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
-2-
EXECUTION COPY
Exhibit A Form of Assignment
Exhibit B Form of Assignment
Exhibit C Form of Assignment
Exhibit D Code of Conduct
Exhibit E Arbitration Provisions
-3-
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.
-2-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
"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
-3-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-4-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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).
-5-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-6-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-7-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-8-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
(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
-9-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-10-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-11-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-12-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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:
-13-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-14-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-15-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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 Xxx Xxxxxx, 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
-16-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-17-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
-18-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
-19-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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
0000 XxXxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Phone: (000) 000-0000
Fax No.: (000) 000-0000
-20-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
With a copy to:
Tejas Midstream Enterprises, LLC
0000 XxXxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Operating Officer
Phone: (000) 000-0000
Fax No.: (000) 000-0000
If to Enterprise Partners, EPCO, Enterprise GP and/or EPC II:
Enterprise Products GP, LLC
X.X. Xxx 0000 (77210-4324)
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Phone: (000) 000-0000
Fax No. (000) 000-0000
With a copy to:
Enterprise Products GP, LLC
X.X. Xxx 0000 (77210-4324)
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Legal Officer
Phone: (000) 000-0000
Fax No. (000) 000-0000
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.
-21-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-22-
C:\My Documents\Uhragt.wpd
EXECUTION COPY
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/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
President and Chief Operating Officer
TEJAS ENERGY, LLC
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
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/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
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.
A-1
IN WITNESS WHEREOF, this Assignment is executed by Assignor and Assignee as
of the Effective Date.
ASSIGNOR
By:___________________________
Name:_________________________
Title:__________________________
ASSIGNEE
By:____________________________
Name:_________________________
Title:_________________________
A-2
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.
B-1
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:__________________________
B-2
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.
B-3
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:__________________________
B-4
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.
C-1
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.
C-2
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
C-3
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;
- Xxxxxx 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
C-4
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 Xxxxxxx 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
C-5
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. Xxxxxxx Xxxxxxx
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 Xxxxxxx Xxxxxxx 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.
C-6
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
