period of one year from the
Closing Date, from soliciting directly or indirectly, the employment of or
otherwise seeking to engage the services of any Transferred Employee. Tejas
shall be responsible for all obligations and liabilities, if any, under the
Worker Adjustment and Retraining Notification Act and any comparable state
laws with respect to the current and former Business Employees who do not
become Transferred Employees.
(b) Without the prior written consent of Tejas, the Enterprise
Parties, Enterprise Products and their respective Affiliates shall refrain
for a period of one year from the Closing Date, from soliciting directly or
indirectly, the employment of or otherwise seeking to
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engage the services of any employee of Tejas or any of its respective
Affiliates, other than the Transferred Employee.
(c) Notwithstanding paragraphs (a) and (b) of this Section 7.02,
nothing herein shall prevent a party hereto (the "Hiring Party") from
hiring any employee of another party hereto if such person responds to a
general advertisement of employment which is not directed to such
individual specifically or was otherwise not directly or indirectly
solicited by the Hiring Party.
Section Employee Benefit Plans. Effective as of their Employment
Commencement Dates, Enterprise Products shall provide to the Transferred
Employees its employee benefit plans and programs ("Enterprise Products' Benefit
Plans") on substantially the same basis such plans and programs are provided to
similarly situated employees of Enterprise Products, except that coverage under
Enterprise Products' group health, life and disability plans shall commence as
of the Benefit Plan Date (as defined below). With respect to the Enterprise
Products' Benefit Plans, Enterprise Products shall grant the Transferred
Employees credit for their service with Tejas Affiliates as of their Employment
Commencement Date for all purposes (other than the accrual of benefits under a
defined benefit pension plan) for which such service was recognized by Tejas
Affiliates under a similar plan or program. With respect to Enterprise Products'
Benefit Plans that provide group health, life and disability benefits: (i)
Enterprise Products shall make Transferred Employees eligible to participate on
their Employment Commencement Date (the "Benefit Plan Date"), (ii) Enterprise
Products shall cause such plans to waive any exclusions or limitations with
respect to pre-existing conditions, waiting periods and actively-at-work
exclusions, except to the same extent the Transferred Employee is subject to a
pre-existing condition or actively-at-work exclusion on the Closing Date under
any health plan of Tejas Affiliates, and (iii) Enterprise Products shall provide
that any health expenses incurred by a Transferred Employee or his or her
covered dependents during 1999 on or before the Benefit Plan Date shall be taken
into account under such plan for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions. Enterprise Products' group
health plan shall be responsible for all benefit claims by Transferred Employees
and their dependents for covered services rendered on and after the date their
participation in Enterprise Products' group health plan commences, and the
respective group health plans of Tejas Affiliates shall be responsible for all
benefit claims by Transferred Employees and their dependents for covered
services rendered before their participation in Enterprise Products' group
health plan commences.
Section Vacation. The Transferred Employees shall receive credit under
Enterprise Products' vacation schedule such that the vacation time they earn
with Enterprise Products is not less than that which they are eligible to earn
under the vacation schedules of Tejas Affiliates as of the Closing Date.
Transferred Employees shall be entitled to vacation time with Enterprise
Products for the remainder of 1999 based only on their actual service with
Enterprise Products, and Enterprise Products' vacation schedule shall be
prorated for the remainder of 1999 for this purpose. Tejas shall cause its
Affiliates to pay each Transferred Employee his or her accrued but unused paid
personal leave as soon as reasonably practicable following the Closing Date.
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Section Access to Information and Personnel. (a) After the Closing Date,
Tejas shall cause its Affiliates to make reasonably available to Enterprise
Products such financial, personnel and related information as may be reasonably
requested by Enterprise Products with respect to any Transferred Employee,
including, but not limited to, compensation and employment histories; except
that neither Tejas nor its Affiliates will provide any historical performance
related data with respect to any Transferred Employee.
(b) After the Closing Date, Enterprise shall make available to Tejas any
Transferred Employees with respect to continuing litigation, audits and other
reasonable business requests at no cost to Tejas.
Section Tejas and Affiliates Benefit Plans. (a) Enterprise Products is
not assuming any employee benefit plan or program or any liability of Tejas and
its Affiliates thereunder or any other liability of Tejas or any Affiliate with
respect to any Business Employee or other current or former employee of Tejas or
any Affiliate, including, without limitation, any liability under COBRA.
(b) Tejas and its Subsidiaries shall cause each Transferred Employee to be
fully vested as of the Closing Date in each plan of Tejas and its Subsidiaries
that is a qualified plan under Section 401(a) of the Code.
(c) Each Transferred Employee who would be eligible to immediately retire
from Tejas and its Subsidiaries on the Closing Date and receive retiree health
benefits under a health plan of Tejas and its Subsidiaries shall be eligible
notwithstanding his active employment with Enterprise Products and its
Affiliates to immediately begin receiving retiree health or pension benefits
under the retiree health plan of Tejas and its Subsidiaries subject to the then
terms of such plan.
Section Third-Party Beneficiaries. No provision of this Article VII shall
create any third-party beneficiary rights in any Transferred Employee (including
any beneficiary or dependent thereof), including, without limitation, any right
to employment or employment in any particular position with Enterprise Products
for any specified period of time after the Closing Date.
ARTICLE
INDEMNIFICATION; SURVIVAL
Section Indemnification by the Enterprise Parties, EPC II and Enterprise
Products. Subject to the limitations set forth in this Article VIII,
(i) the Enterprise Parties, jointly and severally, hereby agree
to indemnify and hold harmless Tejas, Tejas Energy and any of their
respective Affiliates and their respective officers, directors,
partners, members and shareholders (collectively the "Tejas
Indemnified Parties") from and against any and all Damages incurred by
Tejas Indemnified Parties in
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connection with (a) any breach of any representation or any warranty
made by the Enterprise Parties under Sections 5.01 (Organization),
5.02 (Authorization of Agreement), 5.03 (No Violations), 5.04
(Approvals), 5.08 (Taxes), 5.09 (SEC Reports), 5.10 (Ownership;
Issuance of Special Units), 5.12 (No Brokers) and 5.13 (Investment
Intent) (collectively, the "Enterprise Representations and
Warranties"); or (b) any failure by any of the Enterprise Parties to
perform any covenant or other agreement hereunder;
(ii) EPC II hereby agrees to indemnify and hold harmless the
Tejas Indemnified Parties from and against any and all Damages
incurred by the Tejas Indemnified Parties in connection with (a) any
breach of any of the Enterprise Representations and Warranties to the
extent and only to the extent that such representations and warranties
are made by EPC II under Article V hereof, or (b) any failure by EPC
II to perform any covenant or other agreement made by it hereunder;
and
(iii) Enterprise Products hereby agrees to indemnify and hold
harmless the Tejas Indemnified Parties from and against any and all
Damages incurred by the Tejas Indemnified Parties in connection with
(a) any breach of any of the Enterprise Representations and Warranties
to the extent and only to the extent that such representations and
warranties are made by Enterprise Products under Article V hereof, or
(b) any failure by Enterprise Products to perform any covenant or
other agreement made by it hereunder;
in each case regardless of whether such Damages are caused in whole or
in part by the strict liability or negligent act or omission of the
Indemnified Party.
Section Indemnification by Tejas and Tejas Energy. Subject to the
limitations set forth in this Article VIII, Tejas and Tejas Energy agree,
jointly and severally, to indemnify and hold harmless the Enterprise Parties and
their respective officers, directors, partners, members and shareholders
(collectively, the "Enterprise Indemnified Parties") from and against any and
all Damages arising in connection with or out of (a) any breach by Tejas and
Tejas Energy of any of their representations and warranties contained in
Sections 3.01 (Organization); 3.02 (Ownership of Company Interest), 3.03
(Validity and Enforceability), 3.04 (Approvals and Consents), 3.05 (No
Violation), 3.07 (Investment Intent), 3.08 (No Brokers), 4.01 (Organization),
4.02 (Capitalization), 4.06(a) (Litigation), 4.07 (Taxes), 4.11 (Conduct of
Business From the Effective Date to the Closing Date), and 4.12(a), (b) and (d)
(Material Contracts or Indebtedness) and 4.17 (Non-Business Related Assets)
(collectively, the "Tejas Representations and Warranties"), (b) any failure by
Tejas or Tejas Energy to perform any covenant or other agreement hereunder,
(c) the Excluded Assets, (d) the Retained Liabilities, or (e) any claims which
may hereafter be made against the Company or its Subsidiaries pursuant to the
Contribution Agreement dated as of January 12, 1998 among Shell Oil Company,
Tejas Holdings, LLC, Sierra Capital Acquisition Corp., and Tejas Gas
Corporation, in each case regardless of whether such Damages are caused in whole
or in part by the strict liability or negligent act or omission of the
Indemnified Party.
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Section Indemnification Procedure. The party or parties making a claim
for indemnification under this Article VIII shall be, for the purposes of this
Agreement, referred to as the "Indemnified Party" and the party or parties
against whom such claims are asserted under this Article VIII shall be, for the
purposes of this Agreement, referred to as the "Indemnifying Party." All claims
by any Indemnified Party under this Article VIII shall be asserted and resolved
as follows:
(a) In the event that (i) any claim, demand or Proceeding is asserted
or instituted by any Person other than the parties to this Agreement or
their Affiliates which could give rise to Damages for which an Indemnifying
Party could be liable to an Indemnified Party under this Agreement (such
claim, demand or Proceeding, a "Third Party Claim") or (ii) any Indemnified
Party under this Agreement shall have a claim to be indemnified by any
Indemnifying Party under this Agreement which does not involve a Third
Party Claim (such claim, a "Direct Claim"), the Indemnified Party shall,
with reasonable promptness, send to the Indemnifying Party a written notice
specifying the nature of such claim, demand or Proceeding and the amount or
estimated amount thereof (which amount or estimated amount shall not be
conclusive of the final amount, if any, of such claim, demand or
Proceeding) (a "Claim Notice"), provided that a delay in notifying the
Indemnifying Party shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that (and only to the
extent that) such failure shall have caused the Damages for which
Indemnifying Party is obligated to be greater than such Damages would have
been had the Indemnified Party given the Indemnifying Party proper notice.
(b) In the event of a Third Party Claim, the Indemnifying Party shall
be entitled to appoint counsel of the Indemnifying Party's choice at the
expense of the Indemnifying Party to represent the Indemnified Party in
connection with such claim, demand or Proceeding (in which case the
Indemnifying Party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by any Indemnified Party except
as set forth below); provided that such counsel is reasonably acceptable to
the Indemnified Party. Notwithstanding an Indemnifying Party's election to
appoint counsel to represent an Indemnified Party in connection with a
Third Party Claim, an Indemnified Party shall have the right to employ
separate counsel, and the Indemnifying Party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
selected by the Indemnifying Party to represent the Indemnified Party would
present such counsel with a conflict of interest or (ii) the Indemnifying
Party shall not have employed counsel to represent the Indemnified Party
within a reasonable time after notice of the institution of such Third
Party Claim. If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel in
contesting any claim, demand or Proceeding which the Indemnifying Party
defends, or, if appropriate and related to the claim, demand or Proceeding
in question, in making any counterclaim against the Person asserting the
Third Party Claim, or any cross-complaint against any Person. No Third
Party Claim may be settled or compromised (i) by the Indemnified Party
without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed or (ii) by the Indemnifying
Party without the prior written consent of the
HOU04:132863.11
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Indemnified Party, which consent shall not be unreasonably withheld or
delayed. In the event any Indemnified Party settles or compromises or
consents to the entry of any Judgment with respect to any Third Party Claim
without the prior written consent of the Indemnifying Party, each
Indemnified Party shall be deemed to have waived all rights against the
Indemnifying Party for indemnification under this Article VIII.
(c) In the event of a Direct Claim, the Indemnifying Party shall
notify the Indemnified Party within 30 Business Days of receipt of a Claim
Notice whether or not the Indemnifying Party disputes such claim.
(d) From and after the delivery of a Claim Notice under this Agreement
relating to a Third Party Claim, at the reasonable request of the
Indemnifying Party, each Indemnified Party shall grant the Indemnifying
Party and its representatives all reasonable access to the books, records
and properties of such Indemnified Party to the extent reasonably related
to the matters to which the Claim Notice relates. All such access shall be
granted during normal business hours and shall be granted under conditions
which will not unreasonably interfere with the business and operations of
such Indemnified Party. The Indemnifying Party will not, and shall require
that its representatives do not, use (except in connection with such Claim
Notice) or disclose to any third Person other than the Indemnifying Party's
representatives (except as may be required by applicable Law) any
information obtained pursuant to this Section 8.03(d) which is designated
as confidential by an Indemnified Party.
Section Survival. The representations and warranties of the parties
contained in this Agreement shall terminate at and not survive the Closing;
provided that the Tejas Representations and Warranties and the Enterprise
Representations and Warranties shall each survive the Closing for the periods
set forth below:
(a) the representations and warranties of Tejas and Tejas Energy in
Sections 3.04, 3.05, 3.07, 4.02, 4.06(a) and 4.12(a), (b) and (d) and 4.17
and the representations and warranties of the Enterprise Parties, EPC II,
and Enterprise Products in Sections 5.03, 5.04, 5.09 and 5.13 shall survive
the Closing until the second anniversary of the Closing Date;
(b) the representations and warranties of Tejas and Tejas Energy in
Section 4.07 and of the Enterprise Parties in Section 5.08 shall survive
the Closing until the expiration of the applicable Tax Statute of
Limitations Date; and
(c) the representations and warranties of Tejas and Tejas Energy in
Sections 3.01, 3.02, 3.03, 3.08, 4.01, and 4.11 and the representations and
warranties of the Enterprise Parties, EPC II and Enterprise Products in
Sections 5.01, 5.02, 5.10 and 5.12 shall survive the Closing for the
applicable statute of limitations.
Following the Closing, no party shall have the right to make any claim for
indemnification for any representations or warranties under this Agreement which
do not expressly survive the Closing or
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after the expiration of the applicable survival period thereof; provided that,
with respect to any representation or warranty that survives the Closing in
respect of which indemnity may be sought under this Agreement, such
representation or warranty shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, only if a bona fide, written
notice of the inaccuracy of such representation or warranty giving rise to such
right of indemnity (including the specific nature of such inaccuracy) shall have
been given to the party against whom such indemnity may be sought prior to such
time. The covenants and agreements of the parties (including, without
limitation, the covenants and agreements of the parties set forth in this
Article VIII) contained in this Agreement or in any other Transaction Agreement
shall survive the Closing indefinitely.
Section Limitation on Claims.
(a) Each party hereto acknowledges and agrees that (except as set
forth in subsection (d) below), the provisions of this Article VIII shall
be the exclusive remedy of such party with respect to any matter arising
under this Agreement; provided, however, that (i) the foregoing shall not
limit the right of any such party to seek any equitable remedy (including
specific performance) available to enforce the rights of such party under
this Agreement or any other Transaction Agreement in accordance with the
terms of this Agreement and (ii) nothing herein is intended to restrict the
rights of Tejas (or its Affiliates) as a unitholder under the Enterprise
Partners Amended Partnership Agreement, applicable securities laws or
otherwise arising independently of this Agreement.
(b) The liability of Tejas or Tejas Energy for Damages for breaches of
any Tejas Representations and Warranties pursuant to Section 8.02(a), other
than with respect to breaches of Sections 3.02, 3.08 and 4.07 shall be
limited as follows:
(i) Tejas and Tejas Energy shall not be liable for or have
responsibility for any such Damages until the aggregate of such
Damages incurred by the Enterprise Indemnified Parties with respect to
such claims exceeds $8,000,000 in the aggregate and then only to the
extent of the excess over such amount; and
(ii) The obligations and total liability of Tejas and Tejas
Energy for such Damages shall not exceed $60,000,000 in the aggregate.
(c) The liability of any of the Enterprise Parties, EPC II or
Enterprise Products for Damages for breaches of any Enterprise
Representations and Warranties pursuant to Sections 8.01(i)(a), (ii)(a),
and (iii)(a), other than with respect to Sections 5.08, 5.10(f) and (g) and
5.12 shall be limited as follows:
(i) None of the Enterprise Parties, EPC II or Enterprise Products
shall be liable for or have responsibility for any such Damages until
the aggregate of such Damages incurred by the Tejas Indemnified
Parties with respect to such claims
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exceeds $8,000,000 in the aggregate, and then only to the extent of
the excess over such amount; and
(ii) The obligations and total liability of the Enterprise
Parties, EPC II and Enterprise Products for such Damages shall not
exceed $60,000,000 in the aggregate.
(d) Nothing in this Section 8.05 shall prevent any party from making a
claim against the other party for actual and intentional fraud (as opposed
to a fraud claim based on constructive knowledge, or negligent
misrepresentation or similar theory).
Section Tejas Environmental Indemnity.
(a) Subject to the limitations set forth in Section 8.06(b) below,
Tejas and Tejas Energy agree, jointly and severally, to indemnify and hold
harmless each of the Enterprise Indemnified Parties from and against all
Damages to the extent resulting from or arising out of Tejas Third-Party
Environmental Claims made against the Company (or its successors or
assigns) or any of its Subsidiaries or any of the Enterprise Indemnified
Parties following the Closing Date. For purposes hereof, "Tejas Third-Party
Environmental Claims" shall mean (x) a bona fide claim by a third party
(other than a Governmental Authority acting in its regulatory capacity)
alleging property damage resulting from exposure to Hazardous Substances
prior to the Closing Date from properties owned by the Company or its
Subsidiaries on or prior to the Closing Date and (y) a written directive
from a Governmental Authority requiring remediation of properties owned by
the Company or its Subsidiaries on or prior to the Closing Date pursuant to
Environmental Laws in effect at the Closing Date.
(b) The liability of Tejas or Tejas Energy for Damages under this
Section 8.06 shall be limited as follows:
(i) Tejas and Tejas Energy shall not be liable or have
responsibility for any Damages under this Section 8.06 until the
aggregate Damages incurred by the Company and its Subsidiaries with
respect to all Tejas Third-Party Environmental Claims exceed
$5,000,000 in the aggregate and then only to the extent of the excess
over $5,000,000. Individual Tejas Third-Party Environmental Claims
shall not be included in the $5,000,000 deductible until the Company
or its Subsidiaries incurs Damages in excess of $500,000 with respect
to such Tejas Third-Party Environmental Claim and then only to the
extent of the excess over the $500,000 deductible.
(ii) The obligations and total liability for Damages of Tejas and
Tejas Energy under this Section 8.06 shall not exceed $100,000,000 in
the aggregate.
(iii) The obligations and liability of Tejas and Tejas Energy
under this Section 8.06 shall cease in their entirety five (5) years
after the Closing Date except
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with respect to bona fide claims for indemnification made in writing
prior to such date which remain unresolved as of such date.
(c) The Enterprise Indemnified Parties acknowledge and agree that the
liability of Tejas, Tejas Energy or any of their Affiliates (other than the
Company and the Subsidiaries) for Damages resulting out of or relating to
environmental claims, matters or liabilities (including violations of
Environmental Law and required remediation of properties due to the
presence of Hazardous Substances in the soil, groundwater or surface water)
shall be governed exclusively by the indemnification provisions contained
in this Section 8.06.
(d) With regard to all Tejas Third Party-Environmental Claims, the
Enterprise Indemnified Parties shall give written notice identifying such
claim to Tejas and Tejas Energy so that Tejas or Tejas Energy may
participate, at its expense, in any discussions or negotiations with any
applicable Governmental Authority concerning the remediation plan or
project.
Section Enterprise Contingent Environmental Payment.
(a) If, following the Closing Date, any of Enterprise Partners,
Enterprise Operating or any of their respective Subsidiaries or Enterprise
GP incurs any Damages with respect to Enterprise Third-Party Environmental
Claims (the "Enterprise Environmental Payments") then the Enterprise
Parties shall within 20 days following such Enterprise Environmental
Payment make a payment to Tejas (or its successors or designees) equal to
25% of such Enterprise Environmental Payment (the "Contingent Environmental
Payments"). For purposes hereof, "Enterprise Third-Party Environmental
Claims' shall mean (x) a bona fide claim by a third party (other than a
Governmental Authority) alleging personal injury or property damage
resulting from exposure to Hazardous Substances prior to the Closing and
(y) a written directive from a Governmental Authority requiring remediation
of properties, now, previously or hereafter, owned by the Enterprise
Parties or any of their Subsidiaries; provided, however, that the term
Enterprise Third-Party Environmental Claim shall not include any matters
relating to the properties or assets included in the Business as
contemplated by this Agreement.
(b) The obligation of the Enterprise Parties to make the Contingent
Environmental Payments will be subject to the following limitations:
(i) The Enterprise Parties shall not be required to make any
Contingent Environmental Payments under this Section 8.07 until the
aggregate Damages incurred by the Enterprise Parties with respect to
all Enterprise Third-Party Environmental Claims exceeds $5,000,000 in
the aggregate. Individual Enterprise Third-Party Environmental claims
shall not be included in the $5,000,000 threshold unless and until the
Enterprise Parties incur Damages in excess of $500,000 with respect to
such Enterprise Third-Party Environmental Claim.
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(ii) The obligations and total liability for Contingent
Environmental Payments under this Section 8.07 shall not exceed
$100,000,000 in the aggregate .
(iii) The obligation and liability of the Enterprise Parties
under this Section 8.07 shall cease in their entirety five (5) years
after the Closing Date, except with respect to bona fide claims for
indemnification made prior to such date which remain unresolved as of
such date.
Section Louisiana Fuel Tax Audit. Tejas and Tejas Energy, agree, jointly
and severally, to indemnify and hold harmless each of the Enterprise Indemnified
Parties from and against any Taxes which may be assessed against the Company,
any of its Subsidiaries or the assets of the Business as a result of any audit
by the State of Louisiana of fuel gas consumed in plant operations for any
period prior to the Effective Date.
(b) The Enterprise Parties, agree, jointly and severally, to indemnify
and hold harmless each of the Tejas Indemnified Parties from and against
any Taxes which may be assessed against the Company, any of its
Subsidiaries or the assets of the Business as a result of any audit by the
State of Louisiana of fuel gas consumed in plant operations for any period
after the Effective Date.
ARTICLE
GENERAL PROVISIONS
Section Expenses and Taxes; Tax Returns.
(a) Each party to this Agreement shall pay all fees and expenses
incurred by it in connection with this Agreement and the transactions
contemplated by this Agreement. The parties to this Agreement agree that
all applicable excise, sales, transfer, documentary, filing, recordation
and other similar Taxes, levies, fees and charges, if any, that may be
imposed upon, or payable or collectible or incurred in connection with,
this Agreement and the transactions contemplated by this Agreement shall be
borne by the party on which such Taxes, levies, fees or charges are imposed
by operation of law. Each party to this Agreement agrees to file all
necessary documentation (including all Tax Returns) with respect to such
Taxes in a timely manner.
(b) Tejas shall timely file (taking into account any extensions
received from the relevant Tax authorities) all Tax Returns accurately
reflecting the operations of the Company and its Subsidiaries for periods
ending prior to the Closing Date and shall pay all Taxes with respect
thereto.
(c) Enterprise Partners shall timely file (taking into account any
extensions received from the relevant Tax authorities) all Tax Returns
accurately reflecting the
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operations of the Company and its Subsidiaries for periods ending on or
after the Closing Date and shall pay all Taxes with respect thereto. For
purposes of this Section 9.01(c), in the case of any Taxes based upon or
related to income or receipts, including franchise Taxes, that are payable
for a Tax period that includes (but does not end on) the Closing Date,
Tejas shall pay to Enterprise Partners, the portion of such Tax which
relates to the portion of such Tax period ending prior to the Closing Date.
This amount due from Tejas shall be deemed equal to the amount which would
be payable if the relevant Tax period ended on the Closing Date.
(d) Enterprise Partners agrees to and shall reimburse Tejas for any
Taxes relating to the Business which may be paid by Tejas with respect to
the Interim Period, within ten (10) days following notice from Tejas.
Section Amendment. This Agreement may not be amended except by an
instrument in writing signed by the Enterprise Parties, Enterprise Products,
EPC II, Tejas and Tejas Energy.
Section Waiver. Either the Enterprise Parties or the Tejas or Tejas
Energy may (a) extend the time for the performance of any of the obligations or
other acts of the other, (b) waive any inaccuracies in the representations and
warranties of the other contained in this Agreement or in any document delivered
by the other pursuant to this Agreement or (c) waive compliance with any of the
agreements, or satisfaction of any of the conditions, contained in this
Agreement by the other. Any agreement on the part of a party to this Agreement
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party against whom enforcement is sought.
Section Notices. Any notices or other communications required or
permitted under, or otherwise in connection with, this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission or on
receipt after dispatch by registered or certified mail, postage prepaid,
addressed, as follows:
If to Tejas or Tejas Energy:
Tejas Midstream Enterprises, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attn: Chief Operating Officer
Phone: (713) 230-3000
Fax: (713) 230-2900
HOU04:132863.11
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Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attn: Chief Operating Officer
Phone: (713) 230-3000
Fax: (713) 230-1800
With a copy to:
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, TX 77010
Attn: General Counsel
Phone: (713) 230-3000
Fax: (713) 230-2900
If to an Enterprise Party:
Enterprise Products Company
P. O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
Attention: President
Telephone: 713-880-6500
Facsimile: 713-880-6570
With a copy to:
Enterprise Products Company
P. O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
Attention: Chief Legal Officer
Telephone: 713-880-6500
Facsimile: 713-880-6570
or such other address as the person to whom notice is to be given has furnished
in writing to the other parties. A notice of change in address shall not be
deemed to have been given until received by the addressee.
HOU04:132863.11
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Section Headings; Disclosure Memorandum. The descriptive headings of the
Articles and Sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement. The Tejas Disclosure Memorandum
constitutes an integral part of this Agreement and modifies the respective
representations, warranties, covenants or agreements of the Tejas and Tejas
Energy contained herein to the extent that such representations, warranties,
covenants or agreements expressly refer specifically to the applicable section
of the Tejas Disclosure Memorandum. Each item of disclosure set forth in the
Tejas Disclosure Memorandum specifically refers to the article and section of
the Agreement to which such disclosure responds, and shall not be deemed to be
disclosed with respect to any other article or section of the Agreement.
Section Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas regardless of principles of
conflicts of laws.
Section No Third Party Rights. Except as specifically provided in
Article VIII, this Agreement is intended to be solely for the benefit of the
parties to this Agreement and is not intended to confer any benefits upon, or
create any rights in favor of, any Person other than the parties to this
Agreement.
Section Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
Section Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions of this Agreement shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
Section Entire Agreement. This Agreement (including the documents and
instruments referred to in this Agreement) sets forth the entire understanding
and agreement among the parties as to the matters covered in this Agreement and
supersedes and replaces any prior understanding, agreement, including the
Confidentiality Agreement, the Term Sheet dated April 19, 1999 between
Enterprise Partners and Tejas Energy or any other statement of intent, in each
case, written or oral, of any and every nature with respect to such
understanding, agreement or statement.
Section Arbitration; Waiver.
(a) Any controversy or claim, whether based on contract, tort, statute
or other legal or equitable theory arising out of or related to this
Agreement (including any amendments or extensions), or the breach of
termination hereof or any right to indemnity hereunder shall be settled by
arbitration in accordance with the arbitration terms set forth in Exhibit
9.11 hereto.
HOU04:132863.11
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(b) Without any way limiting Section 9.11(a), each of the parties
hereto 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 Agreement or the actions of any of them
in the negotiation, administration, performance and enforcement thereof.
Section Fair Construction. This Agreement shall be deemed to be the joint
work product of the Enterprise Parties, Enterprise Products, EPC II, Tejas and
Tejas Energy without regard to the identity of the draftsperson, and any rule of
construction that a document shall be interpreted or construed against the
drafting party shall not be applicable.
Section Disclaimer of Other Representations and Warranties.
(a) EXCEPT AS EXPRESSLY SET FORTH IN ARTICLES III, IV AND V, NO PARTY
MAKES ANY ORAL OR WRITTEN REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AT LAW OR IN EQUITY, WITH RESPECT TO ANY OF THEIR OR THEIR SUBSIDIARIES' OR
JOINT VENTURE'S RESPECTIVE ASSETS, LIABILITIES OR OPERATIONS (INCLUDING THE
ASSETS, LIABILITIES OR OPERATIONS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES), INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR ANY REPRESENTATION
OR WARRANTIES WITH RESPECT TO THE DESIGN, QUALITY, DURABILITY, VALUE, OR
CONDITION OR SUITABILITY OF SUCH ASSETS AND ANY SUCH REPRESENTATIONS OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
(b) EACH OF THE PARTIES ACKNOWLEDGES THAT, PRIOR TO ITS EXECUTION OF
THIS AGREEMENT, IT HAS CONDUCTED SUCH EXAMINATION OF THE OTHER PARTY'S
TITLE TO THEIR RESPECTIVE PROPERTIES AND ASSETS AS ITS HAS DEEMED NECESSARY
OR ADVISABLE IN ORDER TO SATISFY ITSELF AS TO THE CONDITION OF TITLE TO
SUCH PROPERTIES AND ASSETS, EXCEPT FOR THE LIMITED WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT.
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Each of the parties to this Agreement has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
TEJAS ENERGY, LLC
By: /s/ Curtis R. Frasier
Name: Curtis R. Frasier
Title: Executive Vice President and Chief Operating
Officer
TEJAS MIDSTREAM ENTERPRISES, LLC
By: /s/ Curtis R. Frasier
Name: Curtis R. Frasier
Title: President and Chief Operating Officer
ENTERPRISE PRODUCTS PARTNERS L.P.
By Enterprise Products GP, LLC, General Partner
By: /s/ O.S. Andras
Name: O. S. Andras
Title: President and Chief Executive Officer
ENTERPRISE PRODUCTS OPERATING L.P.
By Enterprise Products GP, LLC, General Partner
By: /s/ O.S. Andras
Name: O. S. Andras
Title: President and Chief Executive Officer
ENTERPRISE PRODUCTS GP, LLC
By: /s/ O.S. Andras
Name: O. S. Andras
Title: President and Chief Executive Officer
HOU04:132863.11
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ENTERPRISE PRODUCTS COMPANY
(for limited purposes of Articles V, VII and VIII
hereof)
By: /s/ O.S. Andras
Name: O. S. Andras
Title: President and Chief Executive Officer
EPC PARTNERS II, INC.
By: /s/ Francis B. Jacobs
Name: Francis B. Jacobs
Title: President
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UNITHOLDER RIGHTS AGREEMENT
among
TEJAS ENERGY, LLC,
TEJAS MIDSTREAM ENTERPRISES, LLC,
ENTERPRISE PRODUCTS PARTNERS L.P.,
ENTERPRISE PRODUCTS OPERATING L.P.
ENTERPRISE PRODUCTS COMPANY,
ENTERPRISE PRODUCTS GP, LLC
AND
EPC PARTNERS II, INC.
September 17, 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS
Section 1.1 Contribution Agreement Definitions...........................1
Section 1.2 Other Definitions............................................1
Section 1.3 Construction.................................................3
ARTICLE II
BOARD AND COMMITTEE
REPRESENTATION; EXECUTIVE
COMMITTEE
Section 2.1 Board and Committee Representation...........................3
Section 2.2 Executive Committee..........................................4
Section 2.3 Voting.......................................................8
Section 2.4 Transfer of Approval Rights..................................8
ARTICLE III
PURCHASE OPTIONS
Section 3.1 Designated Purchase Price....................................9
Section 3.2 GP Interest Purchase Option..................................9
Section 3.3 Enterprise Partners'Right of First Refusal Upon Sale
by Tejas Energy.............................................10
Section 3.4 Right of Purchase in Favor of Enterprise Partners Upon Public
Offering....................................................12
Section 3.5 Tejas Energy's Preemptive Rights Upon a Private Sale of
Interests by Enterprise Partners............................12
Section 3.6 Enterprise Change of Control................................14
ARTICLE IV
MAKE WHOLE
Section 4.1 Make Whole..................................................15
ARTICLE V
TERM OF THIS AGREEMENT
EXECUTION COPY
ARTICLE VI
FIDUCIARY DUTIES WAIVER; BUSINESS
OPPORTUNITIES
Section 6.1 Conduct of Affairs..........................................17
Section 6.2 No Duty to Refrain from Activities..........................17
Section 6.3 No Duty to Communicate Opportunities........................17
Section 6.4 Good Faith Actions..........................................18
ARTICLE VII
GOVERNING PRINCIPLES AND POLICIES
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Injunctions.................................................18
Section 8.2 Severability................................................18
Section 8.3 Amendments..................................................19
Section 8.4 Descriptive Headings........................................19
Section 8.5 Counterparts................................................19
Section 8.6 Notices.....................................................19
Section 8.7 Law Applicable..............................................20
Section 8.8 Arbitration.................................................20
Section 8.9 Successors and Assigns......................................20
Section 8.10 Limitation on Liability....................................20
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Exhibit A Form of Assignment
Exhibit B Form of Assignment
Exhibit C Form of Assignment
Exhibit D Code of Conduct
Exhibit E Arbitration Provisions
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EXECUTION COPY
UNITHOLDER RIGHTS AGREEMENT
THIS UNITHOLDER RIGHTS AGREEMENT dated as of September 17, 1999 (this
"Agreement") is entered into among TEJAS ENERGY, LLC, a Delaware limited
liability company ("Tejas Energy"), TEJAS MIDSTREAM ENTERPRISES, LLC, a Delaware
limited liability company ("Tejas") ENTERPRISE PRODUCTS PARTNERS L.P., a
Delaware limited partnership ("Enterprise Partners"), ENTERPRISE PRODUCTS
OPERATING L.P., a Delaware limited partnership ("Enterprise Operating"),
ENTERPRISE PRODUCTS COMPANY, a Delaware corporation ("EPCO"), ENTERPRISE
PRODUCTS GP, LLC, a Delaware limited liability company (together with any
successor general partner of Enterprise Partners or Enterprise Operating
("Enterprise GP")), and EPC PARTNERS II, INC., a Delaware corporation
("EPC II").
W I T N E S S E T H:
WHEREAS, Enterprise Partners, Enterprise Operating, EPC II, Enterprise GP,
EPCO, Tejas and Tejas Energy are simultaneously herewith entering into a
Contribution Agreement, dated September 17, 1999 (the "Contribution Agreement"),
pursuant to which, subject to the terms and conditions set forth in the
Contribution Agreement, Tejas will contribute all of the member interests (the
"Company Interests") in Tejas Natural Gas Liquids, LLC, a Delaware limited
liability company (the "Company"), to Enterprise Operating (as the designee of
Enterprise Partners) in exchange for Enterprise Partners' issuing to Tejas
Energy (as the designee of Tejas) certain special partnership units and making a
cash payment to Tejas, and Tejas Energy will purchase from EPC II a 30% member
interest in Enterprise GP, the general partner of Enterprise Partners; and
WHEREAS, as consideration for the Company Interests, Enterprise Partners
will issue to Tejas Energy (as the designee of Tejas) up to 20,500,000 units of
a special class of partnership interest in Enterprise Partners ("Special Units")
in the manner specified in the Partnership Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the Contribution
Agreement;
NOW, THEREFORE, in consideration of the aforesaid and of the mutual
representations, warranties and covenants contained herein and in the
Contribution Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE
DEFINED TERMS
Section Contribution Agreement Definitions. All capitalized terms used, but
not defined herein, shall have the meanings expressed in the Contribution
Agreement.
Section Other Definitions. Certain terms are defined in the body of this
Agreement. In addition, as used in this Agreement, the following terms have the
following meanings:
"Adjusted" means adjusted for splits, reverse splits, and similar
recapitalizations applicable to all holders of Common Units.
"Article IV Units" means the Common Units, if any, issued by Enterprise
Partners to Tejas Energy pursuant to Article IV.
"Closing Price" shall mean the average closing sale price, regular way, on
such day, or in case no such sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in each case on the New York
Stock Exchange Consolidated Tape (or any successor composite tape reporting
transactions on national securities exchanges) or, if the subject securities are
not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the subject securities are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices, regular way, of the
subject securities on the over-the-counter market for the five trading days
preceding the day in question as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or a similarly
generally accepted reporting service.
"Conversion Date" means the date on which the applicable series of Special
Units is converted into Common Units pursuant to the terms and conditions of the
Partnership Agreement.
"Dispose" means to transfer, sell, assign or otherwise dispose of the asset
in question. "Disposition", "Disposed" and "Disposing" shall have correlative
meanings.
"Enterprise Securities" means Common Units, Special Units, Subordinated
Units or other Partnership Securities or securities or instruments convertible
into or exchangeable for Common Units, Special Units, Subordinated Units or
other Partnership Securities of Enterprise Partners.
"GP LLC Agreement" means the First Amended and Restated Limited Liability
Company Agreement of Enterprise Products GP, LLC dated September 17, 1999.
"Initial Conversion Date" means the first day following the Record Date (as
defined in the Partnership Agreement) for distribution in respect of the Quarter
(as defined in the Partnership Agreement) ended June 30, 2000 in accordance with
the terms and conditions of the Partnership Agreement.
"Partnership Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of Enterprise Partners, dated September 17, 1999.
"Partnership Security" has the meaning specified in the Partnership
Agreement.
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"Permitted Affiliate" means either (i) any Person in which Shell Oil
Company ("Shell") owns, directly or indirectly, more than 50% of such Person's
equity interests and that is controlled by Shell or (ii) any Person that is
controlled by, controls, or is under common control with the Person which
controls or owns the exploration and production properties, from time to time,
subject to the Shell Processing Agreement. For the purposes of this definition
"controlled" means that such controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of management and
policies of such controlled Person, by contract or otherwise.
"Public Offering" means a public offering of Common Units as defined in
Section 4(2) of the Securities Act of 1933 and the rules, regulations and
judicial interpretations thereof.
"Tejas Change of Control" means an event or related series of events the
result of which is that a Person that holds any of the Tejas Units ceases to be
a Permitted Affiliate; provided, no Tejas Change of Control shall be deemed to
have occurred if such event is remedied by reconveyance to a Permitted Affiliate
within forty-five days following Tejas or Tejas Energy having actual knowledge
that such event or events have caused a Tejas Change of Control.
"Tejas Units" means the Special Units and the Common Units issued upon
conversion of the Special Units.
"Total Enterprise Value" means the aggregate value of all Partnership
Securities of Enterprise Partners at the time in question, determined by
multiplying the number of outstanding Partnership Securities by the applicable
Designated Purchase Price for such Partnership Securities.
"Unitholder" has the meaning specified in the Partnership Agreement.
Section Construction. The rules of construction and interpretation set
forth in Section 1.03 of the Contribution Agreement shall apply, mutatis
mutandis, to this Agreement. If a different part of speech of a defined term is
used (such as the noun form of a defined verb), it shall have a corresponding
meaning.
ARTICLE
BOARD AND COMMITTEE
REPRESENTATION; EXECUTIVE
COMMITTEE
Section Board and Committee Representation. During the term of this
Agreement, Tejas Energy shall be entitled to active, voting and participating
representation on all boards, management committees, executive committees and
other groups or governance bodies performing a policy-making or decision-making
function for or on behalf of Enterprise Partners, Enterprise Operating or
Enterprise GP (and on such boards or other governance bodies of their respective
Subsidiaries as Tejas Energy may request to the relevant Subsidiary in writing),
other than the Audit
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and Conflicts Committee of Enterprise GP (collectively the "Committees"),
pursuant to the following provisions:
With respect to the board of directors and any successor governing body of
Enterprise GP (the "GP Board"), Tejas Energy shall be entitled, from time to
time during the term of this Agreement, to designate certain members of the GP
Board (with Tejas Energy's initial designation to become effective on the
Closing Date), as follows:
Tejas Energy shall be entitled to designate one-third of the GP Board's
members for so long as and provided Tejas Energy and/or its Affiliates maintain
more than a 20% equity interest in Enterprise GP;
Tejas Energy shall be entitled to designate two-ninths of the GP Board's
members for so long as and provided Tejas Energy and/or its Affiliates maintain
less than or equal to a 20% but more than a 10% equity interest in Enterprise
GP; and
Tejas Energy shall be entitled to designate one-ninth of the GP Board's
members (but in any event at least one Board member) provided Tejas Energy and
its Affiliates collectively own at least 5 million of the Tejas Units and/or
Article IV Units.
In the event the calculation of Tejas Energy's percentage representation on
the GP Board results in a fraction (as opposed to a whole number), such
fractional number shall be rounded to the nearest whole number which shall not
be less than one.
With respect to all Committees (other than the Executive Committee of
Enterprise GP referenced in Section 2.2), Tejas Energy shall be entitled, from
time to time during the term of this Agreement, to designate at least one member
or representative to serve on each such Committee; provided Tejas Energy and/or
its Affiliates own at least 5 million of the Tejas Units and/or the Article IV
Units.
Subject to the terms and conditions of this Agreement, if any Person
designated as a director, committee member or representative by Tejas Energy
dies, resigns, or becomes disabled or incapacitated, Tejas Energy shall be
entitled to designate a replacement, and each director, committee member or
representative designated by Tejas Energy shall serve in such capacity until
removed or replaced by Tejas Energy. Upon the termination of Tejas Energy's
designation rights set forth in this Article II, the directors, committee
members and representatives appointed by Tejas Energy pursuant to such rights
may be removed by the Committees on which they serve and Tejas Energy shall have
no right to replace such removed directors, committee members and
representatives.
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Section Executive Committee.
At the Closing, Enterprise GP shall establish a five-member executive
committee(the "GP Executive Committee"). Tejas Energy will be entitled to
designate two members to serve on the GP Executive Committee as long as the
collective equity interest of Tejas Energy and its Affiliates in Enterprise GP
is equal to or greater than 10%. If the collective equity interest of Tejas
Energy and its Affiliates in Enterprise GP is less than 10% but Tejas Energy and
its Affiliates collectively own at least 5 million of the Tejas Units and/or the
Article IV Units, then Tejas Energy shall thereafter be entitled to designate
only one member of the GP Executive Committee. If the collective equity interest
of Tejas Energy and its Affiliates in Enterprise GP is less than 10% and Tejas
Energy and its Affiliates collectively own less than 5 million of the Tejas
Units and/or the Article IV Units, then Tejas Energy shall not be entitled to
designate any member of the GP Executive Committee.
All matters relating to the items listed below must be submitted to and are
subject to the approval of the GP Executive Committee. The GP Executive
Committee will decide matters by majority vote, provided that, until such time
as all of the Special Units (other than any Special Units not issued as a result
of a failure to meet the performance tests referenced in Section 5.3(d) of the
Partnership Agreement) have been converted to Common Units and such Common Units
have a Closing Price in excess of $24 per Common Unit (appropriately Adjusted)
for each trading day during a period of 120 consecutive calendar days (with any
trading days during which Tejas Energy is prevented from trading its Common
Units, as a result of (i) black-out periods under Section 2(b)(ii) of the
Registration Rights Agreement referenced in the Contribution Agreement (the
"Registration Rights Agreement") or (ii) in the event Tejas Energy desires to
sell such Common Units in a manner not requiring registration under the
Securities Act and Tejas Energy advises Enterprise Partners of such intention in
writing, Tejas Energy having been advised by Enterprise Partners in writing that
there is material non-public information relating to Enterprise Partners that
would prevent such a sale, not counting toward such 120-day total), the GP
Executive Committee must receive the vote of at least one of the Tejas Energy
representatives on the GP Executive Committee in order to approve and take any
of the following actions by Enterprise Partners, Enterprise Operating,
Enterprise GP or any of their respective Subsidiaries:
dividends by Enterprise GP or distributions by Enterprise Partners (other
than distributions by Enterprise Partners to its Unitholders of Available Cash
from Operating Surplus pursuant to the Cash Distribution Policy described on
pages 42-49 of the Enterprise Partners' Prospectus, dated July 27, 1998, and
dividends by Enterprise GP to its members of its share of Enterprise Partners'
distributions);
a Disposition, in any one transaction or series of related transactions, of
the properties or assets of Enterprise Partners, Enterprise Operating or any of
their respective Subsidiaries for consideration of $150,000,000 or more
(excluding the sale of product or inventory in the ordinary course of business).
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a Disposition, in any one transaction or series of related transactions, of
any of the properties or assets which were owned by the Company or any of its
Subsidiaries, directly or indirectly, on the Closing Date for consideration in
excess of $15,000,000 or the Disposition of any properties or assets which were
owned by the Company or any of its Subsidiaries on the Closing Date that, in
Tejas Energy's good faith belief, could affect Shell's or any of its Affiliates'
Gulf of Mexico production or jeopardize in a material way any of their
respective abilities to deliver pipeline quality equity gas from the Gulf of
Mexico to their respective markets;
the acquisition, in any one transaction or series of related transactions,
by Enterprise Partners or its Subsidiaries in any fiscal year of assets,
properties or equity (including joint ventures with and investments in other
Persons) with acquisition consideration exceeding $150,000,000;
the merger, liquidation, dissolution, or consolidation of Enterprise
Partners, Enterprise Operating or Enterprise GP or any of their respective
Subsidiaries, except (A) a merger or consolidation in which any of Enterprise
Partners, Enterprise Operating, Enterprise GP or any of their respective
Subsidiaries is (in the case of a merger) the survivor and the percentage equity
ownership of Tejas Energy in Enterprise Partners, Enterprise Operating
(indirectly) or Enterprise GP is not reduced by reason of such merger or
consolidation or (B) a merger or consolidation in connection with an acquisition
described in and permitted by Section 2.2(iv) or Section 3.5(f)(iii) so long as
the percentage reduction in the equity ownership of Tejas Energy in Enterprise
Partners, Enterprise Operating (indirectly) or Enterprise GP by reason of such
merger or consolidation is not greater than the percentage reduction in the
equity ownership in Enterprise Partners, Enterprise Operating (indirectly) or
Enterprise GP of other pre-merger or pre-consolidation owners by reason of such
merger or consolidation, and provided that Enterprise Partners, Enterprise
Operating, Enterprise GP or any of their respective Subsidiaries is (in the case
of a merger) the survivor;
the filing of a petition in bankruptcy or seeking any reorganization,
liquidation or similar relief on behalf of Enterprise GP, Enterprise Partners,
Enterprise Operating or any of their respective Subsidiaries, or consenting to
the filing of a petition in bankruptcy against Enterprise GP, Enterprise
Partners, Enterprise Operating or any of their respective Subsidiaries or
consenting to the appointment of a receiver, custodian, liquidator or trustee
for Enterprise GP, Enterprise Partners, Enterprise Operating or any of their
respective Subsidiaries for all or any substantial portion of its property;
the issuance of partnership units, membership interests, capital stock or
other equity interests of Enterprise GP, Enterprise Partners, Enterprise
Operating or any of their respective Subsidiaries or any securities or
instruments convertible into or exchangeable for such partnership units,
membership interests, capital stock or equity interests, except (A) the issuance
to Enterprise GP, Enterprise Partners, Enterprise Operating or any of their
respective Subsidiaries of such partnership units, membership interests, capital
stock or other equity interests in connection with the creation of wholly-owned
Subsidiaries of Enterprise
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GP, Enterprise Partners, Enterprise Operating or any of their respective
Subsidiaries, (B) the issuance of Common Units or Enterprise Securities
convertible into Common Units in a Public Offering, (C) the issuance of Common
Units or Enterprise Securities convertible into Common Units to purchase assets
or businesses from third parties in bona fide, arm's length transactions, (D)
the issuance of Common Units or Enterprise Securities convertible into Common
Units to employees of EPCO, Enterprise GP, Enterprise Partners or any of their
respective Subsidiaries under employee incentive compensation programs existing
or approved at or prior to the Closing Date or (E) the issuance of Enterprise
Securities upon conversion of other Enterprise Securities existing as of the
date hereof or issued in accordance with the terms of this item (vii); provided
however, that the issuance of Enterprise Securities with voting, distribution or
liquidation preferences having a priority over Common Units requires the
approval of the GP Executive Committee and the vote of at least one of the Tejas
Energy representatives on the GP Executive Committee.
the creation, incurrence, assumption, issuance, guarantee or any other
manner of becoming liable for or with respect to, contingently or otherwise, any
Indebtedness that would result in both (A) a ratio of total Indebtedness to
total capitalization (long-term Indebtedness plus partners' capital) for
Enterprise Partners of greater than 60% and (B) a ratio of total Indebtedness to
Total Enterprise Value for Enterprise Partners of greater than 40%. For purposes
hereof, "Indebtedness" means (I) all indebtedness for borrowed money or for the
deferred purchase price of property or services (other than accounts or trade
payables incurred in the ordinary course of business, which will not be
considered Indebtedness), (II) other obligations evidenced by bonds, notes,
debentures or other similar instruments, (III) indebtedness created or arising
under any conditional sale or other title retention agreement, (IV) capitalized
lease obligations, (V) obligations under interest rate agreements and currency
agreements, and (VI) guarantees of any of the foregoing;
the repurchase by Enterprise Partners or any of its Subsidiaries of
Enterprise Securities or Indebtedness of Enterprise Partners or any of its
Subsidiaries or Affiliates, except from Tejas Energy (or its successors)
pursuant to the terms of this Agreement, except for public market purchases to
reduce the liability of Enterprise Partners or Enterprise GP or their respective
Subsidiaries under employee incentive compensation programs described in Section
2.2(b)(vii)(D) and except for refinancings made in accordance with the
provisions of clause (viii) above;
Enterprise Partners or any of its Subsidiaries or Enterprise GP or any of
its Subsidiaries entering into any new transaction or amending in any way any
existing transactions with, or for the benefit of any Affiliate of Enterprise
Partners (other than any Subsidiary of Enterprise Partners or Enterprise GP or
any of its Subsidiaries), directly or indirectly, except as otherwise agreed to
in the Contribution Agreement;
the implementation of any material change in accounting policies (other
than mandatory changes required by the auditors); change in auditors; or change
in significant tax
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positions that adversely affects the Unitholders as a group (other than
mandatory changes required by law);
the implementation of any material change in the partnership agreement,
regulations or other organizational or governance documents of Enterprise
Partners, Enterprise Operating or Enterprise GP (other than as may be required
by a change in law or as may be required by the transactions contemplated by the
Contribution Agreement);
the adoption of any takeover defense (such as the creation of certain kinds
of preferred units or unitholder rights plans) that would, at any time at which
Enterprise GP and its Affiliates beneficially own less than 50% of the
outstanding Partnership Securities, render it materially more difficult to
effect an acquisition of Enterprise Partners by merger, tender offer or other
change of control transaction;
the change in a material way in the scope of business of Enterprise
Partners, Enterprise Operating or any of their respective Subsidiaries as
conducted immediately after the Closing Date;
the change in or reassignment of executive personnel or key operating
personnel involved in conducting or managing the business of Enterprise Partners
and its Subsidiaries as of the Closing Date, excluding any change initiated by
such personnel in such person's individual capacity, any change for cause based
on the conduct of such personnel and any change resulting from the transactions
contemplated by the Contribution Agreement;
the change to compensation of executives, directors or employees involved
in conducting or managing the business of Enterprise Partners and its
Subsidiaries as of the date hereof, which is outside the scope of or not
consistent with the policies and practices in effect at December 31, 1998;
the submission by Enterprise GP of any matter to a Unitholder vote pursuant
to the terms and conditions of the Partnership Agreement; or
the amendment, replacement or other alteration of the Code of Conduct.
Section Voting.
(a) Enterprise GP agrees that for so long as any of the Tejas Units are
unable to vote as a result of the restrictions contained in the definition of
"Outstanding" under the Partnership Agreement (the "Voting Restrictions"), (i)
Enterprise GP will not submit any matter to a Unitholder vote (including
providing for any execution of a consent in lieu of a meeting) pursuant to the
terms and conditions of the Partnership Agreement without the prior written
approval of Tejas Energy and (ii) Enterprise GP will not vote in favor of any
matter submitted for a Unitholder vote or proposed for Unitholder approval
pursuant to a meeting or consent without the prior written consent of Tejas
Energy.
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(b) EPC II agrees, for itself and its Affiliates, that for so long as any
of the Tejas Units are unable to vote as a result of the Voting Restrictions,
(i) neither EPC II nor its Affiliates will propose or vote to allow any matters
to be submitted to a vote of the Unitholders (including entering into a consent
in lieu of a meeting) pursuant to the terms and conditions of the Partnership
Agreement without the prior written consent of Tejas Energy, (ii) EPC II will
not vote in favor of any matter submitted for a Unitholder vote or proposed for
Unitholder approval pursuant to a meeting or consent without the prior written
consent of Tejas Energy and (iii) EPC II will vote in favor of any matter
submitted for a Unitholder vote or proposed for Unitholder approval pursuant to
a meeting or consent if requested in writing by Tejas Energy to vote in favor of
such matter provided such vote does not adversely impact EPC II.
(c) Enterprise Partners and Enterprise GP acknowledge that at such time as
Tejas Energy and/or its Affiliates own less than 20% of the Common Units, such
Common Units owned by Tejas Energy and or its Affiliates shall not be subject to
the voting restrictions set forth in the definition of "Outstanding" in the
Partnership Agreement.
Section Transfer of Approval Rights. In the event of a Disposition by Tejas
Energy to a Permitted Affiliate of all of its interest in Enterprise GP and/or
any or all of its interest in Enterprise Partners in accordance with the terms
and conditions of this Agreement and the GP LLC Agreement, Tejas Energy may
transfer to such Permitted Affiliate all of the rights of Tejas Energy under
this Article II; provided that such Permitted Affiliate shall be bound by the
terms and conditions of this Agreement and shall execute an assignment
reasonably acceptable to Enterprise Partners agreeing, among other things, to be
bound by the terms and conditions of this Agreement.
ARTICLE
PURCHASE OPTIONS
Section Designated Purchase Price. For purposes of this Agreement, (i) the
term "Designated Purchase Price" shall mean the Closing Price for the subject
securities as of the Business Day immediately preceding the exercise of the
applicable option under this Agreement or, with respect to a calculation of
Total Enterprise Value, the Business Day immediately preceding such calculation
(in either case, the "Determination Date"), or if there is no applicable Closing
Price, shall mean the Fair Market Value of the subject securities on such date,
and (ii) "Fair Market Value" shall mean the fair market value of the securities
as determined by mutual agreement of the selling party and the purchasing party;
provided that, if within five Business Days following the Determination Date,
the selling party and the purchasing party cannot agree upon fair market value,
then the selling party and the purchasing party shall agree upon a mutually
acceptable financial expert who shall determine fair market value. In the event
that, within ten Business Days following the Determination Date, the selling
party and the purchasing party cannot agree upon a mutually acceptable financial
expert, then each of the selling party and the purchasing party will select a
financial expert and the two financial experts as selected shall select a third
financial expert who shall determine Fair Market Value. If either the selling
party or the purchasing party fails to
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designate its financial expert within five Business Days following written
notice of the other party's designation, the financial expert designated by the
other party will determine Fair Market Value. The cost of the financial expert
shall be borne equally by the selling party and the purchasing party.
Section GP Interest Purchase Option. In the event that Tejas Energy shall
hereafter make any Disposition of any of the Tejas Units to any Person (other
than a Permitted Affiliate), Tejas Energy will promptly provide written notice
to EPC II of such Disposition. For purposes of this Section 3.2, either (i) the
closing of a transaction (or series of related transactions) which result in a
Tejas Change of Control or (ii) entering into an agreement the consummation of
which would result in a Tejas Change of Control shall be deemed to be a
Disposition of all of the Tejas Units. Tejas Energy shall provide EPC II with
written notice of a closing described in clause (i) of the preceding sentence at
least ten Business Days prior to such closing. EPC II (or its designee) will
have the right and option, upon such Disposition, to purchase from Tejas Energy
a portion of Tejas Energy's member interest in Enterprise GP (the "GP Interest")
equal to such member interest (representing a percentage equity ownership in
Enterprise GP) multiplied by a fraction equal to the number of Tejas Units
Disposed of by Tejas Energy over the number of Tejas Units held by Tejas Energy
immediately prior to such Disposition; provided however, that in the case of a
Disposition of the type described in clause (ii) of the second sentence of this
Section 3.2, such right shall be contingent upon the closing of the transaction
(or series of related transactions) which effect a Tejas Change of Control. The
purchase option afforded EPC II (or its designee) in this Section 3.2 may be
exercised by EPC II (or its designee) by providing written notice to Tejas
Energy of its election to purchase all of the GP Interest subject to the
purchase option within 30 days following receipt from Tejas Energy of its notice
of Disposition. The purchase price payable following the exercise of such
purchase option will be an amount equal to the members' capital of Enterprise GP
attributable to the purchased interest as then reflected on the books and
records of Enterprise GP. The purchase and sale contemplated by the exercise by
EPC II (or its designee) of its purchase option created by this Section 3.2
shall be completed at a closing that shall occur within ten Business Days after
the written notice by EPC II (or its designee) electing to exercise such option,
by (i) the transfer and assignment by Tejas Energy to EPC II (or its designee)
of the GP Interest purchased and (ii) payment of the purchase price described in
the preceding sentence by EPC II (or its designee) to Tejas Energy by wire
transfer of immediately available funds to an account designated by Tejas Energy
at least five Business Days prior to such transfer and assignment. The
assignment referred to in the preceding sentence shall be substantially in the
form attached hereto as Exhibit A.
Section Enterprise Partners' Right of First Refusal Upon Sale by Tejas Energy.
In the event that Tejas Energy shall hereafter desire to make any
Disposition of Tejas Units, in whole or part, or any interest therein, that is
not permitted in Section 3.3(f), Enterprise Partners or its designee shall have
the right and option to purchase all of the Tejas Units that Tejas Energy
desires to Dispose of, exercisable in the manner and on the terms hereinafter
set forth; provided however, that there shall be no obligation of Tejas Energy
to Dispose of such Tejas Units to Enterprise Partners or its designee unless all
of the Tejas Units that are subject to the option to purchase described in this
Section 3.3 are purchased. For the purposes of this Section 3.3, either (i) the
closing of a transaction (or series of related transactions) which result in a
Tejas Change of
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Control or (ii) entering into an agreement the consummation of which would
result in a Tejas Change of Control shall be deemed to be a Disposition by Tejas
Energy of all of the Tejas Units. Tejas Energy shall provide Enterprise Partners
with written notice of a closing described in clause (i) of the preceding
sentence at least ten Business Days prior to such closing. The total purchase
price for the Tejas Units purchased pursuant to the exercise of any option
granted by this Section 3.3 shall be equal to the number of Tejas Units so
purchased times the Section 3.3 Price Per Unit.
Prior to the Disposition of any Tejas Units, Tejas Energy shall give
written notice ("Tejas' Notice of Disposition") setting forth:
the number of Tejas Units that Tejas Energy desires to Dispose of;
the bona fide cash price (or estimated value of noncash consideration,
which estimate shall not be binding upon Enterprise Partners or its designee)
offered in connection with such Disposition of such Tejas Units; and
the terms upon which such Disposition is to be made and the name of the
Person or Persons to whom such Disposition is to be made.
Upon receipt by Enterprise Partners of any such Tejas' Notice of
Disposition, Enterprise Partners (or its designee) may exercise its purchase
right as to all (but not less than all) of the Tejas Units being Disposed of for
a period of 30 days commencing with the date Tejas' Notice of Disposition was
received by Enterprise Partners; provided however, that in the case of a
Disposition of the type described in clause (ii) of the second sentence of
Section 3.3(a), such rights shall be contingent upon the closing of the
transaction (or series of related transactions) which effect a Tejas Change of
Control. Such right to purchase may be exercised by Enterprise Partners (or its
designee) by giving notice to Tejas Energy that Enterprise Partners (or its
designee) has elected to acquire the Tejas Units. The purchase and sale
contemplated by the exercise by Enterprise Partners (or its designee) of such
purchase right shall be completed at a closing that shall occur within 30 days
after the written notice by Enterprise Partners (or its designee) electing to
exercise such purchase right (or, if later and if Section 3.3(d)(ii) applies,
within 15 Business Days after the determination of the Designated Purchase Price
in accordance with Section 3.1), by (i) the transfer and assignment by Tejas
Energy to Enterprise Partners (or its designee) of certificates, duly endorsed
for transfer, evidencing the Tejas Units purchased and (ii) payment of the
purchase price described in Section 3.3(a) by Enterprise Partners (or its
designee) to Tejas Energy by wire transfer of immediately available funds to an
account designated by Tejas Energy at least five Business Days prior to such
transfer and assignment. Notwithstanding any other provision of this
Section 3.3, if Section 3.3(d)(ii) applies and the Designated Purchase Price as
determined pursuant to Section 3.1(ii) exceeds the estimated value of noncash
consideration specified by Tejas Energy in Tejas' Notice of Disposition by more
than 10%, then at any time within five Business Days after such determination
Enterprise Partners (or its designee) shall have the right to notify Tejas
Energy that it is electing to cancel its exercise of such purchase right, and in
the case of any such cancellation, the 90-day period referred to in Section
3.3(e) shall commence with the date of such cancellation. The assignment
referred to in the preceding sentence shall be substantially in the form
attached hereto as Exhibit B.
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Any Disposition by Tejas Energy pursuant to this Section 3.3 with respect to
which Enterprise does not or is not permitted to exercise its purchase option
created by this Section 3.3 shall be pursuant to an assignment substantially in
the form attached hereto as Exhibit C executed by the Person to which such
Disposition is made.
The "Section 3.3 Price Per Unit" shall be:
the bona fide cash price per unit payable, if any, specified in Tejas'
Notice of Disposition, provided that the price per unit is payable solely in
cash or cash equivalent; or
if, and to the extent the price per unit is payable otherwise than as
specified in Section 3.3(d)(i), then the price per unit shall be the Designated
Purchase Price.
Any proposed Disposition of any Tejas Units with respect to which a Tejas'
Notice of Disposition shall have been given and as to which the rights to
acquire such Tejas Units shall not have been exercised in full as herein
provided may be completed at any time within, but not after, 90 days after the
expiration of the 30-day period during which Enterprise Partners (or its
designee) may exercise the right to acquire such Tejas Units. If a Disposition
is not completed within said 90-day period, Tejas' Notice of Disposition
theretofore given shall in all respects be a nullity and shall be treated as
though it never had been given. If such Disposition is not carried out on the
same material terms set forth in Tejas' Notice of Disposition in respect
thereto, such Disposition shall be of no force, effect or validity for any
purpose whatsoever.
The purchase option in favor of Enterprise Partners (or its designee)
provided in this Section 3.3 shall not be applicable to any Disposition by Tejas
Energy of the Tejas Units (i) to a Permitted Affiliate or (ii) pursuant to a
Public Offering.
Section Right of Purchase in Favor of Enterprise Partners Upon Public
Offering. Offering.
In the event that Tejas Energy proposes to Dispose of any of the Tejas
Units through a Public Offering, Tejas Energy shall first provide written notice
of such proposed Disposition (the "Public Sale Notice") to Enterprise Partners,
including in such notice a statement of the proposed public offering price (the
"Proposed Public Offering Price"). Enterprise Partners (or its designee) shall
have the right and option to purchase all of the Tejas Units that Tejas Energy
desires to Dispose of pursuant to such Public Offering, exercisable in the
manner and on the terms hereinafter set forth.
Upon receipt by Enterprise Partners of any such Public Sale Notice,
Enterprise Partners (or its designee) may exercise its purchase right as to all
(but not less than all) of the Tejas Units subject to the Public Sale Notice for
a period of 20 days commencing with the date the Public Sale Notice was received
by Enterprise Partners. Such right to purchase may be exercised by Enterprise
Partners (or its designee) giving notice to Tejas Energy that Enterprise
Partners (or its designee) has elected to acquire the Tejas Units subject to the
Public Sale Notice at the Proposed Public Offering Price.
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The purchase and sale contemplated by the exercise by Enterprise Partners
(or its designee) of such purchase right shall be completed at a closing that
shall occur within 20 days after the written notice by Enterprise Partners (or
its designee) electing to exercise such purchase right, by (i) the transfer and
assignment by Tejas Energy to Enterprise Partners (or its designee) of
certificates, duly endorsed for transfer, evidencing the Tejas Units purchased
and (ii) payment of the Proposed Public Offering Price by Enterprise Partners
(or its designee) to Tejas Energy by wire transfer of immediately available
funds to an account designated by Tejas Energy at least five Business Days prior
to such transfer and assignment. The assignment referred to in the preceding
sentence shall be substantially in the form attached hereto as Exhibit B.
In the event that Enterprise Partners does not exercise its purchase right
triggered by a Public Sale Notice, then Tejas Energy may proceed to sell such
Tejas Units pursuant to Public Offering provided that such Public Offering is
completed within 120 days following the end of the 20-day period during which
Enterprise Partners could exercise its purchase right hereunder, and the price
at which Tejas Energy sells the Tejas Units in the Public Offering shall not be
less than 90% of the Proposed Public Offering Price.
Section Tejas Energy's Preemptive Rights Upon a Private Sale of Interests
by Enterprise Partners.
In the event that Enterprise Partners desires to issue or Dispose of
Enterprise Securities other than in a transaction referred to in Section 3.5(f),
Tejas Energy (or a Permitted Affiliate designated by Tejas Energy) shall have
the right and option to purchase its pro rata share (based on the aggregate
ownership of Tejas Units and Article IV Units of Tejas Energy or its Permitted
Affiliates) of all of the Enterprise Securities that Enterprise Partners desires
to issue or Dispose of, exercisable in the manner and on the terms hereinafter
set forth (such pro rata share being calculated by multiplying the number of
such Enterprise Securities being issued or Disposed of by a fraction equal to
the result of dividing (i) the aggregate number of Tejas Units and Article IV
Units then owned by Tejas Energy or its Affiliates by (ii) the total number of
Enterprise Securities outstanding on a fully diluted basis without taking into
account the newly issued Enterprise Securities, if any); provided, however, that
there shall be no obligation of Enterprise Partners to issue or Dispose of such
Enterprise Securities to Tejas Energy (or a Permitted Affiliate designated by
Tejas Energy) unless all of the Enterprise Securities that are subject to the
option to purchase described in this Section 3.5 are (subject to the provisions
of subsection (c) below) purchased at the same time and subject to the same
terms as the other Enterprise Securities being issued or Disposed of. The total
purchase price for any Enterprise Securities purchased pursuant to the exercise
of any option granted by this Section 3.5 shall be equal to the number of
Enterprise Securities so purchased times the Section 3.5 Price Per Unit.
Prior to the issuance or Disposition of any Enterprise Securities,
Enterprise Partners shall give written notice "Enterprise Partners' Notice of
Disposition" to Tejas Energy setting forth:
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a description of the Enterprise Securities being offered including detail
as to the terms and rights applicable thereto;
the number of Enterprise Securities that Enterprise Partners desires to
issue or Dispose of;
the bona fide cash price, if any (or the estimated value of noncash
consideration, which estimate shall not be binding upon Tejas Energy), to be
received or estimated to be received in connection with such issuance or
Disposition of such Enterprise Securities; and
the terms upon which such issuance or Disposition is to be made and the
name of the Person or Persons to whom such Disposition is to be made.
Upon receipt by Tejas Energy of any such Enterprise Partners' Notice of
Disposition, Tejas Energy (or a Permitted Affiliate designated by Tejas Energy)
may exercise its purchase right as to the Enterprise Securities that it is
entitled to purchase pursuant to Section 3.5(a) for a period of 30 days
commencing with the date Enterprise Partners' Notice of Disposition was received
by Tejas Energy. Such right to purchase may be exercised by Tejas Energy (or a
Permitted Affiliate designated by Tejas Energy) by giving notice to Enterprise
Partners that Tejas Energy has elected to acquire such Enterprise Securities.
The purchase and sale contemplated by the exercise by Tejas Energy (or a
Permitted Affiliate designated by Tejas Energy) of such purchase right shall be
completed at a closing that shall occur within twenty days after the written
notice by Tejas Energy electing to exercise the Section 3.5 purchase right or,
if later, simultaneously with the closing of the offering that triggered the
Section 3.5 purchase right (or, if later and if Section 3.5(d)(ii) applies,
within 15 Business Days after the determination of the Designated Purchase Price
in accordance with Section 3.1), by (i) the transfer and assignment by
Enterprise Partners to Tejas Energy of certificates evidencing the Enterprise
Securities purchased and (ii) payment of the purchase price described in Section
3.5(a) by Tejas Energy to Enterprise Partners by wire transfer of immediately
available funds to an account designated by Enterprise Partners at least five
Business Days prior to such transfer and assignment. Notwithstanding any other
provision of this Section 3.5, if Section 3.5(d)(ii) applies and the Designated
Purchase Price as determined pursuant to Section 3.1(ii) exceeds the estimated
value of noncash consideration specified by Enterprise Partners in Enterprise
Partners' Notice of Disposition by more than 10%, then at any time within five
Business Days after such determination Tejas Energy shall have the right to
notify Enterprise Partners that it is electing to cancel its exercise of such
purchase right, and in the case of any such cancellation, the 90-day period
referred to in Section 3.5(e) shall commence with the date of such cancellation.
The "Section 3.5 Price Per Unit" shall be:
the bona fide cash price specified in Enterprise Partners' Notice of
Disposition, provided that the price per unit is payable solely in cash or cash
equivalent; or
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if, and to the extent the price per unit is payable otherwise than as
specified in Section 3.5(d)(i), then the price per unit shall be the Designated
Purchase Price.
Any proposed Disposition of any Enterprise Securities with respect to which
an Enterprise Partners' Notice of Disposition shall have been given and as to
which the right to acquire such Enterprise Securities shall not have been
exercised in full as herein provided may be completed at any time within, but
not after, 90 days after the expiration of the 30-day period during which Tejas
Energy may exercise the right to acquire such Enterprise Securities. If a
Disposition is not completed within said 90-day period, Enterprise Partners'
Notice of Disposition theretofore given shall in all respects be a nullity and
shall be treated as though it never had been given. If such Disposition is not
carried out on the same material terms set forth in Enterprise Partners' Notice
of Disposition in respect thereto such Disposition shall be of no force, effect
or validity for any purpose whatsoever.
The rights granted in this Section 3.5 shall not be applicable to (i) the
sale of Common Units effected pursuant to a Public Offering, (ii) the issuance
of Common Units or Enterprise Securities convertible into Common Units to
employees of EPCO, Enterprise Partners, Enterprise GP or any of their respective
Subsidiaries under employee incentive compensation programs approved or existing
at or prior to the Closing Date, (iii) Common Units or Enterprise Securities
convertible into Common Units issued to purchase assets or businesses from third
Persons in bona fide, arm's length transactions and (iv) the issuance of
Enterprise Securities upon conversion of other Enterprise Securities existing on
the date hereof or issued in accordance with the terms of Section 2.2(b)(vii).
Section Enterprise Change of Control.
In the event of an Enterprise Change of Control (as defined in Section
3.6(d)), Enterprise Partners will provide written notice to Tejas Energy of such
an Enterprise Change of Control.
In the event of an Enterprise Change of Control, Tejas Energy (or a
Permitted Affiliate designated by Tejas Energy) shall have the right and option
to purchase all of the Common Units and Subordinated Units and other Partnership
Securities in Enterprise Partners owned by EPCO, EPC II and their respective
Affiliates and, to the extent practicable, all Partnership Securities owned by
the new control group. The total purchase price for any such securities
purchased pursuant to the exercise of any option created by this Section 3.6
shall be equal to the number of units so purchased times the Designated Purchase
Price.
Upon receipt by Tejas Energy of written notice from Enterprise Partners of
an Enterprise Change of Control or (if later) the date upon which Tejas Energy
becomes aware of the Enterprise Change of Control, Tejas Energy (or a Permitted
Affiliate designated by Tejas Energy) may exercise its purchase right to acquire
all (but not less than all) of the units by providing written notice to
Enterprise Partners at any time within 30 days thereafter. The purchase and sale
contemplated by the exercise by Tejas Energy of such purchase right shall be
completed at a closing
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that shall occur before the later of (i) 30 days after the written notice by
Tejas Energy electing to exercise such purchase right and (ii) 15 Business Days
after the determination of the Designated Purchase Price in accordance with
Section 3.1, by (A) the transfer and assignment by the sellers to Tejas Energy
of certificates, duly endorsed for transfer, evidencing the Partnership
Securities purchased and (ii) payment of the purchase price described in Section
3.6(b) by Tejas Energy to the sellers by wire transfer of immediately available
funds to the accounts designated by the sellers at least five Business Days
prior to such transfer and assignment, provided that, notwithstanding any other
provision of this Agreement, if the Designated Purchase Price is determined
pursuant to Section 3.1(ii), then at any time within 5 Business Days after such
determination Tejas Energy shall have the right to notify Enterprise Partners
that it is electing to cancel its exercise of such purchase right.
For purposes of this Section 3.6, the term "Enterprise Change of Control"
shall mean an event or series of related events that result in (or entering into
a definitive agreement the consummation of which would result in (provided that,
in the case of such an agreement, Tejas Energy's rights under this Section 3.6
shall be contingent upon the occurrence of the following)) Enterprise Partners
or EPC II (only if EPC II is a member of Enterprise GP) being controlled,
directly or indirectly, by someone other than Dan Duncan, his wife and/or his
heirs, devisees and/or legatees (and/or trusts for any of their respective
benefit).
If Tejas Energy exercises its purchase option and right under this Section
3.6, then EPCO shall, upon reasonable request of Tejas Energy, transfer any of
its employees primarily involved in the business of Enterprise Partners and its
Subsidiaries to Enterprise GP, Enterprise Partners or any designated Subsidiary;
provided that, EPCO does not guarantee that any such employee will accept such
transfer. EPCO shall bear the reasonable costs necessary for such transfer.
ARTICLE
MAKE WHOLE
Section Make Whole. If (i) Tejas Energy sells to non-Affiliates in a bona
fide arm's- length transaction any of the Common Units received upon conversion
of the Special Units, (ii) such sale either (A) is a block sale (as "block" is
defined under Rule 10b-18 of the Securities Exchange Act of 1934, as amended),
(B) together with sales by Tejas Energy of other Common Units received upon
conversion of the Special Units during the three months preceding such sale,
either (x) includes a number of Common Units not exceeding the average weekly
trading volume requirement set forth in Rule 144(e)(1)(ii) of the Securities Act
or (y) includes a number of Common Units not exceeding 205,000, or (C) is part
of a firmly underwritten offering of Common Units for cash (the restrictions set
forth in (A), (B) and (C) are referred to herein as the "Manner of Sale
Restrictions"), (iii) the sales price per Common Unit of such sale (the "Sales
Price") is less than $18 (appropriately Adjusted) and (iv) such sale occurs
within one year following the Conversion Date for such Common Units (as such
period may be extended pursuant to the provisions of this Section 4.1), then
Enterprise Partners
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will at its option either issue additional registered Common Units to Tejas
Energy, make a cash payment to Tejas Energy or effect a combination of Common
Units and cash payment as follows:
Enterprise Partners may issue to Tejas Energy additional Common Units
having an aggregate value (based on the Closing Price for Common Units on the
Business Day immediately preceding the date of issuance) in an amount equal to
(i) the number of Common Units so sold by Tejas Energy multiplied by (ii) (A)
$18 (as appropriately Adjusted) minus (B) the Sales Price;
Enterprise Partners may pay to Tejas Energy an amount of cash in
immediately available funds equal to (i) the number of Common Units so sold by
Tejas Energy multiplied by (ii) (A) $18 (appropriately Adjusted) minus (B) the
Sales Price; or
Any combination of the foregoing.
Notwithstanding the requirements of clause (iv) of the foregoing, (i) if Tejas
Energy requests in writing that Enterprise Partners waive the Manner of Sale
Restrictions in connection with a proposed sale by Tejas Energy of Common Units
received upon conversion of Special Units and Enterprise Partners declines to
waive the Manner of Sale Restrictions, then the one-year period following the
applicable Conversion Date for such Common Units will be tolled for such period
during which Enterprise Partners declines to waive the Manner of Sale
Restrictions, (ii) in the event Tejas Energy requests a demand registration
under the Registration Rights Agreement and is prevented from registering or
trading Common Units as a result of black-out periods under Section 2(b)(ii) of
the Registration Rights Agreement, then the one-year period following the
applicable Conversion Date for such Common Units will be tolled for such
black-out period, (iii) in the event Tejas Energy desires to sell Common Units
in a manner not requiring registration under the Securities Act and Tejas Energy
advises Enterprise Partners of such intention in writing and Enterprise Partners
advises Tejas Energy in writing that there is material non-public information
relating to Enterprise Partners that would prevent such a sale, then the
one-year period following the applicable Conversion Date for such Common Units
will be tolled for the days covered by such advice and (iv) in the event Tejas
Energy desires to sell Common Units but is restricted from selling such Common
Units as a result of any lock-up agreement binding on Tejas Energy pursuant to
Section 4(a) of the Registration Rights Agreement, then the one-year period
following the applicable Conversion Date for such Common Units will be tolled
for such lock-up period.
In the event Enterprise Partners is unable or fails to fulfill its obligations
under this Article IV, EPCO agrees, if requested in writing by Tejas Energy to
do so, to fulfill the obligations of Enterprise Partners under this Article IV
on behalf of Enterprise Partners.
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ARTICLE
TERM OF THIS AGREEMENT
This Agreement will continue in full force and effect until the date that
Tejas Energy shall Dispose of all right, title and interest in the Tejas Units
and the Article IV Units to a Person other than a Permitted Affiliate, provided
that in the event that Tejas Energy and the Permitted Affiliates cease to own at
least 5 million of the Tejas Units and/or the Article IV Units, the rights of
Tejas Energy and the Permitted Affiliates under Article II, Section 3.5 and
Section 3.6 shall terminate.
ARTICLE
FIDUCIARY DUTIES WAIVER; BUSINESS
OPPORTUNITIES
Section Conduct of Affairs. In anticipation that Tejas Energy and its
Affiliates may engage in the same or similar activities or lines of business and
have an interest in the same areas of business opportunities as Enterprise
Partners and Enterprise GP and their respective Subsidiaries, and in recognition
of the difficulties attendant to any Tejas Energy Committee member ("Management
Designee") who desires and endeavors fully to satisfy such Management Designee's
fiduciary duties, in determining the full scope of such duties in any particular
situation, the provisions of this Article VI are set forth to guide the conduct
of certain affairs of Enterprise Partners and Enterprise GP and their respective
Subsidiaries as they may involve the Management Designees, and to define the
powers, rights and duties of the Management Designees in connection therewith.
Section No Duty to Refrain from Activities. Neither Tejas Energy or its
Affiliates nor any Management Designee shall have a duty to refrain from
engaging directly or indirectly in the same or similar business activities or
lines of business as Enterprise Partners or its Subsidiaries, and to the fullest
extent permitted by applicable law, neither Tejas Energy or its Affiliates nor
the Management Designees shall be liable to Enterprise Partners and Enterprise
GP or their respective Subsidiaries for breach of any fiduciary duty by reason
of any such activities.
Section No Duty to Communicate Opportunities. To the fullest extent
permitted by law, if a Management Designee who is also a director, officer or
employee of Tejas Energy or any of its Affiliates acquires knowledge of a
potential transaction or matter that may be a business opportunity for
Enterprise Partners and Enterprise GP or their respective Subsidiaries (whether
such potential transaction or matter is proposed by a third Person or is
conceived of by such Management Designee), such Management Designee shall be
entitled to offer such business opportunity to any Person as such Management
Designee deems appropriate under the circumstances in his sole discretion, and
neither Tejas Energy or any of its Affiliates nor such Management Designee shall
be liable to Enterprise Partners and Enterprise GP or any of their respective
Subsidiaries for breach of any fiduciary duty or duty of loyalty or failure to
act in (or not opposed to) the best interests of Enterprise Partners and
Enterprise GP or any of their respective Subsidiaries or the derivation of any
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improper personal benefit by reason of the fact that (a) such Management
Designee offered such business opportunity to any Person (rather than Enterprise
Partners and Enterprise GP or any of their respective Subsidiaries) or did not
communicate information regarding such business opportunity to Enterprise
Partners and Enterprise GP or any of their respective Subsidiaries or (b) Tejas
Energy or any of its Affiliates pursued or acquired such business opportunity
for itself or directed such business opportunity to another Person or did not
communicate information regarding such business opportunity to Enterprise
Partners and Enterprise GP or any of their respective Subsidiaries.
Section Good Faith Actions. To the fullest extent permitted by law, neither
Tejas Energy nor any of its Affiliates nor any Management Designee shall be
liable to Enterprise Partners and Enterprise GP or any of their respective
Subsidiaries for breach of any fiduciary duty or duty of loyalty or failure to
act in (or not opposed to) the best interests of Enterprise Partners and
Enterprise GP or any of their respective Subsidiaries or the designation of any
improper personal benefit by reason of the fact that Tejas Energy or any of its
Affiliates or Management Designee in good faith takes any action or exercises
any rights or gives or withholds any consent in connection with any agreement or
contract between Tejas Energy or any of its Affiliates or any Management
Designee on the one hand and Enterprise Partners and Enterprise GP or any of
their respective Subsidiaries on the other hand.
ARTICLE
GOVERNING PRINCIPLES AND POLICIES
Enterprise Partners and Enterprise GP hereby adopt and agree that the Code
of Conduct set forth on Exhibit D (the "Code of Conduct") hereto shall, during
the term of this Agreement, be the governing principles and policies for the
conduct of business and operations of Enterprise Partners, Enterprise GP and
their respective Subsidiaries with respect to the financial policies, audit
rights, budgets, internal controls and other matters set forth in Exhibit D. The
Code of Conduct may be amended, replaced or otherwise altered as provided in
Section 2.2(b)(xviii).
ARTICLE
MISCELLANEOUS
Section Injunctions. Each party acknowledges and agrees that the other
parties could be irreparably damaged in the event any of the provisions of this
Agreement were not performed by the party required to perform the same in
accordance with their specific terms or were otherwise breached. Each party
accordingly agrees that the other parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and
specifically enforce the terms and provisions thereof in any court of the United
States or any state thereof having jurisdiction, in addition to any remedy to
which a party may be entitled at law or equity.
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Section Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants and restrictions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
enforceable.
Section Amendments. This Agreement may be amended only by an agreement of
the affected parties in writing.
Section Descriptive Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
Section Counterparts. For the convenience of the parties, number of
counterparts of this Agreement may be executed by one or more parties hereto and
each such executed counterpart shall be and shall be deemed to be, an original
instrument.
Section Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered
personally, by facsimile transmission (except for legal process) or sent by
registered mail, postage prepaid, if to:
If to Tejas Energy:
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Phone: (713) 230-3000
Fax No.: (713) 230-2900
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With a copy to:
Tejas Midstream Enterprises, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Chief Operating Officer
Phone: (713) 230-3000
Fax No.: (713) 230-1800
If to Enterprise Partners, EPCO, Enterprise GP and/or EPC II:
Enterprise Products GP, LLC
P.O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
Attention: President
Phone: (713) 880-6500
Fax No. (713) 880-6570
With a copy to:
Enterprise Products GP, LLC
P.O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
Attention: Chief Legal Officer
Phone: (713) 880-6500
Fax No. (713) 880-6570
or to such other address and facsimile transmission numbers as any part hereto
may, from time to time, designate in a written notice given in a like manner.
Notice shall be deemed given upon receipt.
Section Law Applicable. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas (without regard
to the principles of conflicts of law thereof).
Section Arbitration. Subject to Section 8.1, any controversy or claim,
whether based on contract, tort, statute or other legal or equitable theory
(including, but not limited to, any claim of fraud, misrepresentation or
fraudulent inducement or any question of validity or effect of this Agreement,
including this Section 8.8) arising out of or related to this Agreement
(including any amendments or extensions), or the breach of termination hereof or
any right to indemnity hereunder shall be settled by arbitration in accordance
with the arbitration terms set forth in Exhibit E hereto.
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Section Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
Section Limitation on Liability. Notwithstanding any other provision of
this Agreement, neither a party nor any of its Affiliates, nor their respective
directors, officers, employees, agents and representatives, shall be liable,
whether in contract, tort, warranty, negligence, strict liability, arbitration
or otherwise, for any special, punitive, exemplary, incidental, or consequential
damages arising out of or in connection with this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers, each of whom is duly and validly
authorized and empowered, all as of the day and year first above written.
TEJAS MIDSTREAM ENTERPRISES, LLC
By: /s/ Curtis R. Frasier
Curtis R. Frasier
President and Chief Operating Officer
TEJAS ENERGY, LLC
By: /s/ Curtis R. Frasier
Curtis R. Frasier
Executive Vice President and
Chief Operating Officer
ENTERPRISE PRODUCTS GP, LLC
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
ENTERPRISE PRODUCTS PARTNERS L.P.
By: Enterprise Products GP, LLC, its general partner
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC, its general partner
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
ENTERPRISE PRODUCTS COMPANY
By: /s/ O.S. Andras
Name: O.S. Andras
Title: President and Chief Executive Officer
EPC PARTNERS II, INC.
By: /s/ Francis B. Jacobs
Name: Francis B. Jacobs
Title: President
EXHIBIT A
ASSIGNMENT OF LLC MEMBERSHIP INTEREST
THIS ASSIGNMENT OF LLC MEMBERSHIP INTEREST (this "Assignment") is made
effective this ___ day of ____________, _____ (the "Effective Date") by
_____________, a _____________ ("Assignor"), with offices at
_____________________, in favor of __________________, a ______________
("Assignee"), with offices at ____________________. Capitalized terms used but
not defined herein shall have the meanings given to them in the Unitholder
Rights Agreement.
1. For the sum of $_______________, Assignor does hereby sell, transfer,
assign and convey to Assignee free and clear of all liens, charges or other
encumbrances whatsoever a __% Membership Interest (as defined in the GP LLC
Agreement) in Enterprise Products GP, LLC, a Delaware limited liability company.
Assignor, pursuant to Section 9.01(b)(iii)(A)(2) of the GP LLC Agreement, does
hereby consent to the admission of Assignee as a Member (as defined in the GP
LLC Agreement). Upon the effectiveness of this Assignment, Assignor shall
possess a Sharing Ratio (as defined in the GP LLC Agreement) of __% and Assignee
shall possess a Sharing Ratio (as defined in the GP LLC Agreement) of __%.
2. Pursuant to Section 9.01(b)(iii)(A)(2)(cc) of the GP LLC Agreement, in
connection with this Assignment, Assignee hereby (i) ratifies, and agrees to be
bound by the terms of, the GP LLC Agreement and (ii) confirms that the
representations and warranties in Section 10.01 of the GP LLC Agreement are true
and correct with respect to Assignee as of the date hereof.
3. This Assignment is made pursuant to the Unitholder Rights Agreement.
4. This Assignment and all terms and conditions contained herein are
binding upon Assignor, Assignee and their respective successors and assigns.
5. The foregoing actions shall be effective as of the Effective Date.
6. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the
conflicts of law principles thereof.
7. Assignor and Assignee agree to execute such further documents and
agreements, and do such further acts and things, as may be reasonably necessary
or appropriate to effectuate the purposes of this Assignment.
8. This Assignment may be executed in any number of original counterparts
and all so executed shall constitute an original of this Assignment, binding on
Assignor and Assignee, notwithstanding that each of them is not a signatory to
the same counterpart.
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IN WITNESS WHEREOF, this Assignment is executed by Assignor and Assignee as
of the Effective Date.
ASSIGNOR
By:___________________________
Name:_________________________
Title:__________________________
ASSIGNEE
By:____________________________
Name:_________________________
Title:_________________________
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EXHIBIT B
ASSIGNMENT OF LLC MLP UNITS
THIS ASSIGNMENT OF MLP UNITS (this "Assignment") is made effective this ___
day of ____________, _____ by _____________, a _____________ ("Assignor"), with
offices at _____________________, in favor of __________________, a
______________ ("Assignee"), with offices at ____________________. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Unitholder Rights Agreement.
1. For the sum of $_______________, Assignor does hereby sell, transfer,
assign and convey to Assignee free and clear of all liens, charges or other
encumbrances whatsoever _____ [describe units] (the "MLP Units") in Enterprise
Products Partners L.P., a Delaware limited partnership.
2. Assignor represents and warrants that Assignor is the sole record and
beneficial owner of the MLP Units free and clear of any liens, charges, or other
encumbrances of any nature whatsoever, that Assignor has the full power and
authority to transfer the MLP Units to Assignee free and clear of any liens,
charges or encumbrances and that this Assignment will, when executed and
delivered, constitute the legal, valid and binding obligation of Assignee,
enforceable in accordance with its terms, except as limited by bankruptcy or
other laws applicable generally to creditor's rights and as limited by general
equitable principles.
3. Assignee represents that it has full corporate power to enter into this
Assignment and has taken all necessary action to authorize the assignment
contemplated hereunder and that this Assignment will, when executed and
delivered, constitute the legal, valid and binding obligation of Assignee,
enforceable in accordance with its terms, except as limited by bankruptcy or
other laws applicable generally to creditor's rights and as limited by general
equitable principles.
4. This Assignment and all terms and conditions contained herein are
binding upon Assignor, Assignee and their respective successors and assigns.
5. This Assignment and the transactions contemplated hereby shall be
effective as of and subject to the execution of an assignment in the form
required by the certificate representing the MLP Units.
6. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the
conflicts of law principles thereof.
7. Assignor and Assignee agree to execute such further documents and
agreements, and do such further acts and things, as may be reasonably necessary
or appropriate to effectuate the purposes of this Assignment, including, without
limitation, the execution of the assignment referred to in Paragraph 5. above.
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8. This Assignment may be executed in any number of original counterparts
and all so executed shall constitute an original of this Assignment, binding on
Assignor and Assignee, notwithstanding that each of them is not a signatory to
the same counterpart.
IN WITNESS WHEREOF, this Assignment is executed by Assignor and Assignee as
of the Effective Date.
ASSIGNOR
By:___________________________
Name:_________________________
Title:__________________________
ASSIGNEE
By:____________________________
Name:_________________________
Title:__________________________
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EXHIBIT C
ASSIGNMENT OF LLC MLP UNITS
THIS ASSIGNMENT OF MLP UNITS (this "Assignment") is made effective this ___
day of ____________, _____ by _____________, a _____________ ("Assignor"), with
offices at _____________________, in favor of __________________, a
______________ ("Assignee"), with offices at ____________________. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Unitholder Rights Agreement.
1. For the sum of $_______________, Assignor does hereby sell, transfer,
assign and convey to Assignee free and clear of all liens, charges or other
encumbrances whatsoever _____ [describe units] (the "MLP Units") in Enterprise
Products Partners L.P., a Delaware limited partnership.
2. Assignor represents and warrants that Assignor is the sole record and
beneficial owner of the MLP Units free and clear of any liens, charges, or other
encumbrances of any nature whatsoever, that Assignor has the full power and
authority to transfer the MLP Units to Assignee free and clear of any liens,
charges or encumbrances and that this Assignment will, when executed and
delivered, constitute the legal, valid and binding obligation of Assignee,
enforceable in accordance with its terms, except as limited by bankruptcy or
other laws applicable generally to creditor's rights and as limited by general
equitable principles.
3. Assignee represents that it has full corporate power to enter into this
Assignment and has taken all necessary action to authorize the assignment
contemplated hereunder and that this Assignment will, when executed and
delivered, constitute the legal, valid and binding obligation of Assignee,
enforceable in accordance with its terms, except as limited by bankruptcy or
other laws applicable generally to creditor's rights and as limited by general
equitable principles.
4. By its execution hereof, Assignee agrees to be bound by the terms and
conditions of the Unitholder Rights Agreement and that the provisions of this
Assignment may be enforced by Enterprise Partners and/or EPC II.
5. This Assignment and all terms and conditions contained herein are
binding upon Assignor, Assignee and their respective successors and assigns.
6. This Assignment and the transactions contemplated hereby shall be
effective as of and subject to the execution of an assignment in the form
required by the certificate representing the MLP Units.
7. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to
the conflicts of law principles thereof.
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8. Assignor and Assignee agree to execute such further documents and
agreements, and do such further acts and things, as may be reasonably
necessary or appropriate to effectuate the purposes of this Assignment,
including, without limitation, the execution of the assignment referred to
in Paragraph 6. above.
9. This Assignment may be executed in any number of original
counterparts and all so executed shall constitute an original of this
Assignment, binding on Assignor and Assignee, notwithstanding that each of
them is not a signatory to the same counterpart.
IN WITNESS WHEREOF, this Assignment is executed by Assignor and
Assignee as of the Effective Date.
ASSIGNOR
By:___________________________
Name:_________________________
Title:__________________________
ASSIGNEE
By:____________________________
Name:_________________________
Title:__________________________
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EXHIBIT D
CODE OF CONDUCT
I. Introduction
This Code of Conduct describes the general business principles that govern how
each of the companies which make up the Enterprise group of companies conducts
its affairs, as well as specific policies and procedures applicable to
Enterprise Products Partners L.P, Enterprise Products Operating L.P., Enterprise
Products Company, Enterprise Transportation Company and their divisions,
affiliates and subsidiaries.
The Enterprise group of companies has widespread activities, and each Enterprise
company has wide freedom of action. However, what we all have in common is the
Enterprise reputation. Upholding the Enterprise reputation is paramount. We are
judged by how we act. Our reputation will be upheld if we act with honesty and
integrity in all our dealings and we do what we think is right at all times
within the legitimate role of business.
Enterprise companies have as their core values honesty, integrity and respect
for people. Enterprise companies also firmly believe in the fundamental
importance of the promotion of trust, openness, teamwork and professionalism and
pride in what they do.
Our underlying corporate values determine our principles. These principles apply
to all transactions, large or small, and describe the behavior expected of every
employee in every Enterprise company in the conduct of business.
In turn, the application of these principles is underpinned by procedures within
each Enterprise company which are designed to make sure that its employees
understand the principles and that they act in accordance with them. We
recognize that it is vital that our behavior matches our intentions.
All the elements of this structure--values, principles and the accompanying
procedures--are necessary.
Enterprise companies recognize that maintaining the trust and confidence of
unitholders, employees, customers and other people with whom they do business ,
as well as the communities in which they work, is crucial to their continued
growth and success.
We intend to merit this trust by conducting ourselves according to the standards
set out in our principles. These principles have served Enterprise companies
well for many years. It is the responsibility of management to ensure that all
employees are aware of these principles and behave in accordance with the spirit
as well as the letter of this statement.
II. General Business Principles
1. Objectives
The objectives of Enterprise companies are to engage efficiently, responsibly
and profitably in the midstream natural gas liquids, petrochemicals,
transportation and other selected businesses. Enterprise companies seek a high
standard of performance and aim to maintain a long-term position in their
respective competitive environments.
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2. Responsibilities
Enterprise companies recognize five areas of responsibility:
a. To unitholders
To protect unitholders' investment and provide an acceptable
return.
b. To customers
To win and maintain customers by developing and providing
products and services which offer value in terms of price,
quality, safety and environmental impact, which are supported by
the requisite technological, environmental and commercial
expertise.
c. To employees
To respect the human rights of their employees, to provide their
employees with good and safe conditions to work, and good and
competitive terms and conditions of service, to promote the
development and best use of human talent and equal opportunity
employment, and to encourage the involvement of employees in the
planning and direction of their work and in the application of
these principles withing their company. It is recognized that
commercial success depends on the full commitment of all
employees.
d. To those with whom they do business
To seek mutually beneficial relationships with contractors,
suppliers and in joint ventures and to promote the application of
these principles in so doing. The ability to promote these
principles effectively will be an important factor in the
decision to enter into or remain in such relationships.
e. To society
To conduct business as responsible corporate members of society,
to observe the laws of the countries in which they operate, to
express support for fundamental human rights in line with the
legitimate role of business and to give proper regard to health,
safety and the environment consistent with their commitment to
contribute to sustainable development.
These five areas are seen as inseparable. Therefore, it is the duty of
management continuously to assess the priorities and discharge its
responsibilities as best in can on the bases of that assessment.
3. Economic Principles
Profitability is essential to discharging the responsibilities outlined above
and staying in business. It is a measure both of efficiency and of the value
that customers place on Enterprise products and services. It is essential to the
allocation of the necessary company resources and to support the continuing
investment required to develop Enterprise businesses and meet customer needs.
Without profits and a strong financial foundation, it would not be possible to
fulfill these responsibilities.
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Enterprise companies work in a wide variety of changing social, political and
economic environments, but in general they believe that the interests of the
community can be served most efficiently by a market economy.
Criteria for investment decisions are not exclusively economic in nature but
also take into account social and environmental considerations and an appraisal
of the security of the investment.
4. Business Integrity
Enterprise companies insist on honesty, integrity and fairness in all aspects of
their business and expect the same in their relationships with all those with
whom they do business. The direct or indirect offer, payment, soliciting and
acceptance of bribes in any form are unacceptable practices. Employees must
avoid conflicts of interest between their private financial activities and their
part in the conduct of company business. All business transactions on behalf of
an Enterprise company must be reflected accurately and fairly in the accounts of
the company in accordance with established procedures and be subject to audit.
5. Political Activities
a. Of Companies
Enterprise companies act in a socially responsible manner within
the laws of the countries in which they operate in pursuit of
their legitimate commercial objectives. Enterprise companies do
not make payments to political parties, organizations or their
representatives or take any part in party politics. However, when
dealing with governments, Enterprise companies have the right and
responsibility to make their position known on any matter which
affects themselves, their employees, their customers or their
unitholders. They also have the right to make their position
known on matters affecting the community, where they have a
contribution to make.
b. Of Employees
Where individuals wish to engage in activities in the community,
including standing for election to public office, they will be
given the opportunity to do so where this is appropriate in light
of local circumstances.
6. Health, Safety and the Environment
Consistent with their commitment to contribute to sustainable development,
Enterprise companies have a systematic approach to health, safety and
environmental management. To this end, Enterprise companies manage these matters
as any other critical business activity.
7. The Community
The most important contribution that companies can make to the social and
material progress of the countries in which they operate is in performing their
basic activities as effectively as possible. In addition Enterprise companies
take a constructive interest in societal matters which may not be directly
related to the business. Opportunities for involvement--for example, through
community, educational or donations programs--will
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vary depending on the size of the company concerned, the nature of the local
society and the scope for useful private initiatives.
8. Competition
Enterprise companies support free enterprise. They seek to compete fairly and
ethically and within the framework of applicable competition laws; they will not
prevent others from competing freely with them.
9. Communications
Enterprise companies recognize that, in view of the importance of the activities
in which they are engaged and their impact on the economies of communities and
individuals, open communications are essential. To this end, Enterprise
companies provide relevant information about their activities to legitimately
interested parties, subject to any overriding considerations of business
confidentiality and cost.
III. Legal and Ethical Obligations under the Code of Conduct
These obligations are simply stated:
- Comply fully with all applicable laws;
- Foster an affirmative attitude concerning compliance with the law
among those reporting to you and among your colleagues;
- Demand and exhibit conduct consistent with the expectations of
the communities in which we operate and necessary to maintain the
good reputation of Enterprise for fair, honest and ethical
conduct; and
- Report any violation of our Code of Conduct or any threat to
human health, safety, the environment or Enterprise assets that
you have a good faith reason to believe has occurred or exists to
your management or your Human Resources representative as
discussed under "Reporting Compliance Issues," below.
IV. Company Compliance Policies
Most of the Enterprise compliance policies covering the matters discussed below
are recorded in written documents generally applicable to all employees and may
be obtained from your Human Resources representative. Others are adapted
specifically to certain work areas or to employees dealing in the areas covered
by the policy. It is the responsibility of every employee to conduct his or her
job in strict compliance with such policies. Questions concerning all policies
may be addressed to your immediate supervisor, your Human Resources
representative or the Enterprise Law Department. Enterprise also conducts
ongoing educational programs and training on certain compliance issues for
employees. Because written policies and training programs cannot anticipate
every possible factual situation, each employee has an obligation to seek
clarification and advice whenever a question concerning compliance with our Code
of Conduct arises.
1. Antitrust Laws
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Enterprise's Antitrust Compliance Policy and Antitrust Compliance Guide set
forth Enterprise's intention to conduct operations in strict compliance with all
applicable antitrust laws. The antitrust laws generally prohibit business
activities that constitute unreasonable restraints of trade. This policy
discusses the Sherman Act's prohibition against horizontal conduct between
competitors, such a price fixing agreements. Also discussed in the policy
statement are the severe criminal and civil penalties, both corporate and
individual, for violations of the antitrust laws. Recommendations for avoiding
inadvertent violations, including guidelines for discussions of business
activities, are also included.
2. Boycott Laws
Federal law prohibits persons from taking or agreeing to take certain actions in
connection with any unsanctioned foreign boycott directed against any country
friendly to the United States. Enterprise's Compliance with the Foreign Boycotts
Title of the Export Administration Act details compliance issues and reporting
requirements.
3. Conflicts of Interest
Employees have a duty to avoid situations that might be adverse to Enterprise's
interest or result in conflicting loyalties or interests. Enterprise's Standards
of Business Conduct include discussions of prohibited involvement with
suppliers, contractors, competitors or customers, prohibited gifts and
entertainment and prohibited use of company information.
4. Drug and Alcohol Abuse
Enterprise strives to provide employees with a workplace free from substance
abuse (i.e., the illegal or illicit use of drugs and the abuse of alcohol) and a
workplace where all individuals are able to perform their assigned
responsibilities in a safe and productive manner. Enterprise's policies on
Illegal and Unauthorized Items at Operational Facilities and in Operational
Vehicles and Illegal and Unauthorized Items at Home Office and Lodge Facilities
and in Company Passenger Vehicles are part of an extensive program that includes
education, substance abuse identification and testing.
5. Environment
Proper regard for the environment, consistent with our commitment to sustainable
development, must be an essential element of all Enterprise business
transactions. Every employee has a responsibility towards ensuring sound
environmental performance. Enterprise's Policy on Environmental Performance sets
out Enterprise's policy for full compliance with all environmental laws and
regulations, including the assessment of environmental consequences before
entering new ventures, activities or acquisitions, as well as fostering
environmental awareness and responsibility. Corporate and individual criminal
and civil liability exists for many violations of environmental laws.
6. Equal Opportunity
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Enterprise is fully committed to a workplace that is founded on diversity and
equal opportunity and is free from discriminatory action. In support of this
commitment, Enterprise's Equal Opportunity Policy clearly prohibits
discrimination on the basis of race, color, religion, sex, sexual orientation,
national origin, age, physical or mental handicap, status as a special disabled
veteran or veteran o f the Vietnam era or citizenship of individuals legally
authorized to work in the United States. Also prohibited is any form of
harassment for any of these reasons.
7. Export Control
All exports of commodities and technical data are regulated under federal law.
Violations of export control regulations can result in serious criminal
penalties to Enterprise and individuals. A summary of the export control laws
and regulations is available through the Enterprise Law Department.
8. Insider Trading
Federal securities laws prohibit an employee from trading in publicly held
securities, including those of Enterprise Products Partners L.P., while in the
possession of material confidential (non-public) information which is learned in
the course of employment. Faillure to comply with these requirements may be a
criminal offence in many instances. More detailed information is contained in
Enterprise's Insider Trading policy and may be obtained from the Enterprise Law
Department.
9. Political Contributions and Foreign Corrupt Practices Act
Enterprise has adopted a policy setting forth the standard of conduct to be
observed and procedures to be followed in all matters pertaining to political
contributions, illegal or questionable payments and related accounting
procedures. Such policy and related guidelines can be found in Enterprise's
Standards of Business Conduct. The use of corporate funds or assets for any
unlawful or improper purpose, including payments to governmental employees or
any other person as a commercial bribe , influence payment or kickback, is
prohibited. Specifically discussed are matters dealing with entertainment of or
gifts to government officials and employees. As a policy, Enterprise does not
make payments with corporate funds to political parties or candidates for public
office. This does not mean, however, that Enterprise will not participate in
public debate. Enterprise has the right and responsibility, in pursuit of its
legitimate commercial objectives, to make its position known on matters
affecting the community if we have expertise and can make a significant
contribution to Enterprise and society.
Enterprise will support Political Action Committees (PACs) in accordance with
applicable law, and employees are encouraged to make personal political
contributions to PACs, candidates and organizations of their choice. However,
any employee who elects to make a personal political contribution must bear the
entire financial burden of such a contribution.
If any employee wishes to engage in political activity, including standing for
election to public office, he or she will be given the opportunity to do so
where this is appropriate in light of local circumstances.
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10. Protection of Assets
Enterprise has a large variety of assets, including extremely valuable
proprietary information and physical assets. Enterprise's proprietary
information includes intellectual property and the confidential business data
entrusted to employees in connection with their jobs. Protection of Enterprise
assets and third party confidential information properly in Enterprise's
possession is the personal responsibility of each employee. Further details
concerning these obligations can be obtained by contacting the Enterprise Law
Department.
11. Safe Workplace Environment
Enterprise is fully dedicated to maintaining a workplace free of recognized
health and safety hazards. In this regard Enterprise has ongoing and
comprehensive programs and policies designed to achieve this policy objective
and ensure full compliance with all applicable laws and regulations. See
Enterprise's Policy on Occupational Safety and Health.
V. Procedures for Obtaining Guidance
Enterprise policies summarized above and numerous specific policies, training
programs and operating procedures exist for the various jobs at Enterprise. Each
employee is charged with the obligation to understand applicable policies,
procedures and training made available to him or her. Seek clarification from
your supervisors when necessary. Managers and supervisors have additional duty
to monitor the continuing adequacy of policies, procedures and training withing
their areas of responsibility and compliance with our Code of Conduct by persons
reporting to them.
When you have a concern or are called upon to evaluate the legal or ethical
correctness of a course of action a result of your employment with Enterprise:
- Seek out the appropriate policy statement and training manuals
and ask your supervisor for clarification when needed.
- Don't debate alone; seek the advice of legal, environmental,
human resources and other administrative organizations that can
be of assistance.
- As a guide in making your decision, consider whether if all the
facts surrounding your decision were published in the local
newspaper, you would have any regrets or concerns.
- Understand that Enterprise's best interests can never be served
by illegal or unethical conduct and Enterprise will never condone
it.
Any questions concerning legal compliance that cannot be answered promptly and
clearly should be referred to the Enterprise Law Department. Legal and other
appropriate administrative organizations, working together, will seek to explain
in a practical and readily understandable manner what is require of employees in
order to comply with the law and with Enterprise's ethical requirements.
Our compliance policies and training and our Code of Conduct are all aimed at
avoiding violations of law and unethical conduct. Our long-term success in this
area will depend on each employee's realizing
C-7
Enterprise's sincere commitment to these goals, seeking advice before engaging
in conduct that presents legal or ethical questions and obtaining correct and
unambiguous advice.
VI. Reporting Compliance Issues
If an employee has a good faith reason to believe that any violation of our Code
of Conduct has occurred, he or she is required to report such violation.
Additionally, any good faith reason to believe that a threat to human health,
safety, the environment or Enterprise assets has arisen or exists in or as the
result of conduct in the workplace must be reported promptly.
Reporting to your vice president, senior vice president, executive vice
president or your Human Resources representative discharges this obligation.
Such parties have the responsibility to see that the appropriate Enterprise
management and, when compliance with law issues are raised, the appropriate
representatives of the Enterprise Law Department are promptly notified.
Any attempt at retaliation or intimidation against anyone reporting in good
faith a suspected violation of our Code of Conduct or any condition thought to
constitute a threat to human health, safety, the environment or Enterprise
assets is a serious violation of our Code of Conduct.
VII. Discipline
Enterprise will consistently and appropriately enforce the Code of Conduct and
company policies. Discipline will be determined by Enterprise senior management.
Non-compliance may result in discipline up to and including discharge. In
appropriate cases or when required by law, law enforcement officials will be
informed of facts discovered by any investigation concerning non-compliance with
the law.
C-8
EXHIBIT E
[Insert Contribution Agreement arbitration procedures]
D-1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of September 17, 1999
(this "Agreement"), is made and entered into by and among Tejas Energy,
LLC, a Delaware limited liability company ("Tejas") and Enterprise Products
Partners L.P., a Delaware limited partnership ("Enterprise Partners").
W I T N E S S E T H:
WHEREAS, Tejas has received certain units of a special class of partnership
interests (the "Special Units") issued by Enterprise Partners pursuant to that
certain Contribution Agreement dated as of September 17, 1999 (the "Contribution
Agreement") between Tejas, Tejas Midstream Enterprises, LLC ("Tejas Midstream"),
Enterprise Partners, Enterprise Products Operating L.P. ("Enterprise
Operating"), Enterprise Products GP, LLC ("Enterprise GP"), Enterprise Products
Company ("EPC"), and EPC Partners II, Inc. ("EPC Partners II");
WHEREAS, the Special Units will be automatically convertible, on a
one-for-one basis into Common Units (the "Tejas Common Units") of Enterprise
Partners, effective as of the dates specified in the Contribution Agreement (the
"Conversion Date");
WHEREAS, in order to improve the transferability of the Tejas Common Units,
Enterprise Partners is willing to provide certain registration rights with
respect thereto; and
WHEREAS, Enterprise Partners and Tejas deem it to be in their respective
best interests to enter into this Agreement to set forth certain rights of Tejas
in connection with public offerings and sales of the Tejas Common Units and are
entering into this Agreement as a condition to and in connection with the
Contribution Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the parties hereto hereby agree as follows:
Section Definitions. As used in this Agreement, the following terms have
the following meanings:
"Affiliate" means, with respect to any Person, (i) a director or executive
officer of such Person, and (ii) any other Person that, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with such Person. The term "control" means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Best Efforts" as used herein means reasonable best efforts in accordance
with reasonable commercial practice.
VEHOU05:142167.1
"Business Day" means a day that is not a Saturday, Sunday or other day on
which banks in Houston, Texas and New York, New York are authorized or obligated
to close.
"Commission" means the Securities and Exchange Commission or any other
governmental body or agency succeeding to the functions thereof.
"Common Units" means the common units representing limited partnership
interests in Enterprise Partners.
"Contribution Agreement" means the Contribution Agreement dated September
17, 1999, by and among Tejas, Tejas Midstream, Enterprise Partners, Enterprise
Operating, Enterprise GP, EPC, and EPC Partners II, as the same may be amended,
supplemented, modified or restated.
"Equity Equivalents" means securities which are convertible, exchangeable
or exercisable for or into Common Units.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Executive Committee" means the Executive Committee or other governing body
of Enterprise Partners.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"Public Offering" means a public offering of Common Units or Equity
Equivalents pursuant to a registration statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering made
in connection with a business acquisition or otherwise on Form S-4 under the
Securities Act (or any successor form) or an employee benefit plan or otherwise
on Form S-8 under the Securities Act (or any successor form).
"Registrable Securities" shall mean (i) Tejas Common Units; (ii) any Common
Units or other securities issued as a dividend or other distribution with
respect to or in exchange for or in replacement of the Tejas Common Units; (iii)
any Common Units issued to Tejas under Section 4.1(a) of the Unitholder
Agreement; and (iv) any then outstanding securities into which the Tejas Common
Units shall have been changed by any reclassification or recapitalization of the
Tejas Common Units or otherwise, in each case to the extent and only to the
extent such securities are held by Unitholders; provided, however, that as to
any particular securities that would otherwise be Registrable Securities, such
securities shall not be Registrable Securities until the Conversion Date with
respect to such securities has occurred and provided further, that as to any
particular Registrable
VEHOU05:142167.1
2
Securities, once issued, such securities shall cease to be Registrable
Securities if (A) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of by the holder in accordance with such
registration statement, (B) such securities shall have been sold pursuant to
Rule 144, (C) as to the provisions of Section 3 hereof only, at any time the
Registrable Securities owned by a Unitholder (together with all Registrable
Securities owned by its Affiliates) represent less than 200,000 Common Units
(adjusted to reflect splits, reclassifications and similar events) and the
holder of such securities may sell such securities pursuant to paragraph (k) of
Rule 144 and without any limitation as to timing, volume or manner of sale, or
(D) such securities shall have ceased to be outstanding.
"Requesting Unitholder" means, with respect to any request for
registration hereunder, the Unitholders that have requested such registration
under Section 2 or Section 3 hereof, as the case may be.
"Required Unitholders" means, as of the date of any determination thereof,
Unitholders which then hold Registrable Securities representing at least a
majority (by number of units) of the Registrable Securities, on a fully diluted
basis, then held by all Unitholders.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto (such as Rule 144A).
"Securities Act" means the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Tejas Common Units" has the meaning specified in the preamble to this
Agreement.
"Unitholder Agreement" means the Unitholder Rights Agreement dated
September 17, 1999 among Tejas, Tejas Midstream, Enterprise Partners, Enterprise
GP, EPC, and EPC Partners II.
"Unitholders" means, collectively, (i) Tejas and (ii) any Persons which, in
the future, may become parties to this Agreement pursuant to Section 13(e).
"Unitholders' Counsel" means one counsel chosen by the Requesting
Unitholders.
Section Required Registration.
Subject to Section 2(b) below, if, at any time following the Conversion
Date with respect to any Registrable Securities, Enterprise Partners shall be
requested by the Required Unitholders to effect the registration under the
Securities Act of Registrable Securities, then Enterprise Partners shall within
15 days of receipt thereof give written notice of such request to all other
holders of Registrable Securities and, thereafter, Enterprise Partners shall use
its Best Efforts to effect the registration under the Securities Act of the
Registrable Securities which Enterprise
VEHOU05:142167.1
3
Partners has been requested to register by the Required Unitholders making the
request and the other Requesting Unitholders to the extent notice of such
request is received by Enterprise Partners within 20 days of their receipt of
Enterprise Partners' notice. Any request for a registration under this Section 2
shall specify the number of Registrable Securities proposed to be sold by the
Requesting Unitholders and the intended method of disposition thereof.
Anything contained in Section 2(a) notwithstanding, Enterprise Partners
shall not be obligated to effect any registration of Registrable Securities
under the Securities Act pursuant to Section 2(a) except in accordance with the
following provisions:
Enterprise Partners shall not be obligated to use its Best Efforts to file
and cause to become effective, within the meaning of clause (iii) below, more
than three registration statements in the aggregate pursuant to Section 2(a)
hereof;
Enterprise Partners may, upon written notice to the Requesting Unitholders,
delay the filing or effectiveness of any registration statement (A) during any
period during which Enterprise Partners is in the process of negotiating or
preparing, and ending on a date 90 days following the effective date of any
registration statement pertaining to a Public Offering of Common Units or Equity
Equivalents (other than on Form S-4 or Form S-8 or a comparable form), provided
that Enterprise Partners is throughout that period actively employing in good
faith its Best Efforts to cause such registration statement to become effective,
(B) until a period of at least 90 days shall have elapsed from the effective
date of any previously effected registration pursuant to Section 2, (C) during
any period during which Enterprise Partners is engaged in any material
acquisition or disposition transaction which could be significantly disrupted by
such registration, qualification and/or compliance, or (D) during any period
during which Enterprise Partners is in possession of material information
concerning it or its business and affairs, the public disclosure of which could
have a material adverse effect on Enterprise Partners as reasonably determined
by the Executive Committee; provided, however, that Enterprise Partners may not
effect more than two periods of delay under clauses (A), (C) or (D) above within
any 12-month period, and any such two delay periods shall in the aggregate not
exceed 120 days within any 12-month period;
At any time before the registration statement covering Registrable
Securities becomes effective, the Requesting Unitholders which requested such
registration may request Enterprise Partners to withdraw or not to file the
registration statement. In that event, if such request of withdrawal shall not
have been caused by, or made in response to, a material adverse change in the
business, properties, condition, financial or otherwise, or operations of
Enterprise Partners occurring on or after the date of such request, one demand
registration right shall be deemed to have been effected, as provided in
clause (i) above, unless the Requesting Unitholders shall pay to Enterprise
Partners the expenses incurred by Enterprise Partners in connection with such
registration statement through the date of such request, which payment shall be
pro rata to the number of Registrable Securities originally requested
VEHOU05:142167.1
4
to be included in such registration, in which case no such demand registration
right shall be deemed to have been effected; and
Subject to clause (iii) above, no registration shall be deemed to have been
requested or effected for any purposes under this Section 2: (A) unless a
registration statement with respect thereto has become effective; (B) if, after
it has become effective, any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court, for any
reason, affecting any of the Registrable Securities covered by such registration
statement, is issued by the Commission or other governmental agency or court and
not withdrawn within 10 Business Days; (C) if the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied by reason of a failure by or
inability of Enterprise Partners to satisfy any of such conditions, or the
occurrence of an event outside the reasonable control of the relevant Requesting
Unitholders; or (D) if the request for withdrawal made by the Requesting
Unitholders pursuant to clause (iii) above shall have been caused by, or made in
response to, the material adverse change in the business properties, condition,
financial or otherwise, or operations of Enterprise Partners. (c) If a
registration effected pursuant to this Section 2 is for an underwritten Public
Offering, Enterprise Partners may include in such registration the number of
securities (for its own account or the account of any securityholder) which in
the opinion of such underwriters can be sold without adversely affecting the
proposed offering or the offering price, provided the number of Registrable
Securities requested by the Requesting Unitholders to be included in such
registration shall not be reduced.
Section Piggyback Registration.
If at any time after the Conversion Date with respect to any Registrable
Securities, Enterprise Partners proposes for any reason to register any Common
Units or Equity Equivalents (other than in connection with a business
acquisition or otherwise on Form S-4 under the Securities Act (or any successor
form) or an employee benefit plan or otherwise on Form S-8 under the Securities
Act (or any successor form)) then it shall promptly give written notice at least
15 Business Days before the anticipated filing date to each of the holders of
Registrable Securities of its intention to so register such Common Units or
Equity Equivalents and, upon the written request, delivered to Enterprise
Partners within 10 Business Days after receipt of any such notice by Enterprise
Partners, of the Unitholders to include in such registration Registrable
Securities (which request shall specify the number of Registrable Securities
proposed to be included in such registration), Enterprise Partners shall use its
Best Efforts to cause all such Registrable Securities to be included in such
registration on the same terms and conditions as the Common Units or Equity
Equivalents otherwise being sold in such registration, subject to the
limitations set forth herein.
If a registration referred to in paragraph 3(a) relates to an underwritten
Public Offering on behalf of Enterprise Partners, and the managing underwriters
advise Enterprise Partners
VEHOU05:142167.1
5
in writing that the inclusion of all Registrable Securities requested to be
included in such registration would materially and adversely affect the proposed
offering or the offering price, Enterprise Partners will include in such
registration: (i) first, all securities Enterprise Partners proposes to sell,
(ii) second, all Registrable Securities which the Requesting Unitholders ask to
be included and (iii) third, such other securities (provided such securities are
of the same class as the securities being sold by Enterprise Partners) as are
requested to be included in such registration equal to the balance, if any,
allocated pro rata among the holders of such securities on the basis of the
dollar amount or number of securities requested to be included therein by each
such holder. If a registration referred to in paragraph 3(a) relates to an
underwritten secondary registration on behalf of holders of Enterprise Partners'
securities (other than holders of Registrable Securities in their capacity as
such), and the managing underwriters advise Enterprise Partners in writing that
in their opinion the securities requested to be included in such registration
exceeds the securities which can be sold in such offering without adversely
affecting the offering or the offering price, Enterprise Partners will include
in such registration, (i) first, the securities which in the opinion of such
underwriters can be sold without adversely affecting the offering or the
offering price of the securities intended to be included therein on behalf of
the other holders of Enterprise Partners' securities, allocated among the
holders of such securities in such proportions as Enterprise Partners and such
holders may agree, and (ii) to the extent of the balance, if any, the
Registrable Securities requested to be included in such registration, allocated
pro rata among the holders of such Registrable Securities on the basis of the
securities requested to be included therein by each such holder.
If the registration referred to in paragraph 3(a) involves an underwritten
offering, the right of any Unitholder to include any Registrable Securities in
such registration pursuant to this Section 3 shall be conditioned upon such
Unitholders' participation in such underwriting. The Unitholders proposing to
include their Registrable Securities pursuant to this Section 3 shall enter into
an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Enterprise Partners.
(d) Notwithstanding anything to the contrary in this Section 3, if a
registration referred to in paragraph 3(a) relates to an underwritten offering
of a class of securities of Enterprise Partners different from the Registrable
Securities proposed to be included in such offering and the managing
underwriters advise that in their opinion Registrable Securities of a different
class cannot be included in such offering without adversely affecting the
offering or the offering price, then the holders of the Registrable Securities
shall not be entitled to include Registrable Securities in such registration.
(e) Enterprise Partners shall have the right to terminate any proposed
registration under this Section 3 at any time without any obligation to the
Requesting Holders requesting inclusion in such registration under this Section
3.
Section Holdback Agreement.
If Enterprise Partners at any time shall register Common Units or Equity
Equivalents under the Securities Act (including any registration pursuant to
Section 3) for sale in an
VEHOU05:142167.1
6
underwritten Public Offering, then to the extent requested by the underwriters
for such offering, the Unitholders shall not sell, make any short sale of, grant
any option for the purchase of, or otherwise dispose of, directly or indirectly,
any Registrable Securities (other than those Registrable Securities included in
such registration) without the prior written consent of Enterprise Partners, for
a period designated by the managing underwriter in writing to the Unitholders,
which period shall begin not more than seven days prior to the effectiveness of
the registration statement pursuant to which such Public Offering shall be made
(or within seven days prior to the execution of the applicable underwriting
agreement in the case of an offering pursuant to Rule 415) and shall not last
more than 90 days after the closing of such Public Offering or such shorter
holdback period to which Enterprise Partners or other unitholders of Enterprise
Partners holding at least 10% of the Common Units of Enterprise Partners (on a
fully diluted basis) are subject. The Requesting Unitholders will enter into
agreements with the underwriters to the foregoing effect.
If, at any time, Enterprise Partners is requested by the Requesting
Unitholders to register Registrable Securities pursuant to Section 2(a) hereof
under the Securities Act for sale in an underwritten Public Offering, then to
the extent requested by the underwriters for such offering Enterprise Partners
shall not sell, make any short sale of, grant any option (other than under
compensatory option or benefit plans of Enterprise Partners or its Affiliates)
for the purchase of, or otherwise dispose of, directly or indirectly, any
securities similar to those being registered or any Equity Equivalents, without
the prior written consent of the managing underwriter, for a period designated
by the managing underwriter in writing to Enterprise Partners, which period
shall begin not more than seven days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made (or
within seven days prior to the execution of the applicable underwriting
agreement in the case of an offering pursuant to Rule 415) and shall not last
more than 90 days after the closing of the sale of units pursuant to such
registration statement or such shorter holdback period to which the Unitholders
are then subject. Enterprise Partners shall use its Best Efforts to cause each
holder of at least 10% (on a fully diluted basis) of Common Units other than
Unitholders to agree not to sell publicly, make any short sale of, grant any
option for the purchase of, or otherwise dispose publicly of, any Common Units
or Equity Equivalents (except as part of the underwritten offering pursuant to
such registration statement), without the prior written consent of the managing
underwriter, for a period designated by the managing underwriter in writing to
such holders, which period shall begin not more than seven days prior to the
effectiveness of the registration statement pursuant to which such public
offering shall be made (or within seven days prior to the execution of the
applicable underwriting agreement in the case of an offering pursuant to
Rule 415) and shall not last more than 90 days after the closing of the sale of
units pursuant to such registration statement or such shorter holdback period to
which the Unitholders are then subject.
Section Preparation and Filing.
If and whenever Enterprise Partners is under an obligation pursuant to the
provisions of this Agreement to use its Best Efforts to effect the registration
of any Registrable Securities, Enterprise Partners shall, as expeditiously as
practicable:
VEHOU05:142167.1
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use its Best Efforts to cause a registration statement that registers such
Registrable Securities to be filed within 45 days following the request
delivered pursuant to Section 2 and to become and remain effective for a period
(the "Registration Period") of 180 days (or such extended period pursuant to
clause (viii) below) or until all of such Registrable Securities have been
disposed of (if earlier);
furnish, at least five Business Days before filing a registration statement
that registers such Registrable Securities, a prospectus relating thereto or any
amendments or supplements relating to such a registration statement or
prospectus, to Unitholders' Counsel, copies of all such documents proposed to be
filed (it being understood that such five-Business-Day period need not apply to
successive drafts of the same document proposed to be filed so long as such
successive drafts are supplied to Unitholders' Counsel in advance of the
proposed filing by a period of time that is customary and reasonable under the
circumstances);
prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective at all times
during the Registration Period and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such Registrable
Securities;
notify in writing Unitholders' Counsel promptly of (A) the receipt by
Enterprise Partners of any notification with respect to any comments by the
Commission with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with respect
thereto, (B) the receipt by Enterprise Partners of any notification with respect
to any stop order issued or threatened to be issued by the Commission suspending
the effectiveness of such registration statement or prospectus or any amendment
or supplement thereto or the initiation or threatening of any proceeding for
that purpose and (C) the receipt by Enterprise Partners of any notification with
respect to the suspension of the qualification of such Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purposes;
use its Best Efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as
Unitholders reasonably request and to keep such registration and qualification
in effect for so long as such registration statement remains in effect and to do
any and all other acts and things which may be reasonably necessary or advisable
to enable Unitholders to consummate the disposition in such jurisdictions of the
Registrable Securities owned by Unitholders; provided, however, that Enterprise
Partners will not be required to qualify generally to do business or consent to
general service of process or taxation in any jurisdiction where it would not
otherwise be required to do so but for this clause (v);
VEHOU05:142167.1
8
furnish, without charge, to the holders of such Registrable Securities such
number of copies of such registration statement, prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents (including exhibits thereto and documents
incorporated by reference therein) as such holders may reasonably request in
order to facilitate the public sale or other disposition of such Registrable
Securities;
use its Best Efforts to cause such Registrable Securities to be registered
with or approved by such other governmental agencies or authorities or
self-regulatory organizations as may be necessary by virtue of the business and
operations of Enterprise Partners to enable the Unitholders holding such
Registrable Securities to consummate the disposition of such Registrable
Securities;
notify in writing holders of Registrable Securities on a timely basis at
any time when a prospectus relating to such Registrable Securities is required
to be delivered under the Securities Act during the Registration Period of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of the holders of Registrable
Securities, prepare and furnish to such holders a reasonable number of copies of
a supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the offerees and purchasers of such units, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
provided, however, that the Registration Period shall be deemed to be extended
by the number of days constituting the period commencing on and including the
date of the giving of such notice to such seller and ending on and including the
date when Enterprise Partners made available to such seller an amended or
supplemented prospectus;
in the case of an underwritten offering, use its Best Efforts to obtain
from its independent certified public accountants "comfort" letters in customary
form and at customary times and covering matters of the type customarily covered
by comfort letters;
in the case of an underwritten offering, (A) use its Best Efforts to obtain
from its counsel an opinion or opinions in customary form to the underwriters
and the holders of Registrable Securities and (B) to enter into a customary
underwriting agreement and make representations and warranties to the
underwriters, in form, substance and scope as are customarily made by issuers to
underwriters in comparable underwritten offerings;
provide a transfer agent and registrar (which may be the same entity and
which may be Enterprise Partners) for such Registrable Securities;
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if required, issue to any underwriter to which the holders of Registrable
Securities may sell units in such offering certificates evidencing such
Registrable Securities;
use its Best Efforts to list such Registrable Securities on the New York
Stock Exchange or such other securities exchange on which the Common Units are
traded;
use all reasonable efforts to obtain the lifting at the earliest possible
time of any stop order suspending the effectiveness of such registration
statement or of any order preventing or suspending the use of any preliminary
prospectus included therein; and
use its Best Efforts to take all other steps necessary to effect the
registration of such Registrable Securities contemplated hereby.
Each holder of the Registrable Securities, upon receipt of any notice from
Enterprise Partners of any event of the kind described in Section 5(a)(viii)
hereof, shall forthwith discontinue disposition of the Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5(a)(viii) hereof, and, if so directed by
Enterprise Partners, such holder shall deliver to Enterprise Partners all
copies, other than permanent file copies then in such holder's possession, of
the prospectus covering such Registrable Securities at the time of receipt of
such notice.
In the case of an underwritten offering pursuant to Section 2 hereof, the
Requesting Unitholders shall choose the managing underwriter, provided that the
managing underwriter is reasonably acceptable to Enterprise Partners. In the
case of an underwritten offering pursuant to Section 3 hereof, Enterprise
Partners shall choose the managing underwriter. In either case, the form of
underwriting agreement shall be reasonably acceptable to Enterprise Partners.
Enterprise Partners may require each seller of Registrable Securities as to
which any registration is being effected hereunder to furnish to Enterprise
Partners such information and complete such questionnaires regarding the seller
and the distribution of such securities as Enterprise Partners may from time to
time reasonably request.
Section Expenses. All expenses (other than as provided in the last sentence
of this Section 6) incident to the registration of Registrable Securities
pursuant to Section 2 and 3 hereof, including, without limitation, the fees and
expenses of the underwriters, all salaries and expenses of Enterprise Partners'
officers and employees performing legal or accounting duties, the expense of any
annual audit or quarterly review, the expense of any liability insurance, all
registration and filing fees, the expense and fees for listing securities on one
or more securities exchanges, the fees and expenses of complying with securities
and blue sky laws, printing expenses, messenger and delivery expenses, fees and
expenses of Enterprise Partners' counsel and accountants, and the reasonable
fees and expenses of one counsel to the Unitholders not to exceed $25,000 for
any registration (all such expenses being herein called "Registration
Expenses"), shall be borne by Enterprise Partners;
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10
provided, however, that with respect to any request for registration begun
pursuant to Section 2 that is subsequently withdrawn by the Requesting
Unitholders, other than if such withdrawal is caused by, or made in response to,
a material adverse change in the business, properties, condition, financial or
otherwise, or operations of Enterprise Partners occurring on or after the date
of such request, then Enterprise Partners shall not be required to pay the
Registration Expenses of such registration and the Registration Expenses shall
be paid by the withdrawing Unitholders pro rata based on the number of
Registrable Securities to be included therein. All underwriting discounts and
selling commissions applicable to the Registrable Securities and the fees and
expenses of any counsel to the Unitholders not provided for in the above
definition of Registration Expenses shall be borne by the holders selling such
securities, in proportion to the number of securities sold by each such holder.
Section Indemnification.
In connection with any registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, Enterprise Partners shall indemnify
and hold harmless, to the fullest extent permitted by law, the holders of
Registrable Securities, each other Person, if any, who controls any such holder
of Registrable Securities within the meaning of the Securities Act or the
Exchange Act, and each of their respective directors, partners, officers and
agents, against any and all losses, claims, damages or liabilities, joint or
several (or actions or threatened actions in respect thereof), to which any of
the foregoing Persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or threatened
actions in respect thereof) arise out of or are based upon (i) an untrue
statement or allegedly untrue statement of a material fact contained in the
registration statement under which such Registrable Securities were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification of
any Registrable Securities or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or, with respect to any prospectus, necessary
to make the statements therein in light of the circumstances under which they
were made not misleading. Enterprise Partners shall reimburse each holder of
Registrable Securities and each such controlling Person for any expenses
(including reasonable attorneys' fees, disbursements and expenses as incurred)
reasonably incurred by any of them in connection with investigating or defending
against any such loss, claim, damage, liability, action or threatened action.
Notwithstanding the foregoing provisions of this Section 7, Enterprise Partners
shall not be liable to any such indemnified Person in any such case to the
extent that any such loss, claim, damage, liability, action or threatened action
(including any reasonable legal or other fees, disbursements and expenses
incurred) arises out of or is based upon an untrue statement or allegedly untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Securities in
reliance upon and in conformity with written information furnished to Enterprise
Partners by or on behalf of a holder of Registrable Securities specifically for
use in the preparation thereof. The foregoing indemnity agreement is subject to
the condition that, insofar as it relates to any untrue statement, allegedly
untrue statement, omission or alleged omission made in any preliminary
VEHOU05:142167.1
11
prospectus but eliminated or remedied in the final prospectus (filed pursuant to
Rule 424 of the Securities Act), such indemnity agreement shall not inure to the
benefit of any underwriter who participates in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter (within the meaning of the Securities Act or the Exchange Act) from
whom a Person asserting any loss, claim, damage, liability or expense purchased
the Registrable Securities which are the subject thereof, if a copy of such
final prospectus had been made available to such underwriter and such
controlling Person and such final prospectus was not delivered to such Person
asserting any loss, claim, damage, liability or expense with or prior to the
written confirmation of the sale of such Registrable Securities to such Person.
In connection with any registration of Registrable Securities under the
Securities Act pursuant to this Agreement, each holder of Registrable Securities
shall severally and not jointly indemnify and hold harmless, in the same manner
and to the same extent as set forth in the preceding paragraph (a) of this
Section 7, Enterprise Partners, each director of Enterprise Partners, each
officer of Enterprise Partners who shall sign such registration statement and
each Person who controls any of the foregoing Persons (within the meaning of the
Securities Act), against any losses, claims, damages or liabilities, joint or
several (or actions or threatened actions in respect thereof), to which any of
the foregoing Persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or threatened
actions in respect thereof) arise out of or are based upon any statement or
omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Securities, if such statement or omission was
made in reliance upon and in conformity with written information furnished to
Enterprise Partners by such holder with respect to such holder specifically for
use in connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document;
provided, however, that the maximum amount of liability in respect of such
indemnification shall be limited, in the case of each seller of Registrable
Securities, to an amount equal to the net proceeds actually received by such
seller from the sale of Registrable Securities effected pursuant to such
registration.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 7, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, (i) the indemnified party shall reasonably cooperate with
the indemnifying party and its counsel in the defense of such claim, and
(ii) the indemnifying party shall not be responsible for any legal or other
fees, disbursements and expenses subsequently incurred by the indemnified party
in connection with the defense thereof; provided, however, that if any
indemnified party shall have reasonably concluded that there may be one or more
legal or equitable defenses available to such indemnified
VEHOU05:142167.1
12
party which are additional to or conflict with those available to the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party and such
indemnifying party shall reimburse such indemnified party and any Person
controlling such indemnified party for that portion of the fees, disbursements
and expenses of not more than one counsel retained by the indemnified party in
connection with the matters covered by the indemnity agreement provided in this
Section 7 provided that no indemnifying party shall, in connection with any such
suit, be liable under this subsection for the fees and expenses of more than one
separate firm for all indemnified parties. No indemnifying party shall be liable
for any compromise or settlement of any such action effected without its
consent, such consent not to be unreasonably withheld. No indemnifying party, in
the defense of any such claim or suit, shall, except with the consent of each
indemnified party which shall not be unreasonably withheld, consent to any
compromise or settlement which does not include as an unconditional term thereof
the giving by the claimant to such indemnified party of a release from all
liability in respect of such claim or suit.
If the indemnification provided for in this Section 7 is unavailable to an
indemnified party hereunder with respect to any loss, claim, damage, liability,
action or threatened action referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such loss,
claim, damage, liability, action or threatened action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage, liability, action or
threatened action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether any statement or
omission, including any 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 indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that the maximum amount
of liability in respect of such contribution shall be limited, in the case of
each seller of Registrable Securities, to an amount equal to the net proceeds
actually received by such seller from the sale of Registrable Securities
effected pursuant to such registration. The amount paid or payable by a party
under this Section 7(d) as a result of the loss, claim, damage, liability,
action or threatened action referred to above shall be deemed to include any
legal or other fees, disbursements and expenses reasonably incurred by such
party in connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by any method of
allocation which does not take account of the equitable considerations referred
to in the first and second sentences of this Section 7(d). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
VEHOU05:142167.1
13
The provisions of this Section 7 shall be in addition to any other
liability which any indemnifying party may have to any indemnified party and
shall survive the termination of this Agreement.
Section Underwriting Agreement. To the extent that the holders of
Registrable Securities participating in any underwritten registration shall
enter into an underwriting or similar agreement that contains provisions which
conflict with any provision of Section 7 hereof, as between Enterprise Partners
and such holders of Registrable Securities, the provisions contained in
Section 7 hereof shall control.
Section Information by Holder. The Unitholders shall furnish to Enterprise
Partners such written information regarding the Unitholders and the distribution
proposed by the Unitholders as Enterprise Partners may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
Section Exchange Act Compliance. Enterprise Partners agrees to and shall
comply with all of the reporting requirements of the Exchange Act applicable to
it. Upon the request of any holder of Registrable Securities, Enterprise
Partners shall deliver to such holder a written statement as to whether it has
complied with such requirements. Enterprise Partners shall cooperate with the
Unitholders in supplying such information as may be necessary for the
Unitholders to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of
Rule 144.
Section No Conflict of Rights. Enterprise Partners shall not, after the
date hereof, grant any registration rights which conflict with or impair the
registration rights granted hereby.
Section Termination. Except as provided in Section 7(e) hereof, this
Agreement shall terminate and be of no further force or effect when there shall
no longer be any Registrable Securities outstanding.
Section Miscellaneous.
Notices. All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally at by facsimile transmission or mailed (prepaid first class certified
mail, return receipt requested) to the parties at the following addresses or
facsimile numbers: If to Enterprise Partners, to:
Enterprise Products Company
P.O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
VEHOU05:142167.1
14
Attention: Chief Financial Officer
Phone: (713) 880-6500
Fax No. (713) 880-6570
With a copy to:
Enterprise Products Company
P.O. Box 4324 (77210-4324)
2727 North Loop West, Suite 700
Houston, Texas 77008
Attention: Chief Legal Officer
Phone: (713) 880-6500
Fax No. (713) 880-6570
If to Tejas or its Affiliates, to:
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attention: Chief Operating Officer
Phone: (713) 230-3000
Fax No. (713) 230-2900
With a copy to:
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attention: General Counsel
Phone: (713) 230-3000
Fax No. (713) 230-1800
All such notices, requests and other communications will (i) if delivered
personally against written receipt to the address as provided in this Section,
be deemed given upon delivery, (ii) if delivered by facsimile transmission to
the facsimile number as provided in this Section, be deemed given upon receipt
or upon the next Business Day if received after normal business hours or a day
which is not a Business Day, and (iii) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given upon
receipt (in each case regardless of whether such notice is received by any other
person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
VEHOU05:142167.1
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Specific Performance. The parties hereto agree that in the event any
provision of this Agreement was not performed in accordance with the terms
hereof, irreparable damage would occur, and that the parties shall therefore be
entitled to specific performance of the terms hereof, in addition to any remedy
that may be available to any of them at law or equity and, to the extent
permitted by applicable law, each party waives any objection to the imposition
of such relief.
Entire Agreement. This Agreement, together with the Contribution Agreement
and the Unitholder Agreement, supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof and thereof, and
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof and thereof.
Successors and Assigns. This Agreement shall bind and inure to the benefit
of Enterprise Partners and the Unitholders and, subject to Section 13(e) below,
the respective successors and assigns of Enterprise Partners and Unitholders.
Assignment. Subject to the terms set forth in the Unitholder Agreement,
each Unitholder may assign its rights hereunder to any purchaser or transferee
of Registrable Securities; provided, however, that (i) such transfer is
otherwise effected in accordance with applicable securities laws, (ii) such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as a Unitholder, whereupon such purchaser or transferee shall have
the benefits of and shall be subject to the restrictions contained in this
Agreement as if such purchaser or transferee was originally included in the
definition of a Unitholder and had originally been a party hereto and
(iii) Enterprise Partners is given written notice of such transfer after such
transfer, setting forth the name and address of such assignee and identifying
the Registrable Securities with respect to which such registration rights have
been assigned. Schedule I hereto shall, from time to time, be amended to include
the name, address and numbers of Registrable Securities of each such Unitholder.
Waiver. Any term or condition of this Agreement may be waived at any time
by the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or on
behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
Amendment. This Agreement may be amended, supplemented or modified only by
a written instrument duly executed by or on behalf of each party hereto.
No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person except to the extent
such Person is expressly given rights herein.
VEHOU05:142167.1
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Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to a contract executed
and performed in such State without giving effect to the conflicts of laws
principles thereof.
Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
VEHOU05:142167.1
17
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed as of the date first written above.
TEJAS ENERGY, LLC
By: /s/ Curtis R. Frasier
Curtis R. Frasier
Executive Vice President and
Chief Operating Officer
ENTERPRISE PRODUCTS PARTNERS L.P.
By: Enterprise Products GP, LLC, its General Partner
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
VEHOU05:142167.1
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Schedule I
Unitholders Number of Registrable Securities Held
VEHOU05:142167.1
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENTERPRISE PRODUCTS PARTNERS L.P.
TABLE OF CONTENTS
ARTICLE I
Definitions
1.1 Definitions............................................................1
1.2 Construction...........................................................1
ARTICLE II
Organization
2.1 Formation..............................................................1
2.2 Name...................................................................1
2.3 Registered Office; Registered Agent; Principal Office; Other Offices...1
2.4 Purpose and Business...................................................2
2.5 Powers.................................................................2
2.6 Power of Attorney......................................................2
2.7 Term...................................................................3
2.8 Title to Partnership Assets............................................3
ARTICLE III
Rights of Limited Partners
3.1 Limitation of Liability................................................4
3.2 Management of Business.................................................4
3.3 Outside Activities of the Limited Partners.............................4
3.4 Rights of Limited Partners.............................................4
ARTICLE IV
Certificates; Record Holders; Transfer of Partnership Interests;
Redemption of Partnership Interests
4.1 Certificates...........................................................5
4.2 Mutilated, Destroyed, Lost or Stolen Certificates......................5
4.3 Record Holders.........................................................6
4.4 Transfer Generally.....................................................6
4.5 Registration and Transfer of Limited Partner Interests.................6
4.6 Transfer of General Partner Interest...................................7
4.7 Restrictions on Transfers..............................................7
4.8 Citizenship Certificates; Non-citizen Assignees........................8
4.9 Redemption of Partnership Interests of Non-citizen Assignees...........9
ARTICLE V
Capital Contributions and Issuance of Partnership Interests
1
5.1 Prior Contributions....................................................9
5.2 Continuation of General Partner and Limited Partner Interests;
Initial Offering; Issuance of Class A Special Units;
Contributions by the General Partner......................................10
5.3 Contributions by the Underwriters.....................................10
5.4 Interest and Withdrawal...............................................11
5.5 Capital Accounts......................................................11
5.6 Issuances of Additional Partnership Securities........................13
5.7 Limitations on Issuance of Additional Partnership Securities..........14
5.8 Conversion of Subordinated Units......................................14
5.9 Limited Preemptive Right..............................................16
5.10 Splits and Combinations..............................................16
5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests....16
5.12 Creation and Conversion of Class A Special Units.....................17
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes..............................17
6.2 Allocations for Tax Purposes..........................................23
6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders............................................................24
6.4 Distributions of Available Cash from Operating Surplus................25
6.5 Distributions of Available Cash from Capital Surplus..................26
6.6 Adjustment of Minimum Quarterly Distribution and
Target Distribution Levels................................................26
6.7 Special Provisions Relating to the Holders of Subordinated Units and
Class A Special Units.....................................................27
6.8 Entity-Level Taxation.................................................27
ARTICLE VII
Management and Operation of Business
7.1 Management............................................................28
7.2 Certificate of Limited Partnership....................................29
7.3 Restrictions on General Partner's Authority...........................29
7.4 Reimbursement of the General Partner..................................30
7.5 Outside Activities....................................................31
7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the
General Partner...........................................................31
7.7 Indemnification.......................................................32
7.8 Liability of Indemnitees..............................................34
7.9 Resolution of Conflicts of Interest...................................34
7.10 Other Matters Concerning the General Partner.........................35
7.11 Purchase or Sale of Partnership Securities...........................36
7.12 Registration Rights of the General Partner and its Affiliates........36
7.13 Reliance by Third Parties............................................37
ARTICLE VIII
Books, Records, Accounting and Reports
2
8.1 Records and Accounting................................................38
8.2 Fiscal Year...........................................................38
8.3 Reports...............................................................38
ARTICLE IX
Tax Matters
9.1 Tax Returns and Information...........................................39
9.2 Tax Elections.........................................................39
9.3 Tax Controversies.....................................................39
9.4 Withholding...........................................................39
ARTICLE X
Admission of Partners
10.1 Admission of Initial Limited Partners................................39
10.2 Admission of Substituted Limited Partner.............................40
10.3 Admission of Successor General Partner...............................40
10.4 Admission of Additional Limited Partners.............................40
10.5 Amendment of Agreement and Certificate of Limited Partnership........41
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partner....................................41
11.2 Removal of the General Partner.......................................42
11.3 Interest of Departing Partner and Successor General Partner..........42
11.4 Termination of Subordination Period, Conversion of Subordinated Units
and Extinguishment of Cumulative Common Unit Arrearages..............43
11.5 Withdrawal of Limited Partners.......................................43
ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution..........................................................44
12.2 Continuation of the Business of the Partnership After Dissolution....44
12.3 Liquidator...........................................................45
12.4 Liquidation..........................................................45
12.5 Cancellation of Certificate of Limited Partnership...................45
12.6 Return of Contributions..............................................46
12.7 Waiver of Partition..................................................46
12.8 Capital Account Restoration..........................................46
ARTICLE XIII
3
Amendment of Partnership Agreement; Meetings; Record Date
13.1 Amendment to be Adopted Solely by the General Partner................46
13.2 Amendment Procedures.................................................47
13.3 Amendment Requirements...............................................47
13.4 Special Meetings.....................................................48
13.5 Notice of a Meeting..................................................48
13.6 Record Date..........................................................48
13.7 Adjournment..........................................................48
13.8 Waiver of Notice.....................................................48
13.9 Quorum...............................................................49
13.10 Conduct of a Meeting................................................49
13.11 Action Without a Meeting............................................49
13.12 Voting and Other Rights.............................................50
ARTICLE XIV
Merger
14.1 Authority............................................................50
14.2 Procedure for Merger or Consolidation................................50
14.3 Approval by Limited Partners of Merger or Consolidation..............51
14.4 Certificate of Merger................................................52
14.5 Effect of Merger.....................................................52
ARTICLE XV
Right to Acquire Limited Partner Interests
15.1 Right to Acquire Limited Partner Interests...........................52
ARTICLE XVI
General Provisions
16.1 Addresses and Notices................................................53
16.2 Further Action.......................................................54
16.3 Binding Effect.......................................................54
16.4 Integration..........................................................54
16.5 Creditors............................................................54
16.6 Waiver...............................................................54
16.7 Counterparts.........................................................54
16.8 Applicable Law.......................................................54
16.9 Invalidity of Provisions.............................................54
16.10 Consent of Partners.................................................54
4
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF ENTERPRISE PRODUCTS PARTNERS L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ENTERPRISE PRODUCTS PARTNERS L.P. dated as of September 17, 1999, is entered
into by and among Enterprise Products GP, LLC, a Delaware limited liability
company, as the General Partner, and the Limited Partners as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions. The definitions listed on Attachment I shall be for all
purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
1.2 Construction. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; and (c) ''include'' or ''includes''
means includes, without limitation, and ''including'' means including, without
limitation.
ARTICLE II
Organization
2.1 Formation. The Partnership has been previously formed as a limited
partnership pursuant to the provisions of the Delaware Act. The General Partner
and the Limited Partners hereby amend and restate in its entirety the Agreement
of Limited Partnership of Enterprise Products Partners L.P., dated April 9,
1998, as amended by that certain First Amendment to Agreement of Limited
Partnership of Enterprise Products Partners L.P., dated as of June 1, 1998, as
amended by that certain Amended and Restated Agreement of Limited Partnership of
Enterprise Products Partners L.P., dated as of July 31, 1998. Subject to the
provisions of this Agreement, the General Partner and the Limited Partners
hereby continue the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the
contrary in this Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All
Partnership Interests shall constitute personal property of the owner thereof
for all purposes and a Partner has no interest in specific Partnership property.
2.2 Name. The name of the Partnership shall be ''Enterprise Products
Partners L.P.'' The Partnership's business may be conducted under any other name
or names deemed necessary or appropriate by the General Partner in its sole
discretion, including the name of the General Partner. The words ''Limited
Partnership,'' ''L.P.,'' ''Ltd.'' or similar words or letters shall be included
in the Partnership's name where necessary for the purpose of complying with the
laws of any jurisdiction that so requires. The General Partner in its discretion
may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular
communication to the Limited Partners.
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the General Partner, the registered office of the
Partnership in the State of Delaware shall be located at 1209 Orange Street, New
Castle County, Wilmington, Delaware 19801, and the registered agent for service
of process on the Partnership in the
C:\My Documents\Mlpagt.wpd
EXECUTION COPY
1
State of Delaware at such registered office shall be The Corporation Trust
Company. The principal office of the Partnership shall be located at P.O. Box
4324, Houston, Texas 77210-4324 or such other place as the General Partner may
from time to time designate by notice to the Limited Partners. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems necessary or appropriate. The address
of the General Partner shall be P.O. Box 4324, Houston, Texas 77210-4324 or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners.
2.4 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be:
(a) to serve as a limited partner in the Operating Partnership and any
of its Subsidiary partnerships and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership as a limited
partner in such partnerships pursuant to the partnership agreements for
such entities or otherwise;
(b) to engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement
to engage indirectly in, any business activity that the Operating
Partnership is permitted to engage in by the Operating Partnership
Agreement and, in connection therewith, to exercise all of the rights and
powers conferred upon the Partnership pursuant to the agreements relating
to such business activity;
(c) to engage directly in, or enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement
to engage indirectly in, any business activity that is approved by the
General Partner and which lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity;
provided, however, that the General Partner determines in good faith, prior
to the conduct of such activity, that the conduct by the Partnership of
such activity is not likely to result in the Partnership being treated as
an association taxable as a corporation for federal income tax purposes;
and
(d) to do anything necessary or appropriate to the foregoing,
including the making of capital contributions or
loans to any Group Member.
The General Partner has no obligation or duty to the Partnership, the Limited
Partners or any Assignee to propose or approve, and in its sole discretion may
decline to propose or approve, the conduct by the Partnership of any business.
2.5 Powers. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
Section 2.4 and for the protection and benefit of the Partnership.
2.6 Power of Attorney.
(a) Each Limited Partner and each Assignee hereby constitutes and appoints
the General Partner and, if a Liquidator (other than the General Partner) shall
have been selected pursuant to Section 12.3, the Liquidator, severally (and any
successor to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, as the
case may be, with full power of substitution, as his true and lawful agent and
attorney-in- fact, with full power and authority in his name, place and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including this Agreement and the Certificate of Limited
Partnership and all amendments or restatements hereof or thereof) that the
General Partner or the Liquidator deems necessary or appropriate to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions
in which the Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the General Partner or
the Liquidator deems necessary or appropriate to reflect, in accordance
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with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments (including
conveyances and a certificate of cancellation) that the General Partner or
the Liquidator deems necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this Agreement;
(D) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the determination
of the rights, preferences and privileges of any class or series of
Partnership Securities issued pursuant to Section 5.6; and (F) all
certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger or consolidation of the
Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all
ballots, consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the discretion of the General
Partner or the Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or
is necessary or appropriate, in the discretion of the General Partner or
the Liquidator, to effectuate the terms or intent of this Agreement;
provided, that when required by Section 13.3 or any other provision of this
Agreement that establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any action, the
General Partner and the Liquidator may exercise the power of attorney made
in this Section 2.6(a)(ii) only after the necessary vote, consent or
approval of the Limited Partners or of the Limited Partners of such class
or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XIII
or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death, incompetency,
disability, incapacity, dissolution, bankruptcy or termination of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the General Partner or the Liquidator acting in good
faith pursuant to such power of attorney; and each such Limited Partner or
Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator deems necessary to effectuate this
Agreement and the purposes of the Partnership.
2.7 Term. The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall
continue in existence until the close of Partnership business on December 31,
2088 or until the earlier termination of the Partnership in accordance with the
provisions of Article XII. The existence of the Partnership as a separate legal
entity shall continue until the cancellation of the Certificate of Limited
Partnership as provided in the Delaware Act.
2.8 Title to Partnership Assets. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partner or Assignee, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership assets for
which record title is held in the name of the General Partner or one or more of
its Affiliates or one or more nominees shall be held by the General Partner or
such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall
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use reasonable efforts to cause record title to such assets (other than those
assets in respect of which the General Partner determines that the expense and
difficulty of conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably
practicable; provided, further, that, prior to the withdrawal or removal of the
General Partner or as soon thereafter as practicable, the General Partner shall
use reasonable efforts to effect the transfer of record title to the Partnership
and, prior to any such transfer, will provide for the use of such assets in a
manner satisfactory to the General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership assets is
held.
ARTICLE III
Rights of Limited Partners
3.1 Limitation of Liability. The Limited Partners and the Assignees shall
have no liability under this Agreement except as expressly provided in this
Agreement or the Delaware Act.
3.2 Management of Business. No Limited Partner or Assignee, in its capacity
as such, shall participate in the operation, management or control (within the
meaning of Section 17-303(a) of the Delaware Act) of the Partnership's business,
transact any business in the Partnership's name or have the power to sign
documents for or otherwise bind the Partnership. Any action taken by any
Affiliate of the General Partner or any officer, director, employee, member,
general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, member, general partner, agent
or trustee of a Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a limited
partner of the Partnership (within the meaning of Section 17-303(a) of the
Delaware Act) and shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
3.3 Outside Activities of the Limited Partners. Subject to the provisions
of Section 7.5, which shall continue to be applicable to the Persons referred to
therein, regardless of whether such Persons shall also be Limited Partners or
Assignees, any Limited Partner or Assignee shall be entitled to and may have
business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities in
direct competition with the Partnership Group. Neither the Partnership nor any
of the other Partners or Assignees shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee.
3.4 Rights of Limited Partners.
(a) In addition to other rights provided by this Agreement or by applicable
law, and except as limited by Section 3.4(b), each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon reasonable written demand and at
such Limited Partner's own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local income tax returns for each year;
(iii) to have furnished to him a current list of the name and last
known business, residence or mailing address of each Partner;
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(iv) to have furnished to him a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto, together
with a copy of the executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash
and a description and statement of the Net Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General
Partner may keep confidential from the Limited Partners and Assignees, for such
period of time as the General Partner deems reasonable, (i) any information that
the General Partner reasonably believes to be in the nature of trade secrets or
(ii) other information the disclosure of which the General Partner in good faith
believes (A) is not in the best interests of the Partnership Group, (B) could
damage the Partnership Group or (C) that any Group Member is required by law or
by agreement with any third party to keep confidential (other than agreements
with Affiliates of the Partnership the primary purpose of which is to circumvent
the obligations set forth in this Section 3.4).
ARTICLE IV
Certificates; Record Holders; Transfer of Partnership Interests;
Redemption of Partnership Interests
4.1 Certificates. Upon the Partnership's issuance of Common Units,
Subordinated Units or Class A Special Units to any Person, the Partnership shall
issue one or more Certificates in the name of such Person evidencing the number
of such Units being so issued. In addition, (a) upon the General Partner's
request, the Partnership shall issue to it one or more Certificates in the name
of the General Partner evidencing its interests in the Partnership and (b) upon
the request of any Person owning any Partnership Securities, the Partnership
shall issue to such Person one or more certificates evidencing such Partnership
Securities. Certificates shall be executed on behalf of the Partnership by the
Chairman of the Board, President or any Executive Vice President or Vice
President and the Secretary or any Assistant Secretary of the General Partner.
No Common Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent. Subject to the requirements of Section
6.7(b), the Partners holding Certificates evidencing Subordinated Units may
exchange such Certificates for Certificates evidencing Common Units on or after
the date on which such Subordinated Units are converted into Common Units
pursuant to the terms of Section 5.8. Subject to the requirements of Section
6.7(b), the Partners holding Certificates evidencing Class A Special Units may
exchange such Certificates for Certificates evidencing Common Units on or after
the date on which such Class A Special Units are converted into Common Units
pursuant to the terms of Section 5.12.
4.2 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the
appropriate officers of the General Partner on behalf of the Partnership shall
execute, and the Transfer Agent shall countersign and deliver in exchange
therefor, a new Certificate evidencing the same number and type of Partnership
Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on behalf of the
Partnership shall execute and deliver, and the Transfer Agent shall countersign
a new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to
the Partnership, that a previously issued Certificate has been lost,
destroyed or stolen;
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(ii) requests the issuance of a new Certificate before the Partnership
has notice that the Certificate has been acquired by a purchaser for value
in good faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to the Partnership a
bond, in form and substance satisfactory to the Partnership, with surety or
sureties and with fixed or open penalty as the Partnership may reasonably
direct, in its sole discretion, to indemnify the Partnership, the Partners,
the General Partner and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Partnership.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Limited Partner Interests represented by the
Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner or Assignee shall
be precluded from making any claim against the Partnership, the General Partner
or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Transfer
Agent) reasonably connected therewith.
4.3 Record Holders. The Partnership shall be entitled to recognize the
Record Holder as the Partner or Assignee with respect to any Partnership
Interest and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Partnership Interest on the part of any other
Person, regardless of whether the Partnership shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation,
guideline or requirement of any National Securities Exchange on which such
Partnership Interests are listed for trading. Without limiting the foregoing,
when a Person (such as a broker, dealer, bank, trust company or clearing
corporation or an agent of any of the foregoing) is acting as nominee, agent or
in some other representative capacity for another Person in acquiring and/or
holding Partnership Interests, as between the Partnership on the one hand, and
such other Persons on the other, such representative Person (a) shall be the
Partner or Assignee (as the case may be) of record and beneficially, (b) must
execute and deliver a Transfer Application and (c) shall be bound by this
Agreement and shall have the rights and obligations of a Partner or Assignee (as
the case may be) hereunder and as, and to the extent, provided for herein.
4.4 Transfer Generally.
(a) The term ''transfer,'' when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its Partnership Interest as a general partner in the
Partnership to another Person who becomes the General Partner, or by which the
holder of a Limited Partner Interest assigns such Limited Partner Interest to
another Person who is or becomes a Limited Partner or an Assignee, and includes
a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a
disposition by any member of the General Partner of any or all of the issued and
outstanding member interests of the General Partner.
4.5 Registration and Transfer of Limited Partner Interests.
(a) The Partnership shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide
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for the registration and transfer of Limited Partner Interests. The Transfer
Agent is hereby appointed registrar and transfer agent for the purpose of
registering Common Units and transfers of such Common Units as herein provided.
The Partnership shall not recognize transfers of Certificates evidencing Limited
Partner Interests unless such transfers are effected in the manner described in
this Section 4.5. Upon surrender of a Certificate for registration of transfer
of any Limited Partner Interests evidenced by a Certificate, and subject to the
provisions of Section 4.5(b), the appropriate officers of the General Partner on
behalf of the Partnership shall execute and deliver, and in the case of Common
Units, the Transfer Agent shall countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Certificates evidencing the same
aggregate number and type of Limited Partner Interests as was evidenced by the
Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9, the Partnership shall not
recognize any transfer of Limited Partner Interests until the Certificates
evidencing such Limited Partner Interests are surrendered for registration of
transfer and such Certificates are accompanied by a Transfer Application duly
executed by the transferee (or the transferee's attorney-in-fact duly authorized
in writing). No charge shall be imposed by the Partnership for such transfer;
provided, that as a condition to the issuance of any new Certificate under this
Section 4.5, the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed with respect
thereto.
(c) Limited Partner Interests may be transferred only in the manner
described in this Section 4.5. The transfer of any Limited Partner Interests and
the admission of any new Limited Partner shall not constitute an amendment to
this Agreement.
(d) Until admitted as a Substituted Limited Partner pursuant to Section
10.2, the Record Holder of a Limited Partner Interest shall be an Assignee in
respect of such Limited Partner Interest. Limited Partners may include
custodians, nominees or any other individual or entity in its own or any
representative capacity.
(e) A transferee of a Limited Partner Interest who has completed and
delivered a Transfer Application shall be deemed to have (i) requested admission
as a Substituted Limited Partner, (ii) agreed to comply with and be bound by and
to have executed this Agreement, (iii) represented and warranted that such
transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set
forth in this Agreement and (v) given the consents and approvals and made the
waivers contained in this Agreement.
(f) The General Partner and its Affiliates shall have the right at any time
to transfer its Subordinated Units, and Common Units (whether issued upon
conversion of the Subordinated Units or otherwise) to one or more Persons.
4.6 Transfer of General Partner Interest.
(a) Subject to Section 4.6(c) below, prior to June 30, 2008, the General
Partner shall not transfer all or any part of its General Partner Interest to a
Person unless such transfer (i) has been approved by the prior written consent
or vote of the holders of at least a majority of the Outstanding Common Units
(excluding any Common Units held by the General Partner and its Affiliates) or
(ii) is of all, but not less than all, of its General Partner Interest to (A) an
Affiliate of the General Partner or (B) another Person in connection with the
merger or consolidation of the General Partner with or into another Person or
the transfer by the General Partner of all or substantially all of its assets to
another Person.
(b) Subject to Section 4.6(c) below, on or after June 30, 2008, the General
Partner may transfer all or any of its General Partner Interest without
Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the
General Partner of all or any part of its General Partner Interest to another
Person shall be permitted unless (i) the transferee agrees to assume the rights
and duties of the General Partner under this Agreement and the Operating
Partnership Agreement and to be bound by the provisions of this Agreement and
the Operating Partnership Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of
any Limited Partner or of any member of
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the Operating Partnership or cause the Partnership or the Operating Partnership
the Operating Partnership or cause the Partnership or the Operating Partnership
to be treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not already so
treated or taxed) and (iii) such transferee also agrees to purchase all (or the
appropriate portion thereof, if applicable) of the partnership interest of the
General Partner as the general partner of each other Group Member. In the case
of a transfer pursuant to and in compliance with this Section 4.6, the
transferee or successor (as the case may be) shall, subject to compliance with
the terms of Section 10.3, be admitted to the Partnership as a General Partner
immediately prior to the transfer of the General Partner Interest, and the
business of the Partnership shall continue without dissolution.
4.7 Restrictions on Transfers.
(a) Except as provided in Section 4.7(d) below, but notwithstanding the
other provisions of this Article IV, no transfer of any Partnership Interests
shall be made if such transfer would (i) violate the then applicable federal or
state securities laws or rules and regulations of the Commission, any state
securities commission or any other governmental authority with jurisdiction over
such transfer, (ii) terminate the existence or qualification of the Partnership
or the Operating Partnership under the laws of the jurisdiction of its
formation, or (iii) cause the Partnership or the Operating Partnership to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes (to the extent not already so treated
or taxed).
(b) The General Partner may impose restrictions on the transfer of
Partnership Interests if a subsequent Opinion of Counsel determines that such
restrictions are necessary to avoid a significant risk of the Partnership or the
Operating Partnership becoming taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes. The restrictions may be imposed by
making such amendments to this Agreement as the General Partner may determine to
be necessary or appropriate to impose such restrictions; provided, however, that
any amendment that the General Partner believes, in the exercise of its
reasonable discretion, could result in the delisting or suspension of trading of
any class of Limited Partner Interests on the principal National Securities
Exchange on which such class of Limited Partner Interests is then traded must be
approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common
Unit shall be subject to the restrictions imposed by Section 6.7(b), and the
transfer of a Class A Special Unit that has been converted into a Common Unit
shall be subject to the restrictions imposed by Section 6.7(b).
(d) Nothing contained in this Article IV, or elsewhere in this Agreement,
shall preclude the settlement of any transactions involving Partnership
Interests entered into through the facilities of any National Securities
Exchange on which such Partnership Interests are listed for trading.
4.8 Citizenship Certificates; Non-citizen Assignees.
(a) If any Group Member is or becomes subject to any federal, state or
local law or regulation that, in the reasonable determination of the General
Partner, creates a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the
General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the nationality, citizenship
or other related status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Citizenship Certification or other requested
information or if upon receipt of such Citizenship Certification or other
requested information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject
to redemption in accordance with the provisions of Section 4.9. In addition, the
General Partner may require that the status of any such Limited Partner or
Assignee be changed to that of a Non-citizen Assignee and, thereupon, the
General
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Partner shall be substituted for such Non-citizen Assignee as the Limited
Partner in respect of his Limited Partner Interests.
(b) The General Partner shall, in exercising voting rights in respect of
Limited Partner Interests held by it on behalf of Non-citizen Assignees,
distribute the votes in the same ratios as the votes of Partners (including
without limitation the General Partner) in respect of Limited Partner Interests
other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have
no right to receive a distribution in kind pursuant to Section 12.4 but shall be
entitled to the cash equivalent thereof, and the Partnership shall provide cash
in exchange for an assignment of the Non-citizen Assignee's share of the
distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen
Assignee of his Limited Partner Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the General
Partner, request admission as a Substituted Limited Partner with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to
Section 4.9, and upon his admission pursuant to Section 10.2, the General
Partner shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee's Limited Partner Interests.
4.9 Redemption of Partnership Interests of Non-citizen Assignees.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 4.8(a), or if upon receipt of such Citizenship
Certification or other information the General Partner determines, with the
advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Partnership may, unless the Limited Partner or Assignee establishes
to the satisfaction of the General Partner that such Limited Partner or Assignee
is an Eligible Citizen or has transferred his Partnership Interests to a Person
who is an Eligible Citizen and who furnishes a Citizenship Certification to the
General Partner prior to the date fixed for redemption as provided below, redeem
the Partnership Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day before the
date fixed for redemption, give notice of redemption to the Limited Partner
or Assignee, at his last address designated on the records of the
Partnership or the Transfer Agent, by registered or certified mail, postage
prepaid. The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for
redemption, the place of payment, that payment of the redemption price will
be made upon surrender of the Certificate evidencing the Redeemable
Interests and that on and after the date fixed for redemption no further
allocations or distributions to which the Limited Partner or Assignee would
otherwise be entitled in respect of the Redeemable Interests will accrue or
be made.
(ii) The aggregate redemption price for Redeemable Interests shall be
an amount equal to the Current Market Price (the date of determination of
which shall be the date fixed for redemption) of Partnership Interests of
the class to be so redeemed multiplied by the number of Partnership
Interests of each such class included among the Redeemable Interests. The
redemption price shall be paid, in the discretion of the General Partner,
in cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate of
10% annually and payable in three equal annual installments of principal
together with accrued interest, commencing one year after the redemption
date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Interests, duly endorsed in blank or
accompanied by an
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assignment duly executed in blank, the Limited Partner or Assignee or his
duly authorized representative shall be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no longer
constitute issued and Outstanding Partnership Interests.
(b) The provisions of this Section 4.9 shall also be applicable to
Partnership Interests held by a Limited Partner or Assignee as nominee of a
Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.9 shall prevent the recipient of a notice of
redemption from transferring his Partnership Interest before the redemption date
if such transfer is otherwise permitted under this Agreement. Upon receipt of
notice of such a transfer, the General Partner shall withdraw the notice of
redemption, provided the transferee of such Partnership Interest certifies to
the satisfaction of the General Partner in a Citizenship Certification delivered
in connection with the Transfer Application that he is an Eligible Citizen. If
the transferee fails to make such certification, such redemption shall be
effected from the transferee on the original redemption date.
ARTICLE V
Capital Contributions and Issuance of Partnership Interests
5.1 Prior Contributions. Prior to the date hereof, the General Partner made
certain Capital Contributions to the Partnership in exchange for an interest in
the Partnership and has been admitted as the General Partner of the Partnership,
and EPC Partners II made certain Capital Contributions to the Partnership in
exchange for an interest in the Partnership and has been admitted as a Limited
Partner of the Partnership.
5.2 Continuation of General Partner and Limited Partner Interests; Initial
Offering; Issuance of Class A Special Units; Contributions by the General
Partner.
(a) The Partnership Interest of the General Partner in the Partnership
shall be continued, subject to all of the rights, privileges and duties of the
General Partner under this Agreement.
(b) On the Closing Date, the Partnership Interest of EPC Partners II in the
Partnership was converted into 33,552,915 Common Units and 21,409,870
Subordinated Units, and such Partnership Interest shall be continued.
(c) All other Partnership Interests that were issued prior to the date
hereof and are currently Outstanding shall be continued.
(d) Upon the issuance of the Class A Special Units (other than the Series
2002B Class A Special Units) and upon the issuance of any additional Limited
Partner Interests by the Partnership, the General Partner shall be required to
make additional Capital Contributions equal to 1/99th of any amount contributed
to the Partnership in exchange for such additional Limited Partner Interests.
Except as set forth in the immediately preceding sentence and Article XII, the
General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
5.3 Contributions by the Underwriters.
(a) On the Closing Date and pursuant to the Underwriting Agreement, each
Underwriter was required to contribute to the Partnership cash in an amount
equal to the Issue Price per Initial Common Unit, multiplied by the number of
Common Units specified in the Underwriting Agreement to be purchased by such
Underwriter at the Closing Date. In exchange for such Capital Contributions by
the Underwriters, the Partnership issued Common Units to each Underwriter
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on whose behalf such Capital Contribution was made in an amount equal to the
quotient obtained by dividing (i) the cash contribution to the Partnership by or
on behalf of such Underwriter by (ii) the Issue Price per Initial Common Unit.
(b) Upon the exercise of the Over-Allotment Option, each Underwriter was
required to contribute to the Partnership cash in an amount equal to the Issue
Price per Initial Common Unit, multiplied by the number of Common Units
specified in the Underwriting Agreement to be purchased by such Underwriter at
the Option Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership issued Common Units to each Underwriter on whose
behalf such Capital Contribution was made in an amount equal to the quotient
obtained by dividing (i) the cash contributions to the Partnership by or on
behalf of such Underwriter by (ii) the Issue Price per Initial Common Unit.
(c) No Limited Partner Partnership Interests were issued or issuable as of
or at the Closing Date other than (i) the Common Units issuable pursuant to
subparagraph (a) hereof in aggregate number equal to 12,000,000, (ii) the
''Option Units'' as such term is used in the Underwriting Agreement in aggregate
number up to 1,800,000 issuable upon exercise of the Over-Allotment Option
pursuant to subparagraph (b) hereof, and (iii) the 33,552,915 Common Units and
21,409,870 Subordinated Units issuable to EPC Partners II pursuant to Section
5.2(b).
(d) On the date hereof, Tejas shall be issued 14,500,000 Class A Special
Units and be admitted as a Limited Partner of the Partnership in exchange for
certain Capital Contributions described in the Tejas Contribution Agreement. If,
but only if, the Year 2000 Performance Test is fully satisfied and met, Tejas
will be issued an additional 3,000,000 Class A Special Units in accordance with
the Year 2000 Performance Test and, if, but only if, the Year 2001 Performance
Test is fully satisfied and met, Tejas will be issued an additional 3,000,000
Class A Special Units in accordance with the Year 2001 Performance Test;
provided, however, that if the Year 2000 Performance Test and/or the Year 2001
Performance Test is not met, the Class A Special Units that would have been but
were not issued pursuant to such tests will be issued to Tejas in accordance
with the Combined Performance Test if, but only if, the Combined Performance
Test is met. In no event shall the aggregate number of Class A Special Units
issued upon satisfaction of the Performance Tests (collectively, the "Series
2002B Class A Special Units") exceed 6,000,000. Upon the issuance of any Series
2002 B Class A Special Units pursuant to this Section 5.3(d), the Net Agreed
Value of Tejas' initial Capital Contribution shall be increased by an amount
equal to the fair market value of such Series 2002B Class A Special Units
discounted at a 5.42% rate to the date hereof.
5.4 Interest and Withdrawal. No interest shall be paid by the Partnership
on Capital Contributions. No Partner or Assignee shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent expressly provided in this
Agreement, no Partner or Assignee shall have priority over any other Partner or
Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of 17-502(b) of the Delaware
Act.
5.5 Capital Accounts.
(a) The Partnership shall maintain for each Partner (or a beneficial owner
of Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and
decreased by (A) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (B) all items of Partnership deduction
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and loss computed in accordance with Section 5.5(b) and allocated with respect
to such Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction which is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by the
General Partner based upon the provisions of the Operating Partnership
Agreement) of all property owned by the Operating Partnership.
(ii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item of deduction
at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under Section
754 of the Code which may be made by the Partnership and, as to those items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes. To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
be taken into account in determining Capital Accounts, the amount of such
adjustment in the Capital Accounts shall be treated as an item of gain or
loss.
(iv) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to the
Partnership's Carrying Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code,
any deductions for depreciation, cost recovery or amortization attributable
to any Contributed Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the Partnership were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section
5.5(d) to the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further deductions for
such depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such property
were equal to the Carrying Value of such property immediately following
such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal income tax
purposes; provided, however, that, if the asset has a zero adjusted basis
for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method
that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost
recovery property is reduced for federal income tax purposes pursuant to
Section 48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall, solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property is placed
in service and shall be allocated among the Partners pursuant to Section
6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
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(c) (i) A transferee of a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Partnership
Interest so transferred.
(ii) Immediately prior to the transfer of (A) a Subordinated Unit or of a
Subordinated Unit that has converted into a Common Unit pursuant to Section 5.8
by a holder thereof (other than a transfer to an Affiliate unless the General
Partner elects to have this subparagraph 5.5(c)(ii) apply) or (B) a Class A
Special Unit that has converted into a Common Unit pursuant to Section 5.12, the
Capital Account maintained for such Person with respect to its Subordinated
Units, converted Subordinated Units or converted Class A Special Units will (x)
first, be allocated to the Subordinated Units, converted Subordinated Units or
converted Class A Special Units to be transferred in an amount equal to the
product of (1) the number of such Subordinated Units, converted Subordinated
Units or converted Class A Special Units to be transferred and (2) the Per Unit
Capital Amount for a Common Unit, and (y) second, any remaining balance in such
Capital Account will be retained by the transferor, regardless of whether it has
retained any Subordinated Units, converted Subordinated Units or converted Class
A Special Units. Following any such allocation, the transferor's Capital
Account, if any, maintained with respect to the retained Subordinated Units,
converted Subordinated Units or converted Class A Special Units, if any, will
have a balance equal to the amount allocated under clause (y) hereinabove, and
the transferee's Capital Account established with respect to the transferred
Subordinated Units, converted Subordinated Units or converted Class A Special
Units will have a balance equal to the amount allocated under clause (x)
hereinabove. If the transferor has not retained any Subordinated Units,
converted Subordinated Units or converted Class A Special Units, any remaining
balance in such Capital Account will be retained by transferor, such Capital
Account interest having rights to receive distributions pursuant to
Section 12.4(c) and being allocated Net Termination Losses pursuant to
Section 6.1(c)(ii)(C).
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for
cash or Contributed Property or the conversion of the General Partner's Combined
Interest to Common Units pursuant to Section 11.3(c), the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately prior
to such issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Section 6.1 in the same manner as any item of
gain or loss actually recognized during such period would have been allocated.
In determining such Unrealized Gain or Unrealized Loss, the aggregate cash
amount and fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the General Partner
using such reasonable method of valuation as it may adopt; provided, however,
that the General Partner, in arriving at such valuation, must take fully into
account the fair market value of the Partnership Interests of all Partners at
such time. The General Partner shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its discretion to
be reasonable) to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of all
Partners and the Carrying Value of all Partnership property shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1 in the same
manner as any item of gain or loss actually recognized during such period would
have been allocated. In determining such Unrealized Gain or Unrealized Loss the
aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of an actual distribution which is not made
pursuant to Section 12.4 or in the case of a deemed contribution and/or
distribution occurring as a result of a termination of the Partnership pursuant
to Section 708 of the Code, be determined and allocated in the same manner as
that provided in Section 5.5(d)(i) or (B) in the case of a liquidating
distribution pursuant to Section 12.4, be determined and allocated by the
Liquidator using such reasonable method of valuation as it may adopt.
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5.6 Issuances of Additional Partnership Securities.
(a) Subject to Section 5.7, the Partnership may issue additional
Partnership Securities and options, rights, warrants and appreciation rights
relating to the Partnership Securities for any Partnership purpose at any time
and from time to time to such Persons for such consideration and on such terms
and conditions as shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner in the
exercise of its sole discretion, including (i) the right to share Partnership
profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership
Security is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (vi) the terms and
conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; and (vii) the right, if any, of each
such Partnership Security to vote on Partnership matters, including matters
relating to the relative rights, preferences and privileges of such Partnership
Security.
(c) The General Partner is hereby authorized and directed to take all
actions that it deems necessary or appropriate in connection with (i) each
issuance of Partnership Securities and options, rights, warrants and
appreciation rights relating to Partnership Securities pursuant to this Section
5.6, (ii) the conversion of the General Partner Interest into Units pursuant to
the terms of this Agreement, (iii) the admission of Additional Limited Partners
and (iv) all additional issuances of Partnership Securities. The General Partner
is further authorized and directed to specify the relative rights, powers and
duties of the holders of the Units or other Partnership Securities being so
issued. The General Partner shall do all things necessary to comply with the
Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities or in connection with the conversion of the General Partner Interest
into Units pursuant to the terms of this Agreement, including compliance with
any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units or
other Partnership Securities are listed for trading.
5.7 Limitations on Issuance of Additional Partnership Securities. The
issuance of Partnership Securities pursuant to Section 5.6 shall be subject to
the following restrictions and limitations:
(a) During the Subordination Period, the Partnership shall not issue
(and shall not issue any options, rights, warrants or appreciation rights
relating to) an aggregate of more than 22,775,000 additional Parity Units
without the prior approval of the holders of a Unit Majority. The Class A
Special Units issued hereunder shall be deemed to be Parity Units. In
applying this limitation, there shall be excluded Common Units and other
Parity Units issued (i) in connection with the exercise of the
Over-Allotment Option, (ii) in accordance with Sections 5.7(b) and 5.7(c),
(iii) upon conversion of Subordinated Units pursuant to Section 5.8, (iv)
upon conversion of Class A Special Units pursuant to Section 5.12, (v) upon
conversion of the General Partner Interest pursuant to Section 11.3(c),
(vi) pursuant to the employee benefit plans of the General Partner, EPC,
the Partnership or any other Group Member and (vii) in the event of a
combination or subdivision of Common Units.
(b) The Partnership may also issue an unlimited number of Parity
Units, prior to the end of the Subordination Period and without the
approval of the Unitholders if such issuance occurs (i) in connection with
an Acquisition or a Capital Improvement or (ii) within 365 days of an
Acquisition or a Capital Improvement where the net proceeds from such
issuance are used to repay debt incurred in connection with such
Acquisition or Capital Improvement, in each case where such Acquisition or
Capital Improvement involves assets that, if acquired by the Partnership as
of the date that is one year prior to the first day of the Quarter in which
such Acquisition is to be
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consummated or such Capital Improvement is to be completed, would have
resulted, on a pro forma basis, in an increase in:
(A) the amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all outstanding Units) with
respect to each of the four most recently completed Quarters (on a pro
forma basis), as compared to
(B) the actual amount of Adjusted Operating Surplus generated by
the Partnership on a per-Unit basis (for all outstanding Units)
(excluding Adjusted Operating Surplus attributable to the Acquisition
or Capital Improvement) with respect to each of such four most
recently completed Quarters.
If the issuance of Units with respect to an Acquisition or Capital
Improvement occurs within the first four full Quarters after the Closing Date,
then Adjusted Operating Surplus as used in clauses (A) (subject to the
succeeding sentence) and (B) above will be calculated (i) for each Quarter, if
any, that commenced after the closing of this offering for which actual results
of operations are available, based on the actual Adjusted Operating Surplus of
the Partnership generated with respect to such Quarter and (ii) for each other
Quarter, on a pro forma basis not inconsistent with the procedures, as
applicable, set forth in Appendix D to the Registration Statement. Furthermore,
the amount in clause (A) shall be determined on a pro forma basis assuming that
(1) all of the Parity Units to be issued in connection with (or as a part of but
within 365 days of) such Acquisition or Capital Improvement had been issued and
outstanding, (2) all indebtedness for borrowed money to be incurred or assumed
in connection with such Acquisition or Capital Improvement (other than any such
indebtedness that is to be repaid with the proceeds of such issuance) had been
incurred or assumed, in each case as of the commencement of such four-Quarter
period, (3) the personnel expenses that would have been incurred by the
Partnership in the operation of the acquired assets are the personnel expenses
for employees to be retained by the Partnership in the operation of the acquired
assets, and (4) the non-personnel costs and expenses are computed on the same
basis as those incurred by the Partnership in the operation of the Partnership's
business at similarly situated Partnership facilities.
(c) During the Subordination Period, the Partnership shall not issue (and
shall not issue any options, rights, warrants or appreciation rights relating
to) additional Partnership Securities having rights to distributions or in
liquidation ranking prior or senior to the Common Units, without the prior
approval of the holders of a Unit Majority.
(d) No fractional Units shall be issued by the Partnership.
5.8 Conversion of Subordinated Units.
(a) A total of 5,352,468 of the Outstanding Subordinated Units will convert
into Common Units on a one-for-one basis on the first day after the Record Date
for distribution in respect of any Quarter ending on or after June 30, 2001, in
respect of which:
(i) distributions under Section 6.4 in respect of all Outstanding
Common Units and Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four- Quarter periods immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly Distribution
on all of the Common Units and Subordinated Units that were Outstanding
during such periods on a fully diluted basis (i.e., taking into account for
purposes of such determination all Outstanding Common Units, all
Outstanding Subordinated Units, all Common Units and Subordinated Units
issuable upon exercise of employee options that have, as of the date of
determination, already vested or are scheduled to vest prior to the end of
the Quarter immediately following the Quarter with respect to which such
determination is made, and all Common
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Units and Subordinated Units that have as of the date of determination,
been earned by but not yet issued to management of the Partnership in
respect of incentive compensation), plus the related distribution on the
General Partner Interest and on the general partner interest in the
Operating Partnership; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units
is zero.
(b) An additional 5,352,468 of the Outstanding Subordinated Units will
convert into Common Units on a one-for- one basis on the first day after the
Record Date for distribution in respect of any Quarter ending on or after June
30, 2002, in respect of which:
(i) distributions under Section 6.4 in respect of all Outstanding
Common Units and Subordinated Units with respect to each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly Distribution
on all of the Outstanding Common Units and Subordinated Units during such
periods;
(ii) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four- Quarter periods immediately preceding
such date equaled or exceeded the sum of the Minimum Quarterly Distribution
on all of the Common Units and Subordinated Units that were outstanding
during such periods on a fully diluted basis (i.e., taking into account for
purposes of such determination all Outstanding Common Units, all
Outstanding Subordinated Units, all Common Units and Subordinated Units
issuable upon exercise of employee options that have, as of the date of
determination, already vested or are scheduled to vest prior to the end of
the Quarter immediately following the Quarter with respect to which such
determination is made, and all Common Units and Subordinated Units that
have as of the date of determination, been earned by but not yet issued to
management of the Partnership in respect of incentive compensation), plus
the related distribution on the General Partner Interest and on the general
partner interest in the Operating Partnership; and
(iii) the Cumulative Common Unit Arrearage on all of the Common Units
is zero;
provided, however, that the conversion of Subordinated Units pursuant to this
Section 5.8(b) may not occur until at least one year following the conversion of
Subordinated Units pursuant to Section 5.8(a).
(c) In the event that less than all of the Outstanding Subordinated Units
shall convert into Common Units pursuant to Section 5.8(a) or 5.8(b) at a time
when there shall be more than one holder of Subordinated Units, then, unless all
of the holders of Subordinated Units shall agree to a different allocation, the
Subordinated Units that are to be converted into Common Units shall be allocated
among the holders of Subordinated Units pro rata based on the number of
Subordinated Units held by each such holder.
(d) Any Subordinated Units that are not converted into Common Units
pursuant to Sections 5.8(a) and (b) shall convert into Common Units on a
one-for-one basis on the first day following the Record Date for distributions
in respect of the final Quarter of the Subordination Period.
(e) Notwithstanding any other provision of this Agreement, all the then
Outstanding Subordinated Units will automatically convert into Common Units on a
one-for-one basis as set forth in, and pursuant to the terms of, Section 11.4.
(f) A Subordinated Unit that has converted into a Common Unit shall be
subject to the provisions of Section 6.7(b).
5.9 Limited Preemptive Right. Except as provided in this Section 5.9, no
Person shall have any preemptive, preferential or other similar right with
respect to the issuance of any Partnership Security, whether unissued, held in
the treasury or hereafter created. The General Partner shall have the right,
which it may from time to time assign in whole or in part to any of its
Affiliates, to purchase Partnership Securities from the Partnership whenever,
and on the same
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terms that, the Partnership issues Partnership Securities to Persons other than
the General Partner and its Affiliates, to the extent necessary to maintain the
Percentage Interests of the General Partner and its Affiliates equal to that
which existed immediately prior to the issuance of such Partnership Securities.
5.10 Splits and Combinations.
(a) Subject to Sections 5.10(d), 6.6 and 6.8 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of
Partnership Securities to all Record Holders or may effect a subdivision or
combination of Partnership Securities so long as, after any such event, each
Partner shall have the same Percentage Interest in the Partnership as before
such event, and any amounts calculated on a per Unit basis (including any Common
Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of
Units (including the number of Subordinated Units that may convert prior to the
end of the Subordination Period, and the number of additional Parity Units that
may be issued pursuant to Section 5.7 without a Unitholder vote, and the number
of Common Units into which Class A Special Units are to be converted pursuant to
Section 5.12) are proportionately adjusted retroactive to the beginning of the
Partnership.
(b) Whenever such a distribution, subdivision or combination of Partnership
Securities is declared, the General Partner shall select a Record Date as of
which the distribution, subdivision or combination shall be effective and shall
send notice thereof at least 20 days prior to such Record Date to each Record
Holder as of a date not less than 10 days prior to the date of such notice. The
General Partner also may cause a firm of independent public accountants selected
by it to calculate the number of Partnership Securities to be held by each
Record Holder after giving effect to such distribution, subdivision or
combination. The General Partner shall be entitled to rely on any certificate
provided by such firm as conclusive evidence of the accuracy of such
calculation.
(c) Promptly following any such distribution, subdivision or combination,
the Partnership may issue Certificates to the Record Holders of Partnership
Securities as of the applicable Record Date representing the new number of
Partnership Securities held by such Record Holders, or the General Partner may
adopt such other procedures as it may deem appropriate to reflect such changes.
If any such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition to the
delivery to a Record Holder of such new Certificate, the surrender of any
Certificate held by such Record Holder immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution,
subdivision or combination of Units. If a distribution, subdivision or
combination of Units would result in the issuance of fractional Units but for
the provisions of Section 5.7(d) and this Section 5.10(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to
the next higher Unit).
5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests. All
Limited Partner Interests issued pursuant to, and in accordance with the
requirements of, this Article V shall be fully paid and non-assessable Limited
Partner Interests in the Partnership, except as such non-assessability may be
affected by Section 17-607 of the Delaware Act.
5.12 Creation and Conversion of Class A Special Units. Pursuant to Section
5.6, the General Partner hereby designates and creates a special class of Units
designated "Class A Special Units" and fixes the designations, preferences and
relative, participating, optional or other special rights, powers and duties of
the holders of the Class A Special Units as follows:
(a) The Class A Special Units shall be divided into four series as set
forth below, and each series of Class A Special Units shall be evidenced by a
distinct Certificate issued in accordance with Section 4.1. The number of Class
A Special Units comprising each series of Class A Special Units shall
automatically convert into Common Units on a one-for-one basis on the date set
forth opposite such number below (the "Class A Special Units Conversation
Dates"):
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(i) 1,000,000 Series 2000 Class A Special Units - the first day
following the Record Date for distribution in respect of the Quarter ended
June 30, 2000;
(ii) 5,000,000 Series 2001 Class A Special Units - the first day
following the Record Date for distribution in respect of the Quarter ended
June 30, 2001;
(iii) 8,500,000 Series 2002 Class A Special Units plus the first
1,000,000 Series 2002B Class A Special Units, if any, issued pursuant to
the second sentence of Section 5.3(d) upon satisfaction of the Performance
Tests -- the first day following the Record Date for distribution in
respect of the Quarter ended June 30, 2002; and
(iv) other than the Series 2002B Class A Special Units converted
pursuant to Section 5.12(a)(iii), the number of Series 2002B Class A
Special Units, if any, issued pursuant to the second sentence of Section
5.3(d) upon satisfaction of the Performance Tests - the first day following
the Record Date for distribution in respect of the Quarter ended June 30,
2003
; provided, however, that notwithstanding the foregoing the Class A Special
Units will not convert or be convertible into Common Units until after such
time as the issuance of such Common Units has been approved by holders of a
majority of the Units (not including for this purpose the Class A Special
Units) present and entitled to vote at a meeting of Unitholders called to
consider and vote upon such issuance.
(b) Except as otherwise provided in this Section 5.12(b), upon conversion
pursuant to Section 5.12(a), Class A Special Units to be converted shall cease
to remain outstanding and shall have no rights or obligations under this
Agreement. Upon a request from the General Partner, Partners holding Class A
Special Units converted pursuant to Section 5.12(a) shall surrender the
Certificates evidencing such Class A Special Units in exchange for Certificates
issued in accordance with Section 4.1.
(c) Except for distributions pursuant to Section 12.4(c) and except as
otherwise expressly provided in this Agreement by reference to the Class A
Special Units, the Class A Special Units shall have no voting rights, rights to
distributions, rights to allocation, rights upon dissolution and liquidation or
other rights with respect to the Partnership.
(d) A Class A Special Unit that has converted into a Common Unit shall be
subject to the provisions of Section 6.7(b).
ARTICLE VI
Allocations and Distributions
6.1 Allocations for Capital Account Purposes. For purposes of maintaining
the Capital Accounts and in determining the rights of the Partners among
themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 5.5(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the special allocations set forth in
Section 6.1(d), Net Income for each taxable year and all items of income, gain,
loss and deduction taken into account in computing Net Income for such taxable
year shall be allocated as follows:
(i) First, 100% to the General Partner in an amount equal to the
aggregate Net Losses allocated to the General Partner pursuant to Section
6.1(b)(iii) for all previous taxable years until the aggregate Net Income
allocated to the General Partner pursuant to this Section 6.1(a)(i) for the
current taxable year and all previous taxable years is equal
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to the aggregate Net Losses allocated to the General Partner pursuant to
Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 1% to the General Partner in an amount equal to the
aggregate Net Losses allocated to the General Partner pursuant to Section
6.1(b)(ii) for all previous taxable years and 99% to Unitholders holding
Common Units and Subordinated Units in accordance with their respective
Percentage Interests, until the aggregate Net Income allocated to such
Partners pursuant to this Section 6.1(a)(ii) for the current taxable year
and all previous taxable years is equal to the aggregate Net Losses
allocated to such Partners pursuant to Section 6.1(b)(ii) for all previous
taxable years; and
(iii) Third, the balance, if any, 100% to the General Partner and
Unitholders holding Common Units and Subordinated Units in accordance with
their respective Percentage Interests.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated as follows:
(i) First, 1% to the General Partner and 99% to Unitholders holding
Common Units and Subordinated Units in accordance with their respective
Percentage Interests, until the aggregate Net Losses allocated pursuant to
this Section 6.1(b)(i) for the current taxable year and all previous
taxable years is equal to the aggregate Net Income allocated to such
Partners pursuant to Section 6.1(a)(iii) for all previous taxable years;
provided that the Net Losses shall not be allocated pursuant to this
Section 6.1(b)(i) to the extent that such allocation would cause any
Unitholder to have a deficit balance in its Adjusted Capital Account at the
end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(ii) Second, 1% to the General Partner and 99% to the Unitholders
holding Common Units and Subordinated Units in accordance with their
respective Percentage Interests; provided, that Net Losses shall not be
allocated pursuant to this Section 6.1(b)(ii) to the extent that such
allocation would cause any Unitholder to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account);
(iii) Third, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 6.1(d), all items of income, gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
6.1 and after all distributions of Available Cash provided under Sections 6.4
and 6.5 have been made; provided, however, that solely for purposes of this
Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized
pursuant to Section 5.5(d)), such Net Termination Gain shall be allocated
among the Partners in the following manner (and the Capital Accounts of the
Partners shall be increased by the amount so allocated in each of the
following subclauses, in the order listed, before an allocation is made
pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its
Capital Account, in the proportion that such deficit balance bears to
the total deficit balances in the Capital Accounts of all Partners,
until each such Partner has been allocated Net Termination Gain equal
to any such deficit balance in its Capital Account;
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(B) Second, if prior to the conversion of the last Outstanding
Class A Special Unit, the Per Unit Capital Amount with respect to a
Class A Special Unit is higher or lower than the Per Unit Capital
Amount with respect to each Common Unit, 99% to the Unitholders
holding Common Units and Class A Special Units in the manner and
amount necessary to equalize, to the maximum extent possible, the Per
Unit Capital Amount with respect to each Common Unit and each Class A
Special Unit, and 1% to the General Partner;
(C) Third, 99% to all Unitholders holding Common Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partner until the Capital Account in respect of each Common
Unit then Outstanding is equal to the sum of (1) its Unrecovered
Capital plus (2) the Minimum Quarterly Distribution for the Quarter
during which the Liquidation Date occurs, reduced by any distribution
pursuant to Section 6.4(a)(i) or (b)(i) with respect to such Common
Unit for such Quarter (the amount determined pursuant to this clause
(2) is hereinafter defined as the ''Unpaid MQD''), plus (3) any then
existing Cumulative Common Unit Arrearage;
(D) Fourth, if such Net Termination Gain is recognized (or is
deemed to be recognized) prior to the expiration of the Subordination
Period, 99% to all Unitholders holding Subordinated Units, in
proportion to their relative Percentage Interests, and 1% to the
General Partner until the Capital Account in respect of each
Subordinated Unit then Outstanding equals the sum of (1) its
Unrecovered Capital, determined for the taxable year (or portion
thereof) to which this allocation of gain relates, plus (2) the
Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to
Section 6.4(a)(iii) with respect to such Subordinated Unit for such
Quarter;
(E) Fifth, 99% to all Unitholders, in accordance with their
relative Percentage Interests, and 1% to the General Partner until the
Capital Account in respect of each Common Unit then Outstanding is
equal to the sum of (1) its Unrecovered Capital, plus (2) the Unpaid
MQD, plus (3) any then existing Cumulative Common Unit Arrearage, plus
(4) the excess of (aa) the First Target Distribution less the Minimum
Quarterly Distribution for each Quarter of the Partnership's existence
over (bb) the cumulative per Unit amount of any distributions of
Operating Surplus that was distributed pursuant to Sections 6.4(a)(iv)
and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus (4) is
hereinafter defined as the ''First Liquidation Target Amount'');
(F) Sixth, 85.8673% to all Unitholders, in accordance with their
relative Percentage Interests, and 14.1327% to the General Partner
until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the First Liquidation Target
Amount, plus (2) the excess of (aa) the Second Target Distribution
less the First Target Distribution for each Quarter of the
Partnership's existence over (bb) the cumulative per Unit amount of
any distributions of Operating Surplus that was distributed pursuant
to Sections 6.4(a)(v) and 6.4(b)(iii) (the sum of (1) plus (2) is
hereinafter defined as the ''Second Liquidation Target Amount'');
(G) Seventh, 75.7653% to all Unitholders, in accordance with
their relative Percentage Interests, and 24.2347% to the General
Partner until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) the Second Liquidation Target
Amount, plus (2) the excess of (aa) the Third Target Distribution less
the Second Target Distribution for each Quarter of the Partnership's
existence over (bb) the cumulative per Unit amount of any
distributions of Operating Surplus that was distributed pursuant to
Sections 6.4(a)(vi) and 6.4(b)(iv); and
(H) Finally, any remaining amount 50.5102% to all Unitholders, in
accordance with their relative Percentage Interests, and 49.4898% to
the General Partner.
(ii) If a Net Termination Loss is recognized (or deemed recognized
pursuant to Section 5.5(d)), such Net Termination Loss shall be allocated
among the Partners in the following manner (and the Capital Accounts of the
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Partners shall be decreased by the amount so allocated in each of the
following subclauses, in the order listed, before an allocation is made
pursuant to the next succeeding subclause):
(A) First, prior to the conversion of the last Outstanding
Subordinated Unit, 99% to the Unitholders holding Subordinated Units,
in proportion to their relative Percentage Interests, and 1% to the
General Partner until the Capital Account in respect of each
Subordinated Unit then Outstanding has been reduced to zero;
(B) Second, if, prior to the conversion of the last Outstanding
Class A Special Unit, the Per Unit Capital Amount with respect to a
Class A Special Unit is higher or lower than the Per Unit Capital
Amount with respect to each Common Unit, 99% to the Unitholders
holding Common Units and Class A Special Units in the manner and
amount necessary to equalize, to the maximum extent possible, the Per
Unit Capital Amount with respect to each Common Unit and each Class A
Special Unit, and 1% to the General Partner;
(C) Third, 99% to all Unitholders holding Common Units and Class
A Special Units and to holders of Capital Account interests described
in the last sentence of Section 5.5(c)(ii), in proportion to their
relative Capital Account balances and 1% to the General Partner until
the Capital Account in respect of each Common Unit and Class A Special
Unit then Outstanding has been reduced to zero; and
(D) Fourth, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this
Section 6.1, the following special allocations shall be made for such taxable
period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 6.1, if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d) with respect to such taxable period (other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section
6.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall
be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.1 (other than
Section 6.1(d)(i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 6.1(d), each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with respect to
such taxable period. This Section 6.1(d)(ii) is intended to comply with the
chargeback of items of income and gain requirement in Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to Section
12.4) to any Unitholder with respect to its Units for a taxable year
is greater
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(on a per Unit basis) than the amount of cash or the Net Agreed Value
of property distributed to the other Unitholders with respect to their
Units (on a per Unit basis), then (1) each Unitholder receiving such
greater cash or property distribution shall be allocated gross income
in an amount equal to the product of (aa) the amount by which the
distribution (on a per Unit basis) to such Unitholder exceeds the
distribution (on a per Unit basis) to the Unitholders receiving the
smallest distribution and (bb) the number of Units owned by the
Unitholder receiving the greater distribution; and (2) the General
Partner shall be allocated gross income in an aggregate amount equal
to 1/99 of the sum of the amounts allocated in clause (1) above.
(B) After the application of Section 6.1(d)(iii)(A), all or any
portion of the remaining items of Partnership gross income or gain for
the taxable period, if any, shall be allocated 100% to the General
Partner, until the aggregate amount of such items allocated to the
General Partner pursuant to this paragraph 6.1(d)(iii)(B) for the
current taxable year and all previous taxable years is equal to the
cumulative amount of all Incentive Distributions made to the General
Partner from the Closing Date to a date 45 days after the end of the
current taxable year.
(iv) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704- 1(b)(2)(ii)(d)(6), items of Partnership
income and gain shall be specially allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the Treasury
Regulations promulgated under Section 704(b) of the Code, the deficit
balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible unless
such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).
(v) Gross Income Allocations. In the event any Partner has a deficit
balance in its Capital Account at the end of any Partnership taxable period
in excess of the sum of (A) the amount such Partner is required to restore
pursuant to the provisions of this Agreement and (B) the amount such
Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially
allocated items of Partnership gross income and gain in the amount of such
excess as quickly as possible; provided, that an allocation pursuant to
this Section 6.1(d)(v) shall be made only if and to the extent that such
Partner would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been
tentatively made as if this Section 6.1(d)(v) were not in this Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its
good faith discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of the Code, the
General Partner is authorized, upon notice to the other Partners, to revise
the prescribed ratio to the numerically closest ratio that does satisfy
such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any taxable period shall be allocated 100% to the Partner that bears
the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance
with Treasury Regulation Section 1.704-2(i). If more than one Partner bears
the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated
between or among such Partners in accordance with the ratios in which they
share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of
the Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
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(ix) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704- 1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Section of the Treasury Regulations.
(x) Economic Uniformity. (A) With respect to any taxable period ending
upon, or after, a Class A Special Unit Conversion Date, all or a portion of
the remaining items of Partnership gross income or gain for such taxable
period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to the Partner holding Class A Special
Units that have been converted to Common Units pursuant to Section 5.12,
until such Partner has been allocated an amount of gross income or gain
that increases the Capital Account maintained with respect to such
converted Class A Special Units to an amount equal to the product of (1)
the number of converted Class A Special Units held by such Partner and (2)
the Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts
underlying converted Class A Special Units and the Capital Accounts
underlying Common Units held by Persons other than the General Partner and
its Affiliates immediately prior to the conversion of such Class A Special
Units into Common Units. This allocation method for establishing such
economic uniformity will only be available if the method for allocating the
Capital Account maintained with respect to the Class A Special Units
between the transferred and retained Class A Special Units pursuant to
Section 5.5(c)(ii) does not otherwise provide such economic uniformity to
the converted Class A Special Units; (B) at the election of the General
Partner with respect to any taxable period ending upon, or after, the
termination of the Subordination Period, all or a portion of the remaining
items of Partnership gross income or gain for such taxable period, after
taking into account allocations pursuant to Sections 6.1(d)(iii) and
6.1(d)(x)(A), shall be allocated 100% to each Partner holding Subordinated
Units that are Outstanding as of the termination of the Subordination
Period (''Final Subordinated Units'') in the proportion of the number of
Final Subordinated Units held by such Partner to the total number of Final
Subordinated Units then Outstanding, until each such Partner has been
allocated an amount of gross income or gain which increases the Capital
Account maintained with respect to such Final Subordinated Units to an
amount equal to the product of (1) the number of Final Subordinated Units
held by such Partner and (2) the Per Unit Capital Amount for a Common Unit.
The purpose of this allocation is to establish uniformity between the
Capital Accounts underlying Final Subordinated Units and the Capital
Accounts underlying Common Units held by Persons other than the General
Partner and its Affiliates immediately prior to the conversion of such
Final Subordinated Units into Common Units. This allocation method for
establishing such economic uniformity will only be available to the General
Partner if the method for allocating the Capital Account maintained with
respect to the Subordinated Units between the transferred and retained
Subordinated Units pursuant to Section 5.5(c)(ii) does not otherwise
provide such economic uniformity to the Final Subordinated Units.
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this Section 6.1,
other than the Required Allocations, the Required Allocations shall be
taken into account in making the Agreed Allocations so that, to the
extent possible, the net amount of items of income, gain, loss and
deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to
the net amount of such items that would have been allocated to each
such Partner under the Agreed Allocations had the Required Allocations
and the related Curative Allocation not otherwise been provided in
this Section 6.1. Notwithstanding the preceding sentence, Required
Allocations relating to (1) Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a
decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
pursuant to this Section 6.1(d)(xi)(A) shall only be made with respect
to Required Allocations to the extent the General Partner reasonably
determines that such
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allocations will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this Section
6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant
to clauses (1) and (2) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be offset by
subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of Section
6.1(d)(xi)(A) in whatever order is most likely to minimize the
economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to
Section 6.1(d)(xi)(A) among the Partners in a manner that is likely to
minimize such economic distortions.
6.2 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of ''book'' income, gain,
loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided under
Section 704(c) of the Code that takes into account the variation between
the Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of ''book'' gain or
loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2)
second, in the event such property was originally a Contributed Property,
be allocated among the Partners in a manner consistent with Section
6.2(b)(i)(A); and (B) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of ''book'' gain or loss is
allocated pursuant to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury
Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Limited Partner Interests (or any class or
classes thereof), the General Partner shall have sole discretion to (i) adopt
such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of this
Agreement as appropriate (A) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (B) otherwise
to preserve or achieve uniformity of the Limited Partner Interests (or any class
or classes thereof). The General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not
have a material adverse effect on the Partners, the holders of any class or
classes of Limited Partner Interests issued and Outstanding or the Partnership,
and if such allocations are consistent with the principles of Section 704 of the
Code.
(d) The General Partner in its discretion may determine to depreciate or
amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the
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unamortized Book-Tax Disparity) using a predetermined rate derived from the
depreciation or amortization method and useful life applied to the Partnership's
common basis of such property, despite any inconsistency of such approach with
Proposed Treasury Regulation Section 1.168-2(n), Treasury Regulation Section
1.167(c)-l(a)(6) or Proposed Treasury Regulation Section 1.197-2(g)(3). If the
General Partner determines that such reporting position cannot reasonably be
taken, the General Partner may adopt depreciation and amortization conventions
under which all purchasers acquiring Limited Partner Interests in the same month
would receive depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in the Partnership's
property. If the General Partner chooses not to utilize such aggregate method,
the General Partner may use any other reasonable depreciation and amortization
conventions to preserve the uniformity of the intrinsic tax characteristics of
any Limited Partner Interests that would not have material adverse effect on the
Limited Partners or the Record Holders of any class or classes of Limited
Partner Interests.
(e) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 6.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction attributable
to a transferred Partnership Interest, shall for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the principal National Securities
Exchange on which the Common Units are then traded on the first Business Day of
each month; provided, however, that such items for the period beginning on the
Closing Date and ending on the last day of the month in which the Option Closing
Date or the expiration of the Over-allotment Option occurs shall be allocated to
the Partners as of the opening of the Nasdaq National Market on the first
Business Day of the next succeeding month; and provided, further, that gain or
loss on a sale or other disposition of any assets of the Partnership other than
in the ordinary course of business shall be allocated to the Partners as of the
opening of the Nasdaq National Market (or such other National Securities
Exchange on which the Common Units are then primarily traded) on the first
Business Day of the month in which such gain or loss is recognized for federal
income tax purposes. The General Partner may revise, alter or otherwise modify
such methods of allocation as it determines necessary, to the extent permitted
or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
Limited Partner Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion.
6.3 Requirement and Characterization of Distributions; Distributions to
Record Holders.
(a) Within 45 days following the end of each Quarter commencing with the
Quarter ending on September 30, 1998, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 17-607 of the Delaware
Act, be distributed in accordance with this Article VI by the Partnership to the
Partners as of the Record Date selected by the General Partner in its reasonable
discretion. All amounts of Available Cash distributed by the Partnership on any
date from any source shall be deemed to be Operating Surplus until the sum of
all amounts of Available Cash theretofore distributed by the Partnership to the
Partners pursuant to Section 6.4 equals the Operating Surplus from the
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Closing Date through the close of the immediately preceding Quarter. Any
remaining amounts of Available Cash distributed by the Partnership on such date
shall, except as otherwise provided in Section 6.5, be deemed to be ''Capital
Surplus.'' All distributions required to be made under this Agreement shall be
made subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and
liquidation of the Partnership, all receipts received during or after the
Quarter in which the Liquidation Date occurs, other than from borrowings
described in (a)(ii)(A) of the definition of Available Cash, shall be applied
and distributed solely in accordance with, and subject to the terms and
conditions of, Section 12.4.
(c) The General Partner shall have the discretion to treat taxes paid by
the Partnership on behalf of, or amounts withheld with respect to, all or less
than all of the Partners, as a distribution of Available Cash to such Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by
the Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holder of such Partnership Interest as of
the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Partnership's liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
6.4 Distributions of Available Cash from Operating Surplus.
(a) During Subordination Period. Available Cash with respect to any Quarter
within the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5 shall, subject to Section 17- 607 of the
Delaware Act, be distributed as follows, except as otherwise required by Section
5.6(b) in respect of additional Partnership Securities issued pursuant thereto:
(i) First, 99% to the Unitholders holding Common Units, Pro Rata, and
1% to the General Partner until there has been distributed in respect of
each Common Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(ii) Second, 99% to the Unitholders holding Common Units, Pro Rata,
and 1% to the General Partner until there has been distributed in respect
of each Common Unit then Outstanding an amount equal to the Cumulative
Common Unit Arrearage existing with respect to such Quarter;
(iii) Third, 99% to the Unitholders holding Subordinated Units, Pro
Rata, and 1% to the General Partner until there has been distributed in
respect of each Subordinated Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, 99% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 1% to the General
Partner until there has been distributed in respect of each such Unit then
Outstanding an amount equal to the excess of the First Target Distribution
over the Minimum Quarterly Distribution for such Quarter;
(v) Fifth, 85.8673% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 14.1327% to the
General Partner until there has been distributed in respect of each such
Unit then Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution for such Quarter;
(vi) Sixth, 75.7653% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 24.2347% to the
General Partner until there has been distributed in respect of each such
Unit
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then Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution for such Quarter; and
(vii) Thereafter, 50.5102% to all Unitholders holding Common Units and
all Unitholders holding Subordinated Units, Pro Rata, and 49.4898% to the
General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).
(b) After Subordination Period. Available Cash with respect to any Quarter
after the Subordination Period that is deemed to be Operating Surplus pursuant
to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of the
Delaware Act, shall be distributed as follows, except as otherwise required by
Section 5.6(b) in respect of additional Partnership Securities issued pursuant
thereto:
(i) First, 99% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 1% to the General
Partner until there has been distributed in respect of each such Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(ii) Second, 99% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 1% to the General
Partner until there has been distributed in respect of each such Unit then
Outstanding an amount equal to the excess of the First Target Distribution
over the Minimum Quarterly Distribution for such Quarter;
(iii) Third, 85.8673% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 14.1327% to the
General Partner until there has been distributed in respect of each such
Unit then Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution for such Quarter;
(iv) Fourth, 75.7653% to all Unitholders holding Common Units and all
Unitholders holding Subordinated Units, Pro Rata, and 24.2347% to the
General Partner until there has been distributed in respect of each such
Unit then Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution for such Quarter; and
(v) Thereafter, 50.5102% to all Unitholders holding Common Units and
all Unitholders holding Subordinated Units, Pro Rata, and 49.4898% to the
General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution
have been reduced to zero pursuant to the second sentence of Section 6.6(a), the
distribution of Available Cash that is deemed to be Operating Surplus with
respect to any Quarter will be made solely in accordance with Section 6.4(b)(v).
6.5 Distributions of Available Cash from Capital Surplus. Available Cash
that is deemed to be Capital Surplus pursuant to the provisions of Section
6.3(a) shall, subject to Section 17-607 of the Delaware Act, be distributed,
unless the provisions of Section 6.3 require otherwise, 99% to all Unitholders
holding Common Units and all Unitholders holding Subordinated Units, Pro Rata,
and 1% to the General Partner until a hypothetical holder of a Common Unit
acquired on the Closing Date has received with respect to such Common Unit,
during the period since the Closing Date through such date, distributions of
Available Cash that are deemed to be Capital Surplus in an aggregate amount
equal to the Initial Unit Price. Available Cash that is deemed to be Capital
Surplus shall then be distributed 99% to all Unitholders holding Common Units,
Pro Rata, and 1% to the General Partner until there has been distributed in
respect
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of each Common Unit then Outstanding an amount equal to the Cumulative Common
Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it
were Operating Surplus and shall be distributed in accordance with Section 6.4.
6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution, Third Target Distribution, Common Unit Arrearages and
Cumulative Common Unit Arrearages shall be proportionately adjusted in the event
of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 5.10. In the event of a distribution of
Available Cash that is deemed to be from Capital Surplus, the then applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be adjusted proportionately
downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution, as the case may be, by a fraction of
which the numerator is the Unrecovered Capital of the Common Units immediately
after giving effect to such distribution and of which the denominator is the
Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 6.8.
6.7 Special Provisions Relating to the Holders of Subordinated Units and
Class A Special Units.
(a) Except with respect to the right to vote on or approve matters
requiring the vote or approval of a percentage of the holders of Outstanding
Common Units and the right to participate in allocations of income, gain, loss
and deduction and distributions made with respect to Common Units, the holder of
a Subordinated Unit shall have all of the rights and obligations of a Unitholder
holding Common Units hereunder; provided, however, that immediately upon the
conversion of Subordinated Units into Common Units pursuant to Section 5.8, the
Unitholder holding a Subordinated Unit so converted shall possess all of the
rights and obligations of a Unitholder holding Common Units hereunder, including
the right to vote as a Common Unitholder and the right to participate in
allocations of income, gain, loss and deduction and distributions made with
respect to Common Units; provided, however, that such converted Subordinated
Units shall remain subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x)
and 6.7(b).
(b) The Unitholder holding a Subordinated Unit or a Class A Special Unit
which has converted into a Common Unit pursuant to Section 5.8 or Section 5.12,
respectively, shall not be issued a Common Unit Certificate pursuant to
Section 4.1, and shall not be permitted to transfer its converted Subordinated
Units or Class A Special Units to a Person which is not an Affiliate of the
holder until such time as the General Partner determines, based on advice of
counsel, that a converted Subordinated Unit or Class A Special Unit should have,
as a substantive matter, like intrinsic economic and federal income tax
characteristics, in all material respects, to the intrinsic economic and federal
income tax characteristics of an Initial Common Unit. In connection with the
condition imposed by this Section 6.7(b), the General Partner may take whatever
reasonable steps are required to provide economic uniformity to the converted
Subordinated Units or Class A Special Units in preparation for a transfer of
such converted Subordinated Units or Class A Special Units, including the
application of Sections 5.5(c)(ii) and 6.1(d)(x); provided, however, that no
such steps may be taken that would have a material adverse effect on the
Unitholders holding Common Units represented by Common Unit Certificates.
(c) Immediately upon the conversion of Class A Special Units into Common
Units pursuant to Section 5.12, the Unitholder holding a Class A Special Unit so
converted shall possess all of the rights and obligations of a Unitholder
holding Common Units hereunder, including the right to vote as a Common
Unitholder and the right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units; provided,
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however, that such converted Class A Special Units shall remain subject to the
provisions of Sections 5.5(c)(ii), 6.1(d)(x)(A) and 6.7(b).
6.8 Entity-Level Taxation. If legislation is enacted or the interpretation
of existing language is modified by the relevant governmental authority which
causes the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise subjects the Partnership or
the Operating Partnership to entity-level taxation for federal income tax
purposes, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall be
adjusted to equal the product obtained by multiplying (a) the amount thereof by
(b) one minus the sum of (i) the highest marginal federal corporate (or other
entity, as applicable) income tax rate of the Partnership or the Operating
Partnership for the taxable year of the Partnership or the Operating Partnership
in which such Quarter occurs (expressed as a percentage) plus (ii) the effective
overall state and local income tax rate (expressed as a percentage) applicable
to the Partnership or the Operating Partnership for the calendar year next
preceding the calendar year in which such Quarter occurs (after taking into
account the benefit of any deduction allowable for federal income tax purposes
with respect to the payment of state and local income taxes), but only to the
extent of the increase in such rates resulting from such legislation or
interpretation. Such effective overall state and local income tax rate shall be
determined for the taxable year next preceding the first taxable year during
which the Partnership or the Operating Partnership is taxable for federal income
tax purposes as an association taxable as a corporation or is otherwise subject
to entity-level taxation by determining such rate as if the Partnership or the
Operating Partnership had been subject to such state and local taxes during such
preceding taxable year.
ARTICLE VII
Management and Operation of Business
7.1 Management.
(a) The General Partner shall conduct, direct and manage all activities of
the Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3, shall have full power and authority to do all
things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 2.5 and to effectuate the purposes set forth in Section
2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money,
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness, including
indebtedness that is convertible into Partnership Securities, and the
incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or
the merger or other combination of the Partnership with or into another
Person (the matters described in this clause (iii) being subject, however,
to any prior approval that may be required by Section 7.3);
(iv) the use of the assets of the Partnership (including cash on hand)
for any purpose consistent with the terms of this Agreement, including the
financing of the conduct of the operations of the Partnership Group;
subject to
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Section 7.6(a), the lending of funds to other Persons (including the
Operating Partnership); the repayment of obligations of the Partnership
Group; and the making of capital contributions to any member of the
Partnership Group;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Partnership under contractual arrangements to all or
particular assets of the Partnership, with the other party to the contract
to have no recourse against the General Partner or its assets other than
its interest in the Partnership, even if same results in the terms of the
transaction being less favorable to the Partnership than would otherwise be
the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees
having titles such as ''president,'' ''vice president,'' ''secretary'' and
''treasurer'') and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(viii) the maintenance of such insurance for the benefit of the
Partnership Group and the Partners as it deems necessary or appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further limited or
general partnerships, joint ventures, corporations or other relationships
(including the acquisition of interests in, and the contributions of
property to, the Operating Partnership from time to time) subject to the
restrictions set forth in Section 2.4;
(x) the control of any matters affecting the rights and obligations of
the Partnership, including the bringing and defending of actions at law or
in equity and otherwise engaging in the conduct of litigation and the
incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with any National
Securities Exchange and the delisting of some or all of the Limited Partner
Interests from, or requesting that trading be suspended on, any such
exchange (subject to any prior approval that may be required under Section
4.8);
(xiii) unless restricted or prohibited by Section 5.7, the purchase,
sale or other acquisition or disposition of Partnership Securities, or the
issuance of additional options, rights, warrants and appreciation rights
relating to Partnership Securities; and
(xiv) the undertaking of any action in connection with the
Partnership's participation in the Operating Partnership as a partner or
any other Group Member as a partner or equity owner, as applicable.
(b) Notwithstanding any other provision of this Agreement, the Operating
Partnership Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who may
acquire an interest in Partnership Securities hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of the
Operating Partnership Agreement, the Underwriting Agreement, the EPCO Agreement,
and the other agreements described in or filed as a part of the Registration
Statement that are related to the transactions contemplated by the Registration
Statement; (ii) agrees that the General Partner (on its own or through any
officer of the Partnership) is authorized to execute, deliver and perform the
agreements referred to in clause (i) of this sentence and the other agreements,
acts, transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Partnership Securities; and (iii) agrees that the execution,
delivery or performance by
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the General Partner, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement authorized or permitted under this Agreement
(including the exercise by the General Partner or any Affiliate of the General
Partner of the rights accorded pursuant to Article XV), shall not constitute a
breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or the Assignees or any other Persons under
this Agreement (or any other agreements) or of any duty stated or implied by law
or equity.
7.2 Certificate of Limited Partnership. The General Partner has caused the
Certificate of Limited Partnership to be filed with the Secretary of State of
the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership or other entity in which the limited partners have limited
liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate of Limited
Partnership, any qualification document or any amendment thereto to any Limited
Partner.
7.3 Restrictions on General Partner's Authority.
(a) The General Partner may not, without written approval of the specific
act by holders of all of the Outstanding Limited Partner Interests (other than
the Class A Special Units) or by other written instrument executed and delivered
by holders of all of the Outstanding Limited Partner Interests (other than the
Class A Special Units) subsequent to the date of this Agreement, take any action
in contravention of this Agreement, including, except as otherwise provided in
this Agreement, (i) committing any act that would make it impossible to carry on
the ordinary business of the Partnership; (ii) possessing Partnership property,
or assigning any rights in specific Partnership property, for other than a
Partnership purpose; (iii) admitting a Person as a Partner; (iv) amending this
Agreement in any manner; or (v) transferring its interest as general partner of
the Partnership.
(b) Except as provided in Articles XII and XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
or approve on behalf of the Partnership the sale, exchange or other disposition
of all or substantially all of the assets of the Partnership or the Operating
Partnership, without the approval of holders of a Unit Majority; provided
however that this provision shall not preclude or limit the General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in all or
substantially all of the assets of the Partnership or the Operating Partnership
and shall not apply to any forced sale of any or all of the assets of the
Partnership or the Operating Partnership pursuant to the foreclosure of, or
other realization upon, any such encumbrance. Without the approval of holders of
a Unit Majority, the General Partner shall not, on behalf of the Partnership,
(i) consent to any amendment to the Operating Partnership Agreement or, except
as expressly permitted by Section 7.9(d), take any action permitted to be taken
by a partner of the Operating Partnership, in either case, that would have a
material adverse effect on the Partnership as a partner of the Operating
Partnership or (ii) except as permitted under Sections 4.6, 11.1 and 11.2, elect
or cause the Partnership to elect a successor general partner of the Partnership
or the Operating Partnership.
7.4 Reimbursement of the General Partner.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement
or in the Operating Partnership Agreement, the General Partner shall not be
compensated for its services as general partner of the Partnership or any Group
Member.
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(b) Subject to any applicable limitations contained in the EPCO Agreement,
the General Partner shall be reimbursed on a monthly basis, or such other
reasonable basis as the General Partner may determine in its sole discretion,
for (i) all direct and indirect expenses it incurs or payments it makes on
behalf of the Partnership (including amounts paid by the General Partner to EPC
under the EPCO Agreement and including salary, bonus, incentive compensation and
other amounts paid to any Person, including Affiliates of the General Partner,
to perform services for the Partnership or for the General Partner in the
discharge of its duties to the Partnership), and (ii) all other necessary or
appropriate expenses allocable to the Partnership or otherwise reasonably
incurred by the General Partner in connection with operating the Partnership's
business (including expenses allocated to the General Partner by its
Affiliates). The General Partner shall determine the expenses that are allocable
to the Partnership in any reasonable manner determined by the General Partner in
its sole discretion. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
(c) Subject to Section 5.7, the General Partner, in its sole discretion and
without the approval of the Limited Partners (who shall have no right to vote in
respect thereof), may propose and adopt on behalf of the Partnership employee
benefit and incentive plans, employee programs and employee practices (including
plans, programs and practices involving the issuance of Partnership Securities
or options to purchase Partnership Securities), or cause the Partnership to
issue Partnership Securities in connection with, or pursuant to, any employee
benefit plan, employee program or employee practice maintained or sponsored by
the General Partner or any of its Affiliates, in each case for the benefit of
employees of the General Partner, any Group Member or any Affiliate, or any of
them, in respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. The Partnership agrees to issue and sell to the
General Partner or any of its Affiliates any Partnership Securities that the
General Partner or such Affiliate is obligated to provide to any employees
pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such
plans, programs and practices (including the net cost to the General Partner or
such Affiliate of Partnership Securities purchased by the General Partner or
such Affiliate from the Partnership to fulfill options or awards under such
plans, programs and practices) shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partner under any
employee benefit or incentive plans, employee programs or employee practices
adopted by the General Partner as permitted by this Section 7.4(c) shall
constitute obligations of the General Partner hereunder and shall be assumed by
any successor General Partner approved pursuant to Section 11.1 or 11.2 or the
transferee of or successor to all of the General Partner's Partnership Interest
as the General Partner in the Partnership pursuant to Section 4.6.
7.5 Outside Activities.
(a) After the Closing Date, the General Partner, for so long as it is the
general partner of the Partnership (i) agrees that its sole business will be to
act as the general partner or managing member of the Partnership, the Operating
Partnership, and any other partnership or limited liability company of which the
Partnership or the Operating Partnership is, directly or indirectly, a partner
or managing member and to undertake activities that are ancillary or related
thereto (including being a limited partner in the partnership), (ii) shall not
engage in any business or activity or incur any debts or liabilities except in
connection with or incidental to (A) its performance as general partner or
managing member of one or more Group Members or as described in or contemplated
by the Registration Statement or (B) the acquiring, owning or disposing of debt
or equity securities in any Group Member and (iii) except to the extent
permitted by the EPCO Agreement, shall not, and shall cause its Affiliates not
to, engage in any Restricted Activity.
(b) EPC has entered into the EPCO Agreement with the Partnership and the
Operating Partnership, which agreement sets forth certain restrictions on the
ability of EPC and its Affiliates to engage in Restricted Activities.
(c) Except as specifically restricted by Section 7.5(a) and the EPCO
Agreement, each Indemnitee (other than the General Partner) shall have the right
to engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by any Group Member, independently or with others,
including business interests and activities in direct competition with the
business and activities of any Group Member, and none
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of the same shall constitute a breach of this Agreement or any duty express or
implied by law to any Group Member or any Partner or Assignee. Neither any Group
Member, any Limited Partner nor any other Person shall have any rights by virtue
of this Agreement, the Operating Partnership Agreement or the partnership
relationship established hereby or thereby in any business ventures of any
Indemnitee.
(d) Subject to the terms of the EPCO Agreement and Section 7.5(a), 7.5(b),
and 7.5(c) and the EPCO Agreement, but otherwise notwithstanding anything to the
contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitees (other than the General Partner) in accordance with the provisions
of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii)
it shall be deemed not to be a breach of the General Partner's fiduciary duty or
any other obligation of any type whatsoever of the General Partner for the
Indemnitees (other than the General Partner) to engage in such business
interests and activities in preference to or to the exclusion of the Partnership
and (iii) the General Partner and the Indemnitees shall have no obligation to
present business opportunities to the Partnership.
(e) The General Partner and any of its Affiliates may acquire Partnership
Securities in addition to those acquired on the Closing Date and, except as
otherwise provided in this Agreement, shall be entitled to exercise all rights
of the General Partner or Limited Partner, as applicable, relating to such
Partnership Securities.
(f) The term ''Affiliates'' when used in Sections 7.5(a) and 7.5(b) with
respect to the General Partner shall not include any Group Member or any
Subsidiary of the Group Member.
7.6 Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates; Certain Restrictions on the General
Partner.
(a) The General Partner or its Affiliates may lend to any Group Member, and
any Group Member may borrow from the General Partner or any of its Affiliates,
funds needed or desired by the Group Member for such periods of time and in such
amounts as the General Partner may determine; provided, however, that in any
such case the lending party may not charge the borrowing party interest at a
rate greater than the rate that would be charged the borrowing party or impose
terms less favorable to the borrowing party than would be charged or imposed on
the borrowing party by unrelated lenders on comparable loans made on an
arm's-length basis (without reference to the lending party's financial abilities
or guarantees). The borrowing party shall reimburse the lending party for any
costs (other than any additional interest costs) incurred by the lending party
in connection with the borrowing of such funds. For purposes of this Section
7.6(a) and Section 7.6(b), the term ''Group Member'' shall include any Affiliate
of a Group Member that is controlled by the Group Member. No Group Member may
lend funds to the General Partner or any of its Affiliates (other than another
Group Member).
(b) The Partnership may lend or contribute to any Group Member, and any
Group Member may borrow from the Partnership, funds on terms and conditions
established in the sole discretion of the General Partner; provided, however,
that the Partnership may not charge the Group Member interest at a rate less
than the rate that would be charged to the Group Member (without reference to
the General Partner's financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised by the General
Partner in its sole discretion and shall not create any right or benefit in
favor of any Group Member or any other Person.
(c) The General Partner may itself, or may enter into an agreement, in
addition to the EPCO Agreement, with any of its Affiliates to, render services
to a Group Member or to the General Partner in the discharge of its duties as
general partner of the Partnership. Any services rendered to a Group Member by
the General Partner or any of its Affiliates shall be on terms that are fair and
reasonable to the Partnership; provided, however, that the requirements of this
Section 7.6(c) shall be deemed satisfied as to (i) any transaction approved by
Special Approval, (ii) any transaction, the terms of which are no less favorable
to the Partnership Group than those generally being provided to or available
from unrelated third parties or (iii) any transaction that, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership Group),
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is equitable to the Partnership Group. The provisions of Section 7.4 shall apply
to the rendering of services described in this Section 7.6(c).
(d) The Partnership Group may transfer assets to joint ventures, other
partnerships, corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions as are consistent with this Agreement and applicable
law.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership; provided, however, that the requirements
of this Section 7.6(e) shall be deemed to be satisfied as to (i) the
transactions effected pursuant to Sections 5.2 and 5.3 and any other
transactions described in or contemplated by the Registration Statement, (ii)
any transaction approved by Special Approval, (iii) any transaction, the terms
of which are no less favorable to the Partnership than those generally being
provided to or available from unrelated third parties, or (iv) any transaction
that, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or
advantageous to the Partnership), is equitable to the Partnership. With respect
to any contribution of assets to the Partnership in exchange for Partnership
Securities, the Audit and Conflicts Committee, in determining whether the
appropriate number of Partnership Securities are being issued, may take into
account, among other things, the fair market value of the assets, the liquidated
and contingent liabilities assumed, the tax basis in the assets, the extent to
which tax-only allocations to the transferor will protect the existing partners
of the Partnership against a low tax basis, and such other factors as the Audit
and Conflicts Committee deems relevant under the circumstances.
(f) The General Partner and its Affiliates will have no obligation to
permit any Group Member to use any facilities or assets of the General Partner
and its Affiliates, except as may be provided in contracts entered into from
time to time specifically dealing with such use, nor shall there be any
obligation on the part of the General Partner or its Affiliates to enter into
such contracts.
(g) Without limitation of Sections 7.6(a) through 7.6(f), and
notwithstanding anything to the contrary in this Agreement, the existence of the
conflicts of interest described in the Registration Statement are hereby
approved by all Partners.
7.7 Indemnification.
(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees shall be indemnified and
held harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as a Person of the type described in clauses (a)--(d) of the
definition of the term ''Indemnitee''; provided, that in each case the
Indemnitee acted in good faith and in a manner that such Indemnitee reasonably
believed to be in, or (in the case of a Person other than the General Partner)
not opposed to, the best interests of the Partnership and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this Section 7.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement (other than obligations incurred
by the General Partner on behalf of the Partnership or the Operating
Partnership). The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the Indemnitee acted in a manner
contrary to that specified above. Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Partnership, it being agreed
that the General Partner shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
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(b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
7.7(a) in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Partnership
of any undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Limited Partner Interests
entitled to vote on such matter, as a matter of law or otherwise, both as to
actions in the Indemnitee's capacity as a Person of the type described in
clauses (a)--(d) of the definition of the term ''Indemnitee'', and as to actions
in any other capacity (including any capacity under the Underwriting Agreement),
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General
Partner or its Affiliates for the cost of) insurance, on behalf of the General
Partner, its Affiliates and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities
or such Person's activities on behalf of the Partnership, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute
''fines'' within the meaning of Section 7.7(a); and action taken or omitted by
it with respect to any employee benefit plan in the performance of its duties
for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Partnership, nor
the obligations of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
7.8 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Partnership, the
Limited Partners, the Assignees or any other Persons who have acquired interests
in the Partnership Securities, for losses sustained or liabilities incurred as a
result of any act or omission if such Indemnitee acted in good faith.
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(b) Subject to its obligations and duties as General Partner set forth in
Section 7.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or to the Partners, the General Partner and any other Indemnitee acting in
connection with the Partnership's business or affairs shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities of an Indemnitee
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Partnership, the Limited Partners, the
General Partner, and the Partnership's and General Partner's directors, officers
and employees under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
7.9 Resolution of Conflicts of Interest.
(a) Unless otherwise expressly provided in this Agreement or the Operating
Partnership Agreement, whenever a potential conflict of interest exists or
arises between the General Partner or any of its Affiliates, on the one hand,
and the Partnership, the Operating Partnership, any Partner or any Assignee, on
the other, any resolution or course of action by the General Partner or its
Affiliates in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this Agreement,
of the Operating Partnership Agreement, of any agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if the resolution or
course of action is, or by operation of this Agreement is deemed to be, fair and
reasonable to the Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict of interest to seek
Special Approval of such resolution. Any conflict of interest and any resolution
of such conflict of interest shall be conclusively deemed fair and reasonable to
the Partnership if such conflict of interest or resolution is (i) approved by
Special Approval (as long as the material facts within the actual knowledge of
the officers and directors of the General Partner and EPC regarding the proposed
transaction were disclosed to the Audit and Conflicts Committee at the time it
gave its approval), (ii) on terms no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) fair to the Partnership, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership). The General
Partner may also adopt a resolution or course of action that has not received
Special Approval. The General Partner (including the Audit and Conflicts
Committee in connection with Special Approval) shall be authorized in connection
with its determination of what is ''fair and reasonable'' to the Partnership and
in connection with its resolution of any conflict of interest to consider (A)
the relative interests of any party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including the Audit and Conflicts Committee) determines in its
sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to nor
shall it be construed to require the General Partner (including the Audit and
Conflicts Committee) to consider the interests of any Person other than the
Partnership. In the absence of bad faith by the General Partner, the resolution,
action or terms so made, taken or provided by the General Partner with respect
to such matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or, to the extent permitted by law, under the Delaware
Act or any other law, rule or regulation.
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(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its ''sole discretion'' or ''discretion,''
that it deems ''necessary or appropriate'' or ''necessary or advisable'' or
under a grant of similar authority or latitude, except as otherwise provided
herein, the General Partner or such Affiliate shall be entitled to consider only
such interests and factors as it desires and shall have no duty or obligation to
give any consideration to any interest of, or factors affecting, the
Partnership, the Operating Partnership, any Limited Partner or any Assignee,
(ii) it may make such decision in its sole discretion (regardless of whether
there is a reference to ''sole discretion'' or ''discretion'') unless another
express standard is provided for, or (iii) in ''good faith'' or under another
express standard, the General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement, the Operating Partnership Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation. In addition, any actions taken by the General Partner or such
Affiliate consistent with the standards of ''reasonable discretion'' set forth
in the definitions of Available Cash or Operating Surplus shall not constitute a
breach of any duty of the General Partner to the Partnership or the Limited
Partners. The General Partner shall have no duty, express or implied, to sell or
otherwise dispose of any asset of the Partnership Group other than in the
ordinary course of business. No borrowing by any Group Member or the approval
thereof by the General Partner shall be deemed to constitute a breach of any
duty of the General Partner to the Partnership or the Limited Partners by reason
of the fact that the purpose or effect of such borrowing is directly or
indirectly to (A) enable distributions to the General Partner or its Affiliates
(including in their capacities as Limited Partners) to exceed 1% of the total
amount distributed to all partners or (B) hasten the expiration of the
Subordination Period or the conversion of any Subordinated Units into Common
Units.
(c) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be ''fair and
reasonable'' to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
(d) The Unitholders hereby authorize the General Partner, on behalf of the
Partnership as a partner or member of a Group Member, to approve of actions by
the general partner or managing member of such Group Member similar to those
actions permitted to be taken by the General Partner pursuant to this Section
7.9.
7.10 Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including an Opinion of Counsel) of such Persons as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers, a duly appointed attorney or attorneys-in-fact or the duly authorized
officers of the Partnership. Each such attorney shall, to the extent provided by
the General Partner in the power of attorney, have full power and authority to
do and perform each and every act and duty that is permitted or required to be
done by the General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited, to the extent permitted by law, as required to permit the General
Partner to act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision
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pursuant to the authority prescribed in this Agreement, so long as such action
is reasonably believed by the General Partner to be in, or not inconsistent
with, the best interests of the Partnership.
7.11 Purchase or Sale of Partnership Securities. The General Partner may
cause the Partnership to purchase or otherwise acquire Partnership Securities;
provided that, except as permitted pursuant to Section 4.10, the General Partner
may not cause any Group Member to purchase Subordinated Units during the
Subordination Period. As long as Partnership Securities are held by any Group
Member, such Partnership Securities shall not be considered Outstanding for any
purpose, except as otherwise provided herein. The General Partner or any
Affiliate of the General Partner may also purchase or otherwise acquire and sell
or otherwise dispose of Partnership Securities for its own account, subject to
the provisions of Articles IV and X.
7.12 Registration Rights of the General Partner and its Affiliates.
(a) If (i) the General Partner or any Affiliate of the General Partner
(including for purposes of this Section 7.12, any Person that is an Affiliate of
the General Partner at the date hereof notwithstanding that it may later cease
to be an Affiliate of the General Partner) holds Partnership Securities that it
desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule
or regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Partnership Securities (the ''Holder'') to
dispose of the number of Partnership Securities it desires to sell at the time
it desires to do so without registration under the Securities Act, then upon the
request of the General Partner or any of its Affiliates, the Partnership shall
file with the Commission as promptly as practicable after receiving such
request, and use all reasonable efforts to cause to become effective and remain
effective for a period of not less than six months following its effective date
or such shorter period as shall terminate when all Partnership Securities
covered by such registration statement have been sold, a registration statement
under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that the
Partnership shall not be required to effect more than three registrations
pursuant to this Section 7.12(a); and provided further, however, that if at the
time a request pursuant to this Section 7.12 is submitted to the Partnership,
EPC or its Affiliates requesting registration is an Affiliate of the General
Partner and the Audit and Conflicts Committee determines in its good faith
judgment that a postponement of the requested registration for up to six months
would be in the best interests of the Partnership and its Partners due to a
pending transaction, investigation or other event, the filing of such
registration statement or the effectiveness thereof may be deferred for up to
six months, but not thereafter. In connection with any registration pursuant to
the immediately preceding sentence, the Partnership shall promptly prepare and
file (x) such documents as may be necessary to register or qualify the
securities subject to such registration under the securities laws of such states
as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation or partnership
doing business in such jurisdiction solely as a result of such registration, and
(y) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities
Exchange as the Holder shall reasonably request, and do any and all other acts
and things that may reasonably be necessary or advisable to enable the Holder to
consummate a public sale of such Partnership Securities in such states. Except
as set forth in Section 7.12(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
7.12(b) shall be an underwritten offering, then, in the event that the managing
underwriter or managing underwriters of such offering advise the Partnership and
the Holder in writing that in their opinion the inclusion of all or some of the
Holder's Partnership Securities would adversely and materially affect the
success of the offering, the Partnership shall include in such offering only
that number or amount, if any, of securities held by the Holder which, in the
opinion of the managing underwriter or managing underwriters, will not so
adversely and materially affect the offering. Except as set
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forth in Section 7.12(c), all costs and expenses of any such registration and
offering (other than the underwriting discounts and commissions) shall be paid
by the Partnership, without reimbursement by the Holder.
(c) If underwriters are engaged in connection with any registration
referred to in this Section 7.12, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
7.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, ''Indemnified Persons'') against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the Securities Act or
otherwise (hereinafter referred to in this Section 7.12(c) as a ''claim'' and in
the plural as ''claims'') based upon, arising out of or resulting from any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which any Partnership Securities were
registered under the Securities Act or any state securities or Blue Sky laws, in
any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out
of, is based upon or results from an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
such preliminary, summary or final prospectus or such amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in
the preparation thereof.
(d) The provisions of Section 7.12(a) and 7.12(b) shall continue to be
applicable with respect to the General Partner (and any of the General Partner's
Affiliates) after it ceases to be a Partner of the Partnership, during a period
of two years subsequent to the effective date of such cessation and for so long
thereafter as is required for the Holder to sell all of the Partnership
Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same
Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this Section
7.12 shall (i) specify the Partnership Securities intended to be offered and
sold by the Person making the request, (ii) express such Person's present intent
to offer such shares for distribution, (iii) describe the nature or method of
the proposed offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and materials and
take all action as may be required in order to permit the Partnership to comply
with all applicable requirements in connection with the registration of such
Partnership Securities.
7.13 Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner and any officer of the General Partner authorized by the General Partner
to act on behalf of and in the name of the Partnership has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the
Partnership, and such Person shall be entitled to deal with the General Partner
or any such officer as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or
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any such officer in connection with any such dealing. In no event shall any
Person dealing with the General Partner or any such officer or its
representatives be obligated to ascertain that the terms of the Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or any such officer or its representatives. Each
and every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or any such officer or its representatives
shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting. The General Partner shall keep or cause to be
kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business, including all books and records
necessary to provide to the Limited Partners any information required to be
provided pursuant to Section 3.4(a). Any books and records maintained by or on
behalf of the Partnership in the regular course of its business, including the
record of the Record Holders and Assignees of Units or other Partnership
Securities, books of account and records of Partnership proceedings, may be kept
on, or be in the form of, computer disks, hard drives, punch cards, magnetic
tape, photographs, micrographics or any other information storage device;
provided, that the books and records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial reporting purposes, on an accrual
basis in accordance with U.S. GAAP.
8.2 Fiscal Year. The fiscal year of the Partnership shall be a fiscal year
ending December 31.
8.3 Reports.
(a) As soon as practicable, but in no event later than 120 days after the
close of each fiscal year of the Partnership, the General Partner shall cause to
be mailed or furnished to each Record Holder of a Unit as of a date selected by
the General Partner in its discretion, an annual report containing financial
statements of the Partnership for such fiscal year of the Partnership, presented
in accordance with U.S. GAAP, including a balance sheet and statements of
operations, Partnership equity and cash flows, such statements to be audited by
a firm of independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the
close of each Quarter except the last Quarter of each fiscal year, the General
Partner shall cause to be mailed or furnished to each Record Holder of a Unit,
as of a date selected by the General Partner in its discretion, a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed for trading, or as
the General Partner determines to be necessary or appropriate.
ARTICLE IX
Tax Matters
9.1 Tax Returns and Information. The Partnership shall timely file all
returns of the Partnership that are required for federal, state and local income
tax purposes on the basis of the accrual method and a taxable year ending on
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December 31. The tax information reasonably required by Record Holders for
federal and state income tax reporting purposes with respect to a taxable year
shall be furnished to them within 90 days of the close of the calendar year in
which the Partnership's taxable year ends. The classification, realization and
recognition of income, gain, losses and deductions and other items shall be on
the accrual method of accounting for federal income tax purposes.
9.2 Tax Elections.
(a) The Partnership shall make the election under Section 754 of the Code
in accordance with applicable regulations thereunder, subject to the reservation
of the right to seek to revoke any such election upon the General Partner's
determination that such revocation is in the best interests of the Limited
Partners. Notwithstanding any other provision herein contained, for the purposes
of computing the adjustments under Section 743(b) of the Code, the General
Partner shall be authorized (but not required) to adopt a convention whereby the
price paid by a transferee of a Limited Partner Interest that is traded on any
National Securities Exchange will be deemed to be the lowest quoted closing
price of such Limited Partner Interests on any National Securities Exchange on
which such Limited Partner Interests are traded during the calendar month in
which such transfer is deemed to occur pursuant to Section 6.2(g) without regard
to the actual price paid by such transferee.
(b) The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a sixty-month period as provided in Section 709 of
the Code.
(c) Except as otherwise provided herein, the General Partner shall
determine whether the Partnership should make any other elections permitted by
the Code.
9.3 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated as the Tax Matters Partner (as defined in the Code) and is
authorized and required to represent the Partnership (at the Partnership's
expense) in connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with the General Partner and to do
or refrain from doing any or all things reasonably required by the General
Partner to conduct such proceedings.
9.4 Withholding. Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines in its
discretion to be necessary or appropriate to cause the Partnership and the
Operating Partnership to comply with any withholding requirements established
under the Code or any other federal, state or local law including, without
limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the
extent that the Partnership is required or elects to withhold and pay over to
any taxing authority any amount resulting from the allocation or distribution of
income to any Partner or Assignee (including, without limitation, by reason of
Section 1446 of the Code), the amount withheld may at the discretion of the
General Partner be treated by the Partnership as a distribution of cash pursuant
to Section 6.3 in the amount of such withholding from such Partner.
ARTICLE X
Admission of Partners
10.1 Admission of Initial Limited Partners. Upon the issuance by the
Partnership of Common Units and Subordinated Units to EPC Partners II, as
described in Section 5.2, EPC Partners II was admitted to the Partnership as a
Limited Partner in respect of the Units issued to it. Upon the issuance by the
Partnership of Common Units to the Underwriters as described in Section 5.3 in
connection with the Initial Offering and the execution by each Underwriter of a
Transfer Application, the General Partner admitted the Underwriters to the
Partnership as Initial Limited Partners in respect of the Common Units purchased
by them. Upon the issuance by the Partnership of Class A Special Units
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to Tejas as described in Section 5.3, the General Partner shall admit Tejas to
the Partnership as an Initial Limited Partner in respect of the Class A Special
Units issued to Tejas.
10.2 Admission of Substituted Limited Partner. By transfer of a Limited
Partner Interest in accordance with Article IV, the transferor shall be deemed
to have given the transferee the right to seek admission as a Substituted
Limited Partner subject to the conditions of, and in the manner permitted under,
this Agreement. A transferor of a Certificate representing a Limited Partner
Interest shall, however, only have the authority to convey to a purchaser or
other transferee who does not execute and deliver a Transfer Application (a) the
right to negotiate such Certificate to a purchaser or other transferee and (b)
the right to transfer the right to request admission as a Substituted Limited
Partner to such purchaser or other transferee in respect of the transferred
Limited Partner Interests. Each transferee of a Limited Partner Interest
(including any nominee holder or an agent acquiring such Limited Partner
Interest for the account of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery, be an Assignee and
be deemed to have applied to become a Substituted Limited Partner with respect
to the Limited Partner Interests so transferred to such Person. Such Assignee
shall become a Substituted Limited Partner (x) at such time as the General
Partner consents thereto, which consent may be given or withheld in the General
Partner's discretion, and (y) when any such admission is shown on the books and
records of the Partnership. If such consent is withheld, such transferee shall
be an Assignee. An Assignee shall have an interest in the Partnership equivalent
to that of a Limited Partner with respect to allocations and distributions,
including liquidating distributions, of the Partnership. With respect to voting
rights attributable to Limited Partner Interests that are held by Assignees, the
General Partner shall be deemed to be the Limited Partner with respect thereto
and shall, in exercising the voting rights in respect of such Limited Partner
Interests on any matter, vote such Limited Partner Interests at the written
direction of the Assignee who is the Record Holder of such Limited Partner
Interests. If no such written direction is received, such Limited Partner
Interests will not be voted. An Assignee shall have no other rights of a Limited
Partner.
10.3 Admission of Successor General Partner. A successor General Partner
approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to
all of the General Partner's Partnership Interest as general partner in the
Partnership pursuant to Section 4.6 who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner pursuant to Section 11.1 or 11.2 or
the transfer of the General Partner's Partnership Interest as a general partner
in the Partnership pursuant to Section 4.6; provided, however, that no such
successor shall be admitted to the Partnership until compliance with the terms
of Section 4.6 has occurred and such successor has executed and delivered such
other documents or instruments as may be required to effect such admission. Any
such successor shall, subject to the terms hereof, carry on the business of the
members of the Partnership Group without dissolution.
10.4 Admission of Additional Limited Partners.
(a) A Person (other than the General Partner, an Initial Limited Partner or
a Substituted Limited Partner) who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including the power of
attorney granted in Section 2.6, and (ii) such other documents or instruments as
may be required in the discretion of the General Partner to effect such Person's
admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 10.4, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an Additional Limited
Partner shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
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10.5 Amendment of Agreement and Certificate of Limited Partnership. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership to reflect such admission and, if necessary, to
prepare as soon as practicable an amendment to this Agreement and, if required
by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 2.6.
ARTICLE XI
Withdrawal or Removal of Partners
11.1 Withdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such
event herein referred to as an ''Event of Withdrawal''):
(i) the General Partner voluntarily withdraws from the Partnership by
giving written notice to the other Partners (and it shall be deemed that
the General Partner has withdrawn pursuant to this Section 11.1(a)(i) if
the General Partner voluntarily withdraws as general partner of the
Operating Partnership);
(ii) the General Partner transfers all of its rights as General
Partner pursuant to Section 4.6;
(iii) the General Partner is removed pursuant to Section 11.2;
(iv) the General Partner (A) makes a general assignment for the
benefit of creditors; (B) files a voluntary bankruptcy petition for relief
under Chapter 7 of the United States Bankruptcy Code; (C) files a petition
or answer seeking for itself a liquidation, dissolution or similar relief
(but not a reorganization) under any law; (D) files an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against the General Partner in a proceeding of the type
described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a
debtor-in-possession), receiver or liquidator of the General Partner or of
all or any substantial part of its properties;
(v) a final and non-appealable order of relief under Chapter 7 of the
United States Bankruptcy Code is entered by a court with appropriate
jurisdiction pursuant to a voluntary or involuntary petition by or against
the General Partner; or
(vi) (A) in the event the General Partner is a corporation, a
certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General Partner
of revocation of its charter without a reinstatement of its charter, under
the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the dissolution
and commencement of winding up of the General Partner; (C) in the event the
General Partner is acting in such capacity by virtue of being a trustee of
a trust, the termination of the trust; (D) in the event the General Partner
is a natural person, his death or adjudication of incompetency; and (E)
otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B),
(C) or (E) occurs, the withdrawing General Partner shall give notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 11.1 shall result
in the withdrawal of the General Partner from the Partnership.
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(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall not constitute a breach of this
Agreement under the following circumstances: (i) at any time during the period
beginning on the Closing Date and ending at 12:00 midnight, Eastern Standard
Time, on December 31, 2008, the General Partner voluntarily withdraws by giving
at least 90 days' advance notice of its intention to withdraw to the Limited
Partners; provided that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion
of Counsel (''Withdrawal Opinion of Counsel'') that such withdrawal (following
the selection of the successor General Partner) would not result in the loss of
the limited liability of any Limited Partner or of a member of the Operating
Partnership or cause the Partnership or the Operating Partnership to be treated
as an association taxable as a corporation or otherwise to be taxed as an entity
for federal income tax purposes (to the extent not previously treated as such);
(ii) at any time after 12:00 midnight, Eastern Standard Time, on December 31,
2008, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Unitholders, such withdrawal to take effect on the date
specified in such notice; (iii) at any time that the General Partner ceases to
be the General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to
Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners, such
withdrawal to take effect on the date specified in the notice, if at the time
such notice is given one Person and its Affiliates (other than the General
Partner and its Affiliates) own beneficially or of record or control at least
50% of the Outstanding Units. The withdrawal of the General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall also constitute
the withdrawal of the General Partner as general partner or managing member, as
the case may be, of the other Group Members. If the General Partner gives a
notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor
General Partner. The Person so elected as successor General Partner shall
automatically become the successor general partner or managing member, as the
case may be, of the other Group Members of which the General Partner is a
general partner or managing member. If, prior to the effective date of the
General Partner's withdrawal, a successor is not selected by the Unitholders as
provided herein or the Partnership does not receive a Withdrawal Opinion of
Counsel, the Partnership shall be dissolved in accordance with Section 12.1. Any
successor General Partner elected in accordance with the terms of this Section
11.1 shall be subject to the provisions of Section 10.3.
11.2 Removal of the General Partner. The General Partner may be removed if
such removal is approved by Unitholders holding at least 662/3% of the
Outstanding Units (including Units held by the General Partner and its
Affiliates but excluding Class A Special Units). Any such action by such holders
for removal of the General Partner must also provide for the election of a
successor General Partner by the Unitholders holding a Unit Majority. Such
removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 10.3. The removal of the General Partner
shall also automatically constitute the removal of the General Partner as
general partner or managing member, as the case may be, of the other Group
Members of which the General Partner is a general partner or managing member. If
a Person is elected as a successor General Partner in accordance with the terms
of this Section 11.2, such Person shall, upon admission pursuant to Section
10.3, automatically become a successor general partner or managing member, as
the case may be, of the other Group Members of which the General Partner is a
general partner or managing member. The right of the holders of Outstanding
Units to remove the General Partner shall not exist or be exercised unless the
Partnership has received an opinion opining as to the matters covered by a
Withdrawal Opinion of Counsel. Any successor General Partner elected in
accordance with the terms of this Section 11.2 shall be subject to the
provisions of Section 10.3.
11.3 Interest of Departing Partner and Successor General Partner.
(a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner by the holders of Outstanding Units under
circumstances where Cause does not exist, if a successor General Partner is
elected in accordance with the terms of Section 11.1 or 11.2, the Departing
Partner shall have the option exercisable prior to the effective date of the
departure of such Departing Partner to require its successor to purchase its
Partnership Interest as a general partner in the Partnership and
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its partnership or member interest as the general partner or managing member in
the other Group Members (collectively, the ''Combined Interest'') in exchange
for an amount in cash equal to the fair market value of such Combined Interest,
such amount to be determined and payable as of the effective date of its
departure or, if there is not agreement as to the fair market value of such
Combined Interest, within ten (10) days after such agreement is reached. If the
General Partner is removed by the Unitholders under circumstances where Cause
exists or if the General Partner withdraws under circumstances where such
withdrawal violates this Agreement or the Operating Partnership Agreement, and
if a successor General Partner is elected in accordance with the terms of
Section 11.1 or 11.2, such successor shall have the option, exercisable prior to
the effective date of the departure of such Departing Partner, to purchase the
Combined Interest for such fair market value of such Combined Interest. In
either event, the Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in
connection with the termination of any employees employed by the General Partner
for the benefit of the Partnership or the other Group Members.
(b) For purposes of this Section 11.3(a), the fair market value of the
Combined Interest shall be determined by agreement between the Departing Partner
and its successor or, failing agreement within 30 days after the effective date
of such Departing Partner's departure, by an independent investment banking firm
or other independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts, and the determination of which shall
be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days
after the effective date of such departure, then the Departing Partner shall
designate an independent investment banking firm or other independent expert,
the Departing Partner's successor shall designate an independent investment
banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent
expert, which third independent investment banking firm or other independent
expert shall determine the fair market value of the Combined Interest. In making
its determination, such third independent investment banking firm or other
independent expert may consider the then current trading price of Units on any
National Securities Exchange on which Units are then listed, the value of the
Partnership's assets, the rights and obligations of the Departing Partner and
other factors it may deem relevant.
(c) If the Combined Interest is not purchased in the manner set forth in
Section 11.3(a), the Departing Partner (or its transferee) shall become a
Limited Partner and its Combined Interest shall be converted into Common Units
pursuant to a valuation made by an investment banking firm or other independent
expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the
admission of its successor). Any successor General Partner shall indemnify the
Departing Partner (or its transferee) as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner (or its
transferee) becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest to Common Units will be characterized as if
the General Partner (or its transferee) contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.
(d) If a successor General Partner is elected in accordance with the terms
of Section 11.1 or 11.2 and the option described in Section 11.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
Partnership cash in the amount equal to 1/99th of the Net Agreed Value of the
Partnership's assets on such date. In such event, such successor General Partner
shall, subject to the following sentence, be entitled to 1% of all Partnership
allocations and distributions. The successor General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of such
successor General Partner's admission, the successor General Partner's interest
in all Partnership distributions and allocations shall be 1%.
11.4 Termination of Subordination Period, Conversion of Subordinated Units
and Extinguishment of Cumulative Common Unit Arrearages. Notwithstanding any
provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and
Units held by the General Partner and its Affiliates are not voted in favor of
such removal, (i) the Subordination Period will end and all Outstanding
Subordinated Units will immediately and automatically convert into Common Units
on a one-for-one basis and (ii) all Cumulative Common Unit Arrearages on the
Common Units will be extinguished.
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11.5 Withdrawal of Limited Partners . No Limited Partner shall have any
right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Limited Partner Interest becomes a Record
Holder of the Limited Partner Interest so transferred, such transferring Limited
Partner shall cease to be a Limited Partner with respect to the Limited Partner
Interest so transferred.
ARTICLE XII
Dissolution and Liquidation
12.1 Dissolution. The Partnership shall not be dissolved by the admission
of Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor General Partner in accordance with the terms of this
Agreement. Upon the removal or withdrawal of the General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or 11.2, the Partnership
shall not be dissolved and such successor General Partner shall continue the
business of the Partnership. The Partnership shall dissolve, and (subject to
Section 12.2) its affairs shall be wound up, upon:
(a) the expiration of its term as provided in Section 2.7;
(b) an Event of Withdrawal of the General Partner as provided in
Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is
elected and an Opinion of Counsel is received as provided in
Section 11.1(b) or 11.2 and such successor is admitted to the Partnership
pursuant to Section 10.3;
(c) an election to dissolve the Partnership by the General Partner
that is approved by the holders of a Unit Majority;
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties
of the Partnership Group.
12.2 Continuation of the Business of the Partnership After Dissolution.
Upon (a) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal or removal of the General Partner as provided in
Section 11.1(a)(i) or (iii) and the failure of the Partners to select a
successor to such Departing Partner pursuant to Section 11.1 or 11.2, then
within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or
(vi), then, to the maximum extent permitted by law, within 180 days thereafter,
the holders of a Unit Majority may elect to reconstitute the Partnership and
continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as the successor general partner a Person
approved by the holders of a Unit Majority. Unless such an election is made
within the applicable time period as set forth above, the Partnership shall
conduct only activities necessary to wind up its affairs. If such an election is
so made, then:
(i) the reconstituted Partnership shall continue until the end of the
term set forth in Section 2.7 unless earlier dissolved in accordance with
this Article XII;
(ii) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be treated
in the manner provided in Section 11.3; and
(iii) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary,
to file a new partnership agreement and certificate of limited partnership,
and the successor general partner may for this purpose exercise the powers
of attorney granted the General Partner pursuant
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to Section 2.6; provided, that the right of the holders of a Unit Majority
to approve a successor General Partner and to reconstitute and to continue
the business of the Partnership shall not exist and may not be exercised
unless the Partnership has received an Opinion of Counsel that (x) the
exercise of the right would not result in the loss of limited liability of
any Limited Partner and (y) neither the Partnership, the reconstituted
limited partnership nor the Operating Partnership would be treated as an
association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to
continue.
12.3 Liquidator. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 12.2, the General Partner shall select one or
more Persons to act as Liquidator. The Liquidator (if other than the General
Partner) shall be entitled to receive such compensation for its services as may
be approved by holders of at least a majority of the Outstanding Common Units
and Subordinated Units voting as a single class. The Liquidator (if other than
the General Partner) shall agree not to resign at any time without 15 days'
prior notice and may be removed at any time, with or without cause, by notice of
removal approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. Upon dissolution, removal
or resignation of the Liquidator, a successor and substitute Liquidator (who
shall have and succeed to all rights, powers and duties of the original
Liquidator) shall within 30 days thereafter be approved by holders of at least a
majority of the Outstanding Common Units and Subordinated Units voting as a
single class. The right to approve a successor or substitute Liquidator in the
manner provided herein shall be deemed to refer also to any such successor or
substitute Liquidator approved in the manner herein provided. Except as
expressly provided in this Article XII, the Liquidator approved in the manner
provided herein shall have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
General Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such
powers, other than the limitation on sale set forth in Section 7.3(b)) to the
extent necessary or desirable in the good faith judgment of the Liquidator to
carry out the duties and functions of the Liquidator hereunder for and during
such period of time as shall be reasonably required in the good faith judgment
of the Liquidator to complete the winding up and liquidation of the Partnership
as provided for herein.
12.4 Liquidation. The Liquidator shall proceed to dispose of the assets of
the Partnership, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as the Liquidator determines to be in the best
interest of the Partners, subject to Section 17-804 of the Delaware Act and the
following:
(a) Disposition of Assets. The assets may be disposed of by public or
private sale or by distribution in kind to one or more Partners on such
terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall
be deemed for purposes of Section 12.4(c) to have received cash equal to
its fair market value; and contemporaneously therewith, appropriate cash
distributions must be made to the other Partners. The Liquidator may, in
its absolute discretion, defer liquidation or distribution of the
Partnership's assets for a reasonable time if it determines that an
immediate sale or distribution of all or some of the Partnership's assets
would be impractical or would cause undue loss to the Partners. The
Liquidator may, in its absolute discretion, distribute the Partnership's
assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Discharge of Liabilities. Liabilities of the Partnership include
amounts owed to Partners otherwise than in respect of their distribution
rights under Article VI. With respect to any liability that is contingent,
conditional or unmatured or is otherwise not yet due and payable, the
Liquidator shall either settle such claim for such amount as it thinks
appropriate or establish a reserve of cash or other assets to provide for
its payment. When paid, any unused portion of the reserve shall be
distributed as additional liquidation proceeds.
(c) Liquidation Distributions. All property and all cash in excess of
that required to discharge liabilities as provided in Section 12.4(b) shall
be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined
after taking into account all Capital Account adjustments (other than those
made by reason of distributions pursuant to this Section 12.4(c)) for the
taxable year
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of the Partnership during which the liquidation of the Partnership occurs
(with such date of occurrence being determined pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be
made by the end of such taxable year (or, if later, within 90 days after
said date of such occurrence).
12.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the
Partnership shall be terminated and the Certificate of Limited Partnership and
all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
12.6 Return of Contributions. The General Partner shall not be personally
liable for, and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate, the return of the
Capital Contributions of the Limited Partners or Unitholders, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Partnership assets.
12.7 Waiver of Partition. To the maximum extent permitted by law, each
Partner hereby waives any right to partition of the Partnership property.
12.8 Capital Account Restoration. No Partner shall have any obligation to
restore any negative balance in its Capital Account upon liquidation of the
Partnership.
ARTICLE XIII
Amendment of Partnership Agreement; Meetings; Record Date
13.1 Amendment to be Adopted Solely by the General Partner. Each Partner
agrees that the General Partner, without the approval of any Partner or
Assignee, may amend any provision of this Agreement and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
necessary or advisable to qualify or continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or to ensure
that no Group Member will be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes;
(d) a change that, in the discretion of the General Partner, (i) does
not adversely affect the Limited Partners in any material respect, (ii) is
necessary or advisable to (A) satisfy any requirements, conditions or
guidelines contained in any opinion, directive, order, ruling or regulation
of any federal or state agency or judicial authority or contained in any
federal or state statute (including the Delaware Act) or (B) facilitate the
trading of the Limited Partner Interests (including the division of any
class or classes of Outstanding Limited Partner Interests into different
classes to facilitate uniformity of tax consequences within such classes of
Limited Partner Interests) or comply with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Limited
Partner Interests are or will be listed for trading, compliance with any of
which the General Partner determines in its discretion to be in the best
interests of the Partnership and the Limited Partners, (iii) is necessary
or advisable in connection with action taken by the General Partner
pursuant to Section 5.10 or (iv) is required to
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effect the intent expressed in the Registration Statement or the intent of
the provisions of this Agreement or is otherwise contemplated by this
Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and
any changes that, in the discretion of the General Partner, are necessary
or advisable as a result of a change in the fiscal year or taxable year of
the Partnership including, if the General Partner shall so determine, a
change in the definition of ''Quarter'' and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership, or the General Partner or its directors, officers,
trustees or agents from in any manner being subjected to the provisions of
the Investment Company Act of 1940, as amended, the Investment Advisers Act
of 1940, as amended, or ''plan asset'' regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, regardless of
whether such are substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(g) subject to the terms of Section 5.7, an amendment that, in the
discretion of the General Partner, is necessary or advisable in connection
with the authorization of issuance of any class or series of Partnership
Securities pursuant to Section 5.6;
(h) any amendment expressly permitted in this Agreement to be made by
the General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(j) an amendment that, in the discretion of the General Partner, is
necessary or advisable to reflect, account for and deal with appropriately
the formation by the Partnership of, or investment by the Partnership in,
any corporation, partnership, joint venture, limited liability company or
other entity other than the Operating Partnership, in connection with the
conduct by the Partnership of activities permitted by the terms of Section
2.4;
(k) a merger or conveyance pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
13.2 Amendment Procedures. Except as provided in Sections 13.1 and 13.3,
all amendments to this Agreement shall be made in accordance with the following
requirements. Amendments to this Agreement may be proposed only by or with the
consent of the General Partner which consent may be given or withheld in its
sole discretion. A proposed amendment shall be effective upon its approval by
the holders of a Unit Majority, unless a greater or different percentage is
required under this Agreement or by Delaware law. A proposed amendment that
adversely alters the powers, obligations or special rights of the Class A
Special Units set forth herein shall be effective upon its approval by the
holders of a majority of the Class A Special Units. Each proposed amendment that
requires the approval of the holders of a specified percentage of Outstanding
Units shall be set forth in a writing that contains the text of the proposed
amendment. If such an amendment is proposed, the General Partner shall seek the
written approval of the requisite percentage of Outstanding Units or call a
meeting of the Unitholders to consider and vote on such proposed amendment. The
General Partner shall notify all Record Holders upon final adoption of any such
proposed amendments.
13.3 Amendment Requirements.
(a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision
of this Agreement that establishes a percentage of Outstanding Units (including
Units deemed owned by the General Partner) required to take any action shall be
amended, altered, changed, repealed or rescinded in any respect that would have
the effect of reducing such voting percentage unless such amendment is approved
by the written consent or the affirmative vote of holders of
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Outstanding Units whose aggregate Outstanding Units constitute not less than the
voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment
to this Agreement may (i) enlarge the obligations of any Limited Partner without
its consent, unless such shall have occurred as a result of an amendment
approved pursuant to Section 13.3(c), (ii) enlarge the obligations of, restrict
in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable to, the General Partner or any
of its Affiliates without its consent, which consent may be given or withheld in
its sole discretion, (iii) change Section 12.1(a) or 12.1(c), or (iv) change the
term of the Partnership or, except as set forth in Section 12.1(c), give any
Person the right to dissolve the Partnership.
(c) Except as provided in Section 14.3, and except as otherwise provided,
and without limitation of the General Partner's authority to adopt amendments to
this Agreement as contemplated in Section 13.1, any amendment that would have a
material adverse effect on the rights or preferences of any class of Partnership
Interests in relation to other classes of Partnership Interests must be approved
by the holders of not less than a majority of the Outstanding Partnership
Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for
amendments pursuant to Section 13.1 and except as otherwise provided by Section
14.3(b), no amendments shall become effective without the approval of the
holders of at least 90% of the Outstanding Common Units and Subordinated Units
voting as a single class unless the Partnership obtains an Opinion of Counsel to
the effect that such amendment will not affect the limited liability of any
Limited Partner under applicable law.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be
amended with the approval of the holders of at least 90% of the Outstanding
Common Units and Subordinated Units voting as a single class.
13.4 Special Meetings. All acts of Limited Partners to be taken pursuant to
this Agreement shall be taken in the manner provided in this Article XIII.
Special meetings of the Limited Partners may be called by the General Partner or
by Limited Partners owning 20% or more of the Outstanding Limited Partner
Interests of the class or classes for which a meeting is proposed. Limited
Partners shall call a special meeting by delivering to the General Partner one
or more requests in writing stating that the signing Limited Partners wish to
call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call
from Limited Partners or within such greater time as may be reasonably necessary
for the Partnership to comply with any statutes, rules, regulations, listing
agreements or similar requirements governing the holding of a meeting or the
solicitation of proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place determined by the General Partner on a date not less than 10 days nor more
than 60 days after the mailing of notice of the meeting. Limited Partners shall
not vote on matters that would cause the Limited Partners to be deemed to be
taking part in the management and control of the business and affairs of the
Partnership so as to jeopardize the Limited Partners' limited liability under
the Delaware Act or the law of any other state in which the Partnership is
qualified to do business.
13.5 Notice of a Meeting. Notice of a meeting called pursuant to Section
13.4 shall be given to the Record Holders of the class or classes of Limited
Partner Interests for which a meeting is proposed in writing by mail or other
means of written communication in accordance with Section 16.1. The notice shall
be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
13.6 Record Date. For purposes of determining the Limited Partners entitled
to notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 13.11 the General Partner may
set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule,
regulation, guideline or requirement of any National Securities Exchange on
which the Limited Partner Interests are listed for trading, in which case the
rule, regulation, guideline or requirement of such
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exchange shall govern) or (b) in the event that approvals are sought without a
meeting, the date by which Limited Partners are requested in writing by the
General Partner to give such approvals.
13.7 Adjournment. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting and a new Record Date need not
be fixed, if the time and place thereof are announced at the meeting at which
the adjournment is taken, unless such adjournment shall be for more than 45
days. At the adjourned meeting, the Partnership may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given in accordance with this Article
XIII.
13.8 Waiver of Notice. Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed, and
whenever held, shall be as valid as if it had occurred at a meeting duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before or after the meeting, Limited Partners representing
such quorum who were present in person or by proxy and entitled to vote, sign a
written waiver of notice or an approval of the holding of the meeting or an
approval of the minutes thereof. All waivers and approvals shall be filed with
the Partnership records or made a part of the minutes of the meeting. Attendance
of a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner does not approve, at the beginning of
the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
13.9 Quorum. The holders of a majority of the Outstanding Limited Partner
Interests of the class or classes for which a meeting has been called (including
Limited Partner Interests deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of
such class or classes unless any such action by the Limited Partners requires
approval by holders of a greater percentage of such Limited Partner Interests,
in which case the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this Agreement at which
a quorum is present, the act of Limited Partners holding Outstanding Limited
Partner Interests that in the aggregate represent a majority of the Outstanding
Limited Partner Interests entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Limited Partner Interests that in the aggregate
represent at least such greater or different percentage shall be required. The
Limited Partners present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage of
Outstanding Limited Partner Interests specified in this Agreement (including
Limited Partner Interests deemed owned by the General Partner). In the absence
of a quorum any meeting of Limited Partners may be adjourned from time to time
by the affirmative vote of holders of at least a majority of the Outstanding
Limited Partner Interests entitled to vote at such meeting (including Limited
Partner Interests deemed owned by the General Partner) represented either in
person or by proxy, but no other business may be transacted, except as provided
in Section 13.7.
13.10 Conduct of a Meeting. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including the determination of
Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of
any proxies and the determination of any controversies, votes or challenges
arising in connection with or during the meeting or voting. The General Partner
shall designate a Person to serve as chairman of any meeting and shall further
designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The
General Partner may make such other regulations consistent with applicable law
and this Agreement as it may deem advisable concerning the conduct of any
meeting of the Limited Partners or solicitation of approvals in writing,
including regulations in regard to the appointment of
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proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote,
and the revocation of approvals in writing.
13.11 Action Without a Meeting. If authorized by the General Partner, any
action that may be taken at a meeting of the Limited Partners may be taken
without a meeting if an approval in writing setting forth the action so taken is
signed by Limited Partners owning not less than the minimum percentage of the
Outstanding Limited Partner Interests (including Limited Partner Interests
deemed owned by the General Partner) that would be necessary to authorize or
take such action at a meeting at which all the Limited Partners were present and
voted (unless such provision conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Limited Partner
Interests are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern). Prompt notice of the taking of
action without a meeting shall be given to the Limited Partners who have not
approved in writing. The General Partner may specify that any written ballot
submitted to Limited Partners for the purpose of taking any action without a
meeting shall be returned to the Partnership within the time period, which shall
be not less than 20 days, specified by the General Partner. If a ballot returned
to the Partnership does not vote all of the Limited Partner Interests held by
the Limited Partners the Partnership shall be deemed to have failed to receive a
ballot for the Limited Partner Interests that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any Person other
than by or on behalf of the General Partner, the written approvals shall have no
force and effect unless and until (a) they are deposited with the Partnership in
care of the General Partner, (b) approvals sufficient to take the action
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the General Partner to the effect that the exercise of
such right and the action proposed to be taken with respect to any particular
matter (i) will not cause the Limited Partners to be deemed to be taking part in
the management and control of the business and affairs of the Partnership so as
to jeopardize the Limited Partners' limited liability, and (ii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.
13.12 Voting and Other Rights.
(a) Only those Record Holders of the Limited Partner Interests on the
Record Date set pursuant to Section 13.6 (and also subject to the limitations
contained in the definition of ''Outstanding'') shall be entitled to notice of,
and to vote at, a meeting of Limited Partners or to act with respect to matters
as to which the holders of the Outstanding Limited Partner Interests have the
right to vote or to act. All references in this Agreement to votes of, or other
acts that may be taken by, the Outstanding Limited Partner Interests shall be
deemed to be references to the votes or acts of the Record Holders of such
Outstanding Limited Partner Interests.
(b) With respect to Limited Partner Interests that are held for a Person's
account by another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose name such
Limited Partner Interests are registered, such other Person shall, in exercising
the voting rights in respect of such Limited Partner Interests on any matter,
and unless the arrangement between such Persons provides otherwise, vote such
Limited Partner Interests in favor of, and at the direction of, the Person who
is the beneficial owner, and the Partnership shall be entitled to assume it is
so acting without further inquiry. The provisions of this Section 13.12(b) (as
well as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
ARTICLE XIV
Merger
14.1 Authority. The Partnership may merge or consolidate with one or more
corporations, limited liability companies, business trusts or associations, real
estate investment trusts, common law trusts or unincorporated businesses,
including a general partnership or limited partnership, formed under the laws of
the State of Delaware or
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any other state of the United States of America, pursuant to a written agreement
of merger or consolidation (''Merger Agreement'') in accordance with this
Article XIV.
14.2 Procedure for Merger or Consolidation. Merger or consolidation of the
Partnership pursuant to this Article XIV requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
discretion, to consent to the merger or consolidation, the General Partner shall
approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the ''Surviving
Business Entity'');
(c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity securities
of each constituent business entity for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving
Business Entity; and (i) if any general or limited partner interests, securities
or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or general or limited partner
interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities
or obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such general or
limited partner interests, securities or rights are to receive in exchange for,
or upon conversion of their general or limited partner interests, securities or
rights, and (ii) in the case of securities represented by certificates, upon the
surrender of such certificates, which cash, property or general or limited
partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent documents or the adoption
of new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the filing
of the certificate of merger pursuant to Section 14.4 or a later date specified
in or determinable in accordance with the Merger Agreement (provided, that if
the effective time of the merger is to be later than the date of the filing of
the certificate of merger, the effective time shall be fixed no later than the
time of the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General Partner.
14.3 Approval by Limited Partners of Merger or Consolidation.
(a) Except as provided in Section 14.3(d), the General Partner, upon its
approval of the Merger Agreement, shall direct that the Merger Agreement be
submitted to a vote of Limited Partners (other than Limited Partners holding
Class A Special Units, in their capacity as such), whether at a special meeting
or by written consent, in either case in accordance with the requirements of
Article XIII. A copy or a summary of the Merger Agreement shall be included in
or enclosed with the notice of a special meeting or the written consent.
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(b) Except as provided in Section 14.3(d), the Merger Agreement shall be
approved upon receiving the affirmative vote or consent of the holders of a Unit
Majority unless the Merger Agreement contains any provision that, if contained
in an amendment to this Agreement, the provisions of this Agreement or the
Delaware Act would require for its approval the vote or consent of a greater
percentage of the Outstanding Limited Partner Interests or of any class of
Limited Partners, in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.
(c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 14.4, the merger or consolidation may
be abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, in its discretion and without
Limited Partner approval, to (i) convert the Partnership or any Group Member to
another type of limited liability entity as provided by Section 17-219 of the
Delaware Act or (ii) merge the Partnership or any Group Member into, or convey
all of the Partnership's assets to, another limited liability entity which shall
be newly formed and shall have no assets, liabilities or operations at the time
of such merger or conveyance other than those it receives from the Partnership
or other Group Member, provided that in any such case (A) the General Partner
has received an Opinion of Counsel that the conversion, merger or conveyance, as
the case may be, would not result in the loss of the limited liability of any
Limited Partner or any member in the Operating Partnership or cause the
Partnership or Operating Partnership to be treated as an association taxable as
a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (ii) the sole purpose
of such conversion, merger or conveyance is to effect a mere change in the legal
form of the Partnership into another limited liability entity and iii) the
governing instruments of the new entity provide the Limited Partners with rights
and obligations that are, in all material respects, the same rights and
obligations of the Limited Partners hereunder.
14.4 Certificate of Merger. Upon the required approval by the General
Partner and the Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
14.5 Effect of Merger.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due to any of those business entities and all
other things and causes of action belonging to each of those business
entities, shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any
of those constituent business entities shall not revert and is not in any
way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests
in property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity and may be enforced
against it to the same extent as if the debts, liabilities and duties had
been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article shall not
be deemed to result in a transfer or assignment of assets or liabilities from
one entity to another.
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ARTICLE XV
Right to Acquire Limited Partner Interests
15.1 Right to Acquire Limited Partner Interests.
(a) Notwithstanding any other provision of this Agreement, if at any time
not more than 15% of the total Limited Partner Interests of any class then
Outstanding is held by Persons other than the General Partner and its
Affiliates, the General Partner shall then have the right, which right it may
assign and transfer in whole or in part to the Partnership or any Affiliate of
the General Partner, exercisable in its sole discretion, to purchase all, but
not less than all, of such Limited Partner Interests of such class then
Outstanding held by Persons other than the General Partner and its Affiliates,
at the greater of (x) the Current Market Price as of the date three days prior
to the date that the notice described in Section 15.1(b) is mailed and (y) the
highest price paid by the General Partner or any of its Affiliates for any such
Limited Partner Interest of such class purchased during the 90-day period
preceding the date that the notice described in Section 15.1(b) is mailed. As
used in this Agreement, (i) ''Current Market Price'' as of any date of any class
of Limited Partner Interests listed or admitted to trading on any National
Securities Exchange means the average of the daily Closing Prices (as
hereinafter defined) per limited partner interest of such class for the 20
consecutive Trading Days (as hereinafter defined) immediately prior to such
date; (ii) ''Closing Price'' for any day means the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted for trading on the principal National
Securities Exchange (other than the Nasdaq Stock Market) on which such Limited
Partner Interests of such class are listed or admitted to trading or, if such
Limited Partner Interests of such class are not listed or admitted to trading on
any National Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use, or, if on any such day
such Limited Partner Interests of such class are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day
no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as
determined reasonably and in good faith by the General Partner; and (iii)
''Trading Day'' means a day on which the principal National Securities Exchange
on which such Limited Partner Interests of any class are listed or admitted to
trading is open for the transaction of business or, if Limited Partner Interests
of a class are not listed or admitted to trading on any National Securities
Exchange, a day on which banking institutions in New York City generally are
open.
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Limited Partner Interests
granted pursuant to Section 15.1(a), the General Partner shall deliver to the
Transfer Agent notice of such election to purchase (the ''Notice of Election to
Purchase'') and shall cause the Transfer Agent to mail a copy of such Notice of
Election to Purchase to the Record Holders of Limited Partner Interests of such
class (as of a Record Date selected by the General Partner) at least 10, but not
more than 60, days prior to the Purchase Date. Such Notice of Election to
Purchase shall also be published for a period of at least three consecutive days
in at least two daily newspapers of general circulation printed in the English
language and published in the Borough of Manhattan, New York. The Notice of
Election to Purchase shall specify the Purchase Date and the price (determined
in accordance with Section 15.1(a)) at which Limited Partner Interests will be
purchased and state that the General Partner, its Affiliate or the Partnership,
as the case may be, elects to purchase such Limited Partner Interests, upon
surrender of Certificates representing such Limited Partner Interests in
exchange for payment, at such office or offices of the Transfer Agent as the
Transfer Agent may specify, or as may be required by any National Securities
Exchange on which such Limited Partner Interests are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a Record Holder of
Limited Partner Interests at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given regardless of
whether the owner receives such notice. On or prior to the Purchase Date,
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the General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the
aggregate purchase price of all of such Limited Partner Interests to be
purchased in accordance with this Section 15.1. If the Notice of Election to
Purchase shall have been duly given as aforesaid at least 10 days prior to the
Purchase Date, and if on or prior to the Purchase Date the deposit described in
the preceding sentence has been made for the benefit of the holders of Limited
Partner Interests subject to purchase as provided herein, then from and after
the Purchase Date, notwithstanding that any Certificate shall not have been
surrendered for purchase, all rights of the holders of such Limited Partner
Interests (including any rights pursuant to Articles IV, V, VI, and XII) shall
thereupon cease, except the right to receive the purchase price (determined in
accordance with Section 15.1(a)) for Limited Partner Interests therefor, without
interest, upon surrender to the Transfer Agent of the Certificates representing
such Limited Partner Interests, and such Limited Partner Interests shall
thereupon be deemed to be transferred to the General Partner, its Affiliate or
the Partnership, as the case may be, on the record books of the Transfer Agent
and the Partnership, and the General Partner or any Affiliate of the General
Partner, or the Partnership, as the case may be, shall be deemed to be the owner
of all such Limited Partner Interests from and after the Purchase Date and shall
have all rights as the owner of such Limited Partner Interests (including all
rights as owner of such Limited Partner Interests pursuant to Articles IV, V, VI
and XII).
(c) At any time from and after the Purchase Date, a holder of an
Outstanding Limited Partner Interest subject to purchase as provided in this
Section 15.1 may surrender his Certificate evidencing such Limited Partner
Interest to the Transfer Agent in exchange for payment of the amount described
in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
General Provisions
16.1 Addresses and Notices. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other
means of written communication to the Partner or Assignee at the address
described below. Any notice, payment or report to be given or made to a Partner
or Assignee hereunder shall be deemed conclusively to have been given or made,
and the obligation to give such notice or report or to make such payment shall
be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at
his address as shown on the records of the Transfer Agent or as otherwise shown
on the records of the Partnership, regardless of any claim of any Person who may
have an interest in such Partnership Securities by reason of any assignment or
otherwise. An affidavit or certificate of making of any notice, payment or
report in accordance with the provisions of this Section 16.1 executed by the
General Partner, the Transfer Agent or the mailing organization shall be prima
facie evidence of the giving or making of such notice, payment or report. If any
notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the
Partnership is returned by the United States Post Office marked to indicate that
the United States Postal Service is unable to deliver it, such notice, payment
or report and any subsequent notices, payments and reports shall be deemed to
have been duly given or made without further mailing (until such time as such
Record Holder or another Person notifies the Transfer Agent or the Partnership
of a change in his address) if they are available for the Partner or Assignee at
the principal office of the Partnership for a period of one year from the date
of the giving or making of such notice, payment or report to the other Partners
and Assignees. Any notice to the Partnership shall be deemed given if received
by the General Partner at the principal office of the Partnership designated
pursuant to Section 2.3. The General Partner may rely and shall be protected in
relying on any notice or other document from a Partner, Assignee or other Person
if believed by it to be genuine.
16.2 Further Action. The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this Agreement.
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16.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
16.4 Integration. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
16.5 Creditors. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
16.6 Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach of any other covenant, duty, agreement or condition.
16.7 Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute an agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto or, in the case of a Person acquiring a Unit,
upon accepting the certificate evidencing such Unit or executing and delivering
a Transfer Application as herein described, independently of the signature of
any other party.
16.8 Applicable Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
16.9 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
16.10 Consent of Partners. Each Partner hereby expressly consents and
agrees that, whenever in this Agreement it is specified that an action may be
taken upon the affirmative vote or consent of less than all of the Partners,
such action may be so taken upon the concurrence of less than all of the
Partners and each Partner shall be bound by the results of such action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
ENTERPRISE PRODUCTS GP, LLC
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as Limited
Partners of the Partnership, pursuant to Powers of Attorney
now and hereafter executed in favor of, and granted and
delivered to the General Partner.
By: Enterprise Products GP, LLC
General Partner, as attorney-in-fact
for the Limited Partners pursuant to
the Powers of Attorney granted pursuant
to Section 2.6.
By: /s/ O.S. Andras
O. S. Andras
President and Chief Executive Officer
Attachment I
DEFINED TERMS
''Acquisition'' means any transaction in which any Group Member acquires
(through an asset acquisition, merger, stock acquisition or other form of
investment) control over all or a portion of the assets, properties or business
of another Person for the purpose of increasing the operating capacity or
revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.
''Additional Limited Partner'' means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 10.4 and who is shown as such on the
books and records of the Partnership.
''Adjusted Capital Account'' means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
''Adjusted Capital Account'' of a Partner in respect of a General Partner
Interest, a Common Unit, a Subordinated Unit or any other specified interest in
the Partnership shall be the amount which such Adjusted Capital Account would be
if such General Partner Interest, Common Unit, Subordinated Unit, or other
interest in the Partnership were the only interest in the Partnership held by a
Partner from and after the date on which such General Partner Interest, Common
Unit, Subordinated Unit, or other interest was first issued.
''Adjusted Operating Surplus'' means, with respect to any period, Operating
Surplus generated during such period (a) less (i) any net increase in working
capital borrowings during such period and (ii) any net reduction in cash
reserves for Operating Expenditures during such period not relating to an
Operating Expenditure made during such period, and (b) plus (i) any net decrease
in working capital borrowings during such period and (ii) any net increase in
cash reserves for Operating Expenditures during such period required by any debt
instrument for the repayment of principal, interest or premium. Adjusted
Operating Surplus does not include that portion of Operating Surplus included in
clause (a)(i) or (a)(iii)(A) of the definition of Operating Surplus.
''Adjusted Property'' means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii). Once an Adjusted
Property is deemed contributed to a new partnership in exchange for an interest
in the new partnership, followed by the deemed liquidation of the Partnership
for federal income tax purposes upon a termination of the Partnership pursuant
to Treasury Regulation Section 1.708-(b)(1)(iv), such property shall thereafter
constitute a Contributed Property until the Carrying Value of such property is
subsequently adjusted pursuant to Section 5.5(d)(i) or 5.5(d)(ii).
''Affiliate'' means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term ''control'' means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, a Person shall only be considered an
"Affiliate" of the General Partner if such Person owns, directly or
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indirectly, 50% or more of the voting securities of the General Partner or
otherwise possesses the sole power to direct or cause the direction of the
management and policies of the General Partner.
''Agreed Allocation'' means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the
provisions of Section 6.1, including, without limitation, a Curative Allocation
(if appropriate to the context in which the term ''Agreed Allocation'' is used).
''Agreed Value'' of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to the fair market value of
each Contributed Property.
''Agreement'' means this Second Amended and Restated Agreement of Limited
Partnership of Enterprise Products Partners L.P., as it may be amended,
supplemented or restated from time to time.
''Assignee'' means a Non-citizen Assignee or a Person to whom one or more
Limited Partner Interests have been transferred in a manner permitted under this
Agreement and who has executed and delivered a Transfer Application as required
by this Agreement, but who has not been admitted as a Substituted Limited
Partner.
''Associate'' means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any class
of voting stock or other voting interest; (b) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such Person, or any relative of such spouse, who has the same
principal residence as such Person.
''Audit and Conflicts Committee'' means a committee of the Board of
Directors of the General Partner composed entirely of two or more directors who
are neither members, officers nor employees of the General Partner nor members,
officers, directors or employees of any Affiliate of the General Partner.
''Available Cash'' means, with respect to any Quarter ending prior to the
Liquidation Date,
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand at the end of such Quarter, and (ii) all additional cash and
cash equivalents of the Partnership Group on hand on the date of
determination of Available Cash with respect to such Quarter resulting from
(A) borrowings under the Working Capital Facility made subsequent to the
end of such Quarter or (B) Interim Capital Transactions after the end of
such Quarter designated by the General Partner as Operating Surplus in
accordance with clause (a)(iii)(A) of the definition of Operating Surplus,
less
(b) the amount of any cash reserves that is necessary or appropriate
in the reasonable discretion of the General Partner to (i) provide for the
proper conduct of the business of the Partnership Group (including reserves
for future capital expenditures and for anticipated future credit needs of
the Partnership Group) subsequent to such Quarter, (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any Group Member is a
party or by which it is bound or its assets are subject or (iii) provide
funds for distributions under Section 6.4 or 6.5 in respect of any one or
more of the next four Quarters; provided, however, that the General Partner
may not establish cash reserves pursuant to (iii) above if the effect of
such reserves would be that the Partnership is unable to distribute the
Minimum Quarterly Distribution on all Common Units with respect to such
Quarter; and, provided further, that disbursements made by a Group Member
or cash reserves established, increased or reduced after the end of such
Quarter, but on or before the date of determination of Available Cash with
respect to such Quarter, shall be deemed to have been made, established,
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increased or reduced, for purposes of determining Available Cash, within
such Quarter if the General Partner so determines.
Notwithstanding the foregoing, ''Available Cash'' with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter
shall equal zero.
''Book-Tax Disparity'' means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
''Business Day'' means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the states of New York or Texas shall not be regarded as a Business
Day.
''Capital Account'' means the capital account maintained for a Partner
pursuant to Section 5.5. The ''Capital Account'' of a Partner in respect of a
General Partner Interest, a Common Unit, a Subordinated Unit, or any other
Partnership Interest shall be the amount which such Capital Account would be if
such General Partner Interest, Common Unit, Subordinated Unit, or other
Partnership Interest were the only interest in the Partnership held by a Partner
from and after the date on which such General Partner Interest, Common Unit,
Subordinated Unit, or other Partnership Interest was first issued.
''Capital Contribution'' means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership.
''Capital Improvement'' means any (a) addition or improvement to the
capital assets owned by any Group Member or (b) acquisition of existing, or the
construction of new, capital assets, in each case made to increase the operating
capacity or revenues of the Partnership Group from the operating capacity or
revenues of the Partnership Group existing immediately prior to such addition,
improvement, acquisition or construction.
''Capital Surplus'' has the meaning assigned to such term in Section
6.3(a).
''Carrying Value'' means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
''Cause'' means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
''Certificate'' means a certificate, substantially in the form of Exhibit A
to this Agreement or in such other form as may be adopted by the General Partner
in its discretion, issued by the Partnership evidencing ownership of one or more
Common Units or a certificate, in such form as may be adopted by the General
Partner in its discretion, issued by the Partnership evidencing ownership of one
or more other Partnership Securities.
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''Certificate of Limited Partnership'' means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of the State of
Delaware as referenced in Section 2.1, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to time.
''Citizenship Certification'' means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
''Claim'' has the meaning assigned to such term in Section 7.12(c).
''Class A Special Units'' means the special class of Units designated and
created pursuant to Section 5.12.
"Class A Special Units Conversion Dates" has the meaning assigned to such
term in Section 5.12.
''Closing Date'' means July 31, 1998.
''Closing Price'' has the meaning assigned to such term in Section 15.1(a).
''Code'' means the Internal Revenue Code of 1986, as amended and in effect
from time to time and as interpreted by the applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of successor law.
''Combined Interest'' has the meaning assigned to such term in Section
11.3(a).
"Combined Performance Test" shall be met if, at any time during the
Production Period, Gas Production reaches 725 billion cubic feet on a cumulative
basis during the Production Period and Tejas provides written notice to the
General Partner stating that such production level has been reached during the
Production Period and which notice shall include information supporting that
statement reasonably acceptable to the General Partner.
''Commission'' means the United States Securities and Exchange Commission.
''Common Unit'' means a Partnership Security representing a fractional part
of the Partnership Interests of all Limited Partners and Assignees and of the
General Partner (exclusive of its interest as a holder of a General Partner
Interest) and having the rights and obligations specified with respect to Common
Units in this Agreement. The term ''Common Unit'' does not refer to a
Subordinated Unit or a Class A Special Unit prior to its conversion into a
Common Unit pursuant to the terms hereof.
''Common Unit Arrearage'' means, with respect to any Common Unit, whenever
issued, as to any Quarter within the Subordination Period, the excess, if any,
of (a) the Minimum Quarterly Distribution with respect to a Common Unit in
respect of such Quarter over (b) the sum of all Available Cash distributed with
respect to a Common Unit in respect of such Quarter pursuant to Section
6.4(a)(i).
''Contributed Property'' means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership (or deemed contributed to a new partnership on termination of the
Partnership pursuant to Section 708 of the Code). Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall
no longer constitute a Contributed Property, but shall be deemed an Adjusted
Property.
''Cumulative Common Unit Arrearage'' means, with respect to any Common
Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of
(a) the sum resulting from adding together the Common Unit Arrearage as to an
Initial Common Unit for each of the Quarters within the Subordination Period
ending on or before the last day of
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such Quarter over (b) the sum of any distributions theretofore made pursuant to
Section 6.4(a)(ii) and the second sentence of Section 6.5 with respect to an
Initial Common Unit (including any distributions to be made in respect of the
last of such Quarters).
''Curative Allocation'' means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).
''Current Market Price'' has the meaning assigned to such term in Section
15.1(a).
''Delaware Act'' means the Delaware Revised Uniform Limited Partnership
Act, 6 Del C. Paragraph 17-101, et seq., as amended, supplemented or restated
from time to time, and any successor to such statute.
''Departing Partner'' means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 11.1 or 11.2.
''Economic Risk of Loss'' has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
''Eligible Citizen'' means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business or proposes to
do business from time to time, and whose status as a Limited Partner or Assignee
does not or would not subject such Group Member to a significant risk of
cancellation or forfeiture of any of its properties or any interest therein.
''EPC'' means Enterprise Products Company, a Texas Subchapter S
corporation.
''EPC Partners II'' means EPC Partners II, Inc., a Delaware corporation.
"EPCO Agreement" means the EPCO Agreement dated the Closing Date among
EPCO, the Partnership, the Operating Partnership and the General Partner.
''Event of Withdrawal'' has the meaning assigned to such term in Section
11.1(a).
''Existing Capital Commitment Amount'' means $46.5 million, which amount
represents the aggregate estimated capital costs to be incurred by the
Partnership Group in connection with the following proposed projects:
Estimated
Proposed Project Capital Costs
(i) Baton Rouge Fractionator.................$20.0 Million
(ii)Tri-State Pipeline.......................$10.0 Million
(iiiWilprise Pipeline.........................$8.0 Million
(iv)NGL Product Chiller.......................$8.5 Million
Total................................$46.5 Million
each of which is described in greater detail in the Registration Statement;
provided, however, that if for any reason (other than as a result of the
cancellation of such project) the actual capital costs incurred by the
Partnership Group in connection with any of the proposed projects
referenced above is less than the estimated capital cost for such project
as set forth above, the ''Existing Capital Commitment Amount'' shall be
reduced by the amount of such difference.
''Final Subordinated Units'' has the meaning assigned to such term in
Section 6.1(d)(x).
''First Liquidation Target Amount'' has the meaning assigned to such term
in Section 6.1(c)(i)(E).
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''First Target Distribution'' means $0.506 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on September 30,
1998, it means the product of $0.506 multiplied by a fraction of which the
numerator is the number of days in the period commencing on the Closing Date and
ending on September 30, 1998, and of which the denominator is 92), subject to
adjustment in accordance with Sections 6.6 and 6.9.
"Force Majeure Event" means an event during which Gas Production is
reduced, in whole or in part, by an event reasonably beyond the control of the
party producing such Gas Production, including but not limited to any event of
force majeure under the Shell Processing Agreement (as defined in the Tejas
Contribution Agreement) or any of the Dedicated Leases under, and as defined in,
the Shell Processing Agreement (as defined in the Tejas Contribution Agreement).
"Gas Production" means natural gas produced from all Dedicated Leases (as
defined in the Shell Processing Agreement (as defined in the Tejas Contribution
Agreement)).
''General Partner'' means Enterprise Products GP, LLC, a Delaware limited
liability company, and its successors and permitted assigns as general partner
of the Partnership.
''General Partner Interest'' means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any Limited Partner Interest held by it) which may be evidenced by
Partnership Securities or a combination thereof or interest therein, and
includes any and all benefits to which the General Partner is entitled as
provided in this Agreement, together with all obligations of the General Partner
to comply with the terms and provisions of this Agreement.
''Group'' means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Securities.
''Group Member'' means a member of the Partnership Group.
''Holder'' as used in Section 7.12, has the meaning assigned to such term
in Section 7.12(a).
''Incentive Distributions'' means any amount of cash distributed to the
General Partner pursuant to Sections 6.4(a)(v), 6.4(a)(vi), 6.4(a)(vii),
6.4(b)(iii), 6.4(b)(iv) or 6.4(b)(v) that exceeds that amount equal to 1% of the
aggregate amount of cash then being distributed pursuant to such provisions.
''Indemnified Persons'' has the meaning assigned to such term in Section
7.12(c).
''Indemnitee'' means (a) the General Partner, any Departing Partner and any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, (b) any Person who is or was a member, director, officer, employee,
agent or trustee of a Group Member, (c) any Person who is or was an officer,
member, partner, director, employee, agent or trustee of the General Partner or
any Departing Partner or any Affiliate of the General Partner or any Departing
Partner, or any Affiliate of any such Person and (d) any Person who is or was
serving at the request of the General Partner or any Departing Partner or any
such Affiliate as a director, officer, employee, member, partner, agent,
fiduciary or trustee of another Person; provided, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for- services basis, trustee,
fiduciary or custodial services.
''Initial Common Units'' means the Common Units sold in the Initial
Offering.
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''Initial Limited Partners'' means EPC Partners II, the Underwriters, and
Tejas, in each case upon being admitted to the Partnership in accordance with
Section 10.1.
''Initial Offering'' means the initial offering and sale of Common Units to
the public, as described in the Registration Statement.
''Initial Unit Price'' means (a) with respect to the Common Units and the
Subordinated Units, the initial public offering price per Common Unit at which
the Underwriters offered the Common Units to the public for sale as set forth on
the cover page of the prospectus included as part of the Registration Statement
and first issued at or after the time the Registration Statement first became
effective or (b) with respect to any other class or series of Units, the price
per Unit at which such class or series of Units is initially sold by the
Partnership, as determined by the General Partner, in each case adjusted as the
General Partner determines to be appropriate to give effect to any distribution,
subdivision or combination of Units.
''Interim Capital Transactions'' means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness and sales of debt securities (other than borrowings under the
Working Capital Facility and other than for items purchased on open account in
the ordinary course of business) by any Group Member; (b) sales of equity
interests by any Group Member (including Common Units sold to the underwriters
pursuant to the exercise of the Over-Allotment Option); and (c) sales or other
voluntary or involuntary dispositions of any assets of any Group Member (other
than (i) sales or other dispositions of inventory, accounts receivable and other
assets in the ordinary course of business, and (ii) sales or other dispositions
of assets as part of normal retirements or replacements), in each case prior to
the Liquidation Date.
''Issue Price'' means the price at which a Unit is purchased from the
Partnership, after taking into account any sales commission or underwriting
discount charged to the Partnership.
''Limited Partner'' means, unless the context otherwise requires, (a) each
Initial Limited Partner, each Substituted Limited Partner, each Additional
Limited Partner and any Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 11.3 or (b) solely for purposes
of Articles V, VI, VII and IX and Sections 12.3 and 12.4, each Assignee.
''Limited Partner Interest'' means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by Common Units,
Subordinated Units, Class A Special Units, or other Partnership Securities or a
combination thereof or interest therein, and includes any and all benefits to
which such Limited Partner or Assignee is entitled as provided in this
Agreement, together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement.
''Liquidation Date'' means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
''Liquidator'' means one or more Persons selected by the General Partner to
perform the functions described in Section 12.3 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.
''Merger Agreement'' has the meaning assigned to such term in Section 14.1.
''Minimum Quarterly Distribution'' means $0.45 per Unit per Quarter (or
with respect to the period commencing on the Closing Date and ending on
September 30, 1998, it means the product of $0.45 multiplied by a fraction of
which
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the numerator is the number of days in the period commencing on the Closing Date
and ending on September 30, 1998, and of which the denominator is 92), subject
to adjustment in accordance with Sections 6.6 and 6.9.
''National Securities Exchange'' means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act of 1934, as
amended, supplemented or restated from time to time, and any successor to such
statute, or the Nasdaq Stock Market or any successor thereto.
''Net Agreed Value'' means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
''Net Income'' means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of loss and deduction (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Income shall be determined in accordance with Section 5.5(b) and shall
not include any items specially allocated under Section 6.1(d).
''Net Loss'' means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items taken into
account in the computation of Net Termination Gain or Net Termination Loss) for
such taxable year over the Partnership's items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation
of Net Loss shall be determined in accordance with Section 5.5(b) and shall not
include any items specially allocated under Section 6.1(d).
''Net Termination Gain'' means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Gain shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
''Net Termination Loss'' means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net
Termination Loss shall be determined in accordance with Section 5.5(b) and shall
not include any items of income, gain or loss specially allocated under Section
6.1(d).
''Non-citizen Assignee'' means a Person whom the General Partner has
determined in its discretion does not constitute an Eligible Citizen and as to
whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 4.9.
''Nonrecourse Built-in Gain'' means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) and
6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
''Nonrecourse Deductions'' means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
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''Nonrecourse Liability'' has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
''Notice of Election to Purchase'' has the meaning assigned to such term in
Section 15.1(b) hereof.
''Operating Expenditures'' means all Partnership Group expenditures,
including, but not limited to, taxes, reimbursements of the General Partner,
debt service payments, and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal of and premium on
indebtedness shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii)
made in connection with the refinancing or refunding of indebtedness with
the proceeds from new indebtedness or from the sale of equity interests.
For purposes of the foregoing, at the election and in the reasonable
discretion of the General Partner, any payment of principal or premium
shall be deemed to be refunded or refinanced by any indebtedness incurred
or to be incurred by the Partnership Group within 180 days before or after
such payment to the extent of the principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i) capital expenditures
made for Acquisitions or for Capital Improvements, (ii) payment of
transaction expenses relating to Interim Capital Transactions or (iii)
distributions to Partners. Where capital expenditures are made in part for
Acquisitions or for Capital Improvements and in part for other purposes,
the General Partner's good faith allocation between the amounts paid for
each shall be conclusive.
''Operating Partnership'' means Enterprise Products Operating L.P., a
Delaware limited partnership, and any successors thereto.
''Operating Partnership Agreement'' means the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as it may be
amended, supplemented or restated from time to time.
''Operating Surplus,'' means, with respect to any period ending prior to
the Liquidation Date, on a cumulative basis and without duplication:
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group on hand as of the close of business on the Closing Date (other than
the Existing Capital Commitment Amount), (ii) all cash receipts of the
Partnership Group for the period beginning on the Closing Date and ending
with the last day of such period, other than cash receipts from Interim
Capital Transactions (except to the extent specified in Section 6.5 and
except as set forth in clause (iii) immediately following), and (iii) as
determined by the General Partner, all or any portion of any cash receipts
of the Partnership Group during such period, or after the end of such
period but on or before the date of determination of Operating Surplus with
respect to such period, that constitute (A) cash receipts from Interim
Capital Transactions, provided that the total amount of cash receipts from
Interim Capital Transactions designated as ''Operating Surplus'' by the
General Partner pursuant to this clause (iii) since the Closing Date may
not exceed an aggregate amount equal to $60.0 million, and/or (B) cash
receipts from borrowings under the Working Capital Facility, less
(b) the sum of (i) Operating Expenditures for the period beginning on
the Closing Date and ending with the last day of such period and (ii) the
amount of cash reserves that is necessary or advisable in the reasonable
discretion of the General Partner to provide funds for future Operating
Expenditures, provided, however, that disbursements made (including
contributions to a Group Member or disbursements on behalf of a Group
Member) or cash reserves established, increased or reduced after the end of
such period but on or before the date of determination of Operating Surplus
with respect to such period shall be deemed to have been made, established,
increased or reduced, for purposes of determining Operating Surplus, within
such period if the General Partner so determines.
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Notwithstanding the foregoing, ''Operating Surplus'' with respect to the
Quarter in which the Liquidation Date occurs and any subsequent Quarter
shall equal zero.
''Opinion of Counsel'' means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner in its reasonable discretion.
''Option Closing Date'' has the meaning assigned to such term in the
Underwriting Agreement.
''Outstanding'' means, with respect to Partnership Securities, all
Partnership Securities that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the date of
determination; provided, however, that, with respect to Partnership Securities
other than Class A Special Units, if at any time any Person or Group (other than
the General Partner or its Affiliates) beneficially owns 20% or more of any
Outstanding Partnership Securities of any class then Outstanding, all
Partnership Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a
meeting of Limited Partners to vote on any matter (unless otherwise required by
law), calculating required votes, determining the presence of a quorum or for
other similar purposes under this Agreement, except that Common Units so owned
shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such
Common Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement).
''Over-Allotment Option'' means the over-allotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.
''Parity Units'' means Common Units and all other Units having rights to
distributions or in liquidation ranking on a parity with the Common Units.
''Partner Nonrecourse Debt'' has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
''Partner Nonrecourse Debt Minimum Gain'' has the meaning set forth in
Treasury Regulation Section 1.704- 2(i)(2).
''Partner Nonrecourse Deductions'' means any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Partner Nonrecourse Debt.
''Partners'' means the General Partner, the Limited Partners and the
holders of Common Units and Subordinated Units.
''Partnership'' means Enterprise Products Partners L.P., a Delaware limited
partnership, and any successors thereto.
''Partnership Group'' means the Partnership, the Operating Partnership and
any Subsidiary of either such entity, treated as a single consolidated entity.
''Partnership Interest'' means an ownership interest in the Partnership,
which shall include General Partner Interests and Limited Partner Interests.
''Partnership Minimum Gain'' means that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
''Partnership Security'' means any class or series of equity interest in
the Partnership (but excluding any options, rights, warrants and appreciation
rights relating to any equity interest in the Partnership), including, without
limitation, Common Units, Subordinated Units, and Class A Special Units.
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''Per Unit Capital Amount'' means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General Partner
who holds Units.
''Percentage Interest'' means as of the date of such determination (a) with
respect to Sections 6.1(a) and (b), (i) as to the General Partner, 1.0%, and
(ii) as to any Unitholder or Assignee holding Common Units or Subordinated
Units, the product obtained by multiplying (A) 99% by (B) the quotient obtained
by dividing (x) the number of Common Units and Subordinated Units held by such
Unitholder or Assignee by (y) the total number of all Outstanding Common Units
and Outstanding Subordinated Units, and (b) with respect to Sections other than
Sections 6.1(a) and (b), (i) as to the General Partner, 1.0%, and (ii) as to any
Unitholder or Assignee holding Units, the quotient obtained by multiplying (A)
99% by (B) the quotient obtained by dividing (x) the number of Units held by
such Unitholder or Assignee by (y) the total number of all Outstanding Units.
"Performance Tests" means the Year 2000 Performance Test, the Year 2001
Performance Test and the Combined Performance Test.
''Person'' means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
''Pro Rata'' means (a) when modifying Units or any class thereof,
apportioned equally among all designated Units in accordance with their relative
Percentage Interests and (b) when modifying Partners and Assignees, apportioned
among all Partners and Assignees in accordance with their respective Percentage
Interests.
''Production Period'' means calendar years 2000 and 2001, as such periods
may be extended as a result of Force Majeure Events in accordance with the Year
2000 Performance Test and the Year 2001 Performance Test.
''Purchase Date'' means the date determined by the General Partner as the
date for purchase of all Outstanding Units (other than Units owned by the
General Partner and its Affiliates) pursuant to Article XV.
''Quarter'' means, unless the context requires otherwise, a fiscal quarter
of the Partnership.
''Recapture Income'' means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
''Record Date'' means the date established by the General Partner for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution or to
participate in any offer.
''Record Holder'' means the Person in whose name a Common Unit is
registered on the books of the Transfer Agent as of the opening of business on a
particular Business Day, or with respect to other Partnership Securities, the
Person in whose name any such other Partnership Security is registered on the
books which the General Partner has caused to be kept as of the opening of
business on such Business Day.
''Redeemable Interests'' means any Partnership Interests for which a
redemption notice has been given, and has not been withdrawn, pursuant to
Section 4.10.
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''Registration Statement'' means the Registration Statement on Form S-1
(Registration No. 333-52537) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
''Required Allocations'' means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or 6.1(c)(ii) and
(b) any allocation of an item of income, gain, loss or deduction pursuant to
Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vi), 6.1(d)(vii) or
6.1(d)(ix).
''Residual Gain'' or ''Residual Loss'' means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
''Restricted Activities'' means the conduct within North America of the
types of businesses and activities engaged in by EPC and its Affiliates as of
May 31, 1998; provided, however, that such term shall not include any business
or activities associated with the assets, properties or businesses of EPC and
its Affiliates as of June 2, 1998 (other than the Sorrento Pipeline System). As
used in this defined term, the Partnership Group and any Subsidiary of a Group
Member shall not be considered to be ''Affiliates'' of EPC.
''Second Liquidation Target Amount'' has the meaning assigned to such term
in Section 6.1(c)(i)(F).
''Second Target Distribution'' means $0.617 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on September 30,
1998, it means the product of $0.617 multiplied by a fraction of which the
numerator is equal to the number of days in the period commencing on the Closing
Date and ending on September 30, 1998, and of which the denominator is 92),
subject to adjustment in accordance with Sections 6.6 and 6.9.
''Securities Act'' means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to such statute.
"Series 2002B Class Special Units" has the meaning assigned to such term in
Section 5.3(d).
''Special Approval'' means approval by a majority of the members of the
Audit and Conflicts Committee.
''Subordinated Unit'' means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the
rights and obligations specified with respect to Subordinated Units in this
Agreement. The term ''Subordinated Unit'' as used herein does not include a
Common Unit.
''Subordination Period'' means the period commencing on the Closing Date
and ending on the first to occur of the following dates:
(a) the first day of any Quarter beginning after June 30, 2003, in
respect of which (i) (A) distributions of Available Cash from Operating
Surplus on each of the Outstanding Common Units and Subordinated Units with
respect to each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the
Minimum Quarterly Distribution on all Outstanding Common Units and
Subordinated Units during such periods and (B) the Adjusted Operating
Surplus generated during each of the three consecutive, non-overlapping
four-Quarter periods immediately preceding such date equaled or exceeded
the sum of the Minimum Quarterly Distribution on all of the Common Units
and Subordinated Units that were outstanding during such periods on a fully
diluted basis (i.e., taking into account for purposes of such determination
all Outstanding Common Units, all Outstanding Subordinated Units, all
Common Units and Subordinated Units issuable upon exercise of employee
options that have, as of the date of determination, already vested or are
scheduled to vest prior to the end of the Quarter immediately following the
Quarter with respect to which such
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determination is made, and all Common Units and Subordinated Units that
have as of the date of determination, been earned by but not yet issued to
management of the Partnership in respect of incentive compensation), plus
the related distribution on the general partner Interest in the Partnership
and on the general partner interest in the Operating Partnership and (ii)
there are no Cumulative Common Unit Arrearages; and
(b) the date on which the General Partner is removed as general
partner of the Partnership upon the requisite vote by holders of
Outstanding Units under circumstances where Cause does not exist and Units
held by the General Partner and its Affiliates are not voted in favor of
such removal.
''Subsidiary'' means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard to
the occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
''Substituted Limited Partner'' means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 10.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
''Surviving Business Entity'' has the meaning assigned to such term in
Section 14.2(b).
"Tejas" means Tejas Energy, LLC, a Delaware limited liability company.
"Tejas Contribution Agreement" means the Contribution Agreement among
Tejas, Tejas Midstream Enterprises, LLC, the Partnership, the Operating
Partnership, EPC, the General Partner and EPC Partners II, dated September 17,
1999.
''Third Target Distribution'' means $0.784 per Unit per Quarter (or, with
respect to the period commencing on the Closing Date and ending on September 30,
1998, it means the product of $0.784 multiplied by a fraction of which the
numerator is equal to the number of days in the period commencing on the Closing
Date and ending on September 30, 1998, and of which the denominator is 92),
subject to adjustment in accordance with Sections 6.6 and 6.9.
''Trading Day'' has the meaning assigned to such term in Section 15.1(a).
''Transfer'' has the meaning assigned to such term in Section 4.4(a).
''Transfer Agent'' means such bank, trust company or other Person
(including the General Partner or one of its Affiliates) as shall be appointed
from time to time by the Partnership to act as registrar and transfer agent for
the Common Units and as may be appointed from time to time by the Partnership to
act as registrar and transfer agent for any other Partnership Securities;
provided that if no Transfer Agent is specifically designated for any such other
Partnership Securities, the General Partner shall act in such capacity.
''Transfer Application'' means an application and agreement for transfer of
Limited Partner Interests in the form set forth on the back of a Certificate or
in a form substantially to the same effect in a separate instrument.
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''Underwriter'' means each Person named as an underwriter in Schedule 1 to
the Underwriting Agreement who purchases Common Units pursuant thereto.
''Underwriting Agreement'' means the Underwriting Agreement dated July 27,
1998, among the Underwriters, the Partnership and certain other parties,
providing for the purchase of Common Units by such Underwriters.
''Unit'' means a Partnership Security that is designated as a ''Unit'' and
shall include Common Units, Subordinated Units, and Class A Special Units but
shall not include a General Partner Interest; provided, that each Common Unit at
any time Outstanding shall represent the same fractional part of the Partnership
Interests of all Limited Partners holding Common Units as each other Common
Unit, each Subordinated Unit at any time Outstanding shall represent the same
fractional part of the Partnership Interests of all Limited Partners holding
Subordinated Units as each other Subordinated Units, and each Class A Special
Unit at any time Outstanding shall represent the same fractional part of the
Partnership Interests of all Limited Partners holding Class A Special Units as
each other Class A Special Unit.
''Unitholders'' means the holders of Common Units, Subordinated Units, and
Class A Special Units.
''Unit Majority'' means, (i) during the Subordination Period, at least a
majority of the Outstanding Common Units, excluding any Common Units held by the
General Partner and its Affiliates, and (ii) following the end of the
Subordination Period, at least a majority of the Outstanding Common Units.
''Unpaid MQD'' has the meaning assigned to such term in Section
6.1(c)(i)(C).
''Unrealized Gain'' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section 5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to any adjustment
to be made pursuant to Section 5.5(d) as of such date).
''Unrealized Loss'' attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
''Unrecovered Capital'' means at any time, with respect to a Unit, the
Initial Unit Price less the sum of all distributions constituting Capital
Surplus theretofore made in respect of an Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of such Units.
''U.S. GAAP'' means United States Generally Accepted Accounting Principles
consistently applied.
''Withdrawal Opinion of Counsel'' has the meaning assigned to such term in
Section 11.1(b).
"Working Capital Facility" means any working capital credit facility of the
Partnership or the Operating Partnership that requires the outstanding balance
of any working capital borrowings thereunder to be reduced to $0 for at least
fifteen consecutive calendar days each fiscal year.
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"Year 2000 Performance Test" shall be met if, at any point in time during
calendar year 2000, as such period shall be extended for a period of days equal
to the number of days during calendar year 2000 when there is a Force Majeure
Event, Gas Production meets either of the following contingencies, and Tejas
provides written notice to the General Partner stating that such contingency has
been met and which notice includes information supporting that statement
reasonably acceptable to the General Partner. The two contingencies are:
1. Gas Production being 950 million cubic feet per day for 180 days
(there being no requirement for such days to be consecutive) during
calendar year 2000 as such period may be extended due to Force Majeure
Events; or
2. Gas Production being 375 billion cubic feet on a cumulative basis
during calendar year 2000 as such period may be extended due to Force
Majeure Events.
"Year 2001 Performance Test"shall be met if, at any point in time during
calendar year 2001, as such period shall be extended for a period of days equal
to the number of days during calendar year 2001 when there is a Force Majeure
Event, Gas Production meets either of the following contingencies, and Tejas
provides written notice to the General Partner stating that such contingency has
been met and which notice includes information supporting that statement
reasonably acceptable to the General Partner. The two contingencies are:
1. Gas production being 900 million cubic feet per day for 180 days
(there being no requirement for such days to be consecutive) during
calendar year 2001 as such period may be extended due to Force Majeure
Events; or
2. Gas Production being 350 billion cubic feet on a cumulative basis
during calendar year 2001 as such period may be extended due to Force
Majeure Events.
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FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC,
A Delaware Limited Liability Company
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LCC,
A Delaware Limited Liability Company
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS
1.01 Definitions..................................................1
1.02 Construction.................................................1
ARTICLE 2: ORGANIZATION
2.01 Formation....................................................2
2.02 Name.........................................................2
2.03 Registered Office; Registered Agent; Principal Office in the
United States; Other Offices.................................2
2.04 Purposes.....................................................2
2.05 Term.........................................................2
2.06 No State-Law Partnership.....................................2
ARTICLE 3: MATTERS RELATING TO MEMBERS
3.02 Creation of Additional Membership Interest...................3
3.03 Access to Information........................................3
3.04 Liability to Third Parties...................................3
3.05 Withdrawal...................................................3
ARTICLE 4: CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions........................................4
4.02 Loans........................................................4
4.03 Return of Contributions......................................4
4.04 Capital Accounts.............................................4
4.05 Deficit Capital Accounts.....................................5
ARTICLE 5: DISTRIBUTIONS AND ALLOCATIONS
5.01 Distributions................................................5
5.02 Distributions on Dissolution and Winding Up..................5
5.03 Allocations..................................................5
5.04 Varying Interests............................................5
ARTICLE 6: MANAGEMENT
-1-
6.01 Management...................................................6
6.02 Board of Directors...........................................7
6.03 Executive Committee.........................................10
6.04 Officers....................................................11
6.04 Duties of Officers and Directors............................13
6.05 Compensation................................................13
6.06 Indemnification.............................................14
6.07 Limitation of Indemnification...............................15
ARTICLE 7: TAXES
7.01 Tax Returns.................................................16
7.02 Tax Elections...............................................16
7.03 Tax Matters Member..........................................17
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books........................................17
8.02 Reports.....................................................18
8.03 Bank Accounts...............................................18
ARTICLE 9: DISPOSITION OF COMPANY INTERESTS
9.01 Dispositions and Encumbrances of Membership Interests.......18
9.02 Transfer of Tejas Energy Rights.............................19
9.03 Transfer of EPC II Rights...................................20
ARTICLE 10: REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MEMBERS
10.01 Representations, Warranties and Covenants...................20
ARTICLE 11: DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution.................................................21
11.02 Winding-Up and Termination..................................21
11.03 Certificate of Cancellation.................................22
ARTICLE 12: GENERAL PROVISIONS
12.01 Intentionally Deleted.......................................22
12.02 Notices.....................................................22
12.03 Entire Agreement; Superseding Effect........................23
12.04 Effect of Waiver or Consent.................................23
12.05 Amendment or Restatement....................................23
12.06 Binding Effect..............................................23
12.07 Governing Law; Severability.................................23
12.08 Further Assurances..........................................23
12.09 Waiver of Certain Rights....................................24
-2-
12.10 Counterparts................................................24
Attachment I Definitions
Exhibit A Members and Sharing Ratios
-3-
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC
A Delaware Limited Liability Company
THIS FIRST AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") of ENTERPRISE PRODUCTS GP, LLC (the "Company"), dated effective as
of September 17, 1999 (the "Effective Date"), is adopted, executed and agreed
to, for good and valuable consideration, by EPC Partners II, Inc. , a Delaware
corporation ("EPC II"), Dan Duncan LLC, a Texas limited liability company
("DDLLC") and Tejas Energy, LLC, a Delaware limited liability company ("Tejas
Energy").
RECITALS
WHEREAS, Enterprise Products Company, a Delaware corporation ("EPC") and
DDLLC formed the Company on April 9, 1998 with EPC as a 95% member and DDLLC as
a 5% member; and
WHEREAS, EPC assigned its 95% membership interest in the Company to EPC II
effective as of July 30, 1998.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
agreed by the parties, EPC II, DDLLC and Tejas Energy hereby agree as follows:
ARTICLE 1: DEFINITIONS
1.01 Definitions. Each capitalized term used herein shall have the meaning
given such term in Attachment I.
1.02 Construction. Unless the context requires otherwise: (a) the gender
(or lack of gender) of all words used in this Agreement includes the masculine,
feminine, and neuter; (b) references to Articles and Sections refer to Articles
and Sections of this Agreement; (c) references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is made a part hereof for all
purposes; (d) references to Laws refer to such Laws as they may be amended from
time to time, and references to particular provisions of a Law include any
corresponding provisions of any succeeding Law; and (e) references to money
refer to legal currency of the United States of America.
ARTICLE2: ORGANIZATION
2.01 Formation. The Company was organized as a Delaware limited liability
company by the filing of a Certificate of Formation (the "Delaware Certificate")
on April 9, 1998 with the Secretary of State of Delaware pursuant to the Act.
2.02 Name. The name of the Company is "Enterprise Products GP, LLC" and all
Company business must be conducted in that name or such other names that comply
with Law as the Board of Directors may select.
2.03 Registered Office; Registered Agent; Principal Office in the United
States; Other Offices. The registered office of the Company required by the Act
to be maintained in the State of Delaware shall be the office of the initial
registered agent named in the Delaware Certificate or such other office (which
need not be a place of business of the Company) as the Board of Directors may
designate in the manner provided by Law. The registered agent of the Company in
the State of Delaware shall be the initial registered agent named in the
Delaware Certificate or such other Person or Persons as the Board of Directors
may designate in the manner provided by Law. The principal office of the Company
in the United States shall be at such place as the Board of Directors may
designate, which need not be in the State of Delaware, and the Company shall
maintain records there or such other place as the Board of Directors shall
designate and shall keep the street address of such principal office at the
registered office of the Company in the State of Delaware. The Company may have
such other offices as the Board of Directors may designate.
2.04 Purposes. The purposes of the Company are the transaction of any or
all lawful business for which limited liability companies may be organized under
the Act; provided, however, that for so long as it is the general partner of the
MLP, (a) the Company's sole business will be to act as the general partner or
managing member of the MLP, the OLP, and any other partnership or limited
liability company of which the MLP or the OLP is, directly or indirectly, a
partner or managing member and to undertake activities that are ancillary or
related thereto (including being a limited partner in the partnership), and
(b) The Company shall not engage in any business or activity or incur any debts
or liabilities except in connection with or incidental to (i) its performance as
general partner or managing member of one or more Group Members or as described
in or contemplated by the Registration Statement or (ii) the acquiring, owning
or disposing of debt or equity securities in any Group Member.
2.05 Term. The period of existence of the Company (the "Term") commenced on
April 9, 1998, and shall end at such time as a certificate of cancellation is
filed with the Secretary of State of Delaware in accordance with Section 11.03.
2.06 No State-Law Partnership. The Members intend that the Company not be a
partnership (including a limited partnership) or joint venture, and that no
Member be a partner or joint venturer of any other Member, for any purposes
other than federal and state tax purposes, and this Agreement may not be
construed to suggest otherwise.
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ARTICLE 3: MATTERS RELATING TO MEMBERS
3.01 Members. DDLLC and EPC II were previously admitted as Members of the
Company, and Tejas Energy is hereby admitted as a Member of the Company
effective as of the date first set forth above.
3.02 Creation of Additional Membership Interest. Additional Membership
Interests may be created and issued to existing Members only with the unanimous
approval of all Members. Additional Membership Interests may be created and
issued to other Persons, and such other Persons may be admitted to the Company
as Members, only with the unanimous consent of the existing Members, on such
terms and conditions as the existing Members may unanimously determine at the
time of admission. The terms of admission or issuance must specify the Sharing
Ratios applicable thereto and may provide for the creation of different classes
or groups of Members having different rights, powers, and duties. The Board of
Directors may reflect the creation of any new class or group in an amendment to
this Agreement indicating the different rights, powers, and duties, and such an
amendment need be executed only by the Board of Directors. Any such admission is
effective only after the new Member has executed and delivered to the Members an
instrument containing the notice address of the new Member, the Assignee's
ratification of this Agreement and agreement to be bound by it, and its
confirmation that the representations and warranties in Section 10.01 are true
and correct with respect to it. The provisions of this Section 3.02 shall not
apply to Dispositions of Membership Interests or admissions of Assignees in
connection therewith, such matters being governed by Section 9.01.
3.03 Access to Information. Each Member shall be entitled to receive any
information that it may request concerning the Company; provided, however, that
this Section 3.03 shall not obligate the Company, the Board of Directors or the
Officers to create any information that does not already exist at the time of
such request (other than to convert existing information from one medium to
another, such as providing a printout of information that is stored in a
computer database). Each Member shall also have the right, upon reasonable
notice, and at all reasonable times during usual business hours to inspect the
properties of the Company and to audit, examine and make copies of the books of
account and other records of the Company. Such right may be exercised through
any agent or employee of such Member designated in writing by it or by an
independent public accountant, engineer, attorney or other consultant so
designated. The Member making the request shall bear all costs and expenses
incurred in any inspection, examination or audit made on such Member's behalf.
3.04 Liability to Third Parties. No Member shall be liable for the debts,
obligations or liabilities of the Company.
3.05 Withdrawal. A Member does not have the right to Withdraw; provided,
however, a Member shall have the power to Withdraw at any time in violation of
this Agreement. If a Member exercises such power in violation of this Agreement,
(a) such Withdrawing Member shall be liable to the Company and the other Members
and their Affiliates for all monetary damages suffered by them as a result of
such Withdrawal; (b) such other Members shall, in addition thereto, have the
rights set forth in Article 11; and (c) such Withdrawing Member shall not have
any rights
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under Section 18-604 of the Act. In no event shall the Company or any Member
have the right, through specific performance or otherwise, to prevent a Member
from Withdrawing in violation of this Agreement.
ARTICLE 4: CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions. In exchange for its Membership Interest in the
Company, DDLLC has made certain Capital Contributions. EPC II and Tejas Energy
are the assignees of their respective Membership Interests in the Company.
4.02 Loans. If the Company does not have sufficient cash to pay its
obligations, any Member(s) that may agree to do so with the consent of the Board
of Directors may advance all or part of the needed funds to or on behalf of the
Company. An advance described in this Section 4.02 constitutes a loan from the
Member to the Company, bears interest at a rate determined by the Board of
Directors from the date of the advance until the date of payment, and is not a
Capital Contribution.
4.03 Return of Contributions. Except as expressly provided herein, a Member
is not entitled to the return of any part of its Capital Contributions or to be
paid interest in respect of either its Capital Account or its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any
cash or property to the Company to enable the Company to return any Member's
Capital Contributions.
4.04 Capital Accounts. A Capital Account shall be established and
maintained for each Member. Each Member's Capital Account shall be increased by
(a) the amount of money contributed by that Member to the Company, (b) the fair
market value of property contributed by that Member to the Company (net of
liabilities secured by such contributed property that the Company is considered
to assume or take subject to under Section 752 of the Code), and (c) allocations
to that Member of Company income and gain (or items thereof), including income
and gain exempt from tax and income and gain described in Treasury Regulation
Section 1.704-1(b)(2)(iv)(g), but excluding income and gain described in
Treasury Regulation Section 1.704-1(b)(4)(i), and shall be decreased by (d) the
amount of money distributed to that Member by the Company, (e) the fair market
value of property distributed to that Member by the Company (net of liabilities
secured by such distributed property that such Member is considered to assume or
take subject to under Section 752 of the Code), (f) allocations to that Member
of expenditures of the Company described (or treated as described) in
Section 705(a)(2)(B) of the Code, and (g) allocations of Company loss and
deduction (or items thereof), including loss and deduction described in Treasury
Regulation Section 1.704-1(b)(2)(iv)(g), but excluding items described in (f)
above and loss or deduction described in Treasury Regulation
Sections 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). The Members' Capital Accounts
shall also be maintained and adjusted as permitted by the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) and as required by the other provisions
of Treasury Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including
adjustments to reflect the allocations to the Members of depreciation,
depletion, amortization, and gain or loss as computed for book purposes rather
than the allocation of the corresponding items as computed for tax purposes, as
required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g). Thus,
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the Members' Capital Accounts shall be increased or decreased to reflect a
revaluation of the Company's property on its books based on the fair market
value of the Company's property on the date of adjustment immediately prior to
(A) the contribution of money or other property to the Company by a new or
existing Member as consideration for a Membership Interest or an increased
Sharing Ratio, (B) the distribution of money or other property by the Company to
a Member as consideration for a Membership Interest, or (C) the liquidation of
the Company. A Member that has more than one Membership Interest shall have a
single Capital Account that reflects all such Membership Interests, regardless
of the class of Membership Interests owned by such Member and regardless of the
time or manner in which such Membership Interests were acquired. Upon the
Disposition of all or a portion of a Membership Interest, the Capital Account of
the Disposing Member that is attributable to such Membership Interest shall
carry over to the Assignee in accordance with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(l). Within forty-five days following the
Closing Date, the Company shall provide Tejas Energy with a written calculation
of each Member's Capital Account.
4.05 Deficit Capital Accounts. No Member will be required to pay to the
Company, to any other Member or to any third party any deficit balance that may
exist from time to time in the Member's Capital Account.
ARTICLE 5: DISTRIBUTIONS AND ALLOCATIONS
5.01 Distributions. Subject to Section 6.03, distributions shall be made in
such amounts and at such times as shall be determined by the Board of Directors.
5.02 Distributions on Dissolution and Winding Up. Upon the dissolution and
winding up of the Company, after adjusting the Capital Accounts for all
distributions made under Section 5.01 and all allocations under this Article 5,
all available proceeds distributable to the Members as determined under
Section 11.02 shall be distributed to all of the Members in amounts equal to the
Members' positive Capital Account balances.
5.03 Allocations. (a) For purposes of maintaining the Capital Accounts
pursuant to Section 4.04 and for income tax purposes, except as provided in
Section 5.03(b), each item of income, gain, loss, deduction and credit of the
Company shall be allocated to the Members in accordance with their Sharing
Ratios.
(b) For income tax purposes, income, gain, loss, and deduction with respect
to property contributed to the Company by a Member or revalued pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall be allocated among the
Members in a manner that takes into account the variation between the adjusted
tax basis of such property and its book value, as required by Section 704(c) of
the Code and Treasury Regulation Section 1.704-1(b)(4)(i), using the remedial
allocation method permitted by Treasury Regulation Section 1.704-3(d).
5.04 Varying Interests. All items of income, gain, loss, deduction or
credit shall be allocated, and all distributions shall be made, to the Persons
shown on the records of the Company
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to have been Members as of the last calendar day of the period for which the
allocation or distribution is to be made. Notwithstanding the foregoing, if
during any taxable year there is a change in any Member's Sharing Ratio, the
Members agree that their allocable shares of such items for the taxable year
shall be determined based on any method determined by the Board of Directors to
be permissible under Code Section 706 and the related Treasury Regulations to
take account of the Members' varying Sharing Ratios.
ARTICLE 6: MANAGEMENT
6.01 Management. All management powers over the business and affairs of the
Company shall be exclusively vested in an Executive Committee (the "Executive
Committee") and a Board of Directors (the "Board of Directors") and, subject to
the direction of the Executive Committee and the Board of Directors, the
Officers. The Officers of the Company shall each constitute a "manager" of the
Company within the meaning of the Act and shall have the power and authority to
execute documents and instruments in such capacity in the name and on behalf of
the Company to the same extent they have such power and authority as Officers of
the Company. No Member, by virtue of having the status of a Member, shall have
any management power over the business and affairs of the Company or actual or
apparent authority to enter into contracts on behalf of, or to otherwise bind,
the Company. The authority and functions of the Executive Committee shall be as
set forth in Section 6.03. Except as otherwise specifically provided in this
Agreement (including Section 6.03(c)), the authority and functions of the Board
of Directors on the one hand and of the Officers on the other shall be identical
to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under the Delaware General Corporation
Law. Thus, except as otherwise specifically provided in this Agreement
(including Section 6.03(c)), the business and affairs of the Company shall be
managed under the direction of the Board of Directors, and the day-to-day
activities of the Company shall be conducted on the Company's behalf by the
Officers, who shall be agents of the Company. In addition to the powers that now
or hereafter can be granted to managers under the Act and to all other powers
granted under any other provision of this Agreement and subject to any
provisions of this Agreement that require approval of specified individuals or
entities prior to the taking of certain actions, the Board of Directors and the
Officers (subject to the direction of the Board of Directors) shall have full
power and authority to do all things on such terms as they may deem necessary or
appropriate to conduct, or cause to be conducted, the business and affairs of
the Company, including the following:
(a) the making of any expenditures, the lending or borrowing of money,
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness and the
incurring of any other obligations;
(b) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Company;
(c) the merger or other combination of the Company with or into
another entity;
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(d) the use of the assets of the Company (including cash on hand) for
any purpose consistent with the terms of this Agreement and the repayment
of obligations of the Company;
(e) the negotiation, execution and performance of any contracts,
conveyances or other instruments;
(f) the distribution of Company cash;
(g) the selection, engagement and dismissal of Officers, employees and
agents, outside attorneys, accountants, engineers, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring;
(h) the maintenance of such insurance for the benefit of the Company,
as it deems necessary or appropriate;
(i) the acquisition or disposition of assets;
(j) the formation of, or acquisition of an interest in, or the
contribution of property to, any entity;
(k) the control of any matters affecting the rights and obligations of
the Company, including the commencement, prosecution and defense of actions
at law or in equity and otherwise engaging in the conduct of litigation and
the incurring of legal expense and the settlement of claims and litigation;
and
(l) the indemnification of any individual or entity against
liabilities and contingencies to the extent permitted by law.
6.02 Board of Directors. (a) Generally. The Board of Directors shall
consist of not less than five nor more than nine natural persons. Each Director
shall be elected as provided in Section 6.02(b) and shall serve in such capacity
until his successor has been elected and qualified or until such Director dies,
resigns or is removed. The Board of Directors may determine the number of
Directors then constituting the whole Board of Directors, but the Board of
Directors shall not decrease the number of persons that constitute the whole
Board of Directors if such decrease would shorten the term of any Director, nor
may it increase the size during any 12-month period in a manner that would cause
the Board of Directors to elect more than two additional Directors to fill the
vacancies created by such increase. The Board of Directors as of the date hereof
shall consist of nine Directors, consisting of the individuals named below (the
last three of which are the initial Tejas Designated Directors, as defined in
Section 6.02(b)):
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Dan L. Duncan
O. S. Andras
Randa L. Duncan
Gary L. Miller
Ralph S. Cunningham
Lee W. Marshall, Sr.
Charles R. Crisp
Curtis R. Frasier
Stephen H. McVeigh
(b) Election of Directors. Except for Tejas Designated Directors, each
member of the Board of Directors shall serve until such member's death,
resignation or removal, any Director may be removed at any time, with or
without cause, by the Board of Directors, and upon the death, resignation
or removal of such Director, such Director's successor shall be elected by
the Board of Directors. Pursuant to the Unitholder Rights Agreement, Tejas
Energy has the right from time to time as specified therein to appoint
members of the Board of Directors. Such designees are referred to herein as
"Tejas Designated Directors." So long as Tejas Energy has the continuing
right to appoint a Tejas Designated Director pursuant to the Unitholder
Rights Agreement, such Director may only be removed by Tejas Energy, and,
in the event of the death, resignation or removal of such Director, Tejas
Energy shall be entitled to appoint such Director's replacement. If,
pursuant to the Unitholder Rights Agreement, Tejas Energy no longer has the
right to designate a Tejas Designated Director, then such Director may be
removed by the Board of Directors, and the Board of Directors may,
notwithstanding Section 6.02(a), decrease the size of the Board of
Directors accordingly or appoint such Director's replacement (in the event
of removal, resignation or death).
(c) Voting; Quorum; Required Vote for Action. Unless otherwise
required by the Act, other law or the provisions hereof,
(1) each member of the Board of Directors shall have one vote;
(2) the presence at a meeting of a majority of the members of the
Board of Directors shall constitute a quorum at any such meeting for
the transaction of business; and
(3) the act of a majority of the members of the Board of
Directors present at a meeting at which a quorum is present shall be
deemed to constitute the act of the Board of Directors.
(d) Meetings. Regular meetings of the Board of Directors shall be held
at such times and places as shall be designated from time to time by
resolution of the Board of Directors. Notice of such regular meetings shall
not be required. Special meetings of the Board of Directors or meetings of
any committee thereof may be called by written request of any member of the
Board of Directors or a committee thereof on at least 48 hours prior
written notice to the other members of the Board of Directors or such
committee. Any such notice, or waiver thereof, need not state the purpose
of such meeting except as may otherwise be required by law. Attendance of a
Director at a meeting (including pursuant to the last sentence of this
Section 6.02(d)) shall constitute a waiver of notice
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of such meeting, except where such Director attends the meeting for
the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called or convened. Any action
required or permitted to be taken at a meeting of the Board of Directors or
any committee thereof may be taken without a meeting, without prior notice
and without a vote if a consent or consents in writing, setting forth the
action so taken, is signed by at least as many members of the Board of
Directors or committee thereof as would have been required to take such
action at a meeting of the Board of Directors or such committee; provided
that, if any such consent has less than the unanimous approval of the
members of the Board of Directors or such committee, as applicable, 48
hours prior written notice shall be provided to the non-approving members
prior to the taking of such action. Members of the Board of Directors or
any committee thereof may participate in and hold a meeting by means of
conference telephone, videoconference or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participation in such meetings shall constitute presence in
person at the meeting.
(e) Committees.
(i) The Board of Directors may appoint one or more committees of the
Board of Directors to consist of two or more Directors, which committee(s)
shall have and may exercise such of the powers and authority of the Board
of Directors with respect to the management of the business and affairs of
the Company as may be provided in a resolution of the Board of Directors.
Any committee designated pursuant to this Section 6.02(e) shall choose its
own chairman, shall keep regular minutes of its proceedings and report the
same to the Board of Directors when requested, and, subject to
Section 6.02(d), shall fix its own rules or procedures and shall meet at
such times and at such place or places as may be provided by such rules or
by resolution of such committee or resolution of the Board of Directors. At
every meeting of any such committee, the presence of a majority of all the
members thereof shall constitute a quorum and the affirmative vote of a
majority of the members present shall be necessary for the adoption by it
of any resolution. The Board of Directors may designate one or more
Directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of such committee; provided, however,
that any such designated alternate of the Audit and Conflicts Committee may
not be a member, officer, or employee of the Company or a member, officer,
director, or employee of any Affiliate of the Company. In the absence or
disqualification of a member of a committee, the member or members present
at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of the absent or
disqualified member; provided, however, that any such replacement member of
the Audit and Conflicts Committee may not be a member, officer, or employee
of the Company or a member, officer, director, or employee of any Affiliate
of the Company.
(ii) In addition to any other committees established by the Board of
Directors pursuant to Section 6.02(e)(i), the Board of Directors shall
establish an "Audit and Conflicts Committee," which shall be composed
entirely of two or more directors who are neither members, officers, nor
employees of the Company nor members, officers, directors, or employees of
any Affiliate of the Company. The Audit and Conflicts Committee shall be
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responsible for approving or disapproving, as the case may be, any
matters regarding the business and affairs of the MLP and the OLP required
to be considered by, or submitted to, such Audit and Conflicts Committee
pursuant to the terms of the MLP Agreement and the Amended and Restated
Agreement of Limited Partnership of the OLP, including the review of the
external financial reporting of the MLP, the recommendation of independent
public accountants to be engaged by the MLP, the review of the MLP's
procedures for internal auditing and the adequacy of its internal
accounting controls and the approval of any proposed increases in the
administrative services fee payable under the EPCO Agreement.
(iii) With respect to any committees established by the Board of
Directors pursuant to the terms and conditions of this Agreement (other
than the Audit and Conflicts Committee and the Executive Committee), Tejas
Energy shall be entitled, from time to time during such time as Tejas
Energy is, pursuant to the Unitholder Rights Agreement, entitled to
designate at least one Director to the Company's Board of Directors, to
designate at least one member or representative to serve on each such
committee.
(f) Chairman. The Board of Directors may elect one of its members as
Chairman of the Board (the "Chairman of the Board"). The Chairman of the
Board, if any, and if present and acting, shall preside at all meetings of
the Board of Directors. Otherwise, the President, if present, acting and a
Director, or any other Director chosen by the Board of Directors, shall
preside. Unless the Board of Directors provides otherwise, the Chairman of
the Board shall be an Officer of the Company and shall have the same power
and authority as the President. The Chairman of the Board as of the Closing
Date shall be Dan L. Duncan.
6.03 Executive Committee. (a) Generally. The Executive Committee shall
consist of five members. The number of members serving on the Executive
Committee can only be increased with a unanimous vote of the members of the
Executive Committee. Each member of the Executive Committee shall be elected as
provided in Section 6.03(b) and shall serve in such capacity until his successor
has been elected and qualified or until such member dies, resigns or is removed.
The initial members of the Executive Committee are the individuals named below
(the last two of which are the initial Tejas Designated Members, as defined in
Section 6.03(b)):
Dan L. Duncan
O. S. Andras
Richard H. Bachmann
Stephen H. McVeigh
Curtis R. Frasier
(b) Election of Executive Committee Members. Except for Tejas
Designated Members, each member of the initial Executive Committee shall
serve until such member's death, resignation or removal, any member of the
Executive Committee may be removed at any time, with or without cause, by
the Board of Directors, and upon the death, resignation or removal of such
member, such member's successor shall be elected by the Board of Directors.
Pursuant to the Unitholder Rights Agreement, Tejas Energy has the right
from time to time as specified therein to appoint members of the Executive
Committee. Such designees are referred to herein as "Tejas Designated
Members."
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So long as Tejas Energy has the continuing right to appoint a Tejas
Designated Member pursuant to the Unitholder Rights Agreement, such member
may only be removed by Tejas Energy, and, in the event of the death,
resignation or removal of such member, Tejas Energy shall be entitled to
appoint such member's replacement. If, pursuant to the Unitholder Rights
Agreement, Tejas Energy no longer has the right to designate a Tejas
Designated Member, then such member may be removed by the Board of
Directors, and the Board of Directors may, notwithstanding Section 6.03(a),
decrease the size of the Executive Committee accordingly or appoint such
member's replacement (in the event of removal, resignation or death).
(c) Approval Authority; Voting. All matters relating to the items
listed in Section 2.2(b) of the Unitholder Rights Agreement must be
submitted to and are subject to the approval of the Executive Committee.
The Executive Committee shall decide matters by majority vote, provided
that, until such time as all of the Special Units (other than any Special
Units not issued as a result of a failure to meet the performance tests
referenced in Section 5.3(d) of the MLP Agreement) have been converted to
Common Units and such Common Units have a Closing Price in excess of $24
per Common Unit (appropriately Adjusted) for each trading day during a
period of 120 consecutive calendar days (with any trading days during which
Tejas Energy is prevented from trading such Common Units, as a result of
(i) black-out provisions under Section 2(b)(ii) of the Registration Rights
Agreement referenced in the Contribution Agreement or (ii) in the event
Tejas Energy desires to sell such Common Units in a manner not requiring
registration under the Securities Act and Tejas Energy advises the MLP of
such intention in writing, Tejas Energy having been advised by the MLP that
there is material non-public information relating to the MLP that would
prevent such a sale, not counting toward such 120-day total) the Executive
Committee must receive the vote of at least one of the Tejas Designated
Members in order to approve any of the actions by the Company, the MLP or
any of their respective Subsidiaries set forth in Section 2.2(b) of the
Unitholder Rights Agreement.
6.04 Officers. (a) Generally. The Board of Directors, as set forth
below, shall appoint agents of the Company, referred to as "Officers" of
the Company. Unless provided otherwise by resolution of the Board of
Directors, the Officers shall have the titles, power, authority and duties
described below in this Section 6.04.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board (unless the Board of Directors provides otherwise),
the President, the Chief Executive Officer, any and all Vice Presidents,
the Secretary, the Chief Financial Officer, any Treasurer and any and all
Assistant Secretaries and Assistant Treasurers and the Chief Legal Officer.
There shall be appointed from time to time, in accordance with
Section 6.04(c) below, such Vice Presidents, Secretaries, Assistant
Secretaries, Treasurers and Assistant Treasurers as the Board of Directors
may desire. Any person may hold two or more offices.
(c) Appointment and Term of Office. The Officers shall be appointed by
the Board of Directors at such time and for such term as the Board of
Directors shall determine. Any Officer may be removed, with or without
cause, only by the Board of Directors. Vacancies in any office may be
filled only by the Board of Directors.
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(d) President. Subject to the limitations imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Directors, the President, subject to the direction of the Board of Directors,
shall be the Chief Executive Officer of the Company and, as such, shall be
responsible for the management and direction of the day-to-day business and
affairs of the Company, its other Officers, employees and agents, shall
supervise generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally take.
The President shall exercise such other powers and perform such other duties as
may be assigned to him by this Agreement or the Board of Directors, including
any duties and powers stated in any employment agreement approved by the Board
of Directors.
(e) Chief Executive Officer. The President shall be the Chief Executive
Officer of the Company. Subject to the limitation imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board of
Directors, the Chief Executive Officer, subject to the direction of the Board of
Directors, shall be responsible for the management and direction of the
day-to-day business and affairs of the Company, its other officers, employees
and agents, shall supervise generally the affairs of the Company and shall have
full authority to execute all documents and take all actions that the Company
may legally take. The Chief Executive Officer shall exercise such other powers
and perform such other duties as may be assigned to him by this Agreement or the
Board of Directors, including any duties and powers stated in any employment
agreement approved by the Board of Directors.
(f) Vice Presidents. In the absence of the President, each Vice President
appointed by the Board of Directors shall have all of the powers and duties
conferred upon the President, including the same power as the President to
execute documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Board of Directors or the President.
(g) Secretary and Assistant Secretaries. The Secretary shall record or
cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board of Directors, shall see that all notices are
duly given in accordance with the provisions of this Agreement and as required
by law, shall be custodian of all records (other than financial), shall see that
the books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed, and, in general, shall perform all
duties incident to the office of Secretary and such other duties as may, from
time to time, be assigned to him by this Agreement, the Board of Directors or
the President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
(h) Chief Financial Officer. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Company. He shall receive and deposit all moneys and
other valuables belonging to the Company in the name and to the credit of the
Company and shall disburse the same and only in such manner as the Board of
Directors or the appropriate Officer of the company may from time to time
determine, shall render to the Board of Directors and the President, whenever
any of them request it, an account of all his transactions as Chief Financial
Officer and of the financial condition of the Company, and shall perform such
further duties as the Board of Directors or the President may require. The Chief
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Financial Officer shall have the same power as the President to execute
documents on behalf of the Company.
(i) Treasurer and Assistant Treasurers. The Treasurer shall have such
duties as may be specified by the Chief Financial Officer in the performance of
his duties. The Assistant Treasurers shall exercise the power of the Treasurer
during that Officer's absence or inability or refusal to act. Each of the
Assistant Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Company. If no
Treasurer or Assistant Treasurer is appointed and serving or in the absence of
the appointed Treasurer and Assistant Treasurer, the Senior Vice President, or
such other Officer as the Board of Directors shall select, shall have the powers
and duties conferred upon the Treasurer.
(j) Chief Legal Officer. The Chief Legal Officer, subject to the discretion
of the Board of Directors, shall be responsible for the management and direction
of the day-to-day legal affairs of the Company. The Chief Legal Officer shall
perform such other duties and may exercise such other powers as may from time to
time be assigned to him by the Board of Directors or the President.
(k) Powers of Attorney. The Company may grant powers of attorney or other
authority as appropriate to establish and evidence the authority of the Officers
and other persons.
(l) Delegation of Authority. Unless otherwise provided by resolution of the
Board of Directors, no Officer shall have the power or authority to delegate to
any person such Officer's rights and powers as an Officer to manage the business
and affairs of the Company.
(m) Officers. The Board of Directors initially appoints the following
Officers of the Company to serve from the date hereof until the death,
resignation or removal by the Board of Directors with or without cause of such
officer.
Dan L. Duncan Chairman of the Board
O. S. Andras President and Chief Executive Officer
Randa L. Duncan Group Executive Vice President
Albert W. Bell Executive Vice President
Gary L. Miller Executive Vice President,
Chief Financial Officer and Treasurer
William D. Ray Executive Vice President
Charles E. Crain Senior Vice President
Michael Falco Senior Vice President
Dannine D. Avara Vice President
Frank A. Chapman Vice President
Theodore Helfgott Vice President
Terrance L. Hurlburt Vice President
Michael J. Knesek Vice President and Controller
A.M. (Monty) Wells Vice President
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William R. Morrow Vice President
Rudy A. Nix Vice President
John L. Tomerlin Vice President
Richard H. Bachmann Executive Vice President and
Chief Legal Officer
Michael R. Johnson General Counsel and Secretary
John E. Smith, II Assistant Secretary
6.04 Duties of Officers and Directors. Except as otherwise specifically
provided in this Agreement, the duties and obligations owed to the Company and
to the Board of Directors by the Officers of the Company and by members of the
Board of Directors of the Company shall be the same as the respective duties and
obligations owed to a corporation organized under the Delaware General
Corporation Law by its officers and directors, respectively.
6.05 Compensation. The Officers shall receive such compensation for their
services as may be designated by the Board of Directors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. Except for the Tejas
Designated Directors, with respect to which only clause (iii) below shall apply,
the members of the Board of Directors that are neither officers nor employees of
the Company shall be entitled to (i) an annual director's fee set by the Board
of Directors (which fee shall initially equal $24,000), (ii) a per-meeting fee
set by the Board of Directors and payable with respect to each meeting during a
given year in excess of four regular meetings of the Board of Directors and four
meetings of the Audit and Conflicts Committee (which fee shall initially equal
$500 per meeting) and (iii) reimbursement of out-of-pocket expenses incurred in
connection with attending meetings of the Board of Directors or committees
thereof.
6.06 Indemnification. (a) To the fullest extent permitted by law but
subject to the limitations expressly provided in this Agreement, each person
shall be indemnified and held harmless by the Company from and against any and
all losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which any such person may be involved, or is threatened to be involved, as a
party or otherwise, by reason of such person's status as (i) a present or former
member of the Board of Directors or any committee thereof, (ii) a present or
former Officer, employee, partner, agent or trustee of the Company or (iii) a
person serving at the request of the Company in another entity in a similar
capacity as that referred to in the immediately preceding clauses (i) or (ii),
provided, that in each case the person described in the immediately preceding
clauses (i), (ii) or (iii) (the "Indemnitee") acted in good faith and in a
manner which such Indemnitee believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal proceeding, had no
reasonable cause to believe such Indemnitee s conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 6.06 shall be made
only out of the assets of the Company.
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(b) To the fullest extent permitted by law, expenses (including reasonable
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 6.06(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined in a judicial proceeding or a binding
arbitration that the Indemnitee is not entitled to be indemnified as authorized
in this Section 6.06.
(c) The indemnification provided by this Section 6.06 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
as a matter of law or otherwise, both as to actions in the Indemnitee's capacity
as (i) a present or former member of the Board of Directors or any committee
thereof, (ii) a present or former Officer, employee, partner, agent or trustee
of the Company or (iii) a person serving at the request of the Company in
another entity in a similar capacity, and as to actions in any other capacity,
and shall continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, on behalf of the
members of the Board of Directors, the Officers and such other persons as the
Board of Directors shall determine, against any liability that may be asserted
against or expense that may be incurred by such person in connection with the
Company's activities, regardless of whether the Company would have the power to
indemnify such person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 6.06, the Company shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of such Indemnitee's duties to the
Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of
Section 6.06(a); and action taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.06 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.06 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other persons.
(h) No amendment, modification or repeal of this Section 6.06 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any
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such Indemnitee under and in accordance with the provisions of this Section 6.06
as in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may be asserted.
(i) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 6.06 ARE
INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF
EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF
SUCH PERSON S NEGLIGENCE, FAULT OR OTHER CONDUCT.
6.07 Limitation of Indemnification. (a) Notwithstanding anything to the
contrary set forth in this Agreement, no Indemnitee shall be liable for monetary
damages to the Company or any other person or entity for losses sustained or
liabilities incurred as a result of any act or omission constituting a breach of
such Indemnitee's fiduciary duty if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as set forth in this Agreement,
the Board of Directors and any committee thereof may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through the Company's agents, and neither the
Board of Directors nor any committee thereof shall be responsible for any
misconduct or negligence on the part of any such agent appointed by the Board of
Directors or any committee thereof in good faith.
(c) Any amendment, modification or repeal of this Section 6.06 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on liability under this Section 6.06 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may be asserted.
ARTICLE 7: TAXES
7.01 Tax Returns. The Board of Directors shall cause to be prepared and
timely filed (on behalf of the Company) all federal, state and local tax returns
required to be filed by the Company, including making the elections described in
Section 7.02. Each Member shall furnish to the Board of Directors all pertinent
information in its possession relating to the Company's operations that is
necessary to enable the Company's tax returns to be timely prepared and filed.
The Company shall bear the costs of the preparation and filing of its returns.
7.02 Tax Elections. The Company shall make the following elections on the
appropriate tax returns:
(a) to adopt as the Company's fiscal year the calendar year;
(b) to adopt the accrual method of accounting;
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(c) if a distribution of the Company's property as described in Code
Section 734 occurs or upon a transfer of Membership Interest as described
in Code Section 743 occurs, on request by notice from any Member, to elect,
pursuant to Code Section 754, to adjust the basis of the Company's
properties;
(d) to elect to amortize the organizational expenses of the Company
ratably over a period of 60 months as permitted by Section 709(b) of the
Code; and
(e) any other election the Board of Directors may deem appropriate.
Neither the Company nor any Member shall make an election for the Company to be
excluded from the application of the provisions of subchapter K of chapter 1 of
subtitle A of the Code or any similar provisions of applicable state law and no
provision of this Agreement (including Section 2.07) shall be construed to
sanction or approve such an election. If an election is made under Code
Section 754 as provided in clause (c) above, such election may not be revoked
without the consent of all Members.
7.03 Tax Matters Member. (a) EPC shall be the "tax matters partner" of the
Company pursuant to Section 6231(a)(7) of the Code (the "Tax Matters Member").
The Tax Matters Member shall take such action as may be necessary to cause to
the extent possible each other Member to become a "notice partner" within the
meaning of Section 6223 of the Code.
(b) The Tax Matters Member shall take no action without the
authorization of the Board of Directors, other than such action as may be
required by Law. Any cost or expense incurred by the Tax Matters Member in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
(c) The Tax Matters Member shall not enter into any extension of the
period of limitations for making assessments on behalf of the Members
without first obtaining the consent of the Board of Directors. The Tax
Matters Member shall not bind any Member to a settlement agreement without
obtaining the consent of such Member. Any Member that enters into a
settlement agreement with respect to any Company item (as described in Code
Section 6231(a)(3)) shall notify the other Members of such settlement
agreement and its terms within 90 Days from the date of the settlement.
(d) No Member shall file a request pursuant to Code Section 6227 for
an administrative adjustment of Company items for any taxable year without
first notifying the other Members. If the Board of Directors consents to
the requested adjustment, the Tax Matters Member shall file the request for
the administrative adjustment on behalf of the Members. If such consent is
not obtained within 30 Days from such notice, or within the period required
to timely file the request for administrative adjustment, if shorter, any
Member, including the Tax Matters Member, may file a request for
administrative adjustment on its own behalf. Any Member intending to file a
petition under Code Sections 6226, 6228 or other Code Section with respect
to any item involving the Company shall notify the other Members of such
intention and the nature of the contemplated proceeding. In the case where
the Tax Matters Member is the Member intending to file such petition
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on behalf of the Company, such notice shall be given within a reasonable
period of time to allow the other Members to participate in the choosing of
the forum in which such petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment
under Code Section 6222(b), such Member shall give reasonable notice under
the circumstances to the other Members of such intent and the manner in
which the Member's intended treatment of an item is (or may be)
inconsistent with the treatment of that item by the other Members.
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books. (a) The Board of Directors shall keep or cause
to be kept at the principal office of the Company or at such other location
approved by the Board of Directors complete and accurate books and records of
the Company, supporting documentation of the transactions with respect to the
conduct of the Company's business and minutes of the proceedings of its Members
and the Board of Directors, and any other books and records that are required to
be maintained by applicable Law.
(b) The books of account of the Company shall be maintained on the
basis of a fiscal year that is the calendar year and on an accrual basis in
accordance with generally accepted accounting principles, consistently
applied.
8.02 Reports. The Board of Directors shall cause to be prepared and
delivered to each Member such reports, forecasts, studies, budgets and other
information as the Members may reasonably request from time to time.
8.03 Bank Accounts. Funds of the Company shall be deposited in such banks
or other depositories as shall be designated from time to time by the Board of
Directors. All withdrawals from any such depository shall be made only as
authorized by the Board of Directors and shall be made only by check, wire
transfer, debit memorandum or other written instruction.
ARTICLE 9: DISPOSITION OF COMPANY INTERESTS
9.01 Dispositions and Encumbrances of Membership Interests. (a) General
Restriction. A Member may not Dispose of or Encumber all or any portion of its
Membership Interest except in strict accordance with this Section 9.01.
References in this Section 9.01 to Dispositions or Encumbrances of a "Membership
Interest" shall also refer to Dispositions or Encumbrances of a portion of a
Membership Interest. Any attempted Disposition or Encumbrance of a Membership
Interest, other than in strict accordance with this Section 9.01, shall be, and
is hereby declared, null and void ab initio. The Members agree that a breach of
the provisions of this Section 9.01 may cause irreparable injury to the Company
and to the other Members for which monetary damages (or other remedy at law) are
inadequate in view of (i) the complexities and uncertainties in measuring the
actual damages that would be sustained by reason of the failure of a Member to
comply with such provision and (ii) the uniqueness of the Company business and
the relationship among the
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Members. Accordingly, the Members agree that the provisions of this Section 9.01
may be enforced by specific performance.
(b) Dispositions of Membership Interests.
(i) General Restriction. A Member may not Dispose of its Membership
Interest except by complying with all of the following requirements: (A) such
Member must receive the consent of the other Members, which consent shall not be
unreasonably withheld; provided that nothing herein shall restrict the ability
of Tejas Energy to transfer its Membership Interest to a Permitted Affiliate or
the ability of EPC II and DDLLC to transfer their respective Membership
Interests to a Duncan Permitted Affiliate; and (B) such Member must comply with
the requirements of Section 9.01(b)(iii) and, if the Assignee is to be admitted
as a Member, Section 9.01(b)(ii).
(ii) Admission of Assignee as a Member. An Assignee has the right to be
admitted to the Company as a Member, with the Membership Interest (and attendant
Sharing Ratio) so transferred to such Assignee, only if (A) the Disposing Member
making the Disposition has granted the Assignee either (1) the Disposing
Member's entire Membership Interest or (2) the express right to be so admitted;
and (B) such Disposition is effected in strict compliance with this
Section 9.01.
(iii) Requirements Applicable to All Dispositions and Admissions. In
addition to the requirements set forth in Sections 9.01(b)(i) and 9.01(b)(ii),
any Disposition of a Membership Interest and any admission of an Assignee as a
Member shall also be subject to the following requirements, and such Disposition
(and admission, if applicable) shall not be effective unless such requirements
are complied with; provided, however, that the Board of Directors, in its sole
and absolute discretion, may waive any of the following requirements:
(A) Disposition Documents. The following documents must be delivered
to the Board of Directors:
(1) Disposition Instrument. A copy of the instrument pursuant to which
the Disposition is effected.
(2) Ratification of this Agreement. An instrument, executed by the
Disposing Member and its Assignee, containing the following information and
agreements, to the extent they are not contained in the instrument
described in Section 9.01(b)(iii)(A)(1): (aa) the notice address of the
Assignee; (bb) the Sharing Ratios after the Disposition of the Disposing
Member and its Assignee (which together must total the Sharing Ratio of the
Disposing Member before the Disposition); and (cc) the Assignee's
ratification of this Agreement and agreement to be bound by it, and its
confirmation that the representations and warranties in Section 10.01 are
true and correct with respect to it.
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(iv) Clarification Regarding Transfer of Equity Interests in Members. The
transfer or other disposition by the equity owner(s) of a Member of all or any
portion of the equity interests in such Member shall not constitute a
Disposition of a Membership Interest for purposes of this Agreement.
(c) Encumbrances of Membership Interest. A Member may not Encumber its
Membership Interest except by complying with both of the following requirements:
(i) such Member must receive the consent of the other Member, which consent may
be granted or withheld in the sole discretion of such other Member; and (ii) the
instrument creating such Encumbrance must provide that any foreclosure of such
Encumbrance (or Disposition in lieu of such foreclosure) must comply with the
requirements of Section 9.01(b).
9.02 Transfer of Tejas Energy Rights. In the event of a Disposition by
Tejas Energy to a Permitted Affiliate of all of its interest in the Company in
accordance with the terms and conditions of this Agreement and the Unitholder
Rights Agreement, Tejas Energy may transfer to such Permitted Affiliate the
rights of Tejas Energy under this Agreement; provided that such Permitted
Affiliate shall agree to be bound by the terms and conditions of the Unitholder
Rights Agreement and shall execute an assignment in the form required by
Section 9.01(b)(iii).
9.03 Transfer of EPC II Rights. In the event of a Disposition by EPC II to
a Duncan Permitted Affiliate of all or part of its interest in the Company (the
"EPC II Transferred Interest") in accordance with the terms and conditions of
this Agreement, EPC II may transfer to such Duncan Permitted Affiliate the
rights of EPC II under this Agreement relating to the EPC II Transferred
Interest; provided that such Duncan Permitted Affiliate shall agree to be bound
by (i) the terms and conditions of the Unitholder Rights Agreement to the same
extent as EPC II was bound with respect to the EPC II Transferred Interest
(including, without limitation, Section 2.3(b)) and (ii) Section 6.13(a) and (b)
of the Contribution Agreement to the same extent as EPC II was bound with
respect to the EPC II Transferred Interest, and shall execute an assignment in
the form required by Section 9.01(b)(iii).
ARTICLE 10: REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MEMBERS
10.01 Representations, Warranties and Covenants. Each Member hereby
represents, warrants and covenants to the Company and each other Member that the
following statements are true and correct as of the Effective Date and shall be
true and correct at all times that such Member is a Member:
(a) that Member is duly incorporated, organized or formed (as
applicable), validly existing, and (if applicable) in good standing under
the Law of the jurisdiction of its incorporation, organization or
formation; if required by applicable Law, that Member is duly qualified and
in good standing in the jurisdiction of its principal place of business, if
different from its jurisdiction of incorporation, organization or
formation; and that Member has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and all
necessary actions by the board of directors, shareholders,
-20-
managers, members, partners, trustees, beneficiaries, or other applicable
Persons necessary for the due authorization, execution, delivery, and
performance of this Agreement by that Member have been duly taken;
(b) that Member has duly executed and delivered this Agreement and the
other documents contemplated herein, and they constitute the legal, valid
and binding obligation of that Member enforceable against it in accordance
with their terms (except as may be limited by bankruptcy, insolvency or
similar Laws of general application and by the effect of general principles
of equity, regardless of whether considered at law or in equity); and
(c) that Member's authorization, execution, delivery, and performance
of this Agreement does not and will not (i) conflict with, or result in a
breach, default or violation of, (A) the organizational documents of such
Member, (B) any contract or agreement to which that Member is a party or is
otherwise subject, or (C) any Law, order, judgment, decree, writ,
injunction or arbitral award to which that Member is subject; or
(ii) require any consent, approval or authorization from, filing or
registration with, or notice to, any Governmental Authority or other
Person, unless such requirement has already been satisfied.
ARTICLE 11: DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution. (a) Subject to Section 11.01(b), the Company shall
dissolve and its affairs shall be wound up on the first to occur of the
following events (each a "Dissolution Event"):
(i) the unanimous consent of the Members;
(ii) the dissolution, Withdrawal or Bankruptcy of a Member; or
(iii) entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.
(b) If a Dissolution Event described in Section 11.01(a)(ii) shall
occur and there shall be at least one other Member remaining, the Company
shall not be dissolved, and the business of the Company shall be continued,
if such Member elects to do so within 90 days following the occurrence of
such Dissolution Event (such agreement is referred to herein as a
"Continuation Election").
11.02 Winding-Up and Termination. (a) On the occurrence of a Dissolution
Event, unless a Continuation Election has been made, the Board of Directors
shall appoint a liquidator. The liquidator shall proceed diligently to wind up
the affairs of the Company and make final distributions as provided herein and
in the Act. The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the Company
properties with all of the power and authority of the Members. The steps to be
accomplished by the liquidator are as follows:
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(i) as promptly as possible after dissolution and again after final
winding up, the liquidator shall cause a proper accounting to be made of
the Company's assets, liabilities, and operations through the last calendar
day of the month in which the dissolution occurs or the final winding up is
completed, as applicable;
(ii) the liquidator shall discharge from Company funds all of the
indebtedness and other debts, liabilities and obligations of the Company
(including all expenses incurred in winding up and any loans described in
Section 4.01) or otherwise make adequate provision for payment and
discharge thereof (including the establishment of a cash escrow fund for
contingent liabilities in such amount and for such term as the liquidator
may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to the
Members as follows:
(A) the liquidator may sell any or all Company property, including to
Members, and any resulting gain or loss from each sale shall be computed
and allocated to the Capital Accounts of the Members in accordance with the
provisions of Article 5;
(B) with respect to all Company property that has not been sold, the
fair market value of that property shall be determined and the Capital
Accounts of the Members shall be adjusted to reflect the manner in which
the unrealized income, gain, loss, and deduction inherent in property that
has not been reflected in the Capital Accounts previously would be
allocated among the Members if there were a taxable disposition of that
property for the fair market value of that property on the date of
distribution; and
(C) Company property (including cash) shall be distributed among the
Members in accordance with Section 5.02; and those distributions shall be
made by the end of the taxable year of the Company during which the
liquidation of the Company occurs (or, if later, 90 Days after the date of
the liquidation).
(b) The distribution of cash or property to a Member in accordance
with the provisions of this Section 11.02 constitutes a complete return to
the Member of its Capital Contributions and a complete distribution to the
Member of its Membership Interest and all the Company s property and
constitutes a compromise to which all Members have consented pursuant to
Section 18-502(b) of the Act. To the extent that a Member returns funds to
the Company, it has no claim against any other Member for those funds.
11.03 Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Members (or such other Person or Persons
as the Act may require or permit) shall file a certificate of cancellation with
the Secretary of State of Delaware, cancel any other filings made pursuant to
Section 2.05, and take such other actions as may be necessary to terminate the
existence of the Company. Upon the filing of such certificate of cancellation,
the existence of the
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Company shall terminate (and the Term shall end), except as may be otherwise
provided by the Act or other applicable Law.
ARTICLE 12: GENERAL PROVISIONS
12.01 Intentionally Deleted
12.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile or other electronic
transmission. A notice, request or consent given under this Agreement is
effective on receipt by the Member to receive it; provided, however, that a
facsimile or other electronic transmission that is transmitted after the normal
business hours of the recipient shall be deemed effective on the next Business
Day. All notices, requests and consents to be sent to a Member must be sent to
or made at the addresses given for that Member on Exhibit A or in the instrument
described in Section 9.01(b)(iii)(A)(2) or 3.02, or such other address as that
Member may specify by notice to the other Members. Any notice, request or
consent to the Company must be given to all of the Members. Whenever any notice
is required to be given by Law, the Delaware Certificate or this Agreement, a
written waiver thereof, signed by the Person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
12.03 Entire Agreement; Superseding Effect. This Agreement (together with
the Unitholder Rights Agreement) constitutes the entire agreement of the Members
and their Affiliates relating to the Company and the transactions contemplated
hereby and supersedes all provisions and concepts contained in all prior
contracts or agreements between the Members or any of their Affiliates with
respect to the Company and the transactions contemplated hereby, whether oral or
written.
12.04 Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member
or to declare any Member in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Member of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
12.05 Amendment or Restatement. This Agreement or the Delaware Certificate
may be amended or restated only by a written instrument executed (or, in the
case of the Delaware Certificate, approved) by all Members.
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12.06 Binding Effect. Subject to the restrictions on Dispositions of
Membership Interests set forth in this Agreement, this Agreement is binding on
and shall inure to the benefit of the Members and their respective successors
and permitted assigns.
12.07 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any mandatory,
non-waivable provision of the Act, such provision of the Act shall control. If
any provision of the Act provides that it may be varied or superseded in a
limited liability company agreement (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed
superseded and waived in its entirety if this Agreement contains a provision
addressing the same issue or subject matter. If any provision of this Agreement
or the application thereof to any Member or circumstance is held invalid or
unenforceable to any extent, (a) the remainder of this Agreement and the
application of that provision to other Members or circumstances is not affected
thereby, and (b) the Members shall negotiate in good faith to replace that
provision with a new provision that is valid and enforceable and that puts the
Members in substantially the same economic, business and legal position as they
would have been in if the original provision had been valid and enforceable.
12.08 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
12.09 Waiver of Certain Rights. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the date
first
set forth above.
MEMBERS:
EPC PARTNERS II, INC.
By: /s/ Francis B. Jacobs II
Francis B. Jacobs II
President
DAN DUNCAN LLC
By: /s/ Dan L. Duncan
Dan L. Duncan
TEJAS ENERGY, LLC
By: /s/ Curtis R. Frasier
Curtis R. Frasier
Executive Vice President and
Chief Operating Officer
Attachment I
Defined Terms
Act--the Delaware Limited Liability Company Act.
Affiliate--with respect to any Person, (a) each entity that such Person
Controls; (b) each Person that Controls such Person; and (c) each entity that is
under common Control with such Person, including, in the case of a Member.
Agreement--introductory paragraph.
Assignee--any Person that acquires a Membership Interest or any portion
thereof through a Disposition; provided, however, that, an Assignee shall have
no right to be admitted to the Company as a Member except in accordance with
Section 9.01(b)(ii). The Assignee of a dissolved Member is the shareholder,
partner, member or other equity owner or owners of the dissolved Member to whom
such Member's Membership Interest is assigned by the Person conducting the
liquidation or winding up of such Member. The Assignee of a Bankrupt Member is
(a) the Person or Persons (if any) to whom such Bankrupt Member's Membership
Interest is assigned by order of the bankruptcy court or other Governmental
Authority having jurisdiction over such Bankruptcy, or (b) in the event of a
general assignment for the benefit of creditors, the creditor to which such
Membership Interest is assigned.
Bankruptcy or Bankrupt--with respect to any Person, that (a) such Person
(i) makes a general assignment for the benefit of creditors; (ii) files a
voluntary bankruptcy petition; (iii) becomes the subject of an order for relief
or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Law; (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Person in a proceeding of the type described in subclauses
(i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces
in the appointment of a trustee, receiver, or liquidator of such Person or of
all or any substantial part of such Person's properties; or (b) against such
Person, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law has been
commenced and 120 Days have expired without dismissal thereof or with respect to
which, without such Person's consent or acquiescence, a trustee, receiver, or
liquidator of such Person or of all or any substantial part of such Person's
properties has been appointed and 90 Days have expired without the appointment's
having been vacated or stayed, or 90 Days have expired after the date of
expiration of a stay, if the appointment has not previously been vacated.
Board of Directors--Section 6.01.
Business Day--any day other than a Saturday, a Sunday, or a holiday on
which national banking associations in the State of Texas are closed.
Capital Account--the account to be maintained by the Company for each
Member in accordance with Section 4.04.
Capital Contribution--with respect to any Member, the amount of money and
the net agreed value of any property (other than money) contributed to the
Company by the Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.
Chairman of the Board--Section 6.02(e).
Closing Date--September 17, 1999.
Code--the Internal Revenue Code of 1986, as amended.
Common Units--as defined in the MLP Agreement.
Company--introductory paragraph.
Continuation Election--Section 11.01(b).
Contribution Agreement--Contribution Agreement by and among Tejas Energy,
Tejas Midstream Enterprises, LLC, the MLP, the OLP, EPC, the Company and EPC II,
dated September 17, 1999.
Control--the possession, directly or indirectly, through one or more
intermediaries, of either of the following:
(a) (i) in the case of a corporation, more than 50% of the outstanding
voting securities thereof; (ii) in the case of a limited liability company,
partnership, limited partnership or venture, the right to more than 50% of
the distributions therefrom (including liquidating distributions); (iii) in
the case of a trust or estate, including a business trust, more than 50% of
the beneficial interest therein; and (iv) in the case of any other entity,
more than 50% of the economic or beneficial interest therein; or
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to exercise a
controlling influence over the management of the entity.
Day--a calendar day; provided, however, that, if any period of Days
referred
to in this Agreement shall end on a Day that is not a Business Day, then the
expiration of such period shall be automatically extended until the end of the
first succeeding Business Day.
DDLLC--introductory paragraph.
-2-
Delaware Certificate--Section 2.01.
Dispose, Disposing or Disposition--with respect to a Membership Interest,
the sale, assignment, transfer, conveyance, gift, exchange or other disposition
of such Membership Interest, excluding, however, any sale, assignment, transfer,
conveyance, gift, exchange or other disposition of such Membership Interest that
occurs involuntarily or by operation of Law. With respect to any other asset,
the transfer, sale, assignment or other disposition of the asset in question.
Dissolution Event--Section 11.01(a).
Duncan Permitted Affiliate--means any Person in which Dan L. Duncan, his
wife and heirs, devisees and legatees (and trusts for any of their respective
benefit) (the "Duncan Interests") own, directly or indirectly, more than 50% of
such Person's equity interests and that is controlled by the Duncan Interests.
For the purposes of this definition, "controlled" means that the Duncan
Interests possess, directly or indirectly, the power to direct or cause the
direction of management and policies of such controlled Person, by contract or
otherwise.
Effective Date--introductory paragraph.
Encumber, Encumbering, or Encumbrance--the creation of a security interest,
lien, pledge, mortgage or other encumbrance, whether such encumbrance be
voluntary, involuntary or by operation of Law.
EPC--recitals.
EPC II--introductory paragraph.
EPC II Transferred Interest--Section 9.03.
Executive Committee--Section 6.01.
Governmental Authority--a federal, state, local or foreign governmental
authority; a state, province, commonwealth, territory or district thereof; a
county or parish; a city, town, township, village or other municipality; a
district, ward or other subdivision of any of the foregoing; any executive,
legislative or other governing body of any of the foregoing; any agency,
authority, board, department, system, service, office, commission, committee,
council or other administrative body of any of the foregoing; any court or other
judicial body; and any officer, official or other representative of any of the
foregoing.
Group Member--a member of the Partnership Group.
including--including, without limitation.
Indemnitee--Section 6.06(a).
-3-
Law--any applicable constitutional provision, statute, act, code (including
the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration, or interpretative or
advisory opinion or letter of a Governmental Authority having valid
jurisdiction.
Member--any Person executing this Agreement as of the date of this
Agreement as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but such term does not include any Person who has
ceased to be a member in the Company.
Membership Interest--with respect to any Member, (a) that Member's status
as a Member; (b) that Member's share of the income, gain, loss, deduction and
credits of, and the right to receive distributions from, the Company; (c) all
other rights, benefits and privileges enjoyed by that Member (under the Act,
this Agreement, or otherwise) in its capacity as a Member; and (d) all
obligations, duties and liabilities imposed on that Member (under the Act, this
Agreement or otherwise) in its capacity as a Member, including any obligations
to make Capital Contributions.
MLP--Enterprise Products Partners L.P., a Delaware limited partnership.
MLP Agreement--Second Amended and Restated Agreement of Limited Partnership
of Enterprise Products Partners L.P., dated September 17, 1999.
Officer--any Person designated as an officer of the Company as provided in
Section 6.04, but such term does not include any Person who has ceased to be an
officer of the Company.
OLP--Enterprise Products Operating L.P., a Delaware limited partnership.
Permitted Affiliates--as defined in the Unitholder Rights Agreement.
Person--the meaning assigned that term in Section 18-101(11) of the Act and
also includes a Governmental Authority and any other entity.
Partnership Group--the MLP, the OLP and any Subsidiary of either such
entity, treated as a single consolidated entity.
Registration Statement--the Registration Statement on Form S-1
(Registration No. 333-52537) as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the United States
Securities and Exchange Commission under the Securities Act to register the
offering and sale of the Common Units in the Initial Offering.
Securities Act--the Securities Act of 1933, as amended, supplemented, or
restated from time to time and any such successor statute.
Sharing Ratio--subject in each case to adjustments in accordance with this
Agreement or in connection with Dispositions of Membership Interests, (a) in the
case of a Member executing this Agreement as of the date of this Agreement or a
Person acquiring such Member's Membership
-4-
Interest, the percentage specified for that Member as its Sharing Ratio on
Exhibit A, and (b) in the case of Membership Interest issued pursuant to
Section 3.02, the Sharing Ratio established pursuant thereto; provided, however,
that the total of all Sharing Ratios shall always equal 100%.
Special Units--as defined in the Unitholder Rights Agreement.
Subsidiary--with respect to any Person, (a) a corporation of which more
than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
Tax Matters Member--Section 7.03(a).
Tejas Designated Directors--Section 6.02(b).
Tejas Designated Members--Section 6.03(b).
Tejas Energy--introductory paragraph.
Term--Section 2.05.
Treasury Regulations--the regulations (including temporary regulations)
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code. All references herein to sections of the
Treasury Regulations shall include any corresponding provision or provisions of
succeeding, similar or substitute, temporary or final Treasury Regulations.
Unitholder Rights Agreement--Unitholder Rights Agreement among Tejas
Energy, Tejas Midstream Enterprises, LLC, the MLP, the OLP, EPC, the Company and
EPC II, dated September 17, 1999.
Withdraw, Withdrawing or Withdrawal--the withdrawal, resignation or
retirement of a Member from the Company as a Member. Such terms shall not
include any Dispositions of Membership Interest (which are governed by Section
9.01), even though the Member making a Disposition may cease to be a Member as a
result of such Disposition.
-5-
Exhibit A
MEMBERS AND SHARING RATIOS
Name and Address
Sharing
Ratio
EPC Partners II, Inc.
2727 North Loop West
Houston, Texas 77008
Attn: President
Telecopier: (713) 880-6570
65%
Tejas Energy, LLC
1301 McKinney Street, Suite 700
Houston, Texas 77010
Attn: Chief Operating Officer
Telecopier: (713) 230-1800
30%
Dan Duncan LLC
c/o Dan L. Duncan
2727 North Loop West
Houston, Texas 77008
Attn: President
Telecopier: (713) 880-6570
5%
FIRST AMENDMENT TO
CREDIT AGREEMENT
BY AND AMONG
ENTERPRISE PRODUCTS OPERATING L.P.,
DEN NORSKE BANK ASA
and
BANK OF TOKYO-MITSUBISHI, LTD., HOUSTON AGENCY,
as Co-Arrangers,
THE BANK OF NOVA SCOTIA,
as Co-Arranger and as Documentation Agent,
THE CHASE MANHATTAN BANK,
as Co-Arranger and as Agent,
and
THE BANKS SIGNATORY HERETO
Effective as of July 28, 1999
TABLE OF CONTENTS
SECTION 1. DEFINITIONS
1.1 Terms Defined Above.......................................................1
1.2 Terms Defined in Credit Agreement.........................................1
1.3 Other Definitional Provisions............................................ 1
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT
2.1 Amendments and Supplements to Definitions.................................2
2.2 Amendments to Subsection 2.4..............................................5
2.3 Amendments to Section 4...................................................5
2.4 Amendments to Section 5...................................................7
2.5 Amendments to Section 6...................................................7
2.6 Amendments to Section 7...................................................8
2.7 Amendments to Section 11.................................................11
SECTION 3. CONDITIONS
3.1 Loan Documents...........................................................11
3.2 Company Proceedings of Loan Parties......................................12
3.3 Representations and Warranties...........................................12
3.4 No Default...............................................................12
3.5 No Change................................................................12
3.6 Other Instruments or Documents...........................................12
3.7 Events...................................................................12
SECTION 4. MISCELLANEOUS
4.1 Adoption, Ratification and Confirmation of Credit Agreement..............13
4.2 Successors and Assigns...................................................13
4.3 Counterparts.............................................................13
4.4 Number and Gender........................................................13
4.5 Entire Agreement.........................................................13
4.6 Invalidity...............................................................13
4.7 Titles of Articles, Sections and Subsections.............................13
4.8 Governing Law............................................................14
FIRST AMENDMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") executed
effective as of the 28th day of July, 1999 (the "Effective Date"), is by and
among ENTERPRISE PRODUCTS OPERATING L.P., a limited partnership formed under the
laws of the State of Delaware (the "Company"); each of the banks that is a
signatory hereto or which becomes a signatory hereto and to the hereinafter
described Credit Agreement (individually, together with its successors and
assigns, a "Bank" and, collectively, the "Banks"); THE CHASE MANHATTAN BANK, DEN
NORSKE BANK ASA, THE BANK OF NOVA SCOTIA and BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY, as Co-Arrangers; THE BANK OF NOVA SCOTIA, as Documentation
Agent; and THE CHASE MANHATTAN BANK ("Chase"), as Agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S:
WHEREAS, the Company, the Agent, the Documentation Agent and the Banks are
parties to that certain Credit Agreement dated as of July 27, 1998, as Amended
and Restated as of September 30, 1998 (the "Credit Agreement"), pursuant to
which the Banks agreed to make loans to and extensions of credit on behalf of
the Company; and
WHEREAS, the Company and the Banks desire to amend the Credit Agreement in
the particulars hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Terms Defined Above. As used in this First Amendment, each of the terms
"Bank", "Banks", "Company", "Credit Agreement", "Effective Date" and "First
Amendment" shall have the meaning assigned to such term hereinabove.
1.2 Terms Defined in Credit Agreement. Each term defined in the Credit
Agreement and used herein without definition shall have the meaning assigned to
such term in the Credit Agreement, unless expressly provided to the contrary.
1.3 Other Definitional Provisions.
(a) The words "hereby", "herein", "hereinafter", "hereof", "hereto" and
"hereunder" when used in this First Amendment shall refer to this First
Amendment as a whole and not to any particular Article, Section, subsection or
provision of this First Amendment. (b) Section, subsection and Exhibit
references herein are to such Sections, subsections and Exhibits to this First
Amendment unless otherwise specified.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT
The Company, the Agent and the Banks agree that the Credit Agreement is
hereby amended, effective as of the Effective Date, in the following
particulars.
2.1 Amendments and Supplements to Definitions.
(a) The following terms, which are defined in subsection 1.1 of the Credit
Agreement, are hereby amended in their entirety to read as follows:
"Agreement": this Credit Agreement, as amended by the First Amendment and
as the same may from time to time be further amended, supplemented or modified.
"Applicable Margin": for each Revolving Credit Loan, the rate per annum set
forth below:
(a) if the Applicable Margin Certificate required pursuant to subsection
6.1(c) for any fiscal quarter of the Company shows that the Total
Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was less than
or equal to 1.5 to 1, then the Applicable Margin, during the period beginning on
(and including) the date on which such Applicable Margin Certificate was
delivered by the Company to the Banks and ending on (and excluding) the date on
which the next Applicable Margin Certificate is delivered by the Company to the
Banks pursuant to subsection 6.1(c), shall be (i) with respect to Alternate Base
Rate Loans, 0% and (ii) with respect to Eurodollar Loans, .75%; and
(b) if the Applicable Margin Certificate required pursuant to subsection
6.1(c) for any fiscal quarter of the Company shows that the Total
Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was greater
than 1.5 to 1 and less than or equal to 2.0 to 1, then the Applicable Margin,
during the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on (and
excluding) the date on which the next Applicable Margin Certificate is delivered
by the Company to the Banks pursuant to subsection 6.1(c), shall be (i) with
respect to Alternate Base Rate Loans, 0% and (ii) with respect to Eurodollar
Loans, 1.00%;
(c) if the Applicable Margin Certificate required pursuant to subsection
6.1(c) for any fiscal quarter of the Company shows that the Total
Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was greater
than 2.0 to 1 and less than or equal to 2.5 to 1, then the Applicable Margin,
during the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on (and
excluding) the date on which the next Applicable Margin Certificate is delivered
by the Company to the Banks pursuant to subsection 6.1(c), shall be (i) with
respect to Alternate Base Rate Loans, .25% and (ii) with respect to Eurodollar
Loans, 1.25%;
(d) if the Applicable Margin Certificate required pursuant to subsection
6.1(c) for any fiscal quarter of the Company shows that the Total
Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was greater
than 2.5 to 1, then the Applicable Margin, during the period beginning on (and
including) the date on which such Applicable Margin Certificate was delivered by
the Company to the Banks and ending on (and excluding) the date on which the
next Applicable Margin Certificate is delivered by the Company to the Banks
pursuant to subsection 6.1(c), shall be (i) with respect to Alternate Base Rate
Loans, .50% and (ii) with respect to Eurodollar Loans, 1.50%;
provided, however, if the Company shall fail to deliver the Applicable
Margin Certificate by the end of the fiscal quarter in which it is required, the
Applicable Margin for the next fiscal quarter shall be as provided in clause (d)
above; provided further, however, that the Applicable Margin for the period from
the Closing Date until (and excluding) the date on which the Company delivers to
the Banks the Applicable Margin Certificate for the fiscal quarter of the
Company ended September 30, 1999, shall be (i) with respect to Alternate Base
Rate Loans, .50% and (ii) with respect to Eurodollar Loans, 1.50%; provided
further, however, that when the Company or the Limited Partner receives a senior
unsecured debt rating of at least BBB- from Standard & Poor's Ratings Services,
a division of McGraw-Hill, Inc. ("Standard & Poor's"), and a debt rating of at
least Baa3 from Moody's Investors Service, Inc. ("Moody's"), the Applicable
Margin with respect to Eurodollar Loans shall be reduced by .125%; and, in the
event the senior unsecured debt rating is greater than BBB- from Standard &
Poor's and Baa3 from Moody's, the Applicable Margin with respect to Eurodollar
Loans shall be reduced by .250%. Each such reduction shall be effective on the
next Business Day following the date the applicable rating is achieved and shall
be reversed on the next Business Day following any downgrade of any one of the
ratings below the levels aforementioned.
"Change of Control": any of the following events:
(1) Dan Duncan (his wife, descendants and trusts for the benefit of his
wife and/or descendants and the heirs, legatees and distributees of his estate)
shall cease to own, directly or indirectly, (A) at least 51% (on a fully
converted, fully diluted basis) of the economic interest in the Capital Stock of
EPCO or (B) an aggregate number of shares of Capital Stock of EPCO sufficient to
elect a majority of the board of directors of EPCO;
(2) EPCO shall cease to own 100% of the issued and outstanding Capital
Stock of EPC Partners II, Inc. ("EPC II");
(3) EPC II (or another wholly owned Subsidiary of EPCO) shall cease to own
at least 65% of the outstanding membership interests in the General Partner;
(4) EPC II shall fail to own at least a majority of the outstanding Common
Units;
(5) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
excluding EPC II and Shell Oil Company and any of its Affiliates acquiring or
owning an interest in any of the special units of the Limited Partner (or the
Common Units into which any of such special units are converted) issued by the
Limited Partner in connection with the Tejas Acquisition, shall become, or
obtain rights (whether by means of warrants, options or otherwise) to become,
the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of more than 20% of the outstanding
Common Units;
(6) the General Partner shall cease to be the general partner of the
Limited Partner or the Company; or
(7) the Limited Partner shall cease to be the sole limited partner of the
Company.
"EBITDA": shall mean, for any period, the sum (without duplication) of (i)
operating income of the Company, and its consolidated Subsidiaries for such
period plus (ii) depreciation and amortization for such period to the extent not
already included in the calculation of operating income plus (iii) interest
income during such period (excluding interest income in respect of the BEF
Participation and the MBA Participation), plus (iv) cash distributions or
dividends received by the Company during such period from unconsolidated
entities (including, without limitation, unconsolidated Permitted Joint
Ventures), plus (v) other cash income received by the Company during such
period, plus (vi) interest and principal payments received by the Company with
respect to the BEF Participation and the MBA Participation, minus (vii)
operating lease expense for such period to the extent not already deducted in
the calculation of operating income, determined in each case, on a consolidated
basis in accordance with GAAP; provided, however, EBITDA (x) will not include
any extraordinary, unusual or non-recurring gains or losses from asset sales and
(y) will be adjusted from time to time for cash flows from acquisitions, which
cash flows shall be added on a pro forma basis to each of the prior four fiscal
quarters.
"Net Cash Proceeds": in connection with the issuance of Debt permitted by
subsection 7.1(j), the cash proceeds received from the issuance of such Debt,
net of all applicable attorney's fees, investment banking fees, accountant fees,
underwriting discounts, commissions and other customary fees and expenses
actually incurred in connection therewith.
"Revolving Credit Commitment Termination Date": the earlier of (a) July 26,
2000, or (b) the date the Revolving Credit Commitments are terminated pursuant
to the provisions of this Agreement, including without limitation, the
provisions of subsection 4.1(a).
(b) Subsection 1.1 of the Credit Agreement is hereby further amended and
supplemented by adding the following new definitions where alphabetically
appropriate, which read in their entirety as follows:
"First Amendment": the First Amendment to Credit Agreement dated as of
July 28, 1999, by and among the Company, the Agent, the Documentation Agent and
the Banks.
"Tejas Acquisition": the acquisition by the Company directly or indirectly
of the natural gas processing assets and other midstream assets of Tejas Natural
Gas Liquids, LLC.
2.2 Amendments to Subsection 2.4. Subsection 2.4(b) of the Credit Agreement
is hereby deleted in its entirety.
2.3 Amendments to Section 4.
(a) Subsection 4.1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.1 Prepayments. (a) Mandatory Prepayments. If on any date the
Company shall receive Net Cash Proceeds from the issuance of Debt permitted
by subsection 7.1(j), then 100% of such Net Cash Proceeds shall be applied
on such date toward the payment in full of all Indebtedness, including,
without limitation, all principal, interest and fees owing under this
Agreement, the Revolving Credit Notes or any other Loan Document until all
of same shall be paid in full. Simultaneously with such payment in full,
the Revolving Credit Commitments shall be terminated.
(b) Optional Prepayments. The Company may on the last day of the relevant
Interest Period if the Revolving Credit Loans to be prepaid are in whole or in
part Eurodollar Loans, or at any time and from time to time if the Revolving
Credit Loans to be prepaid are Alternate Base Rate Loans, prepay the Revolving
Credit Loans, in whole or in part, without premium or penalty, upon at least (i)
three Working Days' irrevocable notice, in the case of Eurodollar Loans, and
(ii) one Business Day's irrevocable notice, in the case of Alternate Base Rate
Loans, in each case to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Working Capital Revolving Credit Loans or
Investment Revolving Credit Loans and whether of Eurodollar Loans or Alternate
Base Rate Loans or a combination thereof, and if of a combination thereof, the
amount of prepayment allocable to each. Upon receipt of such notice the Agent
shall promptly notify each Bank thereof. If such notice is given, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to such date on the amount prepaid.
(c) Each optional partial prepayment of the Revolving Credit Loans pursuant
to Subsection 4.1(b) shall be in an aggregate principal amount of $1,000,000 or
a whole multiple of $1,000,000 in excess thereof."
(b) Subsection 4.2 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.2 Commitment Fees. The Company agrees to pay to the Agent, for the
account of each Bank, commitment fees with respect to the Revolving Credit
Commitment of such Bank for the period from and including the Effective
Date of the First Amendment to and including the Revolving Credit
Termination Date, calculated at the following rates per annum on the
average daily Available Revolving Credit Commitment of such Bank for each
day during the period for which the commitment fee with respect to the
Revolving Credit Commitments is being paid:
(i) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was less than or equal to 1.5 to 1, then the commitment
fee for the Revolving Credit Commitment, during the period beginning on
(and including) the date on which such Applicable Margin Certificate was
delivered by the Company to the Banks and ending on (and excluding) the
date on which the next Applicable Margin Certificate is delivered by the
Company to the Banks pursuant to subsection 6.1(c), shall be .25%;
(ii) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 1.5 to 1 and less than or equal to 2.0
to 1, then the commitment fee for the Revolving Credit Commitment, during
the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on
(and excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be .30%;
(iii) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 2.0 to 1 and less than or equal to 2.5
to 1, then the commitment fee for the Revolving Credit Commitment, during
the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on
(and excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be .375%;
(iv) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after [June
30, 1999] shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 2.5 to 1, then the commitment fee for
the Revolving Credit Commitment, during the period beginning on (and
including) the date on which such Applicable Margin Certificate was
delivered by the Company to the Banks and ending on (and excluding) the
date on which the next Applicable Margin Certificate is delivered by the
Company to the Banks pursuant to subsection 6.1(c), shall be .50%;
provided, that the commitment fee for the Revolving Credit Commitment
for the period from the Closing Date until (and excluding) the date on
which the Company delivers to the Banks the Applicable Margin Certificate
for the fiscal quarter of the Company ended September 30, 1999, shall be
.50%; provided, further, if the Company shall fail to deliver the
Applicable Margin Certificate by the end of the fiscal quarter in which it
is required, the commitment fee for the Revolving Credit Commitment for the
next fiscal quarter shall be as provided in clause (iv) above.
The commitment fees with respect to the Revolving Credit Commitments shall
be payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing September 30, 1999, and on the Revolving
Credit Termination Date or such earlier date as the Revolving Credit Commitments
shall terminate as provided herein."
(c) Subsection 4.6 of the Credit Agreement is hereby amended and
supplemented by the addition of a new sentence to appear at the end of
subsection 4.6(d) which shall read in its entirety as follows:
"If all or any portion of interest due on any of the Revolving Credit Loans
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise) or if all or any portion of any fee due in connection with this
Agreement or any of the Revolving Credit Loans shall not be paid when due, then
any such overdue amount shall bear interest at a rate per annum which is 2%
above the Alternate Base Rate plus the Applicable Margin from the date of such
non-payment until paid in full (as well as after as before judgment)."
2.4 Amendments to Section 5. Subsection 5.22 is hereby amended by deleting
the date "March 31, 1999" therefrom and substituting therefor the date September
30, 1999".
2.5 Amendments to Section 6. Subsection 6.1(c) is hereby amended in its
entirety to read as follows: "6.1(c) Applicable Margin Certificates. (i) Within
45 days after the end of each fiscal quarter of the Company, a certificate of
the principal financial officer of the Company showing in detail the
computations necessary to calculate the Applicable Margin (an "Applicable Margin
Certificate"), and (ii) an Applicable Margin Certificate as soon as practicable
following the obtaining of, and each change in, a current senior unsecured debt
rating referenced in the last proviso contained in the definition of "Applicable
Margin" set forth in subsection 1.1."
2.6 Amendments to Section 7.
(a) Subsection 7.1 of the Credit Agreement is hereby amended as follows:
(i) Clause (g) of subsection 7.1 is hereby amended by deleting the word
"and" found at the end thereof.
(ii) Clause (h) of subsection 7.1 is hereby amended by deleting the
period(.) found at the end thereof and substituting therefor ";".
(iii) Subsection 7.1 is hereby amended and supplemented by adding thereto
two (2) new clauses, to be clauses (i) and (j) reading in their entirety as
follows:
"(i) Debt arising out of or pursuant to that certain Credit Agreement
dated July 28, 1999, by and among the Company, the Agent and the several
banks party thereto, as the same may from time to time be amended or
supplemented, up to the aggregate principal amount of $350,000,000 at any
one time outstanding; and
(j) Debt arising out of or pursuant to the issuance by the Company of
senior unsecured notes up to and including the aggregate principal amount
of $350,000,000, the Net Cash Proceeds of which shall be used by the
Company to make the mandatory prepayment required by subsection 4.1(a).
(b) Subsection 7.2 of the Credit Agreement is hereby amended as follows:
(i) Clause (b) of subsection 7.2 is hereby amended by deleting the
word "and" found at the end thereof.
(ii) Clause (c) of subsection 7.2 is hereby amended by deleting the
period (.) found at the end thereof and substituting therefor "; and".
(iii) Subsection 7.2 is hereby amended and supplemented by adding
thereto a new clause (d), reading in its entirety as follows:
"(d) Liens relating to the obligations under the Lease Agreement
referenced in subsection 7.1(g) and the sublease between the Company and
EPCO pertaining thereto."
(c) Subsection 7.3 of the Credit Agreement is hereby amended as follows:
(i) Clause (a) of subsection 7.3 is hereby amended by deleting the
word "and" found at the end thereof.
(ii) Clause (b) of subsection 7.3 is hereby amended by deleting the
period (.) found at the end thereof and substituting therefor "; and".
(iii) Subsection 7.3 is hereby amended and supplemented by adding
thereto a new clause (c), reading in its entirety as follows:
"(c) the Company and any Subsidiary may enter the natural gas
processing business generally as well as through and in connection with the
Tejas Acquisition."
(d) Subsection 7.5 of the Credit Agreement is hereby amended and
supplemented by adding thereto at the end thereof a new clause (iii), reading in
its entirety as follows:
"and (iii) as long as no Default or Event of Default has occurred and
is continuing or would result therefrom, the Company may make Restricted
Payments to the Limited Partner and the General Partner (but only if the
General Partner thereupon contributes such Common Units to the Limited
Partner) in the form of Common Units for purposes in connection with the
Limited Partner's employee deferred compensation plan, not to exceed
500,000 Common Units in the aggregate."
(e) Subsection 7.6 of the Credit Agreement is hereby amended as follows:
(i) Clause (h) of subsection 7.6 is hereby amended by deleting the
word "and" found at the end thereof.
(ii) Clause (i) of subsection 7.6 is hereby amended by changing the
reference thereof to "(m)."
(iii) Subsection 7.6 is hereby amended and supplemented by adding
thereto four (4) new clauses, to be (i), (j), (k) and (l), reading in their
entirety as follows:
"(i) capital contributions or other Investments to consummate the
Tejas Acquisition;
(j) capital contributions or other Investments in connection with the
proposed acquisition of a 263 mile liquids pipeline from Sorrento, Louisiana to
Mt. Belvieu, Texas, an ethane pipeline and an ethane storage well from Shell
Chemical Company or an affiliate thereof;
(k) capital contributions or other Investments to an entity to be owned by
the Company (or a Subsidiary of the Company) and an affiliate of Exxon
Corporation in connection with a new propylene concentrator facility in Baton
Rouge, Louisiana;"
(l) capital contributions or other Investments to consummate the
acquisition of the 50% general partner interest in Mont Belvieu Associates owned
by one or more Affiliates of Kinder Morgan Energy Partners L.P.; and"
(iv) The last sentence of Subsection 7.6 is hereby amended in its
entirety to read as follows:
"Notwithstanding the foregoing, the aggregate amount of the capital
contributions or other Investments made in Permitted Joint Ventures
pursuant to paragraphs (e) and (g) above shall not exceed $25,000,000 in
any fiscal year (excluding Investments during fiscal years 1998 and 1999
with respect to the Wilprise Pipeline, the Tristates Pipeline, the Baton
Rouge Fractionator and the NGL Product Chiller)."
(f) Subsection 7.11 is hereby amended and supplemented by adding thereto
the following language at the end thereof:
"and further except for the natural gas processing business."
(g) Subsection 7.21(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(a) Tangible Net Worth. Permit its Consolidated Tangible Net Worth as
of the last day of any fiscal quarter of the Company to be less than
$250,000,000."
(h) Subsection 7.21(c) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(c) Ratio of Total Indebtedness to EBITDA. Permit the Total
Indebtedness/EBITDA Ratio to exceed 3.0 to 1.0 as of the last day of any
fiscal quarter of the Company.
For purposes of clauses (b) and (c) of this subsection, EBITDA shall mean,
at the date of determination occurring on September 30, 1999, the product of (A)
EBITDA for the nine-month period ending September 30, 1999 multiplied by (B)
12/9."
(i) Subsection 7.22 is hereby added to read in its entirety as follows:
"No Hostile Tender Offers. Make any hostile tender offer within the
contemplation of Section 14d of the Securities and Exchange Act of 1934, as
amended, or otherwise."
2.7 Amendments to Section 11.
(a) Clause (ii) of the proviso contained in the first full sentence of
subsection 11.2 of the Credit Agreement is hereby amended in its entirety to
read as follows:
"(ii) change the principal of or decrease the rate of interest on the
Revolving Credit Loans or any fees hereunder,".
(b) Subsection 11.4(c) of the Credit Agreement is hereby amended by
deleting therefrom the proviso contained at the end of the first sentence in
said subsection 11.4(c).
(c) Subsection 11.18 is hereby added to read in its entirety as follows:
"Co-Arrangers, etc. The Co-arrangers, co-agents and documentation
agent, in their capacities as such, shall not have any duties or
responsibilities under or pursuant to this Agreement."
SECTION 3. CONDITIONS
The enforceability of this First Amendment against the Agent and the Banks
is subject to the satisfaction of the following conditions precedent:
3.1 Loan Documents. The Agent shall have received multiple original
counterparts, as requested by the Agent, of this First Amendment executed and
delivered by a duly authorized officer of the Company, the Agent, the
Documentation Agent, and each Bank and otherwise in form and substance
satisfactory to the Agent.
3.2 Company Proceedings of Loan Parties. The Agent shall have received
multiple copies, as requested by the Agent, of the resolutions, in form and
substance reasonably satisfactory to the Agent, of the Board of Directors (or
equivalent body) of the Company, authorizing the execution, delivery and
performance of this First Amendment, each such copy being attached to an
original certificate of the Secretary or an Assistant Secretary of the Company,
dated as of the Effective Date, certifying (i) that the resolutions attached
thereto are true, correct and complete copies of resolutions duly adopted by
written consent or at a meeting of the Board of Directors (or equivalent body),
(ii) that such resolutions constitute all resolutions adopted with respect to
the transactions contemplated hereby, (iii) that such resolutions have not been
amended, modified, revoked or rescinded as of the Effective Date, (iv) that the
Partnership Agreement and the Management Agreement have not been amended or
otherwise modified since the effective date of the Credit Agreement, except
pursuant to any amendments attached thereto, and (v) as to the incumbency and
signature of the officers of the Company executing this First Amendment.
3.3 Representations and Warranties. Except as affected by the transactions
contemplated in the Credit Agreement and this First Amendment, each of the
representations and warranties made by the Company in or pursuant to the Loan
Documents, including the Credit Agreement, shall be true and correct in all
material respects as of the Effective Date, as if made on and as of such date.
3.4 No Default. No Default or Event of Default shall have occurred and be
continuing as of the Effective Date.
3.5 No Change. No event shall have occurred since March 31, 1999, which, in
the reasonable opinion of the Banks, could have a material adverse effect on the
condition (financial or otherwise), business, operations or prospects of the
Company.
3.6 Other Instruments or Documents. The Agent or any Bank or counsel to the
Agent shall receive such other instruments or documents as they may reasonably
request.
3.7 Events. The following events shall have occurred or shall occur
contemporaneously with the execution of this First Amendment:
(a) execution of appropriate documentation evidencing the Debt described in
subsection 7.1(i) of the Credit Agreement, as amended hereby;
(b) execution of the First Amendment to the EPCO Credit Agreement;
(c) execution of a contribution agreement in connection with the Tejas
Acquisition; and
(d) receipt by the applicable Banks of the amendment fee pertaining to this
First Amendment.
SECTION 4. MISCELLANEOUS
4.1 Adoption, Ratification and Confirmation of Credit Agreement. Each of
the Company, the Agent and the Banks does hereby adopt, ratify and confirm the
Credit Agreement, as amended hereby, and acknowledges and agrees that the Credit
Agreement, as amended hereby, is and remains in full force and effect.
4.2 Successors and Assigns. This First Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.
4.3 Counterparts. This First Amendment may be executed by one or more of
the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument and shall be enforceable as of the Effective Date upon the execution
of one or more counterparts hereof by the Company, the Agent, the Documentation
Agent and the Banks. In this regard, each of the parties hereto acknowledges
that a counterpart of this First Amendment containing a set of counterpart
execution pages reflecting the execution of each party hereto shall be
sufficient to reflect the execution of this First Amendment by each necessary
party hereto and shall constitute one instrument.
4.4 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be understood to include the plural; and likewise,
the plural shall be understood to include the singular. Words denoting sex shall
be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. Definitions of terms defined in
the singular or plural shall be equally applicable to the plural or singular, as
the case may be, unless otherwise indicated.
4.5 Entire Agreement. This First Amendment constitutes the entire agreement
among the parties hereto with respect to the subject hereof. All prior
understandings, statements and agreements, whether written or oral, relating to
the subject hereof are superseded by this First Amendment.
4.6 Invalidity. In the event that any one or more of the provisions
contained in this First Amendment shall for any reason be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this First Amendment.
4.7 Titles of Articles, Sections and Subsections. All titles or headings to
Articles, Sections, subsections or other divisions of this First Amendment or
the exhibits hereto, if any, are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such Articles, Sections, subsections, other divisions or exhibits,
such other content being controlling as the agreement among the parties hereto.
4.8 Governing Law. This First Amendment shall be deemed to be a contract
made under and shall be governed by and construed in accordance with the
internal laws of the State of New York.
This First Amendment, the Credit Agreement, as amended hereby, the Notes,
and the other Loan Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.
There are no unwritten or oral agreements between the parties.
[Signatures begin on next page]
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the Effective Date.
COMPANY:
ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC, General Partner
By: /s/ Gary L. Miller
---------------------------------------------
Gary L. Miller
Executive Vice President and Chief
Financial Officer
BANKS AND AGENTS:
THE CHASE MANHATTAN BANK,
Individually as a Bank and as Agent
By: /s/ Peter Ling
--------------------------------------------
Name: Peter Ling
Title: Vice President
THE BANK OF NOVA SCOTIA,
Individually as a Bank and as Documentation Agent
By: /s/ F.C.H. Ashby
--------------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
ABN AMRO BANK, NV
By: /s/ Kevin P. Costello
--------------------------------------------
Name: Kevin P. Costello
Title: Vice President
By: /s/ Gordon D. Chang
--------------------------------------------
Name: Gordon D. Chang
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Kenneth J. Fatur
--------------------------------------------
Name: Kenneth J. Fatur
Title: Vice President
BANK OF TOKYO-MITSUBISHI, LTD., HOUSTON AGENCY
By: /s/ I. Otani
--------------------------------------------
Name: I. Otani
Title: Deputy General Manager
CIBC INC.
By: /s/ Aleksandra Dymanus
Name: Aleksandra Dymanus
Title: Authorized Signatory
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Jacques Busquet
Name: Jacques Busquet
Title: Executive Vice President
DEN NORSKE BANK ASA
By: /s/ Byron L. Cooley
Name: Byron L. Cooley
Title: Senior Vice President
By: /s/ J. Morten Kreutz
Name: J. Morten Kreutz
Title: First Vice President
FIRST UNION NATIONAL BANK
By: /s/ Robert R. Wetteroff
Name: Robert R. Wetteroff
Title: Senior Vice President
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ Jim R. Hamilton
Name: Jim R. Hamilton
Title: Vice President
ING (U.S.) CAPITAL CORPORATION
By: /s/ Frank Ferrara
Name: Frank Ferrara
Title: Senior Associate
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ William E. Magee
Name: William E. Magee
Title: Duly Authorized Signatory
MEESPIERSON CAPITAL CORP.
By: /s/ Darrell W. Holley
Name: Darrell W. Holley
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Bet Hunter
Name: Bet Hunter
Title:
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By: /s/ Raymond Ventura
Name: Raymond Ventura
Title: Vice President & Manager
CREDIT AGREEMENT
Among
ENTERPRISE PRODUCTS OPERATING L.P.,
as the Company,
BANKBOSTON, N.A.,
SOCIETE GENERALE, SOUTHWEST AGENCY
and
FIRST UNION NATIONAL BANK,
as Co-Arrangers,
THE CHASE MANHATTAN BANK,
as Co-Arranger and as Administrative Agent,
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Arranger and as Documentation Agent,
THE BANK OF NOVA SCOTIA,
as Co-Arranger and as Syndication Agent
and
THE SEVERAL BANKS FROM TIME TO TIME PARTIES HERETO
with
FIRST UNION CAPITAL MARKETS,
acting as Managing Agent
and
CHASE SECURITIES INC.,
acting as Lead Arranger and Book Manager
Dated as of July 28, 1999
{CHASE LOGO}
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 16
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS 17
2.1 Revolving Credit Commitments 17
2.2 Revolving Credit Notes 17
2.3 Procedure for Borrowing under Revolving Credit Commitments 18
2.4 Termination, Reduction or Extension of Revolving Credit Commitments 18
SECTION 3. LETTERS OF CREDIT 19
3.1 Letter of Credit Commitments 19
3.2 Issuance and Continuation of Letters of Credit 19
3.3 Participating Interests 20
3.4 Reimbursement Obligation of the Company 20
3.5 Letter of Credit Payments 20
3.6 Increased Costs 21
3.7 Nature of Obligations; Indemnities 21
3.8 Purpose of the Letters of Credit 23
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
FINANCING FACILITIES 23
4.1 Optional Prepayments 23
4.2 Commitment Fees 24
4.3 Letter of Credit Commissions 25
4.4 Conversion Options; Minimum Amount of Revolving Credit Loans 25
4.5 Minimum Amounts of Eurodollar Tranches 26
4.6 Interest Rate, Payment Dates and Lending Offices 26
4.7 Computation of Interest and Fees 26
4.8 Inability to Determine Interest Rate 27
4.9 Pro Rata Treatment and Payments 27
4.10 Illegality 28
4.11 Requirements of Law 28
4.12 Taxes 30
4.13 Indemnity 31
SECTION 5. REPRESENTATIONS AND WARRANTIES 31
5.1 Financial Condition. 31
5.2 No Change 32
5.3 Existence; Compliance with Law 32
5.4 Power; Authorization; Enforceable Obligations 32
5.5 No Legal Bar 33
5.6 No Default 33
5.7 Investments and Guaranties 33
5.8 Liabilities; Litigation 33
5.9 Taxes; Governmental Charges 33
5.10 Titles, etc. 33
5.11 Intellectual Property 34
5.12 Casualties; Taking of Properties 34
5.13 Use of Proceeds; Margin Stock; No Financing of Corporate Takeovers 34
5.14 Compliance with Law 34
5.15 ERISA 35
5.16 Investment Company Act; Other Regulations 35
5.17 Accuracy and Completeness of Information 35
5.18 Public Utility Holding Company Act 36
5.19 Subsidiaries 36
5.20 Location of Business and Offices 36
5.21 Neither the Company Nor Subsidiary is a Utility 36
5.22 Year 2000 Matters 36
SECTION 6. AFFIRMATIVE COVENANTS 37
6.1 Financial Statements and Reports of the Company 37
6.2 Annual Certificates of Compliance 38
6.3 Quarterly Certificates of Compliance; Projections 39
6.4 Notice of Certain Events 39
6.5 ERISA Information 40
6.6 Taxes and Other Liens 41
6.7 Maintenance 41
6.8 Insurance 41
6.9 Payment of Expenses and Taxes 43
6.10 Accounts and Records 43
6.11 Right of Inspection 43
6.12 Payment of Obligations 44
6.13 Environmental Laws 44
6.14 Clean-Down 44
SECTION 7. NEGATIVE COVENANTS 45
7.1 Limitation on Debt 45
7.2 Limitation on Liens 46
7.3 Limitations on Fundamental Changes 46
7.4 Limitation on Sale of Assets 46
7.5 Limitation on Dividends 47
7.6 Limitation on Investments 47
7.7 Limitation on Optional Payments and Modifications of
Debt Instruments and Other Agreements 49
7.8 Limitation on Transactions with Affiliates 49
7.9 Limitation on Sales and Leasebacks 49
7.10 Limitation on Changes in Fiscal Year 49
7.11 Limitation on Lines of Business 49
7.12 Constituent Documents 49
7.13 Limitation on Restrictions Affecting Subsidiaries 50
7.14 Creation of Subsidiaries 50
7.15 Hazardous Materials 50
7.16 New Partners 50
7.17 Holding Companies 50
7.18 Actions by Permitted Joint Ventures 51
7.19 Hedging Transactions 51
7.20 ERISA Compliance 51
7.21 Financial Condition Covenants 51
SECTION 8. EVENTS OF DEFAULT 52
8.1 Events 52
8.2 Remedies 54
8.3 Right of Set-off 55
SECTION 9. CONDITIONS OF LENDING 56
9.1 Conditions to Initial Revolving Credit Loans and Letters of Credit 56
9.2 Conditions to Each Revolving Credit Loan and Letter of Credit 57
SECTION 10. THE AGENT 58
10.1 Appointment 58
10.2 Delegation of Duties 58
10.3 Exculpatory Provisions 59
10.4 Reliance by Agent 59
10.5 Notice of Default 59
10.6 Non-Reliance on Agent and Other Banks 60
10.7 Indemnification 60
10.8 Agent in Its Individual Capacity 61
10.9 Successor Agent 61
SECTION 11. MISCELLANEOUS 61
11.1 Notices 61
11.2 Amendments and Waivers 62
11.3 Invalidity 62
11.4 Successors and Assigns; Participations; Purchasing Banks 62
11.5 No Waiver; Cumulative Remedies 65
11.6 Payment of Expenses, Taxes and Indemnification 65
11.7 GOVERNING LAW 66
11.8 Several Obligations 66
11.9 Interest 66
11.10 Governmental Regulation 67
11.11 Entire Agreement 67
11.12 Exhibits 67
11.13 Titles of Sections and Subsections 67
11.14 Number of Documents 67
11.15 SUBMISSION TO JURISDICTION; WAIVERS 67
11.16 Interpretation 68
11.17 Counterparts 68
SCHEDULES
Schedule I - Revolving Credit Commitments
Schedule 5.7 - Investments
Schedule 5.10 - Titles, etc.
Schedule 5.19 - Subsidiaries
Schedule 5.21 - Utility
Schedule 7.1 - Other Debt
Schedule 7.2 - Other Liens
Schedule 7.8 - Transactions with Affiliates
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B-1 - Snell & Smith Opinion
Exhibit B-2 - Opinion of Richard H. Bachmann, Esq.
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Commitment Transfer Supplement
CREDIT AGREEMENT dated as of July 28, 1999 among Enterprise Products
Operating L.P., a Delaware limited partnership (the "Company"), the several
banks from time to time parties hereto (collectively, the "Banks"; individually,
a "Bank"), The Chase Manhattan Bank, BankBoston, N.A., The Bank of Nova Scotia,
The First National Bank of Chicago, Societe Generale, Southwest Agency and First
Union National Bank, as Co-Arrangers, The First National Bank of Chicago, as
Documentation Agent, The Bank of Nova Scotia, as Syndication Agent, and The
Chase Manhattan Bank ("Chase"), as administrative agent for the Banks hereunder
(in such capacity, the "Agent"), with First Union Capital Markets acting as
Managing Agent and Chase Securities Inc. acting as Lead Arranger and Book
Manager.
W I T N E S S E T H:
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms have the
following meanings:
"Affiliate": any Person (other than a Subsidiary) which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
the Company. For purposes of this definition, a Person shall be deemed to be
"controlled by" the Company if the Company possesses, directly or indirectly,
power either to (i) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Aggregate L/C Outstandings": at a particular time, the sum of (a) the
aggregate amount then available to be drawn under all outstanding Letters of
Credit issued for the account of the Company plus (b) the aggregate amount of
any payments made by the Agent under any Letter of Credit for the account of the
Company that have not been reimbursed by the Company pursuant to subsection 3.5.
"Agreement": this Credit Agreement, as amended, supplemented or modified
from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect at its
principal office in New York City (each change in the Prime Rate to be effective
on the date such change is publicly announced); "Base CD Rate" shall mean the
sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day (or,
if such day shall not be a Business Day, the next preceding Business Day) by the
Board of Governors of the Federal Reserve System (the "Board") through the
public information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in Federal
Reserve Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Agent from
three New York City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by it. If
for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate, or both, for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the Alternate Base Rate.
"Applicable Margin": for each Revolving Credit Loan, the rate per annum set
forth below:
(a) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company shows that the
Total Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was
less than or equal to 1.5 to 1, then the Applicable Margin, during the
period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on
(and excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be (i) with respect to Alternate Base Rate Loans, 0% and (ii) with respect
to Eurodollar Loans, .75%; and
(b) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company shows that the
Total Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was
greater than 1.5 to 1 and less than or equal to 2.0 to 1, then the
Applicable Margin, during the period beginning on (and including) the date
on which such Applicable Margin Certificate was delivered by the Company to
the Banks and ending on (and excluding) the date on which the next
Applicable Margin Certificate is delivered by the Company to the Banks
pursuant to subsection 6.1(c), shall be (i) with respect to Alternate Base
Rate Loans, 0% and (ii) with respect to Eurodollar Loans, 1.00%;
(c) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company shows that the
Total Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was
greater than 2.0 to 1 and less than or equal to 2.5 to 1, then the
Applicable Margin, during the period beginning on (and including) the date
on which such Applicable Margin Certificate was delivered by the Company to
the Banks and ending on (and excluding) the date on which the next
Applicable Margin Certificate is delivered by the Company to the Banks
pursuant to subsection 6.1(c), shall be (i) with respect to Alternate Base
Rate Loans, 0.25% and (ii) with respect to Eurodollar Loans, 1.25%;
(d) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company shows that the
Total Indebtedness/EBITDA Ratio on the last day of such fiscal quarter was
greater than 2.5 to 1, then the Applicable Margin, during the period
beginning on (and including) the date on which such Applicable Margin
Certificate was delivered by the Company to the Banks and ending on (and
excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be (i) with respect to Alternate Base Rate Loans, .50% and (ii) with
respect to Eurodollar Loans, 1.50%;
provided if the Company shall fail to deliver the Applicable Margin
Certificate by the end of the fiscal quarter in which it is required, the
Applicable Margin for the next fiscal quarter shall be as provided in
clause (d) above; provided, further, that the Applicable Margin for the
period from the Closing Date until (and excluding) the date on which the
Company delivers to the Banks the Applicable Margin Certificate for the
fiscal quarter of the Company ended September 30, 1999, shall be, with
respect to Alternative Base Rate Loans, .50%, and with respect to
Eurodollar Loans, 1.50%; provided, further, that when the Company or the
Limited Partner receives a senior unsecured debt rating of at least BBB-
from Standard & Poor's Ratings Services, a division of McGraw-Hill, Inc.
("Standard & Poor's"), and a debt rating of at least Baa3 from Moody's
Investors Service, Inc. ("Moody's"), the Applicable Margin with respect to
Eurodollar Loans shall be reduced by .125%; and, in the event the senior
unsecured debt rating is greater than BBB- from Standard & Poor's and Baa3
from Moody's, the Applicable Margin with respect to Eurodollar Loans shall
be reduced by .250%. Each such reduction shall be effective on the next
Business Day following the date the applicable rating is achieved and shall
be reversed on the next Business Day following any downgrade of any one of
the ratings below the levels aforementioned.
"Applicable Margin Certificate": as defined in subsection 6.1(c).
"Application": an application, in such form as the Agent may specify from
time to time, requesting the Agent to open a Letter of Credit.
"Available Investment Revolving Credit Commitment": as to any Bank, at a
particular time, an amount equal to the difference between (a) the amount of
such Bank's Investment Revolving Credit Commitment at such time and (b) such
Bank's Investment Revolving Extensions of Credit at such time.
"Available Revolving Credit Commitment": as to any Bank, at a particular
time, an amount equal to the sum of the Available Investment Revolving Credit
Commitment of such Bank and the Available Working Capital Revolving Credit
Commitment of such Bank.
"Available Working Capital Revolving Credit Commitment": as to any Bank, at
a particular time, an amount equal to the difference between (a) the amount of
such Bank's Working Capital Revolving Credit Commitment at such time and (b)
such Bank's Working Capital Loans outstanding at such time.
"BEF Credit Agreement": the Amended and Restated Credit Agreement, dated as
of August 16, 1995, among Belvieu Environmental Fuels, the financial
institutions and other lenders from time to time parties thereto, Chemical Bank,
now known as The Chase Manhattan Bank, as agent, as amended, supplemented or
otherwise modified from time to time.
"BEF Participation": the interest of the Company in the loans outstanding
under the BEF Credit Agreement.
"Borrowing Date": any Business Day specified by the Company as the Company
requests the Banks to make Revolving Credit Loans thereunder.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.
"C/D Assessment Rate": for any day as applied to any Revolving Credit Loan,
the annual assessment rate (rounded upward to the nearest 1/100th of 1%)
estimated by the Agent to be the then current net annual assessment rate payable
on such day to the Federal Deposit Insurance Corporation or any successor
("FDIC") for FDIC's insuring time deposits made in Dollars at offices of Chase
in the United States.
"C/D Reserve Percentage": for any day as applied to any Revolving Credit
Loan, that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor), for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding one billion
Dollars in respect of new non-personal time deposits in Dollars in New York City
having a maturity of 60 days.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing. In addition, with
respect to the Company, "Capital Stock" shall include the limited partner
interests of the Company and the General Partner Interests and, with respect to
the Limited Partner, "Capital Stock" shall include the Units and the general
partner interest of the Limited Partner.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq.
"Change of Control": any of the following events:
(i) Dan Duncan (his wife, descendants and trusts for the benefit of
his wife and/or descendants and the heirs, legatees and distributees of his
estate) shall cease to own, directly or indirectly, (A) at least 51% (on a
fully converted, fully diluted basis) of the economic interest in the
Capital Stock of EPCO or (B) an aggregate number of shares of Capital Stock
of EPCO sufficient to elect a majority of the board of directors of EPCO;
(ii) EPCO shall cease to own 100% of the issued and outstanding
Capital Stock of EPC Partners II, Inc. ("EPC II");
(iii) EPC II (or another wholly owned Subsidiary of EPCO) shall cease
to own at least 65% of the outstanding membership interests in the General
Partner;
(iv) EPC II shall fail to own at least a majority of the outstanding
Common Units;
(v) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), excluding EPC II and further excluding Shell Oil Company and any of
its Affiliates acquiring or owning an interest in any of the special units
of the Limited Partner (or the Common Units into which any of such special
units are converted) issued by the Limited Partner in connection with the
Tejas Acquisition, shall become, or obtain rights (whether by means of
warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 20% of the outstanding Common Units;
(vi) the General Partner shall cease to be the general partner of the
Limited Partner or the Company; or
(vii) the Limited Partner shall cease to be the sole limited partner
of the Company.
"Chase": The Chase Manhattan Bank and its successors and assigns.
"Closing": the consummation of the transactions contemplated by this
Agreement to occur upon the initial satisfaction or waiver of the conditions
precedent set forth in subsection 9.1.
"Closing Date": the date on which the conditions set forth in subsection
9.1 shall have been satisfied or waived.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Commercial Letters of Credit": the commercial documentary letters of
credit, payable in Dollars, to be issued by the Agent hereunder for the account
of the Company in accordance with subsection 3.2.
"Commitment Percentage": as to any Bank at any time, the percentage which
such Bank's Revolving Credit Commitment then constitutes of the aggregate
Revolving Credit Commitments (or, at any time after the Revolving Credit
Commitments shall have expired or terminated, the percentage which the aggregate
principal amount of such Bank's Revolving Extensions of Credit then outstanding
constitutes of the aggregate principal amount of the Revolving Extensions of
Credit then outstanding).
"Commitment Period": the period from and including the Closing Date to but
not including the Revolving Credit Commitment Termination Date, or such earlier
date on which the Revolving Credit Commitment shall terminate as provided
herein.
"Commitment Transfer Supplement": a commitment transfer supplement,
substantially in the form of Exhibit D.
"Common Units": the common units of limited partner interests in the
Limited Partner.
"Commonly Controlled Entity": an entity, whether or not incorporated, which
is under common control with the Company within the meaning of Section 4001 of
ERISA.
"Consolidated Interest Expense": for any period, total interest expense
(including that attributable to capital lease obligations) of the Company and
its Subsidiaries for such period with respect to all outstanding Debt of the
Company and its Subsidiaries (including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under any hedging agreements to the
extent such net costs are allocable to such period in accordance with GAAP).
"Consolidated Net Income": for any period, the consolidated net income of
the Company and its Subsidiaries for such period after all applicable taxes on
income and profits payable by the Company as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Tangible Net Worth": at any date of determination, the sum of
preferred stock (if any), par value of common stock, capital in excess of par
value of common stock, partners' capital, and retained earnings, less treasury
stock (if any), less goodwill, cost in excess of net assets acquired, deferred
development costs and all other assets as are not properly classified as
tangible assets, all as determined on a consolidated basis.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which
such Person is a party or by which it or any of its property is bound.
"Debt": of any Person, without duplication: (i) all obligations of such
Person for borrowed money; (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments or by any other securities
providing for the mandatory payment of money (including, without limitation,
preferred stock subject to mandatory redemption or sinking fund provisions);
(iii) all obligations of such Person to pay the deferred purchase price of
Property or services, except (a) trade accounts payable in the ordinary course
of business and (b) obligations pursuant to minimum requirement contracts;
(iv) all obligations of such Person as lessee under Financing Leases; (v) all
obligations of such Person to purchase securities (or other Property) which
arise out of or in connection with the sale of the same or substantially similar
securities or Property, excluding time exchanges of Product; (vi) all
obligations of such Person in respect of letters of credit, banker's
acceptances, or similar obligations issued or created for the account of such
Person; (vii) all Guarantee Obligations of such Person in respect of obligations
of the kind referred to in clauses (i) through (vi) above; and (viii) unfunded
vested benefits under each Plan; provided that, with respect to any Subsidiary,
"Debt" also includes any preferred stock of such Subsidiary which is not owned
directly or indirectly by the Company valued at the higher of its voluntary or
involuntary liquidation value.
"Default": any of the events specified in subsection 8.1, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Lending Office": initially, the office of each Bank designated as
such in Schedule I; thereafter, such other office of such Bank, if any, located
within the United States which shall be making or maintaining Alternate Base
Rate Loans.
"EBITDA": shall mean, for any period, the sum (without duplication) of (i)
operating income of the Company, and its consolidated Subsidiaries for such
period plus (ii) depreciation and amortization for such period to the extent not
already included in the calculation of operating income plus (iii) interest
income during such period (excluding interest income in respect of the BEF
Participation and the MBA Participation), plus (iv) cash distributions or
dividends received by the Company during such period from unconsolidated
entities (including, without limitation, unconsolidated Permitted Joint
Ventures), plus (v) other cash income received by the Company during such
period, plus (vi) interest and principal payments received by the Company with
respect to the BEF Participation and the MBA Participation, minus (vii)
operating lease expense for such period to the extent not already deducted in
the calculation of operating income, determined in each case, on a consolidated
basis in accordance with GAAP, provided, however EBITDA (x) will not include any
extraordinary, unusual or non-recurring gains or losses from asset sales and (y)
will be adjusted from time to time for cash flows from acquisitions, which cash
flows shall be added on a pro forma basis to each of the prior four fiscal
quarters.
"Environmental Complaint": any complaint, order, citation, notice or other
written communication from any Governmental Authority with respect to the
existence or alleged existence of a violation of any Requirement of Law or legal
liability resulting from any air emission, water discharge, noise emission,
asbestos, Hazardous Substance at, upon, under or within any of the property
owned, operated or used by the Company or any of its Subsidiaries.
"EPCO": Enterprise Products Company, a Texas corporation.
"EPCO Credit Agreement": as defined in subsection 9.1(g).
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
and as in effect from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto), dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to any Eurodollar Loan for any
Interest Period, the rate per annum equal to the average (rounded upwards to the
nearest whole multiple of one sixteenth of one percent) of the rate at which
Chase's Eurodollar Lending Office is offered Dollar deposits two Working Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted at or about 10:00 A.M.,
New York City time, for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Lending Office": initially, the office of each Bank designated
as such in Schedule I; thereafter, such other office of such Bank, if any, which
shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans": Revolving Credit Loans hereunder at such time as they
are made and/or being maintained at a rate of interest based upon the Eurodollar
Rate.
"Eurodollar Rate": with respect to any Eurodollar Loan for any Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upwards to the nearest whole multiple of 1/100th of
one percent):
Eurodollar Base Rate 1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans having
the same Interest Period (whether or not originally made on the same day).
"Event of Default": any of the events specified in subsection 8.1, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, event or act has been satisfied.
"Excepted Liens": (i) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Company in conformity with GAAP; (ii) pledges
or deposits in connection with workers' compensation, unemployment insurance or
other social security, old age, disability or similar legislation; (iii) legal
or equitable encumbrances deemed to exist by reason of negative pledge or
negative mortgage covenants (such as that made in subsection 7.2 hereof) and
other covenants or undertakings of like nature; (iv) legal or equitable
encumbrances deemed to exist by reason of the existence of any litigation or
other legal proceeding or arising out of a judgment or award with respect to
which an appeal is being prosecuted (for so long as the Properties subject to
such encumbrances are not subject to levy or other enforcement action, due to
the posting of a bond to gain stay of execution or for any other appropriate
reason); (v) vendors', carriers', warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the construction or
improvement of any Property in respect of obligations which are not yet due or
which are being contested in good faith by appropriate proceedings by or on
behalf of the Company or any Subsidiary, provided that adequate reserves with
respect thereto are maintained on the books of the Company in conformity with
GAAP; (vi) easements, restrictions, rights of way and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Company; (vii) Liens securing the purchase price
of automobiles, office equipment or other equipment of the Company or any
Subsidiary, provided that (A) such Lien shall not extend to or cover any other
Property of the Company or any Subsidiary, and (B) the principal amount of the
borrowing secured by any such Lien shall at no time exceed 80% of the purchase
price of the automobiles, office equipment or other equipment acquired; and
(viii) precautionary filings of financing statements under the applicable
Uniform Commercial Code made by (A) a lessor with respect to personal property
leased to the Company or a Subsidiary or (B) an owner of raw make or Product
with respect to raw make or Product being fractionated, processed, transported
or stored, as the case may be, by the Company or a Subsidiary.
"Existing Credit Agreement": the Credit Agreement dated as of July 27, 1998
(as amended and restated as of September 30, 1998), among the Company, The Chase
Manhattan Bank, as Agent, and the financial institutions parties thereto, as
amended, modified or supplemented to and including the Closing Date.
"Facilities": those assets comprising the liquid hydrocarbon fractionation
plants and related equipment located near Mont Belvieu, Chambers County, Texas,
including without limitation any and all personal property, tanks, machinery,
fixtures, appliances, pipes, valves, fittings, computers and all equipment and
materials relating thereto or used in connection therewith, electrical
equipment, meters, gauges, monitors, and any other equipment or material of any
nature whatsoever used in the fractionation operation of such plants, together
with all alterations, additions, enlargements, revisions, substitutions or
replacements of any kind as may be constructed or acquired in connection with
such plants.
"Financing Lease": any lease of property, real or personal, the obligations
of the lessee in respect of which are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States of
America, consistently applied, and in force from time to time.
"General Partner": Enterprise Products GP, LLC, a Delaware limited
liability company.
"General Partner Interest": all general partner interests in the Company.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation": as to any Person, any obligation of such Person
guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation shall be deemed to be the lower of (i) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (ii) the maximum amount for which the
guarantor may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum amount for
which such Person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such Person's maximum
reasonably anticipated liability in respect thereof as determined by the Company
in good faith.
"Hazardous Substance": as defined in subsection 6.2(c)(i).
"Indebtedness": at a particular time, any and all amounts owing or to be
owing, directly or indirectly, by the Company to the Agent or any of the Banks
in connection with this Agreement, the Revolving Credit Notes, the Letters of
Credit or any other Loan Documents.
"Interest Payment Date": (a) as to any Alternate Base Rate Loan, the last
Business Day of each March, June, September and December, commencing on
September 30, 1999, (b) as to any one, two or three month Eurodollar Loan, the
last day of the Interest Period with respect thereto and (c) as to any six month
Eurodollar Loan, the date which is three months after the Borrowing Date or
conversion date with respect thereto and the last day of the Interest Period
with respect thereto.
"Interest Period": (a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to any Eurodollar Loans and
ending one, two, three or six months thereafter, as selected by the Company in
its notice of borrowing as provided in subsection 2.3 or its notice of
conversion as provided in subsection 4.4(a), as the case may be; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loans and ending one,
two, three or six months thereafter, as selected by the Company by irrevocable
notice to the Agent not less than three Working Days prior to the last day of
the then current Interest Period with respect to such Eurodollar Loans; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Working Day, that Interest Period shall be extended to the next
succeeding Working Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Working
Day;
(ii) no Interest Period shall extend beyond the Revolving Credit
Commitment Termination Date;
(iii) if the Company shall fail to give notice as provided above,
the Company shall be deemed to have selected an Alternate Base Rate
Loan to replace the affected Eurodollar Loan;
(iv) any Interest Period that begins on the last Working Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Working Day of a calendar month; and
(v) the Company shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Investment": as applied to any Person, any direct or indirect purchase or
other acquisition by such Person of stock or other securities of or any
partnership interest in any other Person, or any direct or indirect loan,
advance or capital contribution by such Person to any other Person, including
all Debt and accounts receivable from such other Person which are not current
assets or did not arise from sales to such other Person in the ordinary course
of business, and any direct or indirect purchase or other acquisition by such
Person of any assets (other than any acquisition of assets in the ordinary
course of business).
"Investment Revolving Credit Commitment": as to any Bank, its obligation to
make Investment Revolving Credit Loans pursuant to subsection 2.1(b) in an
aggregate principal amount not to exceed the amount set forth opposite such
Bank's name in Schedule I under the caption "Investment Revolving Credit
Commitment", as the same may be reduced pursuant to subsection 2.4,
collectively, as to all the Banks, the "Investment Revolving Credit
Commitments". The original aggregate amount of the Investment Revolving Credit
Commitments is $300,000,000.
"Investment Revolving Credit Loan" and "Investment Revolving Credit Loans":
as defined in subsection 2.1(b).
"Investment Revolving Extensions of Credit": as to any Bank at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Investment
Revolving Credit Loans made by such Bank then outstanding and (b) such Bank's
Commitment Percentage of the Aggregate L/C Outstandings then outstanding.
"Letters of Credit": the collective reference to the Commercial Letters of
Credit and the Standby Letters of Credit.
"Lien": with respect to any assets, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Financing Lease or other title
retention agreement relating to such asset.
"Limited Partner": Enterprise Products Partners L.P., a Delaware limited
partnership.
"Loan Documents": this Agreement and the Revolving Credit Notes and the
Letters of Credit, as any of such agreements may be amended or supplemented from
time to time.
"Management Agreement": the EPCO Agreement, dated as of July 31, 1998,
between EPCO, the General Partner, the Limited Partner and the Company as
amended, modified or supplemented from time to time in accordance with
subsection 7.8.
"Material Adverse Effect": any material adverse effect on (i) the business,
operations, property, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole, (ii) the ability of the Company
and its Subsidiaries taken as a whole to meet its obligations under or in
respect of the Loan Documents or the Letters of Credit on a timely basis or
(iii) the validity or enforceability of the Loan Documents or the Letters of
Credit or the rights and remedies of the Banks hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Company and/or
its Subsidiaries in excess of $15,000,000 for remedial costs, compliance costs,
compensatory damages, punitive damages, fines, penalties or any combination
thereof.
"Maximum Rate": as defined in subsection 11.9(a).
"MBA Participation": the interest of the Company in the loans outstanding
under the Multiple Draw Term Loan Agreement, dated as of July 19, 1996, among
Mont Belvieu Associates, the financial institutions and other lenders from time
to time parties thereto and The Chase Manhattan Bank, as agent, as amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Participants": as defined in subsection 11.4(b).
"Partnership Agreement": the Agreement of Limited Partnership of the
Company among the General Partner and the Limited Partner substantially in the
form previously provided to the Banks, as amended, modified and supplemented
from time to time in accordance with subsection 7.7.
"PBGC": the Pension Benefit Guaranty Corporation or any successor
established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Joint Ventures": any arrangement (including, without limitation,
a partnership, limited liability company, corporation or association but
excluding any such entity which had or has securities that are publicly traded)
whereby the Company and/or one or more of its Subsidiaries on the one hand, and
a Person or Persons other than the Company, an Affiliate of the Company or any
of its Subsidiaries, on the other, directly or indirectly hold interests in an
asset or group of assets (the "JV Assets") that are being operated or are
proposed to be operated by one or more of such holders for the accounts of all
such holders in accordance with the terms of an operating agreement, ownership
agreement, corporate charter, articles of association, partnership agreement or
other customary similar type arrangement among such holders; provided that (a)
the operation of the JV Assets shall at all times constitute a business similar
to the businesses being conducted by the Company and its Subsidiaries at the
inception of the arrangement and (b) the relative ownership interests in the JV
Assets bear a reasonable relationship to the relative capital contributions of
the participations and their respective partnerships in the operation of the JV
Assets.
"Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
"Plan": at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which the Company, any Subsidiary or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Product": all oil, gas and/or other hydrocarbons and petroleum products
and by-products, whether in liquid or gaseous form, now owned or hereafter
acquired by the Company or any Subsidiary including, without limitation,
propane, commercial butane, normal butane, isobutane and ethane.
"Property": any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
"Purchasing Banks": as defined in subsection 11.4(c).
"Register": as defined in subsection 11.4(d).
"Reimbursement Obligation": an obligation of the Company to reimburse the
Agent pursuant to subsection 3.4.
"Release": as defined in subsection 6.2(c)(i).
"Relevant Environmental Laws": all Requirements of Law from time to time
applicable to any property owned, operated or used by the Company or any of its
Subsidiaries or any part thereof with respect to (a) the installation, existence
or removal of asbestos; (b) the existence, discharge or removal of Hazardous
Substances; (c) air emissions, water discharges, noise emissions and any other
environmental, health or safety matters; and (d) effects on the environment of
any of such properties or any part thereof or of any activity heretofore, now or
hereafter conducted on any of such properties.
"Required Banks": the holders of more than 50% of the Revolving Credit
Commitments or, if the Revolving Credit Commitments have been terminated, the
aggregate principal amount of all Revolving Extensions of Credit made by all of
the Banks then outstanding.
"Requirement of Law": as to any Person, the Certificate of Incorporation
and By-Laws, partnership agreement, limited liability company agreement or other
organizational or governing documents of such Person, and any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other direction or
requirement (including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls) of any (domestic or foreign) federal, state,
county, municipal or other government, department, commission, board, court,
agency or any other instrumentality of any of them, in each case applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": with respect to the Company, the Chairman of the
Board, chief executive officer, President, the chief operating officer or any
Executive, Senior or other Vice President or, with respect to financial matters,
the chief financial officer.
"Revolving Credit Commitment": as to any Bank, the sum of its Investment
Revolving Credit Commitment and its Working Capital Revolving Credit Commitment,
collectively, as to all the Banks, the "Revolving Credit Commitments".
"Revolving Credit Commitment Termination Date": July 28, 2001 as the same
may be extended pursuant to subsection 2.4.
"Revolving Credit Loan" and "Revolving Credit Loans": the individual or
collective reference to the Investment Revolving Credit Loans and the Working
Capital Revolving Credit Loans.
"Revolving Credit Note" and "Revolving Credit Notes": as defined in
subsection 2.2.
"Revolving Extensions of Credit": as to any Bank at any time, an amount
equal to the sum of (a) the Investment Revolving Extensions of Credit of such
Bank and (b) the aggregate principal amount of all Working Capital Revolving
Credit Loans made by such Bank then outstanding.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA but
which is not a Multiemployer Plan.
"Standby Letters of Credit": the standby letters of credit, payable in
Dollars, to be issued by the Agent for the account of the Company in accordance
with subsection 3.2.
"Subordinated Units": the subordinated units of limited partner interests
in the Limited Partner.
"Subsidiary": any corporation, limited liability company or partnership of
which more than 50% of the issued and outstanding securities or interests having
ordinary voting power for the election of directors (or persons having similar
authority) is owned or controlled, directly or indirectly, by the Company and/or
one or more of its Subsidiaries.
"Tejas Acquisition": the acquisition by the Company directly or indirectly
of the natural gas processing assets and other midstream assets of Tejas Natural
Gas Liquids, LLC.
"Taxes": as defined in subsection 4.12.
"Total Indebtedness/EBITDA Ratio": shall mean, for any fiscal quarter of
the Company, the ratio of Debt of the Company and its Subsidiaries as of the
last day of such fiscal quarter to EBITDA for the 12-month period ended on the
last day of such fiscal quarter.
"Transferee": as defined in subsection 11.4(f).
"Type": as to any Revolving Credit Loan, its nature as an Alternate Base
Rate Loan or Eurodollar Loan.
"Units": the collective reference to the Common Units and the Subordinated
Units.
"Working Capital Revolving Credit Commitment": as to any Bank, its
obligation to make Working Capital Revolving Credit Loans pursuant to subsection
2.1(a) in an aggregate principal amount not to exceed the amount set forth
opposite such Bank's name in Schedule I under the caption "Working Capital
Revolving Credit Commitment", as the same may be reduced pursuant to subsection
2.4, collectively, as to all the Banks, the "Working Capital Revolving Credit
Commitments". The original aggregate amount of the Working Capital Revolving
Credit Commitments is $50,000,000.
"Working Capital Revolving Credit Loan" and "Working Capital Revolving
Credit Loans": as defined in subsection 2.1(a).
"Working Day": any Business Day on which dealings in foreign currencies and
exchange between banks may be carried on in London, England.
1.2 Other Definitional Provisions . (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the Revolving Credit Notes or any certificate or other documents made or
delivered pursuant hereto.
(b) Where the character or amount of any asset or liability or item of
income or expense or capital expenditures is required to be determined or
any consolidation or other accounting computation is required to be made
for the purposes of this Agreement, this shall be done in accordance with
GAAP applied on a basis consistent with those reflected by the Financial
Statements, except where such principles are inconsistent with the
requirements of this Agreement. All determinations of financial amounts on
the consolidated basis of the Company and its Subsidiaries shall make due
allowance for any minority stock interest in the Subsidiaries.
(c) The Agent shall make such minor technical adjustments among the
Banks as may be necessary or appropriate with respect to the allocation of
final loans or repayments among the Banks in order that such loans and
repayments of the Revolving Credit Loans, the Letters of Credit or other
Indebtedness, which shall have been divided among the Banks on the basis of
their Commitment Percentages, correspond exactly to the loans or repayments
of the Revolving Credit Loans, the Letters of Credit or other Indebtedness
severally due from or to each Bank.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Bank severally agrees to make revolving credit loans (individually,
a "Working Capital Revolving Credit Loan" and, collectively, the "Working
Capital Revolving Credit Loans") to the Company from time to time during the
Commitment Period, in an aggregate principal amount at any one time outstanding
not to exceed the Working Capital Revolving Credit Commitment of such Bank, as
such amount may be reduced as provided herein. During the Commitment Period the
Company may use the Working Capital Revolving Credit Commitments by borrowing,
prepaying the Working Capital Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) Subject to the terms and conditions hereof, each Bank severally
agrees to make revolving credit loans (individually, an "Investment
Revolving Credit Loan" and, collectively, the "Investment Revolving Credit
Loans") to the Company from time to time during the Commitment Period, in
an aggregate principal amount at any one time outstanding which, when added
to such Bank's Commitment Percentage of the Aggregate L/C Outstandings then
outstanding, shall not exceed the Investment Revolving Credit Commitment of
such Bank, as such amount may be reduced as provided herein. During the
Commitment Period the Company may use the Investment Revolving Credit
Commitments by borrowing, prepaying the Investment Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(c) The Revolving Credit Loans may be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined by
the Company and notified to the Agent in accordance with subsections 2.3
and 4.4; provided that no Revolving Credit Loans shall mature after the
Revolving Credit Termination Date.
(d) The Company shall repay all Revolving Credit Loans on the
Revolving Credit Commitment Termination Date.
2.2 Revolving Credit Notes . Upon request of any Bank, the Working Capital
Revolving Credit Loans and/or the Investment Revolving Credit Loans made by such
Bank shall be evidenced by a promissory note or notes of the Company,
substantially in the form of Exhibit A (individually, a "Revolving Credit Note"
and, collectively, the "Revolving Credit Notes") with appropriate insertions
therein, payable to the order of such Bank. Each Bank is hereby authorized to
record the date, type and amount of each Revolving Credit Loan made or converted
by such Bank, the date and amount of each payment or prepayment of principal
thereof, and in the case of Eurodollar Loans, the Interest Period and interest
rate with respect thereto, on the schedule annexed to and constituting a part of
its Revolving Credit Note, which recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided that the
failure by any such Bank to make any such recordation on its Revolving Credit
Note shall not affect any of the obligations of the Company under such Revolving
Credit Note or this Agreement.
2.3 Procedure for Borrowing under Revolving Credit Commitments. The
Company may borrow under either the Working Capital Revolving Credit Commitment
or the Investment Revolving Credit Commitment during the Commitment Period on
any Working Day if the borrowing is a Eurodollar Loan or on any Business Day if
the borrowing is an Alternate Base Rate Loan; provided that the Company shall
give the Agent irrevocable notice (which notice must be received by the Agent
prior to 10:00 A.M., New York City time) (a) three Working Days prior to the
requested borrowing date, in the case of Eurodollar Loans and (b) one Business
Day prior to the requested borrowing date, in the case of Alternate Base Rate
Loans, specifying (i) the amount to be borrowed, (ii) the requested borrowing
date, (iii) whether the borrowing is to be Working Capital Revolving Credit
Loans or Investment Revolving Credit Loans, (iv) whether the borrowing is to be
a Eurodollar Loan, an Alternate Base Rate Loan or a combination thereof and (v)
if the loan is to be entirely or partly a Eurodollar Loan, the length of the
Interest Period for such Eurodollar Loan. Upon receipt of such notice, the Agent
shall notify each Bank thereof promptly, but in any case by 5:00 p.m. of the
same day such notice is received. Each borrowing pursuant to either the Working
Capital Revolving Credit Commitments or the Investment Revolving Credit
Commitments shall be in an aggregate principal amount of (a) $1,000,000 or a
whole multiple of $500,000 in excess thereof in the case of Eurodollar Loans and
(b) in the case of Alternate Base Rate Loans, the lesser of (i) $1,000,000 or a
whole multiple of $500,000 in excess thereof and (ii) the sum of the then
Available Working Capital Revolving Credit Commitments, in the case of
borrowings of Working Capital Revolving Credit Loans, or the then Available
Investment Revolving Credit Commitments, in the case of borrowings of Investment
Revolving Credit Loans. Not later than 12:00 noon, New York City time, on the
date specified in such notice, each Bank shall make available to the Agent at
its office specified in subsection 11.1, in immediately available funds, the
amount then to be loaned by it. Proceeds of Revolving Credit Loans received by
the Agent shall be made available to the Company at the office of the Agent
specified in subsection 11.1 by crediting the Company's account on the books of
such office with the aggregate of the amounts made available to the Agent by the
Banks and in like funds as received by the Agent.
2.4 Termination, Reduction or Extension of Revolving Credit Commitments .
(a) The Company shall have the right, upon not less than five Business Days'
notice to the Agent, to terminate the Revolving Credit Commitments or, from time
to time, reduce the amount of the Revolving Credit Commitments. Any such
reduction shall be ratable among the Working Capital Revolving Credit
Commitments and the Investment Revolving Credit Commitments and no such
reduction shall be permitted to be an amount which is less than the aggregate
principal amount of the Working Capital Revolving Credit Loans, in the case of a
reduction of the Working Capital Revolving Credit Commitments, or the Investment
Revolving Credit Loans, in the case of a reduction of the Investment Revolving
Credit Commitments, then outstanding after giving effect to any contemporaneous
prepayment thereof. Upon receipt of such notice the Agent shall promptly notify
each Bank thereof. Any termination of the Revolving Credit Commitments shall be
accompanied by prepayment in full of the Revolving Credit Loans, together with
accrued interest thereon to the date of such prepayment. Any reduction of the
Working Capital Revolving Credit Commitments or the Investment Revolving Credit
Commitments (other than as a result of any mandatory prepayment) shall be in the
amount of $1,000,000 or any whole multiple of $500,000 in excess thereof and
shall reduce permanently the amount of the Working Capital Revolving Credit
Commitments or the Investment Revolving Credit Commitments, as the case may be,
then in effect. The Revolving Credit Commitments once terminated or reduced may
not be reinstated.
(b) The Company may on any day which is at least 60 and not more than 90
days prior to the Revolving Credit Commitment Termination Date in effect at such
time request by notice to the Agent and the Banks that the Revolving Credit
Commitment Termination Date be extended for an additional 364 day period
beginning on the Revolving Credit Commitment Termination Date then in effect. No
more than 30 days after receipt of any such extension request, each Bank shall
notify the Agent of its decision with respect thereto (as to which decision the
Agent shall promptly notify the Company). The Revolving Credit Commitment
Termination Date shall be so extended provided that (i) no Default or Event of
Default shall have occurred and is continuing at such time and (ii) the Company
shall have received the prior written consent of all the Banks for such
extension.
SECTION 3. LETTERS OF CREDIT
3.1 Letter of Credit Commitments . Subject to the terms and conditions
hereof, the Agent, on behalf of the Banks, and in reliance on the agreement of
the Banks set forth in subsection 3.3, agrees to issue Commercial Letters of
Credit and Standby Letters of Credit for the account of the Company on any
Business Day from and including the Closing Date to but not including the
Revolving Credit Commitment Termination Date (as the same may have been extended
at the time of issuance); provided that the Agent shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the
aggregate amount of the Available Investment Revolving Credit Commitments would
be less than zero or (ii) the Aggregate L/C Outstandings shall exceed
$10,000,000 until such time as all obligations under the Existing Credit
Agreement have been fully and finally paid in full and all commitments by the
Lenders hereunder have been finally terminated and thereafter, $40,000,000.
3.2 Issuance and Continuation of Letters of Credit. (a) The Company may
request the Agent to issue a Commercial Letter of Credit or a Standby Letter of
Credit for its account by delivering to the Agent at least four Business Days
prior to the proposed date of issuance at its address specified in subsection
11.1, an Application setting forth in such Application (i) the proposed issuance
date of such Letter of Credit, (ii) the face amount of such Letter of Credit and
(iii) such other information as may be requested in such Application. The
Company shall also provide such other certificates, documents and other papers
and information as the Agent may reasonably request. Upon receipt of such
Application, the Agent will notify each other Bank thereof and shall, subject to
the terms and conditions hereof, promptly open such Letter of Credit by issuing
the original of such Letter of Credit to the beneficiary thereof and by
furnishing a copy thereof to the Company. (b) Each Commercial Letter of Credit
and Standby Letter of Credit issued hereunder shall, among other things, (i) be
denominated in Dollars, (ii) provide for the payment of sight drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the certificate described therein, (iii) have an expiry date
occurring not later than the Revolving Credit Commitment Termination Date, (iv)
not provide for its automatic extension beyond such expiry date, (v) be in form
and substance satisfactory to the Agent and (vi) be issued to a beneficiary
reasonably satisfactory to the Agent.
3.3 Participating Interests . Effective in the case of each Letter of
Credit as of the date of the opening thereof, each Bank severally agrees that it
shall be (or shall continue to be) unconditionally and irrevocably liable,
without regard to the occurrence of any Default or Event of Default, to the
extent of such Bank's Commitment Percentage, to reimburse the Agent on demand
for the amount of each draft paid by the Agent under such Letter of Credit to
the extent that such amount is not reimbursed by the Company pursuant to
subsection 3.4. Each such payment made by a Bank shall be treated as the
purchase by such Bank of a participating interest in such Company's
Reimbursement Obligation under subsection 3.4 in an amount equal to such
payment. Each Bank shall share on a pro rata basis (calculated by reference to
its participating interest from time to time in such Reimbursement Obligations)
in any interest which accrues pursuant to subsection 3.4. All amounts recovered
by the Agent or any Bank hereunder or under the other Loan Documents and which
are applied to the Reimbursement Obligations under subsection 3.4 shall be
distributed to the Banks in an amount equal to their respective pro rata shares
thereof (calculated as provided in the preceding sentence).
3.4 Reimbursement Obligation of the Company. In order to induce the Agent
to issue (or continue, as the case may be) the Letters of Credit and the Banks
to participate therein, the Company hereby agrees to reimburse the Agent (a)
unless such Reimbursement Obligation has been accelerated pursuant to Section 8,
on each date on which the Agent notifies the Company of the date and amount of a
draft presented under any Letter of Credit issued for its respective account and
paid by the Agent, for (i) the amount of such draft paid by the Agent on behalf
of the Banks under such Letter of Credit and (ii) the amount of any taxes, fees,
charges or other costs or expenses whatsoever incurred by the Agent or any Bank
in connection with any payment made by the Agent or any Bank under, or with
respect to, such Letter of Credit and (b) upon the acceleration of such
Reimbursement Obligation in accordance with subsection 8.2, for an amount equal
to the then maximum liability (whether direct or contingent) of the Agent and
the Banks under such Letter of Credit. Each such payment shall be made to the
Agent at the office of the Agent specified in subsection 11.1, in lawful money
of the United States of America and in immediately available funds. Interest on
any and all amounts remaining unpaid by the Company under this subsection 3.4
from the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full shall be payable on demand of
the Agent at the fluctuating rate per annum equal to 2% above the Alternate Base
Rate.
3.5 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Agent shall promptly notify the Company of the
date and the amount of the draft presented for payment. If the Company fails to
reimburse the Agent as provided in subsection 3.4 by the close of business on
the date each such draft is paid by the Agent, the Agent shall promptly notify
each Bank thereof and of the date, the amount of the draft paid and such Bank's
ratable share thereof. No later than the close of business on the date such
notice is given, each Bank shall make available to the Agent, at its office
specified in subsection 11.1, in immediately available funds, such Bank's
ratable share of such draft. The responsibility of the Agent to the Company and
the Banks shall be only to determine that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment shall
be in conformity with such Letter of Credit. If any Bank's ratable share of a
draft presented for payment under any Letter of Credit is made available to the
Agent on a date after the date such draft is paid by the Agent, such Bank shall
pay to the Agent on demand an amount equal to the product of (i) the daily
average Federal Funds Effective Rate during such period as quoted by the Agent,
times (ii) the amount of such Bank's Commitment Percentage of such draft, times
(iii) a fraction the numerator of which is the number of days that elapse from
and including the date such draft is paid by the Agent to the date on which such
Bank's Commitment Percentage of such draft shall have become immediately
available to the Agent and the denominator of which is 360. A certificate of the
Agent submitted to any Bank with respect to any amounts owing under this
subsection 3.6 shall be conclusive, absent manifest error. If such Bank's
Commitment Percentage is not in fact made available to the Agent by such Bank
within three Business Days of the date such draft is paid by the Agent, the
Agent shall be entitled to recover such amount with interest thereon at the rate
per annum applicable to Alternate Base Rate Loans hereunder, on demand, from the
Company.
3.6 Increased Costs. If the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof or compliance by any Bank
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof
shall either (i) impose, modify, assess or deem applicable any reserve, special
deposit, assessment or similar requirement against letters of credit issued by
the Agent or (ii) impose on the Agent or any Bank any other condition regarding
any Letter of Credit, and the result of any event referred to in clauses (i) or
(ii) above shall be to increase the cost to the Agent or any Bank of issuing or
maintaining such Letter of Credit, or its participation therein, as the case may
be (which increase in cost shall be the result of the Agent or any Bank's
reasonable allocation of the aggregate of such cost increases resulting from
such events), then, upon demand by the Agent or such Bank, the Company shall
promptly pay to the Agent or such Bank from time to time as specified by the
Agent or such Bank additional amounts which shall be sufficient to compensate
the Agent or such Bank for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at the rate
provided in subsection 3.4. A certificate as to the fact and amount of such
increased cost incurred by the Agent or such Bank as a result of any event
showing in reasonable detail the basis for the calculation thereof submitted by
the Agent or any Bank to the Company, shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Revolving Credit Loans and all other amounts payable
hereunder.
3.7 Nature of Obligations; Indemnities. (a) The obligations of the Company
hereunder shall be absolute and unconditional under any and all circumstances
and irrespective of any set off, counterclaim or defense to payment which the
Company may have or had against the Agent, any Bank or any beneficiary of a
Letter of Credit, provided, however, that this provision shall be deemed a
waiver by the Company of the assertion of a compulsory counterclaim only to the
extent permitted by applicable law. The Company assumes all risks of the acts or
omissions of the users of the Letters of Credit. Neither the Agent nor any Bank
nor any of their respective correspondents shall be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document specified in any of the applications for any of the Letters of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any of the Letters of Credit or any of the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of any draft to bear
any reference or adequate reference to any of the Letters of Credit, or failure
of anyone to note the amount of any draft on the reverse of any of the Letters
of Credit or to surrender or to take up any of the Letters of Credit or to send
forward any such document apart from drafts as required by the terms of any of
the Letters of Credit, each of which provisions, if contained in a Letter of
Credit itself, it is agreed, may be waived by the Agent; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) for any error, neglect, default, suspension or insolvency of any
correspondents of the Agent; (v) for errors in translation or for errors in
interpretation of technical terms; (vii) for any loss or delay, in the
transmission or otherwise, of any such document or draft or of proceeds thereof;
(viii) for any misapplication by any beneficiary of any Letter of Credit of the
proceeds of a drawing of such Letter of Credit; or (ix) for any other
circumstances whatsoever in making or failing to make payment under a Letter of
Credit, except only that the Company shall have a claim against the Agent, and
the Agent shall be liable to the Company, to the extent, but only to the extent,
of any direct, as opposed to consequential, damages suffered by the Company
which the Company proves were caused by the Agent's willful misconduct or gross
negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit. None of the above shall affect,
impair or prevent the vesting of any of the rights or powers of the Agent or any
Bank. The Agent shall have the right to transmit the terms of the Letter of
Credit involved without translating them.
(b) In furtherance and extension and not in limitation of the specific
provisions hereinabove in this Section 3 set forth, (i) any action taken or
omitted by the Agent or by any of its correspondents under or in connection with
any of the Letters of Credit, if taken or omitted in good faith, shall be
binding upon the Company and shall not put the Agent or its correspondents under
any resulting liability to the Company and (ii) the Agent may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; provided
that if the Agent shall receive written notification from both the beneficiary
of a Letter of Credit and the Company that sufficiently identifies (in the
opinion of the Agent) documents to be presented to the Agent which are not to be
honored, the Agent agrees that it will not honor such documents.
(c) The Company hereby agrees at all times to protect, indemnify and save
harmless each of the Agent, the Banks or their respective correspondents from
and against any and all claims, actions, suits and other legal proceedings, and
from and against any and all losses, claims, demands, liabilities, damages,
costs, charges, counsel fees and other expenses which they or any of them may,
at any time, sustain or incur by reason of or in consequence of or arising out
of the issuance of any of the Letters of Credit, except for losses and expenses
which the Company proves were caused by the willful misconduct or gross
negligence of an indemnified party; it being the intention of the parties that
this agreement shall be construed and applied to protect and indemnify each of
the Agent, the Banks and their respective correspondents against any and all
risks involved in the issuance of all of the Letters of Credit or participations
therein, all of which risks, whether or not foreseeable, being hereby assumed by
the Company, including, without limitation, any and all risks of all acts by any
Governmental Authority, domestic or foreign. The Agent and the Banks shall not,
in any way, be liable for any failure by the Agent or anyone else to pay a draft
drawn under any of the Letters of Credit as a result of any acts, whether
rightful or wrongful, of any Governmental Authority, or any other cause not
readily within their control or the control of their respective correspondents,
agents, or subagents. Without limiting the generality of the foregoing, the
Company shall reimburse the Agent and the Banks and their respective
correspondents and shall pay and indemnify the Agent, any Banks or its
correspondents against payment of, out-of-pocket costs and expenses, withholding
taxes, liabilities and damages (including, without limitation, reasonable
counsel fees) incurred or sustained by any of them in connection with any of the
Letters of Credit or by reason of any such failure to pay. Also, without
limiting the generality of the foregoing, the Company shall be responsible for,
and shall reimburse the Agent and the Banks forthwith upon its receipt of any
demand therefor, any and all commissions, fees and other charges paid or payable
by the Agent or any Bank to any foreign bank which shall be an advising bank or
a beneficiary of a Letter of Credit which shall, in reliance thereon, have
issued its own letter of credit in respect of obligations of the Company.
3.8 Purpose of the Letters of Credit . The Commercial Letters of Credit and
the Standby Letters of Credit shall be used for (i) the purpose of purchasing
imported Product and (ii) general business purposes in the ordinary course of
business or for such other purposes as may be approved by the Agent.
3.9 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO FINANCING FACILITIES
4.1 Optional Prepayments . (a) The Company may on the last day of the
relevant Interest Period if the Revolving Credit Loans to be prepaid are in
whole or in part Eurodollar Loans, or at any time and from time to time if the
Revolving Credit Loans to be prepaid are Alternate Base Rate Loans, prepay the
Revolving Credit Loans, in whole or in part, without premium or penalty, upon at
least (i) three Working Days' irrevocable notice, in the case of Eurodollar
Loans, and (ii) one Business Day's irrevocable notice, in the case of Alternate
Base Rate Loans, in each case to the Agent, specifying the date and amount of
prepayment and whether the payment is of Working Capital Revolving Credit Loans
or Investment Revolving Credit Loans and whether of Eurodollar Loans or
Alternate Base Rate Loans or a combination thereof, and if of a combination
thereof, the amount of prepayment allocable to each. Upon receipt of such notice
the Agent shall promptly notify each Bank thereof. If such notice is given, the
Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid.
(b) Each optional partial prepayment of the Revolving Credit Loans shall be
in an aggregate principal amount of $1,000,000 or a whole multiple of $1,000,000
in excess thereof. 4.2 Commitment Fees . The Company agrees to pay to the Agent,
for the account of each Bank, commitment fees with respect to the Revolving
Credit Commitment of such Bank for the period from and including the Closing
Date to and including the Revolving Credit Termination Date, calculated at the
following rates per annum on the average daily Available Revolving Credit
Commitment of such Bank for each day during the period for which the commitment
fee with respect to the Revolving Credit Commitments is being paid:
(i) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was less than or equal to 1.5 to 1, then the commitment
fee for the Revolving Credit Commitment, during the period beginning on
(and including) the date on which such Applicable Margin Certificate was
delivered by the Company to the Banks and ending on (and excluding) the
date on which the next Applicable Margin Certificate is delivered by the
Company to the Banks pursuant to subsection 6.1(c), shall be .25%; and
(ii) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 1.5 to 1 and less than or equal to 2.0
to 1, then the commitment fee for the Revolving Credit Commitment, during
the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on
(and excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be .30%;
(iii) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 2.0 to 1 and less than or equal to 2.5
to 1, then the commitment fee for the Revolving Credit Commitment, during
the period beginning on (and including) the date on which such Applicable
Margin Certificate was delivered by the Company to the Banks and ending on
(and excluding) the date on which the next Applicable Margin Certificate is
delivered by the Company to the Banks pursuant to subsection 6.1(c), shall
be .375%;
(iv) if the Applicable Margin Certificate required pursuant to
subsection 6.1(c) for any fiscal quarter of the Company ending after June
30, 1999 shows that the Total Indebtedness/EBITDA Ratio on the last day of
such fiscal quarter was greater than 2.5 to 1, then the commitment fee for
the Revolving Credit Commitment, during the period beginning on (and
including) the date on which such Applicable Margin Certificate was
delivered by the Company to the Banks and ending on (and excluding) the
date on which the next Applicable Margin Certificate is delivered by the
Company to the Banks pursuant to subsection 6.1(c), shall be .50%;
provided, that the commitment fee for the Revolving Credit Commitment for
the period from the Closing Date until (and excluding) the date on which
the Company delivers to the Banks the Applicable Margin Certificate for the
fiscal quarter of the Company ended September 30, 1999, shall be .50%;
provided, further if the Company shall fail to deliver the Applicable
Margin Certificate by the end of the fiscal quarter in which it is
required, the commitment fee for the Revolving Credit Commitment for the
next fiscal quarter shall be as provided in clause (iv) above.
The commitment fees with respect to the Revolving Credit Commitments shall
be payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing September 30, 1999, and on the Revolving
Credit Termination Date or such earlier date as the Revolving Credit Commitments
shall terminate as provided herein.
4.3 Letter of Credit Commissions . (a) The Company agrees to pay to the
Agent for the account of the Banks a Letter of Credit commission for the period
from and including the date of issuance to and including the Revolving Credit
Commitment Termination Date, at the rate per annum equal to the Applicable
Margin then in effect with respect to Eurodollar Loans on the average daily face
amount of each Letter of Credit payable in arrears on the last Business Day of
each March, June, September and December and on the Revolving Credit Commitment
Termination Date.
(b) The Agent as issuer of each such Letter of Credit shall receive a
commission of 1/8 of 1% of the average daily face amount of each such Letter of
Credit for the period from and including the date of issuance to and including
the Revolving Credit Commitment Termination Date, payable in arrears on the last
Business Day of each March, June, September and December and on the Revolving
Credit Commitment Termination Date.
4.4 Conversion Options; Minimum Amount of Revolving Credit Loans . (a) The
Company may elect from time to time to convert Eurodollar Loans to Alternate
Base Rate Loans by giving the Agent at least three Business Days' prior
irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans shall only be made on the last day of an Interest Period with
respect thereto. The Company may elect from time to time to convert Alternate
Base Rate Loans to Eurodollar Loans by giving the Agent at least five Working
Days' prior irrevocable notice of such election. Upon receipt of such notice,
the Agent shall promptly notify each Bank thereof. Promptly following the date
on which such conversion is being made each Bank shall take such action as is
necessary to transfer its portion of such Loans to its Domestic Lending Office
or its Eurodollar Lending Office, as the case may be. All or any part of
outstanding Eurodollar Loans and Alternate Base Rate Loans may be converted as
provided herein, provided that (i) no Revolving Credit Loan may be converted
into a Eurodollar Loan when any Default or Event of Default has occurred and is
continuing, (ii) partial conversions shall be in an aggregate principal amount
of $1,000,000 or a whole multiple of $500,000 in excess thereof and (iii) any
such conversion may only be made if, after giving effect thereto, subsection 4.5
shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Company thereof with
the notice provisions contained in subsection 4.4(a); provided that no
Eurodollar Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to an
Alternate Base Rate Loan on the last day of the then current Interest Period
with respect thereto. The Agent shall notify the Banks promptly that such
automatic conversion contemplated by this subsection 4.4(b) will occur. 4.5
Minimum Amounts of Eurodollar Tranches . All borrowings, conversions, payments,
prepayments and selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, (a) the aggregate principal amount of the Eurodollar Loans comprising
any Eurodollar Tranche shall not be less than $1,000,000 and (b) there shall be
no more than 15 Eurodollar Tranches of Revolving Credit Loans at any one time
outstanding.
4.6 Interest Rate, Payment Dates and Lending Offices . (a) The Revolving
Credit Loans comprising each Eurodollar Tranche shall bear interest for each
Interest Period with respect thereto on the unpaid principal amount thereof at a
rate per annum equal to the Eurodollar Rate determined for such Interest Period
plus the Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for the period from and
including the date thereof until maturity on the unpaid principal amount thereof
at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.
(c) If all or a portion of the principal amount of any of the Revolving
Credit Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise) each Eurodollar Loan shall be converted to an
Alternate Base Rate Loan at the end of the last Interest Period with respect
thereto. Any such overdue principal amount shall bear interest at a rate per
annum which is 2% above the rate which would otherwise be applicable pursuant to
subsection 4.6 (a) or (b) from the date of such non-payment until paid in full
(as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date. If
all or any portion of interest due on any of the Revolving Credit Loans shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise) or if all or any portion of any fee due in connection with this
Agreement or any of the Revolving Credit Loans shall not be paid when due, then
any such overdue amount shall bear interest at a rate per annum which is 2%
above the Alternate Base Rate plus the Applicable Margin from the date of such
non-payment until paid in full (as well as after as before judgment).
(e) Eurodollar Loans shall be made and maintained by each Bank at its
Eurodollar Lending Office, and Alternate Base Rate Loans shall be made and
maintained by each Bank at its Domestic Lending Office.
4.7 Computation of Interest and Fees . (a) Interest in respect of Alternate
Base Rate Loans, commitment fees and interest on overdue interest, commitment
fees and other amounts payable hereunder shall be calculated on the basis of a
365 (or 366, as the case may be) day year for the actual days elapsed. Interest
in respect of Eurodollar Loans shall be calculated on the basis of a 360 day
year for the actual days elapsed. The Agent shall as soon as practicable notify
the Company and the Banks of each determination of a Eurodollar Rate. Any change
in the interest rate on a Revolving Credit Loan resulting from a change in the
Alternate Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change in the
Alternate Base Rate is announced, or such change in the Eurocurrency Reserve
Requirements shall become effective, as the case may be. The Agent shall as soon
as practicable notify the Company and the Banks of the effective date and the
amount of each such change. (b) Each determination of an interest rate by the
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Banks in the absence of manifest error. The Agent
shall, at the request of the Company, deliver to the Company a statement showing
the quotations used by the Agent in determining any interest rate pursuant to
subsection 4.6(a).
4.8 Inability to Determine Interest Rate . In the event that:
(i) the Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for any requested Interest
Period; or
(ii) the Agent shall have received notice prior to the first day of
such Interest Period from Banks constituting the Required Banks that the
interest rate determined pursuant to subsection 4.6(a) for such Interest
Period does not accurately reflect the cost to such Banks (as conclusively
certified by such Banks) of making or maintaining its affected Revolving
Credit Loan during such Interest Period,
with respect to (a) proposed Revolving Credit Loans that the Company has
requested be made as Eurodollar Loans, (b) Eurodollar Loans that will result
from the requested conversion of Alternate Base Rate Loans into Eurodollar Loans
or (c) the continuation of Eurodollar Loans beyond the expiration of the then
current Interest Period with respect thereto, the Agent shall forthwith give
telex or telephonic notice of such determination to the Company and the Banks at
least one day prior to, as the case may be, the requested Borrowing Date for
such Eurodollar Loans, the conversion date of such Domestic Dollar Loans or the
last day of such Interest Period. If such notice is given (x) any requested
Eurodollar Loans shall be made as Alternate Base Rate Loans, (y) any Alternate
Base Rate Loans that were to have been converted to Eurodollar Loans shall be
continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the last day of the then current Interest Period with
respect thereto, to Alternate Base Rate Loans. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans shall be made, nor shall the
Company have the right to convert Alternate Base Rate Loans to Eurodollar Loans.
4.9 Pro Rata Treatment and Payments . (a) Each borrowing by the Company
from the Banks, each payment by the Company on account of any commitment fee
hereunder and any reduction of the Revolving Credit Commitments of the Banks
hereunder shall be made pro rata according to the respective Commitment
Percentages of the Banks. Each payment (including each prepayment) by the
Company on account of principal of and interest on the Working Capital Revolving
Credit Loans or the Investment Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Working Capital
Revolving Credit Loans or the Investment Revolving Credit Loans, as the case may
be, held by each Bank. All payments (including prepayments) to be made by the
Company on account of principal, interest and fees shall be made without set-off
or counterclaim and shall be made to the Agent, for the account of the Banks, at
the Agent's office set forth in subsection 11.1, in lawful money of the United
States of America and in immediately available funds. The Agent shall distribute
such payments to the Banks promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Working Day.
(b) Unless the Agent shall have been notified in writing by any Bank prior
to a Borrowing Date that such Bank will not make the amount which would
constitute its Commitment Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Bank has made such amount available to
the Agent on such Borrowing Date, and the Agent may, in reliance upon such
assumption, make available to the Company a corresponding amount. If such amount
is made available to the Agent on a date after such Borrowing Date, such Bank
shall pay to the Agent on demand an amount equal to the product of (i) the daily
average Federal Funds Effective Rate during such period, times (ii) the amount
of such Bank's Commitment Percentage of such borrowing, times (iii) a fraction
the numerator of which is the number of days that elapse from and including such
Borrowing Date to the date on which such Bank's Commitment Percentage of such
borrowing shall have become immediately available to the Agent and the
denominator of which is 360. A certificate of the Agent submitted to any Bank
with respect to any amounts owing under this subsection 4.9(b) shall be
conclusive, absent manifest error. If such Bank's Commitment Percentage is not
in fact made available to the Agent by such Bank within three Business Days of
such Borrowing Date, the Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to Alternate Base Rate Loans
hereunder, on demand, from the Company.
4.10 Illegality . Notwithstanding any other provisions herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder to make Eurodollar Loans or convert Alternate Base Rate Loans to
Eurodollar Loans shall forthwith be canceled and (b) such Bank's Revolving
Credit Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans on the respective next succeeding
Interest Payment Date(s) for such Revolving Credit Loans or within such earlier
period as required by law. If any such prepayment or conversion of a Eurodollar
Loan occurs on a day which is not the last day of the current Interest Period
with respect thereto, the Company shall pay to such Bank such amounts, if any,
as may be required pursuant to subsection 4.13.
4.11 Requirements of Law . (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Bank with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) does or shall subject any Bank to any tax of any kind whatsoever
with respect to this Agreement, any Revolving Credit Note or any Eurodollar
Loans made by it, or change the basis of taxation of payments to such Bank
of principal, commitment fee, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income
of such Bank);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against (A) assets
held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Bank which are not otherwise included in
the determination of the Eurodollar Rate hereunder or (B) Letters of Credit
issued by the Agent or participated in by the Banks;
(iii) does or shall impose on such Bank any other condition; and the
result of any of the foregoing is to increase the cost to (A) any Bank, by
any amount which such Bank deems to be material, of making, renewing or
maintaining advances or extensions of credit or to reduce any amount
receivable hereunder, in each case, in respect to its Eurodollar Loans, or
(B) the Agent or any Bank of issuing or maintaining Letters of Credit (or
its participation therein, as the case may be), or to reduce any amount
receivable in connection therewith, then, in any such case, upon demand by
the Agent or such Bank (with a copy to the Agent), the Company shall
promptly pay to the Agent or such Bank, as the case may be, any additional
amounts necessary to compensate the Agent or such Bank for such additional
cost or reduced amount receivable, together with interest on each such
amount from the date demanded until payment in full thereof at the rate
provided in subsection 4.6(c) (in the case of increased costs in respect of
Eurodollar Loans) or subsection 3.5 (in the case of increased costs in
respect of Letters of Credit). If the Agent or a Bank becomes entitled to
claim any additional amounts pursuant to this subsection, it shall promptly
notify the Company, through the Agent, of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by the Agent or such Bank,
through the Agent, to the Company shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this
Agreement and payment of the outstanding Revolving Extensions of Credit.
Each Bank will promptly notify the Company and the Agent of any event
described in this subsection 4.11 of which it has knowledge and will
designate a different Eurodollar Lending Office if such designation will
avoid the need for, or reduce the amount of, compensation as described in
this subsection 4.11 and will not be otherwise disadvantageous to such
Bank.
If any Bank demands compensation from the Company pursuant to this
subsection 4.11 the Company may, upon at least three Business Days' prior
notice to such Bank through the Agent, prepay in full the then outstanding
Eurodollar Loans of such Bank, as the case may be, together with accrued
interest thereon to the date of prepayment and, concurrently therewith,
borrow from such Bank Alternate Base Rate Loans, in principal amounts equal
to the aggregate principal amounts of such Loans being prepaid and with the
same maturities, and such Bank shall make such Alternate Base Rate Loans.
If any prepayment or conversion of a Eurodollar Loan occurs on a day which
is not the last day of the then current Interest Period with respect
thereto, the Company shall pay to such Bank such amounts, if any, as may be
required pursuant to subsection 4.13.
(b) In the event that any Bank shall have determined that the adoption
of any law, rule or regulation regarding capital adequacy, or any change
therein or in the interpretation or application thereof or compliance by
any Bank or any corporation controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the force of
law) from any central bank or Governmental Authority, does or shall have
the effect of reducing the rate of return on such Bank's or corporation's
capital as a consequence of such Bank's obligations hereunder to a level
below that which such Bank or corporation could have achieved but for such
Requirement of Law, change or compliance (taking into consideration such
Bank's or corporation's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen days after submission by such Bank or corporation to the Company
(with a copy to the Agent) of a written request therefor, the Company shall
pay to such Bank such additional amount or amounts as will compensate such
Bank or corporation for such reduction. The agreements in this subsection
4.11(b) shall survive the termination of this Agreement and the payment of
the Revolving Extensions of Credit and all other amounts payable hereunder.
4.12 Taxes . (a) All payments made by the Company under this Agreement
shall be made free and clear of, and without reduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority excluding,
in the case of the Agent and each Bank, net income and franchise taxes (or taxes
imposed in lieu of net income or franchise taxes) imposed on (or measured by)
the income or profits of the Agent or such Bank by the jurisdiction under the
laws of which the Agent or such Bank is organized or any political subdivision
or taxing authority thereof or therein or by any jurisdiction in which such
Bank's Domestic Lending Office or Eurodollar Lending Office, as the case may be,
is located or any political subdivision or taxing authority thereof or therein
or by any other jurisdiction (or political subdivision or taxing authority
thereof or therein) as a result of a connection between such Bank and such
jurisdiction (or political subdivision or taxing authority thereof or therein)
other than a connection resulting solely from entering into this Agreement (all
such non-excluded taxes, levies, imposts, deductions, charges or withholdings
being hereinafter called "Taxes"). If any Taxes are required to be withheld from
any amounts payable to the Agent or any Bank hereunder, the amounts so payable
to the Agent or such Bank shall be increased to the extent necessary to yield to
the Agent or such Bank (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement. Whenever any Taxes are payable by the Company, as promptly as
possible thereafter, the Company shall send to the Agent for its own account or
for the account of such Bank a certified copy of an original official receipt
received by the Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Company
shall indemnify the Agent and the Banks for any incremental taxes, interest or
penalties that may become payable by the Agent or any Bank as a result of any
such failure. The agreements in this subsection 4.12 shall survive the
termination of this Agreement and the payment of the Revolving Extensions of
Credit and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the United States
of America or a state thereof agrees that it will deliver to the Company and the
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, and (ii) an
Internal Revenue Service Form W-8 or W-9 or successor applicable form. Each such
Bank also agrees to deliver to the Company and the Agent two further copies of
the said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Company, and such extensions or renewals thereof as may reasonably be requested
by the Company or the Agent, unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Bank from duly
completing and delivering any such form with respect to it and such Bank so
advises the Company and the Agent. Such Bank shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
4.13 Indemnity . The Company agrees to indemnify each Bank and to hold each
Bank harmless from any loss or expense which such Bank may sustain or incur as a
consequence of (a) default by the Company in payment when due of the principal
amount of or interest on any Eurodollar Loans of such Bank, (b) default by the
Company in making a borrowing or conversion after the Company has given a notice
of borrowing in accordance with subsection 2.3 or a notice of conversion
pursuant to subsection 4.4(a), or (c) default by the Company in making any
prepayment after the Company has given a notice in accordance with subsection
4.1(a) or (d) a prepayment of a Eurodollar Loan on a day which is not the last
day of an Interest Period with respect thereto, including, without limitation,
in each case, any such loss or expense arising from the reemployment of funds
obtained by it to maintain its Eurodollar Loans hereunder or from fees payable
to terminate the deposits from which such funds were obtained. A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted
by such Bank or the Agent to the Company shall be conclusive in the absence of
manifest error. This covenant shall survive termination of this Agreement and
payment of the outstanding Revolving Extensions of Credit and all other amounts
payable hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this Agreement and
to make their respective Revolving Credit Loans and to issue and participate in
Letters of Credit, the Company represents and warrants to the Agent and the
Banks that:
5.1 Financial Condition. (a) The audited consolidated and unaudited
consolidating balance sheets of the Company and its consolidated Subsidiaries
(and, if applicable, each Permitted Joint Venture, as provided for in subsection
6.1[a] and [b]) as at December 31, 1998, and the related audited consolidated
(and, as to statements of income, unaudited consolidating) statements of income,
equity and cash flow of the Company and its consolidated Subsidiaries (and, if
applicable, each Permitted Joint Venture, as provided for in subsection 6.1[a]
and [b]) for the fiscal year ended on said date, with the opinion thereon of
Deloitte & Touche heretofore furnished to each of the Banks, and the unaudited
consolidated and unaudited consolidating balance sheets of the Company and its
consolidated Subsidiaries (and, if applicable, each Permitted Joint Venture, as
provided for in subsection 6.1[a] and [b]) as at March 31, 1999, and their
related unaudited consolidated (and, as to statements of income, unaudited
consolidating) statements of income, equity and cash flow of the Company and its
consolidated Subsidiaries (and, if applicable, each Permitted Joint Venture, as
provided for in subsection 6.1[a] and [b]) for the three (3) month period ended
on such date heretofore furnished to the Agent, are complete and correct and
fairly present the consolidated financial condition of the Company and its
consolidated Subsidiaries (and, if applicable, each Permitted Joint Venture, as
provided for in subsection 6.1[a] and [b]) as at said dates and the results of
its operations for the fiscal year and the three (3) month period on said dates,
all in accordance with GAAP, as applied on a consistent basis (subject, in the
case of the interim financial statements, to normal year-end adjustments).
Neither the Company nor any Subsidiary has on the Closing Date any material
Debt, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements or in Schedule 7.1. Since the date of the Financial Statements,
neither the business nor the Property of the Company, any Subsidiary or, to the
best of our knowledge, any Permitted Joint Venture have been materially and
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or
concessions by any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.
(b) The unaudited consolidated financial statements of EPCO for the fiscal
quarter ended March 31, 1999, copies of which have heretofore been delivered to
each Bank, have been prepared in accordance with GAAP and present fairly the
financial condition, results of operation and changes in financial position of
EPCO and its Subsidiaries, as at the date or dates and for the period or periods
stated.
5.2 No Change . Since March 31, 1999, there has been no development or
event that has had or could reasonably be expected to have a Material Adverse
Effect.
5.3 Existence; Compliance with Law . The Company (a) is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(b) has the partnership power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged and which it proposes to be
engaged after the Closing Date, (c) is duly qualified and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except to
the extent that the lack of such qualification could not have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate, have a
Material Adverse Effect.
5.4 Power; Authorization; Enforceable Obligations . The Company has the
partnership power and authority, and the legal right, to make, deliver and
perform the Loan Documents and to borrow hereunder and has taken all necessary
action to authorize the borrowings on the terms and conditions of this Agreement
and to authorize the execution, delivery and performance of the Loan Documents.
No consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the borrowings hereunder
or with the execution, delivery, performance, validity or enforceability of the
Loan Documents. This Agreement has been, and each other Loan Document will be,
duly executed and delivered on behalf of the Company. This Agreement
constitutes, and each other Loan Document when executed and delivered will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
5.5 No Legal Bar . The execution, delivery and performance of the Loan
Documents, the borrowings hereunder and the use of the proceeds thereof, will
not violate any Requirement of Law or any Contractual Obligation of the Company,
and will not result in, or require, the creation or imposition of any Lien on
any of its or their respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation.
5.6 No Default Neither the Company nor any Subsidiary is in default under
or with respect to any Contractual Obligation in any respect which could have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
5.7 Investments and Guaranties . At the date of this Agreement, neither the
Company nor any Subsidiary has any Investments or has outstanding any Guarantee
Obligations, except as permitted by this Agreement, reflected in the Financial
Statements or disclosed to the Banks in Schedule 5.7.
5.8 Liabilities; Litigation . Except as otherwise expressly permitted under
this Agreement, (i) neither the Company nor any Subsidiary has any material
(individually or in the aggregate) liabilities, direct or contingent, other than
liabilities incurred in the normal course of business, and (ii) there is no
litigation, legal, administrative or arbitral proceeding, investigation or other
action of any nature pending or, to the best knowledge of the Company,
threatened against or affecting the Company or any Subsidiary which involves the
reasonable possibility of any material judgment or liability greater than
$10,000,000 and not fully covered (after satisfaction of any deductible) by
insurance or which could reasonably be expected to have a Material Adverse
Effect. No unusual or unduly burdensome restriction, restraint, or hazard exists
by contract, Requirement of Law or otherwise relative to the business or
Properties of the Company or any Subsidiary.
5.9 Taxes; Governmental Charges . The Company and its Subsidiaries have
filed all tax returns and reports required to be filed and have paid all taxes,
assessments, fees and other governmental charges levied upon any of them or upon
any of their respective Properties or income which are due and payable,
including interest and penalties (other than those the amount or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Company); and no tax liens have been filed and, to the best
knowledge of the Company, no claims are being asserted with respect to any such
taxes, fees or other charges.
5.10 Titles, etc. Except as set forth on Schedule 5.10, the Company and
its Subsidiaries have good title to their respective material (individually or
in the aggregate) Properties, free and clear of all Liens except (i) Liens
referred to in the financial statements described in subsection 5.1, (ii)
Excepted Liens, and (iii) Liens otherwise permitted or contemplated by this
Agreement.
5.11 Intellectual Property . The Company and each of its Subsidiaries owns
or is licensed to use, all trademarks, trade names, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted that are material to the condition (financial or other), business, or
operations of the Company and its Subsidiaries (the "Intellectual Property"). No
claim has been asserted and is pending by any Person with the respect to the use
of any such Intellectual Property, or challenging or questioning the validity or
effectiveness of any such Intellectual Property and the Company does not know of
any valid basis for any such claim. The use of such Intellectual Property by the
Company and each of its Subsidiaries does not infringe on the rights of any
Person, subject to such claims and infringements as do not, in the aggregate,
give rise to any liability on the part of the Company or any of its Subsidiaries
that is material to the Company and its Subsidiaries taken as a whole.
5.12 Casualties; Taking of Properties . Neither the business nor the
Properties of the Company or any Subsidiary have been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property or cancellation of contracts, permits or concessions by any
domestic or foreign government or any agency thereof, riot, activities of armed
forces or acts of God or of any public enemy.
5.13 Use of Proceeds; Margin Stock; No Financing of Corporate Takeovers .
The proceeds of the Working Capital Revolving Credit Loans will be used by the
Company for working capital purposes in the ordinary course of business of the
Company and for general partnership purposes, including to pay, in whole or in
part, distributions on the limited partner interests of the Limited Partner in
the Company (to enable the Limited Partner to make cash distributions with
respect to the Units and the general partner interest of the Limited Partner)
and the General Partner Interest (collectively the "Distributions") and for the
purposes of making Investments. The proceeds of the Investment Revolving Credit
Loans will be used by the Company to make Investments permitted pursuant to
subsection 7.6 and other working capital and general partnership purposes,
excluding however, for the purposes of making Distributions. No part of the
proceeds of the Revolving Credit Loans hereunder will be used for "purchasing"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors. If
requested by the Agent, the Company will furnish to the Agent a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U. No proceeds of any loan or extension of credit made
pursuant to this Agreement will be used to acquire any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange Act
of 1934, including particularly but without limitation Sections 13(d) and 14(d)
thereof. Neither the Company nor any Subsidiary nor any Person acting on behalf
of the Company or any Subsidiary has taken or will take any action which might
cause any of the Loan Documents to violate Regulation U or any other regulation
of the Board of Governors of the Federal Reserve System as the same may
hereinafter be in effect.
5.14 Compliance with Law . Each of the Company and its Subsidiaries:
(i) is not in violation of any Requirement of Law, which violation (in
the event such violation were asserted by any Person through appropriate
action) involves the reasonable possibility of having a Material Adverse
Effect; and
(ii) presently possesses all licenses, permits, franchises and other
governmental authorizations necessary to the ownership of any of its
Property, the operation of the Facilities and the conduct of its business,
the failure to obtain which (in the event such failure were asserted by any
Person through appropriate action) involves the reasonable possibility of
having a Material Adverse Effect.
5.15 ERISA . The Company, its Subsidiaries and any Commonly Controlled
Entity are in compliance in all material respects with the applicable provisions
of ERISA with respect to each Plan which they maintain and have fulfilled their
obligations under the minimum funding standards of ERISA with respect to each
Single Employer Plan. No "prohibited transaction," as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, has occurred with
respect to any such Plan which could subject the Company, its Subsidiaries or
any Commonly Controlled Entity to any excise tax. No "reportable event," as such
term is defined in Section 4043 of ERISA and the regulations issued thereunder
(other than a reportable event not subject to the provision for 30-day notice to
the PBGC under such regulations), has occurred with respect to any Plan. No Plan
has been, or is likely to be, terminated in a manner which would result in the
imposition of a Lien on the Property of the Company, any Subsidiary or any
Commonly Controlled Entity pursuant to Section 4068 of ERISA. The present value
of all benefits vested under each Single Employer Plan maintained by the
Company, its Subsidiaries or any Commonly Controlled Entity (based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed the value of the assets of such Plan allocable
to such vested benefits. Neither the Company nor any of its Subsidiaries nor any
Commonly Controlled Entity is making or accruing (or has any obligation to make
or accrue) an obligation to make any contribution to a Multiemployer Plan, nor
has any such contribution been made within five years prior to the date hereof.
Neither the Company nor any of its Subsidiaries nor any Commonly Controlled
Entity provide for post-retirement benefits under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA).
5.16 Investment Company Act; Other Regulations . The Company is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Company is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
5.17 Accuracy and Completeness of Information . All written information,
reports and other papers and data (other than projections) with respect to the
Company furnished to the Agent or the Banks by the Company in connection with
obtaining the Revolving Credit Loans were, at the time the same were so
furnished, complete and correct in all material respects, or have been
subsequently supplemented by other written information, reports or other papers
or data, to the extent necessary to give the Agent or the Banks a true and
accurate knowledge of the subject matter in all material respects. All written
projections with respect to the Company so furnished by the Company were
prepared or presented in good faith by the Company. No fact is known to the
Company which materially and adversely affects or in the future may (so far as
the Company can reasonably foresee) materially and adversely affect the
business, assets or liabilities, financial or other condition, results of
operations or business prospects of the Company which has not been set forth in
the financial statements referred to in subsection 5.1 or in such information,
reports, papers and data or otherwise disclosed in writing to the Agent and
Banks prior to the Closing Date. No document furnished or statement made in
writing to the Agent or the Banks by the Company in connection with the
negotiation, preparation or execution of this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained therein not misleading, in either case
which has not been corrected, supplemented or remedied by subsequent documents
furnished or statements made in writing to the Agent or the Banks on or prior to
the Closing Date.
5.18 Public Utility Holding Company Act . The Company is not a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
5.19 Subsidiaries . As of the date of this Agreement, the Company has no
Subsidiaries except those shown in Schedule 5.19, which Schedule is complete and
accurate.
5.20 Location of Business and Offices . The Company's and each Subsidiary's
principal place of business and chief executive offices are located at 2727
North Loop West, Houston, Texas 77008.
5.21 Neither the Company Nor Subsidiary is a Utility . Except as set forth
on Schedule 5.21, neither the Company nor any Subsidiary is a Person engaged in
the State of Texas in the (i) generation, transmission or distribution and sale
of electric power; (ii) provision of telephone or telegraph service to others;
(iii) production, transmission, or distribution and sale of steam or water; (iv)
operation of a railroad; or (v) provision of sewer service to others.
5.22 Year 2000 Matters . Any reprogramming required to permit the proper
functioning (but only to the extent that such proper functioning would otherwise
be impaired by the occurrence of the year 2000) prior to, in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Company or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Company or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, will be
completed by September 30, 1999. The costs to the Company and its Subsidiaries
that have not been incurred as of the date hereof for such reprogramming and
testing and for the other reasonably foreseeable consequences to them of any
improper functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 could not reasonably be
expected to result in a Default or Event of Default or to have a Material
Adverse Effect. Except for any reprogramming referred to above, the computer
systems of the Company and its Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient for the conduct of their business as currently conducted.
SECTION 6. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as any Revolving Credit Commitment
remains in effect, any Revolving Credit Loan or Reimbursement Obligation remains
outstanding and unpaid or any other amount is owing to any Bank or the Agent
hereunder, the Company shall and (except in the case of delivery of financial
information, reports and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements and Reports of the Company . Promptly furnish to
the Agent and the Banks from time to time upon request such information
regarding the business and affairs and financial condition of the Company and
its Subsidiaries as the Agent may reasonably request, and furnish to each Bank:
(a) Annual Reports. Promptly after becoming available and in any event
within 90 days after the close of each fiscal year of the Company (i) the
audited consolidated and unaudited consolidating balance sheets of the
Company and its consolidated Subsidiaries and, subject to any consents
required by its constituent documents (which the Company shall use
reasonable efforts to obtain), each Permitted Joint Venture (except for any
Permitted Joint Venture in which the Company or any of its Subsidiaries is
not the general partner, in which case such financial statements shall be
delivered when received) as at the end of such year and (ii) the audited
consolidated (and, as to statements of income, unaudited consolidating)
statements of income, equity and cash flow of the Company and its
consolidated Subsidiaries and, subject to any consents required by its
constituent documents (which the Company shall use reasonable efforts to
obtain), each Permitted Joint Venture (except for any Permitted Joint
Venture in which the Company or any of its Subsidiaries is not the general
partner, in which case such financial statements shall be delivered when
received) for such year setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Deloitte & Touche or such other
independent public accountants acceptable to the Banks (in the case of the
Financial Statements of the Company), which report shall be to the effect
that such statements have been prepared in accordance with GAAP; and
(b) Quarterly Reports. Promptly after their becoming available and in
any event within 45 days after the close of each fiscal quarter of the
Company, (i) the unaudited consolidated and unaudited consolidating balance
sheets of the Company and its consolidated Subsidiaries and, subject to any
consents required by its constituent documents (which the Company shall use
reasonable efforts to obtain), each Permitted Joint Venture (except for any
Permitted Joint Venture in which the Company or any of its Subsidiaries is
not the general partner, in which case such financial statements shall be
delivered when received) as at the end of such quarter and (ii) the
unaudited consolidated (and, as to statements of income, unaudited
consolidating) statements of income, equity and cash flow of the Company
and, subject to any consents required by its constituent documents (which
the Company shall use reasonable efforts to obtain), each Permitted Joint
Venture (except for any Permitted Joint Venture in which the Company or any
of its Subsidiaries is not the general partner, in which case such
financial statements shall be delivered when received) for such quarter,
setting forth in each case in comparative form the corresponding figures
for the preceding fiscal year, all of the foregoing certified by the
principal financial officer of the Company to have been prepared in
accordance with GAAP subject to normal changes resulting from year-end
adjustment and accompanied by a written discussion of the financial
performance and operating results, including the major assets, of the
Company and, subject to any consents required by its constituent documents
(which the Company shall use reasonable efforts to obtain), each Permitted
Joint Venture (except for any Permitted Joint Venture in which the Company
or any of its Subsidiaries is not the general partner, in which case such
financial statements shall be delivered when received) for such quarter;
and
(c) Applicable Margin Certificates. (i) Within 45 days after the end
of each fiscal quarter of the Company, a certificate of the principal
financial officer of the Company showing in detail the computations
necessary to calculate the Applicable Margin (an "Applicable Margin
Certificate"), and (ii) an Applicable Margin Certificate as soon as
practicable following the obtaining of , and each change in, a current
senior unsecured debt rating referenced in the last proviso contained in
the definition of "Applicable Margin" set forth in subsection 1.1; and
(d) Other Information. From time to time, such other information or
documents (financial or otherwise) as any Bank may reasonably request.
6.2 Annual Certificates of Compliance . Concurrently with the furnishing of
the annual financial statements pursuant to subsection 6.1(a), furnish or cause
to be furnished to the Banks certificates of compliance, as follows:
(a) a certificate from the independent public accountants stating that
their audit has not disclosed the existence of any condition which
constitutes a Default, or if their audit has disclosed the existence of any
such condition, specifying the nature, period of existence and status
thereof; and
(b) a certificate signed by the principal financial officer of the
Company (i) stating that a review of the activities of the Company and its
Subsidiaries has been made under his supervision with a view to determining
whether the Company and its Subsidiaries have fulfilled all of their
respective obligations under each of the Loan Documents; (ii) stating that
the Company and its Subsidiaries have fulfilled their respective
obligations under such instruments and that all representations made herein
continue to be true and correct (or specifying the nature of any change),
or if the Company or any Subsidiary shall be in Default, specifying any
Default and the nature and status thereof; (iii) to the extent requested
from time to time by the Agent, specifically affirming compliance of the
Company and its Subsidiaries with any of their respective representations
or obligations under such instruments; and (iv) containing or accompanied
by such financial or other details, information and material as the Agent
may reasonably request to evidence such compliance; and
(c) within 60 days after the end of each calendar year, a certificate
of a Responsible Officer, or of the officer of the Company primarily
responsible for monitoring compliance by the Company and its Subsidiaries
with Relevant Environmental Laws, stating that (during such calendar year):
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued for any violation of
Relevant Environmental Laws which could reasonably involve the
possibility of a Material Adverse Effect and, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending, or to the knowledge of such officer, after due inquiry,
threatened by any Governmental Authority or private litigant with
respect to any generation, treatment, storage, accumulation,
recycling, transportation, disposal, release or discharge, all as
defined in 42 USC, Paragraph9601(22) ("Release"), of any hazardous
substance, as defined in 42 USC, Paragraph 9601(14), and including
petroleum, its derivatives, by-products and other hydrocarbons,
polychlorinated biphenyls, paint containing lead, urea formaldehyde
foam insulation, and discharge of sewage or effluent, whether or not
regulated under Federal, state or local environmental statutes,
ordinances, rules, regulations or others ("Hazardous Substance")
generated by the operations or business, or located at any property,
of the Company and its Subsidiaries which complaint, penalty,
investigation, review or threat could involve the possibility of a
Material Adverse Effect; and
(ii) No oral or written notification of a Release of a Hazardous
Substance has been filed by or on behalf of the Company or any
Subsidiary other than reports of Releases not involving the
possibility of a Material Adverse Effect and no property now or
previously owned or leased by the Company or any Subsidiary is listed
or, to the best knowledge of such officer, after due inquiry, proposed
for listing, on the National Priorities List promulgated pursuant to
CERCLA, on CERCLIS or any similar state list of sites requiring
investigation or clean-up.
6.3 Quarterly Certificates of Compliance; Projections . (a) Within 45 days
after the end of each calendar quarter of each calendar year, furnish or cause
to be furnished to the Banks a principal financial officer's certificate in the
same form as the certificate required by subsection 6.2(b), including all the
matters referred to in clauses (i) through (iv), inclusive, thereof.
(b) Not later than 30 days prior to the end of each fiscal year, a copy of
the projections of the operating budget and cash flow for the next succeeding
fiscal year, such projections to be accompanied by a certificate of the chief
financial officer of the Company to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such officer
has no reason to believe they are incorrect or misleading in any material
respect.
6.4 Notice of Certain Events . Promptly notify the Banks of the occurrence
of any of the following events upon a Responsible Officer obtaining knowledge
thereof:
(a) any event which constitutes a Default or Event of Default; or
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding that may exist at any time between the Company
or any of its Subsidiaries and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company or any of its
Subsidiaries in which the amount involved is $10,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) any other event or condition having or which could reasonably be
expected to have a Material Adverse Effect; or
(e) the institution of or the withdrawal or partial withdrawal by the
Company or any Subsidiary from any Multiemployer Plan (as well as any other
information regarding ERISA required by subsection 6.5 hereof); or
(f) any casualties to the extent required by subsection 6.8(e); or
(g) (i) of any Environmental Complaint received by the Company or any
Subsidiary, and (ii) of any notice from any Person of (A) any violation or
alleged violation of any Relevant Environmental Law relating to any such
property or any part thereof or any activity at any time conducted on any
such property, (B) the occurrence of any release, spill or discharge in a
quantity that is reportable under any Relevant Environmental Law or (C) the
commencement of any clean up pursuant to or in accordance with any Relevant
Environmental Law of any Hazardous Substance on or about any such property
or any part thereof, which Environmental Complaint or notice could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take
with respect thereto.
6.5 ERISA Information . Furnish to the Agent:
(a) within ten Business Days after the institution of or the
withdrawal or partial withdrawal by the Company, any Subsidiary or any
Commonly Controlled Entity from any Multiemployer Plan, a written notice
thereof signed by an executive officer of the Company stating the
applicable details;
(b) within ten Business Days after the filing thereof with the United
States Secretary of Labor, the PBGC or the Internal Revenue Service, copies
of each annual and other report with respect to each Plan or any trust
created thereunder;
(c) within ten Business Days after an officer of the Company becomes
aware of the occurrence of any "reportable event," as such term is defined
in Section 4043 of ERISA, or of any "prohibited transaction," as such term
is defined in Section 4975 of the Code, in connection with any Plan or any
trust created thereunder which might constitute grounds for a termination
of such Plan under Title IV of ERISA, a written notice signed by an
executive officer of the Company specifying the nature thereof and what
action the Company, any of its Subsidiaries or any Commonly Controlled
Entity is taking or proposes to take with respect thereto; and
(d) within ten Business Days after an officer of the Company becomes
aware of any material action at law or at equity brought against the
Company, any of its Subsidiaries, any Commonly Controlled Entity, or any
fiduciary of a Plan in connection with the administration of any Plan or
the investment of assets thereunder, a written notice signed by an
executive officer of the Company specifying the nature thereof and what
action the Company is taking or proposes to take with respect thereto.
The Company shall also furnish to the Agent, within ten Business Days after
an officer of the Company becomes aware of any action taken by the Internal
Revenue Service with respect to matters as to which information has been
furnished pursuant to subsection (c) above, a written notice specifying the
nature of such action.
6.6 Taxes and Other Liens . Pay and discharge, or cause to be paid and
discharged, promptly or make, or cause to be made, timely deposit of all taxes
(including Federal Insurance Contribution Act ("FICA") payments and withholding
taxes), assessments and governmental charges or levies imposed upon the Company
or any Subsidiary or upon the income or any Property of the Company or any
Subsidiary as well as all claims of any kind (including claims for labor,
materials, supplies and rent) which, if unpaid, might become a Lien upon any or
all of the Property of the Company or any Subsidiary; provided, however, that
neither the Company nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted by or on behalf of the Company or its Subsidiary, and if
the Company or its Subsidiary shall have set up reserves therefor adequate under
GAAP.
6.7 Maintenance . (i) Continue to engage in business of the same general
type as now conducted by it or as contemplated hereby and maintain its corporate
existence, rights and franchises, except as otherwise permitted by subsection
7.7, (ii) observe and comply with all Contractual Obligations and Requirements
of Law which if not complied with would involve the reasonable possibility of
having a Material Adverse Effect, and (iii) maintain its Properties (and any
Properties leased by or consigned to it or held under title retention or
conditional sales contracts) in good and workable condition, ordinary wear and
tear excepted, at all times and make all repairs, replacements, additions,
betterments and improvements to its Properties as are needful and proper in
accordance with customary industry practices so that the business carried on in
connection therewith may be conducted properly and efficiently at all times.
6.8 Insurance . (a) At all times, provide, maintain (with financially sound
and reputable insurance companies) and keep in force all of the following:
(i) Policies of insurance insuring the Facilities against loss or
damage by fire and lightning and against loss or damage by other risks
embraced by coverage of the type now known as the broad form of
extended coverage, including, but not limited to, riot and civil
commotion, vandalism and malicious mischief, and against such other
risks or hazards as the Agent may from time to time reasonably
designate in an amount sufficient to prevent the Agent or the Company
or any Subsidiary from becoming a co-insurer under the terms of the
applicable policies, but in any event in an amount not less than 100%
of the then full replacement cost thereof (exclusive of the cost of
excavations and foundations) without deduction for physical
depreciation, and each such policy shall contain a replacement cost
endorsement, if available.
(ii) Policies of comprehensive general liability insurance
(primary and excess) insuring the Company (or its Subsidiaries, as the
case may be) against loss resulting in bodily injury, death or
property damage for an aggregate amount per annum satisfactory to the
Banks. The policy terms and conditions shall be customary for the
risks contemplated, and they shall contain standard cross liability
and severability of interests clauses.
(iii) The Agent shall reserve the right to require that the
Company or any of its Subsidiaries secure flood insurance if such
insurance is commercially available up to the amount provided in
subsection 6.8(a)(i).
(iv) Such other insurance (including, but not limited to,
business interruption insurance, boiler and machinery and/or general
liability), in such amounts, as may from time to time be reasonably
required by the Agent.
(v) Such other insurance with respect to its and its
Subsidiaries' Properties and businesses against such liabilities,
casualties, risks, and contingencies and in such types and amounts so
as to maintain adequate insurance coverage in accordance with normal
industry practice for businesses similar to that of the Company and
its Subsidiaries.
(b) Furnish or cause to be furnished to the Agent upon request of
the Agent from time to time a summary of the insurance coverage of the
Company and its Subsidiaries, in form and substance satisfactory to
the Agent and, if requested, will furnish the Agent copies of the
applicable policies.
(c) All policies required by subsection 6.8: (a)(i) shall be
issued by companies approved by the Agent (such approval not to be
unreasonably withheld), (ii) shall be subject to the approval of the
Agent as to amount, expiration dates and a coverage in a form of
industry standards, (iii) shall provide that it cannot be modified as
to basic policy conditions or canceled without 30 days' prior written
notice to the Agent, and (iv) may contain such reasonable deductibles
as are customary in the industry for Persons in circumstances (other
than economic circumstances) similar to those of the Company or its
Subsidiaries, as the case may be.
(d) Furnish or cause to be furnished to the Agent a certificate
of each policy required under subsection 6.8(a) and, at least 30 days
prior to the expiration of any such policy, proof of issuance of a
policy continuing in force the coverage described in subsection 6.8(a)
provided by the expiring policy. In the event that the Company does
not deposit with the Agent a new policy of insurance or certificate
thereof with evidence of payment of premiums within such period, the
Agent may, but shall not be obligated to, procure such insurance and
the Company shall reimburse the Agent for the premiums paid thereon
promptly upon demand, together with interest thereon at the rate
provided in subsection 4.6(c) from the date of written demand of the
Agent for reimbursement until the date of reimbursement to the Agent.
(e) As soon as practicable after the happening of any property
casualty involving potential damage, liabilities, loss or claims in
respect of property in excess of $10,000,000 for each individual
occurrence, the Company shall give prompt written notice thereof to
the Agent.
6.9 Payment of Expenses and Taxes . (a) Pay or reimburse the Agent for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents and any other documents prepared in
connection therewith, and the consummation of the transactions contemplated
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) pay or reimburse each Bank and the Agent for all their
reasonable costs and expenses incurred in connection with the enforcement or
preservation of any rights under the Loan Documents and any such other
documents, including, without limitation, reasonable fees and disbursements of
counsel to the Agent and to the several Banks, (c) pay, indemnify and hold each
Bank and the Agent harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents and any such other documents, and (d) pay, indemnify, and hold each
Bank and the Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of the Loan
Documents and any such other documents (all the foregoing, collectively, the
"indemnified liabilities"), provided that the Company shall have no obligation
hereunder with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Agent or any such Bank, (ii) legal
proceedings commenced against the Agent or any such Bank by any security holder
or creditor thereof arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such, or (iii) legal
proceedings commenced against any such Bank by the Agent or any other Bank. The
agreements in this subsection shall survive repayment of the Revolving Credit
Loans and all other amounts payable hereunder.
6.10 Accounts and Records . Keep books of record and account in which full,
true and correct entries will be made of all dealings or transactions in
relation to their respective business and activities, in accordance with GAAP.
6.11 Right of Inspection . Permit any officer, employee or agent of the
Agent or any of the Banks to visit and inspect any of the Properties of the
Company or any Subsidiary, examine the Company's or any Subsidiary's books of
record and accounts, take copies and extracts therefrom, and discuss the
affairs, finances and accounts of the Company or any Subsidiary with the
Company's or any Subsidiary's officers, accountants and auditors, all upon
reasonable notice and at such times during normal business hours and as often as
the Agent or any of the Banks may desire. If the Company or any Subsidiary
maintains computer tapes, discs, print-outs or other records in the possession
of another Person (including accountants and auditors), the Company hereby
agrees at the request of the Agent or any Bank to notify or cause such
Subsidiary to notify such other Person to permit the Agent or any Bank access to
the same upon reasonable notice and at all reasonable times during normal
business hours and to provide the Agent or any Bank with copies of any records
available to the Company or any Subsidiary which the Agent or any Bank may
request, at the cost and expense of the Company as to any action by the Agent
under this subsection (but not by the Banks unless a Default or Event of Default
has occurred and is continuing).
6.12 Payment of Obligations . Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except when the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Company or its Subsidiaries, as the case may be.
6.13 Environmental Laws .
(a) Comply with, and ensure compliance by all tenants and subtenants,
if any, with, all applicable Relevant Environmental Laws and obtain and
comply with and maintain, and ensure that all tenants and subtenants obtain
and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Relevant
Environmental Laws except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Relevant Environmental Laws and promptly comply with all lawful orders and
directives of all Governmental Authorities regarding Relevant Environmental
Laws except to the extent that the same are being contested in good faith
by appropriate proceedings and the pendency of such proceedings could not
reasonably be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and
against any and all claims, demands, penalties, fines, liabilities,
settlements and damages, and reasonable costs and expenses, of whatever
kind or nature known or unknown, contingent or otherwise, arising out of,
or in any way relating to the violation of, noncompliance with or liability
under, any Relevant Environmental Law applicable to the operations of the
Company, any of its Subsidiaries or the Facilities, or any orders,
requirements or demands of Governmental Authorities related thereto,
including, without limitation, attorney's and consultant's fees,
investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise
out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this paragraph shall survive
repayment of the Loans and all other amounts payable hereunder.
6.14 Clean-Down . For a period of 15 consecutive days during each calendar
year, cause the aggregate outstanding Working Capital Revolving Credit Loans to
be $0.
6.15 Financial Statements of Tejas Natural Gas Liquids, LLC. The Company
shall deliver to the Banks on or before 60 days after the Closing the audited
statements of income of Tejas Natural Gas Liquids, LLC and its subsidiaries
(based upon the "carve-out method" of accounting) as of December 31, 1996 and
December 31, 1997.
SECTION 7. NEGATIVE COVENANTS
The Company hereby agrees that, so long as any Revolving Credit Commitment
remains in effect, any Revolving Credit Loan or Reimbursement Obligation remains
outstanding and unpaid or any other amount is owing to any Bank or the Agent
hereunder, the Company shall not and shall not permit any of its Subsidiaries
to, directly or indirectly:
7.1 Limitation on Debt . Incur, create, assume or suffer to exist any Debt,
except:
(a) the Revolving Credit Loans and other Indebtedness;
(b) Debt which is permitted in connection with the cost of Property
under clause (vii) of the definition of "Excepted Liens";
(c) endorsements of negotiable or similar instruments for collection
or deposit in the ordinary course of business;
(d) taxes, assessments or other government charges which are not yet
due or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall be required by
GAAP shall have been made therefor;
(e) additional Debt and Guarantee Obligations, together not to exceed
$10,000,000 at any one time outstanding;
(f) Guarantee Obligations constituting performance guarantees provided
in the ordinary course of business by the Company and its Subsidiaries
supporting obligations of Subsidiaries which obligations have been incurred
in the ordinary course of business (including in connection with the
operation, construction or acquisition of pipelines and related
facilities);
(g) Guarantee Obligations of the Company of EPCO's obligations under
the Lease Agreement, dated as of September 1, 1989, between Meridian Trust
Company, as Trustee, as Lessor, and EPCO, as Lessee;
(h) Debt set forth in Schedule 7.1;
(i) Indebtedness under the Existing Credit Agreement; and
(j) Debt arising out of or pursuant to the issuance by the Company of
senior unsecured notes up to and including the aggregate principal amount
of $350,000,000.
7.2 Limitation on Liens . Create, incur, assume, permit or suffer to exist
any Lien on any of its Properties (now owned or hereafter acquired), except:
(a) Excepted Liens;
(b) additional Liens securing Debt not to exceed $10,000,000 at any
one time outstanding;
(c) Liens set forth in Schedule 7.2; and
(d) Liens relating to the obligations under the Lease Agreement
referenced in subsection 7.1(g) and the sublease between the Company and
EPCO pertaining thereto.
7.3 Limitations on Fundamental Changes . Except as permitted by subsection
7.4(b), enter into any merger, consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially all
of its property, business or assets or any direct or indirect interest in any
Permitted Joint Venture any of the interests in which is owned by a Subsidiary,
or make any material change in its present method of conducting business,
except:
(a) any Subsidiary of the Company may be merged or consolidated with
or into the Company or any one or more Subsidiaries of the Company
(provided that, if any of such Subsidiaries is not wholly owned by the
Company, the Limited Partner and the General Partner, taken together, the
Subsidiary or Subsidiaries in which the Company owns the greatest interest
or the Company shall be the continuing or surviving entity);
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Company or any other Subsidiary in which, as to any Subsidiary not wholly
owned by the Company, the Limited Partner and the General Partner, taken
together, the Company owns at least the same percentage interests as the
Company owns in the transferor Subsidiary; and
(c) the Company and any Subsidiary may enter the natural gas
processing business generally as well as through and in connection with the
Tejas Acquisition.
7.4 Limitation on Sale of Assets . Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, except:
(a) as permitted by subsection 7.3;
(b) as long as no Default or Event of Default has occurred and is
continuing or would result therefrom the Company and its Subsidiaries may
sell or otherwise dispose of property in any fiscal year having an
aggregate value not in excess of 5% of Consolidated Tangible Net Worth
calculated on the last day of the prior fiscal quarter;
(c) the sale of inventory in the ordinary course of business; and
(d) the sale or disposition of equipment or other property or assets
that are no longer useful in the business of the Company or such Subsidiary
or are replaced by equipment or other property or assets of at least
comparable value and use.
7.5 Limitation on Dividends . Declare or pay any dividend on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Company or any Subsidiary or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), except that (i) any Subsidiary may make
Restricted Payments to the Company, (ii) as long as no Default or Event of
Default has occurred and is continuing or would result therefrom, the Company
may make Restricted Payments once each fiscal quarter consisting of cash
distributions in accordance with the terms of the Partnership Agreement in order
to enable the Limited Partner to make cash distributions with respect to the
Units and the general partner interest of the Limited Partner, and (iii) as long
as no Default or Event of Default has occurred and is continuing or would result
therefrom, the Company may make Restricted Payments to the Limited Partner and
the General Partner (but only if the General Partner thereupon contributes such
Common Units to the Limited Partner) in the form of Common Units for purposes in
connection with the Limited Partner's employee deferred compensation plan, not
to exceed 500,000 Common Units in the aggregate.
7.6 Limitation on Investments . Make any Investment in any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in direct obligations of the United States of America
or any agency thereof having a maturity of less than one year;
(c) Investments in certificates of deposit of maturities less than one
year, issued by commercial banks in the United States having capital and
surplus equal to or in excess of $100,000,000;
(d) Investments made by any Subsidiary to the Company;
(e) Investments in Subsidiaries and Permitted Joint Ventures, provided
that such Investments shall be permitted only to the extent that (A) (i)
such Investments are made from funds constituting "Available Cash" (as
defined in the Partnership Agreement) for such fiscal year or (without
duplication) from the proceeds of Investment Revolving Credit Loans, after
paying in full the "Minimum Quarterly Distribution" (as defined in the
Partnership Agreement) (X) for all Common Units for any previous calendar
quarter and (Y) for all Subordinated Units for the most recently ended
calendar quarter or (ii) such Investments are made from (without
duplication of investments permitted in other clauses of this subsection
7.6) proceeds of public offerings of Units contributed as equity to the
Company, and proceeds of distributions made by Permitted Joint Ventures any
of the interests of which is owned by a Subsidiary or proceeds of
distributions made by other Permitted Joint Ventures to the Company and/or
any Subsidiary, in each case received after the date hereof and (B) in any
such case, no Default or Event of Default shall have occurred and be
continuing, or would occur as a result of such Investment;
(f) capital contributions, loans or other Investments by Subsidiaries
of the Company or any Permitted Joint Venture to or in the Company or any
Subsidiary, provided that no Default or Event of Default shall have
occurred and be continuing, or would occur as a result of such investment;
(g) capital contributions or other Investments by the Company or any
Subsidiary to any existing Permitted Joint Venture any of the interests in
which are owned by the Company or a Subsidiary in accordance with the terms
of the constitutive documents of such Permitted Joint Venture, provided in
each such case that (x) no Default or Event of Default has occurred and is
continuing or would result therefrom and (y) such Permitted Joint Venture
existed on July 27, 1998 and such capital contribution or Investment is
financed with the proceeds of any of the items referred to in subsections
7.6(e) or (h);
(h) capital contributions, loans or other Investments to the extent
made with the proceeds of public offerings of Units for the purposes
described in the offering documents for such public offerings;
(i) capital contributions or other Investments to consummate the Tejas
Acquisition;
(j) capital contributions or other Investments in connection with the
proposed acquisition of a 263 mile liquids pipeline from Sorrento,
Louisiana to Mt. Belvieu, Texas, an ethane pipeline and an ethane storage
well from Shell Chemical Company or an affiliate thereof;
(k) capital contributions or other Investments to an entity to be
owned by the Company (or a Subsidiary of the Company) and an affiliate of
Exxon Corporation in connection with a new propylene concentrator facility
in Baton Rouge, Louisiana;
(l) capital contributions or other Investments to consummate the
acquisition of the 50% general partner interest in Mont Belvieu Associates
owned by one or more Affiliates of Kinder Morgan Energy Partners L.P.; and
(m) other acquisitions of equity securities of, or assets constituting
a business unit of, any Person, provided that, such acquisitions do not
constitute an Investment under any of the foregoing clauses (a) through (g)
and immediately prior to and after giving effect to any such acquisition,
no Default or Event of Default shall have occurred or be continuing.
Notwithstanding the foregoing, the aggregate amount of the capital contributions
or other Investments made in Permitted Joint Ventures pursuant to paragraphs (e)
and (g) above shall not exceed $25,000,000 in any fiscal year (excluding
Investments during fiscal years 1998 and 1999 with respect to the Wilprise
Pipeline, the Tristates Pipeline, the Baton Rouge Fractionator and the NGL
Product Chiller).
7.7 Limitation on Optional Payments and Modifications of Debt Instruments
and Other Agreements . (a) Make any optional payment or prepayment on,
redemption of or purchase of, or voluntarily defease, or directly or indirectly
voluntarily or optionally purchase, redeem, retire or otherwise acquire, any
Debt (other than the Revolving Credit Loans), (b) amend, modify or change, or
consent or agree to any amendment, modification or change to, any of the terms
of any Debt (other than any such amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date for payment of interest thereon),
(c) amend, modify or change, or consent to any amendment, modification or change
to, any of the terms of, the Partnership Agreement, the Management Agreement,
the Company's certificate of limited partnership or any agreement under which
Debt of any Permitted Joint Venture any of the interests in which is owned by a
Subsidiary is issued, evidenced or secured, except to the extent the same could
not reasonably be expected to have a Material Adverse Effect or (d) waive or
otherwise relinquish any of its rights or causes of action arising out of the
Partnership Agreement, the Management Agreement, the Company's certificate of
limited partnership or any agreement under which Debt of any Permitted Joint
Venture any of the interests in which is owned by a Subsidiary is issued,
evidenced or secured.
7.8 Limitation on Transactions with Affiliates . Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a)(i) otherwise permitted under this Agreement, and (ii)
upon fair and reasonable terms no less favorable to the Company or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate or (b) in existence
on the Closing Date and set forth on Schedule 7.8.
7.9 Limitation on Sales and Leasebacks . Enter into any arrangement with
any Person providing for the leasing by the Company or any Subsidiary of real or
personal property which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of the Company or such Subsidiary.
7.10 Limitation on Changes in Fiscal Year . Permit the fiscal year of the
Company to end on a day other than December 31.
7.11 Limitation on Lines of Business . Enter into any business, either
directly or through any Subsidiary or Permitted Joint Venture, except for those
businesses in which the Company and its Subsidiaries and the Permitted Joint
Ventures are engaged on the date of this Agreement and further except for the
natural gas processing business.
7.12 Constituent Documents . Permit the amendment, waiver or modification
of the limited partnership agreement, limited liability company agreement or
certificate of formation or incorporation of any Subsidiary if such amendment
could reasonably be expected to have a Material Adverse Effect or would
authorize or issue any Capital Stock not authorized or issued on the Closing
Date, except to the extent such authorization or issuance would have the same
substantive effect as any transaction permitted by subsection 7.4.
7.13 Limitation on Restrictions Affecting Subsidiaries . Enter into, or
suffer to exist, any agreement with any Person, other than the Banks pursuant
hereto, which prohibits or limits the ability of any Subsidiary to (a) pay
dividends or make other distributions or pay any Debt owed to the Company or any
Subsidiary, (b) make loans or advances to or make other investments in the
Company or any Subsidiary, (c) transfer any of its properties or assets to the
Company or any Subsidiary or (d) transfer any of its properties or assets to the
Company or any Subsidiary.
7.14 Creation of Subsidiaries . Create or acquire any new Subsidiary of the
Company or any of its Subsidiaries, unless, immediately upon the creation or
acquisition of any such Subsidiary, no Default or Event of Default shall have
occurred and be continuing after giving effect thereto.
7.15 Hazardous Materials . Except to the extent that the same could not
reasonably be expected to have a Material Adverse Effect, permit the
manufacture, storage, transmission or presence of any Hazardous Substance over
or upon any of its properties except in accordance with all applicable
Requirements of Law or release, discharge or otherwise dispose of any Hazardous
Substance on any of its properties except that the Company and its Subsidiaries
may treat, store and transport petroleum, its derivatives, by-products and other
hydrocarbons, hydrogen sulfide and sulfur dioxide in the ordinary course of
their business.
7.16 New Partners . Permit any Permitted Joint Venture, the interests in
which are owned by the Company or any Subsidiary, formed or acquired after the
date hereof to admit any new partners or issue or sell any partnership interests
after the date on which the Company or any Subsidiary obtains its interest
therein, if in any such case the result thereof would be to dilute the economic
interest of the Company or such Subsidiary in such Permitted Joint Venture.
7.17 Holding Companies . Notwithstanding any other provisions of this
Agreement and the other Loan Documents, permit any Subsidiary which is a general
partner in or owner of a general partnership interest in a Permitted Joint
Venture to incur or suffer to exist any obligations or indebtedness of any kind,
whether contingent or fixed (excluding any contingent liability of such
Subsidiary to creditors of such Permitted Joint Venture arising solely as a
result of its status as a general partner or owner of such Permitted Joint
Venture) or create or suffer to exist any Liens, in each case except to the
extent any such obligations, indebtedness or Liens are otherwise permitted by
this Agreement; or permit any Subsidiary which is a general partner in or owner
of a general partnership interest in a Permitted Joint Venture to acquire any
property or asset after the Closing Date (or, if later, the date of acquisition
or formation of such Permitted Joint Venture) except for distributions made to
it by such Permitted Joint Venture; or permit any Subsidiary which is a general
partner in or owner of a general partnership interest in a Permitted Joint
Venture to engage in any business or activity other than holding the general
partnership interest in (or other ownership interest) such Permitted Joint
Venture held by it on the date of formation of such Permitted Joint Venture.
7.18 Actions by Permitted Joint Ventures . Consent or agree to or acquiesce
in any Permitted Joint Venture, the interests in which are owned by a
Subsidiary, changing its policy of making distributions of available cash to
partners.
7.19 Hedging Transactions . Enter into any interest rate, cross-currency,
commodity, equity or other security, swap, collar or similar hedging agreement
or purchase any option to purchase or sell or to cap any interest rate,
cross-currency, commodity, equity or other security, in any such case, other
than to hedge risk exposures in the operation of its business, ownership of
assets or the management of its liabilities.
7.20 ERISA Compliance . Permit any Plan maintained by it, any Subsidiary or
any Commonly Controlled Entity to:
(a) engage in any "prohibited transaction" as such term is defined in
Section 406 of ERISA or Section 4975 of the Code;
(b) incur any "accumulated funding deficiency", whether or not waived,
as such term is defined in Section 302 of ERISA;
(c) terminate any Single Employer Plan in a manner which could result
in the imposition of a Lien on the Property of the Company or any
Subsidiary pursuant to Section 4068 of ERISA; or
(d) become subject to any other condition, which could subject the
Company, any Subsidiary or any Commonly Controlled Entity to any tax,
penalty or other liabilities in the aggregate material in relation to the
business, operations, property, financial or other condition of the
Company, its Subsidiaries and any Commonly Controlled Entity taken as a
whole.
7.21 Financial Condition Covenants .
(a) Tangible Net Worth. Permit its Consolidated Tangible Net Worth as
of the last day of any fiscal quarter of the Company to be less than
$250,000,000.
(b) Ratio of EBITDA to Consolidated Interest Expense. For any fiscal
quarter of the Company, permit the ratio of EBITDA for the 12-month period
ended on the last day of such fiscal quarter to Consolidated Interest
Expense for such period to be less than 3.50 to 1.0.
(c) Ratio of Total Indebtedness to EBITDA. Permit the Total
Indebtedness/EBITDA Ratio to exceed 3.00 to 1.0 as of the last day of any
fiscal quarter of the Company.
For purposes of clauses (b) and (c) of this subsection, EBITDA shall mean,
at the date of determination occurring on September 30, 1999, the product of (A)
EBITDA for the nine-month period ending September 30, 1999 multiplied by (B)
12/9.
7.22 No Hostile Tender Offers. Make any hostile tender offer within the
contemplation of Section 14d of the Securities and Exchange Act of 1934, as
amended, or otherwise.
SECTION 8. EVENTS OF DEFAULT
8.1 Events . Any of the following events shall be considered an "Event of
Default" as that term is used herein:
(a) Payments - (i) default is made in the payment or prepayment when
due of any installment of principal of the Revolving Credit Loans or any
Reimbursement Obligation; or (ii) default is made in the payment of any
interest on the Revolving Credit Loans or any commitment fee provided for
herein or other Indebtedness (other than Reimbursement Obligations), within
five days after any such amount becomes due in accordance with the terms
thereof or hereof; or
(b) Representations and Warranties - any representation or warranty by
the Company herein or in any other Loan Document, or in any certificate,
request or other document furnished pursuant to or under this Agreement or
any other Loan Document proves to have been incorrect in any material
respect as of the date when made or deemed made; or
(c) Affirmative Covenants - default is made in the due observance or
performance by the Company or any Subsidiary of any of the covenants or
agreements contained in Section 6 (other than subsections 6.4(a) and 6.14)
or any other Section or subsection (except Section 7) of this Agreement,
and such default continues unremedied for a period of 30 days after the
earlier of (i) notice thereof being given by the Agent at the request or
with the consent of the Required Banks to the Company, or (ii) such default
otherwise becoming known to the Company or any Subsidiary; or
(d) Negative Covenants - default is made in the due observance or
performance by the Company or any Subsidiary of any of the covenants or
agreements contained in subsections 6.4(a) or 6.14 or Section 7 of this
Agreement; or
(e) Other Loan Document Obligations - default is made in the due
observance or performance by the Company or any Subsidiary of any of the
other covenants or agreements contained in any Loan Document other than
this Agreement, and such default continues unremedied for a period of 30
days after notice thereof being given by the Agent at the request or with
the consent of the Required Banks to the Company, or beyond the expiration
of any applicable grace period which may be expressly allowed under such
Loan Document; or
(f) Involuntary Bankruptcy or Other Proceedings - an involuntary case
or other proceeding shall be commenced against the Company or any
Subsidiary which seeks liquidation, reorganization or other relief with
respect to it or its debts or other liabilities under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its Property, and such
involuntary case or other proceeding shall remain undismissed or unstayed
for a period of 30 days; or an order for relief against the Company or any
Subsidiary shall be entered in any such case under the Federal Bankruptcy
Code; or
(g) Voluntary Petitions, etc. - the Company or any Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts or other
liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its Property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall be unable to or shall
fail generally to, or shall admit in writing its inability to pay its debts
generally as they become due, or shall take any corporate action to
authorize or effect any of the foregoing; or
(h) Discontinuance of Business - the Company discontinues its usual
business; or
(i) Default on Other Debt - the Company, any of its Subsidiaries or
Permitted Joint Ventures shall default (A) in any payment of principal of
or interest on any other Debt, which Debt is in the original principal
amount of $10,000,000 or more for each default, beyond any period of grace
provided with respect thereto, or (B) in the performance of any other
agreement, term, or condition relating to any other Debt if the effect of
such default is to cause such obligation to become due before its stated
maturity or to permit the holder(s) of such obligation or the trustee(s)
under any such agreement or instrument to cause such obligation to become
due prior to its stated maturity, whether or not such default or failure to
perform should be waived by the holder(s) of such obligation or such
trustee(s); or
(j) Undischarged Judgments - the Company or any of its Subsidiaries or
Permitted Joint Ventures shall fail within 30 days to pay, bond or
otherwise discharge any judgment or order for the payment of money in
excess of $5,000,000 that is not otherwise being satisfied in accordance
with its terms and is not stayed on appeal or otherwise being appropriately
contested in good faith; or
(k) If at any time the Company or any of its Subsidiaries or Permitted
Joint Ventures shall become liable for remediation and/or environmental
compliance expenses and/or fines, penalties or other charges which, in the
aggregate, are in excess of the Material Environmental Amount for the
Company and its Subsidiaries; or
(l) ERISA Events - (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, (iii) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Required Banks, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Banks is likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or Reorganization
of, a Multiemployer Plan or (vi) any other event or condition shall occur
or exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such events or
conditions, if any, could subject the Company or any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation
to the business, operations, property or financial or other condition of
the Company or any of its Subsidiaries; or
(m) A Change of Control shall occur.
(n) Activities of the Limited Partner - the Limited Partner shall (a)
conduct, transact or otherwise engage in, or commit to conduct, transact or
otherwise engage in, any business or operations other than those incidental
to its ownership of the limited partner interests in the Company, (b)
incur, create, assume or suffer to exist any Debt or other liabilities or
financial obligations, other than (i) nonconsensual obligations imposed by
operation of law and (ii) obligations with respect to the Units or (c) own,
lease, manage or otherwise operate any properties or assets (including cash
and Cash Equivalents), other than (i) the limited partner interests in the
Company, (ii) ownership interests (not to exceed 1% in each such case) of a
Subsidiary and (iii) cash received in connection with dividends made by the
Company in accordance with subsection 7.5 pending application to the
holders of the Units and the General Partner Interest.
(o) Management Agreement - (i) The Management Agreement shall cease to
be in full force and effect prior to the end of the initial term thereof
substantially as in effect on the date hereof; or (ii) EPCO or the General
Partner shall default in the observance or performance of any material
provision of the Management Agreement;
8.2 Remedies . (a) Upon the occurrence of any Event of Default described in
subsection 8.1(f) or (g), the Revolving Credit Commitments and other lending
obligations, if any, of the Banks hereunder shall immediately terminate, and the
entire principal amount of all Indebtedness then outstanding (including the
Reimbursement Obligations) together with interest then accrued thereon shall
become immediately due and payable, all without written notice and without
presentment, demand, protest, notice of protest or dishonor or any other notice
of default of any kind, all of which are hereby expressly waived by the Company.
(b) Upon the occurrence and at any time during the continuance of any
other Event of Default specified in subsection 8.1, the Agent shall at the
request, or may with the consent of, the Required Banks, by written notice
to the Company (i) declare the entire principal amount of all Indebtedness
then outstanding (including the Reimbursement Obligations) together with
interest then accrued thereon to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice
of default of any kind, all of which are hereby expressly waived by the
Company and/or (ii) terminate the Revolving Credit Commitments and other
lending obligations, if any, of the Banks hereunder unless and until the
Agent and the Banks shall reinstate the same in writing. With respect to
all Letters of Credit with respect to which presentment for honor shall not
have occurred at the time of an acceleration pursuant to this paragraph,
the Company shall at such time deposit in a cash collateral account opened
by the Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral
account shall be applied by the Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other obligations of the Company hereunder and
under the other Loan Documents. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have
been satisfied and all other obligations of the Company hereunder and under
the other Loan Documents shall have been paid in full, the balance, if any,
in such cash collateral account shall be returned to the Company (or such
other Person as may be lawfully entitled thereto).
8.3 Right of Set-off . Upon (i) the occurrence and during the continuance
of any Event of Default or if (ii) the Company becomes insolvent, however
evidenced, the Agent and the Banks are hereby authorized at any time and from
time to time, without notice to the Company (any such notice being expressly
waived by the Company), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Agent or any Bank to or for the credit or
the account of the Company against any and all of the Indebtedness (including
the Reimbursement Obligations) of the Company irrespective of whether or not the
Agent or any Bank shall have made any demand under this Agreement or the
Revolving Credit Loans and although such obligations may be unmatured. If an
amount to be set-off by any Bank is to be applied to obligations of the Company
to such Bank other than the Indebtedness, such amount shall be applied ratably
to such other obligations and to the Indebtedness. If any Bank (a "benefitted
Bank") shall at any time receive any payment of all or part of its Revolving
Credit Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in clause (f) or (g) of subsection 8.1, or
otherwise) in a greater proportion than any such payment to and collateral
received by any other Bank, if any, in respect of such other Bank's Revolving
Credit Loans, or interest thereon, such benefitted Bank shall purchase for cash
from the other Banks such portion of each such other Bank's Revolving Credit
Loans, or shall provide such other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Bank to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Banks; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agrees that each Bank so purchasing a portion of another Bank's
Revolving Credit Loan may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Bank were the direct holder of such portion. In case any payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made. The
Agent and the Banks agree promptly to notify the Company after any such set-off
and application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Agent and the
Banks under this subsection are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent or the
Banks may have.
SECTION 9. CONDITIONS OF LENDING
9.1 Conditions to Initial Revolving Credit Loans and Letters of Credit .
The effectiveness of this Agreement and the agreement of each Bank to make
available the Revolving Credit Loans and to participate in the initial issuance
or continuation of the Letters of Credit on the Closing Date pursuant to this
Agreement are subject to the satisfaction of the conditions precedent stated in
this subsection 9.1 wherein each document to be delivered to the Agent or any
Bank shall be in form and substance satisfactory to the Agent or such Bank and
(except for the Revolving Credit Notes and the notices referred to in subsection
11.1(a)) in sufficient copies for each Bank:
(a) Credit Agreement and Revolving Credit Notes. The Company shall
have duly and validly executed and delivered to the Agent this Agreement
and, for the account of each Bank which so requests, a Revolving Credit
Note.
(b) Compliance Certificate. The Agent shall have received a compliance
certificate, which shall be true and correct, in the form of Exhibit C,
duly and properly executed by a Responsible Officer of the Company, and
dated as of the date of this Agreement.
(c) Secretary's Certificates. The Agent shall have received
certificates of the Secretary or Assistant Secretary of the Company setting
forth (x) resolutions of its board of directors (or other equivalent body)
in form and substance satisfactory to the Agent with respect to the
authorization of this Agreement and any other Loan Documents provided
herein and the officers of the Company authorized to sign such instruments,
(y) specimen signatures of the officers so authorized and (z) a duly
executed copy of the Partnership Agreement and the Management Agreement
certified by the General Partner and a certificate of limited partnership
of the Company.
(d) Legal Opinions. The Agent shall have received, with a counterpart
for each Bank, the following executed legal opinions:
(i) the executed legal opinion of Snell & Smith, counsel to the
Company, dated the Closing Date and substantially in the form of
Exhibit B-1, with such changes therein as shall be requested or
approved by the Agent;
(ii) the executed legal opinion of Richard H. Bachmann, Esq.,
chief legal officer of the Company, dated the Closing Date and
substantially in the form of Exhibit B-2, with such changes therein as
shall be requested or approved by the Agent;
Each such legal opinion shall cover such matters incident to the
transactions contemplated by this Agreement and the Loan Documents as
the Agent may reasonably require.
(e) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary in connection with the continuing
operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(f) Existing Credit Agreement. The Company shall have executed an
amendment to the Existing Credit Agreement satisfactory to the Banks.
(g) EPCO Credit Agreement. EPCO shall have executed an amendment to
the EPCO Credit Agreement satisfactory to the Banks.
(h) Acquisition. The Tejas Acquisition shall have been consummated in
form and substance satisfactory to the Banks.
(i) Financial Statements. The Banks shall have received and be
reasonably satisfied with the financial statements referred to in
subsection 5.1, and such financial statements shall not, in the judgment of
the Banks, reflect any material adverse change in the consolidated
financial condition of the Company or EPCO as reflected in the financial
statements or projections previously delivered to the Banks.
(j) No Defaults. There shall exist no event of default (or condition
which would constitute an event of default with the giving of notice or the
passage of time) under any material Capital Stock, financing agreements,
lease agreements, partnership agreements or other material contracts of the
Company, its Subsidiaries, or to the Company's knowledge, the Permitted
Joint Ventures.
(k) Fees. The Agent and the Banks shall have received all fees and
expenses required to be paid on or before the Closing Date.
(l) No Material Adverse Effect. There shall have occurred, in the sole
opinion of the Required Banks, no change, either in any case or in the
aggregate, in the condition, financial or otherwise, of the Company or any
Subsidiary or with respect to the Company's or any Subsidiary's Properties
from the facts represented in this Agreement or any other Loan Document,
which could reasonably be expected to have a Material Adverse Effect.
(m) The Banks shall have received the audited balance statement and
the audited statement of income of Tejas Natural Gas Liquids, LLC and its
subsidiaries (based upon the "carve-out method" of accounting) as of
December 31, 1998.
9.2 Conditions to Each Revolving Credit Loan and Letter of Credit . The
several obligations of the Banks to make any Revolving Credit Loans on any date
and to participate in the issuance or continuation of any Letters of Credit on
any date are subject to the satisfaction of the conditions precedent stated in
this subsection 9.2 wherein each document to be delivered to the Agent or any
Bank shall be in form and substance satisfactory to the Agent and such Bank and
in sufficient copies for each Bank.
(a) Representations and Warranties. Each of the representations and
warranties made by the Company, in or pursuant to this Agreement or any
other Loan Document shall be true and correct in all material respects on
and as of such date as if made on and as of such date (unless such
representations and warranties are stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date).
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Revolving Credit
Loans or the Letters of Credit requested to be made or opened, as the case
may be, on such date.
(c) No Litigation. No litigation, investigation or proceeding before
or by any arbitrator or Governmental Authority shall be continuing or
threatened against the Company or any Subsidiary or any of the officers or
directors of any thereof in connection with this Agreement or any other
Loan Document.
(d) Additional Documents. The Agent shall have received each
additional document, instrument, legal opinion or item of information
reasonably requested by the Agent, including, without limitation, a copy of
any debt instrument, security agreement or other material contract to which
the Company or any Subsidiary may be a party.
(e) Additional Matters. All corporate, partnership and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and any
other Loan Document shall be satisfactory in form and substance to the
Agent, and the Agent shall have received such other documents, legal
opinions and other opinions in respect of any aspect or consequence of the
transactions contemplated hereby as they shall reasonably request. Each
borrowing by, and each issuance of a Letter of Credit for the account of,
the Company hereunder shall constitute a representation and warranty by the
Company as of the date of such borrowing or issuance, as the case may be,
that the conditions contained in this subsection 9.2 have been satisfied.
SECTION 10. THE AGENT
10.1 Appointment . Each Bank hereby irrevocably designates and appoints the
Agent as the agent of such Bank under this Agreement and the other Loan
Documents, and each such Bank irrevocably authorizes the Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties . The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions . Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except to
the extent that any of the foregoing are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from its or such
Person's own gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Banks for any recitals, statements, representations or
warranties made by the Company or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of the Company to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company.
10.4 Reliance by Agent . The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Revolving
Credit Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks (or, if so specified by
this Agreement, all Banks) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Banks (or, if so specified by this
Agreement, all Banks), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks and all future holders of
the Revolving Credit Loans.
10.5 Notice of Default . The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks (or, if so specified by this
Agreement, all Banks); provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the Banks.
10.6 Non-Reliance on Agent and Other Banks . Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates have made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Company or any affiliate thereof, shall be
deemed to constitute any representation or warranty by the Agent to any Bank.
Each Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and its affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Bank also represents that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Company and its affiliates. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Company or any affiliate
thereof that may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification . The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought under this subsection 10.7 (or, if indemnification is sought after the
date upon which the Revolving Credit Commitments shall have terminated and the
Revolving Credit Loans shall have been paid in full, ratably in accordance with
such Commitment Percentages immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time (including, without limitation, at any time following the
payment of the Revolving Credit Loans) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of, the Revolving Credit
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Revolving Credit Loans and all other amounts payable hereunder. The
Administrative Agent shall have the right to deduct any amount owed to it by any
Bank under this subsection 10.7 from any payment made by it to such Bank
hereunder. 10.8 Agent in Its Individual Capacity . The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Company as though the Agent was not the Agent. With respect to
its Revolving Credit Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, the Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
10.9 Successor Agent . The Agent may resign as Agent upon 10 days' notice
to the Banks and the Company. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Banks shall appoint
from among the Banks a successor agent for the Banks, which successor agent
shall (unless an Event of Default shall have occurred and be continuing) be
subject to approval by the Company (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Revolving Credit Loans. If no
successor agent has accepted appointment as Agent by the date that is 10 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
assume and perform all of the duties of the Agent hereunder until such time, if
any, as the Required Banks appoint a successor agent as provided for above.
After any retiring Agent's resignation as Agent, the provisions of this Section
10 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
SECTION 11. MISCELLANEOUS
11.1 Notices . Any notice, request or demand required or permitted to be
given or made under or in connection with this Agreement or the Revolving Credit
Loans shall be in writing and shall be mailed by first class or express mail,
postage prepaid, or sent by telex, telegram, telecopy or other similar form of
rapid transmission confirmed by mailing (by first class or express mail, postage
prepaid) written confirmation at substantially the same time as such rapid
transmission, or personally delivered to an officer of the receiving party. All
such communications shall be mailed, sent or delivered,
(a) if to the Company, to the address shown opposite its signature to
this Agreement, or to such other address or to such individual's or
department's attention as the Company may have furnished the Agent and the
Banks in writing; or
(b) if to the Agent, to its address shown opposite its signature to
this Agreement, or to such other address or to such individual's or
department's attention as it may have furnished to the Company and the
Banks in writing; or
(c) if to the Banks, to their respective addresses shown opposite
their respective signatures to this Agreement, or to such other address or
to such individual's or department's attention as any Bank may have
furnished the Company and the Agent in writing.
Any notice, request or demand so addressed and mailed shall be deemed to be
given when so mailed, except that any notice, request or demand to or upon
the Agent or the Banks pursuant to subsection 2.3, 2.4, 3.2, 4.1 or 4.4 or
communications related to such notice, request or demand shall not be
effective until actually received by the Agent; and any notice, request or
demand so sent by rapid transmission shall be deemed to be given when
receipt of such transmission is acknowledged, and any request or demand so
delivered in person shall be deemed to be given when receipted for by, or
actually received by, an authorized officer of the Company, the Agent or a
Bank, as the case may be.
11.2 Amendments and Waivers . Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is (a) consented to in writing by the Required Banks and (b) in writing and is
signed by the Company (and/or any other Person which is a party to any other
Loan Document being amended or with respect to which a waiver is being obtained)
and the Agent; provided that no such amendment or waiver shall, (a) unless
signed by all the Banks, (i) change the Revolving Credit Commitment of any Bank
or subject any Bank to any additional obligation, (ii) change the principal of
or decrease the rate of interest on the Revolving Credit Loans or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on the Revolving Credit Loans, the Indebtedness or any fees hereunder,
(iv) change the Commitment Percentages or reduce the percentage specified in the
definition of Required Banks, (v) defer or reduce any payment of principal or
interest on the Revolving Credit Loans or (vi) amend, modify or waive any
provision of this subsection, (b) amend, modify or waive any provision of
Sections 3 or 10 without the written consent of the then Agent. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Banks and shall be binding upon the Company, the Banks, the Agent and all
future holders of the Revolving Credit Loans. In the case of any waiver, the
Company, the Banks and the Agent shall be restored to their former position and
rights hereunder and under the outstanding Revolving Credit Loans, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
11.3 Invalidity . In the event that any one or more of the provisions
contained in this Agreement or any other Loan Document shall, for any reason, be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other Loan Document.
11.4 Successors and Assigns; Participations; Purchasing Banks .
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Banks, the Agent, all future holders of the Revolving
Credit Loans and their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") participating interests in
any Revolving Credit Loan owing to such Bank, any Revolving Credit
Commitment of such Bank or any other interest of such Bank hereunder and
under the other Loan Documents. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Revolving Credit
Loan for all purposes under this Agreement and the other Loan Documents,
and the Company and the Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement and the other Loan Documents. The Company agrees that if
amounts outstanding under this Agreement and the Revolving Credit Loans are
due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall
be deemed to have the right of setoff in respect of its participating
interest as if the amount of its participating interest were owing directly
to it as a Bank under this Agreement or any Note, provided that such
Participant shall only be entitled to such right of setoff if it shall have
agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Banks the proceeds thereof as
provided in subsection 8.3. The Company also agrees that each Participant
shall be entitled to the benefits of subsections 4.11, 4.12 and 4.13 with
respect to its participation in the Revolving Credit Commitments and the
Revolving Credit Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to
such subsections than the transferor Bank would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Bank to such Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to any Bank or any
affiliate thereof and, with the consent of the Company (so long as no Event
of Default shall have occurred and is continuing, in which case the consent
of the Company shall not be required) and the Agent (which in each case
shall not be unreasonably withheld), to one or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights
and obligations under this Agreement and the Revolving Extensions of Credit
pursuant to a Commitment Transfer Supplement, substantially in the form of
Exhibit D, executed by such Purchasing Bank, such transferor Bank (and, in
the case of a Purchasing Bank that is not then a Bank or an affiliate
thereof, by the Company and the Agent) and delivered to the Agent for its
acceptance and recording in the Register. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date
determined pursuant to such Commitment Transfer Supplement, (x) the
Purchasing Bank thereunder shall be a party hereto and, to the extent
provided in such Commitment Transfer Supplement, have the rights and
obligations of a Bank hereunder with a Revolving Credit Commitment as set
forth therein, and (y) the transferor Bank thereunder shall, to the extent
provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of a transferor Bank's
rights and obligations under this Agreement, such transferor Bank shall
cease to be a party hereto). Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Revolving Credit Notes. On or
prior to the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, the Company, at its own expense, shall, to the extent
requested by the Purchasing Bank or the transferor Bank, execute and
deliver to the Agent in exchange for the surrendered Revolving Credit Note
a new Revolving Credit Note to the order of such Purchasing Bank in an
amount equal to the Revolving Credit Commitment assumed by it pursuant to
such Commitment Transfer Supplement and, if the transferor Bank has
retained a Revolving Credit Commitment hereunder, new Revolving Credit
Notes to the order of the transferor Bank in an amount equal to the
Revolving Credit Commitment retained by it hereunder. Such new Revolving
Credit Notes shall be dated the Closing Date and shall otherwise be in the
form of the Revolving Credit Notes replaced thereby. The Revolving Credit
Notes surrendered by the transferor Bank shall be returned by the Agent to
the Company marked "canceled".
(d) The Agent shall maintain at its address referred to in subsection
11.1 a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of
the Banks and the Revolving Credit Commitment of, and principal amount of
the Revolving Credit Loans owing to, each Bank from time to time. The
entries in the Register shall be conclusive, in the absence of manifest
error, and the Company, the Agent and the Banks may treat each Person whose
name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Company or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by a
transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank
that is not then a Bank or an affiliate thereof, by the Company and the
Agent), together with payment to the Agent of a registration and processing
fee of $4,000, the Agent shall (i) promptly accept such Commitment Transfer
Supplement, (ii) on the Transfer Effective Date determined pursuant thereto
record the information contained therein in the Register and (iii) give
notice of such acceptance and recordation to the Banks and the Company.
(f) The Company authorizes each Bank to disclose to any Participant or
Purchasing Bank (each, a "Transferee") and any prospective Transferee any
and all financial information in such Bank's possession concerning the
Company and its affiliates which has been delivered to such Bank by or on
behalf of the Company pursuant to this Agreement or which has been
delivered to such Bank by or on behalf of the Company in connection with
such Bank's credit evaluation of the Company and its affiliates prior to
becoming a party to this Agreement.
(g) If, pursuant to this subsection, any interest in this Agreement or
any Revolving Credit Loan is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States
or any state thereof, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to
the transferor Bank (for the benefit of the transferor Bank, the Agent and
the Company) that under applicable law and treaties no taxes will be
required to be withheld by the Agent, the Company or the transferor Bank
with respect to any payments to be made to such Transferee in respect of
the Revolving Credit Loans, (ii) to furnish to the transferor Bank (and, in
the case of any Purchasing Bank registered in the Register, the Agent and
the Company) either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Company) to provide the transferor Bank
(and, in the case of any Purchasing Bank registered in the Register, the
Agent and the Company) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time
with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
11.5 No Waiver; Cumulative Remedies . No failure to exercise and no delay
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder or under the Loan Documents, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided or provided in the Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
11.6 Payment of Expenses, Taxes and Indemnification . The Company agrees
(a) to pay or reimburse the Agent for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, the other
Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Bank and the Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, fees and disbursements
of counsel to the Agent and to the several Banks and (c) to pay, indemnify, and
hold each Bank and the Agent harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Bank and the Agent harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents or in respect of the use of the proceeds of the Revolving Credit Loans
hereunder (all the foregoing, collectively, the "indemnified liabilities"),
provided that the Company shall have no obligation hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of such indemnified party. The agreements in this subsection shall survive
repayment of the Revolving Credit Loans and all other amounts payable hereunder.
11.7 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.8 Several Obligations . The respective obligations of the Banks under
this Agreement are several and not joint, and no Bank shall be the partner or
agent of any other (except to the extent to which the Agent is authorized to act
as such). The failure of any Bank to perform any of its obligations hereunder
shall not relieve any other Bank from any of its obligations hereunder.
11.9 Interest . (a) It is the intention of the parties hereto that each
Bank shall conform strictly to usury laws applicable to it. Accordingly, if the
transactions contemplated hereby would be usurious as to any Bank under laws
applicable (including the laws of the United States of America, the State of
New York or any other jurisdiction whose laws may be mandatorily applicable to
such Bank notwithstanding the other provisions of this Agreement), then, in that
event, notwithstanding anything to the contrary in this Agreement or in any
other Loan Document, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Bank that
is contracted for, taken, reserved, charged or received by such Bank under this
Agreement or under any other Loan Document shall under no circumstances exceed
the maximum amount allowed by such applicable law (the "Maximum Rate"), and any
excess shall be credited by such Bank on the principal amount of the Revolving
Credit Loans (or, if the principal amount of the Revolving Credit Loans shall
have been or would thereby be paid in full, refunded by such Bank to the
Company); and (ii) in the event that the maturity of the Revolving Credit Loans
is accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Bank may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Bank as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by the Bank on the principal amount of the Revolving
Credit Loans (or, if the principal amount of the Revolving Credit Loans shall
have been paid in full, refunded by such Bank to the Company).
(b) Recapture. If at any time the rate of interest on any Revolving Credit
Loans would exceed the Maximum Rate but for the foregoing limitation, the
interest rate on such Revolving Credit Loans shall remain at the Maximum Rate,
notwithstanding subsequent reduction of the rate of interest on such Revolving
Credit Loans, until the total amount of interest accrued thereon equals the
amount of interest which would have accrued if the rate of interest on such
Revolving Credit Loans had not been limited to the Maximum Rate, but nothing in
this paragraph shall effect or extend the maturity of such Revolving Credit
Loans.
If at maturity or final payment of any Revolving Credit Loans, the total
amount of interest accrued thereon is less than the total amount of interest
which would have accrued had the rate of interest on such Revolving Credit Loans
not been limited to the Maximum Rate, the Company agrees, to the full extent
permitted by law, to pay to the Banks an amount equal to the positive
difference, if any, derived by subtracting (a) the amount of interest which
accrued thereon pursuant to the provisions of the foregoing two paragraphs from
(b) the lesser of (i) the amount of interest which would have accrued on such
Revolving Credit Loans if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest which would have accrued if the rate of interest on
such Revolving Credit Loans, not limited to the Maximum Rate, had at all times
been in effect.
11.10 Governmental Regulation . Anything contained in this Agreement to the
contrary notwithstanding, no Bank shall be obligated to extend credit to the
Company in an amount in violation of any limitation or prohibition.
11.11 Entire Agreement . This Agreement and the other Loan Documents embody
the entire agreement and understanding between the Agent, the Banks and the
Company and supersede all prior agreements and understandings between such
parties relating to the subject matter hereof and thereof.
11.12 Exhibits . The exhibits attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail.
11.13 Titles of Sections and Subsections . All titles or headings to
sections, subsections or other divisions of this Agreement or the exhibits
hereto are only for the convenience of the parties and shall not be construed to
have any effect or meaning with respect to the other content of such sections,
subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
11.14 Number of Documents . All statements, notices, reports and requests
hereunder shall be furnished to the Agent with sufficient counterparts so that
the Agent may furnish one to each of the Banks.
11.15 SUBMISSION TO JURISDICTION; WAIVERS . (1) THE COMPANY HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(I) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH
IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT OF ANY THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;
(II) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(III) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM AND MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SPECIFIED IN SUBSECTION 11.1;
(IV) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(V) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO
IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
(2) THE COMPANY, THE BANKS AND THE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.16 Interpretation . Any conflict or inconsistency between a provision of
this Agreement and the corresponding provision of any of the Loan Documents
shall be resolved in favor of this Agreement.
11.17 Counterparts . This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
11.18 Co-Arrangers, etc. The Co-arrangers, co-agents and documentation
agent, in their capacities as such, shall not have any duties or
responsibilities under or pursuant to this Agreement.
THIS WRITTEN AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE OTHER INSTRUMENTS
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
[Signatures begin on next page]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed in New York, New York by their proper and duly authorized officers
as of the date first above written.
Addresses:
Delivery: COMPANY:
ENTERPRISE PRODUCTS OPERATING L.P.
2727 North Loop West
7th Floor
Houston, Texas 77008 By: Enterprise Products GP, LLC, General Partner
Mail: By: /s/ Gary L. Miller
P. O. Box 4324 --------------------------------------------
Houston, Texas 77210-4324 Gary L. Miller
Executive Vice President and Chief
Financial Officer
BANKS AND AGENTS:
THE CHASE MANHATTAN BANK,
Mail: as Agent and as a Bank
707 Travis Street
8th Floor By: /S/ Peter Ling
Houston, Texas 77002 ----------------------------
Name: Peter Ling
With copy to: Title: Vice President
270 Park Avenue
New York, New York 10017
THE FIRST NATIONAL BANK OF CHICAGO,
Mail: as Documentation Agent and as a Bank
One First National Plaza
Mail Suite 0362 By: /s/ Kenneth J. Fatur
Chicago, IL 60670 ------------------------------
Attn: Kenneth Fatur Name: Kenneth J. Fatur
Title: Vice President
With copy to:
910 Travis Street
Mail Suite TX2-4330
Attn: Jeffrey T. Dalton
THE BANK OF NOVA SCOTIA,
Mail: as Syndication Agent and as a Bank
The Bank of Nova Scotia
Houston Representative Office By: /s/ F.C.H. Ashby
1100 Louisiana, Suite 3000 -------------------------------
Houston, TX 77002 Name: F.C.H. Ashby
Attn: Bryan Bulawa Title: Senior Manager Loan Operations
With copy to:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree St. NE
Suite 2700
Atlanta, GA 30308
Attn: Donna Gardner
FIRST UNION NATIONAL BANK
Mail:
1001 Fannin Street By: /s/ illegible signature
Suite 2255 -------------------------------
Houston, TX 77002 Name:
Attn: Scott Huffman Title:
SOCIETE GENERALE
Mail:
1111 Bagby By: /s/ Bet Hunter
Suite 2020 ------------------------------
Houston, TX 77002 Name: Bet Hunter
Attn: Elizabeth Hunter Title:
With copy to:
2001 Ross Avenue
Suite 4800
Dallas, TX 75201
Attn: Stacie Row
BANKBOSTON, N.A.
Mail:
100 Federal St. By: /s/ Kristine A. Kasselman
01-08-04 -------------------------------
Boston, MA 02110 Name: Kristine A. Kasselman
Attn: Christopher Holmgren Title: Managing Director
THE FUJI BANK, LIMITED
Mail: NEW YORK BRANCH
Two World Trade Center By: /s/ Raymond Ventura
New York, New York 10048 -------------------------------
Attn: Ricky Simmons Name: Raymond Ventura
Title: Vice President & Manager
BANK OF TOKYO-MITSUBISHI, LTD.,
Mail: HOUSTON AGENCY
1100 Louisiana Street By: /s/ I Otani
Suite 2800 -------------------------------
Houston, TX 77002-5216 Name: I. Otani
Attn: John M. McIntyre Title: Deputy General Manager
TORONTO DOMINION (TEXAS), INC.
Mail:
Toronto Dominion Securities By: /s/ Alva J. Jones
909 Fannin Street, 17th Floor -------------------------------
Houston, TX 77010 Name: Alva J. Jones
Attn: John Hamer Title: Vice President
Energy Services-Houston
CREDIT AGRICOLE INDOSUEZ
Mail:
600 Travis Street By: /s/ Douglas A. Whiddon
Suite 2340 -------------------------------
Houston, TX 77002 Name: Douglas A. Whiddon
Attn: Doug Whiddon Title: Senior Relationship Manager
By: /s/ Brian D. Knezeak
-------------------------------
Name: Brian D. Knezeak
Title: First Vice President
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
Mail: AG, CAYMAN ISLAND BRANCH
609 Fifth Avenue
New York, NY 10017-1012 By: /s/ Mark K. Connally
Attn: Mark K. Connelly -------------------------------
Name: Mark K. Connally
Title: Vice President
GUARANTY FEDERAL BANK, F.S.B.
Mail:
1100 NE Loop 410 By: /s/ Jim R. Hamilton
San Antonio, TX 78209 -------------------------------
Attn: Jim R. Hamilton Name: Jim R. Hamilton
Title: Vice President
With copy to:
8333 Douglas Avenue
Dallas, TX 75225
Attn: Carol Ray-Barbee
CREDIT LYONNAIS NEW YORK BRANCH
1000 Louisiana Street By: /s/ Jacques Busquet
Suite 5360 -------------------------------
Houston, TX 77002 Name: Jacques Busquet
Attn: Darrell Stanley Title: Executive Vice President
MEESPIERSON CAPITAL CORP.
Mail:
300 Crescent Court By: /s/ Darrell W. Holley
Suite 1750 -------------------------------
Dallas, TX 75201 Name: Darrell W. Holley
Attn: Darrell W. Holley Title: Senior Vice President
HIBERNIA NATIONAL BANK
Mail:
313 Carondelet Street By: /s/ Nancy G. Moragas
New Orleans, LA 70130 -------------------------------
Attn: Nancy Moragas Name: Nancy G. Moragas
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD.
Mail:
One World Trade Center By: /s/ Timothy White
-------------------------------
Name: Timothy White
Title: Senior Vice President
Enterprise Products Operating L.P.
Revolving Credit Commitments
Credit Agreement dated July 28, 1999
Working
Investment Capital Total
Revolving Revolving Revolving
Credit Credit Credit
Committment Committment Committment
----------- ----------- -----------
The Chase Manhattan Bank 8.57% $ 25,714,285.68 $ 4,285,714.32 $ 30,000,000.00
The Bank of Nova Scotia 8.29% 24,857,142.86 4,142,857.14 29,000,000.00
First Union National Bank 8.29% 24,857,142.86 4,142,857.14 29,000,000.00
Societe Generale 8.29% 24,857,142.86 4,142,857.14 29,000,000.00
BankBoston, NA 8.29% 24,857,142.86 4,142,857.14 29,000,000.00
The First National Bank of Chicago 8.29% 24,857,142.86 4,142,857.14 29,000,000.00
The Fuji Bank, Limited 7.14% 21,428,571.43 3,571,428.57 25,000,000.00
Bank of Tokyo-Mitsu, Houston Agency 7.14% 21,428,571.43 3,571,428.57 25,000,000.00
Toronto Dominion (Texas) Inc. 7.14% 21,428,571.43 3,571,428.57 25,000,000.00
Credit Agricole Indosuez 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
DG Bank Duetsche Genossenchaftsban 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
Guaranty Federal Bank, FSB 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
Credit Lyonnais New York Branch 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
Meespierson Capital Corp 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
The DAI-ICHI Kangyo Bank, Ltd 4.29% 12,857,142.86 2,142,857.14 15,000,000.00
Hibernia National Bank 2.86% 8,571,428.57 1,428,571.43 10,000,000.00
---- ------------ ------------ -------------
Totals 100.00% $300,000,000.00 $50,000,000.00 $350,000.000.00
====== =============== ============== ===============
Schedule I
Revolving Credit Commitments
Investment Revolving Working Capital Revolving
Bank Credit Commitment Credit Commitment
---- ----------------- -----------------
The Chase Manhattan Bank $25,714,285.68 $4,285,714.32
Total Revolving Credit Commitment $30,000,000
Domestic Lending Office and Eurodollar Lending Office:
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017
The Bank of Nova Scotia $24,857,142.86 $4,142,857.14
Total Revolving Credit Commitment $29,000,000
Domestic Lending Office and Eurodollar Lending Office:
The Bank of Nova Scotia,
Atlanta Agency
600 Peachtree St., N.E.
Suite 2700
Atlanta, GA 30308
First Union National Bank $24,857,142.86 $4,142,857.14
Total Revolving Credit Commitment $29,000,000
Domestic Lending Office and Eurodollar Lending Office:
301 South College Street
Charlotte, North Carolina 28288
Investment Revolving Working Capital Revolving
Bank Credit Commitment Credit Commitment
---- ----------------- -----------------
Societe Generale $24,857,142.86 $4,142,857.14
Total Revolving Credit Commitment $29,000,000
Domestic Lending Office and Eurodollar Lender Office:
2001 Ross Avenue
Suite 4800
Dallas, Texas 75201
BankBoston, N.A. $24,857,142.86 $4,142,857.14
Total Revolving Credit Commitment $29,000,000
Domestic Lending Office and Eurodollar Lending Office:
100 Federal Street
01-08-04
Boston, MA 02110
The First National Bank of $24,857,142.86 $4,142,857.14
Chicago
Total Revolving Credit Commitment $29,000,000
Domestic Lending Office and Eurodollar Lending Office:
One First National Plaza
Chicago, IL 60870
The Fuji Bank, Limited $21,428,571.43 $3,571,428.57
Total Revolving Credit Commitment $25,000,000
Domestic Lending Office and Eurodollar Lending Office:
Two World Trade Center
New York, New York 10048
Investment Revolving Working Capital Revolving
Bank Credit Commitment Credit Commitment
---- ----------------- -----------------
Bank of Tokyo-Mitsubishi, $21,428,571.43 $3,571,428.57
Ltd., Houston Agency
Total Revolving Credit Commitment $25,000,000
Domestic Lending Office and Eurodollar Lending Office:
1100 Louisiana Street
Suite 2800
Houston, TX 77002-5216
Toronto Dominion (Texas), Inc. $21,428,571.43 $3,571,428.57
Total Revolving Credit Commitment $25,000,000
Domestic Lending Office and Eurodollar Lending Office:
909 Fannin Street
17th Floor
Houston, TX 77010
Credit Agricole Indosuez $12,857,142.86 $2,142,857.14
Total Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
55 E. Monroe
Suite 4700
Chicago, IL 60603
Investment Revolving Working Capital Revolving
Bank Credit Commitment Credit Commitment
---- ----------------- -----------------
DG Bank Deutsche $12,857,142.86 $2,142,857.14
Genossenschaftsbank ag,
Cayman Island Branch
Total Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
DG Bank Deutsche Genossenschaftsbank, AG
609 Fifth Avenue
New York, New York 10017-1021
Guaranty Federal Bank, F.S.B. $12,857,142.86 $2,142,857.14
Total Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
1100 NE Loop 410
San Antonio, TX 78209
Credit Lyonnais New York Branch $12,857,142.86 $2,142,857.14
Total Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
1301 Avenue of the Americas
New York, New York 10019
Investment Revolving Working Capital Revolving
Bank Credit Commitment Credit Commitment
---- ----------------- -----------------
Meespierson Capital Corp. $12,857,142.86 $2,142,857.14
Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
300 Crescent Court
Suite 1750
Dallas, TX 75201
DAI-ICHI Kangyo Bank $12,857,142.86 $2,142,857.14
Total Revolving Credit Commitment $15,000,000
Domestic Lending Office and Eurodollar Lending Office:
The Dai-Ichi Kangyo Bank, New York Branch
One World Trade Center, 48th Floor
New York, New York 10048
Hibernia National Bank $8,571,428.57 $1,428,571.43
Total Revolving Credit Commitment $10,000,000
Domestic Lending Office and Eurodollar Lending Office:
313 Carondelet Street
New Orleans, LA 70130
SCHEDULE 5.7
INVESTMENTS
1. Refer to the Subsidiaries listed on Schedule 5.19.
2. Other Investments
Name of Investment Type of Entity Jurisdiction of Effective Ownership by
Incorporation/ Company
Formation
Baton Rouge Fractionators LLC Limited Liability Delaware Approx. 33-1/3% (Final
Company percentage has not been
determined)
Belvieu Environmental Fuels General Partnership Texas 33-1/3%
EPIK Gas Liquids, LLC Limited Liability Texas 50%
Company
Entell NGL Services, L.L.C. Limited Liability Delaware 50% (100% after Tejas
Company Acquisition)
EPIK Terminalling, LP Limited Partnership Texas 50%
Mont Belvieu Associates General Partnership Texas 49% (99% after
acquisition of interest
from Kinder Morgan)
Tri-States NGL Pipeline, LLC Limited Liability Delaware 16.66% (33.32% after
Company Tejas Acquisition)
Wilprise Pipeline LLC Limited Liability Delaware Approx. 40% (Final
Company percentage has not been
determined)
In connection with the consummation of the Tejas Acquisition, the Company
will acquire the following Investments:
Name of Investment Type of Entity Jurisdiction of Effective Ownership by
Incorporation/ Company
Formation
Dixie Pipeline Company Corporation Delaware 11.5%
Venice Energy Services Company, L.L.C. Limited Liability Delaware 13%
Company
ProGas, LLC Limited Liability Delaware 50%
Company
K/D/S Promix, L.L.C. Limited Liability Delaware 33-1/3%
Company
Belle Rose Pipeline, L.L.C. Limited Liability Delaware 33-1/3%
Company
SCHEDULE 5.10
TITLES, ETC.
Notwithstanding anything to the contrary contained in Section 5.10 of the
Credit Agreement, no representation or warranty is made by the Company as to its
or any of its Subsidiaries= title in and to the easements and rights-of-way
constituting pipelines owned by the Company or any of its Subsidiaries,
including without limitation, the respective grantors thereof; provided,
however, that the examination and investigation by the Company or such
Subsidiary, as the case may be, of title to the lands traversed by the subject
pipeline systems in connection with the acquisition of rights-of-way and similar
property interests for the subject pipeline systems were conducted in accordance
with the standards of the pipeline industry. In addition, neither the Company
nor any of its Subsidiaries have obtained consents to acquire certain of the
rights-of-way and easements for pipelines formerly owned by Enterprise Products
Company, EPC Holdings, Ltd. (formerly EPC Partners, Ltd.), Texas Gulf Partners
Pipeline Company and their respective predecessors.
SCHEDULE 5.19
SUBSIDIARIES
Name of Subsidiary Type of Entity Jurisdiction of Effective Ownership by
Incorporation/ Company
Formation
Cajun Pipeline Company, LLC Limited Liability Texas 100%
Company
Chunchula Pipeline Company, LLC Limited Liability Texas 100%
Company
Enterprise Products Texas Operating, Limited Partnership Texas 99%
L.P.
HSC Pipeline Partnership, LP Limited Partnership Texas 99%
Propylene Pipeline Partnership, LP Limited Partnership Texas 99%
Sorrento Pipeline Company, LLC Limited Liability Texas 100%
Company
In connection with the consummation of the Tejas Acquisition, the Company will
acquire the following Subsidiaries:
Name of Subsidiary Type of Entity Jurisdiction of Effective Ownership by
Incorporation/ Company
Formation
Tejas Natural Gas Liquids, LLC (Name to Limited Liability Delaware 100%
be changed to AEnterprise Natural Gas Company
Liquids, LLC@)
Tejas NGL Pipelines, LLC (Name to be Limited Liability Delaware 100%
changed to AEnterprise NGL Pipeline, Company
LLC@)
Tejas Gas Processing, LLC (Name to be Limited Liability Delaware 100%
changed to AEnterprise Gas Processing, Company
LLC@)
Tejas NGL Private Lines & Storage, LLC Limited Liability Delaware 100%
(Name to be changed to AEnterprise NGL Company
Private Lines & Storage, LLC@)
Tejas Fractionation, LLC (Name to be Limited Liability Delaware 100%
changed to AEnterprise Fractionation, Company
LLC@)
Entell NGL Services, L.L.C. Limited Liability Delaware 50% (100% after Tejas
Company Acquisition)
SCHEDULE 5.21
UTILITY
The Company and/or certain of its Subsidiaries sells to its suppliers of
electric utilities, electric power produced by its cogeneration units and by its
Mont Belvieu operations. The electric utilities are required under Texas law to
purchase such cogeneration power.
SCHEDULE 7.1
OTHER DEBT
Debt of Mont Belvieu Associates, of which, after the acquisition by the
Company of the partnership interest in Mont Belvieu Associates owned by Kinder
Morgan Energy Partners, L.P. and its affiliates, the Company will own,
indirectly, at least a 99% partnership interest. The amount of such Debt is
approximately $10,000,000, of which the Company owns a participation interest of
approximately $6,000,000. Such Debt is expected to be repaid in full on or about
the date of closing of such acquisition.
SCHEDULE 7.2
OTHER LIENS
None.
SCHEDULE 7.8
TRANSACTIONS WITH AFFILIATES
1. The Management Agreement.
2. Master Rail Sublease Agreement dated as of June 1, 1998, between
Enterprise Products Company and Enterprise Products Operating L.P., relating to
100 Trinity 33,687 gallon pressurized tank cars.
3. Equipment Sublease Agreement dated as of June 1, 1998, between
Enterprise Products Company and Enterprise Products Operating L.P., relating to
three Centaur T-4500s Generator Sets.
4. Equipment Sublease Agreement dated as of June 1, 1998, between West
Chambers Co-Generation Partners, L.P. and Enterprise Products Operating L.P.,
relating to three Centaur 40S-4701 Generator Sets.
5. Assignment of Lease (Lessee) dated as of June 1, 1998, between
Enterprise Products Company and EPC Partners, Ltd.
6. Amended and Restated Equipment Sublease Agreement between Enterprise
Products Company and Enterprise Products Operating L.P., relating to certain
isobutane manufacturing equipment.
7. Memorandum of Ground Sublease Agreement dated as of June 1, 1998,
between Enterprise Products Company and Enterprise Products Operating L.P.,
relating to six tracts of land located in Chambers County, Texas.
8. Ground Sublease Agreement dated as of June 1, 1998, between Enterprise
Products Company and Enterprise Products Company, covering six tracts of land
located in Chambers County, Texas.
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$________________________ New York, New York
_________________________, 199____
FOR VALUE RECEIVED, the undersigned, ENTERPRISE PRODUCTS OPERATING L.P., a
Delaware limited partnership (the "Borrower"), hereby unconditionally promises
to pay to the order of (the "Lender") at the office of The Chase Manhattan Bank,
located at 270 Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in immediately available funds, on the Revolving
Credit Commitment Termination Date the principal amount of (a) DOLLARS ($ ), or,
if less, (b) the aggregate unpaid principal amount of all Revolving Credit Loans
made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit
Agreement, as hereinafter defined. The Borrower further agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in subsections 4.4 and
4.6 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Revolving
Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Credit Agreement dated as of July ___, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the Lender, the other banks and financial institutions from time to
time parties thereto and The Chase Manhattan Bank, as agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwisedefined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products LP, LLC, General Partner
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
EXHIBIT B-1
{Snell & Smith Opinion}
EXHIBIT B-2
ENTERPRISE PRODUCTS GP, LLC
P.O. Box 4324
Houston, Texas 77210
September __, 1999
The Chase Manhattan Bank, as Agent,
and the financial institutions
parties to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
I am the Executive Vice President and Chief Legal Officer of Enterprise
Products GP, LLC, a Delaware limited liability company and the sole general
partner of Enterprise Products Operating L.P., a Delaware limited partnership
(the "Borrower"), in connection with the Borrower's execution and delivery of
the Credit Agreement, dated as of July 28, 1999 (the "Credit Agreement"), among
the Borrower, The Chase Manhattan Bank, as agent for the Banks referred to below
(in such capacity, the "Agent"), certain entities, as co-arrangers,
administrative agent, documentation agent, syndication agent, managing agent,
lead arranger and/or book manager, and the other financial institutions parties
thereto (collectively, the "Banks"). This opinion is being furnished to you
pursuant to Section 9.1(d)(ii) of the Credit Agreement. Unless otherwise defined
herein, terms defined in the Credit Agreement are used herein as therein
defined.
In expressing the opinions expressed below, I have examined executed
counterparts (or copies thereof) of each of the Loan Documents, the originals or
conformed copies of such corporate or partnership records, agreements and
instruments of the Borrower and the General Partner and the Limited Partner
(individually, a "Partner" and, collectively, the "Partners"), certificates of
public officials and of officers of the Borrower and the Partners and such other
documents and records, and such matters of law, as I have deemed appropriate as
a basis for the opinions hereinafter expressed. As to factual matters, I have
relied upon, and assumed the accuracy of, (a) statements and certifications of
representatives of the Borrower or officers or managers, as applicable, of the
relevant Partner and of appropriate public officials, and (b) the
representations and warranties of the Borrower and the Partners contained in or
made pursuant to each of the Loan Documents to which they are respectively a
party, and my opinion is limited to such factual matters in existence on the
date hereof. In stating my opinion, I have assumed the genuineness of all
signatures of persons signing the Loan Documents on behalf of parties thereto
(including faxed copies of such signatures), other than the persons signing on
behalf of the Borrower, the authenticity and completeness of all documents,
certificates and records submitted to me as originals and the conformity to
authentic original instruments of all documents (including any of the Loan
Documents), certificates and records submitted to me as certified, conformed,
faxed or photostatic copies. I have assumed further that the execution and
delivery of the Loan Documents or any other instruments executed in connection
with the Loan Documents, or as part of the same transaction as the Loan
Documents, by any party other than the Borrower and the Partners have been duly
authorized by such other party and are legal, valid, binding and enforceable
obligations of such other party.
This opinion is limited in all respects to the laws of the State of Texas
and federal law as in effect on the date hereof. I note that the Credit
Agreement and certain of the other Loan Documents provide that they are to be
governed by the laws of the State of New York. Accordingly, in expressing this
opinion, I have assumed, with your permission, that the laws of the State of New
York are identical in all respects to the laws of the State of Texas.
Based upon the foregoing and subject to the limitations, qualifications,
assumptions and exceptions set forth herein, I am of the opinion that:
1. The Borrower has the legal right to (i) own or lease the property which
it owns or operates as lessee, (ii) conduct the business in which it is
currently engaged and in which it proposes, as of the date hereof, to be engaged
after the date hereof, (iii) make, deliver and perform the Credit Agreement and
each of the other Loan Documents to which it is a party in accordance with the
terms and provisions thereof and (iv) borrow under the Credit Agreement. The
Borrower is in compliance with all Requirements of Law, except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect.
While I am not licensed to practice law in any jurisdiction other than the State
of Texas, and therefore am unable to express an opinion as to whether the
Borrower is required to qualify to do business as a foreign limited partnership
in any jurisdiction, I do not believe that the Borrower would be required to so
qualify in any jurisdiction other than the States of Texas, Alabama, Louisiana
and Mississippi. No other filing, recording, publishing or other act is
necessary or appropriate in connection with the existence or business of the
Borrower.
2. The Borrower has taken all necessary legal action to authorize the
borrowings by the Borrower on the terms and conditions of the Credit Agreement
and the Loan Documents and to authorize the execution, delivery and performance
of each of the Loan Documents to which it is a party in accordance with the
terms and provisions thereof.
3. No approvals or consents of any Governmental Authority or other consents
or approvals by any other Person which have not been obtained on or prior to the
date hereof are required in connection with (a) the participation by the
Borrower in the transactions contemplated by the Credit Agreement and the other
Loan Documents, or the execution, delivery and performance by the Borrower of
the Credit Agreement or any of the other Loan Documents and (b) the validity and
enforceability thereof and the exercise by the Banks of their rights and
remedies thereunder
4. The execution, delivery and performance by the Borrower of the Credit
Agreement and each of the other Loan Documents in accordance with the terms
thereof will not (a) violate any Requirement of Law or any Contractual
Obligation of the Borrower, (b) result in the breach of, or constitute a default
under, any indenture or loan or credit agreement or any other material
agreement, lease or instrument of which I have knowledge to which the Borrower
is a party or by which its properties may be bound, and (c) result in, or
require, the creation or imposition of any Lien on any of its properties or
revenues pursuant to any Requirement of Law or Contractual Obligation.
5. No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the best of our knowledge,
threatened by or against the Borrower or against any of its properties or
revenues (a) with respect to the Credit Agreement or any of the other Loan
Documents to which the Borrower is a party or any of the transactions
contemplated thereby or (b) which, if adversely determined, could reasonably be
expected to have Material Adverse Effect.
This opinion is subject to, and qualified in all respects by, with your
permission, the following:
A. I have not been called upon to, and accordingly do not, express any
opinion as to the various state and federal laws regulating banks or the conduct
of their business that may relate to the Loan Documents and the transactions
provided for therein.
B. All statements in this opinion which are stated "to my knowledge" are
based, to the extent I have deemed proper, solely upon reasonable inquiries of
an officer or representative of the Partners. Although I have not independently
verified the accuracy of the statements, I have discussed the statements with
the individuals making them, and I have no reason to believe that any such
statement is untrue or inaccurate in any material respect.
This opinion is limited to matters stated herein and no opinion is implied
or may be inferred beyond the matters expressly stated. I disclaim any
obligation to up-date this opinion or to advise you of any changes in any of the
opinions or other matters set forth herein.
This opinion is being furnished only to, and is solely for the benefit of,
the addressees who are parties to the Credit Agreement on the date hereof (each
of whom may rely upon this opinion as of the date hereof). This opinion may not
be used, circulated, quoted, relied upon or otherwise referred to by any other
person or entity or for any other purpose without my prior written consent.
Very truly yours,
Richard H. Bachmann
Executive Vice President and
Chief Legal Officer
operatingopinion.wpd
3
EXHIBIT C
COMPLIANCE CERTIFICATE
----------------------
The undersigned hereby certifies that he is an Executive Vice President of
ENTERPRISE PRODUCTS COMPANY, a Texas corporation (the "Company"), and that as
such he is authorized to execute this certificate on behalf of the Company. With
reference to the Credit Agreement dated as of ____________, (the "Agreement"),
among the Company, The Chase Manhattan Bank, as agent (in such capacity, the
"Agent") for the banks named therein (collectively the "Banks"), certain
entities, as co-arrangers and the Banks, the undersigned further certifies,
represents and warrants, in such capacity on behalf of the Company, as follows
(each capitalized term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) The representations and warranties of the Company contained in the
Agreement and otherwise made in writing by or on behalf of the Company
pursuant to the Agreement were true and correct in all material respects
when made, and are repeated at and as of the time of delivery hereof and
are true and correct in all material respect at and as of the time of
delivery hereof.
(b) The Company has performed and complied in all material respects
with all agreement and conditions contained in the Agreement required to be
performed or complied with by it prior to or at the time of delivery
hereof.
(c) Neither the Company nor any Subsidiary has incurred any material
(individually or in the aggregate) liabilities, direct or contingent, since
_____________, other than liabilities incurred in the normal course of
business, liabilities being paid in full on the date hereof and liabilities
specifically permitted in the Agreement.
(d) Since __________, no change has occurred, either in any case or in
the aggregate, in the condition, financial or otherwise, of the Company
which would have a Material Adverse Effect.
(e) There exists, and, after giving effect to the Loan or Loans with
respect to which this Certificate is being delivered, will exist, no
Default under the Agreement or any event or circumstance which constitutes,
or with notice or lapse of time (or both) would constitute, an event of
default under any loan or credit agreement,, indenture, deed of trust,
security agreement or other agreement or instrument evidencing or
pertaining to any Debt of the Company or any Subsidiary, or under any
material agreement or instrument to which the Company or any Subsidiary is
a party or by which the company or any Subsidiary is bound, in any respect
which could have a Material Adverse Effect.
EXECUTED AND DELIVERED this ________ day of ___________, 1999.
ENTERPRISE PRODUCTS COMPANY
By:______________________________
GARY L. MILLER,
Executive Vice President
EXHIBIT D
FORM OF
COMMITMENT TRANSFER SUPPLEMENT
Reference is made to the Credit Agreement, dated as of July 27, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Enterprise Products Operating L.P. (the "Borrower"), the
Lenders named therein, Den norske Bank ASA and Bank of Tokyo-Mitsubishi Ltd.,
Houston Agency, as co-arrangers and The Chase Manhattan Bank, as co-arranger and
as administrative agent for the Lenders (in such capacity, the "Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "Assignor") and the
Assignee identified on Schedule l hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"Assigned Facility"; collectively, the "Assigned Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the Agent, upon
request by the Assignee, exchange the attached Notes for a new Note or Notes
payable to the Assignee and (ii) if the Assignor has retained any interest in
the Assigned Facility, requests that the Agent exchange the attached Notes for a
new Note or Notes payable to the Assignor, in each case in amounts which reflect
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Commitment Transfer Supplement; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements delivered pursuant to subsection 5.1 thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Commitment Transfer Supplement; (c) agrees that it
will, independently and without reliance upon the Assignor, the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to subsection
4.12(b) of the Credit Agreement.
4. The effective date of this Commitment Transfer Supplement shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "Effective
Date"). Following the execution of this Commitment Transfer Supplement, it will
be delivered to the Agent for acceptance by it and recording by the Agent
pursuant to the Credit Agreement, effective as of the Effective Date (which
shall not, unless otherwise agreed to by the Agent, be earlier than five
Business Days after the date of such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to the Effective Date and to the Assignee for amounts
which have accrued subsequent to the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the Agent for
periods prior to the Effective Date or with respect to the making of this
assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Commitment Transfer Supplement,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. This Commitment Transfer Supplement shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
Schedule 1
to Commitment Transfer Supplement
Name of Assignor:_____________________________
Name of Assignee:_____________________________
Effective Date of Assignment:_______________________
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned(1)
- ----------------- --------------- ---------------------------------
$______________ ___.__________ %
[Name of Assignee] [Name of Assignor]
By:___________________________________ By:___________________________________
Title: Title:
Accepted:
THE CHASE MANHATTAN BANK,
as Agent
By:____________________________________ ___________________________________
Title:
(1) Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.