EXHIBIT 2.1
AMENDMENT NO. 1
TO
PARENT COMPANY AGREEMENT
THIS AMENDMENT NO. 1 TO THE PARENT COMPANY AGREEMENT (this
"Amendment No. 1"), is entered into by and among (a) El Paso Corporation, a
Delaware corporation ("El Paso Parent"), Sabine River Investors I, L.L.C., a
Delaware limited liability company ("El Paso Sub 1"), Sabine River Investors II,
L.L.C., a Delaware limited liability company ("El Paso Sub 2"), El Paso EPN
Investments, L.L.C., a Delaware limited liability company ("El Paso Sub 3," and
collectively with El Paso Sub 1 and El Paso Sub 2, the "Unitholders"), and
GulfTerra GP Holding Company, a Delaware corporation ("El Paso GP Holdco," and
collectively with the Unitholders, the "El Paso Parent Parties"), and (b)
Enterprise Products GP, LLC, a Delaware limited liability company ("Enterprise
GP"), Enterprise Products Partners L.P., a Delaware limited partnership
("Enterprise MLP"), and Enterprise Products GTM, LLC ("Enterprise GTM," and
collectively with Enterprise MLP and Enterprise GP, the "Enterprise Parties"),
effective as of April 19, 2004.
W I T N E S S E T H:
WHEREAS, the El Paso Parent Parties and the Enterprise Parties
have entered into the Parent Company Agreement, dated as of December 15, 2003
(the "Agreement"), which provided for, among other things, subject to the terms
and conditions thereof, El Paso GP Holdco to contribute at the Step Two Closing
(as defined in the Agreement) its 50% membership interest in GulfTerra Energy
Company, L.L.C., a Delaware limited liability company ("GulfTerra GP"), to
Enterprise GP in exchange for a newly issued 50% membership interest in
Enterprise GP; and
WHEREAS, in accordance with Section 6.3 of the Agreement, the
El Paso Parent Parties and the Enterprise Parties have agreed to enter into this
Amendment No. 1 to amend the Purchase Agreement to provide for (i) El Paso GP
Holdco to instead contribute at the Step Two Closing its 50% membership interest
in GulfTerra GP to Enterprise GP in exchange for a newly issued 9.9% membership
interest in Enterprise GP and cash in the amount of $370 million, (ii) the
amendment and restatement of the form of limited liability company agreement of
the Enterprise GP to be entered into at the Step Two Closing by and among
Enterprise Parent 1, Enterprise Parent 2 and El Paso GP Holdco and (iii)
Enterprise GP, Enterprise MLP and El Paso GP Holdco to enter into an additional
agreement at the Step Two Closing, an Exchange and Registration Rights Agreement
in the form attached hereto as an exhibit.
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein and in the Agreement, the
parties hereto agree as follows:
ARTICLE I
Section 1.1 Defined Terms. Capitalized terms used in
this Amendment No.1 but not defined herein shall have the meaning assigned to
them in Agreement.
Section 1.2 Amendments.
(a) Section 2.2(c) of the Agreement is hereby deleted,
amended and restated in its entirety as follows:
"(c) Contribution of Class B Membership Interests. On the
Step Two Closing Date and immediately prior to consummation of the
Merger, El Paso Parent shall cause El Paso GP Holdco, and El Paso GP
Holdco agrees, to contribute to Enterprise GP all of the Class B
Membership Interests in GulfTerra GP then owned by El Paso GP Holdco
(which Class B Membership Interests entitle the holder (a) to a 50%
Sharing Ratio (as defined in the Second Amended and Restated GulfTerra
LLC Agreement) (the "Remaining Interest") and (b) to serve as the
managing member of GulfTerra GP), such contribution to be made in
consideration for (x) the issuance by Enterprise GP to El Paso GP
Holdco of a member interest constituting 9.9% of the issued and
outstanding Membership Interests (as defined in the Second Amended and
Restated Limited Liability Company Agreement of Enterprise Products GP,
LLC (the "Enterprise GP LLC Agreement")) of Enterprise GP (the
"Enterprise GP Interests") and (y) payment by Enterprise GP to El Paso
GP Holdco of $370,000,000, which payment shall be made by wire transfer
of immediately available funds to the account specified to Enterprise
GP in writing by El Paso GP Holdco not less than two Business Days
prior to the Step Two Closing, and (i) Enterprise GP shall cause
Enterprise Parent 1 and Enterprise Parent 2 to enter into, and El Paso
GP Holdco will enter into, the Second Amended and Restated Limited
Liability Company Agreement of Enterprise Products GP, LLC in the form
attached hereto as Exhibit 2.2(c)(1), (ii) Enterprise GP, Enterprise
MLP and El Paso GP Holdco will enter into the Exchange and Registration
Rights Agreement in the form attached hereto as Exhibit 2.2(c)(2),
(iii) Enterprise GP shall cause Enterprise Products Delaware Holdings
L.P. to execute and deliver a guaranty in the form attached hereto as
Exhibit 2.2(c)(3), and (iv) El Paso Parent will execute and deliver a
guaranty in the form of the GulfTerra Guaranty Agreement regarding the
obligations of El Paso GP Holdco under the agreement referred to in
Section 2.2(c)(i)."
(b) Section 2.2(e) of the Agreement is hereby amended by
inserting new paragraph (v) immediately following Section 2.2(e)(iv), which new
paragraph shall read in its entirety as follows:
"(v) The payment described in Section 2.2(c)(y) will be
made and the agreements referenced in clauses (i), (ii), (iii) and (iv)
of Section 2.2(c) will be executed and delivered by the parties
thereto."
(c) Concurrently with the execution and delivery of this
Amendment No. 1, Enterprise GTM shall receive a "bring down" opinion, dated such
date, from Xxxxxxx Xxxxx, counsel to El Paso GP Holdco, of their opinion
delivered at the Step One Closing Date pursuant to Section 2.1(d)(i).
(d) The form of Second Amended and Restated Limited
Liability Company Agreement of Enterprise Products GP, LLC attached as Exhibit
2.2(c) to the Agreement, and
2
renumbered as Exhibit 2.2(c)(1) in this Amendment No. 1, is hereby deleted,
amended and restated in its entirety in the form attached as Exhibit 1 to this
Amendment No. 1.
(e) This Amendment No. 1 provides for a new Exhibit
2.2(c)(2), containing a form of Exchange and Registration Rights Agreement, to
be attached as an exhibit to the Agreement. Such form of Exchange and
Registration Rights Agreement is attached as Exhibit 2 to this Amendment No. 1.
(f) This Amendment No. 1 provides for a new Exhibit
2.2(c)(3), containing a form of guaranty, to be attached as an exhibit to the
Agreement. Such form of guaranty is attached as Exhibit 3 to this Amendment No.
1.
ARTICLE II
Section 2.1. Execution. This Amendment No. 1 may be
executed in multiple counterparts, each of which shall be deemed an original and
all of which shall constitute one instrument.
Section 2.2 Signatures and Counterparts. Facsimile
transmissions of any signed original document and/or retransmission of any
signed facsimile transmission shall be the same as delivery of an original. At
the request of the El Paso Parent Parties or the Enterprise Parties, the parties
will confirm facsimile transmission by signing a duplicate original document.
Section 2.3. Governing Law. To the maximum extent
permitted by applicable Law, the provisions of this Amendment No. 1 shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without regard to principles of conflicts of law.
Section 2.4. Continuation of the Agreement. The
Agreement, as amended by this Amendment No. 1, shall remain in full force and
effect, as so amended.
* * * * *
3
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first written above.
EL PASO CORPORATION
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
GULFTERRA GP HOLDING COMPANY
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Treasurer
SABINE RIVER INVESTORS I, L.L.C.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Treasurer:
SABINE RIVER INVESTORS II, L.L.C.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Treasurer
EL PASO EPN INVESTMENTS, L.L.C.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Treasurer
ENTERPRISE PRODUCTS GP, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Legal Officer
4
ENTERPRISE PRODUCTS PARTNERS L.P.
By: Enterprise Products GP, LLC
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Legal Officer
ENTERPRISE PRODUCTS GTM, LLC
By: Enterprise Products Operating L.P.,
its sole member
By: Enterprise Products OLPGP, Inc.,
general partner of Enterprise
Products Operating L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Legal Officer
5
EXHIBIT 1
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC
A DELAWARE LIMITED LIABILITY COMPANY
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.01 Definitions.......................................................................................... 2
1.02 Construction......................................................................................... 2
ARTICLE 2
ORGANIZATION
2.01 Formation............................................................................................ 2
2.02 Name................................................................................................. 2
2.03 Registered Office; Registered Agent; Principal Office; Other Offices................................. 2
2.04 Purpose.............................................................................................. 2
2.05 Term................................................................................................. 3
2.06 No State-Law Partnership; Withdrawal................................................................. 3
ARTICLE 3
MATTERS RELATING TO MEMBERS
3.01 Members.............................................................................................. 3
3.02 Creation of Additional Membership Interest........................................................... 3
3.03 Liability to Third Parties........................................................................... 3
ARTICLE 4
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 Capital Contributions................................................................................ 4
4.02 Loans................................................................................................ 5
4.03 Return of Contributions.............................................................................. 5
4.04 Capital Accounts..................................................................................... 5
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
5.01 Distributions........................................................................................ 6
5.02 Allocations for Capital Account Purposes............................................................. 7
5.03 Allocations for Tax Purposes......................................................................... 8
ARTICLE 6
MANAGEMENT
6.01 Management........................................................................................... 9
6.02 Board of Directors................................................................................... 12
6.03 Officers............................................................................................. 14
6.04 Duties of Officers and Directors..................................................................... 16
i
6.05 Compensation......................................................................................... 16
6.06 Indemnification...................................................................................... 16
6.07 Liability of Indemnitees............................................................................. 18
ARTICLE 7
TAX MATTERS
7.01 Tax Returns.......................................................................................... 19
7.02 Tax Elections........................................................................................ 19
7.03 Tax Matters Member................................................................................... 20
ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books................................................................................. 21
8.02 Reports.............................................................................................. 21
8.03 Bank Accounts........................................................................................ 21
8.04 Tax Statements....................................................................................... 21
ARTICLE 9
DISPOSITIONS
9.01 Dispositions of Membership Interests................................................................. 21
9.02 Permitted Dispositions of Membership Interests and General Restrictions.............................. 22
9.03 Preferential Purchase Right.......................................................................... 24
9.04 Change of Member Control............................................................................. 25
9.05 Tag-Along and Drag-Along Rights...................................................................... 28
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MEMBERS
10.01 Representations and Warranties....................................................................... 31
10.02 Subject Business Activities.......................................................................... 31
10.03 Bankrupt Members..................................................................................... 31
ARTICLE 11
DISSOLUTION, WINDING-UP AND TERMINATION
11.01 Dissolution.......................................................................................... 32
11.02 Winding-Up and Termination........................................................................... 33
11.03 Deficit Capital Accounts............................................................................. 34
ARTICLE 12
MERGER
12.01 Authority............................................................................................ 34
12.02 Procedure for Merger or Consolidation................................................................ 34
12.03 Approval by Members of Merger or Consolidation....................................................... 35
12.04 Certificate of Merger or Consolidation............................................................... 35
12.05 Effect of Merger or Consolidation.................................................................... 35
ii
ARTICLE 13
GENERAL PROVISIONS
13.01 Notices.............................................................................................. 36
13.02 Entire Agreement; Supersedure........................................................................ 36
13.03 Effect of Waiver or Consent.......................................................................... 37
13.04 Amendment or Restatement............................................................................. 37
13.05 Binding Effect....................................................................................... 37
13.06 Governing Law; Severability.......................................................................... 37
13.07 Confidentiality...................................................................................... 37
13.08 Further Assurances................................................................................... 39
13.09 Waiver of Certain Rights............................................................................. 39
13.10 Offset............................................................................................... 40
13.11 Counterparts......................................................................................... 40
EXHIBITS
Exhibit A - Initial Sharing Ratios and Capital Accounts of Members
iii
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ENTERPRISE PRODUCTS GP, LLC
A Delaware Limited Liability Company
THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "AGREEMENT") of ENTERPRISE PRODUCTS GP, LLC, a Delaware limited liability
company (the "COMPANY"), dated and effective as of [_______________] (the
"EFFECTIVE DATE"), is adopted, executed and agreed to, by and among EPC Partners
II, Inc., a Delaware corporation ("ENTERPRISE PARENT 1"), Xxx Xxxxxx LLC, a
Texas limited liability company ("ENTERPRISE PARENT 2") (Enterprise Parent 1 and
Enterprise Parent 2, collectively, "ENTERPRISE PARENT") and GulfTerra GP Holding
Company, a Delaware corporation ("EL PASO GP HOLDCO").
RECITALS
A. Enterprise Products Company ("ORIGINAL ENTERPRISE PARENT 1")
and Enterprise Parent 2 formed the Company on April 9, 1998 with Original
Enterprise Parent I as a 95% member and Enterprise Parent 2 as a 5% member.
Original Enterprise Parent 1 assigned its 95% membership interest in the Company
to Enterprise Parent 1 effective as of July 30, 1998. Shell US Gas & Power LLC
(as successor to Tejas Energy, LLC) ("SHELL") acquired a 30% membership interest
in the Company from Enterprise Parent 1 effective as of September 17, 1999, and
Shell thereupon became a member of the Company. Enterprise Parent 1 reacquired
such 30% membership interest from Shell effective as of September 12, 2003, and
Shell thereupon ceased to be a member of the Company. El Paso GP Holdco acquired
a 9.9% membership interest in the Company as of the Effective Date.
B. The Limited Liability Company Agreement of Enterprise Products
GP, LLC was executed effective April 9, 1998, was amended and restated pursuant
to a First Amended and Restated Limited Liability Company Agreement dated as of
September 17, 1999 and was amended pursuant to Amendment No. 1, dated as of
September 19, 2002, to such First Amended and Restated Limited Liability Company
Agreement (as so amended and as may be further amended from time to time prior
to the Effective Date, the "EXISTING AGREEMENT").
C. Enterprise Parent and El Paso GP Holdco, the only existing
Members of the Company, deem it advisable to amend and restate the limited
liability company agreement of the Company in its entirety as set forth herein.
AGREEMENTS
For and in consideration of the premises, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged and agreed by the
parties, Enterprise Parent and El Paso GP Holdco hereby agree to amend and
restate the Existing Agreement in its entirety as follows:
ARTICLE 1
DEFINITIONS
1.01 DEFINITIONS. Each capitalized term used herein shall have the
meaning given such term in Attachment I.
1.02 CONSTRUCTION. Unless the context requires otherwise: (a) the
gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to Exhibits refer to the
Exhibits attached to this Agreement, each of which is made a part hereof for all
purposes; (d) references to Laws refer to such Laws as they may be amended from
time to time, and references to particular provisions of a Law include any
corresponding provisions of any succeeding Law; (e) references to money refer to
legal currency of the United States of America; (f) "including" means "including
without limitation" and is a term of illustration and not of limitation; (g) all
definitions set forth herein shall be deemed applicable whether the words
defined are used herein in the singular or the plural; and (h) neither this
Agreement nor any other agreement, document or instrument referred to herein or
executed and delivered in connection herewith shall be construed against any
Person as the principal draftsperson hereof or thereof.
ARTICLE 2
ORGANIZATION
2.01 FORMATION. The Company was organized as a Delaware limited
liability company by the filing of a Certificate of Formation ("ORGANIZATIONAL
CERTIFICATE") on April 9, 1998 with the Secretary of State of the State of
Delaware under and pursuant to the Act.
2.02 NAME. The name of the Company is "Enterprise Products GP, LLC"
and all Company business must be conducted in that name or such other names that
comply with Law as the Board of Directors may select.
2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent for service of process named in the Organizational Certificate
or such other office (which need not be a place of business of the Company) as
the Board of Directors may designate in the manner provided by Law. The
registered agent for service of process of the Company in the State of Delaware
shall be the initial registered agent for service of process named in the
Organizational Certificate or such other Person or Persons as the Board of
Directors may designate in the manner provided by Law. The principal office of
the Company in the United States shall be at such a place as the Board of
Directors may from time to time designate, which need not be in the State of
Delaware, and the Company shall maintain records there and shall keep the street
address of such principal office at the registered office of the Company in the
State of Delaware. The Company may have such other offices as the Board of
Directors may designate.
2.04 PURPOSE. The purposes of the Company are the transaction of
any or all lawful business for which limited liability companies may be
organized under the Act; provided,
2
however, that for so long as it is the general partner of the MLP, the Company's
sole business will be (a) to act as the general partner or managing member of
the MLP and any other partnership or limited liability company of which the MLP
is, directly or indirectly, a partner or managing member and to undertake
activities that are ancillary or related thereto and (b) to acquire, own or
Dispose of debt or equity securities in the MLP.
2.05 TERM. The period of existence of the Company commenced on
April 9, 1998 and shall end at such time as a Certificate of Cancellation is
filed in accordance with Section 11.02(c).
2.06 NO STATE-LAW PARTNERSHIP; WITHDRAWAL. The Members intend that
the Company shall be a limited liability company formed under the Laws of the
State of Delaware and shall not be a partnership (including a limited
partnership) or joint venture, and that no Member be a partner or joint venturer
of any other Member, for any purposes other than federal and state tax purposes,
and this Agreement may not be construed to suggest otherwise. A Member does not
have the right to Withdraw from the Company; provided, however, that a Member
shall have the power to Withdraw at any time in violation of this Agreement. If
a Member exercises such power in violation of this Agreement, (a) such
Withdrawing Member shall be liable to the Company and the other Members and
their Affiliates for all monetary damages suffered by them as a result of such
Withdrawal; (b) such other Members shall, in addition thereto, have the rights
set forth in Article 11; and (c) such Withdrawing Member shall not have any
rights under Section 18.604 of the Act. In no event shall the Company or any
Member have the right, through specific performance or otherwise, to prevent a
Member from Withdrawing in violation of this Agreement.
ARTICLE 3
MATTERS RELATING TO MEMBERS
3.01 MEMBERS. Enterprise Parent 1 and Enterprise Parent 2 have
previously been admitted as Members of the Company, and El Paso GP Holdco is
hereby admitted as a Member of the Company effective as of the Effective Date.
3.02 CREATION OF ADDITIONAL MEMBERSHIP INTEREST. Subject to Member
approval requirements of Section 6.01(b), the Company may issue additional
Membership Interests in the Company pursuant to this Section 3.02. The terms of
admission or issuance must specify the Sharing Ratios applicable to such
Membership Interests, and may provide for the creation of different classes or
groups of Members having different rights, powers, and duties. The creation of
any new class or group of Members approved as required herein may be reflected
in an amendment to this Agreement executed in accordance with Section 13.04
indicating the different rights, powers, and duties thereof. Any such admission
is effective only after the new Member has executed and delivered to the Members
an instrument containing the notice address of the new Member and the new
Member's ratification of this Agreement and agreement to be bound by it. The
provisions of this Section 3.02 shall not apply to a Disposition of a Membership
Interest or Change of Member Control, such matters being governed by Article 9.
3.03 LIABILITY TO THIRD PARTIES. No Member or beneficial owner of
any Membership Interest shall be liable for the Liabilities of the Company.
3
ARTICLE 4
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS.
(a) In exchange for its Membership Interest in the
Company and payment by the Company to El Paso GP Holdco of cash consideration in
the amount of $370 million, El Paso GP Holdco has contributed to the Company its
Class B Membership Interest in GulfTerra Energy Company, L.L.C., a Delaware
limited liability company, and Enterprise Parent 2 has made certain Capital
Contributions. Enterprise Parent 1 is the assignee of its predecessor's
Membership Interest. The parties hereto agree that, except as provided in
Section 4.01(c), in no event shall El Paso GP Holdco be required to make any
Capital Contribution to the Company (i) in respect of the transactions to be
effected by the MLP on the Effective Date, including any Capital Contributions
that may be required pursuant to the MLP Agreement in respect of any of those
transactions, or (ii) to fund any capital contribution required to be made by
the Company pursuant to the MLP Agreement in respect of any issuances of Common
Units to El Paso GP Holdco (or its Transferees admitted as Substituted Members
pursuant to Section 9.02) upon exercise of its Exchange Right under the Exchange
Agreement.
(b) The amount of money and the fair market value (as of
the date of contribution) of any property (other than money) contributed to the
Company by a Member in respect of the issuance of a Membership Interest to such
Member shall constitute a "CAPITAL CONTRIBUTION," and the amount of such Capital
Contribution shall be credited to such Member's Capital Account. Any reference
in this Agreement to the Capital Contribution of a Member shall include a
Capital Contribution of its predecessors in interest.
(c) Pursuant to Section 5.2(d) of the MLP Agreement, upon
the issuance of any Class A Special Units (as defined in the MLP Agreement) and
additional Limited Partner Interests (as defined in the MLP Agreement) by the
MLP, the Company, as general partner of the MLP, is required to make an
additional capital contribution to the MLP in an amount equal to 2/98 of the
amount contributed to the MLP in exchange for the Limited Partner Interests.
Concurrently with the capital contribution required to be made by the Company to
the MLP pursuant to Section 5.2(d) of the MLP Agreement (the "GP CONTRIBUTION"),
each of the Members shall contribute to the Company its pro rata share of the GP
Contribution based on its respective Sharing Ratio. In the event any Member
fails to contribute to the Company its pro rata share of the GP Contribution in
accordance with this Section 4.01(c) (the "FAILING MEMBER"), the other Member(s)
may elect to additionally contribute to the Company (the "CONTRIBUTING MEMBER")
such Failing Member's pro rata share of the GP Contribution. If such
contribution is made by a Contributing Member, as a penalty for Default, the
Failing Member shall forfeit all future distributions of Available Cash from the
Company pursuant to Section 5.01(a) and such Failing Member's distributions
shall instead be distributed to the Contributing Member until such time as an
amount equal to 300% of the amount so contributed by the Contributing Member on
behalf of the Failing Member shall be distributed to the Contributing Member
(the amount to be distributed in excess of the amount contributed by a
Contributing Member is referred to as the "EXCESS AMOUNT").
4
4.02 LOANS. If the Company does not have sufficient cash to pay its
obligations, any Member that may agree to do so may, with the consent of the
Audit and Conflicts Committee, advance all or part of the needed funds for such
obligation to or on behalf of the Company. An advance described in this Section
4.02 constitutes a loan from the Member to the Company, may bear interest at a
rate determined by the Board of Directors from the date of the advance until the
date of repayment, and is not a Capital Contribution.
4.03 RETURN OF CONTRIBUTIONS. A Member is not entitled to the
return of any part of its Capital Contributions or to be paid interest in
respect of either its Capital Account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Company or of any Member. No
Member will be required to contribute or to lend any cash or property to the
Company to enable the Company to return any Member's Capital Contributions.
4.04 CAPITAL ACCOUNTS.
(a) The Company shall maintain for each Member a separate
Capital Account in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Each Member's Capital Account shall be increased by (i) the
amount of all Capital Contributions made by that Member to the Company and (ii)
all items of Company income and gain (including, without limitation, income and
gain exempt from tax) computed in accordance with Section 4.04(b) and allocated
to that Member pursuant to Section 5.02, and decreased by (A) the amount of cash
or Net Agreed Value of all actual and deemed distributions of cash or property
to that Member pursuant to this Agreement and (B) all items of Company deduction
and loss computed in accordance with Section 4.04(b) and allocated to that
Member pursuant to Section 5.02. As of immediately after the Effective Date,
each Member's Capital Account is as set forth on Exhibit A.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction which is to be allocated pursuant to Article 5
and is to be reflected in the Members' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Any income, gain or loss attributable to the
taxable disposition of any Company property shall be determined as if
the adjusted basis of such property as of such date of disposition were
equal in amount to the Company's Carrying Value with respect to such
property as of such date.
(ii) In accordance with the requirements of
Section 704(b) of the Code, any deductions for depreciation, cost
recovery or amortization attributable to any Contributed Property shall
be determined as if the adjusted basis of such property on the date it
was acquired by the Company were equal to the Agreed Value of such
property. Upon an adjustment to the Carrying Value of any Company
property subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined (A) as if the
adjusted basis of such property were equal to the Carrying Value of
such property
5
immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same
method and useful life (or, if applicable, the remaining useful life)
as is applied for federal income tax purposes; provided, however, that,
if the asset has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery or amortization deductions shall be
determined using any reasonable method that the Board of Directors may
adopt.
(c) A Transferee of a Membership Interest shall succeed
to a pro rata portion of the Capital Account of the transferor relating to the
Membership Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Membership Interests for cash
or Contributed Property, the Capital Account of all Members and the Carrying
Value of each Company property immediately prior to such issuance shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Company property, as if such Unrealized Gain or Unrealized
Loss had been recognized on an actual sale of each such property immediately
prior to such issuance and had been allocated to the Members at such time
pursuant to Section 5.02 in the same manner as any item of gain or loss actually
recognized during such period would have been allocated.
(ii) In accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Member of any Company property (other than a
distribution of cash that is not in redemption or retirement of a
Membership Interest), the Capital Accounts of all Members and the
Carrying Value of all Company property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Company property, as if such Unrealized Gain or Unrealized Loss
had been recognized in a sale of such property immediately prior to
such distribution for an amount equal to its fair market value, and had
been allocated to the Members, at such time, pursuant to Section 5.02
in the same manner as any item of gain or loss actually recognized
during such period would have been allocated.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
5.01 DISTRIBUTIONS.
(a) Within 45 days following each Quarter (the
"DISTRIBUTION DATE"), the Company shall distribute to each Member, in proportion
to its respective Sharing Ratio, 100% of the Company's Available Cash on such
Distribution Date. Each distribution in respect of a Membership Interest shall
be paid only to the record holder thereof as of the Distribution Date, unless
otherwise directed by the record holder.
(b) Any distributions, redemption payments and
liquidation distributions (subject to Section 11.02) shall be paid
simultaneously to the Members in accordance with their respective Sharing
Ratios.
6
5.02 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights of the Members
among themselves, the Company's items of income, gain, loss and deduction
(computed in accordance with Section 4.04(b)) shall be allocated among the
Members in each taxable year (or portion thereof) as provided herein below.
(a) Except as otherwise required by Section 5.02(b), all
items of income, gain, loss, deduction and credit of the Company shall be
allocated among the Members in accordance with their Sharing Ratios.
(b) Special Allocations. The following special
allocations shall be made for each taxable period:
(i) Company Minimum Gain Chargeback. If there is
a net decrease in Company Minimum Gain during any taxable period, each
Member shall be allocated items of income and gain for such period
(and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2)
and 1.704-2(j)(2)(i), or any successor provision. For purposes of this
Section 5.02(b)(i), each Member's Adjusted Capital Account balance
shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.02(b) with respect to such
taxable period (other than an allocation pursuant to Sections
5.02(b)(v) and 5.02(b)(vi)). This Section 5.02(b)(i) is intended to
comply with the Member Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.
(ii) Chargeback of Member Nonrecourse Debt
Minimum Gain. Except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Member Nonrecourse Debt
Minimum Gain during any taxable period, any Member with a share of
Member Nonrecourse Debt Minimum Gain at the beginning of such taxable
period shall be allocated items of income and gain for such period
(and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this
Section 5.02(b)(ii), each Member's Adjusted Capital Account balance
shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.02(b), other than Section
5.02(b)(i) and other than an allocation pursuant to Sections 5.02(b)(v)
and 5.02(b)(vi), with respect to such taxable period. This Section
5.02(b)(ii) is intended to comply with the chargeback of items of
income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any
Member unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of income and gain shall be specially
allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if
any, in its Adjusted Capital
7
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise eliminated
pursuant to Section 5.02(b)(i) or (ii).
(iv) Gross Income Allocations. In the event any
Member has a deficit balance in its Capital Account at the end of any
taxable period in excess of the sum of (A) the amount such Member is
required to restore pursuant to the provisions of this Agreement and
(B) the amount such Member is deemed obligated to restore pursuant to
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Member
shall be specially allocated items of gross income and gain in the
amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.02(b)(iv) shall be made only if
and to the extent that such Member would have a deficit balance in its
Capital Account as adjusted after all other allocations provided for in
this Section 5.02 have been tentatively made as if this Section
5.02(b)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse
Deductions for any taxable period shall be allocated to the Members in
accordance with their respective Sharing Ratios. If the Board of
Directors determines in its good faith discretion that the Company's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the Board of Directors is
authorized, upon notice to the other Members, to revise the prescribed
ratio to the numerically closest ratio that does satisfy such
requirements.
(vi) Member Nonrecourse Deductions. Member
Nonrecourse Deductions for any taxable period shall be allocated 100%
to the Member that bears the Economic Risk of Loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i).
If more than one Member bears the Economic Risk of Loss with respect to
a Member Nonrecourse Debt, such Member Nonrecourse Deductions
attributable thereto shall be allocated between or among such Members
in accordance with the ratios in which they share such Economic Risk of
Loss.
(vii) Nonrecourse Liabilities. For purposes of
Treasury Regulation Section 1.752-3(a)(3), the Members agree that
Nonrecourse Liabilities of the Company in excess of the sum of (A) the
amount of Company Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Members in accordance with
their respective Sharing Ratios.
5.03 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided herein, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Members in the same manner as its correlative item of "book"
income, gain, loss or deduction is allocated pursuant to Section 5.02.
8
(b) To eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Members as follows:
(i) (A) In the case of a Contributed Property,
such items attributable thereto shall be allocated among the Members in
the manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Members in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 5.02.
(ii) (A) In the case of an Adjusted Property,
such items shall (1) first, be allocated among the Members in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Section
4.04(d)(i) or 4.04(d)(ii), and (2) second, in the event such property
was originally a Contributed Property, be allocated among the Members
in a manner consistent with Section 5.03(b)(i)(A); and (B) any item of
Residual Gain or Residual Loss attributable to an Adjusted Property
shall be allocated among the Members in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 5.02.
(iii) The Board of Directors shall apply the
principles of Treasury Regulation Section 1.704-3(d) to eliminate
Book-Tax Disparities.
ARTICLE 6
MANAGEMENT
6.01 MANAGEMENT..
(a) All management powers over the business and affairs
of the Company shall be exclusively vested in a Board of Directors ("BOARD OF
DIRECTORS" or "BOARD") and, subject to the direction of the Board of Directors,
the Officers. The Officers and Directors shall each constitute a "manager" of
the Company within the meaning of the Act. Except as otherwise specifically
provided in this Agreement, no Member, by virtue of having the status of a
Member, shall have or attempt to exercise or assert any management power over
the business and affairs of the Company or shall have or attempt to exercise or
assert actual or apparent authority to enter into contracts on behalf of, or to
otherwise bind, the Company. Except as otherwise specifically provided in this
Agreement, the authority and functions of the Board of Directors on the one hand
and of the Officers on the other shall be identical to the authority and
functions of the board of directors and officers, respectively, of a corporation
organized under the Delaware General Corporation Law. Except as otherwise
specifically provided in this Agreement, the business and affairs of the Company
shall be managed under the direction of the Board of Directors, and the
day-to-day activities of the Company shall be conducted on the Company's behalf
by the Officers, who shall be agents of the Company. In addition to the powers
that now or hereafter can be granted to managers under the Act and to all other
powers granted under any other provision of this Agreement, except as otherwise
provided in this Agreement (including Section
9
6.01(b)), the Board of Directors and the Officers shall have full power and
authority to do all things on such terms as they may deem necessary or
appropriate to conduct, or cause to be conducted, the business and affairs of
the Company.
(b) Notwithstanding any other provision of this Agreement
to the contrary, the Company, the Board of Directors and the Officers shall not
undertake, either directly or indirectly, any of the actions described in this
Section 6.01(b) unless such action has been approved by El Paso GP Holdco or its
Transferee admitted as a Substituted Member pursuant to Section 9.02, if any of
the foregoing are Members:
(i) any merger or consolidation of the Company;
(ii) any merger or consolidation involving the
MLP in respect of which the MLP (or the holders of its Equity Interests
immediately prior to the merger or consolidation) would not control at
least 51% of the Voting Stock of the surviving entity in the
transaction;
(iii) any Disposition, whether in one transaction
or a series of transactions, of all or substantially all of the
properties or assets of the Company or the Company and the MLP taken as
a whole;
(iv) effect any amendment to the MLP Agreement
that would reduce the Company's allocable share of distributions from
the Partnership or that would otherwise materially adversely affect El
Paso GP Holdco or its Transferees admitted as Substituted Members
pursuant to Section 9.02;
(v) other than equity securities issued upon the
exercise of convertible securities issued in accordance with this
Section 6.01(b), effect any authorization, sale and/or issuance by the
Company of any Membership Interests or other equity securities, whether
in a private or public offering, including an initial public offering,
or the grant, sale or issuance of other securities (including rights,
warrants and options) convertible into, exchangeable for or exercisable
for any Membership Interests, partnership interests, capital stock, or
other equity securities, whether or not presently convertible,
exchangeable or exercisable;
(vi) effect any (A) incurrence of any
indebtedness by the Company, (B) assumption, incurrence, or undertaking
by the Company of, or the grant by the Company of any security for, any
financial commitment of any type whatsoever, including any purchase,
sale, lease, loan, contract, borrowing or expenditure, or (C) lending
of money by the Company to, or the guarantee by the Company of the
debts of, any other Person other than the Partnership or its
Subsidiaries (collectively, "COMPANY OBLIGATIONS") other than Company
Obligations incurred (x) pursuant to Section 4.02 and, (y) pursuant to
joint and several liability for the MLP's Liabilities under Delaware
Law; provided, however, that no consent of the Members shall be
required for the Company to make a capital contribution to the MLP in
connection with the issuance of additional Common Units or other
securities by the MLP;
00
(xxx) xxxxx, xxxxxxxx or terminate distributions
of Available Cash by the Company to the Members, other than pursuant to
Section 4.01(c), Section 5.01 or Section 13.10;
(viii) assign, transfer, sell or otherwise dispose
of the Company's general partner interest in the MLP or any Incentive
Distribution Rights owned by the Company;
(ix) own or lease any assets other than the
Company's general partner interest in the MLP, the Incentive
Distribution Rights, distributions received on such general partner
interest and Incentive Distribution Rights and assets that are
ancillary, related to or in furtherance of the purposes of the Company,
unless the Company shall be reimbursed for the cost of such ownership
or lease by the Partnership;
(x) make (on behalf of the Company or the MLP) a
general assignment for the benefit of creditors;
(xi) file (on behalf of the Company or the MLP) a
petition or answer seeking for the Company or the MLP a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief;
(xii) file (on behalf of the Company or the MLP) a
petition or answer seeking for the Company or the MLP a voluntary
bankruptcy petition;
(xiii) file (on behalf of the Company or the MLP)
an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the Company or the MLP
in (A) a proceeding of the type described in Section 6.01(b)(xi) or
Section 6.01(b)(xii) above or (B) any federal or state bankruptcy or
insolvency proceeding;
(xiv) seek, consent or acquiesce (on behalf of the
Company or the MLP) to the appointment of a trustee, receiver or
liquidator of the Company or the MLP for all or any substantial part of
the Company or the MLP's properties;
(xv) effect any amendment or repeal of the
Organizational Certificate other than to effect (A) any amendment to
this Agreement made in accordance with Section 13.04, (B)
non-substantive changes or (C) changes that do not adversely affect any
Member; or
(xvi) effect any amendment to (A) Section 2.04 of
this Agreement or (B) any other provision of this Agreement that would
materially adversely affect the rights of El Paso GP Holdco or its
Transferees admitted as Substituted Members pursuant to Section 9.02;
provided, however, that notwithstanding the foregoing provisions in this Section
6.01(b), the approval of El Paso GP Holdco or its Transferees admitted as
Substituted Members pursuant to Section 9.02 shall not be required for the
Company to take (1) any of the actions set forth in this
11
Section 6.01(b) in connection with the consummation of any Proposed Drag-Along
Disposition pursuant to Section 9.05(b) or (2) any actions under the Exchange
Agreement.
(c) If El Paso GP Holdco (or a Transferee admitted as a
Substituted Member pursuant to Section 9.02) exercises its Exchange Right
pursuant to Article II of the Exchange Agreement, then during the period between
the date El Paso GP Holdco (or such Transferee) exercises its Exchange Right and
the final consummation of the Exchange, the consent of El Paso GP Holdco (or
such Transferee) shall not be required on any matters set forth in Section
6.01(b), except for those set forth in Sections 6.01(b)(iv), (vii), (x), (xi),
(xii), (xiii), (xiv), (xv) and (xvi).
(d) No Member in Default shall be entitled to consent on
any of the matters set forth in Section 6.01(b).
6.02 BOARD OF DIRECTORS.
(a) Generally. The Board of Directors shall consist of
not less than five nor more than ten natural persons. The members of the Board
of Directors shall be appointed by Enterprise Parent 2, a majority of whom must
meet the independence, qualification and experience requirements of the New York
Stock Exchange (each, an "INDEPENDENT DIRECTOR"), and at least three Independent
Directors shall also meet the independence, qualification and experience
requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934 (or any
successor Law), the rules and regulations of the SEC, other applicable Law and
the charter of the Audit and Conflicts Committee (each, a "SPECIAL INDEPENDENT
DIRECTOR"); provided, however, that if at any time (i) a majority of the members
of the Board of Directors are not Independent Directors or (ii) at least three
of the Independent Directors are not Special Independent Directors, the Board of
Directors shall still have all powers and authority granted to it hereunder, but
the Board of Directors and Enterprise Parent shall endeavor to elect additional
Independent Directors or Special Independent Directors, as applicable, to come
into compliance with this Section 6.02(a).
(b) Term; Resignation; Vacancies; Removal. Each Director
shall hold office until his successor is appointed and qualified or until his
earlier resignation or removal. Any Director may resign at any time upon written
notice to the Board, the Chairman of the Board, to the Chief Executive Officer
or to any other Officer. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Unless otherwise provided
in, vacancies and newly created directorships resulting from any increase in the
authorized number of Directors or from any other cause shall be filled by
Enterprise Parent 2. Any Director may be removed, with or without cause, by
Enterprise Parent at any time, and the vacancy in the Board caused by any such
removal shall be filled by Enterprise Parent 2.
(c) Voting; Quorum; Required Vote for Action. Unless
otherwise required by the Act, other Law or the provisions hereof,
(i) each member of the Board of Directors shall
have one vote;
12
(ii) except as provided in Section 6.02(c)(iii),
the presence at a meeting of a majority of the members of the Board of
Directors shall constitute a quorum at any such meeting for the
transaction of business;
(iii) the act of a majority of the members of the
Board of Directors present at a meeting duly called in accordance with
Section 6.02(d) at which a quorum is present shall be deemed to
constitute the act of the Board of Directors.
(d) Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Special meetings of the Board of
Directors or meetings of any committee thereof may be called by written request
of any member of the Board of Directors or a committee thereof on at least 48
hours prior written notice to the other members of such Board or committee. Each
Director shall be entitled to receive three Days advance written notice of any
regular or special meeting of, or any proposal that action by written consent be
taken by, the Board of Directors and, unless such notice is given or such
advance notice requirement is waived by a majority of the Directors, no regular
or special meeting of the Board of Directors shall have been duly called under,
and no action by written consent may be taken pursuant to, this Section 6.02(d).
Any such notice, or waiver thereof, shall state the purpose of such meeting.
Attendance of a Director at a meeting (including pursuant to the last sentence
of this Section 6.02(d)) shall constitute a waiver of notice of such meeting,
except where such Director attends the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened. Subject to the third preceding sentence, any
action required or permitted to be taken at a meeting of the Board of Directors
or any committee thereof may be taken without a meeting, without prior notice
and without a vote if a consent or consents in writing, setting forth the action
so taken, are signed by all members of the Board of Directors or committee.
Members of the Board of Directors or any committee thereof may participate in
and hold a meeting by means of conference telephone, video conference or similar
communications equipment by means of which all Persons participating in the
meeting can hear each other, and participation in such meetings shall constitute
presence in person at the meeting.
(e) Committees.
(i) Subject to compliance with this Article 6,
committees of the Board of Directors shall have and may exercise such
of the powers and authority of the Board of Directors with respect to
the management of the business and affairs of the Company as may be
provided in a resolution of the Board of Directors. Any committee
designated pursuant to this Section 6.02(e) shall choose its own
chairman, shall keep regular minutes of its proceedings and report the
same to the Board of Directors when requested, and, subject to Section
6.02(d), shall fix its own rules or procedures and shall meet at such
times and at such place or places as may be provided by such rules or
by resolution of such committee or resolution of the Board of
Directors. At every meeting of any such committee, the presence of a
majority of all the members thereof shall constitute a quorum and the
affirmative vote of a majority of the members present shall be
necessary for the adoption by it of any resolution. The Board of
Directors may designate one or more Directors as alternate members of
any committee who may replace any absent or disqualified member at any
meeting of such committee; provided, however, that any such
13
designated alternate of the Audit and Conflicts Committee must meet the
standards for a Special Independent Director. In the absence or
disqualification of a member of a committee, the member or members
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of the absent or
disqualified member; provided, however, that any such replacement
member of the Audit and Conflicts Committee must meet the standards for
a Special Independent Director.
(ii) In addition to any other committees
established by the Board of Directors pursuant to Section 6.02(e)(i),
the Board of Directors shall maintain an "AUDIT AND CONFLICTS
COMMITTEE," which shall be composed of at least three Special
Independent Directors. The Audit and Conflicts Committee shall be
responsible for (A) approving or disapproving, as the case may be, any
matters regarding the business and affairs of the Company, the MLP and
the OLP required to be considered by, or submitted to, such Audit and
Conflicts Committee pursuant to the terms of the MLP Agreement and the
Amended and Restated Agreement of Limited Partnership of the OLP, (B)
assisting the Board in monitoring (1) the integrity of the MLP's, the
OLP's and the Company's financial statements, (2) the qualifications
and independence of the MLP's, the OLP's and the Company's independent
accountants, (3) the performance of the MLP's, the OLP's and the
Company's internal audit function and independent accountants, and (4)
the MLP's, the OLP's and the Company's compliance with legal and
regulatory requirements, (C) preparing the report required by the rules
of the SEC to be included in the MLP's and OLP's annual report on Form
10-K, (D) approving any material amendments to the Administrative
Services Agreement dated as of January 1, 2004, between the Company,
the MLP, the OLP and Enterprise Products Company and others, (E)
approving or disapproving, as the case may be, the entering into of any
transaction with a Member or any Affiliate of a Member, other than
transactions in the ordinary course of business, and (F) performing
such other functions as the Board may assign from time to time, or as
may be specified in the charter of the Audit and Conflicts Committee.
6.03 OFFICERS.
(a) Generally. The Board of Directors, as set forth
below, shall appoint officers of the Company ("OFFICERS"), who shall (together
with the Directors) constitute "managers" of the Company for the purposes of the
Act. Unless provided otherwise by resolution of the Board of Directors, the
Officers shall have the titles, power, authority and duties described below in
this Section 6.03.
(b) Titles and Number. The Officers of the Company shall
be the Chairman of the Board (unless the Board of Directors provides otherwise),
the Vice Chairman and Chief Executive Officer, the President and Chief Operating
Officer, any and all Vice Presidents, the Secretary, the Chief Financial
Officer, any Treasurer and any and all Assistant Secretaries and Assistant
Treasurers and the Chief Legal Officer. There shall be appointed from time to
time such Vice Presidents, Secretaries, Assistant Secretaries, Treasurers and
Assistant Treasurers as the Board of Directors may desire. Any person may hold
two or more offices.
14
(c) Appointment and Term of Office. The Officers shall be
appointed by the Board of Directors at such time and for such term as the Board
of Directors shall determine. Any Officer may be removed, with or without cause,
only by the Board of Directors. Vacancies in any office may be filled only by
the Board of Directors.
(d) President and Chief Operating Officer. Subject to the
limitations imposed by this Agreement, any employment agreement, any employee
plan or any determination of the Board of Directors, the President, subject to
the direction of the Board of Directors, shall be responsible for the management
and direction of the day-to-day business and affairs of the Company, its other
Officers, employees and agents, shall supervise generally the affairs of the
Company and shall have full authority to execute all documents and take all
actions that the Company may legally take. The President and Chief Operating
Officer shall exercise such other powers and perform such other duties as may be
assigned to him by this Agreement or the Board of Directors, including any
duties and powers stated in any employment agreement approved by the Board of
Directors.
(e) Vice Chairman and Chief Executive Officer. Subject to
the limitations imposed by this Agreement, any employment agreement, any
employee plan or any determination of the Board of Directors, the Vice Chairman
and Chief Executive Officer, subject to the direction of the Board of Directors,
shall be responsible for the management and direction of the day-to-day business
and affairs of the Company, its other officers, employees and agents, shall
supervise generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally take.
The Vice Chairman and Chief Executive Officer shall exercise such other powers
and perform such other duties as may be assigned to him by this Agreement or the
Board of Directors, including any duties and powers stated in any employment
agreement approved by the Board of Directors.
(f) Vice Presidents. In the absence of the President,
each Vice President appointed by the Board of Directors shall have all of the
powers and duties conferred upon the President, including the same power as the
President to execute documents on behalf of the Company. Each such Vice
President shall perform such other duties and may exercise such other powers as
may from time to time be assigned to him by the Board of Directors or the
President.
(g) Secretary and Assistant Secretaries. The Secretary
shall record or cause to be recorded in books provided for that purpose the
minutes of the meetings or actions of the Board of Directors, shall see that all
notices are duly given in accordance with the provisions of this Agreement and
as required by law, shall be custodian of all records (other than financial),
shall see that the books, reports, statements, certificates and all other
documents and records required by law are properly kept and filed, and, in
general, shall perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by this Agreement,
the Board of Directors or the President. The Assistant Secretaries shall
exercise the powers of the Secretary during that Officer's absence or inability
or refusal to act.
(h) Chief Financial Officer. The Chief Financial Officer
shall keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of account of the Company. He shall receive and
deposit all moneys and other valuables belonging to the
15
Company in the name and to the credit of the Company and shall disburse the same
and only in such manner as the Board of Directors or the appropriate Officer of
the Company may from time to time determine, shall render to the Board of
Directors and the President, whenever any of them request it, an account of all
his transactions as Chief Financial Officer and of the financial condition of
the Company, and shall perform such further duties as the Board of Directors or
the President may require. The Chief Financial Officer shall have the same power
as the President to execute documents on behalf of the Company.
(i) Treasurer and Assistant Treasurers. The Treasurer
shall have such duties as may be specified by the Chief Financial Officer in the
performance of his duties. The Assistant Treasurers shall exercise the power of
the Treasurer during that Officer's absence or inability or refusal to act. Each
of the Assistant Treasurers shall possess the same power as the Treasurer to
sign all certificates, contracts, obligations and other instruments of the
Company. If no Treasurer or Assistant Treasurer is appointed and serving or in
the absence of the appointed Treasurer and Assistant Treasurer, the Senior Vice
President, or such other Officer as the Board of Directors shall select, shall
have the powers and duties conferred upon the Treasurer.
(j) Chief Legal Officer. The Chief Legal Officer, subject
to the discretion of the Board of Directors, shall be responsible for the
management and direction of the day-to-day legal affairs of the Company. The
Chief Legal Officer shall perform such other duties and may exercise such other
powers as may from time to time be assigned to him by the Board of Directors or
the President.
(k) Powers of Attorney. The Company may xxxxx xxxxxx of
attorney or other authority as appropriate to establish and evidence the
authority of the Officers and other persons.
(l) Delegation of Authority. Unless otherwise provided by
resolution of the Board of Directors, no Officer shall have the power or
authority to delegate to any person such Officer's rights and powers as an
Officer to manage the business and affairs of the Company.
(m) Officers. The Board of Directors shall appoint
Officers of the Company to serve from the date hereof until the death,
resignation or removal by the Board of Directors with or without cause of such
officer.
6.04 DUTIES OF OFFICERS AND DIRECTORS. Except as otherwise
specifically provided in this Agreement, the duties and obligations owed to the
Company and to the Board of Directors by the Officers of the Company and by
members of the Board of Directors of the Company shall be the same as the
respective duties and obligations owed to a corporation organized under the
Delaware General Corporation Law by its officers and directors, respectively.
6.05 COMPENSATION. The members of the Board of Directors that are
neither Officers nor employees of the Company shall be entitled to compensation
as directors and committee members as approved by the Board and shall be
reimbursed for out-of-pocket expenses incurred in connection with attending
meetings of the Board of Directors or committees thereof.
6.06 INDEMNIFICATION.
16
(a) To the fullest extent permitted by Law but subject to
the limitations expressly provided in this Agreement, each person shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which any such person may be involved, or is threatened to be involved, as a
party or otherwise, by reason of such person's status as (i) a present or former
member of the Board of Directors or any committee thereof, (ii) a present or
former Member, (iii) a present or former Officer, or (iv) a Person serving at
the request of the Company in another entity in a similar capacity as that
referred to in the immediately preceding clauses (i) or (iii), provided, that in
each case the Person described in the immediately preceding clauses (i), (ii),
(iii) or (iv) ("INDEMNITEE") acted in good faith and in a manner which such
Indemnitee believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal proceeding, had no reasonable cause to
believe such Indemnitee's conduct was unlawful or in violation of the terms of
this Agreement. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the Indemnitee acted in a manner
contrary to that specified above. Any indemnification pursuant to this Section
6.06 shall be made only out of the assets of the Company.
(b) To the fullest extent permitted by law, expenses
(including reasonable legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.06(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount if it shall be determined that the Indemnitee is not entitled
to be indemnified as authorized in this Section 6.06.
(c) The indemnification provided by this Section 6.06
shall be in addition to any other rights to which an Indemnitee may be entitled
under any agreement, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as (i) a present or former member of the Board of
Directors or any committee thereof, (ii) a present or former Member, (iii) a
present or former Officer of the Company, or (iv) a Person serving at the
request of the Company in another entity in a similar capacity as that referred
to in the immediately preceding clauses (i) or (iii), and as to actions in any
other capacity, and shall continue as to an Indemnitee who has ceased to serve
in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, on
behalf of the members of the Board of Directors, the Officers and such other
persons as the Board of Directors shall determine, against any liability that
may be asserted against or expense that may be incurred by such person in
connection with the Company's activities, regardless of whether the Company
would have the power to indemnify such person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 6.06, the Company shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the
17
performance by the Indemnitee of such Indemnitee's duties to the Company also
imposes duties on, or otherwise involves services by, the Indemnitee to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute "fines" within the meaning of Section 6.06(a); and action taken
or omitted by the Indemnitee with respect to an employee benefit plan in the
performance of such Indemnitee's duties for a purpose reasonably believed by
such Indemnitee to be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is in, or not opposed to, the
best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 6.06 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.06 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons.
(h) No amendment, modification or repeal of this Section
6.06 or any provision hereof shall in any manner terminate, reduce or impair
either the right of any past, present or future Indemnitee to be indemnified by
the Company or the obligation of the Company to indemnify any such Indemnitee
under and in accordance with the provisions of this Section 6.06 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may be
asserted.
(i) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN
THIS SECTION 6.06 ARE INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS
HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE
CONSEQUENCES OF SUCH PERSON'S NEGLIGENCE, FAULT OR OTHER CONDUCT.
6.07 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, no Indemnitee shall be liable for monetary damages to the
Company, the Members or any other Person for losses sustained or liabilities
incurred as a result of any act or omission constituting a breach of such
Indemnitee's fiduciary duty if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as set forth in
this Article 6, the Board of Directors and any committee thereof may exercise
any of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through the Company's
Officers or agents, and neither the Board of Directors nor any committee thereof
shall be responsible for any misconduct or negligence on the part of any such
Officer or agent appointed by the Board of Directors or any committee thereof in
good faith.
(c) Any amendment, modification or repeal of this Section
6.07 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on
18
liability under this Section 6.07 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may be asserted.
ARTICLE 7
TAX MATTERS
7.01 TAX RETURNS.
(a) The Board of Directors shall cause to be prepared and
timely filed (on behalf of the Company) all federal, state and local tax returns
required to be filed by the Company, including making the elections described in
Section 7.02. Upon written request by the Company, each Member shall furnish to
the Board of Directors all pertinent information in its possession relating to
the Company's operations that is necessary to enable the Company's tax returns
to be timely prepared and filed. The Company shall deliver a copy of each such
tax return to the Members within ten Days following the date on which of any
such tax return is filed, together with such additional information as may be
required by the Members. The Company shall bear the costs of the preparation and
filing of its returns.
(b) The Board of Directors shall cause to be prepared and
timely filed (on behalf of the MLP) all federal, state and local tax returns
required to be filed by the MLP. The Company shall deliver a copy of each such
tax return to the Members within ten Days following the date on which any such
tax return is filed, together with such additional information as may be
required by the Members.
7.02 TAX ELECTIONS. The Company shall make the following elections
on the appropriate tax returns:
(a) to adopt as the Company's fiscal year the calendar
year;
(b) to adopt the accrual method of accounting;
(c) if a distribution of the Company's property as
described in Code Section 734 occurs or if a transfer of Membership Interest as
described in Code Section 743 occurs, on request by notice from any Member, to
elect, pursuant to Code Section 754, to adjust the basis of the Company's
properties;
(d) to elect to amortize the organizational expenses of
the Company ratably over a period of 60 months as permitted by Section 709(b) of
the Code; and
(e) any other election the Board of Directors may deem
appropriate.
Neither the Company nor any Member shall make an election for the Company to be
excluded from the application of the provisions of subchapter K of chapter 1 of
subtitle A of the Code or any similar provisions of applicable state law and no
provision of this Agreement (including Section 2.06) shall be construed to
sanction or approve such an election. If an election is made
19
under Code Section 754 as provided in clause (c) above, such election may not be
revoked without the consent of all Members.
7.03 TAX MATTERS MEMBER.
(a) Enterprise Parent 1 shall be the "tax matters member"
of the Company pursuant to Section 6231(a)(7) of the Code (the "TAX MATTERS
MEMBER"). The Tax Matters Member shall take such action as may be necessary to
cause to the extent possible each other Member to become a "notice partner"
within the meaning of Section 6223 of the Code and will inform each other Member
of all significant matters that may come to its attention in its capacity as Tax
Matters Member by giving notice thereof on or before the 30th Business Day after
becoming aware thereof and, within that time, will forward to each other Member
copies of all significant written communications it may receive in that
capacity.
(b) The Tax Matters Member shall take no action
(including settling or compromising any material state tax return on behalf of
the Company or the MLP or settling or compromising any material claim with
respect to taxes of the Company or the MLP) without the authorization of the
Board of Directors, other than such action as may be required by Law. Any cost
or expense incurred by the Tax Matters Member in connection with its duties,
including the preparation for or pursuance of administrative or judicial
proceedings, shall be paid by the Company.
(c) The Tax Matters Member shall not enter into any
extension of the period of limitations for making assessments on behalf of the
Members without first obtaining the consent of the Board of Directors. The Tax
Matters Member shall not bind any Member to a settlement agreement without
obtaining the consent of such Member. Any Member that enters into a settlement
agreement with respect to any Company item (as described in Code Section
6231(a)(3)) shall notify the other Members of such settlement agreement and its
terms within 90 Days from the date of the settlement.
(d) No Member shall file a request pursuant to Code
Section 6227 for an administrative adjustment of Company items for any taxable
year without first notifying the other Members. If the Board of Directors
consents to the requested adjustment, the Tax Matters Member shall file the
request for the administrative adjustment on behalf of the Members. If such
consent is not obtained within 30 Days from such notice, or within the period
required to timely file the request for administrative adjustment, if shorter,
any Member, including the Tax Matters Member, may file a request for
administrative adjustment on its own behalf. Any Member intending to file a
petition under Code Sections 6226, 6228 or other Code Section with respect to
any item involving the Company shall notify the other Members of such intention
and the nature of the contemplated proceeding. In the case where the Tax Matters
Member is the Member intending to file such petition on behalf of the Company,
such notice shall be given within a reasonable period of time to allow the other
Members to participate in the choosing of the forum in which such petition will
be filed.
(e) If any Member intends to file a notice of
inconsistent treatment under Code Section 6222(b), such Member shall give
reasonable notice under the circumstances to the
20
other Members of such intent and the manner in which the Member's intended
treatment of an item is (or may be) inconsistent with the treatment of that item
by the other Members.
ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 MAINTENANCE OF BOOKS.
(a) The Board of Directors shall keep or cause to be kept
at the principal office of the Company or at such other location approved by the
Board of Directors complete and accurate books and records of the Company,
supporting documentation of the transactions with respect to the conduct of the
Company's business and minutes of the proceedings of the Board of Directors and
any other books and records that are required to be maintained by applicable
Law.
(b) The books of account of the Company shall be
maintained on the basis of a fiscal year that is the calendar year and on an
accrual basis in accordance with generally accepted accounting principles,
consistently applied.
8.02 REPORTS. The Board of Directors shall cause to be prepared and
delivered to each Member such reports, forecasts, studies, budgets and other
information as the Members may reasonably request from time to time. Each of the
Members agrees that, notwithstanding the foregoing or any other provision of
this Agreement or the Act to the contrary, to the extent permitted under
applicable Law, the Board of Directors and the Company shall have the right to
withhold from any Member any competitively sensitive information, plans or
reports regarding the business, operations or plans of the Company or the MLP,
and each Member hereby waives any right to demand a disclosure of such
information, plans or reports.
8.03 BANK ACCOUNTS. Funds of the Company shall be deposited in such
banks or other depositories as shall be designated from time to time by the
Board of Directors. All withdrawals from any such depository shall be made only
as authorized by the Board of Directors and shall be made only by check, wire
transfer, debit memorandum or other written instruction.
8.04 TAX STATEMENTS. The Company shall use reasonable efforts to
furnish, within 90 Days of the close of each taxable year of the Company,
estimated tax information reasonably required by the Members for federal and
state income tax reporting purposes.
ARTICLE 9
DISPOSITIONS
9.01 DISPOSITIONS OF MEMBERSHIP INTERESTS. Except to the extent
expressly permitted by this Article 9, no Member may Dispose of all or any part
of a Membership Interest. Unless otherwise provided herein, references in this
Section 9.01 to Dispositions of a "Membership Interest" shall also refer to
Dispositions of a portion of a Membership Interest. Any attempted transfer, sale
or other Disposition of all or any part of a Membership Interest, other than in
strict accordance with this Article 9, shall be, and is hereby declared, null
and void ab initio. The Members agree that a breach of the provisions of this
Article 9 may cause irreparable injury to the Company and to the other Members
for which monetary damages (or other remedies at law) are inadequate in view of
(a) the complexities and uncertainties in measuring the actual damages
21
that would be sustained by reason of the failure of a Member to comply with such
provisions and (b) the uniqueness of the Company's business and the relationship
among the Members. Accordingly, the Members agree that the provisions of this
Article 9 may be enforced by specific performance. If, subject to its compliance
with Article 9, El Paso GP Holdco elects to Dispose of all (but not less than
all) of its Membership Interests in the Company to any Transferee, such
Transferee shall succeed to all of El Paso GP Holdco's rights and obligations
under this Agreement, including (i) the Member approval rights pursuant to
Section 6.01(b), (ii) the drag-along and tag-along rights pursuant to Section
9.05 and (iii) its consent rights in respect of amendments of this Agreement
pursuant to Section 13.04.
9.02 PERMITTED DISPOSITIONS OF MEMBERSHIP INTERESTS AND GENERAL
RESTRICTIONS.
(a) Permitted Dispositions. El Paso GP Holdco (and any
Transferee thereof admitted as a Substituted Member pursuant to this Section
9.02) may Dispose of all (but not less than all) of its Membership Interest, and
any other Member (and any Transferee thereof admitted as a Substituted Member
pursuant to Section 9.02) may Dispose of all or any portion of its Membership
Interest, to its Parent or any Subsidiary Affiliate of its Parent (such
Transferee, a "PERMITTED TRANSFEREE"), and such Permitted Transferee will,
subject to Section 9.02(b), be admitted as a Substituted Member and be bound by
the terms and conditions of this Agreement. The restrictions in (i) this Section
9.02 shall not apply in the case of a merger or consolidation involving the
entire Company, which requires approval pursuant to Section 6.01(b), (ii)
Sections 9.03, 9.04 and 9.05 shall not apply to Dispositions to Permitted
Transferees and (iii) Sections 9.03 and 9.04 (other than Section 9.04(c)) shall
not apply to any Dispositions by Enterprise Parent or its Permitted Transferees
admitted as Substituted Members pursuant to this Section 9.02.
(b) Admission of Transferee as a Member. Upon compliance
with the provisions of this Section 9.02(b) and the other provisions of Article
9, a Transferee has the right to be admitted to the Company as a Member (in such
capacity, a "SUBSTITUTED MEMBER"), with the Disposed Membership Interest so
transferred to such Transferee.
(i) Any Disposition of a Membership Interest and
any admission of a Transferee as a Member shall be subject to the
following requirements, and such Disposition shall not be effective
unless such requirements are complied with; provided, however, that the
Board of Directors, in its sole and absolute discretion, may waive any
of the following requirements:
(A) The following documents must be
delivered to the Board of Directors and must be reasonably
satisfactory, in form and substance, to the Board of
Directors:
(I) A copy of the instrument
pursuant to which the Disposition is effected.
(II) An instrument, executed by
the Disposing Member and its Transferee, containing
the following information and agreements, to the
extent they are not contained in the instrument
described in
22
Section 9.02(b)(i)(A)(I): (a) the notice address of
the Transferee; (b) the Transferee's ratification of
this Agreement and agreement to be bound by it and
assumption of all of the transferor Member's
liabilities under this Agreement; (c) representations
and warranties by the Disposing Member and its
Transferee that the Disposition is being made in
accordance with all applicable Laws; and (d)
representations and warranties of the Transferee
similar to those contained in Section 10.01 hereof.
(B) The Disposition must be made
pursuant to a valid exemption from registration under those
Laws and in accordance with those Laws.
(C) The Disposing Member and its
Transferee shall pay, or reimburse the Company for, all
reasonable costs and expenses incurred by the Company in
connection with the Disposition, on or before the tenth
Business Day after the receipt by that Person of the Company's
invoice for the amount due.
(ii) No Disposition of a Membership Interest
shall effect a release of the Disposing Member from any liabilities to
the Company or the other Members arising from events occurring prior to
the Disposition.
(c) Clarification Regarding Transfer of Equity Interests
in Members. The Disposition by the equity owner(s) of a Member of all or any
portion of the equity interests in such Member shall not constitute a
Disposition of a Membership Interest for purposes of this Agreement.
(d) Special Restrictions applicable to El Paso GP Holdco.
El Paso GP Holdco (and any Transferee thereof admitted as a Substituted Member
pursuant to this Section 9.02) may (i) only Dispose of its Membership Interest
in its entirety and not in part (by operation of Law or otherwise), and the
Transferee thereof must be and remain a single Person, (ii) not Dispose of its
Membership Interest (other than to a Permitted Transferee or pursuant to Section
9.05) prior to the 180th day following the Effective Date unless Enterprise
Parent has given its prior written consent to such Disposition, which consent
may be granted or withheld in the sole discretion of Enterprise Parent and (iii)
Dispose of its Membership Interest to a Competitor only if Enterprise Parent has
given its prior written consent to such Disposition, which consent shall not be
unreasonably withheld; provided, that from and after such Disposition to a
Competitor (A) any rights granted to El Paso GP Holdco (or such Transferee)
pursuant to Section 6.01(b) shall terminate in full, and any action set forth in
Section 6.01(b) shall thereafter only require the consent of Enterprise Parent,
(B) any rights granted to El Paso GP Holdco (or such Transferee) in Section
9.05(a) shall terminate in full and El Paso GP Holdco (or such Transferee) shall
have no further rights thereunder, and (C) the right of the Company to compel El
Paso GP Holdco to exchange its Membership Interest pursuant to Article II of the
Exchange Agreement in accordance with Section 2.5(b) of the Exchange Agreement
shall be accelerated and shall be exercisable at any time from and after
Enterprise Parent's consent is given. The restriction set forth in Section
9.02(d)(ii) shall terminate and be of no further force and effect upon the
occurrence of any of the events described in Section 2.5(c) of the Exchange
Agreement.
23
(e) If any Exchange pursuant to the Exchange Agreement is
treated as a redemption of the Membership Interest of El Paso GP Holdco (and any
Transferee thereof admitted as a Substituted Member pursuant to this Section
9.02), upon such Exchange, the Sharing Ratio of El Paso GP Holdco (or such
Transferee) shall be reduced, and the Sharing Ratios of Enterprise Parent (and
any Transferee thereof admitted as a Substituted Member pursuant to this Section
9.02) shall be increased (proportionately among all such Members), by the amount
of the Membership Interest so Exchanged.
9.03 PREFERENTIAL PURCHASE RIGHT.
(a) Procedure. If at any time El Paso GP Holdco or any of
its Transferees admitted as Substituted Members pursuant to Section 9.02
proposes to Dispose of its Membership Interest to anyone other than a Permitted
Transferee, it shall promptly give notice thereof ("DISPOSITION NOTICE") to the
other Members. Such Disposition Notice shall constitute an offer to sell such
Membership Interest in accordance with this Section 9.03. The Disposition Notice
shall include as an attachment the purchase and sale agreement entered into by
the Disposing Member, which shall set forth all relevant information with
respect to the bona fide third party offer received by the Member (which offer
shall be a legal, valid and binding obligation of the potential Transferee) and
the proposed Disposition, including the name and address of the prospective
Transferee, the price to be paid for such Membership Interest, any other terms
and conditions of the offer and proposed Disposition and, if any portion of the
purchase price is to be paid in Non-Cash Consideration, the information required
by Section 9.03(d). The non-Disposing Members shall have the preferential right
("PREFERENTIAL RIGHT") but not the obligation to acquire in proportion to their
ownership of the Company, or as otherwise agreed among such non-Disposing
Members, all, but not less than all, of the Membership Interest that is subject
to Disposition for 103% of the purchase price proposed to be paid by the
potential Transferee pursuant to the immediately preceding sentence (the
"PREFERENTIAL PURCHASE PRICE") (which, in the case of Non-Cash Consideration,
shall be deemed to be 103% of the fair market value of such Non-Cash
Consideration as determined in accordance with Section 9.03(d)), and on the same
terms and conditions (other than the purchase price, which shall instead be the
Preferential Purchase Price), as are set forth in the Disposition Notice. Each
non-Disposing Member shall have 15 Business Days following the receipt of the
Disposition Notice in which to notify the Disposing Member and the Company
whether it desires to exercise its Preferential Right, and if it fails to so
exercise within such 15 Business Day period, such Member shall be deemed to have
waived its Preferential Right (but not any future Preferential Right).
(b) Closing. If the Preferential Right is exercised in
accordance with Section 9.03(a), the closing of the purchase of the Membership
Interest shall occur at the principal place of business of the Company on the
terms set forth in the Disposition Notice, unless the Disposing Member and the
purchasing Member agree upon a different place or date. At the closing, the
Disposing Member shall execute and deliver to the purchasing Member an
assignment of the Membership Interest that is subject to Disposition, free and
clear of Encumbrances other than those created pursuant to this Agreement or the
purchasing Member and any other instruments reasonably requested by the
purchasing Member to give effect to the purchase. The purchasing Member shall
deliver to the Disposing Member in immediately available funds the purchase
price provided for in Section 9.03(a). Upon the completion of the closing of the
purchase, the
24
Membership Interests, Sharing Ratios and Capital Accounts of the Members shall
be deemed adjusted to reflect the effect of the purchase.
(c) Waiver of Preferential Right. If the Non-Disposing
Members waive or are deemed to have waived the Preferential Right, the Disposing
Member shall have the right to Dispose of the Membership Interest described in
the Disposition Notice to the proposed Transferee strictly in accordance with
the Disposition Notice for a period of 15 Business Days after the expiration of
the last applicable period referred to in such Section 9.03(a). If, however, the
Disposing Member fails so to Dispose of its Membership Interest within such
15-Business Day period, the proposed Disposition shall again become subject to
the Preferential Right in accordance with Section 9.03(a).
(d) Non-Cash Consideration. If any portion of the
purchase price is to be paid in a form other than cash or cash equivalents
(including real or personal property, promissory notes, securities, contractual
benefits, assumption of liabilities or anything else of value) ("NON-CASH
CONSIDERATION"), the Disposing Member shall state in its Disposition Notice its
determination of the aggregate fair market value of such Non-Cash Consideration.
If any non-Disposing Member disagrees with such determination, it shall notify
the Disposing Member of such disagreement within ten Business Days of receiving
the Disposition Notice. If a dispute as to the aggregate fair market value of
the Non-Cash Consideration is not resolved within five Business Days after such
notice, the Disposing Member or any non-Disposing Member may require an
appraisal by delivering a written notice ("APPRAISAL NOTICE") requesting an
independent appraisal. In such event, the value of the Non-Cash Consideration
shall be determined by one investment banking firm of nationally-recognized
standing, agreed upon by the Disposing Member and the non-Disposing Members
objecting to the fair market value of the Non-Cash Consideration stated in the
Disposition Notice, or, failing such agreement, appointed by the Presiding Judge
of the United States District Court for the Southern District of Texas, Houston
Division, pursuant to a petition to compel appraisal. The fair market value of
the Non-Cash Consideration shall be the amount determined by the investment
banking firm selected in accordance with the immediately preceding sentence. The
Disposing Member, on the one hand, and the non-Disposing Members who have
disagreed with the Disposing Member's determination of the aggregate fair market
value of the Non-Cash Consideration, on the other hand, shall bear the expenses
associated with any such appraisal equally.
9.04 CHANGE OF MEMBER CONTROL.
(a) Procedure. In the event of a Change of Member
Control, the Member with respect to which the Change of Member Control has
occurred (the "CHANGING MEMBER") shall promptly (and in all events within five
Business Days after the Change of Member Control) give notice thereof ("CONTROL
NOTICE") to the Company and the other Members. If the Control Notice is not
given by the Changing Member as provided above and any other Member becomes
aware of such Change of Member Control, such other Member shall have the right
to give the Control Notice to the Changing Member, the Company and the other
Members.
(b) Buy-out Right. If a Control Notice is given in
accordance with Section 9.04(a) that involves or relates to a Change of Member
Control of El Paso GP Holdco (or any Transferee thereof admitted as a
Substituted Member pursuant to Section 9.02), then the
25
Company, first, and the other Members, second, shall have the right ("BUY-OUT
RIGHT") but not the obligation to acquire the Membership Interest of the
Changing Member for the fair market value thereof. For purposes of this Section
9.04, fair market value means the cash value for which a third-party buyer and
third-party seller under no compulsion would be willing to buy or sell the
Membership Interest of the Changing Member. The Changing Member shall deliver
its proposed fair market value ("FMV NOTICE") of its Membership Interest to the
Company and the other Members within five Business Days after the delivery of
the Control Notice. The Company and each Member shall have 15 Business Days
after receipt of the FMV Notice to dispute the fair market value set forth
therein by notice to the Changing Member. If the Company or any other Member
disputes the fair market value set forth in the FMV Notice, then the parties
shall attempt to resolve such dispute. If such dispute is not resolved within 15
Business Days after delivery of the dispute notice, then the fair market value
of the Changing Member's Membership Interest shall be determined by one
investment banking firm of nationally-recognized standing, agreed upon by the
Company, the Changing Member and the other Members or failing such agreement,
appointed by the Presiding Judge of the United States District Court for the
Southern District of Texas, Houston Division, pursuant to a petition to compel
appraisal. If such dispute is submitted to the investment banking firm selected
in accordance with the immediately preceding sentence, the fair market value of
the Changing Member's Membership Interest shall be the amount determined by such
investment banking firm. The fair market value of the Changing Member's
Membership Interest determined as set forth in this Section 9.04(a) shall be the
"FAIR MARKET VALUE." The Changing Member shall pay the expenses associated with
any such appraisal. The following procedures shall govern the exercise and
closing of the Buy-out Right:
(i) Company Right. The Company shall have the
right but not the obligation to acquire all, but not less than all, of
the Changing Member's Membership Interest at the Fair Market Value. The
Company shall have 15 Business Days following the determination of the
Fair Market Value in which to notify the Members whether the Company
desires to exercise its Buy-out Right. If the Company fails to exercise
its Buy-out Right during such 15 Business Day period, then the
Company's Buy-out Right shall be deemed to have been waived for the
subject Change of Member Control, but not for any future Change of
Member Control.
(ii) Non-Changing Members Right. If the Company
fails to exercise its Buy-out Right within 15 Business Days following
the determination of the Fair Market Value, each Member (excluding the
Changing Member) shall have the right (but not the obligation) to
acquire a portion of the applicable Membership Interest that is equal
to a fraction, the numerator of which is the Sharing Ratio attributable
to the Membership Interest held by such non-Changing Member as of the
date of the Control Notice and the denominator of which is the
aggregate Sharing Ratios for all Membership Interests held by the
non-Changing Members as of the date of the Control Notice. Each Member
(other than the Changing Member) shall have 15 Business Days following
the determination of the Fair Market Value of such Membership Interest
in which to notify the other Members (including the Changing Member)
whether such Member desires to exercise its Buy-out Right. A notice in
which a Member exercises such Buy-out Right is referred to herein as a
"CHANGE EXERCISE NOTICE," and a Member that delivers a Change Exercise
Notice is referred to herein as a "CHANGE PURCHASING MEMBER." A Member
that fails to exercise
26
its Buy-out Right during such 15 Business Day period shall be deemed to
have waived such right for the subject Change of Member Control, but
not any right for any future Change of Member Control. If the Change
Purchasing Members constitute less than all of the Members (other than
the Changing Member), and consequently, there is a portion of the
Changing Member's Membership Interest for which such Buy-out Right has
not been exercised ("CHANGE UNEXERCISED PORTION"), then each Change
Purchasing Member shall have three Business Days following the end of
such 15 Business Day period in which to notify the other Change
Purchasing Members and the Changing Member whether it desires to
acquire the portion of the Change Unexercised Portion that is equal to
a fraction, the numerator of which is the Sharing Ratio attributable to
the Membership Interest held by such Change Purchasing Member and the
denominator of which is the aggregate Sharing Ratios for the Membership
Interests held by all Change Purchasing Members. If, at the end of such
three Business Day period, there remains a Change Unexercised Portion,
then the Change Purchasing Members shall have an additional three
Business Day period in which to negotiate among themselves for a
mutually-agreeable method of sharing the acquisition of the remaining
Change Unexercised Portion. If the Change Purchasing Members are able
to reach such agreement during such three Business Day period or if
there is no longer a Change Unexercised Portion, then the Buy-out Right
shall be deemed exercised by the Change Purchasing Members, and the
Changing Member and the Change Purchasing Members shall close the
acquisition of the Membership Interest in accordance with Section
9.04(b)(iii). If, however, the Change Purchasing Members are unable to
reach such agreement during such three Business Day period, then the
Buy-out Right shall be deemed to have been waived by the Change
Purchasing Members. A Member that fails to exercise a right during any
applicable period set forth in this Section 9.04(b)(ii) shall be deemed
to have waived such right for the subject Change of Member Control, but
not any right for any future Change of Member Control.
(iii) Closing. If the Buy-out Right is exercised
in accordance with Section 9.04(b)(i) or (ii), the closing of the
purchase of the Membership Interest shall occur at the principal place
of business of the Company on the 30th Day after the expiration of the
last applicable period referred to in such Section 9.04(b)(i) or (ii)
(or such longer period as may be necessary to comply with any waiting
periods imposed by Governmental Authorities or to receive any approvals
required by Law, such period not to exceed 180 days after the last
applicable period referred to in Section 9.04(b)(i) or (ii), unless the
Changing Member and the Company or the Change Purchasing Members, as
applicable, agree upon a different place or date. At the closing, the
Changing Member shall execute and deliver to the Company or the Change
Purchasing Members, as applicable, an assignment of the Membership
Interest that is subject to such Change of Member Control free and
clear of Encumbrances, other than those created by this Agreement or by
the Change Purchasing Members, and any other instruments reasonably
requested by the Company or the Change Purchasing Members, as
applicable, to give effect to the purchase. The Company or the Change
Purchasing Members, as applicable, shall deliver to the Changing Member
in immediately available funds the purchase price provided for in
Section 9.04(b), and the Membership Interests, Sharing Ratios and
Capital Accounts of the Members shall be deemed adjusted to reflect the
effect of the purchase.
27
(c) Exchange Right. If a Control Notice is given in
accordance with Section 9.04(a) that involves or relates to a Change of Member
Control of Enterprise Parent (or Permitted Transferees thereof admitted as
Substituted Members pursuant to Section 9.02) such that following such Change of
Member Control, Enterprise Parent Controls 50% or less of the total Membership
Interests outstanding after such Change of Member Control, El Paso GP Holdco (or
a Transferee thereof admitted as a Substituted Member pursuant to Section 9.02)
shall have the right to elect to exercise its Exchange Right under Article II of
the Exchange Agreement to exchange all of its Membership Interest for Common
Units (without regard to the Section 16 Cap), which Exchange Right shall be
exercisable whether or not otherwise then exercisable under the terms and
provisions of the Exchange Agreement.
9.05 TAG-ALONG AND DRAG-ALONG RIGHTS.
(a) El Paso GP Holdco Tag-Along Rights. If either or both
of Enterprise Parent 1 or Enterprise Parent 2 (or a Transferee thereof admitted
as a Substituted Member pursuant to Section 9.02) (singly or collectively, the
"TAG-INITIATING MEMBER") proposes to Dispose of any of their Membership
Interests, other than to a Permitted Transferee pursuant to Section 9.02 or in a
transaction subject to Section 9.05(b) (such proposed Disposal is referred to
herein as a "PROPOSED TAG-ALONG DISPOSITION"), the Tag-Initiating Member shall
offer (the "TAG-ALONG OFFER") to El Paso GP Holdco (or its Transferees admitted
as Substituted Members pursuant to Section 9.02) (the "TAG-ALONG MEMBER") to
include in the Proposed Tag-Along Disposition a pro rata portion of the
Membership Interests owned by the Tag-Along Member (the "PRO RATA TAG-ALONG
MEMBERSHIP INTEREST"). The mechanics for a Tag-Along Offer are as follows:
(i) The Tag-Along Offer shall be made in writing
and shall specify the name of the proposed Transferee, the Membership
Interest to be Disposed of by the Tag-Initiating Member to such
proposed Transferee, the material terms of such Proposed Tag-Along
Disposition, including the amount and type of consideration to be
received therefor and the anticipated place and date on which the
Proposed Tag-Along Disposition is to be consummated;
(ii) For the avoidance of doubt, the Pro Rata
Tag-Along Membership Interest to be included in Proposed Tag-Along
Transaction shall be calculated by multiplying the total Membership
Interests held by the Tag-Along Member by a fraction, the numerator of
which is the Membership Interest to be Disposed of by the
Tag-Initiating Member and the denominator of which is the
Tag-Initiating Member's total Membership Interest;
(iii) If the Tag-Along Member wishes to include
its Pro Rata Tag Along Membership Interest in the Proposed Tag-Along
Disposition in accordance with the terms of this Section 9.05(a) (the
"TAG-ALONG ELECTING MEMBER"), such Tag-Along Electing Member shall so
notify the Tag-Initiating Member not more than fifteen (15) days after
its receipt of the Tag-Along Offer ("TAG-ALONG ACCEPTANCE NOTICE"). The
Tag-Along Offer shall be conditioned upon the Tag-Initiating Member's
Disposition of its Pro Rata Tag Along Membership Interest pursuant to
the transaction(s) contemplated therein with the proposed Transferee
named therein. If any Tag-Along Member timely
28
accepts the Tag-Along Offer in accordance with this Section 9.05(a),
then the Tag-Initiating Member shall permit the Tag-Along Electing
Member to sell its Pro Rata Tag Along Membership Interest under this
Section 9.05(a), and the Tag-Initiating Member and the Tag-Along
Electing Member (collectively, the "SELLING MEMBERS") shall sell the
Membership Interests specified in the Tag-Along Offer to the proposed
Transferee in accordance with the terms set forth therein; provided,
however, that the Tag-Initiating Member may elect in its sole
discretion (and shall not otherwise be deemed to owe any duty or
responsibility to the Tag-Along Electing Member to proceed) to
terminate or otherwise not to sell its Membership Interest in the
Proposed Tag-Along Disposition, in which case, the obligations under
this Section 9.05(a) in respect of such Proposed Tag-Along Disposition
shall cease;
(iv) If the proposed consideration to be paid to
the Selling Members by the non-Affiliate purchaser in the Proposed
Tag-Along Disposition does not consist entirely of cash and/or
marketable securities, then a Tag-Along Electing Member may elect to
receive, in lieu of such other consideration, cash equal to the fair
market value of such consideration. If the Tag-Initiating Member and
the Tag-Along Electing Member do not agree on the fair market value of
such consideration within ten (10) days following the date of receipt
of the Tag-Along Acceptance Notice by the Tag-Along Electing Member,
the fair market value of such consideration shall be determined by one
investment banking firm of nationally recognized standing, agreed upon
by the Selling Members or, failing such agreement, appointed by the
Presiding Judge of the United States District Court for the Southern
District of Texas, Houston Division, pursuant to a petition to compel
appraisal. The determination of fair market value of the consideration
by the selected firm, however such firm was selected, shall be final,
binding and conclusive on all parties. The aggregate fees and expenses
of any such firms shall be borne one-half by the Tag-Initiating Member
and one-half by the Tag-Along Electing Member. Such cash election shall
be made in the Tag-Along Acceptance Notice provided by the Tag-Along
Electing Member to the Tag-Initiating Member. Upon receipt of such an
election, the Tag-Initiating Member shall be obligated to pay such
consideration or to cause such consideration to be paid to the
Tag-Along Electing Member in cash; and
(v) If for any reason an agreement for such
Proposed Tag-Along Disposition is not executed by the Selling Members
and the prospective Transferee within one-hundred eighty (180) days
after the date of the Tag-Along Offer or, if so executed, the
transaction with such prospective Transferee thereafter should fail to
close, the Tag-Initiating Member must comply with the provisions set
forth in this Section 9.05(a), to the extent applicable, prior to
making any subsequent Disposition of its Membership Interest.
(b) Enterprise Parent Drag-Along Rights. If either or
both of Enterprise Parent 1 or Enterprise Parent 2 (or a Transferee thereof
admitted as a Substituted Member pursuant to Section 9.02) (singly or
collectively, the "DRAG-INITIATING MEMBER") proposes to Dispose of any of its
Membership Interest, other than to a Permitted Transferee pursuant to Section
9.02, such that, immediately following such Disposition, Enterprise Parent would
retain 50% or less of the total Membership Interests outstanding immediately
after such Disposition (a
29
"PROPOSED DRAG-ALONG DISPOSITION"), the Drag-Initiating Member shall give El
Paso GP Holdco (or any Transferee thereof admitted as a Substituted Member
pursuant to Section 9.02) (the "DRAG-ALONG MEMBER") written notice (the
"DRAG-ALONG NOTICE") not less than thirty (30) days prior to the expected
consummation of the Proposed Drag-Along Transaction. The Drag-Initiating Member
shall have the right (the "DRAG-ALONG RIGHT"), but not the obligation, to
require the Drag-Along Member to sell all, but not less than all, of its
Membership Interest pursuant to this Section 9.05(b). The mechanics of the
Proposed-Drag Along Disposition are as follows:
(i) The Drag-Along Notice shall indicate whether
or not the Drag-Initiating Member is exercising its Drag-Along Right
and shall specify the name of the proposed Transferee, the Membership
Interest to be Disposed of by the Drag-Initiating Member to such
proposed Transferee, the material terms of such Proposed Drag-Along
Disposition, including the amount and type of consideration to be
received therefor and the anticipated place and date on which the
Proposed Drag-Along Disposition is to be consummated;
(ii) if the Drag-Along Notice indicates that the
Drag-Initiating Member is exercising its Drag-Along Right, the
Drag-Along Member will then have 10 days during which to deliver
written notice to the Drag-Initiating Member indicating whether the
Drag-Along Member elects to (A) include all of its Membership Interest
in the Proposed Drag-Along Disposition for the same consideration, on a
pro rata basis, as is to be received by the Drag-Initiating Member for
the Disposition of its Membership Interest or (B) exercise its Exchange
Right under Article II of the Exchange Agreement to exchange all of its
Membership Interest for Common Units (without regard to the Section 16
Cap);
(iii) if the Drag-Along Notice indicates that the
Drag-Initiating Member is not exercising its Drag-Along Right, the
Drag-Along Member will then have the right, exercisable by written
notice to the Drag-Initiating Member on or before the 10th day after
delivery of the Drag-Along Notice, to exercise its Exchange Right under
Article II of the Exchange Agreement to exchange all of its Membership
Interest for Common Units (without regard to the Section 16 Cap);
(iv) if the Drag-Along Member exercises its
Exchange Right under Section 9.05(b)(ii)(B) or 9.05(b)(iii), such
Exchange shall be consummated and Exchange Units shall be issued to the
Drag-Along Member (A) pursuant to the terms of the Exchange Agreement
and (B) at the Drag-Initiating Member's option, prior to or
concurrently with the closing of the Proposed Drag-Along Transaction.
(c) Representations and Warranties; Additional Actions.
If El Paso GP Holdco (or its Transferee admitted as a Substituted Member
pursuant to Section 9.02) shall Dispose of its Membership Interest under Section
9.05(a) or (b), it shall represent and warrant to the Transferee (i) as to its
ownership of such Membership Interests to be Disposed of, (ii) that such
Membership Interests are to be Disposed of free and clear of any Encumbrance and
(iii) as to its power and authority to effect such Disposition. If either the
Tag-Along Electing Member or Drag-Initiating Member elects to exercise its
rights under Section 9.05(a) or (b), respectively,
30
the Tag-Along Electing Member or Drag-Along Member, as applicable, shall take
such actions as may be reasonably required, and otherwise cooperate in good
faith, in connection with consummating the Proposed Tag-Along Disposition or
Proposed Drag-Along Disposition.
(d) Type of Consideration. The provisions of Section
9.05(a) or (b) shall apply regardless of the type of consideration to be
received in the Proposed Tag-Along Disposition or Proposed Drag-Along
Disposition.
(e) Disposition of Membership Interests. If, after
compliance with the provisions of this Section 9.05, any Membership Interests
are Disposed of by a Member to any Person not a party to this Agreement, such
Disposition shall be consummated pursuant to and in compliance with Section
9.02(b). Following such Disposition, the terms "Member" and "Members" shall be
deemed to mean and include such permitted Transferee for all purposes of this
Agreement.
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MEMBERS
10.01 REPRESENTATIONS AND WARRANTIES. Each Member represents and
warrants as of the date hereof that (a) such Member is duly organized or formed,
validly existing, and in good standing under the Law of the state of such
Member's incorporation, organization or formation and is duly qualified and in
good standing under the Law of any states that require such Member to be so
qualified and in good standing in order for the Company to be qualified to do
business therein, (b) such Member has full corporate, limited liability company,
partnership, trust or other applicable power and authority to execute, agree to
and perform such Member's obligations under this Agreement, (c) all necessary
actions by the board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other Persons necessary for the due authorization,
execution, delivery, and performance of this Agreement by such Member have been
duly taken, (d) such Member has duly executed and delivered this Agreement, and
this Agreement is enforceable against such Member in accordance with its terms,
subject to Bankruptcy, moratorium, insolvency and principles of equity, and (e)
such Member's authorization, execution, delivery and performance of this
Agreement does not conflict with any other material agreement or arrangement to
which such Member is a party or by which such Member is bound.
10.02 SUBJECT BUSINESS ACTIVITIES. Nothing in this Agreement, nor
any fiduciary duties, shall prevent Affiliates of the Members from pursuing or
engaging in business opportunities, transactions, ventures or other arrangements
of any nature or description, without the consent of the other Members of the
Company, in which the Company or the MLP or their Controlled Affiliates are
engaged or participating, even if the Member Affiliate's pursuit of or
engagement in such activity places it in direct competition with the Company,
the MLP or their Controlled Affiliates within a relevant market or geographic
location; and no Member, nor any Affiliate of a Member, shall have any
obligation to present any business opportunity to the Company or the other
Members before pursuing or engaging in such opportunity.
10.03 BANKRUPT MEMBERS. If any Member becomes Bankrupt (a "BANKRUPT
MEMBER"), the Company, by approval of Members holding a majority of the
outstanding Membership Interests (excluding any Bankrupt Member) or, if the
Company does not exercise the relevant
31
option, the non-Bankrupt Members which desire to participate, will have the
option, exercisable by notice from the Company or the Members, as the case may
be, to the Bankrupt Member (or its representative) at any time prior to the
180th day after receipt of notice of the occurrence of the event causing it to
become a Bankrupt Member, to buy, and, on the exercise of this option, the
Bankrupt Member or its representative will sell, its Membership Interest. The
purchase price will be an amount equal to the fair market value thereof
determined by agreement by the Bankrupt Member (or its representative) and the
potential purchaser; however, if those Persons do not agree on the fair market
value on or before the 90th day following the date of receipt by such potential
purchaser of notice of the occurrence of the event causing the Member to become
a Bankrupt Member, either such Person, by written notice to the other, may
require the determination of fair market value to be made by an independent
appraiser specified in such notice. If the Person receiving that notice objects
on or before the tenth day following receipt to the independent appraiser
designated in that notice, and those Persons otherwise fail to agree on an
independent appraiser, either such Person may petition the United States
District Judge for the Southern District of Texas then senior in active service
to designate an independent appraiser, whose determination of the independent
appraiser, however designated, is final and binding on all parties. The Bankrupt
Member and the potential purchaser each will pay one-half of the costs of the
appraisal and court costs in appointing an appraiser (if any). If the potential
purchaser then elects, within ten Days after the fair market value has been
decided by agreement or by an independent appraiser, to exercise the purchase
option, the purchasing Person will pay the fair market value as so determined in
cash on closing. The payment to be made to the Bankrupt Member or its
representative pursuant to this Section 10.03 is in complete liquidation and
satisfaction of all the rights and interest of the Bankrupt Member and its
representative (and of all Persons claiming by, through, or under the Bankrupt
Member and its representative) in and in respect of the Company, including,
without limitation, any Membership Interest, any rights in specific Company
property, and any rights against the Company or its Subsidiaries and its
Officers, agents, and representatives and (insofar as the affairs of the Company
are concerned) against the Members.
ARTICLE 11
DISSOLUTION, WINDING-UP AND TERMINATION
11.01 DISSOLUTION.
(a) Subject to Section 11.01(b), the Company shall
dissolve and its affairs shall be wound up on the first to occur of the
following events (each a "DISSOLUTION EVENT"):
(i) the unanimous consent of the Board of
Directors;
(ii) the dissolution, Withdrawal or Bankruptcy of
a Member; or
(iii) the entry of a decree of judicial
dissolution of the Company under Section 18-802 of the Act.
(b) If a Dissolution Event described in Section
11.01(a)(ii) shall occur and there shall be at least one other Member not
subject to a Dissolution Event, the Company shall not be dissolved, and the
business of the Company shall be continued, if such Member elects to
32
do so within 90 Days following the occurrence of such Dissolution Event (such
election is referred to herein as a "CONTINUATION ELECTION").
11.02 WINDING-UP AND TERMINATION.
(a) On the occurrence of a Dissolution Event not subject
to a Continuation Election, the Board of Directors shall select one or more
Persons to act as liquidator. The liquidator shall proceed diligently to wind up
the affairs of the Company and make final distributions as provided herein and
in the Act. The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the Company
properties with all of the power and authority of the Board of Directors. The
steps to be accomplished by the liquidator are as follows:
(i) as promptly as possible after dissolution
and again after final winding up, the liquidator shall cause a proper
accounting to be made by a recognized firm of certified public
accountants of the Company's assets, liabilities, and operations
through the last calendar day of the month in which the dissolution
occurs or the final winding up is completed, as applicable;
(ii) the liquidator shall discharge from Company
funds all of the debts, liabilities and obligations of the Company or
otherwise make adequate provision for payment and discharge thereof
(including the establishment of a cash escrow fund for contingent
liabilities in such amount and for such term as the liquidator may
reasonably determine); and
(iii) all remaining assets of the Company shall be
distributed to the Members as follows:
(A) the liquidator may sell any or all
Company property, including to Members, and any resulting gain
or loss from each sale shall be computed and allocated to the
Capital Accounts of the Member in accordance with the
provisions of Articles 4 and 5;
(B) with respect to all Company
property that has not been sold, the fair market value of that
property shall be determined and the Capital Accounts of the
Members shall be adjusted to reflect the manner in which the
unrealized income, gain, loss, and deduction inherent in
property that has not been reflected in the Capital Accounts
previously would be allocated among the Members if there were
a taxable Disposition of that property for the fair market
value of that property on the date of distribution; and
(C) after adjusting the Capital
Accounts for all distributions made under Section 5.01 and all
allocations under Article 5, Company property (including cash)
shall be distributed to all of the Members in amounts equal to
the Members' positive Capital Account balances; and those
distributions shall be made by the end of the taxable year of
the Company during which the liquidation of the Company occurs
(or, if later, 90 Days after the date of the liquidation).
33
(b) The distribution of cash or property to a Member in
accordance with the provisions of this Section 11.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its share of all the Company's property and constitutes a
compromise to which all Members have consented within the meaning of Section
18-502(b) of the Act. No Member shall be required to make any Capital
Contribution to the Company to enable the Company to make the distributions
described in this Section 11.02.
(c) On completion of such final distribution, the
liquidator shall file a Certificate of Cancellation with the Secretary of State
of the State of Delaware and take such other actions as may be necessary to
terminate the existence of the Company.
11.03 DEFICIT CAPITAL ACCOUNTS. No Member will be required to pay to
the Company, to any other Member or to any third party any deficit balance that
may exist from time to time in the Member's Capital Account.
ARTICLE 12
MERGER
12.01 AUTHORITY. Subject to Section 6.01(b), the Company may merge
or consolidate with one or more limited liability companies, corporations,
business trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a general partnership or limited
partnership, formed under the laws of the State of Delaware or any other
jurisdiction, pursuant to a written agreement of merger or consolidation
("MERGER AGREEMENT") in accordance with this Article 12.
12.02 PROCEDURE FOR MERGER OR CONSOLIDATION. The merger or
consolidation of the Company pursuant to this Article 12 requires the prior
approval of a majority the Board of Directors and compliance with the Member
approval requirements of Sections 6.01(b) and 12.03. Upon such approval, the
Merger Agreement shall set forth:
(a) The names and jurisdictions of formation or
organization of each of the business entities proposing to merge or consolidate;
(b) The name and jurisdiction of formation or
organization of the business entity that is to survive the proposed merger or
consolidation ("SURVIVING BUSINESS ENTITY");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into, cash,
property or general or limited partnership or limited liability company
interests, rights, securities or obligations of the Surviving Business Entity;
and (i) if any general or limited partnership or limited liability company
interests, rights, securities or obligations of any constituent business entity
are not to be exchanged or converted solely for, or into, cash, property or
general or limited partnership or limited liability company interests, rights,
securities or obligations of the Surviving Business Entity, the cash, property
or general or limited partnership or limited liability company interests,
rights, securities or obligations of any general or limited partnership, limited
liability company, corporation, trust or other entity (other than the Surviving
Business Entity) which the holders of such interests, rights,
34
securities or obligations of the constituent business entity are to receive in
exchange for, or upon conversion of, their interests, rights, securities or
obligations and (ii) in the case of securities represented by certificates, upon
the surrender of such certificates, which cash, property or general or limited
partnership or limited liability company interests, rights, securities or
obligations of the Surviving Business Entity or any general or limited
partnership, limited liability company, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) A statement of any changes in the constituent
documents or the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or limited liability company or
other similar charter or governing document) of the Surviving Business Entity to
be effected by such merger or consolidation;
(f) The effective time of the merger or consolidation,
which may be the date of the filing of the certificate of merger pursuant to
Section 12.04 or a later date specified in or determinable in accordance with
the Merger Agreement (provided, that if the effective time of the merger or
consolidation is to be later than the date of the filing of the certificate of
merger or consolidation, the effective time shall be fixed no later than the
time of the filing of the certificate of merger or consolidation and stated
therein); and
(g) Such other provisions with respect to the proposed
merger or consolidation as are deemed necessary or appropriate by the Board of
Directors.
12.03 APPROVAL BY MEMBERS OF MERGER OR CONSOLIDATION.
(a) The Board of Directors, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to a vote
of the Members in accordance with the requirements of Section 6.01(b), whether
at a meeting or by written consent. A copy or a summary of the Merger Agreement
shall be included in or enclosed with the notice of a meeting or the written
consent.
(b) After approval by vote or consent of the Members, and
at any time prior to the filing of the certificate of merger or consolidation
pursuant to Section 12.04, the merger or consolidation may be abandoned pursuant
to provisions therefor, if any, set forth in the Merger Agreement.
12.04 CERTIFICATE OF MERGER OR CONSOLIDATION. Upon the required
approval by the Board of Directors and the Members of a Merger Agreement, a
certificate of merger or consolidation shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with the requirements
of the Act.
12.05 EFFECT OF MERGER OR CONSOLIDATION.
(a) At the effective time of the certificate of merger or
consolidation:
(i) all of the rights, privileges and powers of
each of the business entities that has merged or consolidated, and all
property, real, personal and mixed, and
35
all debts due to any of those business entities and all other things
and causes of action belonging to each of those business entities shall
be vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business Entity to
the extent they were property of each constituent business entity;
(ii) the title to any real property vested by
deed or otherwise in any of those constituent business entities shall
not revert and is not in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or
security interest in property of any of those constituent business
entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those
constituent business entities shall attach to the Surviving Business
Entity, and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this
Article 12 shall not (i) be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another having occurred or (ii) require
the Company (if it is not the Surviving Business Entity) to wind up its affairs,
pay its liabilities or distribute its assets as required under Article 11 of
this Agreement or under the applicable provisions of the Act.
ARTICLE 13
GENERAL PROVISIONS
13.01 NOTICES. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile or other electronic
transmission and a notice, request or consent given under this Agreement is
effective on receipt by the Person to receive it; provided, however, that a
facsimile or other electronic transmission that is transmitted after the normal
business hours of the recipient shall be deemed effective on the next Business
Day. All notices, requests and consents to be sent to a Member must be sent to
or made at the addresses given for that Member on Exhibit A or in the instrument
specified in Section 9.02(b)(i)(A)(I) or (II), or such other address as that
Member may specify by notice to the other Members. Any notice, request or
consent to the Company must be given to all of the Members. Whenever any notice
is required to be given by applicable Law, the Organizational Certificate or
this Agreement, a written waiver thereof, signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Whenever any notice is required to be
given by Law, the Organizational Certificate or this Agreement, a written waiver
thereof, signed by the Person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
13.02 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the
entire agreement of the Members and their respective Affiliates relating to the
subject matter hereof and supersedes all prior contracts or agreements with
respect to the Company, whether oral or written.
36
13.03 EFFECT OF WAIVER OR CONSENT. Except as provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Person in the performance by that Person of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Person of the same or any other obligations
of that Person with respect to the Company. Except as provided in this
Agreement, failure on the part of a Person to complain of any act of any Person
or to declare any Person in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Person of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
13.04 AMENDMENT OR RESTATEMENT. This Agreement may be amended or
restated only by a written instrument executed by all Members; provided,
however, that notwithstanding anything to the contrary contained in this
Agreement, each Member agrees that the Board of Directors, without the approval
of any Member, may amend any provision of the Organizational Certificate and
this Agreement, and may authorize any Officer to execute, swear to, acknowledge,
deliver, file and record any such amendment and whatever documents may be
required in connection therewith, to reflect (a) any changes resulting from the
consummation of any Exchange pursuant to the Exchange Agreement, including any
adjustments to the Sharing Ratios, or (b) any change that does not require
consent or approval (or for which such consent or approval has been obtained)
under this Agreement or does not materially adversely affect the rights of the
Members; provided, further, that any amendment to Section 2.04 of this Agreement
shall be deemed to materially affect the Members.
13.05 BINDING EFFECT. This Agreement is binding on and shall inure
to the benefit of the Members and their respective heirs, legal representatives,
successors and assigns.
13.06 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of this Agreement and (a) any
provision of the Organizational Certificate, or (b) any mandatory, non-waivable
provision of the Act, such provision of the Organizational Certificate or the
Act shall control. If any provision of the Act provides that it may be varied or
superseded in the limited liability company agreement (or otherwise by agreement
of the members or managers of a limited liability company), such provision shall
be deemed superseded and waived in its entirety if this Agreement contains a
provision addressing the same issue or subject matter. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, (a) the remainder of this Agreement and
the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by Law, and (b) the Members or Directors (as the case may be) shall
negotiate in good faith to replace that provision with a new provision that is
valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original
provision had been valid and enforceable.
13.07 CONFIDENTIALITY.
37
(a) Except as permitted by Section 13.07(b), (i) each
Member shall keep confidential all Confidential Information and shall not
disclose any Confidential Information to any Person, including any of its
Affiliates, (ii) each Member shall cause its and its Affiliates' directors,
officers and employees to keep confidential all Confidential Information and to
not disclose any Confidential Information to any Person, and (iii) each Member
shall use the Confidential Information only in connection with the Company.
(b) Notwithstanding Section 13.07(a), but subject to the
other provisions of this Section 13.07, a Member may make the following
disclosures and uses of Confidential Information:
(i) disclosures to another Member in connection
with the Company;
(ii) disclosures and uses that are approved by
the Board of Directors;
(iii) disclosures to an Affiliate of such Member
(A) necessary for obtaining board approvals or as reasonably required
for reporting purposes, and (B) on a "need to know" basis in
furtherance of the business of the Company, if such Affiliate has
agreed to abide by the terms of this Section 13.07;
(iv) disclosures to a Person that is not a Member
or an Affiliate of a Member, if such Person has been retained by the
Company or a Member to provide services in connection with the Company
and has agreed to abide by the terms of this Section 13.07;
(v) disclosures to a bona fide potential direct
or indirect purchaser of such Member's Membership Interest, if such
potential purchaser has agreed to abide by the terms of this Section
13.07;
(vi) disclosures to recognized financial
institutions that are lenders or bona fide potential lenders to such
Member, if such financial institution has agreed to abide by the terms
of this Section 13.07;
(vii) disclosures that a Member is legally
compelled to make by deposition, interrogatory, request for documents,
subpoena, civil investigative demand, order of a court of competent
jurisdiction, or similar process, or otherwise by Law or securities
exchange requirements; provided, however, that prior to any such
disclosure, such Member shall, to the extent legally permissible:
(A) provide the Board of Directors with
prompt notice of such requirements so that one or more of the
Members may seek a protective order or other appropriate
remedy or waive compliance with the terms of this Section
13.07(b)(vii);
(B) consult with the Board of Directors
on the advisability of taking steps to resist or narrow such
disclosure; and
38
(C) cooperate with the Board of
Directors and with the other Members in any attempt one or
more of them may make to obtain a protective order or other
appropriate remedy or assurance that confidential treatment
will be afforded the Confidential Information; and in the
event such protective order or other remedy is not obtained,
or the other Members waive compliance with the provisions
hereof, such Member agrees (I) to furnish only that portion of
the Confidential Information that, in the opinion of such
Member's counsel, such Member is legally required to disclose,
and (II) to exercise all reasonable efforts to obtain
assurance that confidential treatment will be accorded such
Confidential Information.
(c) Each Member shall take such precautionary measures as
may be required to ensure (and such Member shall be responsible for) compliance
with this Section 13.07 by any of its Affiliates, and its and their directors,
officers, employees and agents, and other Persons to which it may disclose
Confidential Information in accordance with this Section 13.07.
(d) Promptly after its withdrawal, a Withdrawing Member
shall destroy (and provide a certificate of destruction to the Company with
respect to), or return to the Company, all Confidential Information in its
possession. Notwithstanding the immediately preceding sentence, but subject to
the other provisions of this Section 13.07, a Withdrawing Member may retain for
a stated period, but not disclose to any other Person, Confidential Information
for the limited purposes of preparing such Member's tax returns and defending
audits, investigations and proceedings relating thereto; provided, however, that
the Withdrawing Member must notify the Board of Directors in advance of such
retention and specify in such notice the stated period of such retention.
(e) The Members agree that no adequate remedy at law
exists for a breach or threatened breach of any of the provisions of this
Section 13.07, the continuation of which unremedied will cause the Company and
the other Members to suffer irreparable harm. Accordingly, the Members agree
that the Company and the other Members shall be entitled, in addition to other
remedies that may be available to them, to immediate injunctive relief from any
breach of any of the provisions of this Section 13.07 and to specific
performance of their rights hereunder, as well as to any other remedies
available at law or in equity.
(f) The obligations of the Members under this Section
13.07 (including the obligations of any Withdrawing Member) shall terminate on
the second anniversary of the filing of a Certification of Cancellation pursuant
to Section 11.02(c) of this Agreement following dissolution and winding up of
the Company.
13.08 FURTHER ASSURANCES. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
13.09 WAIVER OF CERTAIN RIGHTS. To the extent permitted by the Act
and other Law, each Member irrevocably waives any right it may have to maintain
any action for dissolution of the Company or for partition of the property of
the Company.
39
13.10 OFFSET. Whenever the Company is to pay any sum to any Member,
any amounts that a Member owes the Company may be deducted from that sum before
payment.
13.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[Signature Page Follows]
40
IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first set forth above.
MEMBERS:
EPC PARTNERS II, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
XXX XXXXXX LLC
By: _______________________________
Name: _____________________________
Title: ____________________________
GULFTERRA GP HOLDING COMPANY
By: _______________________________
Name: _____________________________
Title: ____________________________
41
ATTACHMENT I
DEFINED TERMS
ACT - the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
ADJUSTED CAPITAL ACCOUNT - the Capital Account maintained for
each Member as of the end of each fiscal year of the Company, (a) increased by
any amounts that such Member is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Member in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Member in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Member's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section
5.02(b)(i) or (ii)). The foregoing definition of Adjusted Capital Account is
intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
ADJUSTED PROPERTY - any property the Carrying Value of which
has been adjusted pursuant to Section 4.04(d)(i) or 4.04(d)(ii).
AFFILIATE - with respect to any Person, each Person
Controlling, Controlled by or under common Control with such first Person;
provided, however, that for purposes of this Agreement, the Company shall be
deemed not to be an Affiliate of any Member or its Affiliates.
AGREED VALUE - with respect to any Contributed Property, the
fair market value of such property or other consideration at the time of
contribution as determined by the Board of Directors using such reasonable
method of valuation as it may adopt. The Board of Directors shall, in its
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate Agreed Value of Contributed Properties contributed to the Company
in a single or integrated transaction among each separate property on a basis
proportional to the fair market value of each Contributed Property.
AGREEMENT - this Second Amended and Restated Limited Liability
Company Agreement of Enterprise Products GP, LLC, as the same may be amended,
modified, supplemented or restated from time to time.
APPRAISAL NOTICE - Section 9.03(d).
AUDIT AND CONFLICTS COMMITTEE - Section 6.02(e)(ii).
AVAILABLE CASH - as of any Distribution Date, (A) all cash and
cash equivalents of the Company on hand on such date, less (B) the amount of any
cash reserves (including any
reserves anticipated for any purchase by the Company of additional equity of the
MLP pursuant to the Company's exercising its preemptive rights under the MLP
Agreement) determined to be appropriate by the Board of Directors.
BANKRUPT MEMBER - Section 10.03.
BANKRUPTCY OR BANKRUPT - with respect to any Person, that (a)
such Person (i) makes an assignment for the benefit of creditors; (ii) files a
voluntary petition in bankruptcy; (iii) is insolvent, or has entered against
such Person an order for relief in any bankruptcy or insolvency proceeding; (iv)
files a petition or answer seeking for such Person any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law; (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against such Person in a
proceeding of the type described in subclauses (i) through (iv) of this clause
(a); or (vi) seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of such Person or of all or any substantial part of such
Person's properties; or (b) 120 Days have passed after the commencement of any
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any Law, if the proceeding has
not been dismissed, or 90 Days have passed after the appointment without such
Person's consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of such Person's properties, if the
appointment is not vacated or stayed, or 90 Days have passed after the date of
expiration of any such stay, if the appointment has not been vacated.
BOARD OF DIRECTORS OR BOARD - Section 6.01(a).
BOOK-TAX DISPARITY - with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date.
BUSINESS DAY - any Day other than a Saturday, a Sunday or a
Day on which national banking associations in the State of Texas are authorized
or required by Law to close.
BUY-OUT RIGHT - Section 9.04(a).
CAPITAL ACCOUNT - the account to be maintained by the Company
for each Member in accordance with Section 4.04.
CAPITAL CONTRIBUTION - Section 4.01(b).
CARRYING VALUE - (a) with respect to a Contributed Property,
the Agreed Value of such property reduced (but not below zero) by all
depreciation, amortization and cost recovery deductions charged to the Members'
and assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Company property, the adjusted basis of such property
for federal income tax purposes, all as of the time of determination. The
Carrying Value of any property shall be adjusted from time to time in accordance
with Sections 4.04(d)(i) and 4.04(d)(ii) and to reflect changes, additions or
other adjustments to the Carrying Value for
2
dispositions and acquisitions of Company properties, as deemed appropriate by
the Board of Directors.
CHANGE EXERCISE NOTICE - Section 9.04(b)(ii).
CHANGE OF MEMBER CONTROL - means, in the case of any Member,
an event (such as a Disposal of voting securities) or series of related events
that result in a Member ceasing to be Controlled by the Person that was such
Member's Parent immediately prior to such event.
CHANGE PURCHASING MEMBER - Section 9.04(b)(ii).
CHANGE UNEXERCISED PORTION - Section 9.04(b)(ii).
CHANGING MEMBER - Section 9.04(a).
CODE - the Internal Revenue Code of 1986, as amended from time
to time.
COMMITMENT - means (a) options, warrants, convertible
securities, exchangeable securities, subscription rights, conversion rights,
exchange rights, or other contracts, agreements or commitments that could
require a Person to issue any of its Equity Interests or to sell any Equity
Interests it owns in another Person; (b) any other securities convertible into,
exchangeable or exercisable for, or representing the right to subscribe for any
Equity Interest of a Person or owned by a Person; (c) statutory or contractual
pre-emptive rights or pre-emptive rights granted under a Person's organizational
or constitutive documents; and (d) stock appreciation rights, phantom stock,
profit participation, or other similar rights with respect to a Person.
COMMON UNITS - as defined in the MLP Agreement.
COMPANY - initial paragraph.
COMPANY MINIMUM GAIN - that amount determined in accordance
with the principles of Treasury Regulation Section 1.704-2(d).
COMPETITOR - any Person that, together with its Affiliates,
derives aggregate revenues of at least $25 million from oil and natural gas
production, extraction, processing, transportation, gathering, fractionation,
storage or power generation, in each case, that is in competition with the MLP
and such revenues constitute a substantial portion of its total revenues.
CONFIDENTIAL INFORMATION - information and data (including all
copies thereof) regarding or produced by a Member, the Company, the MLP or their
controlled Affiliates that is furnished or submitted by or on behalf of a Member
or the Company, whether oral, written, or electronic, to the Company (including
its directors, officers and employees) or another Member. Notwithstanding the
foregoing, the term "Confidential Information" shall not include any information
that: (a) is in the public domain at the time of its disclosure or thereafter,
other than as a result of a disclosure directly or indirectly in contravention
of this Agreement; (b) as to any Member or its Affiliates, was in the possession
of such Member or its Affiliates prior to its
3
disclosure; or (c) has been independently acquired or developed by a Member or
its Affiliates without violating any of the obligations of such Member or its
Affiliates under this Agreement.
CONTINUATION ELECTION - Section 11.01(b).
CONTRIBUTED PROPERTY - each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed to the
Company. Once the Carrying Value of a Contributed Property is adjusted pursuant
to Section 4.04(d), such property shall no longer constitute a Contributed
Property, but shall be deemed an Adjusted Property.
CONTRIBUTING MEMBER - Section 4.01(c).
CONTROL - shall mean the possession, directly or indirectly,
of the power and authority to direct or cause the direction of the management
and policies of a Person, whether through ownership or control of Voting Stock,
by contract or otherwise.
CONTROL NOTICE - Section 9.04(a).
DAY - a calendar Day; provided, however, that, if any period
of Days referred to in this Agreement shall end on a Day that is not a Business
Day, then the expiration of such period shall be automatically extended until
the end of the first succeeding Business Day.
DEFAULT - for any Member, (a) the failure to remedy, within
five Business Days of such Member's receipt of written notice thereof from the
Company or any other Member, any failure of such Member to make a Capital
contribution required hereunder; (b) the occurrence of an event that causes such
Member to become a Bankrupt Member; or (c) the failure to remedy, within 10
Business Days of such Member's receipt of written notice thereof from the
Company or any other Member, the non-performance of or non-compliance with any
other material obligation or undertaking of such Member contained in this
Agreement.
DELAWARE GENERAL CORPORATION LAW - Title 8 of the Delaware
Code, as amended from time to time.
DIRECTOR - each member of the Board of Directors elected as
provided in Section 6.02.
DISPOSE, DISPOSING OR DISPOSITION - with respect to any asset
(including a Membership Interest or any portion thereof), any sale, assignment,
transfer, conveyance, gift, exchange or other disposition of such asset, whether
such disposition be voluntary, involuntary or by operation of Law.
DISPOSITION NOTICE - Section 9.03(a).
DISSOLUTION EVENT - Section 11.01(a).
DISTRIBUTION DATE - Section 5.01(a).
DRAG-ALONG MEMBER - Section 9.05(b).
4
DRAG-ALONG NOTICE - Section 9.05(b).
DRAG-ALONG RIGHT - Section 9.05(b).
DRAG-INITIATING MEMBER - Section 9.05(b).
ECONOMIC RISK OF LOSS - has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
EFFECTIVE DATE - initial paragraph.
EL PASO GP HOLDCO - initial paragraph.
ENCUMBER, ENCUMBERING, or ENCUMBRANCE - the creation of a
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of Law.
ENTERPRISE PARENT - initial paragraph.
ENTERPRISE PARENT 1 - initial paragraph.
ENTERPRISE PARENT 2 - initial paragraph.
EQUITY INTEREST - (a) with respect to a corporation, any and
all shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership, limited liability company,
trust or similar interests, and any Commitments with respect thereto, and (c)
any other direct or indirect equity ownership or participation in a Person
(including any incentive distribution rights).
EXCESS AMOUNT - Section 4.01(c).
EXCHANGE - as defined in the Exchange Agreement.
EXCHANGE RIGHT - as defined in the Exchange Agreement.
EXCHANGE UNITS - as defined in the Exchange Agreement.
EXCHANGE AGREEMENT - Exchange Agreement, dated the date
hereof, by and among El Paso GP Holdco, the MLP and the Company.
EXISTING AGREEMENT - Recitals.
FAILING MEMBER - Section 4.01(c).
FAIR MARKET VALUE - Section 9.04(a).
FMV NOTICE - Section 9.04(a).
5
GP CONTRIBUTION - Section 4.01(c).
INCENTIVE DISTRIBUTION RIGHTS - the right to receive Incentive
Distributions (as defined in the MLP Agreement).
INDEMNITEE - Section 6.06(a).
INDEPENDENT DIRECTOR - Section 6.02(a).
LAW - any applicable constitutional provision, statute, act,
code (including the Code), law, regulation, rule, ordinance, order, decree,
ruling, proclamation, resolution, judgment, decision, declaration or
interpretative or advisory opinion or letter of a governmental authority.
LIABILITY - any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
MEMBER - any Person executing this Agreement as of the date of
this Agreement as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but such term does not include any Person who has
ceased to be a member in the Company.
MEMBER NONRECOURSE DEBT - has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
MEMBER NONRECOURSE DEBT MINIMUM GAIN - has the meaning set
forth in Treasury Regulation Section 1.704-2(i)(2).
MEMBER NONRECOURSE DEDUCTIONS - any and all items of loss,
deduction or expenditure (including, without limitation, any expenditure
described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(i), are attributable to a
Member Nonrecourse Debt.
MEMBERSHIP INTEREST - with respect to any Member, (a) that
Member's status as a Member; (b) that Member's share of the income, gain, loss,
deduction and credits of, and the right to receive distributions from, the
Company; (c) all other rights, benefits and privileges enjoyed by that Member
(under the Act, this Agreement, or otherwise) in its capacity as a Member; and
(d) all obligations, duties and liabilities imposed on that Member (under the
Act, this Agreement or otherwise) in its capacity as a Member, including any
obligations to make Capital Contributions.
MERGER AGREEMENT - Section 12.01.
MLP - Enterprise Products Partners L.P., a Delaware limited
partnership.
MLP AGREEMENT - the Third Amended and Restated Agreement of
Limited Partnership of Enterprise Products Partners L.P., dated as of May 15,
2002, as amended, supplemented, amended and restated, or otherwise modified from
time to time.
6
NET AGREED VALUE - (a) in the case of any Contributed
Property, the fair market value of such property reduced by any liability either
assumed by the Company upon such contribution or to which such property is
subject when contributed, as determined under Section 752 of the Code; provided,
however, the fair market value of the property contributed to the Company by El
Paso GP Holdco will be deemed to be the Agreed Value of such Contributed
Property, and (b) in the case of any property distributed to a Member or
Transferee by the Company, the Company's Carrying Value of such property at the
time such property is distributed, reduced by any indebtedness either assumed by
such Member or Transferee upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of the Code.
NON-CASH CONSIDERATION - Section 9.03(d).
NONRECOURSE BUILT-IN GAIN - with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Members pursuant to Section 5.03(b) if such properties
were disposed of in a taxable transaction in full satisfaction of such
Nonrecourse Liabilities and for no other consideration.
NONRECOURSE DEDUCTIONS - any and all items of loss, deduction
or expenditures (described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-2(b), are
attributable to a Nonrecourse Liability.
NONRECOURSE LIABILITY - has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
OFFICERS - any person elected as an officer of the Company as
provided in Section 6.03(a), but such term does not include any person who has
ceased to be an officer of the Company.
OLP - Enterprise Products Operating L.P., a Delaware limited
partnership.
ORGANIZATIONAL CERTIFICATE - Section 2.01.
ORIGINAL ENTERPRISE PARENT 1 - Recitals.
OUTSTANDING - with respect to the Membership Interest, all
Membership Interests that are issued by the Company and reflected as outstanding
on the Company's books and records as of the date of determination.
PARENT - means the Person that Controls and owns a Required
Economic Interest in a Member and that has no other Person that Controls and
owns a Required Economic Interest in it; provided that (i) for so long as El
Paso Corporation (or any successor by merger, consolidation or other business
combination) Controls and owns a Required Economic Interest in a Member, it will
be the Parent of such Member, and (ii) for so long as Enterprise Parent 1 and
Enterprise Parent 2 (in each case, or any successor by merger, consolidation or
other business combination) Control and own a Required Economic Interest in one
or more Members, they will be the Parents of such Members.
7
PERMITTED TRANSFEREE - Section 9.02(a).
PERSON - a natural person, partnership (whether general or
limited), limited liability company, governmental entity, trust, estate,
association, corporation, venture, custodian, nominee or any other individual or
entity in its own or any representative capacity.
PREFERENTIAL PURCHASE PRICE - Section 9.03(a).
PREFERENTIAL RIGHT - Section 9.03(a).
PROPOSED DRAG-ALONG DISPOSITION - Section 9.05(b).
PROPOSED TAG-ALONG DISPOSITION - Section 9.05(a).
PRO RATA TAG-ALONG MEMBERSHIP INTEREST - Section 9.05(a).
QUARTER - unless the context requires otherwise, a calendar
quarter.
REQUIRED ECONOMIC INTEREST - the right, directly or
indirectly, to more than (a) 4.95% of the distributions of the Company
(including liquidating distributions), in the case of El Paso GP Holdco (or any
Transferee thereof admitted as a Substituted Member pursuant to Section 9.02) or
(b) 45.05% of the distributions of the Company (including liquidating
distributions), in the case of Enterprise Parent (or any Transferees thereof
admitted as Substituted Members pursuant to Section 9.02); provided, however,
that following any partial Exchange pursuant to the Exchange Agreement, the
Required Economic Interest in the case of El Paso GP Holdco (or any Transferee
thereof admitted as a Substituted Member pursuant to Section 9.02) shall mean
the right, directly or indirectly, to more than 50% of the distributions of the
Company (including liquidating distributions) to which El Paso GP Holdco (or any
Transferee thereof admitted as a Substituted Member pursuant to Section 9.02) is
entitled immediately following such partial Exchange.
RESIDUAL GAIN or RESIDUAL LOSS - any item of gain or loss, as
the case may be, of the Company recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.03(b)(i)(A) or 5.03(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
SEC - the United States Securities and Exchange Commission.
SECTION 16 CAP - as defined in the Exchange Agreement.
SELLING MEMBERS - Section 9.05(a).
SHARING RATIO - subject in each case to adjustments in
accordance with this Agreement or in connection with Dispositions of Membership
Interests or any Exchange pursuant to the Exchange Agreement, (a) in the case of
a Member executing this Agreement as of the date of this Agreement or a Person
acquiring such Member's Membership Interest, the percentage specified for that
Member as its Sharing Ratio on Exhibit A, and (b) in the case of
8
Membership Interest issued pursuant to Section 3.02, the Sharing Ratio
established pursuant thereto; provided, however, that the total of all Sharing
Ratios shall always equal 100%.
SHELL - Recitals.
SPECIAL INDEPENDENT DIRECTOR - Section 6.02(a).
SUBSIDIARY - with respect to any relevant Person, (a) a
corporation of which more than 50% of the Voting Stock is owned, directly or
indirectly, at the date of determination, by such relevant Person, by one or
more Subsidiaries of such relevant Person or a combination thereof, (b) a
partnership (whether general or limited) in which such relevant Person, one or
more Subsidiaries of such relevant Person or a combination thereof is, at the
date of determination, a general or limited partner of such partnership, but
only if more than 50% of the partnership interests of such partnership
(considering all of the partnership interests of the partnership as a single
class) is owned, directly or indirectly, at the date of determination, by such
relevant Person, by one or more Subsidiaries of such relevant Person, or a
combination thereof, or (c) any other Person (other than a corporation or a
partnership) in which such relevant Person, one or more Subsidiaries of such
relevant Person, or a combination thereof, directly or indirectly, at the date
of determination, has (i) at least a majority ownership interest or (ii) the
power to elect or direct the election of a majority of the directors or other
governing body of such other Person.
SUBSIDIARY AFFILIATE - means, with respect to any Member and
its Parent, any direct or indirect wholly owned Subsidiary of such Parent.
SUBSTITUTED MEMBER - Section 9.02(b).
SURVIVING BUSINESS ENTITY - Section 12.02(b).
TAG-ALONG ACCEPTANCE NOTICE - Section 9.05(a).
TAG-ALONG MEMBER - Section 9.05(a).
TAG-ALONG ELECTING MEMBER - Section 9.05(a).
TAG-INITIATING MEMBER - Section 9.05(a).
TAX MATTERS MEMBER - Section 7.03.
TRANSFEREE - any Person that acquires a Membership Interest or
any portion thereof through a Disposition; provided, however, that, a Transferee
shall have no right to be admitted to the Company as a Member except in
accordance with Section 9.02(b). The Transferee of a Bankrupt Member is (a) the
Person or Persons (if any) to whom such Bankrupt Member's Membership Interest is
assigned by order of the bankruptcy court or other governmental authority having
jurisdiction over such Bankruptcy, or (b) in the event of a general assignment
for the benefit of creditors, the creditor to which such Membership Interest is
assigned.
9
TREASURY REGULATIONS - the regulations promulgated by the
United States Department of the Treasury pursuant to and in respect of
provisions of the Code. All references herein to sections of the Treasury
Regulations shall include any corresponding provisions of succeeding, similar,
substitute, proposed or final Treasury Regulations.
UNREALIZED GAIN - attributable to any item of Company property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date (as determined under Section
4.04(d)) over (b) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 4.04(d) as of such date).
UNREALIZED LOSS - attributable to any item of Company property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.04(d) as of such date) over (b) the fair market value of
such property as of such date (as determined under Section 4.04(d)).
VOTING STOCK - with respect to any Person, Equity Interests in
such Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of, or otherwise appoint,
directors (or Persons with management authority performing similar functions) of
such Person.
WITHDRAW, WITHDRAWING AND WITHDRAWAL - the withdrawal,
resignation or retirement of a Member from the Company as a Member. Such terms
shall not include any Dispositions of Membership Interest (which are governed by
Article 9), even though the Member making a Disposition may cease to be a Member
as a result of such Disposition.
10
EXHIBIT A
MEMBER SHARING RATIO(1) CAPITAL ACCOUNT(2)
-----------------------------------------------------------------------------------------------------
EPC Partners II, Inc. ____% } }
Xxx Xxxxxx LLC ____% } 90.1% } $ 831,346,620
GulfTerra GP Holding Company 9.9% $ 91,346,633
ADDRESSES:
EPC Partners II, Inc.
_________________________________
_________________________________
_________________________________
Xxx Xxxxxx LLC
_________________________________
_________________________________
_________________________________
GulfTerra GP Holding Company
_________________________________
_________________________________
_________________________________
-----------
(1) EPC Partners II, Inc. and Xxx Xxxxxx LLC to collectively equal 90.1%, and
GulfTerra GP Holding Company to equal 9.9%.
(2) EPC Partners II, Inc. and Xxx Xxxxxx LLC to collectively equal $861,346,620,
and GulfTerra GP Holding Company to equal $91,346,633.
EXHIBIT 2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This EXCHANGE AND REGISTRATION RIGHTS AGREEMENT (this "Exchange
Agreement") is entered into as of ___________, 200[4] by and among GulfTerra GP
Holding Company, a Delaware corporation ("El Paso GP Holdco,"), Enterprise
Products GP, LLC, a Delaware limited liability company ("Enterprise GP"), and
Enterprise Products Partners L.P., a Delaware limited partnership ("Enterprise
MLP").
R E C I T A L S
WHEREAS, El Paso Corporation, a Delaware corporation ("El Paso"), El
Paso GP Holdco, Enterprise MLP and certain of their Affiliates have entered into
the Parent Company Agreement, dated as of December 15, 2003, as amended by
Amendment No. 1 thereto, dated _________, 2004 (the "Parent Company Agreement"),
which, among other things, provides for El Paso GP Holdco, Enterprise GP and
Enterprise MLP to enter into this Exchange Agreement at the Step Two Closing;
WHEREAS, pursuant to the Parent Company Agreement, at the Step Two
Closing, El Paso GP Holdco will contribute its 50% membership interest in
GulfTerra Energy Company, L.L.C., a Delaware limited liability company
("GulfTerra GP"), to Enterprise GP in exchange for a newly issued 9.9%
membership interest in Enterprise GP and cash in the amount of $370 million;
WHEREAS, at the Step Two Closing, El Paso GP Holdco, Enterprise Parent
1 and Enterprise Parent 2 (each as defined in the Parent Company Agreement) will
enter into the Second Amended and Restated Limited Liability Company Agreement
of Enterprise GP (the "Enterprise GP LLC Agreement") in the form attached as an
exhibit to the Parent Company Agreement; and
WHEREAS, this Exchange Agreement provides for El Paso GP Holdco, or its
successor as the holder of a 9.9% Membership Interest (as defined in the
Enterprise GP LLC Agreement) (whether as the holder of such Membership Interest
and/or as the holder of Exchange Units, the "Holder"), to exchange such
Membership Interest for (a) common units representing limited partnership
interests in Enterprise MLP ("Common Units"), (b) cash, or (c) a combination
thereof, subject to the terms and provisions set forth herein, and the Holder
desires to limit the number of Common Units it may receive at any one time
pursuant to any such Exchange so as to not result in its direct and/or indirect
beneficial ownership of more than 9.9% of any class of registered equity
security covered by Section 16(a) of the Exchange Act.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows.
1
ARTICLE I
SECTION 1.1 DEFINITIONS. In addition to the terms defined
elsewhere herein, the following terms shall have the meanings set forth below:
"Action" means any action, appeal, petition, plea, charge, complaint,
claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry,
investigation or similar event, occurrence, or proceeding.
"Affiliate" shall have the meaning assigned to such term in the
Enterprise GP LLC Agreement.
"Available Cash" has the meaning assigned to such term in the
Enterprise Partnership Agreement.
"Basis" means any past or current fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction about which the relevant Person has
knowledge that forms or could form the basis for any specified consequence.
"Breach" means any breach, inaccuracy, failure to perform, failure to
comply, conflict with, default, violation, acceleration, termination,
cancellation, modification, or required notification.
"Change of Member Control" has the meaning assigned to such term in the
Enterprise GP LLC Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Unit" has the meaning assigned to such term in the Enterprise
Partnership Agreement.
"Common Unit Quarterly Distribution" means the quarterly distribution
of Available Cash (as defined in the Enterprise Partnership Agreement) paid by
Enterprise MLP to the holders of its Common Units pursuant to the terms of the
Enterprise Partnership Agreement.
"Contract" means any contract, agreement, arrangement, commitment,
letter of intent, memorandum of understanding, heads of agreement, promise,
obligation, right, instrument, document, or other similar understanding, whether
written or oral.
"Control" means the possession, directly or indirectly, of the power
and authority to direct or cause the direction of the management and policies of
a Person, whether through ownership or control of Voting Stock, by contract or
otherwise.
"Disposal" means, with respect to any asset (including a Membership
Interest or any portion thereof), any sale, assignment, transfer, conveyance,
gift, exchange or other disposition of such asset, whether such disposition be
voluntary, involuntary or by operation of Law.
"El Paso Parties" means El Paso, El Paso GP Holdco and their
Affiliates.
2
"El Paso Sub 1" has the meaning assigned to such term in the Parent
Company Agreement.
"El Paso Sub 2" has the meaning assigned to such term in the Parent
Company Agreement.
"Enforceable" means, with respect to a Contract, that it is the legal,
valid, and binding obligation of the applicable Person enforceable against such
Person in accordance with its terms, except as such enforceability may be
subject to the effects of bankruptcy, insolvency, reorganization, moratorium, or
other Laws relating to or affecting the rights of creditors, and general
principles of equity.
"Enterprise Members" means Enterprise Parent 1 and Enterprise Parent 2,
or any Affiliate successor thereto as Members of Enterprise GP.
"Enterprise Parties" means the Enterprise Members, Enterprise GP,
Enterprise MLP and their Affiliates.
"Enterprise Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership of Enterprise MLP, dated as of May 15, 2002, as
amended, supplemented, amended and restated, or otherwise modified from time to
time during the term of this Agreement.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any and successor federal statute, and the rules and regulations thereunder
of the Commission or any successor governmental authority, all as shall be in
effect at the time of determination.
"Governmental Authority" means any legislature, agency, bureau, branch,
department, division, commission, court, tribunal, magistrate, justice,
multi-national organization, quasi-governmental body, or other similar
recognized organization or body of any federal, state, county, municipal, local,
or foreign government or other similar recognized organization or body
exercising similar powers or authority.
"GP Available Cash" shall have the meaning assigned to the term
"Available Cash" in the Enterprise GP LLC Agreement.
"Holder Quarterly Distribution" means the product of the amount of the
distribution of Available Cash (as defined in the Enterprise Partnership
Agreement) by Enterprise MLP to Enterprise GP with respect to Enterprise GP's
general partner interest in Enterprise MLP and Incentive Distribution Rights
times the Sharing Ratio (as defined in the Enterprise GP LLC Agreement)
attributable to the Holder, as of the date of determination.
"Incentive Distributions" has the meaning assigned to such term in the
Enterprise Partnership Agreement.
3
"Incentive Distribution Right" means the right under to the Enterprise
Partnership Agreement to receive Incentive Distributions.
"Initial Exchange" has the meaning assigned to such term in Section
2.7.
"Law" means any applicable constitutional provision, statute, act,
code, law, regulation, rule, ordinance, order, decree, ruling, proclamation,
resolution, judgment, decision, declaration or interpretative or advisory
opinion or letter of a Governmental Authority.
"Member" has the meaning assigned to such term in the Enterprise GP LLC
Agreement.
"Membership Interest" means the Membership Interests (as defined in the
Enterprise GP LLC Agreement) of the Enterprise GP issued and outstanding as of
the date of determination.
"Merger Units" means the Common Units received by El Paso Sub 1 and El
Paso Sub 2 upon closing of the Merger (as defined in the Parent Company
Agreement).
"Order" means any order, ruling, decision, verdict, decree, writ,
subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction, or other similar determination or finding by, before, or
under the supervision of any Governmental Authority, arbitrator, or mediator.
"Person" means any individual or entity, including any corporation,
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or Governmental Authority (or any
department, agency or political subdivision thereof).
"Registrable Securities" means each Exchange Unit to be delivered
pursuant to Article II hereof and each Merger Unit until, in the case of any
such security, (A) the earliest of (i) its effective registration under the
Securities Act and resale in accordance with the Registration Statement covering
it, (ii) expiration of the applicable holding period under Rule 144(k) under the
Securities Act or (iii) its sale to the public pursuant to Rule 144 under the
Securities Act, and (B) as a result of the event or circumstance described in
any of the foregoing clauses (i) through (iii), any legends with respect to
transfer restrictions are removed or removable in accordance with the terms of
such legend.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder of the
Commission or any successor governmental authority, all as shall be in effect at
the time of determination.
"Step Two Closing Date" has the meaning assigned to such term in the
Parent Company Agreement.
"Threatened" means a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing), or any other event
has occurred or any other circumstances exist that would lead a prudent Person
to conclude that an Action or other matter is likely to be asserted, commenced,
taken, or otherwise pursued in the future.
4
"Underwritten Offering" means an offering in which Common Units are
sold to an underwriter for reoffering to the public.
"Voting Stock" shall have the meaning assigned to such term in the
Enterprise GP LLC Agreement.
ARTICLE II
EXCHANGES
SECTION 2.1 EXCHANGE RIGHT. Subject to the provisions of this
Article II, the Holder shall have the right (the "Exchange Right") to make a
one-time election, which once made shall be irrevocable, to contribute all (but
not less than all) of the Holder's Membership Interests to Enterprise GP in
exchange (whether through one or more exchanges, pursuant to this Agreement,
each an "Exchange") for, at Enterprise GP's sole election, one of the following:
(a) a number of Common Units (the "Exchange Units") derived by dividing (i) the
most recent Holder Quarterly Distribution prior to the date of the Initial
Exchange by (ii) the amount per unit distributed to each holder of a Common Unit
in respect of the most recent Common Unit Quarterly Distribution prior to the
date of the Initial Exchange (the "Exchange Formula"), (b) cash in the amount
set forth in Section 2.6(a)(y), or (c) a combination of Exchange Units and cash
as provided in Section 2.6(a)(z).
SECTION 2.2 ADJUSTMENTS.
(a) If the amount of the most recent Holder Quarterly Distribution
prior to the date of the Initial Exchange was impacted to any material extent by
a non-recurring, extraordinary or other similar event, in calculating the
Exchange Formula, the parties shall use the most recent Holder Quarterly
Distribution not impacted to any material extent by a non-recurring,
extraordinary or similar event (the "Prior Holder Distribution") in lieu of the
most recent Holder Quarterly Distribution.
(b) If during the time period commencing on the date of the most
recent Holder Quarterly Distribution (or in the case where Section 2.2(a) is
deemed applicable, the date of the Prior Holder Distribution) preceding the date
of the Initial Exchange and ending on the date of the Initial Exchange,
Enterprise MLP has issued limited partner interests or increased or decreased
(or declared an increase or decrease) in its regular quarterly distribution of
Available Cash to holders of its Common Units, in calculating the Exchange
Formula, the parties shall use a pro forma Holder Quarterly Distribution amount
that assumes that any and all such issuances or increases or decreases occurred
in such quarter; provided, however, that no pro forma adjustment shall be made
for a distribution impacted to any material extent by a non-recurring,
extraordinary or similar event.
SECTION 2.3 EXERCISE; TOTAL NUMBER OF EXCHANGE UNITS.
(a) To exercise the Exchange Right, the Holder shall deliver a
written notice (an "Exchange Notice") to Enterprise GP. Within five business
days after the receipt by Enterprise GP of such Exchange Notice, the parties
shall mutually determine the total number of Exchange Units to be issued to the
Holder in exchange for the Holder Membership Interests by application of the
Exchange Formula, subject if applicable to Section 2.3(b) below (the "Total
Number of
5
Exchange Units"), and execute an acknowledgement in the form attached hereto as
Exhibit A (the "Acknowledgement") that sets forth the Total Number of Exchange
Units; provided, however, that if the Enterprise Members require the Holder to
exercise the Exchange Right pursuant to Section 2.5(b) below, no Exchange Notice
need be submitted by the Holder and the parties shall instead mutually determine
the Total Number of Exchange Units and execute the Acknowledgement within five
business days after the receipt by the Holder of the written notice described in
such Section 2.5(b); and provided, further, that if the parties are unable to
agree upon the Total Number of Exchange Units (including the amount of any
adjustment that may be required under Section 2.2 above), the determination
shall be made in the manner provided in Section 2.3(b) below. After any
determination pursuant to this Section 2.3, the Total Number of Exchange Units,
as set forth in the Acknowledgement, shall thenceforth be fixed, subject to
adjustment only pursuant to the anti-dilution provisions set forth in Section
2.9.
(b) If the parties are unable to mutually agree on the Total
Number of Exchange Units within the periods provided for in Section 2.3(a), each
of the Holder, on the one hand, and the Enterprise Members, on the other hand,
shall select a firm of independent accountants of nationally recognized standing
with which neither the El Paso Parties, on the one hand, nor the Enterprise
Parties, on the other hand, has any material current business relationship
within five business days, which firms shall then mutually agree upon a third
firm of independent accountants of nationally recognized standing and refer the
matter to such third firm for resolution within five additional business days.
Such third firm shall determine the Total Number of Exchange Units within 15
business days of such referral. The aggregate fees and expense of such firms
shall be borne in the following manner: one-half by the Holder and one-half by
the Enterprise Members. The determination of the Total Number of Exchange Units
by such third firm shall be final, binding and conclusive on the parties.
SECTION 2.4 SECTION 16 CAP. Notwithstanding anything in this
Article II to the contrary, if the Holder determines that the number of Exchange
Units that would otherwise be delivered to the Holder in any single Exchange
would result in the Holder and/or any of its affiliates directly or indirectly
beneficially owning more than 9.9% of any class of equity security of Enterprise
MLP which is registered pursuant to Section 12 of the Exchange Act (calculated
pursuant to Section 16(a) of the Exchange Act) (a "9.9% Interest"), the number
of Exchange Units delivered to the Holder shall be limited to the maximum amount
of Exchange Units as would not result in the Holder and/or any of its affiliates
directly or indirectly beneficially owning more than a 9.9% Interest (the
"Section 16 Cap"); provided, however, that the parties hereto hereby expressly
acknowledge and agree that at all times during the term of this Agreement (a)
the Holder shall have the sole duty and responsibility to determine that the
number of Exchange Units delivered in any Exchange does not exceed the Section
16 Cap and (b) neither Enterprise MLP nor Enterprise GP shall have any
obligation to make any independent calculation or otherwise confirm that the
number of Exchange Units delivered in any such Exchange does not exceed the
Section 16 Cap limitation.
SECTION 2.5 TIMING OF EXERCISE OF EXCHANGE RIGHT.
(a) The Holder may exercise the Exchange Right at any time after
the 180th day following of the Step Two Closing Date, subject to earlier
exercise upon the occurrence of the events described in Section 2.5(c) below.
6
(b) If the Holder has not elected to exercise the Exchange Right
prior to the date that is 180 days after the third (3rd) anniversary of the Step
Two Closing Date, at any time thereafter, either of the Enterprise Members may
elect to require the Holder to exercise the Exchange Right by delivering written
notice to the Holder. The Exchange Formula applicable in the case of an election
by either of the Enterprise Members under this Section 2.5(b) shall be
calculated in the same manner as specified in Section 2.1 above (and in
accordance with Sections 2.2, 2.9 and other applicable provisions of this
Article II).
(c) Notwithstanding the limitations on the Holder's right to
exercise the Exchange Right in Section 2.5(a), the Holder may exercise the
Exchange Right (i) upon the public announcement of execution of definitive
transaction documents relating to (and in no event later than 10 days prior to
the consummation of such transaction) the (A) completion of a merger of
Enterprise MLP with another entity or (B) completion of the sale or other
disposition by Enterprise MLP or Enterprise GP of all or substantially all of
its assets, or (ii) at any time during the 10 days prior to the completion of a
direct or indirect Change of Member Control of the Enterprise Members described
in Section 9.04(e) of the Enterprise GP LLC Agreement and an election by the
Holder to exercise the Exchange Right (as provided under Section 9.04(c) of the
Enterprise GP LLC Agreement), (iii) upon the initiation of a Proposed Drag-Along
Transaction (as defined in the Enterprise GP LLC Agreement) and an election by
the Holder to exercise the Exchange Right (as provided under Section 9.05(b)(ii)
of the Enterprise GP LLC Agreement), (iv) at any time during the 10 days prior
to the completion of a liquidation of Enterprise MLP, (v) at any time during the
10 days after the declaration by Enterprise MLP of a distribution of Available
Cash from Capital Surplus (as such term is defined in the Enterprise Partnership
Agreement) or (vi) at any time after the commencement of a voluntary or an
involuntary bankruptcy or similar proceeding against Enterprise Products Company
or any of its material subsidiaries (including Enterprise GP), if at the time of
such exercise there is then pending a proceeding seeking payment pursuant to
ERISA from Enterprise GP of any amounts due relating to the termination of a
benefit plan subject to ERISA.
SECTION 2.6 EXCHANGE PROCEDURES AND SETTLEMENT.
(a) Within five business days after the execution of the
Acknowledgement, the Holder shall deliver written notice to Enterprise GP which
notice must include a determination, made in good faith, that either (i) the
total number of Exchange Units set forth in the Acknowledgement can be issued to
the Holder in compliance with the Section 16 Cap limitation or (ii) a lesser
number of Exchange Units must be delivered to the Holder in order to maintain
compliance with the limitations of the Section 16 Cap (a "Confirmation Notice").
The Holder shall have sole responsibility and liability for determining the
number of Exchange Units so included in the Confirmation Notice. Enterprise GP
shall be entitled to rely, without independent investigation, entirely upon the
number of Exchange Units set forth in the Confirmation Notice by the Holder as
to the number of Exchange Units that may be delivered to the Holder in
compliance with the Section 16 Cap limitation, and the parties hereto hereby
expressly acknowledge and agree that Enterprise GP shall not have any obligation
to make any independent calculation or otherwise confirm that the number of
Exchange Units delivered complies with the Section 16 Cap limitation. Within
five business days after receipt by Enterprise GP of a valid Confirmation Notice
conforming to the requirements of this Section 2.6(a), Enterprise GP shall
deliver to the Holder, at Enterprise GP's sole election, one of the
7
following: (x) such number of Exchange Units set forth in such Confirmation
Notice in fully certificated form, (y) cash by wire transfer of immediately
available funds to an account designated in writing by the Holder at least two
business days beforehand in an amount equal to the fair market value (based on
the average closing price of Common Units on the New York Stock Exchange for the
ten consecutive trading days next preceding the date of receipt by Enterprise GP
of such Confirmation Notice) of the aggregate number of Exchange Units set forth
in such Confirmation Notice or (z) a combination of (1) a number of Exchange
Units in fully certificated form that is at least 10,000 Exchange Units but is
less than the number set forth in the Confirmation Notice (the shortfall in
Exchange Units below the number set forth in the Confirmation Notice being
referred to as the "Exchange Unit Shortfall") and (2) cash by wire transfer of
immediately available funds to an account designated in writing by the Holder at
least two business days beforehand in an amount equal to the fair market value
(based on the average closing price of Common Units on the New York Stock
Exchange for the ten consecutive trading days next preceding the date of receipt
by Enterprise GP of such Confirmation Notice) of the Exchange Unit Shortfall.
(b) Notwithstanding the foregoing, if any Exchange is effected
hereunder following the record date established by Enterprise MLP for its Common
Unit Quarterly Distribution for a particular calendar quarter but prior to the
record date to be established by Enterprise GP for its distribution of GP
Available Cash for such quarter, the Holder shall be entitled to receive, upon
the date of distribution by Enterprise GP, the Holder Quarterly Distribution as
if it were still an owner of its Membership Interest on the record date of
Enterprise GP for its distribution of GP Available Cash for such quarter. For
the sake of clarity and to assure that no negative inference is drawn from the
language immediately above, in all other circumstances, the Holder will be
entitled to any distribution from Enterprise GP and/or Enterprise MLP if it is
the owner of a membership interest of Enterprise GP (including any unexchanged
Membership Interest) or partnership interest of Enterprise MLP, respectively, on
the applicable record date established for such distribution subject to the
provisions of the Enterprise GP LLC Agreement and the Enterprise Partnership
Agreement.
(c) Notwithstanding anything else in this Agreement, the Holder
shall not be required to make any capital contribution to Enterprise GP in
connection with the delivery of Exchange Units by Enterprise GP to the Holder
upon exercise by the Holder of the Exchange Right hereunder.
(d) If the Holder, pursuant to Section 2.6(a)(ii), includes in the
Confirmation Notice less than the Total Number of Exchange Units set forth in
the Acknowledgement, then with respect to the Exchange Units not included in the
Confirmation Notice (the "Section 16 Exchange Units"), Enterprise GP shall have
the right (but not the obligation) to purchase all (but not less than all) of
Holder's remaining Membership Interest in consideration of the payment to the
Holder of cash by wire transfer of immediately available funds to an account
designated in writing by the Holder at least two business days beforehand in an
amount equal to the fair market value (based on the average closing price of
Common Units on the New York Stock Exchange for the ten consecutive trading days
next preceding the date of receipt by Enterprise GP of such Confirmation Notice)
of the Section 16 Exchange Units. Enterprise GP may exercise this right by
notice to the Holder on or before the delivery by Enterprise GP to the Holder,
pursuant to
8
Section 2.6(a), of Exchange Units, cash, or a combination thereof, and
Enterprise GP shall make the payment to the Holder contemplated by this Section
2.6(d) concurrently with such delivery.
SECTION 2.7 ADDITIONAL EXCHANGES.
(a) If the effect of the application of the Section 16 Cap is to
cause Enterprise GP to deliver less than the Total Number of Exchange Units to
the Holder in the initial Exchange pursuant to this Article II (the "Initial
Exchange"), provided that Enterprise GP has not purchased Holder's remaining
Membership Interest pursuant to Section 2.6(d), then on the first business day
of each fiscal quarter of Enterprise MLP commencing thereafter the Holder shall
provide written notice (an "Update Notice") to Enterprise GP which must include
a determination, made in good faith, whether the Holder may receive additional
Exchange Units in compliance with the limitations of the Section 16 Cap and, if
so, the requested number of additional Exchange Units to be delivered to the
Holder ("Additional Exchange Units") in exchange for the contribution of a
corresponding portion (calculated in accordance with the Exchange Formula) of
the Holder's remaining Membership Interests; provided, however, that the maximum
number of Additional Exchange Units that the Holder may request to be delivered
pursuant to any Update Notice, and that Enterprise GP shall be obligated to
deliver in response thereto, may not exceed the lesser of (i) the excess of the
Total Number of Exchange Units over the sum of all Exchange Units delivered to
the Holder prior to the date of such Update Notice (including Exchange Units
issued in the Initial Exchange and all Additional Exchange Units issued in any
subsequent Exchanges) and (ii) the maximum number of Additional Exchange Units
that may be delivered to the Holder in compliance with the limitation of the
Section 16 Cap; provided, further, Enterprise GP shall be entitled to rely,
without independent investigation, entirely upon the number of Additional
Exchange Units set forth by the Holder in the Update Notice as to the number of
Exchange Units that may be delivered to the Holder in compliance with the
limitation set forth in clause (ii) above, and the parties hereto hereby
expressly acknowledge and agree that Enterprise GP shall have no obligation to
make any independent calculation or otherwise confirm that such number of
Additional Exchange Units issued complies with the limitation set forth in
clause (ii) above.
(b) Within five business days of receipt of such Update Notice
conforming to the requirements of Sections 2.7(a), Enterprise GP shall deliver
to the Holder one of the following: (i) such number of Additional Exchange Units
requested in the Update Notice in fully certificated form, (ii) cash in an
amount equal to fair market value (based on the average closing price of Common
Units on the New York Stock Exchange for the ten consecutive trading days next
preceding the date of receipt by Enterprise GP of such Update Notice) of the
aggregate number of Additional Exchange Units set forth in such Update Notice by
wire transfer of immediately available funds to an account designated in writing
by the Holder at least two business days beforehand or (iii) a combination of
(A) a number of Additional Exchange Units in fully certificated form that is at
least 10,000 Additional Exchange Units but is less than the number requested in
the Update Notice (the shortfall in Additional Exchange Units below the number
requested in the Update Notice being referred to as the "Additional Exchange
Unit Shortfall") and (B) cash by wire transfer of immediately available funds to
an account designated in writing by the Holder at least two business days
beforehand in an amount equal to the fair market value (based on the average
closing price of Common Units on the New York Stock
9
Exchange for the ten consecutive trading days next preceding the date of receipt
by Enterprise GP of such Update Notice) of the Additional Exchange Unit
Shortfall.
SECTION 2.8 REFLECTION OF REDUCED SHARING RATIO. Promptly
following each Exchange pursuant to this Article II, Enterprise GP shall amend
Exhibit A to the Enterprise GP LLC Agreement, in compliance with the procedures
set forth therein, to reflect the reduced Sharing Ratio (as defined in the
Enterprise GP LLC Agreement) attributable to Holder's Membership Interest as a
result of such Exchange.
SECTION 2.9 ANTI-DILUTION PROVISIONS. During the period that
commences upon the date of the initial election to exercise the Exchange Right
and continues for so long as less than the Total Number of Exchange Units have
been delivered to the Holder pursuant to the terms of this Article II, the
excess of the Total Number of Exchange Units over the aggregate number of
Exchange Units delivered in all prior Exchanges (such excess, the "Unissued
Exchange Units") shall be subject to adjustment from time to time upon the
happening of certain events as follows (provided, however, that no such
adjustment shall be made to the extent the Holder has received a distribution
attributable to such event on account of its remaining Membership Interest
representing the Unissued Exchange Units):
(a) Reorganization, Merger or Consolidation. If Enterprise MLP
reorganizes, merges, consolidates or otherwise combines with another Person in a
transaction whereby all of the holders of Common Units will receive securities,
property or assets of Enterprise MLP or its successor payable with respect to or
in exchange for each Common Unit held, lawful and adequate provision shall be
made whereby the Holder shall have the right to receive (in lieu of the Unissued
Exchange Units), upon each subsequent Exchange following the consummation of
such transaction, the number of securities, property or assets of Enterprise MLP
or its successor resulting from such reorganization, merger, consolidation or
other transaction as would have been issued or payable to the Holder if the
Holder had held a number of Common Units equal to (and in lieu of) the total
number of Unissued Exchange Units immediately prior to the consummation of such
transaction. The foregoing provisions of this Section 2.9(a) shall similarly
apply to successive reorganizations, mergers, consolidations or other applicable
transactions and to the stock or securities of any other Person that are at the
time receivable upon exercise of the Exchange Right.
(b) Reclassification, etc. If Enterprise MLP, by reclassification
of securities or otherwise, changes the Common Units or any other securities as
to which the Exchange Right may apply hereunder into the same or a different
number of securities of any other class or classes, each subsequent Exchange in
respect of Unissued Exchange Units shall thereafter represent the right to
acquire upon each such Exchange such number and kind of securities as would have
been issuable, as the result of such change, with respect to or in exchange for
a number of Common Units equal to the total number of Unissued Exchange Units.
(c) Subdivision or Combination; Unit Dividends. If Enterprise MLP
shall split, divide or combine its outstanding Common Units or declare and pay a
dividend on its outstanding Common Units which consists of additional Common
Units (including a split effected in the form of a dividend), then the total
number of Unissued Exchange Units shall be adjusted, as of the opening of
business on the effective date of such split, subdivision or
10
combination or the day after the day upon which such dividend or other
distribution is paid to unitholders, as the case may be, to a new total number
of Unissued Exchange Units determined by multiplying the total number of
Unissued Exchange Units immediately prior to such payment or other distribution
by a fraction (i) the numerator of which shall be the total number of
outstanding Common Units immediately after such split, dividend, combination or
distribution and (ii) the denominator of which shall be the total number of
outstanding Common Units immediately prior to such split, dividend, combination
or distribution.
(d) Other Distributions on Common Units. If Enterprise MLP shall
make a distribution on its Common Units which consists of (i) limited partner
interests of Enterprise MLP other than additional Common Units, evidences of its
indebtedness, or assets (including distributions of Available Cash from Capital
Surplus (as such term is defined in the Enterprise Partnership Agreement) or
securities (other than Common Units), but excluding distributions of Available
Cash from Operating Surplus (as such term is defined in the Enterprise
Partnership Agreement)), then the Holder shall be entitled to receive, upon each
Exchange for Unissued Exchange Units, that portion of any such distribution
which the Holder would have been entitled to receive, had such Exchange occurred
immediately prior to the record date of such distribution; provided, however,
that if any such distribution consists of property which has a limited life or
expiration date (including but not limited to options, warrants or similar
instruments), the Holder shall be entitled to receive such property on the date
of such distribution. At the time of the record date established for any such
distribution, Enterprise GP shall allocate sufficient reserves to ensure the
timely and full performance of the provisions of this Section 2.9(d).
(e) Self Tender. If (i) Enterprise MLP shall engage in a tender
offer for more than 10% of the Common Units issued and outstanding at such time
and (ii) such tender offer is closed and payment is made for the Common Units
purchased therein for a purchase price per unit that is at least 5% greater than
the closing sales price per Common Unit on the trading day immediately preceding
the announcement of such tender offer (the "Pre-Tender Value"), then the Holder
shall be entitled to receive, upon each Exchange for Unissued Exchange Units (in
addition to such Exchange Units), the excess of the purchase price per Common
Unit paid upon closing of the tender offer over the Pre-Tender Value per Common
Unit multiplied by the total number of Unissued Exchange Units which would have
been sold by the Holder if it tendered all of the Unissued Exchange Units to
Enterprise MLP in such tender offer. Upon the closing of any such tender offer,
Enterprise GP shall allocate sufficient reserves to ensure the timely and full
performance of the provisions of this Section 2.9(e).
(f) No Other Adjustments. Other than specifically as set forth
above in this Section 2.9, no adjustment shall be made to the total number
Unissued Exchange Units as a result of or pursuant to the granting or issuance
by Enterprise MLP of additional Common Units, or any security convertible
thereinto or exercisable or exchangeable therefore, including without limitation
(i) the issuance of Common Units or any other security of Enterprise MLP or any
Affiliate thereof (including securities convertible into or exchangeable for
Common Units) pursuant to an underwritten public offering or a private
placement, (ii) the issuance of Common Units or any other security of Enterprise
MLP or any affiliate thereof (including securities convertible into or
exchangeable for Common Units) as consideration in an acquisition transaction,
(iii) the issuance of Common Units or any other security of Enterprise MLP or
any affiliate thereof (including securities convertible into or exchangeable for
Common Units)
11
pursuant to a distribution reinvestment plan or in payment or satisfaction of
any dividend upon or distribution to any class of unit or equity security of
Enterprise MLP other than Common Units and (iv) the issuance of options,
restricted Common Units or "phantom" units exercisable for or that upon vesting
become Common Units, or the issuance of Common Units upon the exercise or
vesting or such options or rights, to officers, employees or directors of, or
consultants to, Enterprise MLP, Enterprise GP or any of their Affiliates.
(g) No Multiple Adjustments. In the event of any one circumstance
which may give rise to an adjustment of the total number of Unissued Exchange
Units under one or more of Sections 2.9(a) through 2.9(e) above, Enterprise GP
may only apply the provisions of one of such paragraphs if necessary in order to
avoid unreasonable results given the circumstances, such determination to be
made in Enterprise GP's good faith and reasonable discretion; provided, however,
that a series of steps in a transaction or action shall not be considered one
circumstance for the purposes of this Section 2.9(g).
(h) Calculation of Adjustments. Upon each occurrence of an event
causing an adjustment pursuant to this Section 2.9, Enterprise GP will promptly
(i) calculate such adjustment and retain a record of such calculation at its
principal office and (ii) deliver to the Holder a certificate signed by an
appropriate officer on behalf of Enterprise GP, setting forth in reasonable
detail the event requiring the adjustment, the method of calculation of the
adjustment, and the number of Unissued Exchange Units and/or other securities,
property or assets after giving effect to such adjustment (an "Adjustment
Certificate"). If the Holder does not agree with such calculation, the Holder
shall give written notice (an "Adjustment Dispute Notice") to Enterprise GP
within ten business days of the receipt of such Adjustment Certificate. If the
parties are unable to mutually agree on the calculation of such adjustment
within five business days of receipt by Enterprise GP of such Adjustment Dispute
Notice, the parties shall each select a firm of independent accountants of
nationally recognized standing within five business days, which firms shall then
mutually agree upon a third firm of independent accountants of nationally
recognized standing and refer the matter to such third firm for resolution
within five additional business days. Such third firm shall determine the amount
of such adjustment to the Total Number of Exchange Units within 15 business days
of such referral. The aggregate fees and expense of such firms shall be borne in
the following manner: one-half by the Holder and one-half by Enterprise GP. The
determination by such firm of the calculation of the adjustment described in the
Adjustment Notice shall be final, binding and conclusive on the parties.
SECTION 2.10 NONSEPARABILITY. The Exchange Right is not separable
from Holder's Membership Interests. If El Paso GP Holdco or any subsequent
Holder transfers such Membership Interests (which transfer may only be made in
compliance with applicable provisions of the Enterprise GP LLC Agreement), the
Exchange Right shall be transferred to such transferee who shall then constitute
the Holder hereunder.
SECTION 2.11 LISTING. Prior to the delivery of any Exchange Units
pursuant to this Article II, Enterprise GP shall cause such Exchange Units to be
approved for listing on the New York Stock Exchange or such other exchange or
quotation system on which the Common Units are then listed (to the extent such
Exchange Units are not then so listed).
12
ARTICLE III
[RESERVED]
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1 SHELF REGISTRATION STATEMENT. Within 120 days after
the Step Two Closing Date or, if earlier, within 30 days after the exercise of
the Exchange Right by the Holder pursuant to Section 2.5(c) (the "Initial Shelf
Filing Deadline"), Enterprise MLP shall file with the Commission a "shelf"
registration statement on Form S-3 pursuant to Rule 415 under the Securities Act
(the "Initial Shelf Registration Statement") providing for the resale of an
aggregate of (i) such number of Exchange Units that may be issued to the Holder
pursuant to Article II based on the number of Common Units outstanding on the
Step Two Closing Date and (ii) the aggregate number of Merger Units received by
El Paso Sub 1 and El Paso Sub 2 upon closing of the Merger.
SECTION 4.2 ADDITIONAL COMMON UNITS. If the Initial Shelf
Registration Statement, even if supplemented or amended, does not have
sufficient availability to provide for the resale of Exchange Units issued to
the Holder, the Holder may request that Enterprise MLP file with the Commission
one additional "shelf" registration statement on Form S-3 pursuant to Rule 415
under the Securities Act to accommodate any resale of Exchange Units in such
amounts as are requested at such time by the Holder in writing (a "Shelf
Notice"). Enterprise MLP shall file such additional "shelf" registration
statement (with the Initial Shelf Registration Statement, a "Shelf Registration
Statement"), if any, within 30 days after receipt by Enterprise MLP of a written
request from the Holder (with the Initial Shelf Filing Deadline, a "Shelf Filing
Deadline").
SECTION 4.3 EFFECTIVENESS. Subject to the provisions of this
Article IV, Enterprise MLP shall use its best efforts to cause (i) the Initial
Shelf Registration Statement to be declared effective within 60 days after the
Initial Shelf Filing Deadline (the "Initial Effectiveness Target Date") and (ii)
any subsequent Shelf Registration Statement to be declared effective no later
than 90 days after delivery to Enterprise MLP by the Holder of a Shelf Notice
(with the Initial Effectiveness Target Date, an "Effectiveness Target Date") and
in either case shall use best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended to the extent necessary to
assure that it is available for resale of the Common Units by the Holder and
that it conforms in all material respects with the requirements the Securities
Act, in each case during the entire period (the "Effectiveness Period")
beginning on the date such Shelf Registration Statement shall first be declared
effective under the Securities Act and ending on the earlier to occur of (i) the
sale pursuant to a Shelf Registration Statement of all of the Registrable
Securities registered under such Shelf Registration Statement and (ii) the date
on which all of the Common Units registered under such Shelf Registration
Statement are no longer Registrable Securities.
SECTION 4.4 INFORMATION FURNISHED BY HOLDER. The Holder shall
furnish to Enterprise MLP in writing, as soon as practicable after the earlier
of (a) the exercise of the Exchange Right by the Holder pursuant to Section
2.5(c) and (b) 90 days after the Step Two Closing Date (in the case of the
Initial Shelf Registration Statement) or after requesting the filing of an
additional Shelf Registration Statement pursuant to Section 4.2, the information
specified
13
in Items 507 and 508 of Regulation S-K under the Securities Act and any other
information reasonably requested by Enterprise MLP for inclusion in the
applicable Shelf Registration Statement pursuant to the Securities Act.
Notwithstanding Sections 4.1 and 4.2, Enterprise MLP shall not be required to
file any such Shelf Registration Statement until the Holder has complied with
the immediately preceding sentence. In addition, the Holder shall promptly
furnish to Enterprise MLP (i) any additional information required to be
disclosed in such Shelf Registration Statement in order to make the information
previously furnished to Enterprise MLP by the Holder not materially misleading
and (ii) any additional information as may be reasonably requested by Enterprise
MLP for inclusion in any new prospectus or prospectus supplement or
post-effective amendment. For purposes of this Section 4.4 and Sections 4.5
through 4.11, any reference to "Holder" shall also include El Paso Sub 1 and El
Paso Sub 2.
SECTION 4.5 REGISTRATION PROCEDURES.
(a) In connection with each Shelf Registration Statement,
Enterprise MLP shall comply with all the provisions of Section 4.5(b) hereof and
shall, in accordance with Sections 4.1, 4.2, 4.3 and 4.4 hereof, prepare and
file with the Commission each Shelf Registration Statement relating to the
registration on Form S-3 under the Securities Act.
(b) In connection with each Shelf Registration Statement and any
related prospectus or prospectus supplement required by this Agreement to permit
the sale or resale of Common Units, Enterprise MLP shall:
(i) Subject to any notice by Enterprise MLP in accordance
with this Section 4.5(b) of the existence of any fact or event of the kind
described in Section 4.5(b)(iii)(D), use its best efforts to keep such Shelf
Registration Statement continuously effective during the Effectiveness Period;
upon the occurrence of any event that would cause such Shelf Registration
Statement or the related prospectus or prospectus supplement (A) to contain a
material misstatement or omission or (B) not be effective and usable for resale
of Registrable Securities during the Effectiveness Period, Enterprise MLP shall
file promptly an appropriate amendment or supplement to or a document to be
incorporated by reference into such Shelf Registration Statement or a report
filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use its best efforts to
cause any such amendment to be declared effective and such Shelf Registration
Statement and the related prospectus or prospectus supplement to become usable
for their intended purposes as soon as practicable thereafter. Notwithstanding
anything in this Agreement to the contrary, Enterprise MLP may suspend the
effectiveness or use of and elect not to keep current such Shelf Registration
Statement by written notice to the Holder for a period not to exceed an
aggregate of 30 days in any 90-day period (each such period a "Suspension
Period") if:
(x) an event occurs and is continuing as a
result of which such Shelf Registration Statement would, in
Enterprise MLP's reasonable judgment, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; and
14
(y) Enterprise MLP reasonably determines that
the disclosure of such event at such time would or could
reasonably be expected to either (i) have a material adverse
effect on the business or prospects of Enterprise MLP and its
subsidiaries, taken as a whole, or (ii) adversely affect a
material financing, acquisition or other transaction (existing
or planned);
provided, that (A) in the event the disclosure relates to a previously
undisclosed proposed or pending material business transaction, the disclosure of
which would impede the Enterprise MLP's ability to consummate such transaction,
Enterprise MLP may extend a Suspension Period from 30 days to 45 days and (B)
the Suspension Periods shall not exceed an aggregate of 90 days in any 365-day
period. The Holder, by its acceptance of a Registrable Security, agrees to hold
in confidence any communication by Enterprise MLP relating to an event described
in Section 4.5(b)(i)(x) and (y) or Section 4.5(b)(iii)(D).
(ii) Prepare and file with the Commission such amendments
and post-effective amendments to such Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement effective during the
Effectiveness Period; cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Securities Act in a timely manner;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement or supplement to the prospectus.
(iii) Advise the underwriter(s), if any, and, in the case
of (A), (C) and (D) below, the Holder promptly and, if requested by such
Persons, to confirm such advice in writing:
(A) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to such Shelf Registration Statement or any post-effective
amendment thereto, when the same has become effective;
(B) of any request by the Commission for
amendments to such Shelf Registration Statement or amendments or
supplements to the prospectus or for additional information relating
thereto;
(C) of the issuance by the Commission of any
stop order suspending the effectiveness of such Shelf Registration
Statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Registrable
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes; or
(D) of the existence (but not the nature) of any
fact or the happening of any event, during the Effectiveness Period,
that makes any statement of a material fact made in such Shelf
Registration Statement, the related prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
such Shelf Registration Statement,
15
the related prospectus or any amendment or supplement thereto in order
to make the statements therein not misleading.
If at any time the Commission shall issue any stop order suspending the
effectiveness of such Shelf Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Registrable Securities
under state securities or Blue Sky laws, Enterprise MLP shall use its best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(iv) Furnish to counsel for the Holder and each of the
underwriter(s), if any, before filing with the Commission, a copy of such Shelf
Registration Statement and copies of any prospectus included therein or any
amendments or supplements to either of such Shelf Registration Statement or
prospectus (other than documents incorporated by reference after the initial
filing of such Shelf Registration Statement), which documents will be subject to
the review of such counsel and underwriter(s), if any, for a period of three
business days, and Enterprise MLP will not file such Shelf Registration
Statement or prospectus or any amendment or supplement to such Shelf
Registration Statement or prospectus (other than documents incorporated by
reference) to which such counsel or the underwriter(s), if any, shall reasonably
object within three business days after the receipt thereof.
(v) Make available pursuant to a confidentiality and
non-use agreement at reasonable times for inspection by one or more
representatives of the Holder any underwriter, if any, participating in any
distribution pursuant to such Shelf Registration Statement, and any attorney or
accountant retained by the Holder or any of the underwriter(s), all financial
and other records, pertinent corporate documents and properties of Enterprise
MLP as shall be reasonably necessary to enable them to exercise any applicable
due diligence responsibilities and to supply all information reasonably
requested by any such representative or representatives of the Holder,
underwriter, attorney or accountant in connection with such Shelf Registration
Statement after the filing thereof and before its effectiveness; provided,
however, that the Holder shall be responsible for ensuring that any such
information shall be kept confidential and not used for any purpose other than
as contemplated hereby.
(vi) If requested by the Holder or the underwriter(s), if
any, incorporate in such Shelf Registration Statement or prospectus, pursuant to
a prospectus supplement or post-effective amendment if necessary, such
non-confidential information as the Holder and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation: (1)
information relating to the "Plan of Distribution" of the Registrable
Securities, (2) information with respect to the number of Registrable Securities
being sold, (3) the purchase price being paid therefor and (4) any other terms
of the offering of the Registrable Securities to be sold in such offering; and
make all required filings of such prospectus supplement or post-effective
amendment as soon as reasonably practicable after Enterprise MLP is notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment.
(vii) Furnish to the Holder and each of the underwriter(s),
if any, without charge, at least one copy of such Shelf Registration Statement,
as first filed with the Commission, and of each amendment thereto (and any
documents incorporated by reference
16
therein or exhibits thereto (or exhibits incorporated in such exhibits by
reference) as such Person may request in writing).
(viii) Deliver to the Holder and each of the underwriter(s),
if any, without charge, as many copies of the prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request.
(ix) In the event of an Underwritten Offering, Enterprise
MLP shall enter into a standard underwriting agreement with the underwriters and
shall:
(A) upon request, furnish to the Holder and each
underwriter, if any, in such substance and scope as they may reasonably
request and as are customarily made by Enterprise MLP to underwriters
in primary underwritten offerings, upon the date of closing of any sale
of Registrable Securities in an Underwritten Offering:
(1) an officer's certificate, dated the
date of such closing, confirming, as of the date
thereof, such matters as such parties may reasonably
request;
(2) opinions, each dated the date of
such closing, of counsel (inside and outside) to
Enterprise MLP covering such matters as are
customarily covered in legal opinions to underwriters
in connection with primary underwritten offerings of
securities by Enterprise MLP; and
(3) customary comfort letters, dated
the date of such closing, from Enterprise MLP's
independent accountants (and from any other
accountants whose report is contained or incorporated
by reference in such Shelf Registration Statement),
in the customary form and covering matters of the
type customarily covered in comfort letters to
underwriters in connection with primary underwritten
offerings of securities; provided, that if Enterprise
MLP has used its best efforts to obtain such letters,
Enterprise MLP shall not be responsible if the
accountants do not agree to deliver same;
(B) set forth in full in the underwriting
agreement, if any, indemnification provisions and procedures which
provide rights no less protective than those set forth in Section 4.10
hereof with respect to all parties indemnified; and
(C) deliver such other documents and
certificates as may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into
by the Holder pursuant to this clause (ix).
(x) Before any public offering of Registrable Securities,
cooperate with the Holder, the underwriter(s), if any, and their respective
counsel in connection with the registration and qualification of the Registrable
Securities under the securities or Blue Sky laws of such jurisdictions as the
Holder or underwriter(s), if any, may reasonably request and do any and all
other acts or things necessary or reasonably advisable to enable the disposition
in such
17
jurisdictions of the Registrable Securities covered by such Shelf Registration
Statement; provided, however, that Enterprise MLP shall not be required (A) to
register or qualify as a foreign limited partnership or a dealer of securities
where it is not now so qualified or to take any action that would subject it to
the service of process in any jurisdiction where it is not now so subject or (B)
to subject itself to taxation in any such jurisdiction if it is not now so
subject.
(xi) Cooperate with the Holder and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends (unless required by applicable securities laws); and enable such
Registrable Securities to be in such denominations and registered in such names
as the Holder or the underwriter(s), if any, may reasonably request within a
reasonable time before any sale of Registrable Securities made by such
underwriter(s).
(xii) Use its best efforts to cause the Registrable
Securities covered by any Shelf Registration Statement to be registered with or
approved by such other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if any,
to consummate the disposition of such Registrable Securities, subject to the
proviso in clause (x) above.
(xiii) Subject to Section 4.5(b)(i) hereof, if any fact or
event contemplated by Section 4.5(b)(iii)(D) hereof shall exist or have
occurred, use its best efforts to prepare a supplement or post-effective
amendment to such Shelf Registration Statement or related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Registrable Securities,
the prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(xiv) Provide CUSIP numbers for all Registrable Securities
not later than the effective date of such Shelf Registration Statement and
provide the transfer agent with certificates for the Common Units that are in a
form eligible for transfer in accordance with applicable requirements.
(xv) Cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence investigation by
any underwriter that is required to be retained in accordance with the rules and
regulations of the NASD.
(xvi) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and all reporting
requirements under the rules and regulations of the Exchange Act.
(c) The Holder agrees that, upon receipt of any notice from
Enterprise MLP of the existence of any fact of the kind described in Section
4.5(b)(iii)(D) hereof, the Holder will, and will use its best efforts to cause
any underwriter(s) in an Underwritten Offering to, forthwith discontinue
disposition of Registrable Securities pursuant to such Shelf Registration
Statement until:
(i) the Holder has received copies of the supplemented or
amended prospectus contemplated by Section 4.5(b)(xiii) hereof; or
18
(ii) the Holder is advised in writing by Enterprise MLP
that the use of the prospectus may be resumed.
If so directed by Enterprise MLP, the Holder will deliver to Enterprise MLP (at
Enterprise GP's expense) all copies, other than permanent file copies then in
the Holder's possession, of the prospectus covering such Registrable Securities
that was current at the time of receipt of such notice of suspension.
SECTION 4.6 STOP TRANSFER INSTRUCTIONS. Enterprise MLP may give
such stop transfer instructions to its transfer agent as it shall deem
reasonably necessary to prevent any sale of shares of Common Units under a Shelf
Registration Statement at any time when the Holder is not permitted to make such
a sale pursuant to this Article IV.
SECTION 4.7 NO PIGGYBACK OR OTHER REGISTRATION RIGHTS. Other
than as set forth in this Article IV, the Holder shall have no registration
rights with respect to Common Units beneficially owned by the Holder (including
any "piggyback" registration rights). In addition, Enterprise MLP shall not be
required to include any Common Units acquired by the Holder for resale under a
Shelf Registration Statement other than the Common Units that constitute
Registrable Securities under this Agreement.
SECTION 4.8 REGISTRATION EXPENSES. Enterprise GP shall bear all
expenses incident to the filing of any Shelf Registration Statement, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all fees and disbursements of counsel for Enterprise MLP;
(v) all application and filing fees in connection with listing or quoting, as
the case may be, the Common Units on each securities exchange or automated
quotation system on which the Common Units are then listed or quoted; and (vi)
all fees and disbursements of independent certified public accountants of
Enterprise MLP (including the expenses of any special audit and comfort letters
required by or incident to such performance); provided, however, the Holder
shall bear the all the cost of (x) any discount or selling commission incurred
in connection with the sale of any of such Common Units and (y) any fees and
disbursements of counsel for the Holder or any other professional advisors
engaged by the Holder.
SECTION 4.9 RULE 144. Enterprise MLP covenants that it will file
at times chosen by Enterprise MLP any reports required to be filed by it under
Section 13 or 15(d) of the Exchange Act, all to the extent required from time to
time to enable the Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 under the Securities Act, as such Rule may be amended from time to time
(or any similar rule or regulation hereafter adopted by the Commission). Upon
the reasonable request of the Holder, Enterprise MLP will deliver to the Holder
a written statement as to whether it has complied with such requirements.
Enterprise MLP further covenants that, upon the request of the Holder, it will
take any further actions reasonably necessary to permit the Holder to transfer
the Common Units under Rule 144, including, without limitation, causing any
restrictive legends to be removed from any certificates representing Common
Units in accordance with the terms of such legends.
19
SECTION 4.10 INDEMNIFICATION.
(a) For purposes of this Section 4.10, the following terms shall
have the following meanings:
(i) "Preliminary Prospectus" means any preliminary
prospectus supplement to the base prospectus included in a Shelf Registration
Statement, together with such base prospectus, that describes the Common Units
and the offering thereof, filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Securities Act and used
prior to the filing of the Prospectus.
(ii) "Prospectus" means the final prospectus supplement,
in the form first filed pursuant to Rule 424(b) under the Securities Act,
together with the base prospectus included in a Shelf Registration Statement;
and any reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be, under the
Exchange Act.
(iii) "Registration Statement" means the various parts of
any Shelf Registration Statement, including all exhibits thereto and including
(i) the information contained in the form of final prospectus supplement to the
base prospectus included in such Shelf Registration Statement, filed with the
Commission after the date hereof pursuant to Rule 424(b) under the Securities
Act in accordance with this Article IV and deemed by virtue of Rule 430A under
the Securities Act to be part of such Shelf Registration Statement at the time
it was declared effective and (ii) the documents incorporated by reference in
such final prospectus supplement.
(b) Enterprise GP will indemnify and hold harmless the Holder
against any losses, claims, damages or liabilities, joint or several, to which
the Holder may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Holder for any legal or other
expenses reasonably incurred by the Holder in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that Enterprise GP shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to Enterprise MLP by the Holder expressly for use
therein. To the extent Enterprise GP cannot perform its obligations under this
Section 4.10(b), it will exercise its indemnification rights under the
Enterprise Partnership Agreement.
20
(c) The Holder will indemnify and hold harmless Enterprise MLP and
Enterprise GP against any losses, claims, damages or liabilities to which either
Enterprise MLP, Enterprise GP or both may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, Registration Statement or Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, Registration
Statement or Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to Enterprise MLP by the Holder
expressly for use therein; and will reimburse Enterprise MLP and Enterprise GP
for any legal or other expenses reasonably incurred by the Enterprise MLP and
Enterprise GP in connection with investigating or defending any such action or
claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under Sections
4.10(b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 4.10 is
unavailable to or insufficient to hold harmless an indemnified party under
Sections 4.10 (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of Enterprise MLP and Enterprise GP, on the one hand, and the
Holder, on the other hand, in connection with the statements or
21
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Enterprise MLP and Enterprise GP, on the one hand, or
Holder, on the other hand, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
Enterprise MLP, Enterprise GP and the Holder agree that it would not be just and
equitable if contributions pursuant to this Section 4.10(e) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section
4.10(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 4.10(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.10(e), the Holder shall not be required to
contribute any amount in excess of the amount by which the aggregate
consideration received by the Holder from the sale of any Registrable Securities
pursuant to the relevant Shelf Registration Statement exceeds the amount of any
damages which the Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The obligations of Enterprise GP under this Section 4.10 shall
be in addition to any liability which Enterprise GP may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Holder within the meaning of the Securities Act; and the obligations of the
Holder under this Section 4.10 shall be in addition to any liability which the
Holder may otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of Enterprise GP and to each person, if any, who
controls Enterprise MLP and Enterprise GP within the meaning of the Securities
Act.
22
SECTION 4.11 LOCKUP. Notwithstanding any provision herein to the
contrary, if Enterprise MLP at any time shall register Common Units or
securities that are convertible, exchangeable or exercisable into or for Common
Units under the Securities Act for sale in an Underwritten Offering, then to the
extent requested by the underwriters for such offering, the Holder shall not,
and shall cause its Affiliates not to, sell, make any short sale of, grant any
option for the purchase of, or otherwise dispose of, directly or indirectly, any
Common Units without the prior written consent of the underwriters, for a period
designated by the managing underwriter in writing to the Holder prior to the
beginning of such period, which period shall (i) begin not more than three
business days prior to the effectiveness of the registration statement pursuant
to which such Underwritten Offering shall be made (or within three business days
prior to the execution of the applicable underwriting agreement in the case of
an offering pursuant to Rule 415 under the Securities Act) and (ii) end not last
more than 90 days after the closing of such Underwritten Offering or such
shorter lockup period to which Enterprise MLP or any other unitholders of
Enterprise MLP holding at least 5% of the Common Units of Enterprise MLP (on a
fully diluted basis) are subject. If requested, the Holder will enter into an
agreement with the underwriters to the foregoing effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each
party to this Agreement hereby represents and warrants to each other party that
the statements in this Article V are true and correct as of the date of this
Agreement.
(a) Such party is an entity duly created, formed or organized,
validly existing, and in good standing under the Laws of the jurisdiction of its
creation, formation, or organization. There is no pending or, to such party's
knowledge, Threatened, Action (or Basis therefor) for the dissolution,
liquidation, insolvency, or rehabilitation of such party.
(b) Such party has the entity power and authority to execute and
deliver this Agreement and to perform and consummate the transactions
contemplated herein. Such party has taken all actions necessary to authorize the
execution and delivery of this Agreement, the performance of such party's
obligations hereunder, and the consummation of the transactions contemplated
herein. This Agreement has been duly authorized, executed, and delivered by, and
is Enforceable against, such party.
(c) The execution and the delivery of this Agreement by such party
and the performance and consummation of the transactions contemplated herein by
such party will not (i) Breach any provision of its organizational documents,
(ii) Breach any Law to which such party is subject, (iii) Breach any Contract or
Order to which such party is a party or by which such party is bound or to which
any of such party's assets is subject, or (iv) require any approval, consent,
ratification, permission, waiver or authorization not already obtained, except
in the case of clauses (ii), (iii) and (iv) as would not have a material adverse
affect on the ability of such party to perform its obligations hereunder and
consummate the transactions contemplated herein.
SECTION 5.2 REPRESENTATION AND WARRANTY OF EL PASO GP HOLDCO.
El Paso GP Holdco represents and warrants to Enterprise MLP and Enterprise GP
that in acquiring Exchange
23
Units, El Paso GP Holdco is not offering or selling, and shall not offer or sell
any Exchange Units, for Enterprise MLP in connection with any distribution of
any of the Exchange Units, and El Paso GP Holdco does not have a participation
and shall not participate in any such undertaking or in any underwriting of such
an undertaking except in compliance with applicable federal and state securities
laws. El Paso GP Holdco acknowledges that it is able to fend for itself, can
bear the economic risk of its investment in the Exchange Units, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Exchange Units. El Paso
GP Holdco is an "accredited investor" as such term is defined in Regulation D
under the Securities Act. El Paso GP Holdco understands that none of the
Exchange Units shall have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Exchange Units shall be characterized
as "restricted securities" under federal securities laws and that under such
laws and applicable regulations none of the Exchange Units can be sold or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and the certificates representing the Exchange Units will
contain a legend so restricting the transferability thereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 NOTICES. All notices and other communications
provided for or permitted under this Agreement shall be made in writing by hand
delivery, first class mail (registered or certified, return receipt requested),
telex, telecopier, or air courier guaranteeing overnight delivery:
if to El Paso GP Holdco:
GulfTerra GP Holding Company
El Paso Building
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: [Xxx Xxxx]
with a copy to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000 0000
Attention: G. Xxxxxxx X'Xxxxx
24
if to Enterprise GP:
Enterprise Products GP, LLC
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Enterprise Products GP, LLC
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Legal Officer
Telecopy: (000) 000-0000
If to Enterprise MLP:
Enterprise Products Partners L.P.
c/o Enterprise Products GP, LLC
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Enterprise Products Partners L.P.
c/o Enterprise Products GP, LLC
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Legal Officer
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
says after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
SECTION 6.2 TERMINATION. This Agreement shall terminate upon the
later of (i) such time that Holder no longer owns any Membership Interest in
Enterprise GP and (ii) such time that none of the Exchange Units or Additional
Exchange Units subject to issuance constitute Registrable Securities.
Notwithstanding the foregoing, if any Registrable Securities are sold pursuant
to Article IV hereof, the provisions of Section 4.10 hereof shall not terminate
and shall survive indefinitely.
25
SECTION 6.3 THIRD PARTY BENEFICIARIES. Each of the parties
specifically intends that each of the Enterprise Members, and El Paso Sub 1 and
El Paso Sub 2, respectively, shall be entitled to assert its rights and remedies
hereunder as a third-party beneficiary hereto with respect to those provisions
of this Agreement affording a right, benefit or privilege to it (including,
without limitation, Section 2.5(b) and Article IV).
SECTION 6.4 AMENDMENT. This Agreement may be amended or modified
from time to time only by written agreement of all the parties hereto. Each such
instrument shall be reduced to writing and shall be designated on its face an
"amendment" to this Agreement.
SECTION 6.5 SUCCESSORS AND ASSIGNS. All of the terms, agreements,
covenants, representations, warranties, and conditions of this Agreement are
binding upon, and inure to the benefit of and are enforceable by, the parties
hereto and their respective successors and assigns. Except as expressly provided
in the following sentence, no party may assign, transfer or otherwise alienate
this Agreement or any of its rights, interest or obligations hereunder or any
Registrable Securities without the prior written approval of the other parties.
Notwithstanding the immediately preceding sentence, the Holder can transfer
Registrable Securities so long as (i) such transfer is made in accordance with
Rule 144 under the Securities Act or (ii) the transferee assumes the Holder's
obligations with respect to such Registrable Securities under this Agreement.
SECTION 6.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 6.7 ARTICLES AND SECTIONS; HEADINGS. Unless otherwise
provided, all reference to Articles, Sections and paragraphs herein refer to
Articles, Sections and paragraphs of this Agreement. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
SECTION 6.8 GOVERNING LAW. To the maximum extent permitted by
applicable Law, the provisions of this agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to principles of conflicts of law.
SECTION 6.9 SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 6.10 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding of the parties hereto in respect of its
subject matter and supersedes all prior understandings, agreements, or
representations by or among such parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
* * * * *
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"ENTERPRISE GP"
ENTERPRISE PRODUCTS GP, LLC
By: _______________________________
Name:
Title:
"ENTERPRISE MLP"
Enterprise Products Partners, L.P.
By: Enterprise Products GP, LLC,
its general partner
By: _______________________________
Name:
Title:
"EL PASO GP HOLDCO"
GULFTERRA GP HOLDING COMPANY
By: _______________________________
Name:
Title:
27
EXHIBIT A
FORM OF ACKNOWLEDGEMENT
This Acknowledgment, dated as of , 200 , is executed by Holder,
Enterprise GP and Enterprise MLP (each, as defined in the Exchange and
Registration Rights Agreement, dated ________, 2004, among Enterprise Products
GP, LLC, Enterprise Products Partners, L.P. and GulfTerra GP Holding Company
(the "Exchange Agreement"). Each of such parties hereby acknowledges and agrees
that (i) the Total Number of Exchange Units (as defined in the Exchange
Agreement) for purposes of the Exchange Agreement shall be the number set forth
in the space below and (ii) such Total Number of Exchange Units may only be
adjusted or modified pursuant to the provisions of the Exchange Agreement.
_____________________________________
TOTAL NUMBER OF EXCHANGE UNITS
(as defined in the Exchange Agreement)
HOLDER
By: _______________________________
Name:
Title:
ENTERPRISE GP
By: _______________________________
Name:
Title:
ENTERPRISE MLP
By: _______________________________
Name:
Title:
X-0
XXXXXXX 0
XXXXXXXXXXX XXXXXXXX
This Performance Guaranty (this "GUARANTY") dated as of__________, 2004
is made by Enterprise Products Delaware Holdings L.P., a Delaware limited
partnership (the "GUARANTOR") in favor of GulfTerra GP Holding Company, a
Delaware corporation ("GULFTERRA"). The Guarantor and GulfTerra are sometimes
referred to together herein as the "PARTIES" and individually as a "PARTY."
RECITALS
A. This Guaranty is being executed and delivered in connection
with that certain Exchange and Registration Rights Agreement (the "SUBJECT
AGREEMENT"), dated as of ______________, 2004, by and between GulfTerra,
Enterprise Products GP, LLC, a Delaware limited liability company (the
"OBLIGOR"), and Enterprise Products Partners L.P., a Delaware limited
partnership.
B. The Guarantor acknowledges that (a) it shall substantially
benefit from the Subject Agreement to which the Obligor is a party and (b) this
Guaranty is necessary or convenient to the conduct, promotion or attainment of
the business of the Obligor.
C. To induce GulfTerra to enter into, and to close the
transaction contemplated by the Subject Agreement, GulfTerra desires that the
Guarantor guarantees the Obligor's performance under the Subject Agreement.
D. The Guarantor desires to guarantee the Obligor's performance
under the Subject Agreement upon the terms and conditions set forth herein.
AGREEMENT
For and in consideration of the premises and mutual covenants herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the Guarantor does hereby agree as follows:
1. Definitions. Any capitalized term used, but not defined,
herein shall have the meaning given to such term in the Subject Agreement.
2. The Guaranty. Subject to the last sentence of this Section 2,
the Guarantor hereby irrevocably and unconditionally guarantees to GulfTerra the
full and timely performance and discharge (including the payment of money) by
the Obligor of all obligations and liabilities of the Obligor now existing or
hereafter arising under Article II of the Subject Agreement (the "GUARANTEED
OBLIGATIONS") and hereby agrees that if the Obligor shall fail (i) to pay any
Guaranteed Obligation when and as the same shall be due and payable by the
Obligor to GulfTerra or (ii) timely to perform and discharge in full any other
Guaranteed Obligation in accordance with the terms of the Subject Agreement, the
Guarantor shall be liable to GulfTerra for such Guaranteed Obligation, and, as
such, the Guarantor shall forthwith pay to GulfTerra or perform and discharge
any such Guaranteed Obligation, as the case may be, as such payment or
performance and discharge is required to be made or done by the Obligor pursuant
to the terms of the Subject Agreement. The guarantee in the preceding sentence
is an absolute, present and
continuing guarantee of payment and of performance of obligations and not of
collectibility and is in no way conditional or contingent upon any attempt to
collect from the Obligor or upon any other action, occurrence or circumstance
whatsoever. It shall not be necessary for GulfTerra, in order to enforce such
payment or performance by the Guarantor, first to institute suit or exhaust its
remedies against the Obligor, the Guarantor or any other Person liable with
respect to any Guaranteed Obligations. Notwithstanding anything to the contrary
contained in this Section 2 or elsewhere in this Guaranty, GulfTerra
acknowledges and agrees that (a) the Guarantor shall have the benefit of and the
right to assert any defenses against the claims of GulfTerra which are available
to the Obligor and which would have also been available to the Guarantor if the
Guarantor had been in the same contractual position as the Obligor under the
Subject Agreement, other than defenses arising from an event or circumstance
referred to in clause (e) of Section 3 hereof, or, to the extent related to a
proceeding described in such clause (e), clause (h) of Section 3 hereof, or
related to the financial condition of the Obligor, and (b) with respect to any
and all of the guarantees made by the Guarantor in this Guaranty, the Guarantor
hereby guarantees, and shall be responsible for, each performance and/or
discharge obligation or liability (including the payment of money) of the
Obligor now existing or hereafter arising under Article II of the Subject
Agreement.
3. Obligations Absolute. The obligations of the Guarantor to
GulfTerra hereunder shall be absolute, continuing and unconditional and shall
not be released, discharged or in any way affected by (except to the extent the
Obligor is so released or discharged from the Guaranteed Obligations other than
any such release or discharge of the Obligor occurring as a result of an event
or circumstance referred to in any of clause (e), clause (g), or clause (h) (as
such clause pertains to laws that relate to the proceedings referred to in
clause (e) below), any of the following:
(a) any amendment to, modification of, or supplement to
the Subject Agreement or any other instrument referred to therein or
any assignment or transfer of any rights or obligations thereunder;
(b) any release, consent or waiver, by operation of law
or otherwise, of the performance or observance by the Obligor or any
other Person of any express or implied agreement, covenant, term,
obligation or condition under the Subject Agreement;
(c) any extension of the time for the payment of all or
any portion of any sums payable under the Subject Agreement or the
extension of time for the performance of any obligations under, arising
out of or in connection with the Subject Agreement;
(d) any failure, omission, delay or lack of diligence on
the part of GulfTerra or any other Person to enforce, assert or
exercise, or any waiver of, any right, privilege, power or remedy
conferred on GulfTerra or any other Person by the Subject Agreement, or
any action on the part of GulfTerra or such other Person granting
indulgence or extension of any kind;
(e) any bankruptcy, insolvency, readjustment,
composition, liquidation, dissolution or similar proceeding or any
other defense that may arise in connection with any such proceeding
with respect to the Obligor, the Guarantor or any other Person;
2
(f) any change in the entity structure, existence or
ownership of the Guarantor, the Obligor or GulfTerra, or any sale,
lease or transfer of any or all of the assets of the Guarantor or the
Obligor to any Person;
(g) any failure on the part of the Obligor for any reason
to comply with or perform any of the terms of any other agreement with
the Guarantor;
(h) any law, regulation or order hereafter in effect in
any jurisdiction affecting any of the rights under or terms of the
Subject Agreement;
(i) any exchange, release or nonperfection of any
collateral securing, or any release or amendment or waiver of, or
consent to departure from, any other guaranty of or security for the
performance of, any Guaranteed Obligations; or
(j) any other circumstance that otherwise might
constitute a defense available to the Guarantor in the capacity of a
guarantor or surety.
4. Waiver. With respect to GulfTerra, the Guarantor
unconditionally waives, to the fullest extent permitted by law: (a) notice of
acceptance hereof, of any action taken or omitted in reliance hereon, of demand,
and of any defaults by the Obligor in the payment or performance of any
Guaranteed Obligations, and of any of the matters referred to in Section 3; (b)
all notices that may otherwise be required by statute, rule of law or otherwise
to preserve any of the rights of GulfTerra against the Guarantor, including
presentment to or demand for payment from the Obligor or the Guarantor, or
notice to the Obligor of claims with a court in the event of the bankruptcy of
the Obligor, (c) any right to the enforcement, assertion or exercise by
GulfTerra of any right, power or remedy conferred in this Guaranty or the
Subject Agreement; (d) any requirement of diligence on the part of GulfTerra;
and (e) any other act or omission (including any delay by GulfTerra or any other
Person in the taking of any action) that might in any manner or to any extent
vary the obligation of the Guarantor or that might otherwise operate as a
discharge of the Guarantor.
5. Reinstatement of Guaranty. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if and to the extent at any
time any payment, in whole or in part, made by the Obligor or the Guarantor to
GulfTerra in respect of any Guaranteed Obligations is rescinded or must
otherwise be restored or returned by GulfTerra upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Obligor or the Guarantor, or
upon or as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Obligor or the Guarantor
or any substantial part of its property, or otherwise, all as though such
payments had not been made and, to the extent permitted by applicable law, in
such event, the Guarantor shall be liable to GulfTerra for an amount equal to
the payment that has been rescinded or returned, and, as such, the Guarantor
shall pay to GulfTerra such amount equal to the payment that has been rescinded
or returned. GulfTerra shall not be required to litigate or otherwise dispute
its obligation to make such repayments if it in good faith believes that such
obligation exists.
3
6. Representations and Warranties of the Guarantor. The Guarantor
represents and warrants as follows:
(a) Organization and Good Standing. The Guarantor is a
limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Guarantor has all
requisite power and authority, and all governmental licenses and
permits, to own and operate its properties and to carry on its
businesses as presently conducted. The Guarantor has the requisite
power to enter into and perform its obligations under this Guaranty.
(b) Approval and Enforceability of Guaranty. The
execution, delivery and performance of this Guaranty have been duly
authorized by all necessary action on the part of the Guarantor. This
Guaranty has been duly and validly executed and delivered and
constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against it in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, moratorium, reorganization,
dissolution, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Guarantor is not required to give
any notice to, make any filings with, or obtain any authorization,
consent or approval of, any United States federal, state or local or
any foreign government or any court, administrative or regulatory
agency or commission or other governmental authority or agency,
domestic or foreign (each, a "GOVERNMENTAL ENTITY") or any other Person
to perform its obligations under this Guaranty. Neither the execution
and the delivery of this Guaranty, nor the performance by the Guarantor
of any of its obligations hereunder, shall in any respect violate any
statute, regulation, rule, injunction, judgment, order, decree or
ruling of any Governmental Entity to which the Guarantor is subject, or
any provision of any Organizational Document of the Guarantor, or any
material agreement or instrument, to which the Guarantor is a party.
(c) Ownership of Common Units. Guarantor owns,
beneficially and of record and free and clear of all liens and
encumbrances (other than any restrictions on transfer arising under any
securities laws), not less than 4,500,000 Common Units (as defined in
the Subject Agreement).
7. Maintenance Of Ownership of Common Units. Until the Guaranteed
Obligations have been satisfied in full, Guarantor agrees to continue to own,
beneficially and of record and free and clear of all liens and encumbrances
(other than any restrictions on transfer arising under any securities laws), not
less than 4,500,000 Common Units (as defined in the Subject Agreement), which
number of Common Units shall be subject to adjustment in accordance with the
anti-dilution provisions set forth in Section 2.9 of the Subject Agreement as
applicable.
8. Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given two business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
4
If to the Guarantor: Enterprise Products Delaware Holdings
L.P.
c/o Enterprise Products Partners, L.P.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
If to GulfTerra: GulfTerra GP Holding Company
El Paso Building
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the addresses set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
9. Construction. The Parties have participated jointly in the
negotiation and drafting of this Guaranty. In the event an ambiguity or question
of intent or interpretation arises, this Guaranty shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Guaranty. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. All personal pronouns
used in this Guaranty, whether used in the masculine, feminine or neuter gender,
shall include all other genders, the singular shall include the plural, and vice
versa. All references herein to Exhibits, Schedules, Articles, Sections or
subdivisions thereof shall refer to the corresponding Exhibits, Schedules,
Article, Section or subdivision thereof of this Guaranty unless specific
reference is made to such exhibits, articles, sections or subdivisions of
another document or instrument. The terms "herein," "hereby," "hereunder,"
"hereof," "hereinafter," and other equivalent words refer to this Guaranty in
its entirety and not solely to the particular portion of the Guaranty in which
such word is used.
5
10. Severability. Any term or provision of this Guaranty that is
invalid or unenforceable in any situation in any jurisdiction shall to the
fullest extent permitted by law not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
11. Entire Agreement; Amendment. THIS GUARANTY (INCLUDING THE
DOCUMENTS REFERRED TO HEREIN) CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES
AND SUPERSEDES ANY PRIOR UNDERSTANDINGS, AGREEMENTS, OR REPRESENTATIONS BY OR
AMONG THE PARTIES, WRITTEN OR ORAL TO THE EXTENT THEY HAVE RELATED IN ANY WAY TO
THE SUBJECT MATTER HEREOF. No amendment of any provision of this Guaranty shall
be valid unless the same shall be in writing and signed by the Parties.
12. Term of Agreement. This Guaranty and all guarantees,
representations, warranties, covenants and agreements of the Guarantor contained
herein shall continue in full force and effect and shall not be discharged until
the earlier to occur of: (i) all of the Guaranteed Obligations shall have
terminated or expired, or shall have been indefeasibly paid or otherwise
performed and discharged in full (beyond the period where such Guaranteed
Obligations are subject to rescission, restoration or return as contemplated by
Section 5), or (ii) upon written consent of the Parties.
13. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing or on behalf
of the Guarantor in connection herewith shall survive the execution and delivery
of this Guaranty.
14. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
15. Expenses. The Guarantor agrees to pay or reimburse GulfTerra
for all reasonable costs and expenses incurred in good faith including
reasonable legal fees and expenses, if any, incurred by GulfTerra to enforce any
of the rights of GulfTerra and its Affiliates under this Guaranty unless
GulfTerra does not prevail in the action, suit or proceeding brought to enforce
its rights under this Guaranty.
[Remainder of page intentionally left blank]
6
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered as of the date and year first written in the preamble to
this Guaranty.
ENTERPRISE PRODUCTS DELAWARE
HOLDINGS L.P.
By: ________________________
By: ________________________
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Guaranty
